Activision Blizzard Announces Better-Than-Expected Second Quarter 2012 Financial Results

    Activision Blizzard Announces Better-Than-Expected Second Quarter 2012
                              Financial Results

Company Had The Top Three Best-Selling Games in North America and Europe For
First Six Months of 20121

PR Newswire

SANTA MONICA, Calif., Aug. 2, 2012

SANTA MONICA, Calif., Aug. 2, 2012 /PRNewswire/ -- Activision Blizzard, Inc.
(Nasdaq: ATVI) today announced better-than-expected financial results for the
second quarter of 2012.

                          Second Quarter
                                   Prior
(in millions, except EPS) 2012               2011
                                   Outlook*
GAAP                      $ 1,075  $  950    $ 1,146
Net Revenues
EPS                      $ 0.16   $  0.13   $ 0.29
Non-GAAP                  $ 1,054  $  805    $ 699
Net Revenues
EPS                      $ 0.20   $  0.10   $ 0.10

*Prior outlook was provided by the company on May 9, 2012 in its earnings
release

For the quarter ended June 30, 2012, Activision Blizzard's GAAP net revenues
were $1.08 billion, as compared with $1.15 billion for the second quarter of
2011. On a non-GAAP basis, the company's net revenues were $1.05 billion, as
compared with $699 million for the second quarter of 2011. For the second
quarter, GAAP net revenues from digital channels were $343 million and
represented 32% of the company's total revenues. On a non-GAAP basis, net
revenues from digital channels were a record $497 million and represented 47%
of the company's total revenues.

For the quarter ended June 30, 2012, Activision Blizzard's GAAP earnings per
diluted share were $0.16, as compared with $0.29 for the second quarter of
2011. On a non-GAAP basis, the company's earnings per diluted share were
$0.20, as compared with $0.10 for the second quarter of 2011.

The company reports results on both a GAAP and a non-GAAP basis. Please refer
to the tables at the back of this press release for a reconciliation of the
company's GAAP and non-GAAP results.

Bobby Kotick, Chief Executive Officer of Activision Blizzard, said, "On a
non-GAAP basis, we delivered record Q2 and first halfnet revenues, operating
income and earnings. Our performance was driven by strong audience demand for
our great games. We are very excited to have announced our expanded
investment in China through Activision Publishing's agreement with Tencent to
bring the Call of Duty® franchise  to the Chinese market."

Kotick continued, "For the first six months, we had the top three best-selling
games in North America and Europe with Activision Publishing's Skylanders
Spyro's Adventures® and Call of Duty: Modern Warfare® 3, and Blizzard
Entertainment's record setting Diablo® III."

"For the remainder of the year, we are excited about our product slate which
includes Activision Publishing's Skylanders Giants™ and Call of Duty: Black
Ops II, and Blizzard Entertainment's World of Warcraft®: Mists of Pandaria™.
While we are increasing our financial outlook for full year 2012, we remain
cautious given economic uncertainty, risks to consumer spending especially
during the holiday season and the recognition that the majority of our key
franchise launches are still ahead of us," Kotick added.

Selected Business Highlights:

  oIn North America and Europe, including accessory packs and figures,
    Activision Publishing's Skylanders Spyro's Adventure was the #1
    best-selling console and hand-held game overall in dollars for the first
    six months of 2012.^1 Additionally, Skylanders Spyro's Adventure was the
    #1 action-figure line in the U.S., outselling all other action-figure
    lines for the first six months of 2012.^2
  oFor the June quarter, Activision Blizzard was the #1 independent game
    publisher overall in North America and Europe.^1
  oBlizzard Entertainment's Diablo III, released on May 15, 2012,  set a new
    industry launch record for PC games and was the #1 best-selling PC game
    for the first six months of 2012. Through July, more than 10 million
    players have entered the world of Sanctuary.^3
  oAs of June 30, 2012, Blizzard Entertainment's World of Warcraft remains
    the #1 subscription-based MMORPG and had approximately 9.1 million
    subscribers^4
  oBlizzard Entertainment announced that the company expects to release World
    of Warcraft: Mists of Pandaria on September 25, 2012.
  oOn July 3, 2012, Activision Publishing and Tencent Holdings Limited, a
    leading Internet services provider in China, announced a strategic
    relationship to bring the Call of Duty franchise to Chinese game players.
    Under the multi-year agreement with Activision Publishing, Tencent has the
    exclusive license to operate Activision's new Call of Duty game in
    mainland China. The game will be free-to-play and monetized through the
    sale of in-game items.
  oDuring the quarter, Activision Blizzard paid a cash dividend of $0.18 per
    common share, totaling $204 million, to shareholders of record at the
    close of business on March 21, 2012. This represented a 9% increase over
    the dividend that was paid in 2011.
  oDuring the quarter, Activision Blizzard purchased an aggregate of 4.4
    million shares of its common stock for an aggregate purchase price of
    approximately $54 million.

Company Outlook
During the third quarter, Activision Publishing expects to release
Transformers: Fall of Cybertron™ for the Xbox 360® video game and
entertainment system from Microsoft, Sony's PlayStation® 3 computer
entertainment system and the PC. Additionally, the company expects to release
the Call of Duty: Modern Warfare 3 Content Collection #3, a compilation of
content previously released to Call of Duty Elite premium members, on the Xbox
360 video game and entertainment system from Microsoft,  for Sony's
PlayStation 3 computer entertainment system; and Call of Duty: Modern Warfare
3 Content Collection #4 on the Xbox 360 video game and entertainment system
from Microsoft.

Activision Publishing also expects to release Ice Age™ Continental Drift –
Arctic Games in North America for the Xbox 360 video game and entertainment
system from Microsoft, Sony's PlayStation 3 computer entertainment system,
Wii™ system from Nintendo, the Nintendo 3DS™ and Nintendo DS™ hand-held
system; Wipeout 3 for the Xbox 360 video game and entertainment system from
Microsoft, Wii system from Nintendo and the Nintendo 3DS; and Angry Birds
Trilogy for the Xbox 360 video game and entertainment system from Microsoft,
Sony's PlayStation 3 computer entertainment system, and the Nintendo 3DS.

Blizzard Entertainment expects to release World of Warcraft: Mists of Pandaria
on September 25, 2012.

Based on better-than-expected second quarter results, the company is raising
its calendar year net revenue and earnings per share outlook.

                                      Prior*                          Prior*
(in millions, except   GAAP Outlook                 Non-GAAP Outlook
EPS)                                  GAAP Outlook                    Non-GAAP
                                                                      Outlook
CY 2012                $     4,330    $    4,200    $      4,630      $  4,530
 Net Revenues
 EPS                  $     0.69     $    0.65     $      0.99       $  0.95
Q3 2012                $     740           n/a     $      690           n/a
 Net Revenues
 EPS                  $     0.06          n/a     $      0.07          n/a
* Prior outlook was provided by the company on May 9, 2012 in its earnings
release

Conference Call
Today at 4:30 p.m. EDT, Activision Blizzard's management will host a
conference call and Webcast to discuss the company's results for the quarter
ended June 30, 2012 and management's outlook for the remainder of the calendar
year. The company welcomes all members of the financial and media communities
and other interested parties to visit the "Investor Relations" area of
www.activisionblizzard.com to listen to the conference call via live Webcast
or to listen to the call live by dialing into 888-282-4591 in the U.S. with
passcode 4121658.

About Activision Blizzard
Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a
worldwide online, PC, console, handheld and mobile game publisher with leading
positions across the major categories of the rapidly growing interactive
entertainment software industry.

Activision Blizzard maintains operations in the U.S., Canada, the United
Kingdom, France, Germany, Ireland, Italy, Sweden, Spain, the Netherlands,
Australia, South Korea and China. More information about Activision Blizzard
and its products can be found on the company's website,
www.activisionblizzard.com.

Non-GAAP Financial Measures: As a supplement to our financial measures
presented in accordance with GAAP, Activision Blizzard presents certain
non-GAAP measures of financial performance. These non-GAAP financial measures
are not intended to be considered in isolation from, as a substitute for, or
as more important than, the financial information prepared and presented in
accordance with GAAP. In addition, these non-GAAP measures have limitations
in that they do not reflect all of the items associated with the company's
results of operations as determined in accordance with GAAP.

Activision Blizzard provides net revenues, net income (loss), earnings (loss)
per share and operating margin data and guidance both including (in accordance
with GAAP) and excluding (non-GAAP) certain items. The non-GAAP financial
measures exclude the following items, as applicable in any given reporting
period:

  othe change in deferred net revenue and related cost of sales with respect
    to certain of the company's online-enabled games;
  oexpenses related to stock-based compensation;
  oexpenses related to restructuring;
  othe amortization of intangibles, and impairment of intangible assets and
    goodwill; and
  othe income tax adjustments associated with any of the above items.

In the future, Activision Blizzard may also consider whether other significant
non-recurring items should also be excluded in calculating the non-GAAP
financial measures used by the company. Management believes that the
presentation of these non-GAAP financial measures provides investors with
additional useful information to measure Activision Blizzard's financial and
operating performance. In particular, the measures facilitate comparison of
operating performance between periods and help investors to better understand
the operating results of Activision Blizzard by excluding certain items that
may not be indicative of the company's core business, operating results or
future outlook. Internally, management uses these non-GAAP financial measures
in assessing the company's operating results, as well as in planning and
forecasting.

Activision Blizzard's non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and the terms non-GAAP
net revenues, non-GAAP net income, non-GAAP earnings per share, and non-GAAP
operating margin do not have a standardized meaning. Therefore, other
companies may use the same or similarly named measures, but exclude different
items, which may not provide investors a comparable view of Activision
Blizzard's performance in relation to other companies.

Management compensates for the limitations resulting from the exclusion of
these items by considering the impact of the items separately and by
considering Activision Blizzard's GAAP, as well as non-GAAP, results and
outlook, and by presenting the most comparable GAAP measures directly ahead of
non-GAAP measures, and by providing a reconciliation that indicates and
describes the adjustments made.

In addition to the reasons stated above, which are generally applicable to
each of the items Activision Blizzard excludes from its non-GAAP financial
measures, there are additional specific reasons why the company believes it is
appropriate to exclude the change in deferred net revenue and related cost of
sales with respect to certain of the company's online-enabled games.

Since Activision Blizzard has determined that some of our games' online
functionality represents an essential component of gameplay and, as a result,
a more-than-inconsequential separate deliverable, we recognize revenue
attributed to these game titles over their estimated service periods, which
may range from five months to a maximum of less than a year. The related cost
of sales is deferred and recognized as the related revenues are recognized.
Internally, management excludes the impact of this change in deferred net
revenue and related cost of sales in its non-GAAP financial measures when
evaluating the company's operating performance, when planning, forecasting and
analyzing future periods, and when assessing the performance of its management
team.

Management believes this is appropriate because doing so enables an analysis
of performance based on the timing of actual transactions with our customers,
which is consistent with the way the company is measured by investment
analysts and industry data sources. In addition, excluding the change in
deferred net revenue and the related cost of sales provides a much more timely
indication of trends in our operating results.

Cautionary Note Regarding Forward-looking Statements: Information in this
press release that involves Activision Blizzard's expectations, plans,
intentions or strategies regarding the future, including statements under the
heading "Company Outlook," are forward-looking statements that are not facts
and involve a number of risks and uncertainties.

Activision Blizzard generally uses words such as "outlook," "will," "could,"
"should," "would," "might," "to be," "plans," "believes," "may," "expects,"
"intends," "anticipates," "estimate," "future," "plan," "positioned,"
"potential," "project," "remain," "scheduled," "set to," "subject to,"
"upcoming" and similar expressions to identify forward-looking statements.
Factors that could cause Activision Blizzard's actual future results to differ
materially from those expressed in the forward-looking statements set forth in
this release include, but are not limited to, sales levels of Activision
Blizzard's titles, increasing concentration of titles, shifts in consumer
spending trends, the impact of the current macroeconomic environment and
market conditions within the video game industry, Activision Blizzard's
ability to predict consumer preferences, including interest in specific genres
such as first-person action and massively multiplayer online games and
preferences among competing hardware platforms, the seasonal and cyclical
nature of the interactive game market, changing business models including
digital delivery of content, competition, including from used games and other
forms of entertainment, possible declines in software pricing, product returns
and price protection, product delays, adoption rate and availability of new
hardware (including peripherals) and related software, rapid changes in
technology and industry standards, litigation risks and associated costs,
protection of proprietary rights, maintenance of relationships with key
personnel, customers, licensees, licensors, vendors, and third-party
developers, including the ability to attract, retain and develop key personnel
and developers that can create high quality "hit" titles, counterparty risks
relating to customers, licensees, licensors and manufacturers, domestic and
international economic, financial and political conditions and policies,
foreign exchange rates and tax rates, and the identification of suitable
future acquisition opportunities and potential challenges associated with
geographic expansion, and the other factors identified in the risk factors
section of Activision Blizzard's most recent annual report on Form 10-K and
other filings with the Securities and Exchange Commission. The
forward-looking statements in this release are based upon information
available to Activision Blizzard as of the date of this release, and
Activision Blizzard assumes no obligation to update any such forward-looking
statements. Although these forward-looking statements are believed to be true
when made, they may ultimately prove to be incorrect. These statements are not
guarantees of the future performance of Activision Blizzard and are subject to
risks, uncertainties and other factors, some of which are beyond its control
and may cause actual results to differ materially from current expectations.

^1 According to The NPD Group, Chart-Track and GfK
^2According to The NPD Group
^3According to Activision Blizzard internal estimates and the NPD Group,
Chart-Track and GfK
^4According to Activision Blizzard internal estimates

(Tables to Follow)

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in millions, except per share data)
                         Three Months Ended June 30, Six Months Ended June 30,
                         2012          2011          2012          2011
Net revenues:
    Product sales        $    798      $    768      $    1,672    $   1,829
    Subscription,
    licensing and other       277           378           575          766
    revenues ^1
     Total net            1,075         1,146         2,247        2,595
    revenues
Costs and expenses:
    Cost of sales -           229           213           486          512
    product costs
    Cost of sales -           64            59            123          122
    online subscriptions
    Cost of sales -
    software royalties        57            47            88           109
    and amortization
    Cost of sales -
    intellectual              20            24            27           53
    property licenses
    Product development       152           116           276          258
    Sales and marketing       136           90            216          150
    General and               190           127           291          228
    administrative
    Restructuring             -             3             -            22
     Total costs and      848           679           1,507        1,454
    expenses
Operating income              227           467           740          1,141
Investment and other          2             2             3            5
income (expense), net
Income before income tax      229           469           743          1,146
expense
Income tax expense            44            134           174          308
Net income               $    185      $    335      $    569      $   838
Basic earnings per       $    0.16     $    0.29     $    0.50     $   0.71
common share
Weighted average common       1,109         1,141         1,115        1,157
shares outstanding
Diluted earnings per     $    0.16     $    0.29     $    0.50     $   0.71
common share ^2
Weighted average common
shares outstanding            1,115         1,150         1,121        1,166
assuming dilution
^1 Subscription, licensing and other revenues represents revenues from World
of Warcraft subscriptions, Call of Duty Elite memberships, licensing royalties
from our products and franchises, value-added services, downloadable content,
and other miscellaneous revenues.
^2 The company calculates earnings per share pursuant to the two-class method
which requires the allocation of net income between common shareholders and
participating security holders. Net income attributable to Activision Blizzard
Inc. common shareholders used to calculate earnings per common share assuming
dilution was $181 million and $558 million for the three and six months ended
June 30, 2012, as compared to the total net income of $185 million and $569
million for the same periods, respectively. Net income attributable to
Activision Blizzard Inc. common shareholders used to calculate earnings per
common share assuming dilution was $330 million and $826 million for the three
and six months ended June 30, 2011, as compared to total net income of $335
million and $838 million for the same periods, respectively.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
                                                       June 30, December 31,
                                                       2012     2011
ASSETS
 Current assets:
  Cash and cash equivalents                            $ 2,786  $   3,165
  Short-term investments                               406          360
  Accounts receivable, net                             227          649
  Inventories, net                                     128          144
  Software development                                 141          137
  Intellectual property licenses                       8            22
  Deferred income taxes, net                           484          507
  Other current assets                                 152          396
   Total current assets                              4,332      5,380
 Long-term investments                                   17         16
 Software development                                  123          62
 Intellectual property licenses                        12           12
 Property and equipment, net                           149          163
 Other assets                                          12           12
 Intangible assets, net                                83           88
 Trademark and trade names                               433        433
 Goodwill                                                7,108      7,111
  Total assets                                         $ 12,269 $   13,277
LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
  Accounts payable                                     $ 163    $   390
  Deferred revenues                                      905        1,472
  Accrued expenses and other liabilities                 416        694
   Total current liabilities                        1,484      2,556
  Deferred income taxes, net                             61         55
  Other liabilities                                      160        174
  Total liabilities                                      1,705      2,785
 Shareholders' equity:
  Common stock                                           ---        ---
  Additional paid-in capital                             9,375      9,616
  Retained earnings                                      1,313      948
  Accumulated other comprehensive income (loss)          (124)      (72)
   Total shareholders' equity                       10,564     10,492
   Total liabilities and shareholders' equity $ 12,269 $   13,277

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except earnings per share data)
                                                  Cost of      Cost of
Three months                Cost of Cost of Sales Sales -      Sales -                                           Total
ended June        Net       Sales - - Online      Software     Intellectual Product     Sales and General and    Costs
30, 2012          Revenues  Product Subscriptions Royalties    Property     Development Marketing Administrative and
                            Costs                 and          Licenses                                          Expenses
                                                  Amortization
GAAP              $   1,075 $  229  $     64      $    57      $     20     $    152    $   136   $     190      $  848
Measurement
 Less: Net
 effect from
 deferral in
 net revenues (a)     (21)     (61)       -            -             -           -          -           -           (61)
 and related
 cost of
 sales
 Less:
 Stock-based  (b)     -        -          -            (3)           -           (5)        (1)         (22)        (31)
 compensation
 Less:
 Amortization
 of           (c)     -        -          -            -             (2)         -          -           -           (2)
 intangible
 assets
Non-GAAP          $   1,054 $  168  $     64      $    54      $     18     $    147    $   135   $     168      $  754
Measurement
Three months      Operating Net     Basic         Diluted
ended June        Income    Income  Earnings per  Earnings per
30, 2012                            Share         Share
GAAP              $   227   $  185  $     0.16    $    0.16
Measurement
 Less: Net
 effect from
 deferral in
 net revenues (a)     40       17         0.02         0.02
 and related
 cost of
 sales
 Less:
 Stock-based  (b)     31       21         0.02         0.02
 compensation
 Less:
 Amortization
 of           (c)     2        1          -            -
 intangible
 assets
Non-GAAP          $   300   $  224  $     0.20    $    0.20
Measurement

                                                  Cost of      Cost of
Six months                  Cost of Cost of Sales Sales -      Sales -                                           Total
ended June        Net       Sales - - Online      Software     Intellectual Product     Sales and General and    Costs
30, 2012          Revenues  Product Subscriptions Royalties    Property     Development Marketing Administrative and
                            Costs                 and          Licenses                                          Expenses
                                                  Amortization
GAAP              $   2,247 $ 486   $    123      $   88       $     27     $    276    $   216   $     291      $  1,507
Measurement
 Less: Net
 effect from
 deferral in
 net revenues (a)     (606)   (181)      -            (17)           (1)         -          -           -           (199)
 and related
 cost of
 sales
 Less:
 Stock-based  (b)     -       -          -            (6)            -           (9)        (4)         (33)        (52)
 compensation
 Less:
 Amortization
 of           (c)     -       -          -            -              (5)         -          -           -           (5)
 intangible
 assets
Non-GAAP          $   1,641 $ 305   $    123      $   65       $     21     $    267    $   212   $     258      $  1,251
Measurement
Six months        Operating Net     Basic         Diluted
ended June        Income    Income  Earnings per  Earnings per
30, 2012                            Share         Share
GAAP              $   740   $ 569   $    0.50     $   0.50
Measurement
 Less: Net
 effect from
 deferral in
 net revenues (a)     (407)   (317)      (0.28)       (0.28)
 and related
 cost of
 sales
 Less:
 Stock-based  (b)     52      36         0.03         0.03
 compensation
 Less:
 Amortization
 of           (c)     5       3          -            -
 intangible
 assets
Non-GAAP          $   390   $ 291   $    0.26     $   0.25
Measurement

 (a) Reflects the net change in deferred net revenues and related cost of
 sales.
 (b) Includes expense related to stock-based compensation.
 (c) Reflects amortization of intangible assets.
 The company calculates earnings per share pursuant to the two-class method
 which requires the allocation of net income between common shareholders and
 participating security holders. Net income attributable to Activision
 Blizzard common shareholders used to calculate non-GAAP earnings per common
 share assuming dilution was $219 million and $285 million for the three and
 six months ended June 30, 2012 as compared to the total non-GAAP net income
 of $224 million and $291 million for the same periods, respectively.
 The per share adjustments are presented as calculated, and the GAAP and
 non-GAAP earnings per share information is also presented as calculated. The
 sum of these measures, as presented, may differ due to the impact of
 rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except earnings per share data)
                                                   Cost of      Cost of
                             Cost of Cost of Sales Sales -      Sales -                                                         Total
Three months ended Net       Sales - - Online      Software     Intellectual Product     Sales and General and    Restructuring Costs
June 30, 2011      Revenues  Product Subscriptions Royalties    Property     Development Marketing Administrative               and
                             Costs                 and          Licenses                                                        Expenses
                                                   Amortization
GAAP               $   1,146 $ 213   $    59       $   47       $     24     $    116    $   90    $     127      $     3       $  679
Measurement
 Less: Net
 effect from
 deferral in   (a)     (447)   (78)       -            (32)           (5)         -          -           -              -          (115)
 net revenues
 and related
 cost of sales
 Less:
 Stock-based   (b)     -       -          -            (3)            -           (5)        (1)         (11)           -          (20)
 compensation
 Less:        (c)     -       -          -            -              -           -          -           -              (3)        (3)
 Restructuring
 Less:
 Amortization  (d)     -       -          -            -              (7)         -          -           -              -          (7)
 of intangible
 assets
Non-GAAP           $   699   $ 135   $    59       $   12       $     12     $    111    $   89    $     116      $     -       $  534
Measurement
Three months ended Operating Net     Basic         Diluted
June 30, 2011      Income    Income  Earnings per  Earnings per
                                     Share         Share
GAAP               $   467   $ 335   $    0.29     $   0.29
Measurement
 Less: Net
 effect from
 deferral in   (a)     (332)   (238)      (0.21)       (0.20)
 net revenues
 and related
 cost of sales
 Less:
 Stock-based   (b)     20      15         0.01         0.01
 compensation
 Less:        (c)     3       2          -            -
 Restructuring
 Less:
 Amortization  (d)     7       4          -            -
 of intangible
 assets
Non-GAAP           $   165   $ 118   $    0.10     $   0.10
Measurement



                                                   Cost of      Cost of
                             Cost of Cost of Sales Sales -      Sales -                                                         Total
Six months ended   Net       Sales - - Online      Software     Intellectual Product     Sales and General and    Restructuring Costs
June 30, 2011      Revenues  Product Subscriptions Royalties    Property     Development Marketing Administrative               and
                             Costs                 and          Licenses                                                        Expenses
                                                   Amortization
GAAP               $ 2,595   $ 512   $    122      $   109      $    53      $    258    $   150   $     228      $     22      $  1,454
Measurement
 Less: Net
 effect from
 deferral in   (a)   (1,141)   (209)      -            (75)          (19)         -          -           -              -          (303)
 net revenues
 and related
 cost of sales
 Less:
 Stock-based   (b)   -         -          -            (6)           -            (11)       (3)         (23)           -          (43)
 compensation
 Less:        (c)   -         -          -            -             -            -          -           -              (22)       (22)
 Restructuring
 Less:
 Amortization  (d)   -         -          -            (1)           (15)         -          -           -              -          (16)
 of intangible
 assets
Non-GAAP           $ 1,454   $ 303   $    122      $   27       $    19      $    247    $   147   $     205      $     -       $  1,070
Measurement
Six months ended   Operating Net     Basic         Diluted
June 30, 2011      Income    Income  Earnings per  Earnings per
                                     Share         Share
GAAP               $ 1,141   $ 838   $    0.71     $   0.71
Measurement
 Less: Net
 effect from
 deferral in   (a)   (838)     (619)      (0.53)       (0.52)
 net revenues
 and related
 cost of sales
 Less:
 Stock-based   (b)   43        30         0.03         0.03
 compensation
 Less:        (c)   22        16         0.01         0.01
 Restructuring
 Less:
 Amortization  (d)   16        10         0.01         0.01
 of intangible
 assets
Non-GAAP           $ 384     $ 275   $    0.23     $   0.23
Measurement

 (a) Reflects the net change in deferred net revenues and related cost of
 sales.
 (b) Includes expense related to stock-based compensation.
 (c) Reflects restructuring related to our Activision Publishing operations.
 (d) Reflects amortization of intangible assets.
 The company calculates earnings per share pursuant to the two-class method
 which requires the allocation of net income between common shareholders and
 participating security holders. Net income attributable to Activision
 Blizzard Inc. common shareholders used to calculate non-GAAP earnings per
 common share assuming dilution was $117 million and $270 million for the
 three and six months ended June 30, 2011 as compared to total non-GAAP net
 income of $118 million and $275 million for the same periods, respectively.
 The per share adjustments are presented as calculated, and the GAAP and
 non-GAAP earnings per share information is also presented as calculated. The
 sum of these measures, as presented, may differ due to the impact of
 rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three And Six Months Ended June 30, 2012 and 2011
(Amounts in millions)
                  Three Months Ended
                  June 30, 2012     June 30, 2011      $ Increase  % Increase
                  Amount    % of    Amount     % of    (Decrease)  (Decrease)
                            Total              Total
GAAP Net Revenues
by Distribution
Channel
 Retail channel   $ 685     64%     $ 660      58%     $   25      4%
 Digital online     343    32        423      37          (80)    (19)
 channels^1
 Total Activision   1,028  96        1,083    95          (55)    (5)
 and Blizzard
 Distribution       47     4         63       5           (16)    (25)
 Total
 consolidated       1,075  100       1,146    100         (71)    (6)
 GAAP net
 revenues
Change in
Deferred Net
Revenues^2
 Retail channel     (175)             (448)
 Digital online     154              1
 channels^1
 Total changes in
 deferred net       (21)              (447)
 revenues
Non-GAAP Net
Revenues by
Distribution
Channel
 Retail channel     510     48        212      30          298     141
 Digital online     497    47        424      61          73      17
 channels^1
 Total Activision   1,007  95        636      91          371     58
 and Blizzard
 Distribution       47     5         63       9           (16)    (25)
 Total non-GAAP   $ 1,054   100%    $ 699      100%    $   355     51%
 net revenues ^3
                  Six Months Ended
                  June 30, 2012     June 30, 2011      $ Increase  % Increase
                  Amount    % of    Amount     % of    (Decrease)  (Decrease)
                            Total              Total
GAAP Net Revenues
by Distribution
Channel
 Retail channel   $ 1,479   66%     $ 1,607    62%     $   (128)   (8)%
 Digital online     656     29        851      33          (195)   (23)
 channels^1
 Total Activision   2,135  95        2,458    95          (323)   (13)
 and Blizzard
 Distribution       112    5         137      5           (25)    (18)
 Total
 consolidated       2,247  100       2,595    100         (348)   (13)
 GAAP net
 revenues
Change in
Deferred Net
Revenues^2
 Retail channel     (746)             (1,154)
 Digital online     140              13
 channels^1
 Total changes in
 deferred net       (606)             (1,141)
 revenues
Non-GAAP Net
Revenues by
Distribution
Channel
 Retail channel     733    45        453      31          280     62
 Digital online     796    48        864      60          (68)    (8)
 channels^1
 Total Activision   1,529  93        1,317    91          212     16
 and Blizzard
 Distribution       112    7         137      9           (25)    (18)
 Total non-GAAP   $ 1,641   100%    $ 1,454    100%    $   187     13%
 net revenues ^3
 ^1 Net revenues from digital online channel represent revenues from
 subscriptions and memberships, licensing royalties, value-added services,
 downloadable content, digitally distributed products, and wireless devices.
 ^2 We provide net revenues including (in accordance with GAAP) and excluding
 (non-GAAP) the impact of changes in deferred net revenues.
 ^3 Total non-GAAP net revenues presented also represents our total operating
 segment net revenues.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months Ended June 30, 2012 and 2011
(Amounts in millions)
                    Three Months Ended
                    June 30, 2012     June 30, 2011    $ Increase  % Increase
                    Amount    % of    Amount   % of    (Decrease)  (Decrease)
                              Total            Total
GAAP Net Revenues
by Segment/Platform
Mix
Activision and
Blizzard:
  Online            $ 220     20%     $ 359    31%     $   (139)   (39)%
  subscriptions^1
  PC and Other^5     276    26        80     7           196     245
     Sony             234    22        239    21          (5)     (2)
     PlayStation 3
     Sony             ---     ---       2      ---         (2)     (100)
     PlayStation 2
     Microsoft Xbox   248    23        300    26          (52)    (17)
     360
     Nintendo Wii     32     3         70     6           (38)    (54)
  Total console^2    514    48        611    53          (97)    (16)
     Sony
     PlayStation      1      ---       4      ---         (3)     (75)
     Portable
     Nintendo 3DS     6      1         5      1           1       20
     Nintendo DS      11     1         24     2           (13)    (54)
  Total handheld      18     2         33     3           (15)    (45)
  Total Activision    1,028  96        1,083  94          (55)    (5)
  and Blizzard
Distribution:
  Total               47     4         63     6           (16)    (25)
  Distribution
  Total
  consolidated GAAP   1,075  100       1,146  100         (71)    (6)
  net revenues
Change in Deferred
Net Revenues^3
Activision and
Blizzard:
  Online              (21)              (67)
  subscriptions^1
  PC and Other^5     314              (35)
     Sony             (137)             (156)
     PlayStation 3
     Microsoft Xbox   (162)             (146)
     360
     Nintendo Wii     (12)              (39)
  Total console^2    (311)             (341)
     Nintendo DS      (3)               (4)
  Total changes in
  deferred net        (21)              (447)
  revenues
Non-GAAP Net
Revenues by
Segment/Platform
Mix
Activision and
Blizzard:
  Online              199    19        292    42          (93)    (32)
  subscriptions^1
  PC and Other^5     590    56        45     6           545     NM
     Sony             97     9         83     12          14      17
     PlayStation 3
     Sony             ---     ---       2      ---         (2)     (100)
     PlayStation 2
     Microsoft Xbox   86     8         154    22          (68)    (44)
     360
     Nintendo Wii     20     2         31     4           (11)    (35)
  Total console^2    203    19        270    38          (67)    (25)
     Sony
     PlayStation      1      ---       4      1           (3)     (75)
     Portable
     Nintendo 3DS     6      1         5      1           1       20
     Nintendo DS      8      1         20     3           (12)    (60)
  Total handheld      15     2         29     5           (14)    (48)
  Total Activision    1,007  96        636    91          371     58
  and Blizzard
Distribution:
  Total               47     4         63     9           (16)    (25)
  Distribution
  Total non-GAAP    $ 1,054   100%    $ 699    100%    $   355     51%
  net revenues^4
  ^1 Revenue from online subscriptions consists of revenue from all World of
  Warcraft products, including subscriptions, boxed products, expansion packs,
  licensing royalties, and value-added services. It also includes revenues
  from Call of Duty Elite memberships. We have recorded a reduction of
  revenues of $11 million during the three months ended June 30, 2012 as a
  result of a correction of an accounting error. Please refer to footnote 1
  on our Form 10-Q for the quarter ended June 30, 2012 for further details on
  this correction.
  ^2 Downloadable content and their related revenues are included in each
  respective console platforms and total console.
  ^3 We provide net revenues including (in accordance with GAAP) and excluding
  (non-GAAP) the impact of changes in deferred net revenues.
  ^4 Total non-GAAP net revenues presented also represents our total operating
  segment net revenues.
  ^5 Other includes standalone sales of toys and accessories products from
  Skylanders franchise, mobile sales and other physical merchandise and
  accessories.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Six Months Ended June 30, 2012 and 2011
(Amounts in millions)
                  Six Months Ended
                  June 30, 2012     June 30, 2011      $ Increase  % Increase
                  Amount    % of    Amount     % of    (Decrease)  (Decrease)
                            Total              Total
GAAP Net Revenues
by
Segment/Platform
Mix
Activision and
Blizzard:
 Online           $ 475     21%     $ 754      29%     $   (279)   (37)%
 subscriptions^1
 PC and Other^5    413    18        205      8           208     101
   Sony             534    24        581      22          (47)    (8)
   PlayStation 3
   Sony             2      ---       6        ---         (4)     (67)
   PlayStation 2
   Microsoft Xbox   584    26        697      27          (113)   (16)
   360
   Nintendo Wii     83     4         152      6           (69)    (45)
 Total console^2   1,203  54        1,436    55          (233)   (16)
   Sony
   PlayStation      4      ---       8        ---         (4)     (50)
   Portable
   Nintendo 3DS     15     1         9        1           6       67
   Nintendo DS      25     1         46       2           (21)    (46)
 Total handheld     44     2         63       3           (19)    (30)
 Total Activision   2,135  95        2,458    95          (323)   (13)
 and Blizzard
Distribution:
 Total              112    5         137      5           (25)    (18)
 Distribution
 Total
 consolidated       2,247  100       2,595    100         (348)   (13)
 GAAP net
 revenues
Change in
Deferred Net
Revenues^3
Activision and
Blizzard:
 Online             (27)              (123)
 subscriptions^1
 PC and Other^5    291              (123)
   Sony             (400)             (400)
   PlayStation 3
   Microsoft Xbox   (439)             (405)
   360
   Nintendo Wii     (26)              (84)
 Total console^2   (865)             (889)
   Nintendo DS      (5)               (6)
 Total changes in
 deferred net       (606)             (1,141)
 revenues
Non-GAAP Net
Revenues by
Segment/Platform
Mix
Activision and
Blizzard:
 Online             448    27        631      43          (183)   (29)
 subscriptions^1
 PC and Other^5    704    43        82       6           622     NM
   Sony             134    8         181      12          (47)    (26)
   PlayStation 3
   Sony             2      ---       6        ---         (4)     (67)
   PlayStation 2
   Microsoft Xbox   145    9         292      20          (147)   (50)
   360
   Nintendo Wii     57     4         68       5           (11)    (16)
 Total console^2   338    21        547      37          (209)   (38)
   Sony
   PlayStation      4      ---       8        1           (4)     (50)
   Portable
   Nintendo 3DS     15     1         9        1           6       67
   Nintendo DS      20     1         40       3           (20)    (50)
 Total handheld     39     2         57       5           (18)    (32)
 Total Activision   1,529  93        1,317    91          212     16
 and Blizzard
Distribution:
 Total              112    7         137      9           (25)    (18)
 Distribution
 Total non-GAAP   $ 1,641   100%    $ 1,454    100%    $   187     13%
 net revenues^4
 ^1 Revenue from online subscriptions consists of revenue from all World of
 Warcraft products, including subscriptions, boxed products, expansion packs,
 licensing royalties, and value-added services. It also includes revenues
 from Call of Duty Elite memberships. We have recorded a reduction of
 revenues of $11 million during the three months ended June 30, 2012 as a
 result of a correction of an accounting error. Please refer to footnote 1 on
 our Form 10-Q for the quarter ended June 30, 2012 for further details on this
 correction.
 ^2 Downloadable content and their related revenues are included in each
 respective console platforms and total console.
 ^3 We provide net revenues including (in accordance with GAAP) and excluding
 (non-GAAP) the impact of changes in deferred net revenues.
 ^4 Total non-GAAP net revenues presented also represents our total operating
 segment net revenues.
 ^5 Other includes standalone sales of toys and accessories products from
 Skylanders franchise, mobile sales and other physical merchandise and
 accessories.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three and Six Months Ended June 30, 2012 and 2011
(Amounts in millions)
                Three Months Ended
                June 30, 2012     June 30, 2011      $ Increase    % Increase
                Amount    % of    Amount     % of    (Decrease)    (Decrease)
                          Total              Total
GAAP Net
Revenues by
Geographic
Region
 North America  $ 562     52%     $ 580      50%     $ (18)        (3)%
 Europe           403    38        467      41        (64)        (14)
 Asia Pacific     110    10        99       9         11          11
 Total
 consolidated     1,075  100       1,146    100       (71)        (6)
 GAAP net
 revenues
Change in
Deferred Net
Revenues^1
 North America    (79)              (249)
 Europe           (9)               (181)
 Asia Pacific     67               (17)
 Total changes
 in net           (21)              (447)
 revenues
Non-GAAP Net
Revenues by
Geographic
Region
 North America    483    46        331      47        152         46
 Europe           394    37        286      41        108         38
 Asia Pacific     177    17        82       12        95          116
 Total
 non-GAAP net   $ 1,054   100%    $ 699      100%    $ 355         51%
 revenues^2
                

                Six Months Ended
                                 
                                                       $ Increase  % Increase
                June 30, 2012     June 30, 2011
                  Amount  % of      Amount   % of      (Decrease)  (Decrease)
                          Total              Total
GAAP Net
Revenues by
Geographic
Region
 North America  $ 1,163   52%     $ 1,328    51%     $ (165)       (12)%
 Europe           888    39        1,061    41        (173)       (16)
 Asia Pacific     196    9         206      8         (10)        (5)
 Total
 consolidated     2,247  100       2,595    100       (348)       (13)
 GAAP net
 revenues
Change in
Deferred Net
Revenues^1
 North America    (409)             (632)
 Europe           (235)             (452)
 Asia Pacific     38               (57)
 Total changes
 in net           (606)             (1,141)
 revenues
Non-GAAP Net
Revenues by
Geographic
Region
 North America    754    46        696      48        58          8
 Europe           653    40        609      42        44          7
 Asia Pacific     234    14        149      10        85          57
 Total
 non-GAAP net   $ 1,641   100%    $ 1,454    100%    $ 187         13%
 revenues^2
 ^1 We provide net revenues including (in accordance with GAAP) and excluding
 (non-GAAP) the impact of changes in deferred net revenues.
 ^2 Total non-GAAP net revenues presented also represents our total operating
 segment net revenues.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
For the Three and Six Months Ended June 30, 2012 and 2011
(Amounts in millions)
                    Three Months Ended
                    June 30, 2012     June 30, 2011    $ Increase  % Increase
                    Amount    % of    Amount   % of    (Decrease)  (Decrease)
                              Total            Total
Segment net
revenues:
  Activision^1     $ 373     35%     $ 323    28%     $   50      15%
  Blizzard^2         634    59        313    27          321     103
  Distribution^3     47     4         63     6           (16)    (25)
  Operating segment   1,054  98        699    61          355     51
  total
Reconciliation to
consolidated net
revenues:
  Net effect from
  deferral of net     21     2         447    39
  revenues
  Consolidated net  $ 1,075   100%    $ 1,146  100%    $   (71)    (6)%
  revenues
Segment income from
operations:
  Activision^1     $ (71)            $ 31             $   (102)   NM
  Blizzard^2         371              135                236     175
  Distribution^3     ---               (1)                1       NM
  Operating segment   300              165                135     82
  total
Reconciliation to
consolidated
operating income
and consolidated
income before
income tax expense:
  Net effect from
  deferral of net
  revenues and        (40)              332
  related cost of
  sales
  Stock-based
  compensation        (31)              (20)
  expense
  Restructuring       ---               (3)
  Amortization of     (2)               (7)
  intangible assets
  Consolidated        227              467                (240)   (51)
  operating income
  Investment and
  other income        2                2
  (expense), net
  Consolidated
  income before     $ 229             $ 469            $   (240)   (51)%
  income tax
  expense
      Operating
      margin from
      total           28%               24%
      operating
      segments
                    Six Months Ended
                    June 30, 2012     June 30, 2011    $ Increase  % Increase
                    Amount    % of    Amount   % of    (Decrease)  (Decrease)
                              Total            Total
Segment net
revenues:
  Activision^1     $ 645     29%     $ 646    25%     $   (1)     -%
  Blizzard^2         884    39        671    26          213     32
  Distribution^3     112    5         137    5           (25)    (18)
  Operating segment   1,641  73        1,454  56          187     13
  total
Reconciliation to
consolidated net
revenues:
  Net effect from
  deferral of net     606    27        1,141  44
  revenues
  Consolidated net  $ 2,247   100%    $ 2,595  100%    $   (348)   (13)%
  revenues
Segment income
(loss) from
operations:
  Activision^1     $ (70)            $ 78             $   (148)   (190)%
  Blizzard^2         460              306                154     50
  Distribution^3     ---               ---                -       NM
  Operating segment   390              384                6       2
  total
Reconciliation to
consolidated
operating income
and consolidated
income before
income tax expense:
  Net effect from
  deferral of net
  revenues and        407              838
  related cost of
  sales
  Stock-based
  compensation        (52)              (43)
  expense
  Restructuring       ---               (22)
  Amortization of     (5)               (16)
  intangible assets
  Consolidated        740              1,141              (401)   (35)
  operating income
  Investment and
  other income        3                5
  (expense), net
  Consolidated
  income before     $ 743             $ 1,146          $   (403)   (35)%
  income tax
  expense
      Operating
      margin from
      total           24%               26%
      operating
      segments
      ^1 Activision Publishing ("Activision") — publishes interactive
      entertainment products and contents.
      ^2 Blizzard — Blizzard Entertainment, Inc. and its subsidiaries
      ("Blizzard") publishes PC games and online subscription-based games in
      the MMORPG category.
      ^3 Activision Blizzard Distribution ("Distribution") — distributes
      interactive entertainment software and hardware products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES OUTLOOK
For the Quarter Ending September 30, 2012 and
Year Ending December 31, 2012
GAAP to Non-GAAP Reconciliation
(Amounts in millions, except per share data)
                                   Outlook for             Outlook for
                                   Three Months Ending     Year Ending
                                   September 30, 2012      December 31, 2012
Net Revenues (GAAP)                $        740            $       4,330
Excluding the impact of:
Change in deferred net       (a)            (50)                   300
revenues
Non-GAAP Net Revenues              $        690            $       4,630
Earnings Per Diluted Share         $        0.06           $       0.69
(GAAP)
Excluding the impact of:
Net effect from deferral in
net revenues and related     (b)            (0.02)                 0.19
cost of sales
Stock-based compensation     (c)            0.03                   0.09
Amortization of intangible   (d)            -                      0.02
assets
Non-GAAP Earnings Per              $        0.07           $       0.99
Diluted Share
(a) Reflects the net change in deferred net revenues.
(b) Reflects the net change in deferred net revenues and related cost of
sales.
(c) Reflects expense related to stock-based compensation.
(d) Reflects amortization of intangible assets.
The per share adjustments are presented as calculated, and the GAAP and
non-GAAP earnings (loss) per share information is also presented as
calculated. The sum of these measures, as presented, may differ due to the
impact of rounding.

SOURCE Activision Blizzard, Inc.

Website: http://www.activisionblizzard.com
Contact: Kristin Southey, SVP, Investor Relations, +1-310-255-2635,
ksouthey@activision.com, or Maryanne Lataif, SVP, Corporate Communications,
+1-310-255-2704, mlataif@activision.com