For the quarter ended June 30, 2008, Activision's stand-alone net revenues were $654.2 million, a 32% increase, as compared to net revenues of $495.5 million reported for the June quarter last fiscal year. Activision's stand- alone net income for the June quarter was $59.0 million, or $0.18 earnings per diluted share, as compared to net income of $27.8 million, or earnings per diluted share of $0.09 reported for the previous fiscal year's June quarter. Excluding the impact of expenses related to equity-based compensation of $0.02 per diluted share and one-time costs related to the business combination between Activision and Vivendi Games of $0.02 per diluted share, Activision had non-GAAP net income of $74.3 million and non-GAAP earnings per diluted share of $0.23 for the June quarter. This compares to non-GAAP net income of $32.8 million and non-GAAP earnings per diluted share of $0.11 for the June quarter of the previous year, in each case excluding the impact of expenses related to equity-based compensation.

Separately, on July 24, 2008, Vivendi announced its preliminary June quarter financial results (on IFRS basis) which included results for the business that became part of Activision on July 9, 2008. For the quarter ended June 30, 2008, Vivendi reported 223 million euros in revenues and 42 million euros in EBITA for Vivendi Games which includes the results of Blizzard Entertainment.

Robert Kotick, CEO of Activision Blizzard, stated, "Activision's June quarter stand-alone results were the highest ever for a non-holiday quarter, driven by two new Guitar Hero titles -- Guitar Hero: Aerosmith and Guitar Hero: On Tour --, Kung Fu Panda and continued sales of our catalogue titles. Our record performance highlights the continued strength of our business. We are well positioned to continue to capitalize on our strong product portfolio and the positive trends in our industry."

Kotick continued, "We have completed our transaction with Vivendi and our integration plans have identified higher than anticipated cost-synergy opportunities. Both Activision and Blizzard Entertainment's businesses have maintained their momentum. Activision Blizzard's combined outlook for calendar year 2008 is set to exceed the comparable calendar year 2009 non-GAAP financial targets that we provided on December 2, 2007, by approximately $600 million in non-GAAP net revenues and $100 million in non-GAAP operating income."

"We are very excited to add Vivendi Games' multi-million unit selling properties Crash Bandicoot, Ice Age and Spyro, as well as two new intellectual properties -- Prototype and an as yet unannounced title -- to our game roster," commented Mike Griffith, President and CEO of Activision Publishing. "The combination with Vivendi Games strengthens our holiday slate which is already anchored by three of the top-selling franchises in the industry -- Guitar Hero, Call of Duty, James Bond and includes such highly anticipated games as Call of Duty: World at War, Guitar Hero World Tour and Quantum of Solace, as well as Crash Bandicoot: Mind Over Mutant and The Legend of Spyro: Dawn of the Dragon."

Mike Morhaime, CEO and co-founder of Blizzard Entertainment, added, "Since June 2007, World of Warcraft has grown its subscriber base by over 1.8 million, to 10.9 million players. Blizzard Entertainment also continues to launch World of Warcraft in new territories and we are very excited about its recent release in Latin America and the upcoming launch in Russia. Blizzard has a strong pipeline of products in development including World of Warcraft: Wrath of the Lich King, StarCraft II and Diablo III."

Business Highlights

Activision's record June quarter performance was driven by strong consumer response to the North American launch of Kung Fu Panda early in the quarter, which was the company's largest launch of a DreamWorks Animation licensed property. Late in the quarter, the company had two top selling North American games from the Guitar Hero franchise - Guitar Hero: Aerosmith, which ranked as one of Activision's top-five North American multiplatform launches, and Guitar Hero: On Tour, which was the largest North American launch for the Nintendo DS in Activision's history.

For the quarter ended June 30 and the first half of the calendar year 2008, Activision was the #1 third-party publisher on the Nintendo platforms in the U.S., according to The NPD Group. The company also ranked as the #1 publisher worldwide on the PlayStation 2 computer entertainment system, according to Charttrack, Gfk and The NPD Group.

Other business highlights are as follows:

• In the U.S., for the first half of the calendar year, the Guitar Hero franchise remained the #1 best-selling franchise in dollars, according to The NPD Group.
• During the quarter, Guitar Hero: On Tour was the #1 best-selling title overall in dollars in North America for the Nintendo DS, according to The NPD Group.
• Kung Fu Panda was the #2 third-party children's title in dollars the U.S. for the quarter, according to The NPD Group.
• For the quarter, Activision had three of the top-10 best-selling titles in dollars in the U.S., according to The NPD Group.
• On July 9, 2008, Vivendi and Activision completed the transaction, announced on December 2, 2007 to create Activision Blizzard as the world's most profitable pure-play online and console game publisher. Activision Blizzard was formed by combining Activision, one of the world's leading independent publishers of interactive entertainment, and Vivendi Games, Vivendi's interactive entertainment business, which includes Blizzard Entertainment's World of Warcraft, the world's #1 subscription-based massively multiplayer online role-playing game.
• On July 11, 2008, Activision Blizzard announced that its Board of Directors approved a two-for-one stock split of its outstanding shares of common stock to be effected in the form of a common stock dividend. The company expects that the record date for the stock split will be a date shortly after the closing of the company's self tender offer.
• On July 16, 2008, Activision Blizzard commenced a tender offer to purchase up to 146,500,000 shares of its outstanding common stock at a price of $27.50 per share representing approximately 22% of Activision Blizzard's
• outstanding common stock as of July 9, 2008. The tender offer will expire on August 13, 2008, unless extended.
• Activision Blizzard's fiscal year end has changed from March 31 to December 31.

For the September quarter, Activision Publishing expects to continue releasing Guitar Hero: On Tour internationally and Sierra Entertainment's The Mummy: Tomb of the Dragon Emperor, which released on July 22, 2008 on the Nintendo Wii, Nintendo DS and the PlayStation 2 computer entertainment system.

Activision Blizzard continues to expect that online functionality for certain key titles to be released in the December quarter of calendar year 2008 and thereafter will become a significant component of game play for certain platforms for which the company will have continuing performance obligations beyond the sale of the game. As a result, the company expects to begin recognizing a substantial amount of net revenues and costs of sales from these online-enabled games over a service period, which we currently estimate to be six months beginning the month after shipment.

Activision Blizzard anticipates that a considerable amount of net revenues and costs of sales that would have been recognized in the December quarter 2008 will be recognized in calendar year 2009. While this will not impact the economics of Activision Blizzard's business or its cash flows, these changes will have a material impact on the company's calendar 2008 GAAP results.

In order to provide comparable year-over-year performance information, Activision Blizzard's non-GAAP results will exclude the impact of the change in deferred net revenues and cost of sales related to those online-enabled key titles on certain platforms.

Additionally, in calendar 2008, in order to provide comparable operating performance information for the continuing operations of Activision Blizzard, the company's non-GAAP results will also exclude: equity-based compensation costs; the operating results of products and operations from the historical Vivendi Games businesses that the company intends to dispose of or exit; one-time costs related to the business combination with Vivendi Games (including transaction costs, integration costs, and restructuring activities); and the amortization of intangibles and the increase in the fair value of inventories and the associated increase in cost of sales resulting from purchase price accounting adjustments from the transaction.

The outlook does not incorporate any adjustments that would occur as a result of the company's previously announced stock split.

For the September quarter 2008, Activision Blizzard expects net revenues of $636 million and a loss per diluted share of $0.26. Excluding net revenues from the historical Vivendi Games businesses that the company intends to dispose of or exit ($16 million), the company expects non-GAAP net revenues of $620 million. Excluding the impact of equity-based compensation expense ($0.04 per share), the impact of the operating loss results from the historical Vivendi Games businesses that the company intends to dispose of or exit ($0.06 per share), one-time costs related to the business combination with Vivendi Games ($0.18 per share), and the amortization of intangibles and the increase in costs of sales resulting from purchase price accounting adjustments ($0.06 per share), Activision Blizzard expects non-GAAP earnings per diluted share of $0.08.

Activision Blizzard's September quarter outlook does not include net revenues of approximately $50 million that were generated between July 1 and July 9, 2008 when Activision was a stand-alone company. As the transaction with Vivendi is considered a reverse acquisition, for calendar 2008 the company's reported financial results for the period prior to the combination, (January 1 through July 9, 2008) will be those of Vivendi Games. Activision's businesses will be included in Activision Blizzard's financial statements for the period subsequent to the combination (July 10 through December 31, 2008).

For the December quarter 2008, Activision Blizzard expects net revenues of $1.85 billion and earnings per diluted share of $0.11. Excluding the impact of the change in deferred net revenues related to online-enabled games ($450 million), the company expects non-GAAP net revenues of $2.3 billion.

Excluding the impact of the change in deferred net revenues and cost of sales related to online enabled games ($0.23 per share), equity-based compensation expense ($0.04 per share), the impact of the operating loss results from the historical Vivendi Games businesses that the company intends to dispose of or exit ($0.02 per share), one-time costs related to the business combination with Vivendi Games ($0.04 per share), and the amortization of intangibles and the increase in costs of sales resulting from purchase price accounting adjustments ($0.20 per share), Activision Blizzard expects non-GAAP earnings per diluted share of $0.64.