Post Effective Amendment
As filed with the Securities and Exchange Commission on April 17, 2001.
Registration No. 333-58922
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ACTIVISION, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4803544
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
3100 Ocean Park Boulevard
Santa Monica, California 90405
(Address of Principal Executive Offices) (Zip Code)
Employee Stock Options
(Full title of the Plan)
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Robert A. Kotick
Chairman of the Board
Activision, Inc.
3100 Ocean Park Boulevard
Santa Monica, California 90405
(310) 255-2000
(Name, address and telephone number, including area code, of agent for service)
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Copies to:
Kenneth L. Henderson, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
EXPLANATORY NOTE
This Post-Effective Amendment No. 1 contains the form of reoffer
prospectus to be used by certain officers or directors of the Registrant
with respect to the control securities acquired, or that will be acquired,
by them pursuant to the Registrant's employee benefit plans.
2,000,000 Shares
ACTIVISION, INC.
Common Stock
This Prospectus relates to 2,000,000 shares of Common Stock, par value
$.000001 per share, of Activision, Inc. ("Activision" or the "Company") being
offered hereby for the account of certain of the Company's executive officers
and directors (each a "Selling Stockholder" and collectively the "Selling
Stockholders"). See "Selling Stockholders." All of the shares of Common Stock
offered hereby will be issued by the Company to Selling Stockholders upon the
exercise by such Selling Stockholders of options to purchase Common Stock issued
to them pursuant to the Stock Option Agreement dated May 22, 2000 betweeen the
Company and Robert A. Kotick and the Stock Option Agreement dated May 22, 2000
between the Company and Brian G. Kelly (the "Employee Stock Options").
The Company is a diversified international publisher and developer of
interactive entertainment software. The Company is best known for its action,
adventure and action/simulation products. The Company's products are designed
for a range of platforms including personal computer systems and console
systems. See "The Company."
The Common Stock is traded in the NASDAQ National Market System under the
symbol "ATVI." On April 16, 2001, the last sale price for the Common Stock as
reported on the NASDAQ National Market System was $23.99 per share.
No underwriting is being utilized in connection with this registration of
Common Stock and, accordingly, the shares of Common Stock are being offered
without underwriting discounts. The expenses of this registration will be paid
by the Company. Normal brokerage commissions, discounts and fees will be payable
by the Selling Stockholders.
For a discussion of certain matters which should be considered by
prospective investors, see "Risk Factors" commencing on page 2.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is April 17, 2001.
RISK FACTORS
Before purchasing any of the shares of Common Stock being offered hereby,
prospective investors should carefully consider the following factors in
addition to the other information contained in this Prospectus or incorporated
by reference into it.
We caution you to be aware of the speculative nature of "forward-looking
statements" made by, or on behalf of, our employees and representatives. Such
statements:
o are defined by the Private Securities Litigation Reform Act of 1995;
o may be oral or written;
o do not include recitations of historical facts; and
o can be identified by the use of forward-looking terminology (e.g. "may,"
"expect," "anticipate," "estimate" or "continue") or the negative of such
terminology.
We further caution you that there are numerous risks and uncertainties that
could cause actual events or results to differ materially from those referred to
in such forward-looking statements. The discussion below highlights some of the
more important risks identified by management, but you should not assume them to
be the only factors that could affect future performance. We caution that we do
not have a policy of updating or revising forward-looking statements and
therefore silence by management over time does not mean that actual events are
occurring as anticipated in such forward-looking statements.
Fluctuations in our quarterly net revenues and operating results make future
predictions uncertain.
Our quarterly operating results have varied in the past and can be expected
to vary in the future. These variations are caused by a number of different
factors, many of which are beyond our control. Such factors include:
o demand for our products;
o the size and rate of growth of the interactive entertainment and leisure
markets;
o development and promotional expenses relating to the introduction of new
products;
o changes in computer operating systems and video game platforms;
o product returns;
o the timing of orders from major customers;
o delays in product shipments;
o the level of price competition;
o the timing of product introductions by Activision and its competitors;
o product life cycles;
o product defects and other quality problems;
o the level of our international revenues; and
o personnel changes.
As a result of the above-mentioned factors, revenues and operating results for
any future quarter cannot be predicted with any significant degree of accuracy.
Thus, period-to-period comparisons of our operating results are not necessarily
meaningful and should not be relied upon as indications of future performance.
Our business has experienced, and is expected to continue to experience,
significant seasonality. Typically, our net revenues are significantly higher
during the fourth calendar quarter because of increased demand for consumer
software during the year-end holiday buying season. Net revenues and net income
in other calendar quarters are generally lower and vary significantly as a
result of new product introductions and other factors.
Our revenues and our competitive position could be negatively affected if our
new products are not successful or timely introduced.
Our future success depends in part on the timely introduction of successful
new products as well as sequels or enhancements of existing products. These
products are necessary to replace declining revenues
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from older products. A significant delay in the release of products or the
failure of new products to replace declining revenues from older products could
materially and negatively affect our business, operating results and financial
condition. In addition, competitive factors in the entertainment and leisure
software industries often create the need for higher quality, distinctive
products with increasingly sophisticated effects. This in turn makes it
difficult to produce and release such products on a timely basis and results in
higher development, acquisition and marketing costs. The seasonality of
Activision's business further highlights this problem. Moreover, because a large
portion of a product's revenue generally is associated with initial shipments,
the delay of a product introduction expected near the end of a fiscal quarter
may have a material negative effect on operating results for that quarter.
Activision does not assure that new products will be introduced on schedule, or
at all, or that they will achieve market acceptance or generate significant
revenues.
We rely in significant part on external developers, over whom we have less
control than internal staff.
Although we intend to continue to rely in part on products that are
developed by our own employees, over the last several fiscal years the
percentage of products published by us that are developed by independent third
party developers has increased significantly. Also, occasionally we use
independent contractors for certain aspects of our internal product development
and production. Naturally, we have less control over the timing and the quality
of work of these independent contractors and third party developers, as compared
to our own employees. A delay in the work performed by independent contractors
and third party developers may result in delays in the release of products. In
addition, if our independent contractors and third party developers produce poor
quality work, there is a greater chance that our products will not be
successful.
In addition, our future success will depend, in significant part, on our
continued ability to maintain relationships and obtain development agreements on
favorable terms with skilled independent contractors and third party developers.
We cannot assure you that we will be able to establish or maintain relationships
with independent contractors and third party developers.
Failure of our new products to achieve or sustain market acceptance may have a
material negative effect on our business.
The market for entertainment and leisure systems and software has been
characterized by shifts in consumer preferences and short product life cycles.
Consumer preferences for entertainment and leisure software products are
difficult to predict and few products achieve sustained market acceptance. We
cannot assure that our newly introduced products will achieve any significant
degree of market acceptance, nor can we assure you that any such market
acceptance will continue for any significant period of time. Finally, we cannot
assure you that product life cycles will be sufficient to permit us to recover
our development, marketing and other related costs. In addition, if market
acceptance is not achieved, we could be forced to accept substantial product
returns to maintain relationships with our retailers. Failure of new products to
achieve or sustain market acceptance or product returns in excess of our
expectations would have a material negative effect on our business, operating
results and financial condition.
We depend on a limited number of hit products to produce a large portion of our
revenues. The failure of any of these products to achieve anticipated results
may negatively affect our business.
A significant portion of our revenues are derived from a relatively small
number of products we release each year. In addition, many of these products
have substantial production or acquisition costs and marketing budgets. In
fiscal 2000 Activision had two products which each accounted for approximately
10% of consolidated net revenues. During fiscal 1999, no single product
accounted for greater than 10% of our consolidated net revenues. However, we
expect that a limited number of products will continue to produce a
disproportionate amount of our revenues. Due to this dependence on a limited
number of products, the failure of one or more of these products to achieve
anticipated results may have a material negative effect on Activision's
business, operating results and financial results.
Another key component of our business strategy is publishing titles that
have franchise value, so that sequels, enhancements and add-on products can be
released over time. Focusing on franchise properties, if successful, both
extends the life of the product in the market and results in dependence on a
limited number
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of titles for our revenues. We make no assurances that existing franchise titles
will continue to be as successful as they have been in the past. Also, new
products that we believe will have potential value as franchise properties may
not achieve market acceptance and therefore may not become a basis for future
releases.
Significant competition in our industry could negatively affect our business.
The interactive entertainment and leisure software industries are highly
competitive. Competition in these industries is largely based on:
o product quality and features;
o compatibility of products with popular platforms;
o company or product line brand name recognition;
o access to distribution channels;
o effectiveness of marketing campaigns;
o product reliability and ease of use;
o price; and
o technical support.
The level of financial resources of a publisher also has become a
competitive factor in these industries. This is mainly due to the substantial
cost of product development and marketing required to support best-selling
titles. In addition, competitors with broad product lines and popular titles
typically have greater influence with retailers. Thus, retailers and other
customers may be willing to promote titles with less consumer appeal in return
for access to such competitor's most popular titles.
Activision's competitors range from small companies with limited resources
to large companies with substantially greater financial, technical and marketing
resources than those of Activision. The Company's competitors currently include:
o Acclaim;
o Eidos
o Electronic Arts;
o GT Interactive;
o Hasbro;
o Havas;
o Infogrames;
o LucasArts;
o Mattel;
o Microsoft;
o Nintendo;
o Sega; and
o Sony, among many others.
Increased competition may result in price reductions, increased production
costs and reduced profit margins. Prolonged price competition or reduced demand
would have a material negative effect on our business, operating results and
financial condition. We make no assurances that we will be able to compete
successfully against current or future competitors. We also warn that
competitive pressures facing Activision may have a material negative effect on
our business, operating results and financial condition.
There also exists intense competition among entertainment and leisure
software producers over the limited amount of "shelf space" available at retail
stores and the promotional support that can be obtained from these retailers. As
the number of interactive entertainment and leisure products has increased, the
competition for shelf space has intensified. This has resulted in greater power
for retailers and distributors in negotiating terms of sale, including price
discounts and product return policies. Our products constitute a relatively
small percentage of a retailer's sales volume. Thus, there are no assurances
that retailers will continue to purchase our products or promote our products
with adequate levels of shelf space and promotional support.
-4-
Our dependence on certain retailers and wholesalers exposes us to risks of those
retailers' and wholesalers' business failures as well as product returns.
Retailers in the computer and video game industries have from time to time
experienced significant fluctuations in their businesses and there have been a
number of business failures among these retailers. The loss of, or significant
reduction in sales attributable to, any of our principal retailers could
materially negatively effect our business, operating results and financial
condition.
Certain mass market retailers have established an exclusive buying
relationship with an intermediary whereby the retailers will buy our products
only from the intermediary. Where this is the case, the price or other terms on
which we may sell to these retailers may be negatively effected by the terms
imposed by the intermediary. Further, if the terms imposed by the intermediary
are unacceptable to us, we may be unable to sell to certain retailers at all.
Customer sales typically are made on credit, with terms that vary depending
upon the customer and the nature of the product. We do not hold collateral to
secure payment, but we do have insurance to protect against any bankruptcy,
insolvency, or liquidation of our customers. This insurance, however, contains a
significant deductible as well as a co-payment obligation, and the policy does
not cover all instances of customer non-payment. In addition, we maintain a
reserve for uncollectible receivables that we believe to be adequate, but it may
not be sufficient in every circumstance. Thus, a payment default by a
significant customer could have a material negative effect on our business,
operating results and financial condition.
We are also exposed to the risk of product returns from retailers and other
wholesale purchasers. Although we provide reserves for returns that we believe
are adequate, and although limits are placed on certain product returns, we may
be forced to accept substantial product returns to maintain our relationships
with retailers and our access to distribution channels. Product returns that
exceed our reserves could have a material negative effect on our business,
operating results and financial condition.
Our business may be negatively affected if we are unable to anticipate and
respond timely and effectively to rapidly changing technology and industry
standards.
The consumer software industry is undergoing rapid changes, including
evolving industry standards, frequent new platform introductions and changes in
consumer requirements and preferences. The introduction of new technologies,
including new console systems such as the Sony PlayStation 2, Microsoft X-Box
and Nintendo Dolphin technologies that support multi-player on-line games, and
new media formats and methods of consumer delivery such as on-line delivery,
could render our previously released products obsolete or unmarketable. The
development cycle for products utilizing new console platforms, computer
operating systems and microprocessors or formats may be significantly longer and
more expensive than Activision's current development cycle for products on
existing platforms, operating systems, microprocessors and formats and may
require Activision to invest resources in products that may not become
profitable. There can be no assurance that the mix of Activision's future
product offerings will keep pace with technological changes or satisfy evolving
consumer preferences, or that Activision will be successful in developing and
marketing products for any future operating system or format. Failure to develop
and introduce new products and product enhancements in a timely fashion could
result in significant product returns and inventory obsolescence and could have
a material adverse effect on our business, operating results and financial
condition.
We have substantial indebtedness that exposes us to certain risks.
As of March 31, 2000, Activision had outstanding $60.0 million of
subordinated convertible notes due 2005. In June 1999, Activision obtained a
term loan and revolving credit facility composed of a $25.0 million term loan
and up to $100.0 million of revolving credit loans and letters of credit. The
proceeds of the term loan, which is due in June 2002, were used to complete the
acquisition of Expert Software, Inc. and to pay expenses associated with the
acquisition and the financing transaction. The revolving credit facility is used
for working capital and general corporate purposes. As of March 31, 2000, there
was $20.0 million outstanding under the term loan and $2.5 million outstanding
under the revolving credit facility.
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The term loan and the revolving credit facility are collateralized by
substantially all of the assets of Activision and of its US subsidiaries. The
facility contains various financial and other covenants that Activision and its
subsidiaries must comply with. If Activision were to default under the terms of
the credit facility, either as a result of a failure to pay principal or
interest when due or as a result of a breach of a financial or other covenant,
the lenders could stop providing funds and letters of credit to Activision and
could declare an event of default and foreclose on the collateral. This could
also result in an acceleration of the subordinated notes. A default by
Activision under the revolving credit and term loan facility would materially
adversely affect Activision's business and could result in Activision declaring
bankruptcy.
On June 8, 2000, Activision amended certain of the covenants of its term
loan and revolving credit facility. The amended term loan and credit facility
permits Activision to purchase up to $15.0 million in shares of its common stock
as well as its convertible subordinated notes in accordance with Activision's
stock repurchase program, the distribution of "Rights" under Activision's
shareholders' rights plan, as well as the reorganization of Activision's
organizational structure into a holding company form.
The impact of the EURO conversion on our operations will not be significant.
On January 1, 1999, eleven of the fifteen member countries of the European
Union adopted the "euro" as their common currency. From January 1, 1999 through
January 1, 2002, the participating countries will be able to use their sovereign
currencies or the euro. Beginning January 1, 2002, the participating countries
will issue new euro-denominated bills and coins for use in cash transactions. No
later than July 1, 2002, the participating countries will withdraw all bills and
coins denominated in the sovereign currencies, so that the sovereign currencies
will no longer be legal tender for any transactions, making conversion to the
euro complete.
After conducting an internal analysis, we have determined that the impact
of the conversion will not be significant to our overall operations. Our wholly
owned subsidiaries operating in participating countries represented 12% and 19%
of Activision's consolidated net revenues for the years ended March 31, 2000 and
1999, respectively.
We may not be able to protect our proprietary rights and may infringe on the
proprietary rights of others.
We hold copyrights on the products, manuals, advertising and other
materials we own. We also maintain trademark rights in the Activision name, the
Activision logo, and the names of the products and companies we own. We regard
our software as proprietary and rely primarily on a combination of trademark,
copyright and trade secret laws, employee and third-party nondisclosure
agreements, and other methods to protect our proprietary rights. Unauthorized
copying commonly occurs within the software industry. If a significant amount of
unauthorized copying of our products were to occur, our business, operating
results and financial condition could be negatively effected.
There can be no assurance that third parties will not assert infringement
claims against us in the future with respect to current or future products. As
is common in the industry, we sometimes receive notices from third parties
claiming infringement of intellectual property rights of such parties. We
investigate these claims and respond as we deem appropriate. Any claims or
litigation, with or without merit, could be costly and could result in a
diversion of management's attention, which could have a material negative effect
on our business, operating results and financial condition. Negative
determinations in such claims or litigation could also have a material negative
effect on our business, operating results and financial condition.
Software piracy (the unauthorized use of its products) exists and will
likely remain a persistent problem. Activision is unable to determine the extent
to which piracy of its software products exists. In selling our products, we
rely primarily on "shrink wrap" licenses that are not signed by licensees and,
therefore, may be unenforceable under the laws of certain jurisdictions.
Further, we enter into transactions in countries where intellectual property
laws are not well developed or are poorly enforced. Thus, legal protections of
our intellectual property rights may be ineffective in those countries.
-6-
Our failure to retain or failure to hire qualified key personnel could have a
material negative effect on our business.
Our success depends to a significant extent on the performance and
continued service of our senior management and certain key employees.
Competition for highly skilled employees with technical, management, marketing,
sales, product development and other specialized training is intense, and we may
not be successful in attracting and retaining such personnel. As a result, we
may experience increased costs to attract and retain skilled employees. There is
no guarantee that key employees will not leave Activision or compete against
Activision, despite the fact such employees have entered into term employment
agreements. Our failure to attract or retain qualified employees could have a
material negative effect on our business, operating results and financial
condition.
Our significant international operations subjects us to certain economic and
political risks which could materially negatively effect our business.
Our international revenues have accounted for a significant portion of our
total revenues. International sales and licensing accounted for 71%, 66% and 51%
of Activision's total revenues in the fiscal years 1998, 1999 and 2000,
respectively. We expect that international revenues will continue to account for
a significant portion of our total revenues in the future. We intend to continue
to expand our direct and indirect sales, marketing and localization activities
worldwide. This expansion will require significant management time and attention
and financial resources in order to develop adequate international sales and
support channels. However, in addition to the possibility that we may not be
able to maintain or increase international market demand for our products,
international sales are subject to certain inherent risks, including:
o the impact of possible recessionary environments in economies outside the
United States;
o the costs of transferring and localizing products for foreign markets;
o longer receivable collection periods and greater difficulty in collecting
accounts receivable;
o unexpected changes in regulatory requirements, tariffs and other barriers;
o difficulties and costs of staffing and managing foreign operations; and
o political and economic instability.
There can be no assurance that we will be able to sustain or increase our
international revenues or that the foregoing factors will not have a material
negative effect on our future international revenues and, consequently, on our
business, operating results and financial condition. Presently, we do not engage
in currency hedging activities. Although exposure to currency fluctuations to
date has been insignificant, fluctuations in currency exchange rates may in the
future have a material negative impact on revenues from international sales and
licensing and thus our business, operating results and financial condition.
Our products may contain errors or defects, which may result in a loss of or
delay in market acceptance of the products.
The type of products we offer frequently contains errors or defects.
Despite extensive product testing, in the past we have released products with
defects and have discovered errors in our products after their introduction. In
particular, personal computer hardware is characterized by a wide variety of
non-standard peripherals (such as sound cards and graphics cards) and
configurations that make pre-release testing for programming or compatibility
errors very difficult and time-consuming. Despite testing by Activision, errors
could nonetheless be found in new products after commercial shipments begin.
This may result in a loss of or delay in market acceptance, which could have a
material negative effect on our business, operating results and financial
condition.
We may be at a competitive disadvantage if we are unable to successfully
integrate our recently acquired subsidiaries or find suitable additional
acquisition opportunities.
We are currently integrating the operations of our recently acquired
subsidiaries, CD Contact, Expert Software, Elsinore Multimedia, and Neversoft
Entertainment with our previously existing operations. This process, as well as
the process of managing these significant new operations, requires substantial
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management time and effort and diverts the attention of management from other
matters. In addition, there is a risk of loss of key employees, customers and
vendors of the recently acquired operations as well as existing operations as
this process is implemented. There is a risk we may not be successful in
integrating these operations.
Consistent with our strategy of enhancing our distribution and product
development capabilities, we intend to continue to pursue acquisitions of
companies, properties and other assets that can be purchased or licensed on
acceptable terms and which we believe can be operated or exploited profitably.
Some of these transactions could be material in size and scope. While we will
continually be searching for additional acquisition opportunities, we may not be
successful in identifying suitable acquisitions. We may not be able to
consummate potential acquisitions or an acquisition may not enhance our business
or be maximizing to our earnings. As the interactive entertainment and leisure
businesses continue to consolidate, we face significant competition in seeking
and consummating acquisition opportunities. Future acquisitions could also
divert substantial management time and result in short term reductions in
earnings or special transaction or other charges. In addition, future
acquisitions may be difficult to integrate with existing operations or assets.
In the future, we may issue additional shares of common stock in connection
with one or more acquisitions, which may dilute our existing shareholders. Our
shareholders may not have the opportunity to review, vote, or evaluate future
acquisitions.
Failure to maintain our distribution relationships with certain key vendors
could have a material negative effect on us.
Our CD Contact, NBG and CentreSoft subsidiaries perform interactive
entertainment distribution services in the Benelux territories, Germany and in
the United Kingdom, respectively, and, via export, in other European territories
for a variety of entertainment software publishers, many of which are
competitors of Activision. These services are generally performed under limited
term contracts, some of which provide for cancellation in the event of a change
of control. While Activision expects to use reasonable efforts to retain these
vendors, Activision may not be successful in this regard. The cancellation or
non-renewal of one or more of these contracts could have a material adverse
effect on Activision's business, operating results and financial condition. Two
of CD Contact's third party vendors accounted for 12% and 11%, respectively, of
CD Contact's net revenues in fiscal year 2000. The net revenues from each of
these vendors represented 1% of consolidated net revenues of Activision for this
period. Three of CentreSoft's third party vendors accounted for 25%, 14%, and
10%, respectively, of CentreSoft's net revenues in fiscal year 2000. The net
revenues from these vendors represented 5%, 3% and 2%, respectively, of
consolidated net revenues of Activision for this period. Two of NBG's third
party vendors accounted for 11% and 10%, respectively, of NBG's net revenues in
fiscal year 2000. The net revenues from these vendors each represented 1% of
consolidated net revenues of Activision for this period. All other third party
vendors contributed less than 10% individually to the respective subsidiary's
net revenues.
THE COMPANY
Activision, Inc. is a leading international publisher, developer and
distributor of interactive entertainment and leisure products. The Company's
products span a wide range of product genres (including action, adventure,
strategy and simulation) and target markets (including game enthusiasts, value
buyers and children). In addition to its genre and market diversity, Activision
publishes, develops and distributes products for a variety of game platforms,
including personal computers, the Sony PlayStation console system and the
Nintendo 64 console system.
Activision's objective is to be a worldwide leader in the development,
publishing and distribution of quality interactive entertainment and leisure
products that deliver, at each point of the value spectrum, a highly satisfying
experience. The Company's strategy includes the following elements:
Create and maintain a balanced and diversified portfolio of operations. The
Company has assembled a large diversified portfolio of development, publishing
and distribution operations
-8-
and relationships which are complementary and, at the same time, reduce the
Company's risk of concentration on any one developer, brand, platform, customer
or market. The Company has focused historically on the development and
publishing of premium games which provide the most sophisticated game play and
entertainment experience at the top price point. While the Company will continue
to take advantage of its expertise in this area, it has recently diversified its
business operations and product and audience mix, and plans on continuing such
diversification in the future. For example, the Company acquired several
separate companies in the last two years in order to establish the distribution
business. Additionally, the Company believes that its recent acquisition of
Expert Software, along with the Company's acquisition in June 1998 of Head
Games, positions the Company as a leading publisher of "value" products for the
PC, which are characterized by less sophisticated game play and lower price
points. Further, the Company publishes and distributes titles that run on a
variety of platforms (PC, Sony PlayStation, Nintendo 64 and Sega Dreamcast).
This diversification significantly reduces the risk of downturn or
underperformance in any of the Company's individual operations.
Create and maintain strong brands. The Company focuses its development and
publishing activities principally on titles that are, or have the potential to
become, franchise properties with sustainable consumer appeal and brand
recognition. These titles can thereby serve as the basis for sequels, prequels,
mission packs and other add-ons and related new titles that can be released over
an extended period of time. The Company believes that the publishing and
distribution of products based in large part on franchise properties enhances
revenue predictability and the probability of high unit volume sales and
operating profits. In addition, the Company has entered into a series of
strategic partnerships with the owners of intellectual property pursuant to
which the Company has acquired the rights to publish titles based on franchises
such as Star Trek, various Disney films such as Toy Story 2, A Bug's Life and
Tarzan, and X-men.
Focus on on-time delivery. The success of the Company's publishing business
is dependent, in significant part, on its ability to develop games that will
generate high unit volume sales that can be completed in accordance with planned
budgets and schedules. In order to increase its ability to achieve this
objective, the Company's publishing units have implemented a formal control
process for the development of the Company's products. This process includes
three key elements: (i) in-depth reviews are conducted for each project at five
intervals during the development process by a team that includes several of the
Company's highest ranking operating managers; (ii) each project is led by a
small team which is heavily incentivized to deliver a high-quality product,
on-schedule and within budget; and (iii) day-to-day progress is monitored by a
dedicated process manager in order to insure that issues, if any, are promptly
identified and addressed in a timely manner.
Leverage infrastructure and organization. The Company is continually
striving to reduce its risk and increase its operating leverage and efficiency
through the variabilization of expenses. For example, the Company has
significantly increased its product making capabilities by allocating a larger
portion of its product development investments to experienced independent
development companies. These companies generally are small firms focused on a
particular product type, run and owned by individuals willing to take
development risk by accepting payments based on the completion of fixed
performance milestones in exchange for a royalty on the revenue stream of the
game after the Company recoups its development costs. The Company has also
broadly instituted objective-based reward programs that provide incentives to
management and staff to produce results that meet the Company's financial
objectives.
Grow through continued strategic acquisitions. The interactive
entertainment and leisure industries are consolidating, and the Company believes
that success in these industries will be driven in part by the ability to take
advantage of scale. Specifically, smaller companies are more capital
constrained, enjoy less predictability of revenues and cashflow, lack product
diversity and must spread fixed costs over a smaller revenue base. Several
industry leaders are emerging that combine the entrepreneurial and creative
spirit of the industries with professional management, the ability to access the
capital markets and the ability to maintain favorable relationships with
strategic developers, property owners, and retailers. Through nine completed
acquisitions since 1997, the Company believes that it has successfully
diversified its operations, its channels of distribution and its library of
titles and has emerged as one of the industry's leaders.
The Company's principal executive offices are located at 3100 Ocean Park
Boulevard, Santa Monica, California 90405, and its telephone number is (310)
255-2000. The Company also maintains offices in the
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United Kingdom, France, Germany, Japan, Australia, Belgium, The Netherlands, New
York, New York, Madison, Wisconsin, St. Paul, Minnesota, Elsinore, Florida and
Woodland Hills, California. The Company's World Wide Web home page is located at
http://www.activision.com.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Stock being offered hereby for the account of the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock by the Selling Stockholders as of April 17, 2001, and
the number of shares of Common Stock being offered by this Prospectus.
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Beneficial Ownership of Common Stock Number of Shares
Name and Address of Prior to the Offering (2) of Common Stock
Selling Stockholder(1) Number of Shares Percentage of Class Being Offered
Robert A. Kotick 4,149,248(3) 13.4% 1,000,000
Brian G. Kelly 3,422,057(3) 10.7% 1,000,000
All Selling Stockholders
as a group 7,571,305 24.1% 2,000,000
------------------------
(1) The address for each Selling Stockholder is c/o Activision, Inc., 3100
Ocean Park Boulevard, Santa Monica, California 90405.
(2) Percent of class was computed based on 27,282,476 shares of Common Stock
outstanding as of March 31, 2001 and, in each such person's case, the
number of shares of Common Stock issuable upon the exercise of options
exercisable within 60 days held by such individual or, in the case of all
Selling Stockholders as a group, the number of shares of Common Stock
issuable upon the exercise of the warrants or options exercisable within 60
days held by all such individuals, but does not include the number of
shares of Common Stock issuable upon the exercise of any other outstanding
warrants or options.
(3) Includes (i) 1,256,776 and 1,038,976 shares issuable to Messrs. Kotick and
Kelly, respectively, upon exercise of options exercisable within 60 days
held by each such individual pursuant to the Company's 1991 Stock Option
and Stock Award Plan, the Company's 1998 Incentive Plan, and/or the
Company's 1999 Incentive Plan; (ii) 1,761,323 and 2,159,509 shares issuable
to each of Messrs. Kotick and Kelly, respectively, upon exercise of options
held by such individual pursuant to the Employee Stock Options, 1,261,319
and 1,659,505 of which are exercisable within 60 days; (iii) with respect
to each of Messrs. Kotick and Kelly, 37,481 shares owned directly by
Delmonte Investments, L.L.C., of which each such individual is a member;
and (iv) and with respect to Mr. Kotick, 287,497 options held by The Kotick
Foundation for the Visual Arts, L.L.C., of which Mr. Kotick and his wife
are the sole members. The amount does not include (i) with respect to
Messrs. Kotick and Kelly, 19,500 and 7,032 shares of stock transferred by
them, respectively, to irrevocable trusts for the benefit of their minor
children, and (ii) with respect to Mr. Kotick, 110,689 options transferred
by him to an irrevocable trust for the benefit of his minor children.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 55,000,000 shares
of capital stock, $.000001 par value, consisting of 50,000,000 shares of Common
Stock and 4,500,000 shares of serial preferred stock and 500,000 shares of
Series A Junior Preferred Stock. As of March 31, 2001, 27,282,476 shares of
Common Stock were outstanding. The Common Stock is listed in the NASDAQ National
Market System under the symbol "ATVI."
Each outstanding share of Common Stock entitles the holder to one vote on
all matters submitted to a vote of stockholders, including the election of
directors. There is no cumulative voting in the election of directors, which
means that the holders of a majority of the outstanding shares of Common Stock
can elect all of the directors then standing for election. Subject to
preferences which may be applicable to any outstanding shares of preferred
stock, holders of Common Stock are entitled to such distributions as may be
declared from time to time by directors of the Company out of funds legally
available therefor. The Company has not paid, and has no current plans to pay,
dividends on its Common Stock. The Company intends to retain all earnings for
use in its business.
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Holders of Common Stock have no conversion, redemption or preemptive rights
to subscribe to any securities of the Company. All outstanding shares of Common
Stock are fully paid and nonassessable. In the event of any liquidation,
dissolution or winding-up of the affairs of the Company, holders of Common Stock
will be entitled to share ratably in the assets of the Company remaining after
provision for payment of liabilities to creditors and preferences applicable to
outstanding shares of preferred stock.
The rights, preferences and privileges of holders of Common Stock are
subject to the rights of the holders of any outstanding shares of preferred
stock. At present, no shares of preferred stock are outstanding. As of April 17,
2001, the Company had approximately 5,000 stockholders of record, excluding
banks, brokers and depository companies that are stockholders of record for the
account of beneficial owners.
The transfer agent for the Common Stock of the Company is Continental Stock
Transfer & Trust Company, 2 Broadway, New York, New York 10004.
PLAN OF DISTRIBUTION
The Common Stock may be sold from time to time by the Selling Stockholders,
or by pledgees, donees, transferees or other successors in interest. Such sales
may be made on one or more exchanges or in the over-the-counter market, or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The shares may be sold
by one or more of the following, without limitation: (a) a block trade in which
the broker or dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction, (b) purchases by a broker or dealer as principal and resale by such
broker or dealer or for its account pursuant to the Prospectus, as supplemented,
(c) an exchange distribution in accordance with the rules of such exchange, and
(d) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In addition, any securities covered by this Prospectus
which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather
than pursuant to this Prospectus, as supplemented. From time to time the Selling
Stockholders may engage in short sales, short sales against the box, puts and
calls and other transactions in securities of the Company or derivatives
thereof, and may sell and deliver the shares in connection therewith. From time
to time Selling Stockholders may pledge their shares pursuant to the margin
provisions of their respective customer agreements with their respective
brokers. Upon a default by a Selling Stockholder, the broker may offer and sell
the pledged shares of Common Stock from time to time as described under the
heading "Plan of Distribution" in this Prospectus, as supplemented.
All expenses of registration of the Common Stock (other than commissions
and discounts of underwriters, dealers or agents), estimated to be approximately
$5,000, shall be borne by the Company. As and when the Company is required to
update this Prospectus, it may incur additional expenses in excess of this
estimated amount.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock being
offered hereby will be passed upon for the Company by Robinson Silverman Pearce
Aronsohn & Berman LLP, 1290 Avenue of the Americas, New York, New York 10104.
EXPERTS
The consolidated financial statements and financial statement schedule of
the Company and its subsidiaries as of March 31, 2000 and 1999 and for each of
the years in the three year period ended March 31, 2000, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at its offices at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the SEC located at Seven World Trade Center, New York, New York 10048 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can be obtained by mail from the
Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates, and can also be obtained
electronically through the SEC's Electronic Data Gathering, Analysis and
Retrieval system at the SEC's Web site (http://www.sec.gov). The Company's
Common Stock is listed on the Nasdaq National Market and copies of such reports
and other information can also be inspected at the offices of the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the SEC a registration statement on Form S-8
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, with
respect to the Common Stock offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto, as
permitted by the rules and regulations of the SEC. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof, which may be inspected
and copied at the public reference facilities of the SEC referred to above.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the full text of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
The Company furnishes stockholders with annual reports containing audited
financial statements and with proxy material for its annual meetings complying
with the proxy requirements of the Exchange Act.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents which have been filed by the Company with the SEC
are incorporated in this Prospectus by reference:
(1) The Company's Annual Report on Form 10-K for the year ended March 31,
2000, which contains audited consolidated balance sheets of the Company and
subsidiaries as of March 31, 2000 and 1999, and related consolidated statements
of operations, changes in shareholders' equity and cash flows for each of the
years in the three year period ended March 31, 2000.
(2) Proxy Statement dated August 15, 2000, as filed with the SEC on July
28, 2000.
(3) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended June 30, 2000, September 30, 2000 and December 31, 2000.
(4) The Company's Current Reports on Form 8-K filed with the Commission on
April 19, 2000, June 16, 2000, and March 21, 2001 as amended on Form 8-K/A filed
on March 26, 2001.
(5) Description of the Company's Common Stock contained in the Company's
Registration Statement on Form S-3, Registration No. 333-46425.
(6) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since March 31, 2000.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
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be deemed to be incorporated by reference in and to be a part of this Prospectus
from the date of filing of such reports and documents.
Any statement contained herein or in a document which is incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement in any subsequently filed
document that is also deemed to be incorporated by reference herein modifies or
supersedes such prior statement.
This Prospectus incorporates documents by reference which are not presented
or delivered herewith. These documents are available upon written or oral
request from the Company, without charge, to each person to whom a copy of this
Prospectus has been delivered, other than exhibits to those documents. Requests
should be directed to the Office of the Secretary, Activision, Inc., 3100 Ocean
Park Boulevard, Santa Monica, California 90405 (telephone (310) 255-2000).
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing a post-effective amendment to Form S-8 and has
duly caused this amendment to its registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Los Angeles,
State of California, on April 17, 2001.
ACTIVISION, INC.
By:*/s/ Robert A. Kotick
Robert A. Kotick, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the registration statement has been signed by the following
persons in the capacities and on the dates indicated.
Name Title Date
*/s/ Robert A. Kotick Chairman, Chief Executive Officer April 17, 2001
(Robert A. Kotick) (Principal Executive Officer)and
Director
*/s/ Brian G. Kelly Co-Chairman and Director April 17, 2001
(Brian G. Kelly)
*/s/ William Chardavoyne Chief Financial Officer (Principal April 17, 2001
(William Chardavoyne) Financial and Accounting Officer)
*/s/ Ronald Doornink President and Chief Operating April 17, 2001
(Ronald Doornink) Officer
*/s/ Harold A. Brown Director April 17, 2001
(Harold A. Brown)
*/s/ Barbara S. Isgur Director April 17, 2001
(Barbara S. Isgur)
*/s/ Steven T. Mayer Director April 17, 2001
(Steven T. Mayer)
________________________ Director April 17, 2001
(Robert J. Morgado)
*By: Brian G. Kelly April 17, 2001
-----------------
(Brian G. Kelly)
Attorney-In-Fact
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No dealer, salesman or other person has been authorized to give any
information or to make representations other than those contained in this
Prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by the Company or the Selling
Stockholders. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that the
information herein is correct as of any time subsequent to its date. This
Prospectus does not constitute an offer of solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer of solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.
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TABLE OF CONTENTS
Page
Risk Factors...................................................................2
The Company....................................................................8
Use of Proceeds...............................................................10
Selling Stockholders..........................................................10
Description of Capital Stock..................................................11
Plan of Distribution..........................................................12
Legal Matters.................................................................12
Experts.......................................................................12
Available Information.........................................................13
Documents Incorporated by Reference...........................................13
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2,000,000 Shares
ACTIVISION, INC.
Common Stock
----------------
PROSPECTUS
----------------
April 17, 2001
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