Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Feb. 24, 2014 | Jun. 28, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'Activision Blizzard, Inc. | ' | ' |
Entity Central Index Key | '0000718877 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $5,992,872,321 |
Entity Common Stock, Shares Outstanding | ' | 712,370,652 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash and cash equivalents | $4,410,000,000 | $3,959,000,000 |
Short-term investments | 33,000,000 | 416,000,000 |
Accounts receivable, net of allowances of $381 million and $332 million at December 31, 2013 and 2012, respectively | 515,000,000 | 707,000,000 |
Inventories, net | 171,000,000 | 209,000,000 |
Software development | 367,000,000 | 164,000,000 |
Intellectual property licenses | 11,000,000 | 11,000,000 |
Deferred income taxes, net | 321,000,000 | 487,000,000 |
Other current assets | 413,000,000 | 321,000,000 |
Total current assets | 6,241,000,000 | 6,274,000,000 |
Long-term investments | 9,000,000 | 8,000,000 |
Software development | 21,000,000 | 129,000,000 |
Intellectual property licenses | 0 | 30,000,000 |
Property and equipment, net | 138,000,000 | 141,000,000 |
Other assets | 35,000,000 | 11,000,000 |
Intangible assets, net | 43,000,000 | 68,000,000 |
Trademark and trade names | 433,000,000 | 433,000,000 |
Goodwill | 7,092,000,000 | 7,106,000,000 |
Total assets | 14,012,000,000 | 14,200,000,000 |
Current liabilities: | ' | ' |
Accounts payable | 355,000,000 | 343,000,000 |
Deferred revenues | 1,389,000,000 | 1,657,000,000 |
Accrued expenses and other liabilities | 636,000,000 | 652,000,000 |
Current portion of long-term debt | 25,000,000 | 0 |
Total current liabilities | 2,405,000,000 | 2,652,000,000 |
Long-term debt, net | 4,668,000,000 | 0 |
Deferred income taxes, net | 20,000,000 | 25,000,000 |
Other liabilities | 297,000,000 | 206,000,000 |
Total liabilities | 7,390,000,000 | 2,883,000,000 |
Commitments and contingencies (Note 22) | ' | ' |
Shareholders' equity: | ' | ' |
Common stock, $.000001 par value per share, 2,400,000,000 shares authorized, 1,132,385,424 and 1,111,606,087 shares issued at December 31, 2013 and 2012, respectively | 0 | 0 |
Additional paid-in capital | 9,682,000,000 | 9,450,000,000 |
Less: Treasury stock, at cost, 428,676,471 and 0 shares at December 31, 2013 and 2012, respectively | -5,814,000,000 | 0 |
Retained earnings | 2,686,000,000 | 1,893,000,000 |
Accumulated other comprehensive income (loss) | 68,000,000 | -26,000,000 |
Total shareholders' equity | 6,622,000,000 | 11,317,000,000 |
Total liabilities and shareholders' equity | $14,012,000,000 | $14,200,000,000 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ' | ' |
Accounts receivable, allowances | $381 | $332 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 2,400,000,000 | 2,400,000,000 |
Common stock, shares issued | 1,132,385,424 | 1,111,606,087 |
Treasury stock, shares | 428,676,471 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Net revenues | ' | ' | ' |
Product sales | $3,201 | $3,620 | $3,257 |
Subscription, licensing, and other revenues | 1,382 | 1,236 | 1,498 |
Total net revenues | 4,583 | 4,856 | 4,755 |
Costs and expenses | ' | ' | ' |
Cost of sales-product costs | 1,053 | 1,116 | 1,134 |
Cost of sales-online subscriptions | 204 | 263 | 255 |
Cost of sales-software royalties and amortization | 187 | 194 | 218 |
Cost of sales-intellectual property licenses | 87 | 89 | 165 |
Product development | 584 | 604 | 629 |
Sales and marketing | 606 | 578 | 545 |
General and administrative | 490 | 561 | 456 |
Restructuring | 0 | 0 | 25 |
Total costs and expenses | 3,211 | 3,405 | 3,427 |
Operating income | 1,372 | 1,451 | 1,328 |
Interest and other investment income (expense), net | -53 | 7 | 3 |
Income before income tax expense | 1,319 | 1,458 | 1,331 |
Income tax expense | 309 | 309 | 246 |
Net income | $1,010 | $1,149 | $1,085 |
Earnings per common share | ' | ' | ' |
Basic (in dollars per share) | $0.96 | $1.01 | $0.93 |
Diluted (in dollars per share) | $0.95 | $1.01 | $0.92 |
Weighted-average number of shares outstanding | ' | ' | ' |
Basic (in shares) | 1,024 | 1,112 | 1,148 |
Diluted (in shares) | 1,035 | 1,118 | 1,156 |
Dividends per common share (in dollars per share) | $0.19 | $0.18 | $0.17 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Net income | $1,010 | $1,149 | $1,085 |
Other comprehensive income (loss): | ' | ' | ' |
Foreign currency translation adjustment | 93 | 46 | -61 |
Unrealized gains on investments, net of deferred income taxes of $0 million, $0 million, and $1 million for the years ended December 31, 2013, 2012, and 2011, respectively | 1 | 0 | 2 |
Other comprehensive income (loss) | 94 | 46 | -59 |
Comprehensive Income | 1,104 | 1,195 | 1,026 |
Deferred income taxes on gross unrealized appreciation (depreciation) on investments | $0 | $0 | $1 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) | Total | Common Stock | Additional Paid-In Capital | Treasury Stock | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) |
Balance at Dec. 31, 2010 | $10,203,000,000 | $0 | $12,353,000,000 | ($2,194,000,000) | $57,000,000 | ($13,000,000) |
Balance (in shares) at Dec. 31, 2010 | ' | -1,382,000,000 | ' | -199,000,000 | ' | ' |
Components of comprehensive income (loss): | ' | ' | ' | ' | ' | ' |
Net income | 1,085,000,000 | ' | ' | ' | 1,085,000,000 | ' |
Other comprehensive income (loss) | -59,000,000 | ' | ' | ' | ' | -59,000,000 |
Issuance of common stock pursuant to employee stock options | 69,000,000 | ' | 69,000,000 | ' | ' | ' |
Issuance of common stock pursuant to employee stock options (in shares) | ' | 9,000,000 | ' | ' | ' | ' |
Issuance of common stock pursuant to restricted stock rights (in shares) | ' | 3,000,000 | ' | ' | ' | ' |
Restricted stock surrendered for employees' tax liability | -15,000,000 | ' | -15,000,000 | ' | ' | ' |
Restricted stock surrendered for employees' tax liability (in shares) | ' | -1,000,000 | ' | ' | ' | ' |
Stock-based compensation expense related to employee stock options and restricted stock rights | 95,000,000 | ' | 95,000,000 | ' | ' | ' |
Dividends ($0.19, $0.18, and $0.165 per common share at December 31, 2013, 2012, and 2011, respectively) | -194,000,000 | ' | ' | ' | -194,000,000 | ' |
Shares repurchased (see Note 20) | -692,000,000 | ' | ' | -692,000,000 | ' | ' |
Shares repurchased (in shares) | ' | ' | ' | -61,000,000 | ' | ' |
Retirement of treasury shares | 0 | ' | -2,886,000,000 | 2,886,000,000 | ' | ' |
Retirement of treasury shares (shares) | ' | -260,000,000 | ' | 260,000,000 | ' | ' |
Balance at Dec. 31, 2011 | 10,492,000,000 | 0 | 9,616,000,000 | 0 | 948,000,000 | -72,000,000 |
Balance (in shares) at Dec. 31, 2011 | ' | -1,133,000,000 | ' | 0 | ' | ' |
Components of comprehensive income (loss): | ' | ' | ' | ' | ' | ' |
Net income | 1,149,000,000 | ' | ' | ' | 1,149,000,000 | ' |
Other comprehensive income (loss) | 46,000,000 | ' | ' | ' | ' | 46,000,000 |
Issuance of common stock pursuant to employee stock options | 33,000,000 | ' | 33,000,000 | ' | ' | ' |
Issuance of common stock pursuant to employee stock options (in shares) | ' | 5,000,000 | ' | ' | ' | ' |
Issuance of common stock pursuant to restricted stock rights (in shares) | ' | 4,000,000 | ' | ' | ' | ' |
Restricted stock surrendered for employees' tax liability | -16,000,000 | ' | -16,000,000 | ' | ' | ' |
Restricted stock surrendered for employees' tax liability (in shares) | ' | -1,000,000 | ' | ' | ' | ' |
Forfeiture of restricted stock rights (in shares) | ' | -3,000,000 | ' | ' | ' | ' |
Stock-based compensation expense related to employee stock options and restricted stock rights | 132,000,000 | ' | 132,000,000 | ' | ' | ' |
Dividends ($0.19, $0.18, and $0.165 per common share at December 31, 2013, 2012, and 2011, respectively) | -204,000,000 | ' | ' | ' | -204,000,000 | ' |
Shares repurchased (see Note 20) | -315,000,000 | ' | ' | -315,000,000 | ' | ' |
Shares repurchased (in shares) | ' | ' | ' | -26,000,000 | ' | ' |
Retirement of treasury shares | 0 | ' | -315,000,000 | 315,000,000 | ' | ' |
Retirement of treasury shares (shares) | ' | -26,000,000 | ' | 26,000,000 | ' | ' |
Balance at Dec. 31, 2012 | 11,317,000,000 | 0 | 9,450,000,000 | 0 | 1,893,000,000 | -26,000,000 |
Balance (in shares) at Dec. 31, 2012 | ' | -1,112,000,000 | ' | 0 | ' | ' |
Components of comprehensive income (loss): | ' | ' | ' | ' | ' | ' |
Net income | 1,010,000,000 | ' | ' | ' | 1,010,000,000 | ' |
Other comprehensive income (loss) | 94,000,000 | ' | ' | ' | ' | 94,000,000 |
Issuance of common stock pursuant to employee stock options | 158,000,000 | ' | 158,000,000 | ' | ' | ' |
Issuance of common stock pursuant to employee stock options (in shares) | ' | 16,000,000 | ' | ' | ' | ' |
Issuance of common stock pursuant to restricted stock rights (in shares) | ' | 8,000,000 | ' | ' | ' | ' |
Restricted stock surrendered for employees' tax liability | -49,000,000 | ' | -49,000,000 | ' | ' | ' |
Restricted stock surrendered for employees' tax liability (in shares) | ' | -4,000,000 | ' | ' | ' | ' |
Tax benefit associated with employee stock awards | 11,000,000 | ' | 11,000,000 | ' | ' | ' |
Stock-based compensation expense related to employee stock options and restricted stock rights | 112,000,000 | ' | 112,000,000 | ' | ' | ' |
Dividends ($0.19, $0.18, and $0.165 per common share at December 31, 2013, 2012, and 2011, respectively) | -217,000,000 | ' | ' | ' | -217,000,000 | ' |
Shares repurchased (see Note 20) | -5,830,000,000 | ' | ' | -5,830,000,000 | ' | ' |
Shares repurchased (in shares) | ' | ' | ' | -429,000,000 | ' | ' |
Indemnity on tax attributes assumed in connection with the Purchase Transaction (see Note 18) | 16,000,000 | ' | ' | 16,000,000 | ' | ' |
Balance at Dec. 31, 2013 | $6,622,000,000 | $0 | $9,682,000,000 | ($5,814,000,000) | $2,686,000,000 | $68,000,000 |
Balance (in shares) at Dec. 31, 2013 | ' | -1,132,000,000 | ' | -429,000,000 | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CHA1
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) (USD $) | 0 Months Ended | 12 Months Ended | ||
Feb. 06, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | ' | ' | ' | ' |
Dividends per common share (in dollars per share) | $0.20 | $0.19 | $0.18 | $0.17 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Cash flows from operating activities: | ' | ' | ' |
Net income | $1,010,000,000 | $1,149,000,000 | $1,085,000,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' |
Deferred income taxes | 161,000,000 | -10,000,000 | 75,000,000 |
Provision for inventories | 33,000,000 | 13,000,000 | 8,000,000 |
Depreciation and amortization | 108,000,000 | 120,000,000 | 148,000,000 |
Loss on disposal of property and equipment | 0 | 1,000,000 | 4,000,000 |
Impairment of goodwill (see Note 9) | 0 | 0 | 12,000,000 |
Amortization and write-off of capitalized software development costs and intellectual property licenses | 207,000,000 | 208,000,000 | 287,000,000 |
Amortization of debt discount and debt financing costs | 1,000,000 | 0 | 0 |
Stock-based compensation expense | 108,000,000 | 126,000,000 | 103,000,000 |
Excess tax benefits from stock awards | -29,000,000 | -5,000,000 | -24,000,000 |
Changes in operating assets and liabilities: | ' | ' | ' |
Accounts receivable, net | 198,000,000 | -46,000,000 | 13,000,000 |
Inventories | 6,000,000 | -75,000,000 | -42,000,000 |
Software development and intellectual property licenses | -268,000,000 | -301,000,000 | -254,000,000 |
Other assets | -67,000,000 | 88,000,000 | -67,000,000 |
Deferred revenues | -275,000,000 | 153,000,000 | -248,000,000 |
Accounts payable | 7,000,000 | -54,000,000 | 31,000,000 |
Accrued expenses and other liabilities | 64,000,000 | -22,000,000 | -179,000,000 |
Net cash provided by operating activities | 1,264,000,000 | 1,345,000,000 | 952,000,000 |
Cash flows from investing activities: | ' | ' | ' |
Proceeds from maturities of available-for-sale investments | 304,000,000 | 444,000,000 | 740,000,000 |
Proceeds from auction rate securities called at par | 0 | 10,000,000 | 10,000,000 |
Proceeds from sale of available-for-sale investments | 98,000,000 | 0 | 0 |
Purchases of available-for-sale investments | -26,000,000 | -503,000,000 | -417,000,000 |
Payment of contingent consideration | 0 | 0 | -3,000,000 |
Capital expenditures | -74,000,000 | -73,000,000 | -72,000,000 |
Decrease (increase) in restricted cash | 6,000,000 | -2,000,000 | 8,000,000 |
Net cash provided by (used in) investing activities | 308,000,000 | -124,000,000 | 266,000,000 |
Cash flows from financing activities: | ' | ' | ' |
Proceeds from issuance of common stock to employees | 158,000,000 | 33,000,000 | 69,000,000 |
Tax payment related to net share settlements on restricted stock rights | -49,000,000 | -16,000,000 | -15,000,000 |
Excess tax benefits from stock awards | 29,000,000 | 5,000,000 | 24,000,000 |
Repurchase of common stock | -5,830,000,000 | -315,000,000 | -692,000,000 |
Dividends paid | -216,000,000 | -204,000,000 | -194,000,000 |
Proceeds from issuance of long-term debt | 4,750,000,000 | 0 | 0 |
Repayment of long-term debt | -6,000,000 | 0 | 0 |
Payment of debt discount and financing costs | -59,000,000 | 0 | 0 |
Net cash used in financing activities | -1,223,000,000 | -497,000,000 | -808,000,000 |
Effect of foreign exchange rate changes on cash and cash equivalents | 102,000,000 | 70,000,000 | -57,000,000 |
Net increase (decrease) in cash and cash equivalents | 451,000,000 | 794,000,000 | 353,000,000 |
Cash and cash equivalents at beginning of year | 3,959,000,000 | 3,165,000,000 | 2,812,000,000 |
Cash and cash equivalents at end of year | $4,410,000,000 | $3,959,000,000 | $3,165,000,000 |
Description_of_Business
Description of Business | 12 Months Ended |
Dec. 31, 2013 | |
Description of Business | ' |
Description of Business | ' |
1. Description of Business | |
Activision Blizzard, Inc. (“Activision Blizzard”) is a leading global developer and publisher of interactive entertainment. The terms “Activision Blizzard,” the “Company,” “we,” “us,” and “our” are used to refer collectively to Activision Blizzard, Inc. and its subsidiaries. We publish online, personal computer (“PC”), video game console, handheld, mobile and tablet games. We maintain significant operations in the United States (“U.S.”), Canada, the United Kingdom (“U.K.”), France, Germany, Ireland, Italy, Sweden, Spain, the Netherlands, Australia, South Korea and China. | |
The Business Combination and Recently Consummated Share Repurchase | |
Activision Blizzard is the result of the 2008 business combination (“Business Combination”) by and among Activision, Inc., Sego Merger Corporation, a wholly-owned subsidiary of Activision, Inc., Vivendi S.A. (“Vivendi”), VGAC LLC, a wholly-owned subsidiary of Vivendi, and Vivendi Games, Inc. (“Vivendi Games”), a wholly-owned subsidiary of VGAC LLC. As a result of the consummation of the Business Combination, Activision, Inc. was renamed Activision Blizzard, Inc. and Vivendi became a majority shareholder of Activision. The common stock of Activision Blizzard is traded on The NASDAQ Stock Market under the ticker symbol “ATVI.” | |
On October 11, 2013, we repurchased approximately 429 million shares of our common stock, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”) we entered into on July 25, 2013, with Vivendi and ASAC II LP (“ASAC”), an exempted limited partnership established under the laws of the Cayman Islands, acting by its general partner, ASAC II LLC. Pursuant to the terms of the Stock Purchase Agreement, we acquired all of the capital stock of Amber Holding Subsidiary Co., a Delaware corporation and wholly-owned subsidiary of Vivendi (“New VH”), which was the direct owner of approximately 429 million shares of our common stock, for a cash payment of $5.83 billion, or $13.60 per share, before taking into account the benefit to the Company of certain tax attributes of New VH assumed in the transaction (collectively, the “Purchase Transaction”). Immediately following the completion of the Purchase Transaction, ASAC purchased from Vivendi 172 million shares of Activision Blizzard's common stock, pursuant to the Stock Purchase Agreement, for a cash payment of $2.34 billion, or $13.60 per share (the “Private Sale”). Refer to Note 12 of the Notes to Consolidated Financial Statements for further information regarding the financing of the Purchase Transaction. | |
As a result of the Purchase Transaction and the Private Sale, approximately 64% of our outstanding common stock as of December 31, 2013 is owned by the public, approximately 12% is owned by Vivendi, and approximately 24% is owned by ASAC. | |
Based upon our organizational structure, we conduct our business through three operating segments as follows: | |
(i) Activision Publishing, Inc. | |
Activision Publishing, Inc. (“Activision”) is a leading international developer and publisher of interactive software products and content, including games from the Call of Duty® and Skylanders™ franchises. Activision develops games primarily based on internally-developed properties, as well as some licensed intellectual properties. We sell games through both retail channels and digital downloads. Activision currently offers games that operate on the Microsoft Corporation (“Microsoft”) Xbox One (“Xbox One”) and Xbox 360 (“Xbox 360”), Nintendo Co. Ltd. (“Nintendo”) Wii U (“Wii U”) and Wii (“Wii”), and Sony Computer Entertainment, Inc. (“Sony”) PlayStation 4 (“PS4”) and PlayStation 3 (“PS3”) console systems; the PC; the Nintendo 3DS (“3DS”), Nintendo Dual Screen (“DS”), and Sony PlayStation Vita handheld game systems; and other handheld and mobile devices. | |
(ii) Blizzard Entertainment, Inc. | |
Blizzard Entertainment, Inc. (“Blizzard”) is a leader in the subscription-based massively multi-player online role-playing game (“MMORPG”) category in terms of both subscriber base and revenues generated through the World of Warcraft® franchise, which it develops, hosts and supports. Blizzard also develops, markets, and sells role-playing action and strategy games for the PC and iPad, including games in the multiple-award winning Diablo® and StarCraft® franchises. In September 2013, Blizzard released Diablo III for the PS3 and Xbox 360, and confirmed plans to adapt the game for the PS4. In addition, Blizzard maintains a proprietary online-game related service, Battle.net®. Blizzard distributes its products and generates revenues worldwide through various means, including: subscriptions; sales of prepaid subscription cards; value-added services such as realm transfers, faction changes, and other character customizations within the World of Warcraft gameplay; retail sales of physical “boxed” products; online download sales of PC products; and licensing of software to third-party or related-party companies that distribute World of Warcraft, Diablo III, and StarCraft II products. In August 2013, Blizzard released the closed beta version of Hearthstone™: Heroes of Warcraft™, a free-to-play digital collectible card game, and released the open beta version in January 2014. | |
(iii) Activision Blizzard Distribution | |
Activision Blizzard Distribution (“Distribution”) consists of operations in Europe that provide warehousing, logistical and sales distribution services to third-party publishers of interactive entertainment software, our own publishing operations, and manufacturers of interactive entertainment hardware. |
Summary_of_significant_account
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2013 | |
Summary of significant accounting policies | ' |
Summary of significant accounting policies | ' |
2. Summary of Significant Accounting Policies | |
Basis of Consolidation and Presentation | |
The accompanying consolidated financial statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates and assumptions. | |
Certain reclassifications have been made to prior year amounts to conform to the current period presentation. | |
The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. | |
Results of Adjustment | |
During the year ended December 31, 2013, we identified through our internal processes that, in previous years, we erroneously under-accrued for certain indirect taxes for two countries in our Europe region. We performed an evaluation under SEC Staff Accounting Bulletin No. 108 and concluded the effect of this error was immaterial to prior years' financial statements as well as the full-year 2013 financial statements. As such, during the year ended December 31, 2013, we recorded an adjustment in our consolidated statements of operations which reduced “Total net revenues” by $8 million, “Interest and other investment income (expense), net” by $1 million, “Income before income tax expense” by $9 million, and “Net income” by $7 million. This adjustment reduced net revenues and income from operations before income tax expense by $8 million and $9 million, respectively, in each of our Blizzard segment, Europe region, and online subscriptions platform, as presented in Note 14 of the Notes to Consolidated Financial Statements. The adjustment increased “Accrued expenses and other liabilities” on our consolidated balance sheet by $9 million and represents a correction of an error. Operating cash flows were impacted by $9 million in 2013 when we settled the liability. The adjustment related to prior periods' net income as follows: (i) approximately $1 million for the quarter ended March 31, 2013; (ii) approximately $1 million for each quarter of 2012 (totaling approximately $4 million for the year ended December 31, 2012); (iii) approximately $2 million for the year ended December 31, 2011; and (iv) less than $1 million for the year ended December 31, 2010. Earnings per basic and diluted share were affected by less than $0.01 as a result of recording this adjustment. | |
During the year ended December 31, 2012, we identified through our internal processes that, in previous years, we erroneously over-recognized revenues for a country in our Europe region. We performed an evaluation under SEC Staff Accounting Bulletin No. 108 and concluded the effect of this error was immaterial to prior years' financial statements as well as the full-year 2012 financial statements. As such, during the year ended December 31, 2012, we recorded an adjustment in our consolidated statements of operations which reduced “Total net revenues” by $11 million and “Net income” by $8 million. This adjustment reduced net revenues and income from operations before income tax expense by $11 million in each of our Blizzard segment, Europe region, and online subscriptions platform, as presented in Note 14 of the Notes to Consolidated Financial Statements. The adjustment increased “Deferred revenues” on our consolidated balance sheet by $11 million and represents a correction of an error. There was no impact to operating cash flows. The adjustment related to prior periods' net income as follows: (i) approximately $1 million for the quarter ended March 31, 2012; (ii) less than $1 million for each quarter of 2011 (totaling approximately $3 million for the year ended December 31, 2011); (iii) approximately $2 million for the year ended December 31, 2010; and (iv) approximately $3 million for periods prior to the year ended December 31, 2010. Earnings per basic and diluted share were affected by less than $0.01 as a result of recording this adjustment. | |
Cash and Cash Equivalents | |
We consider all money market funds and highly liquid investments with original maturities of three months or less at the time of purchase to be “Cash and cash equivalents.” | |
Investment Securities | |
Investments designated as available-for-sale securities are carried at fair value, which is based on quoted market prices for such securities, if available, or is estimated on the basis of quoted market prices of financial instruments with similar characteristics. Unrealized gains and losses of the Company's available-for-sale securities are excluded from earnings and are reported as a component of “Other comprehensive income (loss).” | |
Investments with original maturities greater than 90 days and remaining maturities of less than one year are normally classified within “Short-term investments.” In addition, investments with maturities beyond one year may be classified within “Short-term investments” if they are highly liquid in nature and represent the investment of cash that is available for current operations. | |
The specific identification method is used to determine the cost of securities disposed of, with realized gains and losses reflected in “Interest and other investment income (expense), net” in our consolidated statements of operations. | |
The Company's investments include auction rate securities (“ARS”). These ARS are variable rate bonds tied to short-term interest rates with long-term maturities. ARS have interest rates which reset through a modified Dutch auction at predetermined short-term intervals, typically every 7, 28, or 35 days. Interest on ARS is generally paid at the end of each auction process and is based upon the interest rate determined for the prior auction. Our investments in ARS are not material to our consolidated financial statements. | |
Restricted Cash—Compensating Balances | |
Restricted cash is included within “Short-term investments” on the consolidated balance sheets. The majority of our restricted cash relates to a standby letter of credit required by one of our inventory manufacturers so that we can qualify for certain payment terms on our inventory purchases. Under the terms of this arrangement, we are required to maintain with the issuing bank a compensating balance, restricted as to use, of not less than the sum of the available amount of the letter of credit plus the aggregate amount of any drawings under the letter of credit that have been honored thereunder, but have not yet been reimbursed. | |
Financial Instruments | |
The carrying amount of “Cash and cash equivalents,” “Accounts receivable,” “Accounts payable,” and “Accrued expenses” substantively approximate fair value due to the short-term nature of these accounts. Our investments in U.S. treasuries, government agency securities, and corporate bonds are carried at fair value, which is based on quoted market prices for such securities, if available, or is estimated on the basis of quoted market prices of financial instruments with similar characteristics. ARS are carried at fair value, which is estimated using an income-approach model. | |
The Company transacts business in various foreign currencies and has significant international sales and expenses denominated in foreign currencies, subjecting us to foreign currency risk. To mitigate our foreign currency exchange rate exposure resulting from our foreign currency-denominated monetary assets, liabilities, and earnings, we periodically enter into currency derivative contracts, principally forward contracts with maturities of generally less than one year. We do not use derivatives for speculative or trading purposes and we do not designate these derivatives as hedging instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815. Accordingly, we report the fair value of these contracts within “Other current assets” or “Other current liabilities” in our consolidated balance sheets and the changes in fair value within “General and administrative expenses” and “Interest and other investment income (expense), net” in our consolidated statements of operations, depending on the nature of the contracts. The fair value of foreign currency contracts are estimated based on the prevailing exchange rates of the various hedged currencies as of the end of the period. | |
Other-Than-Temporary Impairments | |
The Company regularly reviews its investments to determine whether a decline in fair value below the cost basis is an other-than-temporary impairment. If the decline is determined to be other-than-temporary, the cost basis of the investment is written down to fair value. For available-for-sale fixed maturity instruments where credit-related impairments exist, other-than-temporary impairments are reported in the consolidated statements of operations and non-credit impairments are reported as a component of “Other comprehensive income (loss).” | |
Concentration of Credit Risk | |
Our concentration of credit risk relates to depositors holding the Company's cash and cash equivalents and customers with significant accounts receivable balances. | |
Our cash and cash equivalents are invested primarily in money market funds consisting of short-term, high-quality debt instruments issued by governments and governmental organizations, financial institutions and industrial companies. | |
Our customer base includes retailers and distributors, including mass-market retailers, consumer electronics stores, discount warehouses, and game specialty stores in the U.S. and other countries worldwide. We perform ongoing credit evaluations of our customers and maintain allowances for potential credit losses. We generally do not require collateral or other security from our customers. We did not have any single customer that accounted for 10% or more of net revenues for the years ended December 31, 2013 and 2011. We had one customer for the Activision and Blizzard segments, GameStop, that accounted for approximately 10% of net revenues for the year ended December 31, 2012. We had one customer, Wal-Mart, that accounted for 24% and 20% of consolidated gross receivables at December 31, 2013 and 2012, respectively. | |
Software Development Costs and Intellectual Property Licenses | |
Software development costs include payments made to independent software developers under development agreements, as well as direct costs incurred for internally developed products. | |
We account for software development costs in accordance with ASC Subtopic 985-20, the guidance for costs of computer software to be sold, leased, or otherwise marketed. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product encompasses both technical design documentation and game design documentation, or the completed and tested product design and working model. Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established. For products where proven technology exists, this may occur early in the development cycle. Technological feasibility is evaluated on a product-by-product basis. Prior to a product's release, if and when we believe capitalized costs are not recoverable, we expense the amounts as part of “Cost of sales—software royalties and amortization.” Capitalized costs for products that are cancelled or are expected to be abandoned are charged to “Product development expense” in the period of cancellation. Amounts related to software development which are not capitalized are charged immediately to “Product development expense.” | |
Commencing upon a product's release, capitalized software development costs are amortized to “Cost of sales—software royalties and amortization” based on the ratio of current revenues to total projected revenues for the specific product, generally resulting in an amortization period of six months or less. | |
Intellectual property license costs represent license fees paid to intellectual property rights holders for use of their trademarks, copyrights, software, technology, music or other intellectual property or proprietary rights in the development of our products. Depending upon the agreement with the rights holder, we may obtain the right to use the intellectual property in multiple products over a number of years, or alternatively, for a single product. Prior to a product's release, if and when we believe capitalized costs are not recoverable, we expense the amounts as part of “Cost of sales—intellectual property licenses.” Capitalized intellectual property costs for products that are cancelled or are expected to be abandoned are charged to “Product development expense” in the period of cancellation. | |
Commencing upon a product's release, capitalized intellectual property license costs are amortized to “Cost of sales—intellectual property licenses” based on the ratio of current revenues for the specific product to total projected revenues for all products in which the licensed property will be utilized. As intellectual property license contracts may extend for multiple years and can be used in multiple products to be released over a period beyond one year, the amortization of capitalized intellectual property license costs relating to such contracts may extend beyond one year. | |
We evaluate the future recoverability of capitalized software development costs and intellectual property licenses on a quarterly basis. For products that have been released in prior periods, the primary evaluation criterion is actual title performance. For products that are scheduled to be released in future periods, recoverability is evaluated based on the expected performance of the specific products to which the costs relate or in which the licensed trademark or copyright is to be used. Criteria used to evaluate expected product performance include: historical performance of comparable products developed with comparable technology; market performance of comparable titles; orders for the product prior to its release; general market conditions; and, for any sequel product, estimated performance based on the performance of the product on which the sequel is based. Further, as many of our capitalized intellectual property licenses extend for multiple products over multiple years, we also assess the recoverability of capitalized intellectual property license costs based on certain qualitative factors, such as the success of other products and/or entertainment vehicles utilizing the intellectual property, whether there are any future planned theatrical releases or television series based on the intellectual property, and the rights holder's continued promotion and exploitation of the intellectual property. | |
Significant management judgments and estimates are utilized in assessing the recoverability of capitalized costs. In evaluating the recoverability of capitalized costs, the assessment of expected product performance utilizes forecasted sales amounts and estimates of additional costs to be incurred. If revised forecasted or actual product sales are less than the originally forecasted amounts utilized in the initial recoverability analysis, the net realizable value may be lower than originally estimated in any given quarter, which could result in an impairment charge. Material differences may result in the amount and timing of expenses for any period if management makes different judgments or utilizes different estimates in evaluating these qualitative factors. | |
Inventories | |
Inventories consist of materials (including manufacturing royalties paid to console manufacturers), labor, and freight-in and are stated at the lower of cost (weighted-average method) or net realizable value. Inventories are relieved on a weighted average cost method. | |
Long-Lived Assets | |
Property and Equipment. Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful life (i.e., 25 to 33 years for buildings, and 2 to 5 years for computer equipment, office furniture and other equipment) of the asset. When assets are retired or disposed of, the cost and accumulated depreciation thereon are removed and any resulting gains or losses are included in the consolidated statements of operations. Leasehold improvements are amortized using the straight-line method over the estimated life of the asset, not to exceed the length of the lease. Repair and maintenance costs are expensed as incurred. | |
Goodwill and Other Indefinite-Lived Assets. We account for goodwill in accordance with ASC Topic 350. Under ASC Topic 350, goodwill is considered to have an indefinite life, and is carried at cost. Acquired trade names are assessed as indefinite lived assets as there are no foreseeable limits on the periods of time over which they are expected to contribute cash flows. Goodwill and acquired trade names are not amortized, but are subject to an annual impairment test, as well as between annual tests when events or circumstances indicate that the carrying value may not be recoverable. We perform our annual impairment testing at December 31st. | |
Our annual goodwill impairment test is performed at the reporting unit level. We have determined our reporting units based on the guidance within ASC Subtopic 350-20, which provides that reporting units are generally operating segments or one reporting level below the operating segments. As of December 31, 2013 and 2012, our reporting units are the same as our operating segments: Activision, Blizzard, and Distribution. We test goodwill for possible impairment by first determining the fair value of the related reporting unit and comparing this value to the recorded net assets of the reporting unit, including goodwill. The fair value of our reporting units is determined using an income approach based on discounted cash flow models. In the event the recorded net assets of the reporting unit exceed the estimated fair value of such assets, we perform a second step to measure the amount of the impairment, which is equal to the amount by which the recorded goodwill exceeds the implied fair value of the goodwill after assessing the fair value of each of the assets and liabilities within the reporting unit. We have determined that no impairment has occurred at December 31, 2013 and 2012 based upon a set of assumptions regarding discounted future cash flows, which represent our best estimate of future performance at this time. | |
We test acquired trade names for possible impairment by using a discounted cash flow model to estimate fair value. We have determined that no impairment has occurred at December 31, 2013 and 2012 based upon a set of assumptions regarding discounted future cash flows, which represent our best estimate of future performance at this time. | |
Changes in our assumptions underlying our estimates of fair value, which will be a function of our future financial performance and changes in economic conditions, could result in future impairment charges. | |
Amortizable Intangible Assets. Intangible assets subject to amortization are carried at cost less accumulated amortization, and amortized over the estimated useful life in proportion to the economic benefits received. | |
Management evaluates the recoverability of our identifiable intangible assets and other long-lived assets in accordance with ASC Subtopic 360-10, which generally requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. We considered certain events and circumstances in determining whether the carrying value of identifiable intangible assets and other long-lived assets, other than indefinite-lived intangible assets, may not be recoverable including, but not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in our stock price for a sustained period of time; and changes in our business strategy. If we determine that the carrying value may not be recoverable, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets to determine whether an impairment exists. If an impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. We have determined that there are no events or circumstances that indicate a potential impairment exists at December 31, 2013 and 2012. | |
Revenue Recognition | |
Revenue Arrangements with Multiple Deliverables | |
Certain of our revenue arrangements have multiple deliverables, which we account for in accordance with ASC Topic 605 and Accounting Standards Update (“ASU”) 2009-13. These revenue arrangements include product sales consisting of both software and hardware deliverables (such as peripherals or other ancillary collectors' items sold together with physical “boxed” software) and our sales of World of Warcraft boxed products, expansion packs and value-added services, each of which is considered with the related subscription services for these purposes. | |
Under ASC Topic 605 and ASU 2009-13, when a revenue arrangement contains multiple elements, such as hardware and software products, licenses and/or services, we allocate revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor-specific-objective-evidence (“VSOE”) if it is available, third-party evidence (“TPE”) if VSOE is not available, or best estimated selling price (“BESP”) if neither VSOE nor TPE is available. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue. | |
As noted above, when neither VSOE nor TPE is available for a deliverable, we use BESP. We do not have significant revenue arrangements that require BESP for the years ended December 31, 2013, 2012, and 2011. The inputs we use to determine the selling price of our significant deliverables include the actual price charged by the Company for a deliverable that the Company sells separately, which represents the VSOE, and the wholesale prices of the same or similar products, which represents TPE. The adoption of ASU 2009-13 on January 1, 2011 has not had a material impact on our financial statements. The pattern and timing of revenue recognition for deliverables and allocation of the arrangement consideration did not change upon the adoption of ASU 2009-13. | |
Product Sales | |
We recognize revenues from the sale of our products upon the transfer of title and risk of loss to our customers and once any performance obligations have been completed. Certain products are sold to customers with a “street date” (which is the earliest date these products may be sold by retailers). For these products, we recognize revenues on the later of the street date or the date the product is sold to the customer. Revenues from product sales are recognized after deducting the estimated allowance for returns and price protection. | |
For our software products with online functionality, we evaluate whether that feature or functionality is more than an inconsequential separate deliverable, in addition to the software product. This evaluation is performed for each software product and digital download of a title or product add-ons (including digital downloadable content), when it is released. | |
When we determine that a software title contains online functionality that constitutes a more-than-inconsequential separate service deliverable in addition to the product, which is principally because of the online functionality's importance to gameplay, we consider our performance obligation for this title to extend beyond the sale of the game. VSOE of fair value does not exist for the online functionality of some products, as we do not separately charge for this component of every title. As a result, we recognize all of the software-related revenues from the sale of any such title ratably over the estimated service period of the title. In addition, we initially defer the costs of sales for the title (excluding intangible asset amortization), and recognize the costs of sales as the related revenues are recognized. The costs of sales include manufacturing costs, software royalties and amortization, and intellectual property licenses. | |
Determining whether the online functionality for a particular game constitutes a more-than-inconsequential deliverable, as well as the estimated service periods and product life over which to recognize the revenue and related costs of sales, is subjective and requires management's judgment. | |
We recognize revenues from World of Warcraft boxed products, expansion packs and value-added services, in each case with the related subscription service revenues, ratably over the estimated service period beginning upon activation of the software and delivery of the related services. Revenues attributed to the sale of World of Warcraft boxed software and related expansion packs are classified as “Product sales,” whereas revenues attributable to subscriptions and other value-added services are classified as “Subscription, licensing, and other revenues.” | |
For games where the online functionality is a more-than-inconsequential deliverable and games for which was have a hosted service arrangement, we determine the game's estimated service period with consideration of various data points, including the weighted-average number of days between players' first and last days played online, the average total hours played and the average number of days in which player activity stabilizes. We also consider known online trends, and the service periods of our previously released games and disclosed service periods for our competitor's games that are similar in nature. | |
The estimated service periods for our current games range from five months to less than one year. | |
For our software products with features we consider to be incidental to the overall product offering and are inconsequential deliverables, such as products which provide limited online features at no additional cost to the consumer, we recognize the related revenues upon the transfer of title and risk of loss of the product to our customer. | |
With respect to online transactions, such as online downloads of titles or product add-ons that do not include a more-than-inconsequential separate service deliverable, revenues are recognized when the fee is paid by the online customer to purchase online content and the product is available for download or is activated for gameplay. In addition, persuasive evidence of an arrangement must exist and collection of the related receivable must be probable. | |
Sales incentives and other consideration given by us to our customers, such as rebates and product placement fees, are considered adjustments of the selling price of our products and are reflected as reductions to revenues. Sales incentives and other consideration that represent costs incurred by us for assets or services received, such as the appearance of our products in a customer's national circular ad, are reflected as sales and marketing expenses when the benefit from the sales incentive is separable from sales to the same customer and we can reasonably estimate the fair value of the benefit. | |
Subscription Revenues | |
Subscription revenues are mostly derived from World of Warcraft. World of Warcraft is a game that is playable through Blizzard's servers and is generally sold on a subscription-only basis. | |
For World of Warcraft, after the first month of free usage that is included with the World of Warcraft boxed software, the World of Warcraft end user may enter into a subscription agreement for additional future access. Revenues associated with the sales of subscriptions via boxed software and prepaid subscription cards, as well as prepaid subscriptions sales, are deferred until the subscription service is activated by the consumer and are then recognized ratably over the subscription period. Value-added service revenues associated with subscriptions are recognized ratably over the estimated service periods. | |
Licensing Revenues | |
Third-party licensees in Russia, China and Taiwan distribute and host Blizzard's World of Warcraft game in their respective countries under license agreements, for which they pay the Company a royalty. We recognize these royalties as revenues based on the end users' activation of the underlying prepaid time, if all other performance obligations have been completed, or based on usage by the end user, when we have continuing service obligations. We recognize any upfront licensing fees received over the term of the contracts. | |
With respect to license agreements that provide customers the right to make multiple copies in exchange for guaranteed amounts, revenues are generally recognized upon delivery of a master copy. Per copy royalties on sales that exceed the guarantee are recognized as earned. In addition, persuasive evidence of an arrangement must exist and collection of the related receivable must be probable. | |
Other Revenues | |
Other revenues primarily include licensing activity of intellectual property other than software to third-parties. Revenues are recorded upon the receipt of licensee statements, or upon the receipt of cash, provided the license period has begun and all performance obligations have been completed. | |
Revenues are recorded net of taxes assessed by governmental authorities that are both imposed on and concurrent with the specific revenue-producing transaction between us and our customer, such as sales and value added taxes. | |
Allowances for Returns, Price Protection, Doubtful Accounts, and Inventory Obsolescence | |
We closely monitor and analyze the historical performance of our various titles, the performance of products released by other publishers, market conditions, and the anticipated timing of other releases to assess future demand of current and upcoming titles. Initial volumes shipped upon title launch and subsequent reorders are evaluated with the goal of ensuring that quantities are sufficient to meet the demand from the retail markets, but at the same time are controlled to prevent excess inventory in the channel. We benchmark units to be shipped to our customers using historical and industry data. | |
We may permit product returns from, or grant price protection to, our customers under certain conditions. In general, price protection refers to the circumstances in which we elect to decrease, on a short- or longer-term basis, the wholesale price of a product by a certain amount and, when granted and applicable, allow customers a credit against amounts owed by such customers to us with respect to open and/or future invoices. The conditions our customers must meet to be granted the right to return products or price protection include, among other things, compliance with applicable trading and payment terms, and consistent return of inventory and delivery of sell-through reports to us. We may also consider other factors, including the facilitation of slow-moving inventory and other market factors. | |
Significant management judgments and estimates must be made and used in connection with establishing the allowance for returns and price protection in any accounting period based on estimates of potential future product returns and price protection related to current period product revenues. We estimate the amount of future returns and price protection for current period product revenues utilizing historical experience and information regarding inventory levels and the demand and acceptance of our products by the end consumer. The following factors are used to estimate the amount of future returns and price protection for a particular title: historical performance of titles in similar genres; historical performance of the hardware platform; historical performance of the franchise; console hardware life cycle; sales force and retail customer feedback; industry pricing; future pricing assumptions; weeks of on-hand retail channel inventory; absolute quantity of on-hand retail channel inventory; our warehouse on-hand inventory levels; the title's recent sell-through history (if available); marketing trade programs; and performance of competing titles. The relative importance of these factors varies among titles depending upon, among other items, genre, platform, seasonality, and sales strategy. | |
Based upon historical experience, we believe that our estimates are reasonable. However, actual returns and price protection could vary materially from our allowance estimates due to a number of reasons including, among others, a lack of consumer acceptance of a title, the release in the same period of a similarly themed title by a competitor, or technological obsolescence due to the emergence of new hardware platforms. Material differences may result in the amount and timing of our revenues for any period if factors or market conditions change or if management makes different judgments or utilizes different estimates in determining the allowances for returns and price protection. For example, a 1% change in our December 31, 2013 allowance for sales returns, price protection and other allowances would have impacted net revenues by approximately $4 million. | |
Similarly, management must make estimates as to the collectability of our accounts receivable. In estimating the allowance for doubtful accounts, we analyze the age of current outstanding account balances, historical bad debts, customer concentrations, customer creditworthiness, current economic trends, and changes in our customers' payment terms and their economic condition, as well as whether we can obtain sufficient credit insurance. Any significant changes in any of these criteria would affect management's estimates in establishing our allowance for doubtful accounts. | |
We regularly review inventory quantities on-hand and in the retail channels. We write down inventory based on excess or obsolete inventories determined primarily by future anticipated demand for our products. Inventory write-downs are measured as the difference between the cost of the inventory and net realizable value, based upon assumptions about future demand, which are inherently difficult to assess and dependent on market conditions. At the point of a loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established basis. | |
Shipping and Handling | |
Shipping and handling costs, which consist primarily of packaging and transportation charges incurred to move finished goods to customers, are included in “Cost of sales—product costs.” | |
Advertising Expenses | |
We expense advertising as incurred, except for production costs associated with media advertising, which are deferred and charged to expense when the related advertisement is run for the first time. Advertising expenses for the years ended December 31, 2013, 2012, and 2011 were $401 million, $396 million, and $343 million, respectively, and are included in “Sales and marketing expense” in the consolidated statements of operations. | |
Income Taxes | |
We record a tax provision for the anticipated tax consequences of the reported results of operations. In accordance with ASC Topic 740, the provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We evaluate deferred tax assets each period for recoverability. For those assets that do not meet the threshold of “more likely than not” that they will be realized in the future, a valuation allowance is recorded. | |
We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in “Income tax expense.” | |
Foreign Currency Translation | |
All assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date, and revenue and expenses are translated at average exchange rates during the period. The resulting translation adjustments are reflected as a component of “Accumulated other comprehensive income (loss)” in shareholders' equity. | |
Earnings (Loss) Per Common Share | |
“Basic earnings (loss) per common share” is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding for the periods presented. “Diluted earnings per share” is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding, increased by the weighted average number of common stock equivalents. Common stock equivalents are calculated using the treasury stock method and represent incremental shares issuable upon exercise of our outstanding options. However, potential common shares are not included in the denominator of the diluted earnings (loss) per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded. | |
When we determine whether instruments granted in stock-based payment transactions are participating securities, unvested stock-based awards which include the right to receive non-forfeitable dividends or dividend equivalents are considered to participate with common stock in undistributed earnings. With participating securities, we are required to calculate basic and diluted earnings per common share amounts under the two-class method. The two-class method excludes from the earnings per common share calculation any dividends paid or owed to participating securities and any undistributed earnings considered to be attributable to participating securities. | |
Stock-Based Compensation | |
We account for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation, and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees. Stock-based compensation expense is recognized during the requisite service period (that is, the period for which the employee is being compensated) and is based on the value of stock-based payment awards after a reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense recognized in our consolidated statements of operations for the years ended December 31, 2013, 2012, and 2011 included both compensation expense for stock- based payment awards granted by Activision, Inc. prior to, but not yet vested as of July 9, 2008, based on the revalued fair value estimated at July 9, 2008, and compensation expense for the stock-based payment awards granted by us subsequent to July 9, 2008. | |
We estimate the value of stock-based payment awards on the measurement date using a binomial-lattice model. Our determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. | |
We generally determine the fair value of restricted stock rights (including restricted stock units, restricted stock awards and performance shares) based on the closing market price of the Company's common stock on the date of grant. Certain restricted stock rights granted to our employees and senior management vest based on the achievement of pre-established performance or market goals. We estimate the fair value of performance-based restricted stock rights at the closing market price of the Company's common stock on the date of grant. Each quarter, we update our assessment of the probability that the specified performance criteria will be achieved. We amortize the fair values of performance-based restricted stock rights over the requisite service period adjusted for estimated forfeitures for each separately vesting tranche of the award. We estimate the fair value of market-based restricted stock rights at the date of grant using a Monte Carlo valuation methodology and amortize those fair values over the requisite service period adjusted for estimated forfeitures for each separately vesting tranche of the award. The Monte Carlo methodology that we use to estimate the fair value of market-based restricted stock rights at the date of grant incorporates into the valuation the possibility that the market condition may not be satisfied. Provided that the requisite service is rendered, the total fair value of the market-based restricted stock rights at the date of grant must be recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the performance of the specified market criteria. | |
See Note 15 of the Notes to Consolidated Financial Statements. |
Cash_and_Cash_Equivalents
Cash and Cash Equivalents | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
Cash and Cash Equivalents | ' | |||||||||
Cash and Cash Equivalents | ' | |||||||||
3. Cash and Cash Equivalents | ||||||||||
The following table summarizes the components of our cash and cash equivalents with original maturities of three months or less at the date of purchase (amounts in millions): | ||||||||||
At December 31, | ||||||||||
2013 | 2012 | |||||||||
Cash | $ | 377 | $ | 425 | ||||||
Time deposits | 3 | 23 | ||||||||
Foreign government treasury bills | 30 | --- | ||||||||
Money market funds | 4,000 | 3,511 | ||||||||
Cash and cash equivalents | $ | 4,410 | $ | 3,959 |
Investments
Investments | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Investments | ' | |||||||||||||||
Investments | ' | |||||||||||||||
4. Investments | ||||||||||||||||
The following table summarizes our short-term and long-term investments at December 31, 2013 and 2012 (amounts in millions): | ||||||||||||||||
Amortized | Gross unrealized | Gross unrealized | Fair | |||||||||||||
At December 31, 2013 | cost | gains | losses | Value | ||||||||||||
Short-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
U.S. treasuries and government agency | ||||||||||||||||
securities | $ | 21 | $ | --- | $ | --- | $ | 21 | ||||||||
Restricted cash | 12 | |||||||||||||||
Total short-term investments | $ | 33 | ||||||||||||||
Long-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Auction rate securities held through Morgan | ||||||||||||||||
Stanley Smith Barney LLC | $ | 8 | $ | 1 | $ | --- | $ | 9 | ||||||||
Amortized | Gross unrealized | Gross unrealized | Fair | |||||||||||||
At December 31, 2012 | cost | gains | losses | Value | ||||||||||||
Short-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
U.S. treasuries and government agency | ||||||||||||||||
securities | $ | 387 | $ | --- | $ | --- | $ | 387 | ||||||||
Corporate bonds | 11 | --- | --- | 11 | ||||||||||||
Restricted cash | 18 | |||||||||||||||
Total short-term investments | $ | 416 | ||||||||||||||
Long-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Auction rate securities held through Morgan | ||||||||||||||||
Stanley Smith Barney LLC | $ | 8 | $ | --- | $ | --- | $ | 8 | ||||||||
The following table summarizes the contractually stated maturities of our short-term and long-term investments classified as available-for-sale at December 31, 2013 (amounts in millions): | ||||||||||||||||
Amortized | Fair | |||||||||||||||
At December 31, 2013 | cost | Value | ||||||||||||||
U.S. treasuries and government agency securities | ||||||||||||||||
due in 1 year or less | $ | 21 | $ | 21 | ||||||||||||
Auction rate securities due after ten years | 8 | 9 | ||||||||||||||
$ | 29 | $ | 30 |
Inventories
Inventories | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventories, Net | ' | ||||||||
Inventories | ' | ||||||||
5. Inventories, Net | |||||||||
Our inventories, net consist of the following (amounts in millions): | |||||||||
At December 31, | |||||||||
2013 | 2012 | ||||||||
Finished goods | $ | 149 | $ | 171 | |||||
Purchased parts and components | 22 | 38 | |||||||
Inventories, net | $ | 171 | $ | 209 | |||||
Inventory reserves were $42 million and $22 million at December 31, 2013 and 2012, respectively. |
Software_Development_Costs_and
Software Development Costs and Intellectual Property Licenses | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Software Development Costs and Intellectual Property Licenses | ' | |||||||||||
Software Development Costs and Intellectual Property Licenses | ' | |||||||||||
6. Software Development and Intellectual Property Licenses | ||||||||||||
The following table summarizes the components of our capitalized software development costs and intellectual property licenses (amounts in millions): | ||||||||||||
At | At | |||||||||||
December 31, | December 31, | |||||||||||
2013 | 2012 | |||||||||||
Internally developed software costs | $ | 189 | $ | 159 | ||||||||
Payments made to third-party software developers | 199 | 134 | ||||||||||
Total software development costs | $ | 388 | $ | 293 | ||||||||
Intellectual property licenses | $ | 11 | $ | 41 | ||||||||
Amortization, write-offs and impairments of capitalized software development costs and intellectual property licenses are comprised of the following (amounts in millions): | ||||||||||||
For the Years Ended December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Amortization of capitalized software development | ||||||||||||
costs and intellectual property licenses | $ | 195 | $ | 205 | $ | 258 | ||||||
Write-offs and impairments | 29 | 12 | 60 |
Property_and_Equipment_Net
Property and Equipment, Net | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Property and Equipment, Net | ' | |||||||
Property and Equipment, Net | ' | |||||||
7. Property and Equipment, Net | ||||||||
Property and equipment, net was comprised of the following (amounts in millions): | ||||||||
At December 31, | ||||||||
2013 | 2012 | |||||||
Land | $ | 1 | $ | 1 | ||||
Buildings | 5 | 5 | ||||||
Leasehold improvements | 96 | 80 | ||||||
Computer equipment | 424 | 362 | ||||||
Office furniture and other equipment | 60 | 65 | ||||||
Total cost of property and equipment | 586 | 513 | ||||||
Less accumulated depreciation | -448 | -372 | ||||||
Property and equipment, net | $ | 138 | $ | 141 | ||||
Depreciation expense for the years ended December 31, 2013, 2012, and 2011 was $84 million, $90 million, and $75 million, respectively. | ||||||||
Rental expense was $35 million, $37 million and $38 million for the years ended December 31, 2013, 2012, and 2011, respectively. |
Intangible_Assets_Net
Intangible Assets, Net | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Intangible Assets, Net | ' | |||||||||||||
Intangible Assets, Net | ' | |||||||||||||
8. Intangible Assets, Net | ||||||||||||||
Intangible assets, net consist of the following (amounts in millions): | ||||||||||||||
At December 31, 2013 | ||||||||||||||
Estimated | Gross | |||||||||||||
useful | carrying | Accumulated | Net carrying | |||||||||||
lives | amount | amortization | amount | |||||||||||
Acquired definite-lived intangible assets: | ||||||||||||||
License agreements and other | 3 - 10 years | $ | 98 | $ | -90 | $ | 8 | |||||||
Internally-developed franchises | 11 - 12 years | 309 | -274 | 35 | ||||||||||
Total definite-lived intangible assets | $ | 407 | $ | -364 | $ | 43 | ||||||||
Acquired indefinite-lived intangible assets: | ||||||||||||||
Activision trademark | Indefinite | 386 | ||||||||||||
Acquired trade names | Indefinite | 47 | ||||||||||||
Total indefinite-lived intangible assets | $ | 433 | ||||||||||||
At December 31, 2012 | ||||||||||||||
Estimated | Gross | |||||||||||||
useful | carrying | Accumulated | Net carrying | |||||||||||
lives | amount | amortization | amount | |||||||||||
Acquired definite-lived intangible assets: | ||||||||||||||
License agreements and other | 3 - 10 years | $ | 98 | $ | -88 | $ | 10 | |||||||
Internally-developed franchises | 11 - 12 years | 309 | -251 | 58 | ||||||||||
Total definite-lived intangible assets | $ | 407 | $ | -339 | $ | 68 | ||||||||
Acquired indefinite-lived intangible assets: | ||||||||||||||
Activision trademark | Indefinite | 386 | ||||||||||||
Acquired trade names | Indefinite | 47 | ||||||||||||
Total indefinite-lived intangible assets | $ | 433 | ||||||||||||
Amortization expense of intangible assets was $24 million, $30 million, and $72 million for the years ended December 31, 2013, 2012, and 2011, respectively. | ||||||||||||||
At December 31, 2013, future amortization of definite-lived intangible assets is estimated as follows (amounts in millions): | ||||||||||||||
2014 | $ | 15 | ||||||||||||
2015 | 12 | |||||||||||||
2016 | 7 | |||||||||||||
2017 | 4 | |||||||||||||
2018 | 3 | |||||||||||||
Thereafter | 2 | |||||||||||||
Total | $ | 43 | ||||||||||||
We did not record any impairment charges against our intangible assets for the years ended December 31, 2013, 2012 and 2011. |
Goodwill
Goodwill | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Goodwill: | ' | |||||||||||||
Goodwill | ' | |||||||||||||
9. Goodwill | ||||||||||||||
The changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2013 and 2012 are as follows (amounts in millions): | ||||||||||||||
Activision | Blizzard | Total | ||||||||||||
Balance at December 31, 2011 | $ | 6,933 | $ | 178 | $ | 7,111 | ||||||||
Tax benefit credited to goodwill | -5 | --- | -5 | |||||||||||
Balance at December 31, 2012 | $ | 6,928 | $ | 178 | $ | 7,106 | ||||||||
Tax benefit credited to goodwill | -13 | --- | -13 | |||||||||||
Foreign exchange | -1 | --- | -1 | |||||||||||
Balance at December 31, 2013 | $ | 6,914 | $ | 178 | $ | 7,092 | ||||||||
The tax benefit credited to goodwill represents the tax deduction resulting from the exercise of stock options that were outstanding and vested at the consummation of the Business Combination and included in the purchase price of the Company, to the extent that the tax deduction did not exceed the fair value of those options. Conversely, to the extent that the tax deduction did exceed the fair value of those options, the tax benefit is credited to additional paid-in capital. | ||||||||||||||
During our 2011 annual impairment testing, the Company identified and recorded a $12 million impairment of goodwill, which was equal to the carrying amount of goodwill, related to the Distribution reporting unit. The impairment charge was recorded to “General and administrative” expense in the statement of operations. The impairment was due to declines in our expected future performance of the distribution business, which was a reflection of a continuing shift in the distribution of interactive entertainment software from retail distribution channels towards digital distribution and online gaming. | ||||||||||||||
At December 31, 2013 and 2012, the gross goodwill and accumulated impairment losses by reporting unit are as follows: | ||||||||||||||
Activision | Blizzard | Total | ||||||||||||
Balance at December 31, 2012: | ||||||||||||||
Goodwill | $ | 6,928 | $ | 178 | $ | 7,106 | ||||||||
Accumulated impairment losses | --- | --- | --- | |||||||||||
Total | $ | 6,928 | $ | 178 | $ | 7,106 | ||||||||
Balance at December 31, 2013: | ||||||||||||||
Goodwill | $ | 6,914 | $ | 178 | $ | 7,092 | ||||||||
Accumulated impairment losses | --- | --- | --- | |||||||||||
Total | $ | 6,914 | $ | 178 | $ | 7,092 |
Current_Accrued_Expenses_and_O
Current Accrued Expenses and Other Liabilities, and Other Current Assets | 12 Months Ended |
Dec. 31, 2013 | |
Current Accrued Expenses and Other Liabilities, and Other Current Assets | ' |
Current Accrued Expenses and Other Liabilities, and Other Current Assets | ' |
10. Current Accrued Expenses and Other Liabilities, and Other Current Assets | |
Included in “Accrued expenses and other liabilities” of our consolidated balance sheets are accrued payroll related costs of $254 million and $280 million at December 31, 2013 and 2012, respectively. | |
Included in “Other current assets” of our consolidated balance sheets are deferred cost of sales – product costs of $240 million and $245 million at December 31, 2013 and 2012, respectively. |
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
11. Fair Value Measurements | |||||||||||||||||
Fair Value Measurements on a Recurring Basis | |||||||||||||||||
FASB literature regarding fair value measurements for financial and non-financial assets and liabilities establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of “observable inputs” and minimize the use of “unobservable inputs.” The three levels of inputs used to measure fair value are as follows: | |||||||||||||||||
Level 1—Quoted prices in active markets for identical assets or liabilities; | |||||||||||||||||
Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data; and | |||||||||||||||||
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. | |||||||||||||||||
The table below segregates all financial assets that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date (amounts in millions): | |||||||||||||||||
Fair Value Measurements at | |||||||||||||||||
December 31, 2013 Using | |||||||||||||||||
Quoted | |||||||||||||||||
Prices in | |||||||||||||||||
Active | Significant | ||||||||||||||||
Markets for | Other | Significant | |||||||||||||||
As of | Identical | Observable | Unobservable | ||||||||||||||
December 31, | Assets | Inputs | Inputs | Balance Sheet | |||||||||||||
2013 | (Level 1) | (Level 2) | (Level 3) | Classification | |||||||||||||
Recurring fair value measurements: | |||||||||||||||||
Money market funds | $ | 4,000 | $ | 4,000 | $ | --- | $ | --- | Cash and cash equivalents | ||||||||
Foreign government treasury bills | 30 | 30 | --- | --- | Cash and cash equivalents | ||||||||||||
U.S. treasuries and government agency securities | 21 | 21 | --- | --- | Short-term investments | ||||||||||||
Auction rate securities ("ARS") | 9 | --- | --- | 9 | Long-term investments | ||||||||||||
Total recurring fair value measurements | $ | 4,060 | $ | 4,051 | $ | --- | $ | 9 | |||||||||
Fair Value Measurements at | |||||||||||||||||
December 31, 2012 Using | |||||||||||||||||
Quoted | |||||||||||||||||
Prices in | |||||||||||||||||
Active | Significant | ||||||||||||||||
Markets for | Other | Significant | |||||||||||||||
As of | Identical | Observable | Unobservable | ||||||||||||||
December 31, | Assets | Inputs | Inputs | Balance Sheet | |||||||||||||
2012 | (Level 1) | (Level 2) | (Level 3) | Classification | |||||||||||||
Recurring fair value measurements: | |||||||||||||||||
Money market funds | $ | 3,511 | $ | 3,511 | $ | --- | $ | --- | Cash and cash equivalents | ||||||||
U.S. treasuries and government agency securities | 387 | 387 | --- | --- | Short-term investments | ||||||||||||
Corporate bonds | 11 | 11 | --- | --- | Short-term investments | ||||||||||||
ARS | 8 | --- | --- | 8 | Long-term investments | ||||||||||||
Total recurring fair value measurements | $ | 3,917 | $ | 3,909 | $ | --- | $ | 8 | |||||||||
The following tables provide a reconciliation of the beginning and ending balances of our financial assets classified as Level 3 by major categories (amounts in millions) at December 31, 2013 and 2012, respectively: | |||||||||||||||||
Level 3 | |||||||||||||||||
Total | |||||||||||||||||
financial | |||||||||||||||||
assets at | |||||||||||||||||
ARS | fair | ||||||||||||||||
(a) | value | ||||||||||||||||
Balance at December 31, 2011 | $ | 16 | $ | 16 | |||||||||||||
Total unrealized gains included in other | |||||||||||||||||
comprehensive income | 2 | 2 | |||||||||||||||
Settlements | -10 | -10 | |||||||||||||||
Balance at December 31, 2012 | $ | 8 | $ | 8 | |||||||||||||
Total unrealized gains included in other | |||||||||||||||||
comprehensive income | 1 | 1 | |||||||||||||||
Balance at December 31, 2013 | $ | 9 | $ | 9 | |||||||||||||
(a) Fair value measurements have been estimated using an income-approach model. When estimating the fair value, we consider both observable market data and non-observable factors, including credit quality, duration, insurance wraps, collateral composition, maximum rate formulas, comparable trading instruments, and the likelihood of redemption. Significant assumptions used in the analysis include estimates for interest rates, spreads, cash flow timing and amounts, and holding periods of the securities. At December 31, 2013, assets measured at fair value using significant unobservable inputs (Level 3), all of which were ARS, represent less than 1% of our financial assets measured at fair value on a recurring basis. | |||||||||||||||||
Foreign Currency Forward Contracts Not Designated as Hedges | |||||||||||||||||
We transact business in various currencies other than the U.S. dollar and have significant international sales and expenses denominated in currencies other than the U.S. dollar, subjecting us to currency exchange rate risks. To mitigate our risk from foreign currency fluctuations we periodically enter into currency derivative contracts, principally forward contracts with maturities of generally less than one year. All foreign currency contracts are backed, in amount and by maturity, by an identified economic underlying item. In recent years, Vivendi has been our principal counterparty for our currency derivative contracts, but in connection with the Purchase Transaction described in Note 1 of the Notes to Consolidated Financial Statements, we terminated our cash management services agreement with Vivendi as of October 31, 2013. Further, we have not had any outstanding currency derivative contracts with Vivendi as the counterparty since July 3, 2013. Since the consummation of the Purchase Transaction, our counterparties for our currency derivative contracts have been large and reputable commercial or investment banks. The gross notional amount of outstanding foreign currency contracts was $34 million and $355 million at December 31, 2013 and 2012, respectively. The fair value of foreign currency contracts is estimated based on the prevailing exchange rates of the various hedged currencies as of the end of the relevant period and was not material as of December 31, 2013 or 2012. | |||||||||||||||||
We do not hold or purchase any foreign currency contracts for trading or speculative purposes and we do not designate these contracts as hedging instruments. Accordingly, we report the fair value of these contracts within “Other current assets” or “Other current liabilities” in our consolidated balance sheets and the changes in fair value within “General and administrative expense” and “Interest and other investment income (expense), net” in our consolidated statements of operations, depending on the nature of the contracts. For the year ended December 31, 2013, pre-tax net gains were not material. For the years ended December 31, 2012 and 2011, we recognized a pre-tax net gain of $7 million and a pre-tax net loss of $8 million, respectively. | |||||||||||||||||
Fair Value Measurements on a Non-Recurring Basis | |||||||||||||||||
We measure the fair value of certain assets on a non-recurring basis, generally annually or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. | |||||||||||||||||
For the years ended December 31, 2013 and 2012, there were no impairment charges related to assets that are measured on a non-recurring basis. For the year ended December 31, 2011, we identified and recorded an impairment of $12 million related to the Distribution reporting unit. The decrease in fair value of the reporting unit was primarily due to the decrease of forecasted revenue from our Distribution segment in view of the industry's trend towards digital distribution. | |||||||||||||||||
The tables below present intangible assets that were measured at fair value on a non-recurring basis at December 31, 2011 (amounts in millions): | |||||||||||||||||
Fair Value Measurements at | |||||||||||||||||
December 31, 2011 Using | |||||||||||||||||
Quoted | |||||||||||||||||
Prices in | |||||||||||||||||
Active | |||||||||||||||||
Markets for | Significant | ||||||||||||||||
Identical | Other | Significant | |||||||||||||||
As of | Financial | Observable | Unobservable | ||||||||||||||
December 31, | Instruments | Inputs | Inputs | ||||||||||||||
2011 | (Level 1) | (Level 2) | (Level 3) | Total Losses | |||||||||||||
Non-financial assets: | |||||||||||||||||
Goodwill | $ | 7,111 | $ | --- | $ | --- | $ | 7,111 | $ | 12 | |||||||
Total non-financial assets at fair | |||||||||||||||||
value | $ | 7,111 | $ | --- | $ | --- | $ | 7,111 | $ | 12 |
Debt
Debt | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Debt Disclosure | ' | ||||||||||
Debt Disclosure | ' | ||||||||||
12. Debt | |||||||||||
The proceeds from the credit facilities and the unsecured senior notes, as described below, were used to fund the Purchase Transaction disclosed in Note 1 of the Notes to Consolidated Financial Statements. | |||||||||||
Credit Facilities | |||||||||||
On October 11, 2013, in connection and simultaneously with the Purchase Transaction, we entered into a credit agreement (the “Credit Agreement”) for a $2.5 billion secured term loan facility (the “Term Loan”), maturing in October 2020, and a $250 million secured revolving credit facility (the “Revolver” and, together with the Term Loan, the “Credit Facilities”), maturing in October 2018. A portion of the Revolver can be used to issue letters of credit of up to $50 million, subject to the availability of the Revolver. To date, we have not drawn on the Revolver. | |||||||||||
Borrowings under the Term Loan and the Revolver bear interest, payable on a quarterly basis, at an annual rate equal to an applicable margin plus, at our option, (A) a base rate determined by reference to the highest of (a) the interest rate in effect determined by the administrative agent as its “prime rate,” (b) the federal funds rate plus 0.5%, and (c) the London InterBank Offered Rate (“LIBOR”) rate for an interest period of one month plus 1.00%, or (B) LIBOR. LIBOR borrowings under the Term Loan will be subject to a LIBOR floor of 0.75%. At December 31, 2013, the Credit Facilities bore interest at 3.25%. In certain circumstances, our applicable interest rate under the Credit Facilities would increase. | |||||||||||
In addition to paying interest on outstanding principal balances under the Credit Facilities, we are required to pay the lenders a commitment fee on unused commitments under the Revolver. Commitment fees are recorded within “Interest and other investment income (expense), net” on the consolidated statement of operations. We are also required to pay customary letter of credit fees and agency fees. | |||||||||||
We are required to make quarterly principal repayments of 0.25% of the Term Loan's original principal amount, with the balance due on the maturity date. Amounts borrowed under the Term Loan and repaid may not be re-borrowed. On February 11, 2014, we made a voluntary repayment of $375 million on our Term Loan. This repayment satisfies the required quarterly principal repayments. | |||||||||||
The Credit Facilities are guaranteed by certain of the Company's U.S. subsidiaries, whose assets represent approximately 70% of our consolidated assets. The Credit Agreement contains customary covenants that place restrictions in certain circumstances on, among other things, the incurrence of debt, granting of liens, payment of dividends, sales of assets and mergers and acquisitions. If our obligations under the Revolver exceed 15% of the total facility amount as of the end of any fiscal quarter (subject to certain exclusions for letters of credit), we are also subject to certain financial covenants. A violation of any of these covenants could result in an event of default under the Credit Agreement. Upon the occurrence of such event of default or certain other customary events of default, payment of any outstanding amounts under the Credit Agreement may be accelerated, and the lenders' commitments to extend credit under the Credit Agreement may be terminated. In addition, an event of default under the Credit Agreement could, under certain circumstances, permit the holders of other outstanding unsecured debt, including the debt holders described below, to accelerate the repayment of such obligations. The Company was in compliance with the terms of the Credit Facilities as of December 31, 2013. | |||||||||||
Unsecured Senior Notes | |||||||||||
On September 19, 2013, we issued, at par, $1.5 billion of 5.625% unsecured senior notes due September 2021 (the “2021 Notes”) and $750 million of 6.125% unsecured senior notes due September 2023 (the “2023 Notes” and, together with the 2021 Notes, the “Notes”) in a private offering to qualified institutional buyers made in accordance with Rule 144A under the Securities Act of 1933, as amended. | |||||||||||
The Notes are general senior obligations of the Company and rank pari passu in right of payment to all of the Company's existing and future senior indebtedness, including the Credit Facilities described above. The Notes are guaranteed on a senior basis by the Guarantors. The Notes and related guarantees are not secured and are effectively subordinated to any of the Company's existing and future indebtedness that is secured, including the Credit Facilities. The Notes contain customary covenants that place restrictions in certain circumstances on, among other things, the incurrence of debt, granting of liens, payment of dividends, sales of assets and mergers and acquisitions. The Company was in compliance with the terms of the Notes as of December 31, 2013. | |||||||||||
Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing on March 15, 2014. As of December 31, 2013, we had interest payable of $38 million related to the Notes recorded within “Accrued expenses and other liabilities” in our consolidated balance sheet. | |||||||||||
We may redeem the 2021 Notes on or after September 15, 2016 and the 2023 Notes on or after September 15, 2018, in whole or in part on any one or more occasions, at specified redemption prices, plus accrued and unpaid interest. At any time prior to September 15, 2016, with respect to the 2021 Notes, and at any time prior to September 15, 2018, with respect to the 2023 Notes, we may also redeem some or all of the Notes by paying a “make-whole premium”, plus accrued and unpaid interest. Upon the occurrence of one or more qualified equity offerings, we may also redeem up to 35% of the aggregate principal amount of each of the 2021 Notes and 2023 Notes outstanding with the net cash proceeds from such offerings. The Notes are repayable, in whole or in part and at the option of the holders, upon the occurrence of a change in control and a ratings downgrade, at a purchase price equal to 101% of principal, plus accrued and unpaid interest. These redemption options are considered clearly and closely related to the Notes and are not accounted for separately upon issuance. | |||||||||||
For the year ended December 31, 2013, we recorded $52 million of fees associated with the closing of the Term Loan and the Notes as debt discount, which reduced the carrying value of the Term Loan and the Notes. The debt discount will be amortized over the respective terms of the Term Loan and the Notes. Amortization expense is recorded within “Interest and other investment income (expense), net” in our consolidated statement of operations. | |||||||||||
A summary of our debt is as follows (amounts in millions): | |||||||||||
31-Dec-13 | |||||||||||
Gross Carrying | Unamortized | Net Carrying | |||||||||
Amount | Discount | Amount | |||||||||
Term Loan | $ | 2,494 | $ | -12 | $ | 2,482 | |||||
2021 Notes | 1,500 | -26 | 1,474 | ||||||||
2023 Notes | 750 | -13 | 737 | ||||||||
Total debt | $ | 4,744 | $ | -51 | $ | 4,693 | |||||
Less: current portion of long-term debt | -25 | - | -25 | ||||||||
Total long-term debt | $ | 4,719 | $ | -51 | $ | 4,668 | |||||
For the year ended December 31, 2013, interest expense was $57 million. Amortization of the debt discount for the Credit Facilities and Notes was $1 million and commitment fees for the Revolver were not material. | |||||||||||
As of December 31, 2013, the scheduled maturities and contractual principal repayments of our debt for each of the five succeeding years are as follows (amounts in millions): | |||||||||||
For the year ending December 31, | |||||||||||
2014 | $ | 25 | |||||||||
2015 | 25 | ||||||||||
2016 | 25 | ||||||||||
2017 | 25 | ||||||||||
2018 | 25 | ||||||||||
Thereafter | 4,619 | ||||||||||
Total | $ | 4,744 | |||||||||
As of December 31, 2013, the carrying value of the Term Loan approximates the fair value, as the interest rate is variable over the selected interest period and is similar to current rates at which we can borrow funds. As of December 31, 2013, the fair values of the 2021 Notes and 2023 Notes, based on Level 2 inputs, were $1,559 million and $785 million, respectively. | |||||||||||
On February 11, 2014, we made a voluntary $375 million repayment on the Term Loan. The repayment reduces the outstanding principal balance by $375 million. The repayment also satisfies the required quarterly principal repayments. The scheduled maturities and contractual principal repayments of our debt, as shown in table above, are reduced by $25 million for each of the years ended December 31, 2014 through 2018 and by $250 million thereafter. Since this voluntary principal repayment was not a contractual requirement as of December 31, 2013 and the Board of Directors did not approve the repayment until January 2014, only the contractual principal repayment of $25 million for 2014 has been reflected as “Current portion of long-term debt” in our consolidated balance sheet as of December 31, 2013. | |||||||||||
Deferred Financing Costs | |||||||||||
Costs incurred to obtain our long-term debt are amortized over the terms of the respective debt agreements using a straight-line basis for costs related to the Revolver and the interest earned method for costs related to the Term Loan and Notes. For the year ended December 31, 2013, we recorded $7 million of deferred financing costs within “Other assets – non-current” in our consolidated balance sheet. For the year ended December 31, 2013, amortization expense related to the deferred financing costs was not material and is recorded within “Interest and other investment income (expense), net” in our consolidated statement of operations. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Accumulated Other Comprehensive Income (Loss). | ' | |||||||||||
Accumulated Other Comprehensive Income (Loss) | ' | |||||||||||
13. Accumulated Other Comprehensive Income (Loss) | ||||||||||||
The components of accumulated other comprehensive income (loss) at December 31, 2013 and 2012, were as follows (amounts in millions): | ||||||||||||
For the Year Ended December 31, 2013 | ||||||||||||
Foreign currency | Unrealized gain | |||||||||||
translation | on available-for- | |||||||||||
adjustments | sale securities | Total | ||||||||||
Balance at December 31, 2012 | $ | -26 | $ | --- | $ | -26 | ||||||
Other comprehensive income (loss) | ||||||||||||
before reclassifications | 93 | 1 | 94 | |||||||||
Amounts reclassified from accumulated | ||||||||||||
other comprehensive income (loss) | --- | --- | --- | |||||||||
Balance at December 31, 2013 | $ | 67 | $ | 1 | $ | 68 | ||||||
For the Year Ended December 31, 2012 | ||||||||||||
Foreign currency | Unrealized gain | |||||||||||
translation | on available-for- | |||||||||||
adjustments | sale securities | Total | ||||||||||
Balance at December 31, 2011 | $ | -72 | $ | --- | $ | -72 | ||||||
Other comprehensive income (loss) | ||||||||||||
before reclassifications | 46 | --- | 46 | |||||||||
Amounts reclassified from accumulated | ||||||||||||
other comprehensive income (loss) | --- | --- | --- | |||||||||
Balance at December 31, 2012 | $ | -26 | $ | --- | $ | -26 | ||||||
Income taxes were not provided for foreign currency translation items as these are considered indefinite investments in non-U.S. subsidiaries. |
Operating_Segments_and_Geograp
Operating Segments and Geographic Region | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Operating Segments and Geographic Region | ' | ||||||||||||||||||||
Operating Segments and Geographic Region | ' | ||||||||||||||||||||
14. Operating Segments and Geographic Region | |||||||||||||||||||||
Our operating segments are consistent with our internal organizational structure, the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), the manner in which we assess operating performance and allocate resources, and the availability of separate financial information. Currently, we conduct our business through three operating segments: Activision, Blizzard and Distribution (see Note 1 of the Notes to Consolidated Financial Statements). We do not aggregate operating segments. | |||||||||||||||||||||
The CODM reviews segment performance exclusive of the impact of the change in deferred revenues and related cost of sales with respect to certain of our online-enabled games, stock-based compensation expense, restructuring expense, amortization of intangible assets as a result of purchase price accounting, impairment of goodwill and intangible assets, and expenses related to the Purchase Transaction and related debt financings. The CODM does not review any information regarding total assets on an operating segment basis, and accordingly, no disclosure is made with respect thereto. Information on the operating segments and reconciliations of total net revenues and total segment operating income to consolidated net revenues from external customers and consolidated income before income tax expense for the years ended December 31, 2013, 2012, and 2011 are presented below (amounts in millions): | |||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||
Income (loss) from operations | |||||||||||||||||||||
Net revenues | before income tax expense | ||||||||||||||||||||
Activision | $ | 2,895 | $ | 3,072 | $ | 2,828 | $ | 971 | $ | 970 | $ | 851 | |||||||||
Blizzard | 1,124 | 1,609 | 1,243 | 376 | 717 | 496 | |||||||||||||||
Distribution | 323 | 306 | 418 | 8 | 11 | 11 | |||||||||||||||
Operating segments total | 4,342 | 4,987 | 4,489 | 1,355 | 1,698 | 1,358 | |||||||||||||||
Reconciliation to consolidated net revenues / | |||||||||||||||||||||
consolidated income before income tax | |||||||||||||||||||||
expense: | |||||||||||||||||||||
Net effect from deferral of net revenues and | |||||||||||||||||||||
related cost of sales | 241 | -131 | 266 | 229 | -91 | 183 | |||||||||||||||
Stock-based compensation expense | --- | --- | --- | -110 | -126 | -103 | |||||||||||||||
Restructuring | --- | --- | --- | --- | --- | -26 | |||||||||||||||
Amortization of intangible assets | --- | --- | --- | -23 | -30 | -72 | |||||||||||||||
Impairment of goodwill | --- | --- | --- | --- | --- | -12 | |||||||||||||||
Fees and other expenses related to the Purchase | |||||||||||||||||||||
Transaction and related debt financings | --- | --- | --- | -79 | --- | --- | |||||||||||||||
Consolidated net revenues / operating income | $ | 4,583 | $ | 4,856 | $ | 4,755 | $ | 1,372 | $ | 1,451 | $ | 1,328 | |||||||||
Interest and other investment income (expense), net | -53 | 7 | 3 | ||||||||||||||||||
Consolidated income before income tax expense | $ | 1,319 | $ | 1,458 | $ | 1,331 | |||||||||||||||
For the year ended December 31, 2011, included in the restructuring expense above was the restructuring expense of $1 million, related to the Business Combination consummated in July 2008, reflected in “General and administrative expense” in our consolidated statement of operations. See Note 16 of the Notes to Consolidated Financial Statements for more detail. | |||||||||||||||||||||
Geographic information presented below for the years ended December 31, 2013, 2012, and 2011 is based on the location of the selling entity. Net revenues from external customers by geographic region were as follows (amounts in millions): | |||||||||||||||||||||
Years ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Net revenues by geographic region: | |||||||||||||||||||||
North America | $ | 2,414 | $ | 2,436 | $ | 2,405 | |||||||||||||||
Europe | 1,826 | 1,968 | 1,990 | ||||||||||||||||||
Asia Pacific | 343 | 452 | 360 | ||||||||||||||||||
Total consolidated net revenues | $ | 4,583 | $ | 4,856 | $ | 4,755 | |||||||||||||||
The Company's net revenues in the U.S. were 51%, 48%, and 49% of consolidated net revenues for the years ended December 31, 2013, 2012, and 2011, respectively. The Company's net revenues in the U.K. were 14%, 14%, and 16% of consolidated net revenues for the years ended December 31, 2013, 2012, and 2011, respectively. The Company's net revenues in France were 12%, 13%, and 14% of consolidated net revenues for the years ended December 31, 2013, 2012, and 2011, respectively. No other country's net revenues exceeded 10% of consolidated net revenues. | |||||||||||||||||||||
Net revenues by platform were as follows (amounts in millions): | |||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Net revenues by platform: | |||||||||||||||||||||
Console | $ | 2,379 | $ | 2,186 | $ | 2,439 | |||||||||||||||
Online subscriptions1 | 912 | 986 | 1,357 | ||||||||||||||||||
Other2 | 629 | 703 | 259 | ||||||||||||||||||
PC | 340 | 675 | 282 | ||||||||||||||||||
Total platform net revenues | 4,260 | 4,550 | 4,337 | ||||||||||||||||||
Distribution | 323 | 306 | 418 | ||||||||||||||||||
Total consolidated net revenues | $ | 4,583 | $ | 4,856 | $ | 4,755 | |||||||||||||||
(1) Revenues from online subscriptions consist of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, value-added services, and revenues from Call of Duty Elite memberships. | |||||||||||||||||||||
(2) Revenues from other include revenues from handheld and mobile devices, as well as non-platform specific game related revenues such as standalone sales of toys and accessories products from the Skylanders franchise and other physical merchandise and accessories. | |||||||||||||||||||||
Long-lived assets by geographic region at December 31, 2013, 2012, and 2011 were as follows (amounts in millions): | |||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Long-lived assets* by geographic region: | |||||||||||||||||||||
North America | $ | 102 | $ | 90 | $ | 105 | |||||||||||||||
Europe | 29 | 40 | 46 | ||||||||||||||||||
Asia Pacific | 7 | 11 | 12 | ||||||||||||||||||
Total long-lived assets by geographic region | $ | 138 | $ | 141 | $ | 163 | |||||||||||||||
*The only long-lived assets that we classify by region are our long-term tangible fixed assets, which only include property, plant and equipment assets; all other long-term assets are not allocated by location. | |||||||||||||||||||||
For information regarding significant customers, see “Concentration of Credit Risk” in Note 2 of the Notes to Consolidated Financial Statements. |
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Stock-Based Compensation | ' | ||||||||||||
Stock-Based Compensation | ' | ||||||||||||
15. Stock-Based Compensation | |||||||||||||
Activision Blizzard Equity Incentive Plans | |||||||||||||
The Activision Blizzard Inc. 2008 Incentive Plan was adopted by our Board on July 28, 2008, approved by our stockholders and amended and restated by our Board on September 24, 2008, further amended and restated by our Board with stockholder approval on June 3, 2009, further amended and restated by the Compensation Committee of our Board with stockholder approval on December 17, 2009, further amended and restated by our Board and the Compensation Committee of our Board with shareholder approval on June 3, 2010, and further amended and restated by our Board with shareholder approval on June 7, 2012 (as so amended and restated, the “2008 Plan”). The 2008 Plan authorizes the Compensation Committee of our Board of Directors to provide stock-based compensation in the form of stock options, share appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other performance- or value-based awards structured by the Compensation Committee within parameters set forth in the 2008 Plan, including custom awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of our common stock, or factors that may influence the value of our common stock or that are valued based on our performance or the performance of any of our subsidiaries or business units or other factors designated by the Compensation Committee, as well as incentive bonuses, for the purpose of providing incentives and rewards for performance to the directors, officers, and employees of, and consultants to, Activision Blizzard and its subsidiaries. | |||||||||||||
While the Compensation Committee has broad discretion to create equity incentives, our stock-based compensation program for the most part currently utilizes a combination of options and restricted stock units. Options have time-based vesting schedules, generally vesting annually over a period of three to five years, and all options expire ten years from the grant date. Restricted stock units either have time-based vesting schedules, generally vesting in their entirety on an anniversary of the date of grant, or vesting annually over a period of three to five years, or vest only if certain performance measures are met. In addition, under the terms of the 2008 Plan, the exercise price for the options must be equal to or greater than the closing price per share of our common stock on the date the award is granted, as reported on NASDAQ. | |||||||||||||
At December 31, 2013, 34 million shares of our common stock were available for issuance under the 2008 Plan. The number of shares of our common stock reserved for issuance under the 2008 Plan may be further increased from time to time by: (i) the number of shares relating to awards outstanding under any prior stock compensation plans that: (a) expire, or are forfeited, terminated or cancelled, without the issuance of shares; (b) are settled in cash in lieu of shares; or (c) are exchanged, prior to the issuance of shares of our common stock, for awards not involving our common stock; and (ii) if the exercise price of any option outstanding under any prior plan is, or the tax withholding requirements with respect to any award outstanding under any prior plan are, satisfied by withholding shares otherwise then deliverable in respect of the award or the actual or constructive transfer to the Company of shares already owned, the number of shares equal to the withheld or transferred shares. At December 31, 2013, we had approximately 45 million shares of our common stock reserved for future issuance under the 2008 Plan. Shares issued in connection with awards made under the 2008 Plan are generally issued as new stock issuances. | |||||||||||||
Method and Assumptions on Valuation of Stock Options | |||||||||||||
Our employee stock options have features that differentiate them from exchange-traded options. These features include lack of transferability, early exercise, vesting restrictions, pre- and post-vesting termination provisions, blackout dates, and time-varying inputs. A binomial-lattice model was selected because it is better able to explicitly address these features than closed-form models such as the Black-Scholes model, and is able to reflect expected future changes in model inputs, including changes in volatility, during the option's contractual term. | |||||||||||||
We have estimated expected future changes in model inputs during the option's contractual term. The inputs required by our binomial-lattice model include expected volatility, risk-free interest rate, risk-adjusted stock return, dividend yield, contractual term, and vesting schedule, as well as measures of employees' forfeiture, exercise, and post-vesting termination behavior. Statistical methods were used to estimate employee rank-specific termination rates. These termination rates, in turn, were used to model the number of options that are expected to vest and post-vesting termination behavior. Employee rank-specific estimates of Expected Time-To-Exercise (“ETTE”) were used to reflect employee exercise behavior. ETTE was estimated by using statistical procedures to first estimate the conditional probability of exercise occurring during each time period, conditional on the option surviving to that time period and then using those probabilities to estimate ETTE. The model was calibrated by adjusting parameters controlling exercise and post-vesting termination behavior so that the measures output by the model matched values of these measures that were estimated from historical data. | |||||||||||||
The following tables present the weighted-average assumptions and the weighted-average fair value at grant date using the binomial-lattice model: | |||||||||||||
Employee and Director Options | |||||||||||||
For the Years Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Expected life (in years) | 6.44 | 7.05 | 6.58 | ||||||||||
Risk free interest rate | 1.86 | % | 1.12 | % | 1.91 | % | |||||||
Volatility | 39 | % | 40.76 | % | 43.5 | % | |||||||
Dividend yield | 1.08 | % | 1.65 | % | 1.34 | % | |||||||
Weighted-average fair value at grant date | $ | 4.97 | $ | 3.47 | $ | 4.17 | |||||||
To estimate volatility for the binomial-lattice model, we use methods that consider the implied volatility method based upon the volatilities for exchange-traded options on our stock to estimate short-term volatility, the historical method (annualized standard deviation of the instantaneous returns on Activision Blizzard's stock) during the option's contractual term to estimate long-term volatility, and a statistical model to estimate the transition or “mean reversion” from short-term volatility to long-term volatility. Based on these methods, for options granted during the year ended December 31, 2013, the expected stock price volatility ranged from 25.73% to 39.00%. | |||||||||||||
As is the case for volatility, the risk-free rate is assumed to change during the option's contractual term. Consistent with the calculation required by a binomial-lattice model, the risk-free rate reflects the expected movement in the interest rate from one time period to the next (“forward rate”) as opposed to the interest rate from the grant date to the given time period (“spot rate”). The expected dividend yield assumption for options granted during the year ended December 31, 2013 is based on the Company's historical and expected future amount of dividend payouts. | |||||||||||||
The expected life of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and is an output from the binomial-lattice model. The expected life of employee stock options depends on all of the underlying assumptions and calibration of our model. A binomial-lattice model can be viewed as assuming that employees will exercise their options when the stock price equals or exceeds an exercise multiples, of which the multiple is based on historical employee exercise behaviors. | |||||||||||||
As stock-based compensation expense recognized in the consolidated statement of operations for the years ended December 31, 2013, 2012, and 2011 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience. | |||||||||||||
Accuracy of Fair Value Estimates | |||||||||||||
We developed the assumptions used in the binomial-lattice model, including model inputs and measures of employees' exercise and post-vesting termination behavior. Our ability to accurately estimate the fair value of stock-based payment awards at the grant date depends upon the accuracy of the model and our ability to accurately forecast model inputs as long as ten years into the future. These inputs include, but are not limited to, expected stock price volatility, risk-free rate, dividend yield, and employee termination rates. Although the fair value of employee stock options is determined using an option-pricing model, the estimates that are produced by this model may not be indicative of the fair value observed between a willing buyer and a willing seller. Unfortunately, it is difficult to determine if this is the case, as markets do not currently exist that permit the active trading of employee stock option and other stock-based instruments. | |||||||||||||
Stock Option Activities | |||||||||||||
Stock option activities for the year ended December 31, 2013 are as follows (amounts in millions, except number of shares, which are in thousands, and per share amounts): | |||||||||||||
Weighted-average | |||||||||||||
Weighted-average | remaining | Aggregate | |||||||||||
Shares | exercise price | contractual term | intrinsic value | ||||||||||
Outstanding stock options at December 31, 2012 | 51,748 | $ | 11.45 | ||||||||||
Granted | 3,506 | 17.58 | |||||||||||
Exercised | -16,001 | 9.91 | |||||||||||
Forfeited | -267 | 11.93 | |||||||||||
Expired | -182 | 11.62 | |||||||||||
Outstanding stock options at December 31, 2013 | 38,804 | 12.63 | 5.82 | $ | 202 | ||||||||
Vested and expected to vest at December 31, 2013 | 37,856 | $ | 12.58 | 5.17 | $ | 199 | |||||||
Exercisable at December 31, 2013 | 29,397 | $ | 12.27 | 4.99 | $ | 165 | |||||||
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e. the difference between our closing stock price on the last trading day of the period and the exercise price, times the number of shares for options where the exercise price is below the closing stock price) that would have been received by the option holders had all option holders exercised their options on that date. This amount changes based on the market value of our stock. The total intrinsic value of options actually exercised was $104 million, $25 million, and $47 million for the years ended December 31, 2013, 2012, and 2011, respectively. The total grant date fair value of options vested was $29 million, $47 million, and $57 million for the years ended December 31, 2013, 2012, and 2011, respectively. | |||||||||||||
At December 31, 2013, $21 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 1.41 years. | |||||||||||||
Restricted Stock Units and Restricted Stock Awards Activities | |||||||||||||
We grant restricted stock units, which represent the right to receive shares of our common stock, and restricted stock awards, which are issued and outstanding upon grant but subject to the risk of forfeiture (collectively referred to as “restricted stock rights”), under the 2008 Plan to employees around the world, and we assumed, as a result of the Business Combination, the restricted stock rights granted by Activision, Inc. Vesting for restricted stock rights is contingent upon the holders' continued employment with us and may be subject to other conditions (which may include the satisfaction of a performance measure). If the vesting conditions are not met, unvested restricted stock rights will be forfeited. Holders of restricted stock are restricted from selling the shares until they vest. Upon vesting of restricted stock rights, we may withhold shares otherwise deliverable to satisfy tax withholding requirements. | |||||||||||||
The following table summarizes our restricted stock rights activity for the year ended December 31, 2013 (amounts in thousands except per share amounts): | |||||||||||||
Weighted- | |||||||||||||
Restricted Stock | Average Grant | ||||||||||||
Rights | Date Fair Value | ||||||||||||
Unvested restricted stock rights balance at December 31, 2012 | 25,605 | $ | 12.29 | ||||||||||
Granted | 5,520 | 16.31 | |||||||||||
Vested | -7,841 | 12.64 | |||||||||||
Forfeited | -719 | 11.92 | |||||||||||
Unvested restricted stock rights balance at December 31, 2013 | 22,565 | 12.63 | |||||||||||
At December 31, 2013, approximately $100 million of total unrecognized compensation cost was related to restricted stock rights and is expected to be recognized over a weighted-average period of 1.50 years. Of the total unrecognized compensation cost, $17 million was related to performance-vesting restricted stock rights, which is expected to be recognized over a weighted-average period of 1.34 years. The total grant date fair value of vested restricted stock rights was $57 million, $45 million and $37 million for the years ended December 31, 2013, 2012 and 2011, respectively. | |||||||||||||
The income tax benefit from stock option exercises and restricted stock rights was $77 million, $20 million, and $28 million for the years ended December 31, 2013, 2012, and 2011, respectively. | |||||||||||||
Stock-Based Compensation Expense | |||||||||||||
The following table sets forth the total stock-based compensation expense included in our consolidated statements of operations for the years ended December 31, 2013, 2012, and 2011 (amounts in millions): | |||||||||||||
For the Years Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Cost of sales - software royalties and amortization | $ | 17 | $ | 9 | $ | 10 | |||||||
Product development | 33 | 20 | 40 | ||||||||||
Sales and marketing | 7 | 8 | 6 | ||||||||||
General and administrative | 53 | 89 | 47 | ||||||||||
Stock-based compensation expense before income taxes | 110 | 126 | 103 | ||||||||||
Income tax benefit | -40 | -46 | -38 | ||||||||||
Total stock-based compensation expense, net of income tax benefit | $ | 70 | $ | 80 | $ | 65 | |||||||
The following table summarizes stock-based compensation included in our consolidated balance sheets as a component of “Software development” (amounts in millions): | |||||||||||||
Software | |||||||||||||
Development | |||||||||||||
Balance at December 31, 2010 | $ | 20 | |||||||||||
Stock-based compensation expense capitalized and deferred during period | 27 | ||||||||||||
Amortization of capitalized and deferred stock-based compensation expense | -37 | ||||||||||||
Balance at December 31, 2011 | $ | 10 | |||||||||||
Stock-based compensation expense capitalized and deferred during period | 27 | ||||||||||||
Amortization of capitalized and deferred stock-based compensation expense | -18 | ||||||||||||
Balance at December 31, 2012 | $ | 19 | |||||||||||
Stock-based compensation expense capitalized and deferred during period | 34 | ||||||||||||
Amortization of capitalized and deferred stock-based compensation expense | -31 | ||||||||||||
Balance at December 31, 2013 | $ | 22 |
Restructuring
Restructuring | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Restructuring | ' | ||||||||||||||
Restructuring | ' | ||||||||||||||
16. Restructuring | |||||||||||||||
On February 3, 2011, the Board of Directors of the Company authorized a restructuring plan (the “2011 Restructuring”) involving a focus on the development and publication of a reduced slate of titles on a going-forward basis. The 2011 Restructuring included the discontinuation of the development of music-based games, the closure of the related business unit and the cancellation of other titles then in production, along with a related reduction in studio headcount and corporate overhead. | |||||||||||||||
The following table details the amount of the 2011 Restructuring reserves included in “Accrued Expenses and Other Liabilities” in our consolidated balance sheets at December 31, 2013, 2012, and 2011 (amounts in millions): | |||||||||||||||
Contract | |||||||||||||||
Facilities | termination | ||||||||||||||
Severance | costs | costs | Total | ||||||||||||
Balance at January 1, 2011 | $ | --- | $ | --- | $ | --- | $ | --- | |||||||
Costs charged to expense | 20 | 4 | 1 | 25 | |||||||||||
Costs paid or otherwise settled | -16 | -1 | -1 | -18 | |||||||||||
Balance at December 31, 2011 | $ | 4 | $ | 3 | $ | --- | $ | 7 | |||||||
Costs paid or otherwise settled | -4 | --- | --- | -4 | |||||||||||
Balance at December 31, 2012 | $ | --- | $ | 3 | $ | --- | $ | 3 | |||||||
Costs paid or otherwise settled | --- | --- | --- | --- | |||||||||||
Balance at December 31, 2013 | $ | --- | $ | 3 | $ | --- | $ | 3 | |||||||
The 2011 Restructuring charges for the year ended December 31, 2011 was $25 million. These charges, as well as the 2011 Restructuring reserve balances at December 31, 2013 and 2012 were recorded within our Activision segment. We completed the 2011 Restructuring as of December 31, 2011 and we do not expect to incur significant additional restructuring expenses relating thereto. |
Interest_and_Other_Investment_
Interest and Other Investment Income (Expense), Net | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Interest and Other Investment Income (Expense), Net | ' | ||||||||||
Interest and other investment income (expense), net | ' | ||||||||||
17. Interest and Other Investment Income (Expense), Net | |||||||||||
Interest and other investment income (expense), net is comprised of the following (amounts in millions): | |||||||||||
For the Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Interest income | $ | 5 | $ | 6 | $ | 14 | |||||
Interest expense | --- | -1 | -4 | ||||||||
Interest expense from debt and amortization of debt discount | |||||||||||
and deferred financing costs | -58 | --- | --- | ||||||||
Net realized gain (loss) on foreign exchange contracts | --- | 2 | -7 | ||||||||
Interest and other investment income (expense), net | $ | -53 | $ | 7 | $ | 3 |
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Income Taxes | ' | |||||||||||||||||||
Income Taxes | ' | |||||||||||||||||||
18. Income Taxes | ||||||||||||||||||||
Domestic and foreign income (loss) before income taxes and details of the income tax expense (benefit) are as follows (amounts in millions): | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Income before income tax expense: | ||||||||||||||||||||
Domestic | $ | 626 | $ | 668 | $ | 623 | ||||||||||||||
Foreign | 693 | 790 | 708 | |||||||||||||||||
$ | 1,319 | $ | 1,458 | $ | 1,331 | |||||||||||||||
Income tax expense (benefit): | ||||||||||||||||||||
Current: | ||||||||||||||||||||
Federal | $ | 100 | $ | 256 | $ | 144 | ||||||||||||||
State | 6 | 14 | -2 | |||||||||||||||||
Foreign | 31 | 49 | 28 | |||||||||||||||||
Total current | 137 | 319 | 170 | |||||||||||||||||
Deferred: | ||||||||||||||||||||
Federal | 134 | 12 | 61 | |||||||||||||||||
State | -12 | -11 | -4 | |||||||||||||||||
Foreign | 39 | -11 | 19 | |||||||||||||||||
Total deferred | 161 | -10 | 76 | |||||||||||||||||
Add back tax benefit credited to additional paid-in capital: | ||||||||||||||||||||
Excess tax benefit associated with stock options | 11 | --- | --- | |||||||||||||||||
Income tax expense | $ | 309 | $ | 309 | $ | 246 | ||||||||||||||
The items accounting for the difference between income taxes computed at the U.S. federal statutory income tax rate and the income tax expense (benefit) (the effective tax rate) for each of the years are as follows (amounts in millions): | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Federal income tax provision at statutory rate | $ | 462 | 35 | % | $ | 510 | 35 | % | $ | 466 | 35 | % | ||||||||
State taxes, net of federal benefit | 6 | --- | 31 | 2 | 18 | 1 | ||||||||||||||
Research and development credits | -49 | -4 | -10 | -1 | -21 | -2 | ||||||||||||||
Domestic production activity deduction | -9 | -1 | -17 | -1 | -15 | -1 | ||||||||||||||
Foreign rate differential | -174 | -13 | -241 | -17 | -202 | -15 | ||||||||||||||
Change in tax reserves | 89 | 7 | 53 | 4 | 23 | 2 | ||||||||||||||
Shortfall from employee stock option exercises | --- | --- | 8 | --- | 9 | 1 | ||||||||||||||
Return to provision adjustment | -3 | --- | -4 | --- | -44 | -3 | ||||||||||||||
Net Operating Loss tax attribute received | ||||||||||||||||||||
from Internal Revenue Service audit | --- | --- | -46 | -3 | --- | --- | ||||||||||||||
Net Operating Loss tax attribute assumed | ||||||||||||||||||||
from Purchase Transaction | -16 | -1 | --- | --- | --- | --- | ||||||||||||||
Other | 3 | --- | 25 | 2 | 12 | 1 | ||||||||||||||
Income tax expense | $ | 309 | 23 | % | $ | 309 | 21 | % | $ | 246 | 19 | % | ||||||||
In connection with the Purchase Transaction, we assumed certain tax attributes of New VH, which generally consist of New VH's net operating loss (“NOL”) carryforwards of approximately $676 million, which represent a potential future tax benefit of approximately $237 million. The utilization of such NOL carryforwards will be subject to certain annual limitations and will begin to expire in 2021. The Company also obtained indemnification from Vivendi against losses attributable to the disallowance of claimed utilization of such NOL carryforwards of up to $200 million in unrealized tax benefits in the aggregate, limited to taxable years ending on or prior to December 31, 2016. No benefit for these tax attributes or indemnification was recorded upon the close of the Purchase Transaction as the benefit from these tax attributes did not meet the “more-likely-than-not” standard. As of December 31, 2013, we utilized $45 million of the NOL, which resulted in a benefit of $16 million, and a corresponding reserve was established as the position did not meet the “more-likely-than-not” standard. An indemnification asset of $16 million has been recorded in “Other Assets”, and correspondingly, the same amount has been recorded as a reduction to the consideration paid for the shares repurchased in “Treasury Stock” (see Note 1 of the Notes to Consolidated Financial Statements for details about the share repurchase). | ||||||||||||||||||||
As previously disclosed, on July 9, 2008, the Business Combination occurred amongst Vivendi, the Company and certain of their respective subsidiaries, pursuant to which Vivendi Games, then a member of the consolidated U.S. tax group of Vivendi's subsidiary, Vivendi Holdings I Corp. (“VHI”), became a subsidiary of the Company. As a result of the Business Combination, the favorable tax attributes of Vivendi Games carried forward to the Company. In late August 2012, VHI settled a federal income tax audit with the Internal Revenue Service (“IRS”) for the tax years ended December 31, 2002, 2003, and 2004. In connection with the settlement agreement, VHI's consolidated federal NOL carryovers were adjusted and allocated to various companies that were part of its consolidated group during the relevant periods. This allocation resulted in a $132 million federal NOL allocation to Vivendi Games. In September 2012, the Company filed an amended tax return for its December 31, 2008 tax year to utilize these additional federal net operating losses allocated as a result of the aforementioned settlement, resulting in the recording of a one-time tax benefit of $46 million. Prior to the settlement, and given the uncertainty of the VHI audit, the Company had insufficient information to allow it to record or disclose any information related to the audit until the quarter ended September 30, 2012, as disclosed in the Company's Form 10-Q for that period. | ||||||||||||||||||||
On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law by the President of the United States. Under the provisions of the American Taxpayer Relief Act of 2012, the research and development (“R&D”) tax credit that had expired December 31, 2011, was reinstated retroactively to January 1, 2012, and expired on December 31, 2013. The Company recorded the impact of the extension of the R&D tax credit related to the tax year ended December 31, 2012, as a discrete item the first quarter of 2013. The impact of the extension of the R&D tax credit resulted in a net tax benefit of approximately $12 million related to the tax year ended December 31, 2012. | ||||||||||||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the amounts of assets and liabilities for accounting purposes and the amounts used for income tax purposes. The components of the net deferred tax assets (liabilities) are as follows (amounts in millions): | ||||||||||||||||||||
As of December 31, | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Deferred tax assets: | ||||||||||||||||||||
Reserves and allowances | $ | 3 | $ | 11 | ||||||||||||||||
Allowance for sales returns and price protection | 63 | 56 | ||||||||||||||||||
Inventory reserve | 8 | 5 | ||||||||||||||||||
Accrued expenses | 48 | 65 | ||||||||||||||||||
Deferred revenue | 273 | 357 | ||||||||||||||||||
Tax credit carryforwards | 81 | 62 | ||||||||||||||||||
Net operating loss carryforwards | 11 | 14 | ||||||||||||||||||
Stock-based compensation | 91 | 119 | ||||||||||||||||||
Foreign deferred assets | 13 | 7 | ||||||||||||||||||
Transaction costs | 11 | --- | ||||||||||||||||||
Other | 9 | 2 | ||||||||||||||||||
Deferred tax assets | 611 | 698 | ||||||||||||||||||
Valuation allowance | --- | --- | ||||||||||||||||||
Deferred tax assets, net of valuation allowance | 611 | 698 | ||||||||||||||||||
Deferred tax liabilities: | ||||||||||||||||||||
Intangibles | -152 | -161 | ||||||||||||||||||
Prepaid royalties | -71 | --- | ||||||||||||||||||
Capitalized software development expenses | -60 | -54 | ||||||||||||||||||
State taxes | -27 | -21 | ||||||||||||||||||
Deferred tax liabilities | -310 | -236 | ||||||||||||||||||
Net deferred tax assets | $ | 301 | $ | 462 | ||||||||||||||||
As of December 31, 2013 we have various state NOL carryforwards totaling $16 million that will begin to expire in 2014. We have tax credit carryforwards of $6 million and $75 million for federal and state purposes, respectively, which begin to expire in fiscal 2016. Through our foreign operations, we have approximately $37 million in NOL carryforwards at December 31, 2013, attributed mainly to losses in France and Ireland, the majority of which can be carried forward indefinitely. | ||||||||||||||||||||
We evaluate our deferred tax assets, including net operating losses and tax credits, to determine if a valuation allowance is required. We assess whether a valuation allowance should be established or released based on the consideration of all available evidence using a “more-likely-than-not” standard. Realization of the U.S. deferred tax assets is dependent upon the continued generation of sufficient taxable income. In making such judgments, significant weight is given to evidence that can be objectively verified. Although realization is not assured, management believes it is more likely than not that the net carrying value of the U.S. deferred tax assets will be realized. At December 31, 2013 and 2012, there are no valuation allowances on deferred tax assets. | ||||||||||||||||||||
Cumulative undistributed earnings of foreign subsidiaries for which no deferred taxes have been provided approximated $2,593 million at December 31, 2013. Deferred income taxes on these earnings have not been provided as these amounts are considered to be permanent in duration. Determination of the unrecognized deferred tax liability on unremitted foreign earnings is not practicable because of the complexity of the hypothetical calculation. In the event of a distribution of these earnings to the U.S. in the form of a dividend, we may be subject to both foreign withholding taxes and U.S. income taxes net of allowable foreign tax credits. | ||||||||||||||||||||
Vivendi Games results for the period January 1, 2008 through July 9, 2008 are included in the consolidated federal and certain foreign, state and local income tax returns filed by Vivendi or its affiliates while Vivendi Games results for the period July 10, 2008 through December 31, 2008 are included in the consolidated federal and certain foreign, state and local income tax returns filed by Activision Blizzard. Vivendi Games tax years 2005 through 2010 remain open to examination by the major taxing authorities. The Internal Revenue Service is currently examining Vivendi Games tax returns for the 2005 through 2008 tax years. Although the final resolution of the examination is uncertain, based on current information, in the opinion of the Company's management, the ultimate resolution of these matters will not have a material adverse effect on the Company's consolidated financial position, liquidity or results of operations. | ||||||||||||||||||||
Activision Blizzard's tax years 2008 through 2012 remain open to examination by the major taxing jurisdictions to which we are subject. The Internal Revenue Service is currently examining the Company's federal tax returns for the 2008 and 2009 tax years. The Company also has several state and non-U.S. audits pending. Although the final resolution of the Company's global tax disputes is uncertain, based on current information, in the opinion of the Company's management, the ultimate resolution of these matters will not have a material adverse effect on the Company's consolidated financial position, liquidity or results of operations. However, an unfavorable resolution of the Company's global tax disputes could have a material adverse effect on our business and results of operations in the period in which the matters are ultimately resolved. | ||||||||||||||||||||
As of December 31, 2013, we had approximately $294 million in total unrecognized tax benefits, all of which would affect our effective tax rate if recognized. A reconciliation of unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011 is as follows (amounts in millions): | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Unrecognized tax benefits balance at January 1 | $ | 207 | $ | 154 | $ | 132 | ||||||||||||||
Gross increase for tax positions of prior years | 1 | 3 | 4 | |||||||||||||||||
Gross increase for tax positions of current year | 91 | 59 | 65 | |||||||||||||||||
Settlement with taxing authorities | --- | -8 | --- | |||||||||||||||||
Lapse of statute of limitations | -5 | -1 | -47 | |||||||||||||||||
Unrecognized tax benefits balance at December 31 | $ | 294 | $ | 207 | $ | 154 | ||||||||||||||
As of December 31, 2013 and 2012, we reflected $271 million and $197 million, respectively, of income tax liabilities as non-current liabilities because payment of cash or settlement is not anticipated within one year of the balance sheet date. These non-current income tax liabilities are recorded in “Other liabilities” in our consolidated balance sheets as of December 31, 2013 and 2012. | ||||||||||||||||||||
We recognize interest and penalties related to uncertain tax positions in “Income tax expense.” As of December 31, 2013 and 2012, we had approximately $13 million and $11 million, respectively, of accrued interest and penalties related to uncertain tax positions. For the year ended December 31, 2013, we recorded $2 million of interest expense related to uncertain tax positions. For the year ended December 31, 2012, we did not have any material interest expense and penalties related to uncertain tax positions. For the year ended December 31, 2011, we recorded $1 million of interest expense related to uncertain tax positions. | ||||||||||||||||||||
Based on the current status with the IRS, there is insufficient information to identify any significant changes in unrecognized tax benefits in the next twelve months. However, the Company may recognize a benefit of up to approximately $23 million related to the settlement of tax audits and/or the expiration of statutes of limitations in the next twelve months. | ||||||||||||||||||||
Although the final resolution of the Company's global tax disputes, audits, or any particular issue with the applicable taxing authority is uncertain, based on current information, in the opinion of the Company's management, the ultimate resolution of these matters will not have a material adverse effect on the Company's consolidated financial position, liquidity or results of operations. However, any settlement or resolution of the Company's global tax disputes, audits, or any particular issue with the applicable taxing authority could have a material favorable or unfavorable effect on our business and results of operations in the period in which the matters are ultimately resolved. |
Computation_of_Earnings_Loss_P
Computation of Earnings (Loss) Per Basic/Diluted Common Share | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Computation of Earnings (Loss) Per Basic/Diluted Common Share | ' | ||||||||||||
Computation of Earnings (Loss) Per Basic/Diluted Common Share | ' | ||||||||||||
19. Computation of Basic/Diluted Earnings Per Common Share | |||||||||||||
The following table sets forth the computation of basic and diluted earnings per common share (amounts in millions, except per share data): | |||||||||||||
For the Years Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Numerator: | |||||||||||||
Consolidated net income | $ | 1,010 | $ | 1,149 | $ | 1,085 | |||||||
Less: Distributed earnings to unvested stock-based awards | |||||||||||||
that participate in earnings | -5 | -4 | -3 | ||||||||||
Less: Undistributed earnings allocated to unvested stock-based | |||||||||||||
awards that participate in earnings | -18 | -20 | -13 | ||||||||||
Numerator for basic and diluted earnings per common share - income | |||||||||||||
available to common shareholders | 987 | 1,125 | 1,069 | ||||||||||
Denominator: | |||||||||||||
Denominator for basic earnings per common share - weighted-average | |||||||||||||
common shares outstanding | 1,024 | 1,112 | 1,148 | ||||||||||
Effect of potential dilutive common shares under the treasury stock | |||||||||||||
method: Employee stock options | 11 | 6 | 8 | ||||||||||
Denominator for diluted earnings per common share - weighted- | |||||||||||||
average common shares outstanding plus dilutive effect | |||||||||||||
of employee stock options | 1,035 | 1,118 | 1,156 | ||||||||||
Basic earnings per common share | $ | 0.96 | $ | 1.01 | $ | 0.93 | |||||||
Diluted earnings per common share | $ | 0.95 | $ | 1.01 | $ | 0.92 | |||||||
Our unvested restricted stock rights (including restricted stock units, restricted stock awards, and performance shares) met the definition of participating securities based on their respective rights to dividends or dividend equivalents. Therefore, we are required to use the two-class method in our computation of basic and diluted earnings per common share. For the years ended December 31, 2013 and 2012, we had outstanding unvested restricted stock rights with respect to 24 million shares of common stock on a weighted-average basis. | |||||||||||||
Potential common shares are not included in the denominator of the diluted earnings per common share calculation when the inclusion of such shares would be anti-dilutive. Therefore, options to acquire 5 million, 25 million, and 25 million shares of common stock were not included in the calculation of diluted earnings per common share for the years ended December 31, 2013, 2012, and 2011, respectively, as the effect of their inclusion would be anti-dilutive. |
Capital_Transactions
Capital Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Capital Transactions | ' |
Capital Transactions | ' |
20. Capital Transactions | |
Stock Purchase Agreement | |
As described in Note 1 of the Notes to Consolidated Financial Statements, on October 11, 2013, we completed the Purchase Transaction, repurchasing approximately 429 million shares of our common stock for a cash payment of $5.83 billion, pursuant to the terms of the Stock Purchase Agreement (refer to Note 12 of the Notes to Consolidated Financial Statements for financing details of the Purchase Transaction). The repurchased shares were recorded in “Treasury Stock” in our consolidated balance sheet. | |
Repurchase Program | |
On February 2, 2012, our Board of Directors authorized a stock repurchase program under which we were authorized to repurchase up to $1 billion of our common stock. During the year ended December 31, 2013, there were no repurchases pursuant to this stock repurchase program. During the year ended December 31, 2012, we repurchased 4 million shares of our common stock for $54 million pursuant to this stock repurchase program. The 2012 stock repurchase program expired on March 31, 2013. | |
On February 3, 2011, our Board of Directors authorized a stock repurchase program under which we were authorized to repurchase up to $1.5 billion of our common stock. During the year ended December 31, 2012, we repurchased 22 million shares of our common stock for $261 million pursuant to this stock repurchase plan. During the year ended December 31, 2011, we repurchased 59 million shares of our common stock for $670 million pursuant to this stock repurchase program. The 2011 stock repurchase program expired on March 31, 2012. | |
On February 10, 2010, our Board of Directors authorized a stock repurchase program under which we were authorized to repurchase up to $1 billion of our common stock. In January 2011, we settled a $22 million purchase of 2 million shares of our common stock that we had agreed to repurchase in December 2010 pursuant to this stock repurchase program. The 2010 stock repurchase program expired on December 31, 2010. | |
Dividend | |
On February 6, 2014, our Board of Directors declared a cash dividend of $0.20 per common share, payable on May 14, 2014, to shareholders of record at the close of business on March 19, 2014. | |
On February 7, 2013, our Board of Directors declared a cash dividend of $0.19 per common share, payable on May 15, 2013, to shareholders of record at the close of business on March 20, 2013. On May 15, 2013, we made an aggregate cash dividend payment of $212 million to such shareholders, and on May 31, 2013, we made related dividend equivalent payments of $4 million to the holders of restricted stock rights. | |
On February 9, 2012, our Board of Directors declared a cash dividend of $0.18 per common share, payable on May 16, 2012, to shareholders of record at the close of business on March 21, 2012. On May 16, 2012, we made an aggregate cash dividend payment of $201 million to such shareholders, and on June 1, 2012, we made related dividend equivalent payments of $3 million to the holders of restricted stock units. | |
On February 9, 2011, our Board of Directors declared a cash dividend of $0.165 per common share, payable on May 11, 2011, to shareholders of record at the close of business on March 16, 2011. On May 11, 2011, we made an aggregate cash dividend payment of $192 million to such shareholders, and on August 12, 2011, we made related dividend equivalent payments of $2 million to the holders of restricted stock units. |
Supplemental_Cash_Flow_Informa
Supplemental Cash Flow Information | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Supplemental Cash Flow Information | ' | ||||||||||
Supplemental Cash Flow Information | ' | ||||||||||
21. Supplemental Cash Flow Information | |||||||||||
Supplemental cash flow information is as follows (amounts in millions): | |||||||||||
For the Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Supplemental cash flow information: | |||||||||||
Cash paid for income taxes | $ | 138 | $ | 159 | $ | 317 | |||||
Cash paid for interest | 19 | 2 | 4 |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Commitments and Contingencies | ' | ||||||||||||||
Commitments and Contingencies | ' | ||||||||||||||
22. Commitments and Contingencies | |||||||||||||||
Letters of Credit | |||||||||||||||
As described in Note 12 of the Notes to Consolidated Financial Statements, a portion of our Revolver can be used to issue letters of credit of up to $50 million, subject to the availability of the Revolver. At December 31, 2013, we did not issue any letter of credit under the Revolver. | |||||||||||||||
We maintain two irrevocable standby letters of credit, which are required by one of our inventory manufacturers so that we can qualify for certain payment terms on our inventory purchases. Our standby letters of credit were for $10 million and 15 million Euros ($21 million) at December 31, 2013, and $15 million and 5 million Euros ($7 million) at December 31, 2012. For the standby letter of credit denominated in U.S. dollars, under the terms of the arrangements, we are required to maintain a compensating balance on deposit with a bank, restricted as to use, of not less than the sum of the available amount of the letter of credit plus the aggregate amount of any drawings under the letter of credit that have been honored thereunder, but not reimbursed. Both letters of credit were undrawn at December 31, 2013 and 2012. | |||||||||||||||
Commitments | |||||||||||||||
In the normal course of business, we enter into contractual arrangements with third parties for non-cancelable operating lease agreements for our offices, for the development of products and for the rights to intellectual property. Under these agreements, we commit to provide specified payments to a lessor, developer or intellectual property holder, as the case may be, based upon contractual arrangements. The payments to third-party developers are generally conditioned upon the achievement by the developers of contractually specified development milestones. Further, these payments to third-party developers and intellectual property holders typically are deemed to be advances and, as such, are recoupable against future royalties earned by the developer or intellectual property holder based on sales of the related game. Additionally, in connection with certain intellectual property rights, acquisitions and development agreements, we commit to spend specified amounts for marketing support for the game(s) which is (are) to be developed or in which the intellectual property will be utilized. Assuming all contractual provisions are met, the total future minimum commitments for these and other contractual arrangements in place at December 31, 2013 are scheduled to be paid as follows (amounts in millions): | |||||||||||||||
Contractual Obligations (1) | |||||||||||||||
Facility and | Developer and | ||||||||||||||
Equipment | Intellectual | ||||||||||||||
Leases | Properties | Marketing | Total | ||||||||||||
For the years ending December 31, | |||||||||||||||
2014 | $ | 34 | $ | 145 | $ | 74 | $ | 253 | |||||||
2015 | 31 | 16 | 8 | 55 | |||||||||||
2016 | 27 | 2 | 1 | 30 | |||||||||||
2017 | 26 | 2 | 1 | 29 | |||||||||||
2018 | 25 | --- | --- | 25 | |||||||||||
Thereafter | 46 | 2 | --- | 48 | |||||||||||
Total | $ | 189 | $ | 167 | $ | 84 | $ | 440 | |||||||
(1) We have omitted uncertain tax liabilities from this table due to the inherent uncertainty regarding the timing of potential issue resolution. Specifically, either (a) the underlying positions have not been fully developed under audit to quantify at this time or, (b) the years relating to the issues for certain jurisdictions are not currently under audit. At December 31, 2013, we had $294 million of unrecognized tax benefits, of which $271 million was included in “Other Liabilities” and $23 million was included in “Accrued Expenses and Other Liabilities” in our consolidated balance sheet. | |||||||||||||||
Legal Proceedings | |||||||||||||||
We are subject to various legal proceedings and claims. SEC regulations govern disclosure of legal proceedings in periodic report and FASB ASC Topic 450 governs the disclosure of loss contingencies and accrual of loss contingencies in respect of litigation and other claims. We record an accrual for a potential loss when it is probable that a loss will occur and the amount of the loss can be reasonably estimated. When the reasonable estimate of the potential loss is within a range of amounts, the minimum of the range of potential loss is accrued, unless a higher amount within the range is a better estimate than any other amount within the range. Moreover, even if an accrual is not required, we provide additional disclosure related to litigation and other claims when it is reasonably possible (i.e., more than remote) that the outcomes of such litigation and other claims include potential material adverse impacts on us. | |||||||||||||||
The outcomes of legal proceedings and other claims are subject to significant uncertainties, many of which are outside our control. There is significant judgment required in the analysis of these matters, including the probability determination and whether a potential exposure can be reasonably estimated. In making these determinations, we, in consultation with outside counsel, examine the relevant facts and circumstances on a quarterly basis assuming, as applicable, a combination of settlement and litigated outcomes and strategies. Moreover, legal matters are inherently unpredictable and the timing of development of factors on which reasonable judgments and estimates can be based can be slow. As such, there can be no assurance that the final outcome of any legal matter will not materially and adversely affect our business, financial condition, results of operations, profitability, cash flows or liquidity. | |||||||||||||||
Purchase Transaction Matters | |||||||||||||||
On August 1, 2013, a purported shareholder of the Company filed a shareholder derivative action in the Superior Court of the State of California, County of Los Angeles, captioned Miller v. Kotick, et al., No. BC517086. The complaint names our Board of Directors and Vivendi as defendants, and the Company as a nominal defendant. The complaint alleges that our Board of Directors committed breaches of fiduciary duties, waste of corporate assets and unjust enrichment in connection with Vivendi's sale of its stake in the Company and that Vivendi also breached its fiduciary duties. The plaintiff further alleges that demand by it on our Board of Directors to institute action would be futile because a majority of our Board of Directors is not independent and a majority of the individual defendants face a substantial likelihood of liability for approving the transactions contemplated by the Stock Purchase Agreement. The complaint seeks, among other things, damages sustained by the Company, rescission of the transactions contemplated by the Purchase Agreement, an order restricting our Chief Executive Officer, and our Chairman, from purchasing additional shares of our common stock and an order directing us to take necessary actions to improve and reform our corporate governance and internal procedures to comply with applicable law, including ordering a shareholder vote on certain amendments to our by-laws or charter that would require half of our Board of Directors to be independent of Messrs. Kotick and Kelly and Vivendi and a proposal to appoint a new independent Chairman of the Board of Directors. On January 28, 2014, the parties filed a stipulation and proposed order temporarily staying the California action. On February 6, 2014, the court entered the order granting a stay of the California action. | |||||||||||||||
In addition, on August 14, 2013, we received a letter dated August 9, 2013 from a shareholder seeking, pursuant to Section 220 of the Delaware General Corporation Law, to inspect the books and records of the Company to ascertain whether the Purchase Transaction and Private Sale were in the best interests of the Company. In response to that request, we provided the stockholder with certain materials under a confidentiality agreement. On September 11, 2013, a complaint was filed under seal by the same stockholder in the Court of Chancery of the State of Delaware in an action captioned Pacchia v. Kotick et al., C.A. No. 8884-VCL. A public version of that complaint was filed on September 16, 2013. The allegations in the complaint were substantially similar to the allegations in the above referenced matter filed on August 1, 2013. On October 25, 2013, Pacchia filed an amended complaint under seal. The amended complaint added claims on behalf of an alleged class of Activision stockholders other than the Company's Chief Executive Officer and Chairman, Vivendi, ASAC, investors in ASAC and other stockholders affiliated with the investors of ASAC. The added class claims are against the Company's Chief Executive Officer and Chairman, the Vivendi affiliated directors, the members of the special committee of the Board formed in connection with the Company's consideration of the transactions with Vivendi and ASAC, and Vivendi for breach of fiduciary duty, as well as aiding and abetting a breach of fiduciary duty against ASAC. The amended complaint removed the derivative claims for waste of corporate assets and disgorgement but continued to allege derivative claims for breach of fiduciary duties. The amended complaint seeks, among other things, certification of a class, damages, reformation of the Private Sale, and disgorgement of any alleged profits received by the Company's Chief Executive Officer, Chairman and ASAC. On October 29, 2013, Pacchia filed a motion to consolidate the Pacchia case with the Hayes case described below. On November 2, 2013, the Court of Chancery consolidated the Pacchia and Hayes cases and ordered the plaintiffs to file supplemental papers related to determining lead plaintiff and lead counsel no later than November 8, 2013. On December 3, 2013, the court selected Pacchia as lead plaintiff. Pacchia filed a second amended complaint on December 11, 2013 and Activision filed an answer on January 31, 2014. Also on January 31, 2014, the special committee, ASAC, Messrs. Kotick and Kelly, Vivendi and the Vivendi-affiliated directors each filed motions to dismiss certain claims in the second amended complaint. On February 21, 2014, Pacchia filed a third amended complaint under seal. Responses to the complaint are due on March 4, 2014. The trial is scheduled for December 2014. | |||||||||||||||
On September 11, 2013, another stockholder of the Company filed a putative class action and stockholder derivative action in the Court of Chancery of the State of Delaware, captioned Hayes v. Activision Blizzard, Inc., et al., No. 8885-VCL. The complaint names our Board of Directors, Vivendi, New VH, ASAC, the General Partner of ASAC, Davis Selected Advisers, L.P. (“Davis”) and Fidelity Management & Research Co. (“FMR”) as defendants, and the Company as a nominal defendant. The complaint alleges that the defendants violated certain provisions of our Amended and Restated Certificate of Incorporation by failing to submit the matters contemplated by the Stock Purchase Agreement for approval by a majority of our stockholders (other than Vivendi and its controlled affiliates); that our Board of Directors committed breaches of their fiduciary duties in approving the Stock Purchase Agreement; that Vivendi violated fiduciary duties owed to other stockholders of the Company in entering into the Stock Purchase Agreement; that our Chief Executive Officer and our Chairman usurped a corporate opportunity from the Company; that our Board of Directors and Vivendi have engaged in actions to entrench our Board of Directors and officers in their offices; that the ASAC Entities, Davis and FMR aided and abetted breaches of fiduciary duties by the Board of Directors and Vivendi; and that our Chief Executive Officer and our Chairman, the ASAC Entities, Davis and FMR will be unjustly enriched through the Private Sale. The complaint seeks, among other things, the rescission of the Private Sale; an order requiring the transfer to the Company of all or part of the shares that are the subject of the Private Sale; an order implementing measures to eliminate or mitigate the alleged entrenching effects of the Private Sale; an order requiring our Chief Executive Officer and our Chairman, the ASAC Entities, Davis and FMR to disgorge to the Company the amounts by which they have allegedly been unjustly enriched; and alleged damages sustained by the class and the Company. In addition, the stockholder sought a temporary restraining order preventing the defendants from consummating the transactions contemplated by the Stock Purchase Agreement without stockholder approval. Following a hearing on the motion for a temporary restraining order, on September 18, 2013, the Court of Chancery issued a preliminary injunction order, enjoining the consummation of the transactions contemplated by the Stock Purchase Agreement pending (a) the issuance of a final decision after a trial on the merits; (b) receipt of a favorable Activision Blizzard stockholder vote on the transactions contemplated by the Stock Purchase Agreement under Section 9.1(b) of our Amended and Restated Certificate of Incorporation or (c) modification of such preliminary injunction order by the Court of Chancery or the Delaware Supreme Court. On September 20, 2013, the Court of Chancery certified its order issuing the preliminary injunction for interlocutory appeal to the Delaware Supreme Court. The defendants moved the Delaware Supreme Court to accept and hear the appeal on an expedited basis. On September 23, 2013, the Delaware Supreme Court accepted the appeal of the Court of Chancery's decision and granted the defendant's motion to hear the appeal on an expedited basis. Following a hearing on October 10, 2013, the Delaware Supreme Court reversed the Court of Chancery's order issuing a preliminary injunction, and determined that the Stock Purchase Agreement was not a merger, business combination or similar transaction that would require a vote of Activision's unaffiliated stockholders under the charter. | |||||||||||||||
On October 29, 2013, an amended complaint was filed. It added factual allegations but no new claims or relief. Also on October 29, 2013, Hayes filed a motion to consolidate the Hayes case with the Pacchia case. As noted above, on November 2, 2013, the Court of Chancery consolidated the Pacchia and Hayes cases and ordered the plaintiffs to file supplemental papers related to determining lead plaintiff and lead counsel no later than November 8, 2013. See the discussion above related to the Pacchia matter (now the consolidated matter) for any further updates to the status of the litigation. | |||||||||||||||
Further, on September 18, 2013, the Company received a letter from another purported stockholder of the Company, Milton Pfeiffer, seeking, pursuant to Section 220 of the Delaware General Corporation Law, to inspect the books and records of the Company to investigate potential wrongdoing or mismanagement in connection with the approval of the Stock Purchase Agreement. On November 11, 2013, Pfeiffer filed a lawsuit in the Court of Chancery of the State of Delaware pursuant to Delaware Section 220 containing claims similar to Hayes, Pacchia and Miller. The Company answered on November 27, 2013. On January 21, 2014, the Court of Chancery entered the parties' stipulation and order of dismissal. | |||||||||||||||
On December 17, 2013, the Company received a letter from Mark Benston requesting certain books and records of the Company pursuant to Section 220 of the Delaware General Corporation Law. Benston is represented by the same law firm as Pfeiffer. On January 2, 2014, Benston filed a lawsuit in the Court of Chancery of the State of Delaware pursuant to Delaware Section 220 containing claims similar to Hayes, Pacchia, Pfeiffer and Miller. The Company answered on January 17, 2014. On February 14, 2014, the Court of Chancery entered the parties' stipulation and order of dismissal. | |||||||||||||||
We believe that the defendants have meritorious defenses and intend to defend each of these lawsuits vigorously. However, these lawsuits and any other lawsuits are subject to inherent uncertainties and the actual outcome and costs will depend upon many unknown factors. The outcome of litigation is necessarily uncertain, and the Company could be forced to expend significant resources in the defense of these lawsuits and may not prevail. | |||||||||||||||
The Company also may be subject to additional claims in connection with the Purchase Transaction and Private Sale. Monitoring and defending against legal actions is time consuming for our management and detracts from our ability to fully focus our internal resources on our business activities. In addition, the Company may incur substantial legal fees and costs in connection with litigation and, although coverage may be available under relevant insurance policies, coverage could be denied or prove to be insufficient. Under our Amended and Restated Certificate of Incorporation and the indemnification agreements that the Company has entered into with our officers and directors, the Company may be required in certain circumstances to indemnify and advance expenses to them in connection with their participation in proceedings arising out of their service to us. There can be no assurance that any of these payments will not be material. | |||||||||||||||
The Company is not currently able to estimate the range of possible losses or costs to us from these lawsuits and related indemnification obligations, as they are in the early stages and it cannot be determined how long it may take to resolve these matters. Moreover, the Company cannot be certain what the impact on our operations or financial position will be if any of the purported stockholder plaintiffs are successful in having the Stockholders Agreement dated October 11, 2013 among the Company, ASAC and, for limited purposes, Messrs. Kotick and Kelly (the “Stockholders Agreement”) reformed. A decision adverse to the Company on these actions could result in the reformation of the Stockholders Agreement and could have a material adverse effect on our business, reputation, financial condition, results of operations, profitability, cash flows or liquidity. | |||||||||||||||
Other Matters | |||||||||||||||
In addition, we are party to routine claims, suits, investigations, audits and other proceedings arising from the ordinary course of business, including with respect to intellectual property rights, contractual claims, labor and employment matters, regulatory matters, tax matters, unclaimed property matters, compliance matters, and collection matters. In the opinion of management, after consultation with legal counsel, such routine claims and lawsuits are not significant and we do not expect them to have a material adverse effect on our business, financial condition, results of operations, or liquidity. |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions | ' |
Related Party Transactions | ' |
23. Related Party Transactions | |
As part of the Business Combination, we entered into various transactions and agreements, including cash management services agreements, a tax sharing agreement and an investor agreement, with Vivendi and its subsidiaries. In connection with the consummation of the Purchase Transaction, we terminated the cash management arrangements with Vivendi and amended our investor agreement with Vivendi. We are also party to music royalty and music distribution agreements with subsidiaries and other affiliates of Vivendi, none of which were impacted by the Purchase Transaction. None of these services, transactions and agreements with Vivendi and its affiliates were material, either individually or in the aggregate, to the consolidated financial statements as a whole. | |
Pursuant to the Stock Purchase Agreement, the Company and each of Mr. Kotick, the Company's Chief Executive Officer, and Mr. Kelly, the Company's Chairman of the board of directors, entered into, concurrently with the signing of the Stock Purchase Agreement, certain waiver and acknowledgement letters (the “Waivers”), which provide, among other things, (i) that the Purchase Transaction, Private Sale, any public offerings by Vivendi and restructurings by Vivendi and its subsidiaries contemplated by the Stock Purchase Agreement and other transaction documents, shall not (or shall be deemed not to) constitute a “change in control” (or similar term) under their respective employment arrangements, including their employment agreements with the Company, the Company's 2008 Incentive Plan or any award agreements in respect of awards granted thereunder, or any Other Benefit Plans and Arrangements (as defined in the Waivers), (ii) (A) that the shares of Activision Blizzard common stock acquired by ASAC and held or controlled by the ASAC Investors (as defined in the Waivers) in connection with the Transactions (as defined in the Waivers) will not be included in or count toward, (B) that the ASAC Investors will not be deemed to be a group for purposes of, and (C) any changes in the composition in the board of directors of the Company, in connection with or during the one-year period following the consummation of the Transactions will not contribute towards, a determination that a “change in control” or similar term has occurred with respect to Messrs. Kotick and Kelly's employment arrangements with the Company, and (iii) for the waiver by Messrs. Kotick and Kelly of their rights to change in control payments or benefits under their employment agreements with the Company, the Company's 2008 Incentive Plan or any award agreements in respect of awards granted thereunder, and any Other Benefit Plans and Arrangements (in each case, with respect to all current and future grants, awards, benefits or entitlements) in connection with or as a consequence of the Transactions. |
Recently_Issued_Accounting_Sta
Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 2013 | |
Recently Issued Accounting Standards | ' |
Recently Issued Accounting Standards | ' |
24. Recently issued accounting pronouncements | |
Indefinite-lived intangible assets impairment | |
In July 2012, the FASB issued an update to the authoritative guidance related to testing indefinite-lived intangible assets for impairment. This update gives an entity the option to first consider certain qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test. This update is effective for the indefinite-lived intangible asset impairment test performed for fiscal years beginning after September 15, 2012. The adoption of this guidance did not have a material impact on our consolidated financial statements. | |
Balance sheet offsetting disclosures | |
In December 2011, the FASB issued authoritative guidance on the disclosure of financial instruments and derivative instruments that are either offset or subject to an enforceable master netting arrangement or similar agreement and should be applied retrospectively for all comparative periods presented for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The adoption of this guidance did not have a material impact on our consolidated financial statements. | |
Reclassification of accumulated other comprehensive loss | |
In February 2013, the FASB issued an accounting standards update requiring new disclosures about reclassifications from accumulated other comprehensive loss to net income. These disclosures may be presented on the face of the statements or in the notes to the consolidated financial statements. This update is effective for fiscal years beginning after December 15, 2012. We adopted this guidance and provided the required disclosures in Note 13 of the Notes to Consolidated Financial Statements. | |
Accounting for cumulative translation adjustments | |
In February 2013, the FASB issued an update to the authoritative guidance related to the release of cumulative translation adjustments into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a foreign entity. This update will be effective for fiscal years beginning after December 15, 2013. Upon adoption of this guidance on January 1, 2014, there was no material impact on our consolidated financial statements. | |
Presentation of unrecognized tax benefits | |
In July 2013, the FASB issued an update to the authoritative guidance related to the presentation of an unrecognized tax benefit in the financial statements. The update will require entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss or other tax credit carryforwards when settlement in this manner is available under the tax laws. This update is effective for fiscal years beginning after December 15, 2013. Upon adoption of this guidance on January 1, 2014, “Deferred income taxes, net” under non-current liabilities increased by approximately $46 million, and correspondingly, “Other liabilities” under non-current liabilities decreased by the same amount. |
Quarterly_Financial_and_Market
Quarterly Financial and Market Information (Unaudited) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Quarterly Financial and Market Information | ' | ||||||||||||
Quarterly Financial and Market Information | ' | ||||||||||||
25. Quarterly Financial and Market Information (Unaudited) | |||||||||||||
For the Quarters Ended | |||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||
2013 | 2013 | 2013 | 2013 | ||||||||||
(Amounts in millions, except per share data) | |||||||||||||
Net revenues | $ | 1,518 | $ | 691 | $ | 1,050 | $ | 1,324 | |||||
Cost of sales | 655 | 175 | 285 | 416 | |||||||||
Operating income | 284 | 70 | 430 | 587 | |||||||||
Net income | 174 | 56 | 324 | 456 | |||||||||
Basic earnings per share | 0.23 | 0.05 | 0.28 | 0.4 | |||||||||
Diluted earnings per share | 0.22 | 0.05 | 0.28 | 0.4 | |||||||||
For the Quarters Ended | |||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||
2012 | 2012 | 2012 | 2012 | ||||||||||
(Amounts in millions, except per share data) | |||||||||||||
Net revenues | $ | 1,768 | $ | 841 | $ | 1,075 | $ | 1,172 | |||||
Cost of sales | 682 | 237 | 377 | 364 | |||||||||
Operating income | 484 | 227 | 227 | 513 | |||||||||
Net income | 354 | 226 | 185 | 384 | |||||||||
Basic earnings per share | 0.31 | 0.2 | 0.16 | 0.34 | |||||||||
Diluted earnings per share | 0.31 | 0.2 | 0.16 | 0.33 |
Subsequent_events
Subsequent events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent events | ' |
Subsequent events | ' |
26. Subsequent Events | |
On January 29, 2014, the Board of Directors authorized a $375 million repayment of our Term Loan. Accordingly, we made this repayment on February 11, 2014. Refer to Note 12 of the Notes to Consolidated Financial Statements. | |
On February 6, 2014, our Board of Directors declared a cash dividend of $0.20 per common share payable on May 14, 2014 to shareholders of record at the close of business on March 19, 2014. |
SCHEDULE_II_VALUATION_AND_QUAL
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ' | |||||||||||||
Schedule II Valuation and Qualifying Accounts | ' | |||||||||||||
SCHEDULE II | ||||||||||||||
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES | ||||||||||||||
VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||
(Amounts in millions) | ||||||||||||||
Col. B | ||||||||||||||
Balance at | Col. E | |||||||||||||
Beginning of | Col. C | Col. D | Balance at | |||||||||||
Col. A Description | Period | Additions(A) | Deductions(B) | End of Period | ||||||||||
At December 31, 2013 | ||||||||||||||
Allowances for sales returns and price protection and other allowances | $ | 323 | $ | 174 | $ | -121 | $ | 376 | ||||||
Allowance for doubtful accounts | 9 | 1 | -5 | 5 | ||||||||||
At December 31, 2012 | ||||||||||||||
Allowances for sales returns and price protection and other allowances | $ | 292 | $ | 170 | $ | -139 | $ | 323 | ||||||
Allowance for doubtful accounts | 8 | 1 | --- | 9 | ||||||||||
At December 31, 2011 | ||||||||||||||
Allowances for sales returns and price protection and other allowances | $ | 373 | $ | 166 | $ | -247 | $ | 292 | ||||||
Allowance for doubtful accounts | 4 | 4 | --- | 8 | ||||||||||
(A) Includes increases and reversals of allowances for sales returns, price protection, and doubtful accounts due to normal reserving terms. | ||||||||||||||
(B) Includes actual write-offs and utilization of allowances for sales returns, price protection and uncollectible accounts receivable, net of recoveries, and foreign currency translation and other adjustments. |
Summary_of_significant_account1
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Summary of significant accounting policies | ' |
Basis of Consolidation and Presentation | ' |
Basis of Consolidation and Presentation | |
The accompanying consolidated financial statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates and assumptions. | |
Certain reclassifications have been made to prior year amounts to conform to the current period presentation. | |
The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. | |
Results of Adjustment | ' |
Results of Adjustment | |
During the year ended December 31, 2013, we identified through our internal processes that, in previous years, we erroneously under-accrued for certain indirect taxes for two countries in our Europe region. We performed an evaluation under SEC Staff Accounting Bulletin No. 108 and concluded the effect of this error was immaterial to prior years' financial statements as well as the full-year 2013 financial statements. As such, during the year ended December 31, 2013, we recorded an adjustment in our consolidated statements of operations which reduced “Total net revenues” by $8 million, “Interest and other investment income (expense), net” by $1 million, “Income before income tax expense” by $9 million, and “Net income” by $7 million. This adjustment reduced net revenues and income from operations before income tax expense by $8 million and $9 million, respectively, in each of our Blizzard segment, Europe region, and online subscriptions platform, as presented in Note 14 of the Notes to Consolidated Financial Statements. The adjustment increased “Accrued expenses and other liabilities” on our consolidated balance sheet by $9 million and represents a correction of an error. Operating cash flows were impacted by $9 million in 2013 when we settled the liability. The adjustment related to prior periods' net income as follows: (i) approximately $1 million for the quarter ended March 31, 2013; (ii) approximately $1 million for each quarter of 2012 (totaling approximately $4 million for the year ended December 31, 2012); (iii) approximately $2 million for the year ended December 31, 2011; and (iv) less than $1 million for the year ended December 31, 2010. Earnings per basic and diluted share were affected by less than $0.01 as a result of recording this adjustment. | |
During the year ended December 31, 2012, we identified through our internal processes that, in previous years, we erroneously over-recognized revenues for a country in our Europe region. We performed an evaluation under SEC Staff Accounting Bulletin No. 108 and concluded the effect of this error was immaterial to prior years' financial statements as well as the full-year 2012 financial statements. As such, during the year ended December 31, 2012, we recorded an adjustment in our consolidated statements of operations which reduced “Total net revenues” by $11 million and “Net income” by $8 million. This adjustment reduced net revenues and income from operations before income tax expense by $11 million in each of our Blizzard segment, Europe region, and online subscriptions platform, as presented in Note 14 of the Notes to Consolidated Financial Statements. The adjustment increased “Deferred revenues” on our consolidated balance sheet by $11 million and represents a correction of an error. There was no impact to operating cash flows. The adjustment related to prior periods' net income as follows: (i) approximately $1 million for the quarter ended March 31, 2012; (ii) less than $1 million for each quarter of 2011 (totaling approximately $3 million for the year ended December 31, 2011); (iii) approximately $2 million for the year ended December 31, 2010; and (iv) approximately $3 million for periods prior to the year ended December 31, 2010. Earnings per basic and diluted share were affected by less than $0.01 as a result of recording this adjustment. | |
Cash and cash equivalents | ' |
Cash and Cash Equivalents | |
We consider all money market funds and highly liquid investments with original maturities of three months or less at the time of purchase to be “Cash and cash equivalents.” | |
Investment securities | ' |
Investment Securities | |
Investments designated as available-for-sale securities are carried at fair value, which is based on quoted market prices for such securities, if available, or is estimated on the basis of quoted market prices of financial instruments with similar characteristics. Unrealized gains and losses of the Company's available-for-sale securities are excluded from earnings and are reported as a component of “Other comprehensive income (loss).” | |
Investments with original maturities greater than 90 days and remaining maturities of less than one year are normally classified within “Short-term investments.” In addition, investments with maturities beyond one year may be classified within “Short-term investments” if they are highly liquid in nature and represent the investment of cash that is available for current operations. | |
The specific identification method is used to determine the cost of securities disposed of, with realized gains and losses reflected in “Interest and other investment income (expense), net” in our consolidated statements of operations. | |
The Company's investments include auction rate securities (“ARS”). These ARS are variable rate bonds tied to short-term interest rates with long-term maturities. ARS have interest rates which reset through a modified Dutch auction at predetermined short-term intervals, typically every 7, 28, or 35 days. Interest on ARS is generally paid at the end of each auction process and is based upon the interest rate determined for the prior auction. Our investments in ARS are not material to our consolidated financial statements. | |
Restricted cash - compensating balances | ' |
Restricted Cash—Compensating Balances | |
Restricted cash is included within “Short-term investments” on the consolidated balance sheets. The majority of our restricted cash relates to a standby letter of credit required by one of our inventory manufacturers so that we can qualify for certain payment terms on our inventory purchases. Under the terms of this arrangement, we are required to maintain with the issuing bank a compensating balance, restricted as to use, of not less than the sum of the available amount of the letter of credit plus the aggregate amount of any drawings under the letter of credit that have been honored thereunder, but have not yet been reimbursed. | |
Financial instruments | ' |
Financial Instruments | |
The carrying amount of “Cash and cash equivalents,” “Accounts receivable,” “Accounts payable,” and “Accrued expenses” substantively approximate fair value due to the short-term nature of these accounts. Our investments in U.S. treasuries, government agency securities, and corporate bonds are carried at fair value, which is based on quoted market prices for such securities, if available, or is estimated on the basis of quoted market prices of financial instruments with similar characteristics. ARS are carried at fair value, which is estimated using an income-approach model. | |
The Company transacts business in various foreign currencies and has significant international sales and expenses denominated in foreign currencies, subjecting us to foreign currency risk. To mitigate our foreign currency exchange rate exposure resulting from our foreign currency-denominated monetary assets, liabilities, and earnings, we periodically enter into currency derivative contracts, principally forward contracts with maturities of generally less than one year. We do not use derivatives for speculative or trading purposes and we do not designate these derivatives as hedging instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815. Accordingly, we report the fair value of these contracts within “Other current assets” or “Other current liabilities” in our consolidated balance sheets and the changes in fair value within “General and administrative expenses” and “Interest and other investment income (expense), net” in our consolidated statements of operations, depending on the nature of the contracts. The fair value of foreign currency contracts are estimated based on the prevailing exchange rates of the various hedged currencies as of the end of the period. | |
Other-Than-Temporary Impairments | ' |
Other-Than-Temporary Impairments | |
The Company regularly reviews its investments to determine whether a decline in fair value below the cost basis is an other-than-temporary impairment. If the decline is determined to be other-than-temporary, the cost basis of the investment is written down to fair value. For available-for-sale fixed maturity instruments where credit-related impairments exist, other-than-temporary impairments are reported in the consolidated statements of operations and non-credit impairments are reported as a component of “Other comprehensive income (loss).” | |
Concentration of Credit Risk | ' |
Concentration of Credit Risk | |
Our concentration of credit risk relates to depositors holding the Company's cash and cash equivalents and customers with significant accounts receivable balances. | |
Our cash and cash equivalents are invested primarily in money market funds consisting of short-term, high-quality debt instruments issued by governments and governmental organizations, financial institutions and industrial companies. | |
Our customer base includes retailers and distributors, including mass-market retailers, consumer electronics stores, discount warehouses, and game specialty stores in the U.S. and other countries worldwide. We perform ongoing credit evaluations of our customers and maintain allowances for potential credit losses. We generally do not require collateral or other security from our customers. We did not have any single customer that accounted for 10% or more of net revenues for the years ended December 31, 2013 and 2011. We had one customer for the Activision and Blizzard segments, GameStop, that accounted for approximately 10% of net revenues for the year ended December 31, 2012. We had one customer, Wal-Mart, that accounted for 24% and 20% of consolidated gross receivables at December 31, 2013 and 2012, respectively. | |
Software Development Costs and Intellectual Property Licenses | ' |
Software Development Costs and Intellectual Property Licenses | |
Software development costs include payments made to independent software developers under development agreements, as well as direct costs incurred for internally developed products. | |
We account for software development costs in accordance with ASC Subtopic 985-20, the guidance for costs of computer software to be sold, leased, or otherwise marketed. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product encompasses both technical design documentation and game design documentation, or the completed and tested product design and working model. Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established. For products where proven technology exists, this may occur early in the development cycle. Technological feasibility is evaluated on a product-by-product basis. Prior to a product's release, if and when we believe capitalized costs are not recoverable, we expense the amounts as part of “Cost of sales—software royalties and amortization.” Capitalized costs for products that are cancelled or are expected to be abandoned are charged to “Product development expense” in the period of cancellation. Amounts related to software development which are not capitalized are charged immediately to “Product development expense.” | |
Commencing upon a product's release, capitalized software development costs are amortized to “Cost of sales—software royalties and amortization” based on the ratio of current revenues to total projected revenues for the specific product, generally resulting in an amortization period of six months or less. | |
Intellectual property license costs represent license fees paid to intellectual property rights holders for use of their trademarks, copyrights, software, technology, music or other intellectual property or proprietary rights in the development of our products. Depending upon the agreement with the rights holder, we may obtain the right to use the intellectual property in multiple products over a number of years, or alternatively, for a single product. Prior to a product's release, if and when we believe capitalized costs are not recoverable, we expense the amounts as part of “Cost of sales—intellectual property licenses.” Capitalized intellectual property costs for products that are cancelled or are expected to be abandoned are charged to “Product development expense” in the period of cancellation. | |
Commencing upon a product's release, capitalized intellectual property license costs are amortized to “Cost of sales—intellectual property licenses” based on the ratio of current revenues for the specific product to total projected revenues for all products in which the licensed property will be utilized. As intellectual property license contracts may extend for multiple years and can be used in multiple products to be released over a period beyond one year, the amortization of capitalized intellectual property license costs relating to such contracts may extend beyond one year. | |
We evaluate the future recoverability of capitalized software development costs and intellectual property licenses on a quarterly basis. For products that have been released in prior periods, the primary evaluation criterion is actual title performance. For products that are scheduled to be released in future periods, recoverability is evaluated based on the expected performance of the specific products to which the costs relate or in which the licensed trademark or copyright is to be used. Criteria used to evaluate expected product performance include: historical performance of comparable products developed with comparable technology; market performance of comparable titles; orders for the product prior to its release; general market conditions; and, for any sequel product, estimated performance based on the performance of the product on which the sequel is based. Further, as many of our capitalized intellectual property licenses extend for multiple products over multiple years, we also assess the recoverability of capitalized intellectual property license costs based on certain qualitative factors, such as the success of other products and/or entertainment vehicles utilizing the intellectual property, whether there are any future planned theatrical releases or television series based on the intellectual property, and the rights holder's continued promotion and exploitation of the intellectual property. | |
Significant management judgments and estimates are utilized in assessing the recoverability of capitalized costs. In evaluating the recoverability of capitalized costs, the assessment of expected product performance utilizes forecasted sales amounts and estimates of additional costs to be incurred. If revised forecasted or actual product sales are less than the originally forecasted amounts utilized in the initial recoverability analysis, the net realizable value may be lower than originally estimated in any given quarter, which could result in an impairment charge. Material differences may result in the amount and timing of expenses for any period if management makes different judgments or utilizes different estimates in evaluating these qualitative factors. | |
Inventories | ' |
Inventories | |
Inventories consist of materials (including manufacturing royalties paid to console manufacturers), labor, and freight-in and are stated at the lower of cost (weighted-average method) or net realizable value. Inventories are relieved on a weighted average cost method. | |
Property and equipment | ' |
Long-Lived Assets | |
Property and Equipment. Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful life (i.e., 25 to 33 years for buildings, and 2 to 5 years for computer equipment, office furniture and other equipment) of the asset. When assets are retired or disposed of, the cost and accumulated depreciation thereon are removed and any resulting gains or losses are included in the consolidated statements of operations. Leasehold improvements are amortized using the straight-line method over the estimated life of the asset, not to exceed the length of the lease. Repair and maintenance costs are expensed as incurred. | |
Goodwill and Other Indefinite-Lived Assets | ' |
Goodwill and Other Indefinite-Lived Assets. We account for goodwill in accordance with ASC Topic 350. Under ASC Topic 350, goodwill is considered to have an indefinite life, and is carried at cost. Acquired trade names are assessed as indefinite lived assets as there are no foreseeable limits on the periods of time over which they are expected to contribute cash flows. Goodwill and acquired trade names are not amortized, but are subject to an annual impairment test, as well as between annual tests when events or circumstances indicate that the carrying value may not be recoverable. We perform our annual impairment testing at December 31st. | |
Our annual goodwill impairment test is performed at the reporting unit level. We have determined our reporting units based on the guidance within ASC Subtopic 350-20, which provides that reporting units are generally operating segments or one reporting level below the operating segments. As of December 31, 2013 and 2012, our reporting units are the same as our operating segments: Activision, Blizzard, and Distribution. We test goodwill for possible impairment by first determining the fair value of the related reporting unit and comparing this value to the recorded net assets of the reporting unit, including goodwill. The fair value of our reporting units is determined using an income approach based on discounted cash flow models. In the event the recorded net assets of the reporting unit exceed the estimated fair value of such assets, we perform a second step to measure the amount of the impairment, which is equal to the amount by which the recorded goodwill exceeds the implied fair value of the goodwill after assessing the fair value of each of the assets and liabilities within the reporting unit. We have determined that no impairment has occurred at December 31, 2013 and 2012 based upon a set of assumptions regarding discounted future cash flows, which represent our best estimate of future performance at this time. | |
We test acquired trade names for possible impairment by using a discounted cash flow model to estimate fair value. We have determined that no impairment has occurred at December 31, 2013 and 2012 based upon a set of assumptions regarding discounted future cash flows, which represent our best estimate of future performance at this time. | |
Changes in our assumptions underlying our estimates of fair value, which will be a function of our future financial performance and changes in economic conditions, could result in future impairment charges. | |
Amortizable Intangible Assets | ' |
Amortizable Intangible Assets. Intangible assets subject to amortization are carried at cost less accumulated amortization, and amortized over the estimated useful life in proportion to the economic benefits received. | |
Management evaluates the recoverability of our identifiable intangible assets and other long-lived assets in accordance with ASC Subtopic 360-10, which generally requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. We considered certain events and circumstances in determining whether the carrying value of identifiable intangible assets and other long-lived assets, other than indefinite-lived intangible assets, may not be recoverable including, but not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in our stock price for a sustained period of time; and changes in our business strategy. If we determine that the carrying value may not be recoverable, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets to determine whether an impairment exists. If an impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. We have determined that there are no events or circumstances that indicate a potential impairment exists at December 31, 2013 and 2012. | |
Revenue Recognition | ' |
Revenue Recognition | |
Revenue Arrangements with Multiple Deliverables | |
Certain of our revenue arrangements have multiple deliverables, which we account for in accordance with ASC Topic 605 and Accounting Standards Update (“ASU”) 2009-13. These revenue arrangements include product sales consisting of both software and hardware deliverables (such as peripherals or other ancillary collectors' items sold together with physical “boxed” software) and our sales of World of Warcraft boxed products, expansion packs and value-added services, each of which is considered with the related subscription services for these purposes. | |
Under ASC Topic 605 and ASU 2009-13, when a revenue arrangement contains multiple elements, such as hardware and software products, licenses and/or services, we allocate revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor-specific-objective-evidence (“VSOE”) if it is available, third-party evidence (“TPE”) if VSOE is not available, or best estimated selling price (“BESP”) if neither VSOE nor TPE is available. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue. | |
As noted above, when neither VSOE nor TPE is available for a deliverable, we use BESP. We do not have significant revenue arrangements that require BESP for the years ended December 31, 2013, 2012, and 2011. The inputs we use to determine the selling price of our significant deliverables include the actual price charged by the Company for a deliverable that the Company sells separately, which represents the VSOE, and the wholesale prices of the same or similar products, which represents TPE. The adoption of ASU 2009-13 on January 1, 2011 has not had a material impact on our financial statements. The pattern and timing of revenue recognition for deliverables and allocation of the arrangement consideration did not change upon the adoption of ASU 2009-13. | |
Product Sales | |
We recognize revenues from the sale of our products upon the transfer of title and risk of loss to our customers and once any performance obligations have been completed. Certain products are sold to customers with a “street date” (which is the earliest date these products may be sold by retailers). For these products, we recognize revenues on the later of the street date or the date the product is sold to the customer. Revenues from product sales are recognized after deducting the estimated allowance for returns and price protection. | |
For our software products with online functionality, we evaluate whether that feature or functionality is more than an inconsequential separate deliverable, in addition to the software product. This evaluation is performed for each software product and digital download of a title or product add-ons (including digital downloadable content), when it is released. | |
When we determine that a software title contains online functionality that constitutes a more-than-inconsequential separate service deliverable in addition to the product, which is principally because of the online functionality's importance to gameplay, we consider our performance obligation for this title to extend beyond the sale of the game. VSOE of fair value does not exist for the online functionality of some products, as we do not separately charge for this component of every title. As a result, we recognize all of the software-related revenues from the sale of any such title ratably over the estimated service period of the title. In addition, we initially defer the costs of sales for the title (excluding intangible asset amortization), and recognize the costs of sales as the related revenues are recognized. The costs of sales include manufacturing costs, software royalties and amortization, and intellectual property licenses. | |
Determining whether the online functionality for a particular game constitutes a more-than-inconsequential deliverable, as well as the estimated service periods and product life over which to recognize the revenue and related costs of sales, is subjective and requires management's judgment. | |
We recognize revenues from World of Warcraft boxed products, expansion packs and value-added services, in each case with the related subscription service revenues, ratably over the estimated service period beginning upon activation of the software and delivery of the related services. Revenues attributed to the sale of World of Warcraft boxed software and related expansion packs are classified as “Product sales,” whereas revenues attributable to subscriptions and other value-added services are classified as “Subscription, licensing, and other revenues.” | |
For games where the online functionality is a more-than-inconsequential deliverable and games for which was have a hosted service arrangement, we determine the game's estimated service period with consideration of various data points, including the weighted-average number of days between players' first and last days played online, the average total hours played and the average number of days in which player activity stabilizes. We also consider known online trends, and the service periods of our previously released games and disclosed service periods for our competitor's games that are similar in nature. | |
The estimated service periods for our current games range from five months to less than one year. | |
For our software products with features we consider to be incidental to the overall product offering and are inconsequential deliverables, such as products which provide limited online features at no additional cost to the consumer, we recognize the related revenues upon the transfer of title and risk of loss of the product to our customer. | |
With respect to online transactions, such as online downloads of titles or product add-ons that do not include a more-than-inconsequential separate service deliverable, revenues are recognized when the fee is paid by the online customer to purchase online content and the product is available for download or is activated for gameplay. In addition, persuasive evidence of an arrangement must exist and collection of the related receivable must be probable. | |
Sales incentives and other consideration given by us to our customers, such as rebates and product placement fees, are considered adjustments of the selling price of our products and are reflected as reductions to revenues. Sales incentives and other consideration that represent costs incurred by us for assets or services received, such as the appearance of our products in a customer's national circular ad, are reflected as sales and marketing expenses when the benefit from the sales incentive is separable from sales to the same customer and we can reasonably estimate the fair value of the benefit. | |
Subscription Revenues | |
Subscription revenues are mostly derived from World of Warcraft. World of Warcraft is a game that is playable through Blizzard's servers and is generally sold on a subscription-only basis. | |
For World of Warcraft, after the first month of free usage that is included with the World of Warcraft boxed software, the World of Warcraft end user may enter into a subscription agreement for additional future access. Revenues associated with the sales of subscriptions via boxed software and prepaid subscription cards, as well as prepaid subscriptions sales, are deferred until the subscription service is activated by the consumer and are then recognized ratably over the subscription period. Value-added service revenues associated with subscriptions are recognized ratably over the estimated service periods. | |
Licensing Revenues | |
Third-party licensees in Russia, China and Taiwan distribute and host Blizzard's World of Warcraft game in their respective countries under license agreements, for which they pay the Company a royalty. We recognize these royalties as revenues based on the end users' activation of the underlying prepaid time, if all other performance obligations have been completed, or based on usage by the end user, when we have continuing service obligations. We recognize any upfront licensing fees received over the term of the contracts. | |
With respect to license agreements that provide customers the right to make multiple copies in exchange for guaranteed amounts, revenues are generally recognized upon delivery of a master copy. Per copy royalties on sales that exceed the guarantee are recognized as earned. In addition, persuasive evidence of an arrangement must exist and collection of the related receivable must be probable. | |
Other Revenues | |
Other revenues primarily include licensing activity of intellectual property other than software to third-parties. Revenues are recorded upon the receipt of licensee statements, or upon the receipt of cash, provided the license period has begun and all performance obligations have been completed. | |
Revenues are recorded net of taxes assessed by governmental authorities that are both imposed on and concurrent with the specific revenue-producing transaction between us and our customer, such as sales and value added taxes. | |
Allowances for Returns, Price Protection, Doubtful Accounts, and Inventory Obsolescence | ' |
Allowances for Returns, Price Protection, Doubtful Accounts, and Inventory Obsolescence | |
We closely monitor and analyze the historical performance of our various titles, the performance of products released by other publishers, market conditions, and the anticipated timing of other releases to assess future demand of current and upcoming titles. Initial volumes shipped upon title launch and subsequent reorders are evaluated with the goal of ensuring that quantities are sufficient to meet the demand from the retail markets, but at the same time are controlled to prevent excess inventory in the channel. We benchmark units to be shipped to our customers using historical and industry data. | |
We may permit product returns from, or grant price protection to, our customers under certain conditions. In general, price protection refers to the circumstances in which we elect to decrease, on a short- or longer-term basis, the wholesale price of a product by a certain amount and, when granted and applicable, allow customers a credit against amounts owed by such customers to us with respect to open and/or future invoices. The conditions our customers must meet to be granted the right to return products or price protection include, among other things, compliance with applicable trading and payment terms, and consistent return of inventory and delivery of sell-through reports to us. We may also consider other factors, including the facilitation of slow-moving inventory and other market factors. | |
Significant management judgments and estimates must be made and used in connection with establishing the allowance for returns and price protection in any accounting period based on estimates of potential future product returns and price protection related to current period product revenues. We estimate the amount of future returns and price protection for current period product revenues utilizing historical experience and information regarding inventory levels and the demand and acceptance of our products by the end consumer. The following factors are used to estimate the amount of future returns and price protection for a particular title: historical performance of titles in similar genres; historical performance of the hardware platform; historical performance of the franchise; console hardware life cycle; sales force and retail customer feedback; industry pricing; future pricing assumptions; weeks of on-hand retail channel inventory; absolute quantity of on-hand retail channel inventory; our warehouse on-hand inventory levels; the title's recent sell-through history (if available); marketing trade programs; and performance of competing titles. The relative importance of these factors varies among titles depending upon, among other items, genre, platform, seasonality, and sales strategy. | |
Based upon historical experience, we believe that our estimates are reasonable. However, actual returns and price protection could vary materially from our allowance estimates due to a number of reasons including, among others, a lack of consumer acceptance of a title, the release in the same period of a similarly themed title by a competitor, or technological obsolescence due to the emergence of new hardware platforms. Material differences may result in the amount and timing of our revenues for any period if factors or market conditions change or if management makes different judgments or utilizes different estimates in determining the allowances for returns and price protection. For example, a 1% change in our December 31, 2013 allowance for sales returns, price protection and other allowances would have impacted net revenues by approximately $4 million. | |
Similarly, management must make estimates as to the collectability of our accounts receivable. In estimating the allowance for doubtful accounts, we analyze the age of current outstanding account balances, historical bad debts, customer concentrations, customer creditworthiness, current economic trends, and changes in our customers' payment terms and their economic condition, as well as whether we can obtain sufficient credit insurance. Any significant changes in any of these criteria would affect management's estimates in establishing our allowance for doubtful accounts. | |
We regularly review inventory quantities on-hand and in the retail channels. We write down inventory based on excess or obsolete inventories determined primarily by future anticipated demand for our products. Inventory write-downs are measured as the difference between the cost of the inventory and net realizable value, based upon assumptions about future demand, which are inherently difficult to assess and dependent on market conditions. At the point of a loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established basis. | |
Shipping and Handling | ' |
Shipping and Handling | |
Shipping and handling costs, which consist primarily of packaging and transportation charges incurred to move finished goods to customers, are included in “Cost of sales—product costs.” | |
Advertising Expenses | ' |
Advertising Expenses | |
We expense advertising as incurred, except for production costs associated with media advertising, which are deferred and charged to expense when the related advertisement is run for the first time. Advertising expenses for the years ended December 31, 2013, 2012, and 2011 were $401 million, $396 million, and $343 million, respectively, and are included in “Sales and marketing expense” in the consolidated statements of operations. | |
Income Taxes | ' |
Income Taxes | |
We record a tax provision for the anticipated tax consequences of the reported results of operations. In accordance with ASC Topic 740, the provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We evaluate deferred tax assets each period for recoverability. For those assets that do not meet the threshold of “more likely than not” that they will be realized in the future, a valuation allowance is recorded. | |
We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in “Income tax expense.” | |
Foreign Currency Translation | ' |
Foreign Currency Translation | |
All assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date, and revenue and expenses are translated at average exchange rates during the period. The resulting translation adjustments are reflected as a component of “Accumulated other comprehensive income (loss)” in shareholders' equity. | |
Earnings (Loss) Per Common Share | ' |
Earnings (Loss) Per Common Share | |
“Basic earnings (loss) per common share” is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding for the periods presented. “Diluted earnings per share” is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding, increased by the weighted average number of common stock equivalents. Common stock equivalents are calculated using the treasury stock method and represent incremental shares issuable upon exercise of our outstanding options. However, potential common shares are not included in the denominator of the diluted earnings (loss) per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded. | |
When we determine whether instruments granted in stock-based payment transactions are participating securities, unvested stock-based awards which include the right to receive non-forfeitable dividends or dividend equivalents are considered to participate with common stock in undistributed earnings. With participating securities, we are required to calculate basic and diluted earnings per common share amounts under the two-class method. The two-class method excludes from the earnings per common share calculation any dividends paid or owed to participating securities and any undistributed earnings considered to be attributable to participating securities. | |
Stock-Based Compensation | ' |
Stock-Based Compensation | |
We account for stock-based compensation in accordance with ASC Topic 718-10, Compensation-Stock Compensation, and ASC Subtopic 505-50, Equity-Based Payments to Non-Employees. Stock-based compensation expense is recognized during the requisite service period (that is, the period for which the employee is being compensated) and is based on the value of stock-based payment awards after a reduction for estimated forfeitures. Forfeitures are estimated at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense recognized in our consolidated statements of operations for the years ended December 31, 2013, 2012, and 2011 included both compensation expense for stock- based payment awards granted by Activision, Inc. prior to, but not yet vested as of July 9, 2008, based on the revalued fair value estimated at July 9, 2008, and compensation expense for the stock-based payment awards granted by us subsequent to July 9, 2008. | |
We estimate the value of stock-based payment awards on the measurement date using a binomial-lattice model. Our determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. | |
We generally determine the fair value of restricted stock rights (including restricted stock units, restricted stock awards and performance shares) based on the closing market price of the Company's common stock on the date of grant. Certain restricted stock rights granted to our employees and senior management vest based on the achievement of pre-established performance or market goals. We estimate the fair value of performance-based restricted stock rights at the closing market price of the Company's common stock on the date of grant. Each quarter, we update our assessment of the probability that the specified performance criteria will be achieved. We amortize the fair values of performance-based restricted stock rights over the requisite service period adjusted for estimated forfeitures for each separately vesting tranche of the award. We estimate the fair value of market-based restricted stock rights at the date of grant using a Monte Carlo valuation methodology and amortize those fair values over the requisite service period adjusted for estimated forfeitures for each separately vesting tranche of the award. The Monte Carlo methodology that we use to estimate the fair value of market-based restricted stock rights at the date of grant incorporates into the valuation the possibility that the market condition may not be satisfied. Provided that the requisite service is rendered, the total fair value of the market-based restricted stock rights at the date of grant must be recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the performance of the specified market criteria. | |
See Note 15 of the Notes to Consolidated Financial Statements. |
Cash_and_Cash_Equivalents_Tabl
Cash and Cash Equivalents (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
Cash and Cash Equivalents | ' | |||||||||
Components of cash and cash equivalents | ' | |||||||||
At December 31, | ||||||||||
2013 | 2012 | |||||||||
Cash | $ | 377 | $ | 425 | ||||||
Time deposits | 3 | 23 | ||||||||
Foreign government treasury bills | 30 | --- | ||||||||
Money market funds | 4,000 | 3,511 | ||||||||
Cash and cash equivalents | $ | 4,410 | $ | 3,959 |
Investments_Tables
Investments (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | ||||||||||||||||
Investments | ' | |||||||||||||||
Summary of short-term and long-term investments | ' | |||||||||||||||
Amortized | Gross unrealized | Gross unrealized | Fair | |||||||||||||
At December 31, 2013 | cost | gains | losses | Value | ||||||||||||
Short-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
U.S. treasuries and government agency | ||||||||||||||||
securities | $ | 21 | $ | --- | $ | --- | $ | 21 | ||||||||
Restricted cash | 12 | |||||||||||||||
Total short-term investments | $ | 33 | ||||||||||||||
Long-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Auction rate securities held through Morgan | ||||||||||||||||
Stanley Smith Barney LLC | $ | 8 | $ | 1 | $ | --- | $ | 9 | ||||||||
Amortized | Gross unrealized | Gross unrealized | Fair | |||||||||||||
At December 31, 2012 | cost | gains | losses | Value | ||||||||||||
Short-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
U.S. treasuries and government agency | ||||||||||||||||
securities | $ | 387 | $ | --- | $ | --- | $ | 387 | ||||||||
Corporate bonds | 11 | --- | --- | 11 | ||||||||||||
Restricted cash | 18 | |||||||||||||||
Total short-term investments | $ | 416 | ||||||||||||||
Long-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Auction rate securities held through Morgan | ||||||||||||||||
Stanley Smith Barney LLC | $ | 8 | $ | --- | $ | --- | $ | 8 | ||||||||
Available-for-sale investments, contractually stated maturities | ' | |||||||||||||||
Amortized | Fair | |||||||||||||||
At December 31, 2013 | cost | Value | ||||||||||||||
U.S. treasuries and government agency securities | ||||||||||||||||
due in 1 year or less | $ | 21 | $ | 21 | ||||||||||||
Auction rate securities due after ten years | 8 | 9 | ||||||||||||||
$ | 29 | $ | 30 |
Inventories_Tables
Inventories (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventories, Net | ' | ||||||||
Schedule of inventories | ' | ||||||||
At December 31, | |||||||||
2013 | 2012 | ||||||||
Finished goods | $ | 149 | $ | 171 | |||||
Purchased parts and components | 22 | 38 | |||||||
Inventories, net | $ | 171 | $ | 209 |
Software_development_and_intel
Software development and intellectual property licenses (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Software Development Costs and Intellectual Property Licenses | ' | |||||||||||
Summarizes the components of software development and intellectual property licenses | ' | |||||||||||
At | At | |||||||||||
December 31, | December 31, | |||||||||||
2013 | 2012 | |||||||||||
Internally developed software costs | $ | 189 | $ | 159 | ||||||||
Payments made to third-party software developers | 199 | 134 | ||||||||||
Total software development costs | $ | 388 | $ | 293 | ||||||||
Intellectual property licenses | $ | 11 | $ | 41 | ||||||||
Amortization, write-offs and impairments | ' | |||||||||||
For the Years Ended December 31, | ||||||||||||
2013 | 2012 | 2011 | ||||||||||
Amortization of capitalized software development | ||||||||||||
costs and intellectual property licenses | $ | 195 | $ | 205 | $ | 258 | ||||||
Write-offs and impairments | 29 | 12 | 60 |
Property_and_Equipment_Net_Tab
Property and Equipment, Net (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Property and Equipment, Net | ' | |||||||
Property and equipment, net | ' | |||||||
At December 31, | ||||||||
2013 | 2012 | |||||||
Land | $ | 1 | $ | 1 | ||||
Buildings | 5 | 5 | ||||||
Leasehold improvements | 96 | 80 | ||||||
Computer equipment | 424 | 362 | ||||||
Office furniture and other equipment | 60 | 65 | ||||||
Total cost of property and equipment | 586 | 513 | ||||||
Less accumulated depreciation | -448 | -372 | ||||||
Property and equipment, net | $ | 138 | $ | 141 |
Intangible_Assets_Net_Tables
Intangible Assets, Net (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Intangible Assets, Net | ' | |||||||||||||
Schedule of finite lived and indefinite lived intangible assets by major class | ' | |||||||||||||
At December 31, 2013 | ||||||||||||||
Estimated | Gross | |||||||||||||
useful | carrying | Accumulated | Net carrying | |||||||||||
lives | amount | amortization | amount | |||||||||||
Acquired definite-lived intangible assets: | ||||||||||||||
License agreements and other | 3 - 10 years | $ | 98 | $ | -90 | $ | 8 | |||||||
Internally-developed franchises | 11 - 12 years | 309 | -274 | 35 | ||||||||||
Total definite-lived intangible assets | $ | 407 | $ | -364 | $ | 43 | ||||||||
Acquired indefinite-lived intangible assets: | ||||||||||||||
Activision trademark | Indefinite | 386 | ||||||||||||
Acquired trade names | Indefinite | 47 | ||||||||||||
Total indefinite-lived intangible assets | $ | 433 | ||||||||||||
At December 31, 2012 | ||||||||||||||
Estimated | Gross | |||||||||||||
useful | carrying | Accumulated | Net carrying | |||||||||||
lives | amount | amortization | amount | |||||||||||
Acquired definite-lived intangible assets: | ||||||||||||||
License agreements and other | 3 - 10 years | $ | 98 | $ | -88 | $ | 10 | |||||||
Internally-developed franchises | 11 - 12 years | 309 | -251 | 58 | ||||||||||
Total definite-lived intangible assets | $ | 407 | $ | -339 | $ | 68 | ||||||||
Acquired indefinite-lived intangible assets: | ||||||||||||||
Activision trademark | Indefinite | 386 | ||||||||||||
Acquired trade names | Indefinite | 47 | ||||||||||||
Total indefinite-lived intangible assets | $ | 433 | ||||||||||||
Schedule of finite lived intangible assets, future amortization expense | ' | |||||||||||||
2014 | $ | 15 | ||||||||||||
2015 | 12 | |||||||||||||
2016 | 7 | |||||||||||||
2017 | 4 | |||||||||||||
2018 | 3 | |||||||||||||
Thereafter | 2 | |||||||||||||
Total | $ | 43 |
Goodwill_Tables
Goodwill (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Goodwill: | ' | |||||||||||||
Changes in the carrying amount of goodwill by operating segments | ' | |||||||||||||
Activision | Blizzard | Total | ||||||||||||
Balance at December 31, 2011 | $ | 6,933 | $ | 178 | $ | 7,111 | ||||||||
Tax benefit credited to goodwill | -5 | --- | -5 | |||||||||||
Balance at December 31, 2012 | $ | 6,928 | $ | 178 | $ | 7,106 | ||||||||
Tax benefit credited to goodwill | -13 | --- | -13 | |||||||||||
Foreign exchange | -1 | --- | -1 | |||||||||||
Balance at December 31, 2013 | $ | 6,914 | $ | 178 | $ | 7,092 | ||||||||
Accumulated impairment of goodwill by reporting units | ' | |||||||||||||
Activision | Blizzard | Total | ||||||||||||
Balance at December 31, 2012: | ||||||||||||||
Goodwill | $ | 6,928 | $ | 178 | $ | 7,106 | ||||||||
Accumulated impairment losses | --- | --- | --- | |||||||||||
Total | $ | 6,928 | $ | 178 | $ | 7,106 | ||||||||
Balance at December 31, 2013: | ||||||||||||||
Goodwill | $ | 6,914 | $ | 178 | $ | 7,092 | ||||||||
Accumulated impairment losses | --- | --- | --- | |||||||||||
Total | $ | 6,914 | $ | 178 | $ | 7,092 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair value, assets measured on a recurring and/or non-recurring basis | ' | ||||||||||||||||
Fair Value Measurements at | |||||||||||||||||
December 31, 2013 Using | |||||||||||||||||
Quoted | |||||||||||||||||
Prices in | |||||||||||||||||
Active | Significant | ||||||||||||||||
Markets for | Other | Significant | |||||||||||||||
As of | Identical | Observable | Unobservable | ||||||||||||||
December 31, | Assets | Inputs | Inputs | Balance Sheet | |||||||||||||
2013 | (Level 1) | (Level 2) | (Level 3) | Classification | |||||||||||||
Recurring fair value measurements: | |||||||||||||||||
Money market funds | $ | 4,000 | $ | 4,000 | $ | --- | $ | --- | Cash and cash equivalents | ||||||||
Foreign government treasury bills | 30 | 30 | --- | --- | Cash and cash equivalents | ||||||||||||
U.S. treasuries and government agency securities | 21 | 21 | --- | --- | Short-term investments | ||||||||||||
Auction rate securities ("ARS") | 9 | --- | --- | 9 | Long-term investments | ||||||||||||
Total recurring fair value measurements | $ | 4,060 | $ | 4,051 | $ | --- | $ | 9 | |||||||||
Fair Value Measurements at | |||||||||||||||||
December 31, 2012 Using | |||||||||||||||||
Quoted | |||||||||||||||||
Prices in | |||||||||||||||||
Active | Significant | ||||||||||||||||
Markets for | Other | Significant | |||||||||||||||
As of | Identical | Observable | Unobservable | ||||||||||||||
December 31, | Assets | Inputs | Inputs | Balance Sheet | |||||||||||||
2012 | (Level 1) | (Level 2) | (Level 3) | Classification | |||||||||||||
Recurring fair value measurements: | |||||||||||||||||
Money market funds | $ | 3,511 | $ | 3,511 | $ | --- | $ | --- | Cash and cash equivalents | ||||||||
U.S. treasuries and government agency securities | 387 | 387 | --- | --- | Short-term investments | ||||||||||||
Corporate bonds | 11 | 11 | --- | --- | Short-term investments | ||||||||||||
ARS | 8 | --- | --- | 8 | Long-term investments | ||||||||||||
Total recurring fair value measurements | $ | 3,917 | $ | 3,909 | $ | --- | $ | 8 | |||||||||
Fair value, assets classified as level 3 reconciliation | ' | ||||||||||||||||
Level 3 | |||||||||||||||||
Total | |||||||||||||||||
financial | |||||||||||||||||
assets at | |||||||||||||||||
ARS | fair | ||||||||||||||||
(a) | value | ||||||||||||||||
Balance at December 31, 2011 | $ | 16 | $ | 16 | |||||||||||||
Total unrealized gains included in other | |||||||||||||||||
comprehensive income | 2 | 2 | |||||||||||||||
Settlements | -10 | -10 | |||||||||||||||
Balance at December 31, 2012 | $ | 8 | $ | 8 | |||||||||||||
Total unrealized gains included in other | |||||||||||||||||
comprehensive income | 1 | 1 | |||||||||||||||
Balance at December 31, 2013 | $ | 9 | $ | 9 | |||||||||||||
Fair value, assets measured on a non-recurring basis | ' | ||||||||||||||||
Fair Value Measurements at | |||||||||||||||||
December 31, 2011 Using | |||||||||||||||||
Quoted | |||||||||||||||||
Prices in | |||||||||||||||||
Active | |||||||||||||||||
Markets for | Significant | ||||||||||||||||
Identical | Other | Significant | |||||||||||||||
As of | Financial | Observable | Unobservable | ||||||||||||||
December 31, | Instruments | Inputs | Inputs | ||||||||||||||
2011 | (Level 1) | (Level 2) | (Level 3) | Total Losses | |||||||||||||
Non-financial assets: | |||||||||||||||||
Goodwill | $ | 7,111 | $ | --- | $ | --- | $ | 7,111 | $ | 12 | |||||||
Total non-financial assets at fair | |||||||||||||||||
value | $ | 7,111 | $ | --- | $ | --- | $ | 7,111 | $ | 12 |
Debt_Tables
Debt (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Debt Disclosure | ' | ||||||||||
Summary of debt | ' | ||||||||||
31-Dec-13 | |||||||||||
Gross Carrying | Unamortized | Net Carrying | |||||||||
Amount | Discount | Amount | |||||||||
Term Loan | $ | 2,494 | $ | -12 | $ | 2,482 | |||||
2021 Notes | 1,500 | -26 | 1,474 | ||||||||
2023 Notes | 750 | -13 | 737 | ||||||||
Total debt | $ | 4,744 | $ | -51 | $ | 4,693 | |||||
Less: current portion of long-term debt | -25 | - | -25 | ||||||||
Total long-term debt | $ | 4,719 | $ | -51 | $ | 4,668 | |||||
Schedule of maturities of debt | ' | ||||||||||
For the year ending December 31, | |||||||||||
2014 | $ | 25 | |||||||||
2015 | 25 | ||||||||||
2016 | 25 | ||||||||||
2017 | 25 | ||||||||||
2018 | 25 | ||||||||||
Thereafter | 4,619 | ||||||||||
Total | $ | 4,744 |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Accumulated Other Comprehensive Income (Loss). | ' | |||||||||||
Schedule of accumulated other comprehensive income (loss) | ' | |||||||||||
For the Year Ended December 31, 2013 | ||||||||||||
Foreign currency | Unrealized gain | |||||||||||
translation | on available-for- | |||||||||||
adjustments | sale securities | Total | ||||||||||
Balance at December 31, 2012 | $ | -26 | $ | --- | $ | -26 | ||||||
Other comprehensive income (loss) | ||||||||||||
before reclassifications | 93 | 1 | 94 | |||||||||
Amounts reclassified from accumulated | ||||||||||||
other comprehensive income (loss) | --- | --- | --- | |||||||||
Balance at December 31, 2013 | $ | 67 | $ | 1 | $ | 68 | ||||||
For the Year Ended December 31, 2012 | ||||||||||||
Foreign currency | Unrealized gain | |||||||||||
translation | on available-for- | |||||||||||
adjustments | sale securities | Total | ||||||||||
Balance at December 31, 2011 | $ | -72 | $ | --- | $ | -72 | ||||||
Other comprehensive income (loss) | ||||||||||||
before reclassifications | 46 | --- | 46 | |||||||||
Amounts reclassified from accumulated | ||||||||||||
other comprehensive income (loss) | --- | --- | --- | |||||||||
Balance at December 31, 2012 | $ | -26 | $ | --- | $ | -26 |
Operating_Segments_and_Geograp1
Operating Segments and Geographic Region (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Operating Segments and Geographic Region | ' | ||||||||||||||||||||
Schedule of operating segments and reconciliations of total net revenues and total segment operating income to consolidated net revenues from external customers and consolidated income before income tax expense | ' | ||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||
Income (loss) from operations | |||||||||||||||||||||
Net revenues | before income tax expense | ||||||||||||||||||||
Activision | $ | 2,895 | $ | 3,072 | $ | 2,828 | $ | 971 | $ | 970 | $ | 851 | |||||||||
Blizzard | 1,124 | 1,609 | 1,243 | 376 | 717 | 496 | |||||||||||||||
Distribution | 323 | 306 | 418 | 8 | 11 | 11 | |||||||||||||||
Operating segments total | 4,342 | 4,987 | 4,489 | 1,355 | 1,698 | 1,358 | |||||||||||||||
Reconciliation to consolidated net revenues / | |||||||||||||||||||||
consolidated income before income tax | |||||||||||||||||||||
expense: | |||||||||||||||||||||
Net effect from deferral of net revenues and | |||||||||||||||||||||
related cost of sales | 241 | -131 | 266 | 229 | -91 | 183 | |||||||||||||||
Stock-based compensation expense | --- | --- | --- | -110 | -126 | -103 | |||||||||||||||
Restructuring | --- | --- | --- | --- | --- | -26 | |||||||||||||||
Amortization of intangible assets | --- | --- | --- | -23 | -30 | -72 | |||||||||||||||
Impairment of goodwill | --- | --- | --- | --- | --- | -12 | |||||||||||||||
Fees and other expenses related to the Purchase | |||||||||||||||||||||
Transaction and related debt financings | --- | --- | --- | -79 | --- | --- | |||||||||||||||
Consolidated net revenues / operating income | $ | 4,583 | $ | 4,856 | $ | 4,755 | $ | 1,372 | $ | 1,451 | $ | 1,328 | |||||||||
Interest and other investment income (expense), net | -53 | 7 | 3 | ||||||||||||||||||
Consolidated income before income tax expense | $ | 1,319 | $ | 1,458 | $ | 1,331 | |||||||||||||||
Schedule of net revenues from external customers by geographic region | ' | ||||||||||||||||||||
Years ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Net revenues by geographic region: | |||||||||||||||||||||
North America | $ | 2,414 | $ | 2,436 | $ | 2,405 | |||||||||||||||
Europe | 1,826 | 1,968 | 1,990 | ||||||||||||||||||
Asia Pacific | 343 | 452 | 360 | ||||||||||||||||||
Total consolidated net revenues | $ | 4,583 | $ | 4,856 | $ | 4,755 | |||||||||||||||
Schedule of net revenues by platform | ' | ||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Net revenues by platform: | |||||||||||||||||||||
Console | $ | 2,379 | $ | 2,186 | $ | 2,439 | |||||||||||||||
Online subscriptions1 | 912 | 986 | 1,357 | ||||||||||||||||||
Other2 | 629 | 703 | 259 | ||||||||||||||||||
PC | 340 | 675 | 282 | ||||||||||||||||||
Total platform net revenues | 4,260 | 4,550 | 4,337 | ||||||||||||||||||
Distribution | 323 | 306 | 418 | ||||||||||||||||||
Total consolidated net revenues | $ | 4,583 | $ | 4,856 | $ | 4,755 | |||||||||||||||
Long-lived assets by geographic region | ' | ||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Long-lived assets* by geographic region: | |||||||||||||||||||||
North America | $ | 102 | $ | 90 | $ | 105 | |||||||||||||||
Europe | 29 | 40 | 46 | ||||||||||||||||||
Asia Pacific | 7 | 11 | 12 | ||||||||||||||||||
Total long-lived assets by geographic region | $ | 138 | $ | 141 | $ | 163 |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Stock-Based Compensation | ' | ||||||||||||
Schedule of stock option valuation assumptions and weighted-average grant date fair value | ' | ||||||||||||
Employee and Director Options | |||||||||||||
For the Years Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Expected life (in years) | 6.44 | 7.05 | 6.58 | ||||||||||
Risk free interest rate | 1.86 | % | 1.12 | % | 1.91 | % | |||||||
Volatility | 39 | % | 40.76 | % | 43.5 | % | |||||||
Dividend yield | 1.08 | % | 1.65 | % | 1.34 | % | |||||||
Weighted-average fair value at grant date | $ | 4.97 | $ | 3.47 | $ | 4.17 | |||||||
Schedule of stock option activity | ' | ||||||||||||
Weighted-average | |||||||||||||
Weighted-average | remaining | Aggregate | |||||||||||
Shares | exercise price | contractual term | intrinsic value | ||||||||||
Outstanding stock options at December 31, 2012 | 51,748 | $ | 11.45 | ||||||||||
Granted | 3,506 | 17.58 | |||||||||||
Exercised | -16,001 | 9.91 | |||||||||||
Forfeited | -267 | 11.93 | |||||||||||
Expired | -182 | 11.62 | |||||||||||
Outstanding stock options at December 31, 2013 | 38,804 | 12.63 | 5.82 | $ | 202 | ||||||||
Vested and expected to vest at December 31, 2013 | 37,856 | $ | 12.58 | 5.17 | $ | 199 | |||||||
Exercisable at December 31, 2013 | 29,397 | $ | 12.27 | 4.99 | $ | 165 | |||||||
Schedule of restricted stock rights activity | ' | ||||||||||||
Weighted- | |||||||||||||
Restricted Stock | Average Grant | ||||||||||||
Rights | Date Fair Value | ||||||||||||
Unvested restricted stock rights balance at December 31, 2012 | 25,605 | $ | 12.29 | ||||||||||
Granted | 5,520 | 16.31 | |||||||||||
Vested | -7,841 | 12.64 | |||||||||||
Forfeited | -719 | 11.92 | |||||||||||
Unvested restricted stock rights balance at December 31, 2013 | 22,565 | 12.63 | |||||||||||
Schedule of stock-based compensation expense | ' | ||||||||||||
For the Years Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Cost of sales - software royalties and amortization | $ | 17 | $ | 9 | $ | 10 | |||||||
Product development | 33 | 20 | 40 | ||||||||||
Sales and marketing | 7 | 8 | 6 | ||||||||||
General and administrative | 53 | 89 | 47 | ||||||||||
Stock-based compensation expense before income taxes | 110 | 126 | 103 | ||||||||||
Income tax benefit | -40 | -46 | -38 | ||||||||||
Total stock-based compensation expense, net of income tax benefit | $ | 70 | $ | 80 | $ | 65 | |||||||
Schedule of stock-based compensation costs capitalized | ' | ||||||||||||
Software | |||||||||||||
Development | |||||||||||||
Balance at December 31, 2010 | $ | 20 | |||||||||||
Stock-based compensation expense capitalized and deferred during period | 27 | ||||||||||||
Amortization of capitalized and deferred stock-based compensation expense | -37 | ||||||||||||
Balance at December 31, 2011 | $ | 10 | |||||||||||
Stock-based compensation expense capitalized and deferred during period | 27 | ||||||||||||
Amortization of capitalized and deferred stock-based compensation expense | -18 | ||||||||||||
Balance at December 31, 2012 | $ | 19 | |||||||||||
Stock-based compensation expense capitalized and deferred during period | 34 | ||||||||||||
Amortization of capitalized and deferred stock-based compensation expense | -31 | ||||||||||||
Balance at December 31, 2013 | $ | 22 |
Restructuring_Tables
Restructuring (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Restructuring | ' | ||||||||||||||
Restructuring reserve by type of cost | ' | ||||||||||||||
Contract | |||||||||||||||
Facilities | termination | ||||||||||||||
Severance | costs | costs | Total | ||||||||||||
Balance at January 1, 2011 | $ | --- | $ | --- | $ | --- | $ | --- | |||||||
Costs charged to expense | 20 | 4 | 1 | 25 | |||||||||||
Costs paid or otherwise settled | -16 | -1 | -1 | -18 | |||||||||||
Balance at December 31, 2011 | $ | 4 | $ | 3 | $ | --- | $ | 7 | |||||||
Costs paid or otherwise settled | -4 | --- | --- | -4 | |||||||||||
Balance at December 31, 2012 | $ | --- | $ | 3 | $ | --- | $ | 3 | |||||||
Costs paid or otherwise settled | --- | --- | --- | --- | |||||||||||
Balance at December 31, 2013 | $ | --- | $ | 3 | $ | --- | $ | 3 |
Recovered_Sheet1
Interest and other investment income (expense), net (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Interest and Other Investment Income (Expense), Net | ' | ||||||||||
Interest and other investment income (expense), net | ' | ||||||||||
For the Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Interest income | $ | 5 | $ | 6 | $ | 14 | |||||
Interest expense | --- | -1 | -4 | ||||||||
Interest expense from debt and amortization of debt discount | |||||||||||
and deferred financing costs | -58 | --- | --- | ||||||||
Net realized gain (loss) on foreign exchange contracts | --- | 2 | -7 | ||||||||
Interest and other investment income (expense), net | $ | -53 | $ | 7 | $ | 3 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Income Taxes | ' | |||||||||||||||||||
Schedule of domestic and foreign income (loss) and income tax expense (benefit) | ' | |||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Income before income tax expense: | ||||||||||||||||||||
Domestic | $ | 626 | $ | 668 | $ | 623 | ||||||||||||||
Foreign | 693 | 790 | 708 | |||||||||||||||||
$ | 1,319 | $ | 1,458 | $ | 1,331 | |||||||||||||||
Income tax expense (benefit): | ||||||||||||||||||||
Current: | ||||||||||||||||||||
Federal | $ | 100 | $ | 256 | $ | 144 | ||||||||||||||
State | 6 | 14 | -2 | |||||||||||||||||
Foreign | 31 | 49 | 28 | |||||||||||||||||
Total current | 137 | 319 | 170 | |||||||||||||||||
Deferred: | ||||||||||||||||||||
Federal | 134 | 12 | 61 | |||||||||||||||||
State | -12 | -11 | -4 | |||||||||||||||||
Foreign | 39 | -11 | 19 | |||||||||||||||||
Total deferred | 161 | -10 | 76 | |||||||||||||||||
Add back tax benefit credited to additional paid-in capital: | ||||||||||||||||||||
Excess tax benefit associated with stock options | 11 | --- | --- | |||||||||||||||||
Income tax expense | $ | 309 | $ | 309 | $ | 246 | ||||||||||||||
Reconciliation of income taxes at the U.S. federal statutory rate to income tax expense (benefit) | ' | |||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Federal income tax provision at statutory rate | $ | 462 | 35 | % | $ | 510 | 35 | % | $ | 466 | 35 | % | ||||||||
State taxes, net of federal benefit | 6 | --- | 31 | 2 | 18 | 1 | ||||||||||||||
Research and development credits | -49 | -4 | -10 | -1 | -21 | -2 | ||||||||||||||
Domestic production activity deduction | -9 | -1 | -17 | -1 | -15 | -1 | ||||||||||||||
Foreign rate differential | -174 | -13 | -241 | -17 | -202 | -15 | ||||||||||||||
Change in tax reserves | 89 | 7 | 53 | 4 | 23 | 2 | ||||||||||||||
Shortfall from employee stock option exercises | --- | --- | 8 | --- | 9 | 1 | ||||||||||||||
Return to provision adjustment | -3 | --- | -4 | --- | -44 | -3 | ||||||||||||||
Net Operating Loss tax attribute received | ||||||||||||||||||||
from Internal Revenue Service audit | --- | --- | -46 | -3 | --- | --- | ||||||||||||||
Net Operating Loss tax attribute assumed | ||||||||||||||||||||
from Purchase Transaction | -16 | -1 | --- | --- | --- | --- | ||||||||||||||
Other | 3 | --- | 25 | 2 | 12 | 1 | ||||||||||||||
Income tax expense | $ | 309 | 23 | % | $ | 309 | 21 | % | $ | 246 | 19 | % | ||||||||
Schedule of the components of the net deferred tax assets (liabilities) | ' | |||||||||||||||||||
As of December 31, | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Deferred tax assets: | ||||||||||||||||||||
Reserves and allowances | $ | 3 | $ | 11 | ||||||||||||||||
Allowance for sales returns and price protection | 63 | 56 | ||||||||||||||||||
Inventory reserve | 8 | 5 | ||||||||||||||||||
Accrued expenses | 48 | 65 | ||||||||||||||||||
Deferred revenue | 273 | 357 | ||||||||||||||||||
Tax credit carryforwards | 81 | 62 | ||||||||||||||||||
Net operating loss carryforwards | 11 | 14 | ||||||||||||||||||
Stock-based compensation | 91 | 119 | ||||||||||||||||||
Foreign deferred assets | 13 | 7 | ||||||||||||||||||
Transaction costs | 11 | --- | ||||||||||||||||||
Other | 9 | 2 | ||||||||||||||||||
Deferred tax assets | 611 | 698 | ||||||||||||||||||
Valuation allowance | --- | --- | ||||||||||||||||||
Deferred tax assets, net of valuation allowance | 611 | 698 | ||||||||||||||||||
Deferred tax liabilities: | ||||||||||||||||||||
Intangibles | -152 | -161 | ||||||||||||||||||
Prepaid royalties | -71 | --- | ||||||||||||||||||
Capitalized software development expenses | -60 | -54 | ||||||||||||||||||
State taxes | -27 | -21 | ||||||||||||||||||
Deferred tax liabilities | -310 | -236 | ||||||||||||||||||
Net deferred tax assets | $ | 301 | $ | 462 | ||||||||||||||||
Reconciliation of unrecognized tax benefits for the period | ' | |||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Unrecognized tax benefits balance at January 1 | $ | 207 | $ | 154 | $ | 132 | ||||||||||||||
Gross increase for tax positions of prior years | 1 | 3 | 4 | |||||||||||||||||
Gross increase for tax positions of current year | 91 | 59 | 65 | |||||||||||||||||
Settlement with taxing authorities | --- | -8 | --- | |||||||||||||||||
Lapse of statute of limitations | -5 | -1 | -47 | |||||||||||||||||
Unrecognized tax benefits balance at December 31 | $ | 294 | $ | 207 | $ | 154 |
Computation_of_Earnings_Loss_P1
Computation of Earnings (Loss) Per Basic/Diluted Common Share (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Computation of Earnings (Loss) Per Basic/Diluted Common Share | ' | ||||||||||||
Schedule of computation of earnings per share | ' | ||||||||||||
For the Years Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Numerator: | |||||||||||||
Consolidated net income | $ | 1,010 | $ | 1,149 | $ | 1,085 | |||||||
Less: Distributed earnings to unvested stock-based awards | |||||||||||||
that participate in earnings | -5 | -4 | -3 | ||||||||||
Less: Undistributed earnings allocated to unvested stock-based | |||||||||||||
awards that participate in earnings | -18 | -20 | -13 | ||||||||||
Numerator for basic and diluted earnings per common share - income | |||||||||||||
available to common shareholders | 987 | 1,125 | 1,069 | ||||||||||
Denominator: | |||||||||||||
Denominator for basic earnings per common share - weighted-average | |||||||||||||
common shares outstanding | 1,024 | 1,112 | 1,148 | ||||||||||
Effect of potential dilutive common shares under the treasury stock | |||||||||||||
method: Employee stock options | 11 | 6 | 8 | ||||||||||
Denominator for diluted earnings per common share - weighted- | |||||||||||||
average common shares outstanding plus dilutive effect | |||||||||||||
of employee stock options | 1,035 | 1,118 | 1,156 | ||||||||||
Basic earnings per common share | $ | 0.96 | $ | 1.01 | $ | 0.93 | |||||||
Diluted earnings per common share | $ | 0.95 | $ | 1.01 | $ | 0.92 |
Supplemental_Cash_Flow_Informa1
Supplemental Cash Flow Information (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Supplemental Cash Flow Information | ' | ||||||||||
Schedule of supplemental cash flow information | ' | ||||||||||
For the Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Supplemental cash flow information: | |||||||||||
Cash paid for income taxes | $ | 138 | $ | 159 | $ | 317 | |||||
Cash paid for interest | 19 | 2 | 4 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Commitments and Contingencies | ' | ||||||||||||||
Schedule of future minimum commitments under non-cancelable operating lease agreements and other contractual arrangements | ' | ||||||||||||||
Contractual Obligations (1) | |||||||||||||||
Facility and | Developer and | ||||||||||||||
Equipment | Intellectual | ||||||||||||||
Leases | Properties | Marketing | Total | ||||||||||||
For the years ending December 31, | |||||||||||||||
2014 | $ | 34 | $ | 145 | $ | 74 | $ | 253 | |||||||
2015 | 31 | 16 | 8 | 55 | |||||||||||
2016 | 27 | 2 | 1 | 30 | |||||||||||
2017 | 26 | 2 | 1 | 29 | |||||||||||
2018 | 25 | --- | --- | 25 | |||||||||||
Thereafter | 46 | 2 | --- | 48 | |||||||||||
Total | $ | 189 | $ | 167 | $ | 84 | $ | 440 |
Quarterly_Financial_and_Market1
Quarterly Financial and Market Information (Unaudited) (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Quarterly Financial and Market Information | ' | ||||||||||||
Schedule of quarterly financial information | ' | ||||||||||||
For the Quarters Ended | |||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||
2013 | 2013 | 2013 | 2013 | ||||||||||
(Amounts in millions, except per share data) | |||||||||||||
Net revenues | $ | 1,518 | $ | 691 | $ | 1,050 | $ | 1,324 | |||||
Cost of sales | 655 | 175 | 285 | 416 | |||||||||
Operating income | 284 | 70 | 430 | 587 | |||||||||
Net income | 174 | 56 | 324 | 456 | |||||||||
Basic earnings per share | 0.23 | 0.05 | 0.28 | 0.4 | |||||||||
Diluted earnings per share | 0.22 | 0.05 | 0.28 | 0.4 | |||||||||
For the Quarters Ended | |||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||
2012 | 2012 | 2012 | 2012 | ||||||||||
(Amounts in millions, except per share data) | |||||||||||||
Net revenues | $ | 1,768 | $ | 841 | $ | 1,075 | $ | 1,172 | |||||
Cost of sales | 682 | 237 | 377 | 364 | |||||||||
Operating income | 484 | 227 | 227 | 513 | |||||||||
Net income | 354 | 226 | 185 | 384 | |||||||||
Basic earnings per share | 0.31 | 0.2 | 0.16 | 0.34 | |||||||||
Diluted earnings per share | 0.31 | 0.2 | 0.16 | 0.33 |
SCHEDULE_II_VALUATION_AND_QUAL1
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ' | |||||||||||||
Schedule of valuation and qualifying accounts | ' | |||||||||||||
SCHEDULE II | ||||||||||||||
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES | ||||||||||||||
VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||
(Amounts in millions) | ||||||||||||||
Col. B | ||||||||||||||
Balance at | Col. E | |||||||||||||
Beginning of | Col. C | Col. D | Balance at | |||||||||||
Col. A Description | Period | Additions(A) | Deductions(B) | End of Period | ||||||||||
At December 31, 2013 | ||||||||||||||
Allowances for sales returns and price protection and other allowances | $ | 323 | $ | 174 | $ | -121 | $ | 376 | ||||||
Allowance for doubtful accounts | 9 | 1 | -5 | 5 | ||||||||||
At December 31, 2012 | ||||||||||||||
Allowances for sales returns and price protection and other allowances | $ | 292 | $ | 170 | $ | -139 | $ | 323 | ||||||
Allowance for doubtful accounts | 8 | 1 | --- | 9 | ||||||||||
At December 31, 2011 | ||||||||||||||
Allowances for sales returns and price protection and other allowances | $ | 373 | $ | 166 | $ | -247 | $ | 292 | ||||||
Allowance for doubtful accounts | 4 | 4 | --- | 8 |
Description_of_Business_Detail
Description of Business (Details) | 12 Months Ended |
Dec. 31, 2013 | |
segments | |
Description of Business [Line Items] | ' |
Number of operating segments | 3 |
Description_of_Business_Detail1
Description of Business (Details 2) (USD $) | 0 Months Ended | 12 Months Ended | ||
Oct. 11, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Stock Purchase Agreement [Line Items] | ' | ' | ' | ' |
Treasury Stock, Acquired, Shares | 429,000,000 | ' | ' | ' |
Treasury Stock, Acquired, Value | ' | $5,830,000,000 | $315,000,000 | $692,000,000 |
Activision Blizzard | ' | ' | ' | ' |
Stock Purchase Agreement [Line Items] | ' | ' | ' | ' |
Treasury Stock, Acquired, Shares | 429,000,000 | ' | ' | ' |
Treasury Stock, Acquired, Value | 5,830,000,000 | ' | ' | ' |
Treasury Stock, Price Per Share | 13.6 | ' | ' | ' |
Public | ' | ' | ' | ' |
Stock Purchase Agreement [Line Items] | ' | ' | ' | ' |
Percent of Activision Blizzard common stock owned by a specific shareholder | ' | 64.00% | ' | ' |
Vivendi | ' | ' | ' | ' |
Stock Purchase Agreement [Line Items] | ' | ' | ' | ' |
Percent of Activision Blizzard common stock owned by a specific shareholder | ' | 12.00% | ' | ' |
ASAC | ' | ' | ' | ' |
Stock Purchase Agreement [Line Items] | ' | ' | ' | ' |
Stock Purchased By ASAC, Shares | 172,000,000 | ' | ' | ' |
Stock Purchased By ASAC, Value | 2,340,000,000 | ' | ' | ' |
Stock Purchased By ASAC, Price Per Share | 13.6 | ' | ' | ' |
Percent of Activision Blizzard common stock owned by a specific shareholder | ' | 24.00% | ' | ' |
Summary_of_significant_account2
Summary of significant accounting policies (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2011 | Jun. 30, 2011 | Mar. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 |
2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2013 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | 2012 Results of Adjustments | |
Online subscriptions | Europe | Blizzard | Online subscriptions | Europe | Blizzard | |||||||||||||||||||
Results of Adjustments [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Correction of Error - Net Revenues | ' | ' | ' | ' | ' | $8 | ' | ' | ' | $8 | $8 | $8 | ' | ' | ' | ' | ' | $11 | ' | ' | ' | $11 | $11 | $11 |
Correction of Error - Interest and Other Investment Income (Expense) | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Correction of Error - Income Before Income Tax Expense | ' | ' | ' | ' | ' | 9 | ' | ' | ' | 9 | 9 | 9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11 | 11 | 11 |
Correction of Error - Net Income | 1 | 1 | 1 | 1 | 1 | 7 | 4 | 2 | 1 | ' | ' | ' | 1 | 1 | 1 | 1 | 1 | 8 | 3 | 2 | 3 | ' | ' | ' |
Correction of Error - Accrued Expenses and Other Liabilities | ' | ' | ' | ' | ' | 9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Correction of Error - Deferred Revenues | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11 | ' | ' | ' | ' | ' | ' |
Correction of Error - Operating Cash Flows | ' | ' | ' | ' | ' | ($9) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Correction of Error - Basic and Diluted EPS | ' | ' | ' | ' | ' | ($0.01) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ($0.01) | ' | ' | ' | ' | ' | ' |
Summary_of_significant_account3
Summary of significant accounting policies (Details 2) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
customers | customers | customers | |
Investment Securities | ' | ' | ' |
Short-term investment classification, lower end of the maturity range, greater than | '90 days | ' | ' |
Short-term investment classification, upper end of the maturity range, less than | '1 year | ' | ' |
Auction Rate Securities, interest rate setting interval - period one | '7 days | ' | ' |
Auction Rate Securities, interest rate setting interval - period two | '28 days | ' | ' |
Auction Rate Securities, interest rate setting interval - period three | '35 days | ' | ' |
Financial Instruments | ' | ' | ' |
Maximum contractual terms of foreign exchange forward contracts | '1 year | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Number of significant customers for concentration of credit risk | 0 | 1 | 0 |
Software Development Costs | ' | ' | ' |
Maximum amortization period for software development costs | '6 months | ' | ' |
Wal-Mart | Consolidated gross receivables | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Percentage of concentration risk (in percent) | 24.00% | 20.00% | ' |
GameStop | Consolidated net revenues | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Percentage of concentration risk (in percent) | ' | 10.00% | ' |
Summary_of_significant_account4
Summary of significant accounting policies (Details 3) | 12 Months Ended |
Dec. 31, 2013 | |
Buildings | Maximum | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '33 years |
Buildings | Minimum | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '25 years |
Computer equipment | Maximum | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '5 years |
Computer equipment | Minimum | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '2 years |
Office furniture and other equipment. | Maximum | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '5 years |
Office furniture and other equipment. | Minimum | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '2 years |
Summary_of_significant_account5
Summary of significant accounting policies (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for returns and price protection | ' | ' | ' |
Impact of a one percent change in the allowances for sales returns, price protection and other allowances on net revenues | $4 | ' | ' |
Advertising Expenses | ' | ' | ' |
Advertising expense included in sales and marketing expense | $401 | $396 | $343 |
Minimum | ' | ' | ' |
Revenue Recognition | ' | ' | ' |
Estimated service period over which revenues are recognized | '5 months | ' | ' |
Maximum | ' | ' | ' |
Revenue Recognition | ' | ' | ' |
Estimated service period over which revenues are recognized | '1 year | ' | ' |
Summary_of_significant_account6
Summary of significant accounting policies (Details 5) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Definite-lived And Indefinite-lived Intangible Assets [Line Items] | ' | ' | ' |
Impairment of intangible assets | $0 | $0 | $0 |
Impairment of long-lived assets | 0 | 0 | ' |
Goodwill | ' | ' | ' |
Definite-lived And Indefinite-lived Intangible Assets [Line Items] | ' | ' | ' |
Goodwill impairment | $0 | $0 | ' |
Cash_and_Cash_Equivalents_Deta
Cash and Cash Equivalents (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Cash and Cash Equivalents | ' | ' | ' | ' |
Cash | $377,000,000 | $425,000,000 | ' | ' |
Time deposits | 3,000,000 | 23,000,000 | ' | ' |
Foreign government treasury bills | 30,000,000 | 0 | ' | ' |
Money market funds | 4,000,000,000 | 3,511,000,000 | ' | ' |
Cash and cash equivalents | $4,410,000,000 | $3,959,000,000 | $3,165,000,000 | $2,812,000,000 |
Investments_Details
Investments (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Available-for-sale investments, balance sheet | ' | ' |
Fair value | $30,000,000 | ' |
Total short-term investments | 33,000,000 | 416,000,000 |
Available-for-sale investments | ' | ' |
Amortized cost, U.S. treasuries and government agency securities due in 1 year or less | 21,000,000 | ' |
Amortized cost, Auction rate securities due after ten years | 8,000,000 | ' |
Amortized cost | 29,000,000 | ' |
Fair value, U.S. treasuries and government agency securities due in 1 year or less | 21,000,000 | ' |
Fair value, Auction rate securities due after ten years | 9,000,000 | ' |
Fair value | 30,000,000 | ' |
U.S. treasuries and government agency securities | Short-term investments. | ' | ' |
Available-for-sale investments, balance sheet | ' | ' |
Available-for-sale securities, debt maturities, amortized cost | 21,000,000 | 387,000,000 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 0 | 0 |
Fair value | 21,000,000 | 387,000,000 |
Available-for-sale investments | ' | ' |
Fair value | 21,000,000 | 387,000,000 |
Corporate bonds | Short-term investments. | ' | ' |
Available-for-sale investments, balance sheet | ' | ' |
Available-for-sale securities, debt maturities, amortized cost | ' | 11,000,000 |
Gross unrealized gains | ' | 0 |
Gross unrealized losses | ' | 0 |
Fair value | ' | 11,000,000 |
Available-for-sale investments | ' | ' |
Fair value | ' | 11,000,000 |
Restricted cash | Short-term investments. | ' | ' |
Available-for-sale investments, balance sheet | ' | ' |
Fair value | 12,000,000 | 18,000,000 |
Available-for-sale investments | ' | ' |
Fair value | 12,000,000 | 18,000,000 |
Auction rate securities held through Morgan Stanley Smith Barney LLC | Long-term investments. | ' | ' |
Available-for-sale investments, balance sheet | ' | ' |
Available-for-sale securities, debt maturities, amortized cost | 8,000,000 | 8,000,000 |
Gross unrealized gains | 1,000,000 | 0 |
Gross unrealized losses | 0 | 0 |
Fair value | 9,000,000 | 8,000,000 |
Available-for-sale investments | ' | ' |
Fair value | $9,000,000 | $8,000,000 |
Inventories_Details
Inventories (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Inventories, Net | ' | ' |
Finished goods | $149 | $171 |
Purchased parts and components | 22 | 38 |
Inventories, net | 171 | 209 |
Inventory reserves | $42 | $22 |
Software_Development_Costs_and1
Software Development Costs and Intellectual Property Licenses (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Software development and intellectual property licenses: | ' | ' | ' |
Internally developed software costs | $189 | $159 | ' |
Payments made to third-party software developers | 199 | 134 | ' |
Total software development costs | 388 | 293 | ' |
Intellectual property licenses | 11 | 41 | ' |
Amortization, write-offs and impairments: | ' | ' | ' |
Amortization of capitalized software development costs and intellectual property licenses | 195 | 205 | 258 |
Write-offs and impairments | $29 | $12 | $60 |
Property_and_Equipment_Net_Det
Property and Equipment, Net (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Total cost of property and equipment | $586 | $513 | ' |
Less accumulated depreciation | -448 | -372 | ' |
Property and equipment, net | 138 | 141 | ' |
Depreciation expense | 84 | 90 | 75 |
Rental expense | 35 | 37 | 38 |
Land | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Total cost of property and equipment | 1 | 1 | ' |
Buildings | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Total cost of property and equipment | 5 | 5 | ' |
Leasehold improvements | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Total cost of property and equipment | 96 | 80 | ' |
Computer equipment | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Total cost of property and equipment | 424 | 362 | ' |
Office furniture and other equipment | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Total cost of property and equipment | $60 | $65 | ' |
Intangible_Assets_Net_Details
Intangible Assets, Net (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Amortization expense disclosure | ' | ' | ' |
Amortization expense | $24,000,000 | $30,000,000 | $72,000,000 |
Indefinite Lived Intangible Assets | ' | ' | ' |
Net carrying amount, indefinite-lived intangible assets | 433,000,000 | 433,000,000 | ' |
Finite-Lived Intangible Assets | ' | ' | ' |
Gross carrying amount, definite-lived intangible assets | 407,000,000 | 407,000,000 | ' |
Accumulated amortization, definite-lived intangible assets | -364,000,000 | -339,000,000 | ' |
Impairment of intangible assets | 0 | 0 | 0 |
Net carrying amount, definite-lived intangible assets | 43,000,000 | 68,000,000 | ' |
Definite-lived intangible assets, future amortization expense disclosure | ' | ' | ' |
2014 | 15,000,000 | ' | ' |
2015 | 12,000,000 | ' | ' |
2016 | 7,000,000 | ' | ' |
2017 | 4,000,000 | ' | ' |
2018 | 3,000,000 | ' | ' |
Thereafter | 2,000,000 | ' | ' |
Total | 43,000,000 | 68,000,000 | ' |
Activision trademark | ' | ' | ' |
Indefinite Lived Intangible Assets | ' | ' | ' |
Net carrying amount, indefinite-lived intangible assets | 386,000,000 | 386,000,000 | ' |
License agreements and other | ' | ' | ' |
Finite-Lived Intangible Assets | ' | ' | ' |
Gross carrying amount, definite-lived intangible assets | 98,000,000 | 98,000,000 | ' |
Accumulated amortization, definite-lived intangible assets | -90,000,000 | -88,000,000 | ' |
Net carrying amount, definite-lived intangible assets | 8,000,000 | 10,000,000 | ' |
Definite-lived intangible assets, future amortization expense disclosure | ' | ' | ' |
Total | 8,000,000 | 10,000,000 | ' |
License agreements and other | Maximum | ' | ' | ' |
Finite-Lived Intangible Assets | ' | ' | ' |
Estimated useful life | '10 years | '10 years | ' |
License agreements and other | Minimum | ' | ' | ' |
Finite-Lived Intangible Assets | ' | ' | ' |
Estimated useful life | '3 years | '3 years | ' |
Internally developed franchises | ' | ' | ' |
Finite-Lived Intangible Assets | ' | ' | ' |
Gross carrying amount, definite-lived intangible assets | 309,000,000 | 309,000,000 | ' |
Accumulated amortization, definite-lived intangible assets | -274,000,000 | -251,000,000 | ' |
Net carrying amount, definite-lived intangible assets | 35,000,000 | 58,000,000 | ' |
Definite-lived intangible assets, future amortization expense disclosure | ' | ' | ' |
Total | 35,000,000 | 58,000,000 | ' |
Internally developed franchises | Maximum | ' | ' | ' |
Finite-Lived Intangible Assets | ' | ' | ' |
Estimated useful life | '12 years | '12 years | ' |
Internally developed franchises | Minimum | ' | ' | ' |
Finite-Lived Intangible Assets | ' | ' | ' |
Estimated useful life | '11 years | '11 years | ' |
Acquired trade names | ' | ' | ' |
Indefinite Lived Intangible Assets | ' | ' | ' |
Net carrying amount, indefinite-lived intangible assets | $47,000,000 | $47,000,000 | ' |
Goodwill_Details
Goodwill (Details) (USD $) | 12 Months Ended | ||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Activision | Activision | Blizzard | Blizzard | Distribution | |||
Changes in carrying amount of goodwill | ' | ' | ' | ' | ' | ' | ' |
Goodwill, balance at beginning of period | $7,106,000,000 | $7,111,000,000 | $6,928,000,000 | $6,933,000,000 | $178,000,000 | $178,000,000 | ' |
Impairment of goodwill | ' | ' | ' | ' | ' | ' | -12,000,000 |
Tax benefit credited to goodwill | -13,000,000 | -5,000,000 | -13,000,000 | -5,000,000 | 0 | 0 | ' |
Foreign exchange | -1,000,000 | ' | -1,000,000 | ' | 0 | ' | ' |
Goodwill, balance at end of period | 7,092,000,000 | 7,106,000,000 | 6,914,000,000 | 6,928,000,000 | 178,000,000 | 178,000,000 | ' |
Goodwill, before impairment adjustment | 7,092,000,000 | 7,106,000,000 | 6,914,000,000 | 6,928,000,000 | 178,000,000 | 178,000,000 | ' |
Accumulated impairment losses | $0 | $0 | $0 | $0 | $0 | $0 | ' |
Current_Accrued_Expenses_and_O1
Current Accrued Expenses and Other Liabilities (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Current accrued expenses and other liabilities | ' | ' |
Accrued payroll related costs | $254 | $280 |
Deferred costs | ' | ' |
Deferred costs of sales | $240 | $245 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Recurring, USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | $4,051,000,000 | $3,909,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Money market funds | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 4,000,000,000 | 3,511,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Foreign government treasury bills | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 30,000,000 | ' |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | U.S. treasuries and government agency securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 21,000,000 | 387,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Corporate bonds | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | ' | 11,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | ARS | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | 0 |
Fair value measurements using significant other observable inputs (Level 2) | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | 0 |
Fair value measurements using significant other observable inputs (Level 2) | Money market funds | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | 0 |
Fair value measurements using significant other observable inputs (Level 2) | Foreign government treasury bills | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | ' |
Fair value measurements using significant other observable inputs (Level 2) | U.S. treasuries and government agency securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | 0 |
Fair value measurements using significant other observable inputs (Level 2) | Corporate bonds | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | ' | 0 |
Fair value measurements using significant other observable inputs (Level 2) | ARS | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | 0 |
Fair value measurements using significant unobservable inputs (Level 3) | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 9,000,000 | 8,000,000 |
Fair value measurements using significant unobservable inputs (Level 3) | Money market funds | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | 0 |
Fair value measurements using significant unobservable inputs (Level 3) | Foreign government treasury bills | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | ' |
Fair value measurements using significant unobservable inputs (Level 3) | U.S. treasuries and government agency securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 0 | 0 |
Fair value measurements using significant unobservable inputs (Level 3) | Corporate bonds | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | ' | 0 |
Fair value measurements using significant unobservable inputs (Level 3) | ARS | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 9,000,000 | 8,000,000 |
Fair value | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 4,060,000,000 | 3,917,000,000 |
Fair value | Money market funds | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 4,000,000,000 | 3,511,000,000 |
Fair value | Foreign government treasury bills | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 30,000,000 | ' |
Fair value | U.S. treasuries and government agency securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 21,000,000 | 387,000,000 |
Fair value | Corporate bonds | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | ' | 11,000,000 |
Fair value | ARS | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | $9,000,000 | $8,000,000 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 2) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Asset | ' | ' |
Level 3 measurement reconciliation, recurring basis, fair value assets beginning balance | $8 | $16 |
Total unrealized gains included in other comprehensive income | 1 | 2 |
Settlements, assets | ' | -10 |
Level 3 measurement reconciliation, recurring basis, fair value assets ending balance | 9 | 8 |
Maximum contractual terms of foreign exchange forward contracts | '1 year | ' |
Maximum | ' | ' |
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Asset | ' | ' |
Percentage of assets measured on recurring basis at fair value using significant unobservable inputs | 1.00% | ' |
Auction rate securities | ' | ' |
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Asset | ' | ' |
Level 3 measurement reconciliation, recurring basis, fair value assets beginning balance | 8 | 16 |
Total unrealized gains included in other comprehensive income | 1 | 2 |
Settlements, assets | ' | -10 |
Level 3 measurement reconciliation, recurring basis, fair value assets ending balance | $9 | $8 |
Fair_Value_Measurements_Detail2
Fair Value Measurements (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' |
Goodwill | $7,092,000,000 | $7,106,000,000 | $7,111,000,000 |
Notional amount of foreign currency derivatives | 34,000,000 | 355,000,000 | ' |
Pre-tax net gain (loss) on foreign currency contracts | ' | 7,000,000 | -8,000,000 |
Nonrecurring | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' |
Impairment charges - nonrecurring | 0 | 0 | 12,000,000 |
Goodwill impairment | ' | ' | 12,000,000 |
Fair value | Nonrecurring | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' |
Goodwill | ' | ' | 7,111,000,000 |
Total non-financial assets at fair value | ' | ' | 7,111,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Nonrecurring | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' |
Goodwill | ' | ' | 0 |
Total non-financial assets at fair value | ' | ' | 0 |
Fair value measurements using significant other observable inputs (Level 2) | Nonrecurring | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' |
Goodwill | ' | ' | 0 |
Total non-financial assets at fair value | ' | ' | 0 |
Fair value measurements using significant unobservable inputs (Level 3) | Nonrecurring | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' |
Goodwill | ' | ' | 7,111,000,000 |
Total non-financial assets at fair value | ' | ' | $7,111,000,000 |
Debt_Details
Debt (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2013 | Oct. 11, 2013 | Oct. 11, 2013 | Oct. 11, 2013 | Oct. 11, 2013 | Oct. 11, 2013 | Dec. 31, 2013 |
Credit Facilities | Credit Facilities | Credit Facilities | Credit Facilities | Credit Facilities | Term Loan | Term Loan | ||
Prime Rate | Federal Funds Effective Rate | LIBOR Rate | LIBOR Rate | |||||
Base Rate Loans | Base Rate Loans | Base Rate Loans | LIBOR Rate Loans | |||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of required quarterly payments | ' | ' | ' | ' | ' | ' | ' | 0.25% |
LIBOR floor rate | ' | ' | ' | ' | ' | ' | 0.75% | ' |
Variable rate at end of period | ' | 3.25% | ' | ' | ' | ' | ' | ' |
Applicable margin (as a percent) | ' | ' | ' | 0.50% | 1.00% | ' | ' | ' |
Interest expense | $57 | ' | ' | ' | ' | ' | ' | ' |
Description of variable rate basis | ' | ' | 'Prime rate as designated by the administrative agent | 'Federal funds rate | 'LIBOR rate for one month | 'LIBOR | ' | ' |
Percentage of consolidated total assets pledged as collateral | ' | 70.00% | ' | ' | ' | ' | ' | ' |
Debt_Details_2
Debt (Details 2) (USD $) | 12 Months Ended | 0 Months Ended | |||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Feb. 11, 2014 | Dec. 31, 2013 | Oct. 11, 2013 | Dec. 31, 2013 | Oct. 11, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 19, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 19, 2013 | Dec. 31, 2013 | |
Debt discount | Deferred financing costs | Term Loan | Term Loan | Term Loan | Revolver | Revolver | Unsecured Notes | 2021 Notes | 2021 Notes | 2021 Notes | 2023 Notes | 2023 Notes | 2023 Notes | ||||
Fair value measurements using significant other observable inputs (Level 2) | Fair value measurements using significant other observable inputs (Level 2) | ||||||||||||||||
Long-term Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross Carrying Amount | $4,744,000,000 | ' | ' | ' | ' | ' | $2,494,000,000 | ' | ' | ' | ' | $1,500,000,000 | $1,500,000,000 | ' | $750,000,000 | $750,000,000 | ' |
Unamortized Discount | -51,000,000 | ' | ' | ' | ' | ' | -12,000,000 | ' | ' | ' | ' | -26,000,000 | ' | ' | -13,000,000 | ' | ' |
Net Carrying Amount | 4,693,000,000 | ' | ' | ' | ' | ' | 2,482,000,000 | ' | ' | ' | ' | 1,474,000,000 | ' | ' | 737,000,000 | ' | ' |
Less: current portion of long-term debt | -25,000,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Gross Carrying Amount, Long-term debt | 4,719,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Net Carrying Amount, Long-Term Debt | 4,668,000,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maturites of Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2014 | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2015 | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2016 | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2017 | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2018 | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Thereafter | 4,619,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | 4,744,000,000 | ' | ' | ' | ' | ' | 2,494,000,000 | ' | ' | ' | ' | 1,500,000,000 | 1,500,000,000 | ' | 750,000,000 | 750,000,000 | ' |
Interest payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 38,000,000 | ' | ' | ' | ' | ' | ' |
Financing Facilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | 2,500,000,000 | ' | 250,000,000 | ' | ' | ' | ' | ' | ' | ' |
Maximum letter of credit that can be issued under the Revolver | 50,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | ' | ' | ' | ' | ' | ' | ' |
Interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.63% | ' | ' | 6.13% | ' |
Fees and financing costs | 59,000,000 | 0 | 0 | 52,000,000 | 7,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair Value of Notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,559,000,000 | ' | ' | 785,000,000 |
Percentage of principal repayable to option holders upon certain criteria | 101.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum percentage of outstanding Notes that can be redeemed with net cash proceeds from one or more qualified equity offerings | 35.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of the debt discount | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of Revolver outstanding which triggers certain financial covenants | ' | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Repayment of long-term debt | -6,000,000 | 0 | 0 | ' | ' | -375,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of contractual principal repayments in 2014 | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of contractual principal repayments in 2015 | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of contractual principal repayments in 2016 | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of contractual principal repayments in 2017 | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of contractual principal repayments in 2018 | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of contractual principal repayments in 2019 through maturity | ' | ' | ' | ' | ' | $250,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Loss) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Accumulated other comprehensive income (loss) [Line Items] | ' | ' |
Accumulated other comprehensive income (loss), balance at beginning of period | ($26,000,000) | ($72,000,000) |
Other comprehensive income (loss) before reclassifications | 94,000,000 | 46,000,000 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Accumulated other comprehensive income (loss), balance at end of period | 68,000,000 | -26,000,000 |
Foreign currency translation adjustment | ' | ' |
Accumulated other comprehensive income (loss) [Line Items] | ' | ' |
Accumulated other comprehensive income (loss), balance at beginning of period | -26,000,000 | -72,000,000 |
Other comprehensive income (loss) before reclassifications | 93,000,000 | 46,000,000 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Accumulated other comprehensive income (loss), balance at end of period | 67,000,000 | -26,000,000 |
Unrealized gain on available-for-sale securities | ' | ' |
Accumulated other comprehensive income (loss) [Line Items] | ' | ' |
Accumulated other comprehensive income (loss), balance at beginning of period | 0 | 0 |
Other comprehensive income (loss) before reclassifications | 1,000,000 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Accumulated other comprehensive income (loss), balance at end of period | $1,000,000 | $0 |
Operating_Segments_and_Geograp2
Operating Segments and Geographic Region (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
segments | |||||||||||
Operating Segments and Geographic Region | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of operating segments | ' | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | $1,518,000,000 | $691,000,000 | $1,050,000,000 | $1,324,000,000 | $1,768,000,000 | $841,000,000 | $1,075,000,000 | $1,172,000,000 | $4,583,000,000 | $4,856,000,000 | $4,755,000,000 |
Income from operations | 284,000,000 | 70,000,000 | 430,000,000 | 587,000,000 | 484,000,000 | 227,000,000 | 227,000,000 | 513,000,000 | 1,372,000,000 | 1,451,000,000 | 1,328,000,000 |
Net effect from changes in the deferral of net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 241,000,000 | -131,000,000 | 266,000,000 |
Stock-based compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | -110,000,000 | -126,000,000 | -103,000,000 |
Restructuring | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | -25,000,000 |
Amortization of intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | -24,000,000 | -30,000,000 | -72,000,000 |
Interest and other investment income (expense), net | ' | ' | ' | ' | ' | ' | ' | ' | -53,000,000 | 7,000,000 | 3,000,000 |
Income before income tax expense | ' | ' | ' | ' | ' | ' | ' | ' | 1,319,000,000 | 1,458,000,000 | 1,331,000,000 |
Restructuring expense in general and administrative expense related to the business combination | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 |
Long-lived assets | 138,000,000 | ' | ' | ' | 141,000,000 | ' | ' | ' | 138,000,000 | 141,000,000 | ' |
US | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues as a percentage of consolidated net revenues | 51.00% | ' | ' | ' | 48.00% | ' | ' | ' | 51.00% | 48.00% | 49.00% |
UK | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues as a percentage of consolidated net revenues | 14.00% | ' | ' | ' | 14.00% | ' | ' | ' | 14.00% | 14.00% | 16.00% |
France | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues as a percentage of consolidated net revenues | 12.00% | ' | ' | ' | 13.00% | ' | ' | ' | 12.00% | 13.00% | 14.00% |
Activision | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restructuring | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | -25,000,000 |
Distribution | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment of goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -12,000,000 |
Operating segments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 4,342,000,000 | 4,987,000,000 | 4,489,000,000 |
Income from operations | ' | ' | ' | ' | ' | ' | ' | ' | 1,355,000,000 | 1,698,000,000 | 1,358,000,000 |
Long-lived assets | 138,000,000 | ' | ' | ' | 141,000,000 | ' | ' | ' | 138,000,000 | 141,000,000 | 163,000,000 |
Operating segments | Total platform | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 4,260,000,000 | 4,550,000,000 | 4,337,000,000 |
Operating segments | Console | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 2,379,000,000 | 2,186,000,000 | 2,439,000,000 |
Operating segments | PC | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 340,000,000 | 675,000,000 | 282,000,000 |
Operating segments | Online subscriptions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 912,000,000 | 986,000,000 | 1,357,000,000 |
Operating segments | Other | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 629,000,000 | 703,000,000 | 259,000,000 |
Operating segments | North America | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 2,414,000,000 | 2,436,000,000 | 2,405,000,000 |
Long-lived assets | 102,000,000 | ' | ' | ' | 90,000,000 | ' | ' | ' | 102,000,000 | 90,000,000 | 105,000,000 |
Operating segments | Europe | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 1,826,000,000 | 1,968,000,000 | 1,990,000,000 |
Long-lived assets | 29,000,000 | ' | ' | ' | 40,000,000 | ' | ' | ' | 29,000,000 | 40,000,000 | 46,000,000 |
Operating segments | Asia Pacific | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 343,000,000 | 452,000,000 | 360,000,000 |
Long-lived assets | 7,000,000 | ' | ' | ' | 11,000,000 | ' | ' | ' | 7,000,000 | 11,000,000 | 12,000,000 |
Operating segments | Activision | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 2,895,000,000 | 3,072,000,000 | 2,828,000,000 |
Income from operations | ' | ' | ' | ' | ' | ' | ' | ' | 971,000,000 | 970,000,000 | 851,000,000 |
Operating segments | Blizzard | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 1,124,000,000 | 1,609,000,000 | 1,243,000,000 |
Income from operations | ' | ' | ' | ' | ' | ' | ' | ' | 376,000,000 | 717,000,000 | 496,000,000 |
Operating segments | Distribution | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net revenues | ' | ' | ' | ' | ' | ' | ' | ' | 323,000,000 | 306,000,000 | 418,000,000 |
Income from operations | ' | ' | ' | ' | ' | ' | ' | ' | 8,000,000 | 11,000,000 | 11,000,000 |
Reconciliation items | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net effect from changes in the deferral of net revenues and related cost of sales | ' | ' | ' | ' | ' | ' | ' | ' | 229,000,000 | -91,000,000 | 183,000,000 |
Stock-based compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | -110,000,000 | -126,000,000 | -103,000,000 |
Restructuring | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | -26,000,000 |
Amortization of intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | -23,000,000 | -30,000,000 | -72,000,000 |
Fees and other expenses related to the Purchase Transaction and related debt financings | ' | ' | ' | ' | ' | ' | ' | ' | -79,000,000 | 0 | 0 |
Impairment of goodwill | ' | ' | ' | ' | ' | ' | ' | ' | $0 | $0 | ($12,000,000) |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Aggregate common stock reserved for issuance under stock based awards (in shares) | 45,000,000 | ' | ' |
Common stock available for grant under stock-based awards (in shares) | 34,000,000 | ' | ' |
Method and assumptions on valuation of stock options | ' | ' | ' |
Expected life | '6 years 5 months 8 days | '7 years 0 months 18 days | '6 years 6 months 29 days |
Risk free interest rate (in percent) | 1.86% | 1.12% | 1.91% |
Volatility (in percent) | 39.00% | 40.76% | 43.50% |
Expected dividend yield (in percent) | 1.08% | 1.65% | 1.34% |
Weighted-average fair value at the grant date (dollars per share) | $4.97 | $3.47 | $4.17 |
Expected stock price volatility, low end of range (in percent) | 25.73% | ' | ' |
Expected stock volatility rate, high end of range (in percent) | 39.00% | ' | ' |
Stock-based compensation, capitalized software development costs, activity | ' | ' | ' |
Stock-based compensation, software development at the beginning of the period | $19 | $10 | $20 |
Stock-based compensation expense capitalized during the period | 34 | 27 | 27 |
Amortization of capitalized stock-based compensation expense | -31 | -18 | -37 |
Stock-based compensation, software development at the ending of the period | 22 | 19 | 10 |
Restricted Stock Rights | ' | ' | ' |
Restricted stock rights activity | ' | ' | ' |
Restricted stock rights at the beginning of the period (in shares) | 25,605,000 | ' | ' |
Restricted stock rights, granted (in shares) | 5,520,000 | ' | ' |
Restricted stock rights, vested (in shares) | -7,841,000 | ' | ' |
Restricted stock rights, forfeited (in shares) | -719,000 | ' | ' |
Restricted stock rights at the ending of the period (in shares) | 22,565,000 | 25,605,000 | ' |
Restricted stock rights, weighted-average grant date fair value information | ' | ' | ' |
Restricted stock rights, weighted-average grant date fair value at the beginning of the period (dollars per share) | $12.29 | ' | ' |
Restricted stock rights, weighted-average grant date fair value, granted (dollars per share) | $16.31 | ' | ' |
Restricted stock rights, weighted-average grant date fair value, vested (dollars per share) | $12.64 | ' | ' |
Restricted stock rights, weighted-average grant date fair value, forfeited (dollars per share) | $11.92 | ' | ' |
Restricted stock rights, weighted-average grant date fair value (dollars per share) ending balance | $12.63 | $12.29 | ' |
Stock-based compensation, unrecognized compensation | 100 | ' | ' |
Stock-based compensation, unrecognized compensation weighted-average period of recognition | '1 year 6 months | ' | ' |
Total fair value of shares vested | 57 | 45 | 37 |
Restricted Stock Rights | Maximum | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Vesting period of award | '5 years | ' | ' |
Restricted Stock Rights | Minimum | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Vesting period of award | '3 years | ' | ' |
Performance shares | ' | ' | ' |
Restricted stock rights, weighted-average grant date fair value information | ' | ' | ' |
Stock-based compensation, unrecognized compensation | 17 | ' | ' |
Stock-based compensation, unrecognized compensation weighted-average period of recognition | '1 year 4 months 2 days | ' | ' |
Stock Option Plan | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Expiration period of options | '10 years | ' | ' |
Restricted stock rights, weighted-average grant date fair value information | ' | ' | ' |
Stock-based compensation, unrecognized compensation | 21 | ' | ' |
Stock-based compensation, unrecognized compensation weighted-average period of recognition | '1 year 4 months 28 days | ' | ' |
Income tax benefit from stock option exercises and restricted stock rights | 77 | 20 | 28 |
Stock option activity | ' | ' | ' |
Stock options at the beginning of the period (in shares) | 51,748,000 | ' | ' |
Stock options, granted (in shares) | 3,506,000 | ' | ' |
Stock options, exercised (in shares) | -16,001,000 | ' | ' |
Stock options, forfeited (in shares) | -267,000 | ' | ' |
Stock Options, expired (in shares) | -182,000 | ' | ' |
Stock options at the ending of the period (in shares) | 38,804,000 | 51,748,000 | ' |
Stock options, vested and expected to vest (in shares) | 37,856,000 | ' | ' |
Stock options, exercisable (in shares) | 29,397,000 | ' | ' |
Stock options, weighted-average strike price at the beginning of the period (in dollars per share) | $11.45 | ' | ' |
Stock options, weighted-average exercise price, granted (dollars per share) | $17.58 | ' | ' |
Stock options, weighted-average exercise price, exercised (in dollars per share) | $9.91 | ' | ' |
Stock options, weighted-average exercise price, forfeited (in dollars per share) | $11.93 | ' | ' |
Stock options, weighted-average exercise price, expired (in dollars per share) | $11.62 | ' | ' |
Stock options, weighted-average strike price at the end of the period (in dollars per share) | $12.63 | $11.45 | ' |
Stock options, weighted-average exercise price, vested and expected to vest (in dollars per share) | $12.58 | ' | ' |
Stock options, weighted-average exercise price, exercisable (in dollars per share) | $12.27 | ' | ' |
Stock options, weighted-average remaining contractual term | '5 years 9 months 25 days | ' | ' |
Stock options, weighted-average remaining contractual term, vested and expected to vest | '5 years 2 months 1 day | ' | ' |
Stock options, weighted-average remaining contractual term, exercisable | '4 years 11 months 26 days | ' | ' |
Stock options, aggregate intrinsic value | 202 | ' | ' |
Stock options, aggregate intrinsic value, vested and expected to vest | 199 | ' | ' |
Stock options, aggregate intrinsic value, exercisable | 165 | ' | ' |
Stock options, intrinsic value of options exercised | 104 | 25 | 47 |
Total grant date fair value of options vested | $29 | $47 | $57 |
Stock Option Plan | Maximum | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Vesting period of award | '5 years | ' | ' |
Stock Option Plan | Minimum | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Vesting period of award | '3 years | ' | ' |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Stock-based compensation expense before income taxes | $110 | $126 | $103 |
Stock-based compensation expense, income tax benefit | -40 | -46 | -38 |
Total stock-based compensation expense, net of income tax benefit | 70 | 80 | 65 |
Cost of sales - software royalties and amortization | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Stock-based compensation expense before income taxes | 17 | 9 | 10 |
Product development | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Stock-based compensation expense before income taxes | 33 | 20 | 40 |
Sales and marketing | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Stock-based compensation expense before income taxes | 7 | 8 | 6 |
General and administrative | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Stock-based compensation expense before income taxes | $53 | $89 | $47 |
Restructuring_Details
Restructuring (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Restructuring Reserve. | ' | ' | ' |
Balance at beginning of the period | $3,000,000 | $7,000,000 | $0 |
Costs charged to expense | 0 | 0 | 25,000,000 |
Costs paid or otherwise settled | 0 | -4,000,000 | -18,000,000 |
Balance at end of the period | 3,000,000 | 3,000,000 | 7,000,000 |
Severance | ' | ' | ' |
Restructuring Reserve. | ' | ' | ' |
Balance at beginning of the period | 0 | 4,000,000 | 0 |
Costs charged to expense | ' | ' | 20,000,000 |
Costs paid or otherwise settled | 0 | -4,000,000 | -16,000,000 |
Balance at end of the period | 0 | 0 | 4,000,000 |
Facilities costs | ' | ' | ' |
Restructuring Reserve. | ' | ' | ' |
Balance at beginning of the period | 3,000,000 | 3,000,000 | 0 |
Costs charged to expense | ' | ' | 4,000,000 |
Costs paid or otherwise settled | 0 | 0 | -1,000,000 |
Balance at end of the period | 3,000,000 | 3,000,000 | 3,000,000 |
Contract Termination Costs | ' | ' | ' |
Restructuring Reserve. | ' | ' | ' |
Balance at beginning of the period | 0 | 0 | 0 |
Costs charged to expense | ' | ' | 1,000,000 |
Costs paid or otherwise settled | 0 | 0 | -1,000,000 |
Balance at end of the period | $0 | $0 | $0 |
Restructuring_Details_2
Restructuring (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Restructuring Reserve Disclosures [Abstract] | ' | ' | ' |
Restructuring | $0 | $0 | $25 |
Activision | ' | ' | ' |
Restructuring Reserve Disclosures [Abstract] | ' | ' | ' |
Restructuring | $0 | $0 | $25 |
Interest_and_other_investment_1
Interest and other investment income (expense), net (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Interest and Other Investment Income (Expense), Net | ' | ' | ' |
Interest income | $5,000,000 | $6,000,000 | $14,000,000 |
Interest expense | 0 | -1,000,000 | -4,000,000 |
Interest expense from debt and amortization of debt discount and deferred financing costs | -58,000,000 | 0 | 0 |
Pre-tax net realized gain (loss) on foreign exchange contracts | 0 | 2,000,000 | -7,000,000 |
Interest and other investment income (expense), net | ($53,000,000) | $7,000,000 | $3,000,000 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income (loss) before income tax benefit: | ' | ' | ' |
Domestic | $626,000,000 | $668,000,000 | $623,000,000 |
Foreign | 693,000,000 | 790,000,000 | 708,000,000 |
Income before income tax expense | 1,319,000,000 | 1,458,000,000 | 1,331,000,000 |
Current: | ' | ' | ' |
Federal | 100,000,000 | 256,000,000 | 144,000,000 |
State | 6,000,000 | 14,000,000 | -2,000,000 |
Foreign | 31,000,000 | 49,000,000 | 28,000,000 |
Total Current | 137,000,000 | 319,000,000 | 170,000,000 |
Deferred | ' | ' | ' |
Federal | 134,000,000 | 12,000,000 | 61,000,000 |
State | -12,000,000 | -11,000,000 | -4,000,000 |
Foreign | 39,000,000 | -11,000,000 | 19,000,000 |
Total Deferred | 161,000,000 | -10,000,000 | 76,000,000 |
Add back benefit credited to additional paid-in capital: | ' | ' | ' |
Excess tax benefit associated with stock options | 11,000,000 | 0 | 0 |
Income tax expense | $309,000,000 | $309,000,000 | $246,000,000 |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 0 Months Ended | 12 Months Ended | ||
Oct. 11, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Difference between income taxes computed at the U.S. federal statutory income tax rate and the income tax expense (benefit) | ' | ' | ' | ' |
Federal income tax provision at statutory rate | ' | $462,000,000 | $510,000,000 | $466,000,000 |
Statutory income tax rate (in percent) | ' | 35.00% | 35.00% | 35.00% |
State taxes, net of federal benefit | ' | 6,000,000 | 31,000,000 | 18,000,000 |
State taxes, net of federal benefit (in percent) | ' | 0.00% | 2.00% | 1.00% |
Research and development credits | ' | -49,000,000 | -10,000,000 | -21,000,000 |
Research and development credits (in percent) | ' | -4.00% | -1.00% | -2.00% |
Domestic production activity deduction | ' | -9,000,000 | -17,000,000 | -15,000,000 |
Domestic production activity deduction (in percent) | ' | -1.00% | -1.00% | -1.00% |
Foreign rate differential | ' | -174,000,000 | -241,000,000 | -202,000,000 |
Foreign rate differential (in percent) | ' | -13.00% | -17.00% | -15.00% |
Change in tax reserves | ' | 89,000,000 | 53,000,000 | 23,000,000 |
Change in tax reserves (in percent) | ' | 7.00% | 4.00% | 2.00% |
Shortfall from employee stock option exercises | ' | 0 | 8,000,000 | 9,000,000 |
Shortfall from employee stock option exercises (in percent) | ' | 0.00% | 0.00% | 1.00% |
Return to provision adjustment | ' | -3,000,000 | -4,000,000 | -44,000,000 |
Return to provision adjustment (in percent) | ' | 0.00% | 0.00% | -3.00% |
Net Operating Loss tax attribute received from Internal Revenue Service audit | ' | 0 | -46,000,000 | 0 |
Net Operating Loss tax attribute received from IRS audit (in percent) | ' | 0.00% | -3.00% | 0.00% |
Net Operating Loss tax attribute received from Purchase Transaction | ' | -16,000,000 | 0 | 0 |
Net Operating Loss tax attribute received from Purchase Transaction (in percent) | ' | -1.00% | 0.00% | 0.00% |
Other | ' | 3,000,000 | 25,000,000 | 12,000,000 |
Other (in percent) | ' | 0.00% | 2.00% | 1.00% |
Income tax expense | ' | 309,000,000 | 309,000,000 | 246,000,000 |
Total (in percent) | ' | 23.00% | 21.00% | 19.00% |
Purchase Transaction [Line Items] | ' | ' | ' | ' |
Potential Future Tax Benefit | ' | 309,000,000 | 309,000,000 | 246,000,000 |
Net Operating Loss Carryforward Indemnification Amount Obtained | 200,000,000 | ' | ' | ' |
Indemnification asset recorded in other assets | ' | 16,000,000 | ' | ' |
R&D Tax Credit | ' | 49,000,000 | 10,000,000 | 21,000,000 |
American Taxpayer Relief Act of 2012 | ' | ' | ' | ' |
Difference between income taxes computed at the U.S. federal statutory income tax rate and the income tax expense (benefit) | ' | ' | ' | ' |
Research and development credits | ' | ' | -12,000,000 | ' |
Purchase Transaction [Line Items] | ' | ' | ' | ' |
R&D Tax Credit | ' | ' | 12,000,000 | ' |
New VH | ' | ' | ' | ' |
Purchase Transaction [Line Items] | ' | ' | ' | ' |
Net Operating Loss Carryforwards | 676,000,000 | ' | ' | ' |
Net operating loss utilized - New VH NOL | ' | 45,000,000 | ' | ' |
Indemnification asset recorded in other assets | ' | 16,000,000 | ' | ' |
Vivendi Games | ' | ' | ' | ' |
Purchase Transaction [Line Items] | ' | ' | ' | ' |
Net Operating Loss Carryforwards | ' | ' | 132,000,000 | ' |
Expected | New VH | ' | ' | ' | ' |
Difference between income taxes computed at the U.S. federal statutory income tax rate and the income tax expense (benefit) | ' | ' | ' | ' |
Income tax expense | -237,000,000 | ' | ' | ' |
Purchase Transaction [Line Items] | ' | ' | ' | ' |
Potential Future Tax Benefit | ($237,000,000) | ' | ' | ' |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred tax assets: | ' | ' |
Reserves and allowances | $3,000,000 | $11,000,000 |
Allowance for sales returns and price protection | 63,000,000 | 56,000,000 |
Inventory reserve | 8,000,000 | 5,000,000 |
Accrued expenses | 48,000,000 | 65,000,000 |
Deferred revenue | 273,000,000 | 357,000,000 |
Tax credit carryforwards | 81,000,000 | 62,000,000 |
Net operating loss carryforwards | 11,000,000 | 14,000,000 |
Stock-based compensation | 91,000,000 | 119,000,000 |
Foreign deferred assets | 13,000,000 | 7,000,000 |
Transaction costs | 11,000,000 | 0 |
Other | 9,000,000 | 2,000,000 |
Deferred tax assets | 611,000,000 | 698,000,000 |
Valuation allowance | 0 | 0 |
Deferred tax assets, net of valuation allowance | 611,000,000 | 698,000,000 |
Deferred tax liabilities: | ' | ' |
Intangibles | -152,000,000 | -161,000,000 |
Prepaid royalties | -71,000,000 | 0 |
Capitalized software development expenses | -60,000,000 | -54,000,000 |
State taxes | -27,000,000 | -21,000,000 |
Deferred tax liabilities | -310,000,000 | -236,000,000 |
Net deferred tax assets (liabilities) | 301,000,000 | 462,000,000 |
Various state net operating loss carryforwards | 16,000,000 | ' |
Tax credit carryforward, federal | 6,000,000 | ' |
Tax credit carrforwards, state | 75,000,000 | ' |
Deferred Tax Assets, Operating Loss Carryforwards, Foreign | $37,000,000 | ' |
Income_Taxes_Details_4
Income Taxes (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Taxes | ' | ' | ' |
Undistributed earnings of foreign subsidiaries | $2,593,000,000 | ' | ' |
Unrecognized tax benefits that affect our effective tax rate if recognized | 294,000,000 | ' | ' |
Reconciliation of unrecognized tax benefits | ' | ' | ' |
Unrecognized tax benefits balance at January 1 | 207,000,000 | 154,000,000 | 132,000,000 |
Gross increase for tax positions of prior years | 1,000,000 | 3,000,000 | 4,000,000 |
Gross increase for tax positions of current year | 91,000,000 | 59,000,000 | 65,000,000 |
Settlements | 0 | -8,000,000 | 0 |
Lapse of statute of limitations | -5,000,000 | -1,000,000 | -47,000,000 |
Unrecognized tax benefits balance at December 31 | 294,000,000 | 207,000,000 | 154,000,000 |
Income tax liabilities, non-current | 271,000,000 | 197,000,000 | ' |
Accrued interest and penalties related to uncertain tax positions | 13,000,000 | 11,000,000 | ' |
Interest expense related to uncertain tax positions | 2,000,000 | 0 | 1,000,000 |
Reduction in previously unrecognized tax benefits within next twelve months | $23,000,000 | ' | ' |
Computation_of_Earnings_Loss_P2
Computation of Earnings (Loss) Per Basic/Diluted Common Share (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Numerator: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net income (loss) | $174 | $56 | $324 | $456 | $354 | $226 | $185 | $384 | $1,010 | $1,149 | $1,085 |
Less: Distributed earnings to unvested share-based awards that participate in earnings | ' | ' | ' | ' | ' | ' | ' | ' | -5 | -4 | -3 |
Less: Undistributed earnings allocated to unvested share-based awards that participate in earnings | ' | ' | ' | ' | ' | ' | ' | ' | -18 | -20 | -13 |
Numerator for basic earnings per common share-income (loss) available to common shareholders | ' | ' | ' | ' | ' | ' | ' | ' | $987 | $1,125 | $1,069 |
Denominator: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Denominator for basic earnings per common share - weighted-average common shares outstanding (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 1,024 | 1,112 | 1,148 |
Effect of potential dilutive common shares under the treasury stock method: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Employee stock options (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 11 | 6 | 8 |
Denominator for diluted earnings per common share - weighted-average common shares outstanding plus dilutive effect of employee stock options (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 1,035 | 1,118 | 1,156 |
Basic earnings per common share (in dollars per share) | $0.23 | $0.05 | $0.28 | $0.40 | $0.31 | $0.20 | $0.16 | $0.34 | $0.96 | $1.01 | $0.93 |
Diluted earnings per common share (in dollars per share) | $0.22 | $0.05 | $0.28 | $0.40 | $0.31 | $0.20 | $0.16 | $0.33 | $0.95 | $1.01 | $0.92 |
Common stock weighted-average shares, unvested restricted stock rights (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 24 | 24 | ' |
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 5 | 25 | 25 |
Capital_Transactions_Details
Capital Transactions (Details) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | ||||
Oct. 11, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Feb. 02, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 03, 2011 | Dec. 31, 2012 | Dec. 31, 2011 | Feb. 10, 2010 | Jan. 31, 2011 | |
2012 Share Repurchase Program | 2012 Share Repurchase Program | 2012 Share Repurchase Program | 2011 Share Repurchase Program | 2011 Share Repurchase Program | 2011 Share Repurchase Program | 2010 Share Repurchase Program | 2010 Share Repurchase Program | |||||
Share Repurchase Program [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock repurchase program, dollar amount authorized | ' | ' | ' | ' | $1,000,000,000 | ' | ' | $1,500,000,000 | ' | ' | $1,000,000,000 | ' |
Cost of common stock repurchased under the stock repurchase program | ' | 5,830,000,000 | 315,000,000 | 692,000,000 | ' | 0 | 54,000,000 | ' | 261,000,000 | 670,000,000 | ' | ' |
Shares of common stock repurchased | 429,000,000 | ' | ' | ' | ' | 0 | 4,000,000 | ' | 22,000,000 | 59,000,000 | ' | ' |
Shares of common stock agreed to be repurchase but not yet settled as of the end of the period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,000,000 |
Cost of common stock agreed to be repurchase but not yet settled as of the end of the period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $22,000,000 |
Capital_Transactions_Details_2
Capital Transactions (Details 2) (USD $) | 0 Months Ended | 12 Months Ended | ||||||||
In Millions, except Per Share data, unless otherwise specified | Feb. 06, 2014 | 31-May-13 | 15-May-13 | Jun. 01, 2012 | 16-May-12 | Aug. 12, 2011 | 11-May-11 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Dividends | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends per common share (in dollars per share) | $0.20 | ' | ' | ' | ' | ' | ' | $0.19 | $0.18 | $0.17 |
Cash dividend payment | ' | ' | $212 | ' | $201 | ' | $192 | $216 | $204 | $194 |
Dividend equivalent payment | ' | $4 | ' | $3 | ' | $2 | ' | ' | ' | ' |
Supplemental_Cash_Flow_Informa2
Supplemental Cash Flow Information (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Supplemental Cash Flow Information | ' | ' | ' |
Cash paid for income taxes | $138 | $159 | $317 |
Cash paid for interest | $19 | $2 | $4 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 |
In Millions, unless otherwise specified | USD ($) | USD ($) | European subsidiary | European subsidiary | European subsidiary | European subsidiary |
USD ($) | EUR (€) | USD ($) | EUR (€) | |||
Commitments and Contingencies [Line Items] | ' | ' | ' | ' | ' | ' |
Maximum letter of credit that can be issued under the Revolver | $50 | ' | ' | ' | ' | ' |
Standby letter of credit | $10 | $15 | $21 | € 15 | $7 | € 5 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Long-term Purchase Commitment [Line Items] | ' | ' | ' | ' |
Unrecognized tax benefits | $294,000,000 | $207,000,000 | $154,000,000 | $132,000,000 |
Unrecognized tax benefits included in Other Liabilities | 271,000,000 | 197,000,000 | ' | ' |
Unrecognized tax benefits included in Accrued Expenses and Other Liabilities | 23,000,000 | ' | ' | ' |
Total Contractual Obligations | ' | ' | ' | ' |
Long-term Purchase Commitment [Line Items] | ' | ' | ' | ' |
2014 | 253,000,000 | ' | ' | ' |
2015 | 55,000,000 | ' | ' | ' |
2016 | 30,000,000 | ' | ' | ' |
2017 | 29,000,000 | ' | ' | ' |
2018 | 25,000,000 | ' | ' | ' |
Thereafter | 48,000,000 | ' | ' | ' |
Total | 440,000,000 | ' | ' | ' |
Facility and equipment leases | ' | ' | ' | ' |
Long-term Purchase Commitment [Line Items] | ' | ' | ' | ' |
2014 | 34,000,000 | ' | ' | ' |
2015 | 31,000,000 | ' | ' | ' |
2016 | 27,000,000 | ' | ' | ' |
2017 | 26,000,000 | ' | ' | ' |
2018 | 25,000,000 | ' | ' | ' |
Thereafter | 46,000,000 | ' | ' | ' |
Total | 189,000,000 | ' | ' | ' |
Developer and Intellectual Properties | ' | ' | ' | ' |
Long-term Purchase Commitment [Line Items] | ' | ' | ' | ' |
2014 | 145,000,000 | ' | ' | ' |
2015 | 16,000,000 | ' | ' | ' |
2016 | 2,000,000 | ' | ' | ' |
2017 | 2,000,000 | ' | ' | ' |
2018 | 0 | ' | ' | ' |
Thereafter | 2,000,000 | ' | ' | ' |
Total | 167,000,000 | ' | ' | ' |
Marketing | ' | ' | ' | ' |
Long-term Purchase Commitment [Line Items] | ' | ' | ' | ' |
2014 | 74,000,000 | ' | ' | ' |
2015 | 8,000,000 | ' | ' | ' |
2016 | 1,000,000 | ' | ' | ' |
2017 | 1,000,000 | ' | ' | ' |
2018 | 0 | ' | ' | ' |
Thereafter | 0 | ' | ' | ' |
Total | $84,000,000 | ' | ' | ' |
Recently_issued_accounting_pro
Recently issued accounting pronouncements (Details) (USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Jan. 02, 2014 |
Recently Issued Accounting Standards | ' |
Reclassification between deferred income taxes, net under non-current liabilities and other liabilities under non-current liabilities related to the presentation of an unrecognized tax benefit in the financial statements | $46 |
Quarterly_Financial_and_Market2
Quarterly Financial and Market Information (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Quarterly Financial and Market Information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenues | $1,518 | $691 | $1,050 | $1,324 | $1,768 | $841 | $1,075 | $1,172 | $4,583 | $4,856 | $4,755 |
Cost of sales | 655 | 175 | 285 | 416 | 682 | 237 | 377 | 364 | ' | ' | ' |
Operating (loss) income | 284 | 70 | 430 | 587 | 484 | 227 | 227 | 513 | 1,372 | 1,451 | 1,328 |
Net income | $174 | $56 | $324 | $456 | $354 | $226 | $185 | $384 | $1,010 | $1,149 | $1,085 |
Basic earnings per common share (in dollars per share) | $0.23 | $0.05 | $0.28 | $0.40 | $0.31 | $0.20 | $0.16 | $0.34 | $0.96 | $1.01 | $0.93 |
Diluted earnings per common share (in dollars per share) | $0.22 | $0.05 | $0.28 | $0.40 | $0.31 | $0.20 | $0.16 | $0.33 | $0.95 | $1.01 | $0.92 |
Subsequent_events_Details
Subsequent events (Details) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||
Feb. 06, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Feb. 11, 2014 | Feb. 06, 2014 | |
Subsequent Events | Subsequent Events | |||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' |
Dividends per common share (in dollars per share) | $0.20 | $0.19 | $0.18 | $0.17 | ' | $0.20 |
Repayment of long-term debt | ' | $6,000,000 | $0 | $0 | $375,000,000 | ' |
SCHEDULE_II_VALUATION_AND_QUAL2
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for sales returns and price protection and other allowances | ' | ' | ' |
Valuation and qualifying accounts, reconciliation | ' | ' | ' |
Valuation and qualifying accounts, balance at the beginning of period | $323 | $292 | $373 |
Valuation and qualifying accounts, additions | 174 | 170 | 166 |
Valuation and qualifying accounts, deductions | -121 | -139 | -247 |
Valuation and qualifying accounts, balance at the end of period | 376 | 323 | 292 |
Allowance for doubtful accounts | ' | ' | ' |
Valuation and qualifying accounts, reconciliation | ' | ' | ' |
Valuation and qualifying accounts, balance at the beginning of period | 9 | 8 | 4 |
Valuation and qualifying accounts, additions | 1 | 1 | 4 |
Valuation and qualifying accounts, deductions | -5 | 0 | 0 |
Valuation and qualifying accounts, balance at the end of period | $5 | $9 | $8 |