Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 22, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | Activision Blizzard, Inc. | ||
Entity Central Index Key | 718,877 | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Type | 10-K | ||
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 | $ 13,345,675,247 | ||
Entity Common Stock, Shares Outstanding | 734,998,115 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 1,823 | $ 4,848 |
Short-term investments | 8 | 10 |
Accounts receivable, net of allowances of $343 and $383 at December 31, 2015 and December 31, 2014, respectively | 679 | 659 |
Inventories, net | 128 | 123 |
Software development | 336 | 452 |
Intellectual property licenses | 30 | 5 |
Other current assets | 383 | 444 |
Total current assets | 3,387 | 6,541 |
Cash in escrow | 3,561 | 0 |
Long-term investments | 9 | 9 |
Software development | 80 | 20 |
Intellectual property licenses | 0 | 18 |
Property and equipment, net | 189 | 157 |
Deferred income taxes, net | 275 | 264 |
Other assets | 173 | 85 |
Intangible assets, net | 49 | 29 |
Trademark and trade names | 433 | 433 |
Goodwill | 7,095 | 7,086 |
Total assets | 15,251 | 14,642 |
Current liabilities: | ||
Accounts payable | 284 | 325 |
Deferred revenues | 1,702 | 1,797 |
Accrued expenses and other liabilities | 625 | 592 |
Total current liabilities | 2,611 | 2,714 |
Long-term debt, net | 4,079 | 4,324 |
Deferred income taxes, net | 10 | 10 |
Other liabilities | 483 | 361 |
Total liabilities | 7,183 | $ 7,409 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, $0.000001 par value, 2,400,000,000 shares authorized, 1,163,179,140 and 1,150,605,926 shares issued at December 31, 2015 and December 31, 2014, respectively | 0 | $ 0 |
Additional paid-in capital | 10,242 | 9,924 |
Less: Treasury stock, at cost, 428,676,471 shares at December 31, 2015 and December 31, 2014 | (5,637) | (5,762) |
Retained earnings | 4,096 | 3,374 |
Accumulated other comprehensive loss | (633) | (303) |
Total shareholders' equity | 8,068 | 7,233 |
Total liabilities and shareholders' equity | $ 15,251 | $ 14,642 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 343 | $ 383 |
Common stock, par value (in dollars per share) | $ 0.000001 | $ 0.000001 |
Common stock, shares authorized | 2,400,000,000 | 2,400,000,000 |
Common stock, shares issued | 1,163,179,140 | 1,150,605,926 |
Treasury stock, shares | 428,676,471 | 428,676,471 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net revenues | |||
Product sales | $ 2,447 | $ 2,786 | $ 3,201 |
Subscription, licensing, and other revenues | 2,217 | 1,622 | 1,382 |
Total net revenues | 4,664 | 4,408 | 4,583 |
Costs and expenses | |||
Cost of sales - product costs | 921 | 999 | 1,053 |
Cost of sales - online | 224 | 232 | 204 |
Cost of sales - software royalties and amortization | 412 | 260 | 187 |
Cost of sales - intellectual property licenses | 28 | 34 | 87 |
Product development | 646 | 571 | 584 |
Sales and marketing | 734 | 712 | 606 |
General and administrative | 380 | 417 | 490 |
Total costs and expenses | 3,345 | 3,225 | 3,211 |
Operating income | 1,319 | 1,183 | 1,372 |
Interest and other expense, net | 198 | 202 | 53 |
Income before income tax expense | 1,121 | 981 | 1,319 |
Income tax expense | 229 | 146 | 309 |
Net income | $ 892 | $ 835 | $ 1,010 |
Earnings per common share | |||
Basic (in dollars per share) | $ 1.21 | $ 1.14 | $ 0.96 |
Diluted (in dollars per share) | $ 1.19 | $ 1.13 | $ 0.95 |
Weighted-average number of shares outstanding | |||
Basic (in shares) | 728 | 716 | 1,024 |
Diluted (in shares) | 739 | 726 | 1,035 |
Dividends per common share (in dollars per share) | $ 0.23 | $ 0.20 | $ 0.19 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 892 | $ 835 | $ 1,010 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustment | (326) | (371) | 93 |
Unrealized losses on forward contracts designated as hedges, net of tax | (4) | 0 | 0 |
Unrealized gains on investments, net of tax | 0 | 0 | 1 |
Other comprehensive income (loss) | (330) | (371) | 94 |
Comprehensive Income | $ 562 | $ 464 | $ 1,104 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) |
Balance at Dec. 31, 2012 | $ 11,317 | $ 0 | $ 0 | $ 9,450 | $ 1,893 | $ (26) |
Balance (in shares) at Dec. 31, 2012 | 1,112 | 0 | ||||
Components of comprehensive income: | ||||||
Net income | 1,010 | 1,010 | ||||
Other comprehensive income (loss) | 94 | 94 | ||||
Issuance of common stock pursuant to employee stock options | 158 | 158 | ||||
Issuance of common stock pursuant to employee stock options (in shares) | 16 | |||||
Issuance of common stock pursuant to restricted stock rights (in shares) | 8 | |||||
Restricted stock surrendered for employees' tax liability | (49) | (49) | ||||
Restricted stock surrendered for employees' tax liability (in shares) | (4) | |||||
Tax benefit associated with employee stock awards | 11 | 11 | ||||
Stock-based compensation expense related to employee stock options and restricted stock rights | 112 | 112 | ||||
Dividends ($0.23, $0.20, and $0.19 per common share at December 31, 2015, 2014, and 2013, respectively) | (217) | (217) | ||||
Shares repurchased | (5,830) | $ (5,830) | ||||
Shares repurchased (in shares) | (429) | |||||
Indemnity on tax attributes assumed in connection with the Purchase Transaction | 16 | $ 16 | ||||
Balance at Dec. 31, 2013 | 6,622 | $ 0 | $ (5,814) | 9,682 | 2,686 | 68 |
Balance (in shares) at Dec. 31, 2013 | 1,132 | 429 | ||||
Components of comprehensive income: | ||||||
Net income | 835 | 835 | ||||
Other comprehensive income (loss) | (371) | (371) | ||||
Issuance of common stock pursuant to employee stock options | 172 | 172 | ||||
Issuance of common stock pursuant to employee stock options (in shares) | 14 | |||||
Issuance of common stock pursuant to restricted stock rights (in shares) | 7 | |||||
Restricted stock surrendered for employees' tax liability | (66) | (66) | ||||
Restricted stock surrendered for employees' tax liability (in shares) | (2) | |||||
Tax benefit associated with employee stock awards | 30 | 30 | ||||
Stock-based compensation expense related to employee stock options and restricted stock rights | 106 | 106 | ||||
Dividends ($0.23, $0.20, and $0.19 per common share at December 31, 2015, 2014, and 2013, respectively) | (147) | (147) | ||||
Indemnity on tax attributes assumed in connection with the Purchase Transaction | 52 | $ 52 | ||||
Balance at Dec. 31, 2014 | 7,233 | $ 0 | $ (5,762) | 9,924 | 3,374 | (303) |
Balance (in shares) at Dec. 31, 2014 | 1,151 | 429 | ||||
Components of comprehensive income: | ||||||
Net income | 892 | 892 | ||||
Other comprehensive income (loss) | (330) | (330) | ||||
Issuance of common stock pursuant to employee stock options | 106 | 106 | ||||
Issuance of common stock pursuant to employee stock options (in shares) | 8 | |||||
Issuance of common stock pursuant to restricted stock rights (in shares) | 7 | |||||
Restricted stock surrendered for employees' tax liability | (83) | (83) | ||||
Restricted stock surrendered for employees' tax liability (in shares) | (3) | |||||
Tax benefit associated with employee stock awards | 65 | 65 | ||||
Stock-based compensation expense related to employee stock options and restricted stock rights | 95 | 95 | ||||
Dividends ($0.23, $0.20, and $0.19 per common share at December 31, 2015, 2014, and 2013, respectively) | (170) | (170) | ||||
Indemnity on tax attributes assumed in connection with the Purchase Transaction | 58 | $ 58 | ||||
Shareholder settlement in connection with the Purchase Transaction | 202 | 67 | 135 | |||
Balance at Dec. 31, 2015 | $ 8,068 | $ 0 | $ (5,637) | $ 10,242 | $ 4,096 | $ (633) |
Balance (in shares) at Dec. 31, 2015 | 1,163 | 429 |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | Feb. 03, 2015 | Feb. 06, 2014 | Feb. 07, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Stockholders' Equity [Abstract] | ||||||
Dividends per common share (in dollars per share) | $ 0.23 | $ 0.20 | $ 0.19 | $ 0.23 | $ 0.20 | $ 0.19 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Cash flows from operating activities: | ||||
Net income | $ 892 | $ 835 | $ 1,010 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Deferred income taxes | (27) | (44) | 161 | |
Provision for inventories | 43 | 39 | 33 | |
Depreciation and amortization | 95 | 90 | 108 | |
Loss on disposal of property and equipment | 0 | 1 | 0 | |
Amortization of capitalized software development costs and intellectual property licenses | [1] | 399 | 256 | 207 |
Amortization of debt discount and debt financing costs | 7 | 7 | 1 | |
Stock-based compensation expense | [2] | 92 | 104 | 108 |
Excess tax benefits from stock awards | (67) | (39) | (29) | |
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | (40) | (177) | 198 | |
Inventories | (54) | (2) | 6 | |
Software development and intellectual property licenses | (350) | (349) | (268) | |
Other assets | 21 | 18 | (67) | |
Deferred revenues | (27) | 475 | (275) | |
Accounts payable | (25) | (12) | 7 | |
Accrued expenses and other liabilities | 233 | 90 | 64 | |
Net cash provided by operating activities | 1,192 | 1,292 | 1,264 | |
Cash flows from investing activities: | ||||
Proceeds from maturities of available-for-sale investments | 145 | 21 | 304 | |
Proceeds from sales of available-for-sale investments | 0 | 0 | 98 | |
Purchases of available-for-sale investments | (145) | 0 | (26) | |
Acquisition of business (see Note 23) | (46) | 0 | 0 | |
Cash in escrow (see Note 24) | (3,561) | 0 | 0 | |
Capital expenditures | (111) | (107) | (74) | |
Decrease in restricted cash | 2 | 2 | 6 | |
Net cash (used in) provided by investing activities | (3,716) | (84) | 308 | |
Cash flows from financing activities: | ||||
Proceeds from issuance of common stock to employees | 106 | 175 | 158 | |
Tax payment related to net share settlements on restricted stock rights | (83) | (66) | (49) | |
Excess tax benefits from stock awards | 67 | 39 | 29 | |
Repurchase of common stock | 0 | 0 | (5,830) | |
Dividends paid | (170) | (147) | (216) | |
Proceeds from issuance of long-term debt | 0 | 0 | 4,750 | |
Repayment of long-term debt | (250) | (375) | (6) | |
Payment of debt financing costs | (7) | 0 | (59) | |
Proceeds received from shareholder settlement | 202 | 0 | 0 | |
Net cash used in financing activities | (135) | (374) | (1,223) | |
Effect of foreign exchange rate changes on cash and cash equivalents | (366) | (396) | 102 | |
Net (decrease) increase in cash and cash equivalents | (3,025) | 438 | 451 | |
Cash and cash equivalents at beginning of period | 4,848 | 4,410 | 3,959 | |
Cash and cash equivalents at end of period | $ 1,823 | $ 4,848 | $ 4,410 | |
[1] | Excludes deferral and amortization of stock-based compensation expense. | |||
[2] | Includes the net effects of capitalization, deferral, and amortization of stock-based compensation expense. |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | 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 currently offer games for video game consoles, personal computers ("PC"), and handheld, mobile and tablet devices. 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 King Acquisition On November 2, 2015, we and King Digital Entertainment plc, a leading interactive entertainment company for the mobile world incorporated under the laws of Ireland (“King”), entered into a Transaction Agreement (the “Transaction Agreement”) under the terms of which we would acquire King (the “King Acquisition”) and King would become a wholly-owned subsidiary of the Company. On February 23, 2016 we completed the King Acquisition as further described in Note 24 below. As the closing of the King Acquisition occurred subsequent to December 31, 2015, our financial results as of and for the year ended December 31, 2015 do not contain the results of King. The Business Combination and 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 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"). Refer to Note 11 of the Notes to Consolidated Financial Statements for further information regarding the financing of 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"). Robert A. Kotick, our Chief Executive Officer, and Brian G. Kelly, Chairman of our Board of Directors, are affiliates of ASAC II LLC. On May 28, 2014, Vivendi sold approximately 41 million shares, or approximately 50% of its then-current holdings, of our common stock in a registered public offering. Vivendi received proceeds of approximately $850 million from that sale; we did not receive any proceeds. As of December 31, 2015 , we had approximately 734 million shares of common stock issued and outstanding. At that date, (i) Vivendi held 41 million shares, or approximately 6% of the outstanding shares of our common stock, (ii) ASAC held 172 million shares, or approximately 23% of the outstanding shares of our common stock, and (iii) our other stockholders held approximately 71% of the outstanding shares of our common stock. On January 13, 2016, Vivendi sold all of their remaining shares of our common stock. We did not receive any proceeds. Based upon our organizational structure, we conduct our business through two reportable operating segments, Activision Publishing, Inc. and Blizzard Entertainment, Inc. Previously, we reported “Distribution” as a reportable segment. In the current period, this was no longer deemed a separate reportable segment and is included in “Other”, along with our recently announced media networks and film and television studio businesses. (i) Activision Publishing, Inc. Activision Publishing, Inc. ("Activision") is a leading international developer and publisher of interactive software products and content. Activision delivers content to a broad range of gamers, ranging from children to adults, and from core gamers to mass-market consumers to "value" buyers seeking budget-priced software, in a variety of geographies. Activision develops games based on internally-developed properties, including games in the Call of Duty® and Skylanders® franchises, and to a lesser extent, based on licensed intellectual properties. Additionally, we have established a long-term alliance with Bungie to publish its game universe, Destiny ®. Activision sells games through both retail and digital online channels. 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 (Xbox One, Wii U, and PS4 are collectively referred to as "next-generation"; Xbox 360, Wii, and PS3 are collectively referred to as "prior-generation"); the PC; the Nintendo 3DS, Nintendo Dual Screen, and Sony PlayStation Vita handheld game systems; and mobile and tablet devices. (ii) Blizzard Entertainment, Inc. Blizzard Entertainment, Inc. ("Blizzard") is a leader in online PC gaming, including the subscription-based massively multi-player online role-playing game ("MMORPG") category in terms of both subscriber base and revenues generated through its World of Warcraft® franchise. Blizzard also develops, markets, and sells role-playing action and strategy games for the PC, console, mobile and tablet platforms, including games in the multiple-award winning Diablo®, StarCraft®, Hearthstone®: Heroes of Warcraft™ and Heroes of the Storm™ franchises. In addition, Blizzard maintains a proprietary online gaming service, Battle.net®, which facilitates the creation of user-generated content, digital distribution and online social connectivity across all Blizzard games. Blizzard distributes its products and generates revenues worldwide through various means, including: subscriptions; sales of prepaid subscription cards; in-game purchases and services; retail sales of physical "boxed" products; online download sales of PC products; purchases and downloads via third-party console, mobile and tablet platforms; and licensing of software to third-party or related party companies that distribute Blizzard products. (iii) Other We also engage in other business opportunities including: • The Activision Blizzard Media Networks ("Media Networks") business, announced in 2015 which builds on our efforts in competitive gaming and the growing eSports industry; • The Activision Blizzard Studios ("Studios") business, announced in 2015 which is devoted to creating original film and television content based on the company's extensive library of iconic and globally-recognized intellectual properties; and • The Activision Blizzard Distribution ("Distribution") business, which 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 Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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. 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. Cash in Escrow As part of the King Acquisition, we were required to deposit $3.56 billion in cash to be held in an escrow account until the earlier of (i) the completion of the King Acquisition, or (ii) the termination of the Transaction Agreement. The cash was not accessible to the Company for operating cash needs as its use had been administratively restricted for use in the consummation of the King Acquisition. At December 31, 2015, we recorded the balance of the escrow account as a non-current asset, “Cash in escrow,” in our Consolidated Balance Sheet. Financial Instruments The carrying amounts of "Cash and cash equivalents," "Accounts receivable," "Accounts payable," and "Accrued expenses" approximate fair value due to the short-term nature of these accounts. Our investments in U.S. treasuries, government agency securities, and corporate bonds, if any, 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. 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 risk resulting from our foreign currency-denominated monetary assets, liabilities and earnings and our foreign currency risk related to functional currency-equivalent cash flows resulting from our intercompany transactions, we periodically enter into currency derivative contracts, principally forward contracts. These forward contracts generally have a maturity of less than one year . The counterparties for our currency derivative contracts are large and reputable commercial or investment banks. We assess the nature of these derivatives under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 815 to determine whether such derivatives should be designated as hedging instruments. 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. We report the fair value of these contracts within “Other current assets,” “Accrued expense and other liabilities,” “Other assets,” or “Other liabilities,” as applicable, in our Consolidated Balance Sheets based on the prevailing exchange rates of the various hedged currencies as of the end of the relevant period. We do not hold or purchase any foreign currency forward contracts for trading or speculative purposes. For foreign currency forward contracts entered into to mitigate risk from foreign currency-denominated monetary assets, liabilities, and earnings that are not designated as hedging instruments under ASC 815, changes in the estimated fair value of these derivatives are recorded within “General and administrative expenses” and “Interest and other expense, net” in our Consolidated Statements of Operations, consistent with the nature of the underlying transactions. For foreign currency forward contracts that we entered into to hedge forecasted intercompany cash flows that are subject to foreign currency risk and which have been designated as cash flow hedges in accordance with ASC 815, we assess the effectiveness of these cash flow hedges at inception and on an ongoing basis and determine if the hedges are effective at providing offsetting changes in cash flows of the hedged items. The Company records the effective portion of changes in the estimated fair value of these derivatives in "Accumulated other comprehensive income (loss)" and subsequently reclassifies the related amount of accumulated other comprehensive income (loss) to earnings within "General and administrative expenses" when the hedged item impacts earnings. The Company measures hedge ineffectiveness, if any, and if it is determined that a derivative has ceased to be a highly effective hedge, the Company will discontinue hedge accounting for the derivative. 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 had two customers, Sony and Microsoft, who accounted for 12% and 10% , respectively, of net revenues for the year ended December 31, 2015 . We did no t have any single customer that accounted for 10% or more of net revenues for the years ended December 31, 2014 , and 2013 . We had three customers, Sony, Microsoft, and Wal-Mart, who accounted for 18% , 13% , and 11% of consolidated gross receivables at December 31, 2015, respectively, and 13% , 17% , and 11% of consolidated gross receivables at December 31, 2014, 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. 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. Software development costs related to hosted service revenue arrangements are capitalized after the preliminary project phase is complete and it is probable that the project will be completed and the software will be used to perform the function intended. 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 canceled 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, or over the estimated useful life, generally approximately one to two years . 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 canceled 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 if there is no foreseeable limits on the periods of time over which they are expected to contribute cash flows. Goodwill and indefinite-lived assets 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 31 st . 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. As of December 31, 2015 and 2014 , our reporting units are the same as our operating segments. 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, 2015 , 2014 and 2013 based upon a set of assumptions regarding discounted future cash flows, which represent our best estimate of future performance at this time. We test indefinite lived 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, 2015 , 2014 and 2013 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, 2015 , 2014 , and 2013 . Revenue Recognition We recognize revenues when there is persuasive evidence of an arrangement, the product or service has been provided to the customer, the collection of our fees is reasonably assured and the amount of fees to be paid by the customer is fixed or determinable. 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 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. 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 did not have significant revenue arrangements that require BESP for the years ended December 31, 2015 , 2014 , and 2013 . 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. Product Sales Product sales represent sales of our games, including physical products and digital full-game downloads. We recognize revenues from the sale of our products upon the transfer of title and risk of loss to our customers and once all performance obligations have been completed. With respect to digital full-game downloads, we recognize revenues when the product is available for download or is activated for gameplay. Revenues from product sales are recognized after deducting the estimated allowance for returns and price protection. 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. Products with Online Functionality or Hosted Service Arrangements For our software products with online functionality or that are part of a hosted service agreement, we evaluate whether that functionality constitutes a more-than- inconsequential separate deliverable in addition to the software product. This evaluation is performed for each software product or product add-on (including digital downloadable content), when it is released. Determining whether the online functionality for a particular game constitutes a more-than-inconsequential deliverable is subjective and requires management's judgment. When we determine that the online functionality 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 initially defer all of the software-related revenues from the sale of any such title (including digital downloadable content) and recognize the revenues ratably over the estimated service period of the title. In addition, we initially defer the costs of sales for the title 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 and exclude intangible asset amortization. For our software products with online functionality that we consider to be incidental to the overall product offering and are inconsequential deliverables, we recognize the related revenues when the revenue recognition criteria described above have been met. For our World of Warcraft boxed products, expansion packs and value-added services, we recognize revenues in each case with the related subscription service revenues, ratably over the estimated service period, beginning upon the 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." 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 certain Blizzard games 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 revenues from digital downloadable content (e.g. multi-player content packs), microtransactions and the licensing of intellectual property other than software to third-parties. Microtransaction revenues are derived from the sale of virtual goods to our players to enhance their gameplay experience. Proceeds from the sales of virtual goods are initially recorded in deferred revenues. We categorize our virtual goods as either consumable or durable. Consumable virtual goods represent goods that can be consumed by a specific player action; accordingly, we recognize revenues from the sale of consumable virtual goods as the goods are consumed. Durable virtual goods represent goods that are accessible to the player over an extended period of time. We recognize revenues from the sale of durable virtual goods ratably over the period of time the goods are available to the player, generally the estimated service period of the game. Revenues from the licensing of intellectual property other than software to third-parties 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. Estimated Service Period We determine the estimated service period for our games 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, the average number of days in which player activity stabilizes, and the weighted-average number of days between players' first purchase date and last date played online. We also consider known online trends and the service periods of our previously released games and disclosed service periods for our competitors' games that are similar in nature. Determining the estimated service period is subjective and requires management's judgment. Future usage patterns may differ from historical usage patterns and therefore the estimated service period may change in the future. The estimated service periods for our current games is generally less than 12 months . 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 credits include, among other things, compliance with applicable trading and payment terms, achievement of sell-through performance targets in certain instances, 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. 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, |
Cash and Cash Equivalents
Cash and Cash Equivalents | 12 Months Ended |
Dec. 31, 2015 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | 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, 2015 2014 Cash $ 176 $ 333 Foreign government treasury bills 34 40 Money market funds 1,613 4,475 Cash and cash equivalents $ 1,823 $ 4,848 |
Inventories, Net
Inventories, Net | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | Inventories, Net Our inventories, net consist of the following (amounts in millions): At December 31, 2015 2014 Finished goods $ 101 $ 112 Purchased parts and components 27 11 Inventories, net $ 128 $ 123 Inventory reserves were $ 54 million and $ 52 million at December 31, 2015 and 2014 , respectively. |
Software Development and Intell
Software Development and Intellectual Property Licenses | 12 Months Ended |
Dec. 31, 2015 | |
Software Development Costs and Intellectual Property Licenses | |
Software Development and Intellectual Property Licenses | 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 December 31, 2015 At December 31, 2014 Internally developed software costs $ 266 $ 262 Payments made to third-party software developers 150 210 Total software development costs $ 416 $ 472 Intellectual property licenses $ 30 $ 23 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, 2015 2014 2013 Amortization of capitalized software development costs and intellectual property licenses $ 410 $ 272 $ 195 Write-offs and impairments 4 — 29 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net was comprised of the following (amounts in millions): At December 31, 2015 2014 Land $ 1 $ 1 Buildings 4 4 Leasehold improvements 109 104 Computer equipment 431 347 Office furniture and other equipment 52 45 Total cost of property and equipment 597 501 Less accumulated depreciation (408 ) (344 ) Property and equipment, net $ 189 $ 157 Depreciation expense for the years ended December 31, 2015 , 2014 , and 2013 was $ 82 million , $ 76 million , and $ 84 million , respectively. Rental expense was $ 39 million , $ 38 million and $ 35 million for the years ended December 31, 2015 , 2014 , and 2013 , respectively. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets, Net | Intangible Assets, Net Intangible assets, net consist of the following (amounts in millions): At December 31, 2015 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: License agreements and other 1 - 10 years $ 116 $ (93 ) $ 23 Internally-developed franchises 11 years 309 (298 ) 11 Developed software 5 years 15 — 15 Total definite-lived intangible assets $ 440 $ (391 ) $ 49 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 At December 31, 2014 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: License agreements and other 3 - 10 years $ 98 $ (92 ) $ 6 Internally-developed franchises 11 years 309 (286 ) 23 Total definite-lived intangible assets $ 407 $ (378 ) $ 29 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 $ 13 million , $13 million , and $24 million for the years ended December 31, 2015 , 2014 , and 2013 , respectively. At December 31, 2015 , future amortization of definite-lived intangible assets is estimated as follows (amounts in millions): 2016 $ 17 2017 12 2018 7 2019 5 2020 4 Thereafter 4 Total $ 49 We did not record any impairment charges against our intangible assets for the years ended December 31, 2015 , 2014 and 2013 . |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2015 and 2014 are as follows (amounts in millions): Activision Blizzard Other Total Balance at December 31, 2013 $ 6,914 $ 178 $ — $ 7,092 Tax benefit credited to goodwill (5 ) — — (5 ) Foreign exchange (1 ) — — (1 ) Balance at December 31, 2014 $ 6,908 $ 178 $ — $ 7,086 Additions through acquisition — — 12 12 Tax benefit credited to goodwill (2 ) — — (2 ) Foreign exchange (1 ) — — (1 ) Balance at December 31, 2015 $ 6,905 $ 178 $ 12 $ 7,095 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. The addition to goodwill through acquisition is attributed to the acquisition of the business of Major League Gaming ("MLG") (see Note 23). At December 31, 2015 and 2014 , there were no accumulated impairment losses. |
Other Current Assets and Curren
Other Current Assets and Current Accrued Expenses and Other Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Other Current Assets and Current Accrued Expenses and Other Liabilities | |
Other Current Assets and Current Accrued Expenses and Other Liabilities | Other Current Assets and Current Accrued Expenses and Other Liabilities Included in "Other current assets" of our consolidated balance sheets are deferred cost of sales—product costs of $216 million and $257 million at December 31, 2015 and 2014 , respectively. Included in "Accrued expenses and other liabilities" of our consolidated balance sheets are accrued payroll-related costs of $246 million and $267 million at December 31, 2015 and 2014 , respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements 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. Fair Value Measurements on a Recurring Basis 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, 2015 Using As of December 31, 2015 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Balance Sheet Classification (Level 1) (Level 2) (Level 3) Financial Assets: Recurring fair value measurements: Money market funds $ 1,613 $ 1,613 $ — $ — Cash and cash equivalents Foreign government treasury bills 34 34 — — Cash and cash equivalents Foreign currency forward contracts not designated as hedges 11 — 11 — Other current assets Auction rate securities ("ARS") 9 — — 9 Long-term investments Total recurring fair value measurements $ 1,667 $ 1,647 $ 11 $ 9 Financial Liabilities: Foreign currency forward contracts designated as hedges $ (4 ) $ — $ (4 ) $ — Accrued expenses and other liabilities Fair Value Measurements at December 31, 2014 Using As of December 31, 2014 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Balance Sheet Classification (Level 1) (Level 2) (Level 3) Financial Assets: Recurring fair value measurements: Money market funds $ 4,475 $ 4,475 $ — $ — Cash and cash equivalents Foreign government treasury bills 40 40 — — Cash and cash equivalents ARS 9 — — 9 Long-term investments Total recurring fair value measurements $ 4,524 $ 4,515 $ — $ 9 ARS represented the only level 3 investment held by the Company. The fair value of these investments has been unchanged for the years ended December 31, 2015, 2014, and 2013. Foreign Currency Forward Contracts Foreign Currency Forward Contracts Not Designated as Hedges At December 31, 2015 , the gross notional amount of outstanding foreign currency forward contracts not designated as hedges was approximately $489 million . During the year ended December 31, 2015 , we reclassified $8 million of unrealized gains out of "Accumulated other comprehensive income (loss)" and into earnings due to dedesignating $250 million notional euro to U.S. dollar cash flow hedges when it was determined the hedged transaction would not occur. As a result of the dedesignation, we entered into offsetting foreign currency forward contracts. The dedesignated and offsetting foreign currency forward contracts remain outstanding as of December 31, 2015. The fair value of these foreign currency forward currency contracts was $11 million as of December 31, 2015, and recorded in "Other current assets" in our consolidated balance sheet. At December 31, 2014 , outstanding foreign currency forward contracts not designated as hedges were not material. For the years ended December 31, 2015 , 2014 , and 2013, pre-tax net gains associated with these forward contracts were recorded in “General and administrative expenses” and were not material. Foreign Currency Forward Contracts Designated as Hedges For foreign currency forward contracts entered into to hedge forecasted intercompany cash flows that are subject to foreign currency risk and which we designated as cash flow hedges in accordance with ASC Topic 815, we assess the effectiveness of these cash flow hedges at inception and on an ongoing basis to determine if the hedges are effective at providing offsetting changes in cash flows of the hedged items. We record the effective portion of changes in the estimated fair value of these derivatives in “Accumulated other comprehensive income (loss)” and subsequently reclassify the related amount of accumulated other comprehensive income (loss) to earnings within “General and administrative expense” when the hedged item impacts earnings. Cash flows from these foreign currency forward contracts are classified in the same category as the cash flows associated with the hedged item in the consolidated statements of cash flows. We measure hedge ineffectiveness, if any, and if it is determined that a derivative has ceased to be a highly effective hedge, we will discontinue hedge accounting for the derivative. The gross notional amount of all outstanding foreign currency forward contracts designated as cash flow hedges was approximately $381 million at December 31, 2015 . At December 31, 2014 , there were no outstanding foreign currency forward contracts designated as cash flow hedges. These foreign currency forward contracts have remaining maturities of 12 months or less. During the years ended December 31, 2015 and 2014, there was no ineffectiveness relating to these hedges. At December 31, 2015 , $4 million of net unrealized losses related to these contracts are expected to be reclassified into earnings within the next twelve months. During the year ended December 31, 2015 and 2014, pre-tax net realized gains of $6 million and $8 million , respectively, associated with these contracts were reclassified out of "Accumulated other comprehensive income (loss)" and into "General and administrative expense" due to maturity of these contracts. 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, 2015 , 2014 , and 2013 , there were no impairment charges related to assets that are measured on a non-recurring basis. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt 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 maturing in October 2020 (the "Term Loan"), and a $250 million secured revolving credit facility (the "Revolver" and, together with the Term Loan, the "Credit Facilities"). 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") 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, 2015 , 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, if any, and agency fees. The terms of the Credit Agreement required quarterly principal repayments of 0.25% of the Term Loan's original principal amount, with the balance due on the maturity date. On February 11, 2014, we made a voluntary repayment of $375 million on our Term Loan. This repayment satisfied the required quarterly principal repayments for the entire term of the Credit Agreement. On February 11, 2015, we made an additional voluntary repayment of $250 million on our Term Loan. The Credit Facilities are guaranteed by certain of the Company's U.S. subsidiaries, whose assets represent approximately 67% 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, 2015 . Amendments to Credit Agreement In conjunction with the King Acquisition, the Company entered into three Amendments to the Credit Agreement (the “Amendments”). The Amendments, among other things, provide for incremental term loans in the form of Tranche A Term Loans in an aggregate principal amount of approximately $2.3 billion , the proceeds of which were to be issued upon successful closing to fund the King Acquisition. On February 23, 2016, we successfully completed the King Acquisition. Refer to Note 24 for additional information regarding the closing of the King Acquisition and impact on our debt obligations. 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, 2015 . Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year. As of December 31, 2015 and 2014 , 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. Fees associated with the closing of the Term Loan and the Notes are recorded as debt discount, which reduce the carrying value of the Term Loan and the Notes. The debt discount is amortized over the respective terms of the Term Loan and the Notes. Amortization expense related to the debt discount is recorded within “Interest and other expense, net” in our consolidated statement of operations. A summary of our debt is as follows (amounts in millions): December 31, 2015 Gross Carrying Amount Unamortized Discount Net Carrying Amount Term Loan $ 1,869 $ (9 ) $ 1,860 2021 Notes 1,500 (20 ) 1,480 2023 Notes 750 (11 ) 739 Total long-term debt $ 4,119 $ (40 ) $ 4,079 December 31, 2014 Gross Carrying Amount Unamortized Discount Net Carrying Amount Term Loan $ 2,119 $ (10 ) $ 2,109 2021 Notes 1,500 (23 ) 1,477 2023 Notes 750 (12 ) 738 Total long-term debt $ 4,369 $ (45 ) $ 4,324 For the years ended December 31, 2015 and 2014 , interest expense was $ 193 million and $ 201 million , respectively, amortization of the debt discount for the Credit Facilities and Notes was $ 6 million and $ 6 million , respectively, and commitment fees for the Revolver were not material. As of December 31, 2015 , 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, 2016 $ — 2017 — 2018 — 2019 — 2020 1,869 Thereafter 2,250 Total $ 4,119 As of December 31, 2015 and 2014 , the carrying value of the Term Loan approximates the fair value, based on Level 2 inputs (observable market prices in less than active markets), as the interest rate is variable over the selected interest period and is similar to current rates at which we can borrow funds. Based on Level 2 inputs, the fair values of the 2021 Notes and 2023 Notes were $ 1,571 million and $ 795 million , respectively, as of December 31, 2015 and $ 1,586 million and $ 810 million , respectively, as of December 31, 2014 . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) at December 31, 2015 and 2014 , were as follows (amounts in millions): For the Year Ended December 31, 2015 Foreign currency translation adjustments Unrealized gain (loss) on available-for- sale securities Unrealized gain (loss) Total Balance at December 31, 2014 $ (304 ) $ 1 $ — $ (303 ) Other comprehensive income (loss) before reclassifications (326 ) 1 10 (315 ) Amounts reclassified from accumulated other comprehensive income (loss) — (1 ) (14 ) (15 ) Balance at December 31, 2015 $ (630 ) $ 1 $ (4 ) $ (633 ) For the Year Ended December 31, 2014 Foreign currency translation adjustments Unrealized gain on available-for- sale securities Unrealized gain (loss) on forward contracts Total Balance at December 31, 2013 $ 67 $ 1 $ — $ 68 Other comprehensive income (loss) before reclassifications (371 ) — 8 (363 ) Amounts reclassified from accumulated other comprehensive income (loss) — — (8 ) (8 ) Balance at December 31, 2014 $ (304 ) $ 1 $ — $ (303 ) Income taxes were not provided for foreign currency translation items as these are considered indefinite investments in non-U.S. subsidiaries. |
Operating Segments and Geograph
Operating Segments and Geographic Region | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Operating Segments and Geographic Region | 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 have two reportable operating segments (see Note 1 of the Notes to Consolidated Financial Statements). Previously, we reported “Distribution” as a reportable segment. In the current period, this was no longer deemed a reportable segment and is included in “Other,” along with our recently announced Media Networks and Studios businesses. 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, amortization of intangible assets as a result of purchase price accounting, and fees and other expenses (including legal fees, costs, expenses and accruals) related to acquisitions and the Purchase Transaction. 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, 2015 , 2014 and 2013 are presented below (amounts in millions): Years Ended December 31, 2015 2014 2013 2015 2014 2013 Net revenues Income from operations before income tax expense Activision $ 2,700 $ 2,686 $ 2,895 $ 868 $ 762 $ 971 Blizzard 1,565 1,720 1,124 561 756 376 Other (1) 356 407 323 37 9 8 Segments total 4,621 4,813 4,342 1,466 1,527 1,355 Reconciliation to consolidated net revenues / consolidated income before income tax expense: Net effect from deferral of net revenues and related cost of sales 43 (405 ) 241 (39 ) (215 ) 229 Stock-based compensation expense — — — (92 ) (104 ) (110 ) Amortization of intangible assets — — — (11 ) (12 ) (23 ) Fees and other expenses related to acquisitions and the Purchase Transaction (2) — — — (5 ) (13 ) (79 ) Consolidated net revenues / operating income $ 4,664 $ 4,408 $ 4,583 $ 1,319 $ 1,183 $ 1,372 Interest and other expense, net 198 202 53 Consolidated income before income tax expense $ 1,121 $ 981 $ 1,319 (1) Other includes other income and expenses from operating segments managed outside the reportable segments, including our Media Networks, Studios, and Distribution businesses. Other also includes unallocated corporate income and expenses. (2) Reflects fees and other expenses related to the Purchase Transaction and the King Acquisition, inclusive of related debt financings. Geographic information presented below for the years ended December 31, 2015 , 2014 , and 2013 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, 2015 2014 2013 Net revenues by geographic region: North America $ 2,409 $ 2,190 $ 2,414 Europe 1,741 1,824 1,826 Asia Pacific 514 394 343 Total consolidated net revenues $ 4,664 $ 4,408 $ 4,583 The Company's net revenues in the U.S. were 48% , 48% , and 51% of consolidated net revenues for the years ended December 31, 2015 , 2014 , and 2013 , respectively. The Company's net revenues in the U.K. were 14% , 16% , and 14% of consolidated net revenues for the years ended December 31, 2015 , 2014 , and 2013 , respectively. The Company's net revenues in France were 14% and 12% of consolidated net revenues for the years ended December 31, 2014 and 2013 , 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, 2015 2014 2013 Net revenues by platform: Console $ 2,391 $ 2,150 $ 2,379 Online (1) 851 867 912 PC 648 551 340 Mobile and ancillary (2) 418 433 629 Total Activision Blizzard net revenues 4,308 4,001 4,260 Other (3) 356 407 323 Total consolidated net revenues $ 4,664 $ 4,408 $ 4,583 _______________________________________________________________________________ (1) Revenues from online consist of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services. (2) Revenues from Mobile and ancillary include revenues from handheld, mobile and tablet 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. (3) Net revenues from Other include revenues from our Media Networks and Studios businesses, along with revenues that were historically shown as “Distribution.” Long-lived assets by geographic region at December 31, 2015 , 2014 , and 2013 were as follows (amounts in millions): Years Ended December 31, 2015 2014 2013 Long-lived assets* by geographic region: North America $ 138 $ 122 $ 102 Europe 42 29 29 Asia Pacific 9 6 7 Total long-lived assets by geographic region $ 189 $ 157 $ 138 _______________________________________________________________________________ * 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. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Activision Blizzard Equity Incentive Plans On June 5, 2014, our shareholders approved the Activision Blizzard, Inc. 2014 Incentive Plan (the "2014 Plan") and the 2014 Plan became effective. The 2014 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 2014 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 superior performance to the directors, officers, 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 2014 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. Upon the effective date of the 2014 Plan, we ceased making awards under the following equity incentive plans (collectively, the "Prior Plans"), although such plans will remain in effect and continue to govern outstanding awards: (i) Activision, Inc. 1998 Incentive Plan, as amended; (ii) Activision, Inc. 1999 Incentive Plan, as amended; (iii) Activision, Inc. 2001 Incentive Plan, as amended; (iv) Activision, Inc. 2002 Incentive Plan, as amended; (v) Activision, Inc. 2002 Executive Incentive Plan, as amended; (vi) Activision, Inc. 2002 Studio Employee Retention Incentive Plan, as amended; (vii) Activision, Inc. 2003 Incentive Plan, as amended; (viii) Activision, Inc. 2007 Incentive Plan; and (ix) Activision Blizzard, Inc. 2008 Incentive Plan. As of the date it was approved by our shareholders, there were 46 million shares available for issuance under the 2014 Plan. The number of shares of our common stock reserved for issuance under the 2014 Plan has been, and may be further, increased from time to time by: (i) the number of shares relating to awards outstanding under any Prior Plan that: (a) expire, or are forfeited, terminated or canceled, 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; (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; and (iii) if a share appreciation right is exercised and settled in shares, a number of shares equal to the difference between the total number of shares with respect to which the award is exercised and the number of shares actually issued or transferred. As of December 31, 2015 , we had approximately 40 million shares of our common stock reserved for future issuance under the 2014 Plan. Shares issued in connection with awards made under the 2014 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, 2015 2014 2013 Expected life (in years) 6.26 5.97 6.44 Risk free interest rate 1.90 % 1.82 % 1.86 % Volatility 36.13 % 37.09 % 39.00 % Dividend yield 0.72 % 0.98 % 1.08 % Weighted-average fair value at grant date $ 9.87 $ 5.87 $ 4.97 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, 2015 , the expected stock price volatility ranged from 26.96% to 37.00% . 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, 2015 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, 2015 , 2014 , and 2013 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, 2015 are as follows (amounts in millions, except number of shares, which are in thousands, and per share amounts): Shares Weighted-average exercise price Weighted-average remaining contractual term Aggregate intrinsic value Outstanding stock options at December 31, 2014 29,486 $ 14.50 Granted 4,133 32.55 Exercised (8,356 ) 13.08 Forfeited (928 ) 18.44 Expired (6 ) 8.73 Outstanding stock options at December 31, 2015 24,329 $ 17.90 5.98 $ 506 Vested and expected to vest at December 31, 2015 23,448 $ 17.57 5.86 $ 496 Exercisable at December 31, 2015 15,270 $ 13.51 4.19 $ 385 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 $125 million , $117 million , and $104 million for the years ended December 31, 2015 , 2014 , and 2013 , respectively. The total grant date fair value of options vested was $19 million , $19 million , and $29 million for the years ended December 31, 2015 , 2014 , and 2013 , respectively. At December 31, 2015 , $43 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 1.53 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"). 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). Also, certain of our performance-vesting restricted stock rights include a range of shares that may be released at vesting which are above or below the targeted number of restricted stock rights based on actual performance relative to the grant date 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 minimum tax withholding requirements. The following table summarizes our restricted stock rights activity for the year ended December 31, 2015 , with performance-vesting restricted stock right grants presented at the maximum potential shares that could be earned and issued at vesting (amounts in thousands except per share amounts): Restricted Stock Rights Weighted- Average Grant Date Fair Value Unvested restricted stock rights balance at December 31, 2014 17,967 $ 11.85 Granted* 2,330 29.31 Vested (7,146 ) 12.80 Forfeited (1,221 ) 15.23 Unvested restricted stock rights balance at December 31, 2015 11,930 $ 12.74 * 1.7 million of the performance-vesting restricted stock rights granted at maximum potential shares did not have an accounting grant date as there is not a mutual understanding between the Company and the employee of the performance terms. Accordingly, no grant date fair value was established and the weighted averaged grant date fair value calculated above excludes these shares. At December 31, 2015 , approximately $39 million of total unrecognized compensation cost was related to restricted stock rights and is expected to be recognized over a weighted-average period of 1.14 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 1.28 years. The total grant date fair value of vested restricted stock rights was $93 million , $92 million and $57 million for the years ended December 31, 2015 , 2014 and 2013 , respectively. The income tax benefit from stock option exercises and restricted stock rights was $109 million , $89 million , and $77 million for the years ended December 31, 2015 , 2014 , and 2013 , respectively. Certain of our performance-vesting restricted stock rights do not have an accounting grant date as of December 31, 2015, as there is not a mutual understanding between the Company and the employee of the performance terms. Generally, these performance terms relate to revenue and operating income performance for future years where the performance goals have not yet been set. As of December 31, 2015, there were 3.4 million performance-vesting restricted stock rights for which the accounting grant date has not been set. 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, 2015 , 2014 , and 2013 (amounts in millions): For the Years Ended December 31, 2015 2014 2013 Cost of sales—online $ — $ 1 $ — Cost of sales—software royalties and amortization 15 17 17 Product development 25 22 33 Sales and marketing 9 8 7 General and administrative 43 56 53 Stock-based compensation expense before income taxes 92 104 110 Income tax benefit (27 ) (38 ) (40 ) Total stock-based compensation expense, net of income tax benefit $ 65 $ 66 $ 70 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, 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 Stock-based compensation expense capitalized and deferred during period 27 Amortization of capitalized and deferred stock-based compensation expense (23 ) Balance at December 31, 2014 $ 26 Stock-based compensation expense capitalized and deferred during period 36 Amortization of capitalized and deferred stock-based compensation expense (34 ) Balance at December 31, 2015 $ 28 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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, 2015 2014 2013 Income before income tax expense: Domestic $ 355 $ 325 $ 626 Foreign 766 656 693 $ 1,121 $ 981 $ 1,319 Income tax expense (benefit): Current: Federal $ 169 $ 146 $ 110 State 31 12 7 Foreign 40 38 31 Total current 240 196 148 Deferred: Federal 1 26 134 State (21 ) (18 ) (12 ) Foreign 9 (58 ) 39 Total deferred (11 ) (50 ) 161 Income tax expense $ 229 $ 146 $ 309 For the year ended December 31, 2015, 2014, and 2013, income tax benefits attributable to equity-based compensation transactions exceeded the amounts recorded based on grant date fair value. Accordingly, $65 million , $30 million , and $11 million were credited to shareholder’s equity, respectively, in these years. 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) at the effective tax rate for each of the years are as follows (amounts in millions): For the Years Ended December 31, 2015 2014 2013 Federal income tax provision at statutory rate $ 392 35 % $ 343 35 % $ 462 35 % State taxes, net of federal benefit 5 — 5 — 6 — Research and development credits (26 ) (2 ) (24 ) (2 ) (49 ) (4 ) Foreign rate differential (228 ) (20 ) (245 ) (25 ) (174 ) (13 ) Change in tax reserves 136 12 128 13 89 7 Net operating loss tax attribute assumed from the Purchase Transaction (63 ) (6 ) (52 ) (5 ) (16 ) (1 ) Other 13 1 (9 ) (1 ) (9 ) (1 ) Income tax expense $ 229 20 % $ 146 15 % $ 309 23 % The Company's tax rate is affected by the tax rates in the jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction, and the jurisdictions with a statutory tax rate less than the U.S. rate of 35% . For the year ended December, 2015, 2014 and 2013, the Company's income before income tax expense was $1,121 million , $981 million , and $1,319 million , respectively, and our income tax expense was $229 million (or a 20% effective tax rate), $146 million (or a 15% effective tax rate), and $309 million (or a 23% effective tax rate), respectively. Overall, our effective tax rate differs from the U.S. statutory tax rate of 35% , primarily due to earnings taxed at relatively lower rates in foreign jurisdictions, recognition of the California research and development ("R&D") credits, and recognition of the retroactive reinstatement of the federal R&D tax credit, partially offset by changes in the Company's liability for uncertain tax positions. 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 $760 million , which represent a potential future tax benefit of approximately $266 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. For the year ended December 31, 2015 and 2014 , we utilized $180 million and $148 million , respectively, of the NOL, which resulted in benefits of $63 million and $52 million , respectively. The benefits for the year ended December 31, 2015, were reduced by $5 million for return to provision adjustments recorded. As of December 31, 2015, and 2014, a corresponding reserve of $58 million and $52 million , respectively, were established. As of December 31, 2015 , an indemnification asset of $125 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). 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, 2015 2014 Deferred tax assets: Allowance for sales returns and price protection $ 66 $ 74 Inventory reserve 11 9 Accrued expenses 40 38 Deferred revenue 288 291 Tax credit carryforwards 58 50 Net operating loss carryforwards 10 10 Stock-based compensation 54 69 Transaction costs 9 9 Other 19 13 Deferred tax assets 555 563 Valuation allowance — — Deferred tax assets, net of valuation allowance 555 563 Deferred tax liabilities: Intangibles (166 ) (169 ) Prepaid royalties (30 ) (22 ) Capitalized software development expenses (81 ) (84 ) State taxes (7 ) (34 ) Other (6 ) — Deferred tax liabilities (290 ) (309 ) Net deferred tax assets $ 265 $ 254 As of December 31, 2015 , we have gross tax credit carryforwards of $40 million and $119 million for federal and state purposes, respectively, which begin to expire in fiscal 2025. The tax credit carryforwards are presented in "Deferred tax assets" net of unrealized tax benefits that would apply upon the realization of uncertain tax positions. Through our foreign operations, we have approximately $36 million in NOL carryforwards at December 31, 2015 , 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, 2015 and 2014 , there are no valuation allowances on deferred tax assets. Cumulative undistributed earnings of foreign subsidiaries for which no deferred taxes have been provided approximated $4,084 million at December 31, 2015 . 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 from 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 year 2008 remains open to examination by the major taxing authorities. In addition, Vivendi Games’ tax return for the 2008 tax year is before the appeals function of the IRS and is under examination by several state taxing authorities. Activision Blizzard's tax years 2008 through 2014 remain open to examination by the major taxing jurisdictions to which we are subject. The IRS is currently examining the Company's federal tax returns for the 2008 through 2011 tax years. During the second quarter of 2015, the Company transitioned the review of its transfer pricing methodology from the advanced pricing agreement review process to the IRS examination team. Their review could result in a different allocation of profits and losses under the Company’s transfer pricing agreements. Such allocation could have a positive or negative impact on our provision for the period in which such a determination is reached and the relevant periods thereafter. The Company also has several state and non-U.S. audits pending. As of December 31, 2015 , we had approximately $552 million of gross unrecognized tax benefits, of which $529 million would affect our effective tax rate if recognized. A reconciliation of total gross unrecognized tax benefits for the years ended December 31, 2015 , 2014 , and 2013 is as follows (amounts in millions): For the Years Ended December 31, 2015 2014 2013 Unrecognized tax benefits balance at January 1 $ 419 $ 294 $ 207 Gross increase for tax positions of prior-years 8 2 1 Gross decrease for tax positions of prior-years (11 ) — — Gross increase for tax positions of current year 136 125 91 Settlement with taxing authorities — (2 ) — Lapse of statute of limitations — — (5 ) Unrecognized tax benefits balance at December 31 $ 552 $ 419 $ 294 We recognize interest and penalties related to uncertain tax positions in "Income tax expense". As of December 31, 2015 and 2014 , we had approximately $41 million and $18 million , respectively, of accrued interest and penalties related to uncertain tax positions. For the year ended December 31, 2015 , 2014 , and 2013 , we recorded $10 million , $5 million , and $2 million , respectively, 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 $18 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 Basic_Diluted Ea
Computation of Basic/Diluted Earnings Per Common Share | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Computation of Basic/Diluted Earnings Per Common Share | 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, 2015 2014 2013 Numerator: Consolidated net income $ 892 $ 835 $ 1,010 Less: Distributed earnings to unvested stock-based awards that participate in earnings (4 ) (4 ) (5 ) Less: Undistributed earnings allocated to unvested stock-based awards that participate in earnings (7 ) (14 ) (18 ) Numerator for basic and diluted earnings per common share—income available to common shareholders $ 881 $ 817 $ 987 Denominator: Denominator for basic earnings per common share—weighted-average common shares outstanding 728 716 1,024 Effect of potential dilutive common shares under the treasury stock method: Employee stock options 11 10 11 Denominator for diluted earnings per common share—weighted-average common shares outstanding plus dilutive effect of employee stock options 739 726 1,035 Basic earnings per common share $ 1.21 $ 1.14 $ 0.96 Diluted earnings per common share $ 1.19 $ 1.13 $ 0.95 Certain of our unvested restricted stock rights (including certain restricted stock units, restricted stock awards, and performance shares) met the definition of participating securities based on their 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, 2015 and 2014 , on a weighted-average basis, we had outstanding unvested restricted stock rights with respect to 8 million and 15 million shares of common stock that are participating in earnings, respectively. Certain of our employee-related restricted stock rights are contingently issuable upon the satisfaction of pre-defined performance measures. These shares are included in the weighted-average dilutive common shares only if the performance measures are met as of the end of the reporting period. Approximately 3 million shares are not included in the computation of diluted earnings per share for the year ended December 31, 2015 as their respective performance measures have not been met. Approximately 4 million shares are not included in the computation of diluted earnings per share for the year ended December 31, 2014 as their respective performance measures have not been met. 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, such as in a period in which a net loss is recorded. Therefore, options to acquire 1 million , 2 million , and 5 million shares of common stock were not included in the calculation of diluted earnings per common share for the years ended December 31, 2015 , 2014 , and 2013 , respectively, as the effect of their inclusion would be anti-dilutive. See Note 1 of the Notes to Consolidated Financial Statements for details of the Purchase Transaction which reduced outstanding shares in 2014 as compared to 2013. |
Capital Transactions
Capital Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Capital Transactions | Capital Transactions Stock Purchase Agreement On October 11, 2013, as described in Note 1 of the Notes to Consolidated Financial Statements, 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 11 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 Programs On February 3, 2015, our Board of Directors authorized a stock repurchase program under which we may repurchase up to $750 million of our common stock during the two-year period from February 9, 2015 through February 8, 2017. During the year ended December 31, 2015 , there were no repurchases pursuant to this stock repurchase program. Dividend On February 2, 2016, our Board of Directors declared a cash dividend of $0.26 per common share, payable on May 11, 2016, to shareholders of record at the close of business on March 30, 2016. On February 3, 2015, our Board of Directors declared a cash dividend of $0.23 per common share, payable on May 13, 2015, to shareholders of record at the close of business on March 30, 2015. On May 13, 2015, we made an aggregate cash dividend payment of $ 167 million to such shareholders, and on May 29, 2015, we made related dividend equivalent payments of $ 3 million to certain holders of restricted stock rights. 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 May 14, 2014, we made an aggregate cash dividend payment of $143 million to such shareholders, and on May 30, 2014, we made related dividend equivalent payments of $4 million to the holders of restricted stock rights. 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. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Supplemental cash flow information is as follows (amounts in millions): For the Years Ended December 31, 2015 2014 2013 Supplemental cash flow information: Cash paid for income taxes, net of refunds $ 20 $ 34 $ 138 Cash paid for interest 193 201 19 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letters of Credit As described in Note 11 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, 2015 , we did not have any letters 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 $8 million and 3 million euros ( $3 million ) at December 31, 2015 , and $10 million and 1 million euros ( $1 million ) at December 31, 2014 . 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, 2015 and 2014 . 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, 2015 are scheduled to be paid as follows (amounts in millions): Contractual Obligations(1) Facility and Equipment Leases Developer and Intellectual Properties Marketing Total For the years ending December 31, 2016 $ 35 $ 190 $ 28 $ 253 2017 32 5 53 90 2018 30 — 15 45 2019 27 — — 27 2020 19 — — 19 Thereafter 35 2 — 37 Total $ 178 $ 197 $ 96 $ 471 _______________________________________________________________________________ (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, 2015 , we had $471 million of unrecognized tax benefits, of which $453 million was included in "Other liabilities" and $18 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 reports 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 of 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 In prior periods, the Company reported on litigation related to the Purchase Transaction. During the period ended June 30, 2015, the cases were resolved and dismissed with prejudice. As part of the resolution of the claims, we received a settlement payment of $202 million in July 2015 from Vivendi, ASAC, and our insurers. We recorded the settlement within “Shareholders’ equity” in our consolidated balance sheet as of December 31, 2015. 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, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Transactions with Vivendi and Its Affiliates As part of the Business Combination in 2008, 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 a number of agreements with subsidiaries and other affiliates of Vivendi, including music licensing and distribution arrangements and promotional arrangements, 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. As discussed in Note 1 of the Notes to Consolidated Financial Statements, on May 28, 2014, Vivendi sold 41 million shares, reducing its ownership interest below 10%, and is no longer considered a related party. Subsequent to December 31, 2015, Vivendi sold their remaining shares of our common stock. Transactions with ASAC's Affiliates 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 a waiver and acknowledgement letters (together, 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 our 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. Also pursuant to the Stock Purchase Agreement, on October 11, 2013, we, ASAC and, for the limited purposes set forth therein, Messrs. Kotick and Kelly entered into the Stockholders Agreement. The Stockholders Agreement contains various agreements among the parties regarding voting rights, transfer rights, and a standstill agreement, among other things. In connection with the settlement of the litigation related to the Purchase Transaction, the parties to the Stockholders Agreement amended that agreement on May 28, 2015. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Revenue recognition In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective beginning January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are evaluating the adoption method as well as the impact of this new accounting guidance on our financial statements. Stock-based compensation In June 2014, the FASB issued new guidance related to stock compensation. The new standard requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The new standard is effective for fiscal years beginning after December 15, 2015 and can be applied either prospectively or retrospectively to all awards outstanding as of the beginning of the earliest annual period presented as an adjustment to opening retained earnings. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. Consolidations In February 2015, the FASB issued new guidance related to consolidations. The new standard amends certain requirements for determining whether a variable interest entity must be consolidated. The new standard is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. Debt Issuance Costs In April 2015, the FASB issued new guidance related to the presentation of debt issuance costs in financial statements. The new standard requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2015. The new guidance will be applied retrospectively to each prior period presented. The adoption of this guidance will not have a material impact on our financial statements. Internal-Use Software In April 2015, the FASB issued new guidance related to internal-use software. The new standard relates to a customer’s accounting for fees paid in cloud computing arrangements. The amendment provides guidance for customers to determine whether such arrangements include software licenses. If a cloud arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses and account for the non-software element as a service contract. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new standard is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. Inventory In July 2015, the FASB issued new guidance related to the measurement of inventory which requires inventory within the scope of the guidance to be measured at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new standard is effective for fiscal years beginning after December 15, 2016 and should be applied prospectively. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. Business Combinations In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , providing new guidance related to business combinations. The new standard requires that the cumulative impact of a measurement period adjustment, including the impact on prior periods, made to provisional amounts recorded at the acquisition date as a result of the business combination, be recognized in the reporting period the adjustment is identified. The standard also requires separate presentation on the face of the income statement, or disclosure in the notes, of the portion of the amount recorded in current period earnings by line item. Prior to the issuance of the standard, such adjustments to provisional amounts were recognized retrospectively. The new standard is effective for fiscal years beginning after December 15, 2015 and should be applied prospectively to measurement period adjustments that occur after the effective date. Early adoption is permitted. The adoption of this new accounting guidance could have a material impact on our financial statements in future periods upon occurrence of a measurement period adjustment. Deferred Taxes In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes , providing new guidance to simplify the presentation of deferred taxes. The new standard requires that deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. The issuance of the new standard eliminates the requirement to perform the jurisdiction analysis based on the classifications of the underlying assets and liabilities, and as a result, each jurisdiction will only have one net non-current deferred tax asset or liability. The new standard is effective for fiscal years beginning after December 15, 2016 and can be applied either prospectively or retrospectively. Early adoption is permitted. As of December 31, 2015 we early adopted ASU No. 2015-17 and applied retrospectively to all periods presented. As a result, we reclassified $368 million of deferred tax assets from current "Deferred income taxes, net" resulting in non-current net deferred tax assets and liabilities of $264 million and $10 million , respectively, in our Consolidated Balance Sheet as of December 31, 2014. The adoption of this new guidance did not impact our compliance with debt covenant requirements. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited) For the Quarters Ended December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 (Amounts in millions, except per share data) Net revenues $ 1,353 $ 990 $ 1,044 $ 1,278 Cost of sales 538 337 297 413 Operating income 250 196 332 542 Net income 159 127 212 394 Basic earnings per share 0.22 0.17 0.29 0.54 Diluted earnings per share 0.21 0.17 0.29 0.53 For the Quarters Ended December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014 (Amounts in millions, except per share data) Net revenues $ 1,575 $ 753 $ 970 $ 1,111 Cost of sales 631 253 300 342 Operating income 438 8 310 427 Net income (loss) 361 (23 ) 204 293 Basic earnings (loss) per share 0.49 (0.03 ) 0.28 0.40 Diluted earnings (loss) per share 0.49 (0.03 ) 0.28 0.40 |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Major League Gaming On December 22, 2015, we acquired the business of Major League Gaming, Inc., for an aggregate purchase price of $46 million in cash. MLG is a leader in creating and streaming premium live gaming events, organizing professional competitions and running competitive gaming leagues. MLG’s business will operate under our Media Networks operating segment. We identified and recorded the assets acquired at their estimated fair values at the date of acquisition, and allocated the remaining value of $12 million to goodwill. The goodwill recorded is expected to be tax deductible for tax purposes. The primary intangible asset acquired relates to the developed technology. The values assigned to the acquired assets were preliminary estimates of fair value available as of the date of this Annual Report on Form 10-K, and may be adjusted as further information becomes available during the measurement period of up to 12 months from the date of the acquisition. The primary areas of the preliminary purchase price allocation that are not yet finalized due to information that may become available subsequently include any changes in these fair values which could potentially result in adjustments to goodwill. The individual tangible and intangible assets acquired in the acquisition were immaterial to the Company's consolidated financial statements. We did not assume any significant liabilities as part of the acquisition. The following net assets were recognized resulting from the acquisitions: December 22, 2015 Net tangible assets $ 1 Definite-lived intangible assets 33 Goodwill 12 Total net assets recognized $ 46 Pro forma financial information has not been presented as the acquisition did not have a material impact on our consolidated financial statements for 2015. |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The King Acquisition On November 2, 2015, we and King entered into a Transaction Agreement under the terms of which we would acquire King and King would become a wholly-owned subsidiary of the Company. On February 23, 2016 we completed the King Acquisition under the terms of the Transaction Agreement. We transferred $5.9 billion in consideration to the existing King shareholders and share-based award holders. The Company made this acquisition because it believes that the addition of King’s highly-complementary mobile business will position the Company as a global leader in interactive entertainment across mobile, console and PC platforms, and positions the company for future growth. The combined company has a world-class interactive entertainment portfolio of top-performing franchises. As the closing of the King Acquisition occurred subsequent to December 31, 2015, our financial results as of and for the year ended December 31, 2015 do not contain the results of King. The purchase price, including replacement share awards, is made up of the net assets acquired, including tangible assets, trademark, franchises, developed technology, other intangibles, and goodwill. A portion of the goodwill associated with this purchase is expected to be deductible for U.S. income tax purposes. Due to the timing of the close of the King Acquisition, we did not have sufficient time to complete the valuation of the acquired assets and assumed liabilities, and therefore, the purchase price allocation and amount of goodwill and the tax deduction cannot be determined at this time. Additionally, supplemental pro forma information has not been provided for King due to the timing of the closing of the King Acquisition, compilation of such data is impracticable. Credit Facilities Tranche A Term Loan In connection with the closing of the King Acquisition, the Company was provided with incremental term loans, in the form of Tranche A Term Loans, in an aggregate principal amount of approximately $2.3 billion , of which the proceeds were used to fund the King Acquisition. The Tranche A Term Loans are scheduled to mature on October 11, 2020 and bear interest, at the Company’s option, at either (a) a base rate equal to the highest of (i) the federal funds rate, plus 0.5% , (ii) the prime commercial lending rate of Bank of America, N.A. and (iii) the LIBOR for an interest period of one month beginning on such day plus 1.00% , or (b) LIBOR, in each case, plus an applicable interest margin. LIBOR is subject to a floor of 0% and the base rate is subject to an effective floor of 1.00% . The applicable interest margin for Tranche A Term Loans ranges from 1.50% to 2.25% for LIBOR borrowings and from 0.50% to 1.25% for base rate borrowings and is determined by reference to a pricing grid based on the Company’s Consolidated Total Net Debt Ratio (as defined in the Credit Agreement). The Tranche A Term Loans require quarterly principal payments of 0.625% of the stated principal amount of the Tranche A Term Loans, with increases to 1.250% starting on June 30, 2019 and 3.125% starting on June 30, 2020, with the remaining balance payable on the Tranche A Term Loans’ scheduled maturity date of October 11, 2020. Voluntary prepayments of the Tranche A Term Loans are permitted at any time, in minimum principal amounts, without premium or penalty. The Tranche A Term Loans are subject to a financial maintenance covenant requiring the Company to maintain a maximum Consolidated Total Net Debt Ratio (as defined in the Credit Agreement) of 4.00 to 1.00, which will decrease to 3.50 to 1.00 (I) after the sixth full fiscal quarter after the Tranche A Term Loans are made or (II) if the Collateral Suspension occurs prior to the date falling 18 months after the Tranche A Term Loans are made, on the later of (x) the last day of the fourth full fiscal quarter after the Tranche A Term Loans are made and (y) the last day of the fiscal quarter in which the Collateral Suspension occurs. The Tranche A Term Loans are secured by the same collateral and guaranteed by the same guarantors that secure and guarantee the existing Term Loans. The other terms of the Tranche A Term Loans are also generally the same as the terms of the existing Term Loan. Revolving Credit Facility As part of the Amendments, upon the closing of the King Acquisition, the Company’s existing revolving credit facility under the Credit Agreement (as in effect prior to the closing of the King Acquisition) in an aggregate principal amount of $250 million was replaced with a new revolving credit facility under the Credit Agreement in the same aggregate principal amount (the “2015 Revolving Credit Facility”). Borrowings under the 2015 Revolving Credit Facility may be borrowed, repaid and re-borrowed by the Company and are available for working capital and other general corporate purposes. Up to $50 million of the 2015 Revolving Credit Facility may be used for letters of credit. The 2015 Revolving Credit Facility is scheduled to mature on October 11, 2020. Borrowings under the 2015 Revolving Credit Facility bear interest, at the Company’s option, under the same terms as the Tranche A Term Loans. Additionally, the 2015 Revolving Credit Facility is subject to the same financial maintenance covenant and is secured by the same collateral and guaranteed by the same guarantors that secure and guarantee the Tranche A Term Loans. The other terms of the 2015 Revolving Credit Facility are generally the same as the terms of the Revolver. Debt Repayments On February 2, 2016, the Board of Directors authorized repayments of up to $1.5 billion of our outstanding debt during 2016. On February 25, 2016, we made a voluntary principal repayment of $500 million on our Term Loan, reducing the aggregate term loans outstanding under the Credit Agreement, which includes the $2.3 billion of Tranche A Term Loans, to $3.7 billion . Since this repayment was not a contractual requirement and was not authorized by the Board of Directors until February 2016, we did not reflect the repayment as a "Current portion of long-term debt" in our consolidated balance sheet as of December 31, 2015. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II Valuation and Qualifying Accounts | Col. A Description Col. B Balance at Beginning of Period Col. C Additions(A) Col. D Deductions(B) Col. E Balance at End of Period At December 31, 2015 Allowances for sales returns and price protection and other allowances $ 379 $ 114 $ (154 ) $ 339 Allowance for doubtful accounts 4 1 (1 ) 4 At December 31, 2014 Allowances for sales returns and price protection and other allowances $ 376 $ 212 $ (209 ) $ 379 Allowance for doubtful accounts 5 2 (3 ) 4 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 _______________________________________________________________________________ (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 Accoun34
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
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. |
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. |
Cash in Escrow | Cash in Escrow As part of the King Acquisition, we were required to deposit $3.56 billion in cash to be held in an escrow account until the earlier of (i) the completion of the King Acquisition, or (ii) the termination of the Transaction Agreement. The cash was not accessible to the Company for operating cash needs as its use had been administratively restricted for use in the consummation of the King Acquisition. At December 31, 2015, we recorded the balance of the escrow account as a non-current asset, “Cash in escrow,” in our Consolidated Balance Sheet. |
Financial Instruments | Financial Instruments The carrying amounts of "Cash and cash equivalents," "Accounts receivable," "Accounts payable," and "Accrued expenses" approximate fair value due to the short-term nature of these accounts. Our investments in U.S. treasuries, government agency securities, and corporate bonds, if any, 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. 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 risk resulting from our foreign currency-denominated monetary assets, liabilities and earnings and our foreign currency risk related to functional currency-equivalent cash flows resulting from our intercompany transactions, we periodically enter into currency derivative contracts, principally forward contracts. These forward contracts generally have a maturity of less than one year . The counterparties for our currency derivative contracts are large and reputable commercial or investment banks. We assess the nature of these derivatives under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 815 to determine whether such derivatives should be designated as hedging instruments. 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. We report the fair value of these contracts within “Other current assets,” “Accrued expense and other liabilities,” “Other assets,” or “Other liabilities,” as applicable, in our Consolidated Balance Sheets based on the prevailing exchange rates of the various hedged currencies as of the end of the relevant period. We do not hold or purchase any foreign currency forward contracts for trading or speculative purposes. For foreign currency forward contracts entered into to mitigate risk from foreign currency-denominated monetary assets, liabilities, and earnings that are not designated as hedging instruments under ASC 815, changes in the estimated fair value of these derivatives are recorded within “General and administrative expenses” and “Interest and other expense, net” in our Consolidated Statements of Operations, consistent with the nature of the underlying transactions. For foreign currency forward contracts that we entered into to hedge forecasted intercompany cash flows that are subject to foreign currency risk and which have been designated as cash flow hedges in accordance with ASC 815, we assess the effectiveness of these cash flow hedges at inception and on an ongoing basis and determine if the hedges are effective at providing offsetting changes in cash flows of the hedged items. The Company records the effective portion of changes in the estimated fair value of these derivatives in "Accumulated other comprehensive income (loss)" and subsequently reclassifies the related amount of accumulated other comprehensive income (loss) to earnings within "General and administrative expenses" when the hedged item impacts earnings. The Company measures hedge ineffectiveness, if any, and if it is determined that a derivative has ceased to be a highly effective hedge, the Company will discontinue hedge accounting for the derivative. |
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. |
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. 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. Software development costs related to hosted service revenue arrangements are capitalized after the preliminary project phase is complete and it is probable that the project will be completed and the software will be used to perform the function intended. 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 canceled 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, or over the estimated useful life, generally approximately one to two years . 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 canceled 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. |
Long-Lived Assets | 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 if there is no foreseeable limits on the periods of time over which they are expected to contribute cash flows. Goodwill and indefinite-lived assets 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 31 st . 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. As of December 31, 2015 and 2014 , our reporting units are the same as our operating segments. 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, 2015 , 2014 and 2013 based upon a set of assumptions regarding discounted future cash flows, which represent our best estimate of future performance at this time. We test indefinite lived 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, 2015 , 2014 and 2013 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, 2015 , 2014 , and 2013 . |
Revenue Recognition | Revenue Recognition We recognize revenues when there is persuasive evidence of an arrangement, the product or service has been provided to the customer, the collection of our fees is reasonably assured and the amount of fees to be paid by the customer is fixed or determinable. 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 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. 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 did not have significant revenue arrangements that require BESP for the years ended December 31, 2015 , 2014 , and 2013 . 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. Product Sales Product sales represent sales of our games, including physical products and digital full-game downloads. We recognize revenues from the sale of our products upon the transfer of title and risk of loss to our customers and once all performance obligations have been completed. With respect to digital full-game downloads, we recognize revenues when the product is available for download or is activated for gameplay. Revenues from product sales are recognized after deducting the estimated allowance for returns and price protection. 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. Products with Online Functionality or Hosted Service Arrangements For our software products with online functionality or that are part of a hosted service agreement, we evaluate whether that functionality constitutes a more-than- inconsequential separate deliverable in addition to the software product. This evaluation is performed for each software product or product add-on (including digital downloadable content), when it is released. Determining whether the online functionality for a particular game constitutes a more-than-inconsequential deliverable is subjective and requires management's judgment. When we determine that the online functionality 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 initially defer all of the software-related revenues from the sale of any such title (including digital downloadable content) and recognize the revenues ratably over the estimated service period of the title. In addition, we initially defer the costs of sales for the title 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 and exclude intangible asset amortization. For our software products with online functionality that we consider to be incidental to the overall product offering and are inconsequential deliverables, we recognize the related revenues when the revenue recognition criteria described above have been met. For our World of Warcraft boxed products, expansion packs and value-added services, we recognize revenues in each case with the related subscription service revenues, ratably over the estimated service period, beginning upon the 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." 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 certain Blizzard games 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 revenues from digital downloadable content (e.g. multi-player content packs), microtransactions and the licensing of intellectual property other than software to third-parties. Microtransaction revenues are derived from the sale of virtual goods to our players to enhance their gameplay experience. Proceeds from the sales of virtual goods are initially recorded in deferred revenues. We categorize our virtual goods as either consumable or durable. Consumable virtual goods represent goods that can be consumed by a specific player action; accordingly, we recognize revenues from the sale of consumable virtual goods as the goods are consumed. Durable virtual goods represent goods that are accessible to the player over an extended period of time. We recognize revenues from the sale of durable virtual goods ratably over the period of time the goods are available to the player, generally the estimated service period of the game. Revenues from the licensing of intellectual property other than software to third-parties 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. Estimated Service Period We determine the estimated service period for our games 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, the average number of days in which player activity stabilizes, and the weighted-average number of days between players' first purchase date and last date played online. We also consider known online trends and the service periods of our previously released games and disclosed service periods for our competitors' games that are similar in nature. Determining the estimated service period is subjective and requires management's judgment. Future usage patterns may differ from historical usage patterns and therefore the estimated service period may change in the future. The estimated service periods for our current games is generally less than 12 months . |
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 credits include, among other things, compliance with applicable trading and payment terms, achievement of sell-through performance targets in certain instances, 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. 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, 2015 , 2014 , and 2013 were $523 million , $495 million , and $401 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. 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 conditions. 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. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Revenue recognition In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective beginning January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are evaluating the adoption method as well as the impact of this new accounting guidance on our financial statements. Stock-based compensation In June 2014, the FASB issued new guidance related to stock compensation. The new standard requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The new standard is effective for fiscal years beginning after December 15, 2015 and can be applied either prospectively or retrospectively to all awards outstanding as of the beginning of the earliest annual period presented as an adjustment to opening retained earnings. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. Consolidations In February 2015, the FASB issued new guidance related to consolidations. The new standard amends certain requirements for determining whether a variable interest entity must be consolidated. The new standard is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. Debt Issuance Costs In April 2015, the FASB issued new guidance related to the presentation of debt issuance costs in financial statements. The new standard requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2015. The new guidance will be applied retrospectively to each prior period presented. The adoption of this guidance will not have a material impact on our financial statements. Internal-Use Software In April 2015, the FASB issued new guidance related to internal-use software. The new standard relates to a customer’s accounting for fees paid in cloud computing arrangements. The amendment provides guidance for customers to determine whether such arrangements include software licenses. If a cloud arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses and account for the non-software element as a service contract. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new standard is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. Inventory In July 2015, the FASB issued new guidance related to the measurement of inventory which requires inventory within the scope of the guidance to be measured at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new standard is effective for fiscal years beginning after December 15, 2016 and should be applied prospectively. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. Business Combinations In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , providing new guidance related to business combinations. The new standard requires that the cumulative impact of a measurement period adjustment, including the impact on prior periods, made to provisional amounts recorded at the acquisition date as a result of the business combination, be recognized in the reporting period the adjustment is identified. The standard also requires separate presentation on the face of the income statement, or disclosure in the notes, of the portion of the amount recorded in current period earnings by line item. Prior to the issuance of the standard, such adjustments to provisional amounts were recognized retrospectively. The new standard is effective for fiscal years beginning after December 15, 2015 and should be applied prospectively to measurement period adjustments that occur after the effective date. Early adoption is permitted. The adoption of this new accounting guidance could have a material impact on our financial statements in future periods upon occurrence of a measurement period adjustment. Deferred Taxes In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes , providing new guidance to simplify the presentation of deferred taxes. The new standard requires that deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. The issuance of the new standard eliminates the requirement to perform the jurisdiction analysis based on the classifications of the underlying assets and liabilities, and as a result, each jurisdiction will only have one net non-current deferred tax asset or liability. The new standard is effective for fiscal years beginning after December 15, 2016 and can be applied either prospectively or retrospectively. Early adoption is permitted. As of December 31, 2015 we early adopted ASU No. 2015-17 and applied retrospectively to all periods presented. As a result, we reclassified $368 million of deferred tax assets from current "Deferred income taxes, net" resulting in non-current net deferred tax assets and liabilities of $264 million and $10 million , respectively, in our Consolidated Balance Sheet as of December 31, 2014. The adoption of this new guidance did not impact our compliance with debt covenant requirements. |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Cash and Cash Equivalents [Abstract] | |
Components of 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, 2015 2014 Cash $ 176 $ 333 Foreign government treasury bills 34 40 Money market funds 1,613 4,475 Cash and cash equivalents $ 1,823 $ 4,848 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Our inventories, net consist of the following (amounts in millions): At December 31, 2015 2014 Finished goods $ 101 $ 112 Purchased parts and components 27 11 Inventories, net $ 128 $ 123 |
Software Development and Inte37
Software Development and Intellectual Property Licenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Software Development Costs and Intellectual Property Licenses | |
Summarizes the components of 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 December 31, 2015 At December 31, 2014 Internally developed software costs $ 266 $ 262 Payments made to third-party software developers 150 210 Total software development costs $ 416 $ 472 Intellectual property licenses $ 30 $ 23 |
Amortization, write-offs and impairments | 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, 2015 2014 2013 Amortization of capitalized software development costs and intellectual property licenses $ 410 $ 272 $ 195 Write-offs and impairments 4 — 29 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Property and equipment, net was comprised of the following (amounts in millions): At December 31, 2015 2014 Land $ 1 $ 1 Buildings 4 4 Leasehold improvements 109 104 Computer equipment 431 347 Office furniture and other equipment 52 45 Total cost of property and equipment 597 501 Less accumulated depreciation (408 ) (344 ) Property and equipment, net $ 189 $ 157 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of finite-lived intangible assets | Intangible assets, net consist of the following (amounts in millions): At December 31, 2015 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: License agreements and other 1 - 10 years $ 116 $ (93 ) $ 23 Internally-developed franchises 11 years 309 (298 ) 11 Developed software 5 years 15 — 15 Total definite-lived intangible assets $ 440 $ (391 ) $ 49 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 At December 31, 2014 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: License agreements and other 3 - 10 years $ 98 $ (92 ) $ 6 Internally-developed franchises 11 years 309 (286 ) 23 Total definite-lived intangible assets $ 407 $ (378 ) $ 29 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 |
Schedule of indefinite-lived intangible assets | Intangible assets, net consist of the following (amounts in millions): At December 31, 2015 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: License agreements and other 1 - 10 years $ 116 $ (93 ) $ 23 Internally-developed franchises 11 years 309 (298 ) 11 Developed software 5 years 15 — 15 Total definite-lived intangible assets $ 440 $ (391 ) $ 49 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 At December 31, 2014 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: License agreements and other 3 - 10 years $ 98 $ (92 ) $ 6 Internally-developed franchises 11 years 309 (286 ) 23 Total definite-lived intangible assets $ 407 $ (378 ) $ 29 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 | At December 31, 2015 , future amortization of definite-lived intangible assets is estimated as follows (amounts in millions): 2016 $ 17 2017 12 2018 7 2019 5 2020 4 Thereafter 4 Total $ 49 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying amount of goodwill by operating segments | The changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2015 and 2014 are as follows (amounts in millions): Activision Blizzard Other Total Balance at December 31, 2013 $ 6,914 $ 178 $ — $ 7,092 Tax benefit credited to goodwill (5 ) — — (5 ) Foreign exchange (1 ) — — (1 ) Balance at December 31, 2014 $ 6,908 $ 178 $ — $ 7,086 Additions through acquisition — — 12 12 Tax benefit credited to goodwill (2 ) — — (2 ) Foreign exchange (1 ) — — (1 ) Balance at December 31, 2015 $ 6,905 $ 178 $ 12 $ 7,095 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value, assets measured on a recurring and/or non-recurring basis | 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, 2015 Using As of December 31, 2015 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Balance Sheet Classification (Level 1) (Level 2) (Level 3) Financial Assets: Recurring fair value measurements: Money market funds $ 1,613 $ 1,613 $ — $ — Cash and cash equivalents Foreign government treasury bills 34 34 — — Cash and cash equivalents Foreign currency forward contracts not designated as hedges 11 — 11 — Other current assets Auction rate securities ("ARS") 9 — — 9 Long-term investments Total recurring fair value measurements $ 1,667 $ 1,647 $ 11 $ 9 Financial Liabilities: Foreign currency forward contracts designated as hedges $ (4 ) $ — $ (4 ) $ — Accrued expenses and other liabilities Fair Value Measurements at December 31, 2014 Using As of December 31, 2014 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Balance Sheet Classification (Level 1) (Level 2) (Level 3) Financial Assets: Recurring fair value measurements: Money market funds $ 4,475 $ 4,475 $ — $ — Cash and cash equivalents Foreign government treasury bills 40 40 — — Cash and cash equivalents ARS 9 — — 9 Long-term investments Total recurring fair value measurements $ 4,524 $ 4,515 $ — $ 9 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Summary of debt | A summary of our debt is as follows (amounts in millions): December 31, 2015 Gross Carrying Amount Unamortized Discount Net Carrying Amount Term Loan $ 1,869 $ (9 ) $ 1,860 2021 Notes 1,500 (20 ) 1,480 2023 Notes 750 (11 ) 739 Total long-term debt $ 4,119 $ (40 ) $ 4,079 December 31, 2014 Gross Carrying Amount Unamortized Discount Net Carrying Amount Term Loan $ 2,119 $ (10 ) $ 2,109 2021 Notes 1,500 (23 ) 1,477 2023 Notes 750 (12 ) 738 Total long-term debt $ 4,369 $ (45 ) $ 4,324 |
Schedule of maturities of debt | As of December 31, 2015 , 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, 2016 $ — 2017 — 2018 — 2019 — 2020 1,869 Thereafter 2,250 Total $ 4,119 |
Accumulated Other Comprehensi43
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The components of accumulated other comprehensive income (loss) at December 31, 2015 and 2014 , were as follows (amounts in millions): For the Year Ended December 31, 2015 Foreign currency translation adjustments Unrealized gain (loss) on available-for- sale securities Unrealized gain (loss) Total Balance at December 31, 2014 $ (304 ) $ 1 $ — $ (303 ) Other comprehensive income (loss) before reclassifications (326 ) 1 10 (315 ) Amounts reclassified from accumulated other comprehensive income (loss) — (1 ) (14 ) (15 ) Balance at December 31, 2015 $ (630 ) $ 1 $ (4 ) $ (633 ) For the Year Ended December 31, 2014 Foreign currency translation adjustments Unrealized gain on available-for- sale securities Unrealized gain (loss) on forward contracts Total Balance at December 31, 2013 $ 67 $ 1 $ — $ 68 Other comprehensive income (loss) before reclassifications (371 ) — 8 (363 ) Amounts reclassified from accumulated other comprehensive income (loss) — — (8 ) (8 ) Balance at December 31, 2014 $ (304 ) $ 1 $ — $ (303 ) |
Operating Segments and Geogra44
Operating Segments and Geographic Region (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
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 | 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, 2015 , 2014 and 2013 are presented below (amounts in millions): Years Ended December 31, 2015 2014 2013 2015 2014 2013 Net revenues Income from operations before income tax expense Activision $ 2,700 $ 2,686 $ 2,895 $ 868 $ 762 $ 971 Blizzard 1,565 1,720 1,124 561 756 376 Other (1) 356 407 323 37 9 8 Segments total 4,621 4,813 4,342 1,466 1,527 1,355 Reconciliation to consolidated net revenues / consolidated income before income tax expense: Net effect from deferral of net revenues and related cost of sales 43 (405 ) 241 (39 ) (215 ) 229 Stock-based compensation expense — — — (92 ) (104 ) (110 ) Amortization of intangible assets — — — (11 ) (12 ) (23 ) Fees and other expenses related to acquisitions and the Purchase Transaction (2) — — — (5 ) (13 ) (79 ) Consolidated net revenues / operating income $ 4,664 $ 4,408 $ 4,583 $ 1,319 $ 1,183 $ 1,372 Interest and other expense, net 198 202 53 Consolidated income before income tax expense $ 1,121 $ 981 $ 1,319 (1) Other includes other income and expenses from operating segments managed outside the reportable segments, including our Media Networks, Studios, and Distribution businesses. Other also includes unallocated corporate income and expenses. (2) Reflects fees and other expenses related to the Purchase Transaction and the King Acquisition, inclusive of related debt financings. |
Schedule of net revenues from external customers by geographic region | Geographic information presented below for the years ended December 31, 2015 , 2014 , and 2013 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, 2015 2014 2013 Net revenues by geographic region: North America $ 2,409 $ 2,190 $ 2,414 Europe 1,741 1,824 1,826 Asia Pacific 514 394 343 Total consolidated net revenues $ 4,664 $ 4,408 $ 4,583 |
Schedule of net revenues by platform | Net revenues by platform were as follows (amounts in millions): Years Ended December 31, 2015 2014 2013 Net revenues by platform: Console $ 2,391 $ 2,150 $ 2,379 Online (1) 851 867 912 PC 648 551 340 Mobile and ancillary (2) 418 433 629 Total Activision Blizzard net revenues 4,308 4,001 4,260 Other (3) 356 407 323 Total consolidated net revenues $ 4,664 $ 4,408 $ 4,583 _______________________________________________________________________________ (1) Revenues from online consist of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services. (2) Revenues from Mobile and ancillary include revenues from handheld, mobile and tablet 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. (3) Net revenues from Other include revenues from our Media Networks and Studios businesses, along with revenues that were historically shown as “Distribution.” |
Long-lived assets by geographic region | Long-lived assets by geographic region at December 31, 2015 , 2014 , and 2013 were as follows (amounts in millions): Years Ended December 31, 2015 2014 2013 Long-lived assets* by geographic region: North America $ 138 $ 122 $ 102 Europe 42 29 29 Asia Pacific 9 6 7 Total long-lived assets by geographic region $ 189 $ 157 $ 138 _______________________________________________________________________________ * 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. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option valuation assumptions and weighted-average grant date fair value | 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, 2015 2014 2013 Expected life (in years) 6.26 5.97 6.44 Risk free interest rate 1.90 % 1.82 % 1.86 % Volatility 36.13 % 37.09 % 39.00 % Dividend yield 0.72 % 0.98 % 1.08 % Weighted-average fair value at grant date $ 9.87 $ 5.87 $ 4.97 |
Schedule of stock option activity | Stock option activities for the year ended December 31, 2015 are as follows (amounts in millions, except number of shares, which are in thousands, and per share amounts): Shares Weighted-average exercise price Weighted-average remaining contractual term Aggregate intrinsic value Outstanding stock options at December 31, 2014 29,486 $ 14.50 Granted 4,133 32.55 Exercised (8,356 ) 13.08 Forfeited (928 ) 18.44 Expired (6 ) 8.73 Outstanding stock options at December 31, 2015 24,329 $ 17.90 5.98 $ 506 Vested and expected to vest at December 31, 2015 23,448 $ 17.57 5.86 $ 496 Exercisable at December 31, 2015 15,270 $ 13.51 4.19 $ 385 |
Schedule of restricted stock rights activity | The following table summarizes our restricted stock rights activity for the year ended December 31, 2015 , with performance-vesting restricted stock right grants presented at the maximum potential shares that could be earned and issued at vesting (amounts in thousands except per share amounts): Restricted Stock Rights Weighted- Average Grant Date Fair Value Unvested restricted stock rights balance at December 31, 2014 17,967 $ 11.85 Granted* 2,330 29.31 Vested (7,146 ) 12.80 Forfeited (1,221 ) 15.23 Unvested restricted stock rights balance at December 31, 2015 11,930 $ 12.74 * 1.7 million of the performance-vesting restricted stock rights granted at maximum potential shares did not have an accounting grant date as there is not a mutual understanding between the Company and the employee of the performance terms. Accordingly, no grant date fair value was established and the weighted averaged grant date fair value calculated above excludes these shares. |
Schedule of 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, 2015 , 2014 , and 2013 (amounts in millions): For the Years Ended December 31, 2015 2014 2013 Cost of sales—online $ — $ 1 $ — Cost of sales—software royalties and amortization 15 17 17 Product development 25 22 33 Sales and marketing 9 8 7 General and administrative 43 56 53 Stock-based compensation expense before income taxes 92 104 110 Income tax benefit (27 ) (38 ) (40 ) Total stock-based compensation expense, net of income tax benefit $ 65 $ 66 $ 70 |
Schedule of stock-based compensation costs capitalized | 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, 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 Stock-based compensation expense capitalized and deferred during period 27 Amortization of capitalized and deferred stock-based compensation expense (23 ) Balance at December 31, 2014 $ 26 Stock-based compensation expense capitalized and deferred during period 36 Amortization of capitalized and deferred stock-based compensation expense (34 ) Balance at December 31, 2015 $ 28 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of domestic and foreign income (loss) and income tax expense (benefit) | 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, 2015 2014 2013 Income before income tax expense: Domestic $ 355 $ 325 $ 626 Foreign 766 656 693 $ 1,121 $ 981 $ 1,319 Income tax expense (benefit): Current: Federal $ 169 $ 146 $ 110 State 31 12 7 Foreign 40 38 31 Total current 240 196 148 Deferred: Federal 1 26 134 State (21 ) (18 ) (12 ) Foreign 9 (58 ) 39 Total deferred (11 ) (50 ) 161 Income tax expense $ 229 $ 146 $ 309 |
Reconciliation of income taxes at the U.S. federal statutory rate to income tax expense (benefit) | 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) at the effective tax rate for each of the years are as follows (amounts in millions): For the Years Ended December 31, 2015 2014 2013 Federal income tax provision at statutory rate $ 392 35 % $ 343 35 % $ 462 35 % State taxes, net of federal benefit 5 — 5 — 6 — Research and development credits (26 ) (2 ) (24 ) (2 ) (49 ) (4 ) Foreign rate differential (228 ) (20 ) (245 ) (25 ) (174 ) (13 ) Change in tax reserves 136 12 128 13 89 7 Net operating loss tax attribute assumed from the Purchase Transaction (63 ) (6 ) (52 ) (5 ) (16 ) (1 ) Other 13 1 (9 ) (1 ) (9 ) (1 ) Income tax expense $ 229 20 % $ 146 15 % $ 309 23 % |
Schedule of the components of the net deferred tax assets (liabilities) | 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, 2015 2014 Deferred tax assets: Allowance for sales returns and price protection $ 66 $ 74 Inventory reserve 11 9 Accrued expenses 40 38 Deferred revenue 288 291 Tax credit carryforwards 58 50 Net operating loss carryforwards 10 10 Stock-based compensation 54 69 Transaction costs 9 9 Other 19 13 Deferred tax assets 555 563 Valuation allowance — — Deferred tax assets, net of valuation allowance 555 563 Deferred tax liabilities: Intangibles (166 ) (169 ) Prepaid royalties (30 ) (22 ) Capitalized software development expenses (81 ) (84 ) State taxes (7 ) (34 ) Other (6 ) — Deferred tax liabilities (290 ) (309 ) Net deferred tax assets $ 265 $ 254 |
Reconciliation of unrecognized tax benefits for the period | As of December 31, 2015 , we had approximately $552 million of gross unrecognized tax benefits, of which $529 million would affect our effective tax rate if recognized. A reconciliation of total gross unrecognized tax benefits for the years ended December 31, 2015 , 2014 , and 2013 is as follows (amounts in millions): For the Years Ended December 31, 2015 2014 2013 Unrecognized tax benefits balance at January 1 $ 419 $ 294 $ 207 Gross increase for tax positions of prior-years 8 2 1 Gross decrease for tax positions of prior-years (11 ) — — Gross increase for tax positions of current year 136 125 91 Settlement with taxing authorities — (2 ) — Lapse of statute of limitations — — (5 ) Unrecognized tax benefits balance at December 31 $ 552 $ 419 $ 294 |
Computation of Per Basic_Dilute
Computation of Per Basic/Diluted Earnings Common Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of computation of earnings per 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, 2015 2014 2013 Numerator: Consolidated net income $ 892 $ 835 $ 1,010 Less: Distributed earnings to unvested stock-based awards that participate in earnings (4 ) (4 ) (5 ) Less: Undistributed earnings allocated to unvested stock-based awards that participate in earnings (7 ) (14 ) (18 ) Numerator for basic and diluted earnings per common share—income available to common shareholders $ 881 $ 817 $ 987 Denominator: Denominator for basic earnings per common share—weighted-average common shares outstanding 728 716 1,024 Effect of potential dilutive common shares under the treasury stock method: Employee stock options 11 10 11 Denominator for diluted earnings per common share—weighted-average common shares outstanding plus dilutive effect of employee stock options 739 726 1,035 Basic earnings per common share $ 1.21 $ 1.14 $ 0.96 Diluted earnings per common share $ 1.19 $ 1.13 $ 0.95 |
Supplemental Cash Flow Inform48
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of supplemental cash flow information | Supplemental cash flow information is as follows (amounts in millions): For the Years Ended December 31, 2015 2014 2013 Supplemental cash flow information: Cash paid for income taxes, net of refunds $ 20 $ 34 $ 138 Cash paid for interest 193 201 19 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum commitments under non-cancelable operating lease agreements and other contractual arrangements | Assuming all contractual provisions are met, the total future minimum commitments for these and other contractual arrangements in place at December 31, 2015 are scheduled to be paid as follows (amounts in millions): Contractual Obligations(1) Facility and Equipment Leases Developer and Intellectual Properties Marketing Total For the years ending December 31, 2016 $ 35 $ 190 $ 28 $ 253 2017 32 5 53 90 2018 30 — 15 45 2019 27 — — 27 2020 19 — — 19 Thereafter 35 2 — 37 Total $ 178 $ 197 $ 96 $ 471 _______________________________________________________________________________ (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, 2015 , we had $471 million of unrecognized tax benefits, of which $453 million was included in "Other liabilities" and $18 million was included in "Accrued expenses and other liabilities" in our consolidated balance sheet. |
Quarterly Financial Informati50
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of quarterly financial information | For the Quarters Ended December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 (Amounts in millions, except per share data) Net revenues $ 1,353 $ 990 $ 1,044 $ 1,278 Cost of sales 538 337 297 413 Operating income 250 196 332 542 Net income 159 127 212 394 Basic earnings per share 0.22 0.17 0.29 0.54 Diluted earnings per share 0.21 0.17 0.29 0.53 For the Quarters Ended December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014 (Amounts in millions, except per share data) Net revenues $ 1,575 $ 753 $ 970 $ 1,111 Cost of sales 631 253 300 342 Operating income 438 8 310 427 Net income (loss) 361 (23 ) 204 293 Basic earnings (loss) per share 0.49 (0.03 ) 0.28 0.40 Diluted earnings (loss) per share 0.49 (0.03 ) 0.28 0.40 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Schedule of Preliminary Purchase Price Allocation | : December 22, 2015 Net tangible assets $ 1 Definite-lived intangible assets 33 Goodwill 12 Total net assets recognized $ 46 |
Description of Business (Detail
Description of Business (Details) $ / shares in Units, shares in Millions, $ in Millions | Oct. 11, 2013USD ($)$ / sharesshares | Dec. 31, 2015segmentshares | Dec. 31, 2013USD ($) | May. 28, 2014USD ($)shares |
Stock Purchase Agreement [Line Items] | ||||
Shares of common stock repurchased | 429 | |||
Cost of common stock repurchased under the stock repurchase program | $ | $ 5,830 | |||
Shares outstanding | 734 | |||
Number of reportable segments | segment | 2 | |||
Activision Blizzard | ||||
Stock Purchase Agreement [Line Items] | ||||
Shares of common stock repurchased | 429 | |||
Cost of common stock repurchased under the stock repurchase program | $ | $ 5,830 | |||
Shares repurchase price (in dollars per share) | $ / shares | $ 13.60 | |||
Vivendi | ||||
Stock Purchase Agreement [Line Items] | ||||
Shares sold by Vivendi | 41 | |||
Shares sold by Vivendi as a percent of holdings | 50.00% | |||
Proceeds from sale of stock by Vivendi | $ | $ 850 | |||
Shares of Activision Blizzard common stock owned by a specific shareholder | 41 | |||
Percent of Activision Blizzard common stock owned by a specific shareholder | 6.00% | |||
ASAC | ||||
Stock Purchase Agreement [Line Items] | ||||
Shares purchased by ASAC | 172 | |||
Value of shares purchased by ASAC | $ | $ 2,340 | |||
Share price purchased by ASAC (in dollars per share) | $ / shares | $ 13.60 | |||
Shares of Activision Blizzard common stock owned by a specific shareholder | 172 | |||
Percent of Activision Blizzard common stock owned by a specific shareholder | 23.00% | |||
Public | ||||
Stock Purchase Agreement [Line Items] | ||||
Percent of Activision Blizzard common stock owned by a specific shareholder | 71.00% |
Summary of Significant Accoun53
Summary of Significant Accounting Policies (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015USD ($)customer | Dec. 31, 2014USD ($)customer | Dec. 31, 2013customer | |
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 | ||
Cash in Escrow | |||
Deposit for acquisition | $ | $ 3,561 | $ 0 | |
Financial Instruments | |||
Maximum contractual terms of foreign exchange forward contracts | 1 year | ||
Software Development Costs [Line Items] | |||
Amortization period for capitalized software development costs | 6 months | ||
Consolidated net revenues | |||
Concentration Risk [Line Items] | |||
Number of significant customers for concentration of credit risk | 2 | 0 | 0 |
Consolidated gross receivables | |||
Concentration Risk [Line Items] | |||
Number of significant customers for concentration of credit risk | 3 | 3 | |
Minimum | |||
Software Development Costs [Line Items] | |||
Amortization period for capitalized software development costs | 1 year | ||
Maximum | |||
Software Development Costs [Line Items] | |||
Amortization period for capitalized software development costs | 2 years | ||
Wal-Mart | Consolidated gross receivables | |||
Concentration Risk [Line Items] | |||
Percentage of concentration risk (in percent) | 11.00% | 11.00% | |
Sony | Consolidated net revenues | |||
Concentration Risk [Line Items] | |||
Percentage of concentration risk (in percent) | 12.00% | ||
Sony | Consolidated gross receivables | |||
Concentration Risk [Line Items] | |||
Percentage of concentration risk (in percent) | 18.00% | 13.00% | |
Microsoft | Consolidated net revenues | |||
Concentration Risk [Line Items] | |||
Percentage of concentration risk (in percent) | 10.00% | ||
Microsoft | Consolidated gross receivables | |||
Concentration Risk [Line Items] | |||
Percentage of concentration risk (in percent) | 13.00% | 17.00% |
Summary of Significant Accoun54
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2015 | |
Buildings | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 25 years |
Buildings | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 33 years |
Computer equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 2 years |
Computer 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 |
Office furniture and other equipment. | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Summary of Significant Accoun55
Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Definite-lived And Indefinite-lived Intangible Assets [Line Items] | |||
Impairment of intangible assets | $ 0 | $ 0 | $ 0 |
Acquired trade names | |||
Definite-lived And Indefinite-lived Intangible Assets [Line Items] | |||
Impairment of intangible assets | 0 | 0 | 0 |
Goodwill | |||
Definite-lived And Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill impairment | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun56
Summary of Significant Accounting Policies (Details 4) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue Recognition [Abstract] | |||
Estimated service period over which revenues are recognized (less than) | 12 months | ||
Marketing and Advertising Expense [Abstract] | |||
Advertising expense included in sales and marketing expense | $ 523 | $ 495 | $ 401 |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash and Cash Equivalents [Abstract] | ||||
Cash | $ 176 | $ 333 | ||
Foreign government treasury bills | 34 | 40 | ||
Money market funds | 1,613 | 4,475 | ||
Cash and cash equivalents | $ 1,823 | $ 4,848 | $ 4,410 | $ 3,959 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 101 | $ 112 |
Purchased parts and components | 27 | 11 |
Inventories, net | 128 | 123 |
Inventory reserves | $ 54 | $ 52 |
Software Development and Inte59
Software Development and Intellectual Property Licenses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Software development and intellectual property licenses: | |||
Internally developed software costs | $ 266 | $ 262 | |
Payments made to third-party software developers | 150 | 210 | |
Total software development costs | 416 | 472 | |
Intellectual property licenses | 30 | 23 | |
Amortization, write-offs and impairments: | |||
Amortization of capitalized software development costs and intellectual property licenses | 410 | 272 | $ 195 |
Write-offs and impairments | $ 4 | $ 0 | $ 29 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | |||
Cost of property and equipment | $ 597 | $ 501 | |
Less accumulated depreciation | (408) | (344) | |
Property and equipment, net | 189 | 157 | $ 138 |
Depreciation expense | 82 | 76 | 84 |
Rental expense | 39 | 38 | $ 35 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Cost of property and equipment | 1 | 1 | |
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Cost of property and equipment | 4 | 4 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Cost of property and equipment | 109 | 104 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Cost of property and equipment | 431 | 347 | |
Office furniture and other equipment | |||
Property, Plant and Equipment [Line Items] | |||
Cost of property and equipment | $ 52 | $ 45 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Finite-Lived Intangible Assets | |||
Gross carrying amount, definite-lived intangible assets | $ 440,000,000 | $ 407,000,000 | |
Accumulated amortization, definite-lived intangible assets | (391,000,000) | (378,000,000) | |
Net carrying amount, definite-lived intangible assets | 49,000,000 | 29,000,000 | |
Indefinite Lived Intangible Assets | |||
Net carrying amount, indefinite-lived intangible assets | 433,000,000 | 433,000,000 | |
Amortization expense disclosure | |||
Amortization expense | 13,000,000 | 13,000,000 | $ 24,000,000 |
Definite-lived intangible assets, future amortization expense disclosure | |||
2,016 | 17,000,000 | ||
2,017 | 12,000,000 | ||
2,018 | 7,000,000 | ||
2,019 | 5,000,000 | ||
2,020 | 4,000,000 | ||
Thereafter | 4,000,000 | ||
Net carrying amount, definite-lived intangible assets | 49,000,000 | 29,000,000 | |
Impairment of intangible assets | 0 | 0 | 0 |
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 | 116,000,000 | 98,000,000 | |
Accumulated amortization, definite-lived intangible assets | (93,000,000) | (92,000,000) | |
Net carrying amount, definite-lived intangible assets | 23,000,000 | 6,000,000 | |
Definite-lived intangible assets, future amortization expense disclosure | |||
Net carrying amount, definite-lived intangible assets | $ 23,000,000 | $ 6,000,000 | |
License agreements and other | Minimum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 1 year | 3 years | |
License agreements and other | Maximum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 10 years | 10 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 | (298,000,000) | (286,000,000) | |
Net carrying amount, definite-lived intangible assets | 11,000,000 | 23,000,000 | |
Definite-lived intangible assets, future amortization expense disclosure | |||
Net carrying amount, definite-lived intangible assets | $ 11,000,000 | $ 23,000,000 | |
Internally developed franchises | Minimum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 11 years | 11 years | |
Developed software | |||
Finite-Lived Intangible Assets | |||
Gross carrying amount, definite-lived intangible assets | $ 15,000,000 | ||
Accumulated amortization, definite-lived intangible assets | 0 | ||
Net carrying amount, definite-lived intangible assets | 15,000,000 | ||
Definite-lived intangible assets, future amortization expense disclosure | |||
Net carrying amount, definite-lived intangible assets | $ 15,000,000 | ||
Developed software | Minimum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 5 years | ||
Acquired trade names | |||
Indefinite Lived Intangible Assets | |||
Net carrying amount, indefinite-lived intangible assets | $ 47,000,000 | $ 47,000,000 | |
Definite-lived intangible assets, future amortization expense disclosure | |||
Impairment of intangible assets | $ 0 | $ 0 | $ 0 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in carrying amount of goodwill | ||
Goodwill, balance at beginning of period | $ 7,086 | $ 7,092 |
Goodwill | 12 | |
Tax benefit credited to goodwill | (2) | (5) |
Foreign exchange | (1) | (1) |
Goodwill, balance at end of period | 7,095 | 7,086 |
Goodwill, Impaired, Accumulated Impairment Loss | 0 | 0 |
Activision | ||
Changes in carrying amount of goodwill | ||
Goodwill, balance at beginning of period | 6,908 | 6,914 |
Goodwill | 0 | |
Tax benefit credited to goodwill | (2) | (5) |
Foreign exchange | (1) | (1) |
Goodwill, balance at end of period | 6,905 | 6,908 |
Blizzard | ||
Changes in carrying amount of goodwill | ||
Goodwill, balance at beginning of period | 178 | 178 |
Goodwill | 0 | |
Tax benefit credited to goodwill | 0 | 0 |
Foreign exchange | 0 | 0 |
Goodwill, balance at end of period | 178 | 178 |
Other | ||
Changes in carrying amount of goodwill | ||
Goodwill, balance at beginning of period | 0 | 0 |
Goodwill | 12 | |
Tax benefit credited to goodwill | 0 | 0 |
Foreign exchange | 0 | 0 |
Goodwill, balance at end of period | $ 12 | $ 0 |
Other Current Assets and Curr63
Other Current Assets and Current Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred costs | ||
Deferred costs of sales | $ 216 | $ 257 |
Other Current Assets and Current Accrued Expenses and Other Liabilities | ||
Accrued payroll related costs | $ 246 | $ 267 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | $ 1,667 | $ 4,524 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 1,613 | 4,475 |
Foreign government treasury bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 34 | 40 |
Foreign currency forward contracts designated as hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 11 | |
Liabilities measured at fair value on a recurring basis, gain loss included in earnings | ||
Total liabilities at fair value | (4) | |
ARS | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 9 | 9 |
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 | 1,647 | 4,515 |
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 | 1,613 | 4,475 |
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 | 34 | 40 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Foreign currency forward contracts designated as hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 0 | |
Liabilities measured at fair value on a recurring basis, gain loss included in earnings | ||
Total liabilities at fair value | 0 | |
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 | 11 | 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 | 0 |
Fair value measurements using significant other observable inputs (Level 2) | Foreign currency forward contracts designated as hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 11 | |
Liabilities measured at fair value on a recurring basis, gain loss included in earnings | ||
Total liabilities at fair value | (4) | |
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 | 9 |
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 | 0 |
Fair value measurements using significant unobservable inputs (Level 3) | Foreign currency forward contracts designated as hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 0 | |
Liabilities measured at fair value on a recurring basis, gain loss included in earnings | ||
Total liabilities 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 | $ 9 |
Fair Value Measurements (Deta65
Fair Value Measurements (Details 2) - Foreign currency forward contracts - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Not Designated as Hedges | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of foreign currency forward contracts | $ 11,000,000 | |
Not Designated as Hedges | USD to Euro contract | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount of foreign currency derivatives | 489,000,000 | |
Not Designated as Hedges | Euro to USD contract | ||
Derivatives, Fair Value [Line Items] | ||
Unrealized gain reclassified out of AOCI and into earnings due to discontinuance of foreign currency cash flow hedge | 8,000,000 | |
Notional amount of dedesignatesd cash flow hedge | 250,000,000 | |
Designated as Hedges | Cash Flow Hedging | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount of foreign currency derivatives | 381,000,000 | $ 0 |
Ineffective portion relating to these hedges | 0 | 0 |
Net unrealized losses expected to be reclassified into earnings within the next 12 months | 4,000,000 | |
Pre-tax net realized gains reclassified out of AOCI and into general and administrative expense | $ 6,000,000 | $ 8,000,000 |
Maximum length of time over which our foreign currency forward contracts mature | 1 year |
Fair Value Measurements (Deta66
Fair Value Measurements (Details 3) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Nonrecurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment charges - nonrecurring | $ 0 | $ 0 | $ 0 |
Debt (Details)
Debt (Details) $ in Millions | Feb. 25, 2016USD ($) | Feb. 23, 2016USD ($)amendment | Feb. 11, 2015USD ($) | Feb. 11, 2014USD ($) | Oct. 11, 2013USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Sep. 19, 2013USD ($) |
Debt Instrument [Line Items] | |||||||||
Repayment of long-term debt | $ 250 | $ 375 | $ 6 | ||||||
Long-term debt | $ 4,119 | 4,369 | |||||||
Maximum percentage of outstanding Notes that can be redeemed with net cash proceeds from one or more qualified equity offerings | 35.00% | ||||||||
Percentage of principal repayable to option holders upon certain criteria | 101.00% | ||||||||
Interest expense | $ 193 | 201 | |||||||
Amortization of the debt discount | 6 | 6 | |||||||
Credit Facilities | Subsequent Events | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of amendments to the Credit Agreement | amendment | 3 | ||||||||
Term Loan | Credit Facilities | Subsequent Events | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 3,700 | $ 2,300 | |||||||
Federal Funds Effective Rate | Term Loan | Credit Facilities | Subsequent Events | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (as a percent) | 0.50% | ||||||||
Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 2,500 | ||||||||
LIBOR floor rate | 0.75% | ||||||||
Required quarterly payments, percentage of original principal | 0.25% | ||||||||
Repayment of long-term debt | $ 250 | $ 375 | |||||||
Long-term debt | 1,869 | 2,119 | |||||||
Term Loan | Subsequent Events | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayment of long-term debt | $ 500 | ||||||||
Revolver | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 250 | ||||||||
Amount of letters of credit that can be issued under the Revolver | $ 50 | $ 50 | |||||||
Percentage of Revolver outstanding which triggers certain financial covenants | 15.00% | ||||||||
Commitment fees | $ 0 | 0 | |||||||
Credit Facilities | |||||||||
Debt Instrument [Line Items] | |||||||||
Variable rate at end of period | 3.25% | ||||||||
Percentage of consolidated total assets pledged as collateral | 67.00% | ||||||||
Credit Facilities | Prime Rate | Base Rate Loans | |||||||||
Debt Instrument [Line Items] | |||||||||
Description of variable rate basis | Prime rate as designated by the administrative agent | ||||||||
Credit Facilities | Federal Funds Effective Rate | Base Rate Loans | |||||||||
Debt Instrument [Line Items] | |||||||||
Description of variable rate basis | federal funds rate | ||||||||
Applicable margin (as a percent) | 0.50% | ||||||||
Credit Facilities | LIBOR Rate | Base Rate Loans | |||||||||
Debt Instrument [Line Items] | |||||||||
Description of variable rate basis | LIBOR for one month | ||||||||
Applicable margin (as a percent) | 1.00% | ||||||||
Credit Facilities | LIBOR Rate | LIBOR Rate Loans | |||||||||
Debt Instrument [Line Items] | |||||||||
Description of variable rate basis | LIBOR | ||||||||
Unsecured Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest payable | $ 38 | 38 | |||||||
2021 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | 1,500 | 1,500 | $ 1,500 | ||||||
Interest rate | 5.625% | ||||||||
2021 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||||||||
Debt Instrument [Line Items] | |||||||||
Fair value of notes | 1,571 | 1,586 | |||||||
2023 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | 750 | 750 | $ 750 | ||||||
Interest rate | 6.125% | ||||||||
2023 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||||||||
Debt Instrument [Line Items] | |||||||||
Fair value of notes | $ 795 | $ 810 |
Debt (Details 2)
Debt (Details 2) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 19, 2013 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 4,119 | $ 4,369 | |
Maximum percentage of outstanding Notes that can be redeemed with net cash proceeds from one or more qualified equity offerings | 35.00% | ||
Percentage of principal repayable to option holders upon certain criteria | 101.00% | ||
Interest expense | $ 193 | 201 | |
Amortization of the debt discount | 6 | 6 | |
Unsecured Notes | |||
Debt Instrument [Line Items] | |||
Interest payable | 38 | 38 | |
2021 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 1,500 | 1,500 | $ 1,500 |
Interest rate | 5.625% | ||
2021 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||
Debt Instrument [Line Items] | |||
Fair value of notes | 1,571 | 1,586 | |
2023 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 750 | 750 | $ 750 |
Interest rate | 6.125% | ||
2023 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||
Debt Instrument [Line Items] | |||
Fair value of notes | $ 795 | $ 810 |
Debt (Details 3)
Debt (Details 3) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 19, 2013 |
Debt Instrument [Line Items] | |||
Gross Carrying Amount | $ 4,119 | $ 4,369 | |
Unamortized Discount | (40) | (45) | |
Net Carrying Amount | 4,079 | 4,324 | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | 1,869 | 2,119 | |
Unamortized Discount | (9) | (10) | |
Net Carrying Amount | 1,860 | 2,109 | |
2021 Notes | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | 1,500 | 1,500 | $ 1,500 |
Unamortized Discount | (20) | (23) | |
Net Carrying Amount | 1,480 | 1,477 | |
2023 Notes | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | 750 | 750 | $ 750 |
Unamortized Discount | (11) | (12) | |
Net Carrying Amount | $ 739 | $ 738 |
Debt (Details 4)
Debt (Details 4) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Maturites of Debt | ||
2,016 | $ 0 | |
2,017 | 0 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 1,869 | |
Thereafter | 2,250 | |
Total | $ 4,119 | $ 4,369 |
Accumulated Other Comprehensi71
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Accumulated other comprehensive income (loss), balance at beginning of period | $ (303) | $ 68 |
Other comprehensive income (loss) before reclassifications | (315) | (363) |
Amounts reclassified from accumulated other comprehensive income (loss) | (15) | (8) |
Accumulated other comprehensive income (loss), balance at end of period | (633) | (303) |
Foreign currency translation adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Accumulated other comprehensive income (loss), balance at beginning of period | (304) | 67 |
Other comprehensive income (loss) before reclassifications | (326) | (371) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Accumulated other comprehensive income (loss), balance at end of period | (630) | (304) |
Unrealized gain (loss) on available-for- sale securities | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Accumulated other comprehensive income (loss), balance at beginning of period | 1 | 1 |
Other comprehensive income (loss) before reclassifications | 1 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss) | (1) | 0 |
Accumulated other comprehensive income (loss), balance at end of period | 1 | 1 |
Unrealized gain (loss) on forward contracts | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Accumulated other comprehensive income (loss), balance at beginning of period | 0 | 0 |
Other comprehensive income (loss) before reclassifications | 10 | 8 |
Amounts reclassified from accumulated other comprehensive income (loss) | (14) | (8) |
Accumulated other comprehensive income (loss), balance at end of period | $ (4) | $ 0 |
Operating Segments and Geogra72
Operating Segments and Geographic Region (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($)segment | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Segment Reporting [Abstract] | |||||||||||
Number of reportable segments | segment | 2 | ||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | $ 1,353 | $ 990 | $ 1,044 | $ 1,278 | $ 1,575 | $ 753 | $ 970 | $ 1,111 | $ 4,664 | $ 4,408 | $ 4,583 |
Income from operations | 250 | $ 196 | $ 332 | $ 542 | 438 | $ 8 | $ 310 | $ 427 | 1,319 | 1,183 | 1,372 |
Stock-based compensation expense | (92) | (104) | (110) | ||||||||
Amortization of intangible assets | (13) | (13) | (24) | ||||||||
Interest and other expense, net | 198 | 202 | 53 | ||||||||
Income before income tax expense | 1,121 | 981 | 1,319 | ||||||||
Long-lived assets | 189 | 157 | 189 | 157 | 138 | ||||||
Total platform | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 4,308 | 4,001 | 4,260 | ||||||||
Console | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 2,391 | 2,150 | 2,379 | ||||||||
Online | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 851 | 867 | 912 | ||||||||
PC | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 648 | 551 | 340 | ||||||||
Mobile and ancillary | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 418 | 433 | 629 | ||||||||
North America | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 2,409 | 2,190 | 2,414 | ||||||||
Long-lived assets | 138 | 122 | 138 | 122 | 102 | ||||||
Europe | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 1,741 | 1,824 | 1,826 | ||||||||
Long-lived assets | 42 | 29 | 42 | 29 | 29 | ||||||
Asia Pacific | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 514 | 394 | 343 | ||||||||
Long-lived assets | $ 9 | $ 6 | $ 9 | $ 6 | $ 7 | ||||||
Geographic Concentration Risk | Revenues | US | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Percentage of concentration risk (in percent) | 48.00% | 48.00% | 51.00% | ||||||||
Geographic Concentration Risk | Revenues | UK | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Percentage of concentration risk (in percent) | 14.00% | 16.00% | 14.00% | ||||||||
Geographic Concentration Risk | Revenues | France | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Percentage of concentration risk (in percent) | 14.00% | 12.00% | |||||||||
Segments total | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | $ 4,621 | $ 4,813 | $ 4,342 | ||||||||
Income from operations | 1,466 | 1,527 | 1,355 | ||||||||
Segments total | Activision | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 2,700 | 2,686 | 2,895 | ||||||||
Income from operations | 868 | 762 | 971 | ||||||||
Segments total | Blizzard | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 1,565 | 1,720 | 1,124 | ||||||||
Income from operations | 561 | 756 | 376 | ||||||||
Segments total | Other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Consolidated net revenues | 356 | 407 | 323 | ||||||||
Income from operations | 37 | 9 | 8 | ||||||||
Reconciliation items | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net effect from changes in the deferral of net revenues | 43 | (405) | 241 | ||||||||
Net effect from changes in the deferral of net revenues and related cost of sales | (39) | (215) | 229 | ||||||||
Stock-based compensation expense | (92) | (104) | (110) | ||||||||
Amortization of intangible assets | (11) | (12) | (23) | ||||||||
Fees and other expenses related to the Purchase Transaction and related debt financings | $ (5) | $ (13) | $ (79) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares shares in Millions | 12 Months Ended | |
Dec. 31, 2015 | Jun. 05, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock available for grant under stock-based awards (in shares) | 46 | |
Aggregate common stock reserved for issuance under stock based awards (in shares) | 40 | |
Stock Option Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expiration period of options | 10 years | |
Stock Option Plan | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period of award | 3 years | |
Stock Option Plan | 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 | |
Restricted Stock Rights | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period of award | 5 years |
Stock-Based Compensation (Det74
Stock-Based Compensation (Details 2) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Method and assumptions on valuation of stock options | |||
Expected life | 6 years 3 months 4 days | 5 years 11 months 19 days | 6 years 5 months 8 days |
Risk free interest rate (in percent) | 1.90% | 1.82% | 1.86% |
Volatility (in percent) | 36.13% | 37.09% | 39.00% |
Expected dividend yield (in percent) | 0.72% | 0.98% | 1.08% |
Weighted-average fair value at the grant date (in dollars per share) | $ 9.87 | $ 5.87 | $ 4.97 |
Expected stock price volatility, low end of range (in percent) | 26.96% | ||
Expected stock volatility rate, high end of range (in percent) | 37.00% |
Stock-Based Compensation (Det75
Stock-Based Compensation (Details 3) - Stock Option Plan - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stock option activity, shares | |||
Stock options at the beginning of the period (in shares) | 29,486 | ||
Stock options, granted (in shares) | 4,133 | ||
Stock options, exercised (in shares) | (8,356) | ||
Stock options, forfeited (in shares) | (928) | ||
Stock options, expired (in shares) | (6) | ||
Stock options at the ending of the period (in shares) | 24,329 | 29,486 | |
Stock options, vested and expected to vest (in shares) | 23,448 | ||
Stock options, exercisable (in shares) | 15,270 | ||
Weighted-average exercise price | |||
Stock options, weighted-average strike price at the beginning of the period (in dollars per share) | $ 14.50 | ||
Stock options, weighted-average exercise price, granted (in dollars per share) | 32.55 | ||
Stock options, weighted-average exercise price, exercised (in dollars per share) | 13.08 | ||
Stock options, weighted-average exercise price, forfeited (in dollars per share) | 18.44 | ||
Stock options, weighted-average exercise price, expired (in dollars per share) | 8.73 | ||
Stock options, weighted-average strike price at the end of the period (in dollars per share) | 17.90 | $ 14.50 | |
Stock options, weighted-average exercise price, vested and expected to vest (in dollars per share) | 17.57 | ||
Stock options, weighted-average exercise price, exercisable (in dollars per share) | $ 13.51 | ||
Stock options, weighted-average remaining contractual term | 5 years 11 months 22 days | ||
Stock options, weighted-average remaining contractual term, vested and expected to vest | 5 years 10 months 9 days | ||
Stock options, weighted-average remaining contractual term, exercisable | 4 years 2 months 8 days | ||
Stock options, aggregate intrinsic value | $ 506 | ||
Stock options, aggregate intrinsic value, vested and expected to vest | 496 | ||
Stock options, aggregate intrinsic value, exercisable | 385 | ||
Stock options, intrinsic value of options exercised | 125 | $ 117 | $ 104 |
Total grant date fair value of options vested | 19 | $ 19 | $ 29 |
Stock-based compensation, unrecognized compensation | $ 43 | ||
Stock-based compensation, unrecognized compensation weighted-average period of recognition | 1 year 6 months 10 days |
Stock-Based Compensation (Det76
Stock-Based Compensation (Details 4) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Performance shares | |||
Restricted stock rights, weighted-average grant date fair value information | |||
Performance-vesting restricted stock rights granted without an accounting grant date (shares) | 1,700 | ||
Stock-based compensation, unrecognized compensation | $ 17 | ||
Stock-based compensation, unrecognized compensation weighted-average period of recognition | 1 year 3 months 10 days | ||
Performance-vesting restricted stock rights for which the accounting grant date has not been set (shares) | 3,400 | ||
Restricted Stock Rights | |||
Restricted stock rights activity | |||
Restricted stock rights at the beginning of the period (in shares) | 17,967 | ||
Restricted stock rights, granted (in shares) | 2,330 | ||
Restricted stock rights, vested (in shares) | (7,146) | ||
Restricted stock rights, forfeited (in shares) | (1,221) | ||
Restricted stock rights at the ending of the period (in shares) | 11,930 | 17,967 | |
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 (in dollars per share) | $ 11.85 | ||
Restricted stock rights, weighted-average grant date fair value, granted (in dollars per share) | 29.31 | ||
Restricted stock rights, weighted-average grant date fair value, vested (in dollars per share) | 12.80 | ||
Restricted stock rights, weighted-average grant date fair value, forfeited (in dollars per share) | 15.23 | ||
Restricted stock rights, weighted-average grant date fair value (in dollars per share) ending balance | $ 12.74 | $ 11.85 | |
Stock-based compensation, unrecognized compensation | $ 39 | ||
Stock-based compensation, unrecognized compensation weighted-average period of recognition | 1 year 1 month 20 days | ||
Total fair value of shares vested | $ 93 | $ 92 | $ 57 |
Stock Option Plan | |||
Restricted stock rights, weighted-average grant date fair value information | |||
Stock-based compensation, unrecognized compensation | $ 43 | ||
Stock-based compensation, unrecognized compensation weighted-average period of recognition | 1 year 6 months 10 days | ||
Income tax benefit from stock option exercises and restricted stock rights | $ 109 | $ 89 | $ 77 |
Stock-Based Compensation (Det77
Stock-Based Compensation (Details 5) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense before income taxes | $ 92 | $ 104 | $ 110 |
Stock-based compensation expense, income tax benefit | (27) | (38) | (40) |
Total stock-based compensation expense, net of income tax benefit | 65 | 66 | 70 |
Share-based Compensation, Included in Software Development Noncurrent [Roll Forward] | |||
Stock-based compensation expense capitalized and deferred at the beginning of the period | 26 | 22 | 19 |
Stock-based compensation expense capitalized and deferred during the period | 36 | 27 | 34 |
Amortization of capitalized and deferred stock-based compensation expense | (34) | (23) | (31) |
Stock-based compensation expense capitalized and deferred at the ending of the period | 28 | 26 | 22 |
Cost of sales - online | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense before income taxes | 0 | 1 | 0 |
Cost of sales - software royalties and amortization | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense before income taxes | 15 | 17 | 17 |
Product development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense before income taxes | 25 | 22 | 33 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense before income taxes | 9 | 8 | 7 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense before income taxes | $ 43 | $ 56 | $ 53 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income before income tax expense: | |||
Domestic | $ 355 | $ 325 | $ 626 |
Foreign | 766 | 656 | 693 |
Income before income tax expense | 1,121 | 981 | 1,319 |
Current: | |||
Federal | 169 | 146 | 110 |
State | 31 | 12 | 7 |
Foreign | 40 | 38 | 31 |
Total Current | 240 | 196 | 148 |
Deferred | |||
Federal | 1 | 26 | 134 |
State | (21) | (18) | (12) |
Foreign | 9 | (58) | 39 |
Total Deferred | (11) | (50) | 161 |
Income tax expense | 229 | 146 | 309 |
Add back benefit credited to additional paid-in capital: | |||
Excess tax benefit associated with stock options | $ 65 | $ 30 | $ 11 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
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 | $ 392 | $ 343 | $ 462 |
Statutory income tax rate | 35.00% | 35.00% | 35.00% |
State taxes, net of federal benefit | $ 5 | $ 5 | $ 6 |
State taxes, net of federal benefit | 0.00% | 0.00% | 0.00% |
Research and development credits | $ (26) | $ (24) | $ (49) |
Research and development credits | (2.00%) | (2.00%) | (4.00%) |
Foreign rate differential | $ (228) | $ (245) | $ (174) |
Foreign rate differential | (20.00%) | (25.00%) | (13.00%) |
Change in tax reserves | $ 136 | $ 128 | $ 89 |
Change in tax reserves | 12.00% | 13.00% | 7.00% |
Net operating loss tax attribute received from Purchase Transaction | $ (63) | $ (52) | $ (16) |
Net operating loss tax attribute received from Purchase Transaction | (6.00%) | (5.00%) | (1.00%) |
Other | $ 13 | $ (9) | $ (9) |
Other | 1.00% | (1.00%) | (1.00%) |
Income tax expense | $ 229 | $ 146 | $ 309 |
Total | 20.00% | 15.00% | 23.00% |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Millions | Oct. 11, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax [Line Items] | ||||
Income before income tax expense | $ 1,121 | $ 981 | $ 1,319 | |
Income tax expense | 229 | 146 | 309 | |
Net operating loss tax attribute received from Purchase Transaction | (63) | (52) | (16) | |
Return to provision adjustment | 5 | |||
Reserve established for NOL tax attribute received from Purchase Transaction | 58 | 52 | ||
NOL carryforwards, foreign | 36 | |||
Undistributed earnings of foreign subsidiaries | 4,084 | |||
Unrecognized tax benefits that would affect effective tax rate | 529 | |||
Accrued interest and penalties related to uncertain tax positions | 41 | 18 | ||
Interest expense related to uncertain tax positions | 10 | 5 | $ 2 | |
Possible unrecorded benefit related to settlement of tax audits | 18 | |||
Federal | ||||
Income Tax [Line Items] | ||||
Tax credit carryforward | 40 | |||
State | ||||
Income Tax [Line Items] | ||||
Tax credit carryforward | 119 | |||
New VH | ||||
Income Tax [Line Items] | ||||
NOL carryforward | $ 760 | |||
NOL carryforward indemnification amount | 200 | |||
Net operating loss utilized - New VH NOL | 180 | $ 148 | ||
Indemnification asset recorded in other assets | 125 | |||
Indemnification asset recorded in treasury stock | $ 125 | |||
New VH | Expected | ||||
Income Tax [Line Items] | ||||
Income tax expense | $ 266 |
Income Taxes (Details 4)
Income Taxes (Details 4) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Allowance for sales returns and price protection | $ 66 | $ 74 |
Inventory reserve | 11 | 9 |
Accrued expenses | 40 | 38 |
Deferred revenue | 288 | 291 |
Tax credit carryforwards | 58 | 50 |
Net operating loss carryforwards | 10 | 10 |
Stock-based compensation | 54 | 69 |
Transaction costs | 9 | 9 |
Other | 19 | 13 |
Deferred tax assets | 555 | 563 |
Valuation allowance | 0 | 0 |
Deferred tax assets, net of valuation allowance | 555 | 563 |
Deferred tax liabilities: | ||
Intangibles | (166) | (169) |
Prepaid royalties | (30) | (22) |
Capitalized software development expenses | (81) | (84) |
State taxes | (7) | (34) |
Other | (6) | 0 |
Deferred tax liabilities | (290) | (309) |
Net deferred tax assets | $ 265 | $ 254 |
Income Taxes (Details 5)
Income Taxes (Details 5) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reconciliation of unrecognized tax benefits | |||
Unrecognized tax benefits balance at January 1 | $ 419 | $ 294 | $ 207 |
Gross increase for tax positions of prior years | 8 | 2 | 1 |
Gross decrease for tax positions of prior years | (11) | 0 | 0 |
Gross increase for tax positions of current year | 136 | 125 | 91 |
Settlement with taxing authorities | 0 | (2) | 0 |
Lapse of statute of limitations | 0 | 0 | (5) |
Unrecognized tax benefits balance at December 31 | $ 552 | $ 419 | $ 294 |
Computation of Basic_Diluted 83
Computation of Basic/Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Numerator: | |||||||||||
Consolidated net income | $ 159 | $ 127 | $ 212 | $ 394 | $ 361 | $ (23) | $ 204 | $ 293 | $ 892 | $ 835 | $ 1,010 |
Less: Distributed earnings to unvested share-based awards that participate in earnings | (4) | (4) | (5) | ||||||||
Less: Undistributed earnings allocated to unvested stock-based awards that participate in earnings | (7) | (14) | (18) | ||||||||
Numerator for basic and diluted earnings per common share—income available to common shareholders | $ 881 | $ 817 | $ 987 | ||||||||
Denominator: | |||||||||||
Denominator for basic earnings per common share - weighted-average common shares outstanding (in shares) | 728 | 716 | 1,024 | ||||||||
Effect of potential dilutive common shares under the treasury stock method: Employee stock options (in shares) | 11 | 10 | 11 | ||||||||
Denominator for diluted earnings per common share - weighted-average common shares outstanding plus dilutive effect of employee stock options and others (in shares) | 739 | 726 | 1,035 | ||||||||
Basic earnings per common share (in dollars per share) | $ 0.22 | $ 0.17 | $ 0.29 | $ 0.54 | $ 0.49 | $ (0.03) | $ 0.28 | $ 0.40 | $ 1.21 | $ 1.14 | $ 0.96 |
Diluted earnings per common share (in dollars per share) | $ 0.21 | $ 0.17 | $ 0.29 | $ 0.53 | $ 0.49 | $ (0.03) | $ 0.28 | $ 0.40 | $ 1.19 | $ 1.13 | $ 0.95 |
Computation of Basic_Diluted 84
Computation of Basic/Diluted Earnings Per Common Share (Details 2) (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Per Share [Abstract] | |||
Common stock weighted-average shares, unvested restricted stock rights (in shares) | 8 | 15 | |
Shares not included in computation of diluted EPS due to unmet performance measures | 3 | 4 | |
Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 1 | 2 | 5 |
Capital Transactions (Details)
Capital Transactions (Details) - USD ($) | Oct. 11, 2013 | Dec. 31, 2015 | Dec. 31, 2013 | Feb. 03, 2015 |
Equity, Class of Treasury Stock [Line Items] | ||||
Shares of common stock repurchased | 429,000,000 | |||
Cost of common stock repurchased under the stock repurchase program | $ 5,830,000,000 | |||
Share Repurchase Program 2015 | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Shares of common stock repurchased | 0 | |||
Cost of common stock repurchased under the stock repurchase program | $ 0 | |||
Stock repurchase program, dollar amount authorized | $ 750,000,000 |
Capital Transactions (Details 2
Capital Transactions (Details 2) - USD ($) $ / shares in Units, $ in Millions | Feb. 02, 2016 | May. 29, 2015 | May. 13, 2015 | Feb. 03, 2015 | May. 30, 2014 | May. 14, 2014 | Feb. 06, 2014 | May. 31, 2013 | May. 15, 2013 | Feb. 07, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Dividends Payable [Line Items] | |||||||||||||
Dividends per common share (in dollars per share) | $ 0.23 | $ 0.20 | $ 0.19 | $ 0.23 | $ 0.20 | $ 0.19 | |||||||
Cash dividend payment | $ 167 | $ 143 | $ 212 | $ 170 | $ 147 | $ 216 | |||||||
Dividend equivalent payment | $ 3 | $ 4 | $ 4 | ||||||||||
Subsequent Events | |||||||||||||
Dividends Payable [Line Items] | |||||||||||||
Dividends per common share (in dollars per share) | $ 0.26 |
Supplemental Cash Flow Inform87
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Supplemental Cash Flow Elements [Abstract] | |||
Cash paid for income taxes, net of refunds | $ 20 | $ 34 | $ 138 |
Cash paid for interest | $ 193 | $ 201 | $ 19 |
Commitments and Contingencies88
Commitments and Contingencies (Details) | 1 Months Ended | 12 Months Ended | ||||
Jul. 31, 2015USD ($) | Dec. 31, 2015USD ($)letter_of_credit | Dec. 31, 2015EUR (€) | Dec. 31, 2014USD ($) | Dec. 31, 2014EUR (€) | Oct. 11, 2013USD ($) | |
Loss Contingencies [Line Items] | ||||||
Adjustments To Shareholders Equity Related To Settlement | $ 202,000,000 | |||||
PacchiaCase | ||||||
Loss Contingencies [Line Items] | ||||||
Adjustments To Shareholders Equity Related To Settlement | $ 202,000,000 | |||||
Payments From Settlement Fund | $ 202,000,000 | |||||
Revolver | ||||||
Loss Contingencies [Line Items] | ||||||
Amount of letters of credit that can be issued under the Revolver | 50,000,000 | $ 50,000,000 | ||||
Letters of credit issued | $ 0 | |||||
Standby letters of credit | ||||||
Loss Contingencies [Line Items] | ||||||
Number of irrevocable standby letters of credit | letter_of_credit | 2 | |||||
Standby letters of credit | Denominated in US dollars | ||||||
Loss Contingencies [Line Items] | ||||||
Letters of credit issued | $ 0 | $ 0 | ||||
Standby letters of credit | 8,000,000 | 10,000,000 | ||||
Standby letters of credit | Denominated in Euros | ||||||
Loss Contingencies [Line Items] | ||||||
Letters of credit issued | € | € 0 | € 0 | ||||
Standby letters of credit | $ 3,000,000 | € 3,000,000 | $ 1,000,000 | € 1,000,000 |
Commitments and Contingencies89
Commitments and Contingencies (Details 2) $ in Millions | Dec. 31, 2015USD ($) |
Long-term Purchase Commitment [Line Items] | |
Total | |
Unrecognized tax benefits, net of tax credits | $ 471 |
Unrecognized tax benefits included in Other Liabilities | 453 |
Unrecognized tax benefits included in Accrued Expenses and Other Liabilities | 18 |
Total Contractual Obligations | |
Long-term Purchase Commitment [Line Items] | |
2,016 | 253 |
2,017 | 90 |
2,018 | 45 |
2,019 | 27 |
2,020 | 19 |
Thereafter | 37 |
Total | 471 |
Facility and equipment leases | |
Long-term Purchase Commitment [Line Items] | |
2,016 | 35 |
2,017 | 32 |
2,018 | 30 |
2,019 | 27 |
2,020 | 19 |
Thereafter | 35 |
Total | 178 |
Developer and Intellectual Properties | |
Long-term Purchase Commitment [Line Items] | |
2,016 | 190 |
2,017 | 5 |
2,018 | 0 |
2,019 | 0 |
2,020 | 0 |
Thereafter | 2 |
Total | 197 |
Marketing | |
Long-term Purchase Commitment [Line Items] | |
2,016 | 28 |
2,017 | 53 |
2,018 | 15 |
2,019 | 0 |
2,020 | 0 |
Thereafter | 0 |
Total | $ 96 |
Related Party Transactions (Det
Related Party Transactions (Details) shares in Millions | May. 28, 2014shares |
Vivendi Games | |
Related Party Transaction [Line Items] | |
Shares sold by Vivendi | 41 |
Recently Issued Accounting Pr91
Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Deferred tax assets, net, non-current | $ 275 | $ 264 |
Deferred tax liabilities, net non-current | $ 10 | 10 |
New Accounting Pronouncement, Early Adoption, Effect | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Deferred income taxes, net | (368) | |
Deferred tax assets, net, non-current | 264 | |
Deferred tax liabilities, net non-current | $ 10 |
Quarterly Financial Informati92
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net revenues | $ 1,353 | $ 990 | $ 1,044 | $ 1,278 | $ 1,575 | $ 753 | $ 970 | $ 1,111 | $ 4,664 | $ 4,408 | $ 4,583 |
Cost of sales | 538 | 337 | 297 | 413 | 631 | 253 | 300 | 342 | |||
Operating income | 250 | 196 | 332 | 542 | 438 | 8 | 310 | 427 | 1,319 | 1,183 | 1,372 |
Net income | $ 159 | $ 127 | $ 212 | $ 394 | $ 361 | $ (23) | $ 204 | $ 293 | $ 892 | $ 835 | $ 1,010 |
Basic earnings per common share (in dollars per share) | $ 0.22 | $ 0.17 | $ 0.29 | $ 0.54 | $ 0.49 | $ (0.03) | $ 0.28 | $ 0.40 | $ 1.21 | $ 1.14 | $ 0.96 |
Diluted earnings per common share (in dollars per share) | $ 0.21 | $ 0.17 | $ 0.29 | $ 0.53 | $ 0.49 | $ (0.03) | $ 0.28 | $ 0.40 | $ 1.19 | $ 1.13 | $ 0.95 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | Dec. 22, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Business Acquisition [Line Items] | ||||
Cash paid for acquisition | $ 46 | $ 0 | $ 0 | |
Goodwill | $ 7,095 | $ 7,086 | $ 7,092 | |
MLG | ||||
Business Acquisition [Line Items] | ||||
Cash paid for acquisition | $ 46 | |||
Net tangible assets | 1 | |||
Definite-lived intangible assets | 33 | |||
Goodwill | 12 | |||
Total net assets recognized | $ 46 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Feb. 25, 2016 | Feb. 23, 2016 | Feb. 02, 2016 | Feb. 11, 2015 | Feb. 11, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 11, 2013 |
Subsequent Event [Line Items] | |||||||||
Repayment of long-term debt (up to) | $ 250,000,000 | $ 375,000,000 | $ 6,000,000 | ||||||
Term Loan | |||||||||
Subsequent Event [Line Items] | |||||||||
Repayment of long-term debt (up to) | $ 250,000,000 | $ 375,000,000 | |||||||
Maximum borrowing capacity | $ 2,500,000,000 | ||||||||
Subsequent Events | |||||||||
Subsequent Event [Line Items] | |||||||||
Authorized repayments of long-term debt | $ 1,500,000,000 | ||||||||
Subsequent Events | Term Loan | |||||||||
Subsequent Event [Line Items] | |||||||||
Repayment of long-term debt (up to) | $ 500,000,000 | ||||||||
Subsequent Events | Term Loan | Credit Facilities | |||||||||
Subsequent Event [Line Items] | |||||||||
Maximum borrowing capacity | $ 3,700,000,000 | $ 2,300,000,000 | |||||||
Covenant, Consolidated Total Net Debt ratio, maximum | 400.00% | ||||||||
Covenant, Consolidated Total Net Debt ratio, contingent maximum | 350.00% | ||||||||
Covenant, Collateral Suspension period from inception | 18 months | ||||||||
Subsequent Events | Term Loan | Credit Facilities | Current Period through June 29, 2019 | |||||||||
Subsequent Event [Line Items] | |||||||||
Debt Instrument, Redemption Price, Percentage | 0.625% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | June 30, 2019 through June 29, 2020 | |||||||||
Subsequent Event [Line Items] | |||||||||
Debt Instrument, Redemption Price, Percentage | 1.25% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | June 30, 2020 through October 11, 2020 | |||||||||
Subsequent Event [Line Items] | |||||||||
Debt Instrument, Redemption Price, Percentage | 3.125% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | Federal Funds Effective Rate | |||||||||
Subsequent Event [Line Items] | |||||||||
Applicable margin (as a percent) | 0.50% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | 1-Month LIBOR | |||||||||
Subsequent Event [Line Items] | |||||||||
Applicable margin (as a percent) | 1.00% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | LIBOR | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate interest floor | 0.00% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | LIBOR | Minimum | |||||||||
Subsequent Event [Line Items] | |||||||||
Applicable margin (as a percent) | 1.50% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | LIBOR | Maximum | |||||||||
Subsequent Event [Line Items] | |||||||||
Applicable margin (as a percent) | 2.25% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | Base Rate | |||||||||
Subsequent Event [Line Items] | |||||||||
Variable rate interest floor | 1.00% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | Base Rate | Minimum | |||||||||
Subsequent Event [Line Items] | |||||||||
Applicable margin (as a percent) | 0.50% | ||||||||
Subsequent Events | Term Loan | Credit Facilities | Base Rate | Maximum | |||||||||
Subsequent Event [Line Items] | |||||||||
Applicable margin (as a percent) | 1.25% | ||||||||
Subsequent Events | Revolver | Credit Facilities | 2015 Revolving Credit Facility | |||||||||
Subsequent Event [Line Items] | |||||||||
Maximum borrowing capacity | $ 250,000,000 | ||||||||
Subsequent Events | Letter of Credit | Credit Facilities | 2015 Revolving Credit Facility | |||||||||
Subsequent Event [Line Items] | |||||||||
Maximum borrowing capacity | 50,000,000 | ||||||||
Subsequent Events | King | |||||||||
Subsequent Event [Line Items] | |||||||||
Acquisition consideration transferred | $ 5,900,000,000 |
SCHEDULE II VALUATION AND QUA95
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
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 | $ 379 | $ 376 | $ 323 |
Valuation and qualifying accounts, additions | 114 | 212 | 174 |
Valuation and qualifying accounts, deductions | (154) | (209) | (121) |
Valuation and qualifying accounts, balance at the end of period | 339 | 379 | 376 |
Allowance for doubtful accounts | |||
Valuation and qualifying accounts, reconciliation | |||
Valuation and qualifying accounts, balance at the beginning of period | 4 | 5 | 9 |
Valuation and qualifying accounts, additions | 1 | 2 | 1 |
Valuation and qualifying accounts, deductions | (1) | (3) | (5) |
Valuation and qualifying accounts, balance at the end of period | $ 4 | $ 4 | $ 5 |