Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 28, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Activision Blizzard, Inc. | |
Entity Central Index Key | 718,877 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 741,467,062 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 2,271 | $ 1,823 |
Accounts receivable, net of allowances of $169 and $343, at June 30, 2016 and December 31, 2015, respectively | 462 | 679 |
Inventories, net | 94 | 128 |
Software development | 287 | 336 |
Other current assets | 306 | 421 |
Total current assets | 3,420 | 3,387 |
Cash in escrow | 0 | 3,561 |
Software development | 150 | 80 |
Property and equipment, net | 260 | 189 |
Deferred income taxes, net | 405 | 275 |
Other assets | 320 | 177 |
Intangible assets, net | 2,281 | 482 |
Goodwill | 9,771 | 7,095 |
Total assets | 16,607 | 15,246 |
Current liabilities: | ||
Accounts payable | 176 | 284 |
Deferred revenues | 1,238 | 1,702 |
Accrued expenses and other liabilities | 721 | 625 |
Current portion of long-term debt, net | 56 | 0 |
Total current liabilities | 2,191 | 2,611 |
Long-term debt, net | 4,977 | 4,074 |
Deferred income taxes, net | 50 | 10 |
Other liabilities | 835 | 483 |
Total liabilities | 8,053 | 7,178 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, $0.000001 par value, 2,400,000,000 shares authorized, 1,169,949,406 and 1,163,179,140 shares issued at June 30, 2016 and December 31, 2015, respectively | 0 | 0 |
Additional paid-in capital | 10,425 | 10,242 |
Less: Treasury stock, at cost, 428,676,471 shares at June 30, 2016 and December 31, 2015 | (5,588) | (5,637) |
Retained earnings | 4,366 | 4,096 |
Accumulated other comprehensive loss | (649) | (633) |
Total shareholders' equity | 8,554 | 8,068 |
Total liabilities and shareholders' equity | $ 16,607 | $ 15,246 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 169 | $ 343 |
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 | 1,169,949,406 | 1,163,179,140 |
Treasury stock, shares | 428,676,471 | 428,676,471 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Product sales | $ 501 | $ 528 | $ 1,145 | $ 1,311 |
Subscription, licensing and other revenues | 1,069 | 516 | 1,880 | 1,011 |
Total net revenues | 1,570 | 1,044 | 3,025 | 2,322 |
Costs and expenses | ||||
Cost of revenues, product sales - product costs | 149 | 147 | 318 | 349 |
Cost of revenues, product sales - software royalties, amortization, and intellectual property licenses | 80 | 70 | 208 | 211 |
Cost of revenues, subs/licensing/other - game ops and distribution costs | 241 | 61 | 383 | 120 |
Cost of revenues, subs/licensing/other - software royalties, amortization, and intellectual property licenses | 128 | 19 | 180 | 30 |
Product development | 249 | 149 | 424 | 294 |
Sales and marketing | 322 | 164 | 490 | 256 |
General and administrative | 169 | 102 | 329 | 188 |
Total costs and expenses | 1,338 | 712 | 2,332 | 1,448 |
Operating income | 232 | 332 | 693 | 874 |
Interest and other expense (income), net | 65 | 50 | 117 | 100 |
Income before income tax expense | 167 | 282 | 576 | 774 |
Income tax expense | 40 | 70 | 113 | 168 |
Net income | $ 127 | $ 212 | $ 463 | $ 606 |
Earnings per common share | ||||
Basic (in dollars per share) | $ 0.17 | $ 0.29 | $ 0.62 | $ 0.82 |
Diluted (in dollars per share) | $ 0.17 | $ 0.29 | $ 0.61 | $ 0.81 |
Weighted-average number of shares outstanding | ||||
Basic (in shares) | 739 | 727 | 737 | 725 |
Diluted (in shares) | 750 | 735 | 748 | 734 |
Dividends per common share (in dollars per share) | $ 0 | $ 0 | $ 0.26 | $ 0.23 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 127 | $ 212 | $ 463 | $ 606 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (16) | 85 | (20) | (245) |
Unrealized gains (losses) on forward contracts designated as hedges, net of tax | 9 | (8) | 4 | 6 |
Unrealized losses on investments, net of tax | 0 | (3) | 0 | (3) |
Total other comprehensive income (loss) | (7) | 74 | (16) | (242) |
Comprehensive income | $ 120 | $ 286 | $ 447 | $ 364 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | ||
Cash flows from operating activities: | |||
Net income | $ 463 | $ 606 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Deferred income taxes | (115) | 20 | |
Provision for inventories | 19 | 12 | |
Depreciation and amortization | 341 | 40 | |
Amortization of capitalized software development costs and intellectual property licenses | [1] | 265 | 225 |
Amortization of debt discount and debt financing costs | 12 | 4 | |
Stock-based compensation expense | [2] | 75 | 43 |
Excess tax benefits from stock awards | (52) | (23) | |
Changes in operating assets and liabilities, net of effect from business acquisitions: | |||
Accounts receivable, net | 377 | 445 | |
Inventories | 13 | (9) | |
Software development and intellectual property licenses | (272) | (171) | |
Other assets | 129 | 166 | |
Deferred revenues | (468) | (903) | |
Accounts payable | (112) | (122) | |
Accrued expenses and other liabilities | 113 | 11 | |
Net cash provided by operating activities | 788 | 344 | |
Cash flows from investing activities: | |||
Purchases of available-for-sale investments | 0 | (100) | |
Acquisition of business, net of cash acquired | (4,588) | 0 | |
Release of cash in escrow | 3,561 | 0 | |
Capital expenditures | (71) | (49) | |
Payment to acquire equity method investment | (5) | 0 | |
Decrease (increase) in restricted cash | (10) | 5 | |
Net cash used in investing activities | (1,113) | (144) | |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock to employees | 60 | 61 | |
Tax payment related to net share settlements on restricted stock rights | (69) | (24) | |
Excess tax benefits from stock awards | 52 | 23 | |
Dividends paid | (195) | (170) | |
Proceeds from debt financing | 2,550 | 0 | |
Repayment of long-term debt | (1,566) | (250) | |
Payment of debt discount and financing costs | (34) | 0 | |
Net cash provided by (used in) financing activities | 798 | (360) | |
Effect of foreign exchange rate changes on cash and cash equivalents | (25) | (272) | |
Net increase (decrease) in cash and cash equivalents | 448 | (432) | |
Cash and cash equivalents at beginning of period | 1,823 | 4,848 | |
Cash and cash equivalents at end of period | $ 2,271 | $ 4,416 | |
[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. |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning balance at Dec. 31, 2014 | $ (303) | |||||
Components of comprehensive income: | ||||||
Net income | $ 606 | |||||
Other comprehensive income (loss) | (242) | |||||
Ending balance at Jun. 30, 2015 | (545) | |||||
Beginning 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 | ||||
Components of comprehensive income: | ||||||
Net income | 463 | 463 | ||||
Other comprehensive income (loss) | (16) | (16) | ||||
Issuance of common stock pursuant to employee stock options | 60 | 60 | ||||
Issuance of common stock pursuant to employee stock options (in shares) | 4 | |||||
Issuance of common stock pursuant to restricted stock rights | 0 | 0 | ||||
Issuance of common stock pursuant to restricted stock rights (in shares) | 5 | |||||
Restricted stock surrendered for employees’ tax liability | (74) | (74) | ||||
Restricted stock surrendered for employees' tax liability (in shares) | (2) | |||||
Tax benefit associated with employee stock awards | 51 | 51 | ||||
Stock-based compensation expense related to employee stock options and restricted stock rights | 70 | 70 | ||||
Stock-based compensation assumed in acquisition | 76 | 76 | ||||
Dividends ($0.26 per common share) | (193) | (193) | ||||
Indemnity on tax attributes assumed in connection with the Purchase Transaction | 49 | $ 49 | ||||
Ending balance at Jun. 30, 2016 | $ 8,554 | $ 0 | $ (5,588) | $ 10,425 | $ 4,366 | $ (649) |
Balance (in shares) at Jun. 30, 2016 | 1,170 | 429 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | Feb. 02, 2016 | Feb. 03, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Statement of Stockholders' Equity [Abstract] | ||||||
Dividends per common share (in dollars per share) | $ 0.26 | $ 0.23 | $ 0 | $ 0 | $ 0.26 | $ 0.23 |
Description of Business and Bas
Description of Business and Basis of Consolidation and Presentation | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Consolidation and Presentation | Description of Business and Basis of Consolidation and Presentation 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. Activision Blizzard is the result of the 2008 business combination (“Business Combination”) by and among the Company (then known as 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. As of December 31, 2015, ASAC II LP ("ASAC"), an exempted limited partnership established under the laws of the Cayman Islands, held 172 million shares, or approximately 23% of the outstanding shares of our common stock at that time. On June 8, 2016, ASAC II LLC, the general partner of ASAC, distributed approximately 141 million shares allocable to the limited partners of ASAC in accordance with its limited partnership agreement to allow them to control the voting and ownership of such shares. We did not receive any proceeds from the distribution of the shares. Robert A. Kotick, our Chief Executive Officer, and Brian G. Kelly, Chairman of our Board of Directors, are affiliates of ASAC II LLC. As of June 30, 2016 , we had approximately 741 million shares of common stock issued and outstanding. At that date (i) ASAC held 31 million shares, or approximately 4% of the outstanding shares of our common stock, and (ii) our other stockholders held approximately 96% of the outstanding shares of our common stock. The common stock of Activision Blizzard is traded on The NASDAQ Stock Market under the ticker symbol “ATVI.” The King Acquisition On November 2, 2015, we and King Digital Entertainment plc ("King"), a leading interactive mobile entertainment company, 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 14 of the Notes to the Condensed Consolidated Financial Statements. Our condensed consolidated financial statements include the operations of King commencing on February 23, 2016. Reportable Segments Based upon our organizational structure, we conduct our business through three reportable operating segments as follows: (i) Activision Publishing, Inc. Activision Publishing, Inc. ("Activision") is a leading global 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, in a variety of geographies. Activision develops, markets, and sells products through retail channels or digital downloads, which are principally based on our internally-developed intellectual properties, including games in the Call of Duty® and Skylanders® franchises, as well as some licensed properties. Additionally, we have established a long-term alliance with Bungie to publish its game universe, Destiny. Activision currently offers games that operate on the Microsoft Corporation ("Microsoft") Xbox One ("Xbox One") and Xbox 360 ("Xbox 360"), Nintendo Co. Ltd. ("Nintendo") Wii U ("Wii U") and Wii ("Wii"), and Sony Computer Entertainment, Inc. ("Sony") PlayStation 4 ("PS4") and PlayStation 3 ("PS3") console systems; the PC; the Nintendo 3DS, 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 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. On May 24, 2016, Blizzard added a new franchise, Overwatch®, a team-based first-person shooter available on the PC and console platforms. In addition, Blizzard maintains a proprietary online gaming service, Battle.net®, which facilitates 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) King Digital Entertainment King Digital Entertainment is a leading interactive mobile entertainment company that develops and distributes games on mobile platforms, such as Android and iOS, and on online and social platforms, such as Facebook and king.com websites. King has four established free-to-play franchises: Candy Crush™, Farm Heroes™, Bubble Witch™, and Pet Rescue™, where monetization occurs through players purchasing in-game virtual currency which can be used in-game to buy virtual items. (iv) Other We also engage in other businesses that do not represent reportable segments, including: • The Major League Gaming ("MLG") business (which we formerly referred to as Activision Blizzard Media Networks or Media Networks), which is devoted to eSports and builds on our competitive gaming efforts by creating ways to deliver the best-in-class fan experience across games, platforms, and geographies with a long-term strategy of monetization through advertising, sponsorships, tournaments, and premium content. • The Activision Blizzard Studios (“Studios”) business, which is devoted to creating original film and television content based on our extensive library of iconic and globally‑recognized intellectual properties. • 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. Basis of Consolidation and Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting. Accordingly, certain notes or other information that are normally required by U.S. GAAP have been condensed or omitted if they substantially duplicate the disclosures contained in the annual audited consolidated financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015 . The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair statement of our financial position and results of operations in accordance with U.S. GAAP have been included in the accompanying unaudited condensed consolidated financial statements. Actual results could differ from these estimates and assumptions. The accompanying condensed consolidated financial statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated. 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. Cost of revenues presentation In periods prior to the three months ended June 30, 2016, we presented cost of revenues in our consolidated statements of operations in four financial statement captions: "Cost of sales — product costs," " Cost of sales — online," "Cost of sales — software royalties and amortization," and "Cost of sales — intellectual property licenses." In our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 , we revised the presentation to more clearly align our costs of revenues with the associated revenue captions as follows: Cost of revenues - product sales: (i) “Product costs” - includes the manufacturing costs of goods produced and sold during the reporting period. These generally include product costs, manufacturing royalties, net of volume discounts, personnel-related costs, warehousing, and distribution costs. We generally recognize volume discounts when they are earned (typically in connection with the achievement of unit-based milestones). (ii) “Software royalties, amortization, and intellectual property licenses” - includes the amortization of capitalized software costs and royalties attributable to product sales revenues. These are costs capitalized on the balance sheet until the respective games are released, at which time the capitalized costs are amortized. Also included is amortization of intangible assets recognized in purchase accounting attributable to product sales revenues. Cost of revenues - subscription, licensing, and other revenues: (i) “Game operations and distribution costs” - includes costs to operate our games, such as customer service, internet bandwidth and server costs, platform provider fee, and payment provider fees. (ii) “Software royalties, amortization, and intellectual property licenses” - includes the amortization of capitalized software costs and royalties attributable to subscription, licensing and other revenues. These are costs capitalized on the balance sheet until the respective games are released, at which time the capitalized costs are amortized. Also included is amortization of intangible assets recognized in purchase accounting attributable to subscription, licensing and other revenues. Prior periods have been reclassified to conform to the current presentation. Summary of Significant Accounting Policies During the six months ended June 30, 2016 , there were no significant changes to our accounting policies but we did expand the accounting policy disclosure for revenue recognition to include virtual currency as noted below. Refer to Note 2 contained in our Annual Report on Form 10-K for the year ended December 31, 2015 for our full summary of significant accounting policies. Microtransaction Revenues Microtransaction revenues are derived from the sale of virtual goods and currencies to our players to enhance their gameplay experience. Proceeds from the sales of virtual goods and currencies are initially recorded in deferred revenues. Proceeds from the sales of virtual currencies are recognized as a player uses the virtual goods purchased with the virtual currency. 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, which is generally the estimated service period of the game. Supplemental Cash Flow Information: Non-cash investing and financing activities For the six months ended June 30, 2016 , we had non-cash purchase price consideration of $89 million related to vested and unvested stock options and awards that were assumed and replaced with Activision Blizzard equity or deferred cash awards in the King Acquisition. Refer to Note 14 for further discussion. |
Inventories, Net
Inventories, Net | 6 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | Inventories, Net Our inventories, net consist of the following (amounts in millions): At June 30, 2016 At December 31, 2015 Finished goods $ 69 $ 101 Purchased parts and components 25 27 Inventories, net $ 94 $ 128 At June 30, 2016 , and December 31, 2015 , inventory reserves were $59 million and $54 million, respectively . |
Software Development and Intell
Software Development and Intellectual Property Licenses | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 At December 31, 2015 Internally-developed software costs $ 284 $ 266 Payments made to third-party software developers 153 150 Total software development costs $ 437 $ 416 Intellectual property licenses $ 4 $ 30 Intellectual property licenses are classified within "Other current assets" and "Other assets" in our Condensed Consolidated Balance Sheets. Amortization of capitalized software development costs and intellectual property licenses was the following (amounts in millions): 23 For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Amortization of capitalized software development costs and intellectual property licenses $ 115 $ 85 $ 265 $ 232 |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets, Net | Intangible Assets, Net Intangible assets, net consist of the following (amounts in millions): At June 30, 2016 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: Internally-developed franchises 3 - 11 years $ 1,154 $ (408 ) $ 746 Developed software 3 - 5 years 595 (58 ) 537 Customer base 2 years 617 (111 ) 506 Trade names 7 - 10 years 54 (3 ) 51 Other 1 - 8 years 18 (10 ) 8 Total definite-lived intangible assets $ 2,438 $ (590 ) $ 1,848 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 2,281 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 Total intangible assets, net $ 482 The balances of intangible assets, net presented in the table above at June 30, 2016 , does not include license agreement intangible assets that were fully amortized at December 31, 2015, and hence have been removed from the June 30, 2016 , balances as presented. Amortization expense of intangible assets was $203 million and $285 million for the three and six months ended June 30, 2016, respectively. Amortization expense of intangible assets was $2 million and $3 million for the three and six months ended June 30, 2015, respectively . At June 30, 2016 , future amortization of definite-lived intangible assets is estimated as follows (amounts in millions): 2016 (remaining six months) $ 421 2017 778 2018 361 2019 201 2020 66 Thereafter 21 Total $ 1,848 |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill by operating segment for the six months ended June 30, 2016 , are as follows (amounts in millions): Activision Blizzard King Other Total Balance at December 31, 2015 $ 6,905 $ 178 $ — $ 12 $ 7,095 Additions through acquisition — — 2,678 — 2,678 Other (2 ) — — — (2 ) Balance at June 30, 2016 $ 6,903 $ 178 $ 2,678 $ 12 $ 9,771 Other includes tax benefits credited to goodwill for tax deductions 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. Other also includes the impact to goodwill from changes in foreign exchange rates. The addition to goodwill through acquisition is attributed to the King Acquisition (see Note 14 of the Notes to Condensed Consolidated Financial Statements). |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial Accounting Standards Board (“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 June 30, 2016 Using As of June 30, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance Sheet Classification Financial Assets: Recurring fair value measurements: Money market funds $ 2,071 $ 2,071 $ — $ — Cash and cash equivalents Foreign government treasury bills 34 34 — — Cash and cash equivalents Foreign currency forward contracts not designated as hedges 6 — 6 — Other current assets Foreign currency forward contracts designated as hedges 5 — 5 — Other current assets Auction rate securities (“ARS”) 9 — — 9 Other assets Total recurring fair value measurements $ 2,125 $ 2,105 $ 11 $ 9 Financial liabilities: Foreign currency forward contracts designated as hedges (4 ) $ — $ (4 ) $ — Accrued expenses and other liabilities 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 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 ARS 9 — — 9 Other assets 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 ARS represented the only level 3 investment held by the Company. There were no changes in the fair value of these investments for the six months ended June 30, 2016 . Foreign Currency Forward Contracts Foreign Currency Forward Contracts Not Designated as Hedges 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 in accordance with FASB Accounting Standard Codification ("ASC") Topic 815, changes in the estimated fair value of these derivatives are recorded within “General and administrative expenses” and “Interest and other expense (income), net” in our Condensed Consolidated Statements of Operations, consistent with the nature of the underlying transactions. At June 30, 2016 , the gross notional amount of outstanding foreign currency forward contracts not designated as hedges was approximately $260 million . The fair value of these foreign currency forward contracts was $6 million as of June 30, 2016 , and recorded in “Other current assets” in our Condensed Consolidated Balance Sheet. At December 31, 2015, the gross notional amount of outstanding foreign currency forward contracts not designated as hedges was approximately $489 million . The fair value of these foreign currency forward contracts was $11 million as of December 31, 2015, and recorded in “Other current assets” in our Condensed Consolidated Balance Sheet. For the three and six months ended June 30, 2016 and 2015 , pre‑tax net gains associated with these forward contracts 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 condensed 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 $443 million at June 30, 2016 , and $381 million at December 31, 2015 . These foreign currency forward contracts have remaining maturities of 12 months or less. During the three and six months ended June 30, 2016 , and 2015 , there was no ineffectiveness relating to these hedges. At June 30, 2016 , $1 million of net unrealized gains or losses related to these contracts are expected to be reclassified into earnings within the next twelve months. During the three and six months ended June 30, 2016 and 2015 , the amount pre-tax net realized gains reclassified out of "Accumulated other comprehensive income (loss)" due to maturity of these contracts was not material. 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 three and six months ended June 30, 2016 , and 2015 , there were no impairment charges related to assets that are measured on a non-recurring basis. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Credit Facilities Term Loan. On October 11, 2013, 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 “Original Revolver”). A portion of the Original Revolver could be used to issue letters of credit of up to $50 million , subject to the availability of the Original Revolver. Borrowings under the Term Loan 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 are subject to a LIBOR floor of 0.75% . At June 30, 2016 , the Term Loan bore interest at 3.25% . In certain circumstances, our applicable interest rate under the Term Loan will increase. In addition to paying interest on outstanding principal balances under the Term Loan, we were required to pay the lenders a commitment fee on unused commitments under the Original Revolver. Commitment fees are recorded within “Interest and other expense (income), net” in our Condensed 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 require 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. On February 25, March 31, and May 26, 2016, we made additional voluntary repayments of $500 million , $250 million , and $800 million , respectively, on our Term Loan. Tranche A Term Loans. In conjunction with the King Acquisition, the Company entered into three Amendments to the Credit Agreement (the “Amendments”). The Amendments, among other things, provided for incremental term loans in the form of Tranche A Term Loans in an aggregate principal amount of approximately $2.3 billion . The proceeds were issued and provided on February 23, 2016, upon successful closing of the King Acquisition, and were used to fund the King Acquisition. On March 31, 2016, we entered into a fourth amendment to the Credit Agreement which provided for an incremental Tranche A Term Loan in the aggregate principal amount of $250 million , and the total proceeds from the incremental borrowing were used to make the March 31, 2016 voluntary prepayment on our Term Loan as discussed above. 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 their stated principal amount commencing June 30, 2016, 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 (as defined in the Credit Agreement) 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 Term Loan. The other terms of the Tranche A Term Loans are also generally the same as the terms of the Term Loan. At June 30, 2016 , the Tranche A Term Loans bore interest at 2.46% . In certain circumstances, our applicable interest rate under the Tranche A Term Loans will increase. 2015 Revolving Credit Facility. As part of the Amendments, upon the closing of the King Acquisition, the Company’s Original Revolver under the Credit Agreement 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,” and, together with the Term Loan and Tranche A Term Loans, the "Credit Facilities"). 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. The interest rate options available to the Company for borrowings under the 2015 Revolving Credit Facility are the same as those available to the Company for 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 Original Revolver. To date, we have not drawn on the 2015 Revolving Credit Facility. The Credit Facilities are guaranteed by certain of the Company’s U.S. subsidiaries, whose assets represent approximately 66% of our consolidated total 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. 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 June 30, 2016 . 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 certain of our U.S. subsidiaries. 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 June 30, 2016 . Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year. As of June 30, 2016 , and December 31, 2015 , we had interest payable of $38 million related to the Notes, recorded within “Accrued expenses and other liabilities” in our Condensed 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. Further, 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. Debt Discounts and Issuance Costs Fees associated with the closing of the Term Loan, Tranche A Term Loans, and the Notes are recorded as debt discount, which reduces their respective carrying values, and is amortized over their respective terms. Amortization expense is recorded within “Interest and other expense (income), net” in our Condensed Consolidated Statement of Operations. In connection with the debt financing for the King Acquisition, we incurred $38 million of issuance costs that were capitalized and recorded within "Current portion of long-term debt, net" and "Long-term debt, net" in our Condensed Consolidated Balance Sheet. The amortization of these capitalized costs was not material to our condensed consolidated statement of operations for the three and six months ended June 30, 2016 . We classified and presented unamortized deferred financing costs associated with the Term Loan, Tranche A Term Loans, and the Notes as a reduction of their respective gross carrying amounts for all periods presented in accordance with a recent accounting standard that became effective on January 1, 2016. Refer to Note 15 for further discussion of the recent accounting standard. A summary of our debt is as follows (amounts in millions): At June 30, 2016 Gross Carrying Amount Unamortized Discount and Deferred Financing Costs Net Carrying Amount Term Loan $ 319 $ (3 ) $ 316 Tranche A Term Loans 2,534 (36 ) 2,498 2021 Notes 1,500 (20 ) 1,480 2023 Notes 750 (11 ) 739 Total debt $ 5,103 $ (70 ) $ 5,033 Less: current portion of long-term debt (64 ) 8 (56 ) Total long-term debt $ 5,039 $ (62 ) $ 4,977 At December 31, 2015 Gross Carrying Amount Unamortized Discount and Deferred Financing Costs Net Carrying Amount Term Loan $ 1,869 $ (11 ) $ 1,858 2021 Notes 1,500 (22 ) 1,478 2023 Notes 750 (12 ) 738 Total long-term debt $ 4,119 $ (45 ) $ 4,074 For the three and six months ended June 30, 2016: interest expense was $55 million and $107 million, respectively; amortization of the debt discount for the Credit Facilities and Notes was $6 million and $10 million, respectively; and commitment fees for the Original Revolver and the 2015 Revolving Credit Facility were not material. For the three and six months ended June 30, 2015: interest expense was $48 million and $97 million, respectively; amortization of the debt discount for the Credit Facilities and Notes was $2 million and $3 million, respectively; and commitment fees for the Original Revolver and the 2015 Revolving Credit Facility were not material. As of June 30, 2016 , 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 (remaining six months) $ 32 2017 64 2018 64 2019 112 2020 2,581 Thereafter 2,250 Total $ 5,103 As of June 30, 2016 , and December 31, 2015 , the carrying value of the Term Loan and Tranche A Term Loans 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 $811 million , respectively, as of June 30, 2016 . 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 . Debt Repayments On February 2, 2016, the Board of Directors authorized debt repayments of up to $1.5 billion of our outstanding debt during 2016. For the six months ended June 30, 2016 , we have made prepayments to reduce our total outstanding term loans by $1.3 billion . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 and 2015 , were as follows (amounts in millions): For the Six Months Ended June 30, 2016 Foreign currency translation adjustments Unrealized gain (loss) on forward contracts Unrealized gain (loss) on available-for-sale securities Total Balance at December 31, 2015 $ (630 ) $ (4 ) $ 1 $ (633 ) Other comprehensive income (loss) before reclassifications (20 ) 2 — (18 ) Amounts reclassified from accumulated other comprehensive income (loss) — 2 — 2 Balance at June 30, 2016 $ (650 ) $ — $ 1 $ (649 ) For the Six Months Ended June 30, 2015 Foreign currency translation adjustments Unrealized gain (loss) on forward contracts Unrealized gain (loss) on available-for-sale securities Total Balance at December 31, 2014 $ (304 ) $ — $ 1 $ (303 ) Other comprehensive income (loss) before reclassifications (245 ) 8 (3 ) (240 ) Amounts reclassified from accumulated other comprehensive income (loss) — (2 ) — (2 ) Balance at June 30, 2015 $ (549 ) $ 6 $ (2 ) $ (545 ) 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 | 6 Months Ended |
Jun. 30, 2016 | |
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 three reportable operating segments (see Note 1 of the Notes to Condensed Consolidated Financial Statements). We do not aggregate operating segments in determining and disclosing our reportable segments. The CODM reviews segment performance exclusive of the impact of the change in deferred revenues and related cost of revenues 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 related to financings and acquisitions. 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 three and six months ended June 30, 2016 and 2015 are presented below (amounts in millions): For the Three Months Ended June 30, 2016 2015 2016 2015 Net revenues Operating income and income before income tax expense Activision $ 332 $ 313 $ 88 $ 57 Blizzard 738 385 333 117 King 484 — 176 — Reportable segments total 1,554 698 597 174 Reconciliation to consolidated net revenues / consolidated income before income tax expense: Other segments (1) 55 61 (9 ) (1 ) Net effect from recognition (deferral) of deferred net revenues and related cost of revenues (39 ) 285 (108 ) 181 Stock-based compensation expense — — (41 ) (21 ) Amortization of intangible assets — — (203 ) (1 ) Fees and other expenses related to acquisitions (2) — — (4 ) — Consolidated net revenues / operating income $ 1,570 $ 1,044 $ 232 $ 332 Interest and other expense (income), net 65 50 Consolidated income before income tax expense $ 167 $ 282 For the Six Months Ended June 30, 2016 2016 2015 2016 2015 Net revenues Operating income and income before income tax expense Activision $ 692 $ 616 $ 187 $ 121 Blizzard 1,032 737 419 256 King 691 — 243 — Reportable segments total 2,415 1,353 849 377 Reconciliation to consolidated net revenues / consolidated income before income tax expense: Other segments (1) 102 109 (9 ) (1 ) Net effect from recognition (deferral) of deferred net revenues and related cost of revenues 508 860 261 545 Stock-based compensation expense — — (85 ) (44 ) Amortization of intangible assets — — (285 ) (3 ) Fees and other expenses related to acquisitions (2) — — (38 ) — Consolidated net revenues / operating income $ 3,025 $ 2,322 $ 693 $ 874 Interest and other expense (income), net 117 100 Consolidated income before income tax expense $ 576 $ 774 (1) Other includes other income and expenses from operating segments managed outside the reportable segments, including MLG, Studios, and Distribution businesses. Other also includes unallocated corporate income and expenses. (2) Reflects fees and other expenses related to the King Acquisition, inclusive of related debt financings. Geographic information presented below for the three and six months ended June 30, 2016 and 2015 , is based on the location of the paying customer. Net revenues from external customers by geographic region were as follows (amounts in millions): For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Net revenues by geographic region: Americas $ 860 $ 551 $ 1,613 $ 1,255 EMEA (1) 507 388 1,028 852 Asia Pacific 203 105 384 215 Total consolidated net revenues $ 1,570 $ 1,044 $ 3,025 $ 2,322 (1) EMEA consists of the Europe, Middle East, and Africa geographic regions. The Company's net revenues in the U.S. were 48% and 50% of consolidated net revenues for the three months ended June 30, 2016 and 2015, respectively . The Company's net revenues in the U.K. were 10% and 14% of consolidated net revenues for the three months ended June 30, 2016 and 2015, respectively . No other country's net revenues exceeded 10% of consolidated net revenues for the three months ended June 30, 2016 or 2015 . The Company's net revenues in the U.S. were 47% and 52% of consolidated net revenues for the six months ended June 30, 2016 and 2015, respectively . The Company's net revenues in the U.K. were 11% and 13% of consolidated net revenues for the six months ended June 30, 2016 and 2015, respectively . No other country's net revenues exceeded 10% of consolidated net revenues for the six months ended June 30, 2016 or 2015 . Net revenues by platform were as follows (amounts in millions): For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Net revenues by platform: Console $ 650 $ 559 $ 1,415 $ 1,317 PC (1) 411 370 811 755 Mobile and ancillary (2) 454 54 697 141 Other (3) 55 61 102 109 Total consolidated net revenues $ 1,570 $ 1,044 $ 3,025 $ 2,322 (1) Net revenues from PC includes revenues that were historically shown as “Online.” (2) Net revenues from mobile and ancillary includes 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 our Skylanders franchise and other physical merchandise and accessories. (3) Net revenues from Other include revenues from MLG, Studios, and Distribution businesses. Long-lived assets by geographic region at June 30, 2016 , and December 31, 2015 , were as follows (amounts in millions): At June 30, 2016 At December 31, 2015 Long-lived assets (1) by geographic region: Americas $ 147 $ 138 EMEA 98 42 Asia Pacific 15 9 Total long-lived assets by geographic region $ 260 $ 189 (1) 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. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company accounts for its provision for income taxes in accordance with ASC 740, Income Taxes , which requires an estimate of the annual effective tax rate for the full year to be applied to the interim period, taking into account year-to-date amounts and projected results for the full year. The provision for income taxes represents federal, foreign, state, and local income taxes. Our effective tax rate differs from the statutory U.S. income tax rate due to the effect of state and local income taxes, tax rates in foreign jurisdictions, and certain nondeductible expenses. Our effective tax rate could fluctuate significantly from quarter to quarter based on recurring and nonrecurring factors including, but not limited to: variations in the estimated and actual level of pre-tax income or loss by jurisdiction; changes in the mix of income by tax jurisdiction (as taxes are levied at relatively lower statutory rates in foreign regions and relatively higher statutory rates in the U.S.); research and development credits; changes in enacted tax laws and regulations, rulings, and interpretations thereof, including with respect to tax credits, and state and local income taxes; developments in tax audits and other matters; and certain nondeductible expenses. Changes in judgment from the evaluation of new information resulting in the recognition, derecognition, or remeasurement of a tax position taken in a prior annual period are recognized separately in the quarter of the change. The income tax expense of $40 million for the three months ended June 30, 2016 , reflects an effective tax rate of 24% , which is lower than the effective tax rate of 25% for the three months ended June 30, 2015 . The decrease is due to the mix of foreign earnings taxed at relatively lower statutory rates as compared to domestic earnings. The income tax expense of $113 million for the six months ended June 30, 2016 , reflects an effective tax rate of 20% , which is lower than the effective tax rate of 22% for the six months ended June 30, 2015 . The decrease is primarily due to the net benefit related to the settlement of an income tax audit during the first quarter of 2016 and the mix of foreign earnings taxed at relatively lower statutory rates as compared to domestic earnings. The effective tax rate of 24% for the three months ended June 30, 2016 differs from the US statutory rate of 35% , primarily due to the tax benefit from foreign earnings taxed at relatively lower statutory rates and the recognition of federal and California research and development credits, partially offset by increases to the Company’s reserve for uncertain tax positions. The effective tax rate of 20% for the six months ended June 30, 2016 differs from the U.S. statutory rate of 35% , primarily due to the tax benefit from foreign earnings taxed at relatively lower statutory rates, the recognition of federal and California research and development credits, and the net benefit related to the settlement of an income tax audit during the first quarter of 2016, partially offset by certain nondeductible costs incurred during the period and increases to the Company’s reserve for uncertain tax positions. The overall effective income tax rate for the year will be dependent, in part, on our profitability for the remainder of the year, as well as the other factors described above. The Internal Revenue Service (“IRS”) is currently examining Activision Blizzard’s federal tax returns for the 2009, 2010, and 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 uncertain tax positions for the period in which such a determination is reached and the relevant periods thereafter. In addition, as part of purchase price accounting for the King Acquisition, the Company assumed $77 million of uncertain tax positions primarily related to the transfer pricing of King tax years occurring prior to the King Acquisition. The Company is currently in negotiations with the relevant jurisdictions and taxing authorities, which could result in a different allocation of profits and losses between the relevant jurisdictions. Vivendi Games' results for the period from 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. IRS Appeals proceedings concerning Vivendi Games’ tax return for the 2008 tax year were concluded during July 2016, but that year remains open to examination by other major taxing authorities. The Company is in the process of analyzing the IRS Appeals closing agreements and does not anticipate a significant impact to its consolidated financial statements. Certain of our subsidiaries are under examination or investigation or may be subject to examination or investigation by tax authorities in various jurisdictions, including France. These proceedings may lead to adjustments or proposed adjustments to our taxes or provisions for uncertain tax positions. The outcome of such proceedings may have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations in the period or periods in which the matters are resolved or in which appropriate tax provisions are taken into account in our financial statements. If we were to receive a materially adverse assessment from a taxing jurisdiction, we would plan to vigorously contest it and consider all of our options, including the pursuit of judicial remedies. The final resolution of the Company’s global tax disputes is uncertain. There is significant judgment required in the analysis of disputes, including the probability determination and estimation of the potential exposure. Based on current information, in the opinion of the Company’s management, the ultimate resolution of these matters is not expected to have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations, except as noted above. However, an unfavorable resolution of the Company’s global tax disputes could have a material adverse effect on our consolidated financial position, liquidity or results of operations in the period or periods in which the matters are ultimately resolved or in which appropriate tax provisions are taken into account in our financial statements. In 2013, in connection with a share repurchase from Vivendi (the "Purchase Transaction"), we assumed certain tax attributes, generally consisting of 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 six months ended June 30, 2016 , we utilized $196 million of the NOL, which resulted in a tax benefit of $ 69 million , and a corresponding reserve of $69 million was established. As of June 30, 2016 , an indemnification asset of $175 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.” |
Computation of Basic_Diluted Ea
Computation of Basic/Diluted Earnings Per Common Share | 6 Months Ended |
Jun. 30, 2016 | |
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 Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Numerator: Consolidated net income $ 127 $ 212 $ 463 $ 606 Less: Distributed earnings to unvested stock-based awards that participate in earnings — — (2 ) (4 ) Less: Undistributed earnings allocated to unvested stock-based awards that participate in earnings (1 ) (2 ) (1 ) (5 ) Numerator for basic and diluted earnings per common share — income available to common shareholders $ 126 $ 210 $ 460 $ 597 Denominator: Denominator for basic earnings per common share - weighted-average common shares outstanding 739 727 737 725 Effect of potential dilutive common shares under the treasury stock method: Employee stock options and awards 11 8 11 9 Denominator for diluted earnings per common share - weighted-average common shares outstanding plus dilutive common shares under the treasury stock method 750 735 748 734 Basic earnings per common share $ 0.17 $ 0.29 $ 0.62 $ 0.82 Diluted earnings per common share $ 0.17 $ 0.29 $ 0.61 $ 0.81 Certain of our unvested restricted stock rights (including certain restricted stock units and performance shares) met the definition of participating securities as they participate in earnings 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 three and six months ended June 30, 2016, on a weighted-average basis, we had outstanding unvested restricted stock rights with respect to 3 million shares of common stock that are participating in earnings. For the three and six months ended June 30, 2015, on a weighted-average basis, we had outstanding unvested restricted stock rights with respect to 9 million and 10 million shares of common stock, respectively, that are participating in earnings. Certain of our employee-related restricted stock rights and options 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 10 million shares are not included in the computation of diluted earnings per share for the three and six months ended June 30, 2016, as their respective performance measures had not yet been met. Approximately 3 million shares are not included in the computation of diluted earnings per share for the three and six months ended June 30, 2015, as their respective performance measures had not yet 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. Therefore, options to acquire 4 million shares of common stock were not included in the calculation of diluted earnings per common share for the three and six months ended June 30, 2016, and options to acquire 1 million and 6 million shares of common stock were not included in the calculation of diluted earnings per common share for the three and six months ended June 30, 2015, respectively, as the effect of their inclusion would be anti-dilutive. |
Capital Transactions
Capital Transactions | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Capital Transactions | Capital Transactions Repurchase Program 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. As of June 30, 2016 , we have not repurchased any shares under this program. Dividends 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 May 11, 2016, we made an aggregate cash dividend payment of $192 million to such shareholders, and on May 27, 2016, we made related dividend equivalent payments of $3 million to certain holders of restricted stock rights. 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. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings SEC regulations govern disclosure of legal proceedings in periodic reports and 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. 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. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions King Digital Entertainment plc On February 23, 2016 (the "King Closing Date"), we completed the King Acquisition under the terms of the Transaction Agreement, purchasing all of the outstanding shares of King for $18.00 cash per share. As a result, King became a wholly owned subsidiary of Activision Blizzard. King is a leading interactive entertainment company that develops and distributes games on mobile platforms such as Android and iOS, and on online and social platforms such as Facebook and king.com websites. King’s results of operations since the King Closing Date are included in our condensed consolidated financial statements. We made this acquisition because we believe 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, as well as positioning us for future growth. The aggregate purchase price of the King Acquisition was approximately $5.8 billion , which was paid on the King Closing Date and funded primarily with $3.6 billion of existing cash and $2.2 billion of cash from new debt issued by the Company. The total aggregate purchase price for King was comprised of (amounts in millions): Cash consideration for outstanding King common stock and vested equity options and awards (1) $ 5,730 Fair value of King’s existing vested and unvested stock options and awards assumed (2) 98 Total purchase price $ 5,828 (1) Represents the cash consideration paid based on $18.00 per share to common stock holders of King and the fair value of King's existing vested options and awards that were cash settled at the King Closing Date for the portion of the fair value related to pre-combination services. No future services are required. (2) Represents the fair value of King’s existing vested and unvested stock options and awards that were assumed and replaced with Activision Blizzard equity or deferred cash awards. The purchase price includes the portion of fair value related to pre-combination services. The fair value of the options and awards assumed was determined using binomial-lattice and Monte Carlo models with the following assumptions: (a) volatility of 36% , (b) time varying risk free interest rates based on the U.S. Treasury yield curves, (c) an expected life ranging from approximately 0.1 years to 7.6 years , and (d) an expected dividend yield of 0.9% . See additional discussion under "Stock-Based Compensation" below. The Company identified and recorded assets acquired and liabilities assumed at their estimated fair values at the King Closing Date, and allocated the remaining value of approximately $2.7 billion to goodwill. The values assigned to certain acquired assets and liabilities are preliminary, and are based on information available as of the date of this Quarterly Report on Form 10-Q. Additional information may become available subsequently and may result in changes in the values allocated to various assets and liabilities, including the fair value of identified intangible assets, deferred income taxes, and contingent liabilities. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period of up to 12 months from the date of the King Acquisition may result in material adjustments to goodwill. The preliminary purchase price allocation was as follows (amounts in millions): February 23, 2016 Estimated useful lives Tangible assets and liabilities assumed: Cash and cash equivalents $ 1,151 Accounts receivable 162 Other current assets 72 Property and equipment 57 2 - 7 years Deferred income tax assets, net 27 Other assets 47 Accounts payable (9 ) Accrued expense and other liabilities (272 ) Other liabilities (113 ) Deferred income tax liabilities, net (52 ) Intangible assets Internally-developed franchises 845 3 - 5 years Customer base 609 2 years Developed software 580 3 - 4 years Trademark 46 7 years Goodwill 2,678 Total purchase price $ 5,828 During the six months ended June 30, 2016 , the Company incurred $38 million of expenses related to the King Acquisition, which are included within "General and administrative" in the Condensed Consolidated Statements of Operations. In connection with the debt financing that occurred on the King Closing Date, we incurred $38 million of issuance costs that were capitalized and recorded within "Long-term debt, net" on our Condensed Consolidated Balance Sheet. The amortization of these capitalized costs was not material to our condensed consolidated statement of operations for the three and six months ended June 30, 2016 . Stock-Based Compensation In connection with the King Acquisition, a majority of the outstanding King options and awards that were unvested as of the King Closing Date were converted into equivalent options and awards with respect to shares of the Company’s common stock, using an equity award exchange ratio calculated in accordance with the Transaction Agreement. As a result, replacement equity options and awards of 10 million and 3 million , respectively, were issued in connection with the King Acquisition. The portion of the fair value related to pre-combination services of $76 million was included in the purchase price while the remaining fair value will be recognized over the remaining service periods. As of June 30, 2016 , the future expense for the converted King unvested options and awards was approximately $71 million , which will be recognized over a weighted average service period of approximately 2.0 years . The remaining portion of outstanding unvested awards that were assumed were replaced with deferred cash awards. The cash proceeds were placed in an escrow-like account with the cash releases to occur based on the awards' original vesting schedule upon future service being rendered. The cash associated with these awards is recorded in "Other current assets" and "Other assets" in our Condensed Consolidated Balance Sheet. The portion of the fair value related to pre-combination services of $22 million was included in the purchase price while the remaining fair value of approximately $9 million will be recognized over the remaining service periods. A portion of the cash proceeds placed in an escrow-like account were released to award holders, but the amount was not material. Identifiable Intangible Assets Acquired and Goodwill The preliminary fair values of the identifiable intangible assets acquired from King were estimated using an income approach, with the exception of the customer base, which was estimated using a cost approach. The fair value of the intangibles using the income approach was determined with the following key assumptions: (a) a weighted average cost of capital of 13% , (b) long-term revenue decay rates ranging from 0% to 65% , and (c) royalty rates ranging from 0.5% to 8% . The fair value of the intangibles using the cost approach was based on amounts that would be required to replace the asset ( i.e., replacement cost). The Internally-developed franchises, Customer base, Developed software, and Trademark intangible assets will be amortized to "Cost of revenues - subscription, licensing, and other revenues - software royalties, amortization, and intellectual property licenses," "Sales and marketing," "Cost of revenues - subscription, licensing, and other revenues - software royalties, amortization, and intellectual property licenses," and "General and administrative," respectively. The intangible assets will be amortized over their estimated useful lives in proportion to the economic benefits received. The $2.7 billion of goodwill recognized is primarily attributable to the benefits the Company expects to derive from accelerated expansion as an interactive entertainment provider in the mobile sector, future franchises, and technology, as well as the management team's proven ability to create future games and franchises. Approximately $620 million of the goodwill is expected to be deductible for tax purposes in the U.S. Contingent Liabilities Assumed As a result of the King Acquisition, we assumed contingent liabilities related to contingent consideration associated with King's previous acquisitions of Nonstop Games Oy and Z2Live, Inc. The remaining contingent consideration for Non Stop Games Oy is linked to amounts generated from games launched by Nonstop Games Oy over a specified period. The range of the potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is from $0 million to $84 million . The remaining contingent consideration for Z2Live, Inc., is linked to amounts generated from specific games launched by Z2Live, Inc. within a defined period. The potential range of undiscounted future payments that the Company could be required to make under the contingent consideration arrangement is from $0 million to $75 million . The fair value of the contingent consideration arrangement at the King Closing date and as of June 30, 2016 , for Nonstop Games Oy and Z2Live, Inc. was immaterial. King Net Revenue and Earnings The amount of net revenue and earnings attributable to King in the Company’s condensed consolidated statement of operations during the six months ended June 30, 2016 , are included in the table below. The amounts presented represent the net revenues and earnings after adjustments for purchase price accounting, inclusive of amortization of intangible assets, share-based payments, and deferral of revenues and related cost of revenues. For the Three Months Ended For the Six Months Ended (in millions) June 30, 2016 June 30, 2016 Net revenues $ 458 $ 641 Net loss $ (49 ) $ (99 ) Pro Forma Financial Information The unaudited financial information in the table below summarizes the combined results of operations of the Company and King, on a pro forma basis, as though the acquisition had occurred on January 1, 2015. The pro forma financial information presented includes the effects of adjustments related to amortization charges from acquired intangible assets, employee compensation from replacement equity awards issued in the King Acquisition and the profit sharing bonus plan established as part of the King Acquisition, and interest expense from the new debt, among other adjustments. We also adjusted for Activision Blizzard and King non-recurring acquisition related costs of approximately $64 million for the six months ended June 30, 2016 . Non-recurring acquisition related costs for the three months ended June 30, 2016, were not material. The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the King Acquisition, and any borrowings undertaken to finance the King Acquisition, had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results. For the Three Months Ended June 30, For the Six Months Ended June 30, (in millions) 2016 2015 2016 2015 Net revenues $ 1,570 $ 1,540 $ 3,305 $ 3,389 Net income $ 140 $ 168 $ 470 $ 548 Basic earnings per common share $ 0.19 $ 0.23 $ 0.63 $ 0.74 Diluted earnings per common share $ 0.19 $ 0.22 $ 0.62 $ 0.73 |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2016 | |
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. The 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 for fiscal years and interim periods within those years beginning after December 15, 2017, 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. We adopted this new standard as of January 1, 2016, and applied it prospectively. The adoption of this guidance did not have a material impact on our condensed consolidated 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. We adopted this new standard as of January 1, 2016. The adoption of this guidance did not have a material impact on our condensed consolidated 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. We adopted this change in accounting principle as of January 1, 2016, and applied it retrospectively for each period presented. The adoption of this guidance did not have a material impact on our condensed consolidated 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. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. We adopted this standard as of January 1, 2016, and applied it prospectively. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated 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 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, on 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. We adopted this new standard as of January 1, 2016, and applied it prospectively. No measurement period adjustments occurred as of and for the six months ended June 30, 2016 . Financial Instruments In January 2016, the FASB issued new guidance related to the recognition and measurement of financial assets and financial liabilities. The new standard, amongst other things, generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The new standard also simplifies the impairment assessment of equity investments without readily determinable fair values. The new standard is effective for fiscal years beginning after December 15, 2017, and the guidance should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity investments without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. We are evaluating the impact of this new accounting guidance on our financial statements. Leases In February 2016, the FASB issued new guidance related to the accounting for leases. The new standard will replace all current U.S. GAAP guidance on this topic. The new standard, amongst other things, requires a lessee to classify a lease as either a finance or operating lease in which lessees will need to recognize a right-of-use asset and a lease liability for their leases. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. Operating leases will result in straight-line expense, while finance leases will result in a front-loaded expense pattern. Classification will be based on criteria that are largely similar to those applied in current lease accounting. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and will require application of the new guidance at the beginning of the earliest comparative period presented. We are evaluating the impact of this new accounting guidance on our financial statements. Share-Based Payments In March 2016, the FASB issued new guidance in an effort to simplify accounting for share-based payments. The new standard, amongst other things: • requires that all excess tax benefits and tax deficiencies be recorded as income tax expense or benefit in the statement of operations and that the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur; • requires excess tax benefits from share-based payments to be reported as operating activities on the statement of cash flows; and • permits an accounting policy election to either estimate the number of awards that are expected to vest using an estimated forfeiture rate, as currently required, or account for forfeitures when they occur. The new standard is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. We intend to early adopt this standard during the three months ending September 30, 2016. Upon adoption, we intend to continue to estimate the number of awards that are expected to vest using an estimated forfeiture rate. If we had adopted this standard in the current quarter, we would have recorded $24 million and $51 million of windfall tax benefits as a reduction to income tax expense in our consolidated statement of operations for the three and six months ended June 30, 2016, respectively. Under the new standard, the weighted-average number of dilutive shares outstanding would have increased by approximately 3 million for the three and six months ending June 30, 2016. As a result, the diluted earnings per common share would have increased $0.03 and $0.07 for the three and six months ended June 30, 2016, respectively. Further, as the new standard requires excess tax benefits from share-based payments be reported as an operating activity on the statement of cash flows, net cash provided by operating activities would have increased by $52 million for the six months ended June 30, 2016, with a corresponding decrease in the net cash provided by financing activities. |
Description of Business and B24
Description of Business and Basis of Consolidation and Presentation (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Microtransaction Revenues | Microtransaction Revenues Microtransaction revenues are derived from the sale of virtual goods and currencies to our players to enhance their gameplay experience. Proceeds from the sales of virtual goods and currencies are initially recorded in deferred revenues. Proceeds from the sales of virtual currencies are recognized as a player uses the virtual goods purchased with the virtual currency. 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, which is generally the estimated service period of the game. |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements Revenue recognition In May 2014, the FASB issued new accounting guidance related to revenue recognition. The 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 for fiscal years and interim periods within those years beginning after December 15, 2017, 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. We adopted this new standard as of January 1, 2016, and applied it prospectively. The adoption of this guidance did not have a material impact on our condensed consolidated 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. We adopted this new standard as of January 1, 2016. The adoption of this guidance did not have a material impact on our condensed consolidated 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. We adopted this change in accounting principle as of January 1, 2016, and applied it retrospectively for each period presented. The adoption of this guidance did not have a material impact on our condensed consolidated 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. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. We adopted this standard as of January 1, 2016, and applied it prospectively. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated 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 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, on 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. We adopted this new standard as of January 1, 2016, and applied it prospectively. No measurement period adjustments occurred as of and for the six months ended June 30, 2016 . Financial Instruments In January 2016, the FASB issued new guidance related to the recognition and measurement of financial assets and financial liabilities. The new standard, amongst other things, generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The new standard also simplifies the impairment assessment of equity investments without readily determinable fair values. The new standard is effective for fiscal years beginning after December 15, 2017, and the guidance should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity investments without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. We are evaluating the impact of this new accounting guidance on our financial statements. Leases In February 2016, the FASB issued new guidance related to the accounting for leases. The new standard will replace all current U.S. GAAP guidance on this topic. The new standard, amongst other things, requires a lessee to classify a lease as either a finance or operating lease in which lessees will need to recognize a right-of-use asset and a lease liability for their leases. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. Operating leases will result in straight-line expense, while finance leases will result in a front-loaded expense pattern. Classification will be based on criteria that are largely similar to those applied in current lease accounting. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and will require application of the new guidance at the beginning of the earliest comparative period presented. We are evaluating the impact of this new accounting guidance on our financial statements. Share-Based Payments In March 2016, the FASB issued new guidance in an effort to simplify accounting for share-based payments. The new standard, amongst other things: • requires that all excess tax benefits and tax deficiencies be recorded as income tax expense or benefit in the statement of operations and that the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur; • requires excess tax benefits from share-based payments to be reported as operating activities on the statement of cash flows; and • permits an accounting policy election to either estimate the number of awards that are expected to vest using an estimated forfeiture rate, as currently required, or account for forfeitures when they occur. The new standard is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. We intend to early adopt this standard during the three months ending September 30, 2016. Upon adoption, we intend to continue to estimate the number of awards that are expected to vest using an estimated forfeiture rate. If we had adopted this standard in the current quarter, we would have recorded $24 million and $51 million of windfall tax benefits as a reduction to income tax expense in our consolidated statement of operations for the three and six months ended June 30, 2016, respectively. Under the new standard, the weighted-average number of dilutive shares outstanding would have increased by approximately 3 million for the three and six months ending June 30, 2016. As a result, the diluted earnings per common share would have increased $0.03 and $0.07 for the three and six months ended June 30, 2016, respectively. Further, as the new standard requires excess tax benefits from share-based payments be reported as an operating activity on the statement of cash flows, net cash provided by operating activities would have increased by $52 million for the six months ended June 30, 2016, with a corresponding decrease in the net cash provided by financing activities. |
Inventories, Net (Tables)
Inventories, Net (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Our inventories, net consist of the following (amounts in millions): At June 30, 2016 At December 31, 2015 Finished goods $ 69 $ 101 Purchased parts and components 25 27 Inventories, net $ 94 $ 128 |
Software Development and Inte26
Software Development and Intellectual Property Licenses (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 At December 31, 2015 Internally-developed software costs $ 284 $ 266 Payments made to third-party software developers 153 150 Total software development costs $ 437 $ 416 Intellectual property licenses $ 4 $ 30 |
Amortization of software development costs and intellectual property licenses | Amortization of capitalized software development costs and intellectual property licenses was the following (amounts in millions): 23 For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Amortization of capitalized software development costs and intellectual property licenses $ 115 $ 85 $ 265 $ 232 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of finite-lived intangible assets | Intangible assets, net consist of the following (amounts in millions): At June 30, 2016 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: Internally-developed franchises 3 - 11 years $ 1,154 $ (408 ) $ 746 Developed software 3 - 5 years 595 (58 ) 537 Customer base 2 years 617 (111 ) 506 Trade names 7 - 10 years 54 (3 ) 51 Other 1 - 8 years 18 (10 ) 8 Total definite-lived intangible assets $ 2,438 $ (590 ) $ 1,848 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 2,281 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 Total intangible assets, net $ 482 |
Schedule of indefinite-lived intangible assets | Intangible assets, net consist of the following (amounts in millions): At June 30, 2016 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: Internally-developed franchises 3 - 11 years $ 1,154 $ (408 ) $ 746 Developed software 3 - 5 years 595 (58 ) 537 Customer base 2 years 617 (111 ) 506 Trade names 7 - 10 years 54 (3 ) 51 Other 1 - 8 years 18 (10 ) 8 Total definite-lived intangible assets $ 2,438 $ (590 ) $ 1,848 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 2,281 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 Total intangible assets, net $ 482 |
Schedule of finite lived intangible assets, future amortization expense | At June 30, 2016 , future amortization of definite-lived intangible assets is estimated as follows (amounts in millions): 2016 (remaining six months) $ 421 2017 778 2018 361 2019 201 2020 66 Thereafter 21 Total $ 1,848 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill by operating segment for the six months ended June 30, 2016 , are as follows (amounts in millions): Activision Blizzard King Other Total Balance at December 31, 2015 $ 6,905 $ 178 $ — $ 12 $ 7,095 Additions through acquisition — — 2,678 — 2,678 Other (2 ) — — — (2 ) Balance at June 30, 2016 $ 6,903 $ 178 $ 2,678 $ 12 $ 9,771 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 Using As of June 30, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance Sheet Classification Financial Assets: Recurring fair value measurements: Money market funds $ 2,071 $ 2,071 $ — $ — Cash and cash equivalents Foreign government treasury bills 34 34 — — Cash and cash equivalents Foreign currency forward contracts not designated as hedges 6 — 6 — Other current assets Foreign currency forward contracts designated as hedges 5 — 5 — Other current assets Auction rate securities (“ARS”) 9 — — 9 Other assets Total recurring fair value measurements $ 2,125 $ 2,105 $ 11 $ 9 Financial liabilities: Foreign currency forward contracts designated as hedges (4 ) $ — $ (4 ) $ — Accrued expenses and other liabilities 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 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 ARS 9 — — 9 Other assets 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 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Summary of debt | A summary of our debt is as follows (amounts in millions): At June 30, 2016 Gross Carrying Amount Unamortized Discount and Deferred Financing Costs Net Carrying Amount Term Loan $ 319 $ (3 ) $ 316 Tranche A Term Loans 2,534 (36 ) 2,498 2021 Notes 1,500 (20 ) 1,480 2023 Notes 750 (11 ) 739 Total debt $ 5,103 $ (70 ) $ 5,033 Less: current portion of long-term debt (64 ) 8 (56 ) Total long-term debt $ 5,039 $ (62 ) $ 4,977 At December 31, 2015 Gross Carrying Amount Unamortized Discount and Deferred Financing Costs Net Carrying Amount Term Loan $ 1,869 $ (11 ) $ 1,858 2021 Notes 1,500 (22 ) 1,478 2023 Notes 750 (12 ) 738 Total long-term debt $ 4,119 $ (45 ) $ 4,074 |
Schedule of maturities of debt | As of June 30, 2016 , 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 (remaining six months) $ 32 2017 64 2018 64 2019 112 2020 2,581 Thereafter 2,250 Total $ 5,103 |
Accumulated Other Comprehensi31
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 and 2015 , were as follows (amounts in millions): For the Six Months Ended June 30, 2016 Foreign currency translation adjustments Unrealized gain (loss) on forward contracts Unrealized gain (loss) on available-for-sale securities Total Balance at December 31, 2015 $ (630 ) $ (4 ) $ 1 $ (633 ) Other comprehensive income (loss) before reclassifications (20 ) 2 — (18 ) Amounts reclassified from accumulated other comprehensive income (loss) — 2 — 2 Balance at June 30, 2016 $ (650 ) $ — $ 1 $ (649 ) For the Six Months Ended June 30, 2015 Foreign currency translation adjustments Unrealized gain (loss) on forward contracts Unrealized gain (loss) on available-for-sale securities Total Balance at December 31, 2014 $ (304 ) $ — $ 1 $ (303 ) Other comprehensive income (loss) before reclassifications (245 ) 8 (3 ) (240 ) Amounts reclassified from accumulated other comprehensive income (loss) — (2 ) — (2 ) Balance at June 30, 2015 $ (549 ) $ 6 $ (2 ) $ (545 ) |
Operating Segments and Geogra32
Operating Segments and Geographic Region (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 three and six months ended June 30, 2016 and 2015 are presented below (amounts in millions): For the Three Months Ended June 30, 2016 2015 2016 2015 Net revenues Operating income and income before income tax expense Activision $ 332 $ 313 $ 88 $ 57 Blizzard 738 385 333 117 King 484 — 176 — Reportable segments total 1,554 698 597 174 Reconciliation to consolidated net revenues / consolidated income before income tax expense: Other segments (1) 55 61 (9 ) (1 ) Net effect from recognition (deferral) of deferred net revenues and related cost of revenues (39 ) 285 (108 ) 181 Stock-based compensation expense — — (41 ) (21 ) Amortization of intangible assets — — (203 ) (1 ) Fees and other expenses related to acquisitions (2) — — (4 ) — Consolidated net revenues / operating income $ 1,570 $ 1,044 $ 232 $ 332 Interest and other expense (income), net 65 50 Consolidated income before income tax expense $ 167 $ 282 For the Six Months Ended June 30, 2016 2016 2015 2016 2015 Net revenues Operating income and income before income tax expense Activision $ 692 $ 616 $ 187 $ 121 Blizzard 1,032 737 419 256 King 691 — 243 — Reportable segments total 2,415 1,353 849 377 Reconciliation to consolidated net revenues / consolidated income before income tax expense: Other segments (1) 102 109 (9 ) (1 ) Net effect from recognition (deferral) of deferred net revenues and related cost of revenues 508 860 261 545 Stock-based compensation expense — — (85 ) (44 ) Amortization of intangible assets — — (285 ) (3 ) Fees and other expenses related to acquisitions (2) — — (38 ) — Consolidated net revenues / operating income $ 3,025 $ 2,322 $ 693 $ 874 Interest and other expense (income), net 117 100 Consolidated income before income tax expense $ 576 $ 774 (1) Other includes other income and expenses from operating segments managed outside the reportable segments, including MLG, Studios, and Distribution businesses. Other also includes unallocated corporate income and expenses. (2) Reflects fees and other expenses related to the King Acquisition, inclusive of related debt financings. |
Schedule of net revenues from external customers by geographic region | Geographic information presented below for the three and six months ended June 30, 2016 and 2015 , is based on the location of the paying customer. Net revenues from external customers by geographic region were as follows (amounts in millions): For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Net revenues by geographic region: Americas $ 860 $ 551 $ 1,613 $ 1,255 EMEA (1) 507 388 1,028 852 Asia Pacific 203 105 384 215 Total consolidated net revenues $ 1,570 $ 1,044 $ 3,025 $ 2,322 (1) EMEA consists of the Europe, Middle East, and Africa geographic regions. |
Schedule of net revenues by platform | Net revenues by platform were as follows (amounts in millions): For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Net revenues by platform: Console $ 650 $ 559 $ 1,415 $ 1,317 PC (1) 411 370 811 755 Mobile and ancillary (2) 454 54 697 141 Other (3) 55 61 102 109 Total consolidated net revenues $ 1,570 $ 1,044 $ 3,025 $ 2,322 (1) Net revenues from PC includes revenues that were historically shown as “Online.” (2) Net revenues from mobile and ancillary includes 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 our Skylanders franchise and other physical merchandise and accessories. (3) Net revenues from Other include revenues from MLG, Studios, and Distribution businesses. |
Long-lived assets by geographic region | Long-lived assets by geographic region at June 30, 2016 , and December 31, 2015 , were as follows (amounts in millions): At June 30, 2016 At December 31, 2015 Long-lived assets (1) by geographic region: Americas $ 147 $ 138 EMEA 98 42 Asia Pacific 15 9 Total long-lived assets by geographic region $ 260 $ 189 (1) 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. |
Computation of Basic_Diluted 33
Computation of Basic/Diluted Earnings Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Numerator: Consolidated net income $ 127 $ 212 $ 463 $ 606 Less: Distributed earnings to unvested stock-based awards that participate in earnings — — (2 ) (4 ) Less: Undistributed earnings allocated to unvested stock-based awards that participate in earnings (1 ) (2 ) (1 ) (5 ) Numerator for basic and diluted earnings per common share — income available to common shareholders $ 126 $ 210 $ 460 $ 597 Denominator: Denominator for basic earnings per common share - weighted-average common shares outstanding 739 727 737 725 Effect of potential dilutive common shares under the treasury stock method: Employee stock options and awards 11 8 11 9 Denominator for diluted earnings per common share - weighted-average common shares outstanding plus dilutive common shares under the treasury stock method 750 735 748 734 Basic earnings per common share $ 0.17 $ 0.29 $ 0.62 $ 0.82 Diluted earnings per common share $ 0.17 $ 0.29 $ 0.61 $ 0.81 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Purchase Price | The total aggregate purchase price for King was comprised of (amounts in millions): Cash consideration for outstanding King common stock and vested equity options and awards (1) $ 5,730 Fair value of King’s existing vested and unvested stock options and awards assumed (2) 98 Total purchase price $ 5,828 (1) Represents the cash consideration paid based on $18.00 per share to common stock holders of King and the fair value of King's existing vested options and awards that were cash settled at the King Closing Date for the portion of the fair value related to pre-combination services. No future services are required. (2) Represents the fair value of King’s existing vested and unvested stock options and awards that were assumed and replaced with Activision Blizzard equity or deferred cash awards. The purchase price includes the portion of fair value related to pre-combination services. The fair value of the options and awards assumed was determined using binomial-lattice and Monte Carlo models with the following assumptions: (a) volatility of 36% , (b) time varying risk free interest rates based on the U.S. Treasury yield curves, (c) an expected life ranging from approximately 0.1 years to 7.6 years , and (d) an expected dividend yield of 0.9% . See additional discussion under "Stock-Based Compensation" below. |
Schedule of Preliminary Purchase Price Allocation | The preliminary purchase price allocation was as follows (amounts in millions): February 23, 2016 Estimated useful lives Tangible assets and liabilities assumed: Cash and cash equivalents $ 1,151 Accounts receivable 162 Other current assets 72 Property and equipment 57 2 - 7 years Deferred income tax assets, net 27 Other assets 47 Accounts payable (9 ) Accrued expense and other liabilities (272 ) Other liabilities (113 ) Deferred income tax liabilities, net (52 ) Intangible assets Internally-developed franchises 845 3 - 5 years Customer base 609 2 years Developed software 580 3 - 4 years Trademark 46 7 years Goodwill 2,678 Total purchase price $ 5,828 |
Schedule of Pro Forma Financial Information | The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the King Acquisition, and any borrowings undertaken to finance the King Acquisition, had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results. For the Three Months Ended June 30, For the Six Months Ended June 30, (in millions) 2016 2015 2016 2015 Net revenues $ 1,570 $ 1,540 $ 3,305 $ 3,389 Net income $ 140 $ 168 $ 470 $ 548 Basic earnings per common share $ 0.19 $ 0.23 $ 0.63 $ 0.74 Diluted earnings per common share $ 0.19 $ 0.22 $ 0.62 $ 0.73 The amounts presented represent the net revenues and earnings after adjustments for purchase price accounting, inclusive of amortization of intangible assets, share-based payments, and deferral of revenues and related cost of revenues. For the Three Months Ended For the Six Months Ended (in millions) June 30, 2016 June 30, 2016 Net revenues $ 458 $ 641 Net loss $ (49 ) $ (99 ) |
Description of Business and B35
Description of Business and Basis of Consolidation and Presentation (Details) shares in Millions, $ in Millions | 6 Months Ended | ||
Jun. 30, 2016USD ($)segmentshares | Jun. 08, 2016shares | Dec. 31, 2015shares | |
Organization and Ownership [Line Items] | |||
Common stock issued and outstanding (in shares) | 741 | ||
Segment Reporting [Abstract] | |||
Number of reportable segments | segment | 3 | ||
Supplemental Cash Flow Elements [Abstract] | |||
Non-cash purchase price consideration | $ | $ 89 | ||
ASAC | |||
Organization and Ownership [Line Items] | |||
Shares of Activision Blizzard common stock owned by a specific shareholder | 31 | 172 | |
Percent of Activision Blizzard common stock owned by a specific shareholder | 4.00% | 23.00% | |
Shares of Shareholder Distributed | 141 | ||
Public | |||
Organization and Ownership [Line Items] | |||
Percent of Activision Blizzard common stock owned by a specific shareholder | 96.00% |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 69 | $ 101 |
Purchased parts and components | 25 | 27 |
Inventories, net | 94 | 128 |
Inventory reserves | $ 59 | $ 54 |
Software Development and Inte37
Software Development and Intellectual Property Licenses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Software development and intellectual property licenses: | |||||
Internally-developed software costs | $ 284 | $ 284 | $ 266 | ||
Payments made to third-party software developers | 153 | 153 | 150 | ||
Total software development costs | 437 | 437 | 416 | ||
Intellectual property licenses | 4 | 4 | $ 30 | ||
Amortization: | |||||
Amortization of capitalized software development costs and intellectual property licenses | $ 115 | $ 85 | $ 265 | $ 232 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets | |||||
Gross carrying amount, definite-lived intangible assets | $ 2,438 | $ 2,438 | $ 440 | ||
Accumulated amortization, definite-lived intangible assets | (590) | (590) | (391) | ||
Net carrying amount, definite-lived intangible assets | 1,848 | 1,848 | 49 | ||
Indefinite Lived Intangible Assets | |||||
Net carrying amount, indefinite-lived intangible assets | 433 | 433 | 433 | ||
Total intangible assets, net | 2,281 | 2,281 | 482 | ||
Amortization of Deferred Charges [Abstract] | |||||
Amortization expense | 203 | $ 2 | 285 | $ 3 | |
Activision trademark | |||||
Indefinite Lived Intangible Assets | |||||
Net carrying amount, indefinite-lived intangible assets | 386 | 386 | 386 | ||
Acquired trade names | |||||
Indefinite Lived Intangible Assets | |||||
Net carrying amount, indefinite-lived intangible assets | 47 | 47 | 47 | ||
Internally-developed franchises | |||||
Finite-Lived Intangible Assets | |||||
Gross carrying amount, definite-lived intangible assets | 1,154 | 1,154 | 309 | ||
Accumulated amortization, definite-lived intangible assets | (408) | (408) | (298) | ||
Net carrying amount, definite-lived intangible assets | 746 | $ 746 | $ 11 | ||
Internally-developed franchises | Minimum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 3 years | 11 years | |||
Internally-developed franchises | Maximum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 11 years | 11 years | |||
Developed software | |||||
Finite-Lived Intangible Assets | |||||
Gross carrying amount, definite-lived intangible assets | 595 | $ 595 | $ 15 | ||
Accumulated amortization, definite-lived intangible assets | (58) | (58) | 0 | ||
Net carrying amount, definite-lived intangible assets | 537 | $ 537 | $ 15 | ||
Developed software | Minimum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 3 years | 5 years | |||
Developed software | Maximum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 5 years | 5 years | |||
Customer base | |||||
Finite-Lived Intangible Assets | |||||
Gross carrying amount, definite-lived intangible assets | 617 | $ 617 | |||
Accumulated amortization, definite-lived intangible assets | (111) | (111) | |||
Net carrying amount, definite-lived intangible assets | 506 | $ 506 | |||
Customer base | Minimum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 2 years | ||||
Customer base | Maximum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 2 years | ||||
Acquired trade names | |||||
Finite-Lived Intangible Assets | |||||
Gross carrying amount, definite-lived intangible assets | 54 | $ 54 | |||
Accumulated amortization, definite-lived intangible assets | (3) | (3) | |||
Net carrying amount, definite-lived intangible assets | 51 | $ 51 | |||
Acquired trade names | Minimum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 7 years | ||||
Acquired trade names | Maximum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 10 years | ||||
Other | |||||
Finite-Lived Intangible Assets | |||||
Gross carrying amount, definite-lived intangible assets | 18 | $ 18 | |||
Accumulated amortization, definite-lived intangible assets | (10) | (10) | |||
Net carrying amount, definite-lived intangible assets | $ 8 | $ 8 | |||
Other | Minimum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 1 year | ||||
Other | Maximum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 8 years | ||||
Licensing agreements | |||||
Finite-Lived Intangible Assets | |||||
Gross carrying amount, definite-lived intangible assets | $ 116 | ||||
Accumulated amortization, definite-lived intangible assets | (93) | ||||
Net carrying amount, definite-lived intangible assets | $ 23 | ||||
Licensing agreements | Minimum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 1 year | ||||
Licensing agreements | Maximum | |||||
Finite-Lived Intangible Assets | |||||
Estimated useful life | 10 years |
Intangible Assets, Net (Detai39
Intangible Assets, Net (Details 2) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Definite-lived intangible assets, future amortization expense disclosure | ||
2016 (remaining six months) | $ 421 | |
2,017 | 778 | |
2,018 | 361 | |
2,019 | 201 | |
2,020 | 66 | |
Thereafter | 21 | |
Net carrying amount, definite-lived intangible assets | $ 1,848 | $ 49 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 7,095 |
Additions through acquisition | 2,678 |
Other | (2) |
Ending balance | 9,771 |
Activision | |
Goodwill [Roll Forward] | |
Beginning balance | 6,905 |
Additions through acquisition | 0 |
Other | (2) |
Ending balance | 6,903 |
Blizzard | |
Goodwill [Roll Forward] | |
Beginning balance | 178 |
Additions through acquisition | 0 |
Other | 0 |
Ending balance | 178 |
King | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Additions through acquisition | 2,678 |
Other | 0 |
Ending balance | 2,678 |
Other | |
Goodwill [Roll Forward] | |
Beginning balance | 12 |
Additions through acquisition | 0 |
Other | 0 |
Ending balance | $ 12 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | $ 2,125 | $ 1,667 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 2,071 | 1,613 |
Foreign government treasury bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 34 | 34 |
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 | 2,105 | 1,647 |
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 | 2,071 | 1,613 |
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 | 34 |
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 | 11 |
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) | 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) | ARS | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 9 | 9 |
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 6 | 11 |
Not Designated as Hedging Instrument [Member] | Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 0 | 0 |
Not Designated as Hedging Instrument [Member] | Fair value measurements using significant other observable inputs (Level 2) | Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 6 | 11 |
Not Designated as Hedging Instrument [Member] | Fair value measurements using significant unobservable inputs (Level 3) | Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 0 | 0 |
Designated as Hedging Instrument [Member] | Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 5 | |
Total liabilities at fair value | (4) | (4) |
Designated as Hedging Instrument [Member] | Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total liabilities at fair value | 0 | 0 |
Designated as Hedging Instrument [Member] | Fair value measurements using significant other observable inputs (Level 2) | Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 5 | |
Total liabilities at fair value | (4) | (4) |
Designated as Hedging Instrument [Member] | Fair value measurements using significant unobservable inputs (Level 3) | Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total liabilities at fair value | $ 0 | $ 0 |
Fair Value Measurements (Deta42
Fair Value Measurements (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Nonrecurring | |||||
Derivatives, Fair Value [Line Items] | |||||
Impairment charges - nonrecurring | $ 0 | $ 0 | $ 0 | $ 0 | |
Foreign currency forward contracts | Not Designated as Hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Fair value of derivative asset | 6,000,000 | $ 6,000,000 | $ 11,000,000 | ||
Foreign currency forward contracts | Designated as Hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Maximum length of time over which our foreign currency forward contracts mature | 12 months | ||||
Foreign currency forward contracts | Designated as Hedges | Cash Flow Hedging [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional amount of foreign currency derivatives | 443,000,000 | $ 443,000,000 | 381,000,000 | ||
Ineffective portion relating to these hedges | 0 | $ 0 | 0 | $ 0 | |
Net unrealized gains or losses to be reclassified into earnings within the next twelve months | 1,000,000 | ||||
US Dollar To Euro Contract [Member] | Foreign currency forward contracts | Not Designated as Hedges | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional amount of foreign currency derivatives | $ 260,000,000 | $ 260,000,000 | $ 489,000,000 |
Debt - Credit Facilities (Detai
Debt - Credit Facilities (Details) - USD ($) $ in Millions | May 26, 2016 | Mar. 31, 2016 | Feb. 25, 2016 | Feb. 23, 2016 | Feb. 11, 2015 | Feb. 11, 2014 | Oct. 11, 2013 | Jun. 30, 2016 | Jun. 30, 2015 |
Line of Credit Facility [Line Items] | |||||||||
Repayments of long-term debt | $ 1,566 | $ 250 | |||||||
Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 2,300 | ||||||||
Variable rate at end of period | 2.46% | ||||||||
Debt covenant, Consolidated Total Net Debt ratio, maximum | 400.00% | ||||||||
Debt covenant, Consolidated Total Net Debt ratio, contingent maximum | 350.00% | ||||||||
Debt covenant, Collateral Suspension period from inception | 18 months | ||||||||
Credit Facilities | Incremental Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 250 | ||||||||
Credit Facilities | Debt Instrument, Redemption, Period One [Member] | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Quarterly principal payments as percent of principal | 0.625% | ||||||||
Credit Facilities | Debt Instrument, Redemption, Period Two [Member] | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Quarterly principal payments as percent of principal | 1.25% | ||||||||
Credit Facilities | Debt Instrument, Redemption, Period Three [Member] | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Quarterly principal payments as percent of principal | 3.125% | ||||||||
Federal Funds Effective Rate | Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Applicable margin | 0.50% | ||||||||
One Month LIBOR | Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Applicable margin | 1.00% | ||||||||
LIBOR | Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Variable interest rate floor | 0.00% | ||||||||
LIBOR | Minimum | Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Applicable margin | 1.50% | ||||||||
LIBOR | Maximum | Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Applicable margin | 2.25% | ||||||||
Base Rate | Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Variable interest rate floor | 1.00% | ||||||||
Base Rate | Minimum | Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Applicable margin | 0.50% | ||||||||
Base Rate | Maximum | Credit Facilities | Tranche A Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Applicable margin | 1.25% | ||||||||
Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 2,500 | ||||||||
Variable rate at end of period | 3.25% | ||||||||
Required quarterly payments, percentage of original principal | 0.25% | ||||||||
Repayments of long-term debt | $ 800 | $ 250 | $ 500 | $ 250 | $ 375 | ||||
Term Loan | LIBOR Rate Loans | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Floor rate | 0.75% | ||||||||
Revolver | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 250 | ||||||||
Amount of letters of credit that can be issued under the Revolver | $ 50 | ||||||||
Credit Facilities | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Repayments of long-term debt | $ 1,300 | ||||||||
Percentage of consolidated total assets pledged as collateral | 66.00% | ||||||||
Credit Facilities | Prime Rate | Base Rate Loans | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Description of variable rate basis | Prime rate as designated by the administrative agent | ||||||||
Credit Facilities | Federal Funds Effective Rate | Base Rate Loans | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Applicable margin | 0.50% | ||||||||
Description of variable rate basis | Federal funds rate | ||||||||
Credit Facilities | One Month LIBOR | Base Rate Loans | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Applicable margin | 1.00% | ||||||||
Description of variable rate basis | LIBOR rate for one month | ||||||||
2015 Revolving Credit Facility | Credit Facilities | Revolver | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 250 | ||||||||
2015 Revolving Credit Facility | Credit Facilities | Letter of Credit | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 50 |
Debt - Unsecured Senior Notes a
Debt - Unsecured Senior Notes and Deferred Financing Costs (Details) - USD ($) $ in Millions | Feb. 23, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Sep. 19, 2013 |
Debt Instrument [Line Items] | |||||||
Gross carrying amount | $ 5,103 | $ 5,103 | $ 4,119 | ||||
Percentage of principal repayable to option holders upon certain criteria | 101.00% | 101.00% | |||||
Interest expense | $ 55 | $ 48 | $ 107 | $ 97 | |||
Amortization of the debt discount | 6 | 2 | 10 | 3 | |||
Tranche A Term Loan | Long-term debt, net | |||||||
Debt Instrument [Line Items] | |||||||
Debt discount and issuance costs | $ 38 | ||||||
Revolver | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee, amount | 0 | $ 0 | 0 | $ 0 | |||
2021 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Gross carrying amount | $ 1,500 | $ 1,500 | 1,500 | $ 1,500 | |||
Interest rate | 5.625% | ||||||
Maximum percentage of outstanding Notes that can be redeemed with net cash proceeds from one or more qualified equity offerings | 35.00% | 35.00% | |||||
2021 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||||||
Debt Instrument [Line Items] | |||||||
Fair value of Notes | $ 1,571 | $ 1,571 | 1,571 | ||||
2023 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Gross carrying amount | $ 750 | $ 750 | 750 | $ 750 | |||
Interest rate | 6.125% | ||||||
Maximum percentage of outstanding Notes that can be redeemed with net cash proceeds from one or more qualified equity offerings | 35.00% | 35.00% | |||||
2023 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||||||
Debt Instrument [Line Items] | |||||||
Fair value of Notes | $ 811 | $ 811 | 795 | ||||
Unsecured Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest payable | $ 38 | $ 38 | $ 38 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 | Sep. 19, 2013 |
Debt Instrument [Line Items] | |||
Gross Carrying Amount | $ 5,103 | $ 4,119 | |
Unamortized Discount and Deferred Financing Costs | (70) | (45) | |
Net Carrying Amount | 5,033 | 4,074 | |
Gross Carrying Amount, current portion of long-term debt | (64) | ||
Unamortized Discount and Deferred Financing Costs, current portion of long-term debt | 8 | ||
Net Carrying Amount, current portion of long-term debt, | (56) | 0 | |
Gross Carrying Amount, excluding current portion of long-term debt | 5,039 | ||
Unamortized Discount and Deferred Financing Fees, excluding current portion of long-term debt | (62) | ||
Net Carrying Amount, excluding current portion of long-term debt | 4,977 | 4,074 | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | 319 | 1,869 | |
Unamortized Discount and Deferred Financing Costs | (3) | (11) | |
Net Carrying Amount | 316 | 1,858 | |
Tranche A Term Loan | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | 2,534 | ||
Unamortized Discount and Deferred Financing Costs | (36) | ||
Net Carrying Amount | 2,498 | ||
2021 Notes | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | 1,500 | 1,500 | $ 1,500 |
Unamortized Discount and Deferred Financing Costs | (20) | (22) | |
Net Carrying Amount | 1,480 | 1,478 | |
2023 Notes | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | 750 | 750 | $ 750 |
Unamortized Discount and Deferred Financing Costs | (11) | (12) | |
Net Carrying Amount | $ 739 | $ 738 |
Debt - Schedule of Maturities (
Debt - Schedule of Maturities (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Maturities of Long-term Debt [Abstract] | ||
2016 (remaining six months) | $ 32 | |
2,017 | 64 | |
2,018 | 64 | |
2,019 | 112 | |
2,020 | 2,581 | |
Thereafter | 2,250 | |
Gross Carrying Amount | $ 5,103 | $ 4,119 |
Debt - Debt Repayments (Details
Debt - Debt Repayments (Details) - USD ($) $ in Millions | Feb. 02, 2016 | Jun. 30, 2016 | Jun. 30, 2015 |
Debt Instrument [Line Items] | |||
Authorized net debt repayments (up to) | $ 1,500 | ||
Repayments of long-term debt | $ 1,566 | $ 250 | |
Credit Facilities | |||
Debt Instrument [Line Items] | |||
Repayments of long-term debt | $ 1,300 |
Accumulated Other Comprehensi48
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | $ 8,068 | |
Other comprehensive income (loss) before reclassifications | (18) | $ (240) |
Amounts reclassified from accumulated other comprehensive income (loss) | 2 | (2) |
Ending balance | 8,554 | |
Foreign currency translation adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (630) | (304) |
Other comprehensive income (loss) before reclassifications | (20) | (245) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Ending balance | (650) | (549) |
Unrealized gain (loss) on forward contracts | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (4) | 0 |
Other comprehensive income (loss) before reclassifications | 2 | 8 |
Amounts reclassified from accumulated other comprehensive income (loss) | 2 | (2) |
Ending balance | 0 | 6 |
Unrealized gain (loss) on available-for-sale securities | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | 1 | 1 |
Other comprehensive income (loss) before reclassifications | 0 | (3) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Ending balance | 1 | (2) |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (633) | (303) |
Ending balance | $ (649) | $ (545) |
Operating Segments and Geogra49
Operating Segments and Geographic Region (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)segment | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment Reporting [Abstract] | |||||
Number of reportable segments | segment | 3 | ||||
Segment Reporting Information [Line Items] | |||||
Net revenues | $ 1,570 | $ 1,044 | $ 3,025 | $ 2,322 | |
Income before income tax expense | 232 | 332 | 693 | 874 | |
Amortization of intangible assets | (203) | (2) | (285) | (3) | |
Interest and other expense (income), net | 65 | 50 | 117 | 100 | |
Income before income tax expense | 167 | 282 | 576 | 774 | |
Long-lived assets | 260 | 260 | $ 189 | ||
Console | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 650 | 559 | 1,415 | 1,317 | |
PC | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 411 | 370 | 811 | 755 | |
Mobile and ancillary | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 454 | 54 | 697 | 141 | |
Other | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 55 | 61 | 102 | 109 | |
Americas | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 860 | $ 551 | 1,613 | $ 1,255 | |
Long-lived assets | $ 147 | $ 147 | 138 | ||
US | Revenues | Geographic Concentration Risk | |||||
Segment Reporting Information [Line Items] | |||||
Revenues as a percentage of consolidated net revenues | 48.00% | 50.00% | 47.00% | 52.00% | |
EMEA | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | $ 507 | $ 388 | $ 1,028 | $ 852 | |
Long-lived assets | $ 98 | $ 98 | 42 | ||
UK | Revenues | Geographic Concentration Risk | |||||
Segment Reporting Information [Line Items] | |||||
Revenues as a percentage of consolidated net revenues | 10.00% | 14.00% | 11.00% | 13.00% | |
Asia Pacific | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | $ 203 | $ 105 | $ 384 | $ 215 | |
Long-lived assets | 15 | 15 | $ 9 | ||
Reportable segments | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 1,554 | 698 | 2,415 | 1,353 | |
Income before income tax expense | 597 | 174 | 849 | 377 | |
Reportable segments | Activision | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 332 | 313 | 692 | 616 | |
Income before income tax expense | 88 | 57 | 187 | 121 | |
Reportable segments | Blizzard | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 738 | 385 | 1,032 | 737 | |
Income before income tax expense | 333 | 117 | 419 | 256 | |
Reportable segments | King | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 484 | 0 | 691 | 0 | |
Income before income tax expense | 176 | 0 | 243 | 0 | |
Other segments [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net revenues | 55 | 61 | 102 | 109 | |
Income before income tax expense | (9) | (1) | (9) | (1) | |
Reconciling items | |||||
Segment Reporting Information [Line Items] | |||||
Net effect from recognition (deferral) of deferred net revenues | (39) | 285 | 508 | 860 | |
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues | (108) | 181 | 261 | 545 | |
Stock-based compensation expense | (41) | (21) | (85) | (44) | |
Amortization of intangible assets | (203) | (1) | (285) | (3) | |
Fees and other expenses related to acquisitions | $ (4) | $ 0 | $ (38) | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 40 | $ 70 | $ 113 | $ 168 |
Effective tax rate (in percent) | 24.00% | 25.00% | 20.00% | 22.00% |
Statutory income tax rate (in percent) | 35.00% | 35.00% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2013 | |
Income Tax [Line Items] | |||||
Income tax expense (benefit) | $ 40 | $ 70 | $ 113 | $ 168 | |
New VH | |||||
Income Tax [Line Items] | |||||
Net operating loss carryforwards | $ 760 | ||||
Net operating loss indemnification amount | 200 | ||||
Net operating loss utilized - New VH NOL | 196 | ||||
Tax benefit related to stock repurchase | 69 | ||||
Tax credit reserve for repurchase of stock | 69 | 69 | |||
Indemnification asset recorded in other assets | 175 | 175 | |||
Indemnification asset recorded in treasury stock | $ 175 | 175 | |||
New VH | Expected | |||||
Income Tax [Line Items] | |||||
Income tax expense (benefit) | $ (266) | ||||
King | |||||
Income Tax [Line Items] | |||||
Uncertain tax positions assumed | $ 77 |
Computation of Basic_Diluted 52
Computation of Basic/Diluted Earnings Per Common Share - Computation EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Numerator: | ||||
Consolidated net income | $ 127 | $ 212 | $ 463 | $ 606 |
Less: Distributed earnings to unvested stock-based awards that participate in earnings | 0 | 0 | (2) | (4) |
Less: Undistributed earnings allocated to unvested stock-based awards that participate in earnings | (1) | (2) | (1) | (5) |
Numerator for basic and diluted earnings per common share — income available to common shareholders | $ 126 | $ 210 | $ 460 | $ 597 |
Denominator: | ||||
Denominator for basic earnings per common share - weighted-average common shares outstanding (in shares) | 739 | 727 | 737 | 725 |
Employee stock options and awards (in shares) | 11 | 8 | 11 | 9 |
Denominator for diluted earnings per common share - weighted-average common shares outstanding plus dilutive common shares under treasury stock method (in shares) | 750 | 735 | 748 | 734 |
Basic earnings (loss) per common share (in dollars per share) | $ 0.17 | $ 0.29 | $ 0.62 | $ 0.82 |
Diluted earnings (loss) per common share (in dollars per share) | $ 0.17 | $ 0.29 | $ 0.61 | $ 0.81 |
Computation of Basic_Diluted 53
Computation of Basic/Diluted Earnings Per Common Share (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Unvested restricted stock rights participating in earnings | 3 | 9 | 3 | 10 |
Performance shares not included in dilutive shares (performance measures not yet met) | 10 | 3 | 10 | 3 |
Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 4 | 1 | 4 | 6 |
Capital Transactions (Details)
Capital Transactions (Details) - 2015 Share Repurchase Program - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Feb. 03, 2015 | |
Share Repurchase Program [Line Items] | ||
Stock repurchase program, dollar amount authorized | $ 750,000,000 | |
Shares of common stock repurchased | 0 | |
Cost of common stock repurchased under the stock repurchase program | $ 0 |
Capital Transactions (Details 2
Capital Transactions (Details 2) - USD ($) $ / shares in Units, $ in Millions | May 27, 2016 | May 11, 2016 | Feb. 02, 2016 | May 29, 2015 | May 13, 2015 | Feb. 03, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Dividends | ||||||||||
Dividends per common share (in dollars per share) | $ 0.26 | $ 0.23 | $ 0 | $ 0 | $ 0.26 | $ 0.23 | ||||
Cash dividend payment | $ 192 | $ 167 | $ 195 | $ 170 | ||||||
Dividend equivalent payment | $ 3 | $ 3 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions | Feb. 23, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 9,771,000,000 | $ 7,095,000,000 | |
King | |||
Business Acquisition [Line Items] | |||
Cash consideration paid (in dollars per share) | $ 18 | ||
Aggregate purchase price | $ 5,828,000,000 | ||
Cash paid to acquire business | 3,600,000,000 | ||
Cash paid to acquire business from debt financing | 2,200,000,000 | ||
Goodwill | 2,678,000,000 | ||
Fair value of King’s existing vested and unvested stock options and awards assumed | $ 98,000,000 | ||
Future expense for converted King unvested options and awards | 71,000,000 | ||
Weighted average service period of acquired options and awards | 2 years | ||
Cash proceeds released to award holders | $ 0 | ||
Weighted average cost of capital percent | 13.00% | ||
Goodwill expected to be deductible for tax purposes | $ 620,000,000 | ||
King | Maximum | |||
Business Acquisition [Line Items] | |||
Long-term revenue decay percent | 65.00% | ||
Royalty rate percent | 8.00% | ||
King | Minimum | |||
Business Acquisition [Line Items] | |||
Long-term revenue decay percent | 0.00% | ||
Royalty rate percent | 0.50% | ||
King | Nonstop Games Oy | |||
Business Acquisition [Line Items] | |||
Fair value of contingent consideration liability assumed | $ 0 | ||
King | Nonstop Games Oy | Maximum | |||
Business Acquisition [Line Items] | |||
Contingent consideration liability assumed | 84,000,000 | ||
King | Nonstop Games Oy | Minimum | |||
Business Acquisition [Line Items] | |||
Contingent consideration liability assumed | 0 | ||
King | Z2Live, Inc | |||
Business Acquisition [Line Items] | |||
Fair value of contingent consideration liability assumed | 0 | ||
King | Z2Live, Inc | Maximum | |||
Business Acquisition [Line Items] | |||
Contingent consideration liability assumed | 75,000,000 | ||
King | Z2Live, Inc | Minimum | |||
Business Acquisition [Line Items] | |||
Contingent consideration liability assumed | $ 0 | ||
King | Stock Option | |||
Business Acquisition [Line Items] | |||
Equity options and awards issued in acquisition (in shares) | 10 | ||
King | Equity Award | |||
Business Acquisition [Line Items] | |||
Equity options and awards issued in acquisition (in shares) | 3 | ||
Fair value of King’s existing vested and unvested stock options and awards assumed | $ 76,000,000 | ||
King | Deferred Cash Award | |||
Business Acquisition [Line Items] | |||
Fair value of King’s existing vested and unvested stock options and awards assumed | 22,000,000 | ||
Future expense for converted King unvested options and awards | 9,000,000 | ||
King | Long-term debt, net | |||
Business Acquisition [Line Items] | |||
Debt discount and issuance costs | $ 38,000,000 | ||
King | General and administrative | |||
Business Acquisition [Line Items] | |||
Acquisition costs | $ 38,000,000 |
Acquisitions - Purchase Price C
Acquisitions - Purchase Price Composition (Details) - King $ / shares in Units, $ in Millions | Feb. 23, 2016USD ($)$ / shares |
Business Acquisition [Line Items] | |
Cash consideration for outstanding King common stock and vested equity options and awards | $ 5,730 |
Fair value of King’s existing vested and unvested stock options and awards assumed | 98 |
Total purchase price | $ 5,828 |
Cash consideration paid (in dollars per share) | $ / shares | $ 18 |
Volatility percent | 36.00% |
Expected dividend yield | 0.90% |
Minimum | |
Business Acquisition [Line Items] | |
Expected life | 1 month 15 days |
Maximum | |
Business Acquisition [Line Items] | |
Expected life | 7 years 7 months 15 days |
Acquisitions - Preliminary Purc
Acquisitions - Preliminary Purchase Price Allocation (Details) - USD ($) $ in Millions | Feb. 23, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 9,771 | $ 7,095 | |
Minimum | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 3 years | 11 years | |
Minimum | Customer base | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 2 years | ||
Minimum | Developed software | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 3 years | 5 years | |
Maximum | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 11 years | 11 years | |
Maximum | Customer base | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 2 years | ||
Maximum | Developed software | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 5 years | 5 years | |
King | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 1,151 | ||
Accounts receivable | 162 | ||
Other current assets | 72 | ||
Property and equipment | 57 | ||
Deferred income tax assets, net | 27 | ||
Other assets | 47 | ||
Accounts payable | (9) | ||
Accrued expense and other liabilities | (272) | ||
Other liabilities | (113) | ||
Deferred income tax liabilities, net | (52) | ||
Goodwill | 2,678 | ||
Total purchase price | 5,828 | ||
King | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Intangible assets | 845 | ||
King | Customer base | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 609 | ||
Estimated useful life | 2 years | ||
King | Developed software | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 580 | ||
King | Trademark | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 46 | ||
Estimated useful life | 7 years | ||
King | Minimum | |||
Business Acquisition [Line Items] | |||
Useful life | 2 years | ||
King | Minimum | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 3 years | ||
King | Minimum | Developed software | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 3 years | ||
King | Maximum | |||
Business Acquisition [Line Items] | |||
Useful life | 7 years | ||
King | Maximum | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 5 years | ||
King | Maximum | Developed software | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 4 years |
Acquisitions - Pro Forma Inform
Acquisitions - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
King | ||||
Business Acquisition [Line Items] | ||||
Net revenues | $ 458 | $ 641 | ||
Net loss | (49) | (99) | ||
Net revenues | 1,570 | $ 1,540 | 3,305 | $ 3,389 |
Net income | $ 140 | $ 168 | $ 470 | $ 548 |
Basic earnings per common share (in dollars per share) | $ 0.19 | $ 0.23 | $ 0.63 | $ 0.74 |
Diluted earnings per common share (in dollars per share) | $ 0.19 | $ 0.22 | $ 0.62 | $ 0.73 |
Acquisition-related Costs [Member] | ||||
Business Acquisition [Line Items] | ||||
Non-recurring acquisition related costs | $ 64 | $ 64 |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Increase in weighted-average dilutive shares outstanding (in shares) | 750 | 735 | 748 | 734 |
Change in diluted earnings per share (in dollars per share) | $ 0.17 | $ 0.29 | $ 0.61 | $ 0.81 |
Pro Forma | New Accounting Pronouncement, Early Adoption, Effect [Member] | Potential Adjustments For ASU 2016-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Windfall tax benefits as a reduction to income tax expense | $ 24 | $ 51 | ||
Increase in weighted-average dilutive shares outstanding (in shares) | 3 | 3 | ||
Change in diluted earnings per share (in dollars per share) | $ 0.03 | $ 0.07 | ||
Increase in net cash provided by operating activities | $ 52 | |||
Decrease in net cash provided by (used in) financing activities | $ (52) |