Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 27, 2017 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Activision Blizzard, Inc. | |
Entity Central Index Key | 718,877 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 753,662,407 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 3,248 | $ 3,245 |
Accounts receivable, net of allowances of $137 and $261, at March 31, 2017 and December 31, 2016, respectively | 344 | 732 |
Inventories, net | 48 | 49 |
Software development | 370 | 412 |
Other current assets | 346 | 392 |
Total current assets | 4,356 | 4,830 |
Software development | 74 | 54 |
Property and equipment, net | 245 | 258 |
Deferred income taxes, net | 371 | 283 |
Other assets | 439 | 401 |
Intangible assets, net | 1,673 | 1,858 |
Goodwill | 9,763 | 9,768 |
Total assets | 16,921 | 17,452 |
Current liabilities: | ||
Accounts payable | 150 | 222 |
Deferred revenues | 1,153 | 1,628 |
Accrued expenses and other liabilities | 936 | 806 |
Total current liabilities | 2,239 | 2,656 |
Long-term debt, net | 4,393 | 4,887 |
Deferred income taxes, net | 41 | 44 |
Other liabilities | 812 | 746 |
Total liabilities | 7,485 | 8,333 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, $0.000001 par value, 2,400,000,000 shares authorized, 1,182,228,464 and 1,174,163,069 shares issued at March 31, 2017 and December 31, 2016, respectively | 0 | 0 |
Additional paid-in capital | 10,555 | 10,442 |
Less: Treasury stock, at cost, 428,676,471 shares at March 31, 2017 and December 31, 2016 | (5,563) | (5,563) |
Retained earnings | 5,069 | 4,869 |
Accumulated other comprehensive loss | (625) | (629) |
Total shareholders' equity | 9,436 | 9,119 |
Total liabilities and shareholders' equity | $ 16,921 | $ 17,452 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable allowances | $ 137 | $ 261 |
Common stock, par value (in dollars per share) | $ 0.000001 | $ 0.000001 |
Common stock, shares authorized (in shares) | 2,400,000,000 | 2,400,000,000 |
Common stock, shares issued (in shares) | 1,182,228,464 | 1,174,163,069 |
Treasury stock, shares (in 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 | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Net revenues | ||
Product sales | $ 509 | $ 645 |
Subscription, licensing, and other revenues | 1,217 | 810 |
Total net revenues | 1,726 | 1,455 |
Costs and expenses | ||
Cost of revenues, product sales - product costs | 143 | 169 |
Cost of revenues, product sales - software royalties, amortization, and intellectual property licenses | 88 | 128 |
Cost of revenues, subs/licensing/other - game ops and distribution costs | 232 | 142 |
Cost of revenues, subs/licensing/other - software royalties, amortization, and intellectual property licenses | 122 | 52 |
Product development | 225 | 175 |
Sales and marketing | 246 | 168 |
General and administrative | 177 | 160 |
Total costs and expenses | 1,233 | 994 |
Operating income | 493 | 461 |
Interest and other expense (income), net | 40 | 52 |
Income before income tax expense | 453 | 409 |
Income tax expense | 27 | 46 |
Net income | $ 426 | $ 363 |
Earnings per common share | ||
Basic (in dollars per share) | $ 0.57 | $ 0.49 |
Diluted (in dollars per share) | $ 0.56 | $ 0.48 |
Weighted-average number of shares outstanding | ||
Basic (in shares) | 749 | 735 |
Diluted (in shares) | 761 | 749 |
Dividends per common share (in dollars per share) | $ 0.30 | $ 0.26 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 426 | $ 363 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 19 | (5) |
Unrealized gains (losses) on forward contracts designated as hedges, net of tax | (15) | (5) |
Total other comprehensive income (loss) | 4 | (10) |
Comprehensive income | $ 430 | $ 353 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Cash flows from operating activities: | |||
Net income | $ 426 | $ 363 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Deferred income taxes | (80) | (63) | |
Provision for inventories | 1 | 11 | |
Depreciation and amortization | 224 | 107 | |
Amortization of capitalized software development costs and intellectual property licenses | [1] | 89 | 124 |
Amortization of debt discount, financing costs, and non-cash write-off due to extinguishment of debt | 7 | 4 | |
Share-based compensation expense | [2] | 33 | 34 |
Other | 14 | 0 | |
Changes in operating assets and liabilities, net of effect from business acquisitions: | |||
Accounts receivable, net | 396 | 459 | |
Inventories | 2 | 14 | |
Software development and intellectual property licenses | (67) | (104) | |
Other assets | (3) | 83 | |
Deferred revenues | (494) | (508) | |
Accounts payable | (76) | (184) | |
Accrued expenses and other liabilities | (61) | (3) | |
Net cash provided by operating activities | 411 | 337 | |
Cash flows from investing activities: | |||
Acquisition of King, net of cash acquired (see Note 14) | 0 | (4,588) | |
Release of cash in escrow | 0 | 3,561 | |
Capital expenditures | (21) | (27) | |
Other investing activities | (2) | (14) | |
Net cash used in investing activities | (23) | (1,068) | |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock to employees | 109 | 24 | |
Tax payment related to net share settlements on restricted stock units | (13) | (11) | |
Proceeds from debt issuances, net of discounts | 2,551 | 2,520 | |
Repayment of long-term debt | (3,051) | (750) | |
Debt financing costs related to debt issuances | 0 | (4) | |
Net cash (used in) provided by financing activities | (404) | 1,779 | |
Effect of foreign exchange rate changes on cash and cash equivalents | 19 | 1 | |
Net increase in cash and cash equivalents | 3 | 1,049 | |
Cash and cash equivalents at beginning of period | 3,245 | 1,823 | |
Cash and cash equivalents at end of period | $ 3,248 | $ 2,872 | |
[1] | Excludes deferral and amortization of share-based compensation expense. | ||
[2] | Includes the net effects of capitalization, deferral, and amortization of share-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, 2015 | $ (633) | |||||
Components of comprehensive income: | ||||||
Net income | $ 363 | |||||
Other comprehensive income (loss) | (10) | |||||
Ending balance at Mar. 31, 2016 | (643) | |||||
Beginning balance at Dec. 31, 2016 | 9,119 | $ 0 | $ (5,563) | $ 10,442 | $ 4,869 | (629) |
Balance (in shares) at Dec. 31, 2016 | 1,174 | (429) | ||||
Components of comprehensive income: | ||||||
Net income | 426 | 426 | ||||
Other comprehensive income (loss) | 4 | 4 | ||||
Issuance of common stock pursuant to employee stock options | 111 | 111 | ||||
Issuance of common stock pursuant to employee stock options (in shares) | 7 | |||||
Issuance of common stock pursuant to restricted stock units | 0 | 0 | ||||
Issuance of common stock pursuant to restricted stock units (in shares) | 2 | |||||
Restricted stock surrendered for employees’ tax liability | (29) | (29) | ||||
Restricted stock surrendered for employees' tax liability (in shares) | (1) | |||||
Share-based compensation expense related to employee stock options and restricted stock rights | 31 | 31 | ||||
Dividends ($0.30 per common share) | (226) | (226) | ||||
Ending balance at Mar. 31, 2017 | $ 9,436 | $ 0 | $ (5,563) | $ 10,555 | $ 5,069 | $ (625) |
Balance (in shares) at Mar. 31, 2017 | 1,182 | (429) |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | Feb. 02, 2017 | Feb. 02, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends per common share (in dollars per share) | $ 0.30 | $ 0.26 | $ 0.30 | $ 0.26 |
Description of Business and Bas
Description of Business and Basis of Consolidation and Presentation | 3 Months Ended |
Mar. 31, 2017 | |
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. is a leading global developer and publisher of interactive entertainment content and services. We develop and distribute content and services across all of the major gaming platforms, including video game consoles, personal computers (“PC”), and mobile devices. The terms “Activision Blizzard,” the “Company,” “we,” “us,” and “our” are used to refer collectively to Activision Blizzard, Inc. and its subsidiaries. The Company was originally incorporated in California in 1979 and was reincorporated in Delaware in December 1992. We are the result of the 2008 business combination (the “Business Combination”) by and among the Company (then known as Activision, Inc.), Vivendi S.A. (“Vivendi”), and Vivendi Games, Inc. (“Vivendi Games”), an indirect wholly-owned subsidiary of Vivendi. In connection with the consummation of the Business Combination, Activision, Inc., was renamed Activision Blizzard, Inc. The common stock of Activision Blizzard is traded on The NASDAQ Stock Market under the ticker symbol “ATVI.” The King Acquisition On February 23, 2016 (the “King Closing Date”), we acquired King Digital Entertainment, a leading interactive mobile entertainment company (“King”), by purchasing all of its outstanding shares (the “King Acquisition”), as further described in Note 14. Our condensed consolidated financial statements include the operations of King commencing on the King Closing Date. Our Segments Based upon our organizational structure, we conduct our business through three reportable segments as follows: (i) Activision Publishing, Inc. Activision Publishing, Inc. (“Activision”) is a leading global developer and publisher of interactive software products and entertainment content, particularly in console gaming. Activision primarily delivers content through retail channels or digital downloads, including full-game sales and in-game purchases, as well as licenses of software to third-party or related-party companies that distribute Activision products. Activision develops, markets, and sells products which are principally based on our internally-developed intellectual properties, as well as some licensed properties. Additionally, we have established a long-term alliance with Bungie to publish its game universe, Destiny. Activision’s key product franchises include: Call of Duty ® , a first-person shooter for the console and PC platforms; Destiny, an online universe of first-person action gameplay (which we call a “shared-world shooter”) for console platforms; and Skylanders ® , a franchise geared towards children that brings physical toys to life digitally in the game, primarily for console platforms. (ii) Blizzard Entertainment, Inc. Blizzard Entertainment, Inc. ("Blizzard") is a leading global developer and publisher of interactive software products and entertainment content, particularly in PC gaming. Blizzard primarily delivers content through retail channels or digital downloads, including subscriptions, full-game sales, and in-game purchases, as well as licenses of software to third-party or related party companies that distribute Blizzard products. Blizzard also maintains a proprietary online gaming service which facilitates digital distribution of Blizzard content, online social connectivity across all Blizzard games, and the creation of user-generated content for Blizzard’s games. Blizzard’s key product franchises include: World of Warcraft ® , a subscription-based massive multi-player online role-playing game for the PC; StarCraft ® , a real-time strategy PC franchise; Diablo ® , an action role-playing franchise for PC and console platforms; Hearthstone ® , an online collectible card franchise for the PC and mobile platforms; Heroes of the Storm ® , a free-to-play team brawler for the PC; and Overwatch ® , a team-based first person shooter for the PC and console platforms. (iii) King Digital Entertainment King is a leading global developer and publisher of interactive entertainment content and services, particularly on mobile platforms, such as Android and iOS. King also distributes its content and services on online social platforms, such as Facebook and the king.com websites. King’s games are free-to-play, however, players can acquire in-game virtual items, either with virtual currency the players purchase or directly using real currency. King’s key product franchises, all of which are for the PC and mobile platforms, include: Candy Crush™, which features “match three” games; Farm Heroes™, which also features “match three” games; Pet Rescue™, which is a “clicker” game; and Bubble Witch™, which features “bubble shooter” games. (iv) Other We also engage in other businesses that do not represent reportable segments, including: • the Major League Gaming ("MLG") business, which is devoted to esports and builds on our competitive gaming efforts by creating ways to deliver best-in-class fan experiences across games, platforms, and geographies with a long-term strategy of monetization through advertising, sponsorships, tournaments and leagues, and premium content; • the Activision Blizzard Studios (“Studios”) business, which is devoted to creating original film and television content based on our library of globally recognized intellectual properties, and which, in October 2016, released the first season of the animated TV series Skylanders ™ Academy on Netflix; and • the Activision Blizzard Distribution (“Distribution”) business, which consists of operations in Europe that provide warehousing, logistics, 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, 2016 . 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. Certain reclassifications have been made to prior year amounts to conform to the current period presentation. The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. Cost of Revenues Presentation In periods prior to the second quarter of 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." Commencing with the second quarter of 2016, we have revised the presentation in our condensed consolidated statements of operations 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. 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 the 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 fees, 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 the amortization of intangible assets recognized in purchase accounting attributable to subscription, licensing, and other revenues. Prior periods have been reclassified to conform to this current presentation. Supplemental Cash Flow Information: Non-cash investing and financing activities For the three months ended March 31, 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. As of March 31, 2017 and 2016, we also had the following amounts recorded within "Accrued expenses and other liabilities" associated with investing and financing activities: • dividends payable of $226 million and $195 million , respectively; and • accrued withholding tax payments related to net share settlements on restricted stock units of $17 million and $45 million , respectively. |
Inventories, Net
Inventories, Net | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | Inventories, Net Our inventories, net consist of the following (amounts in millions): At March 31, 2017 At December 31, 2016 Finished goods $ 44 $ 40 Purchased parts and components 4 9 Inventories, net $ 48 $ 49 At March 31, 2017 , and December 31, 2016 , inventory reserves were $33 million and $45 million, respectively . |
Software Development and Intell
Software Development and Intellectual Property Licenses | 3 Months Ended |
Mar. 31, 2017 | |
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 (amounts in millions): At March 31, 2017 At December 31, 2016 Internally-developed software costs $ 246 $ 277 Payments made to third-party software developers 198 189 Total software development costs $ 444 $ 466 As of March 31, 2017 and December 31, 2016, intellectual property licenses were not material to our condensed consolidated balance sheets. Amortization of capitalized software development costs and intellectual property licenses was as follows (amounts in millions): 23 For the Three Months Ended March 31, 2017 2016 Amortization of capitalized software development costs and intellectual property licenses $ 93 $ 132 |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets, Net | Intangible Assets, Net Intangible assets, net consist of the following (amounts in millions): At March 31, 2017 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: Internally-developed franchises 3 - 11 years $ 1,154 $ (654 ) $ 500 Developed software 2 - 5 years 601 (185 ) 416 Customer base 2 years 617 (343 ) 274 Trade names 7 - 10 years 54 (10 ) 44 Other 1 - 8 years 18 (12 ) 6 Total definite-lived intangible assets $ 2,444 $ (1,204 ) $ 1,240 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 1,673 At December 31, 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 $ (583 ) $ 571 Developed software 3 - 5 years 595 (145 ) 450 Customer base 2 years 617 (266 ) 351 Trade names 7 - 10 years 54 (8 ) 46 Other 1 - 8 years 18 (11 ) 7 Total definite-lived intangible assets $ 2,438 $ (1,013 ) $ 1,425 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 1,858 Amortization expense of intangible assets was $190 million and $82 million for the three months ended March 31, 2017 and 2016, respectively . At March 31, 2017 , future amortization of definite-lived intangible assets is estimated as follows (amounts in millions): 2017 (remaining nine months) $ 568 2018 364 2019 216 2020 72 2021 11 Thereafter 9 Total $ 1,240 |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2017 , are as follows (amounts in millions): Activision Blizzard King Other Total Balance at December 31, 2016 $ 6,903 $ 178 $ 2,675 $ 12 $ 9,768 Other (5 ) — — — (5 ) Balance at March 31, 2017 $ 6,898 $ 178 $ 2,675 $ 12 $ 9,763 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial Accounting Standards Board (“FASB”) literature regarding fair value measurements for certain 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 of our financial assets and liabilities 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, generally including money market funds, treasury bills, available-for-sale and derivative financial instruments, and other investments (amounts in millions): Fair Value Measurements at March 31, 2017 Using As of March 31, 2017 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 $ 2,923 $ 2,923 $ — $ — Cash and cash equivalents Foreign government treasury bills 43 43 — — Cash and cash equivalents Foreign currency forward contracts designated as hedges 12 — 12 — Other current assets Auction rate securities (“ARS”) 9 — — 9 Other assets Total recurring fair value measurements $ 2,987 $ 2,966 $ 12 $ 9 Financial liabilities: Foreign currency forward contracts designated as hedges $ (1 ) $ — $ (1 ) $ — Accrued expenses and other liabilities Fair Value Measurements at December 31, 2016 Using As of December 31, 2016 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 $ 2,921 $ 2,921 $ — $ — Cash and cash equivalents Foreign government treasury bills 38 38 — — Cash and cash equivalents Foreign currency forward contracts designated as hedges 22 — 22 — Other current assets ARS 9 — — 9 Other assets Total recurring fair value measurements $ 2,990 $ 2,959 $ 22 $ 9 ARS represented the only level 3 investment held by the Company. The fair value of these investments did not change during the three months ended March 31, 2017 . Foreign Currency Forward Contracts Foreign Currency Forward Contracts Not Designated as Hedges At March 31, 2017 and December 31, 2016, we did not have any outstanding foreign currency forward contracts not designated as hedges. Foreign Currency Forward Contracts Designated as Hedges ("Cash Flow Hedges") At March 31, 2017 , the gross notional amount of outstanding Cash Flow Hedges was approximately $352 million . The fair value of these contracts, all of which have remaining maturities of 12 months or less, was $11 million of net unrealized gains. Additionally, at March 31, 2017 , we had $3 million of net realized but unrecognized gains recorded within “Accumulated other comprehensive income (loss)” associated with contracts that had settled but were deferred and will be amortized into earnings, along with the associated hedged revenues. Such amounts will be reclassified into earnings within the next 12 months. At December 31, 2016 , the gross notional amount of outstanding Cash Flow Hedges was approximately $346 million . The fair value of these contracts was $22 million of net unrealized gains as of December 31, 2016. During the three months ended March 31, 2017 and 2016 , there was no ineffectiveness relating to our Cash Flow Hedges and the amount of pre-tax net realized gains associated with these contracts that were reclassified out of “Accumulated other comprehensive income (loss)” and into earnings 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 months ended March 31, 2017 and 2016 , there were no impairment charges related to assets that are measured on a non-recurring basis. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Credit Facilities At December 31, 2016, we had outstanding term loans "A" of approximately $2.7 billion (the “2016 TLA”) and $250 million available under a revolving credit facility (the “Revolver”) pursuant to a credit agreement executed on October 11, 2013 (as amended thereafter and from time to time, the "Credit Agreement"). On February 3, 2017, we entered into a sixth amendment (the "Sixth Amendment") to the Credit Agreement. The Sixth Amendment (i) provided for a new tranche of term loans “A” in an aggregate principal amount of $2.55 billion (the “2017 TLA” and, together with the Revolver, the “Credit Facilities”) and (ii) released each of our subsidiary guarantors from their respective guarantees provided under the Credit Agreement. All proceeds of the 2017 TLA, together with additional cash on hand of $139 million , were used to fully retire the 2016 TLA, including all accrued and unpaid interest thereon. The terms of the 2017 TLA, other than the absence of the subsidiary guarantees, are generally the same as the terms of the 2016 TLA. The fees incurred as a result of the Sixth Amendment were not material. At March 31, 2017, the 2017 TLA bore interest at 2.23% . The 2017 TLA will mature on August 23, 2021. We were in compliance with the terms of the Credit Facilities as of March 31, 2017 . During the three months ended March 31, 2017, we reduced our total outstanding term loan balances by $500 million , comprised of $139 million of cash used to retire the 2016 TLA, as discussed above, and a $361 million cash prepayment on the 2017 TLA. As a result of our payments, we satisfied the remaining required quarterly principal repayments for the entire term of the Credit Agreement. To date, we have not drawn on the Revolver. Refer to Note 11 contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for further details regarding our Credit Agreement, key terms, and amendments made to our Credit Agreement. Unsecured Senior Notes At March 31, 2017 and December 31, 2016, we had the following unsecured senior notes outstanding: • $750 million of 6.125% unsecured senior notes due September 2023 that we issued on September 19, 2013 (the “2023 Notes”), in a private offering made in accordance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"); and • $650 million of 2.3% unsecured senior notes due September 2021 (the “2021 Notes”) and $850 million of 3.4% unsecured senior notes due September 2026 (the “2026 Notes” and, together with the 2021 Notes and the 2023 Notes, the “Notes”) that we issued on September 19, 2016, in a private offering made in accordance with Rule 144A and Regulation S under the Securities Act. In connection with the issuance of the 2021 Notes and the 2026 Notes, we entered into a registration rights agreement (the “Registration Rights Agreement”), among the Company, the Guarantors, and the representatives of the initial purchasers of the 2021 Notes and the 2026 Notes. Under the Registration Rights Agreement, we are required to use commercially reasonable efforts to within one year of the issue date of the 2021 Notes and the 2026 Notes, among other things, (1) file a registration statement with respect to an offer to exchange each series of the 2021 Notes and the 2026 Notes for new notes that are substantially identical in all material respects (except for the provisions relating to the transfer restrictions and payment of additional interest) (the "Exchange Offer"), and (2) cause the registration statement (the "Exchange Offer Registration Statement") to be declared effective by the SEC under the Securities Act. The Exchange Offer Registration Statement was declared effective by the SEC on April 28, 2017 and the Company commenced the Exchange Offer on May 1, 2017. 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. As of December 31, 2016, the Notes were guaranteed on a senior basis by certain of our U.S. subsidiaries. Pursuant to the terms of the indentures underlying the Notes, the guarantees by certain subsidiaries were automatically released when the 2017 TLA guarantees were removed in connection with the Sixth Amendment to the Credit Agreement. The Notes are not secured and are effectively subordinated to any of the Company’s existing and future indebtedness that is secured. The Company was in compliance with the terms of the Notes as of March 31, 2017. Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year, and is recorded within “Accrued expenses and other liabilities” in our condensed consolidated balance sheets. As of March 31, 2017 and December 31, 2016, we had accrued interest payable of $4 million and $25 million , respectively, related to the Notes recorded within “Accrued expenses and other liabilities” in our condensed consolidated balance sheets. Refer to Note 11 contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for further details regarding our key terms under our indentures that govern the Notes. Interest Expense And Financing Costs Fees and discounts associated with the closing of our debt instruments 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. For the three months ended March 31, 2017 , interest expense was $35 million , amortization of the debt discount and deferred financing costs was $7 million , and commitment fees for the Revolver were not material. For the three months ended March 31, 2016 , interest expense was $53 million , amortization of the debt discount and deferred financing costs was $4 million , and commitment fees for the Revolver were not material. A summary of our debt is as follows (amounts in millions): At March 31, 2017 Gross Carrying Amount Unamortized Net Carrying 2017 TLA $ 2,190 $ (22 ) $ 2,168 2021 Notes 650 (5 ) 645 2023 Notes 750 (10 ) 740 2026 Notes 850 (10 ) 840 Total long-term debt $ 4,440 $ (47 ) $ 4,393 At December 31, 2016 Gross Carrying Unamortized Net Carrying 2016 TLA $ 2,690 $ (27 ) $ 2,663 2021 Notes 650 (5 ) 645 2023 Notes 750 (11 ) 739 2026 Notes 850 (10 ) 840 Total long-term debt $ 4,940 $ (53 ) $ 4,887 As of March 31, 2017 , 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, 2017 (remaining nine months) $ — 2018 — 2019 — 2020 — 2021 2,840 Thereafter 1,600 Total $ 4,440 As of March 31, 2017 , and December 31, 2016 , the carrying values of the 2017 TLA and the 2016 TLA approximate their 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, 2023 Notes, and 2026 Notes were $636 million , $812 million , and $830 million , respectively, as of March 31, 2017 . Based on Level 2 inputs, the fair values of the 2021 Notes, 2023 Notes, and 2026 Notes were $635 million , $818 million , $808 million , respectively, as of December 31, 2016 . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 and 2016 , were as follows (amounts in millions): For the Three Months Ended March 31, 2017 Foreign currency translation adjustments Unrealized gain (loss) on forward contracts Unrealized gain (loss) on available-for-sale securities Total Balance at December 31, 2016 $ (659 ) $ 29 $ 1 $ (629 ) Other comprehensive income (loss) before reclassifications 3 (9 ) — (6 ) Amounts reclassified from accumulated other comprehensive income (loss) into earnings 16 (6 ) — 10 Balance at March 31, 2017 $ (640 ) $ 14 $ 1 $ (625 ) For the Three Months Ended March 31, 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 (5 ) (6 ) — (11 ) Amounts reclassified from accumulated other comprehensive income (loss) into earnings — 1 — 1 Balance at March 31, 2016 $ (635 ) $ (9 ) $ 1 $ (643 ) 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 | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Operating Segments and Geographic Region | Operating Segments and Geographic Region Currently, we have three reportable segments. Our operating segments are consistent with the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). 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; share-based compensation expense; amortization of intangible assets as a result of purchase price accounting; and fees and other expenses (including legal fees, expenses, and accruals) related to acquisitions, associated integration activities, and financings; certain restructuring costs; and other non-cash charges. The CODM does not review any information regarding total assets on an operating segment basis, and accordingly, no disclosure is made with respect thereto. Our operating segments are also consistent with our internal organization structure, the way we assess operating performance and allocate resources, and the availability of separate financial information. We do not aggregate operating segments. Information on the reportable segments and reconciliations of total segment net revenues and total segment operating income to consolidated net revenues from external customers and consolidated income before income tax expense for the three months ended March 31, 2017 and 2016 are presented below (amounts in millions): For the Three Months Ended March 31, 2017 2016 2017 2016 Net revenues Operating income and income before income tax expense Activision $ 215 $ 360 $ 24 $ 99 Blizzard 441 294 166 86 King 474 207 166 67 Reportable segments total 1,130 861 356 252 Reconciliation to consolidated net revenues / consolidated income before income tax expense: Other segments (1) 66 47 (5 ) — Net effect from recognition (deferral) of deferred net revenues and related cost of revenues 530 547 396 369 Share-based compensation expense — — (33 ) (44 ) Amortization of intangible assets — — (190 ) (82 ) Fees and other expenses related to the King Acquisition (2) — — (4 ) (34 ) Restructuring costs (3) — — (11 ) — Other non-cash charges (4) — — (16 ) — Consolidated net revenues / operating income $ 1,726 $ 1,455 $ 493 $ 461 Interest and other expense (income), net 40 52 Consolidated income before income tax expense $ 453 $ 409 (1) Other segments include other income and expenses from operating segments managed outside the reportable segments, including our MLG, Studios, and Distribution businesses. Other segments also include unallocated corporate income and expenses. (2) Reflects fees and other expenses, such as legal, banking and professional services fees, primarily related to the King Acquisition and associated integration activities, inclusive of related debt financings. (3) Reflects restructuring charges incurred, primarily severance costs. (4) Reflects a non-cash accounting charge to reclassify certain cumulative translation losses into earnings due to the substantial liquidation of certain of our foreign entities. Geographic information presented below for the three months ended March 31, 2017 and 2016 , 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 March 31, 2017 2016 Net revenues by geographic region: Americas $ 929 $ 753 EMEA (1) 554 521 Asia Pacific 243 181 Total consolidated net revenues $ 1,726 $ 1,455 (1) EMEA consists of the Europe, Middle East, and Africa geographic regions. The Company's net revenues in the U.S. were 47% and 49% of consolidated net revenues for the three months ended March 31, 2017 and 2016, respectively . The Company's net revenues in the U.K. were 10% and 11% of consolidated net revenues for the three months ended March 31, 2017 and 2016, respectively . No other country's net revenues exceeded 10% of consolidated net revenues for the three months ended March 31, 2017 or 2016 . Net revenues by platform were as follows (amounts in millions): For the Three Months Ended March 31, 2017 2016 Net revenues by platform: Console $ 615 $ 765 PC 566 400 Mobile and ancillary (1) 475 243 Other (2) 70 47 Total consolidated net revenues $ 1,726 $ 1,455 (1) Net revenues from mobile and ancillary include revenues from mobile devices, as well as non-platform specific game-related revenues, such as standalone sales of toys and accessories from our Skylanders franchise and other physical merchandise and accessories. (2) Net revenues from Other include revenues from our MLG, Studios, and Distribution businesses. Long-lived assets by geographic region at March 31, 2017 and December 31, 2016 , were as follows (amounts in millions): At March 31, 2017 At December 31, 2016 Long-lived assets (1) by geographic region: Americas $ 147 $ 154 EMEA 80 87 Asia Pacific 18 17 Total long-lived assets by geographic region $ 245 $ 258 (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 | 3 Months Ended |
Mar. 31, 2017 | |
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; recognition of excess tax benefits and tax deficiencies from share-based payments; 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 $27 million for the three months ended March 31, 2017 , reflects an effective tax rate of 6% , which is lower than the effective tax rate of 11% for the three months ended March 31, 2016 . The decrease is due to increased excess tax benefits from share-based payments, partially offset by proportionately more earnings generated in jurisdictions that have higher statutory tax rates and an increase of reserves for uncertain tax positions. The effective tax rate of 6% for the three months ended March 31, 2017 is lower than the US statutory rate of 35% , primarily due to foreign earnings taxed at lower statutory rates, the recognition of excess tax benefits from share-based payments, and the recognition of federal and California research and development credits, partially offset by an increase of reserves for uncertain tax positions. 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. The Company also has several state level and non-U.S. audits pending. As part of purchase price accounting for the King Acquisition, the Company assumed $74 million of uncertain tax positions, primarily related to the transfer pricing on King tax years occurring prior to the King Acquisition. The Company is currently in negotiations with the relevant jurisdictions and taxing authorities with respect to King’s transfer pricing, 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 resolution of the 2008 IRS Appeals process did not have a material impact to the Company’s condensed 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. 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. |
Computation of Basic_Diluted Ea
Computation of Basic/Diluted Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 2016 Numerator: Consolidated net income $ 426 $ 363 Less: Distributed earnings to unvested share-based awards that participate in earnings — (2 ) Less: Undistributed earnings allocated to unvested share-based awards that participate in earnings — (1 ) Numerator for basic and diluted earnings per common share—income available to common shareholders $ 426 $ 360 Denominator: Denominator for basic earnings per common share—weighted-average common shares outstanding 749 735 Effect of potential dilutive common shares under the treasury stock method: Employee stock options and awards 12 14 Denominator for diluted earnings per common share—weighted-average common shares outstanding plus dilutive common shares under the treasury stock method 761 749 Basic earnings per common share $ 0.57 $ 0.49 Diluted earnings per common share $ 0.56 $ 0.48 Certain of our unvested restricted stock units meet 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 months ended March 31, 2017 and 2016, on a weighted-average basis, we had outstanding unvested restricted stock units of less than a million and 4 million shares of common stock, respectively, that are participating in earnings. Certain of our employee-related restricted stock units 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 9 million and 10 million shares are not included in the computation of diluted earnings per share for the three months ended March 31, 2017 and 2016, respectively, 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 5 million and 6 million shares of common stock were not included in the calculation of diluted earnings per common share for the three months ended March 31, 2017 and 2016, respectively, as the effect of their inclusion would be anti-dilutive. |
Capital Transactions
Capital Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Capital Transactions | Capital Transactions Repurchase Program On February 2, 2017, our Board of Directors authorized a stock repurchase program under which we are authorized to repurchase up to $1 billion of our common stock during the two-year period from February 13, 2017 through February 12, 2019. As of March 31, 2017 , we have not repurchased any shares under this program. Dividends On February 2, 2017, our Board of Directors approved a cash dividend of $0.30 per common share. Such dividend is payable on May 10, 2017, to shareholders of record at the close of business on March 30, 2017. We have recorded $226 million of dividends payable in "Accrued expenses and other liabilities" on our condensed consolidated balance sheet as of March 31, 2017. On February 2, 2016, our Board of Directors declared a cash dividend of $0.26 per common share. On May 11, 2016, we made an aggregate cash dividend payment of $192 million to shareholders of record at the close of business on March 30, 2016. On May 27, 2016, we made related dividend equivalent payments of $3 million to certain holders of restricted stock units. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings 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 | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions King Digital Entertainment On February 23, 2016, we completed the King Acquisition, purchasing all of King's outstanding shares. As a result, King became a wholly-owned subsidiary of Activision Blizzard. King is a leading global developer and publisher of interactive entertainment content and services, particularly on mobile platforms, such as Android and iOS, and on online and social platforms, such as Facebook and the 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 positions us as a global leader in interactive entertainment across console, PC, and mobile 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. We 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 final 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 expenses and other liabilities (272 ) Other liabilities (110 ) 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 Trade name 46 7 years Goodwill 2,675 Total purchase price $ 5,828 During the three months ended March 31, 2016 , the Company incurred $34 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. Share-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 stock options and equity awards of 10 million and 3 million , respectively, were issued. 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 December 31, 2016 , the future expense for the converted King unvested stock options and equity awards was approximately $40 million , which will be recognized over a weighted average service period of approximately 1.6 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 occurring as future services are rendered in accordance with the awards' original vesting schedules. 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. Identifiable Intangible Assets Acquired and Goodwill The internally-developed franchises, customer base, developed software, and trade name 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. 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 three months ended March 31, 2016 , the period of the King Acquisition, 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. (in millions) For the Three Months Ended March 31, 2016 Net revenues $ 183 Net loss $ (50 ) Pro Forma Financial Information The unaudited financial information in the table below summarizes the combined results of operations of the Company and King for the three months ended March 31, 2016 , on a pro forma basis, as though the acquisition had occurred on January 1, 2015. The 2016 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 $60 million for the three months ended March 31, 2016 . The unaudited 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. (in millions) For the Three Months Ended March 31, 2016 Net revenues $ 1,735 Net income $ 329 Basic earnings per common share $ 0.44 Diluted earnings per common share $ 0.44 |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements Recently adopted accounting pronouncements 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. We adopted this new standard as of January 1, 2017, and applied it prospectively. The adoption of this guidance did not have a material impact on our financial statements. Recent accounting pronouncements not yet adopted 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, providing 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 to which the company expects to be entitled to 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. As previously disclosed, we believe the adoption of the new revenue recognition standard may have a significant impact on the accounting for our sales of our games with significant online functionality for which we do not have vendor-specific objective evidence ("VSOE") for unspecified future updates and ongoing online services provided. Under the current accounting standards, VSOE for undelivered elements is required. This requirement will be eliminated under the new standard. Accordingly, we may be required to recognize as revenue a portion of the sales price upon delivery of the software, as compared to the current requirement of recognizing the entire sales price ratably over an estimated offering period. This potential difference may have a material impact on our consolidated financial statements upon adoption of this new guidance. We are continuing to evaluate the adoption method that we will utilize as well as the additional impacts of this new accounting guidance on our financial statements and related disclosures. 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, among other things, requires a lessee to classify a lease as either an operating or financing lease and lessees will need to recognize a lease liability and a right-of-use asset 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 for initial direct costs, lease incentives received, and any prepaid lease payments. Operating leases will result in a straight-line expense pattern, 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. 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. Statement of Cash Flows-Restricted Cash In November 2016, the FASB issued new guidance related to the classification of restricted cash in the statement of cash flows. The new standard requires that a statement of cash flows explain any change during the period in total cash, cash equivalents, and restricted cash. Therefore, restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2018, and should be applied retrospectively. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. We expect there would be a significant impact to the condensed consolidated statements of cash flows for the three months ended March 31, 2016, as this period includes, as an investing activity, the $3.6 billion movement in restricted cash as a result of transferring cash into escrow at December 31, 2015 to facilitate the King Acquisition and the subsequent release of that cash in 2016 in connection with the King Acquisition. Under this new standard, the restricted cash balance would be included in the beginning and ending total cash, cash equivalents, and restricted cash balances and, hence, would not be included as an investing activity in the statement of cash flows. Goodwill In January 2017, the FASB issued new guidance which eliminates Step 2 from the goodwill impairment test. Instead, if any entity forgoes a Step 0 test, an entity will be required to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit, as determined in Step 1 from the goodwill impairment test, with its carrying amount and recognize an impairment charge, if any, for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new standard is effective for fiscal years beginning after December 15, 2019 and should be applied prospectively. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our consolidated financial statements. |
Description of Business and B24
Description of Business and Basis of Consolidation and Presentation (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Consolidation and Presentation | 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, 2016 . 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. Certain reclassifications have been made to prior year amounts to conform to the current period presentation. The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. |
Cost of Revenues Presentation | Cost of Revenues Presentation In periods prior to the second quarter of 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." Commencing with the second quarter of 2016, we have revised the presentation in our condensed consolidated statements of operations 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. 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 the 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 fees, 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 the amortization of intangible assets recognized in purchase accounting attributable to subscription, licensing, and other revenues. Prior periods have been reclassified to conform to this current presentation. |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements Recently adopted accounting pronouncements 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. We adopted this new standard as of January 1, 2017, and applied it prospectively. The adoption of this guidance did not have a material impact on our financial statements. Recent accounting pronouncements not yet adopted 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, providing 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 to which the company expects to be entitled to 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. As previously disclosed, we believe the adoption of the new revenue recognition standard may have a significant impact on the accounting for our sales of our games with significant online functionality for which we do not have vendor-specific objective evidence ("VSOE") for unspecified future updates and ongoing online services provided. Under the current accounting standards, VSOE for undelivered elements is required. This requirement will be eliminated under the new standard. Accordingly, we may be required to recognize as revenue a portion of the sales price upon delivery of the software, as compared to the current requirement of recognizing the entire sales price ratably over an estimated offering period. This potential difference may have a material impact on our consolidated financial statements upon adoption of this new guidance. We are continuing to evaluate the adoption method that we will utilize as well as the additional impacts of this new accounting guidance on our financial statements and related disclosures. 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, among other things, requires a lessee to classify a lease as either an operating or financing lease and lessees will need to recognize a lease liability and a right-of-use asset 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 for initial direct costs, lease incentives received, and any prepaid lease payments. Operating leases will result in a straight-line expense pattern, 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. 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. Statement of Cash Flows-Restricted Cash In November 2016, the FASB issued new guidance related to the classification of restricted cash in the statement of cash flows. The new standard requires that a statement of cash flows explain any change during the period in total cash, cash equivalents, and restricted cash. Therefore, restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2018, and should be applied retrospectively. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our financial statements. We expect there would be a significant impact to the condensed consolidated statements of cash flows for the three months ended March 31, 2016, as this period includes, as an investing activity, the $3.6 billion movement in restricted cash as a result of transferring cash into escrow at December 31, 2015 to facilitate the King Acquisition and the subsequent release of that cash in 2016 in connection with the King Acquisition. Under this new standard, the restricted cash balance would be included in the beginning and ending total cash, cash equivalents, and restricted cash balances and, hence, would not be included as an investing activity in the statement of cash flows. Goodwill In January 2017, the FASB issued new guidance which eliminates Step 2 from the goodwill impairment test. Instead, if any entity forgoes a Step 0 test, an entity will be required to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit, as determined in Step 1 from the goodwill impairment test, with its carrying amount and recognize an impairment charge, if any, for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new standard is effective for fiscal years beginning after December 15, 2019 and should be applied prospectively. Early adoption is permitted. We are evaluating the impact, if any, of adopting this new accounting guidance on our consolidated financial statements. |
Inventories, Net (Tables)
Inventories, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Our inventories, net consist of the following (amounts in millions): At March 31, 2017 At December 31, 2016 Finished goods $ 44 $ 40 Purchased parts and components 4 9 Inventories, net $ 48 $ 49 |
Software Development and Inte26
Software Development and Intellectual Property Licenses (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Software Development Costs and Intellectual Property Licenses | |
Summary of the components of capitalized software development | The following table summarizes the components of our capitalized software development costs (amounts in millions): At March 31, 2017 At December 31, 2016 Internally-developed software costs $ 246 $ 277 Payments made to third-party software developers 198 189 Total software development costs $ 444 $ 466 |
Amortization of capitalized software development costs and intellectual property licenses | Amortization of capitalized software development costs and intellectual property licenses was as follows (amounts in millions): 23 For the Three Months Ended March 31, 2017 2016 Amortization of capitalized software development costs and intellectual property licenses $ 93 $ 132 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of finite-lived intangible assets | Intangible assets, net consist of the following (amounts in millions): At March 31, 2017 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: Internally-developed franchises 3 - 11 years $ 1,154 $ (654 ) $ 500 Developed software 2 - 5 years 601 (185 ) 416 Customer base 2 years 617 (343 ) 274 Trade names 7 - 10 years 54 (10 ) 44 Other 1 - 8 years 18 (12 ) 6 Total definite-lived intangible assets $ 2,444 $ (1,204 ) $ 1,240 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 1,673 At December 31, 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 $ (583 ) $ 571 Developed software 3 - 5 years 595 (145 ) 450 Customer base 2 years 617 (266 ) 351 Trade names 7 - 10 years 54 (8 ) 46 Other 1 - 8 years 18 (11 ) 7 Total definite-lived intangible assets $ 2,438 $ (1,013 ) $ 1,425 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 1,858 |
Schedule of indefinite-lived intangible assets | Intangible assets, net consist of the following (amounts in millions): At March 31, 2017 Estimated useful lives Gross carrying amount Accumulated amortization Net carrying amount Acquired definite-lived intangible assets: Internally-developed franchises 3 - 11 years $ 1,154 $ (654 ) $ 500 Developed software 2 - 5 years 601 (185 ) 416 Customer base 2 years 617 (343 ) 274 Trade names 7 - 10 years 54 (10 ) 44 Other 1 - 8 years 18 (12 ) 6 Total definite-lived intangible assets $ 2,444 $ (1,204 ) $ 1,240 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 1,673 At December 31, 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 $ (583 ) $ 571 Developed software 3 - 5 years 595 (145 ) 450 Customer base 2 years 617 (266 ) 351 Trade names 7 - 10 years 54 (8 ) 46 Other 1 - 8 years 18 (11 ) 7 Total definite-lived intangible assets $ 2,438 $ (1,013 ) $ 1,425 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 Acquired trade names Indefinite 47 Total indefinite-lived intangible assets $ 433 Total intangible assets, net $ 1,858 |
Schedule of finite lived intangible assets, future amortization expense | At March 31, 2017 , future amortization of definite-lived intangible assets is estimated as follows (amounts in millions): 2017 (remaining nine months) $ 568 2018 364 2019 216 2020 72 2021 11 Thereafter 9 Total $ 1,240 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2017 , are as follows (amounts in millions): Activision Blizzard King Other Total Balance at December 31, 2016 $ 6,903 $ 178 $ 2,675 $ 12 $ 9,768 Other (5 ) — — — (5 ) Balance at March 31, 2017 $ 6,898 $ 178 $ 2,675 $ 12 $ 9,763 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value, assets measured on a recurring and/or non-recurring basis | The table below segregates all of our financial assets and liabilities 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, generally including money market funds, treasury bills, available-for-sale and derivative financial instruments, and other investments (amounts in millions): Fair Value Measurements at March 31, 2017 Using As of March 31, 2017 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 $ 2,923 $ 2,923 $ — $ — Cash and cash equivalents Foreign government treasury bills 43 43 — — Cash and cash equivalents Foreign currency forward contracts designated as hedges 12 — 12 — Other current assets Auction rate securities (“ARS”) 9 — — 9 Other assets Total recurring fair value measurements $ 2,987 $ 2,966 $ 12 $ 9 Financial liabilities: Foreign currency forward contracts designated as hedges $ (1 ) $ — $ (1 ) $ — Accrued expenses and other liabilities Fair Value Measurements at December 31, 2016 Using As of December 31, 2016 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 $ 2,921 $ 2,921 $ — $ — Cash and cash equivalents Foreign government treasury bills 38 38 — — Cash and cash equivalents Foreign currency forward contracts designated as hedges 22 — 22 — Other current assets ARS 9 — — 9 Other assets Total recurring fair value measurements $ 2,990 $ 2,959 $ 22 $ 9 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Summary of debt | A summary of our debt is as follows (amounts in millions): At March 31, 2017 Gross Carrying Amount Unamortized Net Carrying 2017 TLA $ 2,190 $ (22 ) $ 2,168 2021 Notes 650 (5 ) 645 2023 Notes 750 (10 ) 740 2026 Notes 850 (10 ) 840 Total long-term debt $ 4,440 $ (47 ) $ 4,393 At December 31, 2016 Gross Carrying Unamortized Net Carrying 2016 TLA $ 2,690 $ (27 ) $ 2,663 2021 Notes 650 (5 ) 645 2023 Notes 750 (11 ) 739 2026 Notes 850 (10 ) 840 Total long-term debt $ 4,940 $ (53 ) $ 4,887 |
Schedule of maturities of debt | As of March 31, 2017 , 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, 2017 (remaining nine months) $ — 2018 — 2019 — 2020 — 2021 2,840 Thereafter 1,600 Total $ 4,440 |
Accumulated Other Comprehensi31
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 and 2016 , were as follows (amounts in millions): For the Three Months Ended March 31, 2017 Foreign currency translation adjustments Unrealized gain (loss) on forward contracts Unrealized gain (loss) on available-for-sale securities Total Balance at December 31, 2016 $ (659 ) $ 29 $ 1 $ (629 ) Other comprehensive income (loss) before reclassifications 3 (9 ) — (6 ) Amounts reclassified from accumulated other comprehensive income (loss) into earnings 16 (6 ) — 10 Balance at March 31, 2017 $ (640 ) $ 14 $ 1 $ (625 ) For the Three Months Ended March 31, 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 (5 ) (6 ) — (11 ) Amounts reclassified from accumulated other comprehensive income (loss) into earnings — 1 — 1 Balance at March 31, 2016 $ (635 ) $ (9 ) $ 1 $ (643 ) |
Operating Segments and Geogra32
Operating Segments and Geographic Region (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 reportable segments and reconciliations of total segment net revenues and total segment operating income to consolidated net revenues from external customers and consolidated income before income tax expense for the three months ended March 31, 2017 and 2016 are presented below (amounts in millions): For the Three Months Ended March 31, 2017 2016 2017 2016 Net revenues Operating income and income before income tax expense Activision $ 215 $ 360 $ 24 $ 99 Blizzard 441 294 166 86 King 474 207 166 67 Reportable segments total 1,130 861 356 252 Reconciliation to consolidated net revenues / consolidated income before income tax expense: Other segments (1) 66 47 (5 ) — Net effect from recognition (deferral) of deferred net revenues and related cost of revenues 530 547 396 369 Share-based compensation expense — — (33 ) (44 ) Amortization of intangible assets — — (190 ) (82 ) Fees and other expenses related to the King Acquisition (2) — — (4 ) (34 ) Restructuring costs (3) — — (11 ) — Other non-cash charges (4) — — (16 ) — Consolidated net revenues / operating income $ 1,726 $ 1,455 $ 493 $ 461 Interest and other expense (income), net 40 52 Consolidated income before income tax expense $ 453 $ 409 (1) Other segments include other income and expenses from operating segments managed outside the reportable segments, including our MLG, Studios, and Distribution businesses. Other segments also include unallocated corporate income and expenses. (2) Reflects fees and other expenses, such as legal, banking and professional services fees, primarily related to the King Acquisition and associated integration activities, inclusive of related debt financings. (3) Reflects restructuring charges incurred, primarily severance costs. (4) Reflects a non-cash accounting charge to reclassify certain cumulative translation losses into earnings due to the substantial liquidation of certain of our foreign entities. |
Schedule of net revenues from external customers by geographic region | Geographic information presented below for the three months ended March 31, 2017 and 2016 , 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 March 31, 2017 2016 Net revenues by geographic region: Americas $ 929 $ 753 EMEA (1) 554 521 Asia Pacific 243 181 Total consolidated net revenues $ 1,726 $ 1,455 (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 March 31, 2017 2016 Net revenues by platform: Console $ 615 $ 765 PC 566 400 Mobile and ancillary (1) 475 243 Other (2) 70 47 Total consolidated net revenues $ 1,726 $ 1,455 (1) Net revenues from mobile and ancillary include revenues from mobile devices, as well as non-platform specific game-related revenues, such as standalone sales of toys and accessories from our Skylanders franchise and other physical merchandise and accessories. (2) Net revenues from Other include revenues from our MLG, Studios, and Distribution businesses. |
Long-lived assets by geographic region | Long-lived assets by geographic region at March 31, 2017 and December 31, 2016 , were as follows (amounts in millions): At March 31, 2017 At December 31, 2016 Long-lived assets (1) by geographic region: Americas $ 147 $ 154 EMEA 80 87 Asia Pacific 18 17 Total long-lived assets by geographic region $ 245 $ 258 (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) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 2016 Numerator: Consolidated net income $ 426 $ 363 Less: Distributed earnings to unvested share-based awards that participate in earnings — (2 ) Less: Undistributed earnings allocated to unvested share-based awards that participate in earnings — (1 ) Numerator for basic and diluted earnings per common share—income available to common shareholders $ 426 $ 360 Denominator: Denominator for basic earnings per common share—weighted-average common shares outstanding 749 735 Effect of potential dilutive common shares under the treasury stock method: Employee stock options and awards 12 14 Denominator for diluted earnings per common share—weighted-average common shares outstanding plus dilutive common shares under the treasury stock method 761 749 Basic earnings per common share $ 0.57 $ 0.49 Diluted earnings per common share $ 0.56 $ 0.48 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Final Purchase Price Allocation | The final 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 expenses and other liabilities (272 ) Other liabilities (110 ) 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 Trade name 46 7 years Goodwill 2,675 Total purchase price $ 5,828 |
Schedule of Pro Forma Financial Information | The amount of net revenue and earnings attributable to King in the Company’s condensed consolidated statement of operations during the three months ended March 31, 2016 , the period of the King Acquisition, 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. (in millions) For the Three Months Ended March 31, 2016 Net revenues $ 183 Net loss $ (50 ) The unaudited 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. (in millions) For the Three Months Ended March 31, 2016 Net revenues $ 1,735 Net income $ 329 Basic earnings per common share $ 0.44 Diluted earnings per common share $ 0.44 |
Description of Business and B35
Description of Business and Basis of Consolidation and Presentation (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2017USD ($)segment | Mar. 31, 2016USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 3 | |
Supplemental Cash Flow Elements [Abstract] | ||
Non-cash purchase price consideration | $ 89 | |
Dividends Payable | $ 226 | 195 |
Accrued withholding tax payments related to net share settlements on restricted stock rights | $ 17 | $ 45 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 44 | $ 40 |
Purchased parts and components | 4 | 9 |
Inventories, net | 48 | 49 |
Inventory reserves | $ 33 | $ 45 |
Software Development and Inte37
Software Development and Intellectual Property Licenses (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Software development and intellectual property licenses: | |||
Internally-developed software costs | $ 246 | $ 277 | |
Payments made to third-party software developers | 198 | 189 | |
Total software development costs | 444 | $ 466 | |
Amortization: | |||
Amortization of capitalized software development costs and intellectual property licenses | $ 93 | $ 132 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets | |||
Gross carrying amount, definite-lived intangible assets | $ 2,444 | $ 2,438 | |
Accumulated amortization, definite-lived intangible assets | (1,204) | (1,013) | |
Net carrying amount, definite-lived intangible assets | 1,240 | 1,425 | |
Indefinite Lived Intangible Assets | |||
Net carrying amount, indefinite-lived intangible assets | 433 | 433 | |
Total intangible assets, net | 1,673 | 1,858 | |
Amortization Expense Disclosure | |||
Amortization expense | 190 | $ 82 | |
Activision trademark | |||
Indefinite Lived Intangible Assets | |||
Net carrying amount, indefinite-lived intangible assets | 386 | 386 | |
Acquired trade names | |||
Indefinite Lived Intangible Assets | |||
Net carrying amount, indefinite-lived intangible assets | 47 | 47 | |
Internally-developed franchises | |||
Finite-Lived Intangible Assets | |||
Gross carrying amount, definite-lived intangible assets | 1,154 | 1,154 | |
Accumulated amortization, definite-lived intangible assets | (654) | (583) | |
Net carrying amount, definite-lived intangible assets | $ 500 | $ 571 | |
Internally-developed franchises | Minimum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 3 years | 3 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 | $ 601 | $ 595 | |
Accumulated amortization, definite-lived intangible assets | (185) | (145) | |
Net carrying amount, definite-lived intangible assets | $ 416 | $ 450 | |
Developed software | Minimum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 2 years | 3 years | |
Developed software | Maximum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 5 years | 5 years | |
Customer base | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 2 years | 2 years | |
Gross carrying amount, definite-lived intangible assets | $ 617 | $ 617 | |
Accumulated amortization, definite-lived intangible assets | (343) | (266) | |
Net carrying amount, definite-lived intangible assets | 274 | 351 | |
Acquired trade names | |||
Finite-Lived Intangible Assets | |||
Gross carrying amount, definite-lived intangible assets | 54 | 54 | |
Accumulated amortization, definite-lived intangible assets | (10) | (8) | |
Net carrying amount, definite-lived intangible assets | $ 44 | $ 46 | |
Acquired trade names | Minimum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 7 years | 7 years | |
Acquired trade names | Maximum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 10 years | 10 years | |
Other | |||
Finite-Lived Intangible Assets | |||
Gross carrying amount, definite-lived intangible assets | $ 18 | $ 18 | |
Accumulated amortization, definite-lived intangible assets | (12) | (11) | |
Net carrying amount, definite-lived intangible assets | $ 6 | $ 7 | |
Other | Minimum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 1 year | 1 year | |
Other | Maximum | |||
Finite-Lived Intangible Assets | |||
Estimated useful life | 8 years | 8 years |
Intangible Assets, Net (Detai39
Intangible Assets, Net (Details 2) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Definite-lived intangible assets, future amortization expense disclosure | ||
2017 (remaining nine months) | $ 568 | |
2,018 | 364 | |
2,019 | 216 | |
2,020 | 72 | |
2,021 | 11 | |
Thereafter | 9 | |
Net carrying amount, definite-lived intangible assets | $ 1,240 | $ 1,425 |
Goodwill (Details)
Goodwill (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 9,768,000,000 |
Other | (5,000,000) |
Ending balance | 9,763,000,000 |
Activision | |
Goodwill [Roll Forward] | |
Beginning balance | 6,903,000,000 |
Other | (5,000,000) |
Ending balance | 6,898,000,000 |
Blizzard | |
Goodwill [Roll Forward] | |
Beginning balance | 178,000,000 |
Other | 0 |
Ending balance | 178,000,000 |
King | |
Goodwill [Roll Forward] | |
Beginning balance | 2,675,000,000 |
Other | 0 |
Ending balance | 2,675,000,000 |
Other | |
Goodwill [Roll Forward] | |
Beginning balance | 12,000,000 |
Other | 0 |
Ending balance | $ 12,000,000 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - Recurring - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | $ 2,987,000,000 | $ 2,990,000,000 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 2,923,000,000 | 2,921,000,000 |
Foreign government treasury bills | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 43,000,000 | 38,000,000 |
Foreign currency forward contracts | Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 12,000,000 | 22,000,000 |
Total liabilities at fair value | (1,000,000) | |
ARS | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 9,000,000 | 9,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 2,966,000,000 | 2,959,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 2,923,000,000 | 2,921,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Foreign government treasury bills | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 43,000,000 | 38,000,000 |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | Foreign currency forward contracts | Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 0 | 0 |
Total liabilities at fair value | 0 | |
Fair value measurements using quoted prices in active markets for identical assets (Level 1) | ARS | ||
Fair Value, Assets and Liabilities Measured on Recurring 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 Basis [Line Items] | ||
Total assets at fair value | 12,000,000 | 22,000,000 |
Fair value measurements using significant other observable inputs (Level 2) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring 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 Basis [Line Items] | ||
Total assets at fair value | 0 | 0 |
Fair value measurements using significant other observable inputs (Level 2) | Foreign currency forward contracts | Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 12,000,000 | 22,000,000 |
Total liabilities at fair value | (1,000,000) | |
Fair value measurements using significant other observable inputs (Level 2) | ARS | ||
Fair Value, Assets and Liabilities Measured on Recurring 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 Basis [Line Items] | ||
Total assets at fair value | 9,000,000 | 9,000,000 |
Fair value measurements using significant unobservable inputs (Level 3) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring 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 Basis [Line Items] | ||
Total assets at fair value | 0 | 0 |
Fair value measurements using significant unobservable inputs (Level 3) | Foreign currency forward contracts | Designated as Hedging Instrument | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | 0 | 0 |
Total liabilities at fair value | 0 | |
Fair value measurements using significant unobservable inputs (Level 3) | ARS | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total assets at fair value | $ 9,000,000 | $ 9,000,000 |
Fair Value Measurements - Deriv
Fair Value Measurements - Derivatives (Details) - Foreign currency forward contracts - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Not Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Notional amount of foreign currency derivatives | $ 0 | $ 0 | |
Designated as Hedges | Cash Flow Hedging | |||
Derivatives, Fair Value [Line Items] | |||
Notional amount of foreign currency derivatives | 352,000,000 | 346,000,000 | |
Fair value of foreign currency forward contracts | 11,000,000 | $ 22,000,000 | |
Cash Flow Hedge Gain (Loss) Remaining Maturity within Twelve Months | 11,000,000 | ||
Deferred Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | 3,000,000 | ||
Ineffective portion relating to these hedges | $ 0 | $ 0 | |
Maximum length of time over which our foreign currency forward contracts mature | 12 months |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements - Non-Recurring Basis (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Nonrecurring | ||
Fair Value Measurements on a Non-Recurring Basis [Line Items] | ||
Impairment charges - nonrecurring | $ 0 | $ 0 |
Debt - Credit Facilities (Detai
Debt - Credit Facilities (Details) - USD ($) | Feb. 03, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 |
Line of Credit Facility [Line Items] | ||||
Long-term Debt, Gross | $ 4,440,000,000 | $ 4,940,000,000 | ||
Repayments of long-term debt | 3,051,000,000 | $ 750,000,000 | ||
Revolver | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | 250,000,000 | |||
Amount drawn on the Revolver | 0 | |||
Line of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Repayments of long-term debt | 500,000,000 | |||
Line of Credit | 2016 TLA | ||||
Line of Credit Facility [Line Items] | ||||
Long-term Debt, Gross | $ 2,700,000,000 | |||
Repayments of long-term debt | $ 139,000,000 | 139,000,000 | ||
Line of Credit | 2017 TLA | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 2,550,000,000 | |||
Repayments of long-term debt | $ 361,000,000 | |||
Line of Credit Facility, Interest Rate at Period End | 2.23% |
Debt - Unsecured Senior Notes a
Debt - Unsecured Senior Notes and Interest Expense and Financing Costs (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||
Gross Carrying Amount | $ 4,440 | $ 4,940 | |
Interest expense | 35 | $ 53 | |
Amortization of financing costs and discounts | 7 | $ 4 | |
Notes | |||
Debt Instrument [Line Items] | |||
Interest payable | 4 | 25 | |
Unsecured Debt | 2021 Notes | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | $ 650 | $ 650 | |
Interest rate | 2.30% | 2.30% | |
Unsecured Debt | 2021 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||
Debt Instrument [Line Items] | |||
Fair value of notes | $ 636 | $ 635 | |
Unsecured Debt | 2023 Notes | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | $ 750 | $ 750 | |
Interest rate | 6.125% | 6.125% | |
Unsecured Debt | 2023 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||
Debt Instrument [Line Items] | |||
Fair value of notes | $ 812 | $ 818 | |
Unsecured Debt | 2026 Notes | |||
Debt Instrument [Line Items] | |||
Gross Carrying Amount | $ 850 | $ 850 | |
Interest rate | 3.40% | 3.40% | |
Unsecured Debt | 2026 Notes | Fair value measurements using significant other observable inputs (Level 2) | |||
Debt Instrument [Line Items] | |||
Fair value of notes | $ 830 | $ 808 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Gross Carrying Amount | $ 4,440 | $ 4,940 |
Unamortized Discount and Deferred Financing Costs | (47) | (53) |
Net Carrying Amount | 4,393 | 4,887 |
Line of Credit | 2017 TLA | ||
Debt Instrument [Line Items] | ||
Gross Carrying Amount | 2,190 | |
Unamortized Discount and Deferred Financing Costs | (22) | |
Net Carrying Amount | 2,168 | |
Line of Credit | 2016 TLA | ||
Debt Instrument [Line Items] | ||
Gross Carrying Amount | 2,690 | |
Unamortized Discount and Deferred Financing Costs | (27) | |
Net Carrying Amount | 2,663 | |
Unsecured Debt | 2021 Notes | ||
Debt Instrument [Line Items] | ||
Gross Carrying Amount | 650 | 650 |
Unamortized Discount and Deferred Financing Costs | (5) | (5) |
Net Carrying Amount | 645 | 645 |
Unsecured Debt | 2023 Notes | ||
Debt Instrument [Line Items] | ||
Gross Carrying Amount | 750 | 750 |
Unamortized Discount and Deferred Financing Costs | (10) | (11) |
Net Carrying Amount | 740 | 739 |
Unsecured Debt | 2026 Notes | ||
Debt Instrument [Line Items] | ||
Gross Carrying Amount | 850 | 850 |
Unamortized Discount and Deferred Financing Costs | (10) | (10) |
Net Carrying Amount | $ 840 | $ 840 |
Debt - Schedule of Maturities (
Debt - Schedule of Maturities (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Maturities of Long-term Debt [Abstract] | ||
2017 (remaining nine months) | $ 0 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 0 | |
2,021 | 2,840,000,000 | |
Thereafter | 1,600,000,000 | |
Gross Carrying Amount | $ 4,440,000,000 | $ 4,940,000,000 |
Accumulated Other Comprehensi48
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | $ 9,119 | |
Ending balance | 9,436 | |
Foreign currency translation adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (659) | $ (630) |
Other comprehensive income (loss) before reclassifications | 3 | (5) |
Amounts reclassified from accumulated other comprehensive income (loss) into earnings | 16 | 0 |
Ending balance | (640) | (635) |
Unrealized gain (loss) on forward contracts | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | 29 | (4) |
Other comprehensive income (loss) before reclassifications | (9) | (6) |
Amounts reclassified from accumulated other comprehensive income (loss) into earnings | (6) | 1 |
Ending balance | 14 | (9) |
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 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss) into earnings | 0 | 0 |
Ending balance | 1 | 1 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (629) | (633) |
Other comprehensive income (loss) before reclassifications | (6) | (11) |
Amounts reclassified from accumulated other comprehensive income (loss) into earnings | 10 | 1 |
Ending balance | $ (625) | $ (643) |
Operating Segments and Geogra49
Operating Segments and Geographic Region (Details) | 3 Months Ended | ||
Mar. 31, 2017USD ($)segment | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting [Abstract] | |||
Number of reportable segments | segment | 3 | ||
Segment Reporting Information [Line Items] | |||
Net revenues | $ 1,726,000,000 | $ 1,455,000,000 | |
Operating income | 493,000,000 | 461,000,000 | |
Amortization of intangible assets | (190,000,000) | (82,000,000) | |
Interest and other expense (income), net | 40,000,000 | 52,000,000 | |
Income before income tax expense | 453,000,000 | 409,000,000 | |
Long-lived assets | 245,000,000 | $ 258,000,000 | |
Console | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 615,000,000 | 765,000,000 | |
PC | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 566,000,000 | 400,000,000 | |
Mobile and ancillary | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 475,000,000 | 243,000,000 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 70,000,000 | 47,000,000 | |
Americas | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 929,000,000 | $ 753,000,000 | |
Long-lived assets | $ 147,000,000 | 154,000,000 | |
US | Revenues | Geographic Concentration Risk | |||
Segment Reporting Information [Line Items] | |||
Revenues as a percentage of consolidated net revenues | 47.00% | 49.00% | |
EMEA | |||
Segment Reporting Information [Line Items] | |||
Net revenues | $ 554,000,000 | $ 521,000,000 | |
Long-lived assets | $ 80,000,000 | 87,000,000 | |
UK | Revenues | Geographic Concentration Risk | |||
Segment Reporting Information [Line Items] | |||
Revenues as a percentage of consolidated net revenues | 10.00% | 11.00% | |
Asia Pacific | |||
Segment Reporting Information [Line Items] | |||
Net revenues | $ 243,000,000 | $ 181,000,000 | |
Long-lived assets | 18,000,000 | $ 17,000,000 | |
Reportable segments | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 1,130,000,000 | 861,000,000 | |
Operating income | 356,000,000 | 252,000,000 | |
Reportable segments | Activision | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 215,000,000 | 360,000,000 | |
Operating income | 24,000,000 | 99,000,000 | |
Reportable segments | Blizzard | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 441,000,000 | 294,000,000 | |
Operating income | 166,000,000 | 86,000,000 | |
Reportable segments | King | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 474,000,000 | 207,000,000 | |
Operating income | 166,000,000 | 67,000,000 | |
Reconciling items | |||
Segment Reporting Information [Line Items] | |||
Net effect from recognition (deferral) of deferred net revenues | 530,000,000 | 547,000,000 | |
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues | 396,000,000 | 369,000,000 | |
Share-based compensation expense | (33,000,000) | (44,000,000) | |
Amortization of intangible assets | (190,000,000) | (82,000,000) | |
Fees and other expenses related to acquisitions | (4,000,000) | (34,000,000) | |
Restructuring costs | (11,000,000) | 0 | |
Other non-cash charges | (16,000,000) | 0 | |
Reconciling items | Other segments | |||
Segment Reporting Information [Line Items] | |||
Net revenues | 66,000,000 | 47,000,000 | |
Operating income | $ (5,000,000) | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax [Line Items] | ||
Income tax expense | $ 27 | $ 46 |
Effective tax rate (in percent) | 6.00% | 11.00% |
Statutory income tax rate (in percent) | 35.00% | |
King | ||
Income Tax [Line Items] | ||
Uncertain tax positions assumed | $ 74 |
Computation of Basic_Diluted 51
Computation of Basic/Diluted Earnings Per Common Share - Computation EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Numerator: | ||
Consolidated net income | $ 426 | $ 363 |
Less: Distributed earnings to unvested share-based awards that participate in earnings | 0 | (2) |
Less: Undistributed earnings allocated to unvested share-based awards that participate in earnings | 0 | (1) |
Numerator for basic and diluted earnings per common share—income available to common shareholders | $ 426 | $ 360 |
Denominator: | ||
Denominator for basic earnings per common share - weighted-average common shares outstanding (in shares) | 749 | 735 |
Effect of potential dilutive common shares under the treasury stock method: | ||
Employee stock options and awards (in shares) | 12 | 14 |
Denominator for diluted earnings per common share - weighted-average common shares outstanding plus dilutive common shares under treasury stock method (in shares) | 761 | 749 |
Basic earnings (loss) per common share (in dollars per share) | $ 0.57 | $ 0.49 |
Diluted earnings (loss) per common share (in dollars per share) | $ 0.56 | $ 0.48 |
Computation of Basic_Diluted 52
Computation of Basic/Diluted Earnings Per Common Share (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Unvested restricted stock units participating in earnings | 0 | 4 |
Performance shares not included in dilutive shares (performance measures not yet met) | 9 | 10 |
Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 5 | 6 |
Capital Transactions (Details)
Capital Transactions (Details) - Share Repurchase Program 2017 - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Feb. 02, 2017 | |
Share Repurchase Program [Line Items] | ||
Share repurchase program, dollar amount authorized | $ 1,000,000,000 | |
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 | Feb. 02, 2017 | May 27, 2016 | May 11, 2016 | Feb. 02, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Dividends | ||||||
Dividends per common share (in dollars per share) | $ 0.30 | $ 0.26 | $ 0.30 | $ 0.26 | ||
Dividends Payable | $ 226 | $ 195 | ||||
Cash dividend payment | $ 192 | |||||
Dividend equivalent payment | $ 3 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) shares in Millions, $ in Millions | Feb. 23, 2016 | Dec. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 9,768 | $ 9,763 | ||
King | ||||
Business Acquisition [Line Items] | ||||
Aggregate purchase price | $ 5,800 | |||
Cash paid to acquire business | 3,600 | |||
Cash paid to acquire business from debt financing | 2,200 | |||
Goodwill | 2,675 | |||
Future expense for converted King unvested options and awards | $ 40 | |||
Weighted average service period of acquired options and awards | 1 year 7 months 18 days | |||
Goodwill expected to be deductible for tax purposes | $ 620 | |||
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 | |||
King | Deferred Cash Award | ||||
Business Acquisition [Line Items] | ||||
Fair value of King’s existing vested and unvested stock options and awards assumed | 22 | |||
Future expense for converted King unvested options and awards | 9 | |||
King | Long-term debt, net | ||||
Business Acquisition [Line Items] | ||||
Debt discount and issuance costs | $ 38 | |||
King | General and administrative | ||||
Business Acquisition [Line Items] | ||||
Acquisition costs | $ 34 |
Acquisitions - Final Purchase P
Acquisitions - Final Purchase Price Allocation (Details) - USD ($) $ in Millions | Feb. 23, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Goodwill | $ 9,763 | $ 9,768 | |
Customer base | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 2 years | 2 years | |
Minimum | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 3 years | 3 years | |
Minimum | Developed software | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 2 years | 3 years | |
Minimum | Trade names | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 7 years | 7 years | |
Maximum | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 11 years | 11 years | |
Maximum | Developed software | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 5 years | 5 years | |
Maximum | Trade names | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 10 years | 10 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 expenses and other liabilities | (272) | ||
Other liabilities | (110) | ||
Deferred income tax liabilities, net | (52) | ||
Goodwill | 2,675 | ||
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 | ||
Intangible assets estimated useful life | 2 years | ||
King | Developed software | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 580 | ||
King | Trade names | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 46 | ||
King | Minimum | |||
Business Acquisition [Line Items] | |||
Property and equipment estimated useful life | 2 years | ||
King | Minimum | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 3 years | ||
King | Minimum | Developed software | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 3 years | ||
King | Minimum | Trade names | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 7 years | ||
King | Maximum | |||
Business Acquisition [Line Items] | |||
Property and equipment estimated useful life | 7 years | ||
King | Maximum | Internally-developed franchises | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 5 years | ||
King | Maximum | Developed software | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 4 years |
Acquisitions - Pro Forma Inform
Acquisitions - Pro Forma Information (Details) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($)$ / shares | |
King | |
Business Acquisition [Line Items] | |
Net revenues | $ 183 |
Net loss | (50) |
Net revenues | 1,735 |
Net income | $ 329 |
Basic earnings per common share (in dollars per share) | $ / shares | $ 0.44 |
Diluted earnings per common share (in dollars per share) | $ / shares | $ 0.44 |
Acquisition-related Costs | |
Business Acquisition [Line Items] | |
Non-recurring acquisition related costs | $ 60 |
Recently Issued Accounting Pr58
Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Movement in restricted cash related to acquisition | $ 0 | $ (3,561) |
Pro Forma | Adjustments For ASU 2016-15 | New Accounting Pronouncement, Early Adoption, Effect [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Movement in restricted cash related to acquisition | $ (3,561) |