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ANNUAL REPORT 2013
®
®

Table of contents

  • Page 1
    ® ® ANNUAL REPORT 2013

  • Page 2
    ANNUAL REPORT 2013 WE ARE THE LARGEST AND MOST-PROFITABLE INDEPENDENT VIDEOGAME PUBLISHER IN NORTH AMERICA AND EUROPE

  • Page 3
    ACTIVISION BLIZZARD, INC // PAGE 1 $ REVENUES 1 4.3B 31% OPERATING MARGIN 1 $ EARNINGS PER SHARE 1 0.94 $ OPERATING CASH FLOW 1.26B 1.19B $ FREE CASH FLOW 1 1 Non-GAAP; for a full reconciliation, please see tables at the end of the annual report.

  • Page 4
    ... INDEPENDENCE AND REDUCED OUR SHARES OUTSTANDING BY 37% VIA A TRANSACTION WITH VIVENDI CALL OF DUTY ® GHOSTS: #1 TITLE ON NEXT-GEN CONSOLES 1 ® SKYLANDERS ® # 3 FRANCHISE IN NORTH AMERICA AND EUROPE COMBINED 1 ® 1 2 According to The NPD Group and GfK Chart-Track. Based on internal company...

  • Page 5
    ACTIVISION BLIZZARD, INC // PAGE 3 WORLD OF WARCRAFT ® #1 SUBSCRIPTION MASSIVELY MULTIPLAYER ONLINE ROLEPLAYING GAME AS OF 12 / 31/13 2 STARCRAFT ® II: HEART OF THE SWARM ® #1 PC GAME IN NORTH AMERICA1 ENTERED FREE-TO-PLAY GAMES WITH HEARTHSTONE™ : HEROES OF WARCRAFT™ AND WE ARE WELL-...

  • Page 6
    ANNUAL REPORT 2013 Destiny ©2014 Bungie, Inc. Destiny is a registered trademark of Bungie, Inc. ® LAUNCHING NEW INTELLECTUAL PROPERTY

  • Page 7
    ACTIVISION BLIZZARD, INC // PAGE 5 ® CREATING NEW CATEGORIES

  • Page 8
    ANNUAL REPORT 2013 ® LEADING ON NEXT-GEN CONSOLES

  • Page 9
    ACTIVISION BLIZZARD, INC // PAGE 7 ® ENTERING NEW REGIONS

  • Page 10
    ANNUAL REPORT 2013 ADDING NEW BUSINESS MODELS

  • Page 11
    ACTIVISION BLIZZARD, INC // PAGE 9 ENTERING NEW GENRES

  • Page 12
    ANNUAL REPORT 2013 DRIVING DIGITAL REVENUES

  • Page 13
    ACTIVISION BLIZZARD, INC // PAGE 11

  • Page 14
    ... ranked us in the top 25% of all companies in the index. For the first time in more than five years, we are an independent company without Vivendi as our controlling shareholder. As of October 11, 2013, the majority of our shares are in the hands of public shareholders. Our transaction with Vivendi...

  • Page 15
    ... a weighted average annual interest rate of less than 5%. Activision Blizzard's stock purchase allowed us to take advantage of attractive financial markets while still retaining the permanently invested cash on hand we needed to preserve financial stability and strategic flexibility. In fact, as of...

  • Page 16
    ...TO LIFE TM concept. World of Warcraft ® also remains the clear leader in its genre. 2013 was not an expansion pack year for the game, but Blizzard Entertainment did release substantial new content updates. Though there was a significant decline in subscribers in the first quarter after many players...

  • Page 17
    ... years in 2013 when it released Diablo III for the PlayStation 3 and the Xbox 360 to widespread acclaim. This expanded on the popularity of the game even further, yielding more than 15 million units sold across all platforms, PC and console. Earlier in 2014, Blizzard released an expansion for Diablo...

  • Page 18
    ... the best employees in the world. We will continue to remain focused on creating great entertainment and providing superior stakeholder returns as we have for the last 23 years. Sincerely, Bobby Kotick President and Chief Executive Officer Activision Blizzard SAME PRINCIPLES, NEW ERA For almost...

  • Page 19
    FINANCIAL REVIEW 2013

  • Page 20
    ... million to license agreements, game engines and internally developed franchise intangible assets, respectively. On February 7, 2013, our Board of Directors declared a cash dividend of $0.19 per share, payable on May 15, 2013, to shareholders of record at the close of business on March 20, 2013. On...

  • Page 21
    ...Overview Activision Blizzard, Inc. is a worldwide online, personal computer ("PC"), video game console, tablet, handheld, and mobile game publisher. The Company's Formation and Recently Consummated Share Repurchase and Related Debt Financing Activision, Inc. was originally incorporated in California...

  • Page 22
    ...-party or related party companies that distribute World of Warcraft, Diablo III and StarCraft II products. In addition, Blizzard developed Hearthstoneâ„¢: Heroes of Warcraftâ„¢, a free-to-play digital collectible card game, which was released in closed beta in August 2013 and in open beta in January...

  • Page 23
    ...Black Ops II Apocalypse (digital downloadable content) Call of Duty: Ghosts Deadpool Diablo III for the PS3 and Xbox 360 Hearthstone: Heroes of Warcraft (closed beta) Skylanders SWAP Force StarCraft II: Heart of the Swarm The Walking Deadâ„¢: Survival Instinct On January 21, 2014, Blizzard released...

  • Page 24
    ... in revenues through digital online channels was primarily due to the releases of Diablo III and World of Warcraft: Mists of Pandaria in 2012, partially offset by the strong performance of digital downloadable content for Call of Duty: Black Ops II in 2013. Digital online channel revenues were...

  • Page 25
    ... beta version of Hearthstone: Heroes of Warcraft was released. On March 25, 2014, Blizzard plans to launch the PC expansion pack Diablo III: Reaper of Souls, and later in the year, Blizzard is expected to deliver another major game release. Activision plans to debut Destiny in September 2014 and new...

  • Page 26
    ... millions): For the Years Ended December 31, 2013 2012 2011 Net revenues: Product sales ...$ Subscription, licensing, and other revenues...Total net revenues ...Costs and expenses: Cost of sales-product costs ...Cost of sales-online subscriptions ...Cost of sales-software royalties and amortization...

  • Page 27
    ... ended December 31, 2013, 2012, and 2011 are presented in the table below (amounts in millions): For the Years Ended December 31, Increase/ (decrease) 2013 v 2012 2012 2011 2013 Increase/ (decrease) 2012 v 2011 Segment net revenues: Activision ...Blizzard ...Distribution...Operating segment net...

  • Page 28
    ... Duty: Black Ops II in the fourth quarter of 2012, lower revenues from our value business due to its more focused slate of titles, and lower revenues from the Skylanders franchise. These decreases were partially offset by higher revenues from digital downloadable content from Call of Duty: Black Ops...

  • Page 29
    ...2012, without a comparable release in the current year. The decreases were partially offset by the release of StarCraft II: Heart of the Swarm in March 2013, the release of Diablo III for the PS3 and Xbox 360 in September 2013, and revenues from Hearthstone: Heroes of Warcraft during its closed beta...

  • Page 30
    ... Years Ended December 31, Increase/ Increase/ (decrease) (decrease) 2013 v 2012 v 2012 2011 2011 2013 2012 % Change 2013 v 2012 % Change 2012 v 2011 GAAP net revenues by distribution channel Retail channels ...$ 2,701 $ Digital online channels(1) ...1,559 Total Activision and Blizzard ...4,260...

  • Page 31
    ... content packs released in 2011 for Call of Duty: Black Ops. The decrease was partially offset by the full game download sales of Diablo III and World of Warcraft: Mists of Pandaria, and revenues from Call of Duty Elite memberships. The decrease in non-GAAP net revenues from retail channels for 2013...

  • Page 32
    ... Diablo III on the PS3 and Xbox 360, which was released in September 2013, and Call of Duty: Black Ops II digital downloadable content released in 2013. Consolidated net revenues from North America and Asia Pacific increased in 2012, as compared to 2011, primarily due to sales from the Skylanders...

  • Page 33
    ... full-year revenues from Skylanders Spyro's Adventure, which was launched in the fourth quarter of 2011), Diablo III and World of Warcraft: Mists of Pandaria. Further, in Europe and certain countries in Asia Pacific, net revenues were also negatively impacted due to the fact that we published titles...

  • Page 34
    ...World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services, and revenues from Call of Duty Elite memberships. Revenues from other includes revenues from handheld and mobile devices, as well as non-platform specific game related...

  • Page 35
    ...of Duty: Ghosts, which was released in 2013, and Hearthstone: Heroes of Warcraft, which was released as a closed beta version in 2013. The decrease in deferred revenues recognized for PC in 2012, as compared to 2011, was primarily related to revenues deferred from the successful launch of Diablo III...

  • Page 36
    ...Duty and Skylanders franchises, offset by lower media spending by our value business due to its more focused slate of titles and by our Blizzard segment, due to higher spending in 2012 to support the launches of Diablo III and World of Warcraft: Mists of Pandaria. The increase in sales and marketing...

  • Page 37
    ... and California research and development ("R&D") credits, recognition of the retroactive reinstatement of the federal R&D tax credit described below, and the federal domestic production deduction. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law by the President of...

  • Page 38
    ... IRS is currently examining Vivendi Games tax returns for the 2005 through 2008 tax years. Activision Blizzard's tax years 2008 through 2012 remain open to examination by the major taxing jurisdictions to which we are subject. The IRS is currently examining the Company's federal tax returns for the...

  • Page 39
    ... operating activities typically include the collection of customer receivables generated by the sale of our products and digital and subscription revenues, partially offset by payments to vendors for the manufacturing, distribution and marketing of our products, payments for customer service support...

  • Page 40
    ... production, marketing and sale of new products; provision of customer service for our subscribers; acquisition of intellectual property rights for future products from third parties; funding of dividends; and payments related to debt obligations. As of December 31, 2013, the amount of cash and cash...

  • Page 41
    ... was held by the public, (ii) Vivendi held 83 million shares, or approximately 12% of the outstanding shares of our common stock, and (iii) ASAC held 172 million shares, or approximately 24% of the outstanding shares of our common stock. Based on cash and short-term investments of $4.44 billion, and...

  • Page 42
    ... obligation based on the outstanding principal balance and interest rate applicable at December 31, 2013. Refer to Note 12 of the Notes to Consolidated Financial Statements included in this Annual Report for additional information on our debt obligations. On February 11, 2014, we made a voluntary...

  • Page 43
    ... software and hardware deliverables (such as peripherals or other ancillary collectors' items sold together with physical "boxed" software) and our sales of World of Warcraft boxed products, expansion packs and value-added services, each of which is considered with the related subscription services...

  • Page 44
    ... case with the related subscription service revenue, ratably over the estimated service period beginning upon activation of the software and delivery of the related services. Revenues attributed to the sale of World of Warcraft boxed software and related expansion packs are classified as "Product...

  • Page 45
    ...related to software development which are not capitalized are charged immediately to "Product development expense." Commencing upon a product's release, capitalized software development costs are amortized to "Cost of sales- software royalties and amortization" based on the ratio of current revenues...

  • Page 46
    ...the costs relate or in which the licensed trademark or copyright is to be used. Criteria used to evaluate expected product performance include: historical performance of comparable products developed with comparable technology; market performance of comparable titles; orders for the product prior to...

  • Page 47
    ... December 31, 2013, 2012 and 2011. FASB literature related to the accounting for goodwill and other intangibles within ASC Topic 350 provides companies an option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less...

  • Page 48
    ... and actual and projected employee stock option exercise behaviors. We generally determine the fair value of restricted stock rights (including restricted stock units, restricted stock awards and performance shares) based on the closing market price of the Company's common stock on the date of grant...

  • Page 49
    ... in Note 8 of the Notes to Consolidated Financial Statements included in this Annual Report. Accounting for cumulative translation adjustments In February 2013, the FASB issued an update to the authoritative guidance related to the release of cumulative translation adjustments into net income when...

  • Page 50
    ... our cash management services agreement with Vivendi as of October 31, 2013. Since the consummation of the Purchase Transaction, the counterparties for our currency derivative contracts have been large and reputable commercial or investment banks. The gross notional amount of outstanding foreign...

  • Page 51
    ... of our internal control over financial reporting as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included in this Annual Report. Changes in Internal Control Over Financial Reporting. There have...

  • Page 52
    ... Public Accounting Firm To the Board of Directors and Shareholders of Activision Blizzard, Inc.: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, changes in shareholders' equity and cash flows, present fairly...

  • Page 53
    ... except share data) At December 31, 2013 At December 31, 2012 Assets Current assets: Cash and cash equivalents...$ Short-term investments ...Accounts receivable, net of allowances of $381 and $332 at December 31, 2013 and 2012, respectively ...Inventories, net ...Software development...Intellectual...

  • Page 54
    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in millions, except per share data) For the Years Ended December 31, 2013 2012 2011 Net revenues Product sales ...$ Subscription, licensing, and other revenues...Total net revenues ...Costs and expenses Cost ...

  • Page 55
    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in millions) For the Years Ended December 31, 2013 2012 2011 Net income ...$ Other comprehensive income (loss): Foreign currency translation adjustment...Unrealized gains on investments, net of ...

  • Page 56
    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the Years Ended December 31, 2013, 2012, and 2011 (Amounts and shares in millions, except per share data) Retained Earnings (Accumulate d Deficit) Accumulated Other Comprehensi ve Income (Loss)...

  • Page 57
    ... ...Decrease (increase) in restricted cash ...6 Net cash provided by (used in) investing activities ...308 Cash flows from financing activities: Proceeds from issuance of common stock to employees ...158 Tax payment related to net share settlements on restricted stock rights ...(49) Excess tax...

  • Page 58
    ... it develops, hosts and supports. Blizzard also develops, markets, and sells role-playing action and strategy games for the PC and iPad, including games in the multiple-award winning Diablo® and StarCraft® franchises. In September 2013, Blizzard released Diablo III for the PS3 and Xbox 360, and...

  • Page 59
    companies that distribute World of Warcraft, Diablo III, and StarCraft II products. In August 2013, Blizzard released the closed beta version of Hearthstoneâ„¢: Heroes of Warcraftâ„¢, a free-to-play digital collectible card game, and released the open beta version in January 2014. (iii) Activision ...

  • Page 60
    ...money market funds and highly liquid investments with original maturities of three months or less at the time of purchase to be "Cash and cash equivalents." Investment Securities Investments designated as available-for-sale securities are carried at fair value, which is based on quoted market prices...

  • Page 61
    ...the Activision and Blizzard segments, GameStop, that accounted for approximately 10% of net revenues for the year ended December 31, 2012. We had one customer, Wal-Mart, that accounted for 24% and 20% of consolidated gross receivables at December 31, 2013 and 2012, respectively. Software Development...

  • Page 62
    ... the operating segments. As of December 31, 2013 and 2012, our reporting units are the same as our operating segments: Activision, Blizzard, and Distribution. We test goodwill for possible impairment by first determining the fair value of the related reporting unit and comparing this value to the...

  • Page 63
    ... software and hardware deliverables (such as peripherals or other ancillary collectors' items sold together with physical "boxed" software) and our sales of World of Warcraft boxed products, expansion packs and value-added services, each of which is considered with the related subscription services...

  • Page 64
    ... case with the related subscription service revenues, ratably over the estimated service period beginning upon activation of the software and delivery of the related services. Revenues attributed to the sale of World of Warcraft boxed software and related expansion packs are classified as "Product...

  • Page 65
    ... of the franchise; console hardware life cycle; sales force and retail customer feedback; industry pricing; future pricing assumptions; weeks of on-hand retail channel inventory; absolute quantity of on-hand retail channel inventory; our warehouse on-hand inventory levels; the title's recent sell...

  • Page 66
    ... and actual and projected employee stock option exercise behaviors. We generally determine the fair value of restricted stock rights (including restricted stock units, restricted stock awards and performance shares) based on the closing market price of the Company's common stock on the date of grant...

  • Page 67
    ... gains Gross unrealized losses Fair Value Short-term investments: Available-for-sale investments: U.S. treasuries and government agency securities ...$ Corporate bonds ...Restricted cash ...Total short-term investments...Long-term investments: Available-for-sale investments: Auction rate...

  • Page 68
    ... are comprised of the following (amounts in millions): For the Years Ended December 31, 2013 2012 2011 Amortization of capitalized software development costs and intellectual property licenses ...$ Write-offs and impairments ... 195 $ 29 205 $ 12 258 60 7. Property and Equipment, Net Property...

  • Page 69
    ... intangible assets... $ Estimated useful lives At December 31, 2012 Gross Accumulated carrying amortization amount Net carrying amount Acquired definite-lived intangible assets: License agreements and other ...3 - 10 years Internally developed franchises ...11 - 12 years Total definite-lived...

  • Page 70
    ...interactive entertainment software from retail distribution channels towards digital distribution and online gaming. At December 31, 2013 and 2012, the gross goodwill and accumulated impairment losses by reporting unit are as follows: Activision Blizzard Total Balance at December 31, 2011: Goodwill...

  • Page 71
    ...000 30 21 9 4,060 $ 4,000 30 21 - $ - - - - $ - Cash and cash equivalents - Cash and cash equivalents - Short-term investments 9 Long-term investments $ 4,051 $ - $ 9 Fair Value Measurements at December 31, 2012 Using Quoted Prices in Active Markets for Identical Assets (Level 1) As of...

  • Page 72
    ... 1 of the Notes to Consolidated Financial Statements, we terminated our cash management services agreement with Vivendi as of October 31, 2013. Further, we have not had any outstanding currency derivative contracts with Vivendi as the counterparty since July 3, 2013. Since the consummation of the...

  • Page 73
    ... of liens, payment of dividends, sales of assets and mergers and acquisitions. The Company was in compliance with the terms of the Notes as of December 31, 2013. Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing on March 15, 2014. As of...

  • Page 74
    ... interest. These redemption options are considered clearly and closely related to the Notes and are not accounted for separately upon issuance. For the year ended December 31, 2013, we recorded $52 million of fees associated with the closing of the Term Loan and the Notes as debt discount, which...

  • Page 75
    ... Distribution (see Note 1 of the Notes to Consolidated Financial Statements). We do not aggregate operating segments. The CODM reviews segment performance exclusive of the impact of the change in deferred revenues and related cost of sales with respect to certain of our online-enabled games, stock...

  • Page 76
    ... (amounts in millions): Years Ended December 31, 2013 2012 2011 Net revenues by geographic region: North America ...$ 2,414 $ 2,436 $ 2,405 Europe ...1,826 1,968 1,990 Asia Pacific ...343 452 360 Total consolidated net revenues...$ 4,583 $ 4,856 $ 4,755 The Company's net revenues in the U.S. were...

  • Page 77
    ... handheld and mobile devices, as well as non-platform specific game related revenues such as standalone sales of toys and accessories products from the Skylanders franchise and other physical merchandise and accessories. Long-lived assets by geographic region at December 31, 2013, 2012, and 2011...

  • Page 78
    ... tables present the weighted-average assumptions and the weighted-average fair value at grant date using the binomial-lattice model: Employee and director options For the Year For the Year For the Year Ended Ended Ended December 31, 2013 December 31, 2012 December 31, 2011 Expected life (in years...

  • Page 79
    ... stock units, which represent the right to receive shares of our common stock, and restricted stock awards, which are issued and outstanding upon grant but subject to the risk of forfeiture (collectively referred to as "restricted stock rights"), under the 2008 Plan to employees around the world...

  • Page 80
    ... operations for the years ended December 31, 2013, 2012, and 2011 (amounts in millions): For the Years Ended December 31, 2013 2012 2011 Cost of sales-software royalties and amortization ...$ Product development ...Sales and marketing...General and administrative...Stock-based compensation expense...

  • Page 81
    ... 2011 Restructuring reserve balances at December 31, 2013 and 2012 were recorded within our Activision segment. We completed the 2011 Restructuring as of December 31, 2011 and we do not expect to incur significant additional restructuring expenses relating thereto. 17. Interest and Other Investment...

  • Page 82
    ...'s Form 10-Q for that period. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law by the President of the United States. Under the provisions of the American Taxpayer Relief Act of 2012, the research and development ("R&D") tax credit that had expired December 31, 2011...

  • Page 83
    ...state and local income tax returns filed by Activision Blizzard. Vivendi Games tax years 2005 through 2010 remain open to examination by the major taxing authorities. The Internal Revenue Service is currently examining Vivendi Games tax returns for the 2005 through 2008 tax years. Although the final...

  • Page 84
    Activision Blizzard's tax years 2008 through 2012 remain open to examination by the major taxing jurisdictions to which we are subject. The Internal Revenue Service is currently examining the Company's federal tax returns for the 2008 and 2009 tax years. The Company also has several state and non...

  • Page 85
    ... Note 1 of the Notes to Consolidated Financial Statements, on October 11, 2013, we completed the Purchase Transaction, repurchasing approximately 429 million shares of our common stock for a cash payment of $5.83 billion, pursuant to the terms of the Stock Purchase Agreement (refer to Note 12 of the...

  • Page 86
    ... on June 1, 2012, we made related dividend equivalent payments of $3 million to the holders of restricted stock units. On February 9, 2011, our Board of Directors declared a cash dividend of $0.165 per common share, payable on May 11, 2011, to shareholders of record at the close of business on March...

  • Page 87
    ... our business, financial condition, results of operations, profitability, cash flows or liquidity. Purchase Transaction Matters On August 1, 2013, a purported shareholder of the Company filed a shareholder derivative action in the Superior Court of the State of California, County of Los Angeles...

  • Page 88
    ... duties owed to other stockholders of the Company in entering into the Stock Purchase Agreement; that our Chief Executive Officer and our Chairman usurped a corporate opportunity from the Company; that our Board of Directors and Vivendi have engaged in actions to entrench our Board of Directors...

  • Page 89
    ... business, financial condition, results of operations, or liquidity. 23. Related Party Transactions As part of the Business Combination, we entered into various transactions and agreements, including cash management services agreements, a tax sharing agreement and an investor agreement, with Vivendi...

  • Page 90
    ... 15, 2012. We adopted this guidance and provided the required disclosures in Note 13 of the Notes to Consolidated Financial Statements. Accounting for cumulative translation adjustments In February 2013, the FASB issued an update to the authoritative guidance related to the release of cumulative...

  • Page 91
    ..., we made this repayment on February 11, 2014. Refer to Note 12 of the Notes to Consolidated Financial Statements. On February 6, 2014, our Board of Directors declared a cash dividend of $0.20 per common share payable on May 14, 2014 to shareholders of record at the close of business on March 19...

  • Page 92
    ... that the value of the investment in our common stock and in each of the indexes (including reinvestment of dividends) was $100 on December 31, 2008 and tracks each such investment through December 31, 2013. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Activision Blizzard, Inc., the NASDAQ...

  • Page 93
    ... Notes to Consolidated Financial Statements included in this Annual Report, limit our ability to pay distributions or dividends with certain exceptions. There can be no assurances that dividends will be declared in the future. 10b5-1 Stock Trading Plans The Company's directors and employees may, at...

  • Page 94
    ... of New VH assumed in the transaction (collectively, the "Purchase Transaction"). The repurchased shares were recorded in "Treasury Stock" in our consolidated balance sheet. The following table provides the number of shares purchased and the average price paid per share during each quarter of 2013...

  • Page 95
    ... historical fact and include, but are not limited to: (1) projections of revenues, expenses, income or loss, earnings or loss per share, cash flow or other financial items; (2) statements of our plans and objectives, including those relating to product releases; (3) statements of future financial or...

  • Page 96
    ... all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services. It also includes revenues from Call of Duty Elite memberships. 2 Downloadable content and their related revenues are included in each respective console platforms...

  • Page 97
    ... December 31, 2013 and 2012 (Amounts in millions) Year Ended December 31, 2013 Amount % of Total4 Amount (Decrease) % of Total4 December 31, 2012 $ Increase % Increase (Decrease) GAAP Net Revenues by Distribution Channel Retail channels Digital online channels1 Total Activision and Blizzard $ 2,701...

  • Page 98
    ... FINANCIAL INFORMATION For the Year Ended December 31, 2013 and 2012 (Amounts in millions) Year Ended December 31, 2013 Amount % of Total3 Amount % of Total3 December 31, 2012 $ Increase (Decrease) % Increase (Decrease) GAAP Net Revenues by Geographic Region North America Europe Asia Pacific...

  • Page 99
    ... ("Blizzard") publishes PC games and online subscription-based games in the MMORPG category. 3 Activision Blizzard Distribution ("Distribution") - distributes interactive entertainment software and hardware products. 4 Reflects fees and other expenses related to the repurchase of 429 million shares...

  • Page 100
    ... 11, 2013 and related debt financings. The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Activision Blizzard common shareholders used to...

  • Page 101
    ... per share data) Year Ended December 31, 2012 Net Revenues $ (a) (b) (c) $ 4,987 $ 1,116 $ 264 $ 221 $ 62 $ 4,856 131 584 $ 1,116 $ 263 1 $ 194 36 (9) $ 89 3 (30) $ 604 (20) - $ Cost of Sales Product Costs Cost of Sales Online Subscriptions Product Development Cost of Sales Software Royalties...

  • Page 102
    ... sales. (b) Includes expense related to stock-based compensation. (c) Reflects restructuring related to our Activision Publishing operations. (d) Reflects amortization of intangible assets from purchase price accounting. (e) Reflects impairment of goodwill. The company calculates earnings per share...

  • Page 103
    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL INFORMATION (Amounts in millions) December 31, 2010 March 31, 201 Three Months Ended June 30, September 30, 2011 2011 December 31, 2011 March 31, 2012 Year over Year % Increase (Decrease) Three Months Ended June 30, September 30...

  • Page 104
    ... fees and other expenses related to the repurchase of 429 million shares of our common stock from Vivendi (the "Purchase Transaction") completed on October 11, 2013 and related debt financings. Trailing twelve months amounts are presented as calculated. Therefore, the sum of the four quarters...

  • Page 105
    ANNUAL REPORT 2013 CORPORATE INFORMATION BOARD OF DIRECTORS Robert J. Corti Chairman, Avon Foundation Brian G. Kelly Chairman of the Board, Activision Blizzard Robert A. Kotick President and Chief Executive Officer, Activision Blizzard Barry Meyer Former Chairman and CEO, Warner Brothers ...

  • Page 106
    3100 OCEAN PARK BOULEVARD SANTA MONICA, CALIFORNIA 90405 T: (310) 255-2000 F: (310) 255-2100 WWW.ACTIVISIONBLIZZARD.COM ® ®