Activision 2014 Annual Report Download - page 11

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SELECTED FINANCIAL DATA
The terms “Activision Blizzard,” the “Company,” “we,” “us,” and “our” are used to refer collectively to Activision
Blizzard, Inc. and its subsidiaries.
The following table summarizes certain selected consolidated financial data, which should be read in conjunction with our
Consolidated Financial Statements and Notes thereto and with Management’s Discussion and Analysis of Financial
Condition and Results of Operations included elsewhere in this Annual Report. The selected consolidated financial data
presented below at and for each of the years in the five-year period ended December 31, 2014 is derived from our
Consolidated Financial Statements. All amounts set forth in the following tables are in millions, except per share data.
For the Years Ended December 31,
2014 2013 2012 2011 2010
Statement of Operations Data:
Net Revenues ........................................................................... $ 4,408 $ 4,583 $ 4,856 $ 4,755 $ 4,447
Net income ............................................................................... 835 1,010 1,149 1,085 418(1)
Basic net income per share ....................................................... 1.14 0.96 1.01 0.93 0.34
Diluted net income per share .................................................... 1.13 0.95 1.01 0.92 0.33
Cash dividends declared per share(2) ........................................ 0.20 0.19 0.18 0.165 0.15
Balance Sheet Data:
Total assets ............................................................................... $ 14,746 $ 14,012 $ 14,200 $ 13,277 $ 13,447
Total debt, net(3) ....................................................................... 4,324 4,693 — — —
(1) In the fourth quarter of 2010, we recorded $326 million of impairment charges within our Activision segment. These
charges consisted of impairments of $67 million, $9 million and $250 million to license agreements, game engines
and internally developed franchises intangible assets, respectively.
(2) On February 6, 2014, our Board of Directors declared a cash dividend of $0.20 per share, payable on May 14, 2014, to
shareholders of record at the close of business on March 19, 2014. On February 7, 2013, our Board of Directors
declared a cash dividend of $0.19 per share, payable on May 15, 2013, to shareholders of record at the close of
business on March 20, 2013. On February 9, 2012, our Board of Directors declared a cash dividend of $0.18 per share,
payable on May 16, 2012, to shareholders of record at the close of business on March 21, 2012. On February 9, 2011,
our Board of Directors declared a cash dividend of $0.165 per share, payable on May 11, 2011, to shareholders of
record at the close of business on March 16, 2011. On February 10, 2010, our Board of Directors declared a cash
dividend of $0.15 per share, payable on April 2, 2010, to shareholders of record at the close of business on
February 22, 2010. Prior to the cash dividend declared in February 2010, the Company had never paid a cash
dividend.
(3) In connection with the Purchase Transaction, on September 19, 2013, we issued $1.5 billion of 5.625% unsecured
senior notes due September 2021 (the “2021 Notes”), and $750 million of 6.125% unsecured senior notes due
September 2023 (the “2023 Notes”, and together with the 2021 Notes, the “Notes”). On October 11, 2013, we entered
into a $2.5 billion secured term loan facility (the “Term Loan”), maturing in October 2020. The carrying values of the
Notes and Term Loan are presented net of unamortized debt discount fees.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Business Overview
Activision Blizzard, Inc. is a leading global developer and publisher of interactive entertainment.
The Business Combination and Share Repurchase
Activision, Inc. was originally incorporated in California in 1979 and was reincorporated in Delaware in December 1992.
On July 9, 2008, a business combination (the “Business Combination”) by and among Activision, Inc., Sego Merger
Corporation, a wholly-owned subsidiary of Activision, Inc., Vivendi S.A. (“Vivendi”), VGAC LLC, a wholly-owned
subsidiary of Vivendi , and Vivendi Games, Inc. (“Vivendi Games”), a wholly-owned subsidiary of VGAC LLC, was
consummated. As a result of the consummation of the Business Combination, Activision, Inc. was renamed Activision
Blizzard, Inc. and Vivendi became a majority shareholder of Activision Blizzard. Activision Blizzard is a public company
traded on the NASDAQ under the ticker symbol “ATVI.”
On October 11, 2013, we repurchased approximately 429 million shares of our common stock, pursuant to a stock purchase
agreement (the “Stock Purchase Agreement”) we entered into on July 25, 2013, with Vivendi and ASAC II LP (“ASAC”),
an exempted limited partnership established under the laws of the Cayman Islands, acting by its general partner, ASAC
II LLC. Pursuant to the terms of the Stock Purchase Agreement, we acquired all of the capital stock of Amber Holding
Subsidiary Co., a Delaware corporation and wholly-owned subsidiary of Vivendi (“New VH”), which was the direct owner
of approximately 429 million shares of our common stock, for a cash payment of $5.83 billion, or $13.60 per share, before
taking into account the benefit to the Company of certain tax attributes of New VH assumed in the transaction (collectively,
the “Purchase Transaction”). Refer to Note 12 of the Notes to Consolidated Financial Statements for further information
regarding the financing of the Purchase Transaction, and below in Other Liquidity and Capital Resources for additional
information.
Immediately following the completion of the Purchase Transaction, Vivendi sold ASAC 172 million shares of Activision
Blizzard’s common stock, pursuant to the Stock Purchase Agreement, for a cash payment of $2.34 billion, or $13.60 per
share.
On May 28, 2014, Vivendi sold approximately 41 million shares, or approximately 50% of its then-current holdings, of our
common stock in a registered public offering. Vivendi received proceeds of approximately $850 million from that sale; we
did not receive any proceeds. Vivendi currently owns approximately 41 million shares of our common stock.
As of December 31, 2014, we had approximately 722 million shares of common stock issued and outstanding. At that date,
(i) Vivendi held 41 million shares, or approximately 6% of the outstanding shares of our common stock, (ii) ASAC held
172 million shares, or approximately 24% of the outstanding shares of our common stock, and (iii) our other stockholders
held approximately 70% of the outstanding shares of our common stock.
Operating Segments
Based upon our organizational structure, we conduct our business through three operating segments as follows:
(i) Activision Publishing, Inc.
Activision Publishing, Inc. (“Activision”) is a leading international developer and publisher of interactive software products
and content. Activision delivers content to a broad range of gamers, ranging from children to adults, and from core gamers
to mass-market consumers to “value” buyers seeking budget-priced software, in a variety of geographies. Activision
develops games based on internally-developed properties, including games in the Call of Duty® and Skylanders® franchises,
and to a lesser extent, based on licensed intellectual properties. Additionally, we have established a long- term alliance with
Bungie to publish its game universe, Destiny®, which was released on September 9, 2014. Activision sells games through
both retail and digital online channels. Activision currently offers games that operate on the Microsoft Corporation
(“Microsoft”) Xbox One (“Xbox One”) and Xbox 360 (“Xbox 360”), Nintendo Co. Ltd. (“Nintendo”) Wii U (“Wii U”) and
Wii (“Wii”), and Sony Computer Entertainment, Inc. (“Sony”) PlayStation 4 (“PS4”) and PlayStation 3 (“PS3”) console
systems (Xbox One, Wii U, and PS4 are collectively referred to as “next- generation”; Xbox 360, Wii, and PS3 are