Activision 2014 Annual Report Download - page 39

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As of December 31, 2014, 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,
2015 ...................................................................................................... $ —
2016 ...................................................................................................... —
2017 ...................................................................................................... —
2018 ...................................................................................................... —
2019 ...................................................................................................... —
Thereafter .............................................................................................. 4,369
Total .................................................................................................. $ 4,369
As of December 31, 2014 and 2013, the carrying value of the Term Loan approximates the fair value, based on Level 2
inputs (observable market prices in less than active markets), as the interest rate is variable over the selected interest period
and is similar to current rates at which we can borrow funds. Based on Level 2 inputs, the fair values of the 2021 Notes and
2023 Notes were $1,586 million and $810 million, respectively, as of December 31, 2014 and $1,559 million and
$785 million, respectively, as of December 31, 2013.
Deferred Financing Costs
Costs incurred to obtain our long-term debt are recorded as deferred financing costs within “Other assets—non-current” in
our consolidated balance sheets and are amortized over the terms of the respective debt agreements using a straight-line
basis for costs related to the Revolver and the interest earned method for costs related to the Term Loan and Notes. For the
year ended December 31, 2013, we recorded $7 million of deferred financing costs. Amortization expense related to the
deferred financing costs is recorded within “Interest and other investment income (expense), net” in our consolidated
statements of operations. For the year ended December 31, 2014, this amount was $1 million. For the year ended
December 31, 2013, this amount was not material.
13. Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) at December 31, 2014 and 2013, were as follows
(amounts in millions):
For the Year Ended December 31, 2014
Foreign currency
translation
adjustments
Unrealized gain
on available-for-
sale securities
Unrealized gain
on forward
contracts Total
Balance at December 31, 2013 ................................... $ 67 $ 1 $ — $ 68
Other comprehensive income (loss) before
reclassifications.................................................. (371) — 8 (363)
Amounts reclassified from accumulated other
comprehensive income (loss) ............................. ——(8) (8)
Balance at December 31, 2014 ................................... $ (304) $ 1 $ — $ (303)
For the Year Ended December 31, 2013
Foreign currency
translation
adjustments
Unrealized gain
on available-for-
sale securities
Unrealized gain
on forward
contracts Total
Balance at December 31, 2012 ................................... $ (26) $ — $ — $ (26)
Other comprehensive income (loss) before
reclassifications .................................................. 93 1 — 94
Amounts reclassified from accumulated other
comprehensive income (loss) ............................. —— — —
Balance at December 31, 2013 ................................... $ 67 $ 1 $ — $ 68
Income taxes were not provided for foreign currency translation items as these are considered indefinite
investments in non-U.S. subsidiaries.
14. Operating Segments and Geographic Region
Our operating segments are consistent with our internal organizational structure, the manner in which our operations are
reviewed and managed by our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), the
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manner in which we assess operating performance and allocate resources, and the availability of separate financial
information. Currently, we conduct our business through three operating segments: Activision, Blizzard and 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-based compensation expense, amortization of intangible
assets as a result of purchase price accounting, and fees and other expenses (including legal fees, costs, expenses and
accruals) related to the Purchase Transaction and related debt financings. The CODM does not review any information
regarding total assets on an operating segment basis, and accordingly, no disclosure is made with respect thereto.
Information on the operating segments and reconciliations of total net revenues and total segment operating income to
consolidated net revenues from external customers and consolidated income before income tax expense for the years ended
December 31, 2014, 2013 and 2012 are presented below (amounts in millions):
Years Ended December 31,
2014 2013 2012 2014 2013 2012
Net revenues
Income (loss) from operations
before income tax expense
Activision .................................................................................... $ 2,686 $ 2,895 $ 3,072 $ 762 $ 971 $ 970
Blizzard ....................................................................................... 1,720 1,124 1,609 756 376 717
Distribution ................................................................................. 407 323 306 9 8 11
Operating segments total ....................................................... 4,813 4,342 4,987 1,527 1,355 1,698
Reconciliation to consolidated net revenues / consolidated income
before income tax expense:
Net effect from deferral of net revenues and related cost of sales (405) 241 (131) (215) 229 (91)
Stock-based compensation expense ........................................... — — —(104) (110) (126)
Amortization of intangible assets ............................................... — — — (12) (23) (30)
Fees and other expenses related to the Purchase Transaction
and related debt financings .................................................... —— — (13) (79) —
Consolidated net revenues / operating income ................................ $ 4,408 $ 4,583 $ 4,856 $ 1,183 $ 1,372 $ 1,451
Interest and other investment income (expense), net ................. (202) (53) 7
Consolidated income before income tax expense ........................... $ 981
$ 1,319 $ 1,458
Geographic information presented below for the years ended December 31, 2014, 2013, and 2012 is based on the location
of the selling entity. Net revenues from external customers by geographic region were as follows (amounts in millions):
Years Ended December 31,
2014 2013 2012
Net revenues by geographic region:
North America .......................................................... $ 2,190 $ 2,414 $ 2,436
Europe ....................................................................... 1,824 1,826 1,968
Asia Pacific ............................................................... 394 343 452
Total consolidated net revenues .................................... $ 4,408 $ 4,583 $ 4,856
The Company’s net revenues in the U.S. were 48%, 51%, and 48% of consolidated net revenues for the years ended
December 31, 2014, 2013, and 2012, respectively. The Company’s net revenues in the U.K. were 16%, 14%, and 14% of
consolidated net revenues for the years ended December 31, 2014, 2013, and 2012, respectively. The Company’s net
revenues in France were 14%, 12%, and 13% of consolidated net revenues for the years ended December 31, 2014, 2013,
and 2012, respectively. No other country’s net revenues exceeded 10% of consolidated net revenues.
Net revenues by platform were as follows (amounts in millions):
Years Ended December 31,
2014 2013 2012
Net revenues by platform:
Console ..................................................................... $ 2,150 $ 2,379 $ 2,186
Online(1) ..................................................................... 867 912 986
PC.............................................................................. 551 340 675
Mobile and other(2) .................................................... 433 629 703
Total Activision Blizzard net revenues ......................... 4,001 4,260 4,550
Distribution ................................................................... 407 323 306
Total consolidated net revenues .................................... $ 4,408 $ 4,583 $ 4,856