[February 11, 2016] |
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Activision Blizzard Announces Fourth Quarter and Full Year 2015 Financial Results
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced fourth quarter
and full year results.
This Smart News Release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20160211006451/en/
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Fourth Quarter
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Calendar Year
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Prior
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(in millions, except EPS)
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2015
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Outlook*
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2014
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2015
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2014
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GAAP
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Net Revenues
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$
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1,353
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$
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1,218
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$
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1,575
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$
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4,664
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$
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4,408
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EPS
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$
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0.21
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$
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0.09
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$
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0.49
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$
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1.19
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$
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1.13
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Non-GAAP
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Net Revenues
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$
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2,118
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$
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2,148
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$
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2,213
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$
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4,621
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$
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4,813
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EPS
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$
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0.83
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$
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0.82
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$
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0.94
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$
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1.32
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$
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1.42
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*Prior outlook was provided by the company on November 2, 2015 in its
earnings release.
For calendar year 2015, Activision Blizzard delivered GAAP net revenues
of $4.66 billion, as compared with $4.41 billion for 2014. GAAP net
revenues from digital channels were $2.50 billion and represented a
record 54% of the company's total net revenues. The company delivered
record GAAP earnings per diluted share of $1.19, as compared with $1.13
per diluted share for 2014.
On a non-GAAP basis, for the calendar year 2015, the company delivered
net revenues of $4.62 billion, as compared with $4.81 billion for 2014.
Non-GAAP net revenues from digital channels were a record $2.63 billion
and represented a record 57% of the company's total non-GAAP net
revenues. Non-GAAP earnings per share were $1.32, as compared with $1.42
per diluted share for 2014.
For the quarter ended December 31, 2015, Activision Blizzard's GAAP net
revenues were $1.35 billion, as compared with $1.58 billion for the
fourth quarter of 2014. GAAP net revenues from digital channels were a
record $724 million and represented a Q4 record 54% of the company's
total revenues, growing 34% year-over-year. GAAP earnings per diluted
share for the fourth quarter of 2015 were $0.21, as compared with $0.49
for the fourth quarter of 2014.
On a non-GAAP basis, for the quarter ended December 31, 2015, the
company's net revenues were $2.12 billion, as compared with $2.21
billion for the fourth quarter of 2014. Non-GAAP net revenues from
digital channels were a record $780 million and represented a Q4 record
37% of the company's total non-GAAP net revenues, growing 14%
year-over-year. Non-GAAP earnings per diluted share for the fourth
quarter of 2015 were $0.83, as compared with $0.94 for the fourth
quarter of 2014.
At constant FXB, calendar year 2015 non-GAAP net revenues and
EPS were up 4% and 13%, respectively, year-over-year, driven by strong
engagement and recurring digital trends on our year-round monetizing
franchises. Operating margin at constant FXB was also ahead
of 2012's all-time high of 34%. Non-GAAP net revenues and EPS for the
quarter were roughly flat versus prior year at constant FXB.
Please refer to the tables at the back of this press release for a
reconciliation of the company's GAAP and non-GAAP results.
Bobby Kotick, Chief Executive Officer of Activision Blizzard, said,
"With our expected closing of the acquisition of King Digital later this
month, we will have the largest game network in the world, with over 500
million users playing our games every month.A Our
entertainment franchises, including Call of Duty, World of Warcraft and
soon Candy Crush, will reach people on mobile, console and desktop
devices in almost every country in the world. This gives us the
opportunity to engage our global audiences and create revenue streams
from content and services. Our esports initiatives, enhanced by our
recent acquisition of Major League Gaming, allow us to reward our
players around the world for their dedication and investment in our
games. We expect to generate approximately $6.25 billion in revenues and
over $2.0 billion of operating income in 2016 and we will have over
9,000 of the most talented people making, marketing and selling great
games around the world."
Selected Business Highlights:
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At constant FXB, Activision Publishing's 2015 non-GAAP
operating income grew 30%, and revenues grew 7%. Average MAUsA
for the year were up 20% year-over-year, reaching an all-time high,
and digital revenues grew over 65%. Activision Publishing now has 4 of
the top 10 games on next-generation consoles life-to-date, including Call
of Duty®: Black Ops III at
number one.1
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Activision Publishing's Call of Duty franchise revenues
grew double digits year-over-year both for the full year and in Q4,
ending the quarter with the highest MAUsA in franchise
history. The strong performance was driven by Call of Duty:
Black Ops III, which had the biggest entertainment opening
weekend of 2015, and was the #1 console game globally for the calendar
year.2 Call of Duty was the #1 franchise in
North America for the seventh year in a row.1 Black
Ops III also has the highest season pass attach rate for
downloadable content in franchise history. The Call of Duty
franchise has now surpassed 250 million units sold life-to-date
worldwide with over $15 billion in total sales, including in-game
content, since it first launched in 2003.2
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Activision Publishing's Destiny achieved record digital
attach rates on its critically acclaimed Q3 expansion, The Taken
King. Destiny's 25+ million registered users have logged
nearly 3 billion hours playing the game.
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Activision Publishing's casual titles, namely Q3 release Skylanders®
SuperChargers and Q4 release Guitar Hero®
Live, performed weaker than expected, we believe largely due
to greater competition in the toys to life genre and due to the casual
audience's shift to mobile devices.
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Blizzard Entertainment reached an all-time high for MAUsA in
2015. Fourth quarter MAUsA were up nearly 25%
year-over-year, reflecting strong engagement with the online player
community. At constant FXB, Blizzard's 2015 revenues
are above 2014's record results.
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On November 6, 2015, Blizzard Entertainment revealed that Hearthstone®:
Heroes of Warcraft™ had surpassed the
40 million-registered-player milestone. On November 12, 2015, Blizzard
launched The League of Explorers™, the third adventure
for the franchise, with 45 new cards. This Adventure sold over 20%
more units as of the first 6 weeks after launch than the prior
Adventure in the same time frame. As a result of this new content, and
continued strength across platforms and geographies, Hearthstone
hit all-time franchise highs in multiple categories, including MAUsA,
at the end of Q4.
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On November 6, 2015, Blizzard Entertainment kicked off presales for Legion™,
the upcoming expansion for World of Warcraft®.
Pre-purchasers will receive the expansion's level-100
character boost, as well as early access to the Demon Hunter class
when available. World of Warcraft remains the #1
subscription-based MMORPG in the world.
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On November 10, 2015, Blizzard Entertainment launched Legacy of
the Void™, the standalone third chapter of StarCraft®
II, selling through over 1 million copies in the first 24
hours of launch. Legacy of the Void received multiple
Strategy Game of the Year awards. At BlizzCon® on November
6, 2015, Blizzard announced plans for a series of standalone mission
packs.
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At BlizzCon, Blizzard Entertainment announced Heroes of the
Storm's™ upcoming Arena mode,
planned for release in 2016, featuring smaller maps and shorter
sessions. Heroes of the Storm ended the year taking home
multiple awards, including Best Competitive Multiplayer and Best MOBA
from Game Informer.
Company Outlook:
-
On November 2, 2015, the company announced its agreement to acquire
King Digital Entertainment for approximately $5.9 billion in equity
value ($4.8 billion in enterprise value). Following the closing of the
transaction, the addition of King's business is expected to further
position Activision Blizzard for growth across platforms, audiences,
genres, and business models. Our outlook for 2016 includes King,
assuming we receive the necessary regulatory approvals to allow us to
complete the transaction, which is currently expected to close later
this month.
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On December 22, 2015, Activision Publishing announced that the field
is set for the inaugural Call of Duty World League Pro Division,
with 800 professional esports teams across the world vying for more
than $3 million in cash prizes playing Call of Duty: Black Ops
III, culminating with the Call of Duty Championship
presented by PlayStation 4 in the fall of 2016.
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On February 2, 2016, Activision Publishing launched the first of four
map packs for Call of Duty: Black Ops III, delivering
four new, epic multiplayer maps in addition to an all-new Zombies
experience, available first on PlayStation 4.
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In Q4 2016, Activision Publishing plans to release an innovative new Call
of Duty game from its studio, Infinity Ward, the makers of the Modern
Warfare series.
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Activision Publishing, along with its partners at Bungie, expects to
bring a large new expansion to Destiny in 2016 and to
release a full game sequel in 2017.
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Activision Publishing expects a new Skylanders game to
launch in 2016 along with Skylanders Academy, a new TV
series celebrating the beloved kids franchise.
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On January 28, 2016, Blizzard Entertainment announced the 2016 Heroes
of the Dorm™ competition, featuring online team brawler Heroes
of the Storm, with more than
$500,000 in tuition and other prizes on the line as part of this
year's event. Esports fans will be able to follow the action on ESPN
networks, who will once again deliver live coverage of the events on
television and digital platforms.
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Blizzard Entertainment's team-based shooter, Overwatch™,
will be coming to PC, PlayStation 4, and Xbox One in spring of 2016.
An initial closed beta test ran from October 27, 2015 to December 10,
2015, and the game reached top-viewed status on Twitch. Closed beta
testing resumed on February 9, 2016.
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Blizzard's World of Warcraft is expected to launch its
highly anticipated expansion, Legion, this summer,
following the June release of the Warcraft film
by Legendary Pictures.
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On January 4, 2016, Activision Blizzard announced the acquisition of
Major League Gaming, a leader in creating and streaming premium live
gaming events, organizing professional competitions and running
competitive gaming leagues. The acquisition expands Activision
Blizzard's reach across the rapidly-growing esports ecosystem by
adding proven live streaming capabilities and technologies to the
Activision Blizzard Media Networks division, led by former ESPN CEO
Steve Bornstein and Major League Gaming co-founder Mike Sepso.
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Activision Blizzard's first quarter and calendar year 2016 outlook is
as follows. Please note that this outlook includes King Digital
Entertainment in our results based on an assumed transaction close
later this month.
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GAAP
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Non-GAAP
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(in millions, except EPS)
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Outlook**
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Outlook**
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CY 2016
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Net Revenues
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$
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6,100
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$
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6,250
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EPS
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$
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0.45
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$
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1.75
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Fully Diluted Shares*
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767
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767
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Q1 2016
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Net Revenues
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$
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1,260
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$
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800
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EPS
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$
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0.21
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$
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0.11
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Fully Diluted Shares*
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756
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756
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* Fully diluted weighted average shares include participating
securities and dilutive options on a weighted average basis.
** Outlook includes King Digital Entertainment based on an
assumed transaction close later this month. The outlook includes certain
estimates and assumptions associated with the King transaction based on
the data currently available to us considering the transaction has not
closed. Additionally, our GAAP outlook includes estimates and
assumptions that may be materially different from those at the
transaction close, including our stock price at and around the
transaction close date, market inputs and assumptions in our stock
option expenses, allocation of the purchase consideration to the
acquired assets, and related tax impact from the transaction, among
others.
Currency Assumptions for 2016 Outlook:
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$1.11 USD/Euro for current outlook (vs. a $1.11 average for 2015 and a
$1.33 average for 2014)
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$1.45 USD/British Pound Sterling for current outlook (vs. a $1.53
average for 2015 and a $1.65 average for 2014)
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Note: Revenue and EPS increase if the Euro or British Pound Sterling
strengthen vs. USD.
Board Declares Cash Dividend and Authorizes Debt Repayment
The company also announced that its Board of Directors declared a cash
dividend of $0.26 per common share, payable on May 11, 2016 to
shareholders of record at the close of business on March 30, 2016, which
represents a 13% increase from the cash dividend paid in 2015.
The Board of Directors also approved a repayment of up to $1.5 billion
of the company's outstanding debt during 2016.
Conference Call
Today at 4:30 p.m. EST, Activision Blizzard's management will host a
conference call and Webcast to discuss the company's results for the
quarter ended December 31, 2015 and management's outlook for 2016. The
company welcomes all members of the financial and media communities and
other interested parties to visit the "Investor Relations" area of www.activisionblizzard.com
to listen to the conference call via live Webcast or to listen to the
call live by dialing into 888-239-5257 in the U.S. with passcode 1448926.
About Activision Blizzard
Activision Blizzard, Inc., a member of the S&P 500, is the world's most
successful standalone interactive entertainment company. Activision
Blizzard develops and publishes games based on some of the most beloved
entertainment franchises, including Call of Duty®, Destiny,
Skylanders®, World of Warcraft®, StarCraft®, Diablo®,
and Hearthstone®: Heroes of Warcraft™. The company is one of the
FORTUNE "100 Best Companies To Work For®" 2015. Headquartered in Santa
Monica, California, Activision Blizzard has operations throughout the
world, and its games are played in 196 countries. More information about
Activision Blizzard and its products can be found on the company's
website, www.activisionblizzard.com.
1 The NPD Group
2 The NPD Group, GfK Chart-Track and Activision Blizzard
internal estimates
A Monthly Active User (MAU) Definition: We
monitor MAUs as a key measure of the overall size of our user base and
their regular engagement with our portfolio of games. MAUs are the
number of individuals who played a particular game in a given month. We
calculate average MAUs in a period by adding the total number of MAUs in
each of the months in a given period and dividing by the number of
months in the period. An individual who plays two of our games would be
counted as two users. For Activision and King MAUs, an individual who
plays the same game on two platforms or devices in the relevant period
would be counted as two users due to technical limitations. For Blizzard
MAUs, an individual who plays the same game on two platforms or devices
in the relevant period would be counted as one user.
B Constant FX Definition: Constant FX
provides current period results converted into USD using the average
exchange rates from the comparative prior periods rather than the actual
exchange rates in effect during the respective current periods. We have
provided various measurements at constant FX. Refer to the tables at the
back of this press release for a reconciliation of the company's GAAP
and non-GAAP results. For the full year and fourth quarter of 2015, we
estimated $364 million and $125 million exchange rate impacts on
non-GAAP revenues, respectively, and $0.28 and $0.11 on non-GAAP EPS,
respectively. Exchange rates impact our non-GAAP operating margins by
approximately 240 basis points for the full year 2015. For the full year
2015, we estimated $169 million and $111 million exchange rate impacts
on Activision Publishing's non-GAAP revenues and operating income. For
the full year 2015, we estimated $170 million exchange rate impacts on
Blizzard's non-GAAP revenues.
No Profit Forecasts: Other than the specific information relating
to the combined outlook for Activision Blizzard and King Digital
Entertainment for 2016 set out in this press release, no statement in
this press release is intended to constitute a profit forecast for any
period, nor should any statements be interpreted to mean that earnings
or earnings per share will necessarily be greater or lesser than those
for the relevant preceding financial periods for Activision Blizzard
and/or King Digital Entertainment, as appropriate.
Non-GAAP Financial Measures: As a supplement to our financial
measures presented in accordance with Generally Accepted Accounting
Principles ("GAAP"), Activision Blizzard presents certain non-GAAP
measures of financial performance. These non-GAAP financial measures are
not intended to be considered in isolation from, as a substitute for, or
as more important than, the financial information prepared and presented
in accordance with GAAP. In addition, these non-GAAP measures have
limitations in that they do not reflect all of the items associated with
the company's results of operations as determined in accordance with
GAAP.
Activision Blizzard provides net revenues, net income (loss), earnings
(loss) per share and operating margin data and guidance both including
(in accordance with GAAP) and excluding (non-GAAP) certain items. When
relevant, the Company also provides constant FX information to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. In addition,
Activision Blizzard provides EBITDA (defined as GAAP net income (loss)
before interest (income) expense, income taxes, depreciation and
amortization) and adjusted EBITDA (defined as non-GAAP operating margin
(see non-GAAP financial measure below) before depreciation). The
non-GAAP financial measures exclude the following items, as applicable
in any given reporting period:
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the change in deferred revenues and related cost of sales with respect
to certain of the company's online-enabled games;
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expenses related to stock-based compensation;
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the amortization of intangibles from purchase price accounting;
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fees and other expenses (including legal fees, costs, expenses and
accruals) related to the acquisition of 429 million shares of our
common stock on October 11, 2013 from Vivendi, pursuant to the stock
purchase agreement dated July 25, 2013 and the $4.75 billion debt
financings related thereto;
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fees and other expenses related to acquisitions, including the
acquisition of King Digital Entertainment, and the debt financings
related thereto; and
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the income tax adjustments associated with any of the above items.
In the future, Activision Blizzard may also consider whether other items
should also be excluded in calculating the non-GAAP financial measures
used by the company. Management believes that the presentation of these
non-GAAP financial measures provides investors with additional useful
information to measure Activision Blizzard's financial and operating
performance. In particular, the measures facilitate comparison of
operating performance between periods and help investors to better
understand the operating results of Activision Blizzard by excluding
certain items that may not be indicative of the company's core business,
operating results or future outlook. Internally, management uses these
non-GAAP financial measures in assessing the company's operating
results, and measuring compliance with the requirements of the company's
debt financing agreements, as well as in planning and forecasting.
Activision Blizzard's non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and the terms
non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share,
non-GAAP operating margin, and non-GAAP or adjusted EBITDA do not have a
standardized meaning. Therefore, other companies may use the same or
similarly named measures, but exclude different items, which may not
provide investors a comparable view of Activision Blizzard's performance
in relation to other companies.
In addition to the reasons stated above, which are generally applicable
to each of the items Activision Blizzard excludes from its non-GAAP
financial measures, there are additional specific reasons why the
company believes it is appropriate to exclude the change in deferred
revenues and related cost of sales with respect to certain of the
company's online-enabled games.
Since Activision Blizzard has determined that some of our games' online
functionality represents an essential component of gameplay and, as a
result, a more-than-inconsequential separate deliverable, we recognize
revenues attributed to these game titles over their estimated service
periods, which may range from five months to a maximum of less than a
year. The related cost of sales is deferred and recognized as the
related revenues are recognized. Internally, management excludes the
impact of this change in deferred revenues and related cost of sales in
its non-GAAP financial measures when evaluating the company's operating
performance, when planning, forecasting and analyzing future periods,
and when assessing the performance of its management team. Management
believes this is appropriate because doing so enables an analysis of
performance based on the timing of actual transactions with our
customers, which is consistent with the way the company is measured by
investment analysts and industry data sources. In addition, excluding
the change in deferred revenues and the related cost of sales provides a
much more timely indication of trends in our operating results.
Cautionary Note Regarding Forward-looking Statements: The
statements contained in this press release that are not historical facts
are forward-looking statements, including, but not limited to,
statements about (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 related to
product releases; (3) statements of future financial or operating
performance; (4) statements relating to the agreement to acquire King
Digital Entertainment and the timing and expected impact of that
proposed transaction, including without limitation, the expected impact
on Activision Blizzard's future financial results; and (5) statements of
assumptions underlying such statements. The company generally uses words
such as "outlook," "forecast," "will," "could," "should," "would," "to
be," "plan," "plans," "believes," "may," "might," "expects," "intends,"
"intends as," "anticipates," "estimate," "future," "positioned,"
"potential," "project," "remain," "scheduled," "set to," "subject to,"
"upcoming" and other similar expressions to help identify
forward-looking statements. Forward-looking statements are subject to
business and economic risk, reflect management's current expectations,
estimates and projections about our business, and are inherently
uncertain and difficult to predict.
The Company cautions that a number of important factors could cause
Activision Blizzard's actual future results and other future
circumstances to differ materially from those expressed in any forward
looking statements. Such factors include, but are not limited to:
uncertainties as to whether and when the proposed acquisition of King
Digital Entertainment will close; uncertainties as to whether and when
Activision Blizzard will be able to realize the anticipated financial
results of such acquisition; the integration of King Digital
Entertainment being more difficult, time-consuming or costly than
expected; the diversion of management time and attention to issues
relating to the proposed acquisition and integration of King Digital
Entertainment; sales levels of Activision Blizzard's titles including,
following completion of the proposed acquisition, King Digital
Entertainment titles; increasing concentration of revenue among a small
number of titles; Activision Blizzard's ability to predict consumer
preferences, including interest in specific genres, and preferences
among hardware platforms; the amount of our debt and the limitations
imposed by the covenants in the agreements governing our debt; adoption
rate and availability of new hardware (including peripherals) and
related software, particularly during console transitions; counterparty
risks relating to customers, licensees, licensors and manufacturers;
maintenance of relationships with key personnel, customers, financing
providers, licensees, licensors, manufacturers, vendors, and third-party
developers, including the ability to attract, retain and develop key
personnel and developers that can create high quality titles; changing
business models, including digital delivery of content and the increased
prevalence of free-to-play games; product delays or defects;
competition, including from used games and other forms of entertainment;
rapid changes in technology and industry standards; possible declines in
software pricing; product returns and price protection; the
identification of suitable future acquisition opportunities and
potential challenges associated with geographic expansion; the seasonal
and cyclical nature of the interactive entertainment market; litigation
risks and associated costs; protection of proprietary rights; shifts in
consumer spending trends; capital market risks; applicable regulations;
domestic and international economic, financial and political conditions
and policies; tax rates and foreign exchange rates; the impact of the
current macroeconomic environment; and the other factors identified in
"Risk Factors" included in Part I, Item 1A of Activision Blizzard's most
recent annual report on Form 10-K and subsequent quarterly reports on
Form 10-Q.
The forward-looking statements in this press release are based on
information available to the Company, including information provided to
the Company by King Digital Entertainment and our preliminary assessment
on the impact to our financial information of purchase price accounting,
as of the date of this press release and, while believed to be true when
made, may ultimately prove to be incorrect. The Company may change its
intention, belief or expectation, at any time and without notice, based
upon any changes in such factors, in the Company's assumptions or
otherwise. The Company undertakes no obligation to release publicly any
revisions to any forward-looking statements to reflect events or
circumstances after the original date of this press release, February
11, 2016.
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ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
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(Amounts in millions, except per share data)
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|
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Three Months Ended December 31,
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Year Ended December 31,
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2015
|
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2014
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2015
|
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2014
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|
|
|
|
|
|
|
|
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Net revenues
|
|
|
|
|
|
|
|
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Product sales
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$
|
711
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|
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$
|
1,094
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|
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$
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2,447
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|
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$
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2,786
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Subscription, licensing and other revenues1
|
|
642
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|
|
481
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|
|
2,217
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|
|
1,622
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Total net revenues
|
|
1,353
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|
|
1,575
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|
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4,664
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|
|
4,408
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|
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Costs and expenses
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Cost of sales - product costs
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361
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432
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|
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921
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|
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999
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Cost of sales - online
|
|
63
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|
|
61
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|
|
224
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|
|
232
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Cost of sales - software royalties and amortization
|
|
98
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|
|
124
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|
|
412
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|
|
260
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Cost of sales - intellectual property licenses
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|
16
|
|
|
14
|
|
|
28
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|
|
34
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Product development
|
|
193
|
|
|
184
|
|
|
646
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|
|
571
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Sales and marketing
|
|
289
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|
|
247
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|
|
734
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|
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712
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General and administrative
|
|
83
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|
|
75
|
|
|
380
|
|
|
417
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Total costs and expenses
|
|
1,103
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|
|
1,137
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|
|
3,345
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|
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3,225
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|
|
|
|
|
|
|
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Operating income
|
|
250
|
|
|
438
|
|
|
1,319
|
|
|
1,183
|
|
|
|
|
|
|
|
|
|
Interest and other expense, net
|
|
49
|
|
|
50
|
|
|
198
|
|
|
202
|
|
|
|
|
|
|
|
|
|
Income before income tax expense
|
|
201
|
|
|
388
|
|
|
1,121
|
|
|
981
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
42
|
|
|
27
|
|
|
229
|
|
|
146
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
159
|
|
|
$
|
361
|
|
|
$
|
892
|
|
|
$
|
835
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share 2
|
|
$
|
0.22
|
|
|
$
|
0.49
|
|
|
$
|
1.21
|
|
|
$
|
1.14
|
Weighted average common shares outstanding
|
|
733
|
|
|
720
|
|
|
728
|
|
|
716
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share 2
|
|
$
|
0.21
|
|
|
$
|
0.49
|
|
|
$
|
1.19
|
|
|
$
|
1.13
|
Weighted average common shares outstanding assuming dilution
|
|
744
|
|
|
729
|
|
|
739
|
|
|
726
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Subscription, licensing and other revenues represent
revenues from World of Warcraft subscriptions, licensing royalties from
our products and franchises, value-added services, downloadable content,
and other miscellaneous revenues.
2 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. We had, on a
weighted-average basis, participating securities of approximately 6
million and 8 million for the three months and year ended December 31,
2015, respectively, and 12 million and 15 million for the three months
and year ended December 31, 2014, respectively. For the three months and
year ended December 31, 2015, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate earnings per common
share, assuming dilution, was $158 million and $881 million,
respectively, as compared to total net income of $159 million and $892
million, respectively, for the same periods. For the three months and
year ended December 31, 2014, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate earnings per common
share, assuming dilution, was $355 million and $817 million,
respectively, as compared to total net income of $361 million and $835
million, respectively, for the same periods.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(Amounts in millions)
|
|
|
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,823
|
|
|
$
|
4,848
|
|
Cash in escrow
|
|
3,561
|
|
|
-
|
|
Short-term investments
|
|
8
|
|
|
10
|
|
Accounts receivable, net
|
|
679
|
|
|
659
|
|
Inventories, net
|
|
128
|
|
|
123
|
|
Software development
|
|
336
|
|
|
452
|
|
Intellectual property licenses
|
|
30
|
|
|
5
|
|
Other current assets
|
|
383
|
|
|
444
|
|
Total current assets
|
|
6,948
|
|
|
6,541
|
|
Long-term investments
|
|
9
|
|
|
9
|
|
Software development
|
|
80
|
|
|
20
|
|
Intellectual property licenses
|
|
-
|
|
|
18
|
|
Property and equipment, net
|
|
189
|
|
|
157
|
|
Deferred income taxes, net
|
|
268
|
|
|
258
|
|
Other assets
|
|
173
|
|
|
85
|
|
Intangible assets, net
|
|
49
|
|
|
29
|
|
Trademark and trade names
|
|
433
|
|
|
433
|
|
Goodwill
|
|
7,095
|
|
|
7,086
|
|
Total assets
|
|
$
|
15,244
|
|
|
$
|
14,636
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
$
|
284
|
|
|
$
|
325
|
|
Deferred revenues
|
|
1,702
|
|
|
1,797
|
|
Accrued expenses and other liabilities
|
|
625
|
|
|
592
|
|
Total current liabilities
|
|
2,611
|
|
|
2,714
|
|
Long-term debt, net
|
|
4,079
|
|
|
4,324
|
|
Deferred income taxes, net
|
|
3
|
|
|
4
|
|
Other liabilities
|
|
483
|
|
|
361
|
|
Total liabilities
|
|
7,176
|
|
|
7,403
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
Common stock
|
|
-
|
|
|
-
|
|
Additional paid-in capital
|
|
10,242
|
|
|
9,924
|
|
Treasury stock
|
|
(5,637
|
)
|
|
(5,762
|
)
|
Retained earnings
|
|
4,096
|
|
|
3,374
|
|
Accumulated other comprehensive loss
|
|
(633
|
)
|
|
(303
|
)
|
Total shareholders' equity
|
|
8,068
|
|
|
7,233
|
|
Total liabilities and shareholders' equity
|
|
$
|
15,244
|
|
|
$
|
14,636
|
|
|
|
|
|
|
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(Amounts in millions)
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2015
|
|
2014
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
892
|
|
|
$
|
835
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Deferred income taxes
|
|
(27
|
)
|
|
(44
|
)
|
Provision for inventories
|
|
43
|
|
|
39
|
|
Depreciation and amortization
|
|
95
|
|
|
90
|
|
Loss on disposal of property and equipment
|
|
-
|
|
|
1
|
|
Amortization of capitalized software development costs and
intellectual property licenses1
|
|
399
|
|
|
256
|
|
Amortization of debt discount and debt financing costs
|
|
7
|
|
|
7
|
|
Stock-based compensation expense2
|
|
92
|
|
|
104
|
|
Excess tax benefits from stock awards
|
|
(67
|
)
|
|
(39
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Accounts receivable, net
|
|
(40
|
)
|
|
(177
|
)
|
Inventories
|
|
(54
|
)
|
|
(2
|
)
|
Software development and intellectual property licenses
|
|
(350
|
)
|
|
(349
|
)
|
Other assets
|
|
21
|
|
|
18
|
|
Deferred revenues
|
|
(27
|
)
|
|
475
|
|
Accounts payable
|
|
(25
|
)
|
|
(12
|
)
|
Accrued expenses and other liabilities
|
|
233
|
|
|
90
|
|
Net cash provided by operating activities
|
|
1,192
|
|
|
1,292
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Proceeds from maturities of available-for-sale investments
|
|
145
|
|
|
21
|
|
Purchases of available-for-sale investments
|
|
(145
|
)
|
|
-
|
|
Acquisition of business
|
|
(46
|
)
|
|
-
|
|
Cash in escrow
|
|
(3,561
|
)
|
|
-
|
|
Capital expenditures
|
|
(111
|
)
|
|
(107
|
)
|
Decrease in restricted cash
|
|
2
|
|
|
2
|
|
Net cash used in investing activities
|
|
(3,716
|
)
|
|
(84
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from issuance of common stock to employees
|
|
106
|
|
|
175
|
|
Tax payment related to net share settlements on restricted stock
rights
|
|
(83
|
)
|
|
(66
|
)
|
Excess tax benefits from stock awards
|
|
67
|
|
|
39
|
|
Dividends paid
|
|
(170
|
)
|
|
(147
|
)
|
Repayment of long-term debt
|
|
(250
|
)
|
|
(375
|
)
|
Payment of debt financing costs
|
|
(7
|
)
|
|
-
|
|
Proceeds received from shareholder settlement
|
|
202
|
|
|
-
|
|
Net cash used in financing activities
|
|
(135
|
)
|
|
(374
|
)
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash and cash equivalents
|
|
(366
|
)
|
|
(396
|
)
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(3,025
|
)
|
|
438
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
4,848
|
|
|
4,410
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
1,823
|
|
|
$
|
4,848
|
|
1 Excludes deferral and amortization of stock-based
compensation expense.
2 Includes the net effects of capitalization, deferral, and
amortization of stock-based compensation expense.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
SUPPLEMENTAL FINANCIAL INFORMATION
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year over Year
|
|
Three Months Ended
|
|
Year over Year
|
|
|
December 31,
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
% Increase
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
% Increase
|
|
|
2013
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
(Decrease)
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
(Decrease)
|
Cash Flow Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow
|
|
$
|
880
|
|
|
$
|
136
|
|
|
$
|
106
|
|
|
$
|
(145
|
)
|
|
$
|
1,195
|
|
|
36
|
%
|
|
$
|
209
|
|
|
$
|
135
|
|
|
$
|
(181
|
)
|
|
$
|
1,029
|
|
|
(14
|
)%
|
Capital Expenditures
|
|
16
|
|
|
37
|
|
|
25
|
|
|
28
|
|
|
17
|
|
|
6
|
|
|
21
|
|
|
28
|
|
|
46
|
|
|
16
|
|
|
(6
|
)
|
Non-GAAP Free Cash Flow1
|
|
864
|
|
|
99
|
|
|
81
|
|
|
(173
|
)
|
|
1,178
|
|
|
36
|
|
|
188
|
|
|
107
|
|
|
(227
|
)
|
|
1,013
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow - TTM2
|
|
1,264
|
|
|
1,075
|
|
|
1,072
|
|
|
977
|
|
|
1,292
|
|
|
2
|
|
|
1,365
|
|
|
1,394
|
|
|
1,358
|
|
|
1,192
|
|
|
(8
|
)
|
Capital Expenditures - TTM2
|
|
74
|
|
|
94
|
|
|
100
|
|
|
106
|
|
|
107
|
|
|
45
|
|
|
91
|
|
|
94
|
|
|
112
|
|
|
111
|
|
|
4
|
|
Non-GAAP Free Cash Flow - TTM2
|
|
$
|
1,190
|
|
|
$
|
981
|
|
|
$
|
972
|
|
|
$
|
871
|
|
|
$
|
1,185
|
|
|
-
|
%
|
|
$
|
1,274
|
|
|
$
|
1,300
|
|
|
$
|
1,246
|
|
|
$
|
1,081
|
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Non-GAAP free cash flow represents operating cash flow
minus capital expenditures.
2 TTM represents trailing twelve months. Operating Cash Flow
for the three months ended December 31, 2013, three months ended
September 30, 2013, three months ended June 30, 2013, and three months
ended March 31, 2013 was $880 million, $(50) million, $109 million, and
$325 million, respectively. Capital Expenditures for the three months
ended December 31, 2013, three months ended September 30, 2013, three
months ended June 30, 2013, and three months ended March 31, 2013 was
$16 million, $22 million, $19 million, and $17 million, respectively.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
|
(Amounts in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2015
|
|
Net Revenues
|
|
|
Cost of Sales - Product Costs
|
|
|
Cost of Sales - Online
|
|
|
Cost of Sales - Software Royalties and Amortization
|
|
|
Cost of Sales - Intellectual Property Licenses
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
|
GAAP Measurement
|
|
$
|
1,353
|
|
|
$
|
361
|
|
|
$
|
63
|
|
|
$
|
98
|
|
|
$
|
16
|
|
|
$
|
193
|
|
|
$
|
289
|
|
|
$
|
83
|
|
|
$
|
1,103
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
765
|
|
|
133
|
|
|
-
|
|
|
74
|
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
211
|
|
Less: Stock-based compensation2
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5
|
)
|
|
-
|
|
|
(5
|
)
|
|
(2
|
)
|
|
(10
|
)
|
|
(22
|
)
|
Less: Amortization of intangible assets3
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7
|
)
|
Less: Fees and other expenses related to acquisitions4
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5
|
)
|
|
(5
|
)
|
Non-GAAP Measurement
|
|
$
|
2,118
|
|
|
$
|
494
|
|
|
$
|
63
|
|
|
$
|
167
|
|
|
$
|
13
|
|
|
$
|
188
|
|
|
$
|
287
|
|
|
$
|
68
|
|
|
$
|
1,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
$
|
250
|
|
|
$
|
159
|
|
|
$
|
0.22
|
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
554
|
|
|
438
|
|
|
0.59
|
|
|
0.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Stock-based compensation2
|
|
22
|
|
|
15
|
|
|
0.02
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amortization of intangible assets3
|
|
7
|
|
|
5
|
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Fees and other expenses related to acquisitions4
|
|
5
|
|
|
$
|
5
|
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measurement
|
|
$
|
838
|
|
|
$
|
622
|
|
|
$
|
0.84
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
Net Revenues
|
|
|
Cost of Sales - Product Costs
|
|
|
Cost of Sales - Online
|
|
|
Cost of Sales - Software Royalties and Amortization
|
|
|
Cost of Sales - Intellectual Property Licenses
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
|
GAAP Measurement
|
|
$
|
4,664
|
|
|
$
|
921
|
|
|
$
|
224
|
|
|
$
|
412
|
|
|
$
|
28
|
|
|
$
|
646
|
|
|
$
|
734
|
|
|
$
|
380
|
|
|
$
|
3,345
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
(43
|
)
|
|
(32
|
)
|
|
-
|
|
|
(55
|
)
|
|
5
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(82
|
)
|
Less: Stock-based compensation2
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(15
|
)
|
|
-
|
|
|
(25
|
)
|
|
(9
|
)
|
|
(43
|
)
|
|
(92
|
)
|
Less: Amortization of intangible assets3
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(11
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(11
|
)
|
Less: Fees and other expenses related to acquisitions4
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5
|
)
|
|
(5
|
)
|
Non-GAAP Measurement
|
|
$
|
4,621
|
|
|
$
|
889
|
|
|
$
|
224
|
|
|
$
|
342
|
|
|
$
|
22
|
|
|
$
|
621
|
|
|
$
|
725
|
|
|
$
|
332
|
|
|
$
|
3,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
$
|
1,319
|
|
|
$
|
892
|
|
|
$
|
1.21
|
|
|
$
|
1.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
39
|
|
|
19
|
|
|
0.02
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Stock-based compensation2
|
|
92
|
|
|
65
|
|
|
0.09
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amortization of intangible assets3
|
|
11
|
|
|
8
|
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Fees and other expenses related to acquisitions4
|
|
5
|
|
|
5
|
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measurement
|
|
$
|
1,466
|
|
|
$
|
989
|
|
|
$
|
1.34
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Reflects the net change in deferred revenues and related
cost of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects amortization of intangible assets from purchase
price accounting.
4 Reflects fees and other expenses related to acquisitions,
including the acquisition of King Digital Entertainment, and the debt
financings related thereto.
The per share adjustments and the GAAP and non-GAAP earnings per share
information are presented as calculated. The sum of these measures, as
presented, may differ due to the impact of rounding.
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. For the three months
and year ended December 31, 2015, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate non-GAAP earnings
per common share, assuming dilution, was $617 million and $977 million,
respectively, as compared to total net income of $622 million and $989
million, respectively, for the same periods. For purposes of calculating
earnings per share, we had, on a weighted-average basis, common shares
outstanding of 733 million, participating securities of approximately 6
million, and dilutive shares of 11 million during the three months ended
December 31, 2015. For purposes of calculating earnings per share, we
had, on a weighted-average basis, common shares outstanding of 728
million, participating securities of approximately 8 million, and
dilutive shares of 11 million during the year ended December 31, 2015.
Refer to Note B in the earnings release for information about the
reconciliation of constant FX non-GAAP measures.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
|
(Amounts in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2014
|
|
Net Revenues
|
|
|
Cost of Sales - Product Costs
|
|
|
Cost of Sales - Online
|
|
|
Cost of Sales - Software Royalties and Amortization
|
|
|
Cost of Sales - Intellectual Property Licenses
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
|
GAAP Measurement
|
|
$
|
1,575
|
|
|
$
|
432
|
|
|
$
|
61
|
|
|
$
|
124
|
|
|
$
|
14
|
|
|
$
|
184
|
|
|
$
|
247
|
|
|
$
|
75
|
|
|
$
|
1,137
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
638
|
|
|
112
|
|
|
-
|
|
|
52
|
|
|
(1
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
163
|
|
Less: Stock-based compensation2
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5
|
)
|
|
-
|
|
|
(5
|
)
|
|
(2
|
)
|
|
(17
|
)
|
|
(29
|
)
|
Less: Amortization of intangible assets3
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(8
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(8
|
)
|
Less: Fees and other expenses related to the Purchase Transaction
and related debt financings4
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
36
|
|
|
36
|
|
Non-GAAP Measurement
|
|
$
|
2,213
|
|
|
$
|
544
|
|
|
$
|
61
|
|
|
$
|
171
|
|
|
$
|
5
|
|
|
$
|
179
|
|
|
$
|
245
|
|
|
$
|
94
|
|
|
$
|
1,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
$
|
438
|
|
|
$
|
361
|
|
|
$
|
0.49
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
475
|
|
|
349
|
|
|
0.48
|
|
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Stock-based compensation2
|
|
29
|
|
|
19
|
|
|
0.03
|
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amortization of intangible assets3
|
|
8
|
|
|
5
|
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Fees and other expenses related to the Purchase Transaction
and related debt financings4
|
|
(36
|
)
|
|
(36
|
)
|
|
(0.05
|
)
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measurement
|
|
$
|
914
|
|
|
$
|
698
|
|
|
$
|
0.95
|
|
|
$
|
0.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
|
Net Revenues
|
|
|
Cost of Sales - Product Costs
|
|
|
Cost of Sales - Online
|
|
|
Cost of Sales - Software Royalties and Amortization
|
|
|
Cost of Sales - Intellectual Property Licenses
|
|
|
Product Development
|
|
|
Sales and Marketing
|
|
|
General and Administrative
|
|
|
Total Costs and Expenses
|
|
GAAP Measurement
|
|
$
|
4,408
|
|
|
$
|
999
|
|
|
$
|
232
|
|
|
$
|
260
|
|
|
$
|
34
|
|
|
$
|
571
|
|
|
$
|
712
|
|
|
$
|
417
|
|
|
$
|
3,225
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
405
|
|
|
29
|
|
|
-
|
|
|
161
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
190
|
|
Less: Stock-based compensation2
|
|
-
|
|
|
-
|
|
|
(1
|
)
|
|
(17
|
)
|
|
-
|
|
|
(22
|
)
|
|
(8
|
)
|
|
(56
|
)
|
|
(104
|
)
|
Less: Amortization of intangible assets3
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
Less: Fees and other expenses related to the Purchase Transaction
and related debt financings4
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(13
|
)
|
|
(13
|
)
|
Non-GAAP Measurement
|
|
$
|
4,813
|
|
|
$
|
1,028
|
|
|
$
|
231
|
|
|
$
|
404
|
|
|
$
|
22
|
|
|
$
|
549
|
|
|
$
|
704
|
|
|
$
|
348
|
|
|
$
|
3,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
Net Income
|
|
|
Basic Earnings per Share
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Measurement
|
|
$
|
1,183
|
|
|
$
|
835
|
|
|
$
|
1.14
|
|
|
$
|
1.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net effect from deferral of net revenues and related cost of
sales1
|
|
215
|
|
|
136
|
|
|
0.19
|
|
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Stock-based compensation2
|
|
104
|
|
|
65
|
|
|
0.09
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amortization of intangible assets3
|
|
12
|
|
|
8
|
|
|
0.01
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Fees and other expenses related to the Purchase Transaction
and related debt financings4
|
|
13
|
|
|
13
|
|
|
0.02
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measurement
|
|
$
|
1,527
|
|
|
$
|
1,057
|
|
|
$
|
1.44
|
|
|
$
|
1.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Reflects the net change in deferred revenues and related
cost of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects amortization of intangible assets from purchase
price accounting.
4 Reflects fees and other expenses (including legal fees,
costs, expenses and accruals) 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.
The per share adjustments and the GAAP and non-GAAP earnings per share
information are presented as calculated. The sum of these measures, as
presented, may differ due to the impact of rounding.
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. For the three months
and year ended December 31, 2014, net income attributable to Activision
Blizzard, Inc. common shareholders used to calculate non-GAAP earnings
per common share, assuming dilution, was $686 million and $1,034
million, respectively, as compared to total net income of $698 million
and $1,057 million, respectively, for the same periods. For purposes of
calculating earnings per share, we had, on a weighted-average basis,
common shares outstanding of 720 million, participating securities of
approximately 12 million, and dilutive shares of 9 million during the
three months ended December 31, 2014. For purposes of calculating
earnings per share, we had, on a weighted-average basis, common shares
outstanding of 716 million, participating securities of approximately 15
million, and dilutive shares of 10 million during the year ended
December 31, 2014.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
For the Three Months and Year Ended December 31, 2015 and 2014
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
GAAP Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
$
|
462
|
|
|
34
|
%
|
|
$
|
846
|
|
|
54
|
%
|
|
$
|
(384
|
)
|
|
(45
|
)%
|
Digital online channels2
|
|
724
|
|
|
54
|
|
|
539
|
|
|
34
|
|
|
185
|
|
|
34
|
|
Total Activision and Blizzard
|
|
1,186
|
|
|
88
|
|
|
1,385
|
|
|
88
|
|
|
(199
|
)
|
|
(14
|
)
|
Other3
|
|
167
|
|
|
12
|
|
|
190
|
|
|
12
|
|
|
(23
|
)
|
|
(12
|
)
|
Total consolidated GAAP net revenues
|
|
1,353
|
|
|
100
|
|
|
1,575
|
|
|
100
|
|
|
(222
|
)
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
709
|
|
|
|
|
|
492
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
56
|
|
|
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
765
|
|
|
|
|
|
638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
1,171
|
|
|
55
|
|
|
1,338
|
|
|
60
|
|
|
(167
|
)
|
|
(12
|
)
|
Digital online channels2
|
|
780
|
|
|
37
|
|
|
685
|
|
|
31
|
|
|
95
|
|
|
14
|
|
Total Activision and Blizzard
|
|
1,951
|
|
|
92
|
|
|
2,023
|
|
|
91
|
|
|
(72
|
)
|
|
(4
|
)
|
Other3
|
|
167
|
|
|
8
|
|
|
190
|
|
|
9
|
|
|
(23
|
)
|
|
(12
|
)
|
Total non-GAAP net revenues5
|
|
$
|
2,118
|
|
|
100
|
%
|
|
$
|
2,213
|
|
|
100
|
%
|
|
$
|
(95
|
)
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
GAAP Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
$
|
1,806
|
|
|
39
|
%
|
|
$
|
2,104
|
|
|
48
|
%
|
|
$
|
(298
|
)
|
|
(14
|
)%
|
Digital online channels2
|
|
2,502
|
|
|
54
|
|
|
1,897
|
|
|
43
|
|
|
605
|
|
|
32
|
|
Total Activision and Blizzard
|
|
4,308
|
|
|
92
|
|
|
4,001
|
|
|
91
|
|
|
307
|
|
|
8
|
|
Other3
|
|
356
|
|
|
8
|
|
|
407
|
|
|
9
|
|
|
(51
|
)
|
|
(13
|
)
|
Total consolidated GAAP net revenues
|
|
4,664
|
|
|
100
|
|
|
4,408
|
|
|
100
|
|
|
256
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
(169
|
)
|
|
|
|
|
104
|
|
|
|
|
|
|
|
|
|
|
Digital online channels2
|
|
126
|
|
|
|
|
|
301
|
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
(43
|
)
|
|
|
|
|
405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Distribution Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail channels
|
|
1,637
|
|
|
35
|
|
|
2,208
|
|
|
46
|
|
|
(571
|
)
|
|
(26
|
)
|
Digital online channels2
|
|
2,628
|
|
|
57
|
|
|
2,198
|
|
|
46
|
|
|
430
|
|
|
20
|
|
Total Activision and Blizzard
|
|
4,265
|
|
|
92
|
|
|
4,406
|
|
|
92
|
|
|
(141
|
)
|
|
(3
|
)
|
Other3
|
|
356
|
|
|
8
|
|
|
407
|
|
|
8
|
|
|
(51
|
)
|
|
(13
|
)
|
Total non-GAAP net revenues5
|
|
$
|
4,621
|
|
|
100
|
%
|
|
$
|
4,813
|
|
|
100
|
%
|
|
$
|
(192
|
)
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ due to
the impact of rounding.
2 Net revenues from digital online channels represent
revenues from digitally distributed subscriptions, licensing royalties,
value-added services, downloadable content, micro-transactions, and
products.
3 Net revenues from Other include revenues from our film and
tv studio and media network businesses, along with revenues that were
historically shown as "Distribution."
4 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred revenues.
5 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
|
For the Three Months Ended December 31, 2015 and 2014
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
GAAP Net Revenues by Segment/Platform Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision and Blizzard:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online2
|
|
$
|
164
|
|
|
12
|
%
|
|
$
|
266
|
|
|
17
|
%
|
|
$
|
(102
|
)
|
|
(38
|
)%
|
PC
|
|
221
|
|
|
16
|
|
|
104
|
|
|
7
|
|
|
117
|
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Next-generation (PS4, Xbox One, Wii U)
|
|
497
|
|
|
37
|
|
|
367
|
|
|
23
|
|
|
130
|
|
|
35
|
|
Prior-generation (PS3, Xbox 360, Wii)
|
|
158
|
|
|
12
|
|
|
380
|
|
|
24
|
|
|
(222
|
)
|
|
(58
|
)
|
Total console3
|
|
655
|
|
|
48
|
|
|
747
|
|
|
47
|
|
|
(92
|
)
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary4
|
|
146
|
|
|
11
|
|
|
268
|
|
|
17
|
|
|
(122
|
)
|
|
(46
|
)
|
Total Activision and Blizzard
|
|
1,186
|
|
|
88
|
|
|
1,385
|
|
|
88
|
|
|
(199
|
)
|
|
(14
|
)
|
Other5
|
|
167
|
|
|
12
|
|
|
190
|
|
|
12
|
|
|
(23
|
)
|
|
(12
|
)
|
Total consolidated GAAP net revenues
|
|
1,353
|
|
|
100
|
|
|
1,575
|
|
|
100
|
|
|
(222
|
)
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision and Blizzard:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online2
|
|
27
|
|
|
|
|
|
132
|
|
|
|
|
|
|
|
|
|
|
PC
|
|
30
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Next-generation (PS4, Xbox One, Wii U)
|
|
616
|
|
|
|
|
|
263
|
|
|
|
|
|
|
|
|
|
|
Prior-generation (PS3, Xbox 360, Wii)
|
|
89
|
|
|
|
|
|
219
|
|
|
|
|
|
|
|
|
|
|
Total console3
|
|
705
|
|
|
|
|
|
482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary4
|
|
3
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
765
|
|
|
|
|
|
638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Segment/Platform Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision and Blizzard:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online2
|
|
191
|
|
|
9
|
|
|
398
|
|
|
18
|
|
|
(207
|
)
|
|
(52
|
)
|
PC
|
|
251
|
|
|
12
|
|
|
127
|
|
|
6
|
|
|
124
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Next-generation (PS4, Xbox One, Wii U)
|
|
1,113
|
|
|
53
|
|
|
630
|
|
|
28
|
|
|
483
|
|
|
77
|
|
Prior-generation (PS3, Xbox 360, Wii)
|
|
247
|
|
|
12
|
|
|
599
|
|
|
27
|
|
|
(352
|
)
|
|
(59
|
)
|
Total console3
|
|
1,360
|
|
|
64
|
|
|
1,229
|
|
|
56
|
|
|
131
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary4
|
|
149
|
|
|
7
|
|
|
269
|
|
|
12
|
|
|
(120
|
)
|
|
(45
|
)
|
Total Activision and Blizzard
|
|
1,951
|
|
|
92
|
|
|
2,023
|
|
|
91
|
|
|
(72
|
)
|
|
(4
|
)
|
Other5
|
|
167
|
|
|
8
|
|
|
190
|
|
|
9
|
|
|
(23
|
)
|
|
(12
|
)
|
Total consolidated non-GAAP net revenues7
|
|
$
|
2,118
|
|
|
100
|
%
|
|
$
|
2,213
|
|
|
100
|
%
|
|
$
|
(95
|
)
|
|
(4
|
)%
|
1 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ due to
the impact of rounding.
2 Revenues from online consists of revenues from all World
of Warcraft products, including subscriptions, boxed products,
expansion packs, licensing royalties, and value-added services.
3 Downloadable content and their related revenues are
included in each respective console platforms and total console.
4 Revenues from mobile and ancillary include revenues from
handheld, mobile and tablet devices, as well as non-platform specific
game related revenues such as standalone sales of toys and accessories
products from the Skylanders franchise and other physical merchandise
and accessories.
5 Net revenues from Other include revenues from our film and
tv studio and media network businesses, along with revenues that were
historically shown as "Distribution."
6 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred net revenues.
7 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
|
For the Year Ended December 31, 2015 and 2014
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
GAAP Net Revenues by Segment/Platform Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision and Blizzard:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online2
|
|
$
|
851
|
|
|
18
|
%
|
|
$
|
867
|
|
|
20
|
%
|
|
$
|
(16
|
)
|
|
(2
|
)%
|
PC
|
|
648
|
|
|
14
|
|
|
551
|
|
|
13
|
|
|
97
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Next-generation (PS4, Xbox One, Wii U)
|
|
1,492
|
|
|
32
|
|
|
720
|
|
|
16
|
|
|
772
|
|
|
107
|
|
Prior-generation (PS3, Xbox 360, Wii)
|
|
899
|
|
|
19
|
|
|
1,430
|
|
|
32
|
|
|
(531
|
)
|
|
(37
|
)
|
Total console3
|
|
2,391
|
|
|
51
|
|
|
2,150
|
|
|
49
|
|
|
241
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary4
|
|
418
|
|
|
9
|
|
|
433
|
|
|
10
|
|
|
(15
|
)
|
|
(3
|
)
|
Total Activision and Blizzard
|
|
4,308
|
|
|
92
|
|
|
4,001
|
|
|
91
|
|
|
307
|
|
|
8
|
|
Other5
|
|
356
|
|
|
8
|
|
|
407
|
|
|
9
|
|
|
(51
|
)
|
|
(13
|
)
|
Total consolidated GAAP net revenues
|
|
4,664
|
|
|
100
|
|
|
4,408
|
|
|
100
|
|
|
256
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision and Blizzard:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online2
|
|
(138
|
)
|
|
|
|
|
168
|
|
|
|
|
|
|
|
|
|
|
PC
|
|
82
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Next-generation (PS4, Xbox One, Wii U)
|
|
252
|
|
|
|
|
|
477
|
|
|
|
|
|
|
|
|
|
|
Prior-generation (PS3, Xbox 360, Wii)
|
|
(274
|
)
|
|
|
|
|
(295
|
)
|
|
|
|
|
|
|
|
|
|
Total console3
|
|
(22
|
)
|
|
|
|
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary4
|
|
35
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
Total changes in deferred revenues
|
|
(43
|
)
|
|
|
|
|
405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Segment/Platform Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision and Blizzard:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online2
|
|
713
|
|
|
15
|
|
|
1,035
|
|
|
22
|
|
|
(322
|
)
|
|
(31
|
)
|
PC
|
|
730
|
|
|
16
|
|
|
592
|
|
|
12
|
|
|
138
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Next-generation (PS4, Xbox One, Wii U)
|
|
1,744
|
|
|
38
|
|
|
1,197
|
|
|
25
|
|
|
547
|
|
|
46
|
|
Prior-generation (PS3, Xbox 360, Wii)
|
|
625
|
|
|
14
|
|
|
1,135
|
|
|
24
|
|
|
(510
|
)
|
|
(45
|
)
|
Total console3
|
|
2,369
|
|
|
51
|
|
|
2,332
|
|
|
48
|
|
|
37
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobile and ancillary4
|
|
453
|
|
|
10
|
|
|
447
|
|
|
9
|
|
|
6
|
|
|
1
|
|
Total Activision and Blizzard
|
|
4,265
|
|
|
92
|
|
|
4,406
|
|
|
92
|
|
|
(141
|
)
|
|
(3
|
)
|
Other5
|
|
356
|
|
|
8
|
|
|
407
|
|
|
8
|
|
|
(51
|
)
|
|
(13
|
)
|
Total consolidated non-GAAP net revenues7
|
|
$
|
4,621
|
|
|
100
|
%
|
|
$
|
4,813
|
|
|
100
|
%
|
|
$
|
(192
|
)
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ due to
the impact of rounding.
2 Revenues from online consists of revenues from all World
of Warcraft products, including subscriptions, boxed products,
expansion packs, licensing royalties, and value-added services.
3 Downloadable content and their related revenues are
included in each respective console platforms and total console.
4 Revenues from mobile and ancillary include revenues from
handheld, mobile and tablet devices, as well as non-platform specific
game related revenues such as standalone sales of toys and accessories
products from the Skylanders franchise and other physical merchandise
and accessories.
5 Net revenues from Other include revenues from our film and
tv studio and media network businesses, along with revenues that were
historically shown as "Distribution."
6 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred net revenues.
7 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
|
For the Three Months and Year Ended December 31, 2015 and 2014
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
GAAP Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
659
|
|
|
49
|
%
|
|
$
|
806
|
|
|
51
|
%
|
|
$
|
(147
|
)
|
|
(18
|
)%
|
Europe
|
|
522
|
|
|
39
|
|
|
653
|
|
|
41
|
|
|
(131
|
)
|
|
(20
|
)
|
Asia Pacific
|
|
172
|
|
|
13
|
|
|
116
|
|
|
7
|
|
|
56
|
|
|
48
|
|
Total consolidated GAAP net revenues
|
|
1,353
|
|
|
100
|
|
|
1,575
|
|
|
100
|
|
|
(222
|
)
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
447
|
|
|
|
|
|
342
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
277
|
|
|
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
41
|
|
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
Total changes in net revenues
|
|
765
|
|
|
|
|
|
638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
1,106
|
|
|
52
|
|
|
1,148
|
|
|
52
|
|
|
(42
|
)
|
|
(4
|
)
|
Europe
|
|
799
|
|
|
38
|
|
|
907
|
|
|
41
|
|
|
(108
|
)
|
|
(12
|
)
|
Asia Pacific
|
|
213
|
|
|
10
|
|
|
158
|
|
|
7
|
|
|
55
|
|
|
35
|
|
Total non-GAAP net revenues3
|
|
$
|
2,118
|
|
|
100
|
%
|
|
$
|
2,213
|
|
|
100
|
%
|
|
$
|
(95
|
)
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
GAAP Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
2,409
|
|
|
52
|
%
|
|
$
|
2,190
|
|
|
50
|
%
|
|
$
|
219
|
|
|
10
|
%
|
Europe
|
|
1,741
|
|
|
37
|
|
|
1,824
|
|
|
41
|
|
|
(83
|
)
|
|
(5
|
)
|
Asia Pacific
|
|
514
|
|
|
11
|
|
|
394
|
|
|
9
|
|
|
120
|
|
|
30
|
|
Total consolidated GAAP net revenues
|
|
4,664
|
|
|
100
|
|
|
4,408
|
|
|
100
|
|
|
256
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Deferred Revenues2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
(55
|
)
|
|
|
|
|
206
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
(20
|
)
|
|
|
|
|
153
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific
|
|
32
|
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
Total changes in net revenues
|
|
(43
|
)
|
|
|
|
|
405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Revenues by Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
2,354
|
|
|
51
|
|
|
2,396
|
|
|
50
|
|
|
(42
|
)
|
|
(2
|
)
|
Europe
|
|
1,721
|
|
|
37
|
|
|
1,977
|
|
|
41
|
|
|
(256
|
)
|
|
(13
|
)
|
Asia Pacific
|
|
546
|
|
|
12
|
|
|
440
|
|
|
9
|
|
|
106
|
|
|
24
|
|
Total non-GAAP net revenues3
|
|
$
|
4,621
|
|
|
100
|
%
|
|
$
|
4,813
|
|
|
100
|
%
|
|
$
|
(192
|
)
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ due to
the impact of rounding.
2 We provide net revenues including (in accordance with GAAP)
and excluding (non-GAAP) the impact of changes in deferred net revenues.
3 Total non-GAAP net revenues presented also represents our
total operating segment net revenues.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
FINANCIAL INFORMATION
|
|
For the Three Months and Year Ended December 31, 2015 and 2014
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
Segment net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
$
|
1,492
|
|
|
70
|
%
|
|
$
|
1,492
|
|
|
67
|
%
|
|
$
|
-
|
|
|
-
|
%
|
Blizzard3
|
|
459
|
|
|
22
|
|
|
531
|
|
|
24
|
|
|
(72
|
)
|
|
(14
|
)
|
Activision and Blizzard total
|
|
1,951
|
|
|
92
|
|
|
2,023
|
|
|
91
|
|
|
(72
|
)
|
|
(4
|
)
|
Other4
|
|
167
|
|
|
8
|
|
|
190
|
|
|
9
|
|
|
(23
|
)
|
|
(12
|
)
|
Segments total
|
|
2,118
|
|
|
100
|
%
|
|
2,213
|
|
|
100
|
%
|
|
(95
|
)
|
|
(4
|
)
|
Reconciliation to consolidated net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues
|
|
(765
|
)
|
|
|
|
|
(638
|
)
|
|
|
|
|
|
|
|
|
|
Consolidated net revenues
|
|
$
|
1,353
|
|
|
|
|
|
$
|
1,575
|
|
|
|
|
|
(222
|
)
|
|
(14
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
$
|
626
|
|
|
|
|
|
$
|
696
|
|
|
|
|
|
$
|
(70
|
)
|
|
(10
|
)%
|
Blizzard3
|
|
177
|
|
|
|
|
|
208
|
|
|
|
|
|
(31
|
)
|
|
(15
|
)
|
Activision and Blizzard total
|
|
803
|
|
|
|
|
|
904
|
|
|
|
|
|
(101
|
)
|
|
(11
|
)
|
Other4
|
|
35
|
|
|
|
|
|
10
|
|
|
|
|
|
25
|
|
|
NM
|
|
Segments total
|
|
838
|
|
|
|
|
|
914
|
|
|
|
|
|
(76
|
)
|
|
(8
|
)
|
Reconciliation to consolidated operating income and consolidated
income before income tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues and related cost of sales
|
|
(554
|
)
|
|
|
|
|
(475
|
)
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
(22
|
)
|
|
|
|
|
(29
|
)
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
(7
|
)
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to acquisitions and the Purchase
Transaction and related debt financings5
|
|
(5
|
)
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income
|
|
250
|
|
|
|
|
|
438
|
|
|
|
|
|
(188
|
)
|
|
(43
|
)
|
Interest and other expense, net
|
|
49
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
Consolidated income before income tax expense
|
|
$
|
201
|
|
|
|
|
|
$
|
388
|
|
|
|
|
|
(187
|
)
|
|
(48
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin from total operating segments
|
|
39.6
|
%
|
|
|
|
|
41.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
$ Increase (Decrease)
|
|
|
% Increase (Decrease)
|
|
|
|
Amount
|
|
|
% of Total1
|
|
|
Amount
|
|
|
% of Total1
|
|
|
|
|
|
Segment net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
$
|
2,700
|
|
|
58
|
%
|
|
$
|
2,686
|
|
|
56
|
%
|
|
$
|
14
|
|
|
1
|
%
|
|
Blizzard3
|
|
1,565
|
|
|
34
|
|
|
1,720
|
|
|
36
|
|
|
(155
|
)
|
|
(9
|
)
|
|
Activision and Blizzard total
|
|
4,265
|
|
|
92
|
|
|
4,406
|
|
|
92
|
|
|
(141
|
)
|
|
(3
|
)
|
|
Other4
|
|
356
|
|
|
8
|
|
|
407
|
|
|
8
|
|
|
(51
|
)
|
|
(13
|
)
|
|
Segments total
|
|
4,621
|
|
|
100
|
%
|
|
4,813
|
|
|
100
|
%
|
|
(192
|
)
|
|
(4
|
)
|
|
Reconciliation to consolidated net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues
|
|
43
|
|
|
|
|
|
(405
|
)
|
|
|
|
|
|
|
|
|
|
Consolidated net revenues
|
|
$
|
4,664
|
|
|
|
|
|
$
|
4,408
|
|
|
|
|
|
256
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activision2
|
|
$
|
868
|
|
|
|
|
|
$
|
762
|
|
|
|
|
|
$
|
106
|
|
|
14
|
%
|
|
Blizzard3
|
|
561
|
|
|
|
|
|
756
|
|
|
|
|
|
(195
|
)
|
|
(26
|
)
|
|
Activision and Blizzard total
|
|
1,429
|
|
|
|
|
|
1,518
|
|
|
|
|
|
(89
|
)
|
|
(6
|
)
|
|
Other4
|
|
37
|
|
|
|
|
|
9
|
|
|
|
|
|
28
|
|
|
NM
|
|
Operating segment total
|
|
1,466
|
|
|
|
|
|
1,527
|
|
|
|
|
|
(61
|
)
|
|
(4
|
)
|
|
Reconciliation to consolidated operating income and consolidated
income before income tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect from deferral of net revenues and related cost of sales
|
|
(39
|
)
|
|
|
|
|
(215
|
)
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
(92
|
)
|
|
|
|
|
(104
|
)
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
(11
|
)
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
Fees and other expenses related to acquisitions and the Purchase
Transaction and related debt financings5
|
|
(5
|
)
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
Consolidated operating income
|
|
1,319
|
|
|
|
|
|
1,183
|
|
|
|
|
|
136
|
|
|
11
|
|
|
Interest and other expense, net
|
|
198
|
|
|
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
Consolidated income before income tax expense
|
|
$
|
1,121
|
|
|
|
|
|
$
|
981
|
|
|
|
|
|
140
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin from total operating segments
|
|
31.7
|
%
|
|
|
|
|
31.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The percentages of total are presented as calculated.
Therefore the sum of these percentages, as presented, may differ due to
the impact of rounding.
2 Activision Publishing ("Activision") - publishes
interactive entertainment products and content.
3 Blizzard Entertainment, Inc. ("Blizzard") - publishes PC
games and online subscription-based games in the MMORPG category.
4 Other includes other income and expenses from operating
segments managed outside the reportable segments, including our
distribution, film and tv studio, and media network businesses, as well
as other unallocated corporate income and expenses.
5 Reflects fees and other expenses related to the Purchase
Transaction and acquisitions, including the acquisition of King Digital
Entertainment and the debt financings related thereto.
Refer to Note B in the earnings release for information about the
reconciliation of constant FX non-GAAP measures.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
EBITDA and Adjusted EBITDA
|
|
For the Trailing Twelve Months Ended December 31, 2015
|
(Amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve Months Ended
|
|
|
March 31, 2015
|
|
|
June 30, 2015
|
|
|
September 30, 2015
|
|
|
December 31, 2015
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
|
|
$
|
394
|
|
|
$
|
212
|
|
|
$
|
127
|
|
|
$
|
159
|
|
|
$
|
892
|
Interest Expense, net
|
|
50
|
|
|
50
|
|
|
51
|
|
|
50
|
|
|
200
|
Provision for income taxes
|
|
98
|
|
|
70
|
|
|
18
|
|
|
42
|
|
|
229
|
Depreciation and amortization
|
|
20
|
|
|
21
|
|
|
25
|
|
|
30
|
|
|
95
|
EBITDA
|
|
562
|
|
|
353
|
|
|
221
|
|
|
281
|
|
|
1,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferral of net revenues and related cost of sales1
|
|
(362
|
)
|
|
(181
|
)
|
|
26
|
|
|
554
|
|
|
39
|
Stock-based compensation expense2
|
|
23
|
|
|
21
|
|
|
28
|
|
|
22
|
|
|
92
|
Fees and other expenses related to acquisitions3
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5
|
|
|
5
|
Adjusted EBITDA
|
|
$
|
223
|
|
|
$
|
193
|
|
|
$
|
275
|
|
|
$
|
862
|
|
|
$
|
1,552
|
1 Reflects the net change in deferred revenues and related
cost of sales.
2 Includes expenses related to stock-based compensation.
3 Reflects fees and other expenses related to acquisitions,
including the acquisition of King Digital Entertainment, and the debt
financings related thereto.
Trailing twelve months amounts are presented as calculated. Therefore
the sum of the four quarters, as presented, may differ due to the impact
of rounding.
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
|
|
Outlook for the Three Months Ending March 31, 2016 and Year
Ending December 31, 2016
|
GAAP to Non-GAAP Reconciliation
|
(Amounts in millions, except per share data)
|
|
|
|
Outlook for the
|
|
Outlook for the
|
|
|
Three Months Ending
|
|
Year Ending
|
|
|
March 31, 2016
|
|
December 31, 2016
|
|
|
|
|
|
Net Revenues (GAAP)
|
|
$
|
1,260
|
|
|
$
|
6,100
|
Excluding the impact of:
|
|
|
|
|
Change in deferred revenues1
|
|
|
(460
|
)
|
|
|
150
|
Net Revenues (Non-GAAP)
|
|
$
|
800
|
|
|
$
|
6,250
|
|
|
|
|
|
|
|
|
|
|
Operating Income (GAAP)
|
|
$
|
265
|
|
|
$
|
705
|
Excluding the impact of:
|
|
|
|
|
Deferral of net revenues and related cost of sales2
|
|
|
(300
|
)
|
|
|
176
|
Stock-based compensation3
|
|
|
40
|
|
|
|
197
|
Amortization of intangible assets4
|
|
|
110
|
|
|
|
892
|
Fees and other expenses related to acquisitions5
|
|
|
45
|
|
|
|
50
|
Operating Income (Non-GAAP)
|
|
$
|
160
|
|
|
$
|
2,020
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Diluted Share (GAAP)
|
|
$
|
0.21
|
|
|
$
|
0.45
|
Excluding the impact of:
|
|
|
|
|
Deferral of net revenues and related cost of sales2
|
|
|
(0.30
|
)
|
|
|
0.15
|
Stock-based compensation3
|
|
|
0.04
|
|
|
|
0.18
|
Amortization of intangible assets4
|
|
|
0.11
|
|
|
|
0.91
|
Fees and other expenses related to acquisitions5
|
|
|
0.05
|
|
|
|
0.07
|
Earnings Per Diluted Share (Non-GAAP)
|
|
$
|
0.11
|
|
|
$
|
1.75
|
|
1 Reflects the net change in deferred revenues.
2 Reflects the net change in deferred revenues and related
cost of sales.
3 Reflects expenses related to stock-based compensation.
4 Reflects amortization of intangible assets from purchase
price accounting, including the acquisition of King Digital
Entertainment.
5 Reflects fees and other expenses related to acquisitions,
including the acquisition of King Digital Entertainment, and the debt
financings related thereto.
Outlook includes King Digital Entertainment based on an assumed
transaction close later this month. The outlook includes certain
estimates and assumptions associated with the King transaction based on
the data currently available to us considering the transaction has not
closed. Additionally, our GAAP outlook includes estimates and
assumptions that may be materially different from those at the
transaction close, including our stock price at and around the
transaction close date, market inputs and assumptions in our stock
option expenses, allocation of the purchase consideration to the
acquired assets, and related tax impact from the transaction, among
others.
The per share adjustments and the GAAP and non-GAAP earnings (loss) per
share information are presented as calculated. Therefore the sum of
these measures, as presented, may differ due to the impact of rounding.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160211006451/en/
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