Operating Segments and Geographic Region

6 Months Ended

Jun. 30, 2013

Operating Segments and Geographic Region

Operating Segments and Geographic Region

7.       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 manner in which we assess operating performance and allocate resources, and the availability of separate financial information. Currently, we operate under three operating segments: Activision, Blizzard and Distribution (see Note 1 of the Notes to the Condensed Consolidated Financial Statements). We do not aggregate operating segments.

The CODM reviews segment performance exclusive of the impact of the change in deferred net revenues and related cost of sales with respect to certain of our online-enabled games, stock-based compensation expense, and amortization of intangible assets as a result of purchase price accounting. 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 three and six months ended June 30, 2013 and 2012 are presented below (amounts in millions):

			Three months ended June 30,
			2013		2012		2013		2012
							Income from operations
			Net revenues				before income tax expense
	Activision		$	347	$	373	$	60	$	(71)
	Blizzard			224		634		60		371
	Distribution			37		47		(1)		---
		Operating segments total		608		1,054		119		300
Reconciliation to consolidated net revenues /
consolidated income before income tax
expense:
	Net effect from deferral of net revenues and
		related cost of sales		442		21		338		(40)
	Stock-based compensation expense			---		---		(24)		(31)
	Amortization of intangible assets			---		---		(3)		(2)
Consolidated net revenues / operating income			$	1,050	$	1,075		430		227
	Investment and other income (expense), net							---		2
Consolidated income before income tax expense							$	430	$	229
			Six months ended June 30,
			2013		2012		2013		2012
							Income from operations
			Net revenues				before income tax expense
	Activision		$	771	$	645	$	173	$	(70)
	Blizzard			554		884		194		460
	Distribution			88		112		(1)		---
		Operating segments total		1,413		1,641		366		390
Reconciliation to consolidated net revenues /
consolidated income before income tax
expense:
	Net effect from deferral of net revenues and
		related cost of sales		962		606		707		407
	Stock-based compensation expense			---		---		(50)		(52)
	Amortization of intangible assets			---		---		(6)		(5)
Consolidated net revenues / operating income			$	2,375	$	2,247	$	1,017	$	740
	Investment and other income (expense), net							3		3
Consolidated income before income tax expense							$	1,020	$	743

Geographic information for the three and six months ended June 30, 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):

		Three months ended June 30,				Six months ended June 30,
		2013		2012		2013		2012
Net revenues by geographic region:
	North America	$	562	$	562	$	1,300	$	1,163
	Europe		402		403		889		888
	Asia Pacific		86		110		186		196
Total consolidated net revenues		$	1,050	$	1,075	$	2,375	$	2,247

Net revenues by platform were as follows (amounts in millions):

		Three months ended June 30,				Six months ended June 30,
		2013		2012		2013		2012
Net revenues by platform:
	Console	$	590	$	514	$	1,339	$	1,203
	Online subscriptions1		233		220		508		475
	Other2		90		143		245		259
	PC		100		151		195		198
Total platform net revenues			1,013		1,028		2,287		2,135
Distribution			37		47		88		112
Total consolidated net revenues		$	1,050	$	1,075	$	2,375	$	2,247

(1)       Revenues from online subscriptions consist of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, value-added services, and revenues from Call of Duty® Elite memberships.

(2)Revenues from other include revenues from handheld and mobile devices, as well as non-platform specific game related revenues such as standalone sales of toys and accessories products from the Skylanders® franchise and other physical merchandise and accessories.

Long-lived assets by geographic region at June 30, 2013 and December 31, 2012 were as follows (amounts in millions):

		At June 30, 2013		At December 31, 2012
Long-lived assets* by geographic region:
	North America	$	92	$	90
	Europe		32		40
	Asia Pacific		8		11
Total long-lived assets by geographic region		$	132	$	141

*The only long-lived assets that we classify by region are our long term tangible fixed assets, which only include property, plant and equipment assets; all other long term assets are not allocated by location.

We did not have any single external customer that accounted for 10% or more of consolidated net revenues for the three and six months ended June 30, 2013 and 2012.