XML 55 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
Operating Segments and Geographic Region
 9 Months Ended
Sep. 30, 2014
Operating Segments and Geographic Region  
Operating Segments and Geographic Region

9.       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 conduct our business through three operating segments: Activision, Blizzard and Distribution (see Note 1 of the Notes to Condensed 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 (loss) before income tax expense (benefit) for the three and nine months ended September 30, 2014 and 2013 are presented below (amounts in millions):

    Three Months Ended September 30,
    2014 2013 2014 2013
          Income (loss) from operations
    Net revenues before income tax expense (benefit)
 Activision  $ 704 $ 319 $95 $ 41
 Blizzard    388   282   164   88
 Distribution    78   56  1  (1)
 Operating segments total    1,170   657   260   128
               
Reconciliation to consolidated net revenues /            
consolidated income (loss) before income tax            
expense (benefit):            
 Net effect from deferral of net revenues and            
  related cost of sales   (417)   34   (180)   32
 Stock-based compensation expense   ---  ---  (22)   (25)
 Amortization of intangible assets  ---  ---  (2)   (3)
 Fees and other expenses related to the Purchase            
  Transaction and related debt financings  ---  ---  (48)  (62)
Consolidated net revenues / operating income  $ 753 $ 691   8   70
 Interest and other investment income (expense), net        (51)  (4)
Consolidated income (loss) before income tax expense (benefit)        $ (43) $ 66
               
               
    Nine Months Ended September 30,
    2014 2013 2014 2013
               
          Income (loss) from operations
  Net revenuesbefore income tax expense
 Activision  $ 1,193 $ 1,090 $ 66 $ 214
 Blizzard    1,189   837   548   282
 Distribution    218   143   (1)   (1)
 Operating segments total    2,600   2,070   613   495
               
Reconciliation to consolidated net revenues /            
consolidated income before income tax            
expense:            
 Net effect from deferral of net revenues and            
  related cost of sales    233   995   260   738
 Stock-based compensation expense   ---  ---   (76)   (76)
 Amortization of intangible assets  ---  ---   (4)   (8)
 Fees and other expenses related to the Purchase            
  Transaction and related debt financings  ---  ---  (48)  (62)
Consolidated net revenues / operating income  $ 2,833 $ 3,065 $ 745 $ 1,087
 Interest and other investment income (expense), net        (152)  (1)
Consolidated income before income tax expense        $ 593 $ 1,086

Geographic information presented below for the three and nine months ended September 30, 2014 and 2013 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 September 30, Nine Months Ended September 30,
   2014 2013 2014 2013
Net revenues by geographic region:            
 North America  $ 350 $ 344 $1,384 $1,643
 Europe    316   290  1,172  1,180
 Asia Pacific    87   57  277  242
Total consolidated net revenues  $ 753 $ 691 $ 2,833 $ 3,065

The Company's net revenues in the U.S. were 45% and 48% of consolidated net revenues for the three months ended September 30, 2014 and 2013, respectively.  The Company's net revenues in France were 19% and 16% of consolidated net revenues for the three months ended September 30, 2014 and 2013, respectively.  The Company's net revenues in the U.K. were 14% and 13% of consolidated net revenues for the three months ended September 30, 2014 and 2013, respectively. No other country's net revenues exceeded 10% of consolidated net revenues.

 

The Company's net revenues in the U.S. were 46% and 51% of consolidated net revenues for the nine months ended September 30, 2014 and 2013, respectively.  The Company's net revenues in France were 16% and 13% of consolidated net revenues for the nine months ended September 30, 2014 and 2013, respectively.  The Company's net revenues in the U.K. were 14% and 12% of consolidated net revenues for the nine months ended September 30, 2014 and 2013, respectively. No other country's net revenues exceeded 10% of consolidated net revenues.

 

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

  Three Months Ended September 30, Nine Months Ended September 30,
  2014 2013 2014 2013
Net revenues by platform:           
 Console $270 $296 $1,402 $1,634
 Online (1) 205  205  601  714
 PC  165  79  447  274
 Mobile and other (2) 35  55  165  300
Total Activision Blizzard net revenues  675  635  2,615  2,922
Distribution  78  56  218  143
Total consolidated net revenues $753 $691 $2,833 $3,065

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

(2)       Revenues from mobile and 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 September 30, 2014 and December 31, 2013 were as follows (amounts in millions):

   At September 30, At December 31,
   2014 2013
Long-lived assets* by geographic region:      
 North America  $ 123 $ 102
 Europe    32   29
 Asia Pacific    7   7
Total long-lived assets by geographic region $ 162 $ 138

*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 had one customer, GameStop, which accounted for approximately 16% of consolidated net revenues for the three months ended September 30, 2014. There were no external customers that accounted for 10% or more of consolidated net revenues for the nine months ended September 30, 2014. No single external customer accounted for 10% or more of consolidated net revenues for the three and nine months ended September 30, 2013.