ACTIVISION BLIZZARD, INC. - Zonebourse.com€¦ · ACTIVISION BLIZZARD, INC. FORM 8-K (Current report filing) Filed 08/03/17 for the Period Ending 08/03/17 Address 3100 OCEAN PARK

ACTIVISION BLIZZARD, INC.

FORM 8-K(Current report filing)

Filed 08/03/17 for the Period Ending 08/03/17

Address 3100 OCEAN PARK BLVD

SANTA MONICA, CA 90405Telephone 3102552000

CIK 0000718877Symbol ATVI

SIC Code 7372 - Prepackaged SoftwareIndustry Internet Services

Sector TechnologyFiscal Year 12/31

http://www.edgar-online.com© Copyright 2017, EDGAR Online, Inc. All Rights Reserved.

Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

http://www.edgar-online.com

UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

FORM 8-K

CURRENT REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Dateofreport(Dateofearliesteventreported):August3,2017

ACTIVISIONBLIZZARD,INC.(ExactNameofRegistrantasSpecifiedinCharter)

Delaware

001-15839

95-4803544(StateorOtherJurisdictionof

Incorporation)

(CommissionFileNumber)

(IRSEmployerIdentificationNo.)

3100OceanParkBoulevard,

SantaMonica,CA

90405(AddressofPrincipalExecutive

Offices)

(ZipCode)

Registrant’stelephonenumber,includingareacode:(310)255-2000

(FormerNameorFormerAddress,ifChangedSinceLastReport)

ChecktheappropriateboxbelowiftheForm8-Kfilingisintendedtosimultaneouslysatisfythefilingobligationoftheregistrantunderanyofthefollowingprovisions(see GeneralInstructionA.2.below):¨WrittencommunicationspursuanttoRule425undertheSecuritiesAct(17CFR230.425)

¨SolicitingmaterialpursuanttoRule14a-12undertheExchangeAct(17CFR240.14a-12)

¨Pre-commencementcommunicationspursuanttoRule14d-2(b)undertheExchangeAct(17CFR240.14d-2(b))

¨Pre-commencementcommunicationspursuanttoRule13e-4(c)undertheExchangeAct(17CFR240.13e-4(c))IndicatebycheckmarkwhethertheregistrantisanemerginggrowthcompanyasdefinedinRule405oftheSecuritiesActof1933(§230.405ofthischapter)orRule12b-2oftheSecuritiesExchangeActof1934(§240.12b-2ofthischapter).EmerginggrowthcompanyoIfanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.o

Certain Information Not Filed . The information in Item 2.02 of this Form 8-K and Exhibit 99.1 attached to this Form 8-K shall not bedeemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such Item 2.02 or such Exhibit 99.1 or any of theinformation contained therein be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the SecuritiesAct of 1933, except as shall be expressly set forth by specific reference in such filing.Item 2.02. Results of Operations and Financial Condition.OnAugust3,2017,ActivisionBlizzard,Inc.(the“Company”)issuedapressreleaseannouncingresultsfortheCompanyforthefiscalquarterendedJune30,2017.AcopyofthepressreleaseisattachedheretoasExhibit99.1.Aspreviouslyannounced,theCompanyishostingaconferencecallandwebcastinconjunctionwiththatrelease.Item 9.01. Financial Statements and Exhibits.(d)Exhibits

99.1PressReleasedatedAugust3,2017(furnishednotfiled)

2

SIGNATURE

PursuanttotherequirementsoftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonits

behalfbytheundersignedhereuntodulyauthorized.Date:August3,2017 ACTIVISIONBLIZZARD,INC.

By: /s/SpencerNeumann

SpencerNeumann

ChiefFinancialOfficer

3

EXHIBIT INDEX

ExhibitNo.

Description 99.1

PressReleasedatedAugust3,2017(furnishednotfiled)

4

Exhibit 99.1

ACTIVISION BLIZZARD ANNOUNCES BETTER-THAN-EXPECTEDSECOND-QUARTER 2017 FINANCIAL RESULTS

Record First-Half Total Revenues and Digital Revenues

Company Increases CY 2017 Revenues and EPS Outlook

Announced Team Sales for the Overwatch League ™, First Major Global, City-Based Professional Esports League

SantaMonica,CA–August3,2017–ActivisionBlizzard,Inc.(Nasdaq:ATVI)todayannouncedbetter-than-expectedsecond-quarter2017results.

Second Quarter

Prior

(in millions, except EPS)

2017

Outlook*

2016

GAAP Net Revenues

$ 1,631

$ 1,425

$ 1,570

Impact of GAAP deferrals

$ (213)

$ (225)

$ 39

GAAP EPS

$ 0.32

$ 0.15

$ 0.20

Non-GAAP (redefined) EPS**

$ 0.55

$ 0.38

$ 0.45


$ (0.12)

$ (0.11)

$ 0.08

*PrioroutlookwasprovidedbythecompanyonMay4,2017initsearningsrelease.**“Non-GAAP(redefined)”includestheneteffectofrevenuedeferralsaccountingtreatmentoncertainofouronlineenabledproducts.PleaserefertoourJuly29,2016callandmaterialsforadditionalinformation.

ForthequarterendedJune30,2017,ActivisionBlizzard’snetrevenuespresentedinaccordancewithGAAPwere$1.63billion,as

comparedwith$1.57billionforthesecondquarterof2016,anincreaseof4%.GAAPnetrevenuesfromdigitalchannelswere$1.31billion,growing15%year-over-year.GAAPoperatingmarginwas21%.GAAPearningsperdilutedsharewereaQ2recordof$0.32,ascomparedwith$0.20forthesecondquarterof2016,anincreaseof60%.

For the quarter ended June 30, 2017, on a non-GAAP (redefined) basis, Activision Blizzard’s operating margin was 35% andearningsperdilutedsharewereaQ2recordof$0.55,ascomparedwith$0.45forthesecondquarterof2016,anincreaseof22%.

Forthequarter,operatingcashflowswere$265million.

Pleaserefer to thetables at thebackof this press releasefor a reconciliationof thecompany’sGAAPandnon-GAAP(redefined)results.

1

A

A

Activision Blizzard Announces Q2 2017 Financial Results

BobbyKotick, Chief Executive Officer of ActivisionBlizzard, said,“This was another strongquarter for Activision Blizzard. Weexceededouroutlookanddeliveredrecordrevenuesforthefirsthalfof2017.”

Kotickadded,“Celebratingplayersandaudiencesisthefoundationforoursuccess.Thisquarterweannouncedthefirstteamownersin the Overwatch League™, the first major global, city-based professional esports league. With hundreds of hours of broadcast contentaheadofus,aswellassignificantsponsorshipandmediaopportunities,theOverwatchLeaguewillprovidenewwaysforustohighlightandsupportthepassionofesportsfansandtheskillofsomeoftheworld’stopOverwatch players.”Selected Business Highlights:·Regularcontentandfeatureupdatesacrosstheportfolioenableddeeperplayerengagementandthereforeplayerinvestment.Audience Reach·ActivisionBlizzardhad407millionMonthlyActiveUsers(MAUs) inthequarter.·Blizzardhadthebiggestquarterlyonlineplayercommunityinitshistorywitharecord46millionMAUs ,up38%year-over-year.The

Overwatch communitycontinuedtogrowmorethanayearafterlaunch,settinganotherall-timeMAU recordwiththereleaseoftwoseasonaleventsinthequarter.Hearthstone MAUs grewyear-over-yearandquarter-over-quartertoanall-timerecord,drivenbyitsexpansion,Journey to Un’Goro ™ .

·Activisionhad47millionMAUs inthesecondquarter,downslightlyyear-over-year.ThelaunchofZombies Chronicles ledtoaMAU

increasequarter-over-quarterinCall of Duty : Black Ops III .ActivisionalsoreleasedCrash Bandicoot ™ N. Sane Trilogy forPS4,acollectionofremasteredCrash Bandicoot ™ classictitles.Despiteonlytwodaysofsalesonasingleplatform,itwasthenumberoneconsoletitlegloballyinJunebasedonunits.

·ActivisionanditspartnersatBungieexpecttoreleaseDestiny 2 onSeptember6,2017forconsolesandonOctober24,2017forPC.The

Destiny 2 consoleBetahadmoretotalplayersthanthe2014Destiny Beta,andDestiny 2 pre-ordersarenowabovethefirstDestiny .ActivisionexpectstoreleaseCall of Duty: WWII onNovember3,2017.Momentumonpre-ordersandhands-onfeedbackhavebeenstrong.

·Kinghad314millionMAUs forthequarter,downyear-over-year,butwithbettergrossbookings perpayinguser.Kinghadtwoof

thetop-10highest-grossingtitlesintheU.S.mobileappstoresforthefifteenthquarterinarow.

2

®

B

B

B

® B

B

B ®

1

B C

2

Activision Blizzard Announces Q2 2017 Financial ResultsDeep Engagement·BlizzardhadQ2-recordtimespent.InApril,BlizzardlaunchedUprising ,anOverwatch seasonaleventthatincludedaplayer-versus-

environmentmodethatdrewrecordplaytime.Overwatch ’sAnniversary eventinMayandJunealsodrovestrongengagementwithrecordparticipationincustomizationitems.TimespentinWorld of Warcraft grewyear-over-yearinthesecondquarter,andtheLegion ™ expansioncontinuedtoperformaheadofthepriorexpansion.

·King’sliveoperationsandnewcontentcontinuetodrivestrongengagementwithsteadytimespentat35minutesperdayandplayers

engagingmorefrequently.·BlizzardannouncedthefirstseventeamsalesfortheOverwatch League ,thefirstmajorglobalprofessionalesportsleaguewithcity-

basedteams,andtheleagueissettobeginitsinauguralcompetitiveseasonlaterthisyear.·Blizzardannouncedalive-streamingmediarightspartnershipforesportsandin-gamecontentacrossanumberoffranchises,but

excludingOverwatch League content.·Activision’sCall of Duty World League willculminateinitsChampionshipsheldinOrlandoinAugust.Player Investment·ActivisionBlizzarddeliverednearly$1billionofin-gamerevenuesinthequarterwithrecordperformanceinthefirsthalfof2017.·King’sgrossbookings perpayingusergrewforthe8 quarterinarowtoanewrecord.Strongengagementandplayerinvestmentled

toanincreaseinmobilegrossbookings year-over-yearandquarter-over-quarter.·Call of Duty: Black Ops III ’sZombies Chronicles, Activision’sfirstlargecontentdropinyeartwoafteragamelaunch,notonlydrove

purchasesofthatspecificpieceofcontent,butalsoledtohigherengagementandtoadd-onrevenuesforthatgame.·Blizzard’sOverwatch ,Hearthstone ,World of Warcraft ,andDiablo III ,whichdebutednewcontentduringthequarter,drove

strongin-gameparticipation.

3

®

C th

C

®

Activision Blizzard Announces Q2 2017 Financial ResultsCompany Outlook:

(in millions, except EPS)

GAAP Outlook

Non-GAAP Outlook (redefined)


CY 2017

Net Revenues

$ 6,400

6,400

175

EPS

$ 1.05

1.94

0.06

Fully Diluted Shares*

767

767

Q3 2017

Net Revenues

$ 1,385

1,385

315

EPS

$ 0.09

0.34

0.11

Fully Diluted Shares*

766

766

*Fullydilutedweightedaveragesharesincludeparticipatingsecuritiesanddilutiveoptionsonaweightedaveragebasis.AsreferencedonourJuly29,2016call,ifyouwouldliketocalculateNon-GAAPmetricsaspreviouslydefined,youwouldaddtheimpactofGAAPdeferralstotheNon-GAAP(redefined)metrics.CurrencyAssumptionsfor2017Outlook:

·$1.12USD/Euroforcurrentoutlook(vs.averageof$1.11for2016and$1.11for2015);and·$1.30USD/BritishPoundSterlingforcurrentoutlook(vs.averageof$1.36for2016and$1.53for2015).·Note:OurfinancialguidanceincludestheforecastedimpactoftheFXcashflowhedgingprogram.

Cash Dividend:

Thecompanypaidacashdividendof$0.30percommonshare,up15%year-over-year,inMay2017toshareholdersofrecordatthecloseofbusinessonMarch30,2017,totaling$226million.Conference Call:

Todayat4:30p.m.EDT,ActivisionBlizzard’smanagementwillhostaconferencecallandWebcasttodiscussthecompany’sresultsforthequarterendedJune30,2017andmanagement’soutlookfortheremainderofthecalendaryear.Thecompanywelcomesallmembersofthefinancialandmediacommunitiesandotherinterestedpartiestovisitthe“InvestorRelations”areaofwww.activisionblizzard.comtolistentotheconferencecallvialiveWebcastortolistentothecalllivebydialinginto888-364-3108intheU.S.withpasscode1183538.About Activision Blizzard:ActivisionBlizzard,Inc.,amemberoftheS&P500,istheworld’smostsuccessfulstandaloneinteractiveentertainmentcompany.WedelighthundredsofmillionsofmonthlyactiveusersaroundtheworldthroughfranchisesincludingActivision’sCallofDuty ,DestinyandSkylanders ,Blizzard’sWorldofWarcraft ,Overwatch ,Hearthstone ,Diablo ,StarCraft ,andHeroesoftheStorm ,andKing’sCandyCrush™,PetRescue™,BubbleWitch™andFarmHeroes™.ThecompanyisoneoftheFortune“100BestCompaniesToWorkFor ”.HeadquarteredinSantaMonica,California,ActivisionBlizzardhasoperationsthroughouttheworld,anditsgamesareplayedin196countries.MoreinformationaboutActivisionBlizzardanditsproductsandservicescanbefoundonthecompany’swebsite,www.activisionblizzard.com.PerNPD,GfK,GSD,andinternalestimatesU.S.rankingforAppleAppStoreandGooglePlayStorecombined,perAppAnnieIntelligenceforsecondquarter2017.

4

A

® ® ®

® ® ® ® ®

®

1

2

Activision Blizzard Announces Q2 2017 Financial ResultsNeteffectofaccountingtreatmentfromrevenuedeferralsoncertainofouronlineenabledproducts.Someofourgames’onlinefunctionalityrepresentsanessentialcomponent

ofgameplayand,asaresult,amore-than-inconsequentialseparatedeliverable.Asaresult,werecognizerevenuesattributedtothesegametitlesovertheirestimatedserviceperiods,whichisgenerallylessthanayear.Therelatedcostofrevenuesisdeferredandrecognizedasanexpenseastherelatedrevenuesarerecognized.Impactfromchangesindeferralsreferstotheneteffectfromrevenuedeferralsaccountingtreatmentforthepurposesofrevenues,alongwith,forthepurposesofEPS,therelatedcostofrevenuesdeferralstreatmentandtherelatedtaximpacts.Internally,managementexcludestheimpactofthischangeindeferredrevenuesandrelatedcostofrevenueswhenevaluatingthecompany’soperatingperformance,whenplanning,forecastingandanalyzingfutureperiods,andwhenassessingtheperformanceofitsmanagementteam.Managementbelievesthisisappropriatebecausedoingsoenablesananalysisofperformancebasedonthetimingofactualtransactionswithourcustomers.Inaddition,managementbelievesexcludingthechangeindeferredrevenuesandtherelatedcostofrevenuesprovidesamuchmoretimelyindicationoftrendsinouroperatingresults.MonthlyActiveUser(“MAU”)Definition: Wemonitor MAUsasa keymeasureof theoverall size of our user base. MAUsarethe number of individuals whoplayeda

particulargameinagivenmonth.WecalculateaverageMAUsinaperiodbyaddingthetotalnumberofMAUsineachofthemonthsinagivenperiodanddividingthattotalbythenumberofmonthsintheperiod.Anindividualwhoplaystwoofourgameswouldbecountedastwousers.Inaddition,duetotechnicallimitations,forActivisionandKing,anindividualwhoplaysthesamegameontwoplatformsordevicesintherelevantperiodwouldbecountedastwousers.ForBlizzard,anindividualwhoplaysthesamegameontwoplatformsordevicesintherelevantperiodwouldgenerallybecountedasasingleuser.Grossbookingsisanoperatingmetricthatrepresentsthetotalcashspentbyplayersintheperiodforthepurchaseofvirtualitems.Kingusesgrossbookingstoevaluateits

resultsofoperations,generatefutureoperatingplansandassessperformance.Grossbookingsisthetotalpricepaidbyplayers,whichincludesindirecttaxes(salestaxorvalueaddedtaxetc.),platformprovidersfees,andKing’sshareofrevenues.Non-GAAP (as previously defined) and Non-GAAP (redefined) Financial Measures: InaccordancewiththeupdatedComplianceandDisclosureInterpretationsissuedbytheSECstaffonMay17,2016,beginningwiththereportingofoursecond-quarter2016results,wehavereportedourfinancialresultsandprovidedouroutlookusingGAAPandnon-GAAP(redefined).WehavehistoricallyprovidedNon-GAAP(aspreviouslydefined)financialmeasures.Theonlydifferencebetweenthetwomeasuresistheinclusion(Non-GAAP(redefined))orexclusion(Non-GAAP(aspreviouslydefined))oftheimpactfromrevenuedeferralsaccountingtreatmentoncertainofouronlineenabledproducts.PleaseseematerialsfromJuly29,2016callforfurtherdetails.Non-GAAP Financial Measures: Asasupplement toourfinancial measurespresentedinaccordancewithGenerallyAcceptedAccountingPrinciples (“GAAP”), ActivisionBlizzardpresentscertainnon-GAAPmeasuresoffinancialperformance.Thesenon-GAAPfinancialmeasuresarenotintendedtobeconsideredinisolationfrom,asasubstitutefor,orasmoreimportantthan,thefinancialinformationpreparedandpresentedinaccordancewithGAAP.Inaddition,thesenon-GAAPmeasureshavelimitationsinthattheydonotreflectalloftheitemsassociatedwiththecompany’sresultsofoperationsasdeterminedinaccordancewithGAAP.ActivisionBlizzardprovidesnetincome(loss),earnings(loss)pershareandoperatingmargindataandguidancebothincluding(inaccordancewithGAAP)andexcluding(non-GAAP) certain items. When relevant, the company also provides constant FX information to provide a framework for assessing how our underlying businesses performedexcluding 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) beforedepreciation).Thenon-GAAPfinancialmeasuresexcludethefollowingitems,asapplicableinanygivenreportingperiodandouroutlook:

·expensesrelatedtostock-basedcompensation;·theamortizationofintangiblesfrompurchasepriceaccounting;

5

A

B

C

Activision Blizzard Announces Q2 2017 Financial Results

· feesandotherexpensesrelatedtotheKingacquisition,inclusiveofrelateddebtfinancings,andrefinancingoflong-termdebt,includingpenaltiesandthewriteoffofunamortizeddiscountanddeferredfinancingcosts;

·restructuringcharges;·othernon-cashchargesfromreclassificationofcertaincumulativetranslationadjustmentsintoearningsasrequiredbyGAAP;and· theincometaxadjustmentsassociatedwithanyoftheaboveitems(taximpactonnon-GAAPpre-taxincomeiscalculatedunderthesameaccounting

principlesappliedtotheGAAPpre-taxincomeunderASC740,whichemploysanannualeffectivetaxratemethodtotheresults).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’sfinancial and operating performance. In particular, the measures facilitate comparison of operating performance between periods and help investors to better understand theoperatingresults of ActivisionBlizzardbyexcludingcertainitemsthat maynot beindicativeofthecompany’scorebusiness, operatingresults, or futureoutlook. Internally,managementusesthesenon-GAAPfinancialmeasures,alongwithothers,inassessingthecompany’soperatingresults,andmeasuringcompliancewiththerequirementsofthecompany’sdebtfinancingagreements,aswellasinplanningandforecasting.ActivisionBlizzard’snon-GAAPfinancialmeasuresarenotbasedonacomprehensivesetofaccountingrulesorprinciples,andthetermsnon-GAAPnetincome,non-GAAPearningspershare,non-GAAPoperatingmargin,andnon-GAAPoradjustedEBITDAdonothaveastandardizedmeaning.Therefore, othercompaniesmayusethesameorsimilarlynamedmeasures,butexcludedifferentitems,whichmaynotprovideinvestorsacomparableviewofActivisionBlizzard’sperformanceinrelationtoothercompanies.Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering ActivisionBlizzard’sGAAP,aswellasnon-GAAP,resultsandoutlook,andbypresentingthemostcomparableGAAPmeasuresdirectlyaheadofnon-GAAPmeasures,andbyprovidingareconciliationthatindicatesanddescribestheadjustmentsmade.Cautionary Note Regarding Forward-looking Statements: Thestatements contained herein that are not historical facts are forward-looking statements, including, but notlimitedto,statementsabout:(1)projectionsofrevenues,expenses,incomeorloss,earningsorlosspershare,cashfloworotherfinancialitems;(2)statementsofourplansandobjectives,includingthoserelatedtoreleasesofproductsandservices;(3)statementsoffuturefinancialoroperatingperformance;and(4)statementsofassumptionsunderlyingsuchstatements. The company generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “plans,” “believes,” “may,” “might,”“expects,”“intends,”“intendsas,”“anticipates,”“estimate,”“future,”“positioned,”“potential,”“project,”“remain,”“scheduled,”“setto,”“subjectto,”“upcoming”andothersimilar expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risk, reflect management’s currentexpectations,estimatesandprojectionsaboutourbusiness,andareinherentlyuncertainanddifficulttopredict.ThecompanycautionsthatanumberofimportantfactorscouldcauseActivisionBlizzard’sactualfutureresultsandotherfuturecircumstancestodiffermateriallyfromthoseexpressedin anyforward-looking statements. Suchfactors include, but are not limited to: sales levels of Activision Blizzard’s titles, products and services; concentration ofrevenueamongasmallnumberoftitles;ActivisionBlizzard’sabilitytopredictconsumerpreferences,includinginterestinspecificgenres,andpreferencesamongplatforms;thediversionofmanagementtimeandattentiontoissuesrelatingtotheoperationsofouracquiredornewlystartedbusinesses;theamountofourdebtandthelimitationsimposedbythecovenantsintheagreementsgoverningourdebt;theadoptionrateandavailabilityofnewhardware(includingperipherals)andrelatedsoftware;counterpartyrisksrelatingtocustomers,licensees,licensorsandmanufacturers;maintenanceofrelationshipswithkeypersonnel,customers,financingproviders,licensees,licensors,manufacturers,vendors,andthird-partydevelopers,includingtheabilitytoattract,retainanddevelopkeypersonnelanddevelopersthatcancreatehigh-qualitytitles,productsandservices;risksrelatingto the expansion into newbusinesses, including the potential impact on our existing businesses; changing business models within the video gameindustry, including digitaldeliveryofcontentandtheincreasedprevalenceoffree-to-playgames;productdelaysordefects;competition,includingfromotherformsofentertainment;

6

Activision Blizzard Announces Q2 2017 Financial Resultsrapidchangesintechnologyandindustrystandards;possibledeclinesinsoftwarepricing;productreturnsandpriceprotection;theidentificationofsuitablefutureacquisitionopportunitiesandpotentialchallengesassociatedwithgeographicexpansion;theseasonalandcyclicalnatureoftheinteractiveentertainmentmarket;theoutcomeofcurrentorfuture tax disputes; the impact of litigation risks and associated costs; protection of proprietary rights; shifts in consumer spending trends; capital market risks; applicableregulations;domesticandinternationaleconomic,financialandpoliticalconditionsandpolicies;taxratesandforeignexchangerates;theimpactofthecurrentmacroeconomicenvironment;andtheotherfactorsidentifiedin“RiskFactors”includedinPartI,Item1AofourAnnualReportonForm10-KfortheyearendedDecember31,2016.Theforward-lookingstatementsinthispressreleasearebasedoninformationavailabletothecompanyatthistimeandweassumenoobligationtoupdateanysuchforward-looking statements. Although these forward-looking statements are believed to be true when made, they may ultimately prove to be incorrect. These statements are notguarantees of our future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and may cause actual results to differmateriallyfromcurrentexpectations.

###

(TablestoFollow)For Information Contact:Amrita Ahuja

Mary OsakoSVP, Investor Relations

SVP, Global Communications(310) 255-2075

(424) [email protected]

[email protected]

7

1

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(Amounts in millions, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2017

2016

2017

2016

Net revenues

Productsales $ 481 $ 501 $ 989 $ 1,145

Subscription,licensing,andotherrevenues 1,150 1,069 2,367 1,880

Totalnetrevenues 1,631 1,570 3,356 3,025

Costs and expenses

Costofrevenues—productsales:

Productcosts 130 149 273 318

Softwareroyalties,amortization,andintellectualpropertylicenses

75

80

163

208

Costofrevenues—subscription,licensing,andother:

Gameoperationsanddistributioncosts 236 241 468 383

Softwareroyalties,amortization,andintellectualpropertylicenses

120

128

242

180

Productdevelopment 252 249 478 424

Salesandmarketing 308 322 554 490

Generalandadministrative 171 169 347 329

Totalcostsandexpenses 1,292 1,338 2,525 2,332

Operatingincome 339 232 831 693

Interestandotherexpense(income),net 46 65 85 117

Incomebeforeincometaxexpense 293 167 746 576

Incometaxexpense 50 16 77 62

Netincome $ 243 $ 151 $ 669 $ 514

Basicearningspercommonshare $ 0.32 $ 0.20 $ 0.89 $ 0.69

Weightedaveragecommonsharesoutstanding 754 739 752 737

Dilutedearningspercommonshare $ 0.32 $ 0.20 $ 0.88 $ 0.68

Weightedaveragecommonsharesoutstandingassumingdilution 764 753 763 751

Subscription,licensing,andotherrevenuesrepresentrevenuesfromWorldofWarcraftsubscriptions,licensingroyaltiesfromourproductsandfranchises,value-added

services,downloadablecontent,microtransactions,andothermiscellaneousrevenues.

Thecompanycalculatesearningspersharepursuanttothetwo-classmethodwhichrequirestheallocationofnetincomebetweencommonshareholdersandparticipatingsecurityholders.Wehad,onaweighted-averagebasis,participatingsecuritiesoflessthan1millionforboththethreeandsixmonthsendedJune30,2017,andapproximately3millionforboththethreeandsixmonthsendedJune30,2016.ForthethreeandsixmonthsendedJune30,2017,netincomeattributabletoActivisionBlizzard,Inc.commonshareholdersusedtocalculateearningspercommonshare,assumingdilution,was$243millionand$669million,respectively,ascomparedtototalnetincomeof$243millionand$669million,respectively,forthesameperiod.ForthethreeandsixmonthsendedJune30,2016,netincomeattributabletoActivisionBlizzard,Inc.commonshareholdersusedtocalculateearningspercommonshare,assumingdilution,was$150millionand$511million,respectively,ascomparedtototalnetincomeof$151millionand$514million,respectively,forthesameperiod.

1

2

2

1

2

2

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(Amounts in millions)

June 30, 2017

December 31, 2016

Assets

Currentassets

Cashandcashequivalents $ 3,278 $ 3,245

Accountsreceivable,net 360 732

Inventories,net 51 49

Softwaredevelopment 349 412

Othercurrentassets 314 392

Totalcurrentassets 4,352 4,830

Softwaredevelopment 104 54

Propertyandequipment,net 246 258

Deferredincometaxes,net 398 283

Otherassets 466 401

Intangibleassets,net 1,479 1,858

Goodwill 9,763 9,768

Totalassets $ 16,808 $ 17,452

Liabilities and Shareholders’ Equity

Currentliabilities

Accountspayable $ 163 $ 222

Deferredrevenues 940 1,628

Accruedexpensesandotherliabilities 662 806

Totalcurrentliabilities 1,765 2,656

Long-termdebt,net 4,387 4,887

Deferredincometaxes,net 38 44

Otherliabilities 903 746

Totalliabilities 7,093 8,333

Shareholders’equity

Commonstock — —

Additionalpaid-incapital 10,606 10,442

Treasurystock (5,563) (5,563)

Retainedearnings 5,312 4,869

Accumulatedothercomprehensiveloss (640) (629)

Totalshareholders’equity 9,715 9,119

Totalliabilitiesandshareholders’equity $ 16,808 $ 17,452

3

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAPMEASURES (Amounts in millions, except per share data)

Three Months Ended June 30, 2017

Net Revenues

Cost of Revenues - Product Sales: Product Costs

Cost of Revenues- Product Sales:

Software Royalties and Amortization

Cost of Revenues - Subs/Lic/Other:Game Operationsand Distribution

Costs

Cost of Revenues- Subs/Lic/Other:


Product Development

Sales and Marketing

General and Administrative

Total Costs andExpenses

GAAPMeasurement

$ 1,631

$ 130

$ 75

$ 236

$ 120

$ 252

$ 308

$ 171

$ 1,292

Share-basedcompensation

—

—

(3) —

—

(14) (4) (18) (39)Amortizationofintangibleassets

—

—

—

—

(114) —

(78) (2) (194)FeesandotherexpensesrelatedtotheKing

Acquisition

—

—

—

—

—

—

—

(5) (5)Othernon-cashcharges

—

—

—

—

—

—

—

1

1

Non-GAAP(redefined)Measurement

$ 1,631

$ 130

$ 72

$ 236

$ 6

$ 238

$ 226

$ 147

$ 1,055

Neteffectofdeferredrevenuesandrelatedcost

ofrevenues

$ (213) $ (44) $ (68) $ 1

$ 3

$ —

$ —

$ —

$ (108)

Operating Income

Net Income

Basic Earnings per Share

Diluted Earnings per Share

GAAPMeasurement

$ 339

$ 243

$ 0.32

$ 0.32


39

39

0.05

0.05

Amortizationofintangibleassets

194

194

0.26

0.25

FeesandotherexpensesrelatedtotheKingAcquisition

5

6

0.01

0.01

Othernon-cashcharges

(1) (1) —

—

Lossonextinguishmentofdebt

—

12

0.02

0.02

Incometaximpactsfromitemsabove

—

(75) (0.10) (0.10)


$ 576

$ 418

$ 0.55

$ 0.55


ofrevenues

$ (105) $ (86) $ (0.11) $ (0.12)

Includesexpensesrelatedtoshare-basedcompensation.Reflectsamortizationofintangibleassetsfrompurchasepriceaccounting.ReflectsfeesandotherexpensesrelatedtotheacquisitionofKingDigitalEntertainment(“KingAcquisition”),inclusiveofrelateddebtfinancingsandintegrationcosts.Reflectsanon-cashaccountingchargetoreclassifycertaincumulativetranslation(gains)lossesintoearningsduetothesubstantialliquidationofcertainofourforeignentities.Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenues,alongwithrelatedcostofrevenues,oncertainofouronlineenabledproducts,includingtheeffectsoftaxes.Reflectsthelossonextinguishmentofdebtfromrefinancingactivities.Reflectstheincometaximpactassociatedwiththeaboveitems.Taximpactonnon-GAAP(redefined)pre-taxincomeiscalculatedunderthesameaccountingprinciplesappliedtotheGAAPpre-taxincomeunderASC740,whichemploysanannualeffectivetaxratemethodtotheresults.

TheGAAPandnon-GAAP(redefined)earningspershareinformationispresentedascalculated.Thesumofthesemeasures,aspresented,maydifferduetotheimpactofrounding.Forpurposesofcalculatingearningspershare,wehad,onaweighted-averagebasis,commonsharesoutstandingof754million,participatingsecuritiesoflessthan1million,anddilutivesharesof10millionduringthethreemonthsendedJune30,2017.

12

34

5

12

34

67

5

1

2

3

4

5

6

7

4

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAPMEASURES (Amounts in millions, except per share data)

Six Months Ended June 30, 2017

Net Revenues

Cost of Revenues- Product Sales: Product Costs




Costs

Cost of Revenues - Subs/Lic/Other:


Product Development

Sales and Marketing


Total Costs andExpenses

GAAPMeasurement

$ 3,356

$ 273

$ 163

$ 468

$ 242

$ 478

$ 554

$ 347

$ 2,525


—

—

(7) (1) —

(27) (7) (31) (73)Amortizationofintangibleassets

—

—

(1) —

(224) —


Acquisition

—

—

—

—

—

—

—

(9) (9)Restructuringcosts

—

—

—

—

—

—

—

(11) (11)Othernon-cashcharges

—

—

—

—

—

—

—

(15) (15)Non-GAAP(redefined)Measurement

$ 3,356

$ 273

$ 155

$ 467

$ 18

$ 451

$ 392

$ 277

$ 2,033


ofrevenues

$ (742) $ (101) $ (137) $ (3) $ —

$ —

$ —

$ —

$ (241)

Operating Income

Net Income



GAAPMeasurement

$ 831

$ 669

$ 0.89

$ 0.88


73

73

0.10

0.10


384

384

0.51

0.50


9

15

0.02

0.02

Restructuringcosts

11

11

0.01

0.01


15

15

0.02

0.02

Lossonextinguishmentofdebt

—

12

0.02

0.02


—

(215) (0.28) (0.28)


$ 1,323

$ 964

$ 1.28

$ 1.26


ofrevenues

$ (501) $ (395) $ (0.52) $ (0.51)

Includesexpensesrelatedtoshare-basedcompensation.Reflectsamortizationofintangibleassetsfrompurchasepriceaccounting.ReflectsfeesandotherexpensesrelatedtotheKingAcquisition,inclusiveofrelateddebtfinancingsandintegrationcosts.

Reflectsrestructuringchargesincurred,primarilyseverancecosts.Reflectsanon-cashaccountingchargetoreclassifycertaincumulativetranslation(gains)lossesintoearningsduetothesubstantialliquidationofcertainofourforeignentities.

Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenues,alongwithrelatedcostofrevenues,oncertainofouronlineenabledproducts,includingtheeffectsoftaxes.Reflectsthelossonextinguishmentofdebtfromrefinancingactivities.

Reflectstheincometaximpactassociatedwiththeaboveitems.Taximpactonnon-GAAP(redefined)pre-taxincomeiscalculatedunderthesameaccountingprinciplesappliedtotheGAAPpre-taxincomeunderASC740,whichemploysanannualeffectivetaxratemethodtotheresults.

TheGAAPandnon-GAAP(redefined)earningspershareinformationispresentedascalculated.Thesumofthesemeasures,aspresented,maydifferduetotheimpactofrounding.Forpurposesofcalculatingearningspershare,wehad,onaweighted-averagebasis,commonsharesoutstandingof752million,participatingsecuritiesoflessthan1million,anddilutivesharesof11millionduringthesixmonthsendedJune30,2017.

12

34

5

6

12

34

57

8

6

1

2

3

456

78

5

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESRECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES(Amounts in millions, except per share data)

Three Months Ended June 30, 2016

Net Revenues

Cost of Revenues - Product Sales: Product Costs




Costs



Product Development

Sales and Marketing


Total Costs and Expenses

GAAPMeasurement

$ 1,570

$ 149

$ 80

$ 241

$ 128

$ 249

$ 322

$ 169

$ 1,338


—

—

(6) —

(1) (13) (4) (17) (41)Amortizationofintangibleassets

—

—

(1) —

(122) —


Acquisition

—

—

—

—

—

—

—


$ 1,570

$ 149

$ 73

$ 241

$ 5

$ 236

$ 240

$ 146

$ 1,090


ofrevenues

$ 39

$ (44) $ (34) $ 7

$ 2

$ —

$ —

$ —

$ (69)

Operating Income

Net Income



GAAPMeasurement

$ 232

$ 151

$ 0.20

$ 0.20


41

41

0.06

0.05


203

203

0.27

0.27


4

5

0.01

0.01


—

(59) (0.08) (0.08)


$ 480

$ 341

$ 0.46

$ 0.45


ofrevenues

$ 108

$ 63

$ 0.08

$ 0.08

Includesexpensesrelatedtoshare-basedcompensation.Reflectsamortizationofintangibleassetsfrompurchasepriceaccounting.ReflectsfeesandotherexpensesrelatedtotheKingAcquisition,inclusiveofrelateddebtfinancingsandintegrationcosts.Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenues,alongwithrelatedcostofrevenues,oncertainofouronlineenabledproducts,includingtheeffectsoftaxes.Reflectstheincometaximpactassociatedwiththeaboveitems.Taximpactonnon-GAAP(redefined)pre-taxincomeiscalculatedunderthesameaccountingprinciplesappliedtotheGAAPpre-taxincomeunderASC740,which

employsanannualeffectivetaxratemethodtotheresults.TheGAAPandnon-GAAP(redefined)earningspershareinformationispresentedascalculated.Thesumofthesemeasures,aspresented,maydifferduetotheimpactofrounding.Thecompanycalculatesearningspersharepursuanttothetwo-classmethodwhichrequirestheallocationofnetincomebetweencommonshareholdersandparticipatingsecurityholders.ForthethreemonthsendedJune30,2016,netincomeattributabletoActivisionBlizzard,Inc.commonshareholdersusedtocalculatenon-GAAP(redefined)earningspercommonshare,assumingdilution,was$340million,ascomparedtototalnetincomeof$341million,forthesameperiod.Forpurposesofcalculatingearningspershare,wehad,onaweighted-averagebasis,commonsharesoutstandingof739million,participatingsecuritiesofapproximately3million,anddilutivesharesof14millionduringthethreemonthsendedJune30,2016.

12

3

4

12

35

4

1

2

3

4

5

6

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESRECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES(Amounts in millions, except per share data)

Six Months Ended June 30, 2016

Net Revenues

Cost of Revenues- Product Sales: Product Costs




Costs



Product Development

Sales and Marketing


Total Costs and Expenses

GAAPMeasurement

$ 3,025

$ 318

$ 208

$ 383

$ 180

$ 424

$ 490

$ 329

$ 2,332


—

—

(14) —

(1) (23) (7) (40) (85)Amortizationofintangibleassets

—

—

(2) (1) (168) —


Acquisition

—

—

—

—

—

—

—


$ 3,025

$ 318

$ 192

$ 382

$ 11

$ 401

$ 372

$ 248

$ 1,924


ofrevenues

$ (508) $ (127) $ (122) $ 3

$ (1) $ —

$ —

$ —

$ (247)

Operating Income

Net Income



GAAPMeasurement

$ 693

$ 514

$ 0.69

$ 0.68


85

85

0.12

0.11


285

285

0.38

0.38


38

41

0.06

0.05


—

(143) (0.19) (0.19)


$ 1,101

$ 782

$ 1.06

$ 1.04


ofrevenues

$ (261) $ (205) $ (0.28) $ (0.28)

Includesexpensesrelatedtoshare-basedcompensation.Reflectsamortizationofintangibleassetsfrompurchasepriceaccounting.ReflectsfeesandotherexpensesrelatedtotheKingAcquisition,inclusiveofrelateddebtfinancingsandintegrationcosts.Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenues,alongwithrelatedcostofrevenues,oncertainofouronlineenabledproducts,includingtheeffectsoftaxes.Reflectstheincometaximpactassociatedwiththeaboveitems.Taximpactonnon-GAAP(redefined)pre-taxincomeiscalculatedunderthesameaccountingprinciplesappliedtotheGAAPpre-taxincomeunderASC740,which

employsanannualeffectivetaxratemethodtotheresults.TheGAAPandnon-GAAP(redefined)earningspershareinformationispresentedascalculated.Thesumofthesemeasures,aspresented,maydifferduetotheimpactofrounding.Thecompanycalculatesearningspersharepursuanttothetwo-classmethodwhichrequirestheallocationofnetincomebetweencommonshareholdersandparticipatingsecurityholders.ForthesixmonthsendedJune30,2016,netincomeattributabletoActivisionBlizzard,Inc.commonshareholdersusedtocalculatenon-GAAP(redefined)earningspercommonshare,assumingdilution,was$778million,ascomparedtototalnetincomeof$782million,forthesameperiod.Forpurposesofcalculatingearningspershare,wehad,onaweighted-averagebasis,commonsharesoutstandingof737million,participatingsecuritiesofapproximately3million,anddilutivesharesof14millionduringthesixmonthsendedJune30,2016.

12

3

4

12

35

4

1

2

3

4

5

7

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION

For the Three and Six Months Ended June 30, 2017 and 2016

(Amounts in millions)

Three Months Ended

June 30, 2017

June 30, 2016

$ Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)Net Revenues by Distribution Channel

Digitalonlinechannels

$ 1,309

80%

$ 1,141

73%

$ 168

15%Retailchannels

260

16

374

24

(114)

(30)Other

62

4

55

4

7

13Totalconsolidatednetrevenues

$ 1,631

100%

$ 1,570

100%

$ 61

4 Change in deferred revenues


$ (31)

$ 261

Retailchannels

(180)

(222)

Other

(2)

—

Totalchangesindeferredrevenues

$ (213)

$ 39

Six Months Ended

June 30, 2017

June 30, 2016

$ Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)Net Revenues by Distribution Channel


$ 2,694

80%

$ 2,067

68%

$ 627

30%Retailchannels

529

16

856

28

(327)

(38)Other

133

4

102

3

31


$ 3,356

100%

$ 3,025

100%

$ 331

11

Change in deferred revenues


$ (350)

$ 132

Retailchannels

(385)

(640)

Other

(7)

—


$ (742)

$ (508)

Thepercentagesoftotalarepresentedascalculated.Therefore,thesumofthesepercentages,aspresented,maydifferduetotheimpactofrounding.NetrevenuesfromDigitalonlinechannelsrepresentrevenuesfromdigitally-distributedsubscriptions,licensingroyalties,value-addedservices,downloadablecontent,microtransactions,

andproducts.NetrevenuesfromOtherincluderevenuesfromourstudiosanddistributionbusinesses,aswellasrevenuesfromMajorLeagueGaming.Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenuesoncertainofouronlineenabledproducts.

1 1

2

3

4

2

3

1 1

2

3

4

2

3

1

2

3

4

8

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION

For the Three and Six Months Ended June 30, 2017 and 2016

(Amounts in millions)

Three Months Ended

June 30, 2017

June 30, 2016

$ Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)Net Revenues by Platform

Console

$ 568

35%

$ 650

41%

$ (82)

(13)%PC

508

31

411

26

97

24Mobileandancillary

493

30

454

29

39

9Other

62

4

55

4

7


$ 1,631

100%

$ 1,570

100%

$ 61


Console

$ (203)

$ (210)

PC

(15)

219

Mobileandancillary

7

30

Other

(2)

—


$ (213)

$ 39

Six Months Ended

June 30, 2017

June 30, 2016

$ Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)Net Revenues by Platform

Console

$ 1,182

35%

$ 1,415

47%

$ (233)

(16)%PC

1,072

32

811

27

261

32Mobileandancillary

969

29

697

23

272

39Other

133

4

102

3

31


$ 3,356

100%

$ 3,025

100%

$ 331


Console

$ (577)

$ (648)

PC

(161)

121

Mobileandancillary

3

19

Other

(7)

—


$ (742)

$ (508)

Thepercentagesoftotalarepresentedascalculated.Therefore,thesumofthesepercentages,aspresented,maydifferduetotheimpactofrounding.NetrevenuesfromMobileandancillaryincluderevenuesfrommobiledevices,aswellasnon-platformspecificgamerelatedrevenues,suchasstandalonesalesoftoysandaccessoriesfromtheSkylandersfranchiseandother

physicalmerchandiseandaccessories.NetrevenuesfromOtherincluderevenuesfromourstudiosanddistributionbusinesses,aswellasrevenuesfromMajorLeagueGaming.Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenuesoncertainofouronlineenabledproducts.

1 1

2

3

4

2

3

1 1

2

3

4

2

3

1

2

3

4

9

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESFINANCIAL INFORMATIONFor the Three and Six Months Ended June 30, 2017 and 2016(Amounts in millions)

Three Months Ended

June 30, 2017

June 30, 2016

$ Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)Net Revenues by Geographic Region

Americas

$ 858

53%

$ 860

55%

$ (2)

—%EMEA

538

33

507

32

31

6AsiaPacific

235

14

203

13

32


$ 1,631

100%

$ 1,570

100%

$ 61


Americas

$ (129)

$ (24)

EMEA

(72)

(17)

AsiaPacific

(12)

80


$ (213)

$ 39

Six Months Ended

June 30, 2017

June 30, 2016

$ Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)Net Revenues by Geographic Region

Americas

$ 1,787

53%

$ 1,613

53%

$ 174

11%EMEA

1,092

33

1,028

34

64

6AsiaPacific

477

14

384

13

93

24TotalconsolidatedGAAPnetrevenues

$ 3,356

100%

$ 3,025

100%

$ 331

11


Americas

$ (438)

$ (317)

EMEA

(234)

(211)

AsiaPacific

(70)

20

Totalchangesinnetrevenues

$ (742)

$ (508)

Thepercentagesoftotalarepresentedascalculated.Therefore,thesumofthesepercentages,aspresented,maydifferduetotheimpactofrounding.

EMEAconsistsoftheEurope,MiddleEast,andAfricageographicregions.Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenuesoncertainofouronlineenabledproducts.

1 1

2

3

2

1 1

2

3

2

1

2

3

10

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESFINANCIAL INFORMATIONFor the Three Months Ended June 30, 2017 and 2016(Amounts in millions)

Three Months Ended

June 30, 2017

June 30, 2016

$ Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)Segment net revenues:

Activision

$ 316

23%

$ 332

21%

$ (16)

(5)%Blizzard

566

42

741

48

(175)

(24)King

480

35

484

31

(4)

(1)Reportablesegmentstotal

1,362

100%

1,557

100%

(195)

(13)Reconciliation to consolidated net revenues:

Othersegments

56

52

Neteffectfromdeferralofnetrevenues

213

(39)

Consolidatednetrevenues

$ 1,631

$ 1,570

$ 61

4%

Segment income (loss) from operations:

Activision

$ 87

$ 88

$ (1)

(1)%Blizzard

225

329

(104)

(32)King

164

176

(12)

(7)Reportablesegmentstotal

476

593

(117)

(20)Reconciliation to consolidated operating income andconsolidated income before income tax expense:

Othersegments

(5)

(5)

Neteffectfromcertainrevenuesdeferralsaccountingtreatment

105

(108)

Share-basedcompensationexpense

(39)

(41)


(194)

(203)


(5)

(4)


1

—

Consolidatedoperatingincome

339

232

107

46Interestandotherexpense(income),net

46

65

Consolidatedincomebeforeincometaxexpense

$ 293

$ 167

$ 126

75%

Operatingmarginfromtotalreportablesegments

34.9%

38.1%

Thepercentagesoftotalarepresentedascalculated.Therefore,thesumofthesepercentages,aspresented,maydifferduetotheimpactofrounding.ActivisionPublishing(“Activision”)—publishesinteractiveentertainmentproductsandcontent.BlizzardEntertainment,Inc.(“Blizzard”)—publishesinteractiveentertainmentproductsandonlinesubscription-basedgames.KingDigitalEntertainmentplc(“King”)—publishesinteractivemobileentertainmentproducts.Otherincludesotherincomeandexpensesfromoperatingsegmentsmanagedoutsidethereportablesegments,includingourstudiosanddistributionbusinesses.Otheralsoincludesunallocatedcorporateincomeandexpenses.Reflectstheneteffectfrom(deferral)ofrevenuesandrecognitionofdeferredrevenues,alongwithrelatedcostofrevenues,oncertainofouronlineenabledproducts.ReflectsfeesandotherexpensesrelatedtotheKingAcquisition,inclusiveofrelateddebtfinancingsandintegrationcosts.

Reflectsanon-cashaccountingchargetoreclassifycertaincumulativetranslationgains(losses)intoearningsduetothesubstantialliquidationofcertainofourforeignentities.OuroperatingsegmentsareconsistentwiththemannerinwhichouroperationsarereviewedandmanagedbyourChiefExecutiveOfficer,whoisourchiefoperatingdecisionmaker(“CODM”).TheCODMreviewssegmentperformanceexclusiveof:theimpactofthechangeindeferredrevenuesandrelatedcostofrevenueswithrespecttocertainofouronline-enabledgames;share-basedcompensationexpense;amortizationofintangibleassetsasaresultofpurchasepriceaccounting;feesandotherexpenses(includinglegalfees,costs,expensesandaccruals)relatedtoacquisitions,associatedintegrationactivities,andfinancings;certainrestructuringcosts;andothernon-cashcharges.Ouroperatingsegmentsarealsoconsistentwithourinternalorganizationstructure,thewayweassessoperatingperformanceandallocateresources,andtheavailabilityofseparatefinancialinformation.Duetochangeinourinternalorganizationandreportingstructureandhowwemanagethebusiness,commencingwiththesecondquarterof2017,ourMajorLeagueGamingbusiness,whichwaspreviouslyincludedinOthersegments,isnowincludedintheBlizzardsegment.Wehavealsorevisedpriorperiodstoreflectthischange.Wedonotaggregateoperatingsegments.

1 1

2

3

4

5

6

2

3

4

5

6

7

8

1

2

3

4

5

6

7

8

11

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESFINANCIAL INFORMATIONFor the Six Months Ended June 30, 2017 and 2016(Amounts in millions)

Six Months Ended

June 30, 2017 June 30, 2016 $ Increase

(Decrease)

% Increase (Decrease)

Amount % of Total Amount % of Total

Segment net revenues:

Activision $ 532 21% $ 692 29% $ (160) (23)%

Blizzard 1,009 40 1,038 43 (29) (3)

King 954 38 691 29 263 38

Reportablesegmentstotal 2,495 100% 2,421 100% 74 3

Reconciliation to consolidated net revenues:

Othersegments 119 96

Neteffectfromdeferralofnetrevenues 742 508

Consolidatednetrevenues $ 3,356 $ 3,025 $ 331 11%

Segment income (loss) from operations:

Activision $ 111 $ 187 $ (76) (41)%

Blizzard 384 413 (29) (7)

King 330 243 87 36

Reportablesegmentstotal 825 843 (18) (2)

Reconciliation to consolidated operating income and consolidatedincome before income tax expense

Othersegments (3) (3)

Neteffectfromcertainrevenuesdeferralsaccountingtreatment

501

261

Share-basedcompensationexpense (73) (85)

Amortizationofintangibleassets (384) (285)

FeesandotherexpensesrelatedtotheKingAcquisition (9) (38)

Restructuringcosts (11) —

Othernon-cashcharges (15) —

Consolidatedoperatingincome 831 693 138 20

Interestandotherexpense(income),net 85 117

Consolidatedincomebeforeincometaxexpense $ 746 $ 576 $ 170 30%

Operatingmarginfromtotalreportablesegments 33.1% 34.8%

Thepercentagesoftotalarepresentedascalculated.Therefore,thesumofthesepercentages,aspresented,maydifferduetotheimpactofrounding.ActivisionPublishing(“Activision”)—publishesinteractiveentertainmentproductsandcontent.BlizzardEntertainment,Inc.(“Blizzard”)—publishesinteractiveentertainmentproductsandonlinesubscription-basedgames.KingDigitalEntertainmentplc(“King”)—publishesinteractivemobileentertainmentproducts.Otherincludesotherincomeandexpensesfromoperatingsegmentsmanagedoutsidethereportablesegments,includingourstudiosanddistributionbusinesses.Otheralsoincludesunallocatedcorporateincomeandexpenses.Reflectstheneteffectfrom(deferral)ofrevenuesandrecognitionofdeferredrevenues,alongwithrelatedcostofrevenues,oncertainofouronlineenabledproducts.ReflectsfeesandotherexpensesrelatedtotheKingAcquisition,inclusiveofrelateddebtfinancingsandintegrationcosts.Reflectsrestructuringchargesincurred,primarilyseverancecosts.

Reflectsanon-cashaccountingchargetoreclassifycertaincumulativetranslationgains(losses)intoearningsduetothesubstantialliquidationofcertainofourforeignentities.OuroperatingsegmentsareconsistentwiththemannerinwhichouroperationsarereviewedandmanagedbyourChiefExecutiveOfficer,whoisourchiefoperatingdecisionmaker(“CODM”).TheCODMreviewssegmentperformanceexclusiveof:theimpactofthechangeindeferredrevenuesandrelatedcostofrevenueswithrespecttocertainofouronline-enabledgames;share-basedcompensationexpense;amortizationofintangibleassetsasaresultofpurchasepriceaccounting;feesandotherexpenses(includinglegalfees,costs,expensesandaccruals)relatedtoacquisitions,associatedintegrationactivities,andfinancings;certainrestructuringcosts;andothernon-cashcharges.Ouroperatingsegmentsarealsoconsistentwithourinternalorganizationstructure,thewayweassessoperatingperformanceandallocateresources,andtheavailabilityofseparatefinancialinformation.Duetochangeinourinternalorganizationandreportingstructureandhowwemanagethebusiness,commencingwiththesecondquarterof2017,ourMajorLeagueGamingbusiness,whichwaspreviouslyincludedinOthersegments,isnowincludedintheBlizzardsegment.Wehavealsorevisedpriorperiodstoreflectthischange.Wedonotaggregateoperatingsegments.

1 1

2

3

4

5

6

2

3

4

5

6

7

8

9

1

2

3

4

5

6

7

8

9

12

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESEBITDA and Adjusted EBITDAFor the Trailing Twelve Months Ended June 30, 2017(Amounts in millions)

Trailing Twelve Months Ended

September 30, 2016

December 31, 2016

March 31, 2017

June 30, 2017

June 30, 2017

GAAP Net Income $ 199 $ 254 $ 426 $ 243 $ 1,122

Interestandotherexpense(income),net 53 43 40 34 170

Lossonextinguishmentofdebt 10 82 — 12 104

Provisionforincometaxes 32 46 27 50 155

Depreciationandamortization 243 246 224 226 939

EBITDA 537 671 717 565 2,490

Share-basedcompensationexpense 33 40 33 39 145

FeesandotherexpensesrelatedtotheKingAcquisition 4 4 4 5 17

Restructuringcosts — — 11 — 11

Othernon-cashcharges — — 16 (1) 15

Adjusted EBITDA (redefined) $ 574 $ 715 $ 781 $ 608 $ 2,678

Changeindeferrednetrevenuesandrelatedcostofrevenues

$ 33

$ 238

$ (396)

$ (105)

$ (230)

Werecognized$12million,$18million,$69million,and$13millionofexcesstaxbenefitsfromshare-basedpaymentsasanincometaxbenefitintheprovisionforincometaxesforthethreemonthsendedSeptember30,2016,December31,2016,March31,2017,andJune30,2017,respectively.

Includesexpensesrelatedtoshare-basedcompensation.ReflectsfeesandotherexpensesrelatedtotheKingAcquisition,inclusiveofrelateddebtfinancingsandintegrationcosts.

Reflectsrestructuringchargesincurred,primarilyseverancecosts.Reflectsanon-cashaccountingchargetoreclassifycertaincumulativetranslation(gains)lossesintoearningsduetothesubstantialliquidationofcertainofourforeignentities.

Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenues,alongwithrelatedcostofrevenues,oncertainofouronlineenabledproducts.

1

1

2

3

4

5

6

1

2

3

4

5

6

13

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESSUPPLEMENTAL FINANCIAL INFORMATION(Amounts in millions)

Three Months Ended

Year over Year %

June 30,

September 30,

December 31,

March 31,

June 30,

Increase

2016

2016

2016

2017

2017

(Decrease)

Cash Flow Data

OperatingCashFlow

$ 503

$ 456

$ 859

$ 411

$ 265

(47)%

CapitalExpenditures

44

28

37

21

31

(30)

Non-GAAPFreeCashFlow

459

428

822

390

234

(49)

OperatingCashFlow-TTM

1,732

2,359

2,155

2,229

1,991

15

CapitalExpenditures-TTM

133

115

136

130

117

(12)

Non-GAAPFreeCashFlow-TTM

$ 1,599

$ 2,244

$ 2,019

$ 2,099

$ 1,874

17%

Non-GAAPfreecashflowrepresentsoperatingcashflowminuscapitalexpenditures.TTMrepresentstrailingtwelvemonths.OperatingCashFlowforthethreemonthsendedSeptember30,2015,threemonthsendedDecember31,2015,andthreemonthsendedMarch31,2016,was$(171)million,$1,063million,and$337million,respectively.CapitalExpendituresforthethreemonthsendedSeptember30,2015,threemonthsendedDecember31,2015,andthreemonthsendedMarch31,2016,were$46million,$16million,and$27million,respectively.

1

2

2

2

1

2

14

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESOutlook for the Three Months Ending September 30, 2017 and Year Ending December 31, 2017GAAP to Non-GAAP (redefined) Reconciliation(Amounts in millions, except per share data)

Outlook for the

Outlook for the

Three Months Ending

Year Ending

September 30, 2017

December 31, 2017

Net Revenues

$ 1,385

$ 6,400


$ 315

$ 175

Earnings Per Diluted Share (GAAP)

$ 0.09

$ 1.05

Excludingtheimpactof:


0.06

0.23


0.24

0.99


0.01

0.05

Restructuringcosts

—

0.03


—

0.02


(0.07)

(0.42)Earnings Per Diluted Share (Non-GAAP redefined)

$ 0.34

$ 1.94

Net effect of deferred net revenues and related cost of revenues onEarnings Per Diluted Share

$ 0.11

$ 0.06

NetRevenuesrepresentstherevenueoutlookforbothGAAPandNon-GAAP(redefined)astheyaremeasuredthesame.Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenuesoncertainofouronlineenabledproducts.Reflectsexpensesrelatedtoshare-basedcompensation.Reflectsamortizationofintangibleassetsfrompurchasepriceaccounting,includingintangibleassetsfromtheKingAcquisition.ReflectsfeesandotherexpensesrelatedtotheKingAcquisition,inclusiveofrelateddebtfinancingsandintegrationcosts,aswellasalossonextinguishmentofdebtof

$12millionincurredduringthethreemonthsendedJune30,2017relatedtotherefinancingofourlong-termdebt.Reflectsrestructuringcharges,primarilyseverancecosts.Reflectsanon-cashaccountingchargeincurredtoreclassifycertaincumulativetranslationlossesintoearningsduetothesubstantialliquidationofcertainofourforeign

entities.Reflectstheincometaximpactsassociatedwiththeaboveitems.Duetotheinherentuncertaintiesinsharepriceandoptionexercisebehavior,wedonotgenerallyforecast

excesstaxbenefitsortaxshortfalls.Reflectstheneteffectfromdeferralofrevenuesand(recognition)ofdeferredrevenues,alongwithrelatedcostofrevenues,oncertainofouronlineenabledproducts,

includingtheeffectoftaxes.

ThepershareadjustmentsandtheGAAPandNon-GAAP(redefined)earningspershareinformationarepresentedascalculated.Therefore,thesumofthesemeasures,aspresented,maydifferduetotheimpactofrounding.

1

2

3

4

5

6

7

8

9

1

2

3

4

5

6

7

8

9

Documents

ACTIVISION BLIZZARD, INC. - Zonebourse.com€¦ · ACTIVISION BLIZZARD, INC. FORM 8-K (Current report filing) Filed 08/03/17 for the Period Ending 08/03/17 Address 3100 OCEAN PARK