UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

 

Date of report (Date of earliest event reported):  February 5, 2015

 

 

 

ACTIVISION BLIZZARD, INC.

 

 

(Exact Name of Registrant as Specified in Charter)

 

 

 

 

Delaware

 

001-15839

 

95-4803544

 

(State or Other Jurisdiction of
Incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

 

 

 

3100 Ocean Park Boulevard,
Santa Monica, CA

 

90405

 

(Address of Principal Executive
Offices)

 

(Zip Code)

 

 

 

 

Registrant’s telephone number, including area code:  (310) 255-2000

 

 

 

 

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



 

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 be deemed “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 the information contained therein be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

Item 2.02.                             Results of Operations and Financial Condition.

 

On February 5, 2015, Activision Blizzard, Inc. (the “Company”) issued a press release announcing results for the Company for the fiscal quarter and year ended December 31, 2014. A copy of the press release is attached hereto as Exhibit 99.1.  As previously announced, the Company is hosting a conference call and webcast in conjunction with that release.

 

 

Item 8.01.                             Other Events.

 

Cash Dividend.  On February 5, 2015, the Company’s Board of Directors approved a cash dividend of $0.23 per share to be paid on May 13, 2015 to shareholders of record of the Company’s common stock on March 30, 2015.

 

Share Repurchase.  On February 3, 2015, the Company’s Board of Directors authorized the Company to repurchase up to $750 million of the Company’s common stock on terms and conditions to be determined by the Company from February 9, 2015 until the earlier of February 8, 2017 and a determination by the Board of Directors to discontinue the repurchase program.

 

Condensed Consolidated Financial Highlights — Fourth Quarter 2014 Results (Unaudited).  Set forth below are the Company’s condensed consolidated financial highlights for the periods and at the dates indicated.

 

2



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

(Amounts in millions, except per share data)

 

 

Three Months Ended December 31,

Year Ended December 31,

 

2014

2013

2014

2013

 

 

 

 

 

Net revenues:

 

 

 

 

Product sales

  $

1,094

  $

1,152

  $

2,786

  $

3,201

Subscription, licensing and other revenues 1

481

366

1,622

1,382

Total net revenues

1,575

1,518

4,408

4,583

 

 

 

 

 

Costs and expenses:

 

 

 

 

Cost of sales - product costs

432

502

999

1,053

Cost of sales - online

61

50

232

204

Cost of sales - software royalties and amortization

124

72

260

187

Cost of sales - intellectual property licenses

14

31

34

87

Product development

184

197

571

584

Sales and marketing

247

239

712

606

General and administrative

75

143

417

490

Total costs and expenses

1,137

1,234

3,225

3,211

Operating income

438

284

1,183

1,372

Interest and other investment income (expense), net

(50)

(51)

(202)

(53)

Income before income tax expense

388

233

981

1,319

Income tax expense

27

59

146

309

Net income

  $

361

  $

174

  $

835

  $

1,010

 

 

 

 

 

Basic earnings per common share 2

  $

0.49

  $

0.23

  $

1.14

  $

0.96

Weighted average common shares outstanding

720

745

716

1,024

 

 

 

 

 

Diluted earnings per common share 2

  $

0.49

  $

0.22

  $

1.13

  $

0.95

Weighted average common shares outstanding assuming dilution

729

757

726

1,035

 

 

 

 

 

 

 

 

1 Subscription, licensing and other revenues represents 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 12 million and 15 million for the three months and year ended December 31, 2014, respectively. We had, on a weighted-average basis, participating securities of approximately 23 million and 24 million for the three months and year ended December 31, 2013, respectively.  Net income attributable to Activision Blizzard Inc. common shareholders used to calculate earnings per common share assuming dilution was $355 million and $817 million for the three months and year ended December 31, 2014 as compared to total net income of $361 million and $835 million for the same periods, respectively. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate earnings per common share assuming dilution was $168 million and $987 million for the three months and year ended December 31, 2013 as compared to total net income of $174 million and $1,010 million for the same periods, respectively.

 

3



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in millions)

 

 

December 31,

December 31,

 

2014

2013

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

4,848

$

4,410

Short-term investments

10

33

Accounts receivable, net

659

510

Inventories, net

123

171

Software development

452

367

Intellectual property licenses

5

11

Deferred income taxes, net

368

321

Other current assets

444

418

Total current assets

6,909

6,241

Long-term investments

9

9

Software development

20

21

Intellectual property licenses

18

---

Property and equipment, net

157

138

Other assets

85

35

Intangible assets, net

29

43

Trademark and trade names

433

433

Goodwill

7,086

7,092

Total assets

$

14,746

$

14,012

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$

325

$

355

Deferred revenues

1,797

1,389

Accrued expenses and other liabilities

592

636

Current portion of long-term debt

---

25

Total current liabilities

2,714

2,405

Long-term debt, net

4,324

4,668

Deferred income taxes, net

114

66

Other liabilities

361

251

Total liabilities

7,513

7,390

Shareholders’ equity:

 

 

Common stock

---

---

Additional paid-in capital

9,924

9,682

Treasury stock

(5,762)

(5,814)

Retained earnings

3,374

2,686

Accumulated other comprehensive income (loss)

(303)

68

Total shareholders’ equity

7,233

6,622

Total liabilities and shareholders’ equity

$

14,746

$

14,012

 

 

 

 

4



 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

(Amounts in millions)

 

 

Year Ended December 31,

 

2014

2013

 

 

 

Cash flows from operating activities:

 

 

Net income

  $

835

  $

1,010

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Deferred income taxes

(44)

161

Provision for inventories

39

33

Depreciation and amortization

90

108

Loss on disposal of property and equipment

1

---

Amortization and write-off of capitalized software development costs and intellectual property licenses (1)

256

207

Amortization of debt discount and debt financing costs

7

1

Stock-based compensation expense (2)

104

108

Excess tax benefits from stock awards

(39)

(29)

Changes in operating assets and liabilities:

 

 

Accounts receivable, net

(177)

198

Inventories

(2)

6

Software development and intellectual property licenses

(349)

(268)

Other assets

18

(67)

Deferred revenues

475

(275)

Accounts payable

(12)

7

Accrued expenses and other liabilities

90

64

Net cash provided by operating activities

1,292

1,264

 

 

 

Cash flows from investing activities:

 

 

Proceeds from maturities of available-for-sale investments

21

304

Proceeds from sales of available-for-sale investments

---

98

Purchases of available-for-sale investments

---

(26)

Capital expenditures

(107)

(74)

Decrease (increase) in restricted cash

2

6

Net cash provided by (used in) investing activities

(84)

308

 

 

 

Cash flows from financing activities:

 

 

Proceeds from issuance of common stock to employees

175

158

Tax payment related to net share settlements on restricted stock rights

(66)

(49)

Repurchase of common stock

---

(5,830)

Dividends paid

(147)

(216)

Proceeds from issuance of long-term debt

---

4,750

Repayment of long-term debt

(375)

(6)

Payment of debt discount and financing costs

---

(59)

Excess tax benefits from stock awards

39

29

Net cash used in financing activities

(374)

(1,223)

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

(396)

102

Net increase in cash and cash equivalents

438

451

 

 

 

Cash and cash equivalents at beginning of period

4,410

3,959

 

 

 

Cash and cash equivalents at end of period

  $

4,848

  $

4,410

 

 

 

 

(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.

 

5



 

Item 9.01.                             Financial Statements and Exhibits.

 

(d)  Exhibits

 

99.1                    Press Release dated February 5, 2015 (furnished not filed)

 

6



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 5, 2015

ACTIVISION BLIZZARD, INC.

 

 

 

 

 

 

 

By:

/s/ Dennis Durkin

 

 

 

Dennis Durkin

 

 

 

Chief Financial Officer

 

 

7



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated February 5, 2015 (furnished not filed)

 

8