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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Activision Blizzard Inc | NASDAQ:ATVI | NASDAQ | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 94.42 | 104.01 | 94.42 | 0 | 01:00:00 |
From Apr 2019 to Apr 2024
Exceeds Outlook for Fourth Quarter and Full Year 2014
Achieved More Than 50% Non-GAAP Earnings Per Share Growth and Double-Digit Non-GAAP Revenue Growth in 2014
Digital Revenues At All-Time High, Representing 46% of Full Year Non-GAAP Revenues
Generated Operating Cash Flow of $1.3 Billion in 2014
Announces Two-Year Stock Repurchase Plan of $750 Million and Debt Paydown of $250 Million
Increases Cash Dividend By 15% to $0.23 Per Common Share
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced record fourth quarter and full year earnings per share.
Fourth Quarter Calendar Year (in millions, except EPS) 2014 PriorOutlook*
2013 2014 2013GAAP
Net Revenues $ 1,575 $ 1,492 $ 1,518 $ 4,408 $ 4,583 EPS $ 0.49 $ 0.28 $ 0.22 $ 1.13 $ 0.95Non-GAAP
Net Revenues $ 2,213 $ 2,200 $ 2,272 $ 4,813 $ 4,342 EPS $ 0.94 $ 0.86 $ 0.79 $ 1.42 $ 0.94*Prior outlook was provided by the company on November 4, 2014 in its earnings release
For calendar year 2014, Activision Blizzard delivered record non-GAAP earnings per diluted share of $1.42, as compared with $0.94 per diluted share for 2013. On a GAAP basis, the company delivered record earnings per diluted share of $1.13, as compared with $0.95 per diluted share for 2013.
For calendar year 2014, Activision Blizzard delivered non-GAAP net revenues of $4.81 billion, as compared with $4.34 billion for 2013. On a GAAP basis, the company delivered net revenues of $4.41 billion, as compared with $4.58 billion for 2013. For the calendar year, non-GAAP net revenues from digital channels were $2.20 billion and represented a record 46% of the company’s total net revenues. On a GAAP basis, for the calendar year 2014, net revenues from digital channels were $1.90 billion and represented 43% of the company’s total revenues.
For the quarter ended December 31, 2014, Activision Blizzard’s non-GAAP earnings per diluted share were a record $0.94, as compared with $0.79 for the fourth quarter of 2013. On a GAAP basis, the company’s earnings per diluted share were a record $0.49, more than double the earnings per diluted share of $0.22 for the fourth quarter of 2013.
For the quarter ended December 31, 2014, the company delivered non-GAAP net revenues of $2.21 billion, as compared with $2.27 billion for the fourth quarter of 2013. On a GAAP basis, the company’s net revenues were $1.58 billion, as compared with $1.52 billion for the fourth quarter of 2013.
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, “2014 was another successful year as we achieved record results and introduced new franchises with outstanding gameplay, expanded on exciting new business models and continued investing in some of the world’s most important entertainment franchises. We delivered record earnings per share which increased more than 50% from the previous year, double-digit revenue growth, and record high-margin digital revenues that represent an all-time high of 46% of total revenues (all non-GAAP).”
Kotick, added, “We expanded our franchise portfolio by launching two of the industry’s most successful new brands, Blizzard’s Hearthstone®: Heroes of Warcraft™, and the biggest new IP launch in industry history, Destiny®. Combined, these franchises attracted over 40 million registered players worldwide and generated more than $850 million in non-GAAP revenue.1 This year, we expect to expand our franchise portfolio to 10 blockbusters, up from five franchises at the beginning of 2014. Our amazingly talented teams will continue to produce the world’s best content for gamers.”
Kotick, continued, “We have a growing portfolio of the very best franchises and great confidence in our future. Our Board has once again increased our dividend, authorized a $750 million share repurchase program and the repayment of another $250 million of our debt, and we have returned nearly $10 billion to our shareholders in dividends and repurchases since 2008.”
Selected Business Highlights:
Company Outlook:
On January 11, 2015, Activision Publishing and Tencent launched a public open beta for Call of Duty® Online, making the game available to millions of Chinese gamers. The open beta marks a historic first for the Call of Duty series as it expands into the world’s largest gaming market.
On January 13, 2015, Blizzard Entertainment began the closed beta test for Heroes of the Storm™, its upcoming free-to-play online team brawler featuring iconic heroes from more than 20 years of Blizzard gaming history. To date, more than nine million players have signed up to beta test the game.
On January 27, 2015, Activision Publishing launched the first DLC for Call of Duty®: Advanced Warfare – Havoc, available first on the Xbox Live online entertainment network from Microsoft for Xbox One and Xbox 360. The DLC offers four new multi-player maps, exclusive weapon, custom weapon variant and a new zombies cooperative mode called Exo Zombies.
In January 2015, Blizzard Entertainment’s Hearthstone: Heroes of Warcraft reached more than 25 million registered players.
Additionally, in 2015, Blizzard Entertainment expects to begin beta testing Overwatch.
Given the significant weakening of foreign currencies versus the U.S. dollar, the company’s 2015 international revenues and earnings are expected to be translated at much lower rates than in 2014. This will impact the company’s 2015 outlook as compared to 2014 actual results given approximately 50% of the company’s revenues, and a higher percentage of profits, are generated outside the U.S. See reconciliation table, below.
Activision Blizzard’s first quarter and calendar year 2015 outlook is, as follows:
(in millions, except EPS)
GAAP Outlook
Non-GAAP Outlook
CY 2015
Net Revenues
$ 4,140 $ 4,400 EPS $ 0.89 $ 1.15 Fully Diluted Shares** 750 750Q1 2015
Net Revenues
$ 1,140 $ 640 EPS $ 0.37 $ 0.05 Fully Diluted Shares** 745 745The following table reconciles our CY14 actual earnings per share to CY15 outlook earnings per share.
EPS GAAP Non-GAAP CY14 – Actuals $ 1.13 $ 1.42 Slate / Operations*** 0.01 (0.05 ) Foreign Currency (0.17 ) (0.14 ) Tax Rate & Share Count (0.08 ) (0.08 ) CY15 – Outlook $ 0.89 $ 1.15Currency Assumptions for 2015 Outlook:
** Fully diluted weighted average shares include participating securities and dilutive options on a weighted average basis.*** For GAAP purpose, it includes the net change in deferred net revenues and related cost of sales.
Board Authorizes Stock Repurchase Program and Debt Repayment and Declares Cash Dividend
The company also announced that its Board of Directors authorized a new two-year stock repurchase program under which the company is authorized to repurchase up to $750 million of its outstanding common stock during the period from February 9, 2015 through February 8, 2017.
Additionally, the company announced that its Board of Directors has approved a repayment of $250 million of the company’s outstanding “Term Loan B,” which is expected to occur during the first quarter of 2015.
The Board of Directors also declared a cash dividend of $0.23 per common share, payable on May 13, 2015 to shareholders of record at the close of business on March 30, 2015, which represents a 15% increase from 2014.
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, 2014 and management’s outlook for 2015. 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 877-741-4239 in the U.S. with passcode 3638929.
About Activision Blizzard
Activision Blizzard, Inc. is the largest and most profitable western interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty, Call of Duty Online, Destiny, Skylanders, World of Warcraft, StarCraft®, Diablo®, and Hearthstone.
Headquartered in Santa Monica, California, it maintains operations throughout the United States, Europe, and Asia. Activision Blizzard develops and publishes games on all leading interactive platforms and its games are available in most countries around the world. More information about Activision Blizzard and its products can be found on the company's website, www.activisionblizzard.com.
1 During calendar year 2014, combined GAAP revenues from Hearthstone: Heroes of Warcraft and Destiny were more than $450 million. The difference in GAAP and non-GAAP revenues represents the net change in deferrals of revenues of approximately $400 million.2 The NPD Group and GfK Chart-Track, including toys and accessories3 The NPD Group and GfK Chart-Track and Activision Blizzard internal estimates, including toys and accessories4 The NPD Group5 The NPD Group and GfK Chart-Track
Subscriber Definition: World of Warcraft subscribers include individuals who have paid a subscription fee or have an active prepaid card to play World of Warcraft, as well as those who have purchased the game and are within their free month of access. Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers. The above definition excludes all players under free promotional subscriptions, expired or cancelled subscriptions, and expired prepaid cards. Subscribers in licensees' territories are defined along the same rules.
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. 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:
In the future, Activision Blizzard may also consider whether other significant non-recurring 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.
Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard’s GAAP, as well as non-GAAP, results and outlook, and by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.
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: Information in this press release that involves Activision Blizzard’s expectations, plans, intentions or strategies regarding the future, including statements under the heading “Company Outlook,” are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements consist of any statement other than a recitation of historical facts and include, but are not limited to: (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 relating to product releases; and (3) statements of future financial or operating performance.
Activision Blizzard 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. Activision Blizzard’s actual future results could differ materially from those expressed in the forward-looking statements set forth in this release. Risks and uncertainties that may affect our future results include, but are not limited to, sales levels of Activision Blizzard’s titles, increasing concentration of titles, shifts in consumer spending trends, the impact of the current macroeconomic environment, Activision Blizzard’s ability to predict consumer preferences, including interest in specific genres, such as first-person action, massively multiplayer online and “toys to life” games, and preferences among hardware platforms, the seasonal and cyclical nature of the interactive game market, changing business models, including digital delivery of content, competition including from used games and other forms of entertainment, possible declines in software pricing, product returns and price protection, product delays, adoption rate and availability of new hardware (including peripherals) and related software, particularly during the ongoing console transition, rapid changes in technology and industry standards, the current regulatory environment, litigation risks and associated costs, protection of proprietary rights, maintenance of relationships with key personnel, customers, financing providers, licensees, licensors, vendors, and third-party developers, including the ability to attract, retain and develop key personnel and developers that can create high quality titles, counterparty risks relating to customers, licensees, licensors and manufacturers, domestic and international economic, financial and political conditions and policies, foreign exchange rates and tax rates, the identification of suitable future acquisition opportunities and potential challenges associated with geographic expansion, capital market risks, the possibility that expected benefits related to the transactions involving the repurchase of shares from Vivendi S.A. may not materialize as expected, the amount of our debt and the limitations imposed by the covenants in the agreements governing our debt, 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. The forward-looking statements in this release are based upon information available to Activision Blizzard as of the date of this release, and Activision Blizzard assumes no obligation to update any such forward-looking statements. Although these forward-looking statements are believed to be true when made, they may ultimately prove to be incorrect. These statements are not guarantees of the future performance of Activision Blizzard and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.
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. 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 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. 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 2012 2013 2013 2013 2013 (Decrease) 2014 2014 2014 2014 (Decrease) Cash Flow Data Operating Cash Flow $ 976 $ 325 $ 109 $ (50 ) $ 880 (10 )% $ 136 $ 106 $ (145 ) $ 1,195 36 % Capital Expenditures 27 17 19 22 16 (41 ) 37 25 28 17 6 Non-GAAP Free Cash Flow2 949 308 90 (72 ) 864 (9 ) 99 81 (173 ) 1,178 36 Operating Cash Flow - TTM1 1,345 1,516 1,532 1,360 1,264 (6 ) 1,075 1,072 977 1,292 2 Capital Expenditures - TTM1 73 82 84 85 74 1 94 100 106 107 45 Non-GAAP Free Cash Flow - TTM1 $ 1,272 $ 1,434 $ 1,448 $ 1,275 $ 1,190 (6 )% $ 981 $ 972 $ 871 $ 1,185 (0 )%1
TTM represents trailing twelve months. Operating Cash Flow for the three months ended December 31, 2012, three months ended September 30, 2012, three months ended June 30, 2012, and three months ended March 31, 2012 was $976 million, $122 million, $93 million, and $154 million, respectively. Capital expenditures for the three months ended December 31, 2012, three months ended September 30, 2012, three months ended June 30, 2012, and three months ended March 31, 2012 was $27 million, $21 million, $17 million, and $8 million, respectively.2
Non-GAAP free cash flow represents operating cash flow minus capital expenditures (which includes payment for acquisition of intangible assets). ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES (Amounts in millions, except earnings 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 sales (a) 638 112 - 52 (1 ) - - - 163 Less: Stock-based compensation (b) - - - (5 ) - (5 ) (2 ) (17 ) (29 ) Less: Amortization of intangible assets (c) - - - - (8 ) - - - (8 ) Less: Fees and other expenses related to the Purchase Transaction and related debt financings (d) - - - - - - - 36 36 Non-GAAP Measurement $ 2,213 $ 544 $ 61 $ 171 $ 5 $ 179 $ 245 $ 94 $ 1,299 Three Months Ended December 31, 2014 Operating Income Net Income Basic Earnings per ShareDiluted Earnings per Share
GAAP Measurement $ 438 $ 361 $ 0.49 $ 0.49 Less: Net effect from deferral of net revenues and related cost of sales (a) 475 349 0.48 0.47 Less: Stock-based compensation (b) 29 19 0.03 0.03 Less: Amortization of intangible assets (c) 8 5 0.01 0.01 Less: Fees and other expenses related to the Purchase Transaction and related debt financings (d) (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 sales (a) 405 29 - 161 - - - - 190 Less: Stock-based compensation (b) - - (1 ) (17 ) - (22 ) (8 ) (56 ) (104 ) Less: Amortization of intangible assets (c) - - - - (12 ) - - - (12 ) Less: Fees and other expenses related to the Purchase Transaction and related debt financings (d) - - - - - - - (13 ) (13 ) Non-GAAP Measurement $ 4,813 $ 1,028 $ 231 $ 404 $ 22 $ 549 $ 704 $ 348 $ 3,286 Year Ended December 31, 2014 Operating Income Net Income Basic Earnings per ShareDiluted Earnings per Share
GAAP Measurement $ 1,183 $ 835 $ 1.14 $ 1.13 Less: Net effect from deferral of net revenues and related cost of sales (a) 215 136 0.19 0.18 Less: Stock-based compensation (b) 104 65 0.09 0.09 Less: Amortization of intangible assets (c) 12 8 0.01 0.01 Less: Fees and other expenses related to the Purchase Transaction and related debt financings (d) 13 13 0.02 0.02 Non-GAAP Measurement $ 1,527 $ 1,057 $ 1.44 $ 1.42 (a) Reflects the net change in deferred revenues and related cost of sales. (b) Includes expense related to stock-based compensation. (c) Reflects amortization of intangible assets from purchase price accounting. (d) 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 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. Net income attributable to Activision Blizzard common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $686 million and $1,034 million for the three months and year ended December 31, 2014 as compared to total non-GAAP net income of $698 million and $1,057 million for the same periods, respectively. For purpose of calculation of 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 purpose of calculation of 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. The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES (Amounts in millions, except earnings per share data) Three Months Ended December 31, 2013 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 $ 1,518 $ 502 $ 50 $ 72 $ 31 $ 197 $ 239 $ 143 $ 1,234 Less: Net effect from deferral of net revenues and related cost of sales (a) 754 181 - 64 - - - - 245 Less: Stock-based compensation (b) - - - (7 ) - (10 ) (2 ) (15 ) (34 ) Less: Amortization of intangible assets (c) - - - - (15 ) - - - (15 ) Less: Fees and other expenses related to the Purchase Transaction and related debt financings (d) - - - - - - - (18 ) (18 ) Non-GAAP Measurement $ 2,272 $ 683 $ 50 $ 129 $ 16 $ 187 $ 237 $ 110 $ 1,412 Three Months Ended December 31, 2013 Operating Income Net Income Basic Earnings per ShareDiluted Earnings per Share
GAAP Measurement $ 284 $ 174 $ 0.23 $ 0.22 Less: Net effect from deferral of net revenues and related cost of sales (a) 509 401 0.52 0.51 Less: Stock-based compensation (b) 34 23 0.03 0.03 Less: Amortization of intangible assets (c) 15 9 0.01 0.01 Less: Fees and other expenses related to the Purchase Transaction and related debt financings (d) 18 14 0.02 0.02 Non-GAAP Measurement $ 860 $ 621 $ 0.81 $ 0.79 Year Ended December 31, 2013 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 $ 4,583 $ 1,053 $ 204 $ 187 $ 87 $ 584 $ 606 $ 490 $ 3,211 Less: Net effect from deferral of net revenues and related cost of sales (a) (241 ) (10 ) - 2 (4 ) - - - (12 ) Less: Stock-based compensation (b) - - - (17 ) - (33 ) (7 ) (53 ) (110 ) Less: Amortization of intangible assets (c) - - - - (23 ) - - - (23 ) Less: Fees and other expenses related to the Purchase Transaction and related debt financings (d) - - - - - - - (79 ) (79 ) Non-GAAP Measurement $ 4,342 $ 1,043 $ 204 $ 172 $ 60 $ 551 $ 599 $ 358 $ 2,987 Year Ended December 31, 2013 Operating Income Net Income Basic Earnings per ShareDiluted Earnings per Share
GAAP Measurement $ 1,372 $ 1,010 $ 0.96 $ 0.95 Less: Net effect from deferral of net revenues and related cost of sales (a) (229 ) (150 ) (0.14 ) (0.14 ) Less: Stock-based compensation (b) 110 71 0.07 0.07 Less: Amortization of intangible assets (c) 23 14 0.01 0.01 Less: Fees and other expenses related to the Purchase Transaction and related debt financings (d) 79 54 0.05 0.05 Non-GAAP Measurement $ 1,355 $ 999 $ 0.95 $ 0.94 (a) Reflects the net change in deferred revenues and related cost of sales. (b) Includes expense related to stock-based compensation. (c) Reflects amortization of intangible assets from purchase price accounting. (d) 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 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. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $602 million and $976 million for the three months and year ended December 31, 2013 as compared to total non-GAAP net income of $621 million and $999 million for the same periods, respectively. For purpose of calculation of earnings per share, we had, on a weighted-average basis, common shares outstanding of 745 million, participating securities of approximately 23 million, and dilutive shares of 12 million during the three months ended December 31, 2013. For purpose of calculation of earnings per share, we had, on a weighted-average basis, common shares outstanding of 1,024 million, participating securities of approximately 24 million, and dilutive shares of 11 million during the year ended December 31, 2013. The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL INFORMATION For the Three Months and Year Ended December 31, 2014 and 2013 (Amounts in millions) Three Months Ended December 31, 2014 December 31, 2013 $ Increase % Increase Amount % of Total4 Amount % of Total4 (Decrease) (Decrease) GAAP Net Revenues by Distribution Channel Retail channels $ 846 54 % $ 953 63 % $ (107 ) (11 )% Digital online channels1 539 34 385 25 154 40 Total Activision and Blizzard 1,385 88 1,338 88 47 4 Distribution 190 12 180 12 10 6 Total consolidated GAAP net revenues 1,575 100 1,518 100 57 4 Change in Deferred Revenues2 Retail channels 492 786 Digital online channels1 146 (32 ) Total changes in deferred revenues 638 754 Non-GAAP Net Revenues by Distribution Channel Retail channels 1,338 60 1,739 77 (401 ) (23 ) Digital online channels1 685 31 353 16 332 94 Total Activision and Blizzard 2,023 91 2,092 92 (69 ) (3 ) Distribution 190 9 180 8 10 6 Total non-GAAP net revenues3 $ 2,213 100 % $ 2,272 100 % $ (59 ) (3 )% Year Ended December 31, 2014 December 31, 2013 $ Increase % Increase Amount % of Total4 Amount % of Total4 (Decrease) (Decrease) GAAP Net Revenues by Distribution Channel Retail channels $ 2,104 48 % $ 2,701 59 % $ (597 ) (22 )% Digital online channels1 1,897 43 1,559 34 338 22 Total Activision and Blizzard 4,001 91 4,260 93 (259 ) (6 ) Distribution 407 9 323 7 84 26 Total consolidated GAAP net revenues 4,408 100 4,583 100 (175 ) (4 ) Change in Deferred Revenues2 Retail channels 104 (247 ) Digital online channels1 301 6 Total changes in deferred revenues 405 (241 ) Non-GAAP Net Revenues by Distribution Channel Retail channels 2,208 46 2,454 57 (246 ) (10 ) Digital online channels1 2,198 46 1,565 36 633 40 Total Activision and Blizzard 4,406 92 4,019 93 387 10 Distribution 407 8 323 7 84 26 Total non-GAAP net revenues3 $ 4,813 100 % $ 4,342 100 % $ 471 11 % 1 Net revenues from digital online channels represent revenues from subscriptions, licensing royalties, value-added services, downloadable content, digitally distributed products, and wireless devices. 2 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred revenues. 3 Total non-GAAP net revenues presented also represents our total operating segment net revenues. 4 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Three Months Ended December 31, 2014 and 2013 (Amounts in millions) Three Months Ended December 31, 2014 December 31, 2013 $ Increase % Increase Amount % of Total6 Amount % of Total6 (Decrease) (Decrease) GAAP Net Revenues by Segment/Platform Mix Activision and Blizzard: Online1 $ 266 17 % $ 198 13 % $ 68 34 % PC 104 7 66 4 38 58 Next-generation (PS4, Xbox One, Wii U) 367 23 79 5 288 NM Prior-generation (PS3, Xbox 360, Wii) 380 24 666 44 (286) (43) Total console2 747 47 745 49 2 --- Mobile and other5 268 17 329 22 (61) (19) Total Activision and Blizzard 1,385 88 1,338 88 47 4 Distribution: Total Distribution 190 12 180 12 10 6 Total consolidated GAAP net revenues 1,575 100 1,518 100 57 4 Change in Deferred Revenues3 Activision and Blizzard: Online1 132 3 PC 23 45 Next-generation (PS4, Xbox One, Wii U) 263 222 Prior-generation (PS3, Xbox 360, Wii) 219 484 Total console2 482 706 Mobile and other5 1 --- Total changes in deferred revenues 638 754 Non-GAAP Net Revenues by Segment/Platform Mix Activision and Blizzard: Online1 398 18 201 9 197 98 PC 127 6 111 5 16 14 Next-generation (PS4, Xbox One, Wii U) 630 28 301 13 329NM
Prior-generation (PS3, Xbox 360, Wii) 599 27 1,150 51 (551) (48) Total console2 1,229 56 1,451 64 (222) (15) Mobile and other5 269 12 329 14 (60) (18) Total Activision and Blizzard 2,023 91 2,092 92 (69) (3) Distribution: Total Distribution 190 9 180 8 10 6 Total consolidated non-GAAP net revenues4 $ 2,213 100 % $ 2,272 100 % $ (59) (3) % 1 Revenues from online consists of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services. 2 Downloadable content and their related revenues are included in each respective console platforms and total console. 3 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues. 4 Total non-GAAP net revenues presented also represents our total operating segment net revenues. 5 Revenues from mobile and other includes 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. 6 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION For the Year Ended December 31, 2014 and 2013 (Amounts in millions) Year Ended December 31, 2014 December 31, 2013 $ Increase % Increase Amount % of Total6 Amount % of Total6 (Decrease) (Decrease) GAAP Net Revenues by Segment/Platform Mix Activision and Blizzard: Online1 $ 867 20 % $ 912 20 % $ (45 ) (5 ) % PC 551 13 340 7 211 62 Next-generation (PS4, Xbox One, Wii U) 720 16 92 2 628 NM Prior-generation (PS3, Xbox 360, Wii) 1,430 32 2,287 50 (857 ) (37 ) Total console2 2,150 49 2,379 52 (229 ) (10 ) Mobile and other5 433 10 629 14 (196 ) (31 ) Total Activision and Blizzard 4,001 91 4,260 93 (259 ) (6 ) Distribution: Total Distribution 407 9 323 7 84 26 Total consolidated GAAP net revenues 4,408 100 4,583 100 (175 ) (4 ) Change in Deferred Revenues3 Activision and Blizzard: Online1 168 (107 ) PC 41 (22 ) Next-generation (PS4, Xbox One, Wii U) 477 213 Prior-generation (PS3, Xbox 360, Wii) (295 ) (324 ) Total console2 182 (111 ) Mobile and other5 14 (1 ) Total changes in deferred revenues 405 (241 ) Non-GAAP Net Revenues by Segment/Platform Mix Activision and Blizzard: Online1 1,035 22 805 19 230 29 PC 592 12 318 7 274 86 Next-generation (PS4, Xbox One, Wii U) 1,197 25 305 7 892 NM Prior-generation (PS3, Xbox 360, Wii) 1,135 24 1,963 45 (828 ) (42 ) Total console2 2,332 48 2,268 52 64 3 Mobile and other5 447 9 628 14 (181 ) (29 ) Total Activision and Blizzard 4,406 92 4,019 93 387 10 Distribution: Total Distribution 407 8 323 7 84 26 Total consolidated non-GAAP net revenues4 $ 4,813 100 % $ 4,342 100 % $ 471 11 % 1 Revenues from online consists of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services. 2 Downloadable content and their related revenues are included in each respective console platforms and total console. 3 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues. 4 Total non-GAAP net revenues presented also represents our total operating segment net revenues. 5 Revenues from mobile and other includes 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. 6 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES FINANCIAL INFORMATION For the Three Months and Year Ended December 31, 2014 and 2013 (Amounts in millions) Three Months Ended December 31, 2014 December 31, 2013 $ Increase % Increase Amount % of Total3 Amount % of Total3 (Decrease) (Decrease) GAAP Net Revenues by Geographic Region North America $ 806 51 % $ 770 51 % $ 36 5 % Europe 653 41 647 43 6 1 Asia Pacific 116 7 101 7 15 15 Total consolidated GAAP net revenues 1,575 100 1,518 100 57 4 Change in Deferred Revenues1 North America 342 457 Europe 254 247 Asia Pacific 42 50 Total changes in net revenues 638 754 Non-GAAP Net Revenues by Geographic Region North America 1,148 52 1,227 54 (79) (6) Europe 907 41 894 39 13 1 Asia Pacific 158 7 151 7 7 5 Total non-GAAP net revenues2 $ 2,213 100 % $ 2,272 100 % $ (59) (3) % Year Ended December 31, 2014 December 31, 2013 $ Increase % Increase Amount % of Total3 Amount % of Total3 (Decrease) (Decrease) GAAP Net Revenues by Geographic Region North America $ 2,190 50 % $ 2,414 53 % $ (224) (9) % Europe 1,824 41 1,826 40 (2) --- Asia Pacific 394 9 343 7 51 15 Total consolidated GAAP net revenues 4,408 100 4,583 100 (175) (4) Change in Deferred Revenues1 North America 206 (108) Europe 153 (107) Asia Pacific 46 (26) Total changes in net revenues 405 (241) Non-GAAP Net Revenues by Geographic Region North America 2,396 50 2,306 53 90 4 Europe 1,977 41 1,719 40 258 15 Asia Pacific 440 9 317 7 123 39 Total non-GAAP net revenues2 $ 4,813 100 % $ 4,342 100 % $ 471 11 % 1 We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred revenues. 2 Total non-GAAP net revenues presented also represents our total operating segment net revenues. 3 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES SEGMENT INFORMATION For the Three Months and Year Ended December 31, 2014 and 2013 (Amounts in millions) Three Months Ended December 31, 2014 December 31, 2013 $ Increase % Increase Amount % of Total5 Amount % of Total5 (Decrease) (Decrease) Segment net revenues: Activision1 $ 1,492 67 % $ 1,805 79 % $ (313 ) (17 ) % Blizzard2 531 24 287 13 244 85 Distribution3 190 9 180 8 10 6 Operating segment total 2,213 100 % 2,272 100 % (59 ) (3 ) Reconciliation to consolidated net revenues: Net effect from deferral of net revenues (638 ) (754 ) Consolidated net revenues $ 1,575 $ 1,518 $ 57 4 % Segment income from operations: Activision1 $ 696 $ 758 $ (62 ) (8 ) % Blizzard2 208 93 115 124 Distribution3 10 9 1 11 Operating segment total 914 860 54 6 Reconciliation to consolidated operating income and consolidated income before income tax expense: Net effect from deferral of net revenues and related cost of sales (475 ) (509 ) Stock-based compensation expense (29 ) (34 ) Amortization of intangible assets (8 ) (15 ) Fees and other expenses related to the Purchase Transaction and related debt financings4 36 (18 ) Consolidated operating income 438 284 154 54 Interest and other investment income (expense), net (50 ) (51 ) Consolidated income before income tax expense $ 388 $ 233 $ 155 67 % Operating margin from total operating segments 41.3 % 37.9 % Year Ended December 31, 2014 December 31, 2013 $ Increase % Increase Amount % of Total5 Amount % of Total5 (Decrease) (Decrease) Segment net revenues: Activision1 $ 2,686 56 % $ 2,895 67 % $ (209 ) (7 ) % Blizzard2 1,720 36 1,124 26 596 53 Distribution3 407 8 323 7 84 26 Operating segment total 4,813 100 % 4,342 100 % 471 11 Reconciliation to consolidated net revenues: Net effect from deferral of net revenues (405 ) 241 Consolidated net revenues $ 4,408 $ 4,583 $ (175 ) (4 ) % Segment income from operations: Activision1 $ 762 $ 971 $ (209 ) (22 ) % Blizzard2 756 376 380 101 Distribution3 9 8 1 13 Operating segment total 1,527 1,355 172 13 Reconciliation to consolidated operating income and consolidated income before income tax expense: Net effect from deferral of net revenues and related cost of sales (215 ) 229 Stock-based compensation expense (104 ) (110 ) Amortization of intangible assets (12 ) (23 ) Fees and other expenses related to the Purchase Transaction and related debt financings4 (13 ) (79 ) Consolidated operating income 1,183 1,372 (189 ) (14 ) Interest and other investment income (expense), net (202 ) (53 ) Consolidated income before income tax expense $ 981 $ 1,319 $ (338 ) (26 ) % Operating margin from total operating segments 31.7 % 31.2 % 1 Activision Publishing (“Activision”) — publishes interactive entertainment products and contents. 2 Blizzard — Blizzard Entertainment, Inc. and its subsidiaries (“Blizzard”) publishes PC games and online subscription-based games in the MMORPG category. 3 Activision Blizzard Distribution (“Distribution”) — distributes interactive entertainment software and hardware products. 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. 5 The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES For the Trailing Twelve Months Ending December 31, 2014 EBITDA and Adjusted EBITDA (Amounts in millions) Trailing Twelve Months Ending March 31, 2014 June 30, 2014 September 30, 2014 December 31, 2014 December 31, 2014 GAAP Net Income (Loss) $ 293 $ 204 $ (23 ) $ 361 $ 835 Interest (Income) / Expense, net 51 50 51 51 203 Provision (Benefit) for income taxes 83 56 (20 ) 27 146 Depreciation and amortization 19 19 22 29 90 EBITDA 446 329 30 468 1,274 Deferral of net revenues and related cost of sales (a) (219 ) (220 ) 180 475 215 Stock-based compensation expense (b) 30 22 22 29 104 Fees and other expenses related to the Purchase Transaction and related debt financings (c) --- --- 48 (36 ) 13 Adjusted EBITDA $ 257 $ 131 $ 280 $ 936 $ 1,606 (a) Reflects the net change in deferred net revenues and related cost of sales. (b) Includes expense related to stock-based compensation.(c)
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.
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 Quarter Ending March 31, 2015 and Year Ending December 31, 2015 GAAP to Non-GAAP Reconciliation (Amounts in millions, except per share data) Outlook for Outlook for Three Months Ending Year Ending March 31, 2015 December 31, 2015 Net Revenues (GAAP) $1,140
$ 4,140Excluding the impact of:
Change in deferred net revenues (a) (500 ) 260 Net Revenues (Non-GAAP) $640
$ 4,400 Earnings Per Diluted Share (GAAP) $0.37
$ 0.89Excluding the impact of:
Net effect from deferral in net revenues and related cost of sales (b) (0.35 ) 0.15 Stock-based compensation (c) 0.03 0.10 Amortization of intangible assets (d) - 0.01 Earnings Per Diluted Share (Non-GAAP) $0.05
$ 1.15 (a) Reflects the net change in deferred net revenues. (b) Reflects the net change in deferred net revenues and related cost of sales. (c) Reflects expense related to stock-based compensation. (d) Reflects amortization of intangible assets from purchase price accounting. The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings (loss) per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding. ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES Reconciliation of 2014 Actual Earnings Per Share to 2015 Outlook Earnings Per Share GAAP Non-GAAP CY14 Actuals $ 1.13 $ 1.42Slate / Operations (a)
0.01 (0.05 )Foreign Currency (b)
(0.17 ) (0.14 )Tax Rate and share count (c)
(0.08
)(0.08
) CY15 Outlook $ 0.89 $ 1.15 (a) Reflects changes in operations and, for GAAP purpose, includes the net change in deferred net revenues and related cost of sales.(b) Reflects changes in foreign currency on operating results.
● Currency assumptions for 2015 outlook:
- $1.13 USD / Euro (vs. a $1.33 average for 2014)
- $1.51 USD / British Pound Sterling (vs. a $1.65 average for 2014)
- Revenue and EPS increase if the Euro or British Pound Sterling strengthens vs. USD
(c) Reflects changes in tax rate and share count.
Activision Blizzard, Inc.Kristin SoutheySVP, Investor Relations(310) 255-2635ksouthey@activision.comorMary OsakoSVP, Global Communications(424) 322-5166mary.osako@activision.com
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