Analysis of Property, Plant and Equipment
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Property, Plant and Equipment Disclosure
Activision Blizzard Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of property, plant, and equipment data demonstrates several notable trends over the five-year period.
- Land
- Land value remained constant throughout the period, holding steady at US$1 million.
- Buildings
- The value of buildings remained stable at US$4 million from 2018 to 2021 but declined slightly to US$3 million in 2022, indicating a potential disposal or revaluation.
- Leasehold improvements
- Leasehold improvements displayed minor fluctuations, peaking at US$252 million in 2019, then declining to US$227 million in 2021, followed by a partial recovery to US$244 million in 2022. This suggests some capital expenditure activity alongside depreciation.
- Computer and server equipment
- Computer and server equipment showed variability, starting at US$700 million in 2018, decreasing to its lowest point of US$653 million in 2022 after peaking at US$704 million in 2020. This reflects a moderate turnover or asset replacement during the period.
- Office furniture and other equipment
- This category decreased from US$99 million in 2018 to US$90 million by 2022, indicating a gradual reduction or limited reinvestment in these assets.
- Cost of property and equipment
- The total cost of property and equipment exhibited a declining trend from US$1,052 million in 2018 to US$991 million in 2022. This overall reduction suggests asset disposals, decreased capital expenditure, or impairment losses.
- Accumulated depreciation
- Accumulated depreciation demonstrated consistent growth until 2021, moving from -US$770 million in 2018 to -US$856 million, followed by a reduction to -US$798 million in 2022. The decrease in 2022 may imply asset disposals or adjustments affecting the depreciation base.
- Property and equipment, net
- Net property and equipment showed a steady decline from US$282 million in 2018 to US$169 million in 2021, before rising to US$193 million in 2022. This pattern reflects continued depreciation overpowering capital additions until 2021, with some asset additions or lower depreciation impacting net book value positively in 2022.
In summary, the company's property, plant, and equipment experienced a general downward trend in net value over the five years, primarily driven by depreciation exceeding capital expenditures. Minor recoveries in net value and certain asset categories in 2022 suggest a possible shift in investment or asset management strategies toward asset renewal or retention. The overall data imply cautious management of fixed assets with a focus on balancing asset aging and replacement.
Asset Age Ratios (Summary)
Activision Blizzard Inc., asset age ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Average age ratio
- The average age ratio exhibits a generally increasing trend from 73.26% in 2018 to a peak of 83.59% in 2021, followed by a slight decrease to 80.61% in 2022. This indicates that the property, plant, and equipment have been aging steadily, with the assets being relatively more utilized or closer to the end of their useful lives over this period.
- Estimated total useful life
- There is a consistent increase in the estimated total useful life of the assets, rising from 8 years in 2018 and 2019 to 11 years by 2022. This upward adjustment suggests either an extension in asset longevity expectations, potentially due to improved maintenance or technological upgrades, or a reevaluation of asset types and their durability.
- Estimated age (time elapsed since purchase)
- The estimated age of the assets shows a steady, linear increase over the years, moving from 6 years in 2018 and 2019 to 9 years in 2022. This progression aligns with the passage of time and reflects that assets are aging continuously without significant replacement or renewal activity within the fleet.
- Estimated remaining life
- The estimated remaining life remains constant at 2 years throughout the period from 2018 to 2022. Despite the increase in total estimated useful life, the remaining life of the assets suggests that they are consistently approaching the end of their serviceable period by the end of each fiscal year, indicating a close alignment between asset aging and expected life extension.
- Overall insights
- The data indicates a scenario where assets are aging steadily and are expected to last longer, as demonstrated by the increasing total useful life. However, the constant remaining life implies that asset renewal or replacement is not accelerating, and assets are being utilized near the end of their lifespan. The slight decrease in average age ratio in 2022 may reflect some reinvestment in newer assets or reassessment, but the overall pattern points to an aging asset base with extended useful life estimates.
Average Age
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Accumulated depreciation | ||||||
| Cost of property and equipment | ||||||
| Land | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Cost of property and equipment – Land)
= 100 × ÷ ( – ) =
The financial data related to property, plant, and equipment demonstrate notable trends over the five-year period ending December 31, 2022. The cost of property and equipment exhibits a gradual decline from US$1,052 million in 2018 to US$991 million in 2022, indicating a reduction in gross asset investment or possible asset disposals or retirements.
Accumulated depreciation figures fluctuate within the range of US$749 million to US$856 million across the years, peaking in 2021 before decreasing to US$798 million in 2022. This pattern suggests ongoing depreciation charges aligned with asset usage, with a slight reduction in accumulated depreciation in the latest period potentially due to impairments, disposals, or changes in asset base composition.
Land values remain constant at US$1 million throughout the entire period, reflecting the stability in land holdings with no acquisitions or disposals.
The average age ratio of property, plant, and equipment shows an overall increasing trend from 73.26% in 2018 to a peak of 83.59% in 2021, followed by a minor decline to 80.61% in 2022. This rising average age ratio suggests that assets are aging with limited addition of new assets or asset renewal, indicating a possible decline in capital expenditure relative to asset retirement.
- Summary of key observations
- The decline in cost of property and equipment alongside a generally high and increasing average age ratio points to an aging asset base with reduced reinvestment.
- Accumulated depreciation's peak in 2021 and subsequent reduction in 2022 might correlate with asset disposal or reassessment activities.
- Stable land value suggests no significant changes in land asset holdings.
- Overall, the data suggest cautious or constrained capital expenditure policies, leading to a gradually older asset base with potential implications for future maintenance costs or replacement needs.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Estimated total useful life = (Cost of property and equipment – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Cost of Property and Equipment
- The cost of property and equipment shows a fluctuating but generally declining trend over the five-year period. Starting at US$1,052 million in 2018, it decreased to US$1,002 million in 2019, slightly rose to US$1,050 million in 2020, then declined again to US$1,025 million in 2021 and further to US$991 million in 2022. This overall decrease may indicate reduced investment in new property and equipment or increased disposals.
- Land
- The value of land remains constant at US$1 million throughout the entire period, indicating no acquisitions or disposals of land assets.
- Depreciation Expense
- Depreciation expense steadily decreased each year from US$138 million in 2018 to US$91 million in 2022. This consistent reduction over time may result from depreciable assets aging, changes in asset mix, or adjustments in depreciation methods or rates.
- Estimated Total Useful Life
- The estimated total useful life of property and equipment shows a gradual increase from 8 years in 2018 and 2019, to 9 years in 2020, 10 years in 2021, and 11 years in 2022. This trend suggests the company is either revising its estimates to reflect longer asset usability or investing in more durable assets.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
The accumulated depreciation of property, plant, and equipment exhibits a fluctuating trend over the analyzed period. Starting at US$770 million at the end of 2018, it decreased slightly to US$749 million in 2019, followed by an increase to US$841 million in 2020 and a marginal rise to US$856 million in 2021. However, it declined again to US$798 million by the end of 2022. This pattern suggests periods of asset disposal, impairment, or revisions in depreciation assumptions.
Depreciation expense shows a continuous downward trend throughout the years. The expense decreased from US$138 million in 2018 to US$124 million in 2019, then further dropped to US$117 million in 2020, US$105 million in 2021, and finally to US$91 million in 2022. This steady reduction may indicate a slowing pace of asset acquisition, changes in the useful lives of assets, or shifts in depreciation methods applied.
The time elapsed since purchase consistently increases by one year each period, reflecting the aging of the asset base from 6 years in 2018 to 9 years in 2022. The increasing age of the assets aligns with the declining depreciation expense, as older assets generally yield lower depreciation charges if fully or mostly depreciated.
Overall, the data reveals an aging fixed asset base with decreasing depreciation expenses, coupled with fluctuating accumulated depreciation totals. This combination may highlight strategic asset management, including limited reinvestment or disposal activity and the natural progression of asset lifecycle effects on financial depreciation metrics.
Estimated Remaining Life
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Estimated remaining life = (Property and equipment, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property and Equipment, Net
- The net value of property and equipment exhibited a declining trend from 2018 to 2021, decreasing from $282 million to $169 million. This indicates a consistent reduction in the asset base over these four years. However, in 2022, there was a slight reversal of this trend as the net value increased to $193 million, suggesting potential acquisitions, capital investments, or a slower rate of disposals or depreciation in that year.
- Land
- The value of land remained constant at $1 million throughout the entire period from 2018 to 2022. This stability implies no significant land transactions or revaluations during these years.
- Depreciation Expense
- Depreciation expense steadily decreased year over year from $138 million in 2018 to $91 million in 2022. This consistent decline aligns with the reduction observed in the net property and equipment balance, indicating a diminishing depreciable asset base. The decrease in depreciation expense could also point to asset disposals, completion of asset lifecycles, or changes in depreciation policies.
- Estimated Remaining Life
- The estimated remaining life of property and equipment was stable at 2 years throughout all years considered, suggesting no changes in the management’s assumptions regarding the asset lifespan or useful life estimates during this period.