Activision 2012 Annual Report Download - page 96

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ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except earnings per share data)
Year Ended December 31, 2012
Net Revenues
Cost of Sales -
Product Costs
Cost of Sales -
Online
Subscriptions
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
$
4,856
$
1,116
$
263
$
194
$
89
$
604
$
578
$
561
$
3,405
Less: Net effect from deferral in net revenues and related cost of sales
(a)
131
-
1
36
3
-
-
-
40
Less: Stock-based compensation
(b)
-
-
-
(9)
-
(20)
(8)
(89)
(126)
Less: Amortization of intangible assets
(c)
-
-
-
-
(30)
-
-
-
(30)
Non-GAAP Measurement
$
4,987
$
1,116
$
264
$
221
$
62
$
584
$
570
$
472
$
3,289
Year Ended December 31, 2012
Operating
Income
Net Income
Basic Earnings
per Share
Diluted Earnings per
Share
GAAP Measurement
$
1,451
$
1,149
$
1.01
$
1.01
Less: Net effect from deferral in net revenues and related cost of sales
(a)
91
84
0.07
0.07
Less: Stock-based compensation
(b)
126
98
0.09
0.09
Less: Amortization of intangible assets
(c)
30
19
0.02
0.02
Non-GAAP Measurement
$
1,698
$
1,350
$
1.19
$
1.18
(a) Reflects the net change in deferred net revenues and related cost of sales.
(b) Includes expense related to stock-based compensation.
(c) Reflects amortization of intangible assets from purchase price accounting.
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 $870 million and $1,322 million for the three months and year ended December 31, 2012 as compared to the total
non-GAAP net income of $891 million and $1,350 million for the same periods, respectively.
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.
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