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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, 2010
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
Impairment of
Intangible Assets
Total Costs and
Expenses
GAAP Measurement
$
4,447
$
1,350
$
241
$
338
$
197
$
635
$
516
$
375
$
326
$
3,978
Less: Net effect from deferral in net revenues and related cost of sales
(a)
356
3
-
29
5
-
-
-
-
37
Less: Stock-based compensation
(b)
-
-
-
(65)
-
(12)
(8)
(46)
-
(131)
Less: Restructuring (included in general and administrative)
(c)
-
-
-
-
-
-
-
(3)
-
(3)
Less: Amortization of intangible assets
(d)
-
(5)
-
(15)
(102)
-
-
(1)
-
(123)
Less: Impairment of intangible assets
(e)
-
-
-
-
-
-
-
-
(326)
(326)
Non-GAAP Measurement
$
4,803
$
1,348
$
241
$
287
$
100
$
623
$
508
$
325
$
-
$
3,432
Year Ended December 31, 2010
Operating
Income
Net Income
Basic
Earnings per
Share
Diluted
Earnings per
Share
Basic
591
GAAP Measurement
$
469
$
418
$
0.34
$
0.33
Less: Net effect from deferral in net revenues and related cost of sales
(a)
319
232
0.19
0.19
Less: Stock-based compensation
(b)
131
88
0.07
0.07
Less: Restructuring (included in general and administrative)
(c)
3
2
-
-
Less: Amortization of intangible assets
(d)
123
53
0.04
0.04
Less: Impairment of intangible assets
(e)
326
198
0.16
0.16
Non-GAAP Measurement
$
1,371
$
991
$
0.81
$
0.79
(a) Reflects the net change in deferred net revenues and related cost of sales.
(b) Includes expense related to stock-based compensation.
(c) Reflects restructuring related to the Business Combination with Vivendi Games. Restructuring activities includes severance costs, facility exit costs and balance sheet write down and exit costs from the cancellation of projects.
(d) Reflects amortization of intangible assets.
(e) Reflects impairment of intangible assets acquired as a result of purchase 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 $646 million and $982 million for the three months and year ended December 31, 2010 as compared to the total non-GAAP net income of $655 million and $991 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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