Blizzard 2009 Annual Report Download - page 19

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7
Forbetterunderstandingofthedifferencesinpresentationbetweenoursegmentresultsandthe
consolidatedresults,thefollowingexplainsthenatureofeachreconcilingitem.
NetEffectfromDeferralofNetRevenuesandRelatedCostofSales
Wehavedeterminedthatsomeofourgames’onlinefunctionalityrepresentsanessential
componentofgameplayandasaresultamorethaninconsequentialseparatedeliverable.Assuch,weare
requiredtorecognizetherevenuesofthesegametitlesovertheestimatedserviceperiods.Theproductlife
mayrangefromaminimumoffivemonthstoamaximumoflessthanayear.Therelatedcostofsalesare
deferredandrecognizedtomatchrevenues.Inthetableabove,wepresenttheamountofnetrevenuesand
relatedcostofsalesseparatelyforeachperiodasaresultoftheaccountingtreatment.
StockBasedCompensationExpense
Weexpenseourstockbasedawardsusingthegrantdatefairvalueoverthevestingperiodsofthe
stockawards.Inthecaseofliabilityawards,theliabilityissubjecttomarktomarketbasedonthecurrent
stockprice.Includedwithinstockbasedcompensationaretheneteffectsofcapitalization,deferral,and
amortization.Thestockbasedcompensationexpensesforeachperiodarepresentedabove.
Restructuring
WehaveimplementedanorganizationalrestructuringplanasaresultoftheBusiness
Combination.Therestructuringactivitiesincludeseverancecosts,facilityexitcostsandbalancesheetwrite
downsandexitcostsfromthecancellationofprojects.Wedonotexpectanymaterialcostsrelatingtothis
itemgoingforwardaswehavecompletedourrestructuringactivities.
AmortizationofIntangibleAssetsandPurchasePriceAccountingRelatedAdjustments
AllofourintangibleassetsaretheresultoftheBusinessCombinationandotheracquisitions.We
amortizetheintangibleassetsovertheirestimatedusefullivesbasedonthepatternoftheireconomic
benefitsconsumption.Theamountpresentedinthetablerepresentstheeffectoftheamortizationof
intangibleassetsaswellasotherpurchasepriceaccountingadjustments,whereapplicable,inour
consolidatedstatementsofoperations.
ImpairmentofIntangibleAssets
Asaresultoftheaccountingimpairmenttest,werecordedanoncashimpairmentchargeon
finitelivedintangibleassetsof$409million,or$0.19losspershare,fortheyearendedDecember31,2009
reflectingaweakerenvironmentforthecasualgameandmusicgenres.
IntegrationandTransactionCosts
ThesecostswereincurredtoeffecttheBusinessCombinationandincludedactivitiessuchas
mergingsystemsandstreamliningthebusinessprocessesofthecombinedcompanyofActivisionBlizzard.
Wedonotexpectanyfurthercostsrelatingtothisitemgoingforwardaswehavecompletedourintegration
andtransactionactivities.
SegmentNetRevenues
Activision
FortheyearendedDecember31,2009,netrevenuesfromtheActivisionsegmentincreasedas
comparedto2008primarilyduetothefollowing:
• AsaresultoftheconsummationoftheBusinessCombination,netrevenuesof$685million
fromtheActivisionbusinessesoperatedbyActivision,Inc.forthesixmonthsendedJune30,
2009wereincludedin2009,butnotin2008;