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14.OperatingSegmentsandGeographicArea
Ouroperatingsegmentsareconsistentwithourinternalorganizationalstructure,themannerin
whichouroperationsarereviewedandmanagedbyourChiefExecutiveOfficer,ourChiefOperating
DecisionMaker(“CODM”),themannerinwhichoperatingperformanceisassessedandresourcesare
allocated,andtheavailabilityofseparatefinancialinformation.Wedonotaggregateoperatingsegments.
Currently,weoperateunderthreeoperatingsegments:(i)Activision,whichpublishesinteractive
entertainmentsoftwareandperipherals,andwhichincludesbusinessesoperatedbyActivision
Publishing,Inc.priortotheBusinessCombinationandstudios,assets,andtitlespreviouslyincludedin
VivendiGames’SierraEntertainmentoperatingsegmentpriortotheBusinessCombination,(ii)Blizzard,
whichpublishesrealtimestrategy,roleplayingPCgamesandonlinesubscriptionbasedgamesinthe
MMORPGcategory,and(iii)Distribution,whichdistributesinteractiveentertainmentsoftwareand
hardwareproducts.
PriortoJuly1,2009weoperatedafourthoperatingsegment,NonCore,whichrepresentedlegacy
VivendiGames’divisionsorbusinessunitsthattheCompanyhadexited,divested,orwounddownaspart
ofitsrestructuringandintegrationeffortsasaresultoftheBusinessCombination.AtJuly1,2009inlight
oftheminimalactivitiesandinsignificanceofNonCoreactivities,weceasedmanagementofNonCoreas
aseparateoperatingsegmentandconsequentlywearenolongerprovidingseparateoperatingsegment
disclosurewithrespecttoNonCoreandhavereclassifiedourpriorperiods’segmentpresentationsothatit
conformstothecurrentperiod’spresentation.
AsthehistoricalfinancialstatementspriortoJuly10,2008arethoseofVivendiGames,segment
netrevenuesandsegmentincome(loss)fromthebusinessoperatedbyActivision,Inc.priortotheBusiness
CombinationarenotincludedfortheperiodJanuary1,2008throughJuly9,2008.Also,theActivision
operatingsegmentincludesVivendiGamestitlesretainedaftertheBusinessCombination.
TheCODMreviewssegmentperformanceexclusiveoftheimpactofthedeferrednetrevenues
andrelatedcostofsales,stockbasedcompensationexpense,restructuringincome(expense),amortization
ofintangibleassetsandpurchasepriceaccountingrelatedadjustments,impairmentofintangibleassets,
integrationandtransactioncosts,andother*.Informationontheoperatingsegmentsandreconciliationsof
totalnetrevenuesandtotalsegmentincome(loss)fromoperationstoconsolidatednetrevenuesand
operatingincome(loss)fortheyearsendedDecember31,2009,2008,and2007arepresentedbelow
(amountsinmillions):
Fortheyearsended
December31,
Fortheyearsended
December31,
2009
2008
2007
2009
2008
2007
Netrevenues
Income(loss)
fromoperations
Activision...............................................................................................................
$3,156
$2,152
$272
$663
$307
$(13)
Blizzard..................................................................................................................
1,196
1,343
1,107
555
704
568
Distribution.............................................................................................................
423
227
—
16
22
—
Operatingsegmentstotal.............................................................................................
4,775
3,722
1,379
1,234
1,033
555
Reconciliationtoconsolidatednetrevenues/operatingincome(loss):
Neteffectfromdeferralofnetrevenuesandrelatedcostofsales...........................
(497)
(713)
(40)
(383)
(496)
(38)
Stockbasedcompensationexpense........................................................................
—
—
—
(154)
(90)
(137)
Restructuringincome(expense).............................................................................
—
—
—
(23)
(93)
1
Amortizationofintangibleassetsandpurchasepriceaccountingrelated
adjustments........................................................................................................
—
—
—
(259)
(292)
(4)
Impairmentofintangibleassets..............................................................................
—
—
—
(409)
—
—
Integrationandtransactioncosts.............................................................................
—
—
—
(24)
(29)
—
Other*.....................................................................................................................
1
17
10
(8)
(266)
(198)
Consolidatednetrevenues/operatingincome(loss)...................................................
$4,279
$3,026
$1,349
$(26)
$(233)
$179