Blizzard 2010 Annual Report Download - page 20

8
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 revaluation based on the then-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 implemented an organizational restructuring plan in the third quarter of 2008 as a result of the Business
Combination. The restructuring activities included severance costs, facility exit costs, write offs of assets and liabilities and
exit costs from the cancellation of projects. On June 30, 2009, we had completed the majority of our organizational
restructuring activities as a result of the Business Combination and do not expect any material costs relating to this item
going forward as we have completed these restructuring activities.
However, on February 3, 2011, the Board of Directors of the Company approved a new restructuring plan expected
to be implemented in the quarter ending March 31, 2011, resulting in a net pretax charge in the first two quarters of 2011,
which is expected to total between $35 and $50 million, comprised of severance costs, the costs of other separation benefits
and other exit costs. This represents a subsequent event that occurs after the balance sheet date.
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 consumption of the underlying economic benefits.
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
We recorded a non-cash impairment charge on finite-lived intangible assets of $326 million and $409 million for the
years ended December 31, 2010 and 2009, respectively, reflecting a continuing 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
Activision’s net revenues decreased for 2010 as compared to 2009, primarily due to the following:
� Release of fewer key titles in 2010 than in 2009 and weaker sales of games in the music and casual genres. In
2010, Activision released twelve key titles compared to the release of sixteen key titles in 2009; and
� Blur and Singularity, two new intellectual properties that were released in the second quarter of 2010, had only
limited market success. While establishing successful new intellectual properties has always been difficult, the
economic environment made it particularly challenging in 2010.
The decreases were partially offset by the:
� Strong performance from Call of Duty: Black Ops, which was released in the fourth quarter of 2010;
� Continued strong performance of Call of Duty: Modern Warfare 2, which was released in November 2009;