Blizzard 2010 Annual Report Download - page 23

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11
For the years ended December 31,
2010 2009 2008
Increase/
(decrease)
2010 v 2009
Increase/
(decrease)
2009 v 2008
% change
2010 v 2009
% change
2009 v 2008
Pro forma segment net revenues:
Activision ......................................... $2,769 $3,156 $3,279 $(387) $(123) (12)% (4)%
Blizzard ............................................ 1,656 1,196 1,343 460 (147) 38 (11)
Distribution ...................................... 378 423 410 (45) 13 (11) 3
Pro forma operating segment net
revenue total..................................... 4,803 4,775 5,032 28 (257) 1 (5)
Reconciliation to pro forma
consolidated net revenues:
Net effect from deferral of net
revenues ....................................... (356) (497) (713) 141 216 28 30
Other* .............................................. — 1 17 (1) (16) (100) (94)
Pro forma consolidated net revenues ... $4,447 $4,279 $4,336 $168 $(57) 4% (1)%
Pro forma segment income from
operations:
Activision ......................................... $511 $663 $469 $(152) $194 (23)% 41%
Blizzard ............................................ 850 555 704 295 (149) 53 (21)
Distribution ...................................... 10 16 27 (6) (11) (38) (41)
Pro forma operating segment
income from operations total ........... 1,371 1,234 1,200 137 34 11 3
Reconciliation to pro forma
consolidated operating income
(loss):
Net effect from deferral of net
revenues and related cost of
sales ............................................. (319) (383) (496) 64 113 17 23
Stock-based compensation
expense ........................................ (131) (154) (181) 23 27 15 15
Restructuring.................................... (3) (23) (93) 20 70 87 75
Amortization of intangible assets
and purchase price accounting
related adjustments ...................... (123) (259) (376) 136 117 53 31
Impairment of intangible assets ....... (326) (409) — 83 (409) 20 —
Integration and transaction costs ...... — (24) (42) 24 18 100 43
Other* .................................................. — (8) (266) 8 258 100 97
Total pro forma consolidated
operating income (loss) .................... $469 $(26) $(254) $495 $228 NM 90%
(*) Represents Non-Core activities, which are legacy Vivendi Games’ divisions or business units that we have exited,
divested or wound down as part of our restructuring and integration efforts as a result of the Business Combination.
Prior to July 1, 2009, Non-Core activities were managed as a stand-alone operating segment; however, in light of the
minimal activities and insignificance of Non-Core activities, as of that date we ceased their management as a
separate operating segment and consequently, we are no longer providing separate operating segment disclosure and
have reclassified our prior periods’ segment presentation so that it conforms to the current period’s presentation.
On a pro forma operating segment basis, our operating margin for the years ended December 31, 2010, 2009 and
2008 was 29%, 26% and 24%, respectively. Highlights and analysis of our individual segment net revenues and income from
operations are as follows:
Pro forma Activision Segment Net Revenues
Activision’s net revenues decreased for 2010 as compared to 2009, primarily due to the:
� Release of fewer key titles in 2010 than in 2009 and weaker sales of games in the music and casual genres; and