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70
activities. This update provides amendments to the criteria for separating deliverables, measuring and allocating arrangement
consideration to one or more units of accounting. The amendments in this update also establish a selling price hierarchy for
determining the selling price of a deliverable. Significantly enhanced disclosures are also required to provide information
about a vendor’s multiple-deliverable revenue arrangements, including information about the nature and terms, significant
deliverables, and its performance within arrangements. The amendments also require providing information about the
significant judgments made and changes to those judgments and about how the application of the relative selling-price
method affects the timing or amount of revenue recognition. The amendments in this update are effective prospectively for
revenue arrangements entered into or materially modified in the fiscal years beginning on or after June 15, 2010. The
adoption of this update on January 1, 2011 will not have a material impact on the consolidated financial statements.
In October 2009, the FASB issued an update to Software—Certain Revenue Arrangements That Include Software
Elements. This update changes the accounting model for revenue arrangements that include both tangible products and
software elements that are “essential to the functionality,” and excludes these products from the scope of current software
revenue guidance. The new guidance will include factors to help companies determine which software elements are
considered “essential to the functionality.” The amendments will now subject software-enabled products to other revenue
guidance and disclosure requirements, such as guidance surrounding revenue arrangements with multiple-deliverables. The
amendments in this update are effective prospectively for revenue arrangements entered into or materially modified in the
fiscal years beginning on or after June 15, 2010. The adoption of this update on January 1, 2011 will not have a material
impact on the consolidated financial statements.
25. Subsequent events
Restructuring Plan. On February 3, 2011, the Board of Directors of the Company approved a restructuring plan
involving a focus on the development and publication of a reduced slate of titles on a going-forward basis, including the
discontinuation of the development of all music-based games and the closure of the related business unit and the cancellation
of other titles then in production, and a related reduction in studio headcount and corporate overhead. Driven by a desire to
improve operating margin by focusing the Company’s resources on titles the Company believes have the largest potential for
success and the anticipation of a continuing weak environment for casual and music-based games, the plan will result in the
separation of approximately 500 employees. The plan is 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 million and
$50 million, comprised of severance costs, the costs of other separation benefits and other exit costs. All of the above
estimated charges are expected to result in future cash expenditures during 2011.
Repurchase Program. On February 3, 2011, our Board of Directors authorized a new stock repurchase program
under which we may repurchase up to $1.5 billion of our common stock until the earlier of March 31, 2012 and a
determination by the Board of Directors to discontinue the repurchase program.
Cash Dividend. On February 9, 2011, our Board of Directors approved a cash dividend of $0.165 per common share
to be paid on May 11, 2011 to shareholders of record at the close of business on March 16, 2011.
26. Quarterly Financial and Market Information (Unaudited)
For the Quarters Ended
December 31,
2010
September 30,
2010
June 30,
2010
March 31,
2010
(Amounts in millions, except per share data)
Net revenues .......................................................................................... $1,427 $745 $967 $1,308
Cost of sales ........................................................................................... 878 349 367 533
Operating (loss) income ......................................................................... (397) 55 300 511
Net (loss) income ................................................................................... (233) 51 219 381
Basic (loss) earnings per share ............................................................... (0.20) 0.04 0.18 0.30
Diluted (loss) earnings per share............................................................ (0.20) 0.04 0.17 0.30