Activision 2008 Annual Report Download - page 74

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60
In connection with our acceptance of the UBS offer in November 2008, resulting in our
right to require UBS to purchase our ARS at par value beginning on June 30, 2010, we transferred
our investments in ARS held through UBS from available-for-sale to trading securities in
accordance with Statement of Financial Accounting Standard No. 115, “Accounting for Certain
Investments in Debt and Equity Securities” (“SFAS 115”). The transfer to trading securities
reflects management’s intent to exercise the Rights during the period between June 30, 2010 and
July 3, 2012, which results in the securities being held for the purpose of selling them in the near
future. Prior to our agreement with UBS, our intent was to hold the ARS until the market
recovered. At the time of transfer, the unrealized loss on our ARS was $5 million. This unrealized
loss was included in accumulated other comprehensive income (loss). Upon transfer to trading
securities, we immediately recognized in investment income, net, the $5 million unrealized loss
not previously recognized in earnings. Subsequently, we recognized an additional decline in fair
value of $2 million for a total unrealized loss of $7 million, included in investment income, net, in
the Consolidated Statements of Operations for the year ended December 31, 2008. The fair value
of the ARS held through UBS totaled $55 million at December 31, 2008.
We continue to monitor the ARS market and consider its impact (if any) on the fair value
of our investments. If the market conditions deteriorate further, we may be required to record
additional unrealized losses in earnings, which may be offset by corresponding increases in value
of the UBS offer. (See Notes 3 and 5 of the Notes to Consolidated Financial Statements)
7. Software Development Costs and Intellectual Property Licenses
The following table presents the amortization and write-off of capitalized software
development costs and intellectual property licenses (amounts in millions):
For the years ended
December 31,
2008 2007 2006
(as adjusted)
Amortization of capitalized software development and intellectual
property licenses..................................................................................................... $90 $10 $8
Write-off and impairments ......................................................................................... 89 7 19
8. Restructuring
The Company has been implementing its organizational restructuring plan as a result of
the Business Combination described in Note 1 of the Notes to Consolidated Financial Statements.
This organizational restructuring plan includes the integration of different operations to streamline
the combined organization of Activision Blizzard.
The primary goals of the organizational restructuring are to rationalize the title portfolio
and consolidate certain corporate functions to realize synergies from the Business Combination.
Since the consummation of the Business Combination, we have communicated to the
affected employees in North America, Europe, and Australia and ceased use of certain offices and
studios under operating lease contracts. Impairment of goodwill and acquired trade name, and
write-off of fixed assets upon disposal were also recorded as a result. The following table details
the amount of restructuring reserves included in accrued expenses and other liabilities in the
Consolidated Balance Sheets at December 31, 2008 (amounts in millions):