Activision 2010 Annual Report Download - page 66

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54
* 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. 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.
See “Concentration of Credit Risk” in Note 2 of the notes to consolidated financial statements for information
regarding significant customers.
15. Computation of Basic/Diluted Earnings (Loss) Per Common Share
The following table sets forth the computation of basic and diluted earnings (loss) per common share (amounts in
millions, except per share data):
Years Ended December 31,
2010 2009 2008
Numerator:
Consolidated net income (loss) ...................................................................................................... $418 $113 $(107)
Less: Distributed earnings to unvested stock-based awards that participate in earnings ........... (2) — —
Less: Undistributed earnings allocated to unvested stock-based awards that participate in
earnings .................................................................................................................................. (2) (1) —
Numerator for basic and diluted earnings per common share—income (loss) available to
common shareholders ................................................................................................................ 414 112 (107)
Denominator:
Denominator for basic earnings per common share—weighted-average common shares
outstanding ................................................................................................................................. 1,222 1,283 946
Effect of potential dilutive common shares under the treasury stock method: Employee stock
options ....................................................................................................................................... 14 28 —
Denominator for diluted earnings per common share—weighted-average common shares
outstanding plus dilutive effect of employee stock options ................................................... 1,236 1,311 946
Basic earnings (loss) per common share ............................................................................................ $0.34 $0.09 $(0.11)
Diluted earnings (loss) per common share ......................................................................................... $0.33 $0.09 $(0.11)
Our unvested restricted stock rights (including restricted stock units, restricted stock awards, and performance
shares) are considered participating securities since these securities have non-forfeitable rights to dividends or dividend
equivalents during the contractual period of the award. Since the unvested restricted stock rights are considered participating
securities, we are required to use the two-class method in our computation of basic and diluted earnings per common share.
For the years ended December 31, 2010 and 2009, we had outstanding unvested restricted stock rights with respect to
12 million and 10 million shares of common stock on a weighted-average basis, respectively.
According to the terms of our restricted stock plans, our unvested restricted stock rights do not participate with
common stock in undistributed losses. Therefore, the two-class method in our computation of basic and diluted net earnings
per common share for the year ended December 31, 2008 does not apply as there were losses during this period.
In July 2008, the Board of Directors approved a two-for-one split of our outstanding common stock effected in the
form of a stock dividend (“the split”). The stock dividend was issued on September 5, 2008 to shareholders of record as of
August 25, 2008. The par value of our common stock was maintained at the pre-split amount of $.000001 per share. The
consolidated financial statements and notes thereto, including all share and per share data, have been restated as if the split
had occurred as of the earliest period presented.
On July 9, 2008, Vivendi obtained control of Activision, Inc. through acquisition of the majority of the outstanding
common stock of Activision, Inc. For accounting purposes, Vivendi Games is deemed to be the acquirer (as the transaction
was a “reverse acquisition”—see Note 1 of the notes to consolidated financial statements). As such, the historical financial
statements prior to July 10, 2008, are those of Vivendi Games.