Activision 2011 Annual Report Download - page 65

13. Operating Segments and Geographic Region
Our operating segments are consistent with our internal organizational structure, the manner in which our operations
are reviewed and managed by our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), the manner
in which operating performance is assessed and resources are allocated, and the availability of separate financial information.
Currently, we operate under three operating segments: Activision, Blizzard and Distribution (see Note 1 of the notes to the
consolidated financial statements). We do not aggregate operating segments.
The CODM reviews segment performance exclusive of the impact of the change in deferred net revenues and related
cost of sales with respect to certain of our online-enabled games, stock-based compensation expense, restructuring expense,
amortization of intangible assets and purchase price accounting related adjustments, impairment of intangible assets and
goodwill, integration and transaction costs, and other. The CODM does not review any information regarding total assets on an
operating segment basis and, accordingly, no disclosure is made. Information on the operating segments and reconciliations of
total net revenues and total segment income (loss) from operations to consolidated net revenues from external customers and
income (loss) before income tax expense for the years ended December 31, 2011, 2010, and 2009 are presented below (amounts
in millions):
Years Ended December 31,
2011 2010 2009 2011 2010 2009
Net Revenues
Income (loss) from
operations
Activision .............................................................................................................. $2,828 $2,769 $3,156 $851 $511 $663
Blizzard .................................................................................................................. 1,243 1,656 1,196 496 850 555
Distribution ............................................................................................................ 418 378 423 11 10 16
Operating segments total .................................................................................. 4,489 4,803 4,775 1,358 1,371 1,234
Reconciliation to consolidated net revenues / consolidated income (loss) before
tax expense:
Net effect from deferral of net revenues and related cost of sales ....................... 266 (356) (497) 183 (319) (383)
Stock-based compensation expense ...................................................................... — — — (103) (131) (154)
Restructuring ......................................................................................................... — — — (26) (3) (23)
Amortization of intangible assets .......................................................................... — — — ( 72) (123) (259)
Impairment of goodwill/intangible assets ............................................................. — — — (12) (326) (409)
Integration and transaction costs ........................................................................... — — — — — (24)
Other ...................................................................................................................... ——1 — — (8)
Consolidated net revenues / operating income (loss) ................................................ $4,755 $4,447 $4,279 $1,328 $469 $(26)
Investment and other income, net ......................................................................... 3 23 18
Consolidated income (loss) before income tax expense ............................................ $1,331 $492 $(8)
For the years ended December 31, 2011 and 2010, restructuring expense of $1 million and $3 million is reflected in
the “General and administrative expense” in the consolidated statement of operations, respectively. These restructuring expenses
were related to the Business Combination consummated in July 2008. See Note 7 of the Notes to Consolidated Financial
Statements for more detail.
Geographic information for the years ended December 31, 2011, 2010, and 2009 is based on the location of the
selling entity. Net revenues from external customers by geographic region were as follows (amounts in millions):
Years Ended
December 31,
2011 2010 2009
Net revenues by geographic region:
North America ................................................................................................. $2,405 $2,409 $2,217
Europe.............................................................................................................. 1,990 1,743 1,798
Asia Pacific ...................................................................................................... 360 295 263
Total geographic region net revenues .................................................................. 4,755 4,447 4,278
Other ................................................................................................................ —— 1
Total consolidated net revenues ........................................................................... $4,755 $4,447 $4,279
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