Activision 2011 Annual Report Download - page 88

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ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except earnings per share data)
Year Ended December 31, 2010Net
Revenues Cost of Sales -
Product Costs
Cost of Sales
- Online
Subscriptions
Cost of Sales -
Software Royalties
and Amortization
Cost of Sales -
Intellectual
Property
Licenses Product
Development Sales and
Marketing
Impairment of
Intangible
Assets
Total Costs
and
Expenses
GAAP Measurement $ 4,447 $ 1,350 $ 241 $ 338 $ 197 $ 635 $ 516 $ 375 $ 326 $ 3,978
Less: Net effect from deferral in net revenues and related cost of sales (a) 356 3 - 29 5 - - - - 37
Less: Stock-based compensation (b) - - - (65) - (12) (8) (46) - (131)
Less: Restructuring (included in general and administrative) (c) - - - - - - - (3) - (3)
Less: Amortization of intangible assets (d) - (5) - (15) (102) - - (1) - (123)
Less: Impairment of intangible assets (e) - - - - - - - - (326) (326)
Non‐GAAPMeasurement $ 4,803 $ 1,348 $ 241 $ 287 $ 100 $ 623 $ 508 $ 325 $ - $ 3,432
Year Ended December 31, 2010 Operating
Income Net Income
Basic
Earnings per
Share Diluted Earnings
per Share Basic 591
GAAPMeasurement $ 469 $ 418 $ 0.34 $ 0.33
Less: Net effect from deferral in net revenues and related cost of sales (a) 319 232 0.19 0.19
Less: Stock-based compensation (b) 131 88 0.07 0.07
Less: Restructuring (included in general and administrative) (c) 3 2 - -
Less: Amortization of intangible assets (d) 123 53 0.04 0.04
Less: Impairment of intangible assets (e) 326 198 0.16 0.16
Non‐GAAPMeasurement $ 1,371 $ 991 $ 0.81 $ 0.79
(a) Reflects the net change in deferred net revenues and related cost of sales.
(b) Includes expense related to stock-based compensation.
(c) Reflects restructuring related to the Business Combination with Vivendi Games. Restructuring activities includes severance costs, facility exit costs and balance sheet write down and exit costs from the cancellation of projects.
(d) Reflects amortization of intangible assets.
(e) Reflects impairment of intangible assets acquired as a result of purchase accounting.
The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Activision Blizzard Inc
common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $982 million for the year ended December 31, 2010 as compared to the total non-GAAP net income of $991 million for the same period.
The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.
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72
General and
Administrative