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ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amount s in m illions , e xc ept earni ngs pe r sha re data)
1eectsthenetchangeindeferredrevenuesandrelatedcostofsales.
2 ncludesexpensesrelatedtostoc-basedcompensation.
3 eectsamortiationofintangibleassetsfrompurchasepriceaccounting.
4 eectsfeesandotherexpenses(includinglegalfees,costs,expensesandaccruals)relatedtotherepurchaseof429millionsharesofourcommonstoc
fromivendi(thePurchaseTransaction)completedonOctober11,2013andrelateddebtnancings.
ThepershareadustmentsandtheGAAPandnon-GAAPearningspershareinformationarepresentedascalculated.Thesumofthesemeasures,aspresented,
maydifferduetotheimpactofrounding.
Thecompanycalculatesearningspersharepursuanttothetwo-classmethodwhichreuirestheallocationofnetincomebetweencommonshareholdersand
participatingsecurityholders.FortheyearendedDecember31,2014,netincomeattributabletoActivisionliard,nc.commonshareholdersusedtocalculate
non-GAAPearningspercommonshare,assumingdilution,was$1,034million,ascomparedtototalnetincomeof$1,057million,forthesameperiod.For
purposesofcalculatingearningspershare,wehad,onaweighted-averagebasis,commonsharesoutstandingof716million,participatingsecuritiesof
approximately15million,anddilutivesharesof10millionduringtheyearendedDecember31,2014.
Year Ended December 31, 2014
Netevenues $ 4,408 $ 405 $ — $ — $ — $ 4,813
CostofSales-ProductCosts 999 29 — — — 1,028
CostofSales-Online 232 — (1) — — 231
CostofSales-SoftwareoyaltiesandAmortiation 260 161 (17) — — 404
CostofSales-ntellectualPropertyicenses 34 — — (12) — 22
ProductDevelopment 571 — (22) — — 549
SalesandMareting 712 — (8)— — 704
GeneralandAdministrative 417 — (56)— (13)348
TotalCostsandExpenses $ 3,225 $ 190 $ (104) $ (12) $ (13) $ 3,286
Year Ended December 31, 2014
Operatingncome $ 1,183 $ 215 $ 104 $ 12 $ 13 $ 1,527
Netncome 835 136 65 8 13 1,057
asicEarningsperShare 1.14 0.19 0.09 0.01 0.02 1.44
DilutedEarningsperShare $ 1.13 $ 0.18 $ 0.09 $ 0.01 $ 0.02 $ 1.42
Less:
Net effect from
deferral of net
revenues and related
cost of sales 1
Less:
Stock-
based
compensation 2
Less:
Amortization
of intangi ble
assets 3
Less:
Fees and other
exp enses related to the
Purchase Transaction
and related
debt nancings 4
GAAP
Measurement
Non-GAAP
Measurement
Less:
Net effect from
deferral of net
revenues and related
cost of sales 1
Less:
Stock-
based
compensation 2
Less:
Amortization
of intangi ble
assets 3
Less:
Fees and other
exp enses related to the
Purchase Transaction
and related
debt nancings 4
GAAP
Measurement
Non-GAAP
Measurement
85
10-K Activision_Master_032416_PrinterMarksAdded.pdf 85 3/24/16 11:00 PM