Blizzard 2012 Annual Report Download - page 67

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49
8. Inventories, net
Our inventories consist of the following (amounts in millions):
At December 31,
2012
2011
Finished goods ....................................................................................................................
$151
$116
Purchased parts and components .......................................................................................
58
28
Inventories, net ...................................................................................................................
$209
$144
9. Property and Equipment, Net
Property and equipment, net was comprised of the following (amounts in millions):
At December 31,
2012
2011
Land ..................................................................................................................................................
$1
$1
Buildings ...........................................................................................................................................
5
5
Leasehold improvements ..................................................................................................................
80
72
Computer equipment ........................................................................................................................
362
406
Office furniture and other equipment ...............................................................................................
65
49
Total cost of property and equipment ..........................................................................................
513
533
Less accumulated depreciation .........................................................................................................
(372)
(370)
Property and equipment, net ........................................................................................................
$141
$163
Depreciation expense for the years ended December 31, 2012, 2011, and 2010 was $90 million, $75 million, and $68 million,
respectively.
Rental expenses were $37 million, $38 million and $37 million for the years ended December 31, 2012, 2011, and 2010, respectively.
10. Goodwill
The changes in the carrying amount of goodwill by reporting unit for the years ended December 31, 2012 and 2011 are as follows
(amounts in millions):
Activision
Blizzard
Distribution
Total
Balance at December 31, 2010 .......................................................................................
$6,942
$178
$12
$7,132
Tax benefit credited to goodwill ...............................................................................
(12)
—
—
(12)
Issuance of contingent consideration ........................................................................
3
—
—
3
Impairment of goodwill .............................................................................................
—
—
(12)
(12)
Balance at December 31, 2011 .......................................................................................
$6,933
$178
$—
$7,111
Tax benefit credited to goodwill ...............................................................................
(5)
—
—
(5)
Balance at December 31, 2012 .......................................................................................
$6,928
$178
$—
$7,106
Issuance of contingent consideration consists of additional purchase consideration paid or accrued in relation to previous acquisitions.
The tax benefit credited to goodwill represents the tax deduction resulting from the exercise of stock options that were outstanding and vested at
the consummation of the Business Combination and included in the purchase price of Activision, Inc. to the extent that the tax deduction did not
exceed the fair value of those options. Conversely, to the extent that the tax deduction did exceed the fair value of those options, the tax benefit is
credited to accumulated paid in capital.
During our 2011 annual impairment testing, the Company identified and recorded a $12 million impairment of goodwill to “General
and administrative” in the statement of operations related to the Distribution reporting unit. The impairment was due to declines in our expected
future performance of the distribution business, which was a reflection of a continuing shift in the distribution of interactive entertainment
software from retail distribution channels towards digital distribution and online gaming.