Activision Blizzard (ATVI) 10-K 1 Mar 10 2009 FY Annual report Financial data

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)
In Millions	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$2,768	$2,958
Short-term investments	477	44
Accounts receivable, net of allowances of $317 million and $268 million at December 31, 2009 and 2008, respectively	739	974
Inventories	241	262
Software development	224	235
Intellectual property licenses	55	35
Deferred income taxes, net	498	536
Intangible assets, net		14
Other current assets	327	201
Total current assets	5,329	5,259
Long-term investments	23	78
Software development	10	1
Intellectual property licenses	28	5
Property and equipment, net	138	149
Other assets	9	30
Intangible assets, net	618	1,283
Trademark and trade names	433	433
Goodwill	7,154	7,227
Total assets	13,742	14,465
Current liabilities:
Accounts payable	302	319
Deferred revenues	1,426	923
Accrued expenses and other liabilities	779	842
Total current liabilities	2,507	2,084
Deferred income taxes, net	270	615
Other liabilities	209	239
Total liabilities	2,986	2,938
Shareholders' equity:
Common stock, $.000001 par value per share, 2,400,000,000 shares authorized, 1,364,117,675 and 1,325,206,032 shares issued at December 31, 2009 and 2008, respectively	0	0
Additional paid-in capital	12,376	12,170
Less: Treasury stock, at cost, 113,686,498 and 12,967,265 shares at December 31, 2009 and 2008, respectively	(1,235)	(126)
Accumulated deficit	(361)	(474)
Accumulated other comprehensive loss	(24)	(43)
Total shareholders' equity	10,756	11,527
Total liabilities and shareholders' equity	$13,742	$14,465

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data	Dec. 31, 2009	Dec. 31, 2008
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowances (in dollars)	$317	$268
Common stock, par value per share (in dollars per share)	0.000001	0.000001
Common stock, shares authorized	2,400,000,000	2,400,000,000
Common stock, shares issued	1,364,117,675	1,325,206,032
Treasury stock, shares	113,686,498	12,967,265

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Net revenues
Product sales	$3,080	$1,872	$457
Subscription, licensing, and other revenues	1,199	1,154	892
Total net revenues	4,279	3,026	1,349
Costs and expenses
Cost of sales-product costs	1,432	1,160	171
Cost of sales-software royalties and amortization	348	267	52
Cost of sales-intellectual property licenses	315	219	9
Cost of sales-massively multi-player online role-playing game ("MMORPG")	212	193	204
Product development	627	592	397
Sales and marketing	544	464	172
General and administrative	395	271	166
Impairment of intangible assets	409
Restructuring	23	93	(1)
Total costs and expenses	4,305	3,259	1,170
Operating income (loss)	(26)	(233)	179
Investment and other income (loss), net	18	46	(4)
Income (loss) before income tax benefit	(8)	(187)	175
Income tax benefit	(121)	(80)	(52)
Net income (loss)	$113	($107)	$227
Earnings (loss) per common share
Basic (in dollars per share)	0.09	-0.11	0.38
Diluted (in dollars per share)	0.09	-0.11	0.38
Weighted average number of shares outstanding
Basic (in shares)	1,283	946	591
Diluted (in shares)	1,311	946	591

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)
In Millions	Common Stock		Additional Paid-In Capital	Treasury Stock	Net Payable to Vivendi	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 31, 2006			$535		$372	($594)	$34	$347
Balance (in shares) at Dec. 31, 2006	591	[1]
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Net transfers to Vivendi			(45)		(295)			(340)
Components of comprehensive income (loss):
Net income (loss)						227		227
Foreign currency translation adjustment							6	6
Total comprehensive income (loss)								233
Balance at Dec. 31, 2007			490		77	(367)	40	240
Balance (in shares) at Dec. 31, 2007	591	[1]
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Settlement of payable to Vivendi (see Note 23)			(2)		(77)			(79)
Components of comprehensive income (loss):
Net income (loss)						(107)		(107)
Unrealized depreciation on short-term investments, net of taxes							(2)	(2)
Foreign currency translation adjustment							(81)	(81)
Total comprehensive income (loss)								(190)
Purchase consideration upon the business combination			9,919					9,919
Purchase consideration upon the business combination (in shares)	602
Issuance of additional common stock related to the Business Combination (see Note 1)			1,731					1,731
Issuance of additional common stock related to the Business Combination (see Note 1) (in shares)	126
Tender offer (see Note 1)			(2)					(2)
Issuance of common stock pursuant to employee stock options and restricted stock rights			22					22
Issuance of common stock pursuant to employee stock options and restricted stock rights (in shares)	6
Stock-based compensation expense related to employee stock options and restricted stock rights			89					89
Tax effect from stock plans			2					2
Shares repurchased (see Note 20)				(126)				(126)
Shares repurchased (see Note 20) (in shares)				(13)
Return of capital to Vivendi (see Note 23)			(79)					(79)
Balance at Dec. 31, 2008			12,170	(126)		(474)	(43)	11,527
Balance (in shares) at Dec. 31, 2008	1,325			(13)
Components of comprehensive income (loss):
Net income (loss)						113		113
Foreign currency translation adjustment							19	19
Total comprehensive income (loss)								132
Issuance of common stock pursuant to employee stock options and restricted stock rights			81					81
Issuance of common stock pursuant to employee stock options and restricted stock rights (in shares)	36
Stock-based compensation expense related to employee stock options and restricted stock rights			154					154
Tax effect from stock plans			(1)					(1)
Issuance of contingent considerations			2					2
Issuance of contingent considerations (in shares)	3
Shares repurchased (see Note 20)				(1,109)				(1,109)
Shares repurchased (see Note 20) (in shares)				(101)
Return of capital to Vivendi related to settlement of pre-Business Combination taxes (see Note 16)			(30)					(30)
Balance at Dec. 31, 2009			$12,376	($1,235)		($361)	($24)	$10,756
Balance (in shares) at Dec. 31, 2009	1,364			(114)
[1](1) The number of shares issued reflects the number of split adjusted shares received by Vivendi, former parent company of Vivendi Games.

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions	12 Months Ended Dec. 31, 2009		12 Months Ended Dec. 31, 2008		12 Months Ended Dec. 31, 2007
Cash flows from operating activities:
Net income (loss)	$113		($107)		$227
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income taxes	(256)		(430)		(77)
Impairment (see Notes 8 and 12)	409		26
Depreciation and amortization	347		385		63
Unrealized (gain)/loss on auction rate securities classified as trading securities	(3)		7
Unrealized loss on ARS rights from UBS	3		2
Loss on disposal of property and equipment (see Note 8)	2		1		1
Amortization and write-off of capitalized software development costs and intellectual property licenses(1)	281	[1]	176	[1]	54	[1]
Stock-based compensation expense(2)	156	[2]	89	[2]	138	[2]
Excess tax benefits from stock option exercises	(79)		(21)
Changes in operating assets and liabilities:
Accounts receivable	235		(428)		25
Inventories	21		(20)		7
Software development and intellectual property licenses	(308)		(181)		(102)
Other assets	(110)		(165)		(6)
Deferred revenues	503		726		79
Accounts payable	(18)		86		(12)
Accrued expenses and other liabilities	(113)		233		34
Net cash provided by operating activities	1,183		379		431
Cash flows from investing activities:
Capital expenditures	(69)		(46)		(68)
Net proceeds from disposal of assets-restructuring (see Note 8)			9
Cash acquired through Business Combination, net of cash payments to effect acquisitions			1,120
Proceeds from sale of available-for-sale investments	2
Proceeds from maturities of investments	44
Purchase of short-term investments	(425)
Decrease in restricted cash	5		18
Net cash provided by (used in) investing activities	(443)		1,101		(68)
Cash flows from financing activities:
Proceeds from issuance of common stock to employees	81		22
Repurchase of common stock through tender offer			(2)
Return of capital to Vivendi (see Note 23)			(79)
Issuance of additional common stock related to the Business Combination			1,731
Repurchase of common stock	(1,109)		(126)
Settlement of payable to Vivendi			(79)		(371)
Excess tax benefits from stock option exercises	79		21
Net cash provided by (used in) financing activities	(949)		1,488		(371)
Effect of foreign exchange rate changes on cash and cash equivalents	19		(72)		2
Net increase (decrease) in cash and cash equivalents	(190)		2,896		(6)
Cash and cash equivalents at beginning of year	2,958		62		68
Cash and cash equivalents at end of year	$2,768		$2,958		$62
[1](1) Excludes deferral and amortization of stock-based compensation expense.
[2](2) Includes the net effects of capitalization, deferral, and amortization of stock-based compensation expense.

Business and Business Combinati

Business and Business Combination
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Business and Business Combination	1. Business and Business Combination Business Activision Blizzard,Inc. is a worldwide online, personal computer ("PC"), console and handheld game publisher. The terms "Activision Blizzard," the "Company," "we," "us," and "our" are used to refer collectively to Activision Blizzard,Inc. and its subsidiaries. Based upon our current organizational structure, we operate three operating segments as follows: (i) Activision Publishing,Inc. Activision Publishing,Inc. ("Activision") is a leading international publisher of interactive software products and peripherals. Activision develops and publishes video games on various consoles, handheld platforms and the PC platform through internally developed franchises and license agreements. Activision currently offers games that operate on the Sony Computer Entertainment,Inc. ("Sony") PlayStation 2 ("PS2"), Sony PlayStation 3 ("PS3"), NintendoCo.Ltd. ("Nintendo") Wii ("Wii"), and Microsoft Corporation ("Microsoft") Xbox360 ("Xbox360") console systems; the Sony PlayStation Portable ("PSP") and Nintendo Dual Screen ("NDS") handheld devices; the PC; the Apple iPhone; and the new handheld game system Nintendo DSi. Our Activision business involves the development, marketing, and sale of products directly, by license, or through our affiliate label program with certain third-party publishers. Activision's products cover diverse game categories including action/adventure, action sports, racing, role-playing, simulation, first-person action, music, and strategy. Activision's target customer base ranges from casual players to core gamers, and children to adults. (ii) Blizzard Entertainment,Inc. Blizzard Entertainment,Inc. ("Blizzard") is a leader in terms of subscriber base and revenues generated in the subscription-based massively multi-player online role-playing game ("MMORPG") category. Blizzard internally develops and publishes PC-based computer games and maintains its proprietary online-game related service, Battle.net. Our Blizzard business involves the development, marketing, sales and support of role playing action and strategy games. Blizzard also develops, hosts, and supports its online subscription-based games in the MMORPG category. Blizzard is the development studio and publisher best known as the creator of World of Warcraft and the multiple award winning Diablo, StarCraft, and World of Warcraft franchises. Blizzard distributes its products and generates revenues worldwide through various means, including: subscription revenues (which consist of fees from individuals playing World of Warcraft, prepaid cards and other value added service revenues); retail sales of physical "boxed" products; electronic download sales of PC products; and licensing of software to third-party, or related party companies that distribute World of Warcraft in Russia, China, and Taiwan. (iii) Activision Blizzard Distribution Activision Blizzard Distribution ("Distribution") consists of operations in Europe that provide warehousing, logistical, and sales distribution services to third-party publishers of interactive entertainment software, our own publishing operations, and manufacturers of interactive

Summary of significant accounti

Summary of significant accounting policies
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Summary of significant accounting policies	2. Summary of significant accounting policies Basis of Consolidation and Presentation The accompanying consolidated financial statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S.GAAP"). The preparation of the consolidated financial statements in conformity with U.S.GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates and assumptions. The prior year consolidated balance sheet at December31, 2008 and consolidated statement of cash flows for the year ended December31, 2008 have been adjusted to correct immaterial errors related to the elimination of intercompany receivables and payables. The corrections reduced the accounts receivable and accounts payable line items in the December31, 2008 consolidated balance sheet by $236million, which correspondingly impacted the change in accounts receivable and accounts payable in the consolidated statement of cash flows for the year ended December31, 2008 by $236million. These corrections had no impact on net income, earnings (loss) per share, working capital or net cash provided by operating, investing and financing activities. Certain reclassifications have been made to prior year amounts to conform to the current period presentation. The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. Cash, Cash Equivalents and Investment Securities We consider all money market funds and highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Investments designated as available-for-sale securities are carried at fair value based on quoted market prices or estimated based on quoted market prices of financial instruments with similar characteristics. Unrealized gains and losses of the Company's available-for-sale securities are excluded from earnings and reported as a component of other comprehensive income (loss), when credit losses are not expected and the Company does not intend, or it is more likely than not that the Company will not be required, to sell the security prior to recovery of the security's amortized cost basis. In general, investments with original maturities greater than 90days and remaining maturities of less than one year are classified as short-term investments. In addition, investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such investments represent the investment of cash that is available for current operations. The specific identification method is used to determine the cost of securities disposed with realized gains and losses reflected in investment and other income (loss), net in the consoli

Acquisitions

Acquisitions
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Acquisitions	3. Acquisitions Reverse Acquisition The Business Combination (See Note1 of the notes to consolidated financial statements) is accounted for as a reverse acquisition under the purchase method of accounting. For this purpose, Vivendi Games was deemed to be the accounting acquirer and Activision,Inc. was deemed to be the accounting acquiree. The purchase price of Activision,Inc. consists of the following items (amounts in millions): Fair market value of Activision,Inc.'s outstanding common stock immediately prior to the Business Combination at the closing price $ 9,057 Fair value of Activision,Inc.'s existing vested and unvested stock awards at the closing price* 861 Transaction expenses 1 Total consideration $ 9,919 * The fair value of the existing vested and unvested stock award is comprised of the following (amounts in millions): Fair value of Activision,Inc. existing vested stock awards $ 713 Fair value of Activision,Inc. unvested stock awards 296 Less: Unearned stock-based compensation (148 ) $ 861 The fair value of Activision,Inc.'s stock awards was determined using the fair value of Activision,Inc.'s common stock of $15.04 per share, which was the closing price at July9, 2008, and using a binomial-lattice model and the following assumptions: (a)varying volatility ranging from 42.38% to 51.50%, (b)a risk free interest rate of 3.97%, (c)an expected life ranging from 3.22years to 4.71years, (d)risk adjusted stock return of 8.89%, and (e)an expected dividend yield of 0.0%. The Company's allocation of the purchase price of Activision,Inc. is as follows (amounts in millions): Amount Working capital, excluding inventories $ 1,192 Inventories 221 Property and equipment 64 Deferred tax asset 62 Other long term assets 129 Estimated useful life Intangible assets: License agreements 3-10years 207 Developed software 1-2years 68 Game engines 2-5years 128 Internally developed franchises 11-12years 1,124 Retail customer relationships < 1year 40 Favorable leases 1-4years 5 Distribution agreements 4years 17 Activision trade name Indefinite 385 Goodwill Indefinite 7,044 Long term liabilities (24 ) Deferred tax liability (743 ) Total consideration $ 9,919 Goodwill arises from the Business Combination due to the acquired work force of Activision,Inc., and the expected synergies from the Business Combination. The following table summarizes unaudited pro forma financial information assuming the Business Combination had occurred at the beginning of the periods presented. This pro forma financial information is for informational purposes only and does not reflect any operating efficiencies or inefficiencies which may result from the Business Combination and therefore is not necessarily indicative of results that would have been achieved had the businesses been combined during the periods presented (amounts i

Investment and other income

Investment and other income (loss), net
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Investment and other income (loss), net	4. Investment and other income (loss), net Investment and other income (loss), net is comprised of the following (amounts in millions): For the years ended December31, 2009 2008 2007 Interest income $ 15 $ 36 $ 1 Interest expense (4 ) (3 ) (3 ) Unrealized gain (loss) on trading securities 3 (7 ) Unrealized gain (loss) on ARS rights from UBS (3 ) 10 Net realized gain on investments 4 Change in fair value of other financial liability 8 Net realized and unrealized gain (loss) on foreign exchange contracts with Vivendi (1 ) 6 (2 ) Investment and other income (loss), net $ 18 $ 46 $ (4 )

Cash and Cash Equivalents

Cash and Cash Equivalents
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Cash and Cash Equivalents	5. Cash and Cash Equivalents Cash and cash equivalents primarily consist of deposits held at major banks and money market funds with original maturities of three months or less at the date of purchase. The following table summarizes the components of our cash and cash equivalents (amounts in millions): At December31, 2009 2008 Cash and time deposits $ 464 $ 349 Money market funds 2,304 2,609 Total cash and cash equivalents $ 2,768 $ 2,958

Investments

Investments
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Investments	6. Investments The following table summarizes our short-term and long-term investments at December31, 2009 (amounts inmillions): At December31, 2009 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Short-term investments: Available-for-sale investments: Mortgage-backed securities $ 2 $ $ $ 2 U.S. government agency securities 389 389 Total short-term available-for-sale investments $ 391 $ $ 391 Trading investments: Auction rate securities held through UBS 54 Restricted cash 32 Total short-term investments $ 477 Long-term investments: Available-for-sale investments: Auction rate securities held through Morgan Stanley Smith BarneyLLC $ 27 $ $ (4 ) $ 23 At December31, 2008 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Short-term investments: Available-for-sale investments: Mortgage-backed securities $ 8 $ $ (1 ) $ 7 Total short-term available-for-sale investments $ 8 $ $ (1 ) $ 7 Restricted cash 37 Total short-term investments $ 44 Long-term investments: Available-for-sale investments: Auction rate securities held through Citigroup, Inc. $ 27 $ $ (4 ) $ 23 Trading investments: Auction rate securities held through UBS 55 Total long-term investments $ 78 The following table illustrates the gross unrealized losses on available-for-sale securities and the fair value of those securities, aggregated by investment categories at December31, 2009 and 2008. The table also illustrates the length of time that they have been in a continuous unrealized loss position at December31, 2009 and 2008 (amounts in millions): Less than 12months 12months or more Total At December31, 2009 Unrealized losses Fair value Unrealized losses Fair value Unrealized losses Fair value Taxable auction rate securities $ $ $ (4 ) $ 23 $ (4 ) $ 23 Less than 12months 12months or more Total At December31, 2008 Unrealized losses Fair value Unrealized losses Fair value Unrealized losses Fair value Mortgage-backed securities $ (1 ) $ 7 $ $ $ (1 ) $ 7 Taxable auction rate securities (4 ) 23 (4 ) 23 Total $ (5 ) $ 30 $ $ $ (5 ) $ 30 The total unrealized loss of $4million at December31, 2009 is

Software Development Costs and

Software Development Costs and Intellectual Property Licenses
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Software Development Costs and Intellectual Property Licenses	7. Software Development Costs and Intellectual Property Licenses At December31, 2009, capitalized software development costs included $182million of internally developed software costs and $52million of payments made to third-party software developers. At December31, 2008, capitalized software development costs included $173million of internally developed software costs and $63million of payments made to third-party software developers. Capitalized intellectual property licenses were $83million and $40million at December31, 2009 and December31, 2008, respectively. Amortization of capitalized software development costs and intellectual property licenses for the years ended December31, 2009, 2008 and 2007 were $314million, $90million and $10million, respectively. Write-offs and impairments were $21million, $89million and $7million for the years ended December31, 2009, 2008 and 2007, respectively.

Restructuring

Restructuring
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Restructuring	8. Restructuring We have substantially completed our implementation of our organizational restructuring plan as a result of the Business Combination described in Note1 of the notes to consolidated financial statements. This organizational restructuring plan included the integration of different operations to streamline the combined organization of Activision Blizzard. The primary goals of the organizational restructuring are to rationalize the title portfolio and consolidate certain corporate functions to realize synergies from the Business Combination. The following table details the amount of restructuring reserves included in accrued expenses and other liabilities in the consolidated balance sheets at December31, 2009 and 2008 (amounts inmillions): Severance Facilities costs Asset write-down Contract termination costs Loss on disposal of assets/liabilities Total Balance at December31, 2007 $ $ $ $ $ $ Costs charged to expense 54 7 26 5 1 93 Costs paid or otherwise settled (18 ) (3 ) (21 ) Non-cash write-down: Fixed asset disposals (5 ) (5 ) Impairment of acquired trade name (5 ) (5 ) Impairment of goodwill (16 ) (16 ) Foreign exchange and other 1 (2 ) (1 ) (2 ) Balance at December31, 2008 37 7 44 Costs charged to expense 19 4 23 Costs paid or otherwise settled (48 ) (8 ) (56 ) Foreign exchange and other (2 ) (2 ) Balance at December31, 2009 $ 8 $ 1 $ $ $ $ 9 The total restructuring reserve balances and the net restructuring charges are presented below by operating segment (amounts inmillions): Restructuring Reserve Balance Restructuring Charges At December31, 2009 At December31, 2008 Year ended December31, 2009 Year ended December31, 2008 Activision $ 9 $ $ 2 $ 2 Blizzard Distribution 3 Total operating segments 9 5 2 Other(i) 44 18 91 Total $ 9 $ 44 $ 23 $ 93 (i) Other 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 July1, 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 and consequently we are no longer providing separate operating segment disclosure and have reclassified our prior periods' presentation so that it conforms to the current period's presentation.

Inventories

Inventories
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Inventories	9. Inventories Our inventories consisted of the following (amounts inmillions): At December31, 2009 2008 Finished goods $ 201 $ 251 Purchased parts and components 40 11 $ 241 $ 262

Property and Equipment, Net

Property and Equipment, Net
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Property and Equipment, Net	10. Property and Equipment, Net Property and equipment, net was comprised of the following (amounts in millions): At December31, 2009 2008 Land $ 1 $ 1 Buildings 6 5 Leasehold improvements 54 45 Computer equipment 311 293 Office furniture and other equipment 65 52 Total cost of property and equipment 437 396 Less accumulated depreciation (299 ) (247 ) Property and equipment, net $ 138 $ 149 Depreciation expense for the years ended December31, 2009, 2008, and 2007 was $76million, $79million, and $59million, respectively.

Goodwill

Goodwill
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Goodwill	11. Goodwill The changes in the carrying amount of goodwill by operating segments for the years ended December31, 2009 and 2008 are as follows (amounts in millions): Activision Blizzard Distribution Activision Blizzard's core operations Other(i) Total Balance at December31, 2007 $ $ 178 $ $ 178 $ 25 $ 203 Goodwill acquired 7,043 12 7,055 7,055 Issuance of contingent consideration 9 9 6 15 Goodwill re-assignment 7 7 (7 ) Disposal (8 ) (8 ) Impairment charge (16 ) (16 ) Tax benefit credited to goodwill (19 ) (19 ) (19 ) Foreign exchange (3 ) (3 ) (3 ) Balance at December31, 2008 7,037 178 12 7,227 7,227 Goodwill acquired 3 3 3 Issuance of contingent consideration 6 6 6 Purchase accounting adjustments (6 ) (6 ) (6 ) Tax benefit credited to goodwill (78 ) (78 ) (78 ) Foreign exchange 2 2 2 Balance at December31, 2009 $ 6,964 $ 178 $ 12 $ 7,154 $ $ 7,154 Activision Blizzard Distribution Activision Blizzard's core operations Other(i) Total Balance at December31, 2007: Goodwill $ $ 178 $ $ 178 $ 27 $ 205 Accumulated impairment losses (2 ) (2 ) Total 178 178 25 203 Balance at December31, 2008: Goodwill 7,037 178 12 7,227 18 7,245 Accumulated impairment losses (18 ) (18 ) Total 7,037 178 12 7,227 7,227 Balance at December31, 2009: Goodwill 6,964 178 12 7,154 18 7,172 Accumulated impairment losses (18 ) (18 ) Total $ 6,964 $ 178 $ 12 $ 7,154 $ $ 7,154 (i) Other 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 July1, 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 and 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. Issuance of contingent consideration consists of additional purchase consideration paid or accrued during 2009 and 2008 in relation to previous a

Intangible Assets, Net

Intangible Assets, Net
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Intangible Assets, Net	12. Intangible Assets, Net Intangible assets, net consist of the following (amounts inmillions): At December31, 2009 Estimated useful lives Gross carrying amount Accumulated amortization Impairment charge Net carrying amount Acquired definite-lived intangible assets: License agreements 3-10years $ 209 $ (77 ) $ (24 ) $ 108 Developed software 1-2years 288 (288 ) Game engines 2-5years 134 (94 ) (12 ) 28 Internally developed franchises 11-12years 1,124 (278 ) (373 ) 473 Favorable leases 1-4years 5 (4 ) 1 Distribution agreements 4years 18 (10 ) 8 Other intangibles 0-2years 5 (5 ) Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 386 Acquired trade names Indefinite 47 47 Total $ 2,216 $ (756 ) $ (409 ) $ 1,051 At December31, 2008 Estimated useful lives Gross carrying amount Accumulated amortization Impairment charge (See Note8) Net carrying amount Acquired definite-lived intangible assets: License agreements 3-10years $ 207 $ (34 ) $ $ 173 Developed software 1-2years 286 (272 ) 14 Game engines 2-5years 134 (42 ) 92 Internally developed franchises 11-12years 1,124 (123 ) 1,001 Favorable leases 1-4years 5 (1 ) 4 Distribution agreements 4years 17 (5 ) 12 Other intangibles 0-2years 5 (4 ) 1 Acquired indefinite-lived intangible assets: Activision trademark Indefinite 386 386 Acquired trade names Indefinite 52 (5 ) 47 Total $ 2,216 $ (481 ) $ (5 ) $ 1,730 Amortization expense of intangible assets was $271million, $306million, and $4million for the years ended December31, 2009, 2008, and 2007, respectively. At December31, 2009, future amortization of finite-lived intangible assets is estimated as follows (amounts inmillions): 2010 $ 117 2011 98 2012 88 2013 62 2014 54 Thereafter 199 Total $ 618 In the fourth quarter of 2009, with the franchise and industry results of the holiday season, our outlook for the console platforms was significantly revised. With the continued economic downturn within our industry in 2009 and the change in the buying habits of casual consumers, we reassessed our overall expectations. We considered these economic changes during our 2010 planning process conducted during the months of November and December, which resulted in a strategy change to focus on fewer title releases in the casual and music genres. As we consider this a triggering event, we updated our future projected revenues streams for certain

Current Accrued Expenses and Ot

Current Accrued Expenses and Other Liabilities
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Current Accrued Expenses and Other Liabilities	13. Current Accrued Expenses and Other Liabilities Current accrued expenses and other liabilities were comprised of the following (amounts inmillions): At December31, 2009 2008 Accrued royalties payable $ 64 $ 88 Accrued selling and marketing costs 128 128 Current income tax payable 136 Accrued payroll related costs 271 208 Other 316 282 Total current accrued expenses and other liabilities $ 779 $ 842

Operating Segments and Geograph

Operating Segments and Geographic Area
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Operating Segments and Geographic Area	14. Operating Segments and Geographic Area 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, 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. We do not aggregate operating segments. Currently, we operate under three operating segments: (i)Activision, which publishes interactive entertainment software and peripherals, and which includes businesses operated by Activision Publishing,Inc. prior to the Business Combination and studios, assets, and titles previously included in Vivendi Games' Sierra Entertainment operating segment prior to the Business Combination, (ii)Blizzard, which publishes real-time strategy, role-playing PC games and online subscription-based games in the MMORPG category, and (iii)Distribution, which distributes interactive entertainment software and hardware products. Prior to July1, 2009 we operated a fourth operating segment, Non-Core, which represented legacy Vivendi Games' divisions or business units that the Company had exited, divested, or wound down as part of its restructuring and integration efforts as a result of the Business Combination. At July1, 2009 in light of the minimal activities and insignificance of Non-Core activities, we ceased management of Non-Core as a separate operating segment and consequently we are no longer providing separate operating segment disclosure with respect to Non-Core and have reclassified our prior periods' segment presentation so that it conforms to the current period's presentation. As the historical financial statements prior to July10, 2008 are those of Vivendi Games, segment net revenues and segment income (loss) from the business operated by Activision,Inc. prior to the Business Combination are not included for the period January1, 2008 through July9, 2008. Also, the Activision operating segment includes Vivendi Games titles retained after the Business Combination. The CODM reviews segment performance exclusive of the impact of the deferred net revenues and related cost of sales, stock-based compensation expense, restructuring income (expense), amortization of intangible assets and purchase price accounting related adjustments, impairment of intangible assets, integration and transaction costs, and other*. Information on the operating segments and reconciliations of total net revenues and total segment income (loss) from operations to consolidated net revenues and operating income (loss) for the years ended December31, 2009, 2008, and 2007 are presented below (amounts inmillions): For the years ended December31, For the years ended December31, 2009 2008 2007 2009 2008 2007 Net revenues Income (loss) from operations Activision $ 3,156 $ 2,152 $ 272 $ 663 $ 307 $ (13 ) Blizzard 1,196 1,343 1,107 555 704 568 Distribution 423 227 16 22 Operati

Computation of Earnings

Computation of Earnings (Loss) Per Basic Diluted Common Share
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Computation of Earnings (Loss) Per Basic/Diluted Common Share	15. Computation of Earnings (Loss) Per Basic/Diluted Common Share The following table sets forth the computation of basic and diluted earnings (loss) per common share (amounts inmillions, except per share data): For the Years ended December31, 2009 2008 2007 Numerator: Consolidated net income (loss) $ 113 $ (107 ) $ 227 Net income allocated to unvested share-based awards that participate in earnings (1 ) Numerator for basic and diluted earnings per common shareincome (loss) available to common shareholders $ 112 $ (107 ) $ 227 Denominator: Denominator for basic earnings per common shareweighted-average common shares outstanding 1,283 946 591 Effect of potential dilutive common shares under treasury stock method: Employee stock options 28 Denominator for diluted earnings per common shareweighted-average common shares outstanding plus potential dilutive effect of employee stock options 1,311 946 591 Basic earnings (loss) per common share $ 0.09 $ (0.11 ) $ 0.38 Diluted earnings (loss) per common share $ 0.09 $ (0.11 ) $ 0.38 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 net earnings per common share. For the year ended December31, 2009, we had outstanding unvested restricted stock rights with respect to 10million shares of common stock on a weighted-average basis. 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 December31, 2008 does not apply as there were losses during this period. In July2008, 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 split was paid September5, 2008 to shareholders of record as of August25, 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 July9, 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 Note1 of the notes to consolidated financial statements). As such, the h

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Income Taxes	16. Income Taxes Through July9, 2008, Vivendi Games' results were included in the consolidated federal and certain foreign, state and local income tax returns filed by Vivendi or its affiliates. However, the income tax provision is reflected in our consolidated statements of operations, including the impact of U.S. net operating losses carried forward, as if the amounts were computed on a separate stand-alone basis. Under Vivendi group policy, any U.S. net operating losses generated by Vivendi Games were surrendered to Vivendi or Vivendi's subsidiaries in the year of loss with no benefit for such losses being recorded in Vivendi Games' income tax provision. Vivendi Games' remaining separate U.S. net operating loss carry forward tax benefit of $79million was recognized in 2007 through a reduction in the valuation allowance. Domestic and foreign income before income taxes and details of the income tax expense (benefit) are as follows (amounts inmillions): For the years ended December31, 2009 2008 2007 Income (loss) before income tax benefit: Domestic $ (237 ) $ (131 ) $ 144 Foreign 229 (56 ) 31 $ (8 ) $ (187 ) $ 175 Income tax expense (benefit): Current: Federal $ 237 $ 251 $ 90 State 46 49 7 Foreign 14 41 24 Total current 297 341 121 Deferred: Federal (309 ) (294 ) (55 ) State (75 ) (67 ) (2 ) Foreign (12 ) (62 ) (7 ) Release of valuation allowance (22 ) (30 ) Change in valuation allowance related to net operating loss surrendered (79 ) Total deferred (418 ) (423 ) (173 ) Add back benefit credited to additional paid-in capital: Excess tax benefit associated with stock options 2 Income tax benefit $ (121 ) $ (80 ) $ (52 ) For the year ended December31, 2009, we have a pretax domestic loss of $237million and foreign pretax income of $229million. The U.S. pretax loss is primarily driven by stock option expense, intangible asset amortization recorded domestically as well as an impairment of intangible assets in the current year. The items accounting for the difference between income taxes computed at the U.S. federal statutory income tax rate and the income tax expense (benefit) for each of the years are as follows: For the years ended December31, 2009 2008 2007 Federal income tax provision at statutory rate $ (3 ) (35 )% $ (65 ) (35 )% $ 61 35 % State taxes, net of federal benefit (17 ) (219 ) (6 ) (3 ) 4 2 Research and development credits (24 ) (302 ) (31 ) (17 ) (10 ) (6 ) Domestic production activity deduction (7 ) (89 ) (12 ) (6 ) Foreign rate differential (82 ) (1,040 ) (2 ) (1 ) Chan

Fair Value Measurements

Fair Value Measurements
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Fair Value Measurements	17. Fair Value Measurements FASB literature regarding fair value measurements for financial and non-financial assets and liabilities establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of "observable inputs" and minimize the use of "unobservable inputs." The three levels of inputs used to measure fair value are as follows: Level1Quoted prices in active markets for identical assets or liabilities. Level2Observable inputs other than quoted prices included in Level1, such as quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data. Level3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The table below segregates all assets and liabilities that are measured at fair value on a recurring basis (which means they are so measured at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date (amounts in millions): Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Financial Instruments Significant Other Observable Inputs Significant Unobservable Inputs As of December31, 2009 (Level1) (Level2) (Level3) Balance Sheet Classification Financial assets: Money market funds $ 2,304 $ 2,304 $ $ Cash and cash equivalents Mortgage backed securities 2 2 Short-term investments Auction rate securities held through UBS 54 54 Short-term investments U.S.government agency securities 389 389 Short-term investments Auction rate securities held through Morgan Stanley Smith BarneyLLC 23 23 Long-term investments ARS rights from UBS 7 7 Other assetscurrent Total financial assets at fair value $ 2,779 $ 2,693 $ 2 $ 84 Financial liabilities: Other financial liability $ (23 ) $ $ $ (23 ) Other liabilitiescurrent Total financial liabilities at fair value $ (23 ) $ $ $ (23 ) Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Financial Instruments Significant Other Observable Inputs Significant Unobservable Inputs As of December31, 2008 (Level1) (Level2) (Level3) Balance Sheet Classification Financial assets: Money market funds $ 2,609 $ 2,609 $ $ Cash and cash equivalents Mortgage backed securities 7 7 Short-term investments Auction rate securities held through UBS and Citigroup, In

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Commitments and Contingencies	18. Commitments and Contingencies Credit Facilities At December31, 2009 and 2008, we maintained a $30million and $35million irrevocable standby letter of credit, respectively. The standby letter of credit is required by one of our inventory manufacturers to qualify for payment terms on our inventory purchases. Under the terms of this arrangement, we are required to maintain on deposit with the bank a compensating balance, restricted as to use, of not less than the sum of the available amount of the letter of credit plus the aggregate amount of any drawings under the letter of credit that have been honored thereunder but not reimbursed. The letter of credit was undrawn at December31, 2009 and 2008. At December31, 2009 and 2008, our publishing subsidiary located in the U.K. maintained a EUR30million ($43million) and EUR25million ($35million) irrevocable standby letter of credit, respectively. The standby letter of credit is required by one of our inventory manufacturers to qualify for payment terms on our inventory purchases. The standby letter of credit does not require a compensating balance and expires in March 2010. No amounts were outstanding at December31, 2009 and 2008. On April29, 2008, Activision,Inc. entered into a senior unsecured credit agreement with Vivendi (as lender). Borrowings under the agreement became available upon consummation of the Business Combination. At December31, 2009 and 2008, the credit agreement provides for a revolving credit facility of up to $475million, bearing interest at LIBOR plus 1.20% per annum. Any unused amount under the revolving credit facility is subject to a commitment fee of 0.42% per annum. The revolving credit facility is subject to customary negative covenants, in each case subject to certain exceptions and qualifications, including limitations on: indebtedness; liens; investments, mergers, consolidations and acquisitions; transactions with affiliates; issuance of preferred stock by subsidiaries; sale and leaseback transactions; restricted payments; and certain restrictions with respect to subsidiaries. The limitation on indebtedness provides that Activision Blizzard cannot incur consolidated indebtedness, net of unrestricted cash, in excess of $1.5billion, and that no additional indebtedness may be incurred as long as the ratio of Activision Blizzard's consolidated indebtedness (including the indebtedness to be incurred) minus the amount of unrestricted cash to Activision Blizzard's consolidated earnings before interest, taxes, depreciation and amortization for its most recently ended four quarters would be greater than 1.50 to 1.0. This limitation does not, however, affect Activision Blizzard's ability to borrow under the revolving credit facility or to incur certain types of limited debt. The revolving credit facility also imposes a requirement on Activision Blizzard that the ratio of (i)consolidated indebtedness (net of certain cash) to (ii)the sum of its shareholder's equity plus consolidated indebtedness (net of certain cash) not exceed 20% at any time. No borrowings under revolving credit facility with Vivendi were outstanding at December31, 2009 and 2008. Commitm

Stock-Based Compensation

Stock-Based Compensation
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Stock-Based Compensation	19. Stock-Based Compensation Equity Incentive Plans The Activision BlizzardInc. 2008 Incentive Plan was adopted by our Board on July28, 2008, approved by our stockholders and amended and restated by our Board on September24, 2008, further amended and restated by our Board with stockholder approval on June3, 2009 and further amended and restated by the Compensation Committee of our Board with stockholder approval on December17, 2009 (as so amended and restated, the "2008Plan").The 2008Plan authorizes the Compensation Committee of our Board of Directors to provide equity-based compensation in the form of stock options, share appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other performance- or value-based awards structured by the Compensation Committee within parameters set forth in the 2008Plan, including custom awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of our common stock, or factors that may influence the value of our common stock or that are valued based on our performance or the performance of any of our subsidiaries or business units or other factors designated by the Compensation Committee, as well as incentive bonuses, for the purpose of providing incentives and rewards for performance to the directors, officers, and employees of, and consultants to, Activision Blizzard and its subsidiaries. While the Compensation Committee has broad discretion to create equity incentives, our equity-based compensation program for the most part currently utilizes a combination of options and restricted stock units. Such awards generally have time-based vesting schedules, vesting annually over periods of three to five years, or vest in their entirety on an anniversary of the date of grant, subject to possible earlier vesting if certain performance measures are met, and all such awards which are options generally expire ten years from the grant date. In addition, under the terms of the 2008Plan, the exercise price for the options must be equal to or greater than the closing price per share of our common stock on the date the award is granted, as reported on NASDAQ. Upon the effective date of the 2008Plan, we ceased to make awards under the following equity incentive plans (collectively, the "Prior Plans"), although such plans will remain in effect and continue to govern outstanding awards: (i)Activision,Inc. 1998Incentive Plan, as amended; (ii)Activision,Inc. 1999Incentive Plan, as amended; (iii)Activision,Inc. 2001Incentive Plan, as amended; (iv)Activision,Inc. 2002Incentive Plan, as amended; (v)Activision,Inc. 2002 ExecutiveIncentive Plan, as amended; (vi)Activision,Inc. 2002 Studio Employee RetentionIncentive Plan, as amended; (vii)Activision,Inc. 2003Incentive Plan, as amended; and (viii)Activision,Inc. 2007Incentive Plan. Pursuant to the 2008Plan as adopted, 30million shares of our common stock were made available for issuance. The 2008 plan was amended with stockholder approval on December17, 2009 to increase the number of shares of our common stock available for issuance thereunder by 14mil

Capital Transactions

Capital Transactions
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Capital Transactions	20. Capital Transactions Repurchase Program On November5, 2008, we announced that our Board of Directors authorized a stock repurchase program under which we were able to repurchase up to $1billion of our common stock. On July31, 2009, our Board of Directors authorized an increase of $250million to the stock repurchase program bringing the total authorization to $1.25billion. Through December31, 2009, we repurchased 114million shares of our common stock for $1,235million under the program. In addition, we had agreed to repurchase 1.3million shares of our common stock at an average price per share of $11.32 for a value of $15million that had not yet settled at December31, 2009. This completed our initial $1.25billion stock repurchase program. On February10, 2010, we announced that our Board of Directors authorized a new stock repurchase program under which we may repurchase up to $1billion of our common stock on terms and conditions to be determined by the Company until the earlier of December31, 2010 or a determination by the Board of Directors to discontinue the repurchase program.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Accumulated Other Comprehensive Income (Loss)	21. Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) at December31, 2009 and 2008 were as follows (amounts in millions): At December31, 2009 2008 Foreign currency translation adjustment $ (22 ) $ (41 ) Unrealized appreciation (depreciation) on investments, net of deferred income taxes of $(2) for both December31, 2009 and 2008 (2 ) (2 ) Accumulated other comprehensive income (loss) $ (24 ) $ (43 ) Income taxes were not provided for foreign currency translation items as these are considered indefinite investments in non-U.S. subsidiaries.

Supplemental Cash Flow Informat

Supplemental Cash Flow Information
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Supplemental Cash Flow Information	22. Supplemental Cash Flow Information Supplemental cash flow information is as follows (amounts in millions): For the years ended December31, 2009 2008 2007 Supplemental cash flow information: Cash paid for income taxes $ 257 $ 151 $ 22 Cash paid for interest 5 2 (1 )

Related Party Transactions

Related Party Transactions
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Related Party Transactions	23. Related Party Transactions Treasury Our foreign currency risk policy seeks to reduce risks arising from foreign currency fluctuations. We use derivative financial instruments, primarily currency forward contracts and swaps, with Vivendi as our principal counterparty. The gross notional amount of outstanding foreign exchange swaps was $120million at December31, 2009. The notional amounts of outstanding forward foreign exchange contracts and foreign exchange swaps were $126million and $118million, respectively, at December31, 2008. A pre-tax net unrealized loss of $2million and gain of $3million for the years ended December31, 2009 and 2008, respectively, resulted from the foreign exchange contracts and swaps with Vivendi and were recognized in the consolidated statements of operations. To mitigate our risk from foreign currency fluctuations we enter into currency derivatives contracts, principally currency forwards and swaps, with Vivendi, generally with maturities of twelve months or less. We expect to continue to use economic hedge programs in the future and may use, in addition to currency forwards and swaps, other financial derivative instruments such as currency options to reduce foreign exchange risks if it is determined that such hedging activities are appropriate. We do not hold or purchase any derivatives contracts for trading or speculative purposes. The following procedures are designed to prohibit speculative transactions: Vivendi is the counterparty for foreign currency transactions within Activision Blizzard, unless regulatory, operational, or other considerations require otherwise; and All foreign currency hedging transactions are backed, in amount and by maturity, by an identified underlying economic exposure. Prior to the Business Combination, Vivendi maintained a centralized cash management pool from which Vivendi Games borrowed and loaned cash on a daily basis. Net cash transfers, under the cash pooling agreement, were included in owner's equity as part of net transfers to Vivendi. Vivendi charged Vivendi Games interest on the cumulative net cash transfers and such charges are included in investment income (loss), net in the accompanying consolidated statements of operations. Net interest earned from Vivendi for the year ended December31, 2008 was $4million. Net interest expense for the year ended December31, 2007 was $3million. In addition, in accordance with the terms of the Business Combination Agreement, in 2008 Vivendi Games settled its payable to VivendiS.A. and distributed its excess cash on-hand as defined in the Business Combination Agreement immediately prior to the close of the transaction, resulting in cash payments of $79million to settle its payable and $79million to distribute its excess cash to Vivendi. Others Activision Blizzard has entered into various transactions and agreements, including cash management services, investor agreement, credit facilities arrangement and music royalty agreements with Vivendi and its subsidiaries and affiliates. None of these services, transactions and agreements with Vivendi and its subsidiaries and affiliates is material either individuall

Recently Issued Accounting Stan

Recently Issued Accounting Standards
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Recently Issued Accounting Standards	24. Recently Issued Accounting Standards In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs), which amends the evaluation criteria to identify the primary beneficiary of a variable interest entity. Additionally, this amendment requires ongoing reassessments of whether an enterprise is the primary beneficiary of the variable interest entity. This amendment is effective for financial statements issued for fiscal years beginning after November15, 2009. The adoption of this FASB amendment does not have material impact on our consolidated financial statements. In October 2009, the FASB issued an update to Revenue RecognitionMultiple-Deliverable Revenue Arrangements. This update establishes the accounting and reporting guidance for arrangements including multiple revenue-generating activities. This update provides amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of accounting. The amendments in this update also establish a selling price hierarchy for determining the selling price of a deliverable. Significantly enhanced disclosures are also required to provide information about a vendor's multiple-deliverable revenue arrangements, including information about the nature and terms, significant deliverables, and its performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. The amendments in this update are effective prospectively for revenue arrangements entered into or materially modified in the fiscal years beginning on or after June15, 2010. Early application is permitted. We are currently evaluating the impact, if any, of this new accounting update on our consolidated financial statements. In October 2009, the FASB issued an update to SoftwareCertain Revenue Arrangements That Include Software Elements. This update changes the accounting model for revenue arrangements that include both tangible products and software elements that are "essential to the functionality," and excludes these products from the scope of current software revenue guidance. The new guidance will include factors to help companies determine which software elements are considered "essential to the functionality." The amendments will now subject software-enabled products to other revenue guidance and disclosure requirements, such as guidance surrounding revenue arrangements with multiple-deliverables. The amendments in this update are effective prospectively for revenue arrangements entered into or materially modified in the fiscal years beginning on or after June15, 2010 although early application is permitted. We are currently evaluating the impact, if any, of this new accounting update on our consolidated financial statements. In January 2010, the FASB issued an update to Fair Value Measurements and Disclosures. This update provides amendments to ASC Subtopic 820-10 requiring new

Subsequent events

Subsequent events
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Subsequent events	25. Subsequent events On February10, 2010 Activision Blizzard's Board of Directors declared a cash dividend of $0.15 per common share payable on April2, 2010 to shareholders of record at the close of business on February22, 2010. Also, on February10, 2010, our Board of Directors authorized a new stock repurchase program under which we may repurchase up to $1billion of our common stock (see Note20 of the notes to consolidated financial statements for further details regarding the repurchase program).

Quarterly Financial and Market

Quarterly Financial and Market Information (Unaudited)
	12 Months Ended Dec. 31, 2009 USD / shares
Notes to Consolidated Financial Statements
Quarterly Financial and Market Information (Unaudited)	26. Quarterly Financial and Market Information (Unaudited) NoteAs the historical financial statements prior to July10, 2008 are those of Vivendi Games, the financial information of the businesses operated by Activision,Inc. prior to the Business Combination are included from the date of the Business Combination (i.e.from July10, 2008 onwards), but not for prior periods. For the quarters ended December31, 2009 September30, 2009 June30, 2009 March31, 2009 (Amounts in millions, except per share data) Net revenues $ 1,557 $ 703 $ 1,038 $ 981 Cost of sales 1,012 339 472 484 Operating (loss) income (432 ) 9 218 179 Net (loss) income (286 ) 15 195 189 Basic (loss) earnings per share (0.23 ) 0.01 0.15 0.14 Diluted (loss) earnings per share (0.23 ) 0.01 0.15 0.14 For the quarters ended December31, 2008 September30, 2008 June30, 2008 March31, 2008 (Amounts in millions, except per share data) Net revenues $ 1,639 $ 711 $ 352 $ 324 Cost of sales 1,211 416 106 106 Operating (loss) income (148 ) (194 ) 44 65 Net (loss) income (72 ) (108 ) 29 44 Basic (loss) earnings per share (0.05 ) (0.08 ) 0.05 0.07 Diluted (loss) earnings per share (0.05 ) (0.08 ) 0.05 0.07

SCHEDULE II VALUATION AND QUALI

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
	12 Months Ended Dec. 31, 2009 USD / shares
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS	SCHEDULE II ACTIVISION BLIZZARD,INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (Amounts in millions) Col. A Description Col. B Balance at Beginning of Period Col. C Additions(A) Col. D Deductions(B) Col. E Balance at End of Period At December31, 2009 Allowance for sales returns and price protection and other allowances $ 266 $ 332 $ (284 ) $ 314 Allowance for doubtful accounts 2 1 3 Deferred tax valuation allowance 22 (22 ) At December31, 2008 Allowance for sales returns and price protection and other allowances $ 76 $ 295 $ (105 ) $ 266 Allowance for doubtful accounts 10 3 (11 ) 2 Deferred tax valuation allowance 22 4 (4 ) 22 At December31, 2007 Allowance for sales returns and price protection and other allowances $ 105 $ 76 $ (105 ) $ 76 Allowance for doubtful accounts 5 5 10 Deferred tax valuation allowance 92 39 (109 ) 22 (A) Includes increases in allowance for sales returns, price protection, doubtful accounts, and deferred tax valuation due to normal reserving terms and allowance accounts acquired in conjunction with acquisitions. (B) Includes actual write-off of sales returns, price protection, uncollectible accounts receivable, net of recoveries, and foreign currency translation and other adjustments, and deferred taxes.

Document and Entity Information

Document and Entity Information (USD $)
	12 Months Ended Dec. 31, 2009	Feb. 22, 2010	Jun. 30, 2009
Document and Entity Information
Entity Registrant Name	Activision Blizzard, Inc.
Entity Central Index Key	0000718877
Document Type	10-K
Document Period End Date	2009-12-31
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$7,039,447,050
Entity Common Stock, Shares Outstanding		1,249,909,250