Recently Issued Accounting Pronouncements (Tables)

9 Months Ended

Sep. 30, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Adoption of the new revenue accounting standard impacted our condensed consolidated statement of operations for the three and nine months ended September 30, 2018, and our condensed consolidated balance sheet as of September 30, 2018 as follows (in millions, except per share data):



	For the Three Months Ended September 30, 2018
Condensed Consolidated Statement of Operations:	Under new revenue accounting standard			Under old revenue accounting standards			Increase (decrease) due to adoption of new revenue accounting standard
Net revenues
Product sales	$	263		$	269		$	(6	)
Subscription, licensing, and other revenues	1,249			1,226			23
Total net revenues	1,512			1,495			17

Costs and expenses
Cost of revenues—product sales:
Product costs	127			126			1
Software royalties, amortization, and intellectual property licenses	20			24			(4		)
Cost of revenues—subscription, licensing, and other revenues:
Game operations and distribution costs	257			257			—
Software royalties, amortization, and intellectual property licenses	109			109			—
Product development	263			263			—
Sales and marketing	263			263			—
General and administrative	208			208			—
Total costs and expenses	1,247			1,250			(3		)

Operating income	265			245			20
Interest and other expense (income), net	13			13			—
Loss on extinguishment of debt	40			40			—
Income before income tax expense (benefit)	212			192			20
Income tax expense (benefit)	(48		)	(57		)	9
Net income	$	260		$	249		$	11

Earnings per common share
Basic	$	0.34		$	0.33		$	0.01
Diluted	$	0.34		$	0.32		$	0.02



	For the Nine Months Ended September 30, 2018
Condensed Consolidated Statement of Operations:	Under new revenue accounting standard		Under old revenue accounting standards		Increase (decrease) due to adoption of new revenue accounting standard
Net revenues
Product sales	$	1,447	$	1,593	$	(146	)
Subscription, licensing, and other revenues	3,672		3,645		27
Total net revenues	5,119		5,238		(119		)

Costs and expenses
Cost of revenues—product sales:
Product costs	416		438		(22		)
Software royalties, amortization, and intellectual property licenses	214		232		(18		)
Cost of revenues—subscription, licensing, and other revenues:
Game operations and distribution costs	777		777		—
Software royalties, amortization, and intellectual property licenses	278		278		—
Product development	776		776		—
Sales and marketing	741		740		1
General and administrative	623		623		—
Total costs and expenses	3,825		3,864		(39		)

Operating income	1,294		1,374		(80		)
Interest and other expense (income), net	67		67		—
Loss on extinguishment of debt	40		40		—
Income before income tax expense	1,187		1,267		(80		)
Income tax expense	25		41		(16		)
Net income	$	1,162	$	1,226	$	(64	)

Earnings per common share
Basic	$	1.53	$	1.61	$	(0.08	)
Diluted	$	1.51	$	1.59	$	(0.08	)



	At September 30, 2018
Condensed Consolidated Balance Sheet:	Under new revenue accounting standard		Under old revenue accounting standards		Increase (decrease) due to adoption of new revenue accounting standard
Assets
Accounts receivable, net	$	641	$	637	$	4
Software development	348		350		(2		)
Other current assets	501		519		(18		)
Deferred income taxes, net	243		262		(19		)
Other assets	454		469		(15		)

Liabilities and Shareholders’ Equity
Deferred revenues	$	1,017	$	1,077	$	(60	)
Accrued expenses and other liabilities	1,053		1,056		(3		)
Other liabilities	991		1,005		(14		)
Shareholders’ equity	10,659		10,632		27

The cumulative effect adjustment recorded to our retained earnings was $88 million (see our condensed consolidated statements of changes in shareholders’ equity) and included the impact from the following adjustments to our condensed consolidated balance sheet at January 1, 2018 (amounts in millions):



Condensed Consolidated Balance Sheet:	Balance at December 31, 2017		Adjustments due to adoption of new revenue accounting standard			Balance at January 1, 2018
Assets
Accounts receivable, net	$	918	$	3		$	921
Software development	367		(20		)	347
Other current assets	476		(35		)	441
Deferred income taxes, net	459		(32		)	427
Other assets	440		4			444

Liabilities and Shareholders’ Equity
Deferred revenues	$	1,929	$	(194	)	$	1,735
Other liabilities	1,132		23			1,155
Shareholders’ equity	9,462		91			9,553