and it may be modified, suspended or discontinued at any time. During fiscal year 2013, we repurchased and
retired approximately 22 million shares of our common stock for approximately $278 million under this new
accepted in the United States ("U.S. GAAP"). The preparation of these Consolidated Financial Statements
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
contingent assets and liabilities, and revenue and expenses during the reporting periods. The policies discussed
below are considered by management to be critical because they are not only important to the portrayal of our
financial condition and results of operations, but also because application and interpretation of these policies
requires both management judgment and estimates of matters that are inherently uncertain and unknown. As a
result, actual results may differ materially from our estimates.
(1) video game consoles (such as the PLAYSTATION 3, Xbox 360 and WiiU) and PCs, (2) mobile devices (such
as the Apple iPhone and Google Android compatible phones), and (3) tablets and electronic readers (such as the
Apple iPad and Amazon Kindle). We evaluate revenue recognition based on the criteria set forth in FASB
Accounting Standards Codification ("ASC") 605, Revenue Recognition and ASC 985-605, Software: Revenue
Recognition. We classify our revenue as either product revenue or service and other revenue.
downloads, micro-transactions), and licensing of game software to third-parties. Product revenue also includes
revenue from mobile full game downloads that do not require our hosting support, and sales of tangible products
such as hardware, peripherals, or collectors' items.
cannot be played without an Internet connection). This includes (1) entitlements to content that are accessed
through hosting services (e.g., micro-transactions for Internet-based, social network and mobile games),
(2) massively multi-player online ("MMO") games (both software game and subscription sales), (3) subscriptions
for our Pogo-branded online game services, and (4) allocated service revenue from sales of software games with
an online service element (i.e., "matchmaking" service). Our other revenue includes advertising and non-
software licensing revenue.
mentioned above, our allocation of proceeds between product and service revenue for presentation purposes is
based on management's best estimate of the selling price of the matchmaking service with the residual value
allocated to product revenue. Our estimate of the selling price of the matchmaking service is comprised of
several factors including, but not limited to, prior selling prices for the matchmaking service, prices charged
separately by other third-party vendors for similar service offerings, and a cost-plus-margin approach. We review
the estimated selling price of the online matchmaking service on a regular basis and use this methodology
consistently to allocate revenue between product and service for software game sales with a matchmaking
conditions to deliver the related products or services must be present.