Blizzard 2009 Annual Report Download - page 60

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48
3.Acquisitions
ReverseAcquisition
TheBusinessCombination(SeeNote1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July9,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3.22yearsto4.71years,
(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