Blizzard 2011 Annual Report Download - page 36

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Liquidity and Capital Resources
Sources of Liquidity (amounts in millions)
For the Years Ended December 31,
2011 2010
Increase
(Decrease)
2011 v 2010
Cash and cash equiv alents ........................................................................................................
.
$3,165 $2,812 $353
Short-term investments ............................................................................................................
.
360 696 (336)
$3,525 $3,508 $17
Percentage of total assets .........................................................................................................
.
27% 26%
For the Years Ended December 31,
2011 2010 2009
Increase
(Decrease)
2011 v 2010
Increase
(Decrease)
2010 v 2009
Cash flows provided by operating activities ...................................
.
$952 $1,376 $1,183 $(424) $193
Cash flows provided by (used in) investing activities ....................
.
266 (312) (443) 578 131
Cash flows used in financing activities ...........................................
.
(808) (1,053) (949) 245 (104)
Effect of foreign exchange rate changes .........................................
.
(57) 33 19 (90) 14
Net increase (decrease) in cash and cash equivalents .....................
.
$353 $44 $(190) $309 $234
Cash Flows Provided by Operating Activities
For 2011, the primary drivers of cash flows provided by operating activities included the collection of customer
receivables generated by the sale of our products and digital and subscription revenues, partially offset by payments to vendors
for the manufacture, distribution and marketing of our products, payments to third-party developers and intellectual property
holders, tax liabilities, and payments to our workforce. A significant operating use of our cash relates to our continued focus on
customer service for our subscribers, and investment in software development and intellectual property licenses.
Cash flows provided by operating activities were lower for 2011 as compared to 2010. Our source of cash inflow
varies with our release schedule. For example, Blizzard’s two major releases of StarCraft II and World of World: Cataclysm
during 2010 contributed to the higher cash inflow for 2010 as compared to 2011 as there was no major current year releases from
Blizzard. The lower cash from operating activities was also attributable to the increased use of cash in our operations, such as for
inventory, the payment of taxes, restructuring expenses, and operating expenses for which we had previously accrued.
Cash Flows Provided by (Used in) Investing Activities
The primary drivers of cash flows from investing activities have typically included capital expenditures, acquisitions
and the net effect of purchases and sales/maturities of short-term investments. Cash flows provided by investing activities were
higher for 2011 as compared to 2010, primarily due to increased proceeds from the maturity of investments, decreased purchases
of short-term investments and lower capital expenditures. Proceeds from the maturity of investments were $740 million, the
majority of which consisted of U.S. treasury and other government agency securities, while the purchase of short-term
investments totaled $417 million and capital expenditures, primarily related to property and equipment, were $72 million.
Cash Flows Used in Financing Activities
The primary drivers of cash flows used in financing activities have historically related to transactions involving our
common stock, including the issuance of shares of common stock to employees, payment of dividends and the repurchase of our
common stock. We have not utilized debt financing as a source of cash flows. Cash flows used in financing activities for the year
ended December 31, 2011 primarily reflected payment of a cash dividend and dividend equivalents totaling $194 million to
holders of our common stock and restricted stock units. In addition, cash flows used in financing activities for the year ended
December 31, 2011 reflect the repurchase of 59 million shares of our common stock for an aggregate of $670 million under the
2011 Stock Repurchase Program and the purchase of 1.8 million shares of our common stock for $22 million under the stock
repurchase program authorized by our Board of Directors on February 10, 2010, which expired on December 31, 2010.
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