Activision 2008 Annual Report Download - page 38

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24
our ARS held through UBS at par value, which is defined as the price equal to the liquidation
preference of the ARS plus accrued but unpaid dividends or interest, at any time during the period
of June 30, 2010 through July 2, 2012. Conversely, UBS has the right, in its discretion, to
purchase or sell our ARS at any time until July 2, 2012, so long as we receive payment at par
value upon any sale or disposition. If auctions continue to fail, we expect to sell our ARS under
the Rights. However, if the Rights are not exercised before July 2, 2012 they will expire and UBS
will have no further rights or obligation to buy our ARS. So long as we hold our ARS, they will
continue to accrue interest as determined by the auction process or the terms of the ARS if the
auction process fails.
UBS’s obligations under the Rights are not secured by its assets and do not require UBS
to obtain any financing to support its performance obligations under the Rights. UBS has
disclaimed any assurance that it will have sufficient financial resources to satisfy its obligations
under the Rights.
The fair value of auction rate securities through UBS and Citi totaled $55 million and
$23 million, respectively, at December 31, 2008.
Based on our other available cash and expected operating cash flows and financing, we
do not anticipate that the potential lack of liquidity on these investments will affect our ability to
execute our current business plan.
Cash Flows from Financing Activities
The primary drivers of cash flows provided by financing activities have historically
related to transactions involving our common stock, including the issuance of our common stock
to employees and the public and the purchase of treasury shares. We have not utilized debt
financing as a significant source of cash flows. However, if needed, we may access and utilize the
credit facilities that are described in “Credit Facilities” in Note 18 of the Notes to Consolidated
Financial Statements.
Capital Requirements
For the year ending December 31, 2009, we anticipate total capital expenditures of
approximately $118 million. Capital expenditures will be primarily for computer hardware and
software purchases and various corporate projects.
Credit Facilities
We have revolving credit facilities with our Centresoft subsidiary located in the UK (the
“UK Facility”) and our NBG subsidiary located in Germany (the “German Facility”). The UK
Facility provides Centresoft with the ability to borrow up to 12 million Great British Pound
Sterling (“GBP”) ($18 million), including issuing letters of credit, on a revolving basis at
December 31, 2008. The German Facility provides for revolving loans up to 1 million Euro
(“EUR”) ($1 million) at December 31, 2008. No borrowings were outstanding against the UK
Facility or the German Facility at December 31, 2008.