Activision 2008 Annual Report Download - page 44

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30
Exchange Act. Our management, with the participation of our principal executive officer and
principal financial officer, conducted an evaluation of the effectiveness, as of December 31, 2008,
of our internal control over financial reporting using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—
Integrated Framework. Based on this evaluation, our management concluded that our internal
control over financial reporting was effective as of December 31, 2008.
Management excluded the internal control over financial reporting of Vivendi
Games, Inc., which was acquired by the Company during 2008 in a purchase business
combination, from its assessment of the Company’s internal control over financial reporting as of
December 31, 2008. The acquired Vivendi Games, Inc. businesses, which includes Vivendi
Games’ subsidiary Blizzard Entertainment, Inc., and business units and divisions that the
Company has exited or is winding down such as Sierra Online and Vivendi Games Mobile,
represented approximately 4% of the Company’s consolidated total assets as of December 31,
2008 and 46% of its consolidated net revenues for the year then ended.
Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risks that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies and procedures may deteriorate.
The effectiveness of our internal control over financial reporting as of December 31,
2008 has been audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report included in this Annual Report.
4) Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting during
the most recent fiscal quarter that have materially affected or are reasonably likely to materially
affect our internal control over financial reporting.
5) Other Information
As noted above and described in more detail in Note 1 to the Consolidated Financial
Statements, during the year ended December 31, 2008, the Company completed its Business
Combination with Vivendi Games.
Prior to the consummation of the Business Combination on July 9, 2008, Vivendi Games
was a wholly owned subsidiary of Vivendi S.A. As a wholly owned subsidiary operating as a
business unit within the Vivendi S.A. group, Vivendi Games had not historically prepared
financial statements for separate stand-alone purposes, had its taxable income processed within the
Vivendi U.S. tax returns and did not maintain an external financial reporting group or tax group.
Internal controls were determined to be adequate to comply with Vivendi S.A.’s internal reporting
requirements under International Financial Reporting Standards. For purposes of inclusion in
Activision’s proxy statement related to the Business Combination, Vivendi Games prepared
U.S. GAAP stand-alone financial statements for the fiscal years ended December 31, 2007 and
2006, and these stand-alone financial statements were issued after the announcement of the
transaction. As previously disclosed, it was determined that the following matters constituted
material weaknesses as it related to those stand-alone financial statements. A material weakness is