Activision 2012 Annual Report Download - page 37

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19
Foreign Exchange Impact
Changes in foreign exchange rates had a negative impact of $67 million and a positive impact of $49 million on Activision Blizzard’s
consolidated operating income in 2012 and 2011, respectively. The change is primarily due to the strengthening of the British pound, Euro and
Australian dollar average rates relative to the U.S. dollar.
Liquidity and Capital Resources
Sources of Liquidity (amounts in millions)
For the Years Ended December 31,
2012
2011
Increase
(Decrease)
2012 v 2011
Cash and cash equivalents ................................................................................................................................
$3,959
$3,165
$794
Short-term investments ..........................................................................................................................................
416
360
56
$4,375
$3,525
$850
Percentage of total assets................................................................................................................................
31%
27%
For the Years Ended December 31,
2012
2011
2010
Increase
(Decrease)
2012 v 2011
Increase
(Decrease)
2011 v 2010
Cash flows provided by operating activities ........................................................
$1,345
$952
$1,376
$393
$(424)
Cash flows provided by (used in) investing activities .........................................
(124)
266
(312)
(390)
578
Cash flows used in financing activities ................................................................
(497)
(808)
(1,053)
311
245
Effect of foreign exchange rate changes ..............................................................
70
(57)
33
127
(90)
Net increase in cash and cash equivalents ...........................................................
$794
$353
$44
$441
$309
Cash Flows Provided by Operating Activities
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 manufacturing, 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 higher for 2012 as compared to 2011, and were lower for 2011 as compared to 2010.
Our source of cash inflow varies with our release schedule. For example, Blizzard’s major releases of StarCraft II and World of Warcraft:
Cataclysm during 2010, and Blizzard’s major releases of Diablo III and World of Warcraft: Mist of Pandaria during 2012 contributed to the
higher cash inflows for 2010 and 2012 as compared to 2011, when there were no major releases from Blizzard. Additionally, the strong
performance of Activision’s Skylanders franchise and Call of Duty: Black Ops II contributed to strong operating cash flows in 2012.
Cash Flows Provided by (Used in) Investing Activities
The primary drivers of cash flows used in 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 lower for 2012 as compared to 2011, primarily due to decreased proceeds from the
maturity of investments, partially offset by higher purchases of short-term investments. In 2012, proceeds from the maturity of investments were
$444 million, the majority of which consisted of U.S. treasury and other government agency securities, while the purchase of short-term
investments totaled $503 million. Further, capital expenditures, primarily related to property and equipment, were $73 million.
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