Activision 2012 Annual Report Download - page 38

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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
historically utilized debt financing as a source of cash flows although we may do so in the future.
Cash flows used in financing activities were lower for 2012 as compared to 2011, primarily due to decreased share repurchase
activities. Cash flows used in financing activities for the year ended December 31, 2012 primarily reflected an aggregate cash payment of
$204 million to holders of our common stock and restricted stock units in connection with our annual dividend. In addition, cash flows used in
financing activities for the year ended December 31, 2012 reflect the repurchase of $315 million of our common stock and the payment of
$16 million in taxes relating to the vesting of employees’ restricted stock rights. The repurchases and dividend payments were partially offset by
$33 million of proceeds from the issuance of shares of our common stock to employees in connection with stock option exercises.
Cash flows used in financing activities were lower for 2011 as compared to 2010, primarily due to decreased share repurchase
activities. Cash flows used in financing activities for the year ended December 31, 2011 primarily reflected an aggregate cash payment of
$194 million to holders of our common stock and restricted stock units in connection with our annual dividend. In addition, cash flows used in
financing activities for the year ended December 31, 2011 reflect the repurchase of $692 million of our common stock, as compared to the
repurchase of $959 million for the year ended December 31, 2010.
Other Liquidity and Capital Resources
Our primary sources of liquidity are cash and cash equivalents and investments and cash flows provided by operating activities. With
our cash and cash equivalents and investments of $4.4 billion and expected cash flows provided by operating activities, we believe that we have
sufficient liquidity to meet daily operations for the foreseeable future. We also believe that we have sufficient working capital ($3.6 billion at
December 31, 2012) to finance our operational requirements for at least the next twelve months, including purchases of inventory and equipment,
the development, production, marketing and sale of new products, the provision of customer service for our subscribers, the acquisition of
intellectual property rights for future products from third parties, and to fund our stock repurchase program and dividends.
As of December 31, 2012, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was
$2.6 billion, compared with $1.6 billion as of December 31, 2011. If these funds are needed in the future for our operations in the U.S., we would
accrue and pay the required U.S. taxes to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S.
and our current plans do not demonstrate a need to repatriate them to fund our U.S. operations.
We are considering, or may consider during 2013, substantial stock repurchases, dividends, acquisitions, licensing or other non-
ordinary course transactions, and significant debt financings relating thereto.
Capital Expenditures
We made capital expenditures of $73 million in 2012, as compared to $72 million in 2011. In 2013, we anticipate total capital
expenditures of approximately $85 million. Capital expenditures are expected to be primarily for computer hardware and software purchases.
Commitments
In the normal course of business, we enter into contractual arrangements with third-parties for non-cancelable operating lease
agreements for our offices, for the development of products, and for the rights to intellectual property. Under these agreements, we commit to
provide specified payments to a lessor, developer or intellectual property holder, as the case may be, based upon contractual arrangements. The
payments to third-party developers are generally conditioned upon the achievement by the developers of contractually specified development
milestones. Further, these payments to third-party developers and intellectual property holders typically are deemed to be advances and are
recoupable against future royalties earned by the developer or intellectual property holder based on the sale of the related game. Additionally, in
connection with certain intellectual property rights acquisitions and development agreements, we commit to spend specified amounts for
marketing support for the related game(s) which is to be developed or in which the intellectual property will be utilized. Assuming all contractual