Activision 2015 Annual Report Download - page 40

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Cash Flows Used in Financing Activities
The primary drivers of cash flows used in financing activities typically include the proceeds from, and repayments of, our long-term
debt, transactions involving our common stock, such as the issuance of shares of common stock to employees, the repurchase of our
common stock, and the payment of dividends.
Cash flows used in financing activities of $135 million were lower in 2015, as compared to $374 million used in 2014, primarily due
to $202 million of proceeds received in the settlement of the litigation related to the Purchase Transaction, and the lower partial
repayment of our Term Loan in 2015 of $250 million, as compared to the $375 million partial repayment of our Term Loan in 2014.
These were partially offset by lower proceeds from stock options exercised by our employees and the higher cash dividend payment
made during 2015, as compared to 2014.
Cash flows used in financing activities of $374 million were lower in 2014, as compared to $1,223 million used in 2013, primarily due
to the lack of share repurchases in 2014, offset by the $375 million partial repayment of our Term Loan. We also paid $147 million in
dividends and related dividend equivalents and $66 million for taxes in connection with the vesting of employees’ restricted stock
rights. Cash flows from financing activities for 2014 reflected proceeds of $175 million from the issuance of shares of our common
stock to employees in connection with stock option exercises.
Effect of Foreign Exchange Rate Changes
Changes in foreign exchange rates had a negative impact of $366 million, a negative impact of $396 million and a positive impact of
$102 million on our cash and cash equivalents for the years ended December 31, 2015, 2014, and 2013, respectively. The change is
primarily due to changes in the value of the U.S. dollar relative to the euro and British pound.
Other Liquidity and Capital Resources
Our primary sources of liquidity are typically cash and cash equivalents, investments, and cash flows provided by operating activities.
In addition, as described below, we have availability of $250 million, subject to certain restrictions, under a secured revolving credit
facility. With our cash and cash equivalents and short-term investments of $1.8 billion at December 31, 2015, and expected cash flows
provided by operating activities, we believe that we have sufficient liquidity to meet daily operations in the foreseeable future. We
also believe that we have sufficient working capital of $0.8 billion at December 31, 2015, to finance our operational and financing
requirements for at least the next twelve months, including: purchases of inventory and equipment; the development, production,
marketing and sale of new products; provision of customer service for our players; acquisition of intellectual property rights for future
products from third parties; funding of dividends; and payments related to debt obligations.
As of December 31, 2015, the amount of cash and cash equivalents held outside of the U.S. by our foreign subsidiaries was
$0.5 billion, as compared to $3.6 billion as of December 31, 2014. The decrease is due to the requirements under the Transaction
Agreement for the King Acquisition, which required us to deposit $3.6 billion in cash to be held in an escrow account until the earlier
of (i) the completion of the King Acquisition, or (ii) the termination of the Transaction Agreement. The cash was not accessible to the
Company for operating cash needs as its use was administratively restricted for use in the consummation of the King Acquisition. At
December 31, 2015, we recorded the balance of the escrow account as a non-current asset, “Cash in escrow,” in our Consolidated
Balance Sheet.
If the cash and cash equivalents held outside of the U.S. is 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.
Debt
On September 19, 2013, we issued, at par, $1.5 billion of 5.625% unsecured senior notes due September 2021 (the “2021 Notes”) and
$750 million of 6.125% unsecured senior notes due September 2023 (the “2023 Notes” and, together with the 2021 Notes, the
“Notes”). Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing on
March 15, 2014. As of December 31, 2015, the Notes had a carrying value of $2.2 billion.
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