Activision 2015 Annual Report Download - page 42

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LIBOR is subject to a floor of 0% and the base rate is subject to an effective floor of 1.00%. The applicable interest margin for
Tranche A Term Loans ranges from 1.50% to 2.25% for LIBOR borrowings and from 0.50% to 1.25% for base rate borrowings and is
determined by reference to a pricing grid based on the Company’s Consolidated Total Net Debt Ratio (as defined in the Credit
Agreement).
The Amendments require quarterly principal payments of 0.625% of the stated principal amount of the Tranche A Term Loans, with
increases to 1.250% starting on June 30, 2019 and 3.125% starting on June 30, 2020, with the remaining balance payable on the
Tranche A Term Loans’ scheduled maturity date of October 11, 2020. Voluntary prepayments of the Tranche A Term Loans are
permitted at any time, in minimum principal amounts, without premium or penalty.
The Tranche A Term Loans are subject to a financial maintenance covenant requiring the Company to maintain a maximum
Consolidated Total Net Debt Ratio (as defined in the Credit Agreement) of 4.00 to 1.00, which will decrease to 3.50 to 1.00 (I) after
the sixth full fiscal quarter after the Tranche A Term Loans are made or (II) if the Collateral Suspension occurs prior to the date falling
18 months after the Tranche A Term Loans are made, on the later of (x) the last day of the fourth full fiscal quarter after the Tranche A
Term Loans are made and (y) the last day of the fiscal quarter in which the Collateral Suspension occurs.
The Tranche A Term Loans are secured by the same collateral and guaranteed by the same guarantors that secure and guarantee the
existing Term Loans. The other terms of the Tranche A Term Loans are also generally the same as the terms of the existing Term
Loan.
Revolving Credit Facility As part of the Amendments, upon the closing of the King Acquisition, the Company’s existing revolving
credit facility under the Credit Agreement (as in effect prior to the closing of the King Acquisition) in an aggregate principal amount
of $250 million was replaced with a new revolving credit facility under the Credit Agreement in the same aggregate principal amount
(the “2015 Revolving Credit Facility”).
Borrowings under the 2015 Revolving Credit Facility may be borrowed, repaid and re-borrowed by the Company and are available for
working capital and other general corporate purposes. Up to $50 million of the 2015 Revolving Credit Facility may be used for letters
of credit.
The 2015 Revolving Credit Facility is scheduled to mature on October 11, 2020. Borrowings under the 2015 Revolving Credit Facility
bear interest, at the Company’s option, under the same terms as the Tranche A Term Loans. Additionally, the 2015 Revolving Credit
Facility is subject to the same financial maintenance covenant and is secured by the same collateral and guaranteed by the same
guarantors that secure and guarantee the Tranche A Term Loans. The other terms of the 2015 Revolving Credit Facility are generally
the same as the terms of the Revolver.
Debt Repayments
On February 2, 2016, the Board of Directors authorized repayments of up to $1.5 billion of our outstanding debt during 2016. On
February 25, 2016, we made a voluntary principal repayment of $500 million on our Term Loan, reducing the aggregate term loans
outstanding under the Credit Agreement, which includes the $2.3 billion of Tranche A Term Loans, to $3.7 billion.
Dividends
On February 2, 2016, our Board of Directors declared a cash dividend of $0.26 per common share, payable on May 11, 2016, to
shareholders of record at the close of business on March 30, 2016.
Capital Expenditures
We made capital expenditures of $111 million in 2015, as compared to $107 million in 2014. In 2016, we anticipate total capital
expenditures of approximately $155 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 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
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