Blizzard 2003 Annual Report Download - page 38

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the fair value of common stock warrants granted is determined as of the measurement date and is capi-
talized, expensed and amortized consistent with our policies relating to software development and intel-
lectual property license costs.
Related Parties. As of March 31, 2002, we had $3.1 million of loans due from employees. The loans bore
interest at 6.75% and were primarily due from Activision executives. There were no such loans outstand-
ing as of March 31, 2003.
In August 2001, we elected to our Board of Directors an individual who is a partner in a law firm that has
provided legal services to Activision for more than ten years. For the years ended March 31, 2003 and
2002, the fees we paid to the law firm account for less than 1% of the firm’s total revenues. The rates
charged to us were at arm’s length, and we believe that the fees are competitive with the fees charged by
other law firms.
Recently Issued Accounting Standards. In January 2003, the Financial Accounting Standards Board
(“FASB”) issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure,
an amendment of FASB Statement No. 123.” SFAS No. 148 provides alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-based employee compensation.
It also requires disclosures in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on reported results. SFAS
No. 148 is effective for annual and interim periods beginning after December 15, 2002. We adopted SFAS
No. 148 in the fourth quarter of fiscal 2003. As we elected not to change to the fair value based method
of accounting for stock-based employee compensation, the adoption of SFAS No. 148 did not have an
impact upon our financial condition or results of operations.
In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments
and Hedging Activities.” SFAS No. 149 amends and clarifies the accounting guidance on derivative instru-
ments (including certain derivative instruments embedded in other contracts) and hedging activities that
fall within the scope of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.”
SFAS No. 149 is effective for all contracts entered into or modified after June 30, 2003, with certain excep-
tions, and for hedging relationships designated after June 30, 2003. The guidance is to be applied
prospectively. We are currently assessing the impact of SFAS No. 149 on our financial position and results
of operations.
In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Charac-
teristics of both Liabilities and Equity.” SFAS No. 150 changes the accounting guidance for certain financial
instruments that, under previous guidance, could be classified as equity or “mezzanine” equity by now
requiring those instruments to be classified as liabilities (or assets in some circumstances) in the statement
of financial position. Further, SFAS No. 150 requires disclosure regarding the terms of those instruments
and settlement alternatives. SFAS No. 150 is generally effective for all financial instruments entered into or
modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning
after June 15, 2003. We are currently assessing the impact of SFAS No. 150 on our financial position and
results of operations.
Reclassifications. Certain amounts in the consolidated financial statements have been reclassified to conform
with the current year’s presentation. These reclassifications had no effect on net income, shareholders’
equity or net increase in cash and cash equivalents.
2. Stock Split
In April 2003, the Board of Directors approved a three-for-two split of our outstanding common shares
effected in the form of a 50% stock dividend. The split is payable on June 6, 2003 to shareholders of
record as of May 16, 2003. The par value of our common stock will be maintained at the pre-split amount
of $.000001. The consolidated financial statements and Notes thereto, including all share and per share
data, have been restated as if the stock split had occurred as of the earliest period presented.
Activision 2003