Blizzard 2005 Annual Report Download - page 47

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Cash Flows from Investing Activities
The฀ primary฀ drivers฀ of฀ cash฀ used฀ in฀ investing฀ activities฀ typically฀ have฀ included฀ capital฀ expenditures,฀ acquisitions฀ of฀ privately฀ held฀ interactive฀ software฀ development฀
companies฀and฀the฀net฀effect฀of฀purchases฀and฀sales/maturities฀of฀short-term฀investment฀vehicles.฀The฀goal฀of฀our฀short-term฀investments฀is฀to฀maximize฀return฀while฀
minimizing฀risk,฀maintaining฀liquidity,฀coordinating฀with฀anticipated฀working฀capital฀needs฀and฀providing฀for฀prudent฀investment฀diversification.
For฀the฀year฀ended฀March฀31,฀2005฀and฀2004,฀cash฀flows฀used฀in฀investing฀activities฀were฀$143.9฀million฀and฀$170.2฀million,฀respectively.฀For฀the฀year฀ended฀March฀31,฀2005,฀
cash฀flows฀used฀in฀investing฀activities฀were฀primarily฀the฀result฀of฀capital฀expenditures,฀cash฀paid฀for฀an฀acquisition,฀and฀the฀increase฀in฀short-term฀investments.฀We฀have฀
historically฀financed฀our฀acquisitions฀through฀the฀issuance฀of฀shares฀of฀common฀stock฀or฀a฀combination฀of฀common฀stock฀and฀cash.฀We฀will฀continue฀to฀evaluate฀potential฀
acquisition฀candidates฀as฀to฀the฀benefit฀they฀bring฀to฀us.
Cash Flows from Financing Activities
The฀primary฀drivers฀of฀cash฀provided฀by฀financing฀activities฀have฀related฀to฀transactions฀involving฀our฀common฀stock,฀including฀the฀issuance฀of฀shares฀of฀common฀stock฀
to฀employees฀and฀the฀public,฀the฀purchase฀of฀treasury฀shares,฀as฀well฀as฀the฀use฀of฀structured฀stock฀repurchase฀transactions.฀We฀have฀not฀utilized฀debt฀financing฀as฀a฀
significant฀source฀of฀cash฀flows.฀However,฀we฀do฀have฀available฀at฀certain฀of฀our฀international฀locations,฀credit฀facilities,฀which฀are฀described฀below฀in฀“Credit฀Facilities,”฀
that฀can฀be฀utilized฀if฀needed.
For฀the฀ year฀ended฀March฀31,฀2005฀and฀2004,฀cash฀flows฀from฀financing฀activities฀were฀$72.7฀million฀ and฀$117.6฀ million,฀ respectively.฀The฀cash฀provided฀ by฀financing฀
activities฀for฀the฀year฀ended฀March฀31,฀2005฀primarily฀is฀the฀result฀of฀the฀issuance฀of฀common฀stock฀related฀to฀employee฀stock฀option฀and฀stock฀purchase฀plans.฀During฀
fiscal฀2003,฀our฀Board฀of฀Directors฀authorized฀a฀buyback฀program฀under฀which฀we฀can฀repurchase฀up฀to฀$350.0฀million฀of฀our฀common฀stock.฀Under฀the฀program,฀shares฀
may฀be฀purchased฀as฀determined฀by฀management฀and฀within฀certain฀guidelines,฀from฀time฀to฀time,฀in฀the฀open฀market฀or฀in฀privately฀negotiated฀transactions,฀including฀
privately฀negotiated฀structured฀stock฀repurchase฀transactions฀and฀through฀transactions฀in฀the฀options฀markets.฀Depending฀on฀market฀conditions฀and฀other฀factors,฀these฀
purchases฀may฀be฀commenced฀or฀suspended฀at฀any฀time฀or฀from฀time฀to฀time฀without฀prior฀notice.฀In฀the฀past,฀we฀have฀entered฀into฀structured฀stock฀repurchase฀transactions฀
that฀were฀settled฀in฀cash฀or฀stock฀based฀on฀the฀market฀price฀of฀our฀common฀stock฀on฀the฀date฀of฀the฀settlement.฀Upon฀settlement,฀we฀either฀had฀our฀capital฀investment฀
returned฀with฀a฀premium฀or฀received฀shares฀of฀our฀common฀stock,฀depending,฀respectively,฀on฀whether฀the฀market฀price฀of฀our฀common฀stock฀was฀above฀or฀below฀a฀
pre-determined฀price฀agreed฀in฀ connection฀with฀each฀such฀ transaction.฀As฀of฀March฀31,฀2005,฀we฀had฀ approximately฀ $226.2฀million฀available฀ for฀utilization฀under฀the฀
buyback฀program฀and฀no฀outstanding฀structured฀stock฀repurchase฀transactions.฀We฀actively฀manage฀our฀capital฀structure฀as฀a฀component฀of฀our฀overall฀business฀strategy.฀
Accordingly,฀in฀the฀future,฀when฀we฀determine฀that฀market฀conditions฀are฀appropriate,฀we฀may฀seek฀to฀achieve฀long฀term฀value฀for฀the฀shareholders฀through,฀among฀other฀
things,฀new฀debt฀or฀equity฀financings฀or฀refinancings,฀share฀repurchases฀and฀other฀transactions฀involving฀our฀equity฀or฀debt฀securities.
Key Balance Sheet Accounts
Accounts Receivable
(Amounts in thousands) March 31, 2005 March 31, 2004
Increase/
(Decrease)
Gross฀accounts฀receivable $178,335 $109,605 $68,730
Net฀accounts฀receivable 109,144 62,577 46,567
The฀increase฀in฀gross฀accounts฀receivable฀was฀primarily฀the฀result฀of:
•฀ ฀Late฀fourth฀quarter฀North฀American฀releases฀of฀
THUG 2 Remix
฀and฀
Spider-Man 2
฀for฀the฀PSP.฀Both฀titles฀were฀released฀concurrently฀with฀the฀release฀of฀the฀PSP฀platform฀
in฀late฀March฀2005.
•฀ ฀The฀fourth฀quarter฀releases฀of฀three฀affiliate฀titles,฀
Mercenaries, Star Wars: Knights of the Old Republic II
฀and฀
Star Wars: Republic Commando,
฀in฀our฀European฀territories.
•฀ ฀A฀ continued฀increase฀in฀business฀of฀our฀UK฀distribution฀facility฀with฀large,฀mass-market฀customers.฀Large,฀mass-market฀customers฀typically฀have฀longer฀trading฀
terms฀than฀smaller,฀independent฀accounts.
page 45
Activision, Inc. — 2005 Annual Report