ATVI » Topics » 3. Acquisitions

These excerpts taken from the ATVI 10-K filed Feb 27, 2009.

2008 Acquisitions

        On September 11, 2008, we completed an acquisition of Freestyle Games, Ltd. ("Freestyle"), a premier United Kingdom based video game developer specializing in the music based genre. Additionally, on November 10, 2008, we acquired Budcat Creations, LLC ("Budcat"), a privately-owned video game developer based in Iowa City, Iowa. Budcat is an award-winning development studio with expertise on the Wii and NDS. Pro forma consolidated statements of operations for these acquisitions are not shown, as they would not differ materially from reported results.

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Table of Contents


ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

2008 Acquisitions



        On September 11, 2008, we completed an acquisition of Freestyle Games, Ltd. ("Freestyle"), a premier United Kingdom based
video game developer specializing in the music based genre. Additionally, on November 10, 2008, we acquired Budcat Creations, LLC ("Budcat"), a privately-owned video game developer based
in Iowa City, Iowa. Budcat is an award-winning development studio with expertise on the Wii and NDS. Pro forma consolidated statements of operations for these acquisitions are not shown, as they would
not differ materially from reported results.



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HREF="#bg18301a_main_toc">Table of Contents





ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (Continued)




These excerpts taken from the ATVI 8-K filed Nov 5, 2008.

2005 Acquisitions

 

Total purchase consideration was approximately $73.6 million. This amount includes additional consideration earned since the acquisition date.

 

As originally defined in each applicable acquisition agreement, additional consideration of up to $21.2 million may be payable to the former owners of the development studios acquired in 2005 based on future performance through March 2010. Amounts will be paid if and when certain financial targets are achieved or upon satisfaction of certain service commitments. Based on the studios’ current performance, management believes that most of the $21.2 million will be earned. During the six months ended June 30, 2008, Vivendi Games paid an additional $4.4 million and accrued an additional $1.7 million to be paid in the third quarter of 2008. Both these amounts were recorded as goodwill. In the six months ended June 30, 2008 and the year ended December 31, 2007, $0.5 million and $0.6 million of the $21.2 million were forfeited, respectively. As of June 30, 2008, the remaining balance amounts to $9.4 million and remains subject to future earnings targets, as defined. If earned, future payments will be recorded as additional goodwill.

 

2005 Acquisitions

 

During 2005, Vivendi Games acquired the net assets or all of the common stock of several development studios located in Canada, the U.S., and the U.K. These studios develop interactive entertainment software products (games) and related technologies. The acquisitions were accounted for as purchases under SFAS No. 141. Results from operations are included in the consolidated statements of operations from the date of acquisition.

 

Total purchase consideration was approximately $67.6 million, all of which was paid in cash. The following net assets were recognized resulting from these acquisitions (amounts in thousands):

 

Goodwill

 

$

46,000

 

Acquired developed software

 

9,560

 

Property and equipment

 

4,100

 

Other non-current assets

 

70

 

Contract termination (immediately charged to earnings)

 

1,000

 

Current net assets

 

9,350

 

Non-current deferred tax liabilities and other non-current liabilities

 

(2,520

)

Total Net Assets Recognized

 

$

67,560

 

 

Acquired developed software is being amortized over five years. Of the acquired goodwill, approximately $6.5 million is tax deductible. Prior to the studio acquisitions, Vivendi Games had entered into certain development and licensing agreements with certain of the studios. These agreements were terminated in connection with the respective acquisitions.

 

Additional consideration of up to $21.2 million may be payable to the former owners of the development studios acquired in 2005 based on future performance, as defined in each applicable acquisition agreement, through March 2010. Amounts will be paid if and when certain financial targets are achieved or upon satisfaction of certain service commitments. Based on the studio’s current performance, management believes that most part of the $21.2 million will be earned. As of December 31, 2007, Vivendi Games has expensed as compensation and paid a total of $4.6 million of the maximum contingent consideration of $21.2 million. As of December 31, 2007, $0.6 million of the $21.2 million was forfeited. The remaining balance of $16.0 million remains subject to future earnings targets or service obligations, as defined. If earned, future payments will be expensed as compensation or recorded as additional goodwill.

 

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Pro forma consolidated statements of operations for these acquisitions are not shown, as they would not differ materially from reported results.

 

2005 Acquisitions

 

During 2005, Vivendi Games acquired the net assets or all of the common stock of several development studios located in Canada, the U.S., and the U.K. These studios develop interactive entertainment software products (games) and related technologies. These acquisitions were accounted for as purchases under SFAS No. 141. Results from operations are included in the consolidated statements of operations from the date of acquisition.

 

17



 

Total purchase consideration was approximately $67.6 million, all of which was paid in cash. The following net assets were recognized resulting from these acquisitions (amounts in thousands):

 

Goodwill

 

$

46,000

 

Acquired developed software

 

9,560

 

Property and equipment

 

4,100

 

Other non-current assets

 

70

 

Contract termination (immediately charged to earnings)

 

1,000

 

Current net assets

 

9,350

 

Non-current deferred tax liabilities and other non-current liabilities

 

(2,520

)

Total Net Assets Recognized

 

$

67,560

 

 

Acquired developed software is being amortized over five years. Of the acquired goodwill, approximately $6.5 million is tax deductible. Prior to these studio acquisitions, Vivendi Games had entered into certain development and licensing agreements with certain of the studios. These agreements were terminated in connection with the respective acquisitions.

 

Additional consideration of up to $21.2 million may be payable to the former owners of the development studios acquired in 2005 based on future performance, as defined in each applicable acquisition agreement, through March 2010. Amounts will be paid if and when certain financial targets are achieved or upon satisfaction of certain service commitments. Based on the studios’ current performance, management believes that the full $21.2 million will not be earned. As of December 31, 2006, Vivendi Games has expensed as compensation $3.3 million of the maximum contingent consideration of $21.2 million. Of this expensed amount, $1.5 million had been paid. As of September 30, 2007, Vivendi Games has expensed as compensation and paid a total of $4.6 million of the maximum contingent consideration of $21.2 million. As of September 30, 2007, $0.6 million of the $21.2 million was forfeited. The remaining balance of $16.0 million remains subject to future earnings targets or service obligations, as defined. If earned, future payments will be expensed as compensation or recorded as additional goodwill.

 

Pro forma consolidated statements of operations for these acquisitions are not shown, as they would not differ materially from reported results.

 

2005 Acquisitions

 

During 2005, Vivendi Games acquired the net assets or all of the common stock of several development studios located in Canada, the U.S., and the U.K. These studios develop interactive entertainment software products (games) and related technologies. The acquisitions were accounted for as purchases under SFAS No. 141. Results from operations are included in the consolidated statements of operations from the date of acquisition.

 

Total purchase consideration was approximately $71.6 million, all of which was paid in cash. This amount includes additional consideration earned since the acquisition date. The following net assets were recognized resulting from these acquisitions (amounts in thousands):

 

Goodwill

 

$

50,069

 

Acquired developed software

 

9,560

 

Property and equipment

 

4,100

 

Other non-current assets

 

70

 

Contract termination (immediately charged to earnings)

 

1,000

 

Current net assets

 

9,350

 

Non-current deferred tax liabilities and other non-current liabilities

 

(2,520

)

Total Net Assets Recognized

 

$

71,629

 

 

Acquired developed software is being amortized over five years. Of the acquired goodwill, approximately $6.5 million is tax deductible. Prior to the studio acquisitions, Vivendi Games had entered into certain development

 

19



 

and licensing agreements with certain of the studios. These agreements were terminated in connection with the respective acquisitions.

 

As originally defined in each applicable acquisition agreement, additional consideration of up to $21.2 million may be payable to the former owners of the development studios acquired in 2005 based on future performance through March 2010. Amounts will be paid if and when certain financial targets are achieved or upon satisfaction of certain service commitments. Based on the studios’ current performance, management believes that most of the $21.2 million will be earned. As of December 31, 2007, Vivendi Games has expensed as compensation and paid a total of $4.6 million of the maximum contingent consideration of $21.2 million. During the three months ended March 31, 2008, Vivendi Games paid an additional $4.1 million, which was recorded as goodwill. In the three months ended March 31, 2008 and the year ended December 31, 2007, $0.5 million and $0.6 million of the $21.2 million were forfeited, respectively. As of March 31, 2008, the remaining balance of $11.4 million remains subject to future earnings targets, as defined. If earned, future payments will be recorded as additional goodwill.

 

Pro forma consolidated statements of operations for these acquisitions are not shown, as they would not differ materially from reported results.

 

This excerpt taken from the ATVI 10-Q filed Aug 7, 2007.

2.              Acquisitions

DemonWare

On May 11, 2007, Activision completed its acquisition of DemonWare, the leading provider of network middleware technologies for console and PC games headquartered in Dublin, Ireland. The acquisition is expected to enable Activision to gain efficiencies related to online game development and to position the company to take advantage of the growth in online gameplay that is expected to be driven by the next-generation consoles.  The acquisition is expected to be immaterial to fiscal 2008 earnings per share and cash flow. Additionally, pro forma consolidated statements of operations for this acquisition are not shown, as they would not differ materially from reported results.

RedOctane, Inc.

Activision acquired RedOctane, Inc. (“RedOctane”) on June 6, 2006.  RedOctane is a publisher, developer, and distributor of interactive entertainment software and peripherals, including the popular Guitar Hero music-based gaming franchise.  Under the terms of the merger agreement, additional contingent purchase consideration of $22.5 million was earned on June 30, 2007, as a result of the achievement of targeted net income levels.  This additional consideration has been recorded as an accrued liability as of the period ended June 30, 2007, and is payable in 1,214,864 shares of Activision common stock to be issued within 90 days to the former shareholders of RedOctane.  The additional purchase consideration of $22.5 million has been recorded as an increase to Goodwill.

This excerpt taken from the ATVI 10-K filed May 25, 2007.

4.         Acquisitions

During the three years ended March 31, 2006, we separately completed the acquisition of four privately held interactive software development companies.  We accounted for these acquisitions in accordance with SFAS No. 141, “Business Combinations.”  SFAS No. 141 addresses financial accounting and reporting for business combinations, requiring that the purchase method be used to account and report for all business combinations.  These acquisitions have further enabled us to implement our multi-platform development strategy by bolstering our internal product development capabilities for console systems and personal computers and strengthening our position in the first-person action, action/adventure, and action sports game categories.  A significant portion of the purchase price for all of these acquisitions was assigned to goodwill as the primary asset we acquired in each of the transactions was an assembled workforce with proven technical and design talent with a history of high quality product creation.  Pro forma consolidated statements of operations for these acquisitions are not shown, as they would not differ materially from reported results.

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This excerpt taken from the ATVI 10-Q filed Aug 4, 2005.

3.              Acquisitions

 

During the quarter ended June 30, 2005, we completed the acquisitions of two privately held interactive software development companies.  We accounted for these acquisitions in accordance with SFAS No. 141, “Business Combinations.”  SFAS No. 141 addresses financial accounting and reporting for business combinations, requiring that the purchase method be used to account and report for all business combinations.  These acquisitions have further enabled us to implement our multi-platform development strategy by bolstering our internal product development capabilities for console systems and personal computers and strengthening our position in the first-person action, action and action sports game categories.  A significant portion of the purchase price for these acquisitions was assigned to goodwill as the primary asset we acquired in each of the transactions was an assembled workforce with proven technical and design talent with a history of high quality product creation.  Pro forma consolidated statements of operations for these acquisitions are not shown, as they would not differ materially from reported results.  During the quarter ended June 30, 2004, we did not complete any acquisitions.

 

This excerpt taken from the ATVI 10-K filed Jun 9, 2005.

3.         Acquisitions

 

During the three years ended March 31, 2005, we separately completed the acquisition of four privately held interactive software development companies.  We accounted for these acquisitions in accordance with SFAS No. 141, “Business Combinations.”   SFAS No. 141 addresses financial accounting and reporting for business combinations, requiring that the purchase method be used to account and report for all business combinations.  These acquisitions have further enabled us to implement our multi-platform development strategy by bolstering our internal product development capabilities for console systems and personal computers and strengthening our position in the first-person action, action and action sports game categories.  A significant portion of the purchase price for all of these acquisitions was assigned to goodwill as the primary asset we acquired in each of the transactions was an assembled workforce with proven technical and design talent with a history of high quality product creation.  Pro forma consolidated statements of operations for these acquisitions are not shown, as they would not differ materially from reported results.

 

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