Blizzard 2011 Annual Report Download - page 73

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17. Commitments and Contingencies
Credit Facilities
At December 31, 2011 and 2010, we maintained a $15 million and $22 million irrevocable standby letter of credit,
respectively. The standby letter of credit is required by one of our inventory manufacturers to qualify for payment terms on our
inventory purchases. Under the terms of this arrangement, we are required to maintain on deposit with the bank a compensating
balance, restricted as to use, of not less than the sum of the available amount of the letter of credit plus the aggregate amount of
any drawings under the letter of credit that have been honored thereunder, but not reimbursed. The letter of credit was undrawn
at December 31, 2011 and 2010.
At December 31, 2011 and 2010, our subsidiary located in Europe maintained an irrevocable standby letter of credit
of EUR 5 million ($7 million) and EUR 30 million ($40 million), respectively. The standby letter of credit is required by one of
our inventory manufacturers to qualify for payment terms on our inventory purchases. There were no amounts outstanding at
December 31, 2011 and 2010.
On April 29, 2008, Activision, Inc. entered into a senior unsecured credit agreement with Vivendi, as lender.
Borrowings under the agreement became available upon consummation of the Business Combination. The credit agreement
provided for a revolving credit facility of up to $475 million, bearing interest at LIBOR plus 1.20% per annum. Any unused
amount under the revolving credit facility was subject to a commitment fee of 0.42% per annum. No borrowings under revolving
credit facility with Vivendi were outstanding at December 31, 2009. Effective July 23, 2010, we terminated our unsecured credit
agreement.
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 the 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 based on the sale of the related game. Additionally, in connection with
certain intellectual property rights acquisitions and development agreements, we will commit to spend specified amounts for
marketing support for the related game(s) which is to be developed or in which the intellectual property will be utilized.
Assuming all contractual provisions are met, the total future minimum commitments for these and other contractual
arrangements in place at December 31, 2011 are scheduled to be paid as follows (amounts in millions):
Contractual Obligations(1)
Facility and
Equipment
Leases
Developer and
Intellectual
Properties Marketing Total
For the years ending December 31,
2012 ........................................................... $33 $108 $32 $173
2013 ........................................................... 30 49 — 79
2014 ........................................................... 27 16 — 43
2015 ........................................................... 18 — — 18
2016 ........................................................... 15 — — 15
Thereafter ................................................... 60 — — 60
Total ...................................................... $183 $173 $32 $388
(1) We have omitted uncertain tax liabilities from this table due to the inherent uncertainty regarding
the timing of potential issue resolution. Specifically, either (a) the underlying positions have not
been fully developed under audit to quantify at this time or, (b) the years relating to the issues for
certain jurisdictions are not currently under audit. At December 31, 2011, we had $154 million of
unrecognized tax benefits.
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