Activision 2008 Annual Report Download - page 39

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25
At December 31, 2008, we maintained a $35 million irrevocable standby letter of credit
required by one of our inventory manufacturers to qualify for payment terms on our inventory
purchases. The letter of credit was undrawn at December 31, 2008.
At December 31, 2008, our publishing subsidiary located in the UK maintained a EUR
25 million ($35 million) irrevocable standby letter of credit. The standby letter of credit is required
by one of our inventory manufacturers to qualify for payment terms on our inventory purchases.
The standby letter of credit does not require a compensating balance, is collateralized by
substantially all of the assets of the subsidiary and expires in February 2009. No borrowings were
outstanding at December 31, 2008.
On April 29, 2008, Activision, Inc. entered a senior unsecured credit agreement with
Vivendi (as lender). At December 31, 2008, the credit agreement provides for a revolving credit
facility of up to $475 million. No borrowings were outstanding at December 31, 2008.
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 (“IP”). 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
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, 2008 are scheduled to be paid as follows (amounts in
millions):
Contractual Obligations(1)
Facility
and
equipment
leases Developer
and IP Marketing Total
For the year ending December 31,
2009 ..................................................................................................... $38 $111 $45 $194
2010 ..................................................................................................... 33 46 14 93
2011 ..................................................................................................... 21 17 13 51
2012 ..................................................................................................... 19 22 — 41
2013 ..................................................................................................... 15 16 — 31
Thereafter............................................................................................. 42 22 — 64
Total................................................................................................. $168 $234 $72 $474
(1) We have omitted FIN 48 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 enough developed under audit to quantify at this time or,