Activision 2008 Annual Report Download - page 90

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76
limitation does not, however, affect Activision Blizzard’s ability to borrow under the revolving
credit facility or to incur certain types of limited debt. The revolving credit facility also imposes a
requirement on Activision Blizzard that the ratio of (i) consolidated indebtedness (net of certain
cash) to (ii) the sum of its shareholder’s equity plus consolidated indebtedness (net of certain cash)
not exceed 20.0% at any time.
No borrowings under revolving credit facility with Vivendi 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. 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, 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 years 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 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, 2008, we had $103 million of unrecognized tax benefits.
Legal Proceedings
On February 8, 2008, the Wayne County Employees’ Retirement System filed a lawsuit
challenging the Business Combination in the Delaware Court of Chancery. The suit is a putative