2K Sports 2008 Annual Report Download - page 60

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We have entered into various agreements in the ordinary course of business that require substantial cash
commitments over the next several years. Generally, these include:
• Agreements to acquire licenses to intellectual property such as trademarks, copyrights and
technology for use in the publishing, marketing and distribution of our software titles. Our licensing
and marketing commitments primarily reflect agreements with major sports leagues and players’
associations and expire at various times through October 2012;
• Contractual advances and royalty payments to third party software developers that expire at various
times through November 2010. Guaranteed minimum payments assume satisfactory performance;
• Operating leases, primarily related to occupancy, furniture and equipment, expiring at various times
through June 2015; and
• A distribution services agreement to outsource non-core elements (shipping, receiving, warehouse
management and related functions) of our publishing and distribution business to Ditan through
September 2013.
A summary of annual minimum contractual obligations and commitments as of October 31, 2008 is as
follows (in thousands of dollars):
Licensing
and Software Operating Distribution Line of
Fiscal year ending October 31, Marketing Development Leases Services credit Total
2009 $ 65,848 $51,524 $16,156 $ 3,833 $ — $137,361
2010 54,569 13,805 13,325 2,750 — 84,449
2011 59,659 1,120 11,398 1,500 — 73,677
2012 53,008 — 9,496 1,500 70,000 134,004
2013 — — 7,315 1,250 — 8,565
Thereafter — — 3,234 — — 3,234
Total $233,084 $66,449 $60,924 $10,833 $70,000 $441,290
In addition to the cash commitments above, we have also entered into acquisition agreements that contain
provisions for us to pay contingent cash consideration, typically contingent on the acquired company
achieving certain financial, unit sales, or performance conditions. The amount and timing of these
payments are currently not fixed or determinable. See Note 5 to the Consolidated Financial Statements for
a full discussion of our potential acquisition commitments.
At October 31, 2008, the Company had unrecognized tax benefits of $26.4 million for which we were
unable to make a reasonable reliable estimate of the period in which these liabilities will be settled with the
respective tax authorities. Thus, these liabilities have not been included in the contractual obligations table.
See Note 14 of Notes to Consolidated Financial Statements for additional information.
We believe our current cash and cash equivalents and projected cash flow from operations, along with
availability under our Amended Credit Agreement, will provide us with sufficient liquidity to satisfy our
cash requirements for working capital, capital expenditures and commitments through at least the next
12 months.
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