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48
Inventory. Inventory decreased $1.2millionin fiscal 2007, from $28.6 million at March 31, 2006 to
$27.4 million at March31, 2007. Thedecreasein inventory is primarily dueto increased focus on inventory
processes andan increase in catalogsales. Inventoryturns on a rolling twelve month basis were 10 at
March 31, 2007 and 2006, respectively.
Licenses. Licenses increased $9.6 million in fiscal2007, from $81.5million at March31, 2006 to
$91.1 million at March 31, 2007. The increase in licenses is due to the acquisitionof new licenses during
fiscal 2007, partially offset by amortization of our existing licenses.
Software Development. Software development increased $55.2 million in fiscal2007,from $109.1 million
at March 31, 2006 to $164.3 million at March 31, 2007. Theincrease in software development is primarily
theresult of our investment in newgeneration cross-platform titles with higher development costs which
are scheduled to be released in fiscal 2008 and beyond.
Accrued and OtherCurrent Liabilities. Accrued and othercurrent liabilitiesincreased $32.5 million in
fiscal 2007, from $110.9 million at March31, 2006 to $143.4million at March 31, 2007. The increase in
accrued and other current liabilities is primarilydue to the withholding of payments due our venture
partner as well as an increase in accrued compensation.
Inflation
Our management currently believes that inflation hasnot had a material impact on continuingoperations.
Financial Condition
We believethe existingcash, cash equivalents, short-term investments, and cash generatedfrom operations
will be sufficient to meetour operating requirements for at least thenext twelve months, including working
capital requirements, capital expenditures and potential future acquisitions or strategic investments. We
maychooseatanytime to raise additionalcapital to strengthenour cash position,facilitate expansion,
pursue strategic investments or to take advantage of business opportunities as they arise.
Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties described in
Item1A“Risk Factors” in this Annual Report on Form 10-K.
Guarantees and Commitments
Asummary of annual minimum contractual obligations and commercial commitments as of March 31,
2007 is as follows (in thousands):
ContractualObligations and CommercialCommitments
License /
Fiscal Software
Years Ending Development Letters of
March 31, Commitments(1)Advertising(2) Leases(3) Credit(4) Total
2008 .................... $ 95,642 $14,078 $14,206 $22,699 $146,625
2009 .................... 49,294 14,034 13,669 —76,997
2010 .................... 43,115 14,815 13,151 —71,081
2011 .................... 13,850 9,678 12,558 —36,086
2012 .................... 850 1,461 10,637 —12,948
Thereafter ............... 1,100 2,557 23,044 —26,701
$203,851 $56,623 $87,265 $22,699 $370,438
(1) Licenses and SoftwareDevelopment.We enter into contractual agreements with third parties forthe
rights to intellectual property and for the development of products. Under these agreements, we
commit to provide specified payments to an intellectualproperty holder or developer. Assuming all