THQ 2009 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2009 THQ annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

Guarantees and Commitments
A summary of annual minimum contractual obligations and commercial commitments as of March 31,
2009 is as follows (in thousands):
Contractual Obligations and Commercial Commitments(6)
License /
Fiscal Software Secured
Years Ending Development Credit
March 31, Commitments(1) Advertising(2) Leases(3) Lines(4) Other(5) Total
2010 ............. $ 79,909 $ 5,692 $15,541 $24,360 $3,231 $128,733
2011 ............. 51,508 4,722 14,402 — — 70,632
2012 ............. 13,860 3,572 11,994 — — 29,426
2013 ............. 6,600 3,172 8,749 — — 18,521
2014 ............. 2,000 2,379 7,759 — — 12,138
Thereafter ......... — — 9,232 — — 9,232
$153,877 $19,537 $67,677 $24,360 $3,231 $268,682
(1) Licenses and Software Development. We enter into contractual arrangements with third parties
for the rights to intellectual property and for the development of products. Under these
agreements, we commit to provide specified payments to an intellectual property holder or
developer. Assuming all contractual provisions are met, the total future minimum license and
software development commitments for contracts in place as of March 31, 2009 are
$153.9 million. License/software development commitments in the table above include
$30.1 million of commitments to licensors that are included in our consolidated balance sheet as
of March 31, 2009 because the licensors do not have any significant performance obligations to
us. These commitments were included in both current and long-term licenses and accrued
royalties.
(2) Advertising. We have certain minimum advertising commitments under most of our major
license agreements. These minimum commitments generally range from 2% to 12% of net sales
related to the respective license. We estimate that our minimum commitment for advertising in
fiscal 2010 will be $5.7 million.
(3) Leases. We are committed under operating leases with lease termination dates through 2015.
Most of our leases contain rent escalations. Of these obligations, $2.2 million and $2.8 million are
accrued and classified as short-term liabilities and long-term liabilities, respectively in the
accompanying consolidated balance sheet, due to abandonment of certain lease obligations
pursuant to our business realignment.
(4) Secured Credit Lines. In fiscal 2009 we obtained a line of credit with UBS and a margin account
at Wachovia Securities (now Wells Fargo & Company (‘‘Wells Fargo’’)). There were $21.4 million
and $3.0 million, respectively, outstanding on these secured credit lines as of March 31, 2009. See
‘‘Note 10—Secured Credit Lines’’ in the notes to the consolidated financial statements.
(5) Other. In fiscal 2008 and 2009 we entered into various international distribution agreements
with one to two year terms. Pursuant to the terms of these agreements, we had purchase
commitments of $2.4 million as of March 31, 2009. These commitments are included in the table
above and are not included in current liabilities in our March 31, 2009 consolidated balance
sheet.
Pursuant to the terms of our acquisition of Universomo there is additional consideration of
$0.8 million included in accrued and other current liabilities in our March 31, 2009 consolidated
balance sheet and included in the table above.
49