THQ 2009 Annual Report Download - page 98

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• We are responsible for the day-to-day operations of the venture. We are responsible for
development, sales and distribution of WWE-licensed games, and JAKKS is responsible for the
approval process and other relationship matters with WWE.
For financial reporting purposes, we are deemed to control the venture; therefore, all venture operating
results are consolidated with our results.
In November 2001, through the venture with JAKKS, we entered into an amendment to expand the WWE
license to include exclusive rights to other wrestling content produced by the WWE through December
2014. In exchange for these rights we paid a minimum guarantee to WWE that has already been recouped.
We are currently involved in litigation with WWE and JAKKS with respect to the license and the preferred
payment. See ‘‘Note 21—Commitments and Contingencies—Litigation.’’
19. Commitments and Contingencies
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.
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