THQ 2012 Annual Report Download - page 44

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Accrued and Other Current Liabilities. Accrued and other current liabilities decreased $54.2 million, from $137.9 million at
March 31, 2011 to $83.7 million at March 31, 2012. The decrease was primarily due to payment of obligations.
Our liabilities at March 31, 2012 also consisted of:
Other long-term liabilities. Other long-term liabilities decreased $34.2 million, from $88.0 million at March 31, 2011 to $53.8
million at March 31, 2012. The decrease was primarily due to the negotiations with four of our kids' licensors which reduced
our minimum license guarantees, most of which were classified as long-term as of March 31, 2011.
Convertible Senior Notes. We issued the Notes on August 4, 2009 and the full principal amount of $100.0 million is
outstanding as of March 31, 2012 (see "Note 9— Debt" in the notes to the consolidated financial statements in Part II, Item 8).
Inflation
Our management currently believes that inflation has not had, and does not currently have, a material impact on continuing
operations.
Contractual Obligations
Guarantees and Commitments
A summary of annual minimum contractual obligations and commercial commitments as of March 31, 2012 is as follows
(amounts in thousands):
Contractual Obli
g
ations and Commercial Commitments
(
6
)
Fiscal
Years Ending
March 31,
License /
Software
Development
Commitments
(
1
)
Advertising
(
2
)
Leases
(
3
)
Debt
(
4
)
Other
(
5
)
Total
2013 $ 74,304 $ 15,634 $ 14,940 $
—
$ 4,061 $ 108,939
2014 20,429 4,056 14,088
—
4,062 42,635
2015 14,600 3,093 12,603 100,000 62 130,358
2016 7,651 2,961 7,727
—
—
18,339
2017 7,905 3,025 4,822
—
—
15,752
Thereafte
r
3,349 5,025 9,842
—
—
18,216
$ 128,238 $ 33,794 $ 64,022 $ 100,000 $ 8,185 $ 334,239
(1) Licenses and Software Development. We enter into contractual arrangements with third parties for the rights to exploit
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 contract commitments for such agreements in place as of March 31, 2012 are $128.2 million. License
commitments in the table above include $59.9 million of commitments payable to licensors that are included in both
"Accrued and other current liabilities" and "Other long-term liabilities" in our March 31, 2012 consolidated balance sheet
because the licensors do not have any remaining significant performance obligations.
(2) Advertising. We have certain minimum advertising commitments under many of our major license agreements. These
minimum commitments generally range from 3% to 10% of net sales related to the respective license. Included in the table
above in fiscal 2013, fiscal 2014, fiscal 2015, fiscal 2016, fiscal 2017, and thereafter, are advertising commitments of $1.3
million, $2.2 million, $2.3 million, $2.4 million, $2.5 million, and $4.7 million, respectively, for a total of $15.4 million of
advertising commitments that were cancelled in connection with the termination of the license agreement we had with
Zuffa to make video games based on their UFC content (see "Note 22 — Subsequent Events" in the notes to the
consolidated financial statements included in Part II, Item 8).
(3) Leases. We are committed under operating leases with lease termination dates through 2020. Most of our leases contain
rent escalations. Of these obligations, $1.8 million and $3.1 million are accrued and classified as "Accrued and other
current liabilities" and "Other long-term liabilities," respectively, in our March 31, 2012 consolidated balance sheet due to
the abandonment of certain lease obligations in connection with our realignment plans (see "Note 5 — Licenses and
Software Development" in the notes to the consolidated financial statements included in Part II, Item 8). We expect future
sublease rental income under non-cancellable agreements of approximately $2.5 million; this income is not contemplated