Commitments and Contingencies

A summary of annual minimum contractual obligations and commercial commitments as of December 31, 2011 is as follows (amounts in thousands):



	Contractual Obligations and Commercial Commitments (6)
Fiscal Years Ending March 31,	License / Software Development Commitments (1)		Advertising (2)		Leases (3)		Debt (4)		Other (5)		Total
Remainder of 2012	$	49,894	$	5,643	$	3,825	$	—	$	146	$	59,508
2013	79,454		20,580		14,880		—		4,000		118,914
2014	20,012		4,716		13,953		—		4,000		42,681
2015	16,619		589		12,501		100,000		—		129,709
2016	10,000		500		7,589		—		—		18,089
Thereafter	19,904		875		14,376		—		—		35,155
	$	195,883	$	32,903	$	67,124	$	100,000	$	8,146	$	404,056

(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 December 31, 2011 are $195.9 million. Of these obligations, $6.0 million is accrued and classified as "Accrued and other current liabilities" in our December 31, 2011 condensed consolidated balance sheet related to the abandonment of a license in connection with our fiscal 2012 second quarter realignment plan (see "Note 5 — Restructuring and Other Charges"). Additionally, license commitments in the table above include $113.5 million of commitments payable to licensors that are included in both "Accrued and other current liabilities" and "Other long-term liabilities" in our December 31, 2011 condensed consolidated balance sheet because the licensors do not have any remaining significant performance obligations. Subsequent to December 31, 2011, we entered into agreements with two of our licensors that resulted in a reduction of our future commitments contained in the table above related to certain of our licenses (see "Note 15 — Subsequent Events" for further details).


(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.

(3)

Leases. We are committed under operating leases with lease termination dates through 2020. Most of our leases contain rent escalations. Of these obligations, $1.5 million and $2.9 million are accrued and classified as "Accrued and other current liabilities" and "Other long-term liabilities," respectively, in our December 31, 2011 condensed consolidated balance sheet due to the abandonment of certain lease obligations in connection with our realignment plans (see "Note 5 — Restructuring and Other Charges"). We expect future sublease rental income under non-cancellable agreements of approximately $2.7 million; this income is not contemplated in the lease commitments shown in the table above.

(4)

Debt. We issued the Notes on August 4, 2009. The Notes pay interest semiannually, in arrears on February 15 and August 15 of each year, beginning February 15, 2010, through maturity and are convertible at each holder's option at any time prior to the close of business on the trading day immediately preceding the maturity date. Absent any conversions or required repurchases of the Notes, we expect to pay $2.5 million in the remainder of fiscal 2012, $5.0 million in each of the fiscal years 2013 and 2014, and $2.5 million in fiscal 2015, for an aggregate of $15.0 million in interest payments over the remaining term of the Notes (see "Note 6 — Debt").

(5)

Other. As discussed more fully in "Note 18 — Joint Venture and Settlement Agreements" in the notes to the consolidated financial statements in our 2011 10-K, amounts payable to Jakks totaling $8.0 million are reflected in the table above. The present value of these amounts is included in "Accrued and other current liabilities" and "Other long-term liabilities" in our condensed consolidated balance sheet at December 31, 2011 (see "Note 2 — Balance Sheet Details"). The remaining other commitments included in the table above are also included as current or long-term liabilities in our December 31, 2011 condensed consolidated balance sheet.

(6)

We have omitted unrecognized tax benefits from this table due to the inherent uncertainty regarding the timing and amount of certain payments related to these unrecognized tax benefits. The underlying positions have not been fully developed under audit to quantify at this time. At December 31, 2011, we had $3.8 million of unrecognized tax benefits. See "Note 9 — Income Taxes" for further information regarding the unrecognized tax benefits.

Manufacturer Indemnification. We must indemnify the platform manufacturers (Microsoft, Nintendo, Sony) of our games with respect to all loss, liability and expenses resulting from any claim against such manufacturer involving the development, marketing, sale or use of our games, including any claims for copyright or trademark infringement brought against such manufacturer. As a result, we bear a risk that the properties upon which the titles of our games are based, or that the information and technology licensed from others and incorporated into the products, may infringe the rights of third parties. Our agreements with our third-party software developers and property licensors typically provide indemnification rights for us with respect to certain matters. However, if a manufacturer brings a claim against us for indemnification, the developers or licensors may not have sufficient resources to, in turn, indemnify us.

Indemnity Agreements. We have entered into indemnification agreements with the members of our Board of Directors, our Chief Executive Officer and our Chief Financial Officer, to provide a contractual right of indemnification to such persons to the extent permitted by law against any and all liabilities, costs, expenses, amounts paid in settlement and damages incurred by any such person as a result of any lawsuit, or any judicial, administrative or investigative proceeding in which such person is sued as a result of service as a member of our Board of Directors, as Chief Executive Officer or as Chief Financial Officer. The indemnification agreements provide specific procedures and time frames with respect to requests for indemnification and clarify the benefits and remedies available to the indemnitees in the event of an indemnification request.

Litigation. We are subject to ordinary routine claims and litigation incidental to our business. We do not believe that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on our financial position or results of operations.