Note 16: Commitments and Contingencies

Lease Commitments

Operating Leases

During the first half of 2015, we made the following changes to our operating leases:


•	We early terminated our operating lease of certain floors of our Redbox headquarters and recognized the fair value of the ongoing lease payments and other related costs through the effective date of termination, July 31, 2016, as of the cease use date, March 31, 2015. See Note 11: Restructuring for additional information; and


•	We entered into a new operating lease of 16,085 square feet of office space in Woodland Hills, California which expires May 31, 2022.

As of June 30, 2015, our future minimum lease payments, net of sublease income are as follows:



Dollars in thousands	Operating Leases⁽¹⁾
Remaining in 2015	$	8,875
2016	14,624
2017	10,718
2018	6,891
2019	6,123
Thereafter	11,682
Total minimum lease commitments	58,913
Less: sublease income	(1,955		)
Total minimum lease commitments, net	$	56,958


(1)	Includes all operating leases having an initial or remaining non-cancelable lease term in excess of one year.

Purchase commitments

Pursuant to the manufacturing and services agreement entered into as part of the NCR Asset Acquisition, Outerwall, Redbox or an affiliate were committed to purchase goods and services from NCR for a period of five years from June 22, 2012. At the end of the five-year period, if the aggregate amount paid in margin to NCR for goods and services delivered was to equal less than $25.0 million, Outerwall was to pay NCR the difference between such aggregate amount and $25.0 million. We made no purchases in the six months ended June 30, 2015. As of June 30, 2015, our remaining commitment is $15.8 million under this arrangement.

We have also entered into other certain miscellaneous purchase agreements in the normal course of business, which resulted in total purchase commitments of $41.9 million as of June 30, 2015.

Content License Agreements

On July 14, 2015, Sony elected to exercise its option to extend our existing content license agreement with them. This will extend the license period through September 30, 2016. See Note 20: Subsequent Events for additional information.

On June 5, 2015, Redbox entered into an amendment to the existing April 22, 2010, agreement with Twentieth Century Fox Home Entertainment LLC (“Fox”) that maintains a 28-day window on Blu-ray Disc^® and DVD titles through June 30, 2017, and includes a revenue sharing arrangement between Redbox and Fox.

On March 26, 2015, we entered into a revenue sharing agreement with Warner Home Video, a division of Warner Bros. Home Entertainment Inc., (the “Warner Agreement”) under which Redbox agrees to license minimum quantities of theatrical and direct-to-video titles for rental through March 31, 2017. The Warner Agreement maintains a 28-day window on such titles.

We have entered into certain license agreements to obtain content for movie and video game rentals. A summary of the estimated commitments in relation to these agreements as of June 30, 2015, is presented in the following table:



Dollars in thousands			Years Ended December 31,
Dollars in thousands	Total		Remaining in 2015		2016		2017
Fox	$	224,013	$	53,148	$	106,134	$	64,731
Warner	167,570		54,366		92,245		20,959
Lionsgate	91,707		44,225		47,482		—
Universal	45,806		37,952		7,854		—
Paramount	33,276		33,276		—		—
Sony⁽¹⁾	19,821		19,821		—		—
Total estimated commitments	$	582,193	$	242,788	$	253,715	$	85,690


(1)	Subsequent to quarter end and not included in this table, Sony elected to exercise its option to extend our existing content license agreement with them. This will extend the license period through September 30, 2016. See Note 20: Subsequent Events for additional information.

Letters of Credit

As of June 30, 2015, we had five irrevocable standby letters of credit that totaled $6.4 million. These standby letters of credit, which expire at various times through May 2016, are used to collateralize certain obligations to third parties. As of June 30, 2015, no amounts were outstanding under these standby letter of credit agreements.

Legal Matters

In October 2009, an Illinois resident, Laurie Piechur, individually and on behalf of all others similarly situated, filed a putative class action complaint against our Redbox subsidiary in the Circuit Court for the Twentieth Judicial Circuit, St. Clair County, Illinois. The plaintiff alleged that, among other things, Redbox charges consumers illegal and excessive late fees in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and that Redbox's rental terms violate the Illinois Rental Purchase Agreement Act or the Illinois Automatic Contract Renewal Act and the plaintiff is seeking monetary damages and other relief. In November 2009, Redbox removed the case to the U.S. District Court for the Southern District of Illinois. In February 2010, the District Court remanded the case to the Circuit Court for the Twentieth Judicial Circuit, St. Clair County, Illinois. In May 2010, the court denied Redbox's motion to dismiss the plaintiff's complaint. In November 2011, the plaintiff moved for class certification, and Redbox moved for summary judgment. The court denied Redbox's motion for summary judgment in February 2012. The plaintiff filed an amended complaint on April 19, 2012, and an amended motion for class certification on June 5, 2012. The court denied Redbox's motion to dismiss the amended complaint. The amended class certification motion was briefed and argued. At the hearing on plaintiff's amended motion for class certification, the plaintiff dismissed all claims but two and is pursuing only her claims under the Illinois Rental Purchase Agreement Act and the Illinois Automatic Contract Renewal Act. On May 21, 2013, the court denied plaintiff's amended class action motion. On January 29, 2014, the Illinois Supreme Court denied plaintiff’s petition for leave to appeal the trial court’s denial of class certification. Redbox has moved to dismiss all remaining claims on mootness grounds, and the Court granted Redbox’s motion on December 11, 2014. The plaintiffs appealed on January 7, 2015. We believe that the claims against us are without merit and intend to defend ourselves vigorously in this matter. Currently, no accrual has been established as it was not possible to estimate the possible loss or range of loss because this matter had not advanced to a stage where we could make any such estimate.