Electronic Arts 2004 Annual Report Download - page 59

The following table summarizes our minimum contractual obligations and commercial commitments as of
March 31, 2004, and the eÅect we expect them to have on our liquidity and cash Öow in future periods (in
thousands):
Commercial
Contractual Obligations Commitments
Fiscal Year Developer/ Bank and Letters
Ended Licensee Other of
March 31, Leases(1) Commitments Marketing Guarantees Credit Total
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 20,234 $ 42,691 $24,744 $2,234 $305 $ 90,208
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23,041 36,962 7,167 234 Ì 67,404
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17,254 12,789 4,152 204 Ì 34,399
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14,132 16,003 4,152 204 Ì 34,491
2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,816 10,503 4,152 203 Ì 24,674
ThereafterÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35,758 11,307 Ì 203 Ì 47,268
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $120,235 $130,255 $44,367 $3,282 $305 $298,444
(1) See discussion on operating leases in the ""OÅ-Balance Sheet Commitments'' section herein and Note 10
in the Notes to Consolidated Financial Statements, included in Item 8 hereof, for additional information.
The lease commitments disclosed above exclude commitments included in our restructuring activities for
contractual rental commitments of $31.3 million under real estate leases for unutilized oÇce space, oÅset by
$18.4 million of estimated future sub-lease income. These amounts were expensed in the periods of the
related restructuring and are included in our accrued liabilities reported on our Consolidated Balance Sheet as
of March 31, 2004. Please see Note 6 in the Notes to Consolidated Financial Statements, included in Item 8
hereof, for additional information.
Transactions with Related Parties
Transactions with Executive OÇcers
On June 24, 2002, we agreed to loan Warren Jenson $4,000,000, to be forgiven over four years based on his
continuing employment. Two million dollars of the note will be forgiven after two years employment (at
which time we will provide Mr. Jenson the funds required to oÅset the tax implications of the forgiveness),
and the remainder forgiven after four years. No additional funds will be provided to oÅset the tax
implications of the forgiveness of the second two million dollars. The loan does not bear interest. The entire
balance of the loan was outstanding as of June 1, 2004.
In April 2002, we agreed to pay certain taxes incurred by Bruce McMillan, Executive Vice President, Group
Studio General Manager, Worldwide Studios, arising from his temporary employment with us in the United
Kingdom. Mr. McMillan agreed to reimburse us for those payments upon receipt of his corresponding tax
refund from the Canadian taxing authorities. We subsequently paid approximately $168,704 and $32,931 in
October 2002 and April 2003, respectively, to the UK Inland Revenue for taxes incurred by Mr. McMillan. In
May 2003, Mr. McMillan became an executive oÇcer of Electronic Arts. As of January 22, 2004,
Mr. McMillan had repaid us the entire amount of the tax payments we made on his behalf.
OFF-BALANCE SHEET COMMITMENTS
Lease Commitments
We lease certain of our current facilities and certain equipment under non-cancelable operating lease
agreements. We are required to pay property taxes, insurance and normal maintenance costs for certain of our
facilities and will be required to pay any increases over the base year of these expenses on the remainder of
our facilities.
In February 1995, we entered into a build-to-suit lease with a third party for our headquarters facility in
Redwood City, California, which was reÑnanced with Keybank National Association in July 2001 and expires
in July 2006. We accounted for this arrangement as an operating lease in accordance with SFAS No. 13,
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