Electronic Arts 2004 Annual Report Download - page 93

Download and view the complete annual report

Please find page 93 of the 2004 Electronic Arts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 119

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119

(c) Accrued and Other Liabilities
Accrued and other liabilities as of March 31, 2004 and 2003 consisted of (in thousands):
As of March 31,
2004 2003
Accrued income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $225,878 $154,712
Accrued compensation and beneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 142,756 109,687
Other accrued expensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 134,000 111,878
Accrued royalties ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 82,631 77,681
Deferred revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22,901 10,589
Accrued and other liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $608,166 $464,547
(10) COMMITMENTS AND CONTINGENCIES
Lease Commitments and Residual Value Guarantees
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,
""Accounting for Leases'', as amended. Existing campus facilities developed in phase one comprise a total of
350,000 square feet and provide space for sales, marketing, administration and research and development
functions. We have an option to purchase the property (land and facilities) for a maximum of $145.0 million
or, at the end of the lease, to arrange for (i) an extension of the lease or (ii) sale of the property to a third
party while we retain an obligation to the owner for approximately 90 percent of the diÅerence between the
sale price and the guaranteed residual value of up to $128.9 million if the sales price is less than this amount,
subject to certain provisions of the lease.
In December 2000, we entered into a second build-to-suit lease with Keybank National Association for a Ñve-
year term beginning December 2000 to expand our Redwood City, California headquarters facilities and
develop adjacent property adding approximately 310,000 square feet to our campus. Construction was
completed in June 2002. We accounted for this arrangement as an operating lease in accordance with
SFAS No. 13, as amended. The facilities provide space for marketing, sales and research and development.
We have an option to purchase the property for a maximum of $130.0 million or, at the end of the lease, to
arrange for (i) an extension of the lease, or (ii) sale of the property to a third party while we retain an
obligation to the owner for approximately 90 percent of the diÅerence between the sale price and the
guaranteed residual value of up to $118.8 million if the sales price is less than this amount, subject to certain
provisions of the lease.
We believe the estimated fair values of both properties under these operating leases are in excess of their
respective guaranteed residual values as of March 31, 2004.
78