Electronic Arts 2005 Annual Report Download - page 137

(c) Accrued and Other Liabilities
Accrued and other liabilities as of March 31, 2005 and 2004 consisted of (in millions):
As of
March 31,
2005 2004
Accrued income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 267 $ 226
Other accrued expensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 172 120
Accrued compensation and beneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 132 143
Accrued royalties ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88 118
Deferred revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35 23
Accrued and other liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 694 $ 630
(9) 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 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 $129 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
and one-half 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
Annual Report
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 sales, marketing, administration and research and
development functions. We have an option to purchase the property for a maximum of $130 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 $119 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, 2005.
81