Electronic Arts 2005 Annual Report Download - page 139

minimum guarantee payments and marketing commitments that are not dependent on any deliverables.
Celebrities and organizations with whom we have contracts include: ESPN (content in EA SPORTS
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games); FIFA and UEFA (professional soccer); NASCAR (stock car racing); John Madden (professional
football); National Basketball Association (professional basketball); PGA TOUR (professional golf); Tiger
Woods (professional golf); National Hockey League and NHLPA (professional hockey); Warner Bros.
(Harry Potter, Batman and Superman); MGM/Danjaq (James Bond); New Line Productions (The Lord of
the Rings); National Football League, Arena Football League and PLAYERS Inc. (professional football);
Collegiate Licensing Company (collegiate football and basketball); ISC (stock car racing); Island Def Jam
(Ñghting); and Viacom Consumer Products (The Godfather). These developer and content license commit-
ments represent the sum of (i) the cash payments due under non-royalty-bearing licenses and services
agreements, and (ii) the minimum payments and advances against royalties due under royalty-bearing
licenses and services agreements, the majority of which are conditional upon performance by the counterparty.
These minimum guarantee payments and any related marketing commitments are included in the table below.
The following table summarizes our minimum contractual obligations and commercial commitments as of
March 31, 2005, and the eÅect we expect them to have on our liquidity and cash Öow in future periods (in
millions):
Contractual Obligations Commercial Commitments
Developer/ Bank and Letters
Fiscal Year Licensor Other of
Ended March 31, Leases Commitments(1) Marketing Guarantees Credit Total
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 30 $ 134 $ 33 $4 $1 $ 202
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24 131 34 Ì Ì 189
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20 128 30 Ì Ì 178
2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15 136 30 Ì Ì 181
2010 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12 124 31 Ì Ì 167
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35 830 197 Ì Ì 1,062
TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $136 $1,483 $355 $4 $1 $1,979
(1) Developer/licensor commitments include $50 million of commitments to developers or licensors that have
been included in both current and long-term assets and liabilities in our Consolidated Balance Sheets as of
March 31, 2005 because the developer or licensor does not have any performance obligations to us. Our
developer/licensor and marketing commitments increased signiÑcantly in the latter half of Ñscal 2005
primarily as a result of agreements we renewed with the National Football League and PLAYERS Inc., as
Annual Report
well as an exclusive, long-term agreement we entered into with ESPN Inc. (""ESPN'') for the
development and integrated marketing of ESPN content in EA SPORTS games beginning in calendar
2006. While our commitments with ESPN are not contractually due until Ñscal 2011 and beyond and are
presented as such in the table above, we anticipate paying these commitments earlier as we publish titles
associated with the agreement.
Total rent expense for all operating leases was $41 million, $27 million and $22 million, for the Ñscal years
ended March 31, 2005, 2004 and 2003, respectively.
The lease commitments disclosed above exclude commitments included in our restructuring activities for
contractual rental commitments of $23 million under real estate leases for unutilized oÇce space, oÅset by
$13 million of estimated future sub-lease income. These amounts were expensed in the periods of the related
restructuring and are included in our accrued and other liabilities reported on our Consolidated Balance
Sheets as of March 31, 2005. See Note 6 in the Notes to Consolidated Financial Statements.
Litigation
On July 29, 2004, a class action lawsuit, Kirschenbaum v. Electronic Arts Inc., was Ñled against us in Superior
Court in San Mateo, California. The complaint alleges that we improperly classiÑed ""Image Production
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