Electronic Arts 2006 Annual Report Download - page 130

As of March 31, 2006, 42 million was payable to Nintendo of Europe under the standby letter of credit, as
amended.
In August 2003, we provided an irrevocable standby letter of credit to 300 California Associates II, LLC
in replacement of our security deposit for oÇce space. The standby letter of credit guarantees performance
of our obligations to pay our lease commitment up to approximately $1 million. The standby letter of
credit expires in December 2006. As of March 31, 2006, we did not have a payable balance on this
standby letter of credit.
Development, Celebrity, League and Content Licenses: Payments and Commitments
The products we produce in our studios are designed and created by our employee designers, artists,
software programmers and by non-employee software developers (""independent artists'' or ""third-party
developers''). We typically advance development funds to the independent artists and third-party
developers during development of our games, usually in installment payments made upon the completion
of speciÑed development milestones. Contractually, these payments are generally considered advances
against subsequent royalties on the sales of the products. These terms are set forth in written agreements
entered into with the independent artists and third-party developers.
In addition, we have certain celebrity, league and content license contracts that contain minimum
guarantee payments and marketing commitments that are not dependent on any deliverables. Celebrities
and organizations with whom we have contracts include: FIFA, FIFPRO Foundation and UEFA
(professional soccer); NASCAR and ISC (stock car racing); National Basketball Association (profes-
sional basketball); PGA TOUR, Tiger Woods and Pebble Beach (professional golf); National Hockey
League and NHL Players' Association (professional hockey); Warner Bros. (Harry Potter, Batman and
Superman); New Line Productions and Saul Zaentz Company (The Lord of the Rings); Marvel
Enterprises (Ñghting); National Football League Properties, Arena Football League and PLAYERS Inc.
(professional football); Collegiate Licensing Company (collegiate football, basketball and baseball);
Simcoh (Def Jam); Viacom Consumer Products (The Godfather); Valve Corporation (Half-Life); ESPN
(content in EA SPORTS
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games); Twentieth Century Fox Licensing and Merchandising (The
Simpsons); Lamborghini, McLaren and Porsche (car licenses for Need for Speed); and mobile game
rights with PopCap Games and The Tetris Company. These developer and content license commitments
represent the sum of (1) the cash payments due under non-royalty-bearing licenses and services
agreements and (2) the minimum guaranteed 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.
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