Electronic Arts 2008 Annual Report Download - page 129

Line Productions and Saul Zaentz Company (The Lord of the Rings); Red Bear Inc. (John Madden); National
Football League Properties and PLAYERS Inc. (professional football); Collegiate Licensing Company (colle-
giate football and basketball); Viacom Consumer Products (The Godfather); ESPN (content in EA SPORTS
TM
games); Twentieth Century Fox Licensing and Merchandising (The Simpsons); and Hasbro, Inc. (a wide array
of Hasbro intellectual properties). 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 agree-
ments, 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, 2008, and the effect we expect them to have on our liquidity and cash flow in future periods (in
millions):
Fiscal Year Ending March 31, Leases
(1)
Developer/
Licensor
Commitments
(2)
Marketing
Letter of Credit,
Bank and Other
Guarantees Total
Contractual Obligations
Commercial
Commitments
2009 ............................. $ 62 $ 176 $ 66 $ 6 $ 310
2010 ............................. 50 183 42 — 275
2011 ............................. 40 298 38 — 376
2012 ............................. 33 147 38 — 218
2013 ............................. 26 134 38 — 198
Thereafter ......................... 53 612 155 — 820
Total ......................... $264 $1,550 $377 $ 6 $2,197
(1)
See discussion on operating leases in the “Off-Balance Sheet Commitments” section below for additional
information. Lease commitments include contractual rental commitments of $13 million under real estate
leases for unutilized office space resulting from our restructuring activities. These amounts, net of esti-
mated future sub-lease income, were expensed in the periods of the related restructuring and are included
in our accrued and other current liabilities reported on our Consolidated Balance Sheets as of March 31,
2008. See Note 6 of the Notes to Consolidated Financial Statements.
(2)
Developer/licensor commitments include $10 million of commitments to developers or licensors that have
been recorded in current and long-term liabilities and a corresponding amount in current and long-term
assets in our Consolidated Balance Sheets as of March 31, 2008 because payment is not contingent upon
performance by the developer or licensor.
The amounts represented in the table above reflect our minimal cash obligations for the respective fiscal years,
but do not necessarily represent the periods in which they will be expensed in our Consolidated Financial
Statements.
In addition to what is included in the table above, as discussed in Note 10 of the Notes to Consolidated
Financial Statements, we have adopted the provisions of FIN No. 48. As of March 31, 2008, we had a liability
for unrecognized tax benefits and an accrual for the payment of related interest totaling $360 million, of which
approximately $41 million is offset by prior cash deposits to tax authorities for issues pending resolution. For
the remaining liability, we are unable to make a reasonably reliable estimate of when cash settlement with a
taxing authority will occur.
Related Person Transaction
Prior to becoming Chief Executive Officer of Electronic Arts, John Riccitiello was a Founder and Managing
Director of Elevation Partners, L.P., and also served as Chief Executive Officer of VGH, which we acquired in
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