Electronic Arts 2009 Annual Report Download - page 103

Annual Report
We currently own a 418,000-square-foot product development studio facility in Burnaby, British Columbia,
Canada. We also own a 122,000-square-foot administrative, sales and development facility in Chertsey, England,
which we no longer occupy. In addition to the properties we own, we lease approximately 3.3 million square feet
of facilities, including significant leases for our corporate headquarters in Redwood City, California, our studios
in Los Angeles, California and Orlando, Florida, and our distribution center in Louisville, Kentucky. Our leased
space is summarized as follows (in square feet):
Purpose
North
America Europe Asia Total
Distribution ....................................... 250,000 125,508 — 375,508
Sales and Administrative ............................. 745,769 256,839 78,706 1,081,314
Research and Development ........................... 1,438,364 204,643 176,581 1,819,588
Total Leased Square Footage ..................... 2,434,133 586,990 255,287 3,276,410
Redwood City Headquarters
In February 1995, we entered into a build-to-suit lease (“Phase One Lease”) for our headquarters facilities in
Redwood City, California (“Phase One Facilities”). The Phase One Facilities comprise a total of approximately
350,000 square feet and provide space for sales, marketing, administration and research and development
functions. The Phase One Lease expires in January 2039, subject to early termination in the event the underlying
financing between the lessor and its lenders is not extended or if we chose to exercise our option to purchase the
facility.
The lessor has extended its loan financing underlying the Phase One Lease with its lenders on several occasions.
The financing currently extends through July 2009. Upon the expiration of the lease financing arrangement, the
terms of the Phase One Lease provide for our purchase of the Phase One Facilities for a purchase price of $132
million. However, at any time prior to the expiration of the financing in July 2009, we may re-negotiate the lease
and the related financing arrangement or negotiate an alternative financing arrangement.
In December 2000, we entered into a second build-to-suit lease (“Phase Two Lease”) for a five and one-half year
term beginning in December 2000 to expand our Redwood City, California, headquarters facilities and develop
adjacent property (“Phase Two Facilities”). Construction of the Phase Two Facilities was completed in June
2002. The Phase Two Facilities comprise a total of approximately 310,000 square feet and provide space for
sales, marketing, administration and research and development functions. The Phase Two Lease is subject to
early termination in the event the underlying financing between the lessor and its lenders is not extended or if we
chose to exercise our option to purchase the facility.
The lessor has extended the lease term and its loan financing underlying the Phase Two Lease with its lenders on
several occasions. Upon the expiration of the lease financing arrangement, the terms of the Phase Two Lease
provide for our purchase of the Phase Two Facilities for a purchase price of $115 million. However, at any time
prior to the expiration of the lease term and loan financing in July 2009, we may re-negotiate the lease and the
related financing arrangement or negotiate an alternative financing arrangement.
Guildford, Orlando, and Los Angeles Studios; Louisville Distribution Center
In February 2006, we entered into an agreement with an independent third party to lease a facility in Guildford,
Surrey, United Kingdom, which commenced in June 2006 and will expire in May 2016. The facility comprises a
total of approximately 95,000 square feet, which we use for administrative, sales and development functions. Our
rental obligation under this agreement is approximately $33 million over the initial ten-year term of the lease.
In June 2004, we entered into a lease agreement, amended in December 2005, with an independent third party for
a studio facility in Orlando, Florida. The lease commenced in January 2005 and expires in June 2010, with one
five-year option to extend the lease term. The campus facilities comprise a total of 140,000 square feet and
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