Electronic Arts 2009 Annual Report Download - page 135

Annual Report
August 18, 2008, we allowed the tender offer to expire and on September 14, 2008, we announced that we had
terminated discussions with Take-Two. On September 26, 2008, pursuant to the terms of the funding, we
received a notice from the financial institutions that had committed to provide us with the funding that, in light of
our decision not to make a proposal to acquire Take-Two, their commitment to provide the funding had
terminated.
The loan financing arrangements supporting our Redwood City headquarters leases, described in the “Off-
Balance Sheet Commitments” section below, are scheduled to expire in July 2009. Upon the expiration of the
lease financing arrangements, the terms of the leases provide for our purchase of the facilities for a purchase
price of approximately $250 million. However, at any time prior to the expiration of the financing, we may
re-negotiate the leases and the related financing arrangements or negotiate an alternative financing arrangement.
As of March 31, 2009, approximately $925 million of our cash, cash equivalents, short-term investments and
marketable equity securities that was generated from operations was domiciled in foreign tax jurisdictions. While
we have no plans to repatriate these funds to the United States in the short term, if we choose to do so, we would
be required to accrue and pay additional taxes on any portion of the repatriation where no United States income
tax had been previously provided.
We have a “shelf” registration statement on Form S-3 on file with the SEC. This shelf registration statement,
which includes a base prospectus, allows us at any time to offer any combination of securities described in the
prospectus in one or more offerings. Unless otherwise specified in a prospectus supplement accompanying the
base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the shelf
registration statement for general corporate purposes, including for working capital, financing capital
expenditures, research and development, marketing and distribution efforts and, if opportunities arise, for
acquisitions or strategic alliances. Pending such uses, we may invest the net proceeds in interest-bearing
securities. In addition, we may conduct concurrent or other financings at any time.
Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties including, but not
limited to, those related to customer demand and acceptance of our products on new platforms and new versions
of our products on existing platforms, our ability to collect our accounts receivable as they become due,
successfully achieving our product release schedules and attaining our forecasted sales objectives, the impact of
acquisitions and other strategic transactions in which we may engage, the impact of competition, economic
conditions in the United States and abroad, the seasonal and cyclical nature of our business and operating results,
risks of product returns and the other risks described in the “Risk Factors” section, included in Part I, Item 1A of
this report.
Contractual Obligations and Commercial Commitments
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 specified 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 may not be dependent on any deliverables. Celebrities and
organizations with whom we have contracts include: FIFA, FIFPRO Foundation, and FAPL (Football
Association Premier League Limited) (professional soccer); NASCAR (stock car racing); National Basketball
Association (professional basketball); PGA TOUR and Tiger Woods (professional golf); National Hockey
League and NHL Players’ Association (professional hockey); Warner Bros. (Harry Potter); New Line
Productions and Saul Zaentz Company (The Lord of the Rings); Red Bear Inc. (John Madden); National Football
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