Electronic Arts 2010 Annual Report Download - page 137

Annual Report
The following table summarizes our minimum contractual obligations as of March 31, 2010, and the effect we
expect them to have on our liquidity and cash flow in future periods (in millions):
Contractual Obligations
Fiscal Year Ending March 31, Leases(a)
Developer/
Licensor
Commitments(b) Marketing
Other
Purchase
Obligations Total
2011 ....................................... $ 46 $ 253 $ 91 $ 2 $ 392
2012 ....................................... 39 244 53 1 337
2013 ....................................... 32 164 47 — 243
2014 ....................................... 23 12 27 — 62
2015 ....................................... 18 13 15 — 46
Thereafter ................................... 23 607 92 — 722
Total ....................................... $181 $1,293 $325 $ 3 $1,802
(a) See discussion on operating leases in the “Off-Balance Sheet Commitments” section below for additional
information. Lease commitments have not been reduced by minimum sub-lease rentals for unutilized office
space resulting from our reorganization activities of approximately $13 million due in the future under
non-cancelable sub-leases.
(b) Developer/licensor commitments include $13 million of commitments that have been recorded in current
and long-term liabilities and a corresponding amount in current and long-term assets in our Consolidated
Balance Sheet as of March 31, 2010 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 of March 31, 2010, we had a liability for unrecognized tax
benefits and an accrual for the payment of related interest totaling $277 million, of which approximately $35
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.
In connection with our acquisition of Playfish on November 9, 2009, we may be required to pay additional
variable cash consideration that is contingent upon the achievement of certain performance milestones through
December 31, 2011. The additional consideration is limited to a maximum of $100 million.
Subsequent to March 31, 2010, we entered into various licensor and development agreements with third parties,
which contingently commits us to pay up to $170 million at various dates through fiscal year 2016. No single
licensor and development agreement represented greater than one-third of the total $170 million.
Related Person Transaction
Prior to becoming Chief Executive Officer of Electronic Arts, John Riccitiello was a co-founder and Managing
Partner of Elevation Partners, L.P., and also served as Chief Executive Officer of VGH, which we acquired in
January 2008. At the time of the acquisition, Mr. Riccitiello held an indirect financial interest in VGH resulting
from his interest in the entity that controlled Elevation Partners, L.P. and his interest in a limited partner of
Elevation Partners, L.P. Elevation Partners, L.P. was a significant stockholder of VGH. As a result of the
acquisition, Mr. Riccitiello’s financial returns related to these interests, including returns of deemed capital
contributions, were $2.4 million through May 2008 (some of which Mr. Riccitiello could be required to return
depending on the performance of the Elevation entities). Mr. Riccitiello has not received any additional payments
related to the VGH acquisition to date. However, he could receive up to an additional $1.6 million plus any
interest or other amounts earned thereon. This amount could be reduced, however, by a variety of factors,
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