Electronic Arts 2010 Annual Report Download - page 138

including investment losses of Elevation, if any, as well as certain expenses of Elevation that could offset
partnership profits. Upon his separation from Elevation Partners, L.P., Mr. Riccitiello ceased to have any further
control or influence over these factors.
From the commencement of negotiations with VGH, at the direction of EA’s Board of Directors, EA’s Audit
Committee engaged directly with EA management (independently from Mr. Riccitiello) to analyze and consider
the potential benefits, risks and material terms of the acquisition. EA’s Board of Directors approved the
acquisition after reviewing with EA’s management and members of the Audit Committee the terms of the
acquisition and the potential benefits and risks thereof, as well as Mr. Riccitiello’s personal financial interest in
VGH and the acquisition. Mr. Riccitiello recused himself from the Board of Directors meeting during the
Board’s deliberation of the acquisition and he did not vote on the acquisition.
OFF-BALANCE SHEET COMMITMENTS
Lease Commitments
As of March 31, 2010, we leased certain of our current facilities, furniture and equipment under non-cancelable
operating lease agreements. We were required to pay property taxes, insurance and normal maintenance costs for
certain of these facilities and any increases over the base year of these expenses on the remainder of our facilities.
On July 13, 2009, we purchased our Redwood Shores headquarters facilities comprised of approximately
660,000 square feet concurrent with the expiration and extinguishment of the lessor’s financing agreements.
These facilities were subject to lease obligations to non-affiliated parties, which expired in July 2009, and had
previously been accounted for as operating leases. The total amount paid under the terms of the leases was $247
million, of which $233 million related to the purchase price of the facilities and $14 million was for the loss on
our lease obligation. Subsequent to our purchase, we classified the facilities on our Consolidated Balance Sheet
as property and equipment, net and depreciate the facilities acquired, excluding land, on a straight-line basis over
the estimated useful lives.
Director Indemnity Agreements
We entered into indemnification agreements with each of the members of our Board of Directors at the time they
joined the Board to indemnify them to the extent permitted by law against any and all liabilities, costs, expenses,
amounts paid in settlement and damages incurred by the directors as a result of any lawsuit, or any judicial,
administrative or investigative proceeding in which the directors are sued or charged as a result of their service as
members of our Board of Directors.
INFLATION
We believe the impact of inflation on our results of operations has not been significant in any of the past three
fiscal years.
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