Electronic Arts 2012 Annual Report Download - page 181

Annual Report
notionally underlie the Notes), with a strike price of $41.14. The Warrants could have a dilutive effect with
respect to our common stock to the extent that the market price per share of its common stock exceeds $41.14 on
or prior to the expiration date of the Warrants. We received proceeds of $65 million from the sale of the
Warrants.
(12) COMMITMENTS AND CONTINGENCIES
Lease Commitments
As of March 31, 2012, 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.
See Note 9 regarding the purchase of our Redwood Shores headquarters facilities on July 13, 2009.
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, FAPL (Football Association Premier League Limited),
and DFL Deutsche Fußball Liga GmbH (German Soccer League) (professional soccer); National Basketball
Association (professional basketball); PGA TOUR, Tiger Woods and Augusta National (professional golf); National
Hockey League and NHL Players’ Association (professional hockey); National Football League Properties,
PLAYERS Inc., and Red Bear Inc. (professional football); Collegiate Licensing Company (collegiate football);
ESPN (content in EA SPORTS games); Hasbro, Inc. (most of Hasbro’s toy and game intellectual properties); and
LucasArts and Lucas Licensing (Star Wars: The Old Republic). 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
agreements, 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 unrecognized minimum contractual obligations as of March 31, 2012 (in
millions):
Contractual Obligations
Fiscal Year
Ending March 31, Leases(a)
Developer/
Licensor
Commitments Marketing
Covertible Notes
Interest(b)
Other Purchase
Obligations Total
2013 ........................ $ 54 $158 $ 52 $ 5 $15 $ 284
2014 ........................ 48 123 51 5 7 234
2015 ........................ 40 116 32 5 — 193
2016 ........................ 28 166 33 5 — 232
2017 ........................ 15 8 18 2 — 43
Thereafter .................... 26 239 77 — — 342
Total ........................ $211 $810 $263 $22 $22 $1,328
(a) Lease commitments have not been reduced by minimum sub-lease rentals for unutilized office space
resulting from our reorganization activities of approximately $7 million due in the future under
non-cancelable sub-leases.
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