Electronic Arts 2012 Annual Report Download - page 182

(b) In addition to the interest payments reflected in the table above, we will be obligated to pay the $632.5
million principal amount of the 0.75% Convertible Senior Notes due 2016 and any excess conversion value
in shares of our common stock upon redemption after the maturity of the Notes on July 15, 2016 or earlier.
See Note 11 for additional information related to our 0.75% Convertible Senior Notes due 2016.
The amounts represented in the table above reflect our unrecognized minimum cash obligations for the respective
fiscal years, but do not necessarily represent the periods in which they will be recognized and expensed in our
Consolidated Financial Statements. In addition, the amounts in the table above are presented based on the dates
the amounts are contractually due; however, certain payment obligations may be accelerated depending on the
performance of our operating results.
In addition to what is included in the table above as of March 31, 2012, we had a liability for unrecognized tax
benefits and an accrual for the payment of related interest totaling $251 million, of which approximately $43
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 addition to what is included in the table above as of March 31, 2012, primarily in connection with our PopCap,
KlickNation, and Chillingo acquisitions, we may be required to pay an additional $572 million of cash
consideration based upon the achievement of certain performance milestones through March 31, 2015. As of
March 31, 2012, we have accrued $112 million of contingent consideration on our Consolidated Balance Sheet
representing the estimated fair value of the contingent consideration.
Total rent expense for all operating leases was $139 million, $96 million and $91 million, for the fiscal years
ended March 31, 2012, 2011 and 2010, respectively.
Legal Proceedings
In June 2008, Geoffrey Pecover filed an antitrust class action in the United States District Court for the Northern
District of California, alleging that EA obtained an illegal monopoly in a discreet antitrust market that consists of
“league-branded football simulation video games” by bidding for, and winning, exclusive licenses with the NFL,
Collegiate Licensing Company and Arena Football League. In December 20, 2010, the district court granted the
plaintiffs’ request to certify a class of plaintiffs consisting of all consumers who purchased EA’s Madden NFL,
NCAA Football or Arena Football video games after 2005. The court has set a trial date for October 2012. The
complaint seeks compensatory damages. The parties initiated settlement negotiations in May 2012 and
subsequently reached a non-binding settlement in principle; however, no settlement agreement has been
approved by the court as of the date of this filing. As a result, we recognized a $27 million accrual in the fourth
quarter of fiscal 2012 associated with the potential settlement.
We are also subject to claims and litigation arising in the ordinary course of business. We do not believe that any
liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the
aggregate, would have a material adverse effect on our Consolidated Financial Statements.
(13) PREFERRED STOCK
As of March 31, 2012 and 2011, we had 10,000,000 shares of preferred stock authorized but unissued. The rights,
preferences, and restrictions of the preferred stock may be designated by our Board of Directors without further
action by our stockholders.
(14) STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS
Valuation Assumptions
We are required to estimate the fair value of share-based payment awards on the date of grant. We recognize
compensation costs for stock-based payment awards to employees based on the grant-date fair value using a
straight-line approach over the service period for which such awards are expected to vest.
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