Electronic Arts 2014 Annual Report Download - page 164

Download and view the complete annual report

Please find page 164 of the 2014 Electronic Arts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 188

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188

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, but are not limited to: FIFA (Fédération Internationale de Football
Association), FIFPRO Foundation, FAPL (Football Association Premier League Limited), and DFL Deutsche
Fußball Liga GmbH (German Soccer League) (professional soccer); Dr. Ing. h.c. F. Porsche AG, Ferrari S.p.A.
(Need For Speed and Real Racing games); National Basketball Association (professional basketball); PGA TOUR
(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); Zuffa, LLC (Ultimate Fighting Championship); ESPN (content in EA SPORTS
games); Hasbro, Inc. (certain of Hasbro’s board game intellectual properties); Disney Interactive (Star Wars); and
Fox Digital Entertainment, Inc. (The Simpsons). 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 minimum contractual obligations as of March 31, 2014 (in millions):
Fiscal Year Ending March 31,
Total 2015 2016 2017 2018 2019 Thereafter
Unrecognized commitments
Developer/licensor commitments ................... $1,301 $132 $288 $212 $129 $ 98 $442
Marketing commitments .......................... 254 48 41 62 24 24 55
Operating leases ................................. 148 46 39 23 17 13 10
0.75% Convertible Senior Notes due 2016 interest(a) .... 12552—— —
Other purchase obligations ........................ 19 17 2——— —
Total unrecognized commitments ................. 1,734 248 375 299 170 135 507
Recognized commitments
0.75% Convertible Senior Notes due 2016 principal(a) ... 633——633—— —
Licensing and lease obligations(b) ................... 59 12 11 34 1 1 —
Total recognized commitments ................... 692 12 11 667 1 1 —
Total Commitments ............................ $2,426 $260 $386 $966 $171 $136 $507
(a) Included in the $12 million coupon interest on the 0.75% Convertible Senior Notes due 2016 is $1 million
of accrued interest recognized as of March 31, 2014. We will be obligated to pay the $632.5 million
principal amount of the 0.75% Convertible Senior Notes due 2016 in cash and any excess conversion value
in shares of our common stock upon redemption of the Notes at maturity on July 15, 2016 or upon earlier
redemption. The $632.5 million principal amount excludes $53 million of unamortized discount of the
liability component. See Note 12 for additional information regarding our 0.75% Convertible Senior Notes
due 2016.
(b) See Note 8 for additional information regarding recognized commitments resulting from our restructuring
plans. Lease commitments have not been reduced for approximately $6 million due in the future from third
parties under non-cancelable sub-leases.
94