(13) COMMITMENTS AND CONTINGENCIES

Lease Commitments

As of March 31, 2019, we leased certain 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.

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 E.V. (German Soccer League) (professional soccer); Liga Nacional De Futbol Profesional (professional soccer); National Basketball Association and National Basketball Players Association (professional basketball); National Hockey League and NHL Players’ Association (professional hockey); National Football League Properties and PLAYERS Inc. (professional football); William Morris Endeavor Entertainment LLC (professional mixed martial arts); ESPN (content in EA SPORTS games); 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, 2019 (in millions):



			Fiscal Year Ending March 31,
	Total		2020		2021		2022		2023		2024		Thereafter
Unrecognized commitments
Developer/licensor commitments	$	973	$	214	$	292	$	240	$	93	$	75	$	59
Marketing commitments	377		94		97		85		37		37		27
Operating leases	264		52		54		44		36		28		50
Senior Notes interest	175		38		41		19		19		19		39
Other purchase obligations	92		40		30		19		3		—		—
Total unrecognized commitments	1,881		438		514		407		188		159		175

Recognized commitments
Senior Notes principal and interest	1,003		3		600		—		—		—		400
Transition and other taxes	90		22		23		24		3		5		13
Licensing commitments	78		25		26		27		—		—		—
Total recognized commitments	1,171		50		649		51		3		5		413

Total Commitments	$	3,052	$	488	$	1,163	$	458	$	191	$	164	$	588

The unrecognized amounts represented in the table above reflect our 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 as of March 31, 2019; however, certain payment obligations may be accelerated depending on the performance of our operating results. Furthermore, up to $30 million of the unrecognized amounts in the table above may be payable, at the licensor’s election, in shares of our common stock, subject to a $10 million maximum during any fiscal year. The number of shares to be issued will be based on their fair market value at the time of issuance.

In addition to what is included in the table above, as of March 31, 2019, we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $209 million, of which 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, 2019, we may be required to pay up to $140 million of cash consideration in connection with the December 1, 2017 acquisition of Respawn based on the achievement of certain performance milestones through the end of calendar year 2022. As of March 31, 2019, we have recorded $136 million of contingent consideration on our Consolidated Balance Sheet representing the estimated fair value. Subsequent to March 31, 2019, we paid $35 million of contingent consideration as a performance milestone was met. As of the date of this filing, the remaining maximum amount that we may be required to pay is $105 million.

Total rent expense for our operating leases was $100 million, $92 million and $91 million for the fiscal years ended March 31, 2019, 2018 and 2017, respectively.

Legal Proceedings

On July 29, 2010, Michael Davis, a former NFL running back, filed a putative class action in the United States District Court for the Northern District of California against the Company, alleging that certain past versions of Madden NFL included the images of certain retired NFL players without their permission. The parties reached a settlement in this matter in March 2019 that was not material to the Company’s financial results and on May 7, 2019, the United States District Court for the Northern District of California dismissed the case.

Governmental authorities in Belgium have sought to limit or discontinue the use of in-game mechanics involving a randomized selection of virtual items. On August 10, 2018, we were notified that the Belgian Gambling Commission made a referral to the Belgian Public Prosecutor’s Office regarding the use such mechanics in the FIFA Ultimate Team service included in FIFA 18. On February 1, 2019, we discontinued the sale of FIFA Points in Belgium after discussions with Belgian authorities. We do not expect Belgian authorities to pursue the matter further. The Company does not believe that its products and services violate applicable gambling laws and continues to engage with appropriate governmental authorities in Belgium.

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.