Electronic Arts 2004 Annual Report Download - page 56

""Accounting for Certain Investments Held by Not-for-ProÑt Organizations'' that are impaired at the balance
sheet date but for which an other-than-temporary impairment has not been recognized. We adopted
EITF 03-1 in the year ended March 31, 2004; however, it did not have a material impact on the disclosures in
our Consolidated Financial Statements.
In March 2004, the FASB, issued an exposure draft on the Proposed Statement of Financial Accounting
Standards, ""Share-Based Payment Ì an amendment of FASB Statements No. 123 and 95''. The proposed
statement addresses the accounting for share-based payment transactions with employees and other third-
parties. The proposed standard would eliminate the ability to account for share-based compensation
transactions using Accounting Principles Board (""APB'') Opinion No. 25, ""Accounting for Stock Issued to
Employees'', and generally would require that such transactions be accounted for using a fair-value-based
method. If the Ñnal standard is approved as currently drafted in the exposure draft, it would have a material
impact on the amount of earnings we report. Management has not yet determined the impact that the
proposed statement will have on our business.
LIQUIDITY AND CAPITAL RESOURCES
Year Ended
March 31, March 31, Increase/
2004 2003 (Decrease)
(In millions)
Cash, cash equivalents and short-term investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $2,414 $1,588 $826
Marketable equity securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1 1 Ì
$2,415 $1,589 $826
Percentage of total assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 71.0% 67.3%
Year Ended
March 31, March 31, Increase/
2004 2003 (Decrease)
(In millions)
Cash provided by operating activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 669 $ 714 $(45)
Cash provided by (used in) investing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 288 (463) 751
Cash provided by Ñnancing activitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 225 132 93
EÅect of foreign exchange on cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏ 18 14 4
Net increase in cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,200 $ 397 $803
Changes in Cash Flow
During the year ended March 31, 2004, we generated $669.3 million of cash from operating activities
compared to $714.5 million for the year ended March 31, 2003. This decline was primarily the result of our
fourth quarter sales in Ñscal 2004 occurring later in the quarter as compared to Ñscal 2003, particularly in
Europe. We expect to continue to generate similar levels of operating cash Öow in Ñscal 2005. For the year
ended March 31, 2004, our primary use of cash in non-operating activities consisted of $89.6 million in
capital expenditures, primarily related to the expansions of our Los Angeles and Vancouver studios. These
non-operating expenditures were oÅset by net proceeds of $371.8 million in short-term investments and
$227.8 million in proceeds from the sale of our common stock through stock plans during the year ended
March 31, 2004.
Receivables, Net
Our gross accounts receivable balance was $366.6 million and $246.7 million as of March 31, 2004 and
March 31, 2003, respectively. The increase in our accounts receivable balance was primarily due to our fourth
quarter sales in Ñscal 2004 occurring later in the quarter as compared to Ñscal 2003, particularly in Europe.
We expect to collect a substantial portion of these amounts in the three months ended June 30, 2004.
Reserves for sales returns, pricing allowances and doubtful accounts decreased from $164.6 million as of
March 31, 2003 to $154.7 million as of March 31, 2004. Both the sales return and price protection reserves
decreased in absolute dollars and as a percentage of trailing six and nine month net revenue as of March 31,
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