Electronic Arts 2005 Annual Report Download - page 100

Accounts payable
Accounts payable increased to $134 million as of March 31, 2005, from $114 million as of March 31, 2004,
primarily due to higher gross sales volumes and an extension of payment terms with our vendors in Ñscal 2005.
Accrued and other liabilities
Our accrued and other liabilities increased to $694 million as of March 31, 2005 from $630 million as of
March 31, 2004. The increase was due to increases in income taxes payable, accruals for pending litigation and
increases to our deferred rent and deferred revenue, oÅset by a decrease in royalties payable and accrued
payroll and related expenses. We anticipate our accrued and other liabilities balance will decline following our
bonus payments during the three months ended June 30, 2005.
Financial Condition
We believe that existing cash, cash equivalents, short-term investments, marketable equity securities and cash
generated from operations will be suÇcient to meet our operating requirements for at least the next twelve
months, including working capital requirements, capital expenditures, potential future acquisitions or strategic
investments, and funding of our stock repurchase program. We may choose at any time to raise additional
capital to strengthen our Ñnancial position, facilitate expansion, pursue strategic investments or to take
advantage of business opportunities as they arise. There can be no guarantee that such additional capital will
be available to us on favorable terms, if at all, or that it will not result in substantial dilution to our existing
stockholders.
Our two lease agreements with Keybank National Association, described in the ""OÅ-Balance Sheet
Commitments'' section below, are scheduled to expire in June 2006 and July 2006. We currently are
evaluating whether to extend the leases, purchase the properties under lease, or identify a third party buyer for
the properties when the leases expire. Should we choose to renew the leases, we would not expect a material
change in our lease payments from the amounts under the current lease agreements. Should we choose to
purchase the properties, we could incur a cash outÖow of at least $200 million. We have not yet determined
the course of action that we will take.
A portion of our cash that was generated from operations domiciled in foreign tax jurisdictions (approximately
$987 million as of March 31, 2005) is designated as indeÑnitely reinvested in the respective tax jurisdiction.
While we have no plans to repatriate these funds to the United States in the short-term, if we were required to
do so in order to fund our operations in the United States, we would accrue and pay additional taxes in
connection with their repatriation. We are in the process of evaluating whether we will repatriate foreign
earnings under the repatriation provisions of the Jobs Act.
On October 18, 2004, our Board of Directors authorized a program to repurchase up to an aggregate of
$750 million of shares of our common stock. Pursuant to the authorization, we may repurchase shares of our
common stock from time to time in the open market or through privately negotiated transactions over the
course of a twelve-month period. During the year ended March 31, 2005, we repurchased and retired
805,500 shares of our common stock for approximately $41 million.
We have a ""shelf'' registration statement on Form S-3 on Ñle with the Securities and Exchange Commission.
This shelf registration statement, which includes a base prospectus, allows us at any time to oÅer any
combination of securities described in the prospectus in one or more oÅerings up to a total amount of
$2.0 billion. Unless otherwise speciÑed in a prospectus supplement accompanying the base prospectus, we will
use the net proceeds from the sale of any securities oÅered pursuant to the shelf registration statement for
general corporate purposes, including for working capital, Ñnancing capital expenditures, research and
development, marketing and distribution eÅorts and, if opportunities arise, for acquisitions or strategic
alliances. Pending such uses, we may invest the net proceeds in interest-bearing securities. In addition, we may
conduct concurrent or other Ñnancings at any time.
Our ability to maintain suÇcient liquidity could be aÅected by various risks and uncertainties including, but
not limited to, those related to customer demand and acceptance of our titles on new platforms and new
44