Electronic Arts 2006 Annual Report Download - page 129

The Ñnancing arrangements supporting our Redwood City headquarters leases with Keybank National
Association, described in the ""OÅ-Balance Sheet Commitments'' section below, are scheduled to expire in
July 2007. Upon expiration of the Ñnancing, we may purchase the facilities for $247 million, request an
extension of the Ñnancing (subject to bank approval), self-fund approximately 90 percent of the Ñnancing
and extend the remainder, or arrange for a sale of the facilities to a third party. In the event of a sale to a
third party, if the sale price is less than $247 million, we will be obligated to reimburse the diÅerence
between the actual sale price and $247 million, up to maximum of $222 million, subject to certain
provisions of the lease.
A portion of our cash, cash equivalents, short-term investments and marketable equity securities that was
generated from operations domiciled in foreign tax jurisdictions (approximately $692 million as of
March 31, 2006) is designated as indeÑnitely reinvested in the respective tax jurisdiction. During the
fourth quarter of Ñscal 2006, our CEO approved a domestic reinvestment plan, which was subsequently
approved by our Board of Directors, to repatriate $375 million of foreign earnings in Ñscal 2006 under the
Jobs Act. We completed the repatriation in Ñscal 2006 and resulted in a tax expense of $17 million related
to this $375 million repatriation.
On October 18, 2004, our Board of Directors authorized a program to repurchase up to an aggregate of
$750 million of our common stock. Pursuant to the authorization, we repurchased shares of our common
stock from time to time in the open market until we had completed our common stock repurchase
program in September 2005. We repurchased and retired the following (in millions):
Number of Shares
Repurchased and Approximate
Retired Amount
From the inception of the program through March 31, 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.8 $ 41
Six months ended September 30, 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12.6 709
From the inception of the program through September 30, 2005 ÏÏÏÏÏÏÏÏÏÏ 13.4 $750
We have a ""shelf'' registration statement on Form S-3 on Ñle with the SEC. 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
Annual Report
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 products on new platforms and
new versions of our products on existing platforms, our ability to collect our accounts receivable as they
become due, successfully achieving our product release schedules and attaining our forecasted sales
objectives, the impact of competition, economic conditions in the United States and abroad, the seasonal
and cyclical nature of our business and operating results, risks of product returns and the other risks
described in the ""Risk Factors'' section, included in Item 1A of this report.
Contractual Obligations and Commercial Commitments
Letters of Credit
In July 2002, we provided an irrevocable standby letter of credit to Nintendo of Europe, which we have
amended on a number of occasions. The standby letter of credit, as amended, guarantees performance of
our obligations to pay Nintendo of Europe for trade payables. As of March 31, 2006, the standby letter of
credit, as amended, guaranteed our trade payable obligations to Nintendo of Europe for up to 47 million.
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