Electronic Arts 2009 Annual Report Download - page 134

the fourth quarter of fiscal year 2009 as compared to the fourth quarter of fiscal year 2008. Reserves for sales
returns, pricing allowances and doubtful accounts decreased in absolute dollars from $238 million as of
March 31, 2008 to $217 million as of March 31, 2009. As a percentage of trailing nine month net revenue,
reserves decreased from 7 percent as of March 31, 2008, to 6 percent as of March 31, 2009. We believe these
reserves are adequate based on historical experience and our current estimate of potential returns, pricing
allowances and doubtful accounts.
Inventories
Inventories increased to $217 million as of March 31, 2009 from $168 million as of March 31, 2008, primarily as
a result of an increase of $47 million of Rock Band and Rock Band 2 inventory.
Other current assets and other assets
Other current assets decreased to $216 million as of March 31, 2009, from $290 million as of March 31, 2008.
Other assets decreased to $115 million as of March 31, 2009 from $157 million as of March 31, 2008. Other
current assets and other assets combined, decreased by $116 million primarily due to (1) the impairment and
subsequent reclassification of an asset classified as an asset held for sale in other current assets to property and
equipment, net, in the amount of $48 million and (2) a decrease in prepaid and value-added taxes of $33 million.
Accounts payable
Accounts payable decreased to $152 million as of March 31, 2009, from $182 million as of March 31, 2008,
primarily due to the timing of payments related to our inventory purchases.
Accrued and other current liabilities
Our accrued and other current liabilities decreased to $723 million as of March 31, 2009 from $730 million as of
March 31, 2008. The $7 million decrease was primarily due to (1) a $44 million decrease in accrued incentive-
based compensation and (2) a $23 million decrease in accrued contingent liabilities related to certain of our
acquisitions. These decreases were partially offset by (1) an increase of $33 million in our deferred net revenue
(other) and (2) a $30 million increase in royalties payable directly associated with the increase in our
co-publishing and distribution revenue and inventory.
Deferred income taxes, net
Our net deferred income tax asset position decreased by $229 million as of March 31, 2009 as compared to
March 31, 2008 primarily due to the increase in the valuation allowance.
Financial Condition
We believe that cash, cash equivalents, short-term investments, marketable equity securities, cash generated from
operations and available financing facilities will be sufficient to meet our operating requirements for at least the
next twelve months, including working capital requirements, capital expenditures and, potentially, future
acquisitions or strategic investments. We may choose at any time to raise additional capital to strengthen our
financial position, facilitate expansion, pursue strategic acquisitions and investments or to take advantage of
business opportunities as they arise. There can be no assurance, however, 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.
On March 13, 2008, we commenced an unsolicited $26.00 per share cash tender offer for all of the outstanding
shares of Take-Two, for a total purchase price of approximately $2.1 billion. On May 9, 2008, we received a
commitment from certain financial institutions to provide us with up to $1.0 billion of senior unsecured term loan
at any time until January 9, 2009, to be used to provide a portion of the funds for the offer and/or merger. On
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