Electronic Arts 2011 Annual Report Download - page 128

The fair value of our marketable equity securities decreased to $161 million as of March 31, 2011, from $291
million as of March 31, 2010. This decrease was primarily due to a $194 million decrease, resulting from a
decrease in the unrealized gains and the sale of a certain investment during the period. This decrease was
partially offset by a $73 million increase in the fair value of our investments in Neowiz.
Restricted Cash and Contingent Consideration
In connection with our acquisitions of Playfish and Chillingo, we may be required to pay an additional $110
million of cash consideration, of which $100 million was deposited into an escrow account. As this deposit is
restricted in nature, it is excluded from cash and cash equivalents. This cash consideration is based upon the
achievement of certain performance milestones through March 31, 2014. Through fiscal year 2011, no
distributions were made from the restricted cash amount. As of March 31, 2011, we have accrued $51 million of
contingent consideration on our Consolidated Balance Sheet.
Fiscal 2011 Restructuring
In connection with our fiscal 2011 restructuring plan, we expect to incur cash expenditures through June 2016 of
approximately (1) $42 million in fiscal year 2012, (2) $15 million in both fiscal years 2013 and 2014, (3) $11
million in fiscal year 2015, and (4) $40 million thereafter. The actual cash expenditures are variable as they will
be dependent upon the actual revenue we generate from certain games.
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 12 months, including working capital requirements, capital expenditures and, potentially, future
acquisitions, stock repurchases, or strategic investments. We may choose at any time to raise additional capital to
strengthen our financial position, facilitate expansion, repurchase our stock, pursue strategic acquisitions and
investments, and/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.
As of March 31, 2011, approximately $793 million of our cash, cash equivalents, and short-term investments and
$69 million of our marketable equity securities were domiciled in foreign tax jurisdictions. While we have no
plans to repatriate these funds to the United States in the short term, if we choose to do so, we would be required
to accrue and pay additional taxes on any portion of the repatriation where no United States income tax had been
previously provided.
During fiscal year 2011, our Board of Directors authorized a program to repurchase up to $600 million of our
common stock over the next 18 months. The timing and actual amount of the stock repurchases will depend on
several factors including price, capital availability, regulatory requirements, alternative investment opportunities
and other market conditions. We are not obligated to repurchase any specific number of shares under the program
and the repurchase program may be modified, suspended or discontinued at any time.
We have a “shelf” registration statement on Form S-3 on file with the SEC. This shelf registration statement,
which includes a base prospectus, allows us at any time to offer any combination of securities described in the
prospectus in one or more offerings. Unless otherwise specified in a prospectus supplement accompanying the
base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the shelf
registration statement for general corporate purposes, including for working capital, financing capital
expenditures, research and development, marketing and distribution efforts 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 financings at any time.
Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties including, but not
limited to, those related to customer demand and acceptance of our products, our ability to collect our accounts
receivable as they become due, successfully achieving our product release schedules and attaining our forecasted
52