Electronic Arts 2012 Annual Report Download - page 139

Annual Report
Short-term Investments and Marketable Equity Securities
Due to our mix of fixed and variable rate securities, our short-term investment portfolio is susceptible to changes
in short-term interest rates. As of March 31, 2012, our short-term investments had gross unrealized gains of $1
million, or less than 1 percent of the total in short-term investments, and gross unrealized losses of less than $1
million, or less than 1 percent of the total in short-term investments. From time to time, we may liquidate some
or all of our short-term investments to fund operational needs or other activities, such as capital expenditures,
business acquisitions or stock repurchase programs. Depending on which short-term investments we liquidate to
fund these activities, we could recognize a portion, or all, of the gross unrealized gains or losses.
The fair value of our marketable equity securities decreased to $119 million as of March 31, 2012 from $161
million as of March 31, 2011 primarily due to a decrease in the value of our investment in Neowiz.
Restricted Cash and Contingent Consideration
As of March 31, 2012, primarily in connection with our acquisitions of PopCap, KlickNation, and Chillingo
Limited (“Chillingo”), we may be required to pay an additional $572 million of cash consideration based upon
the achievement of certain performance milestones through March 31, 2015. In fiscal year 2010, in connection
with our Playfish acquisition, we deposited $100 million into an escrow account related to the contingent
consideration. During the three months ended March 31, 2012, $25 million was paid to settle performance
milestones earned through December 31, 2011 in connection with the Playfish acquisition, and $50 million was
reclassified and converted to available cash and cash equivalents. As of March 31, 2012, $25 million remains in
restricted cash related to the Playfish performance milestones, which we expect to pay in the second quarter of
fiscal 2013. In addition, in connection with our PopCap acquisition, we acquired an additional $6 million of
restricted cash which is held in an escrow account in the event that certain liabilities become due. As these
deposits are restricted in nature, they are excluded from cash and cash equivalents. As of March 31, 2012, the
restricted cash of $31 million is included in other current assets in our Consolidated Balance Sheets.
Fiscal 2011 Restructuring
In connection with our fiscal 2011 restructuring plan, we expect to incur cash expenditures through June 2016 of
approximately (1) $24 million in both fiscal years 2013 and 2014, (2) $17 million in fiscal year 2015, (3) $3
million in fiscal year 2016, and (4) $20 million in fiscal year 2017. The actual cash expenditures are variable as
they will be dependent upon the actual revenue we generate from certain games.
Fiscal 2013 Restructuring
On May 7, 2012, we announced a plan of restructuring to align our cost structure with our ongoing digital
transformation. Under this plan, we anticipate reducing our workforce and incurring other costs. We expect the
majority of these actions to be completed by September 30, 2012.
In connection with this plan, we anticipate incurring approximately $40 million in total costs, of which
approximately $31 million will result in future cash expenditures. All of these charges are expected to occur
during the fiscal year ending March 31, 2013. These costs will consist of severance and other employee-related
costs (approximately $23 million), license termination costs (approximately $11 million) and other costs
(approximately $6 million).
Financing Arrangement
In July 2011, we issued $632.5 million aggregate principal amount of 0.75% Convertible Senior Notes due 2016
(the “Notes”). The Notes are senior unsecured obligations which pay interest semi-annually in arrears at a rate of
0.75 percent per annum on January 15 and July 15 of each year, beginning on January 15, 2012 and will mature
on July 15, 2016, unless earlier purchased or converted in accordance with their terms prior to such date. The
Notes are convertible into cash and shares of our common stock based on an initial conversion value of 31.5075
shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of
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