Electronic Arts 2012 Annual Report Download - page 171

Annual Report
(7) RESTRUCTURING AND OTHER CHARGES
Restructuring and other restructuring plan-related information as of March 31, 2012 was as follows (in millions):
Fiscal 2011
Restructuring
Fiscal 2010
Restructuring
Fiscal 2009
Restructuring
Other Restructurings
and Reorganization
Workforce Other Workforce
Facilities-
related Other Workforce
Facilities-
related
Facilities-
related Other Total
Balances as of March 31,
2009 ................ — — — — — 8 5 7 3 23
Charges to operations . . . — — 62 22 32 1 13 3 7 140
Charges settled in
cash ............... — — (29) (2) (1) (9) (11) — (10) (62)
Charges settled in
non-cash ........... — — (25) (9) (24) — (4) (3) — (65)
Accrual
reclassification ...... — — — — — — — (7) — (7)
Balances as of March 31,
2010 ................ — — 8 11 7 — 3 — — 29
Charges to operations . . . 13 135 — — 13 — — — — 161
Charges settled in
cash ............... (8) (32) (8) (6) (15) — (1) — — (70)
Charges settled in
non-cash ........... (2) (2) — 1 — — — — — (3)
Balances as of March 31,
2011 ................ 3 101 — 6 5 — 2 — — 117
Charges to operations . . . (1) 21 — (2) 8 — — (10) — 16
Charges settled in
cash ............... (2) (47) — (3) (13) — — 10 — (55)
Balances as of March 31,
2012 ................ $— $ 75 $— $ 1 $— $— $ 2 $— $— $ 78
Fiscal 2011 Restructuring
In fiscal year 2011, we announced a plan focused on the restructuring of certain licensing and developer
agreements in an effort to improve the long-term profitability of our packaged goods business. Under this plan,
we amended certain licensing and developer agreements. To a much lesser extent, as part of this restructuring we
had workforce reductions and facilities closures through March 31, 2011. Substantially all of these exit activities
were completed by March 31, 2011.
As part of our fiscal 2011 restructuring plan, we amended certain license agreements to terminate certain rights
we previously had to use the licensors’ intellectual property. However, under these agreements we continue to be
obligated to pay the contractual minimum royalty-based commitments set forth in the original agreements.
Accordingly, we recognized losses and impairments of $123 million representing (1) the net present value of the
estimated payments related to terminating these rights and (2) writing down assets associated with these
agreements to their approximate fair value. In addition, for one agreement, the actual amount of the loss is
variable and subject to periodic adjustments as it is dependent upon the actual revenue we generate from the
games. Because the loss for one agreement will be paid in installments through June 2016, our accrued loss was
computed using the effective interest method. We currently estimate recognizing in future periods through June
2016, approximately $13 million for the accretion of interest expense related to this obligation. This interest
expense will be included in restructuring and other charges in our Consolidated Statement of Operations.
In addition, for the development of certain games, we previously entered into publishing agreements with
independent software developers. Under these agreements, we were obligated to pay the independent software
developers a predetermined amount (a “Minimum Guarantee”) upon delivery of a completed product. The
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