Electronic Arts 2014 Annual Report Download - page 122

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.
Fiscal 2011 Restructuring
In connection with our fiscal 2011 restructuring plan, we expect to incur cash expenditures through June 2016 of
approximately (1) $10 million in fiscal year 2015, (2) $9 million in fiscal year 2016, and (3) $34 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.
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 semiannually 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
approximately $31.74 per share). Upon conversion of the Notes, holders will receive cash up to the principal
amount of each Note, and any excess conversion value will be delivered in shares of our common stock. We used
the net proceeds of the Notes to finance the cash consideration of our acquisition of PopCap, which closed in
August 2011.
Prior to April 15, 2016, the Notes will be convertible only upon the occurrence of certain events and during
certain periods, and thereafter, at any time until the close of business on the second scheduled trading day
immediately preceding the maturity date of the Notes. The Notes do not contain any financial covenants.
The conversion rate is subject to customary anti-dilution adjustments, but will not be adjusted for any accrued
and unpaid interest. Following certain corporate events described in the indenture governing the notes (the
“Indenture”) that occur prior to the maturity date, the conversion rate will be increased for a holder who elects to
convert its Notes in connection with such corporate event in certain circumstances. The Notes are not redeemable
prior to maturity, and no sinking fund is provided for the Notes.
If we undergo a “fundamental change,” as defined in the Indenture, subject to certain conditions, holders may
require us to purchase for cash all or any portion of their Notes. The fundamental change purchase price will be
100 percent of the principal amount of the Notes to be purchased plus any accrued and unpaid interest up to but
excluding the fundamental change purchase date.
The Indenture contains customary terms and covenants, including that upon certain events of default occurring
and continuing, either the trustee or the holders of at least 25 percent in principal amount of the outstanding
Notes may declare 100 percent of the principal and accrued and unpaid interest on all the Notes to be due and
payable.
In addition, in July 2011, we entered into privately negotiated convertible note hedge transactions (the
“Convertible Note Hedge”) with certain counterparties to reduce the potential dilution with respect to our
common stock upon conversion of the Notes. The Convertible Note Hedge, subject to customary anti-dilution
adjustments, provides us with the option to acquire, on a net settlement basis, approximately 19.9 million shares
of our common stock at a strike price of $31.74, which corresponds to the conversion price of the Notes and is
equal to the number of shares of our common stock that notionally underlie the Notes. As of March 31, 2014, we
have not purchased any shares under the Convertible Note Hedge. We paid $107 million for the Convertible Note
Hedge.
Separately, we have also entered into privately negotiated warrant transactions with certain counterparties
whereby we sold to independent third parties warrants (the “Warrants”) to acquire, subject to customary anti-
dilution adjustments that are substantially the same as the anti-dilution provisions contained in the Notes, up to
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