Electronic Arts 2014 Annual Report Download - page 123

Annual Report
19.9 million shares of our common stock (which is also equal to the number of shares of our common stock that
notionally underlie the Notes), with a strike price of $41.14. The Warrants could have a dilutive effect with
respect to our common stock to the extent that the market price per share of our common stock exceeds $41.14
on or prior to the expiration date of the Warrants. We received proceeds of $65 million from the sale of the
Warrants.
See Note 12 to the Consolidated Financial Statements for additional information related to our 0.75%
Convertible Senior Notes due 2016.
Credit Facility
On August 30, 2012, we entered into a $500 million senior unsecured revolving credit facility with a syndicate of
banks. The credit facility terminates on February 29, 2016 and contains an option to arrange with existing lenders
and/or new lenders for them to provide up to an aggregate of $250 million in additional commitments for
revolving loans. Proceeds of loans made under the credit facility may be used for general corporate purposes.
The loans bear interest, at our option, at the base rate plus an applicable spread or an adjusted LIBOR rate plus an
applicable spread, in each case with such spread being determined based on our consolidated leverage ratio for
the preceding fiscal quarter. We are also obligated to pay other customary fees for a credit facility of this size and
type. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an
interest period (or at each three month interval in the case of loans with interest periods greater than three
months) in the case of loans bearing interest at the adjusted LIBOR rate. Principal, together with all accrued and
unpaid interest, is due and payable on February 29, 2016.
The credit agreement contains customary affirmative and negative covenants, including covenants that limit or
restrict our ability to, among other things, incur subsidiary indebtedness, grant liens, dispose of all or
substantially all assets and pay dividends or make distributions, in each case subject to customary exceptions for
a credit facility of this size and type. We are also required to maintain compliance with a capitalization ratio and
maintain a minimum level of total liquidity and a minimum level of domestic liquidity.
The credit agreement contains customary events of default, including among others, non-payment defaults,
covenant defaults, bankruptcy and insolvency defaults and a change of control default, in each case, subject to
customary exceptions for a credit facility of this size and type. The occurrence of an event of default could result
in the acceleration of the obligations under the credit agreement, an obligation by any guarantors to repay the
obligations in full and an increase in the applicable interest rate.
As of March 31, 2014, no amounts were outstanding under the credit facility.
Financial Condition
We believe that our cash, cash equivalents, short-term investments, 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, 2014, approximately $762 million of our cash, cash equivalents, and short-term investments
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 may be required to accrue and pay additional taxes on any portion of
the repatriation where no United States income tax had been previously provided. We made a one-time
repatriation of $700 million from certain of our wholly-owned subsidiaries during the three months ended
March 31, 2014. This repatriation did not have a material impact on our effective tax rate for fiscal 2014 due to
the deferred tax valuation allowance.
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