Electronic Arts 2014 Annual Report Download - page 124

In July 2012, our Board of Directors authorized a program to repurchase up to $500 million of our common
stock. During fiscal year 2013, we repurchased and retired approximately 26 million shares of our common stock
for approximately $349 million, of which approximately 22 million shares, or $278 million, was repurchased
under this program. The remainder of the shares repurchased and retired during fiscal year 2013 were
repurchased pursuant to a stock repurchase program approved by our Board of Directors in February 2011.
In May 2014, a special committee of our Board of Directors, on behalf of the full Board of Directors, authorized
a new program to repurchase up to $750 million of our common stock. This new stock repurchase program,
which expires on May 31, 2016, supersedes and replaces the stock repurchase authorization approved by our
Board of Directors in July 2012. Under this program, we may purchase stock in the open market or through
privately-negotiated transactions in accordance with applicable securities laws, including pursuant to pre-
arranged stock trading plans. 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 this program
and it 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
sales objectives, the impact of acquisitions and other strategic transactions in which we may engage, the impact
of competition, economic conditions in the United States and abroad, the seasonal and cyclical nature of our
business and operating results, risks of product returns and the other risks described in the “Risk Factors” section,
included in Part II, Item 1A of this report.
Contractual Obligations and Commercial Commitments
Development, Celebrity, League and Content Licenses: Payments and Commitments
The products we produce in our studios are designed and created by our employee designers, artists, software
programmers and by non-employee software developers (“independent artists” or “third-party developers”). We
typically advance development funds to the independent artists and third-party developers during development of
our games, usually in installment payments made upon the completion of specified development milestones.
Contractually, these payments are generally considered advances against subsequent royalties on the sales of the
products. These terms are set forth in written agreements entered into with the independent artists and third-party
developers.
In addition, we have certain celebrity, league and content license contracts that contain minimum guarantee
payments and marketing commitments that may not be dependent on any deliverables. Celebrities and
organizations with whom we have contracts include, but are not limited to: FIFA (Fédération Internationale de
Football Association), FIFPRO Foundation, FAPL (Football Association Premier League Limited), and DFL
Deutsche Fußball Liga GmbH (German Soccer League) (professional soccer); Dr. Ing. h.c. F. Porsche AG,
Ferrari S.p.A. (Need For Speed and Real Racing games); National Basketball Association (professional
basketball); PGA TOUR (professional golf); National Hockey League and NHL Players’ Association
(professional hockey); National Football League Properties, PLAYERS Inc., and Red Bear Inc. (professional
football); Collegiate Licensing Company (collegiate football); Zuffa, LLC (Ultimate Fighting Championship);
ESPN (content in EA SPORTS games); Hasbro, Inc. (certain of Hasbro’s board game intellectual properties);
Disney Interactive (Star Wars); and Fox Digital Entertainment, Inc. (The Simpsons). These developer and
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