Electronic Arts 2014 Annual Report Download - page 127

Annual Report
designed to reduce, but do not entirely eliminate, the impact of currency exchange rate movements in net revenue
and research and development expenses. Total gross notional amounts and fair values for currency derivatives
with cash flow hedge accounting designation are as follows:
As of March 31, 2014 As of March 31, 2013
Notional
Amount
Fair Value Notional
Amount
Fair Value
Asset Liability Asset Liability
Option contracts to purchase ......................... $ — $— $— $ 84 $— $—
Forward contracts to purchase ........................ 179 — 3 — — —
Total .......................................... $179 $— $ 3 $ 84 $— $—
Option contracts to sell ............................. $ — $— $— $149 $ 6 $—
Forward contracts to sell ............................ 363 — 2 — — —
Total .......................................... $363 $— $ 2 $149 $ 6 $—
The net impact of the effective portion of gains and losses from our cash flow hedging activities in our
Consolidated Statements of Operations for the fiscal years ended March 31, 2014, 2013 and 2012 was a loss of
$9 million, $4 million, and $4 million respectively. During the fiscal years ended March 31, 2014, 2013 and
2012, we reclassified an immaterial amount of the ineffective portion of gains or losses resulting from changes in
fair value into interest and other income (expense), net.
Balance Sheet Hedging Activities. We use foreign currency forward contracts to mitigate foreign currency risk
associated with foreign-currency-denominated monetary assets and liabilities, primarily intercompany
receivables and payables. The foreign currency forward contracts generally have a contractual term of three
months or less and are transacted near month-end. Our foreign currency forward contracts that are not designated
as hedging instruments are accounted for as derivatives whereby the fair value of the contracts is reported as
other current assets or accrued and other current liabilities on our Consolidated Balance Sheets, and gains and
losses resulting from changes in the fair value are reported in interest and other income (expense), net, in our
Consolidated Statements of Operations. The gains and losses on these foreign currency forward contracts
generally offset the gains and losses on the underlying foreign-currency-denominated monetary assets and
liabilities, which are also reported in interest and other income (expense), net, in our Consolidated Statements of
Operations. In certain cases, the amount of such gains and losses will significantly differ from the amount of
gains and losses recognized on the underlying foreign-currency-denominated monetary asset or liability, in which
case our results will be impacted. Total gross notional amounts and fair values for currency derivatives that are
not designated as hedging instruments are accounted for as follows:
As of March 31, 2014 As of March 31, 2013
Notional
Amount
Fair Value Notional
Amount
Fair Value
Asset Liability Asset Liability
Forward contracts to purchase in exchange for USD ...... $140 $— $ 1 $ 87 $— $—
Total .......................................... $140 $— $ 1 $ 87 $— $—
Forward contracts to sell in exchange for USD ........... $232 $— $— $213 $— $—
Forward contracts to sell in exchange for GBP ........... — — — 6 — —
Total .......................................... $232 $— $— $219 $— $—
The effect of foreign currency forward contracts not designated as hedging instruments in our Consolidated
Statements of Operations for the fiscal years ended March 31, 2014, 2013 and 2012 was a loss of $5 million, a
loss of $2 million, and a gain of $21 million, respectively.
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