Electronic Arts 2015 Annual Report Download - page 120

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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 I, Item 1A of this report.
Contractual Obligations and Commercial Commitments
Note 13 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-K as it
relates to our contractual obligations and commercial commitments is incorporated by reference into this Item 7.
OFF-BALANCE SHEET ARRANGEMENTS
As of March 31, 2015, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of
Regulation S-K promulgated by the SEC, that have or are reasonably likely to have a current or future effect on
our financial condition, changes in financial condition, revenues and expenses, results of operations, liquidity,
capital expenditures, or capital resources that is material to investors.
INFLATION
We believe the impact of inflation on our results of operations has not been significant in any of the past three
fiscal years.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk
MARKET RISK
We are exposed to various market risks, including changes in foreign currency exchange rates, interest rates and
market prices, which have experienced significant volatility. Market risk is the potential loss arising from
changes in market rates and market prices. We employ established policies and practices to manage these risks.
Foreign currency forward contracts are used to hedge anticipated exposures or mitigate some existing exposures
subject to foreign exchange risk as discussed below. While we do not hedge our short-term investment portfolio,
we protect our short-term investment portfolio against different market risks, including interest rate risk as
discussed below. Our cash and cash equivalents portfolio consists of highly liquid investments with insignificant
interest rate risk and original or remaining maturities of three months or less at the time of purchase. We do not
enter into derivatives or other financial instruments for speculative trading purposes and do not hedge our market
price risk relating to marketable equity securities, if any.
Foreign Currency Exchange Rate Risk
Foreign Currency Exchange Rates. International sales are a fundamental part of our business, and the
significant strengthening of the U.S. Dollar during the second half of fiscal year 2015 (particularly relative to the
Euro, British pound sterling, Swedish krona and Canadian dollar) had a negative impact on our reported
international net revenues, but a positive impact on our reported international operating expenses because these
amounts were translated at lower rates in fiscal year 2015 than in fiscal year 2014. While we use foreign currency
hedging contracts to mitigate some foreign currency exchange risk, these activities are limited in the protection
that they provide us and can themselves result in losses. We currently anticipate foreign currency exchange rates
to have a negative impact on our expected reported net revenue in fiscal year 2016 as compared to fiscal year
2015, but the strengthening of the U.S. dollar is expected to have a positive impact on our reported operating
expenses as a significant portion of those expenses are incurred outside the United States.
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