Electronic Arts 2015 Annual Report Download - page 89

Annual Report
Acquisitions, investments and other strategic transactions could result in operating difficulties, dilution to
our investors and other negative consequences.
We expect to continue making acquisitions or entering into other strategic transactions including (1) acquisitions
of companies, businesses, intellectual properties, and other assets, (2) minority investments in strategic partners,
and (3) investments in new interactive entertainment businesses (e.g., online and mobile publishing platforms) as
part of our long-term business strategy. These transactions involve significant challenges and risks including, in
the end, that the transaction does not advance our business strategy, that we do not realize a satisfactory return on
our investment, that we acquire unknown liabilities, or that we experience difficulty in the integration of business
systems and technologies, the integration and retention of new employees, or in the maintenance of key business
and customer relationships of the businesses we acquire, or diversion of management’s attention from our other
businesses. These events could harm our operating results or financial condition.
Future acquisitions and investments also could involve the issuance of our equity and equity-linked securities
(potentially diluting our existing stockholders), the incurrence of debt, contingent liabilities or amortization
expenses, write-offs of goodwill, intangibles, or acquired in-process technology, or other increased cash and non-
cash expenses, such as stock-based compensation. Any of the foregoing factors could harm our financial
condition or prevent us from achieving improvements in our financial condition and operating performance that
could have otherwise been achieved by us on a stand-alone basis. Our stockholders may not have the opportunity
to review, vote on or evaluate future acquisitions or investments.
Our products and brands are subject to the threat of piracy, unauthorized copying and other forms of
intellectual property infringement.
We regard our products and brands as proprietary and take measures to protect our products, brands and other
confidential information from infringement. We are aware that some unauthorized copying of our products and
brands occurs, and if a significantly greater amount were to occur, it could negatively impact our business.
Piracy and other forms of unauthorized copying and use of our content and brands are persistent problems for us,
and policing is difficult. Further, the laws of some countries in which our products are or may be distributed
either do not protect our products and intellectual property rights to the same extent as the laws of the United
States, or are poorly enforced. Legal protection of our rights may be ineffective in such countries. In addition,
although we take steps to enforce and police our rights, factors such as the proliferation of technology designed
to circumvent the protection measures used in our products, the availability of broadband access to the Internet,
the refusal of Internet service providers or platform holders to remove infringing content in certain instances, and
the proliferation of online channels through which infringing product is distributed have all have contributed to
an expansion in unauthorized copying of our products and brands.
We may experience outages and disruptions of our infrastructure that may harm our business.
We may be subject to outrages or disruptions of our infrastructure, including information technology system
failures and network disruptions. These may be caused by natural disasters, cyber-incidents, weather events,
power disruptions, telecommunications failures, acts of terrorism or other events. System redundancy may be
ineffective or inadequate, and the Company’s disaster recovery planning may not be sufficient for all
eventualities. Such failures or disruptions could prevent access to our products, services or online stores selling
our products and services. Our corporate headquarters in Redwood City, CA and our studio in Burnaby, British
Columbia are located in seismically active regions, and certain of our game development activities and other
essential business operations are conducted at these locations. An event that results in the disruption of any of our
critical business or IT systems could harm our ability to conduct normal business operations.
Our business is subject to currency fluctuations.
International sales are a fundamental part of our business. For the fiscal year ended March 31, 2015, international
net revenue comprised 57 percent of our total net revenue and we expect international sales to continue to
account for a significant portion of our total net revenue. As a result of our international sales, and also the
denomination of our foreign investments and our cash and cash equivalents in foreign currencies, we are exposed
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