Electronic Arts 2016 Annual Report Download - page 128

Convertible Notes and Convertible Note Hedge
In July 2011, we issued $632.5 million aggregate principal amount of 0.75% Convertible Senior Notes due 2016
(the “Convertible Notes”), of which $163 million aggregate principal amount remained outstanding as of
March 31, 2016. The Convertible Notes will mature on July 15, 2016, unless purchased earlier or converted in
accordance with their terms prior to such date.
The Convertible Notes are convertible at the option of the holder through July 13, 2016. During fiscal year 2016,
approximately $497 million principal value of the Convertible Notes were converted by holders thereof. During
fiscal year 2016, we repaid $470 million principal balance of the Convertible Notes and issued approximately
7.8 million shares of common stock to noteholders with a fair value of $518 million, resulting in a loss on
extinguishment of $10 million. We also received and cancelled approximately 7.8 million shares of common
stock from the exercise of the Convertible Note Hedge during fiscal year 2016.
Subsequent to the fiscal year ended March 31, 2016 and through May 23, 2016, we received an immaterial
amount of conversion requests for the Convertible Notes. During the quarter ending June 30, 2016, we expect to
settle conversion requests with $27 million in cash and a number of shares of our common stock equal in value to
the excess conversion value. Based on the closing price of our common stock of $65.92 at the end of the fiscal
year ended March 31, 2016, approximately 0.4 million shares of our common stock would be issuable to
converting holders. The actual amount of shares issuable upon conversion will be determined based upon the
market price of our common stock during an observation period following any conversion.
Warrants
We have outstanding Warrants with independent third parties to acquire up to 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 Convertible
Notes), with a strike price of $41.14. The Warrants 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. The Warrants automatically exercises over a 60 trading day period beginning on October 17, 2016.
Based on the closing price of our common stock of $65.92 at the end of the fiscal year ended March 31, 2016,
approximately 7.5 million shares of our common stock would be issuable to Warrant holders. The actual amount
of shares issuable upon exercise will be determined based upon the market price of our common stock during the
60 day trading period beginning on October 17, 2016.
See Note 12 — Financing Arrangements to the Consolidated Financial Statements as it relates to the
Convertibles Notes, the Convertible Note Hedge and Warrants, which is incorporated by reference into this
Item 7.
Senior Notes
In February 2016, we issued $600 million aggregate principal amount of 3.70% Senior Notes due March 1, 2021
(the “2021 Notes”) and $400 million aggregate principal amount of 4.80% Senior Notes due March 1, 2026 (the
“2026 Notes,” and together with the 2021 Notes, the “Senior Notes”). We used the net proceeds of $989 million
for general corporate purposes, including the payment of amounts due upon conversion of our Convertible Notes
and the repurchase of our common stock, including under the $500 million stock repurchase program approved in
February 2016. The effective interest rate was 3.94% for the 2021 Notes and 4.97% for the 2026 Notes. Interest
is payable semiannually in arrears, on March 1 and September 1 of each year, beginning on September 1, 2016.
See Note 12 — Financing Arrangements to the Consolidated Financial Statements in this Form 10-K as it relates
to our Senior Notes, which is incorporated by reference into this Item 7.
Credit Facility
In March 19, 2015, we entered into a $500 million senior unsecured revolving credit facility with a syndicate of
banks. As of March 31, 2016, no amounts were outstanding under the credit facility. See Note 12 — Financing
Arrangements to the Consolidated Financial Statements in this Form 10-K as it relates to our credit facility,
which is incorporated by reference into this Item 7.
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