Convertible Debt Offering Summary Electronic Arts July 20, 2011 Exhibit 99.2 |
Safe Harbor Statement Please review our risk factors on Form 10-K filed with the SEC. Some statements set forth in this presentation contain forward-looking statements that are subject to change. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause results to differ materially from the expectations expressed in these forward-looking statements include the following: sales of the Company’s titles; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; the effectiveness of the Company’s sales and marketing programs; timely development and release of Electronic Arts’ products; the Company’s ability to realize the anticipated benefits of acquisitions, including the PopCap acquisition; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences among competing platforms; the Company’s ability to service and support digital product offerings; general economic conditions; and other factors described in EA’s SEC filings (including EA’s Annual Report on Form 10-K for the year ended March 31, 2011). If any of these risks or uncertainties materializes, actual results could differ materially from the expectations described in these forward-looking statements. These forward-looking statements speak only as of the date of this presentation. EA assumes no obligation to update these forward-looking statements. |
3 Security Convertible Senior Notes due 2016 (“The Notes”) Total Size $632.5MM (including fully exercised $82.5MM greenshoe) Coupon 0.75% Conversion Premium / Price 35.0% / $31.74 Underlying Shares 19.93MM Call Spread To raise the effective conversion premium and price to 75% and $41.14, respectively Maturity 5 years Call Protection Non-call life Puts None Financial Covenants None Settlement Net share settlement Ranking Senior unsecured Takeover Protection Standard change of control provision with make-whole Dividend Protection Standard adjustment if EA initiates a dividend Use of Proceeds Fund acquisition of PopCap, pay the cost of the convertible note hedge transaction and for general corporate purposes EA Announces Completion of $632.5MM Convertible Notes Offering |
4 • The Notes: $632.5MM of 0.75% Convertible Senior Notes due 2016 • Net cost of convertible note hedge transactions $42.3M or 6.7% of bond issuance • Significant high quality investor demand including existing shareholders of EA • Marketed Efficiently: One-day marketed transaction enabled EA to efficiently reach investors while minimizing market exposure and stock price impact • Settlement: Net share settlement • Principal is paid with cash at maturity and only the amount above the upper strike is settled in shares • Minimal Economic Dilution: Call spread overlay increased effective conversion premium and price to 75% and $41.14, respectively • No ownership dilution to common stock holders below $41.14 per share • Allows for a 5-year ERTS CAGR of ~12% of stock price appreciation Convertible Offering Highlights A cost efficient form of financing; no shareholder dilution below $41.14/share Note: Tax deductibility on issuance expected to be better than the stated cash coupon due to tax integration of bond and hedge. The result is approximately $130 million of gross implied deductible interest costs further lowering after-tax borrowing costs. Preliminary estimates as of July 20, 2011, subject to change. |
0.0 5.0 10.0 $26.14 $31.14 $36.14 $41.14 $46.14 $51.14 $56.14 $61.14 $66.14 0.0% 1.5% 3.0% Number of Shares % of Total Shares Outstanding Stock Price at Conversion Shares Issued Upon Conversion Minimal Economic Dilution Shares Issued Upon Conversion MM % of TSO 0.75% up 35.0% for base convertible, $41.14 upper strike (75.0% effective premium) A B C = Max(0, A-$41.14) D = B*C E = D/A F Stock Price At Conversion Shares Underlying (MM) In-the-Money Amount including Call Spread In-the-Money Amount ($MM) including Call Spread Number of Shares (MM) % of Total Shares Outstanding $26.14 19.9 $0.00 0.0 0.0 0.0% $31.14 19.9 $0.00 0.0 0.0 0.0% $36.14 19.9 $0.00 0.0 0.0 0.0% $41.14 19.9 $0.00 0.0 0.0 0.0% $46.14 19.9 $5.00 99.6 2.2 0.6% $51.14 19.9 $10.00 199.2 3.9 1.2% $56.14 19.9 $15.00 298.9 5.3 1.6% $61.14 19.9 $20.00 398.5 6.5 2.0% $66.14 19.9 $25.00 498.2 7.5 2.3% 5 Shares Issued Upon Conversion - Convertible with Call Spread Overlay |