Attached files
 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 |