background image
Annual
Report
protection measures could make it more difficult for us to adequately protect against piracy. These factors could
have a negative effect on our growth and profitability in the future.
Our business is subject to currency fluctuations.
International sales are a fundamental part of our business. For the fiscal year ended March 31, 2013, international
net revenue comprised 55 percent of our total net revenue. We expect international sales to continue to account
for a significant portion of our total net revenue. Such sales may be subject to unexpected regulatory
requirements, tariffs and other barriers. Additionally, foreign sales are primarily made in local currencies, which
may fluctuate against the U.S. dollar. In addition, our foreign investments and our cash and cash equivalents
denominated in foreign currencies are subject to currency fluctuations. We use foreign currency forward
contracts to mitigate some foreign currency risk associated with foreign currency denominated monetary assets
and liabilities (primarily certain intercompany receivables and payables) to a limited extent and foreign currency
option contracts to hedge foreign currency forecasted transactions (primarily related to a portion of the revenue
and expenses denominated in foreign currency generated by our operational subsidiaries). However, these
activities are limited in the protection they provide us from foreign currency fluctuations and can themselves
result in losses. In the past, the disruption in the global financial markets has impacted many of the financial
institutions with which we do business, and we are subject to counterparty risk with respect to such institutions
with whom we enter into hedging transactions. A sustained decline in the financial stability of financial
institutions as a result of the disruption in the financial markets could negatively impact our treasury operations,
including our ability to secure credit-worthy counterparties for our foreign currency hedging programs.
Accordingly, our results of operations, including our reported net revenue, operating expenses and net income,
and financial condition can be adversely affected by unfavorable foreign currency fluctuations, especially the
Euro, British pound sterling and Canadian dollar.
We utilize debt financing and such indebtedness could adversely impact our business and financial
condition.
In July 2011, we issued $632.5 million aggregate principal amount of 0.75% Convertible Senior Notes due 2016
(the "Notes"), resulting in debt service obligations on the Notes of approximately $5 million per year. In
addition, in August 2012, we entered into an unsecured committed $500 million revolving credit facility. While
the facility is currently undrawn, we may use the proceeds of any future borrowings for general corporate
purposes. The credit facility contains affirmative, negative and financial covenants, including a maximum
capitalization ratio and minimum liquidity requirements.
We intend to fulfill our debt service obligations from cash generated by our operations and from our existing
cash and investments. We may enter into other financial instruments in the future.
Our indebtedness could have significant negative consequences. For example, it could:
increase our vulnerability to general adverse economic and industry conditions;
limit our ability to obtain additional financing;
require the dedication of a substantial portion of any cash flow from operations to the payment of
principal of, and interest on, our indebtedness, thereby reducing the availability of such cash flow to
fund our growth strategy, working capital, capital expenditures and other general corporate purposes;
limit our flexibility in planning for, or reacting to, changes in our business and our industry; and
place us at a competitive disadvantage relative to our competitors with less debt.
We may not have enough available cash or be able to arrange for financing to pay such principal amount at the
time we are required to make purchases of the Notes or convert the Notes. In addition, we may be required to use
funds that are domiciled in foreign tax jurisdictions in order to make the cash payments upon any purchase or
conversion of the Notes. If we were to choose to use such funds, we would be required to accrue and pay
19