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Annual
Report
The effect of foreign currency forward contracts in our Consolidated Statements of Operations for the fiscal years
ended March 31, 2013, 2012 and 2011, was as follows (in millions):
Location of Gain (Loss)
Recognized in Income on
Derivative
Amount of Gain (Loss) Recognized in Income on
Derivative
Year Ended March 31,
2013
2012
2011
Foreign currency forward contracts not
designated as hedging instruments . . . .
Interest and other income
(expense), net
$(2)
$21
$(12)
(5) BUSINESS COMBINATIONS
Fiscal Year 2013 Acquisitions
During the fiscal year ended March 31, 2013, we completed one acquisition that did not have a significant impact
on our Consolidated Financial Statements.
Fiscal Year 2012 Acquisitions
PopCap Games Inc.
In August 2011, we acquired all of the outstanding shares of PopCap for an aggregate purchase price of
approximately (1) $645 million in cash and (2) $87 million in privately-placed shares of our common stock to the
founders and chief executive officer of PopCap. In addition, we agreed to grant over a four year period to
PopCap's employees up to $50 million in long-term equity retention arrangements in the form of restricted stock
unit awards and options to acquire our common stock. These awards and options are accounted for as stock-
based compensation in accordance with ASC 718, Compensation Stock Compensation. PopCap is a leading
developer of games for mobile phones, tablets, PCs, and social network sites. This acquisition strengthened our
participation in casual gaming and contributed to the growth of our digital product offerings.
The following table summarizes the acquisition date fair value of the consideration transferred which consisted
of the following (in millions):
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$645
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Total purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$732
The equity included in the consideration above consisted of privately-placed shares of our common stock, whose
fair value was determined based on the quoted market price of our common stock on the date of acquisition.
In addition, we may be required to pay additional variable cash consideration that is contingent upon the
achievement of certain performance milestones through December 31, 2013 and is limited to a maximum of $550
million based on achievement of certain non-GAAP earnings targets before interest and tax. At the upper end of
the earn-out, the performance targets for earnings before income and taxes ("EBIT") are approximately $343
million in aggregate PopCap stand-alone EBIT generated over the two-year period ending December 31, 2013.
We have not paid any earn-out to date. The estimated fair value of the contingent consideration arrangement at
the acquisition date was $95 million. We estimated the fair value of the contingent consideration using
probability assessments of expected future cash flows over the period in which the obligation is expected to be
settled, and applied a discount rate that appropriately captures a market participant's view of the risk associated
with the obligation. The final allocation of the purchase price was completed during the third quarter of fiscal
year 2012.
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