Item 2.05 Costs Associated with Exit or Disposal Activities.
On March 27, 2023, the Board of Directors of Electronic Arts Inc. (the "Company") approved a restructuring plan (the "Plan") focused on prioritizing investments to the Company's growth opportunities and optimizing its real estate portfolio. The Plan includes actions driven by portfolio rationalization, including intellectual property impairment charges and headcount reductions impacting approximately 6% of the Company's workforce, in addition to office space reductions.
The Company estimates that it will incur approximately $170 million to $200 million in charges in connection with the Plan. These charges consist primarily of approximately $65 million to $70 million in charges related to intellectual property impairment, approximately $55 million to $65 million related to employee severance and employee-related costs, approximately $45 million to $55 million associated with office space reductions, and approximately $5 million to $10 million of other charges, including contract cancellations. Of the aggregate amount of charges that the Company estimates it will incur, the Company expects that approximately $80 million to $100 million will be future cash expenditures.
The actions associated with the Plan are expected to be substantially complete by September 30, 2023. Certain payments associated with lease obligations will be paid in accordance with their terms.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements. We use words such as “anticipate,” “believe,” “expect,” “intend,” “estimate”, “plan”, “predict”, “seek”, “goal”, “will”, “may”, “likely”, “should”, “could” (and the negative of any of these terms), “future” and similar expressions to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, trends in our business, uncertain events and assumptions and other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements consist of, among other things, statements related to our business, operations and financial results, and our future financial performance, and may include certain assumptions that underlie the forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that might cause or contribute to such differences include those described in Electronic Arts’ latest Quarterly Report on Form 10-Q under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission, including Electronic Arts’ Annual Report on Form 10-K, filed on May 25, 2022. We assume no obligation to revise or update any forward-looking statement for any reason, except as required by law.