Electronic Arts 2000 Annual Report Download - page 47

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(L) NET INCOME PER SHARE The following summarizes the computations of Basic Earnings Per Share (“EPS”) and Diluted
EPS. Basic EPS is computed as net earnings divided by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based com-
pensation plans including stock options, restricted stock awards, warrants and other convertible securities using the treasury
stock method.
Years Ended March 31, 2000 1999 1998
(In thousands, except for per share amounts):
Net income $ 116,751 $ 72,872 $ 72,562
Shares used to compute net income per share:
Weighted-average common shares 62,830 60,748 58,867
Dilutive stock options 3,541 2,524 2,091
Dilutive potential common shares 66,371 63,272 60,958
Net income per share:
Basic $ 1.86 $ 1.20 $ 1.23
Diluted $ 1.76 $ 1.15 $ 1.19
Excluded from the above computation of weighted-average shares for diluted EPS for the fiscal years ended March 31, 2000,
1999 and 1998 were options to purchase 229,000, 645,000 and 137,000 shares of common stock, respectively, as the options’
exercise price was greater than the average market price of the common shares. For the fiscal year ended March 31, 2000, the
weighted-average exercise price of the respective options was $81.88. Class B common stock, authorized on March 22, 2000
was excluded from the Company’s calculations of basic and diluted EPS because its impact on the calculation is immaterial.
(M) EMPLOYEE BENEFITS The Company has a 401(k) Plan covering substantially all of its U.S. employees. The 401(k) Plan
permits the Company to make discretionary contributions to employees’ accounts based on the Company’s financial per-
formance. The Company contributed $1,799,000, $2,092,000 and $902,000 to the Plan in fiscal 2000, fiscal 1999 and fiscal
1998, respectively.
(N) STOCK-BASED COMPENSATION The Company accounts for stock-based awards to employees using the intrinsic value
method in accordance with Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees”
(“APB 25”).
(O) IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In December 1999, the Securities and Exchange Commission
(“SEC”) issued Staff Accounting Bulletin No. 101(“SAB 101”),
“Revenue Recognition,”
which outlines the basic criteria that
must be met to recognize revenue and provides guidance for presentation of revenue and for disclosure related to revenue
recognition policies in financial statements filed with the SEC. SAB 101 is effective for fiscal years beginning after December
15, 1999, except, as amended by SAB 101A, registrants with fiscal years that begin between December 16, 1999 and March 15,
2000 may report a change in accounting principle no later than the second quarter of fiscal years beginning after December
15, 1999. The Company believes the adoption of SAB 101 will not have a material impact on the Company’s financial position
and results of operations.
EA 2000 AR
45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS