Electronic Arts 2001 Annual Report Download - page 62

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60
2001 AR
At March 31, 2001, deferred tax assets of $57,082,000 and $2,926,000 were included in other current assets and
other assets, respectively.
At March 31, 2001, the Company had net Federal operating loss carryforwards of approximately $19,000,000
for income tax reporting purposes, which expire in 2021.
The Company also has research and experimental tax credits aggregating approximately $15,000,000 and
$11,000,000 for federal and California purposes, respectively. The federal credit carryforwards expire in 2021.
The California credits carry over indefinitely until utilized.
The differences between the statutory income tax rate and the Company’s effective tax rate, expressed as a percentage
of income before provision for income taxes, for the years ended March 31, 2001, 2000 and 1999 were as follows:
2001 2000 1999
Statutory Federal tax rate (35.0 %) 35.0 % 35.0 %
State taxes, net of Federal benefit (10.0 %) 1.5 % 1.5 %
Differences between statutory rate and foreign effective tax rate 20.2 % (2.8 %) (2.5 %)
Research and development credits (4.7 %) (1.7 %) (2.1 %)
Nondeductible acquisition costs 0.0 % 0.0 % 7.4 %
Other (1.5 %) (1.0 %) (1.0 %)
(31.0 %) 31.0 % 38.3 %
The Company provides for U.S. taxes on an insignificant portion of the undistributed earnings of its foreign
subsidiaries and does not provide taxes on the remainder. The Company has not provided for Federal income tax
on approximately $170,000,000 of undistributed earnings of its foreign subsidiaries, since the Company intends
to reinvest this amount in foreign subsidiary operations indefinitely.
At March 31, 2001, the Company believes it is more likely than not that the results of future operations will gen-
erate sufficient taxable income to realize the net deferred tax assets.
The Company’s U.S. income tax returns for the years 1992 through 1995 have been examined by the Internal
Revenue Service (IRS). In 1998, the Company received a notice of deficiencies from the IRS. These deficiencies
relate primarily to operations in Puerto Rico, which the Company is contesting in Tax Court. The Company
believes that any additional liabilities, if any, that arise from the outcome of this examination will not be material
to the Company’s consolidated financial statements.
(16) INTEREST AND OTHER INCOME, NET
Interest and other income, net for the years ended March 31, 2001, 2000 and 1999 consisted of:
(In thousands)
2001 2000 1999
Interest income $ 17,903 $ 13,744 $ 12,625
Gain (loss) on disposition of assets, net (1,778) 8,339 725
Foreign currency losses (888) (1,781) (1,168)
Equity in net gain (loss) of affiliates 820 1,138 (155)
Other income (expense), net 829 (5,412) 1,153
$ 16,886 $ 16,028 $ 13,180