Electronic Arts 2002 Annual Report Download - page 56

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(p) 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
performance.The Company contributed $4,811,000, $1,127,000 and $1,799,000 to the Plan in fiscal
2002, fiscal 2001 and fiscal 2000, respectively.
(q) 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 (“APB 25”),
“Accounting for Stock Issued to Employees”
and Financial Accounting Standards Board issued Interpretation No. 44 (“FIN 44”),
“Accounting for Certain
Transactions Involving Stock Compensation (an interpretation of APB Opinion No. 25)”
.The Company
has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123
(“SFAS 123”),
“Accounting for Stock-Based Compensation”
.
(r) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Such estimates
include provisions for doubtful accounts, sales returns and allowances, long-lived assets, deferred income
taxes, warranty provisions, and estimates regarding the recoverability of prepaid royalty advances and inven-
tories. Actual results could differ from those estimates.
(s) Reclassifications
Certain amounts have been reclassified to conform to fiscal 2002 presentation.
(2) TRACKING STOCK
On March 22, 2000, the stockholders of Electronic Arts authorized the issuance of a new series of common
stock, designated as Class B common stock (“Tracking Stock”).The Tracking Stock is intended to reflect the
performance of Electronic Arts’ online and e-Commerce division, EA.com. As a result of the approval of the
Tracking Stock Proposal, Electronic Arts’ existing common stock has been re-classified as Class A common
stock (“Class A Stock”) and that stock reflects the performance of Electronic Arts’ other businesses, EA Core.
(3) FINANCIAL INSTRUMENTS
(a) Cash and Investments
(In thousands)
AS OF MARCH 31, 2002 2001
Cash and cash equivalents:
Cash $134,577 $70,196
Money market funds 380,632 250,182
Municipal securities 27,189 91,879
Commercial paper 10,428 7,555
Cash and cash equivalents 552,826 419,812
Short-term investments:
Available-for-sale
U.S. Agency bonds 222,985 —
Corporate bonds 8,236 4,076
Municipal securities 4,489 42,604
Held-to-maturity
U.S.Treasury securities 8,400 —
Short-term investments 244,110 46,680
Cash, cash equivalents and short-term investments $796,936 $466,492
Long-term investments:
U.S.Treasury securities $—$8,400
EA 2002 AR
52