Electronic Arts 2004 Annual Report Download - page 81

(p) Foreign Currency Translation
For each of our foreign operating subsidiaries the functional currency is its local currency. Assets and liabilities
of foreign operations are translated into U.S. dollars using month end exchange rates, and revenue and
expenses are translated into U.S. dollars using average exchange rates. The eÅects of foreign currency
translation adjustments are included as a component of accumulated other comprehensive income (loss) in
stockholders' equity.
Foreign currency transaction gains and losses are a result of the eÅect of exchange rate changes on
transactions denominated in currencies other than the functional currency. Included in interest and other
income, net, in the Consolidated Statements of Operations are foreign currency transaction gains (losses) of
$44.3 million, $21.7 million and $(2.0) million for the Ñscal years ended March 31, 2004, 2003 and 2002,
respectively.
(q) Impact of Recently Issued Accounting Standards
In January 2003, the FASB issued Interpretation No. 46 (""FIN 46''), ""Consolidation of Variable Interest
Entities''. This interpretation of Accounting Research Bulletin No. 51, ""Consolidated Financial Statements,''
addresses consolidation by business enterprises of variable interest entities (""VIEs'') that either (i) do not
have suÇcient equity investment at risk to permit the entity to Ñnance its activities without additional
subordinated Ñnancial support, or (ii) are owned by equity investors who lack an essential characteristic of a
controlling Ñnancial interest. This interpretation applies immediately to VIEs created after January 31, 2003.
With regard to VIEs already in existence prior to February 1, 2003, the implementation of FIN 46 was
delayed and currently applies to the Ñrst Ñscal year or interim period beginning after December 15, 2003.
FIN 46 requires disclosure of VIEs in Ñnancial statements issued after January 31, 2003, if it is reasonably
possible that as of the transition date (i) we will be the primary beneÑciary of an existing VIE that will
require consolidation, or (ii) we will hold a signiÑcant variable interest in, or have signiÑcant involvement
with, an existing VIE. We adopted FIN 46 in the quarter ended December 31, 2003; however, it did not have a
material impact on our consolidated Ñnancial position or results of operations.
In January 2003, the Emerging Issues Task Force reached consensus on Issue No. 00-21 (""EITF 00-21''),
""Revenue Arrangements with Multiple Deliverables''. EITF 00-21 provides guidance on how to determine
whether an arrangement involving multiple deliverables requires that such deliverables be accounted for
separately. EITF 00-21 allows for prospective adoption for arrangements entered into after June 15, 2003 or
adoption via a cumulative eÅect of a change in accounting principle. We adopted EITF 00-21 in the quarter
ended June 30, 2003; however, it did not have a material impact on our consolidated Ñnancial position or
results of operations.
In March 2004, the Emerging Issues Task Force ratiÑed the consensus reached on paragraphs 6 through 23 of
Issue No. 03-01 (""EITF 03-1''), ""The Meaning of Other-Than-Temporary Impairment and Its Application
to Certain Investments''. EITF 03-1 requires that certain quantitative and qualitative disclosures should be
required for debt and marketable equity securities classiÑed as available-for-sale or held-to-maturity under
SFAS No. 115, ""Accounting for Certain Investments in Debt and Equity Securities'' and SFAS No. 124,
""Accounting for Certain Investments Held by Not-for-ProÑt Organizations'' that are impaired at the balance
sheet date but for which an other-than-temporary impairment has not been recognized. We adopted
EITF 03-1 in the year ended March 31, 2004; however, it did not have a material impact on the disclosures in
our Consolidated Financial Statements.
66