Electronic Arts 2006 Annual Report Download - page 118

Consolidated Statement of Operations. See Note 4 of the Notes to Consolidated Financial Statements
included in Item 8 of this report.
Restructuring Charges
Restructuring charges for Ñscal years 2006 and 2005 were as follows (in millions):
March 31, % of Net March 31, % of Net
2006 Revenue 2005 Revenue $ Change % Change
$26 1% $2 Ì $24 1,200%
In November 2005, we announced plans to establish an international publishing headquarters in Geneva,
Switzerland. Since that time and through the six months ending September 30, 2006, we expect to
continue to relocate certain current employees to our new facility in Geneva, close certain facilities in the
U.K., and make other related changes in our international publishing business.
During Ñscal 2006, restructuring charges were approximately $14 million, of which $8 million was for the
closure of certain U.K. facilities, $3 million for employee-related expenses, and $3 million in other costs
relating to our international publishing reorganization. In Ñscal 2007, we expect to incur between
$15 million and $20 million of restructuring costs. Overall, including Ñscal 2006, we expect to incur
between $40 million and $50 million of restructuring costs, substantially all of which will result in cash
expenditures by 2017. These restructuring costs will consist primarily of employee-related relocation
assistance (approximately $28 million), facility exit costs (approximately $10 million), as well as other
reorganization costs (approximately $8 million). While we may incur severance costs paid to terminating
employees in connection with the reorganization, we do not expect these costs to be signiÑcant.
During the fourth quarter of Ñscal 2006, we aligned our resources with our product plan for Ñscal 2007 and
strategic opportunities with next-generation consoles, online and mobile platforms. As part of this
alignment we recorded a total pre-tax restructuring charge of $10 million consisting entirely of one-time
beneÑts related to headcount reductions which are included in restructuring charges in our Consolidated
Statement of Operations.
Interest and Other Income, Net
Interest and other income, net, for Ñscal years 2006 and 2005 was as follows (in millions):
March 31, % of Net March 31, % of Net
2006 Revenue 2005 Revenue $ Change % Change
$64 2% $56 2% $8 14%
For Ñscal 2006, interest and other income, net, increased by $8 million, or 14 percent, as compared to
Ñscal 2005 primarily due to an increase of $31 million in interest income as a result of higher yields on our
cash, cash equivalent and short-term investment balances, partially oÅset by a net loss of $22 million in
investments and foreign currency activities.
Income Taxes
Income taxes for Ñscal years 2006 and 2005 were as follows (in millions):
March 31, EÅective March 31, EÅective
2006 Tax Rate 2005 Tax Rate % Change
$147 37.6% $221 30.5% (33%)
Our eÅective income tax rates were 37.6 percent and 30.5 percent for Ñscal 2006 and Ñscal 2005,
respectively. For Ñscal 2006, our eÅective income tax rate is higher than the U.S. statutory rate of
35.0 percent for Ñscal 2006 due to a number of factors, including the repatriation of foreign earnings in
connection with the American Jobs Creation Act of 2004 (the ""Jobs Act''), as discussed below, and
additional charges resulting from certain intercompany transactions during the second and fourth quarters
of Ñscal 2006, which were partially oÅset by other items.
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