Electronic Arts 2007 Annual Report Download - page 164
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Director Indemnity Agreements
We have entered into indemnification agreements with each of the members of our Board of Directors at the
time they joined the Board to indemnify them to the extent permitted by law against any and all liabilities,
costs, expenses, amounts paid in settlement and damages incurred by the directors as a result of any lawsuit,
or any judicial, administrative or investigative proceeding in which the directors are sued or charged as a result
of their service as members of our Board of Directors.
(10) INCOME TAXES
Our pretax income from operations for the fiscal years ended March 31, 2007, 2006 and 2005 consisted of the
following components (in millions):
2007 2006 2005
Year Ended March 31,
Domestic .......................................................... $ 31 $200 $386
Foreign ........................................................... 107 189 339
Income before provision for income taxes and minority interest.................. $138 $389 $725
Income tax expense (benefit) for the fiscal years ended March 31, 2007, 2006 and 2005 consisted of (in
millions):
Current Deferred Total
Year Ended March 31, 2007
Federal ...................................................... $ 98 $(31) $ 67
State ........................................................ 4 (22) (18)
Foreign ...................................................... 14 3 17
$116 $(50) $ 66
Year Ended March 31, 2006
Federal ...................................................... $ 91 $17 $108
State ........................................................ 13 2 15
Foreign ...................................................... 32 (8) 24
$136 $ 11 $147
Year Ended March 31, 2005
Federal ...................................................... $184 $ 4 $188
State ........................................................ 10 11 21
Foreign ...................................................... 9 3 12
$203 $ 18 $221
During fiscal 2006 we recognized a $73 million reduction in income taxes payable following a U.S. Tax Court
ruling regarding the proper allocation of the tax deduction for stock options between U.S. and foreign entities.
Although the Tax Court ruling remains subject to appeal, as a precedent, it is relevant to our situation.
Accordingly, we released a reserve of $73 million during fiscal 2006, whereby, we recorded a reduction to our
income tax payable and an increase to additional paid-in capital with no impact to net income.
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