Electronic Arts 2007 Annual Report Download - page 166

The components of the deferred tax assets, net, as of March 31, 2007 and 2006 consisted of (in millions):
2007 2006
As of March 31,
Deferred tax assets:
Accruals, reserves and other expenses ......................................... $101 $103
Tax credit carryforwards ................................................... 60 40
Unrealized loss on marketable equity securities .................................. — 3
Equity compensation ...................................................... 25 —
Net operating loss & capital loss carryforwards .................................. 8 4
Total ................................................................ 194 150
Valuation allowance ...................................................... (5) (6)
Deferred tax asset net of valuation allowance .................................. 189 144
Deferred tax liabilities:
Depreciation ............................................................ (41) (40)
Amortization ........................................................... (21) (27)
State effect on federal taxes ................................................ (23) (14)
Prepaids and other liabilities ................................................ (3) (6)
Total ................................................................ (88) (87)
Deferred tax asset, net ................................................... $101 $ 57
As of March 31, 2007, deferred tax assets, net, of $84 million were classified as current assets, $25 million
were classified as long-term assets and deferred tax liabilities, net, of $8 million were classified as long-term
liabilities. As of March 31, 2006, deferred tax assets, net, of $86 million were classified as current assets and
deferred tax liabilities, net, of $29 million were classified as long-term liabilities.
Of the tax credit carryforwards as of March 31, 2007, we have research and development tax credit
carryforwards of approximately $54 million for California purposes, which can be carried forward indefinitely.
In the fourth quarter of fiscal 2006, we repatriated $375 million of foreign earnings to take advantage of the
favorable provisions of the American Jobs Creation Act (the “Jobs Act”). Under the Jobs Act, the qualifying
portion of this repatriation was eligible for a temporary 85 percent dividends received deduction on certain
foreign earnings. Accordingly, we recorded tax expense in fiscal 2006 of $17 million related to this
repatriation.
(11) STOCKHOLDERS’ EQUITY
(a) Preferred Stock
As of March 31, 2007 and 2006, we had 10,000,000 shares of preferred stock authorized but unissued. The
rights, preferences, and restrictions of the preferred stock may be designated by our Board of Directors without
further action by our stockholders.
(b) Common Stock
On March 22, 2000, our stockholders authorized the issuance of a new series of common stock, designated as
Class B common stock (“Tracking Stock”). The Tracking Stock was intended to reflect the performance of the
EA.com online games business segment. As a result of the approval of the Tracking Stock proposal, our
existing common stock was re-classified as Class A common stock and was intended to reflect the
performance of our core console and PC business segment. With the authorization of the Class B common
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