Electronic Arts 2008 Annual Report Download - page 176
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The impact on retained earnings is comprised of the following amounts (in millions):
Fiscal 2007 Beginning
Balance Adjustment 2006 2005 2004
Year Ended March 31,
Increase in operating income............................. $13 $— $10 $3
Taxeffect........................................... (3) — (2) (1)
Increase in net income ................................. $10 $— $ 8 $2
Business Tax Expense Adjustment
We adjusted the beginning retained earnings balance for fiscal 2007 related to the correction of our historical
accounting of certain business tax expenses. Our internal review indicated that we had inadvertently not
accrued for approximately $7 million in probable business tax obligations related to prior years. We believe
the impact of these adjustments were not material to prior years’ income statements under the rollover
approach. However, under the iron curtain method, the cumulative business tax expense adjustments were
material to our fiscal 2007 financial statements and, therefore, we recognized the following cumulative
adjustment to our fiscal 2007 opening balance sheet (in millions):
Increase in accrued and other liabilities ................................................. $7
Decrease in deferred income tax liabilities ............................................... (3)
Decrease in retained earnings ......................................................... (4)
The impact on retained earnings is comprised of the following amounts (in millions):
Fiscal 2007 Beginning
Balance Adjustment 2006 2005 2004 2003
Year Ended March 31,
Decrease in operating income ...................... $(7) $(3) $(2) $ (1) $ (1)
Taxeffect..................................... 3 1 1 1 —
Decrease in net income ........................... $(4) $(2) $(1) $ — $ (1)
(15) INTEREST AND OTHER INCOME, NET
Interest and other income, net, for the years ended March 31, 2008, 2007 and 2006 consisted of (in millions):
2008 2007 2006
Year Ended March 31,
Interest income, net ................................................... $102 $104 $75
Net gain (loss) on foreign currency transactions .............................. 20 10 (1)
Net loss on foreign currency forward contracts ............................... (31) (13) (3)
Other income (expense), net ............................................ 7 (2) (7)
Interest and other income, net ......................................... $ 98 $ 99 $64
(16) NET INCOME (LOSS) PER SHARE
The following table summarizes the computations of basic earnings per share (“Basic EPS”) and diluted
earnings per share (“Diluted EPS”). Basic EPS is computed as net income divided by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could
occur from common shares issuable through stock-based compensation plans including stock options, restricted
100