Electronic Arts 2008 Annual Report Download - page 177

stock, restricted stock units, common stock through our employee stock purchase plan, warrants and other
convertible securities using the treasury stock method.
(In millions, except per share amounts) 2008 2007 2006
Year Ended March 31,
Net income (loss) ................................................. $(454) $ 76 $ 236
Shares used to compute net income (loss) per share:
Weighted-average common stock outstanding — basic ..................... 314 308 304
Dilutive potential common shares .................................... — 9 10
Weighted-average common stock outstanding — diluted ................... 314 317 314
Net income (loss) per share:
Basic ......................................................... $(1.45) $0.25 $0.78
Diluted ....................................................... $(1.45) $0.24 $0.75
As a result of our net loss for the fiscal year ended March 31, 2008, we have excluded certain stock awards
from the diluted loss per share calculation as their inclusion would have been antidilutive. Had we reported
net income during this period, an additional 7 million shares of common stock would have been included in
the number of shares used to calculate diluted earnings per share for the fiscal year ended March 31, 2008.
Options to purchase 18 million, 16 million and 7 million shares of common stock were excluded from the
above computation of diluted shares for the fiscal years ended March 31, 2008, 2007 and 2006, respectively,
as their inclusion would have been antidilutive. For fiscal 2008, 2007 and 2006, the weighted-average exercise
price of these shares was $53.89, $55.84 and $63.64 per share, respectively.
(17) RELATED PERSON TRANSACTIONS
Prior to becoming Chief Executive Officer of Electronic Arts, John Riccitiello was a Founder and Managing
Director of Elevation Partners, L.P., and also served as Chief Executive Officer of VGH, which we acquired in
January 2008. At the time of the acquisition, Mr. Riccitiello held an indirect financial interest in VGH
resulting from his interest in the entity that controlled Elevation Partners, L.P. and his interest in a limited
partner of Elevation Partners, L.P. Elevation Partners, L.P. was a significant stockholder of VGH.
On June 24, 2002, we hired Warren C. Jenson as our Executive Vice President, Chief Financial and
Administrative Officer and agreed to loan him $4 million to be forgiven over four years based on his
continuing employment. The loan did not bear interest. On June 24, 2004, pursuant to the terms of the loan
agreement, we forgave $2 million of the loan and provided Mr. Jenson approximately $1.6 million to offset
the tax implications of the forgiveness. On June 24, 2006, pursuant to the terms of the loan agreement, we
forgave the remaining outstanding loan balance of $2 million. No additional funds were provided to offset the
tax implications of the forgiveness of the $2 million balance.
(18) SEGMENT INFORMATION
Our reporting segments are based upon: our internal organizational structure; the manner in which our
operations are managed; the criteria used by our Chief Executive Officer, our chief operating decision maker
(“CODM”), to evaluate segment performance; the availability of separate financial information; and overall
materiality considerations.
Prior to the fourth quarter of fiscal 2008, we managed our business primarily based on geographical
performance. Accordingly, our combined global publishing organizations represented our reportable segment,
namely Publishing, due to their similar economic characteristics, products and distribution methods. Publishing
refers to the manufacturing, marketing, advertising and distribution of products developed or co-developed by
us, or distribution of certain third-party publishers’ products through our co-publishing and distribution
program.
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