Electronic Arts 2009 Annual Report Download - page 130

Fiscal 2008 Reorganization
In connection with our fiscal 2008 reorganization, during fiscal year 2008, we incurred approximately $97
million of reorganization charges, of which $58 million was for facilities-related expenses, $27 million was for
other expenses including other contract termination costs as well as IT and consulting costs to assist in the
reorganization of our business support functions, and $12 million was for employee-related expenses.
Fiscal 2006 International Publishing Reorganization
In connection with our fiscal 2006 international publishing reorganization, during fiscal year 2008, we incurred
approximately $6 million of employee-related expenses. During fiscal 2007, restructuring charges related to our
fiscal 2006 international publishing reorganization were approximately $15 million, of which $10 million was for
employee-related expenses.
Losses on Strategic Investments, Net
Losses on strategic investments, net for fiscal years 2008 and 2007 were as follows (in millions):
March 31,
2008
% of Net
Revenue
March 31,
2007
% of Net
Revenue $ Change % Change
$(118) (3%) $— — $(118) N/A
For fiscal year 2008, we recognized $118 million of losses on strategic investments, net due to (1) an $81 million
impairment charge on our investment in The9 and (2) a $37 million impairment charge on our investments in
Neowiz Corporation’s common and preferred shares.
Interest and Other Income, Net
Interest and other income, net, for fiscal years 2008 and 2007 were as follows (in millions):
March 31,
2008
% of Net
Revenue
March 31,
2007
% of Net
Revenue $ Change % Change
$98 3% $99 3% $(1) (1%)
For fiscal year 2008, interest and other income, net, decreased by $1 million, or 1 percent, as compared to fiscal
year 2007 primarily resulting from (1) an increase of $8 million in losses recognized due to foreign exchange and
(2) a net decrease of $2 million in interest. These items were significantly offset by a $9 million gain recognized
on sales of investments.
Income Taxes
Income tax expense (benefit) for fiscal years 2008 and 2007 were as follows (in millions):
March 31,
2008
Effective
Tax Rate
March 31,
2007
Effective
Tax Rate % Change
$(53) (10.3%) $66 48.2% (180%)
Our effective income tax benefit rate was 10.3 percent for fiscal year 2008. Our effective income tax expense rate
was 48.2 percent for fiscal year 2007. For fiscal year 2008, our effective income tax benefit rate was lower than
the U.S. statutory rate of 35.0 percent due to a number of factors, including non-deductible acquisition-related
costs, losses on strategic investments and certain loss on facility impairment for which future tax benefit is
uncertain and not more likely than not to be realized, as well as certain non-deductible stock-based compensation
expenses. For fiscal year 2007, our effective income tax rate was higher than the U.S. statutory rate of 35.0
percent due to a number of factors, including certain non-deductible stock-based compensation expenses and
additional charges resulting from certain non-deductible acquisition-related costs.
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