Electronic Arts 2009 Annual Report Download - page 176

Provision for (benefit from) income taxes for the fiscal years ended March 31, 2009, 2008 and 2007 consisted of
(in millions):
Current Deferred Total
Year Ended March 31, 2009
Federal .......................................................... $(15) $161 $146
State ............................................................ (2) 76 74
Foreign .......................................................... 26 (13) 13
$ 9 $224 $233
Year Ended March 31, 2008
Federal .......................................................... $(28) $ (43) $ (71)
State ............................................................ (1) (21) (22)
Foreign .......................................................... 46 (6) 40
$ 17 $ (70) $ (53)
Year Ended March 31, 2007
Federal .......................................................... $ 98 $(31) $ 67
State ............................................................ 4 (22) (18)
Foreign .......................................................... 14 3 17
$116 $ (50) $ 66
The differences between the statutory tax expense (benefit) rate and our effective tax expense (benefit) rate,
expressed as a percentage of income (loss) before provision for (benefit from) income taxes and minority
interest, for the years ended March 31, 2009, 2008 and 2007 were as follows:
Year Ended March 31,
2009 2008 2007
Statutory federal tax expense (benefit) rate ............................ (35.0%) (35.0%) 35.0%
State taxes, net of federal benefit .................................... (2.1%) (2.7%) (0.7%)
Differences between statutory rate and foreign effective tax rate ........... 2.6% 1.9% (8.6%)
Valuation allowance .............................................. 42.8% — 0.7%
Research and development credits ................................... (1.6%) (1.5%) (3.0%)
Non-deductible acquisition-related costs and tax expense from integration
restructurings ................................................. — 9.5% 7.2%
Non-deductible goodwill impairment ................................ 13.6% — —
Non-deductible losses on strategic investments ......................... 2.6% 8.2% —
Loss on facility impairment ........................................ 0.6% 3.5% —
Non-deductible stock-based compensation ............................ 3.7% 5.5% 15.5%
Other .......................................................... — 0.3% 2.1%
Effective tax expense (benefit) rate ................................ 27.2% (10.3%) 48.2%
Undistributed earnings of our foreign subsidiaries amounted to approximately $1.1 billion as of March 31, 2009.
Those earnings are considered to be indefinitely reinvested and, accordingly, no U.S. income taxes have been
provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject
to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to
various foreign countries. It is not practicable to determine the income tax liability that might be incurred if these
earnings were to be distributed.
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