Electronic Arts 2008 Annual Report Download - page 175

The change in the components of accumulated other comprehensive income is summarized as follows (in
millions):
Foreign
Currency
Translation
Adjustment
Unrealized
Gains
(Losses) on
Investments,
net
Unrealized
Gains
(Losses) on
Derivative
Instruments,
net
Accumulated
Other
Comprehensive
Income
Balances as of March 31, 2005 . . ............... $30 $ 26 $— $ 56
Other comprehensive income (loss) .............. (10) 37 — 27
Balances as of March 31, 2006 . . ............... 20 63 — 83
Other comprehensive income . . . ............... 23 188 — 211
Balances as of March 31, 2007 . . ............... 43 251 — 294
Other comprehensive income (loss) .............. 42 251 (3) 290
Balances as of March 31, 2008 . . ............... $85 $502 $ (3) $584
The change in unrealized gains (losses) on investments and derivative instruments are shown net of taxes of
$3 million in fiscal 2008, less than $1 million in fiscal 2007 and $0 in fiscal 2006.
During fiscal 2007 and 2006, we realized substantially all gains and losses outstanding from our derivative
instruments. See Note 3 of the Notes to Consolidated Financial Statements.
(14) STAFF ACCOUNTING BULLETIN No. 108
In September 2006, the SEC issued SAB No. 108, “Financial Statements — Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”. SAB No. 108
provides guidance on how prior year misstatements should be taken into consideration when quantifying
misstatements in current year financial statements for purposes of determining whether the current year’s
financial statements are materially misstated. We adopted SAB No. 108 in fiscal 2007.
In accordance with SAB No. 108, we considered both the “rollover” approach, which quantifies misstatements
originating in the current year income statement and the “iron curtain” approach which quantifies misstate-
ments based on the effects of correcting the misstatements existing in the balance sheet at the end of the
reporting period. Prior to our application of the guidance in SAB No. 108, we used the rollover approach. We
elected to recognize the cumulative effect of adoption as adjustments to assets and liabilities as of the
beginning of fiscal 2007 and the offsetting adjustment to the opening balance of retained earnings for fiscal
2007.
Property and Equipment Capitalization Adjustment
We adjusted the beginning retained earnings balance for fiscal 2007 related to the correction of our historical
accounting treatment of certain property and equipment purchases. We capitalize property and equipment
purchases when certain quantitative thresholds are met; otherwise, they are expensed when purchased. Our
internal review of our capitalization thresholds suggested that certain property and equipment should have
been capitalized and not expensed. We believe the impact of the property and equipment capitalization errors
were not material to prior years’ income statements under the rollover approach. However, under the iron
curtain method, the cumulative property and equipment capitalization errors 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 property and equipment, net ................................................. $13
Increase in deferred income tax liabilities ............................................... 3
Increase in retained earnings . ........................................................ 10
Annual Report
99