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EA Reports Third Quarter Fiscal Year 2009 Results

Quality Scores Rise in Calendar 2008

Cost-Reduction Initiatives to Result in Significantly

Lower Operating Expenses in Fiscal 2010

Category:

Tuesday, February 3, 2009 1:00 pm PST

Dateline:

REDWOOD CITY, Calif.

Public Company Information:

NASDAQ:
ERTS
US2855121099

REDWOOD CITY, Calif.--(BUSINESS WIRE)--REDWOOD CITY, Calif.--(BUSINESS WIRE)--Electronic Arts Inc. (NASDAQ:ERTS) today announced preliminary financial results for its fiscal third quarter ended December 31, 2008.

Fiscal Third Quarter Results (comparisons are to the quarter ended December 31, 2007)

GAAP net revenue for the third quarter was $1.65 billion, up $151 million as compared with $1.50 billion for the prior year. During the quarter, EA had a net deferral of $88 million of net revenue related to certain online-enabled packaged goods games and digital content as compared with $231 million in the prior year.

Non-GAAP net revenue was $1.74 billion, as compared with $1.73 billion for the prior year. Sales were driven by FIFA 09, Rock Band™ 2, Need for Speed™ Undercover, Rock Band, Left 4 Dead™, Dead Space™, Madden NFL 09, LITTLEST PET SHOP, NBA Live 09 and Mirror’s Edge™.

GAAP net loss for the quarter was $641 million, including certain charges, as compared with a net loss of $33 million for the prior year. Diluted loss per share was $2.00 as compared with diluted loss per share of $0.10 for the prior year. During the quarter, the Company recorded an estimated pre-tax goodwill impairment charge of $368 million related to its wireless business and a $244 million charge for a valuation allowance reserve on certain deferred tax assets.

Non-GAAP net income was $179 million as compared with non-GAAP net income of $290 million a year ago. Non-GAAP diluted earnings per share were $0.56 as compared with non-GAAP diluted earnings per share of $0.90 for the prior year.

Trailing-twelve-month operating cash flow was $82 million as compared with $267 million a year ago. The Company ended the quarter with cash and short-term investments of $2.0 billion.

“Our holiday quarter came in below our expectations and we have significantly reduced our financial outlook for fiscal 2009, a clear disappointment,” said John Riccitiello, Chief Executive Officer. “We delivered on game quality and innovation in calendar 2008, with 13 titles rated 80 or above -- more than any third-party publisher. We expect to build on this great quality record in the year ahead while delivering more profitability.”

As a part of an overall cost reduction program, the Company is reducing its workforce by approximately 11%, or 1,100 people, closing 12 facilities, narrowing its product portfolio and cutting other variable costs. The Company expects to incur total restructuring charges, including severance and facility closures, of $65 to $75 million, which will be recorded over the next twelve months.

“Given our recent performance and the current economic environment, we are aligning our cost structure with a lower projection of revenue, resulting in approximately $500 million of operating expense reductions in fiscal 2010 as compared with our previous plans,” said Eric Brown, Chief Financial Officer.

Highlights

  • EA was the leading publisher in North America with approximately 20 percent segment share according to NPD. In Europe, EA was number two behind Nintendo with an estimated 16 percent segment share.
  • EA had 13 titles rated 80 or above in calendar 2008 – up from seven a year ago.
  • FIFA 09 was EA’s best selling title with 7.8 million copies and charted at number one across all platforms in Europe in the holiday quarter.
  • Rock Band was the number one title across all platforms in North America for calendar 2008, based on NPD data.
  • Need for Speed Undercover sold 5.2M copies. For fiscal year 2010, the Company will launch three separate versions of Need For Speed (NFS), NFS Shift for the PLAYSTATION®3 computer entertainment system and Xbox 360® video game and entertainment system, NFS Nitro for the Wii™ and Nintendo DS™ and NFS World Online for the PC.
  • LITTLEST PET SHOP sold 2.8 million copies on the Nintendo DS, Wii and PC. In the holiday quarter, it was a top-five title on the Nintendo DS in Europe and North America, based on NPD data.
  • Warhammer® Online: Age of Reckoning®, an MMO from EA’s Mythic Entertainment studio, ended the quarter with over 300K paying subscribers in North America and Europe.
  • EA’s digital direct-to-consumer revenue, which includes online and wireless, was $313 million year-to-date, up 27 percent year-over-year.
  • Pogo™ achieved an all-time high of 1.7M paying subscribers in the quarter.
  • EA Mobile™ is the world’s leading publisher of games for phones – with revenue of $50 million in the quarter – up 28 percent year-over-year.

Business Outlook

The following forward-looking statements, as well as those made above, reflect expectations as of February 3, 2009. Results may be materially different and are affected by many factors, including: development delays on EA’s products; competition in the industry; the health of the economy in the U.S. and abroad and the related impact on discretionary consumer spending; changes in anticipated costs; expected savings and impact on EA’s operations of the Company’s cost reduction plan; consumer demand for console hardware and the ability of the console manufacturers to produce an adequate supply of consoles to meet that demand; changes in foreign exchange rates; the financial impact of potential future acquisitions by EA; the popular appeal of EA’s products; EA’s effective tax rate; and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

The Company updated its fiscal year 2009 guidance and provided initial guidance for fiscal year 2010.

Fiscal Year Expectations – Ending March 31, 2009

  • GAAP net revenue is expected to be between $4.2 and $4.25 billion.
  • Non-GAAP net revenue is expected to be approximately $4.1 billion.
  • GAAP diluted loss per share is expected to be between $3.29 and $3.56.
  • Non-GAAP diluted loss per share is expected to be approximately $0.35.
  • For purposes of calculating fiscal year 2009 GAAP and non-GAAP loss per share, the Company estimates a share count of 321 million shares.
  • Expected non-GAAP net loss excludes the following pre-tax items (other than the difference in the Company’s GAAP and non-GAAP tax expenses) from expected GAAP net loss:
  • $(150) to $(100) million for the impact of the change in deferred net revenue (packaged goods and digital content),
  • $368 million of estimated goodwill impairment,
  • $206 million of estimated stock-based compensation,
  • $21 million of certain abandoned acquisition related costs
  • $75 million of amortization of intangible assets,
  • $60 to $70 million of restructuring charges,
  • $67 million of losses on strategic investments,
  • $3 million in acquired-in process technology, and
  • $295 to $320 million in difference between the Company’s GAAP and non-GAAP tax expenses.

The Company’s updated fiscal year 2009 revenue guidance is lower than its previously announced guidance primarily as a result of weaker than expected sales, the Company’s decision to release certain titles, including The Sims 3, Godfather 2 and Dragon Age on the PC in fiscal 2010 (rather than in fiscal 2009), and the strengthening of the US dollar.

In fiscal 2009, the Company began using a fixed, long-term projected tax rate of 28 percent internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team. Accordingly, the Company has applied the same 28 percent tax rate to its fiscal 2009 non-GAAP financial results. The Company expects its GAAP tax expense to be approximately $250 to $275 million for fiscal 2009.

Fiscal Year Expectations – Ending March 31, 2010

  • GAAP net revenue is expected to be between $4.2 and $4.35 billion.
  • Non-GAAP net revenue is expected to be approximately $4.3 billion.
  • GAAP diluted earnings (loss) per share are expected to be between a loss per share of $0.05 and earnings per share of $0.40.
  • Non-GAAP diluted earnings per share are expected to be approximately $1.00.
  • For purposes of calculating fiscal year 2010 GAAP and non-GAAP earnings (loss) per share, the Company estimates a share count of 323 million shares.
  • Expected non-GAAP net income excludes the following pre-tax items from expected GAAP net income (other than the difference in the Company’s GAAP and non-GAAP tax expenses):
  • $100 to $(50) million for the impact of the change in deferred net revenue (packaged goods and digital content),
  • $185 million of estimated stock-based compensation,
  • $85 million of amortization of intangible assets,
  • $40 to $55 million of restructuring charges, and
  • $(65) to $(85) million in difference between the Company’s GAAP and non-GAAP tax expenses.

Conference Call

Electronic Arts will host a conference call today at 2:00 pm PT (5:00 pm ET) to review its results for the fiscal third quarter ended December 31, 2008 and its outlook for the future. During the course of the call, Electronic Arts may also disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number: (877) 874-1565, access code 220497, or via webcast: http://investor.ea.com.

A dial-in replay of the conference call will be provided until February 10, 2009 at (719) 457-0820, access code 220497. A webcast archive of the conference call will be available for one year at http://investor.ea.com.

Non-GAAP Financial Measures

To supplement the Company’s unaudited condensed consolidated financial statements presented in accordance with GAAP, Electronic Arts uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. The non-GAAP financial measures used by Electronic Arts include: non-GAAP net revenue, non-GAAP gross profit, non-GAAP operating income (loss), non-GAAP net income (loss) and historical and estimated non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures exclude the following items, as applicable in a given reporting period, from the Company’s unaudited condensed consolidated statements of operations:

  • Amortization of intangibles
  • Stock-based compensation
  • Acquired in-process technology
  • Restructuring charges
  • Losses on strategic investments
  • Change in deferred net revenue (packaged goods and digital content)
  • Certain abandoned acquisition-related costs
  • Estimated goodwill impairment

Through the end of fiscal 2008, Electronic Arts made certain income tax adjustments to its non-GAAP financial measures to reflect the income tax effects of each of the items it excluded from its pre-tax non-GAAP financial measures, as well as certain discrete one-time income tax adjustments. This approach was consistent with how the Company evaluated operating performance, planned, forecasted and analyzed future periods, and assessed the performance of its management team.

In fiscal 2009, the Company began using a fixed, long-term projected tax rate of 28 percent internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team. Accordingly, the Company has applied the same 28 percent tax rate to its fiscal 2009 non-GAAP financial results.

Electronic Arts may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.

Electronic Arts believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding the Company’s performance by excluding certain items that may not be indicative of the Company’s core business, operating results or future outlook. Electronic Arts’ management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing the Company’s operating results both as a consolidated entity and at the business unit level, as well as when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of the Company’s performance to prior periods.

In addition to the reasons stated above, which are generally applicable to each of the items Electronic Arts excludes from its non-GAAP financial measures, the Company believes it is appropriate to exclude certain items for the following reasons:

Amortization of Intangibles. When analyzing the operating performance of an acquired entity, Electronic Arts’ management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity as compared to the purchase price paid) without taking into consideration any allocations made for accounting purposes. Because the purchase price for an acquisition necessarily reflects the accounting value assigned to intangible assets (including acquired in-process technology and goodwill), when analyzing the operating performance of an acquisition in subsequent periods, the Company’s management excludes the GAAP impact of acquired intangible assets to its financial results. Electronic Arts believes that such an approach is useful in understanding the long-term return provided by an acquisition and that investors benefit from a supplemental non-GAAP financial measure that excludes the accounting expense associated with acquired intangible assets.

In addition, in accordance with GAAP, Electronic Arts generally recognizes expenses for internally-developed intangible assets as they are incurred, notwithstanding the potential future benefit such assets may provide. Unlike internally-developed intangible assets, however, and also in accordance with GAAP, the Company generally capitalizes the cost of acquired intangible assets and recognizes that cost as an expense over the useful lives of the assets acquired (other than goodwill, which is not amortized, and acquired in-process technology, which is expensed immediately, as required under GAAP). As a result of their GAAP treatment, there is an inherent lack of comparability between the financial performance of internally-developed intangible assets and acquired intangible assets. Accordingly, Electronic Arts believes it is useful to provide, as a supplement to its GAAP operating results, a non-GAAP financial measure that excludes the amortization of acquired intangibles.

Stock-Based Compensation. Electronic Arts adopted SFAS 123(R), “Share-Based Payment” beginning in its fiscal year 2007. When evaluating the performance of its individual business units, the Company does not consider stock-based compensation charges. Likewise, the Company’s management teams exclude stock-based compensation expense from their short and long-term operating plans. In contrast, the Company’s management teams are held accountable for cash-based compensation and such amounts are included in their operating plans. Further, when considering the impact of equity award grants, Electronic Arts places a greater emphasis on overall shareholder dilution rather than the accounting charges associated with such grants.

Video game platforms have historically had a life cycle of four to six years, which causes the video game software market to be cyclical. The Company’s management analyzes its business and operating performance in the context of these business cycles, comparing Electronic Arts’ performance at similar stages of different cycles. For comparability purposes, Electronic Arts believes it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of its core business.

Restructuring Charges. Although Electronic Arts has engaged in various restructuring activities in the past, each has been a discrete, extraordinary event based on a unique set of business objectives. Each of these restructurings has been unlike its predecessors in terms of its operational implementation, business impact and scope. The Company does not engage in restructuring activities on a regular basis or in the ordinary course of business. As such, the Company believes it is appropriate to exclude restructuring charges from its non-GAAP financial measures.

Change in Deferred Net Revenue (Packaged Goods and Digital Content). Beginning in fiscal 2008, Electronic Arts was no longer able to objectively determine the fair value of the online service included in certain of its packaged goods games and online content. As a result, the Company began recognizing the revenue from the sale of these games and content over the estimated online service period. Although Electronic Arts defers the recognition of a significant portion of its net revenue as a result of this change, there has been no adverse impact to its operating cash flow. Internally, Electronic Arts’ management excludes the impact of the change in deferred net revenue related to packaged goods games and digital content in its non-GAAP financial measures when evaluating the Company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. The Company believes that excluding the impact of the change in deferred net revenue from its operating results is important to facilitate comparisons to prior periods during which the Company was able to objectively determine the fair value of the online service and not delay the recognition of significant amounts of net revenue related to online-enabled packaged goods.

Certain Abandoned Acquisition-Related Costs. Electronic Arts incurred significant legal, banking and other consulting fees related to the Company’s proposed acquisition and related cash tender offer for all of the outstanding shares of Take-Two Interactive Software, Inc. On August 18, 2008, the Company allowed the tender offer to expire without purchasing any shares of Take-Two and, on September 14, 2008, the Company announced that it had terminated discussions with, and would not be making a proposal to acquire, Take-Two. The costs incurred in connection with the abandoned proposal and tender offer were outside the ordinary course of business and will be excluded by the Company when assessing the performance of its management team. As such, the Company believes it is appropriate to exclude such expenses from its non-GAAP financial measures.

Estimated Goodwill Impairment. Adverse economic conditions, including the decline in the Company’s market capitalization and expected financial performance, indicated that a potential impairment of goodwill existed during the three months ended December 31, 2008. As a result, the Company performed goodwill impairment tests for its reporting units in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” and determined that goodwill related to its mobile reporting unit was impaired. As the Company excludes the GAAP impact of acquired intangible assets (such as goodwill) from its financial results when analyzing the operating performance of an acquisition in subsequent periods, Electronic Arts believes it is appropriate to exclude estimated goodwill impairment charges from its non-GAAP financial measures.

In the financial tables below, Electronic Arts has provided a reconciliation of the most comparable GAAP financial measure to each of the historical non-GAAP financial measures used in this press release.

Forward-Looking Statements

Some statements set forth in this release, including the estimates relating to operating expense reductions in fiscal year 2010, charges that the Company will incur in connection with its restructuring plan and estimates under the headings “Business Outlook” contain forward-looking statements that are subject to change. Statements including words such as "anticipate", "believe", “estimate” or "expect" and statements in the future tense are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: the Company’s ability to successfully implement its cost reduction plans; sales of the Company’s titles during the remainder of fiscal year 2009 and fiscal year 2010; the general health of the U.S. and global economy and the related impact on discretionary consumer spending; fluctuations in foreign exchange rates; consumer spending trends; the Company’s ability to manage expenses during the remainder of the fiscal year and beyond; the competition in the interactive entertainment industry; the effectiveness of the Company’s sales and marketing programs; timely development and release of Electronic Arts’ products; the consumer demand for, and the availability of an adequate supply of console hardware units (including the Xbox 360® video game and entertainment system, the PLAYSTATION®3 computer entertainment system and the Wii™); consumer demand for software for the PlayStation 2; the Company’s ability to predict consumer preferences among competing hardware platforms; the financial impact of potential future acquisitions by EA; the Company’s ability to realize the anticipated benefits of acquisitions; the seasonal and cyclical nature of the interactive game segment; the Company’s ability to attract and retain key personnel; changes in the Company’s effective tax rates; the performance of strategic investments; the impact of certain accounting requirements, such as the Company’s ability to estimate and recognize goodwill impairment charges and make tax valuation allowances; adoption of new accounting regulations and standards; potential regulation of the Company’s products in key territories; developments in the law regarding protection of the Company’s products; the Company’s ability to secure licenses to valuable entertainment properties on favorable terms; and other factors described in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008. These forward-looking statements speak only as of February 3, 2009. Electronic Arts assumes no obligation and does not intend to update these forward-looking statements, including those made under the heading “Business Outlook”. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2008. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended December 31, 2008.

About Electronic Arts

Electronic Arts Inc. (EA), headquartered in Redwood City, California, is the world's leading interactive entertainment software company. Founded in 1982, the Company develops, publishes, and distributes interactive software worldwide for video game systems, personal computers, wireless devices and the Internet. Electronic Arts markets its products under four brand names: EA SPORTSTM, EATM, EA SPORTS Freestyle TM and POGOTM. In fiscal 2008, EA posted GAAP net revenue of $3.67 billion and had 27 titles that sold more than one million copies. EA's homepage and online game site is www.ea.com. More information about EA's products and full text of press releases can be found on the Internet at http://info.ea.com.

EA, EA SPORTS, EA SPORTS Freestyle, EA Mobile, POGO, Need for Speed, and Dead Space are trademarks or registered trademarks of Electronic Arts Inc. in the U.S. and/or other countries. Mirror’s Edge is a trademark or registered trademark of EA Digital Illusions CE AB. Rock Band is a trademark of Harmonix Music Systems, Inc., a division of MTV Networks. Warhammer, Warhammer Online and Age of Reckoning are either ®, ™ and/or © Games Workshop Ltd 2000-2008. John Madden, NFL, FIFA, and NBA are trademarks or registered trademarks of their respective owners and used with permission. Xbox and Xbox 360 are trademarks of the Microsoft group of companies and are used under license from Microsoft. “PlayStation” and “PLAYSTATION” are registered trademarks of Sony Computer Entertainment Inc. Wii and Nintendo DS are trademarks of Nintendo. All other trademarks are the property of their respective owners.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in millions, except per share data)
               
Three Months Ended Nine Months Ended
December 31,   December 31,
  2008     2007     2008     2007  
 
Net revenue $ 1,654 $ 1,503 $ 3,352 $ 2,537
Cost of goods sold   925     782     1,778     1,342  
Gross profit 729 721 1,574 1,195
 
Operating expenses:
Marketing and sales 250 213 575 459
General and administrative 82 95 258 250
Research and development 299 321 1,027 829
Acquired in-process technology 1 - 3 -
Amortization of intangibles 15 7 46 21
Certain abandoned acquisition-related costs - - 21 -
Goodwill impairment 368 - 368 -
Restructuring charges   18     78     41     85  
Total operating expenses   1,033     714     2,339     1,644  
 
Operating income (loss) (304 ) 7 (765 ) (449 )
 
Losses on strategic investments (27 ) (12 ) (67 ) (12 )
Interest and other income, net   14     32     36     90  
 
Income (loss) before provision for (benefit from) income taxes (317 ) 27 (796 ) (371 )
 
Provision for (benefit from) income taxes   324     60     250     (10 )
 
Net loss $ (641 ) $ (33 ) $ (1,046 ) $ (361 )
 
Loss per share
Basic and diluted $ (2.00 ) $ (0.10 ) $ (3.28 ) $ (1.15 )
 
Number of shares used in computation
Basic and diluted 321 315 319 313
 
Non-GAAP Results (in millions, except per share data)
 

The following tables reconcile the Company's net loss and loss per share as presented in its Unaudited Condensed Consolidated Statements of Operations as prepared in accordance with Generally Accepted Accounting Principles ("GAAP") to its non-GAAP net income and non-GAAP diluted earnings per share.  The Company's non-GAAP results exclude the following, if any: the impact of the change in deferred net revenue (packaged goods and digital content), acquisition-related expenses (such as amortization of intangibles, acquired in-process technology, and certain abandoned acquisition-related costs), stock-based compensation, goodwill impairment, restructuring charges, and losses on strategic investments.  In addition, prior to fiscal 2009, the Company's non-GAAP financial results excluded income tax adjustments consisting of the income tax expense or benefit associated with the foregoing excluded items and the impact of certain one-time income tax adjustments.  On April 1, 2008, the Company began using a fixed, long-term projected tax rate of 28% internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team.  Accordingly, the Company began applying the same 28% tax rate to its fiscal 2009 non-GAAP financial results.  Had the three and nine months ended December 31, 2007, been adjusted to reflect a comparable 28% non-GAAP tax rate, adjusted income tax adjustments would have been ($52) and ($132) as compared to ($49) and ($137), adjusted non-GAAP net income would have been $287 and $313 as compared to $290 and $308, and adjusted non-GAAP diluted earnings per share would have been $0.89 and $0.98 as compared to $0.90 and $0.96, respectively.

 
Three Months Ended Nine Months Ended
December 31,   December 31,
  2008     2007     2008     2007  
 
Net loss $ (641 ) $ (33 ) $ (1,046 ) $ (361 )
 
Acquired in-process technology 1 - 3 -
Amortization of intangibles 15 7 46 21
Certain abandoned acquisition-related costs - - 21 -
Change in deferred net revenue (packaged goods and digital content) 88 231 125 563
COGS amortization of intangibles 4 6 11 20
Goodwill impairment 368 - 368 -
Losses on strategic investments 27 12 67 12
Restructuring charges 18 78 41 85
Stock-based compensation 44 38 147 105
Income tax adjustments   255     (49 )   241     (137 )
 
Non-GAAP net income $ 179   $ 290   $ 24   $ 308  
 
Non-GAAP diluted earnings per share $ 0.56 $ 0.90 $ 0.07 $ 0.96
 
Number of shares used in computation 322 323 325 320
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in millions)
       
December 31, March 31,
2008

2008 (a)

 
ASSETS
 
Current assets:
Cash, cash equivalents and short-term investments $ 1,959 $ 2,287
Marketable equity securities 302 729
Receivables, net of allowances of $303 and $238, respectively 794 306
Inventories 295 168
Deferred income taxes, net 48 145
Other current assets   239   290  
Total current assets 3,637 3,925
 
Property and equipment, net 372 396
Goodwill 808 1,152
Other intangibles, net 236 265
Deferred income taxes, net 33 164
Other assets   118   157  
 
TOTAL ASSETS $ 5,204 $ 6,059  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 333 $ 229
Accrued and other current liabilities 943 683
Deferred net revenue (packaged goods and digital content)   512   387  
Total current liabilities 1,788 1,299
 
Income tax obligations 228 319
Deferred income taxes, net 42 5
Other liabilities   93   97  
Total liabilities 2,151 1,720
 
Common stock 3 3
Paid-in capital 2,074 1,864
Retained earnings 842 1,888
Accumulated other comprehensive income   134   584  
Total stockholders' equity   3,053   4,339  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,204 $ 6,059  
 
(a)Derived from audited consolidated financial statements.
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
         
Three Months Ended Nine Months Ended
December 31,   December 31,
  2008       2007     2008       2007  
 
OPERATING ACTIVITIES
 
Net loss $ (641 ) $ (33 ) $ (1,046 ) $ (361 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, net 48 42 152 115
Stock-based compensation 44 38 147 105
Net losses on investments and sale of property and equipment 27 9 67 8
Goodwill impairment 368 - 368 -
Non-cash restructuring charges 2 42 18 42
Acquired in-process technology 1 - 3 -
Change in assets and liabilities:
Receivables, net (223 ) (383 ) (476 ) (539 )
Inventories 35 (69 ) (128 ) (108 )
Other assets 12 22 30 (56 )
Accounts payable 19 140 108 169
Accrued and other liabilities 52 267 171 183
Deferred income taxes, net 380 43 258 (68 )
Deferred net revenue (packaged goods and digital content)   88     231     125     563  
Net cash provided by (used in) operating activities   212     349     (203 )   53  
 
INVESTING ACTIVITIES
 
Capital expenditures (27 ) (25 ) (90 ) (62 )
Purchase of marketable equity securities and other investments - - - (277 )
Proceeds from maturities and sales of short-term investments 100 587 610 1,978
Purchase of short-term investments (146 ) (179 ) (459 ) (1,388 )
Loan advance - (30 ) - (30 )
Acquisition of subsidiaries, net of cash acquired   (16 )   -     (58 )   -  
Net cash provided by (used in) investing activities   (89 )   353     3     221  
 
FINANCING ACTIVITIES
 
Proceeds from issuance of common stock 6 74 75 160
Excess tax benefit from stock-based compensation   (14 )   14     2     45  
Net cash provided by (used in) financing activities   (8 )   88     77     205  
 
Effect of foreign exchange on cash and cash equivalents   (33 )   14     (51 )   28  
Increase (decrease) in cash and cash equivalents 82 804 (174 ) 507
Beginning cash and cash equivalents   1,297     1,074     1,553     1,371  
Ending cash and cash equivalents 1,379 1,878 1,379 1,878
Short-term investments   580     705     580     705  
Ending cash, cash equivalents and short-term investments $ 1,959   $ 2,583   $ 1,959   $ 2,583  
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and Headcount)
               
Q3 Q4 Q1 Q2 Q3 YOY %
FY08 FY08 FY09 FY09 FY09 Change
 
CONSOLIDATED FINANCIAL DATA
 
Net revenue 1,503 1,127 804 894 1,654 10 %
Net revenue - trailing twelve months ("TTM") 3,151 3,665 4,074 4,328 4,479 42 %
 
Gross profit 721 665 508 337 729 1 %
Gross profit % (as a % of net revenue) 48 % 59 % 63 % 38 % 44 %
Gross profit - TTM 1,573 1,860 2,139 2,231 2,239 42 %
Gross profit % (as a % of TTM net revenue) 50 % 51 % 53 % 52 % 50 %
 
Operating income (loss) 7 (37 ) (97 ) (364 ) (304 ) (4443 %)
Operating income (loss) % (as a % of net revenue) - (3 %) (12 %) (41 %) (18 %)
Operating loss - TTM (521 ) (487 ) (401 ) (491 ) (802 ) (54 %)
Operating loss % (as a % of TTM net revenue) (17 %) (13 %) (10 %) (11 %) (18 %)
 
Net loss (33 ) (94 ) (95 ) (310 ) (641 ) (1842 %)
Loss per share $ (0.10 ) $ (0.30 ) $ (0.30 ) $ (0.97 ) $ (2.00 ) (1900 %)
Net loss - TTM (385 ) (454 ) (417 ) (532 ) (1,140 ) (196 %)
Loss per share - TTM $ (1.22 ) $ (1.45 ) $ (1.32 ) $ (1.67 ) $ (3.57 ) (193 %)
 
CASH FLOW DATA
 
Operating cash flow 349 285 (291 ) (124 ) 212 (39 %)
Operating cash flow - TTM 267 338 239 219 82 (69 %)
 
Capital expenditures 25 22 31 32 27 8 %
Capital expenditures - TTM 122 84 101 110 112 (8 %)
 
BALANCE SHEET DATA
 
Cash, cash equivalents and short-term investments 2,583 2,287 1,947 1,825 1,959 (24 %)
Marketable equity securities 837 729 732 640 302 (64 %)
Receivables, net 830 306 269 547 794 (4 %)
Inventories 178 168 223 328 295 66 %

Deferred net revenue (packaged goods and
digital content)

End of the quarter 595 387 192 424 512
Less: Beginning of the quarter   364     595     387     192     424  
Change in deferred net revenue (packaged goods and digital content)   231     (208 )   (195 )   232     88  
 
STOCK-BASED COMPENSATION
 
Cost of goods sold 1 - 1 - -
Marketing and sales 5 5 5 5 5
General and administrative 11 9 10 13 11
Research and development   21     31     34     35     28  
Total Stock-Based Compensation   38     45     50     53     44  
 
Marketing and sales 1 % - 1 % 1 % -
General and administrative 1 % 1 % 1 % 1 % 1 %
Research and development   1 %   3 %   4 %   4 %   2 %
Total Stock-Based Compensation (as a % of Net Revenue)   3 %   4 %   6 %   6 %   3 %
 
OTHER
 
Employees 8,165 9,037 9,391 9,671 9,760 20 %
Diluted weighted-average shares 315 317 318 319 321
 
GEOGRAPHIC NET REVENUE MIX
 
North America 768 649 429 555 957 25 %
Europe 668 421 329 301 623 (7 %)
Asia   67     57     46     38     74   10 %
Net Revenue   1,503     1,127     804     894     1,654   10 %
 
Geographic Net Revenue Mix (as a % of Net Revenue)
North America 51 % 58 % 53 % 62 % 58 %
Europe 44 % 37 % 41 % 34 % 38 %
Asia   5 %   5 %   6 %   4 %   4 %
Net Revenue   100 %   100 %   100 %   100 %   100 %
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and Headcount)
               
Q3 Q4 Q1 Q2 Q3 YOY %
FY08 FY08 FY09 FY09 FY09 Change  
 
PLATFORM NET REVENUE MIX
 
Xbox 360 196 128 81 224 265 35 %
PLAYSTATION 3 102 152 139 98 217 113 %
Wii 139 75 57 33 172 24 %
PlayStation 2 301 166 79 54 137 (54 %)
Xbox 3 1 - 1 - (100 %)
Nintendo GameCube 1   -   -   -   -   (100 %)
Total Consoles 742 522 356 410 791 7 %
 
PC 148 114 86 88 119 (20 %)
 
Nintendo DS 122 36 21 43 115 (6 %)
Wireless 39 42 44 47 48 23 %
PSP 74 69 57 36 35 (53 %)
Game Boy Advance 2   -   -   -   -   (100 %)
Total Mobile 237 147 122 126 198 (16 %)
 
Co-publishing and Distribution 320 295 191 214 456 43 %
 
Licensing, Advertising & Other 31 24 21 27 45 45 %
Subscription Services 25   25   28   29   45   80 %
Total Internet Services, Licensing & Other 56   49   49   56   90   61 %
 
Total Net Revenue 1,503   1,127   804   894   1,654   10 %

 

Platform Net Revenue Mix (as a % of Net Revenue)
 
Xbox 360 13 % 11 % 10 % 25 % 16 %
PLAYSTATION 3 7 % 14 % 17 % 11 % 13 %
Wii 9 % 7 % 7 % 4 % 11 %
PlayStation 2 20 % 15 % 10 % 6 % 8 %
Total Consoles 49 % 47 % 44 % 46 % 48 %
 
PC 10 % 10 % 11 % 10 % 7 %
 
Nintendo DS 8 % 3 % 3 % 5 % 7 %
Wireless 3 % 4 % 5 % 5 % 3 %
PSP 5 % 6 % 7 % 4 % 2 %
Total Mobile 16 % 13 % 15 % 14 % 12 %
 
Co-publishing and Distribution 21 % 26 % 24 % 24 % 27 %
 
Licensing, Advertising & Other 2 % 2 % 3 % 3 % 3 %
Subscription Services 2 % 2 % 3 % 3 % 3 %
Total Internet Services, Licensing & Other 4 % 4 % 6 % 6 % 6 %
 
Total Net Revenue 100 % 100 % 100 % 100 % 100 %
 
PLATFORM SKU RELEASE MIX (a)
 
Xbox 360 5 4 4 8 8 60 %
PLAYSTATION 3 5 4 3 8 7 40 %
Wii 7 - 1 4 12 71 %
PlayStation 2 7 - 2 4 7 -
Xbox -   -   -   1   -   -
Total Consoles 24 8 10 25 34 42 %
 
PC 4 5 8 5 13 225 %
 
Nintendo DS 5 1 - 6 9 80 %
PSP 4   1   1   3   3   (25 %)
Total Mobile 9   2   1   9   12   33 %
 
Total SKUs 37   15   19   39   59   59 %
 
(a)

Co-publishing and Distribution, Wireless, iPod®, and iPhoneTM releases are not included in SKU count.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Reconciliation of GAAP to Non-GAAP Results
(in millions, except per share data)
                   
 
 

The following tables reconcile the Company's net revenue, gross profit, operating income (loss), net loss and loss per share as presented in its Unaudited Condensed Consolidated Statements of Operations as prepared in accordance with Generally Accepted Accounting Principles ("GAAP") with its non-GAAP net revenue, non-GAAP gross profit, non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP diluted earnings (loss) per share.  The Company's non-GAAP net revenue excludes the impact of the change in deferred net revenue (packaged goods and digital content).  The Company's non-GAAP gross profit excludes the impact of the change in deferred net revenue (packaged goods and digital content), COGS amortization of intangibles, and stock-based compensation. The Company's non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP diluted earnings (loss) per share exclude the impact of the change in deferred net revenue (packaged goods and digital content), amortization of intangibles, stock-based compensation, acquired in-process technology, certain abandoned acquisition-related costs, goodwill impairment, and restructuring charges.  In addition, the Company's non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share exclude losses on strategic investments and, prior to fiscal 2009, income tax adjustments consisting of the income tax expense or benefit associated with the foregoing excluded items and the impact of certain one-time income tax adjustments.  On April 1, 2008, the Company began using a fixed, long-term projected tax rate of 28% internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team.  Accordingly, the Company began applying the same 28% tax rate to its fiscal 2009 non-GAAP financial results.  Had Q3 and Q4 in FY08 been adjusted to reflect a comparable 28% non-GAAP tax rate, adjusted income tax adjustments would have been ($52) and ($37) as compared to ($49) and $6, adjusted non-GAAP net income (Ioss) would have been $287 and ($13) as compared to $290 and $30, and adjusted non-GAAP diluted earnings (loss) per share would have been $0.89 and ($0.04) as compared to $0.90 and $0.09, respectively.

 
Q3 Q4 Q1 Q2 Q3 YOY %
FY08 FY08 FY09 FY09 FY09 Change
QUARTERLY RECONCILIATION OF RESULTS
 
GAAP net revenue $ 1,503 $ 1,127 $ 804 $ 894 $ 1,654 10 %
Change in deferred net revenue (packaged goods and digital content)   231     (208 )   (195 )   232     88  
Non-GAAP net revenue $ 1,734   $ 919   $ 609   $ 1,126   $ 1,742   -
 
GAAP gross profit $ 721 $ 665 $ 508 $ 337 $ 729 1 %
Change in deferred net revenue (packaged goods and digital content) 231 (208 ) (195 ) 232 88
COGS amortization of intangibles 6 6 3 4 4
Stock-based compensation   1     -     1     -     -  
Non-GAAP gross profit $ 959   $ 463   $ 317   $ 573   $ 821   (14 %)
Non-GAAP gross profit % (as a % of non-GAAP net revenue) 55 % 50 % 52 % 51 % 47 %
 
GAAP operating income (loss) $ 7 $ (37 ) $ (97 ) $ (364 ) $ (304 ) (4443 %)
Acquired in-process technology - 138 2 - 1
Amortization of intangibles 7 13 15 16 15
Certain abandoned acquisition-related costs - - - 21 -
Change in deferred net revenue (packaged goods and digital content) 231 (208 ) (195 ) 232 88
COGS amortization of intangibles 6 6 3 4 4
Goodwill impairment - - - - 368
Restructuring charges 78 18 20 3 18
Stock-based compensation   38     45     50     53     44  
Non-GAAP operating income (loss) $ 367   $ (25 ) $ (202 ) $ (35 ) $ 234   (36 %)
Non-GAAP operating income (loss) profit % (as a % of non-GAAP net revenue) 21 % (3 %) (33 %) (3 %) 13 %
 
GAAP net loss $ (33 ) $ (94 ) $ (95 ) $ (310 ) $ (641 ) (1842 %)
Acquired in-process technology - 138 2 - 1
Amortization of intangibles 7 13 15 16 15
Certain abandoned acquisition-related costs - - - 21 -
Change in deferred net revenue (packaged goods and digital content) 231 (208 ) (195 ) 232 88
COGS amortization of intangibles 6 6 3 4 4
Goodwill impairment - - - - 368
Losses on strategic investments 12 106 6 34 27
Restructuring charges 78 18 20 3 18
Stock-based compensation 38 45 50 53 44
Income tax adjustments   (49 )   6     59     (73 )   255  
Non-GAAP net income (loss) $ 290   $ 30   $ (135 ) $ (20 ) $ 179   (38 %)
Non-GAAP net income (loss) % (as a % of non-GAAP net revenue) 17 % 3 % (22 %) (2 %) 10 %
 
GAAP loss per share $ (0.10 ) $ (0.30 ) $ (0.30 ) $ (0.97 ) $ (2.00 ) (1900 %)
Non-GAAP diluted earnings (loss) per share $ 0.90 $ 0.09 $ (0.42 ) $ (0.06 ) $ 0.56 (38 %)
Number of shares used in computation 323 323 318 319 322
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Reconciliation of GAAP to Non-GAAP Results
(in millions, except per share data)
           
 
 
     

The following tables reconcile the Company's net revenue, gross profit, operating loss, net loss and loss per share as presented in its Unaudited Condensed Consolidated Statements of Operations as prepared in accordance with Generally Accepted Accounting Principles ("GAAP") with its non-GAAP net revenue, non-GAAP gross profit, non-GAAP operating income (loss), non-GAAP net income, and non-GAAP diluted earnings per share.  The Company's non-GAAP net revenue excludes the impact of the change in deferred net revenue (packaged goods and digital content).  The Company's non-GAAP gross profit excludes the impact of the change in deferred net revenue (packaged goods and digital content), COGS amortization of intangibles, and stock-based compensation.  The Company's non-GAAP operating income (loss), non-GAAP net income, and non-GAAP diluted earnings per share exclude the impact of the change in deferred net revenue (packaged goods and digital content), amortization of intangibles, stock-based compensation, acquired in-process technology, certain abandoned acquisition-related costs, goodwill impairment, and restructuring charges.  In addition, the Company's non-GAAP net income and non-GAAP diluted earnings per share exclude losses on strategic investments and, prior to fiscal 2009, income tax adjustments consisting of the income tax expense or benefit associated with the foregoing excluded items and the impact of certain one-time income tax adjustments.  On April 1, 2008, the Company began using a fixed, long-term projected tax rate of 28% internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team.  Accordingly, the Company began applying the same 28% tax rate to its fiscal 2009 non-GAAP financial results.  Had Q3 and Q4 in FY08 and Q1, Q2, and Q3 in FY09 been adjusted to reflect a comparable 28% non-GAAP tax rate, adjusted TTM income tax adjustments would have been ($150), ($170), ($108), ($103), and $204 as compared to ($138), ($131), ($55), ($57), and $247, adjusted TTM non-GAAP net income would have been $315, $300, $219, $119, and $11 as compared to $327, $339, $272, $165, and $54, and adjusted TTM non-GAAP diluted earnings per share would have been $0.97, $0.94, $0.68, $0.37, and $0.04 as compared to $1.01, $1.06, $0.84, $0.51, and $0.17, respectively.

 
Q3 Q4 Q1 Q2 Q3 YOY %
FY08 FY08 FY09 FY09 FY09 Change
TRAILING TWELVE MONTH RECONCILIATION OF RESULTS
 
GAAP net revenue $ 3,151 $ 3,665 $ 4,074 $ 4,328 $ 4,479 42 %
Change in deferred net revenue (packaged goods and digital content) (a)   563     355     124     60     (83 )
Non-GAAP net revenue (a) $ 3,714   $ 4,020   $ 4,198   $ 4,388   $ 4,396   18 %
 
GAAP gross profit $ 1,573 $ 1,860 $ 2,139 $ 2,231 $ 2,239 42 %
Change in deferred net revenue (packaged goods and digital content) (a) 563 355 124 60 (83 )
COGS amortization of intangibles 27 26 22 19 17
Stock-based compensation   3     2     3     2     1  
Non-GAAP gross profit $ 2,166   $ 2,243   $ 2,288   $ 2,312   $ 2,174   -
Non-GAAP gross profit % (as a % of non-GAAP net revenue) 58 % 56 % 55 % 53 % 49 %
 
GAAP operating loss $ (521 ) $ (487 ) $ (401 ) $ (491 ) $ (802 ) (54 %)
Acquired in-process technology - 138 140 140 141
Amortization of intangibles 28 34 42 51 59
Certain abandoned acquisition-related costs - - - 21 21
Change in deferred net revenue (packaged goods and digital content) (a) 563 355 124 60 (83 )
COGS amortization of intangibles 27 26 22 19 17
Goodwill impairment - - - - 368
Restructuring charges 88 103 121 119 59
Stock-based compensation   132     150     171     186     192  
Non-GAAP operating income (loss) $ 317   $ 319   $ 219   $ 105   $ (28 ) (109 %)
Non-GAAP operating income (loss) % (as a % of non-GAAP net revenue) 9 % 8 % 5 % 2 % (1 %)
 
GAAP net loss $ (385 ) $ (454 ) $ (417 ) $ (532 ) $ (1,140 ) (196 %)
Acquired in-process technology - 138 140 140 141
Amortization of intangibles 28 34 42 51 59
Certain abandoned acquisition-related costs - - - 21 21
Change in deferred net revenue (packaged goods and digital content) (a) 563 355 124 60 (83 )
COGS amortization of intangibles 27 26 22 19 17
Goodwill impairment - - - - 368
Losses on strategic investments 12 118 124 158 173
Restructuring charges 88 103 121 119 59
Stock-based compensation 132 150 171 186 192
Income tax adjustments   (138 )   (131 )   (55 )   (57 )   247  
Non-GAAP net income $ 327   $ 339   $ 272   $ 165   $ 54   (83 %)
Non-GAAP net income % (as a % of non-GAAP net revenue) 9 % 8 % 6 % 4 % 1 %
 
GAAP loss per share $ (1.22 ) $ (1.45 ) $ (1.32 ) $ (1.67 ) $ (3.57 ) (193 %)
Non-GAAP diluted earnings per share $ 1.01 $ 1.06 $ 0.84 $ 0.51 $ 0.17 (83 %)
 
(a) Prior to fiscal 2008, the change in deferred net revenue (packaged goods and digital content) did not have a material impact on the Company's net revenue. Accordingly, the Company has not revised its fiscal 2007 non-GAAP financial measures to exclude the impact of the change in deferred net revenue (packaged goods and digital content).
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Non-GAAP Financial Information and Business Metrics
(in millions, except per share data)
                 
Q3 Q4 Q1 Q2 Q3 YOY %
FY08 FY08 FY09 FY09 FY09 Change
CONSOLIDATED NON-GAAP FINANCIAL DATA (a)
 
Non-GAAP net revenue 1,734 919 609 1,126 1,742 -
Non-GAAP net revenue - TTM 3,714 4,020 4,198 4,388 4,396 18 %
 
Non-GAAP gross profit 959 463 317 573 821 (14 %)
Non-GAAP gross profit % (as a % of non-GAAP net revenue) 55 % 50 % 52 % 51 % 47 %
Non-GAAP gross profit - TTM 2,166 2,243 2,288 2,312 2,174 -
Non-GAAP gross profit % (as a % of TTM non-GAAP net revenue) 58 % 56 % 55 % 53 % 49 %
 
Non-GAAP operating income (loss) 367 (25 ) (202 ) (35 ) 234 (36 %)
Non-GAAP operating income (loss) % (as a % of non-GAAP net revenue) 21 % (3 %) (33 %) (3 %) 13 %
Non-GAAP operating income (loss) - TTM 317 319 219 105 (28 ) (109 %)
Non-GAAP operating income (loss) % (as a % of TTM non-GAAP net revenue) 9 % 8 % 5 % 2 % (1 %)
 
Non-GAAP net income (loss) (b) 290 30 (135 ) (20 ) 179 (38 %)
Non-GAAP diluted earnings (loss) per share (b) $ 0.90 $ 0.09 $ (0.42 ) $ (0.06 ) $ 0.56 (38 %)
Non-GAAP net income - TTM (b) 327 339 272 165 54 (83 %)
Non-GAAP diluted earnings per share - TTM (b) $ 1.01 $ 1.06 $ 0.84 $ 0.51 $ 0.17 (83 %)
 
GEOGRAPHIC NET REVENUE MIX (GAAP TO NON-GAAP RECONCILIATION)
 
North America 768 649 429 555 957 25 %
Europe 668 421 329 301 623 (7 %)
Asia   67     57     46     38     74   10 %
GAAP Net Revenue 1,503 1,127 804 894 1,654 10 %
 
North America 93 (105 ) (89 ) 191 (47 )
Europe 124 (103 ) (95 ) 37 123
Asia   14     -     (11 )   4     12  
Change In Deferred Net Revenue (Packaged Goods and Digital Content) 231 (208 ) (195 ) 232 88
 
North America 861 544 340 746 910 6 %
Europe 792 318 234 338 746 (6 %)
Asia   81     57     35     42     86   6 %
Non-GAAP Net Revenue   1,734     919     609     1,126     1,742   -
 
Non-GAAP Geographic Net Revenue Mix (as a % of Non-GAAP Net Revenue)
 
North America 50 % 59 % 56 % 66 % 52 %
Europe 45 % 35 % 38 % 30 % 43 %
Asia   5 %   6 %   6 %   4 %   5 %
Non-GAAP Net Revenue   100 %   100 %   100 %   100 %   100 %
 
(a)Refer to Unaudited Reconciliation of GAAP to Non-GAAP Results.

(b) On April 1, 2008, the Company began using a fixed, long-term projected tax rate of 28% internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team.  Accordingly, the Company began applying the same 28% tax rate to its fiscal 2009 non-GAAP financial results.  Had Q3 and Q4 in FY08 been adjusted to reflect a comparable 28% non-GAAP tax rate, adjusted non-GAAP net income (Ioss) would have been $287 and ($13) as compared to $290 and $30, and adjusted non-GAAP diluted earnings (loss) per share would have been $0.89 and ($0.04) as compared to $0.90 and $0.09.  Had Q3 and Q4 in FY08 and Q1, Q2, and Q3 in FY09 been adjusted to reflect a comparable 28% non-GAAP tax rate, adjusted TTM non-GAAP net income would have been $315, $300, $219, $119, and $11 as compared to $327, $339, $272, $165, and $54, and adjusted TTM non-GAAP diluted earnings per share would have been $0.97, $0.94, $0.68, $0.37, and $0.04 as compared to $1.01, $1.06, $0.84, $0.51, and $0.17, respectively.

 

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Non-GAAP Financial Information and Non-GAAP Business Metrics
(in millions)
               
Q3 Q4 Q1 Q2 Q3 YOY %
FY08 FY08 FY09 FY09 FY09 Change
 
PLATFORM NON-GAAP NET REVENUE MIX
 
Non-GAAP Net Revenue
 
PLAYSTATION 3 196 138 68 166 273 39 %
Xbox 360 196 128 81 224 265 35 %
Wii 156 61 39 60 200 28 %
PlayStation 2 324 52 40 77 126 (61 %)
Xbox 3 1 - 1 - (100 %)
Nintendo GameCube 1   -   -   -   -   (100 %)
Total Consoles 876 380 228 528 864 (1 %)
 
PC 153 92 70 190 111 (27 %)
 
Nintendo DS 122 36 21 43 115 (6 %)
PSP 111 47 26 33 70 (37 %)
Wireless 39 42 43 47 50 28 %
Game Boy Advance 2   -   -   -   -   (100 %)
Total Mobile 274 125 90 123 235 (14 %)
 
Co-publishing and Distribution 372 271 171 221 453 22 %
 
Licensing, Advertising & Other 36 28 23 36 45 25 %
Subscription Services 23   23   27   28   34   48 %
Total Internet Services, Licensing & Other 59   51   50   64   79   34 %
 
Non-GAAP Net Revenue 1,734 919 609 1,126 1,742 -
 
Change in Deferred Net Revenue (Packaged Goods and Digital Content)
PLAYSTATION 3 (94 ) 14 71 (68 ) (56 )
Wii (17 ) 14 18 (27 ) (28 )
PlayStation 2 (23 ) 114 39 (23 ) 11
PC (5 ) 22 16 (102 ) 8
PSP (37 ) 22 31 3 (35 )
Wireless - - 1 - (2 )
Co-publishing and Distribution (52 ) 24 20 (7 ) 3
Licensing, Advertising & Other (5 ) (4 ) (2 ) (9 ) -
Subscription Services 2   2   1   1   11  
Change in Deferred Net Revenue (Packaged Goods and Digital Content) (231 ) 208   195   (232 ) (88 )
 
GAAP Net Revenue 1,503   1,127   804   894   1,654  
 
PLATFORM NON-GAAP NET REVENUE MIX (as a % of Non-GAAP Net Revenue)
 
Non-GAAP Net Revenue
 
PLAYSTATION 3 11 % 15 % 11 % 15 % 16 %
Xbox 360 11 % 14 % 13 % 20 % 15 %
Wii 9 % 7 % 6 % 5 % 12 %
PlayStation 2 19 % 5 % 7 % 7 % 7 %
Total Consoles 50 % 41 % 37 % 47 % 50 %
 
PC 9 % 10 % 12 % 17 % 6 %
 
Nintendo DS 7 % 4 % 4 % 4 % 6 %
PSP 7 % 5 % 4 % 3 % 4 %
Wireless 2 % 4 % 7 % 4 % 3 %
Total Mobile 16 % 13 % 15 % 11 % 13 %
 
Co-publishing and Distribution 22 % 30 % 28 % 20 % 26 %
 
Licensing, Advertising & Other 2 % 3 % 4 % 3 % 3 %
Subscription Services 1 % 3 % 4 % 2 % 2 %
Total Internet Services, Licensing & Other 3 % 6 % 8 % 5 % 5 %
 
Non-GAAP Net Revenue 100 % 100 % 100 % 100 % 100 %
ELECTRONIC ARTS INC. AND SUBSIDIARIES  
Unaudited Supplemental Fact Sheet
                   

Quarterly Product Releases

Q3 Fiscal 2009