Electronic Arts 2006 Annual Report Download

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Table of contents

  • Page 1

  • Page 2

  • Page 3
    ... 2006, EA had three of the top ten games in both North America and Europe. Although hardware launch quantities were limited, revenue from our 360 titles more than oÃ...set the decline in sales of games for the original Xbox. In addition, the ratio of software to hardware hit an all-time high in North...

  • Page 4
    ... to both PCs and consoles, paying for premium content and accepting dynamic in-game advertising. In addition to bringing added value to the consumer, these elements deliver more revenue and proÃ't to our business. Digital Downloads ÃŒ Retail stores where consumers buy packaged games will always...

  • Page 5
    ... licensed properties and increase the number of games that are based on ideas from people in our own studios. Sports relationships such as our agreements with the NFL, NBA and FIFA, as well as movie titles like Harry Potter and The Godfather will always be a part of EA's portfolio. However the cost...

  • Page 6
    ... they purchase and play games Ì is changing rapidly. We learned to challenge traditional thinking while planning to exploit new revenue streams that will improve our margins. Never in EA's 24-year history have we experienced a period of such dynamic change and opportunity. The months ahead will be...

  • Page 7
    Proxy Statement ELECTRONIC ARTS INC. Notice of 2006 Annual Meeting and Proxy Statement

  • Page 8
    (Intentionally Left Blank)

  • Page 9
    ... your questions. Enclosed with this proxy statement are your proxy card and voting instructions and our 2006 annual report. We encourage you to conserve natural resources, expedite the delivery of future communications, and help us reduce our printing and mailing costs, by signing up for electronic...

  • Page 10
    (Intentionally Left Blank)

  • Page 11
    ...6, 2006 are entitled to notice of the meeting and to attend and vote at the meeting. A complete list of these stockholders will be available at Electronic Arts' headquarters prior to the meeting. Proxy Statement By Order of the Board of Directors, STEPHEN G. BENE π Senior Vice President, General...

  • Page 12
    ...STOCK PERFORMANCE GRAPH SUMMARY COMPENSATION TABLE OPTIONS GRANTED IN FISCAL 2006 OPTIONS EXERCISED EQUITY COMPENSATION PLAN INFORMATION EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS...

  • Page 13
    ... 30, 2006. In this proxy statement: ‚ ""EA'', ""we'' and ""the Company'' mean Electronic Arts Inc. ‚ ""2000 Equity Plan'' and ""Equity Plan'' mean EA's 2000 Equity Incentive Plan. ‚ ""2000 Purchase Plan'' and ""Purchase Plan'' mean EA's 2000 Employee Stock Purchase Plan. ‚ Holding shares in...

  • Page 14
    ... if you currently plan to attend the meeting, it is a good idea to complete and return your proxy card, or vote by telephone or on the Internet, before the meeting date just in case your plans change. Who can vote at the Annual Meeting? Stockholders who owned common stock on June 6, 2006 may attend...

  • Page 15
    ... You may revoke your proxy and change your vote at any time before the polls close at the meeting. You may do this by: ‚ Sending a signed statement to the Company that the proxy is revoked (you may send such a statement to the Company's Secretary at our corporate headquarters address listed on the...

  • Page 16
    ...currently hold stock options with exercise prices signiÃ'cantly higher than the current market prices of our Common Stock to remain with the Company; ‚ to reduce our ""overhang'' of outstanding equity awards; and ‚ to further align our outstanding equity compensation with our philosophy of using...

  • Page 17
    ... are responsible for telephone charges you may incur. In addition, some of our oÇcers, directors, employees and other agents may also solicit proxies personally, by telephone and by electronic and regular mail, and we will pay these costs as well. EA will also reimburse brokerage houses and other...

  • Page 18
    ... by EA's management unless you mark your proxy to ""withhold authority'' to so vote. The Board recommends a vote FOR each of the nominees. Director Biographies Each of the following directors and Mr. Simonson have been nominated for election or re-election at the 2006 Annual Meeting. M. Richard...

  • Page 19
    ...B. MaÃ...ei Director since 2003 Mr. MaÃ...ei, age 46, has served as President and Chief Executive OÇcer of Liberty Media Corporation, which owns electronic retailing, media, communications and entertainment businesses and investments, since February 2006. He joined Liberty Media in November 2005 as CEO...

  • Page 20
    ... and Director of Business Development, Group Managing Director, and in 1997, was named Chief Executive OÇcer of Y&R's New York oÇce, becoming the Ã'rst female CEO in the company's 75-year history. Ms. Srere also serves on the Board of Directors of aQuantive, Inc., a digital marketing services and...

  • Page 21
    ... to review and, where appropriate, change Committee assignments at its regularlyscheduled meeting in July 2006. Audit Committee The Audit Committee assists the Board in its oversight of the Company's Ã'nancial reporting and other matters, and is directly responsible for the appointment, compensation...

  • Page 22
    ... Committee may do so by writing to EA's Corporate Secretary at 209 Redwood Shores Parkway, Redwood City, CA 94065, Attn: Director Nominations. To be considered by the Nominating and Governance Committee in connection with EA's annual meeting of stockholders, recommendations must be submitted in...

  • Page 23
    ... a committee of the Board, or with an individual director by sending a letter to EA's Corporate Secretary at Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065, or by sending an email to [email protected]. All stockholder communications received will be handled...

  • Page 24
    ... shares. All annual grant options were granted on July 28, 2005, the date of the directors' re-election to the Board, at an exercise price of $58.45 per share. Under the Equity Plan, non-employee directors may elect to receive all or part of their cash compensation in the form of common stock. As an...

  • Page 25
    ... using the Black-Scholes option valuation model, of the options to be cancelled in exchange for the restricted stock rights. The restricted stock rights will be subject to vesting schedules ranging from a minimum of two years to a maximum of four years measured from August 1, 2006, depending...

  • Page 26
    ... 3.6% of the number of shares of our Common Stock issued and outstanding as of June 19, 2006. In this example, assuming all Eligible Options were surrendered for cancellation in the Exchange Program and not taking into account additional stock option grant and exercise activity prior to completion...

  • Page 27
    ... of the election period under the Exchange Program (provided, however, in no event will the Exchange Program permit the issuance of restricted stock rights having a value greater than the value of the stock options surrendered, as estimated using the Black-Scholes option valuation model). Upon the...

  • Page 28
    ... estimating the fair value of an Eligible Option under the Black-Scholes model, the following factors were used: (a) the option's exercise price; (b) an assumed value of $41.21 per share of our Common Stock, which was the closing price reported on the NASDAQ National Market on June 19, 2006; (c) an...

  • Page 29
    ...we assumed a fair market value per share equal to the closing price per share of our Common Stock reported on the NASDAQ National Market on June 19, 2006. The following table provides for each of the three option exercise price ranges the number of shares subject to Eligible Options an employee must...

  • Page 30
    .... The Company intends to satisfy its tax withholding obligations by deducting from the shares of Common Stock that would otherwise be released to employees upon the vesting of restricted stock or issued in settlement of restricted stock units a number of whole shares having a fair market value that...

  • Page 31
    ...to this proxy statement. The tax consequences of the receipt of restricted stock and stock units under the Equity Plan for participating non-United States employees may diÃ...er signiÃ'cantly from the United States federal income tax consequences described above and in Appendix A. Accounting Treatment...

  • Page 32
    Our Board of Directors believes that the proposed Exchange Program is favorable to the interests of our stockholders and, at the same time, will strengthen incentives for employees currently holding underwater stock options to remain with the Company and to contribute to our growth and success. The ...

  • Page 33
    ... fair market value. The Equity Plan also does not contain an ""evergreen'' provision whereby the number of authorized shares is automatically increased on a regular basis. In addition, the Equity Plan prohibits us from loaning, or guaranteeing the loan of, funds to participants under the Equity Plan...

  • Page 34
    ... to (i) use shares subject to the options cancelled for the issuance of the restricted stock rights granted under the Exchange Program, and (ii) return up to a total of an additional seven million shares subject to the options cancelled in the Exchange Program to the Equity Plan to be available for...

  • Page 35
    ... 2003, we terminated our International Employee Stock Purchase Plan, and have since allowed our international employees to participate in the Purchase Plan. The following table presents information since the beginning of Ã'scal 2003 relating to the aggregate number of shares purchased under the...

  • Page 36
    ... includes the annual audit of the Company's Ã'nancial statements and management's assessment of internal control over Ã'nancial reporting, (including required quarterly reviews of Ã'nancial statements included in the Company's quarterly reports on Form 10-Q) and services normally provided by the...

  • Page 37
    ... Company's procedures for the pre-approval by the Audit Committee of all services provided by KPMG LLP comply with SEC regulations regarding pre-approval of services. Services subject to these SEC requirements include audit services, audit-related services, tax services and other services. The audit...

  • Page 38
    ... known to us holding more than 5% of our common stock. As of June 1, 2006, there were 306,143,008 shares of our common stock outstanding. Except as otherwise indicated, the address for each of our directors and executive oÇcers is c/o Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City...

  • Page 39
    ... cumulative total returns during the period from March 31, 2001 through March 31, 2006, for our common stock, the NASDAQ Market Composite Index, the S&P 500 Index (to which EA was added in July 2002), the RDG Technology Index and the S&P Application Software Index (to which EA was added in July 2002...

  • Page 40
    ... Ended Other Annual Stock Underlying All Other March 31, Salary ($) Bonus ($) Compensation ($) Awards ($)(1) Options (#)(2) Compensation ($) Name and Principal Position Lawrence F. Probst IIIÏÏÏ Chairman and Chief Executive OÇcer Warren C. Jenson Executive Vice President, Chief Financial and...

  • Page 41
    ... taxable relocation-related expenses. Represents the value of unvested restricted stock units granted on March 1, 2006 calculated by multiplying the closing price of EA common stock on the date of grant, which was $52.03, by the number of restricted stock units granted to the Named Executive OÇcer...

  • Page 42
    ...employees (excluding non-employee directors) in Ã'scal 2006. The exercise price of each stock option is equal to the closing price of EA common stock on the date of grant. These options were granted on March 1, 2006, will Ã'rst vest and become exercisable as to 24% of the underlying shares 12 months...

  • Page 43
    ... the option exercise price from $54.72 (the fair market value of EA's common stock at the close of business on the last trading day of Ã'scal 2006, March 31, 2006) to get the value per share subject to option, and (b) multiplying the value per share subject to option by the number of shares...

  • Page 44
    ... options under the Artist Plan, with a weighted average exercise price of $10.23. No further grants will be made under the Artist Plan. (2) (3) See also Note 12 to the Financial Statements included in EA's Annual Report on Form 10-K for the period ended March 31, 2006 for additional information...

  • Page 45
    ... from enticing away from us any member of our senior management or our sales and development staÃ.... On September 2, 2005, Dr. Florin was promoted to Executive Vice President and General Manager, International Publishing and accepted a letter setting forth the new terms and conditions of his...

  • Page 46
    ... the Company's equity compensation plans and the bonus plan for executive oÇcers and all signiÃ'cant or non-standard equity grants for other employees. During Ã'scal 2006, the Compensation Committee engaged in extensive reviews of long-term incentive compensation strategies in light of stock option...

  • Page 47
    ... to build its senior management team and has been successful in attracting talent from the entertainment software industry and other market segments to add management depth and experience to the organization. The Company continues to look at creative new methods using its compensation programs to...

  • Page 48
    ... members of his executive staÃ... that the CEO, all Executive Vice Presidents and the CEO's other executive direct reports should not be awarded incentive bonuses. Other executives and employees received bonuses that were substantially below their target levels. Stock-Based Compensation. The Company...

  • Page 49
    ...the Company's employees hold options with exercise prices signiÃ'cantly higher than the current market price of EA's Common Stock. The Compensation Committee concluded that to enhance long-term stockholder value, the Company needed to maintain competitive employee compensation and incentive programs...

  • Page 50
    ... maximize the retention value of those option holdings. Other Company-provided air travel for EA's executives is for business purposes only. EA's use of noncommercial aircraft is limited to appropriate business travel. In June 2002, EA hired Warren Jenson as Chief Financial and Administrative OÇcer...

  • Page 51
    ... is to assist the Board of Directors in its oversight responsibilities relating to the integrity of EA's accounting policies, internal controls and Ã'nancial reporting. The Audit Committee reviews EA's quarterly and annual Ã'nancial statements prior to public earnings releases and submission to the...

  • Page 52
    ... and in light of its role and responsibilities, the Audit Committee recommended to the Board of Directors that the audited Ã'nancial statements of the Company for the three years ended March 31, 2006 be included for Ã'ling with the SEC in the Company's Annual Report on Form 10-K for the year ended...

  • Page 53
    ... deliver written notice of the proposal to our Corporate Secretary c/o Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065, no earlier than March 24, 2007 and no later than April 23, 2007 (provided, however, that if the 2007 Annual Meeting is held earlier than June 27, 2007 or...

  • Page 54
    ...executive oÇce, or contact our Corporate Secretary at (650) 628-1500. Stockholders who currently receive multiple copies of the proxy statement and annual report at their address and would like to request ""householding'' of their communications should contact their broker. OTHER BUSINESS The Board...

  • Page 55
    ... forth in the proxy statement prepared in connection with our 2006 Annual Meeting of Stockholders, we will amend the Equity Plan to limit the number of shares subject to options surrendered and cancelled in the Exchange Program that will again become available for issuance under the Equity Plan to...

  • Page 56
    ... EA (a ""Ten Percent Stockholder''), the exercise price for each such incentive stock option must be no less than 110% of the fair market value of a share of common stock at the time the incentive stock option is granted. Pursuant to an amendment to the Equity Plan approved by the Board of Directors...

  • Page 57
    ... the Compensation Committee may determine. A SAR is an award which provides the holder with the right to receive the appreciation in value of a set number of shares of company stock over a set period of time. A SAR is similar to an option in that the holder beneÃ'ts from any increases in stock price...

  • Page 58
    ... by the Board of Directors. United States Federal Income Tax Information THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT OF THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPANTS UNDER THE EQUITY PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE...

  • Page 59
    ... between the fair market value of the ISO Shares on the date of exercise and the exercise price) and reducing this amount by the applicable exemption amount. Under the Tax Increase Prevention and Reconciliation Act of 2005, the exemption amount for 2006 is $62,550 in case of a joint return, subject...

  • Page 60
    ...or depreciation in the value of the shares will be treated as capital gain or loss, taxable at a rate that depends upon the length of time the shares were held by the participant. Internal Revenue Code Section 409A At the present time, the Company intends to grant equity awards to participants which...

  • Page 61
    ... Program'') set forth in the proxy statement prepared in connection with our 2006 Annual Meeting of Stockholders, we will amend the Equity Plan to limit the number of shares subject to options surrendered and cancelled in the Exchange Program that will be available for issuance under the Equity Plan...

  • Page 62
    (Intentionally Left Blank)

  • Page 63
    ...been purchased with the payroll deductions if the purchase price were determined by using 85% of the fair market value of a share of the Company's common stock on the OÃ...ering Date or (b) the maximum number of shares set by the Board. In addition, no employee may purchase shares at a rate that, when...

  • Page 64
    .... The fair market value of the common stock on a given date is the closing price of the common stock on the immediately preceding business day as quoted on the NASDAQ National Market. On May 31, 2006, the closing price of the Company's common stock was $42.07. Purchase of Stock. The number of whole...

  • Page 65
    ... purchased under the Purchase Plan. Proposed amendment of the 2000 Employee Stock Purchase Plan. At the Annual Meeting, stockholders will be asked to approve an amendment to the Purchase Plan to increase by 1,500,000 the number of shares of the Company's common stock reserved for issuance under...

  • Page 66
    (Intentionally Left Blank)

  • Page 67
    ...the Board of Directors (the ""Committee'') is charged with providing assistance to the Board of Directors (the ""Board'') in fulÃ'lling its responsibility to Electronic Arts Inc. (""EA'') and its stockholders in overseeing (a) management and its auditors in respect of corporate accounting, Ã'nancial...

  • Page 68
    ... of the independent auditor's activities or on access to requested information, and any signiÃ'cant disagreements with management, and management's response. In that regard, no oÇcer or director of EA, or any other person acting under the direction thereof, shall violate any law or regulation that...

  • Page 69
    ... by law or regulation, or that it deems advisable to review, including without limitation EA's critical accounting policies, the status of any signiÃ'cant income tax matters, the Company's investment and foreign exchange policies and practices, and certiÃ'cations by management of EA's Ã'lings...

  • Page 70
    ...rescinded by the Board. 4. COMMITTEE MEETINGS The Committee will meet as often as necessary to carry out its responsibilities and in any event at least quarterly. Meetings may be called by any Committee member and/or by the management of EA. A majority of the total number of members of the Committee...

  • Page 71
    ELECTRONIC ARTS INC. 2006 Annual Report on Form 10-K Annual Report

  • Page 72
    (Intentionally Left Blank)

  • Page 73
    ...) 94-2838567 (I.R.S. Employer IdentiÃ'cation No.) 209 Redwood Shores Parkway Redwood City, California (Address of principal executive oÇces) 94065 (Zip Code) Registrant's telephone number, including area code: (650) 628-1500 Securities registered pursuant to Section 12(b) of the Act: None...

  • Page 74
    ... Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting on Financial Disclosure Controls and Procedures Other Information PART III Directors and Executive OÇcers of the Registrant Executive Compensation Security...

  • Page 75
    ... heading ""Risk Factors'', beginning on page 18. Item 1: Business Overview Electronic Arts develops, markets, publishes and distributes interactive software games (we sometimes refer to them as ""titles'') that are playable by consumers on the following devices: ‚ In-home video game players (such...

  • Page 76
    ... (downloadable games). Franchises We develop product families, which we call ""franchises'' around many of our products. For example, every year we release new versions of most of our EA SPORTS titles. Likewise, we have been successful in developing, marketing, publishing and distributing sequels...

  • Page 77
    ... we make available on the World Wide Web Ì such as card games, puzzle games and word games Ì marketed under our Pogo brand. These are made available to consumers on our web site, www.pogo.com, and on certain online services provided by America Online, Inc. ‚ Another type of online-only games is...

  • Page 78
    ... characters, storylines and software code. We acquire the rights to include these kinds of intellectual property in our products through our own development, acquisitions, and license agreements such as those with sports leagues and player associations, movie studios and performing talent, music...

  • Page 79
    ... on the Xbox Live service. Next-Generation Consoles Our industry is cyclical and is in the transition stage to the next cycle. Microsoft launched the Xbox 360 at the end of calendar year 2005. In the coming months, we expect Sony and Nintendo to introduce new video game consoles as well. These next...

  • Page 80
    ...three types of EA-published games that are played online by consumers: (1) online casual games marketed under the Pogo brand available to consumers on our web site, www.pogo.com, and on certain online services provided by America Online, Inc., (2) massively multiplayer online games sold to consumers...

  • Page 81
    ...diversiÃ'ed media/entertainment companies (e.g., Time Warner, Viacom, Fox and Disney) are expanding their software game publishing eÃ...orts. The software games business is highly competitive. It is characterized by the continuous introduction of new titles and the development of new technologies. Our...

  • Page 82
    ... agreements we have entered into with Microsoft, we are authorized to develop and distribute DVD-based software products and online content compatible with the Xbox and Xbox 360. In Ã'scal 2006, approximately 13 percent of our net revenue was derived from sales of EA Studio games designed for play...

  • Page 83
    ...ve Xbox 360 releases for Ã'scal 2006 were Need for Speed Most Wanted, Madden NFL 06, EA SPORTS TM Fight Night Round 3, FIFA 06 and NBA LIVE 06. Nintendo. Under the terms of license agreements we entered into with Nintendo of America and Nintendo Company Ltd. (Japan), we are authorized to develop and...

  • Page 84
    ... on prevailing market conditions. The retail selling prices of our titles outside of North America vary widely depending on factors such as local market conditions. Our goal is to maintain our position as a leading publisher of games sold for play on video game consoles, PCs and mobile platforms. We...

  • Page 85
    ... and include such titles as FIFA Street 2 and NBA Street V3. We market non-sports games under the EA brand including franchises such as Need for Speed, The Sims and The Lord of the Rings, as well as The Godfather TM The Game. Our EA Partners business unit operates under a variety of deal types and...

  • Page 86
    ...Wal-Mart Stores, Inc., which represented approximately 13 percent of total net revenue in both Ã'scal 2006 and 2004 and approximately 14 percent of total net revenue in Ã'scal 2005. In North America, we have stock-balancing programs for our PC products, which allow for the exchange of PC products by...

  • Page 87
    ... in December and a seasonal low in revenue and proÃ't in the quarter ending in June. Our results however can vary based on title release dates, consumer demand for our products and shipment schedules, among other factors. Employees As of March 31, 2006, we employed approximately 7,200 people, of...

  • Page 88
    ... Software Inc. until it was acquired by Electronic Arts in 1991. Mr. Lee holds a Bachelor of Commerce degree from the University of British Columbia and is a Chartered Financial Analyst. Dr. Florin has served as Executive Vice President, General Manager, International Publishing since September 2005...

  • Page 89
    ... at Electronic Arts in the sales, marketing and customer support departments since joining the company in 1983. Mr. Gibeau has served as Executive Vice President, General Manager, North America Publishing since September 2005. Previously he was Senior Vice President of North American Marketing...

  • Page 90
    .... Our business is highly dependent on the success, timely release and availability of new video game platforms, on the continued availability of existing video game platforms, as well as our ability to develop commercially successful products for these platforms. We derive most of our revenue from...

  • Page 91
    ... the Xbox 360 in November 2005, and we expect Sony and Nintendo to introduce new video game players into the market as well (socalled ""next-generation platforms'') in the coming months. As a result, we believe that the interactive entertainment industry is in the midst of a transition stage leading...

  • Page 92
    ...the availability and popularity of other forms of entertainment; and critical reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted. Technology changes rapidly in our business and if we fail to anticipate or successfully implement new technologies or...

  • Page 93
    ... fewer hit titles and our revenue, proÃ'tability and cash Ã-ows will decline. Competition for these licenses may make them more expensive and increase our costs. Many of our products are based on or incorporate intellectual property owned by others. For example, our EA SPORTS products include rights...

  • Page 94
    ...titles were found to contain hidden, objectionable content, our business could suÃ...er. Throughout the history of our industry, many video games have been designed to include certain hidden content and gameplay features that are accessible through the use of in-game cheat codes or other technological...

  • Page 95
    ... executives and key creative talent. If we cannot successfully recruit and retain the employees we need, or replace key employees following their departure, our ability to develop and manage our businesses will be impaired. We annually review and evaluate with the Compensation Committee of our Board...

  • Page 96
    ... employee equity compensation and employee stock purchase programs. The recognition of this expense will signiÃ'cantly lower our reported net income (or increase our reported net loss). On April 2, 2006, the Ã'rst day of our current Ã'scal year, we adopted Statement of Financial Accounting Standard...

  • Page 97
    .... For example, accounting policies aÃ...ecting software revenue recognition have been the subject of frequent interpretations, which could signiÃ'cantly aÃ...ect the way we account for revenue related to our products. In addition, the rules for tax accounting are in the process of being changed. As...

  • Page 98
    ... changes in securities analysts' earnings estimates or ratings, to our results or future Ã'nancial guidance falling below the expectations of analysts and investors, to factors aÃ...ecting the computer, software, Internet, entertainment, media or electronics industries, or to national or international...

  • Page 99
    ... Louisville, Kentucky. Our leased space is summarized as follows (in square feet): Purpose North America Europe Asia Total Annual Report Distribution Sales & Administrative Studio Development Total Leased Square Footage Redwood City Headquarters 250,000 732,077 1,138,080 2,120,157 86,735 167...

  • Page 100
    ... our Redwood City, California headquarters facilities and develop adjacent property (""Phase Two Facilities''). Construction of the Phase Two Facilities was completed in June 2002. The Phase Two Facilities comprise a total of approximately 310,000 square feet and provide space for sales, marketing...

  • Page 101
    ... or substitute space will be available as needed to accommodate our future needs. Item 3: Legal Proceedings On February 14, 2005, an employment-related class action lawsuit, Hasty v. Electronic Arts Inc., was Ã'led against the company in Superior Court in San Mateo, California. The complaint alleges...

  • Page 102
    ... II Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ National Market under the symbol ""ERTS''. The following table sets forth the quarterly high and low price per share of...

  • Page 103
    ... CONSOLIDATED FINANCIAL DATA (In millions, except per share data) STATEMENTS OF OPERATIONS DATA 2006 Year Ended March 31, 2005 2004 2003 2002 Net revenue Cost of goods sold Gross proÃ't Operating expenses: Marketing and sales General and administrative Research and development Amortization...

  • Page 104
    ELECTRONIC ARTS INC. AND SUBSIDIARIES SELECTED FIVE-YEAR CONSOLIDATED FINANCIAL DATA (Continued) (In millions) BALANCE SHEET DATA 2006 Year Ended March 31, 2005 2004 2003 2002(1) Cash and cash equivalents Short-term investments Marketable equity securities Working capital Total assets Long-...

  • Page 105
    ... the Consolidated Financial Statements and related notes. About Electronic Arts We develop, market, publish and distribute interactive software games that are playable by consumers on home video game consoles (such as the Sony PlayStation» 2, Microsoft Xbox» and Xbox 360TM, and Nintendo GameCubeTM...

  • Page 106
    ...handhelds and cellular handsets Ì will become an increasingly important part of our business. Investment in Online. Today, we generate net revenue from a variety of online products and services, including casual games and downloadable content marketed under our Pogo brand, persistent state world 34

  • Page 107
    ... will become an increasingly important part of our business in the long term, we do not expect revenue from persistent state world games or online gameplay and distribution to be signiÃ'cant in Ã'scal 2007. International Expansion. Net revenue from international sales accounted for approximately 46...

  • Page 108
    ... principally derive revenue from sales of packaged interactive software games designed for play on video game consoles (such as the PlayStation 2, Xbox, Xbox 360 and Nintendo GameCube), PCs and mobile platforms including handheld game players (such as the Sony PSP, Nintendo DS and Nintendo Game Boy...

  • Page 109
    ... the distribution channels are exposed to rapid changes in consumer preferences, market conditions or technological obsolescence due to new platforms, product updates or competing products. For example, the risk of product returns and/or price protection for our products may continue to increase as...

  • Page 110
    ... asset by evaluating future business prospects and estimated cash Ã-ows. Our future net cash Ã-ows are primarily dependent on the sale of products for play on proprietary video game consoles, handheld game players, PCs and cellular handsets (""platforms''). The success of our products is aÃ...ected by...

  • Page 111
    ...on a calendar month end. Comparison of Fiscal 2006 to Fiscal 2005 Net Revenue We principally derive net revenue from sales of packaged interactive software games designed for play on video game consoles (such as the PlayStation 2, Xbox, Xbox 360 and Nintendo GameCube), PCs and mobile platforms which...

  • Page 112
    ... advertisements on our online web pages. From a geographical perspective, our total net revenue for the Ã'scal years ended March 31, 2006 and 2005 was as follows (in millions): Year Ended March 31, 2006 2005 Increase/ (Decrease) % Change North America Europe Asia International Total Net Revenue...

  • Page 113
    ... Our total net revenue by product line for Ã'scal years 2006 and 2005 was as follows (in millions): Year Ended March 31, 2006 2005 Increase/ (Decrease) % Change Consoles PlayStation 2 Xbox Xbox 360 Nintendo GameCube Other consoles Total Consoles PC Mobility PSP Nintendo DS Game Boy Advance...

  • Page 114
    ... Game, BLACKTM, Medal of Honor European AssaultTM, and BattleÃ'eld 2: Modern Combat none of which had a corresponding release in Ã'scal 2005. Xbox For Ã'scal 2006, net revenue from sales of titles for the Xbox was $400 million, driven primarily by sales of Madden NFL 06, Need for Speed Most Wanted...

  • Page 115
    ... services increased from $55 million in Ã'scal 2005 to $61 million in Ã'scal 2006. The increase in net revenue was primarily due to an increase in the number of paying subscribers to Club PogoTM, partially oÃ...set by a decrease in net revenue from Ultima Online. Licensing, Advertising and Other Net...

  • Page 116
    ...card fees and royalties for use of third-party properties. Cost of goods sold for our web site advertising business primarily consists of ad-serving costs. Cost of goods sold for Ã'scal years 2006 and 2005 were as follows (in millions): March 31, 2006 % of Net Revenue March 31, 2005 % of Net Revenue...

  • Page 117
    ... web site content, network infrastructure direct expenses, software licenses and maintenance, and network and management overhead. Research and development expenses for Ã'scal years 2006 and 2005 were as follows (in millions): March 31, 2006 % of Net Revenue March 31, 2005 % of Net Revenue $ Change...

  • Page 118
    ... an international publishing headquarters in Geneva, Switzerland. Since that time and through the six months ending September 30, 2006, we expect to continue to relocate certain current employees to our new facility in Geneva, close certain facilities in the U.K., and make other related changes in...

  • Page 119
    ... driven by an increase in research and development expenses as we increased our internal development eÃ...orts and invested in next-generation tools, technologies and titles, while at the same time we continued to support current-generation product development. We expect our net income to decline...

  • Page 120
    ... sales of products in our Need for Speed franchise and sales of products in our Burnout franchise, which did not have a corresponding title release in Ã'scal 2004, partially oÃ...set by declines in our Medal of Honor franchise. We estimate foreign exchange rates strengthened reported Asia net revenue...

  • Page 121
    ... total net revenue by product line for Ã'scal years 2005 and 2004 was as follows (in millions): Year Ended March 31, 2005 2004 Increase/ (Decrease) % Change Consoles PlayStation 2 Xbox Nintendo GameCube Other consoles Total Consoles PC Mobility Game Boy Advance and Game Boy Color Nintendo DS...

  • Page 122
    ...in the number of paying subscribers to Club Pogo, partially oÃ...set by a decrease in subscription net revenue from Earth & BeyondTM and The SimsTM Online subscription services. Licensing, Advertising and Other In Ã'scal 2005, net revenue from licensing, advertising and other products increased by $41...

  • Page 123
    ... Report $633 20% $511 17% $122 24% Research and development expenses increased by 24 percent, or 3 percent of net revenue, in Ã'scal 2005 as compared to Ã'scal 2004 primarily due to: ‚ An increase of $103 million in personnel-related costs resulting from a 30 percent increase in employee...

  • Page 124
    ... of new products with our co-publishing partners and development costs for Renderware and mobile platforms. ‚ An increase of $18 million in facilities-related expenses to help support the growth of our research and development functions worldwide. Acquired In-process Technology Acquired in-process...

  • Page 125
    ... change in the statement of cash Ã-ows, whereby a portion of the income tax beneÃ't from stock options will move from operating cash Ã-ow activities to Ã'nancing cash Ã-ow activities (total cash Ã-ows will remain unchanged). In March 2005, the Securities and Exchange Commission (""SEC'') released...

  • Page 126
    ... Issued As Employee Compensation That Allow for Cash Settlement upon the Occurrence of a Contingent Event'', which amends certain paragraphs in SFAS No. 123R. FSP FAS No. 123(R)-4 addresses situations when a company has option plans that require the company to settle outstanding options in cash upon...

  • Page 127
    ... million for Ã'scal 2005. The decrease in cash generated from operating activities was primarily due to our overall decline in net income resulting from a decrease in net revenue and an increase in operating expenses primarily to support the development of titles for next-generation consoles. This...

  • Page 128
    ... the Ã'rst two months of our fourth quarter of Ã'scal 2006 as compared to the fourth quarter of Ã'scal 2005, which allowed us to collect a higher percentage of our net revenue during the quarter. Reserves for sales returns, pricing allowances and doubtful accounts increased in absolute dollars from...

  • Page 129
    ... of our products on new platforms and new versions of our products on existing platforms, our ability to collect our accounts receivable as they become due, successfully achieving our product release schedules and attaining our forecasted sales objectives, the impact of competition, economic...

  • Page 130
    ... 31, 2006, we did not have a payable balance on this standby letter of credit. Development, Celebrity, League and Content Licenses: Payments and Commitments The products we produce in our studios are designed and created by our employee designers, artists, software programmers and by non-employee...

  • Page 131
    ... in Redwood City, California (""Phase One Facilities''). The Phase One Facilities comprise a total of approximately 350,000 square feet and provide space for sales, marketing, administration and research and development functions. In July 2001, we reÃ'nanced the Phase One Lease 59 Annual Report

  • Page 132
    ... our Redwood City, California headquarters facilities and develop adjacent property (""Phase Two Facilities''). Construction of the Phase Two Facilities was completed in June 2002. The Phase Two Facilities comprise a total of approximately 310,000 square feet and provide space for sales, marketing...

  • Page 133
    ... square feet and provide space for research and development functions. Our rental obligation over the initial Ã've-and-a-half year term of the lease is $15 million. As of March 31, 2006, our remaining rental obligation under this lease was $14 million. In July 2003, we entered into a lease agreement...

  • Page 134
    ... with original maturities of three months or less (see Note 2 to the Consolidated Financial Statements included in Item 8 of this report). Foreign Currency Exchange Rate Risk From time to time, we hedge some of our foreign currency risk related to forecasted foreign-currencydenominated sales and...

  • Page 135
    assets associated with our hedging activities are recorded at fair value in other current assets in our Consolidated Balance Sheet. The eÃ...ective portion of gains or losses resulting from changes in fair value of these hedges is initially reported, net of tax, as a component of accumulated other ...

  • Page 136
    ... Market Price Risk The value of our equity investments in publicly traded companies are subject to market price volatility. As of March 31, 2006, our marketable equity securities were classiÃ'ed as available-for-sale and, consequently, were recorded in our Consolidated Balance Sheets at fair market...

  • Page 137
    ... (25%) Fair Value as of March 31, 2006 Valuation of Securities Given an X Percentage Increase in Each Stock's Market Price 25% 50% 75% (In millions) Marketable equity securities ÏÏ $40 $80 $120 $160 $200 $240 $280 The following table presents the hypothetical changes in fair value in our...

  • Page 138
    ...Flows for the Years Ended March 31, 2006, 2005 and 2004 ÏÏÏÏ Notes to Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm Financial Statement Schedule: The following Ã'nancial statement schedule of Electronic Arts Inc. and Subsidiaries for the years ended...

  • Page 139
    ...: Accounts payable Accrued and other current liabilities Total current liabilities Deferred income taxes Other liabilities Total liabilities Commitments and contingencies (See Note 9) Minority interest Stockholders' equity: Preferred stock, $0.01 par value. 10 shares authorized Common stock...

  • Page 140
    ... CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Net revenue Cost of goods sold Gross proÃ't Operating expenses: Marketing and sales General and administrative Research and development Amortization of intangibles Acquired in-process technology Restructuring...

  • Page 141
    ... 27 (1) 10 Annual Report Proceeds from sales of shares through employee stock plans and other plansÏÏÏÏ 9,914 Repurchase and retirement of common stock 806) Conversion of Class B shares to common stock Stock-based compensation Tax beneÃ't from exercise of stock optionsÏÏ ÃŒ Balances as of...

  • Page 142
    ...sale of property and equipmentÏÏÏ 7 (8) 2 Stock-based compensation 3 6 1 Tax beneÃ't from exercise of stock options 133 75 69 Acquired in-process technology 8 13 ÃŒ Change in assets and liabilities: Receivables, net 104 (80) (194) Inventories 3) (14) (23) Other assets 71) (35) (61) Accounts...

  • Page 143
    ELECTRONIC ARTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES We develop, market, publish and distribute interactive software games that are playable by consumers on home video game consoles (such as the ...

  • Page 144
    ... for use in current operations or other activities such as capital expenditures, business acquisitions, or stock repurchase programs. As of March 31, 2006 and March 31, 2005, short-term investments and marketable equity securities were classiÃ'ed as available-for-sale and stated at fair value based...

  • Page 145
    ... intended purpose. The net book value of capitalized costs associated with internal-use software amounted to $23 million and $28 million as of March 31, 2006 and 2005, respectively, and are being depreciated on a straight-line basis over each project's estimated useful life that ranges from three to...

  • Page 146
    ... or a month-to-month basis and prepaid subscription revenue, including revenue collected from credit card sales, are recognized ratably over the period for which the services are provided. Software Licenses: We license software rights to manufacturers of products in related industries (for example...

  • Page 147
    ... future product returns, price protection and stock-balancing programs related to current-period product revenue. We analyze historical returns, current sell-through of distributor and retailer inventory of our products, current trends in the video game market and the overall economy, changes in...

  • Page 148
    ...were used for grants made under our stock-based compensation plans in Ã'scal 2006, 2005 and 2004: 2006 Year Ended March 31, 2005 2004 Risk-free Expected Expected Expected Assumed interest rate volatility life of stock options (in years life of employee stock purchase plans (in months dividends...

  • Page 149
    ... Issued As Employee Compensation That Allow for Cash Settlement upon the Occurrence of a Contingent Event'', which amends certain paragraphs in SFAS No. 123R. FSP FAS No. 123(R)-4 addresses situations when a company has option plans that require the company to settle outstanding options in cash upon...

  • Page 150
    ... clariÃ'es that concentrations of credit risk in the form of subordination are not embedded derivatives, and (5) amends SFAS No. 140, ""Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ÃŒ A Replacement of FASB Statement 125'' to eliminate the prohibition...

  • Page 151
    ... Unrealized Losses 12 Months or Greater Gross Fair Unrealized Value Losses Total Fair Value Gross Unrealized Losses Cash and cash equivalents: Cash Money market funds Cash and cash equivalents Short-term investments: U.S. agency securities U.S. Treasury securities Corporate bonds Asset-backed...

  • Page 152
    ...281 $1,030 Gross Unrealized Losses Fair Value As of March 31, 2006 As of March 31, 2005 $91 $93 $69 $47 $Ì $Ì $160 $140 Our investments in marketable equity securities consist of investments in common stock of publicly traded companies. On February 3, 2005, we purchased approximately 19...

  • Page 153
    ... 12 months. The following table summarizes the activity in accumulated other comprehensive income, net of related taxes, with regard to the changes in fair value of derivative instruments, for Ã'scal 2006 and 2005 (in millions): Year Ended March 31, 2006 2005 Annual Report Beginning balance of...

  • Page 154
    ...further growth in the mobile entertainment market. We paid $27 per share in cash in exchange for each share of JAMDAT common stock and assumed outstanding stock options and restricted stock units under certain JAMDAT equity plans for an aggregate purchase price of $684 million, including transaction...

  • Page 155
    ... Useful Life (Years) Developed and Core Technology Carrier Contracts and Related Other Intangibles Total Finite-Lived Intangibles $122 85 5 $212 10 5 3 8 We recorded $495 million of goodwill, substantially none of which is tax deductible. Acquired in-process technology includes the value...

  • Page 156
    ...Japan, the companies established Electronic Arts Square K.K. (""EA Square KK'') in 1998, which localized and published in Japan a selection of EA's properties originally created in North America and Europe, as well as developed and published original video games in Japan. We contributed cash and had...

  • Page 157
    ...and include costs for obtaining (1) developed technologies, (2) carrier contracts and related, (3) trade names, and (4) subscribers and other intangibles. Amortization of intangibles for Ã'scal 2006, 2005 and 2004 was $16 million (of which $9 million was recognized in cost of goods sold), $6 million...

  • Page 158
    ... an international publishing headquarters in Geneva, Switzerland. Since that time and through the six months ending September 30, 2006, we expect to continue to relocate certain current employees to our new facility in Geneva, close certain facilities in the U.K., and make other related changes in...

  • Page 159
    ... sports organizations, movie studios and other organizations for our use of their trademarks, copyrights, personal publicity rights, content and/or other intellectual property. Royalty payments to independent software developers are payments for the development of intellectual property related...

  • Page 160
    ... as research and development as the services are incurred. Payments due after completion of the product (primarily royalty-based in nature) are generally expensed as cost of goods sold generally at the greater of the contractual rate or an eÃ...ective royalty rate based on expected net product sales...

  • Page 161
    ... Commitments and Residual Value Guarantees $ 234 216 122 82 52 $ 706 $ 267 151 132 88 35 $ 673 We lease certain of our current facilities and equipment under non-cancelable operating lease agreements. We are required to pay property taxes, insurance and normal maintenance costs for certain of...

  • Page 162
    ... party for our headquarters facilities in Redwood City, California (""Phase One Facilities''). The Phase One Facilities comprise a total of approximately 350,000 square feet and provide space for sales, marketing, administration and research and development functions. In July 2001, we reÃ'nanced...

  • Page 163
    ... square feet and provide space for research and development functions. Our rental obligation over the initial Ã've-and-a-half year term of the lease is $15 million. As of March 31, 2006, our remaining rental obligation under this lease was $14 million. In July 2003, we entered into a lease agreement...

  • Page 164
    ... 31, 2006, we did not have a payable balance on this standby letter of credit. Development, Celebrity, League and Content Licenses: Payments and Commitments The products we produce in our studios are designed and created by our employee designers, artists, software programmers and by non-employee...

  • Page 165
    ... and other current liabilities reported on our Consolidated Balance Sheet as of March 31, 2006. See Note 6 of the Notes to Consolidated Financial Statements. Litigation On February 14, 2005, an employment-related class action lawsuit, Hasty v. Electronic Arts Inc., was Ã'led against the company in...

  • Page 166
    ... disposition from employee stock plans $121 4 18 69 $212 Our current income tax beneÃ't for Ã'scal 2006 reÃ-ects a $73 million reduction we recorded during Ã'scal year following a recent U.S. Tax Court ruling regarding the proper allocation of the tax deduction for stock options between U.S. and...

  • Page 167
    ... 31, 2006 2005 2004 Statutory federal tax rate State taxes, net of federal beneÃ't DiÃ...erences between statutory rate and foreign eÃ...ective tax rate Research and development credits Resolution of tax-related matters with tax authorities Non-deductible acquisition related costs and tax expense...

  • Page 168
    ... credit carryforwards as of March 31, 2006, we have research and development tax credit carryforwards of approximately $40 million for California purposes, which can be carried forward indeÃ'nitely. The state tax credit carryforwards are valued at $26 million, net of federal beneÃ'ts. In the fourth...

  • Page 169
    ... and PC business segment. With the authorization of the Class B common stock, we transferred a portion of our consolidated assets, liabilities, revenue, expenses and cash Ã-ows to EA.com Inc., a wholly-owned subsidiary of Electronic Arts. In March 2003, we consolidated the operations of EA.com back...

  • Page 170
    ...the Equity Plan, incentive stock options may be granted to employees and oÇcers and non-qualiÃ'ed options may be granted to employees, oÇcers and directors, at not less than 100 percent of the fair market value on the date of grant. At our Annual Meeting of Stockholders, held on July 28, 2005, our...

  • Page 171
    ... activity under our common stock option plans during the Ã'scal years ended March 31, 2006, 2005 and 2004: (In thousands, except weighted-average exercise price) Options Outstanding WeightedAverage Number of Exercise Shares Price Balance as of March 31, 2003 Granted Canceled Exercised Balance...

  • Page 172
    ... fair value of stock options granted during Ã'scal years 2006, 2005 and 2004 was $15.19, $17.70 and $16.22, respectively. The fair value was estimated on the date of grant using the Black-Scholes optionpricing model assumptions described in Note 1(o) of the Notes to Consolidated Financial Statements...

  • Page 173
    ... summarizes our RSU activity during the Ã'scal year ended March 31, 2006: (In thousands, except weighted-average grant date fair value) Restricted Stock Units WeightedAverage Number Grant Date of Shares Fair Value Balance as of March 31, 2005 Granted and Assumed(1 Canceled Vested Balance as of...

  • Page 174
    ... instruments outstanding. In Ã'scal 2005 and 2004, activity related to derivatives was not material. See Note 3 of the Notes to Consolidated Financial Statements. (14) INTEREST AND OTHER INCOME, NET Interest and other income, net, for the years ended March 31, 2006, 2005 and 2004 consisted of (in...

  • Page 175
    ..., 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. Annual Report 103

  • Page 176
    ... of substantially all of our research and development expense as well as certain corporate functional costs that are not allocated to the publishing organizations. Information about our total net revenue by product line for the Ã'scal years ended March 31, 2006, 2005 and 2004 is presented below...

  • Page 177
    ...129 542 $2,957 408 Our direct sales to Wal-Mart Stores, Inc. represented approximately 13 percent of total net revenue in both Ã'scal 2006 and 2004 and approximately 14 percent of total net revenue in Ã'scal 2005. (18) QUARTERLY FINANCIAL AND MARKET INFORMATION (UNAUDITED) (In millions, except per...

  • Page 178
    ... in-process technology of $4 million, restructuring charges of $1 million, certain litigation expenses of $21 million and a bonus reversal of $26 million, all pre-tax. Our common stock is traded on the NASDAQ National Market under the symbol ERTS. The prices for the common stock in the table above...

  • Page 179
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders Electronic Arts Inc.: We have audited the accompanying consolidated balance sheets of Electronic Arts Inc. and subsidiaries as of April 1, 2006 and March 26, 2005, and the related consolidated statements ...

  • Page 180
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders Electronic Arts Inc.: We have audited management's assessment, included in the accompanying Management's Report on Internal Control over Financial Reporting, that Electronic Arts Inc. maintained eÃ...ective...

  • Page 181
    We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Electronic Arts Inc. and subsidiaries as of April 1, 2006 and March 26, 2005 and the related consolidated statements of operations, stockholders...

  • Page 182
    ...processed, summarized and reported within the time periods speciÃ'ed in the SEC's rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including the Chief Executive OÇcer and Executive Vice President...

  • Page 183
    ... total assets. For the period from February 15, 2006 through March 31, 2006, total net revenue subject to JAMDAT's internal control over Ã'nancial reporting represented less than 1 percent of our consolidated net revenue. In making its assessment, management used the criteria set forth in...

  • Page 184
    ... includes code of ethics provisions applicable to our directors, principal executive oÇcer, principal Ã'nancial oÇcer, principal accounting oÇcer, and other senior Ã'nancial oÇcers) appears in Item 1 of this Form 10-K under the caption ""Investor Information''. Item 11: Executive Compensation...

  • Page 185
    ... 2000 Employee Stock Purchase Plan as amended, and related documents.(*)(7) Form of Indemnity Agreement with Directors.(*)(8) Electronic Arts Discretionary Bonus Program Plan Document (*)(9) Electronic Arts Deferred Compensation Plan.(*)(3) Electronic Arts Executive Long-Term Disability Plan.(*)(10...

  • Page 186
    ... transaction), dated as of July 11, 2005, among Electronic Arts Redwood, LLC, Electronic Arts, Inc., Selco Service Corporation, Victory Receivables Corporation, The Bank of Tokyo-Mitsubishi, Ltd., New York Branch, various Liquidity Banks, Deutsche Bank Trust Company Americas, The Bank of Nova Scotia...

  • Page 187
    Number Exhibit Title 10.43 10.44 10.45 10.46 21.01 23.01 31.1 31.2 32.1 32.2 Agreement for Underlease relating to Onslow House, Guildford, Surrey, dated 7 February 2006, by and between The Standard Life Assurance Company and Electronic Arts Limited and Electronic Arts Inc.(24) OÃ...er Letter ...

  • Page 188
    ... by reference to exhibits Ã'led with Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. (10) Incorporated by reference to exhibits Ã'led with Registrant's Annual Report on Form 10-K for the year ended March 31, 2005. (11) Incorporated by reference to exhibits Ã'led...

  • Page 189
    ... J. Srere Chairman of the Board and Chief Executive OÇcer Executive Vice President, Chief Financial and Administrative OÇcer Senior Vice President, Chief Accounting OÇcer (Principal Accounting OÇcer) Director Director Director Director Director Director Director Director Annual Report 117

  • Page 190
    ELECTRONIC ARTS INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS Years Ended March 31, 2006, 2005 and 2004 (In millions) Balance at Beginning of Period Charged to Costs and Expenses Charged (credited) to Other Accounts(1) Balance at End of Period Allowance for Doubtful Accounts, ...

  • Page 191
    ... 2006 FORM 10-K ANNUAL REPORT EXHIBIT INDEX Exhibit Number Exhibit Title 10.44 21.01 23.01 31.1 31.2 OÃ...er Letter for Employment at Electronic Arts Inc. to Gabrielle Toledano, dated February 6, 2006. Subsidiaries of the Registrant. Consent of KPMG LLP, Independent Registered Public Accounting Firm...

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  • Page 195
    ... Public Accounting Firm Mountain View, California TRANSFER AGENT Wells Fargo Shareowner Services St. Paul, Minnesota FORM 10-K A copy of the Company's Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, is available by contacting: Investor Relations Electronic Arts...

  • Page 196
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