Electronic Arts 2007 Annual Report Download - page 4

In fiscal 2008, some of the industry’s most innovative games will be coming from EA including Boogie and
Army of Two from EA Montreal; NBA Live from EA Canada; SKATE from EA Blackbox; Warhammer Online:
Age of Reckoning from EA Mythic; The Simpsons from EA Redwood Shores; Burnout Paradise from EA
Criterion; and from EALA, Medal of Honor Airborne and a new Wii game from our collaboration with Steven
Spielberg. In calendar year 2008, we are looking forward to the release of SPORE by Will Wright and the
team at Maxis.
I want to stop and thank every one of the people who make, market, support and sell our games. You are the
best in the business.
Performance in Fiscal Year 2007
Fiscal 2007 is best summarized as a year in which we exceeded our operating plan and made important
strategic investments. We grew our mobile and online businesses, launched EA SPORTS FIFA Online in Asia
and extended our creative capability with studio acquisitions.
The year marked the completion of the console transition — consumers now have three exciting new systems
which are faster, more innovative, more powerful and more connected than anything we imagined just five
years ago. EA was the number one publisher across all consoles combined but we hope to improve our
performance on each individual platform in the year ahead.
Microsoft’s Xbox 360 was the first in the market with an impressive suite of online features. In fiscal 2007,
EA was the number one publisher on this system.
Sony’s PLAYSTATION 3 got started a year after the Xbox 360, but is more powerful from a development
standpoint. We completed our fiscal year as the number two developer on this system in North America and
we estimate that we were number three in Europe.
Nintendo’s Wii and the Nintendo DS handheld have revolutionized gaming with an innovative and simple
approach to fun. EA initially underestimated the popularity of the Wii but we quickly deployed resources to
provide more games as the installed base of players grew.
Our team in Japan and a newly acquired team, EA Headgate in Utah, have shown a particular expertise
developing for Nintendo systems. We are currently creating original properties for the Wii and NDS such as
MySims and EA Playground. Additionally for the Wii, we are also working on Boogie and a game from our
collaboration with Steven Spielberg.
Overall, EA’s business reflects a good balance between the present and future — we continue to generate
industry-leading revenue from our traditional business while our investments incubate and contribute new
sources of revenue, including mobile games and online advertising. Our net revenue was $3.091 billion, up
five percent as compared with $2.951 billion for the prior year. Gross profit for the year was $1.879 billion,
up six percent year-over-year. Net income for the year was $76 million as compared with $236 million for the
prior year. The company incurred an after-tax stock-based compensation charge of $107 million, or $0.34 per
share, for the year. Diluted earnings per share were $0.24 as compared with $0.75 for the prior year.
Our Priorities
Next Generation Consoles — Leadership on consoles is a long-standing pillar of EA’s success. That’s not
going to change. Our goal is to be the leader on the Xbox 360 and PLAYSTATION 3 and to solidify our
position as the top independent publisher on the Wii. We have the people and the content to make that
happen.
Online — As more consumers connect, online has evolved from a niche for hard core players to a mainstream
feature of many games — for instance, our Battlefield franchise is played almost exclusively online.
Last year, EA consumers purchased more than nine million digital items online for games like EA SPORTS
FIFA Online in Korea, Need for Speed Carbon, and from our casual game offering, Pogo.