Electronic Arts 2008 Annual Report Download

Download and view the complete annual report

Please find the complete 2008 Electronic Arts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 196

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196

Notice of 2008 Annual Meeting of Stockholders
Proxy Statement
Annual Report on Form 10-K for the
Fiscal Year Ended March 31, 2008

Table of contents

  • Page 1
    Notice of 2008 Annual Meeting of Stockholders Proxy Statement Annual Report on Form 10-K for the Fiscal Year Ended March 31, 2008

  • Page 2

  • Page 3
    Stockholder Letter Stockholder Letter

  • Page 4
    (This page intentionally left blank)

  • Page 5
    ...or five platforms. Today, games generate revenue on over 10 platforms including consoles, PCs, handhelds and mobile phones. In addition to purchasing discs in stores, consumers pay for content via downloads, subscriptions and micro-transactions. Systems like the Wii from Nintendo are leading the way...

  • Page 6
    ...goods business, digital direct-to-consumer business models of subscription, digital downloads, micro-transactions and advertising will be a major part of EA's revenue mix in the years to come. 4. Execute Smart Mergers and Acquisitions - Smart M&A brings new creative teams and intellectual properties...

  • Page 7
    ... Redwood Shores Studio that is complemented with a serial online graphic novel. • SimAnimals - a new property with animal protagonists for the Nintendo platforms. • FaceBreaker - this new, humorous, arcade-style boxing game will be the first title to launch under the recently-announced EA SPORTS...

  • Page 8
    ...Pogo online site is generating revenue with a host of business models. Today, Pogo has 1.6 million subscribers and is the highest engagement game website. In FY09 we plan to expand our offering by adding new games and more online community features. EA's mobile team will launch a slate of new titles...

  • Page 9
    Proxy Statement Notice of 2008 Annual Meeting and Proxy Statement

  • Page 10
    (This page intentionally left blank)

  • Page 11
    ... our web site at investor.ea.com. At this meeting, we are asking the stockholders to: • Elect eight directors; • Approve amendments to our 2000 Equity Incentive Plan and 2000 Employee Stock Purchase Plan; and • Ratify the appointment of KPMG LLP as our independent registered public accounting...

  • Page 12
    (This page intentionally left blank)

  • Page 13
    Notice of 2008 Annual Meeting of Stockholders DATE: TIME: PLACE: July 31, 2008 2:00 p.m. ELECTRONIC ARTS' HEADQUARTERS Building 250* 209 Redwood Shores Parkway Redwood City, CA 94065 * Please note: Building 250 is located on the headquarters campus at 250 Shoreline Drive MATTERS TO BE VOTED UPON: 1....

  • Page 14
    ... THE 2000 EMPLOYEE STOCK PURCHASE PLAN ...PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF KPMG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ...REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS ...PRINCIPAL STOCKHOLDERS ...COMPENSATION OF EXECUTIVE OFFICERS ...Compensation Discussion and...

  • Page 15
    ...Equity Plan" mean EA's 2000 Equity Incentive Plan. • "2000 Purchase Plan" and "Purchase Plan" mean EA's 2000 Employee Stock Purchase Plan. • "Executive Bonus Plan" means the Electronic Arts Inc. Executive Bonus Plan. • Holding shares in "street name" means your EA shares are held in an account...

  • Page 16
    ... materials to you in connection with the solicitation of proxies for use at our 2008 Annual Meeting of Stockholders, which will take place on Thursday, July 31, 2008 at 2:00 p.m. local time, at our corporate headquarters in Redwood City, California. This proxy statement describes proposals on which...

  • Page 17
    ... 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 Notice of 2008 Annual Meeting of Stockholders...

  • Page 18
    ... must be present to hold the meeting? To hold the meeting and conduct business, a majority of EA's outstanding voting shares as of June 9, 2008 must be present or represented by proxies at the meeting. On this date, a total of 318,567,924 shares of common stock were outstanding and entitled to vote...

  • Page 19
    ... Once filed, you can request a copy of the Form 10-Q by contacting our Investor Relations department at (650) 628-7352 or the SEC at (800) SEC-0330 for the location of its nearest public reference room. You can also get a copy on the Internet at http://investor.ea.com or through the SEC's electronic...

  • Page 20
    ... OF DIRECTORS At the Annual Meeting, stockholders will elect eight directors to hold office for a one-year term until the next Annual Meeting (or until their respective successors are elected and qualified). All nominees have consented to serve a one-year term, if elected. In May 2008, Timothy...

  • Page 21
    ... Inc., co-founded and was Chief Executive Officer and Chairman of Macromedia Inc., co-founded and was Senior Vice President of Electronic Arts, and was a member of the research staff at Xerox PARC. Other than in his role as a director of EA, Mr. Mott has had no operating involvement with EA since he...

  • Page 22
    ..., Executive Vice President and Director of Business Development, Group Managing Director, and in 1997, was named Chief Executive Officer of Y&R's New York office, becoming the first female CEO in the company's 75-year history. Ms. Srere also serves on the Board of Directors of Universal Technical...

  • Page 23
    ...found in the Investor Relations portion of our website at http://investor.ea.com. In accordance with the charters for each, and with current regulatory requirements, all members of these Committees are independent directors. During fiscal 2008, each director participated in at least 75% of all Board...

  • Page 24
    ... of the CEO (via recommendation to the Board) and other executive officers and for overseeing the Company's equity incentive plans and other benefit plans. In addition, the Compensation Committee is responsible for reviewing and recommending to the Board compensation for non-employee directors. The...

  • Page 25
    ... 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 writing...

  • Page 26
    ... 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 27
    ... in fiscal 2008. Stock Ownership Guidelines Each non-employee director is required, within three years of becoming a director, to own shares of EA common stock having a value of at least 3 years' annual retainer for service on the Board. As of June 1, 2008, each of our directors had either fulfilled...

  • Page 28
    ... used to calculate the fair value of EA's stock options, see note 12, "Stock-Based Compensation and Employee Benefit Plans", of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended March 29, 2008. In fiscal 2008, each non-employee director standing...

  • Page 29
    ... option having an exercise price equal to the fair market value of our common stock on the date of grant. The following table presents the amount of cash each director was entitled to receive and the number of shares such director received in lieu of such cash: Name Cash Fees Earned ($) Shares of EA...

  • Page 30
    ... annual reviews and merit increases. Excluding stock options and restricted stock units we granted in connection with acquisitions, during fiscal 2008, a year in which our employee base grew by over 1,100 people, we granted stock options to purchase a total of 6,671,977 shares and restricted stock...

  • Page 31
    ... at the 2007 Annual Meeting of Stockholders. The Executive Bonus Plan allows cash bonuses paid under it to be considered "performance-based compensation" within the meaning of Section 162(m) of the Code and therefore fully deductible by Electronic Arts for federal income tax purposes. We are...

  • Page 32
    ...Employee Stock Purchase Plan, which initially was approved by the stockholders on July 27, 2000, provides our employees with a convenient means of purchasing equity in the Company through payroll deductions. It also provides an incentive for continued employment. Since its adoption, 8,300,000 shares...

  • Page 33
    ... to the Company. Representatives of KPMG LLP have direct access to members of the Audit Committee and the Board. We expect one or more representatives of KPMG LLP to attend the Annual Meeting in order to respond to appropriate questions from stockholders, and to make a statement if they desire...

  • Page 34
    ... the Board of Directors in its oversight responsibilities relating to the integrity of EA's accounting policies, internal controls and financial reporting. The Audit Committee reviews EA's quarterly and annual financial statements prior to public earnings releases and submission to the SEC; reviews...

  • Page 35
    ... light of its role and responsibilities, the Audit Committee recommended to the Board of Directors that the audited financial statements of the Company as of and for each of the last three years ended March 31, 2008 be included for filing with the SEC in the Company's Annual Report on Form 10-K for...

  • Page 36
    ..., the address for each of our directors and executive officers is c/o Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065. Stockholder Name Shares Owned(1)(2) Right to Acquire(3) Percent of Outstanding Shares(4) Wellington Management Co. LLP(5) ...T. Rowe Price Associates Inc...

  • Page 37
    ... MD 21202. Based on information contained in a report on Schedule 13F filed with the SEC on March 31, 2008, in which Fidelity Management & Research indicated that it had sole power to vote or direct the vote of 16,197,964 shares. The address for Fidelity Management & Research is 82 Devonshire Street...

  • Page 38
    ... the key individuals that lead our business. This discussion describes our executive compensation program and addresses how we made compensation decisions in fiscal 2008 for our: • Chief Executive Officer, John S. Riccitiello, • Former Executive Vice President, Chief Financial and Administrative...

  • Page 39
    ... and administration of all compensation, equity, and employee benefit plans and programs, including the annual bonus and equity compensation plans for executive officers. The Committee regularly meets on a quarterly basis and holds additional meetings as needed during the year. The Committee also...

  • Page 40
    ...Arts Executive Bonus Plan. Compensia works directly with the Committee Chair and Committee members and sends all invoices, including descriptions of services rendered, to the Committee Chair for review and payment approval. Compensia performed no work for our management during fiscal 2008. From time...

  • Page 41
    ...Vice President. The Committee used the survey data and the Peer Group information to validate the range of competitive pay for the business sectors in which we compete for executive talent. Based on its assessment of the competitive marketplace, the Company's long-term strategic objectives, our need...

  • Page 42
    ...-based compensation" within the meaning of Section 162(m) of the Internal Revenue Code. The Executive Bonus Plan required that the Company achieve at least 75% of a pre-established corporate financial performance metric in order to fund a pool from which participating executive officers were...

  • Page 43
    ..., the Company generated nonGAAP net income, adjusted as described above, sufficient to meet the minimum funding requirement under the Executive Bonus Plan. The Committee then used the factors set forth in the Discretionary Bonus Program to determine the amount of each participating executive officer...

  • Page 44
    ..., as the competition for creative and technical talent and leadership in our industry is intense. Executive officers are eligible to receive equity awards when they first join the Company, in connection with a significant change in responsibilities, annually to provide incentives for continued...

  • Page 45
    ... with his appointment as Chief Executive Officer, consist solely of stock options. Equity Awards Grant Practices All stock options granted to the Named Executive Officers in fiscal 2008 were granted at the fair market value (i.e., the closing price) of the Company's common stock on the date of...

  • Page 46
    ... and Mr. Moore received certain of these assignment-related benefits, which have been reported in the All Other Compensation column of the Summary Compensation Table set forth below. Executive Changes Appointment of New Chief Executive Officer In February 2007, we entered into an agreement with Mr...

  • Page 47
    ... 2008 at his current bonus target level (75% of base salary), subject to his being employed by the Company at the time annual bonus payments are made to other executive officers. Fiscal 2009 Compensation Program Changes During fiscal 2008, based on the results of the Committee's comprehensive review...

  • Page 48
    ... Plan In February 2008, our Board of Directors approved a "double-trigger" change of control plan, entitled the Electronic Arts Inc. Key Employee Continuity Plan (the "CoC Plan"). Pursuant to the CoC Plan, any eligible employee, including the Named Executive Officers, may receive certain benefits...

  • Page 49
    ...up to 60 months following termination of employment (but in no event beyond the original term of the stock option). Non-Competition and Non-Solicitation Agreements Each of our newly-hired employees, including our executive officers, must enter into a standard proprietary information agreement, which...

  • Page 50
    ...value from a decline in the trading price of our stock. Tax and Accounting Policies Section 162(m) Section 162(m) of the Internal Revenue Code limits the ability of a public company to deduct the remuneration of its chief executive officer and each of the next three most highly compensated executive...

  • Page 51
    ... limitation of Section 162(m). In fiscal 2008, the compensation paid to Peter Moore, which included a signing bonus and relocation-related financial assistance, exceeded the Section 162(m) deductibility threshold by approximately $926,000. Pursuant to guidance from the Internal Revenue Service...

  • Page 52
    ...12, "Stock-Based Compensation and Employee Benefit Plans", of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008. For additional information regarding the specific terms of restricted stock units granted to the Named Executive Officers in...

  • Page 53
    ...of a househunting trip, temporary housing, home sale costs and storage and shipping of household goods; and (b) $46,917 for the tax gross-up related to the relocation costs incurred during fiscal 2008. For more information regarding Mr. Moore's compensation, see "Compensation Discussion and Analysis...

  • Page 54
    ... regarding the valuation methodology used by EA, see note 12, "Stock-Based Compensation and Employee Benefit Plans", of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008. Stock option vests as follows: (a) 300,000 shares will vest on our...

  • Page 55
    ... month thereafter for 38 months. Restricted stock units vest as to 25% of the shares on each of the first three anniversaries of the grant date, with the remaining shares vesting on the fourth anniversary of the grant date. Restricted stock units vest as to 50% of the shares on September 16, 2008...

  • Page 56
    ...pursuant to EA's 2000 Equity Incentive Plan. Represents restricted stock units. The market value was calculated by multiplying the number of unvested restricted stock units by $49.34, the closing price of EA's common stock on March 28, 2008, the last trading day of fiscal 2008. Stock option vests as...

  • Page 57
    ...market value on the date of exercise to get the realized value per share, and (b) multiplying the realized value per share by the number of shares underlying options exercised. Represents restricted stock units that vested during fiscal 2008. Shares of EA common stock, net of shares withheld for tax...

  • Page 58
    ...the CoC Plan. Includes eighteen months of post-termination health benefits and any accrued paid time off/vacation pay. (2) (3) (4) (5) EQUITY COMPENSATION PLAN INFORMATION We have four equity incentive plans (excluding plans assumed or adopted by EA in connection with acquisitions, as described...

  • Page 59
    ...The table does not include information for equity incentive plans we assumed in connection with our acquisitions of Maxis in 1997, Criterion Software in 2004, JAMDAT Mobile Inc. in 2006 and VGH in 2008. As of March 29, 2008, a total of: (a) 246,345 shares of common stock were issuable upon exercise...

  • Page 60
    ...as members of our Board of Directors. Prior to becoming Chief Executive Officer of Electronic Arts, John Riccitiello was a Founder and Managing Director of Elevation Partners, L.P., and also served as Chief Executive Officer of VG Holding Corp. ("VGH"), which we acquired in January 2008. At the time...

  • Page 61
    ...a member of the board of directors or the compensation committee of a company at which a member of EA's Compensation Committee is an employee or officer. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires EA's directors and executive...

  • Page 62
    ... and 2000 Employee Stock Purchase Plan, each as proposed to be amended. Any such request should be directed as follows: Stock Administration Department, Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065 - telephone number (650) 628-1500. OTHER BUSINESS The Board does not know...

  • Page 63
    ... that are not issued or delivered as a result of the net settlement of a stock option or stock appreciation right; (y) shares that are used to pay the exercise price or withholding taxes related to an award granted under the Equity Plan; and (z) shares that are repurchased by us with the proceeds of...

  • Page 64
    ... issuance of shares to the extent permitted by applicable laws. No Repricings or Exchanges of Awards Without Stockholder Approval The Compensation Committee may, at any time or from time to time, authorize the Company, with the consent of the affected Equity Plan participants, to issue new awards in...

  • Page 65
    ...additional option to purchase 8,400 shares of common stock and 1,200 restricted stock units.. If a non-employee director has not served on our Board of Directors for a full year at the time of the annual meeting of our stockholders, such director will receive a pro-rated annual grant. Options issued...

  • Page 66
    ... income; (m) earnings per share; (n) total stockholder return; (o) market share; (p) return on assets or net assets; (q) the Company's stock price; (r) growth in stockholder value relative to a pre-determined index; (s) return on equity; (t) return on invested capital; (u) cash flow (including free...

  • Page 67
    ..., the Equity Plan would be extended by ten years to 2020 unless terminated earlier by the Board. 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...

  • Page 68
    ... taxable income at the time a nonqualified stock option ("NQSO") is granted or vests provided the exercise price is no less than the fair market value of the underlying shares on the grant date. Upon exercise of a vested NQSO, the participant will include in income as compensation an amount equal to...

  • Page 69
    ... of the Company's authorized common stock have been reserved for issuance under the Equity Plan. Proposed Amendments to the Equity Plan At the 2008 Annual Meeting, stockholders will be asked to approve amendments to the Equity Plan as follows: • Increase the number of shares authorized under the...

  • Page 70
    ... stock appreciation rights granted after July 31, 2008 will reduce the number of shares remaining available for issuance by 1 share); • Add additional performance measures to the list of performance factors for use in granting performance-based equity awards under the Equity Plan; and • Extend...

  • Page 71
    ...Period. In any given Purchase Period, no employee may purchase more than (a) twice the number of shares that could have 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 Offering Date...

  • Page 72
    ... shares at a rate that, when aggregated with all other rights to purchase stock under all other employee stock purchase plans of the Company, or any parent or subsidiary of the Company, exceeds $25,000 in fair market value (determined on the Offering Date) for each year. Purchase Price. The purchase...

  • Page 73
    ... of shares purchased under the Purchase Plan. Proposed Amendments of the 2000 Employee Stock Purchase Plan At the 2008 Annual Meeting, stockholders will be asked to approve amendments to the Purchase Plan as follows: • Increase by 1,500,000 the number of shares of the Company's common stock...

  • Page 74
    (This page intentionally left blank)

  • Page 75
    2008 Annual Report on Form 10-K Annual Report

  • Page 76
    (This page intentionally left blank)

  • Page 77
    ... Redwood Shores Parkway Redwood City, California (Address of principal executive offices) 94065 (Zip Code) Registrant's telephone number, including area code: (650) 628-1500 Securities registered pursuant to Section 12(b) of the Act: Annual Report Title of Each Class Common Stock, $0.01 par value...

  • Page 78
    ... 8 Financial Statements and Supplementary Data ...Item 9 Changes in and Disagreements with Accountants on Accounting on Financial Disclosure ...Item 9A Controls and Procedures ...Item 9B Other Information ...Item 10 Item 11 Item 12 Item 13 Item 14 PART III Directors, Executive Officers and Corporate...

  • Page 79
    ... fiscal 2008 we also published over 30 games for cellular handsets. We also provide online game-related services (e.g., matchmaking and subscription services) for these platforms. We generate net revenue primarily from sales of packaged goods, online subscriptions, online and mobile downloads, micro...

  • Page 80
    ...one title, Need for Speed Most Wanted, published on eight platforms, which represented approximately 10 percent of our total net revenue. We were initially incorporated in California in 1982. In September 1991, we reincorporated under the laws of Delaware. Our principal executive offices are located...

  • Page 81
    ..., product certification, quality assurance, motion capture, art outsourcing and localization within the local markets in which we operate. In fiscal 2008, we generated approximately 55 percent of our net revenue from games developed by our studios that were initially released during the year...

  • Page 82
    ... of sports games. The Sims Label The Sims label develops and markets life-simulation games and online communities with an emphasis on creativity, community and humor. The Sims has sold over 100 million units world-wide since it was originally launched in 2000. A significant factor in its success has...

  • Page 83
    ... than EA Mobile games). Our North America publishing organization is headquartered in Redwood City, California. We have local offices in several states including California, Washington and New York, among others. We also have a distribution center in Kentucky. North America net revenue increased...

  • Page 84
    ... markets, we sell our products through distributors with whom we have agreements. We also distribute products of other companies through our rack jobbing business in Switzerland. We had direct sales to GameStop Corp. which represented approximately 13 percent and 12 percent of total net revenue...

  • Page 85
    ... of innovative new titles and the development of new technologies. Competition is also based on product quality and features, timing of product releases, brand-name recognition, availability and quality of in-game content, access to distribution channels, effectiveness of marketing and price. For...

  • Page 86
    ... and software code. We develop products from wholly-owned intellectual properties we create within our own studios. We also acquire the rights to include proprietary intellectual property in our products through acquisitions. We also enter into content license agreements such as those with sports...

  • Page 87
    ... than the quarter in which we recognize the highest amount of net revenue. Our results can also vary based on a number of factors, including title release dates, consumer demand for our products, shipment schedules and our revenue recognition policies. Employees As of March 31, 2008, we had...

  • Page 88
    ..., Chief Financial Officer President, EA Games Label President, EA Sports Label President, Global Publishing and Chief Operating Officer President, The Sims Label President, EA Casual Entertainment Executive Vice President, General Manager, International Publishing Executive Vice President, Business...

  • Page 89
    ... was named President, Global Publishing and Chief Operating Officer in March 2008. Prior to joining EA, Mr. Pleasants was an investor in, and served as an advisor to, various privately-held companies. From September 2005 until June 2007, Mr. Pleasants served as President and Chief Executive Officer...

  • Page 90
    .... Mr. Bené is a member of the Bar of the State of California. Investor Information We file or furnish various reports, such as registration statements, periodic and current reports, proxy statements, and other materials with the Securities and Exchange Commission ("SEC"). You may read and copy any...

  • Page 91
    .... Likewise, if a key event to which our product release schedule is tied were to be delayed or cancelled, our sales would also suffer disproportionately. Our ability to meet product development schedules is affected by a number of factors, including the creative processes involved, the coordination...

  • Page 92
    ...revenue generated from our products and services to fall below expectations. If our competitors develop more successful products or services, offer competitive products or services at lower price points or based on payment models perceived as offering a better value proposition (such as pay-for-play...

  • Page 93
    ...essential to the development and marketing of our products and management of our businesses is extremely competitive. Our leading position within the interactive entertainment industry makes us a prime target for recruiting of executives and key creative talent. If we cannot successfully recruit and...

  • Page 94
    ... strategic transactions, including (i) acquisitions of companies, businesses, intellectual properties, and other assets, (ii) minority investments in strategic partners, and (iii) investments in new interactive entertainment businesses (for example, online and mobile games). Any of these strategic...

  • Page 95
    ... to sustain our current business models or profits, or we may be precluded from pursuing new business opportunities in the future. Many patents have been issued that may apply to widely-used game technologies, or to potential new modes of delivering, playing or monetizing game software products. For...

  • Page 96
    ... other video games we sell. If any of these consequences were to occur, our business and financial performance could be significantly harmed. If we ship defective products, our operating results could suffer. Products such as ours are extremely complex software programs, and are difficult to develop...

  • Page 97
    ... tax rate will be more volatile. We are also required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions. We are regularly under examination by tax authorities...

  • Page 98
    ... number of key customers. If these customers reduce their purchases of our products or become unable to pay for them, our business could be harmed. In our fiscal year ended March 31, 2008, over 73 percent of our U.S. sales were made to seven key customers. In Europe, our top ten customers accounted...

  • Page 99
    ...-party lessor 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, the lessor...

  • Page 100
    ... to extend the lease term. Additionally, we have options to purchase the property after five and ten years based on the fair market value of the property at the date of sale, a right of first offer to purchase the property upon terms offered by the Landlord, and a right to share in the profits from...

  • Page 101
    provides space for research and development functions. Our rental obligation under this agreement is approximately $16 million over the initial ten-year term of the lease. Our North American distribution is supported by a centralized warehouse facility that we lease in Louisville, Kentucky, ...

  • Page 102
    ... of our common stock as of May 16, 2008, and the closing price of our common stock was $49.60 per share as reported by the NASDAQ Global Select Market. In addition, we believe that a significant number of beneficial owners of our common stock hold their shares in street name. Dividends We have not...

  • Page 103
    ... Annual Report $80 $60 $40 $20 $0 3/03 3/04 3/05 3/06 3/07 3/08 Electronic Arts Inc. NASDAQ Composite S & P 500 RDG Technology Composite * $100 invested on March 31, 2003 in stock or index-including reinvestment of dividends. Fiscal year ending March 31. March 31, 2003 2004 2005 2006 2007 2008...

  • Page 104
    ...YEAR CONSOLIDATED FINANCIAL DATA (In millions, except per share data) STATEMENTS OF OPERATIONS DATA 2008 Year Ended March 31, 2006 2005 2007(a) 2004 Net revenue ...Cost of goods sold ...Gross profit ...Operating expenses: Marketing and sales ...General and administrative ...Research and development...

  • Page 105
    ...deferral amount will vary significantly depending upon the number of titles we release, the timing of their release, sales volume, returns and price protection provided for these online-enabled software products. In addition, we expense the cost of goods sold related to these transactions during the...

  • Page 106
    ... deferrals related to packaged goods and digital content for the fiscal year ended March 31, 2008 decreased our reported net revenue and operating income by $355 million. Net revenue was driven by sales of Rock Band, Madden NFL 08, FIFA 08, Need for Speed ProStreet, and The SimpsonsTM Game. Net loss...

  • Page 107
    ... development expenses to increase on an absolute basis in fiscal 2009 as compared to fiscal 2008 (although not necessarily as a percentage of net revenue). Online. Today, we generate net revenue from a variety of online products and services, including casual games and downloadable content marketed...

  • Page 108
    ...were purchased, thereby completing the acquisition of the remaining minority interest of DICE. • In July 2006, we acquired Mythic Entertainment, Inc., located in Virginia, as part of our efforts to accelerate our growth in the massively multiplayer online role-playing market. In the fourth quarter...

  • Page 109
    ...product and online service sale between these two elements and recognize the related revenue separately. However, starting in fiscal 2008, VSOE does not exist for the online service to be delivered for certain platforms and all revenue from these transactions are recognized over the estimated online...

  • Page 110
    ... our reserves, this would increase our reported total net revenue. In addition, if our estimates of returns and price protection related to online-enabled packaged goods products change, the amount of net deferred revenue we recognize in the future would change. Significant judgment is required to...

  • Page 111
    ... trigger impairment. Stock-Based Compensation. We are required to estimate the fair value of share-based payment awards on the date of grant. The estimated fair value of stock options and stock purchase rights granted pursuant to our employee stock purchase plan is determined using the Black-Scholes...

  • Page 112
    ... publicity rights, content and/or other intellectual property. Royalty payments to independent software developers are payments for the development of intellectual property related to our games. Co-publishing and distribution royalties are payments made to third parties for the delivery of product...

  • Page 113
    ... services in connection with some of our online games, (5) programming third-party web sites with our game content, (6) allowing other companies to manufacture and sell our products in conjunction with other products, and (7) advertisements on our online web pages and in our games. 37 Annual Report

  • Page 114
    ...were not able to objectively determine the fair value (as defined by U.S. Generally Accepted Accounting Principles for software sales) of a free online service that we provided in connection with the sale. The deferral of net revenue related to certain of our packaged goods and digital content sales...

  • Page 115
    ... sold for our web site advertising business primarily consists of server costs. Cost of goods sold for fiscal years 2008 and 2007 were as follows (in millions): March 31, 2008 % of Net Revenue March 31, 2007 % of Net Revenue % Change Change as a % of Net Revenue Annual Report $1,805 49.3% $1,212...

  • Page 116
    ... to fiscal 2008 as a result of (1) a decrease in the change in deferred net revenue related to certain online-enabled packaged goods (we expense the cost of goods sold related to these transactions when delivered) and (2) a favorable mix of EA Studio revenue. Marketing and Sales Marketing and sales...

  • Page 117
    ... in personnel-related costs and a greater number of titles in development. Amortization of Intangibles Amortization of intangibles for fiscal years 2008 and 2007 were as follows (in millions): March 31, 2008 % of Net Revenue March 31, 2007 % of Net Revenue $ Change % Change Annual Report $34...

  • Page 118
    ...this report. In connection with our acquisition of VGH, we incurred acquired in-process technology charges of $138 million in relation to game software that had not reached technical feasibility at the date of acquisition. The fair values of VGH's products under development were determined using the...

  • Page 119
    ... funds under the American Jobs Creation Act of 2004 in fiscal 2006, we currently intend to continue to indefinitely reinvest the undistributed earnings of our foreign subsidiaries outside of the United States. Annual Report Net Income (Loss) Net income (loss) for fiscal years 2008 and 2007 was...

  • Page 120
    ...$101 million decrease in net revenue from sales of titles for the PlayStation 2. Asia For fiscal 2007, net revenue in Asia was $164 million, driven primarily by sales of Need for Speed Carbon. We estimate that changes in foreign exchange rates decreased reported net revenue in Asia by approximately...

  • Page 121
    ... license royalties from movie-based titles in fiscal 2007. Marketing and Sales Marketing and sales expenses for fiscal years 2007 and 2006 were as follows (in millions): March 31, 2007 % of Net Revenue March 31, 2006 % of Net Revenue $ Change % Change $466 15% $431 15% $35 8% Annual Report...

  • Page 122
    ...increase in our annual bonus expense, (3) $54 million in additional personnel-related costs, primarily due to a 14 percent increase in headcount related in part to our acquisitions of JAMDAT and Mythic, and partially to support development of games for the new generation of consoles, (4) an increase...

  • Page 123
    ...our annual bonus expense, and (3) a $75 million increase in additional personnelrelated costs due to an increase in headcount (related in part to our acquisitions and growth in our EA Mobile business). These increases in operating expenses were mitigated by (1) a $140 million increase in net revenue...

  • Page 124
    ... to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS No. 157 establishes a fair value hierarchy that prioritizes the information used to develop those...

  • Page 125
    ... operating activities ...Cash used in investing activities ...Cash provided by financing activities ...Effect of foreign exchange on cash and cash equivalents ... Year Ended March 31, 2008 2007 Increase / (Decrease) ...$ 338 ...(429) ...243 ...30 $ 397 (487) 190 29 $ 129 $(59) 58 53 1 $ 53 Net...

  • Page 126
    ... of trailing nine month net revenue, reserves decreased from 8 percent as of March 31, 2007, to 7 percent as of March 31, 2008. We believe these reserves are adequate based on historical experience and our current estimate of potential returns, pricing allowances and doubtful accounts. Inventories...

  • Page 127
    ... not change as a result of the adjustment to the per share purchase price in the tender offer. On May 9, 2008, we received a commitment from certain financial institutions to provide us with up to $1.0 billion of senior unsecured term loan financing at any time until January 9, 2009, to be used to...

  • Page 128
    ... accrue and pay additional taxes on any portion of the repatriation where no United States income tax had been previously provided. We have a "shelf" registration statement on Form S-3 on file with the SEC. This shelf registration statement, which includes a base prospectus, allows us at any time to...

  • Page 129
    ... net of estimated future sub-lease income, were expensed in the periods of the related restructuring and are included in our accrued and other current liabilities reported on our Consolidated Balance Sheets as of March 31, 2008. See Note 6 of the Notes to Consolidated Financial Statements. Developer...

  • Page 130
    ... of Directors meeting during the Board's deliberation of the acquisition and he did not vote on the acquisition. OFF-BALANCE SHEET COMMITMENTS We lease certain of our current facilities, furniture and equipment under non-cancelable operating lease agreements. We are required to pay property taxes...

  • Page 131
    ... to extend the lease term. Additionally, we have options to purchase the property after five and ten years based on the fair market value of the property at the date of sale, a right of first offer to purchase the property upon terms offered by the Landlord, and a right to share in the profits from...

  • Page 132
    ...from changes in fair value, if any, is reported in each period in interest and other income, net, in our Consolidated Statements of Operations. Our hedging programs are designed to reduce, but do not entirely eliminate, the impact of currency exchange rate movements in revenue and operating expenses...

  • Page 133
    ...to sell foreign currencies in exchange for British pounds sterling and $23 million to purchase foreign currencies in exchange for U.S. dollars. The fair value of our forward contracts was immaterial as of March 31, 2008 and March 31, 2007. The counterparties to these forward and option contracts are...

  • Page 134
    ... Price Risk The value of our equity investments in publicly traded companies is subject to market price volatility and foreign currency risk for investments denominated in foreign currencies. As of March 31, 2008 and 2007, our marketable equity securities were classified as available-for-sale and...

  • Page 135
    ... Sheets at fair market value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income, net of any tax effects, in stockholders' equity. The fair value of our marketable equity securities was $729 million and $341 million as of March 31, 2008 and 2007...

  • Page 136
    ... Financial Statements ...Reports of Independent Registered Public Accounting Firm ...Financial Statement Schedule: The following financial statement schedule of Electronic Arts Inc. and Subsidiaries for the years ended March 31, 2008, 2007 and 2006 is filed as part of this report and should be read...

  • Page 137
    ... net revenue (packaged goods and digital content) ...Total current liabilities ...Income tax obligations ...Deferred income taxes, net ...Other liabilities ...Total liabilities ...Commitments and contingencies (See Note 9) Stockholders' equity: Preferred stock, $0.01 par value. 10 shares authorized...

  • Page 138
    ELECTRONIC ARTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Year Ended March 31, 2008 2007 2006 Net revenue ...$3,665 Cost of goods sold ...1,805 Gross profit ...Operating expenses: Marketing and sales ...General and administrative ...Research ...

  • Page 139
    ..., realized on investments and derivative instruments, net ...Translation adjustment ...- - - - Annual Report 183 5 23 $ 287 Comprehensive income ...Issuance of common stock ...Stock-based compensation ...Tax benefit from exercise of stock options ...6,044 3 - $ 3 - - - - 164 133 34 $1,412 14...

  • Page 140
    ... 55 188 - Supplemental cash flow information: Cash paid during the year for income taxes ...Non-cash investing activities: Change in unrealized gains on investments, net ...Assumption of stock options in connection with acquisitions ... See accompanying Notes to Consolidated Financial Statements 64

  • Page 141
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES We develop, market, publish and distribute video game software and content that can be played by consumers on a variety of platforms, including video game consoles (such as the...

  • Page 142
    ... for use in current operations or other activities such as capital expenditures and business acquisitions. As of March 31, 2008 and March 31, 2007, short-term investments and marketable equity securities were classified as available-for-sale and stated at fair value based upon quoted market prices...

  • Page 143
    ... is considered to occur as the service is provided. For online services associated with our packaged goods products (other than massively multiplayer online games) such as matchmaking, we estimate the service period to be six months after the month of sale. For digital downloads that do not have an...

  • Page 144
    ... Reserves We estimate potential future product returns, price protection and stock-balancing programs related to product revenue. We analyze historical returns, current sell-through of distributor and retailer inventory of our products, current trends in retail and the video game segment, changes in...

  • Page 145
    ... made to our employees and directors based on estimated fair values and recognize compensation over the service period for awards expected to vest. The estimated fair value of stock options and stock purchase rights granted pursuant to our employee stock purchase plan is determined using the Black...

  • Page 146
    ... to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS No. 157 establishes a fair value hierarchy that prioritizes the information used to develop those...

  • Page 147
    ... 15, 2008, and interim periods within those fiscal years. We do not expect the adoption of SFAS No. 161 to have a material impact on our Consolidated Financial Statements. Annual Report (2) FINANCIAL INSTRUMENTS (a) Fair Value of Financial Instruments Cash, cash equivalents, receivables, accounts...

  • Page 148
    ... The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of March 31, 2008 (in millions): Amortized Cost Fair Value Due in 1 year or less ...Due in 1-2 years...Due in 2-3 years...Asset-backed securities ... ... $163 254 245 63...

  • Page 149
    ... investments in common stock of publicly traded companies. In May 2007, we entered into a licensing agreement with and made a strategic equity investment in The9 Limited, a leading online game operator in China. We purchased approximately 15 percent of the outstanding common shares (representing 15...

  • Page 150
    ... is initially reported, net of tax, as a component of accumulated other comprehensive income in stockholders' equity. The gross amount of the effective portion of gains or losses resulting from changes in fair value of these hedges is subsequently reclassified into net revenue or operating expenses...

  • Page 151
    ... Statements of Operations. Annual Report (4) BUSINESS COMBINATIONS VG Holding Corp. On January 4, 2008, we acquired all of the outstanding shares of VG Holding Corp. ("VGH"), owner of both Bioware Corp. and Pandemic Studios, LLC, which create action, adventure and role-playing games. BioWare...

  • Page 152
    ... of operations of Electronic Arts and VGH as if the acquisition had taken place at the beginning of each respective year and after giving effect to purchase accounting adjustments (in millions, except per share data): Year Ended March 31, 2008 2007 (Unaudited) Net revenue ...Net loss ...Net loss...

  • Page 153
    ... the acquisition of Digital Illusions C.E. ("DICE") (in millions): Year Ended March 31, 2007 2006 2005 Total Current assets...Property and equipment, net ...Acquired in-process technology ...Goodwill ...Finite-lived intangibles ...Liabilities...Minority interest...Total purchase price ... $- - 1 19...

  • Page 154
    ... online role-playing games market. The results of operations of Mythic and the estimated fair market values of the acquired assets and assumed liabilities have been included in our Consolidated Financial Statements since the date of acquisition. The following table summarizes the estimated fair...

  • Page 155
    .... This acquisition positions us for 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...

  • Page 156
    ...) measures the amount of impairment by applying fair value-based tests to individual assets and liabilities within each reporting unit. We completed the first step of the annual goodwill impairment testing in the fourth quarter of fiscal 2008 and found no indicators of impairment of our recorded...

  • Page 157
    ... (43) (56) $ 14 Annual Report In June 2007, we announced a plan to reorganize our business into several new divisions, including four new "Labels": EA SPORTS, EA Games, EA Casual Entertainment and The Sims. Each Label operates with dedicated studio and product marketing teams focused on consumer...

  • Page 158
    ... publicity rights, content and/or other intellectual property. Royalty payments to independent software developers are payments for the development of intellectual property related to our games. Copublishing and distribution royalties are payments made to third parties for the delivery of product...

  • Page 159
    ... 31, 2008 2007 Other current assets ...$ 54 Other assets ...62 Royalty-related assets ...$116 $ 69 40 $109 Annual Report At any given time, depending on the timing of our payments to our co-publishing and/or distribution affiliates, content licensors and/or independent software developers, we...

  • Page 160
    ...Accrued income taxes ... ...$200 ...199 ...189 ...73 ...22 $ 91 175 206 58 284 $814 Accrued and other current liabilities ...$683 Deferred net revenue (other), includes the deferral of subscription revenue, deferrals related to our Switzerland distribution business, advertising revenue, licensing...

  • Page 161
    ...31, 2008 and $32 million as of March 31, 2007. Deferred net revenue (packaged goods and digital content), includes the deferral of (1) the total net revenue from the sale of certain online-enabled packaged goods and PC digital downloads for which we do not have VSOE for the online service we provide...

  • Page 162
    ... to extend the lease term. Additionally, we have options to purchase the property after five and ten years based on the fair market value of the property at the date of sale, a right of first offer to purchase the property upon terms offered by the Landlord, and a right to share in the profits from...

  • Page 163
    ... net of estimated future sub-lease income, were expensed in the periods of the related restructuring and are included in our accrued and other current liabilities reported on our Consolidated Balance Sheets as of March 31, 2008. See Note 6 of the Notes to Consolidated Financial Statements. Developer...

  • Page 164
    ...a result of their service as members of our Board of Directors. (10) INCOME TAXES The components of the provision (benefit) for income taxes are as follows (in millions): Year Ended March 31, 2008 2007 2006 Domestic ...Foreign ...Income (loss) before provision for income taxes and minority interest...

  • Page 165
    ... to be distributed. The components of the deferred tax assets, net, as of March 31, 2008 and 2007 consisted of (in millions): As of March 31, 2008 2007 Annual Report Deferred tax assets: Accruals, reserves and other expenses ...Tax credit carryforwards ...Equity compensation ...Net operating loss...

  • Page 166
    ... Chertsey, England. As of March 31, 2008, we have net operating loss ("NOL") carryforwards attributable to various acquired companies of approximately $149 million. These net operating loss carryforwards are subject to an annual limitation under Internal Revenue Code Section 382, but are expected to...

  • Page 167
    ... in unrecognized tax benefits related to current year tax positions ...Decreases in unrecognized tax benefits related to settlements with taxing authorities ...Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations ...Changes in unrecognized tax benefits due to...

  • Page 168
    ... 31, 2008 and 2007, we had 10,000,000 shares of preferred stock authorized but unissued. The rights, preferences, and restrictions of the preferred stock may be designated by our Board of Directors without further action by our stockholders. (12) STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS...

  • Page 169
    ... stock options, restricted stock, restricted stock units and our employee stock purchase plan included in our Consolidated Statements of Operations (in millions): Year Ended March 31, 2008 2007 2006 Cost of goods sold ...Marketing and sales ...General and administrative ...Research and development...

  • Page 170
    ... may be granted to employees, officers and directors, at not less than 100 percent of the fair market value on the date of grant. We also have options outstanding that were granted under (1) the Criterion Software Limited Approved Share Option Scheme (the "Criterion Plan"), which we assumed in...

  • Page 171
    ... related range of exercise prices by 318 million shares of common stock, which were issued and outstanding as of March 31, 2008. At our Annual Meeting of Stockholders, held on July 26, 2007, our stockholders approved amendments to the 2000 Equity Incentive Plan to (a) increase the number of shares...

  • Page 172
    ... payable in shares of common stock that we granted in connection with our acquisition of VGH, but exclude performance-based restricted stock unit grants discussed below, for the fiscal year ended March 31, 2008: Restricted Stock Rights (in thousands) WeightedAverage Grant Date Fair Value Balance as...

  • Page 173
    ... fiscal 2008, 2007 and 2006 the estimated weighted-average fair value of purchase rights was $14.57, $16.51 and $15.42, respectively. We issue new common stock out of the ESPP's pool of authorized shares. The fair value above was estimated on the date of grant using the Black-Scholes option-pricing...

  • Page 174
    ...term of stock options (in years) ...term of employee stock purchase plan (in months) ...dividends ... 4.3% 33% 3.2 6 None Our calculations were based on a multiple-award valuation method and forfeitures were recognized when they occurred. (In millions, except per share data) Net income: As reported...

  • Page 175
    ... to Consolidated Financial Statements. (14) STAFF ACCOUNTING BULLETIN No. 108 In September 2006, the SEC issued SAB No. 108, "Financial Statements - Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements". SAB No. 108 provides guidance...

  • Page 176
    ... amounts (in millions): Fiscal 2007 Beginning Balance Adjustment Year Ended March 31, 2006 2005 2004 Increase in operating income...Tax effect ...Increase in net income ... $13 (3) $10 $- - $- $10 (2) $ 8 $3 (1) $2 Business Tax Expense Adjustment We adjusted the beginning retained earnings...

  • Page 177
    ... fiscal 2008, 2007 and 2006, the weighted-average exercise price of these shares was $53.89, $55.84 and $63.64 per share, respectively. (17) RELATED PERSON TRANSACTIONS Annual Report Prior to becoming Chief Executive Officer of Electronic Arts, John Riccitiello was a Founder and Managing Director of...

  • Page 178
    ... net revenue related to packaged goods and digital content (see Note 8 of the Notes to Consolidated Financial Statements), and (3) the results of EA Mobile. Our Chief Executive Officer reviews assets on a consolidated basis and not on a segment basis. When we updated our financial systems to provide...

  • Page 179
    ... net revenue related to packaged goods and digital content. Information about our total net revenue by platform for the fiscal years ended March 31, 2008, 2007 and 2006 is presented below (in millions): Year Ended March 31, 2008 2007 2006 Annual Report Consoles PlayStation 2 ...Xbox 360 ...Wii...

  • Page 180
    ...(19) QUARTERLY FINANCIAL AND MARKET INFORMATION (UNAUDITED) (In millions, except per share data) Fiscal 2008 Consolidated Net revenue ...Gross profit ...Operating income (loss) ...Net loss ...Common Stock Net loss per share - basic ...Net loss per share - diluted ...Common stock price per share High...

  • Page 181
    ...) SUBSEQUENT EVENT In April 2008, we entered into definitive agreements to acquire certain assets from Hands-On Mobile Inc. and its affiliates relating to its Korean mobile games business based in Seoul, Korea. The purchase price to be paid for the assets at closing will be approximately $29 million...

  • Page 182
    ... the Current Year Financial Statements, effective April 2, 2006. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Electronic Arts Inc.'s internal control over financial reporting as of March 29, 2008, based...

  • Page 183
    ... net revenue. Our audit of internal control over financial reporting of Electronic Arts Inc. also excluded an evaluation of the internal control over financial reporting of VGH. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States...

  • Page 184
    ... in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as...

  • Page 185
    ... completed fiscal year, our internal control over financial reporting was effective. KPMG LLP, our independent registered public accounting firm, has issued an auditors' report on the effectiveness of our internal control over financial reporting. That report appears on page 107. Changes in Internal...

  • Page 186
    ...Annual Meeting of Stockholders (the "Proxy Statement") other than the information regarding (a) executive officers, and (b) our Global Code of Conduct (which includes code of ethics provisions applicable to our directors, principal executive officer, principal financial officer, principal accounting...

  • Page 187
    ... April 1, 1999.(12) Option agreement, agreement of purchase and sale, and escrow instructions for Zones 2 and 4, Electronic Arts Business Park, Redwood Shores California, dated April 5, 1999.(12) Licensed Publisher Agreement by and between EA and Sony Computer Entertainment America Inc. dated as of...

  • Page 188
    ...to lease, dated December 13, 2005, by and between Liberty Property Limited Partnership, a Pennsylvania limited partnership and Electronic Arts - Tiburon, a Florida corporation f/k/a Tiburon Entertainment, Inc.(21) Agreement for Underlease relating to Onslow House, Guildford, Surrey, dated 7 February...

  • Page 189
    ...28) Offer Letter for Employment at Electronic Arts Inc. to Peter Moore, dated June 5, 2007.(*)(29) Electronic Arts Inc. Executive Bonus Plan.(*)(30) Agreement and Plan of Merger By and Among Electronic Arts Inc., WHI Merger Corporation, a wholly-owned subsidiary of Parent, VG Holding Corp., and with...

  • Page 190
    ... of Executive Vice President, Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * Management contract or compensatory plan or arrangement. ** Portions of this exhibit have been redacted pursuant to a confidential treatment request filed with the SEC. (1) Incorporated...

  • Page 191
    ...Quarterly Report on Form 10-Q for the quarter ended December 31, 2005. (22) Incorporated by reference to exhibits filed with Registrant's Annual Report on Form 10-K for the year ended March 31, 2006. (23) Incorporated by reference to exhibits filed with Registrant's Current Report on Form 8-K, filed...

  • Page 192
    ... A. Simonson /s/ Linda J. Srere Linda J. Srere Chief Executive Officer Executive Vice President, Chief Financial Officer Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) Chairman of the Board Director Director Director Director Director Director Director Director 116

  • Page 193
    ...Doubtful Accounts, Price Protection and Returns Deductions Year Ended March 31, 2008 ...Year Ended March 31, 2007 ...Year Ended March 31, 2006 ... $214 $232 $162 $328 $308 $483 $16 $17 $ (6) $320 $343 $407 $238 $214 $232 (1) Primarily the translation effect of using the average exchange rate...

  • Page 194
    ... INC. 2008 FORM 10-K ANNUAL REPORT EXHIBIT INDEX Exhibit Number Exhibit Title 10.60 21.01 23.01 31.1 31.2 Electronic Arts Label Incentive Plan - Plan Document Subsidiaries of the Registrant Consent of KPMG LLP, Independent Registered Public Accounting Firm Certification of Chief Executive Officer...

  • Page 195

  • Page 196