Electronic Arts 2009 Annual Report Download

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Electronic Arts Inc.
Fiscal Year 2009
Proxy Statement and Annual Report

Table of contents

  • Page 1
    Electronic Arts Inc. Fiscal Year 2009 Proxy Statement and Annual Report

  • Page 2

  • Page 3
    Proxy Statement Notice of 2009 Annual Meeting and Proxy Statement

  • Page 4
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  • Page 5
    ...Electronic Arts in Building 250 (please note that the street address for Building 250 is 250 Shoreline Drive, Redwood City, California). For your convenience, we are also pleased to offer a live webcast of our Annual Meeting on the Investor Relations section of our web site at http://investor.ea.com...

  • Page 6
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  • Page 7
    Notice of 2009 Annual Meeting of Stockholders DATE: TIME: July 29, 2009 2:00 p.m. PLACE: 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: ...

  • Page 8
    ... Report on Executive Compensation ...Summary Compensation Table ...Grants of Plan-Based Awards Table ...Outstanding Equity Awards at Fiscal Year-end ...Option Exercises and Stock Vested Table ...Potential Payments Upon Change of Control ...EQUITY COMPENSATION PLAN INFORMATION ...RELATED PERSON...

  • Page 9
    ...and will help conserve natural resources. In this proxy statement: • "EA", "we", "our" 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...

  • Page 10
    ... materials to you in connection with the solicitation of proxies for use at our 2009 Annual Meeting of Stockholders, which will take place on Wednesday, July 29, 2009 at 2:00 p.m. local time, at our corporate headquarters in Redwood City, California. This proxy statement describes proposals on which...

  • Page 11
    ... 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 Notice of 2009 Annual Meeting...

  • Page 12
    ... 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 data system called EDGAR at www.sec.gov. Who will pay for this proxy...

  • Page 13
    ... you may incur. In addition, some of our officers, directors, employees and other agents may also solicit proxies personally, by telephone and by electronic and regular mail, and we will pay these costs. EA will also reimburse brokerage houses and other custodians for their reasonable out-of-pocket...

  • Page 14
    ...Meeting, stockholders will elect ten 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. The Board has nominated the following directors to stand...

  • Page 15
    ... of Pennsylvania. Gregory B. Maffei Director since 2003 Mr. Maffei, age 49, has served as President and Chief Executive Officer of Liberty Media Corporation, which owns electronic retailing, media, communications and entertainment businesses and investments, since February 7 Proxy Statement

  • Page 16
    ... Vice Chairman and Chief Client Officer, 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...

  • Page 17
    ...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 2009, each director participated in at least 75% of all Board...

  • Page 18
    ... 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 19
    ...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 to EA not less...

  • Page 20
    ... with the Board of Directors EA stockholders may communicate with the Board as a whole, with 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...

  • Page 21
    ... Annual Meeting of Stockholders. All stock options were granted on July 31, 2008, the date of the directors' re-election to the Board, at an exercise price of $43.18 per share, which was the closing price of the Company's common stock on the NASDAQ Global Select Market on that day. Each non-employee...

  • Page 22
    ... information regarding the valuation methodology used by EA, see Note 13, "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, 2009. In fiscal 2009, each non-employee director standing...

  • Page 23
    ...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, 2009. In fiscal 2009, each non-employee director standing for re-election received a stock option to purchase 8,400 shares of EA common stock...

  • Page 24
    ...our stock price and our equity valuation has decreased significantly. As a result, the current situation provides a considerable challenge in maintaining employee motivation, as well as creating a serious threat to retention until a recovery commences. The stock option exchange would help to address...

  • Page 25
    ... the interactive entertainment industry makes us a prime target for our competitors (which range from very small start-up companies with limited resources to very large, diversified corporations with greater financial and marketing resources than ours) seeking to recruit our employees. Reasons for...

  • Page 26
    ... Board of Directors, the Compensation Committee took into account that since 2005, we have been shifting from the exclusive use of stock options to using a mix of stock options and other equity-based incentives, such as restricted stock units, to provide long-term equity incentives to our employees...

  • Page 27
    ..., which would adversely affect our business and operating results. In addition, we believed that cash compensation alternatives would not provide as strong a focus on long-term employee retention and the execution of long-term business strategies as equity compensation. After weighing each of the...

  • Page 28
    ...by the Compensation Committee who hold Eligible Options. However, members of our Board of Directors and our Named Executive Officers will not be eligible to participate. In addition, we may exclude employees in certain non-U.S. jurisdictions from the Exchange Program if local tax or other laws would...

  • Page 29
    ... to the trading price used in determining the average exchange ratio set forth above, • stock option forfeitures that may occur between March 28, 2009 and the commencement of the Exchange Program, or • a change to any of the other factors used in the Black-Scholes calculation used to determine...

  • Page 30
    ... income and employment or social tax withholding. We generally intend to satisfy our 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...

  • Page 31
    ...common stock are issued to the employees, the shares issued will be subject to US income and employment taxes and applicable income and employment taxes will be withheld. To comply with our withholding requirements, we will withhold shares, provided that we will only withhold a number of shares with...

  • Page 32
    ... Program, the Committee intends to review the equity holdings of certain of our key employees, which will include our Named Executive Officers, in the fall of 2009 to ensure that the equity component of the total compensation package continues to provide a sufficiently strong incentive for certain...

  • Page 33
    ... we offer within a reasonable range. Historically, we have made a significant portion of our equity grants in a given fiscal year in connection with our annual reviews and merit increases. During fiscal 2009, we granted stock options to purchase a total of approximately 6,291,000 shares and...

  • Page 34
    ... than 1.82 shares) following the 2009 Annual Meeting. This change will provide us with greater flexibility to utilize the shares remaining available for issuance under the Equity Plan. Plan Benefits Except for the automatic stock option and restricted stock unit grants to non-employee directors, the...

  • Page 35
    ... STOCK PURCHASE PLAN The 2000 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...

  • Page 36
    ... 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 37
    ... audit-related services are compatible with maintaining KPMG LLP's independence. Proxy Statement Required Vote and Board of Directors' Recommendation Approval of this proposal requires the affirmative vote of a majority of the voting shares present at the meeting in person or by proxy and voting...

  • Page 38
    ... 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 39
    ... recommended to the Board of Directors that the audited consolidated financial statements of the Company as of and for each of the last three years ended March 31, 2009 be included for filing with the SEC in the Company's Annual Report on Form 10-K for the year ended March 31, 2009. The Audit...

  • Page 40
    ... 15, 2009, there were 322,954,870 shares of our common stock outstanding. Except as otherwise indicated, 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...

  • Page 41
    ..., and retain the key individuals that lead our business. This discussion describes our executive compensation program and addresses how we made compensation decisions in fiscal 2009 for our: • Chief Executive Officer, John S. Riccitiello, • Executive Vice President, Chief Financial Officer, Eric...

  • Page 42
    ... our longterm financial and operational success. In December 2008, we granted stock options to our executive officers, including certain of the Named Executive Officers, and equity awards comprised of a mix of stock options and RSUs to other key employees. In the fourth quarter of fiscal 2009, the...

  • Page 43
    ... compensation levels of senior executives, review of the compensation levels for members of our Board, review and approval of all executive officer employment offers and promotions, review and approval of the fiscal 2009 bonus payments, and a review of all actions taken by management using authority...

  • Page 44
    ... 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 for a strong management team to help us achieve our operating...

  • Page 45
    ... competitive total cash compensation to our executive officers that is linked to the achievement of both the Company's annual financial objectives and individual performance objectives and, for those employees with direct responsibility for the development or publishing of products, business unit...

  • Page 46
    ... per share, non-GAAP net revenue and non-GAAP net income, to exclude the following items (as applicable, in a given reporting period): amortization of intangibles, stock-based compensation, acquisition-related expenses, restructuring charges, income tax adjustments, changes in deferred net revenue...

  • Page 47
    ... executive officers' focus on personal responsibility, creativity, and stockholder returns. We also believe that delivering a portion of their total direct compensation in the form of long-term equity awards helps encourage a long-term view in an industry that is subject to lengthy business cycles...

  • Page 48
    ... the retention of key employees. The Committee also reviews the estimated total pool of stock options and RSU awards to be granted to executive officers and other employees to ensure that share use remains in line with internal targets. Performance-Based RSUs On May 15, 2008, the Board, upon the...

  • Page 49
    ... for all equity awards to employees below the Senior Vice President level, up to an annual grant limit of stock options to purchase 30,000 shares and 10,000 RSUs. The Management Committee reports on its activities to the Committee on at least an annual basis. Benefits and Retirement Plans We provide...

  • Page 50
    .... Company-provided air and ground transportation is limited solely to business travel. Relocation Assistance We also provide certain benefits to our employees, including our executive officers, in connection with domestic relocations, including home sale and purchase assistance, household goods and...

  • Page 51
    ... provision in connection with the exercise of outstanding vested stock options following a qualifying termination of employment. All stock option grants made after April 2004 to employees, including the Named Executive Officers, contain this provision. Under the standard 43 Proxy Statement

  • Page 52
    ... the Company's common stock. As such, our directors, executive officers, and other employees may not engage in short sales of shares of the Company's common stock under any circumstances, including trading in puts and calls that increase in value from a decline in the trading price of our stock. Tax...

  • Page 53
    ... year 2006, we expanded the use of RSUs to all employee groups, including our executive officers. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The following Compensation Committee Report on Executive Compensation shall not be deemed to be "soliciting material" or to be "filed" with...

  • Page 54
    ... used by EA, see Note 13, "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, 2009. For additional information regarding the specific terms of restricted stock units granted to the Named...

  • Page 55
    ... for Mr. Moore in fiscal 2008 include costs of a house hunting trip, temporary housing, home sale costs, storage and shipping of household goods. Represents the payment upon Mr. Jenson's termination of employment for accrued paid time-off/vacation pay. Relocation-related costs for Mr. Jenson include...

  • Page 56
    ... following table shows information regarding equity and non-equity plan-based awards granted to the Named Executive Officers during fiscal 2009. All Other Stock Awards: Estimated Future Payouts Estimated Future Payouts Number of Under Non-Equity Incentive Under Equity Incentive Plan Shares of Plan...

  • Page 57
    ... additional information regarding the valuation methodology used by EA, see Note 13, "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, 2009. Stock option vests as to 24% of the shares...

  • Page 58
    ... AWARDS AT FISCAL YEAR-END The following table shows information regarding all outstanding equity awards held by the Named Executive Officers as of the end of fiscal 2009. Option Awards Number of Securities Underlying Unexercised Options (#)(1) Exercisable Number of Securities Underlying Unexercised...

  • Page 59
    ... net income targets (as measured on a trailing four-quarter basis). The performance period with respect to these awards ends June 30, 2013. For more information regarding these awards, see "Equity Awards" in the Compensation Discussion and Analysis above. Options vested as to 24% on April 1, 2009...

  • Page 60
    ... 2009. Shares of EA common stock, net of shares withheld for tax purposes, are issued upon vesting of restricted stock units. The value realized upon vesting of restricted stock units is calculated by multiplying the number of restricted stock units vested by the closing price of EA common stock...

  • Page 61
    ... with applicable NASDAQ listing standards. The following table and related footnotes gives aggregate information regarding grants under all of our equity incentive plans as of the end of fiscal 2009 including the 2000 Equity Incentive and 2000 Employee Stock Purchase Plans. Number of Securities...

  • Page 62
    ... Consolidated Financial Statements included in EA's Annual Report on Form 10-K for the period ended March 31, 2009 for additional information about these equity awards and related plans. OTHER INFORMATION RELATED PERSON TRANSACTIONS POLICY Our Board of Directors has adopted a written Related Person...

  • Page 63
    ... charged as a result of their service as members of our Board of Directors. Prior to becoming Chief Executive Officer of Electronic Arts, John S. 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...

  • Page 64
    ... principal executive office no later than February 12, 2010. Stockholders who otherwise wish to present a proposal at the 2010 Annual Meeting of Stockholders must deliver written notice of the proposal to our Corporate Secretary c/o Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA...

  • Page 65
    ... a copy of the 2000 Equity Incentive Plan 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...

  • Page 66
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  • Page 67
    ...share granted. Eligibility The Equity Plan provides for the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units. The Equity Plan provides that employees (including officers and directors who are also employees) of EA...

  • Page 68
    ... holder in the public market; (d) by waiver of compensation due or accrued for services rendered; (e) with respect only to purchases upon exercise of an option, and provided that a public market for the Company's stock exists: (1) subject to applicable laws, by a "same-day sale" commitment from the...

  • Page 69
    ... 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 70
    ... profit, or net operating profit; (i) net profit; (j) gross margin; (k) operating expenses or operating expenses as a percentage of revenue; (l) net 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...

  • Page 71
    ... 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 UNDER THE EQUITY PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL...

  • Page 72
    ... the fair market value of the shares of stock on the date of receipt of the award (determined without regard to lapse restrictions), less any purchase price paid for such shares in income as compensation. The income will be subject to withholding by the Company or its subsidiary (by payment in cash...

  • Page 73
    ...the Equity Plan At the 2009 Annual Meeting, stockholders will be asked to approve amendments to the Equity Plan as follows: • Increase the number of shares authorized under the Equity Plan by 20,800,000 shares; and • Replace the 1.82 multiple that is currently used to reduce the number of shares...

  • Page 74
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  • Page 75
    ... 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 or (b) the maximum number of shares set by the Board. In addition, no employee may purchase shares at a rate that, when aggregated...

  • Page 76
    ... case a "disqualifying disposition"), the employee will realize ordinary income at the time of sale or other disposition taxable to the extent that the fair market value of the shares at the date of purchase was greater than the purchase price. This excess will constitute ordinary income in the year...

  • Page 77
    ... of shares purchased under the Purchase Plan. Proposed Amendment of the 2000 Employee Stock Purchase Plan At the 2009 Annual Meeting, stockholders will be asked to increase by 3,000,000 the number of shares of the Company's common stock reserved for issuance under the Purchase Plan. Proxy Statement...

  • Page 78
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  • Page 79
    2009 Annual Report on Form 10-K Annual Report

  • Page 80
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  • Page 81
    ... 0-17948 ELECTRONIC ARTS INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 94-2838567 (I.R.S. Employer Identification No.) 209 Redwood Shores Parkway Redwood City, California (Address of principal executive offices...

  • Page 82
    ... 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 ...PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation...

  • Page 83
    ... Business Overview Electronic Arts ("EA™") develops, markets, publishes and distributes video game software and content that can be played by consumers on a variety of platforms, including: • Video game consoles such as the PLAYSTATION® 3, Microsoft Xbox 360™ and Nintendo Wii™, • Personal...

  • Page 84
    ... the development of our games at their own development and production studios. Our global sales network allows us to market, publish and distribute games in over 35 countries throughout the world. We generate a significant portion of our net revenue from direct sales of packaged goods products to...

  • Page 85
    ... under the laws of Delaware. Our principal executive offices are located at 209 Redwood Shores Parkway, Redwood City, California 94065 and our telephone number is (650) 628-1500. Significant Business Developments in Fiscal 2009 Fiscal 2009 Cost Reduction Plan In fiscal year 2009, we announced...

  • Page 86
    ... online games service and our EA Mobile wireless games publishing business. Distribution, Sales and Marketing. Our global sales network allows us to market, publish and distribute games for all Labels throughout the world. Our North America publishing organization is headquartered in Redwood City...

  • Page 87
    ..., timing of product releases, brand-name recognition, availability and quality of in-game content, access to distribution channels, effectiveness of marketing and price. For sales of packaged goods, we compete directly with Sony, Microsoft and Nintendo, each of which develop and publish software for...

  • Page 88
    ... entertainment applications market segment to be Gameloft, Glu Mobile, Namco, Pangea and Sony Pictures. Competition in Online Gaming Services The online (i.e., Internet-based) games market segment is characterized by frequent product introductions, new and evolving business models and new platforms...

  • Page 89
    ... Through our EA Partners group, we team with external game developers and third party companies, to provide these partners with a variety of services including development assistance, publishing, and distribution. For example, in fiscal year 2009, through agreements with Crytek, Valve Software and...

  • Page 90
    ... In fiscal year 2009, we continued to defer the recognition of a significant amount of net revenue related to our online-enabled packaged goods and digital content over an extended period of time (i.e., typically six months). As a result, the quarter in which we generate the highest sales volume may...

  • Page 91
    ... Vice President of The Sims studio in September 2008. Prior to joining Electronic Arts, Mr. Humble was the Vice President of Product Development at Sony Online Entertainment from 2000 to 2004. From 1997 to 2000, he served as Chief Executive Officer of Harmless Games, an independent games company...

  • Page 92
    ... EA in March 1995. Mr. Bené earned his J.D. from Stanford Law School, and received his B.S. in Mechanical Engineering from Rice University. Mr. Bené is a member of the Bar of the State of California. Investor Information Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current...

  • Page 93
    ..., such as the release of a related movie or the beginning of a sports season or major sporting event. If we miss these key selling periods for any reason, including product delays or delayed introduction of a new platform for which we have developed products, our sales will suffer disproportionately...

  • Page 94
    ... products and services fail to resonate with our customers, particularly during the critical holiday season or during other key selling periods, or if advertising rates or other media placement costs increase, these factors could have a material adverse impact on our business and operating results...

  • Page 95
    ... top ten customers accounted for approximately 44 percent of our sales in that territory during the fiscal year ended March 31, 2009. Worldwide, we had direct sales to two customers, GameStop Corp. and Wal-Mart Stores Inc., which each represented approximately 14 percent of total net revenue for the...

  • Page 96
    ... our products with online capabilities or significantly impacted the financial terms on which these services are offered to our customers, our business could be harmed. The video game hardware manufacturers set the royalty rates and other fees that we must pay to publish games for their platforms...

  • Page 97
    ... of companies, businesses, intellectual properties, and other assets, (2) minority investments in strategic partners, and (3) investments in new interactive entertainment businesses (for example, online and mobile games). Any of these strategic transactions could be material to our financial...

  • Page 98
    ... Retaining key employees and maintaining the key business and customer relationships of the businesses we acquire, • The need to integrate an acquired company's accounting, management information, human resource and other administrative systems to permit effective management and timely reporting...

  • Page 99
    ... of entertainment software based on content could harm our business by limiting the products we are able to offer to our customers and compliance with new and possibly inconsistent regulations for different territories could be costly or delay the release of our products. As we increase the online...

  • Page 100
    ... in-game cheat codes or other technological means that are intended to enhance the gameplay experience. However, in several recent cases, hidden content or features have been found to be included in other publishers' products by an employee who was not authorized to do so or by an outside developer...

  • Page 101
    ... product offerings, the application of existing or future financial accounting standards, particularly those relating to the way we account for revenue and taxes, could have a significant adverse effect on our reported results although not necessarily on our cash flows. We rely on business partners...

  • Page 102
    ...material), to changes in securities analysts' earnings estimates or ratings, to our results or future financial guidance falling below our expectations and analysts' and investors' expectations, to factors affecting the entertainment, computer, software, Internet, media or electronics industries, to...

  • Page 103
    ... ("Phase One Lease") 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. The Phase One Lease...

  • Page 104
    ... offer to purchase the property upon terms offered by the Landlord, and a right to share in the profits from a sale of the property. Existing campus facilities comprise a total of 243,000 square feet and provide space for research and development functions. Our rental obligation under this agreement...

  • Page 105
    ... Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol "ERTS." The following table sets forth the quarterly high and low sales price per share of our common stock from April 1, 2007 through March 31, 2009. Prices High Low Fiscal Year Ended March 31, 2008...

  • Page 106
    ... it by reference into a filing. The following graph shows a five-year comparison of cumulative total returns during the period from March 31, 2004 through March 31, 2009, for our common stock, the NASDAQ Composite Index, the S&P 500 Index (to which EA was added in July 2002) and the RDG Technology...

  • Page 107
    ... Data ELECTRONIC ARTS INC. AND SUBSIDIARIES SELECTED FIVE-YEAR CONSOLIDATED FINANCIAL DATA (In millions, except per share data) STATEMENTS OF OPERATIONS DATA 2009 Year Ended March 31, 2008 2007(a) 2006 2005 Net revenue ...Cost of goods sold ...Gross profit ...Operating expenses: Marketing and sales...

  • Page 108
    ... Statements and related notes. About Electronic Arts 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 PLAYSTATION® 3, Microsoft Xbox 360™ and Nintendo Wii™), personal...

  • Page 109
    ...revenue associated with sales of online-enabled packaged goods and digital content decreased by $126 million as compared to March 31, 2008, directly increasing the amount of reported net revenue during the year ended March 31, 2009. Without these changes in deferred net revenue, reported net revenue...

  • Page 110
    ...strategies for operating in the current environment. International Operations and Foreign Currency Exchange Impact. International sales are a fundamental part of our business. Net revenue from international sales accounted for approximately 43 percent of our total net revenue during fiscal year 2009...

  • Page 111
    ... or management judgments, or changes to the elements in a software arrangement, could cause a material increase or decrease in the amount of revenue that we report in a particular period. For example, in connection with some of our packaged goods product sales, we offer an online service without...

  • Page 112
    ...current sell-through of distributor and retailer inventory of our software products, current trends in retail and the video game segment, changes in customer demand and acceptance of our software products, and other related factors. In addition, we monitor the volume of sales to our channel partners...

  • Page 113
    ... for doubtful accounts by evaluating customer creditworthiness in the context of current economic trends and historical experience. Depending upon the overall economic climate and the financial condition of our customers, the amount and timing of our bad debt expense and cash collection could...

  • Page 114
    ... impairment. Our short-term investments consist of securities with remaining maturities greater than three months at the time of purchase and our marketable equity securities consist of investments in common stock of publicly traded companies, both are accounted for as available-for-sale under the...

  • Page 115
    ... 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 to our games. Co-publishing and distribution royalties...

  • Page 116
    ...in the fiscal year ended March 31, 2009, we did not include as a source of future taxable income the accumulated tax depreciation on our headquarters facilities in Redwood City, California. These facilities are subject to leases which expire in July 2009, and are accounted for as operating leases in...

  • Page 117
    ... sales of certain online-enabled packaged goods and digital content for which we were not able to objectively determine the fair value (as defined by U.S. Generally Accepted Accounting Principles for software sales) of the online service that we provided in connection with the sale 37 Annual Report

  • Page 118
    ... for the online service that we provide in connection with the sale of the software or we have an obligation to provide future incremental unspecified digital content, (2) revenue from certain packaged goods sales of massively-multiplayer online role-playing games, and (3) revenue from the sale of...

  • Page 119
    ... year 2010 as compared to fiscal year 2009 due to an expected increase in deferred net revenue related to our online-enabled packaged goods and digital content. The change in deferred net revenue for the fiscal years ended March 31, 2009 and 2008 for Europe was as follows (in millions): Year Ended...

  • Page 120
    ... use of third-party properties. Cost of goods sold for our web site advertising business primarily consists of server costs. Cost of goods sold for fiscal years 2009 and 2008 were as follows (in millions): March 31, 2009 % of Net Revenue March 31, 2008 % of Net Revenue Change as a % of Net Revenue...

  • Page 121
    ... on intellectual property licensor agreements. The overall increase in cost of goods sold as a percentage of net revenue was mitigated by a $481 million favorable change in deferred net revenue related to certain online-enabled packaged goods and digital content during the twelve months ended March...

  • Page 122
    ... direct development and related overhead costs in connection with the development and production of our online games. Research and development expenses also include expenses associated with the development of web site content, software licenses and maintenance, network infrastructure and management...

  • Page 123
    ... charge of $368 million related to our EA Mobile reporting unit. Annual Report Restructuring Charges Restructuring charges for fiscal years 2009 and 2008 were as follows (in millions): March 31, 2009 % of Net Revenue March 31, 2008 % of Net Revenue $ Change % Change $80 2% $103 3% $(23) (22...

  • Page 124
    ... business support functions, and $12 million was employee-related expenses. Losses on Strategic Investments, Net Losses on strategic investments, net for fiscal years 2009 and 2008 were as follows (in millions): March 31, 2009 % of Net Revenue March 31, 2008 % of Net Revenue $ Change % Change $(62...

  • Page 125
    ...-enabled packaged goods and digital content for which we were not able to objectively determine the fair value (as defined by U.S. Generally Accepted Accounting Principles for software sales) of the online service that we provided in connection with the sale. During the year ended March 31, 2008, we...

  • Page 126
    ... our reported net revenue of $5 million for the year ended March 31, 2007. The change in deferred net revenue for the fiscal years ended March 31, 2008 and 2007 for North America was as follows (in millions): Year Ended March 31, 2008 2007 Decrease PLAYSTATION 3 ...PlayStation 2 ...PSP ...Wii ...PC...

  • Page 127
    ... change in deferred net revenue for the fiscal years ended March 31, 2008 and 2007 for Asia was as follows (in millions): Year Ended March 31, 2008 2007 Decrease Annual Report PLAYSTATION 3 ...PC ...Other ...Total Impact on Net Revenue ...Cost of Goods Sold Cost of goods sold for fiscal years 2008...

  • Page 128
    ... % of Net Revenue $ Change % Change $588 16% $466 15% $122 26% As a percentage of net revenue, marketing and sales expenses were adversely impacted by our deferral of net revenue related to online-enabled packaged goods and digital content during fiscal year 2008. Marketing and sales expenses...

  • Page 129
    ... Net Revenue $ Change % Change $1,145 31% $1,041 34% $104 10% As a percentage of net revenue, research and development expenses were adversely impacted by our deferral of net revenue related to online-enabled packaged goods and digital content during fiscal year 2008. Research and development...

  • Page 130
    ... Corporation's common and preferred shares. Interest and Other Income, Net Interest and other income, net, 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 $98 3% $99 3% $(1) (1%) For fiscal year...

  • Page 131
    ...with limited exceptions. SFAS No. 141(R) will change the accounting treatment for certain specific items and includes a substantial number of new disclosure requirements. In April 2009, the FASB issued FSP FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination...

  • Page 132
    ... fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. FSP...

  • Page 133
    ... million for fiscal year 2008. The decrease in cash provided by operating activities for fiscal year 2009 as compared to fiscal year 2008 was primarily due to an increase in external development costs, advertising and marketing costs and personnel-related expenses. For fiscal year 2009, we generated...

  • Page 134
    ... fiscal year 2009 as compared to the fourth quarter of fiscal year 2008. Reserves for sales returns, pricing allowances and doubtful accounts decreased in absolute dollars from $238 million as of March 31, 2008 to $217 million as of March 31, 2009. As a percentage of trailing nine month net revenue...

  • Page 135
    ... nature of our business and operating results, risks of product returns and the other risks described in the "Risk Factors" section, included in Part I, Item 1A of this report. Contractual Obligations and Commercial Commitments Development, Celebrity, League and Content Licenses: Payments and...

  • Page 136
    ... activities. These amounts, 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, 2009. Developer/licensor commitments include $37...

  • Page 137
    Related Person Transaction 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 VGH, which we acquired in January 2008. At the time of the acquisition, Mr. ...

  • Page 138
    ... 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 139
    ...Balance Sheets. The effective 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 comprehensive income in stockholders' equity and subsequently reclassified into net revenue or research and development...

  • Page 140
    ... No. 133 and are accounted for as derivatives whereby the fair value of the contracts are reported as other current assets or other current liabilities in our Consolidated Balance Sheets, and gains and losses from changes in fair value are reported in interest and other income, net. The gains and...

  • Page 141
    ...31, 2009 and 2008, our short-term investments were classified as available-for-sale and, consequently, recorded at fair market value with unrealized gains or losses resulting from changes in fair value reported as a separate component of accumulated other comprehensive income, net of any tax effects...

  • Page 142
    ..., 2009 and 2008, our marketable equity securities were classified as available-for-sale and, consequently, were recorded in our Consolidated Balance Sheets at fair market value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income, net of any tax...

  • Page 143
    ... of Electronic Arts Inc. and Subsidiaries: Consolidated Balance Sheets as of March 31, 2009 and 2008 ...Consolidated Statements of Operations for the Years Ended March 31, 2009, 2008 and 2007 ...Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) for the Years Ended March...

  • Page 144
    ... 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 10) Stockholders' equity: Preferred stock, $0.01 par value. 10 shares authorized...

  • Page 145
    ELECTRONIC ARTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Net revenue ...Cost of goods sold ...Gross profit ...Operating expenses: Marketing and sales ...General and administrative ...Research and development ...Acquired in-process technology ...

  • Page 146
    ELECTRONIC ARTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) (In millions, share data in thousands) Accumulated Other Total Common Stock Paid-in Retained Comprehensive Stockholders' Shares Amount Capital Earnings Income Equity Balances as of ...

  • Page 147
    ... charges ...Stock-based compensation ...Change in assets and liabilities: Receivables, net ...Inventories ...Other assets ...Accounts payable ...Accrued and other liabilities ...Deferred income taxes, net ...Deferred net revenue (packaged goods and digital content) ...Net cash provided by operating...

  • Page 148
    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 video game software and content that can be played by consumers on a variety of platforms, including ...

  • Page 149
    ... three months at the time of purchase. The short-term investments are available for use in current operations or other activities such as capital expenditures and business acquisitions. Marketable equity securities consist of investments in common stock of publicly traded companies and are accounted...

  • Page 150
    ... business. Our business consists of developing, marketing and distributing video game software using both established and emerging intellectual properties and our forecasts for emerging intellectual properties are based upon internal estimates and external sources rather than historical information...

  • Page 151
    ... related to our EA Mobile reporting unit. We did not recognize any goodwill impairment charges in fiscal years 2008 and 2007. Taxes Collected from Customers and Remitted to Governmental Authorities Taxes assessed by a government authority that are both imposed on and concurrent with specific revenue...

  • Page 152
    ... or management judgments, or changes to the elements in a software arrangement, could cause a material increase or decrease in the amount of revenue that we report in a particular period. For example, in connection with some of our packaged goods product sales, we offer an online service without...

  • Page 153
    ... products, current trends in retail and the video game segment, changes in customer demand and acceptance of our products and other related factors when evaluating the adequacy of our sales returns and price protection allowances. In addition, we monitor the volume of sales to our channel partners...

  • Page 154
    ...for the fiscal years ended March 31, 2009, 2008 and 2007, respectively, are included in interest and other income, net, in our Consolidated Statements of Operations. Impact of Recently Issued Accounting Standards In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141...

  • Page 155
    ... fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. FSP...

  • Page 156
    ...Reporting Date Using Quoted Prices in Active Markets Significant for Identical Other Significant Financial Observable Unobservable Instruments Inputs Inputs (Level 1) (Level 2) (Level 3) As of March 31, 2009 Balance Sheet Classification Assets Money market funds ...Available-for-sale fixed income...

  • Page 157
    ... measured and recorded on a nonrecurring basis using other observable market inputs for comparable instruments. During the year ended March 31, 2009, we measured certain of our other investments at fair value due to various factors, including but not limited to, the extent and duration during which...

  • Page 158
    ... to our corporate bond investments. As of March 31, 2009 and 2008, these gross unrealized loss were primarily in loss positions for less than 12 months. We periodically evaluate our short-term investments for impairment in accordance with SFAS No. 115. Factors considered in the review of investments...

  • Page 159
    .... The licensing agreement gives The9 exclusive publishing rights for EA SPORTSâ„¢ FIFA Online 2 in mainland China. In April 2007, we expanded our commercial agreements with, and made strategic equity investments in, Neowiz Corporation and a related online gaming company, Neowiz Games. We refer...

  • Page 160
    ... from the sale of marketable equity securities for the years ended March 31, 2009, 2008 and 2007. Other Investments Included in Other Assets Our other investments consist principally of non-voting preferred shares in two companies whose common stock is publicly traded and are accounted for under...

  • Page 161
    ... Accumulated OCI into Income (Effective Portion)(a) Annual Report Foreign currency option contracts designated as hedging instruments under SFAS No. 133(b) ...(a) Net revenue $4 See our Consolidated Statements of Stockholders' Equity for additional information on the net-of-tax amounts of our...

  • Page 162
    ... 2009 Acquisitions In May 2008, we acquired ThreeSF, Inc. Based in San Francisco, California, ThreeSF's Rupture service is an online social network for gamers. Separately, in May 2008, we acquired certain assets of Hands-On Mobile Inc. and its affiliates relating to its Korean Mobile games business...

  • Page 163
    ... year ended March 31, 2008 (in millions): Current assets ...Property and equipment, net ...Acquired in-process technology ...Goodwill ...Finite-lived intangibles ...Long-term deferred taxes ...Other liabilities ...Total purchase price ...$ 68 8 138 414 114 9 (69) $682 The results of operations...

  • Page 164
    ... 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 165
    ... Useful Life (in years) Annual Report Developed and Core Technology ...Trade Name ...Total Finite-Lived Intangibles ...None of the goodwill recognized upon acquisition is deductible for tax purposes. $3 2 $5 2 4 3 The acquired in-process technology was expensed in our Consolidated Statements...

  • Page 166
    ..., Inc. On July 24, 2006, we acquired all outstanding shares of Mythic Entertainment, Inc. for an aggregate purchase price of $76 million in cash, including transaction costs. Based in Fairfax, Virginia, Mythic is a developer and publisher of massively multiplayer online role-playing games. This...

  • Page 167
    ...million related to our EA Mobile reporting unit. During the fourth quarter of fiscal year 2009, we completed the first step of our annual goodwill impairment test and found no indicators of impairment. See Note 18 for information regarding our segment information. Finite-lived intangible assets, net...

  • Page 168
    ... EA SPORTS, EA Games and EA Play, as well as a new organization, EA Interactive, which reports into our Publishing business. Each Label, as well as EA Interactive, operates with dedicated studio and product marketing teams focused on consumer-driven priorities. Since the inception of the fiscal 2008...

  • Page 169
    ... 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 to our games. Co-publishing and distribution royalties...

  • Page 170
    ... had no loss or impairment charges during fiscal year 2007. The loss charges in fiscal year 2009 primarily relate to an amendment of a licensor agreement in which we terminated certain rights we previously had to use the licensor's intellectual property. The current and long-term portions of prepaid...

  • Page 171
    ... from other current assets as an asset held for sale back to property and equipment, net, on our Consolidated Balance Sheets. Depreciation expense associated with property and equipment amounted to $117 million, $126 million and $113 million for the fiscal years ended March 31, 2009, 2008 and 2007...

  • Page 172
    ... for the online service that we provide in connection with the sale of the software or we have an obligation to provide future incremental unspecified digital content, (2) revenue from certain packaged goods sales of massively-multiplayer online role-playing games, and (3) revenue from the sale of...

  • Page 173
    ... compliance with as of March 31, 2009. Financial Covenants Requirements for the Year Ended March 31, 2009 Actual as of March 31, 2009 Annual Report Consolidated Net Worth (in millions) ...Fixed Charge Coverage Ratio ...Total Consolidated Debt to Capital ...Quick Ratio ... equal to or greater than...

  • Page 174
    ... offer to purchase the property upon terms offered by the Landlord, and a right to share in the profits from a sale of the property. Existing campus facilities comprise a total of 243,000 square feet and provide space for research and development functions. Our rental obligation under this agreement...

  • Page 175
    ... reliable estimate of when cash settlement with a taxing authority will occur. Total rent expense for all operating leases was $98 million, $94 million and $88 million, for the fiscal years ended March 31, 2009, 2008 and 2007, respectively. Legal Proceedings Annual Report We are subject to...

  • Page 176
    ... years ended March 31, 2009, 2008 and 2007 were as follows: 2009 Year Ended March 31, 2008 2007 Statutory federal tax expense (benefit) rate ...State taxes, net of federal benefit ...Differences between statutory rate and foreign effective tax rate ...Valuation allowance ...Research and development...

  • Page 177
    ... paid-in capital related to the tax benefits of employee stock options. In our second quarter of fiscal year 2008, we increased the beginning retained earnings by approximately $1 million to reflect an immaterial revision to the cumulative effect of the adoption of FIN No. 48. Annual Report 97

  • Page 178
    ... year tax positions ...Increases in unrecognized tax benefits related to current year tax positions ...Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations ...Changes in unrecognized tax benefits due to foreign currency translation ...Balance as of March 31, 2008...

  • Page 179
    ... 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. Annual Report (13) STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS Adoption of...

  • Page 180
    ... employee stock purchase plan included in our Consolidated Statements of Operations (in millions): Year Ended March 31, 2009 2008 2007 Cost of goods sold ...Marketing and sales ...General and administrative ...Research and development ...Stock-based compensation expense ...Benefit from income taxes...

  • Page 181
    ... of tax benefit from the exercise of stock options, net of $2 million of deferred tax asset write-offs; of this amount, $36 million of excess tax benefit related to stock-based compensation was reported in financing activities. Summary of Plans and Plan Activity Annual Report Equity Incentive...

  • Page 182
    ... the total pre-tax intrinsic value based on our closing stock price as of March 31, 2009, which would have been received by the option holders had all option holders exercised their options as of that date. We issue new common stock from our authorized shares upon the exercise of stock options. The...

  • Page 183
    ... related range of exercise prices by 323 million shares of common stock, which were issued and outstanding as of March 31, 2009. At our Annual Meeting of Stockholders, held on July 31, 2008, our stockholders approved amendments to the Equity Plan to (a) increase the number of shares authorized for...

  • Page 184
    ... with exercise prices for purchase rights ranging from $13.71 to $40.20. During fiscal years 2009, 2008 and 2007 the estimated weightedaverage fair value of purchase rights was $13.04, $14.57 and $16.51, respectively. We issue new common stock out of the ESPP's pool of authorized shares. The fair...

  • Page 185
    ... and other income, net, for the years ended March 31, 2009, 2008 and 2007 consisted of (in millions): Year Ended March 31, 2009 2008 2007 Interest income, net ...Net gain (loss) on foreign currency transactions ...Net gain (loss) on foreign currency forward contracts ...Other income (expense), net...

  • Page 186
    .... For fiscal years 2009, 2008 and 2007, the weighted-average exercise price of these shares was $44.59, $53.89 and $55.84 per share, respectively. (17) RELATED PERSON TRANSACTIONS Prior to becoming Chief Executive Officer of Electronic Arts, John Riccitiello was a Founder and Managing Director of...

  • Page 187
    ...we provide our CODM financial information based upon management's new organizational structure (the "Label Structure"). Our business is currently organized around three operating labels, EA Games, EA SPORTS and EA Play, as well as a new organization, EA Interactive, which reports into our Publishing...

  • Page 188
    ...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 platform for the fiscal years ended March 31, 2009, 2008 and 2007 is presented below (in millions): Year Ended March 31, 2009 2008...

  • Page 189
    ...Our direct sales to Wal-Mart Stores, Inc. represented approximately 14 percent, 12 percent and 13 percent of total net revenue in fiscal years ended March 31, 2009, 2008 and 2007, respectively. (19) STAFF ACCOUNTING BULLETIN No. 108 In September 2006, the SEC issued SAB No. 108, Financial Statements...

  • Page 190
    ... 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 balance for fiscal year 2007 related to the correction of our historical accounting of certain business tax...

  • Page 191
    ... FINANCIAL AND MARKET INFORMATION (UNAUDITED) (In millions, except per share data) Fiscal 2009 Consolidated Net revenue ...Gross profit ...Operating loss ...Net loss ...Common Stock Net loss per share - Basic and Diluted ...Common stock price per share High ...Low ...Fiscal 2008 Consolidated Net...

  • Page 192
    ... stock to ZelnickMedia Corporation pursuant to its management agreement with Take-Two. The total aggregate purchase price for Take-Two did 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...

  • Page 193
    ...consolidated balance sheets of Electronic Arts Inc. and subsidiaries (the Company) as of March 28, 2009 and March 29, 2008, and the related consolidated statements of operations, stockholders' equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended...

  • Page 194
    ...the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Electronic Arts Inc. and subsidiaries as of March 28, 2009 and March 29, 2008, and the related consolidated statements of operations, stockholders' equity and comprehensive income (loss), and cash flows...

  • Page 195
    ... 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 196
    ..., 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 114. Changes in Internal Controls During fiscal year 2009, there were no significant changes in our internal controls...

  • Page 197
    PART III Item 10: Directors, Executive Officers and Corporate Governance The information required by Item 10 is incorporated herein by reference to the information to be included in our definitive Proxy Statement for our 2009 Annual Meeting of Stockholders (the "Proxy Statement") other than the ...

  • Page 198
    ... April 1, 1999.(10) 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.(10) Licensed Publisher Agreement by and between EA and Sony Computer Entertainment America Inc. dated as...

  • Page 199
    ... corporation f/k/a Tiburon Entertainment, Inc.(19) 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.(19) Offer Letter for Employment at Electronic Arts...

  • Page 200
    ...) Form of Stock Option Agreement (2000 Equity Incentive Plan: Director Grants).(*)(33) Sixth Omnibus Amendment (2000 Transaction), dated as of February 2, 2009 among Electronic Arts Redwood LLC, as Lessee, Electronic Arts Inc., as Guarantor, SELCO Service Corporation (doing business in California as...

  • Page 201
    ...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 202
    ...Quarterly Report on Form 10-Q for the quarter ended December 31, 2005. (20) Incorporated by reference to exhibits filed with Registrant's Annual Report on Form 10-K for the year ended March 31, 2006. (21) Incorporated by reference to exhibits filed with Registrant's Current Report on Form 8-K, filed...

  • Page 203
    ... undersigned, thereunto duly authorized. ELECTRONIC ARTS INC. By: /s/ John S. Riccitiello John S. Riccitiello, Chief Executive Officer Date: May 21, 2009 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the...

  • Page 204
    ELECTRONIC ARTS INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS Years Ended March 31, 2009, 2008 and 2007 (In millions) Balance at Beginning of Period Charged to Revenue, Costs and Expenses Charged (Credited) to Other Accounts(a) Balance at End of Period Allowance for Doubtful ...

  • Page 205
    ... Certificate of Registrant's Common Stock. First Amendment to the Electronic Arts Deferred Compensation Plan, as amended and restated. Subsidiaries of the Registrant. Consent of KPMG LLP, Independent Registered Public Accounting Firm. Certification of Chief Executive Officer pursuant to Rule 13a-14...

  • Page 206
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  • Page 207
    ...: Investor Relations Electronic Arts Inc. 209 Redwood Shores Parkway Redwood City, CA 94065 (650) 628-7352 ANNUAL MEETING The Company's Annual Meeting of Stockholders is scheduled to be held on July 29, 2009 at 2:00 P.M. at the Company's headquarters: Electronic Arts Inc. 209 Redwood Shores Parkway...

  • Page 208
    Electronic Arts Inc. 209 Redwood Shores Parkway Redwood City, CA 94065 www.ea.com Cert no. SCS-COC-00648