EA Reports Fourth Quarter and Fiscal Year 2009 Results

Press Release from Electronic Arts Inc.

REDWOOD CITY, Calif. -- Electronic Arts Inc. (NASDAQ: ERTS) today announced preliminary financial results for its fourth quarter and fiscal year ended March 31, 2009.

Fiscal Fourth Quarter Results (comparisons are to the quarter ended March 31, 2008)

GAAP net revenue for the fourth quarter was $860 million, down $267 million as compared with $1.13 billion for the prior year. During the quarter, EA had a net benefit of $251 million related to the recognition of deferred net revenue for certain online-enabled packaged goods games and digital content.

Non-GAAP net revenue was $609 million, as compared with $919 million for the prior year. Sales were driven by SKATE 2, ROCK BAND 2, THE LORD OF THE RINGS: CONQUEST, LEFT 4 DEAD and NEED FOR SPEED UNDERCOVER.

GAAP net loss for the quarter was $42 million, as compared with a net loss of $94 million for the prior year. Diluted loss per share was $0.13 as compared with diluted loss per share of $0.30 for the prior year.

Non-GAAP net loss was $120 million as compared with non-GAAP net income of $30 million a year ago. Non-GAAP diluted loss per share was $0.37 as compared with non-GAAP diluted earnings per share of $0.09 for the prior year.

"EA's strong cost actions in Q4 FY09 together with our investments in our digital service businesses will set us up for a stronger FY10," said John Riccitiello, Chief Executive Officer. "EA is well positioned with the right strategies in a growing industry."

"We remain vigilant on managing costs," said Eric Brown, Chief Financial Officer. "We are confirming our FY10 non-GAAP guidance and expect to show strong profit growth in the year ahead."

Full Year Results

GAAP net revenue for the fiscal year ended March 31, 2009 was $4.212 billion, up 15 percent as compared with $3.665 billion for the prior year. The Company ended the year with $261 million in deferred net revenue from packaged goods and digital content -- down $126M from a year ago.

Non-GAAP net revenue was $4.086 billion, up 2 percent as compared with $4.020 billion for the prior year.

GAAP net loss for the year was $1.088 billion as compared with a net loss of $454 million for the prior year. Diluted loss per share was $3.40 as compared with a diluted loss per share of $1.45 for the prior year. Fiscal 2009 GAAP results include a $368 million non-cash charge for goodwill impairment and a non-cash charge for tax valuation allowances consisting of $232 million related to deferred tax assets that existed as of the end of Fiscal 2008 plus an additional $134 million against deferred tax assets recorded during Fiscal 2009.

Non-GAAP net loss was $96 million as compared with net income of $339 million a year ago. Non-GAAP diluted loss per share was $0.30 as compared with diluted earnings per share of $1.06 for the prior year.

Trailing-twelve-month operating cash flow was $12 million as compared with $338 million a year ago. The Company ended the year with cash and short-term investments of $2.2 billion.

Fiscal 2009 Highlights

-- EA had 31 titles that sold more than one million copies in the year -- as compared with 27 titles in the prior year.
-- FIFA 09, MADDEN NFL 09 and NEED FOR SPEED UNDERCOVER each sold over five million copies in the year.
-- EA Partners posted its strongest year ever driven by ROCK BAND, ROCK BAND 2 and LEFT 4 DEAD. ROCK BAND, in partnership with MTX/Harmonix, was EA's highest revenue producing title during the fiscal year.
-- EA strengthened its portfolio by launching new games -- SPORE, WARHAMMER ONLINE: AGE OF RECKONING, DEAD SPACE, MIRROR'S EDGE, BOOM BLOX, MERCENARIES 2 and a slate of Hasbro games.
-- SPORE sold over two million copies with users generating more than 100 million creatures.
-- EA generated 14% of its total non-GAAP revenue on the Wii -- as compared with 8% a year ago. EA to ship EA SPORTS ACTIVE in May and HARRY POTTER AND THE HALF-BLOOD PRINCE in June. Also in June, TIGER WOODS PGA TOUR 10 and EA SPORTS GRAND SLAM TENNIS -- both bundled with the Wii MotionPlus accessory (Tennis bundle available in Europe only).
-- EA's non-GAAP digital services revenue, which includes online and wireless, was $429 million in fiscal 2009, up 27% year-over-year.
-- POGO achieved an all-time high of 1.8M paying subscribers for the fiscal year.
-- EA recently launched the open beta of EA SPORTS FIFA ONLINE 2 in China -- the Company's first online game in China.
-- EA Mobile, the world's leading publisher of games for wireless, delivered non-GAAP revenue of $189 million for fiscal 2009 -- up 24 percent year-over-year.