Document and Entity Information
Document and Entity Information (USD $) | |||
12 Months Ended
Mar. 31, 2010 | May. 21, 2010
| Oct. 02, 2009
| |
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | 2010-03-31 | ||
Document Fiscal Year Focus | 2,010 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | ERTS | ||
Entity Registrant Name | ELECTRONIC ARTS INC. | ||
Entity Central Index Key | 0000712515 | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Well-Known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 329,676,985 | ||
Entity Public Float | $5,931,009,000 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | 12 Months Ended
Mar. 31, 2010 | 12 Months Ended
Mar. 31, 2009 |
Current assets: | ||
Cash and cash equivalents | $1,273 | $1,621 |
Short-term investments | 432 | 534 |
Marketable equity securities | 291 | 365 |
Receivables, net of allowances of $217 in each year | 206 | 116 |
Inventories | 100 | 217 |
Deferred income taxes, net | 44 | 51 |
Other current assets | 239 | 216 |
Total current assets | 2,585 | 3,120 |
Property and equipment, net | 537 | 354 |
Goodwill | 1,093 | 807 |
Acquisition-related intangibles, net | 204 | 221 |
Deferred income taxes, net | 52 | 61 |
Other assets | 175 | 115 |
TOTAL ASSETS | 4,646 | 4,678 |
Current liabilities: | ||
Accounts payable | 91 | 152 |
Accrued and other current liabilities | 717 | 723 |
Deferred net revenue (packaged goods and digital content) | 766 | 261 |
Total current liabilities | 1,574 | 1,136 |
Income tax obligations | 242 | 268 |
Deferred income taxes, net | 2 | 42 |
Other liabilities | 99 | 98 |
Total liabilities | 1,917 | 1,544 |
Commitments and contingencies (See Note 11) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value. 10 shares authorized | ||
Common stock, $0.01 par value. 1,000 shares authorized; 330 and 323 shares issued and outstanding, respectively | 3 | 3 |
Paid-in capital | 2,375 | 2,142 |
Retained earnings | 123 | 800 |
Accumulated other comprehensive income | 228 | 189 |
Total stockholders' equity | 2,729 | 3,134 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $4,646 | $4,678 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
In Millions, except Share data | Mar. 31, 2010
| Mar. 31, 2009
|
Receivables, allowances | $217 | $217 |
Preferred stock, par value | 0.01 | 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 330,000,000 | 323,000,000 |
Common stock, shares outstanding | 330,000,000 | 323,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Mar. 31, 2010 | 12 Months Ended
Mar. 31, 2009 | 12 Months Ended
Mar. 31, 2008 |
Net revenue | $3,654 | $4,212 | $3,665 |
Cost of goods sold | 1,866 | 2,127 | 1,805 |
Gross profit | 1,788 | 2,085 | 1,860 |
Operating expenses: | |||
Marketing and sales | 730 | 691 | 588 |
General and administrative | 320 | 332 | 339 |
Research and development | 1,229 | 1,359 | 1,145 |
Restructuring charges | 140 | 80 | 103 |
Amortization of intangibles | 53 | 58 | 34 |
Acquisition-related contingent consideration | 2 | ||
Goodwill impairment | 368 | ||
Certain abandoned acquisition-related costs | 21 | ||
Acquired in-process technology | 3 | 138 | |
Total operating expenses | 2,474 | 2,912 | 2,347 |
Operating loss | (686) | (827) | (487) |
Losses on strategic investments, net | (26) | (62) | (118) |
Interest and other income, net | 6 | 34 | 98 |
Loss before provision for (benefit from) income taxes | (706) | (855) | (507) |
Provision for (benefit from) income taxes | (29) | 233 | (53) |
Net loss | ($677) | ($1,088) | ($454) |
Net loss per share: | |||
Basic and Diluted | -2.08 | -3.4 | -1.45 |
Number of shares used in computation: | |||
Basic and Diluted | 325 | 320 | 314 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS (USD $) | |||||
In Millions, except Share data in Thousands | Common Stock
| Paid-in Capital
| Retained Earnings
| Accumulated Other Comprehensive Income
| Total
|
Beginning Balance at Apr. 02, 2007 | $3 | $1,412 | $2,323 | $294 | $4,032 |
Beginning Balance (in shares) at Apr. 02, 2007 | 311,038 | ||||
Cumulative effect of adjustments resulting from the adoption of FASB ASC 740 | 14 | 19 | 33 | ||
Adjusted Beginning Balances (in shares) | 311,038 | ||||
Adjusted Beginning Balances | 3 | 1,426 | 2,342 | 294 | 4,065 |
Net loss | (454) | (454) | |||
Change in unrealized gains (losses) on investments, net | 146 | 146 | |||
Reclassification adjustment for losses (gains) realized on investments, net | 105 | 105 | |||
Change in unrealized gains (losses) on derivative instruments, net | (5) | (5) | |||
Reclassification adjustment for losses (gains) realized on derivative instruments, net | 2 | 2 | |||
Translation adjustment | 42 | 42 | |||
Comprehensive loss | (164) | ||||
Issuance of common stock (in shares) | 6,643 | ||||
Issuance of common stock | 184 | 184 | |||
Stock-based compensation | 150 | 150 | |||
Tax benefit from exercise of stock options | 45 | 45 | |||
Assumption of stock options in connection with acquisition | 59 | 59 | |||
Ending Balance (in shares) at Mar. 31, 2008 | 317,681 | ||||
Ending Balance at Mar. 31, 2008 | 3 | 1,864 | 1,888 | 584 | 4,339 |
Net loss | (1,088) | (1,088) | |||
Change in unrealized gains (losses) on investments, net | (366) | (366) | |||
Reclassification adjustment for losses (gains) realized on investments, net | 55 | 55 | |||
Change in unrealized gains (losses) on derivative instruments, net | 14 | 14 | |||
Reclassification adjustment for losses (gains) realized on derivative instruments, net | (10) | (10) | |||
Translation adjustment | (88) | (88) | |||
Comprehensive loss | (1,483) | ||||
Issuance of common stock (in shares) | 5,161 | ||||
Issuance of common stock | 73 | 73 | |||
Stock-based compensation | 203 | 203 | |||
Tax benefit from exercise of stock options | 2 | 2 | |||
Ending Balance (in shares) at Mar. 31, 2009 | 322,842 | 323,000 | |||
Ending Balance at Mar. 31, 2009 | 3 | 2,142 | 800 | 189 | 3,134 |
Net loss | (677) | (677) | |||
Change in unrealized gains (losses) on investments, net | (54) | (54) | |||
Reclassification adjustment for losses (gains) realized on investments, net | 21 | 21 | |||
Change in unrealized gains (losses) on derivative instruments, net | (2) | (2) | |||
Reclassification adjustment for losses (gains) realized on derivative instruments, net | 1 | 1 | |||
Translation adjustment | 73 | 73 | |||
Comprehensive loss | (638) | ||||
Issuance of common stock (in shares) | 6,745 | ||||
Issuance of common stock | 21 | 21 | |||
Stock-based compensation | 187 | 187 | |||
Tax benefit from exercise of stock options | 14 | 14 | |||
Assumption of stock options in connection with acquisition | 11 | 11 | |||
Ending Balance (in shares) at Mar. 31, 2010 | 329,587 | 330,000 | |||
Ending Balance at Mar. 31, 2010 | $3 | $2,375 | $123 | $228 | $2,729 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | |||
In Millions | 12 Months Ended
Mar. 31, 2010 | 12 Months Ended
Mar. 31, 2009 | 12 Months Ended
Mar. 31, 2008 |
OPERATING ACTIVITIES | |||
Net loss | ($677) | ($1,088) | ($454) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation, amortization and accretion, net | 192 | 198 | 164 |
Stock-based compensation | 187 | 203 | 150 |
Other non-cash restructuring charges | 39 | 25 | 56 |
Net losses on investments and sale of property and equipment | 22 | 65 | 111 |
Acquisition-related contingent consideration | 2 | ||
Goodwill impairment | 368 | ||
Acquired in-process technology | 3 | 138 | |
Change in assets and liabilities: | |||
Receivables, net | (66) | 221 | (8) |
Inventories | 123 | (49) | (100) |
Other assets | 18 | 52 | (8) |
Accounts payable | (57) | (26) | 22 |
Accrued and other liabilities | (138) | (56) | 72 |
Deferred income taxes, net | 2 | 222 | (160) |
Deferred net revenue (packaged goods and digital content) | 505 | (126) | 355 |
Net cash provided by operating activities | 152 | 12 | 338 |
INVESTING ACTIVITIES | |||
Purchase of headquarters facilities | (233) | ||
Capital expenditures | (72) | (115) | (84) |
Proceeds from sale of marketable equity securities | 17 | ||
Purchase of marketable equity securities and other investments | (275) | ||
Proceeds from maturities and sales of short-term investments | 710 | 891 | 2,306 |
Purchase of short-term investments | (611) | (695) | (1,739) |
Loan advance | (30) | ||
Acquisition-related restricted cash | (100) | ||
Acquisition of subsidiaries, net of cash acquired | (283) | (58) | (607) |
Net cash provided by (used in) investing activities | (572) | 23 | (429) |
FINANCING ACTIVITIES | |||
Proceeds from issuance of common stock | 39 | 89 | 192 |
Excess tax benefit from stock-based compensation | 14 | 2 | 51 |
Net cash provided by financing activities | 53 | 91 | 243 |
Effect of foreign exchange on cash and cash equivalents | 19 | (58) | 30 |
Increase (decrease) in cash and cash equivalents | (348) | 68 | 182 |
Beginning cash and cash equivalents | 1,621 | 1,553 | 1,371 |
Ending cash and cash equivalents | 1,273 | 1,621 | 1,553 |
Supplemental cash flow information: | |||
Net cash paid (refunded) during the year for income taxes, net | (34) | 25 | 31 |
Non-cash investing activities: | |||
Change in unrealized gains (losses) on investments, net of taxes | (54) | (366) | 146 |
Assumption of stock options in connection with acquisitions | $11 | $59 |
DESCRIPTION OF BUSINESS AND SUM
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
12 Months Ended
Mar. 31, 2010 | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | (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 PLAYSTATION 3, Microsoft Xbox 360 and Nintendo Wii), personal computers, handheld game players (such as the PlayStation Portable (PSP) and the Nintendo DS) and mobile devices (such as cellular phones and smart phones including the Apple iPhone). Some of our games are based on content that we license from others (e.g., FIFA Soccer, Madden NFL Football, Harry Potter, and Hasbros toy and game intellectual properties), and some of our games are based on our own wholly-owned intellectual property (e.g., The Sims, Need for Speed, and Dead Space). Our goal is to publish titles with global mass-market appeal, which often means translating and localizing them for sale in non-English speaking countries. In addition, we also attempt to create software game franchises that allow us to publish new titles on a recurring basis that are based on the same property. Examples of this franchise approach are the annual iterations of our sports-based products (e.g., FIFA Soccer, Madden NFL Football, and NCAA Football), wholly-owned properties that can be successfully sequeled (e.g., The Sims, Need for Speed and Battlefield) and titles based on long-lived literary and/or movie properties (e.g., Harry Potter). A summary of our significant accounting policies applied in the preparation of our Consolidated Financial Statements follows: Consolidation The accompanying Consolidated Financial Statements include the accounts of Electronic Arts Inc. and its wholly- and majority-owned subsidiaries. Intercompany balances and transactions have been eliminated in the consolidation. Fiscal Year Our fiscal year is reported on a 52 or 53-week period that ends on the Saturday nearest March31. Our results of operations for the fiscal year ended March31, 2010 contained 53 weeks and ended on April3, 2010. Our results of operations for the fiscal years ended March31, 2009 and 2008 contained 52 weeks and ended on March28, 2009 and March29, 2008, respectively. For simplicity of disclosure, all fiscal periods are referred to as ending on a calendar month end. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenue and expenses during the reporting period. Such estimates include sales returns and allowances, provisions for doubtful accounts, accrued liabilities, service period for deferred net revenue, income taxes, losses on royalty commitments, estimates regarding the recoverability of prepaid royalties, inventories, long-lived assets, assets acquired and liabilities assumed in business combinations, certain estimates related to the measurement and recognition of costs resulting from our share-based payment transactions, deferred income tax assets and associated valuation allowance as wel |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | |
12 Months Ended
Mar. 31, 2010 | |
FAIR VALUE MEASUREMENTS | (2)FAIR VALUE MEASUREMENTS On April1, 2009, we adopted FASB ASC 820, Fair Value Measurements and Disclosures, as it applies to nonfinancial assets and nonfinancial liabilities. These nonfinancial items include assets and liabilities such as a reporting unit measured at fair value in a goodwill impairment test and nonfinancial assets acquired and liabilities assumed in a business combination. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which we would transact, and we consider assumptions that market participants would use when pricing the asset or liability. We measure certain financial and nonfinancial assets and liabilities at fair value on a recurring and nonrecurring basis. Fair Value Hierarchy The three levels of inputs that may be used to measure fair value are as follows: Level 1. Quoted prices in active markets for identical assets or liabilities. Level 2. Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. Assets and Liabilities Measured at Fair Value on a Recurring Basis Our money market funds, available-for-sale fixed income and marketable equity securities, deferred compensation plan assets, foreign currency derivatives and contingent consideration are measured and recorded at fair value on a recurring basis. Our Level 1 assets are valued using quoted prices in active markets for identical instruments. Our Level 2 assets, including foreign currency derivatives, are valued using quoted prices for identical instruments in less active markets or using other observable market inputs for comparable instruments. Our Level 3 liability is valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the contingent consideration. As of March31, 2010 and 2009, our assets and liabilities that are measured and recorded at fair value on a recurring basis were as follows (in millions): FairValueMeasurementsatReportingDateUsing QuotedPricesin Active Markets for Identical Financial Instruments Significant Other Observable Inputs Significant Unobservable Inputs Asof March 31, 2010 (Level 1) (Level 2) (Level 3) Balance Sheet Classification Assets Money market funds $ 619 $ 619 $ $ Cash equivalents Available-for-sale securities: Marketable equity securities 2 |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | |
12 Months Ended
Mar. 31, 2010 | |
FINANCIAL INSTRUMENTS | (3)FINANCIAL INSTRUMENTS Cash, Cash Equivalents and Short-Term Investments Cash, cash equivalents and short-term investments consisted of the following as of March31, 2010 and 2009 (in millions): As of March31, 2010 As of March31, 2009 Cost or Amortized Cost Gross Unrealized Fair Value Cost or Amortized Cost Gross Unrealized Fair Value Gains Losses Gains Losses Cash and cash equivalents: Cash $ 629 $ $ $ 629 $ 490 $ $ $ 490 Money market funds 619 619 1,069 1,069 Commercial paper 11 11 39 39 U.S. Treasury securities 10 10 12 12 U.S. agency securities 3 3 9 9 Corporate bonds 1 1 2 2 Cash and cash equivalents 1,273 1,273 1,621 1,621 Short-term investments: Corporate bonds 231 2 233 130 1 131 U.S. agency securities 115 115 108 1 109 U.S. Treasury securities 83 83 198 2 200 Commercial paper 1 1 79 79 Asset-backed securities 15 15 Short-term investments 430 2 432 530 4 534 Cash, cash equivalents and short-term investments $ 1,703 $ 2 $ $ 1,705 $ 2,151 $ 4 $ $ 2,155 We evaluate our investments for impairment quarterly. Factors considered in the review of investments with an unrealized loss include the credit quality of the issuer, the duration that the fair value has been less than the adjusted cost basis, severity of the impairment, reason for the decline in value and potential recovery period, the financial condition and near-term prospects of the investees, our intent to sell the investments, any contractual terms impacting the prepayment or settlement process, as well as if we would be required to sell an investment due to liquidity or contractual reasons before its anticipated recovery.Based on our review, we did not consider the investments listed above to be other-than-temporarily impaired as of March31, 2010 and 2009. The following table summarizes the amortized cost and fair value of our short-term investments, classified by stated maturity as of March31, 2010 and 2009 (in millions): As of March31, 2010 As of March31, 2009 Amortized Cost Fair Value Amortized Cost Fair Value Short-term investments excluding asset-backed securities Due in 1 year or less $ 165 $ 165 $ 245 $ 245 Due in 1-2 years 174 176 156 159 Due in 2-3 years 91 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | |
12 Months Ended
Mar. 31, 2010 | |
DERIVATIVE FINANCIAL INSTRUMENTS | (4)DERIVATIVE FINANCIAL INSTRUMENTS The assets or liabilities associated with our derivative instruments and hedging activities are recorded at fair value in other current assets or accrued and other current liabilities, respectively, in our Consolidated Balance Sheets. As discussed below, the accounting for gains and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and qualifies for hedge accounting. We transact business in various foreign currencies and have significant international sales and expenses denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency option contracts, generally with maturities of 15 months or less, to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in certain foreign currencies. In addition, we utilize foreign currency forward contracts to mitigate foreign exchange rate risk associated with foreign-currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. The foreign currency forward contracts generally have a contractual term of approximately three months or less and are transacted near month-end. At each quarter-end, the fair value of the foreign currency forward contracts generally is not significant. We do not use foreign currency option or foreign currency forward contracts for speculative or trading purposes. Cash Flow Hedging Activities Our foreign currency option contracts are designated and qualify as cash flow hedges. The effectiveness of the cash flow hedge contracts, including time value, is assessed monthly using regression analysis, as well as other timing and probability criteria. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. 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. 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 research and development expenses, as appropriate, in the period when the forecasted transaction is recognized in our Consolidated Statements of Operations. In the event that the gains or losses in accumulated other comprehensive income are deemed to be ineffective, the ineffective portion of gains or losses resulting from changes in fair value, if any, is reclassified to interest and other income, net, on our Consolidated Statements of Operations. In the event that the underlying forecasted transactions do not occur, or it becomes remote that they will occur, within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from accumulated other comprehensive income to interest and other income, net, on our Consolidated Statements of Operations. During the reporting periods all forecaste |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | |
12 Months Ended
Mar. 31, 2010 | |
BUSINESS COMBINATIONS | (5)BUSINESS COMBINATIONS On April1, 2009, we adopted FASB ASC 805, Business Combinations, which generally requires the recognition of assets acquired, liabilities assumed, and any noncontrolling interest in an acquiree at the acquisition date based on their fair value with limited exceptions. FASB ASC 805 changes the accounting treatment for certain specific items and includes a substantial number of new disclosure requirements. Fiscal Year 2010 Acquisitions Playfish On November9, 2009, we acquired all of the outstanding shares of Playfish for an aggregate purchase price of approximately $308 million in cash and equity. Playfish is a developer of free-to-play social games that can be played on social networking platforms. This acquisition accelerates our participation in social gaming and contributes to our digital business. The following table summarizes the acquisition date fair value of the consideration transferred which consisted of the following (in millions): Cash $ 297 Equity 11 Total purchase price $ 308 The equity included in the consideration above consisted of restricted stock and restricted stock units, using the quoted market price of our common stock on the date of grant. In addition, we may be required to pay additional variable cash consideration that is contingent upon the achievement of certain performance milestones through December31, 2011. The additional consideration is limited to a maximum of $100 million based on tiered revenue targets over a two-year period. The final fair value of the contingent consideration arrangement at the acquisition date was $63 million. We estimated the fair value of the contingent consideration using probability assessments of expected future cash flows over the period in which the obligation is expected to be settled, and applied a discount rate that appropriately captures a market participants view of the risk associated with the obligation. This fair value is based on significant inputs not observable in the market. As of March31, 2010, there were no significant changes in the range of outcomes for the contingent consideration. The final allocation of the purchase price was based upon valuations for certain assets and was completed during the fourth quarter of fiscal year 2010. The following table summarizes the final fair values of assets acquired and liabilities assumed at the date of acquisition (in millions): Current assets $ 32 Deferred income taxes, net 20 Property and equipment, net 1 Goodwill 274 Finite-lived intangibles assets 53 Contingent consideration (63 ) Other liabilities (9 ) Total purchase price $ 308 All of the goodwill was assigned to our Playfish operating segment. None of the goodwill recognized upon acquisition is deductible for tax purposes. See Note 6 for additional information related to the changes in the carrying amount of goodwill and Note 17 for segment information. The results of operations of Playfish and the estimated fair market values of the assets acquired and liabilities assumed have been |
GOODWILL AND ACQUISITION-RELATE
GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET | |
12 Months Ended
Mar. 31, 2010 | |
GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET | (6)GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET The changes in the carrying amount of goodwill are as follows (in millions): Label Segment Other Segments Total As of March31, 2009 Goodwill $ 667 $ 508 $ 1,175 Accumulated Impairment (368 ) (368 ) 667 140 807 Goodwill Acquired 278 278 Effects of Foreign Currency Translation 5 3 8 As of March31, 2010 Goodwill 672 789 1,461 Accumulated Impairment (368 ) (368 ) $ 672 $ 421 $ 1,093 Purchased goodwill is not amortized, but rather subject to at least an annual assessment for impairment by applying a fair value-based test. We are required to perform a two-step approach to testing goodwill for impairment for each reporting unit annually, or whenever events or changes in circumstances indicate the fair value of a reporting unit is below its carrying amount. Our reporting units are determined by the components of our operating segments that constitute a business for which (1)discrete financial information is available and (2)segment management regularly reviews the operating results of that component. The first step measures for impairment by applying fair value-based tests at the reporting unit level. The second step (if necessary) measures the amount of impairment by applying fair value-based tests to individual assets and liabilities within each reporting unit. The fair values of each reporting unit are estimated using a combination of the market approach, which utilizes comparable companies data, and/or the income approach, which utilizes discounted cash flows. During fiscal years ended March31, 2010 and 2008, we completed the first step of the annual goodwill impairment testing in the fourth quarter of each year and found no indicators of impairment of our recorded goodwill. We did not recognize an impairment loss on goodwill in fiscal years 2010 and 2008. Adverse economic conditions, including the decline in our market capitalization and our expected financial performance, indicated that a potential impairment of goodwill existed during the fiscal year ended March31, 2009. As a result, we performed goodwill impairment tests for our reporting units and determined that the fair value of our EA Mobile reporting unit fell below the carrying value of that reporting unit. As a result, we conducted the second step in the impairment testing and determined that the EA Mobile reporting units goodwill was impaired. The fair value of the EA Mobile reporting unit was determined using the income approach. Substantially all of our goodwill associated with our EA Mobile reporting unit was derived from our fiscal 2006 acquisition of JAMDAT Mobile Inc. During the fiscal year ended March31, 2009, we recognized a goodwill impairment charge of $368 million related to our EA Mobile reporting unit. See Note 17 for information regarding our segment information. Finite-lived intangible assets, net |
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES | |
12 Months Ended
Mar. 31, 2010 | |
RESTRUCTURING CHARGES | (7)RESTRUCTURING CHARGES Restructuring information as of March31, 2010 was as follows (in millions): Fiscal 2010 Restructuring Fiscal 2009 Restructuring Fiscal 2008 Reorganization Other Restructurings Work- force Facilities- related Other Work- force Facilities- related Other Work- force Facilities- related Other Work- force Facilities- related Other Total Balances as of March31, 2007 $ $ $ $ $ $ $ $ $ $ $ 9 $ 1 $ 10 Charges to operations 12 58 27 6 103 Charges settled in cash (11 ) (3 ) (22 ) (6 ) (1 ) (43 ) Charges settled in non-cash (55 ) (1 ) (56 ) Balances as of March31, 2008 1 4 9 14 Charges to operations 32 7 2 22 12 4 1 80 Charges settled in cash (24 ) (1 ) (1 ) (13 ) (4 ) (3 ) (46 ) Charges settled in non-cash (1 ) (2 ) (22 ) (25 ) Balances as of March31, 2009 8 5 3 7 23 Charges to operations 62 22 32 1 13 3 7 140 Charges settled in cash (29 ) (2 ) (1 ) (9 ) (11 ) (10 ) (62 ) Charges settled in non-cash (25 ) (9 ) (24 ) (4 ) (3 ) (65 ) Accrual reclassification (7 ) (7 ) Balances as of March31, 2010 $ 8 $ 11 $ 7 $ $ 3 $ $ $ $ $ $ $ $ 29 Fiscal 2010 Restructuring In fiscal year 2010, we announced details of a restructuring plan to narrow our product portfolio to provide greater focus on titles with higher margin opportunities. Under this plan, we reduced our workforce by approximately 1,200 employees and have been (1)consolidating or closing various facilities, (2)eliminating certain titles, and (3)incurring IT and other costs to assist in reorganizing certain activities. The majority of these actions were completed by March31, 2010. Since the inception of |
ROYALTIES AND LICENSES
ROYALTIES AND LICENSES | |
12 Months Ended
Mar. 31, 2010 | |
ROYALTIES AND LICENSES | (8)ROYALTIES AND LICENSES Our royalty expenses consist of payments to (1)content licensors, (2)independent software developers, and (3)co-publishing and distribution affiliates. License royalties consist of payments made to celebrities, professional sports organizations, movie studios and other organizations for our use of their trademarks, copyrights, personal publicity rights, content and/or other intellectual property. Royalty payments to independent software developers are payments for the development of intellectual property related to our games. Co-publishing and distribution royalties are payments made to third parties for the delivery of products. Royalty-based obligations with content licensors and distribution affiliates are either paid in advance and capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations are generally expensed to cost of goods sold generally at the greater of the contractual rate or an effective royalty rate based on the total projected net revenue. Prepayments made to thinly capitalized independent software developers and co-publishing affiliates are generally in connection with the development of a particular product and, therefore, we are generally subject to development risk prior to the release of the product. Accordingly, payments that are due prior to completion of a product are generally expensed to research and development over the development period as the services are incurred. Payments due after completion of the product (primarily royalty-based in nature) are generally expensed as cost of goods sold. Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as an asset and as a liability at the contractual amount when no performance remains with the licensor. When performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a liability when incurred, rather than recording the asset and liability upon execution of the contract. Royalty liabilities are classified as current liabilities to the extent such royalty obligations are contractually due within the next twelve months. As of March31, 2010 and 2009, approximately $13 million and $37 million, respectively, of minimum guaranteed royalty obligations had been recognized and are included in the royalty-related assets and liabilities tables below. Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through product sales. Any impairments or losses determined before the launch of a product are charged to research and development expense. Impairments or losses determined post-launch are charged to cost of goods sold. We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment indicators exist. Unrecognized minimum royalty-based commitments are accounted for as executory contracts and, therefore, any losses on these commitments are recognized when the underlying intellectual property is abandoned (i.e |
BALANCE SHEET DETAILS
BALANCE SHEET DETAILS | |
12 Months Ended
Mar. 31, 2010 | |
BALANCE SHEET DETAILS | (9)BALANCE SHEET DETAILS Inventories Inventories as of March31, 2010 and 2009 consisted of (in millions): As of March31, 2010 2009 Raw materials and work in process $ 8 $ 7 In-transit inventory 2 9 Finished goods 90 201 Inventories $ 100 $ 217 Property and Equipment, Net Property and equipment, net, as of March31, 2010 and 2009 consisted of (in millions): As of March31, 2010 2009 Computer equipment and software $ 480 $ 663 Buildings 347 143 Leasehold improvements 99 125 Office equipment, furniture and fixtures 71 63 Land 65 11 Warehouse equipment and other 10 14 Construction in progress 13 16 1,085 1,035 Less accumulated depreciation (548 ) (681 ) Property and equipment, net $ 537 $ 354 Depreciation expense associated with property and equipment amounted to $123 million, $117 million and $126 million for the fiscal years ended March31, 2010, 2009 and 2008, respectively. On July13, 2009, we purchased our Redwood Shores headquarters facilities comprised of approximately 660,000 square feet concurrent with the expiration and extinguishment of the lessors financing agreements. These facilities were subject to lease obligations to non-affiliated parties, which expired in July 2009, and had previously been accounted for as operating leases. The total amount paid under the terms of the leases was $247 million, of which $233 million related to the purchase price of the facilities and $14 million was for the loss on our lease obligation. This $14 million loss is included in general and administrative expense on our Consolidated Statements of Operations. Subsequent to our purchase, we classified the facilities on our Consolidated Balance Sheet as property and equipment, net and depreciate the facilities acquired, excluding land, on a straight-line basis over the estimated useful lives. Acquisition-Related Restricted Cash Included in Other Current Assets and Other Assets In connection with our acquisition of Playfish on November9, 2009, we deposited $100 million into an escrow account to be used to pay the former shareholders of Playfish in the event certain performance milestones through December31, 2011 are achieved. During fiscal year 2010, no distributions were made from the restricted cash amount. As this deposit is restricted in nature, the long-term portion of $61 million is included in other assets and the short-term portion of $39 million is included in other current assets on our Consolidated Balance Sheet as of March31, 2010. See Note 5 regarding our acquisition of Playfish. Accrued and Other Current Liabilities Accrued and other current liabilities as of March31, 2010 and 2009 consisted of (in millions): As of March31, 2010 2009 Other accrued expenses $ 293 $ 237 Accrued compensation and benefits 177 142 Accrued royalties 144 237 Deferred ne |
INCOME TAXES
INCOME TAXES | |
12 Months Ended
Mar. 31, 2010 | |
INCOME TAXES | (10)INCOME TAXES The components of our loss before provision for (benefit from) income taxes for the fiscal years ended March31, 2010, 2009 and 2008 are as follows (in millions): Year Ended March31, 2010 2009 2008 Domestic $ (501 ) $ (670 ) $ (353 ) Foreign (205 ) (185 ) (154 ) Loss before provision for (benefit from) income taxes $ (706 ) $ (855 ) $ (507 ) Provision for (benefit from) income taxes for the fiscal years ended March31, 2010, 2009 and 2008 consisted of (in millions): Current Deferred Total Year Ended March31, 2010 Federal $ (8 ) $ (57 ) $ (65 ) State 2 (4 ) (2 ) Foreign 27 11 38 $ 21 $ (50 ) $ (29 ) Year Ended March31, 2009 Federal $ (15 ) $ 161 $ 146 State (2 ) 76 74 Foreign 26 (13 ) 13 $ 9 $ 224 $ 233 Year Ended March31, 2008 Federal $ (28 ) $ (43 ) $ (71 ) State (1 ) (21 ) (22 ) Foreign 46 (6 ) 40 $ 17 $ (70 ) $ (53 ) The differences between the statutory tax expense (benefit) rate and our effective tax expense (benefit) rate, expressed as a percentage of loss before provision for (benefit from) income taxes, for the years ended March31, 2010, 2009 and 2008 were as follows: Year Ended March31, 2010 2009 2008 Statutory federal tax (benefit) rate (35.0% ) (35.0% ) (35.0% ) State taxes, net of federal benefit (3.4% ) (2.1% ) (2.7% ) Differences between statutory rate and foreign effective tax rate 4.2% 2.6% 1.9% Valuation allowance 17.2% 42.8% Research and development credits (1.1% ) (1.6% ) (1.5% ) Non-deductible acquisition-related costs and tax expense from integration restructurings 8.2% 9.5% Non-deductible goodwill impairment 13.6% Non-deductible losses on strategic investments 2.6% 8.2% Loss on facility impairment 0.6% 3.5% Non-deductible stock-based compensation 5.0% 3.7% 5.5% Other 0.8% 0.3% Effective tax expense (benefit) rate (4.1% ) 27.2% (10.3% ) Undistributed earnings of our foreign subsidiaries amounted to approximately $1.1 billion as of March31, 2010. Those earnings are considered to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to various foreign countries. It is not practicable to determine the income tax liability that might be incurred if these |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | |
12 Months Ended
Mar. 31, 2010 | |
COMMITMENTS AND CONTINGENCIES | (11)COMMITMENTS AND CONTINGENCIES Lease Commitments As of March31, 2010, we leased certain of our current facilities, furniture and equipment under non-cancelable operating lease agreements. We were required to pay property taxes, insurance and normal maintenance costs for certain of these facilities and any increases over the base year of these expenses on the remainder of our facilities. See Note 9 regarding the purchase of our Redwood Shores headquarters facilities on July13, 2009. Development, Celebrity, League and Content Licenses: Payments and Commitments The products we produce in our studios are designed and created by our employee designers, artists, software programmers and by non-employee software developers (independent artists or third-party developers). We typically advance development funds to the independent artists and third-party developers during development of our games, usually in installment payments made upon the completion of specified development milestones. Contractually, these payments are generally considered advances against subsequent royalties on the sales of the products. These terms are set forth in written agreements entered into with the independent artists and third-party developers. In addition, we have certain celebrity, league and content license contracts that contain minimum guarantee payments and marketing commitments that may not be dependent on any deliverables. Celebrities and organizations with whom we have contracts include: FIFA, FIFPRO Foundation, FAPL (Football Association Premier League Limited), and DFL Deutsche Fuball Liga GmbH (German Soccer League) (professional soccer); National Basketball Association (professional basketball); PGA TOUR and Tiger Woods (professional golf); National Hockey League and NHL Players Association (professional hockey); Warner Bros. (Harry Potter); National Football League Properties, PLAYERS Inc., and Red Bear Inc. (professional football); Collegiate Licensing Company (collegiate football and basketball); ESPN (content in EA SPORTS games); Hasbro, Inc. (most of Hasbros toy and game intellectual properties); and the Estate of Robert Ludlum (Robert Ludlum novels and films). These developer and content license commitments represent the sum of (1)the cash payments due under non-royalty-bearing licenses and services agreements, and (2)the minimum guaranteed payments and advances against royalties due under royalty-bearing licenses and services agreements, the majority of which are conditional upon performance by the counterparty. These minimum guarantee payments and any related marketing commitments are included in the table below. The following table summarizes our minimum contractual obligations as of March31, 2010 (in millions): Contractual Obligations Fiscal Year Ending March 31, Leases(a) Developer/ Licensor Commitments(b) Marketing Other Purchase Obligations Total 2011 $ 46 $ 253 $ 91 $ 2 $ 392 2012 39 244 53 1 337 2013 32 164 47 243 2014 23 12 27 62 2015 18 13 15 46 Thereafte |
PREFERRED STOCK
PREFERRED STOCK | |
12 Months Ended
Mar. 31, 2010 | |
PREFERRED STOCK | (12)PREFERRED STOCK As of March31, 2010 and 2009, 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. |
STOCK-BASED COMPENSATION AND EM
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |
12 Months Ended
Mar. 31, 2010 | |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | (13)STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS Valuation Assumptions We are required to estimate the fair value of share-based payment awards on the date of grant. We recognize compensation costs for stock-based payment transactions to employees based on their grant-date fair value on a straight-line approach over the service period for which such awards are expected to vest. The fair value of restricted stock units and restricted stock is determined based on the quoted market price of our common stock on the date of grant. The fair value of stock options and stock purchase rights granted pursuant to our equity incentive plans and our ESPP, respectively, is determined using the Black-Scholes valuation model. The fair value of our stock options is based on the multiple-award valuation method. The determination of fair value is affected by our stock price, as well as assumptions regarding subjective and complex variables such as expected employee exercise behavior and our expected stock price volatility over the expected term of the award. Generally, our assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. The key assumptions for the Black-Scholes valuation calculation are: Risk-free interest rate. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected term of the option. Expected volatility. We use a combination of historical stock price volatility and implied volatility computed based on the price of options publicly traded on our common stock for our expected volatility assumption. Expected term. The expected term represents the weighted-average period the stock options are expected to remain outstanding. The expected term is determined based on historical exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise behavior. Expected dividends. The estimated assumptions used in the Black-Scholes valuation model to value our option grants and ESPP were as follows: Stock Option Grants ESPP Year Ended March 31, Year Ended March 31, 2010 2009 2008 2010 2009 2008 Risk-free interest rate 1.4-3.1 % 1.0-3.8 % 1.8-5.1 % 0.2-0.4 % 0.5-2.1 % 1.7-4.2 % Expected volatility 40-48 % 32-53 % 31-37 % 35-57 % 35-75 % 32-35 % Weighted-average volatility 45 % 42 % 33 % 39 % 66 % 34 % Expected term 4.2years 4.3years 4.4years 6-12months 6-12months 6-12months Expected dividends None None None None None None Stock-Based Compensation Expense Employee stock-based compensation expense recognized during the fiscal years ended March31, 2010, 2009 and 2008 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. In subsequent periods, if actual forfeitures differ from those estimates, an adjustment to stock-based compensation expense will be recognized at that time. The |
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME | |
12 Months Ended
Mar. 31, 2010 | |
COMPREHENSIVE INCOME | (14)COMPREHENSIVE INCOME We are required to classify items of other comprehensive income (loss) by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and paid-in capital in the equity section of a balance sheet. Accumulated other comprehensive income primarily includes foreign currency translation adjustments, and the net of tax amounts for unrealized gains (losses) on investments and unrealized gains (losses) on derivative instruments designated as cash flow hedges. Foreign currency translation adjustments are not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. The change in the components of accumulated other comprehensive income, net of related immaterial taxes, is summarized as follows (in millions): Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Investments, net Unrealized Gains (Losses) on Derivative Instruments, net Accumulated Other Comprehensive Income Balances as of March31, 2007 $ 43 $ 251 $ $ 294 Other comprehensive income (loss) 42 251 (3 ) 290 Balances as of March31, 2008 85 502 (3 ) 584 Other comprehensive income (loss) (88 ) (311 ) 4 (395 ) Balances as of March31, 2009 (3 ) 191 1 189 Other comprehensive income (loss) 73 (33 ) (1 ) 39 Balances as of March31, 2010 $ 70 $ 158 $ $ 228 |
INTEREST AND OTHER INCOME, NET
INTEREST AND OTHER INCOME, NET | |
12 Months Ended
Mar. 31, 2010 | |
INTEREST AND OTHER INCOME, NET | (15)INTEREST AND OTHER INCOME, NET Interest and other income, net, for the years ended March31, 2010, 2009 and 2008 consisted of (in millions): YearEndedMarch31, 2010 2009 2008 Interest income, net $ 10 $ 48 $ 102 Net gain (loss) on foreign currency transactions (19 ) (49 ) 20 Net gain (loss) on foreign currency forward contracts 10 34 (31 ) Other income, net 5 1 7 Interest and other income, net $ 6 $ 34 $ 98 |
NET LOSS PER SHARE
NET LOSS PER SHARE | |
12 Months Ended
Mar. 31, 2010 | |
NET LOSS PER SHARE | (16)NET LOSS PER SHARE Basic earnings per share is computed as net loss divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur from common shares issuable through stock-based compensation plans including stock options, restricted stock, restricted stock units, common stock through our ESPP, warrants and other convertible securities using the treasury stock method. As a result of our net loss for the fiscal years ended March31, 2010, 2009 and 2008, we have excluded certain equity-based instruments from the diluted loss per share calculation as their inclusion would have had an antidilutive effect. Had we reported net income for these periods, an additional 2million shares, 4million shares and 7million shares of common stock would have been included in the number of shares used to calculate diluted earnings per share for the fiscal years ended March31, 2010, 2009 and 2008, respectively. Options to purchase and restricted stock units and restricted stock to be released in the amount of 32million shares, 28million shares and 18million shares of common stock were excluded from the computation of diluted shares for the fiscal years ended March31, 2010, 2009 and 2008, respectively, as their inclusion would have had an antidilutive effect. For fiscal years 2010, 2009 and 2008, the weighted-average exercise prices of these shares were $32.89, $44.59 and $53.89 per share, respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | |
12 Months Ended
Mar. 31, 2010 | |
SEGMENT INFORMATION | (17)SEGMENT INFORMATION Our reporting segments are based upon: our internal organizational structure; the manner in which our operations are managed; the criteria used by our Chief Executive Officer, our Chief Operating Decision Maker (CODM), to evaluate segment performance; the availability of separate financial information; and overall materiality considerations. Our business is currently organized around three operating labels, EA Games, EA SPORTS and EA Play, as well as EA Interactive, which reports into our Publishing Organization. Our CODM regularly receives separate financial information for distinct businesses within the EA Interactive organization, including EA Mobile, Pogo and Playfish. Accordingly, in assessing performance and allocating resources, our CODM reviews the results of our three Labels, as well as the operating segments in EA Interactive, including EA Mobile, Pogo and Playfish. Due to their similar economic characteristics, products, and distribution methods, EA Games, EA SPORTS, and EA Plays results are aggregated into one Reportable Segment (the Label segment) as shown below. The remaining operating segments results are not material for separate disclosure and are included in the reconciliation of Label segment profit to consolidated operating loss below. In addition to assessing performance and allocating resources based on our operating segments as described herein, to a lesser degree, our CODM also reviews results based on geographic performance. The following table summarizes the financial performance of the Label segment and a reconciliation of the Label segments profit to our consolidated operating loss for the fiscal years ended March31, 2010, 2009 and 2008 (in millions): Year Ended March31, 2010 2009 2008 Label segment: Net revenue before revenue deferral $ 3,692 $ 3,746 $ 3,722 Depreciation and amortization (53 ) (67 ) (68 ) Other expenses (2,929 ) (3,284 ) (2,928 ) Label segment profit 710 395 726 Reconciliation to consolidated operating loss: Other: Revenue deferral (2,358 ) (1,077 ) (1,186 ) Recognition of revenue deferral 1,853 1,203 831 Other net revenue 467 340 298 Depreciation and amortization (133 ) (121 ) (118 ) Other expenses (1,225 ) (1,567 ) (1,038 ) Consolidated operating loss $ (686 ) $ (827 ) $ (487 ) Label segment profit differs from consolidated operating loss primarily due to the exclusion of (1)certain corporate and other functional costs that are not allocated to the Labels, (2)the deferral of certain net revenue related to online-enabled packaged goods and digital content (see Note 9 of the Notes to Consolidated Financial Statements), and (3)the results of EA Mobile, Pogo, Playfish, and our Switzerland distribution revenue that has not been allocated to the Labels. Our CODM reviews assets on a consolidated basis and not o |
COLLABORATIVE ARRANGEMENTS
COLLABORATIVE ARRANGEMENTS | |
12 Months Ended
Mar. 31, 2010 | |
COLLABORATIVE ARRANGEMENTS | (18)COLLABORATIVE ARRANGEMENTS On April1, 2009, we adopted FASB ASC 808, Collaborative Arrangements. FASB ASC 808 defines collaborative arrangements and establishes reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. The adoption of FASB ASC 808 did not have a significant impact on our Consolidated Financial Statements for the fiscal years ended March31, 2010, 2009 and 2008. |
RELATED PERSON TRANSACTION
RELATED PERSON TRANSACTION | |
12 Months Ended
Mar. 31, 2010 | |
RELATED PERSON TRANSACTION | (19)RELATED PERSON TRANSACTION Prior to becoming Chief Executive Officer of Electronic Arts, John Riccitiello was a co-founder and Managing Partner 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.Riccitiello held an indirect financial interest in VGH resulting from his interest in the entity that controlled Elevation Partners, L.P. and his interest in a limited partner of Elevation Partners, L.P. Elevation Partners, L.P. was a significant stockholder of VGH. |
CERTAIN ABANDONED ACQUISITION-R
CERTAIN ABANDONED ACQUISITION-RELATED COSTS | |
12 Months Ended
Mar. 31, 2010 | |
CERTAIN ABANDONED ACQUISITION-RELATED COSTS | (20)CERTAIN ABANDONED ACQUISITION-RELATED COSTS On March13, 2008, we commenced an unsolicited $2.1 billion cash tender offer for all of the outstanding shares of Take-Two Interactive Software, Inc. On August18, 2008, we allowed our tender offer for Take-Two shares to expire and on September14, 2008, we announced that we had terminated discussions with Take-Two. As a result of the terminated discussions, during the fiscal year ended March31, 2009, we recognized $21 million in related costs consisting of legal, banking and other consulting fees. These costs are included in our Consolidated Statements of Operations. |
QUARTERLY FINANCIAL AND MARKET
QUARTERLY FINANCIAL AND MARKET INFORMATION (UNAUDITED) | |
12 Months Ended
Mar. 31, 2010 | |
QUARTERLY FINANCIAL AND MARKET INFORMATION (UNAUDITED) | (21)QUARTERLY FINANCIAL AND MARKET INFORMATION (UNAUDITED) Quarter Ended Year Ended (In millions, except per share data) June 30 Sept. 30 Dec. 31 March31 Fiscal 2010 Consolidated Net revenue $ 644 $ 788 $ 1,243 $ 979 $ 3,654 Gross profit 323 195 589 681 1,788 Operating income (loss) (245 ) (417 ) (107 ) 83 (686 ) Net income (loss) (234 )(a) (391 )(b) (82 )(c) 30 (d) (677 ) Common Stock Net income (loss) per share Basic and Diluted $ (0.72 ) $ (1.21 ) $ (0.25 ) $ 0.09 $ (2.08 ) Common stock price per share High $ 23.76 $ 22.14 $ 21.05 $ 18.99 $ 23.76 Low $ 17.48 $ 17.68 $ 15.86 $ 15.70 $ 15.70 Fiscal 2009 Consolidated Net revenue $ 804 $ 894 $ 1,654 $ 860 $ 4,212 Gross profit 508 337 729 511 2,085 Operating loss (97 ) (364 ) (304 ) (62 ) (827 ) Net loss (95 )(e) (310 )(f) (641 )(g) (42 )(h) (1,088 ) Common Stock Net loss per share Basic and Diluted $ (0.30 ) $ (0.97 ) $ (2.00 ) $ (0.13 ) $ (3.40 ) Common stock price per share High $ 54.81 $ 50.17 $ 39.56 $ 20.60 $ 54.81 Low $ 43.46 $ 38.36 $ 15.01 $ 14.24 $ 14.24 (a) Net loss includes losses on strategic investments of $16 million and restructuring charges of $14 million, both of which are pre-tax amounts. (b) Net loss includes a loss on lease obligation (GA) of $14 million, losses on strategic investments of $8 million, restructuring charges of $6 million, and a $2 million gain on licensed intellectual property commitment (COGS), all of which are pre-tax amounts. (c) Net loss includes restructuring charges of $100 million and losses on strategic investments of $1 million, both of which are pre-tax amounts. (d) Net income includes restructuring charges of $20 million, $2 million of acquisition-related contingent consideration expense, a $1 million gain on licensed intellectual property commitment (COGS), and a $1 million loss on strategic investments, all of which are pre-tax amounts. (e) Net loss includes restructuring charges of $20 million, losses on strategic investments of $6 million, and acquired in-process technology of $2 million, all of which are pre-tax amounts. (f) Net loss includes losses on strategic investments of $34 million, $21 million of certain abandoned acquisition-related costs, and restructuring charges of $3 million, all of which are pre-tax amounts. (g) Net loss includes a $368 million goodwill impairment charge, losses on strategic investments of $27 million, restructuring charges of $18 million, and acquired in-process technology of $1 million, all of |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
12 Months Ended
Mar. 31, 2010 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ELECTRONIC ARTS INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS Years Ended March31, 2010, 2009 and 2008 (In millions) Allowance for DoubtfulAccounts, Price Protection and Returns Balanceat Beginning of Period Chargedto Revenue, Costs and Expenses Charged (Credited) to Other Accounts(a) Deductions(b) Balanceat End of Period Year Ended March31, 2010 $ 217 $ 515 $ $ 515 $ 217 Year Ended March31, 2009 $ 238 $ 543 $ (28 ) $ 536 $ 217 Year Ended March31, 2008 $ 214 $ 328 $ 16 $ 320 $ 238 (a) Primarily the translation effect of using the average exchange rate for expense items and the year-end exchange rate for the balance sheet item (allowance account) and other reclassification adjustments. (b) Primarily the utilization of our returns allowance and price protection reserves. |