Electronic Arts Inc. (NASDAQ: ERTS) has unveiled preliminary financial results for its fiscal first quarter ended June 30, 2009. GAAP net revenue for the quarter, which includes the impact of deferred revenue adjustments, was $644 million, as compared with $804 million for the prior year. During the quarter, EA had a net revenue deferral of $172 million related to certain online-enabled packaged goods games and digital content as compared with a net benefit of $195 million in the first quarter of the prior year.

Non-GAAP net revenue was $816 million, up 34 percent as compared with $609 million for the prior year. Sales were driven by launches of The Sims™ 3, EA SPORTS Active™, and Fight Night Round 4.

GAAP net loss for the quarter, including the impact of deferred revenue, was $234 million as compared with a net loss of $95 million for the prior year. GAAP diluted loss per share was $0.72 as compared with GAAP diluted loss per share of $0.30 for the prior year.

Non-GAAP net loss was $6 million as compared with a non-GAAP net loss of $135 million a year ago. Non-GAAP diluted loss per share was $0.02 as compared with a non-GAAP diluted loss per share of $0.42 for the prior year.

Trailing-twelve-month cash flow used in operations was $25 million as compared with cash flow generated from operations of $239 million a year ago. The Company ended the quarter with cash, cash equivalents and short-term investments of $1.8 billion.

“Good execution delivered better-than-expected financial results in the first quarter,” said John Riccitiello, Chief Executive Officer. “We are very pleased with the success of both The Sims 3 and EA SPORTS Active.”

“Our Q1 performance was driven by our previously announced cost-cutting initiatives and a strong frontline slate,” said Eric Brown, Chief Financial Officer, EA. “We had a solid Q1 both top and bottom line and we are focused on delivering the balance of the year.”

Highlights (comparisons are to the quarter ended June 30, 2008)

• EA was the #1 publisher in North America and Europe in the June quarter. EA had four of the top-ten games in North America and Europe.
• EA launched five titles in the quarter that received a Metacritic rating of 80 or above, including: Fight Night Round 4, BOOM BLOX™ Bash Party, The Sims 3, Tiger Woods PGA TOUR® 10 and EA SPORTS Active. Calendar year-to-date, EA has nine titles rated at 80 or above.
• Four titles won Best of E3 awards: Mass Effect™ 2 won Best RPG; Fight Night Round 4 won Best Sports Game; Star Wars®: The Old Republic™ won Best PC Game; Left 4 Dead 2 won Best Online Multiplayer.
• The Sims 3 was the #1 selling title at retail in Europe and North America combined for the quarter.
• EA SPORTS Active sold over 1.8 million copies in the quarter - making it EA’s best-selling Wii title ever.
• EA’s Wii share hit a record 21 percent in North America and was 13 percent in Europe - driven by EA SPORTS Active, Tiger Woods PGA TOUR 10, EA SPORTS Grand Slam® Tennis and Rock Band® 2 in partnership with MTV Games.
• EA Digital non-GAAP revenue $124 million - up 38 percent year-over-year.
• EA Mobile™, the world’s leading publisher of games for phones, delivered $50 million of non-GAAP revenue in the quarter - up 14 percent year-over-year.
• EA acquired J2Play, a leading social gaming company.

Business Outlook
The following forward-looking statements, as well as those made above, reflect expectations as of August 4, 2009. Results may be materially different and are affected by many factors, including: development delays on EA’s products; competition in the industry; the health of the economy in the U.S. and abroad and the related impact on discretionary consumer spending; changes in anticipated costs; expected savings and impact on EA’s operations of the Company’s cost reduction plan; consumer demand for console hardware and the ability of the console manufacturers to produce an adequate supply of consoles to meet that demand; changes in foreign exchange rates; the financial impact of potential future acquisitions by EA; the popular appeal of EA’s products; EA’s effective tax rate; and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

Fiscal Year Expectations - Ending March 31, 2010

• GAAP net revenue is expected to be between $3.7 and $3.85 billion - consistent with the Company’s previously provided guidance.
• Non-GAAP net revenue is expected to be approximately $4.3 billion - consistent with the Company’s previously provided guidance.
• GAAP diluted loss per share is expected to be between $0.85 and $1.35 - adjusted from the Company’s previously provided guidance of $0.85 and $1.45.
• Non-GAAP diluted earnings per share are expected to be approximately $1.00 - consistent with the Company’s previously provided guidance.
• For purposes of calculating fiscal year 2010 GAAP loss per share, the Company estimates a share count of 323 million and for non-GAAP EPS, the Company estimates a share count of 325 million.
• Expected non-GAAP net income excludes the following items from expected GAAP net income:
• $450 to $600 million for the impact of the change in deferred net revenue (packaged goods and digital content),
• $210 million of estimated stock-based compensation,
• $55 million of amortization of intangible assets,
• $25 to $35 million of restructuring charges,
• $14M loss on lease termination and facilities acquisition, and
• ($152) million in the difference between the Company’s GAAP and non-GAAP tax expenses.

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