Net revenue for the third quarter was $1.503 billion, up 17 percent as compared with $1.281 billion for the prior year. Beginning in fiscal 2008, EA no longer charges for its service related to certain online-enabled packaged goods games. As a result, the Company recognizes revenue from the sale of these games over the estimated service period. This change resulted in a $231 million sequential net increase in deferred net revenue as of December 31, 2007, which will be recognized in future periods.

Sales were driven by Need for Speed Pro Street, FIFA 08, Rock Band, The Simpsons Game, Madden NFL 08, The Sims 2 Castaway, and NBA LIVE 08.

Gross profit for the quarter was $721 million, down 11 percent year-over-year. Net loss for the quarter was $33 million as compared with net income of $160 million for the prior year. Diluted loss per share was $0.10 as compared with diluted earnings per share of $0.50 for the prior year.

Non-GAAP net income was $290 million as compared with $201 million a year ago. Non-GAAP diluted earnings per share were $0.90 as compared with $0.63 for the prior year. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)

“This was a record revenue quarter for EA and the single biggest revenue quarter for any third party publisher in our industry,” said John Riccitiello, Chief Executive Officer. “While we are disappointed that two titles slipped out of the March quarter, Burnout Paradise is off to a terrific start and we are looking forward to the upcoming launches of Army of Two and FIFA Street 3.”

“Our holiday quarter was solid, with non-GAAP earnings up 43 percent,” said Warren Jenson, Chief Financial and Administrative Officer. “For fiscal 2008, we tightened our top-line range toward the high end of our previous guidance, but given that two high-margin titles are now shipping in fiscal 2009, we tightened our bottom-line range toward the lower end of our previous guidance.”

Highlights (comparisons are to the quarter ended December 31, 2006)

• EA Partners posted its strongest quarterly performance ever driven by Rock Band, Half Life® 2 Orange Box, Crysis® and Hellgate: London.
• Need for Speed Pro Street sold over 5.5 million copies in the quarter -- over 65 percent internationally.
• FIFA 08 sold over 4.5 million copies in the quarter and is EA’s top-selling title year-to-date.
• The critically-acclaimed Rock Band had a strong North American launch on the Xbox 360, PLAYSTATION®3 and PlayStation 2 -- selling 1.5 million copies.
• The Simpsons Game sold 4.0 million copies in the quarter and was the highest rated entertainment-based game in 2007.
• In calendar year 2007, EA was the number one global publisher across all platforms with 18 percent share in North America and 19 percent in Europe.
• On the Wii, EA was the number one third-party publisher in calendar 2007 in Europe with 15 percent share -- up 11 points from a year ago; in North America, EA had 12 percent share -- up three points from a year ago.
• EA closed the acquisition of BioWare Corp. and Pandemic Studios in January 2008, adding strong development talent and ten new franchises.

The following forward-looking statements, as well as those made above, reflect expectations as of January 31, 2008. Results may be materially different and are affected by many factors, including: development delays on EA’s products; competition in the industry; changes in anticipated costs, expected savings and impact on EA’s operations of the Company’s reorganization plan; consumer demand for console hardware and the ability of the console manufacturers to produce an adequate supply of consoles to meet that demand; consumer demand for games for legacy consoles, particularly the PS2; the financial impact of the Company’s acquisition of VG Holding Corp. (BioWare Corp. and Pandemic Studios); the popular appeal of EA’s products; changes in foreign exchange rates; the overall global economy; EA’s effective tax rate; and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

Fiscal Fourth Quarter Expectations – Ending March 31, 2008

• Net revenue is expected to be between $925 million and $1.05 billion.
• Net revenue excluding the impact of the change in deferred net revenue (packaged goods and digital content) is expected to be between $775 and $850 million.
• GAAP diluted loss per share is expected to be between ($0.52) and ($0.33).
• Non-GAAP diluted earnings per share are expected to be between a loss per share of ($0.03) and earnings per share of $0.02. Expected non-GAAP diluted earnings (loss) per share exclude the following items from expected GAAP diluted loss per share:
  • ($0.52) to ($0.38) for the impact of the change in deferred net revenue (packaged goods and digital content)
  • $0.65 for acquisition-related charges
  • $0.14 of estimated stock-based compensation
  • $0.05 of amortization of intangible assets
  • $0.03 of restructuring charges

The Company expects Battlefield: Bad Company and Mercenaries 2: World in Flames to ship in fiscal 2009.

Fiscal Year Expectations – Ending March 31, 2008

• Net revenue is expected to be between $3.462 and $3.587 billion - as compared to Company's previous guidance of $3.35 to $3.65 billion.
• Net revenue excluding the impact of the change in deferred net revenue (packaged goods and digital content) is expected to be between $3.875 and $3.95 billion -- as compared to the Company's previous guidance of $3.8 and $4.0 billion.
• GAAP diluted loss per share is expected to be between ($1.67) and ($1.48) - as compared to the Company's previous guidance of GAAP diluted loss per share of ($1.60) and ($0.91).
• Non-GAAP diluted earnings per share are expected to be between $0.93 and $0.98 - as compared to the Company's previous guidance of $0.85 to $1.15. Expected non-GAAP diluted earnings per share exclude the following items from expected GAAP diluted loss per share:
  • $0.92 to $1.06 for the impact of the change in deferred net revenue (packaged goods and digital content)
  • $0.65 for acquisition-related charges
  • $0.41 of estimated stock-based compensation
  • $0.27 of restructuring charges
  • $0.15 of amortization of intangible assets
  • $0.04 of losses on strategic investments
  • $0.02 related to the difference between diluted and basic share count