Electronic Arts Reports Q3 FY13 Financial Results

  Electronic Arts Reports Q3 FY13 Financial Results

             Q3 Non-GAAP EPS In Line with Guidance and Consensus

  Trailing Twelve-Month Non-GAAP Digital Net Revenue Up 37% to $1.5 Billion

             FIFA 13 Sold Over 12 Million Units Through Q3 FY2013

          Battlefield 3 Premium Has 2.9 Million Subscribers To Date

Business Wire

REDWOOD CITY, Calif. -- January 30, 2013

Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial
results for its third fiscal quarter ended December 31, 2012.

“Despite a challenging quarter, we were able to deliver non-GAAP EPS at the
high end of our guidance range,” said Chief Executive Officer John
Riccitiello. “We are investing for the future wave of growth that we foresee
in digital and console.”

“We delivered on non-GAAP EPS by driving high-margin digital revenue and
through disciplined expense management,” said Chief Financial Officer Blake
Jorgensen.

“EA had six of the top twenty titles in Western markets in 2012, compared to
four in 2011,” said Chief Operating Officer Peter Moore. “EA was also the #1
publisher on iOS worldwide for the year.”

Selected Operating Highlights and Metrics:
*On a non-GAAP basis

  *FIFA 13 sold through over 12 million units through the third quarter, a
    23% increase versus FIFA 12 in the prior year.
  *FIFA 13 digital net revenue topped $100 million* in the quarter, a 98%
    increase versus FIFA 12 in the prior year.
  *Total FIFA digital net revenue generated over $230 million* in the first
    three quarters of fiscal 13, including EA SPORTS FIFA Online 2 and FIFA
    World Class Soccer that together contributed over $60 million*.
  *Battlefield 3™ Premium generated over $108 million in sales through the
    third quarter, and has 2.9 million subscriptions to date.
  *EA had six of the top twenty titles in Western World retail markets in
    2012, compared to four in 2011, and was the #1 global publisher in the iOS
    game market for 2012.
  *The Simpsons™: Tapped Out was a top grossing iOS game for the quarter,
    generating over $23 million* in digital net revenue.
  *EA’s games and services for mobile, including handhelds, have generated
    approximately $100 million* in the quarter, an 18%* year-over-year
    increase in digital net revenue.
  *EA’s Origin™ platform for downloading digital games and services has
    registered over 39 million users, including 17 million mobile users. EA
    has signed agreements with 86 independent developers for Origin.
  *Trailing twelve-month non-GAAP digital net revenue was up 37% to a record
    $1.5 billion*.
  *Trailing twelve-month operating cash flow was $378 million, a $135 million
    improvement versus the prior year.
  *EA repurchased 12.2 million shares at a cost of $157 million in the third
    fiscal quarter, pursuant to a $500 million Share Repurchase Program
    announced on July 31, 2012, bringing the total shares repurchased under
    the current program to 20.6 million shares at a total cost of $265
    million.
  *Dead Space™ 3 pre-sells are outpacing Dead Space 2, and Crysis® 3
    pre-orders are tracking 40% ahead of Crysis 2.

Q3 Financial Highlights:

For the quarter, non-GAAP net revenue of $1,182 million was below our guidance
of $1,250 million to $1,350 million. Non-GAAP diluted earnings per share of
$0.57 was above the midpoint of our guidance of $0.50 to $0.60.


                                                         Quarter     Quarter
                                                       Ended      Ended
                                                         12/31/12    12/31/11
(in millions of $, except per share amounts)
                                                                     
Digital Net Revenue                                      $ 321       $ 274
Publishing Packaged Goods and Other Net Revenue            568         738
Distribution Packaged Goods Net Revenue                   33       49    
GAAP Total Net Revenue                                   $ 922     $ 1,061 
                                                                     
Non-GAAP Digital Net Revenue                             $ 407       $ 377
Non-GAAP Publishing Packaged Goods and Other Net           742         1,225
Revenue
Non-GAAP Distribution Packaged Goods Net Revenue          33       49    
Non-GAAP Total Net Revenue                               $ 1,182   $ 1,651 
                                                                     
GAAP Net Loss                                            $ (45   )   $ (205  )
Non-GAAP Net Income                                        176         334
GAAP Diluted Loss Per Share                                (0.15 )     (0.62 )
Non-GAAP Diluted Earnings Per Share                        0.57        0.99
                                                                     
Cash Provided by Operations                              $ 363       $ 475

                                                            
Trailing Twelve Month (TTM) Financial Highlights:
                                                  
                                                    TTM        TTM
(in millions of $)                                  Ended      Ended
                                                    12/31/12   12/31/11
                                                               
GAAP Net Revenue                                    $  3,956   $ 3,865
GAAP Net Income (Loss)                                 175       (173  )
                                                               
Non-GAAP Net Revenue                                $  3,730   $ 4,204
Non-GAAP Net Income                                    151       311
                                                               
Cash Provided by Operations                         $  378     $ 243
                                                               
                                                               
Q3 FY13 Digital Metrics:
                                                               
                                                    Quarter    Quarter
(in millions)                                       Ended      Ended
                                                    12/31/12   12/31/11
                                                               
GAAP Mobile Net Revenue                             $  86      $ 70
Non-GAAP Mobile Net Revenue                         $  99      $ 83
                                                               

Business Outlook as of January 30, 2013

The following forward-looking statements, as well as those made above, reflect
expectations as of January 30, 2013. Electronic Arts assumes no obligation to
update these statements. Results may be materially different and are affected
by many factors, including: product development delays; 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; the
financial impact of 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.

Fourth Quarter Fiscal Year 2013 Expectations – Ending March 31, 2013

  *GAAP net revenue is expected to be approximately $1.115 to $1.215 billion.
  *Non-GAAP net revenue is expected to be approximately $1.025 to $1.125
    billion.
  *GAAP diluted earnings per share is expected to be approximately $0.92 to
    $1.12.
  *Non-GAAP diluted earnings per share is expected to be approximately $0.57
    to $0.72.
  *For purposes of calculating fourth quarter fiscal year 2013 diluted
    earnings per share, the Company estimates a share count of 305 million.
  *Expected non-GAAP net income excludes the following from expected GAAP net
    income (loss):

       *Non-GAAP net revenue is expected to be approximately $90 million
         lower than GAAP net revenue due to the impact of the change in
         deferred net revenue (packaged goods and digital content);
       *Approximately $40 million of estimated stock-based compensation;
       *Approximately $25 million of gain on strategic investments;
       *Approximately $20 million of acquisition-related expenses;
       *Approximately $5 million of restructuring charges;
       *Approximately $5 million from the amortization of debt discount; and
       *Non-GAAP tax expense is expected to be $62 million to $79 million
         higher than GAAP tax expense.

Fiscal Year 2013 Expectations – Ending March 31, 2013

  *GAAP net revenue is expected to be approximately $3.703 to $3.803 billion.

  *Non-GAAP net revenue is expected to be approximately $3.778 to $3.878
    billion.
  *GAAP diluted earnings per share is expected to be approximately $0.18 to
    $0.38.

  *Non-GAAP diluted earnings per share is expected to be approximately $0.86
    to $1.00.
  *For purposes of calculating fiscal year 2013 diluted earnings per share,
    the Company estimates a share count of 313 million.
  *Expected non-GAAP net income excludes the following from expected GAAP net
    income (loss):

       *Non-GAAP net revenue is expected to be approximately $75 million
         higher than GAAP net revenue due to the impact of the change in
         deferred net revenue (packaged goods and digital content);
       *Approximately $162 million of estimated stock-based compensation;
       *Approximately $39 million of gain on strategic investments;
       *Approximately $28 million of acquisition-related expenses;
       *Approximately $32 million of restructuring charges;
       *Approximately $20 million from the amortization of debt discount; and
       *Non-GAAP tax expense is expected to be approximately $65 million to
         $82 million higher than GAAP tax expense.

Conference Call and Supporting Documents

Electronic Arts will host a conference call on January 30, 2013 at 2:00 pm PT
(5:00 pm ET) to review its results for the third quarter ended December 31,
2012 and its outlook for the future. During the course of the call, Electronic
Arts may disclose material developments affecting its business and/or
financial performance. Listeners may access the conference call live through
the following dial-in number: 773-799-3213 (domestic) or 888-677-1083
(international), using the password “EA” or via webcast at http://ir.ea.com.

EA will also post a slide presentation that accompanies the call at
http://ir.ea.com.

A dial-in replay of the conference call will be provided until February 14,
2013 at the following number: 203-369-0099 (domestic) or 866-356-3373
(international). A webcast replay of the conference call will be available for
one year at http://ir.ea.com.

Non-GAAP Financial Measures

To supplement the Company’s unaudited condensed consolidated financial
statements presented in accordance with GAAP, Electronic Arts uses certain
non-GAAP measures of financial performance. The presentation of these non-GAAP
financial measures is not intended to be considered in isolation from, as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP, and may be different from non-GAAP
financial measures used by other companies. In addition, these non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with the Company’s results of operations as determined in
accordance with GAAP. The non-GAAP financial measures used by Electronic Arts
include: non-GAAP net revenue, non-GAAP gross profit, non-GAAP operating
income (loss), non-GAAP net income (loss) and historical and estimated
non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures
exclude the following items, as applicable in a given reporting period, from
the Company’s unaudited condensed consolidated statements of operations:

  *Acquisition-related expenses
  *Amortization of debt discount
  *Certain non-recurring litigation expenses
  *Change in deferred net revenue (packaged goods and digital content)
  *Loss (gain) on strategic investments
  *Restructuring charges
  *Stock-based compensation
  *Income tax adjustments

Electronic Arts may consider whether other significant non-recurring items
that arise in the future should also be excluded in calculating the non-GAAP
financial measures it uses.

Electronic Arts believes that these non-GAAP financial measures, when taken
together with the corresponding GAAP financial measures, provide meaningful
supplemental information regarding the Company’s performance by excluding
certain items that may not be indicative of the Company’s core business,
operating results or future outlook. Electronic Arts’ management uses, and
believes that investors benefit from referring to, these non-GAAP financial
measures in assessing the Company’s operating results both as a consolidated
entity and at the business unit level, as well as when planning, forecasting
and analyzing future periods. These non-GAAP financial measures also
facilitate comparisons of the Company’s performance to prior periods.

In addition to the reasons stated above, which are generally applicable to
each of the items Electronic Arts excludes from its non-GAAP financial
measures, the Company believes it is appropriate to exclude certain items for
the following reasons:

Acquisition-Related Expenses. GAAP requires expenses to be recognized for
various types of events associated with a business acquisition. These events
include, expensing acquired intangible assets, including acquired in-process
technology, post-closing adjustments associated with changes in the estimated
amount of contingent consideration to be paid in an acquisition, and the
impairment of accounting goodwill created as a result of an acquisition when
future events indicated there has been a decline in its value. When analyzing
the operating performance of an acquired entity, Electronic Arts’ management
focuses on the total return provided by the investment (i.e., operating profit
generated from the acquired entity as compared to the purchase price paid
including the final amounts paid for contingent consideration) without taking
into consideration any allocations made for accounting purposes. Because the
final purchase price paid for an acquisition necessarily reflects the
accounting value assigned to both contingent consideration and to the
intangible assets (including goodwill), when analyzing the operating
performance of an acquisition in subsequent periods, the Company’s management
excludes the GAAP impact of any adjustments to the fair value of these
acquisition-related balances to its financial results.

Amortization of Debt Discount on the Convertible Senior Notes. Under GAAP,
certain convertible debt instruments that may be settled in cash on conversion
are required to be separately accounted for as liability (debt) and equity
(conversion option) components of the instrument in a manner that reflects the
issuer’s non-convertible debt borrowing rate. Accordingly, for GAAP purposes,
we are required to amortize as a debt discount an amount equal to the fair
value of the conversion option as interest expense on the Company’s $632.5
million of 0.75% convertible senior notes that were issued in a private
placement in July 2011 over the term of the notes. Electronic Arts’ management
will exclude the effect of this amortization when evaluating the Company’s
operating performance and the performance of its management team during this
period and will continue to do so, when it plans, forecasts and analyzes
future periods.

Certain non-recurring litigation expenses. During the fourth quarter of fiscal
2012, Electronic Arts recognized a $27 million expense related to a settlement
of a litigation matter. This significant non-recurring litigation expense is
excluded from our non-GAAP financial measures in order to provide
comparability between periods. Further, the Company excluded this expense when
evaluating its operating performance and the performance of its management
team during this period and will continue to do so when it plans, forecasts
and analyzes future periods.

Change in Deferred Net Revenue (Packaged Goods and Digital Content).
Electronic Arts is not able to objectively determine the fair value of the
online service included in certain of its packaged goods and digital content.
As a result, the Company recognizes the revenue from the sale of these games
and content over the estimated online service period. In other transactions,
at the date we sell the software product we have an obligation to provide
incremental unspecified digital content in the future without an additional
fee. In these cases, we account for the sale of the software product and the
right to receive either an online service or incremental unspecified digital
content in the future as a multiple element arrangement and recognize the
revenue on a straight-line basis over the period we expect the consumer to
play the game. Internally, Electronic Arts’ management excludes the impact of
the change in deferred net revenue related to packaged goods games and digital
content in its non-GAAP financial measures when evaluating the Company’s
operating performance, when planning, forecasting and analyzing future
periods, and when assessing the performance of its management team. The
Company believes that excluding the impact of the change in deferred net
revenue from its operating results is important to (1) facilitate comparisons
to prior periods during which the Company was able to objectively determine
the fair value of the online service and not delay the recognition of
significant amounts of net revenue related to online-enabled packaged goods
and (2) understanding our operations because all related costs are expensed as
incurred instead of deferred and recognized ratably.

Loss (gain) on Strategic Investments. From time to time, the Company makes
strategic investments. Electronic Arts’ management excludes the impact of any
losses and gains on such investments when evaluating the Company’s operating
performance, when planning, forecasting and analyzing future periods, and when
assessing the performance of its management team. In addition, the Company
believes that excluding the impact of such losses and gains on these
investments from its operating results is important to facilitate comparisons
to prior periods.

Restructuring Charges. Although Electronic Arts has engaged in various
restructuring activities in the past, each has been a discrete, extraordinary
event based on a unique set of business objectives. Each of these
restructurings has been unlike its predecessors in terms of its operational
implementation, business impact and scope. As such, the Company believes it is
appropriate to exclude restructuring charges from its non-GAAP financial
measures.

Stock-Based Compensation. When evaluating the performance of its individual
business units, the Company does not consider stock-based compensation
charges. Likewise, the Company’s management teams exclude stock-based
compensation expense from their short and long-term operating plans. In
contrast, the Company’s management teams are held accountable for cash-based
compensation and such amounts are included in their operating plans. Further,
when considering the impact of equity award grants, Electronic Arts places a
greater emphasis on overall shareholder dilution rather than the accounting
charges associated with such grants.

Income Tax Adjustments. The Company uses a fixed, long-term projected tax rate
of 28 percent internally to evaluate its operating performance, to forecast,
plan and analyze future periods, and to assess the performance of its
management team. Accordingly, the Company has applied the same 28 percent tax
rate to its non-GAAP financial results.

In the financial tables below, Electronic Arts has provided a reconciliation
of the most comparable GAAP financial measure to the historical non-GAAP
financial measures used in this press release.

Forward-Looking Statements

Some statements set forth in this release, including the information relating
to EA’s fiscal 2013 guidance information under the heading “Business Outlook”,
contain forward-looking statements that are subject to change. Statements
including words such as "anticipate", "believe", “estimate” or "expect" and
statements in the future tense are forward-looking statements. These
forward-looking statements are preliminary estimates and expectations based on
current information and are subject to business and economic risks and
uncertainties that could cause actual events or actual future results to
differ materially from the expectations set forth in the forward-looking
statements.

Some of the factors which could cause the Company’s results to differ
materially from its expectations include the following: sales of the Company’s
titles; the Company’s ability to manage expenses; the competition in the
interactive entertainment industry; the effectiveness of the Company’s sales
and marketing programs; timely development and release of Electronic Arts’
products; the Company’s ability to realize the anticipated benefits of
acquisitions, including the PopCap acquisition; the consumer demand for, and
the availability of an adequate supply of console hardware units; the
Company’s ability to predict consumer preferences among competing platforms;
the Company’s ability to service and support digital product offerings,
including managing online security; general economic conditions; and other
factors described in the Company’s Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2012.

These forward-looking statements are current as of January 30, 2013.
Electronic Arts assumes no obligation and does not intend to update these
forward-looking statements. In addition, the preliminary financial results set
forth in this release are estimates based on information currently available
to Electronic Arts.

While Electronic Arts believes these estimates are meaningful, they could
differ from the actual amounts that Electronic Arts ultimately reports in its
Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2012.
Electronic Arts assumes no obligation and does not intend to update these
estimates prior to filing its Form 10-Q for the fiscal quarter ended December
31, 2012.

About Electronic Arts

Electronic Arts (NASDAQ:EA) is a global leader in digital interactive
entertainment. The Company’s game franchises are offered as both packaged
goods products and online services delivered through Internet-connected
consoles, personal computers, mobile phones and tablets. EA has more than 250
million registered players and operates in 75 countries. In fiscal year 2012,
EA posted GAAP net revenue of $4.1 billion. Headquartered in Redwood City,
California, EA is recognized for critically acclaimed, high-quality
blockbuster franchises such as The Sims™, Madden NFL, FIFA Soccer, Need for
Speed™, Battlefield™, and Mass Effect™. More information about EA is available
at http://info.ea.com.

EA SPORTS, Origin, Dead Space, The Sims and Need for Speed are trademarks of
Electronic Arts Inc. Mass Effect is a trademark of EA International (Studio
and Publishing) Ltd. Battlefield 3 and Battlefield are trademarks of EA
Digital Illusions CE AB. Crysis is a trademark of GmbH. The Simpsons TM & ©
2012 Twentieth Century Fox Film Corporation. All Rights Reserved. John Madden,
NFL and FIFA are the property of their respective owners and used with
permission. All other trademarks are the property of their respective owners.


ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in millions, except per share data)

                                Three Months Ended     Nine Months Ended
                                 December 31,            December 31,
                                 2012       2011        2012       2011
Net revenue
Product                          $ 703       $ 884       $ 1,886     $ 2,370
Service and other                219        177        702        405     
Total net revenue                922         1,061       2,588       2,775
Cost of revenue
Product                          363         477         866         1,088
Service and other                66         75         213        136     
Total cost of revenue            429        552        1,079      1,224   
Gross profit                     493         509         1,509       1,551
Operating expenses:
Marketing and sales              214         269         571         631
General and administrative       68          98          253         260
Research and development         286         325         890         928
Acquisition-related contingent   (45     )   (11     )   (65     )   8
consideration
Amortization of intangibles      7           11          21          37
Restructuring and other          2          —          27         17      
Total operating expenses         532        692        1,697      1,881   
Operating loss                   (39     )   (183    )   (188    )   (330    )
Gain on strategic investments    14          —           14          —
Interest and other income        (8      )   (10     )   (17     )   (13     )
(expense), net
Loss before provision for        (33     )   (193    )   (191    )   (343    )
(benefit from) income taxes
Provision for (benefit from)     12         12         34         (19     )
income taxes
Net loss                         $ (45   )   $ (205  )   $ (225  )   $ (324  )
Loss per share
Basic and Diluted                $ (0.15 )   $ (0.62 )   $ (0.72 )   $ (0.98 )
Number of shares used in
computation
Basic and Diluted                304         332         313         331


Non-GAAP Results (in millions, except per share data)
The following tables reconcile the Company’s net loss and loss per share as
presented in its Unaudited Condensed Consolidated Statements of Operations and
prepared in accordance with Generally Accepted Accounting Principles (“GAAP”)
to its non-GAAP net income and non-GAAP earnings per share.

                                                        
                                     Three Months Ended    Nine Months Ended
                                     December 31,          December 31,
                                     2012      2011       2012      2011
Net loss                             $ (45  )   $ (205 )   $ (225 )   $ (324 )
Acquisition-related expenses         (15    )   14         8          70
Amortization of debt discount        5          5          15         9
Change in deferred net revenue
(packaged goods and digital          260        590        165        434
content)
Gain on strategic investments        (14    )   —          (14    )   —
Restructuring and other              2          —          27         17
Stock-based compensation             39         48         122        129
Income tax adjustments               (56    )   (118   )   (3     )   (107   )
Non-GAAP net income                  $ 176     $ 334     $ 95      $ 228  
Non-GAAP earnings per share
Basic                                $ 0.58     $ 1.01     $ 0.30     $ 0.69
Diluted                              $ 0.57     $ 0.99     $ 0.30     $ 0.67
Number of shares used in Non-GAAP
computation
Basic                                304        332        313        331
Diluted                              308        338        315        338


ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in millions)
                                                                  
                                                      December 31,   March 31,
                                                      2012           2012 (a)
ASSETS
Current assets:
Cash and cash equivalents                             $  1,158       $ 1,293
Short-term investments                                275            437
Marketable equity securities                          59             119
Receivables, net of allowances of $284 and $252,      382            366
respectively
Inventories                                           59             59
Deferred income taxes, net                            67             67
Other current assets                                  229           268     
Total current assets                                  2,229          2,609
Property and equipment, net                           550            568
Goodwill                                              1,724          1,718
Acquisition-related intangibles, net                  304            369
Deferred income taxes, net                            47             42
Other assets                                          185           185     
TOTAL ASSETS                                          $  5,039      $ 5,491 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                                      $  93          $ 215
Accrued and other current liabilities                 840            857
Deferred net revenue (packaged goods and digital      1,213         1,048   
content)
Total current liabilities                             2,146          2,120
0.75% convertible senior notes due 2016, net          554            539
Income tax obligations                                211            189
Deferred income taxes, net                            2              8
Other liabilities                                     168           177     
Total liabilities                                     3,081          3,033
Common stock                                          3              3
Paid-in capital                                       2,138          2,359
Accumulated deficit                                   (302      )    (77     )
Accumulated other comprehensive income                119           173     
Total stockholders’ equity                            1,958         2,458   
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY            $  5,039      $ 5,491 

(a)  Derived from audited consolidated financial statements.


ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)

                                Three Months Ended     Nine Months Ended
                                 December 31,            December 31,
                                 2012       2011        2012       2011
OPERATING ACTIVITIES
Net loss                         $ (45   )   $ (205  )   $ (225  )   $ (324  )
Adjustments to reconcile net
loss to net cash provided by
(used in) operating
activities:
Acquisition-related contingent   (45     )   (11     )   (65     )   8
consideration
Depreciation, amortization and   66          54          178         148
accretion, net
Net gains on investments and     (12     )   —           (12     )   (12     )
sale of property and equipment
Non-cash restructuring charges   —           (3      )   7           (3      )
Stock-based compensation         39          48          122         129
Change in assets and
liabilities:
Receivables, net                 256         39          (18     )   (176    )
Inventories                      13          22          —           11
Other assets                     14          (18     )   14          (81     )
Accounts payable                 (124    )   (93     )   (115    )   (150    )
Accrued and other liabilities    (56     )   48          53          50
Deferred income taxes, net       (3      )   4           (13     )   (44     )
Deferred net revenue (packaged   260        590        165        434     
goods and digital content)
Net cash provided by (used in)   363        475        91         (10     )
operating activities
INVESTING ACTIVITIES
Capital expenditures             (25     )   (44     )   (81     )   (128    )
Proceeds from sale of property   —           —           —           26
and equipment
Proceeds from sale of            25          —           25          —
marketable equity securities
Proceeds from maturities and
sales of short-term              124         144         404         463
investments
Purchase of short-term           (47     )   (195    )   (244    )   (374    )
investments
Acquisition-related restricted   —           —           25          —
cash
Acquisition of subsidiaries,     —          (19     )   (10     )   (676    )
net of cash acquired
Net cash provided by (used in)   77         (114    )   119        (689    )
investing activities
FINANCING ACTIVITIES
Payment of debt issuance costs   —           —           (2      )   —
Proceeds from borrowings on
convertible senior notes, net    —           —           —           617
of issuance costs
Proceeds from issuance of        —           —           —           65
warrants
Purchase of convertible note     —           —           —           (107    )
hedge
Proceeds from issuance of        1           4           19          39
common stock
Excess tax benefit from          —           1           —           4
stock-based compensation
Repurchase and retirement of     (157    )   (41     )   (336    )   (230    )
common stock
Acquisition-related contingent   (2      )   —          (28     )   —       
consideration payment
Net cash provided by (used in)   (158    )   (36     )   (347    )   388     
financing activities
Effect of foreign exchange on    5           (13     )   2           (26     )
cash and cash equivalents
Increase (decrease) in cash      287        312        (135    )   (337    )
and cash equivalents
Beginning cash and cash          871        930        1,293      1,579   
equivalents
Ending cash and cash             $ 1,158    $ 1,242    $ 1,158    $ 1,242 
equivalents


ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data and headcount)

                     Q3         Q4         Q1         Q2         Q3         YOY %
                      FY12        FY12        FY13        FY13        FY13        Change
QUARTERLY
RECONCILIATION OF
RESULTS
Net Revenue
GAAP net revenue      $ 1,061     $ 1,368     $ 955       $ 711       $ 922       (13 %)
Change in deferred
net revenue           590        (391    )   (464    )   369        260     
(packaged goods and
digital content)
Non-GAAP net          $ 1,651    $ 977      $ 491      $ 1,080    $ 1,182    (28 %)
revenue
Gross Profit
GAAP gross profit     $ 509       $ 994       $ 750       $ 266       $ 493       (3  %)
Acquisition-related   14          27          15          14          23
expenses
Change in deferred
net revenue           590         (391    )   (464    )   369         260
(packaged goods and
digital content)
Stock-based           —          1          1          —          —       
compensation
Non-GAAP gross        $ 1,113    $ 631      $ 302      $ 649      $ 776      (30 %)
profit
GAAP gross profit %
(as a % of GAAP net   48%         73%         79%         37%         53%
revenue)
Non-GAAP gross
profit % (as a % of   67%         65%         62%         60%         66%
non-GAAP net
revenue)
Operating Income
(Loss)
GAAP operating        $ (183  )   $ 365       $ 215       $ (364  )   $ (39   )   79  %
income (loss)
Acquisition-related   14          36          2           21          (15     )
expenses
Certain
non-recurring         —           27          —           —           —
litigation expenses
Change in deferred
net revenue           590         (391    )   (464    )   369         260
(packaged goods and
digital content)
Restructuring and     —           (1      )   27          (2      )   2
other
Stock-based           48         41         39         44         39      
compensation
Non-GAAP operating    $ 469      $ 77       $ (181  )   $ 68       $ 247      (47 %)
income (loss)
GAAP operating
income (loss) % (as   (17%)       27%         23%         (51%)       (4%)
a % of GAAP net
revenue)
Non-GAAP operating
income (loss) % (as   28%         8%          (37%)       6%          21%
a % of non-GAAP net
revenue)
Net Income (Loss)
GAAP net income       $ (205  )   $ 400       $ 201       $ (381  )   $ (45   )   78  %
(loss)
Acquisition-related   14          36          2           21          (15     )
expenses
Amortization of       5           5           5           5           5
debt discount
Certain
non-recurring         —           27          —           —           —
litigation expenses
Change in deferred
net revenue           590         (391    )   (464    )   369         260
(packaged goods and
digital content)
Gain on strategic     —           —           —           —           (14     )
investments
Restructuring and     —           (1      )   27          (2      )   2
other
Stock-based           48          41          39          44          39
compensation
Income tax            (118    )   (61     )   60         (7      )   (56     )
adjustments
Non-GAAP net income   $ 334      $ 56       $ (130  )   $ 49       $ 176      (47 %)
(loss)
GAAP net income
(loss) % (as a % of   (19%)       29%         21%         (54%)       (5%)
GAAP net revenue)
Non-GAAP net income
(loss) % (as a % of   20%         6%          (26%)       5%          15%
non-GAAP net
revenue)
Diluted Earnings
(Loss) Per Share
GAAP earnings         $ (0.62 )   $ 1.20      $ 0.63      $ (1.21 )   $ (0.15 )   76  %
(loss) per share
Non-GAAP earnings     $ 0.99      $ 0.17      $ (0.41 )   $ 0.15      $ 0.57      (42 %)
(loss) per share
                                                                                  
Number of diluted
shares used in
computation
GAAP                  332         332         320         316         304
Non-GAAP              338         332         317         318         308


ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data and headcount)

                      Q3       Q4       Q1      Q2       Q3       YOY %
                       FY12      FY12      FY13     FY13      FY13      Change
QUARTERLY NET
REVENUE
PRESENTATIONS - GAAP
AND NON-GAAP
                                                                        
Geography Net
Revenue
North America          500       653       450      329       409       (18 %)
Europe                 505       627       435      332       464       (8  %)
Asia                   56       88       70      50       49       (13 %)
Total GAAP Net         1,061    1,368    955     711      922      (13 %)
Revenue
North America          310       (188  )   (265 )   179       80
Europe                 235       (187  )   (174 )   171       166
Asia                   45       (16   )   (25  )   19       14    
Change In Deferred
Net Revenue            590      (391  )   (464 )   369      260   
(Packaged Goods and
Digital Content)
North America          810       465       185      508       489       (40 %)
Europe                 740       440       261      503       630       (15 %)
Asia                   101      72       45      69       63       (38 %)
Total Non-GAAP Net     1,651    977      491     1,080    1,182    (28 %)
Revenue
North America          47%       48%       47%      46%       44%
Europe                 48%       46%       46%      47%       51%
Asia                   5%        6%        7%       7%        5%
Total GAAP Net         100%      100%      100%     100%      100%
Revenue %
North America          49%       48%       38%      47%       42%
Europe                 45%       45%       53%      47%       53%
Asia                   6%        7%        9%       6%        5%
Total Non-GAAP Net     100%      100%      100%     100%      100%
Revenue %
                                                                        
Net Revenue
Composition
Publishing and Other   738       926       592      365       568       (23 %)
Wireless,
Internet-derived,      274       419       342      324       321       17  %
and Advertising
(Digital)
Distribution           49       23       21      22       33       (33 %)
Total GAAP Net         1,061    1,368    955     711      922      (13 %)
Revenue
Publishing and Other   487       (397  )   (446 )   379       174
Wireless,
Internet-derived,      103      6        (18  )   (10   )   86    
and Advertising
(Digital)
Change In Deferred
Net Revenue            590      (391  )   (464 )   369      260   
(Packaged Goods and
Digital Content)
Publishing and Other   1,225     529       146      744       742       (39 %)
Wireless,
Internet-derived,      377       425       324      314       407       8   %
and Advertising
(Digital)
Distribution           49       23       21      22       33       (33 %)
Total Non-GAAP Net     1,651    977      491     1,080    1,182    (28 %)
Revenue
Publishing and Other   69%       68%       62%      51%       62%
Wireless,
Internet-derived,      26%       30%       36%      46%       35%
and Advertising
(Digital)
Distribution           5%        2%        2%       3%        3%
Total GAAP Net         100%      100%      100%     100%      100%
Revenue %
Publishing and Other   74%       54%       30%      69%       63%
Wireless,
Internet-derived,      23%       44%       66%      29%       34%
and Advertising
(Digital)
Distribution           3%        2%        4%       2%        3%
Total Non-GAAP Net     100%      100%      100%     100%      100%
Revenue %


ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data and headcount)

                      Q3       Q4       Q1      Q2       Q3       YOY %
                       FY12      FY12      FY13     FY13      FY13      Change
QUARTERLY NET
REVENUE
PRESENTATIONS - GAAP
AND NON-GAAP
Platform Net Revenue
Xbox 360               331       454       292      204       277       (16 %)
PLAYSTATION 3          314       432       267      150       289       (8  %)
Wii                    49        20        8        17        20        (59 %)
PlayStation 2          7        3        2       6        3        (57 %)
Total Consoles         701       909       569      377       589       (16 %)
Mobile                 70        87        69       75        86        23  %
PlayStation            14        6         10       14        15        7   %
Handhelds
Nintendo Handhelds     15       5        9       8        9        (40 %)
Total Mobile and       99        98        88       97        110       11  %
Handhelds
PC                     214       334       276      214       186       (13 %)
Other                  47       27       22      23       37       (21 %)
Total GAAP Net         1,061    1,368    955     711      922      (13 %)
Revenue
Xbox 360               174       (128  )   (186 )   144       72
PLAYSTATION 3          179       (210  )   (183 )   222       95
Wii                    3         (7    )   (5   )   —         —
PlayStation 2          —         —         (1   )   1         —
Mobile                 13        (3    )   9        13        13
PlayStation            (2    )   10        (4   )   7         11
Handhelds
Nintendo Handhelds     9         (5    )   (4   )   (2    )   13
PC                     214      (48   )   (90  )   (16   )   56    
Change in Deferred
Net Revenue            590      (391  )   (464 )   369      260   
(Packaged Goods and
Digital Content)
Xbox 360               505       326       106      348       349       (31 %)
PLAYSTATION 3          493       222       84       372       384       (22 %)
Wii                    52        13        3        17        20        (62 %)
PlayStation 2          7        3        1       7        3        (57 %)
Total Consoles         1,057     564       194      744       756       (28 %)
Mobile                 83        84        78       88        99        19  %
PlayStation            12        16        6        21        26        117 %
Handhelds
Nintendo Handhelds     24       —        5       6        22       (8  %)
Total Mobile and       119       100       89       115       147       24  %
Handhelds
PC                     428       286       186      198       242       (43 %)
Other                  47       27       22      23       37       (21 %)
Total Non-GAAP Net     1,651    977      491     1,080    1,182    (28 %)
Revenue
Xbox 360               31%       33%       31%      29%       30%
PLAYSTATION 3          29%       32%       28%      21%       32%
Wii                    5%        1%        1%       2%        2%
PlayStation 2          1%        —        —       1%        —     
Total Consoles         66%       66%       60%      53%       64%
Mobile                 7%        6%        7%       11%       9%
PlayStation            1%        1%        1%       2%        2%
Handhelds
Nintendo Handhelds     1%        —        1%       1%        1%
Total Mobile and       9%        7%        9%       14%       12%
Handhelds
PC                     20%       25%       29%      30%       20%
Other                  5%        2%        2%       3%        4%
Total GAAP Net         100%      100%      100%     100%      100%
Revenue %
Xbox 360               31%       34%       22%      32%       30%
PLAYSTATION 3          30%       23%       17%      34%       32%
Wii                    3%        1%        1%       2%        2%
PlayStation 2          —        —        —       1%        —     
Total Consoles         64%       58%       40%      69%       64%
Mobile                 5%        8%        16%      8%        8%
PlayStation            1%        2%        1%       2%        2%
Handhelds
Nintendo Handhelds     1%        —        1%       1%        2%
Total Mobile and       7%        10%       18%      11%       12%
Handhelds
PC                     26%       29%       38%      18%       21%
Other                  3%        3%        4%       2%        3%
Total Non-GAAP Net     100%      100%      100%     100%      100%
Revenue %


ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data and headcount)

                     Q3       Q4       Q1       Q2       Q3       YOY %
                      FY12      FY12      FY13      FY13      FY13      Change
CASH FLOW DATA
Operating cash flow   475       287       (244  )   (28   )   363       (24 %)
Operating cash flow   243       277       307       490       378       56  %
- TTM
Capital               44        44        31        25        25        (43 %)
expenditures
Capital               149       172       171       144       125       (16 %)
expenditures - TTM
BALANCE SHEET DATA
Cash and cash         1,242     1,293     919       871       1,158     (7  %)
equivalents
Short-term            406       437       444       351       275       (32 %)
investments
Marketable equity     143       119       76        93        59        (59 %)
securities
Receivables, net      526       366       111       643       382       (27 %)
Inventories           69        59        60        71        59        (14 %)
Deferred net
revenue (packaged
goods and digital
content)
End of the quarter    1,439     1,048     584       953       1,213
Less: Beginning of    849      1,439    1,048    584      953   
the quarter
Change in deferred
net revenue           590      (391  )   (464  )   369      260   
(packaged goods and
digital content)
STOCK-BASED
COMPENSATION
Cost of goods sold    —         1         1         —         —
Marketing and sales   7         8         7         8         7
General and           11        7         9         9         7
administrative
Research and          30       25       22       27       25    
development
Total Stock-Based     48       41       39       44       39    
Compensation
EMPLOYEES             9,043     9,158     9,225     9,224     9,370     4   %

Contact:

Electronic Arts Inc.
Rob Sison, 650-628-7787
Vice President, Investor Relations
rsison@ea.com
Jeff Brown, 650-628-7922
Senior Vice President, Corporate Communications
jbrown@ea.com
 
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