EA Reports Record Q2 Non-GAAP Net Revenue of $1.15 Billion

http://www.businesswire.com/news/home/20091109006515/en

Revenue Exceeds Street Expectations

#1 Publisher Across All Platforms - Console, PC, Mobile

Segment Share Increases Four Points Fiscal Year-to-Date

All-Time Record Digital Direct Revenues

Cost-Reduction Plan to Cut $100 Million in Operating Expenses

Acquires Social Gaming Leader Playfish
REDWOOD CITY, Calif.--(Business Wire)--
Electronic Arts Inc. (NASDAQ:ERTS) today announced preliminary financial results
for its second quarter ended September 30, 2009.

Fiscal Second Quarter Results (comparisons are to the quarter ended September
30, 2008)

GAAP net revenue for the quarter, which includes the impact of deferred net
revenue adjustments, was $788 million as compared with $894 million for the
prior year. During the quarter, EA had a net revenue deferral of $359 million
related to certain online-enabled packaged goods and digital content as compared
with $232 million in the second quarter of the prior year.

Non-GAAP net revenue for the quarter was a record $1.147 billion, up 2 percent
as compared with $1.126 billion for the prior year. Revenues were above street
expectations. Sales were driven by the launches of FIFA 10, Madden NFL 10, The
Beatles: Rock Band, Need for Speed SHIFT and NCAA Football 10.

GAAP net loss for the quarter, including the impact of deferred net revenue, was
$391 million as compared with a net loss of $310 million for the prior year.
GAAP diluted loss per share was $1.21 as compared with GAAP diluted loss per
share of $0.97 for the prior year.

Non-GAAP net income was $19 million as compared with a non-GAAP net loss of $20
million a year ago. Non-GAAP diluted earnings per share was $0.06 as compared
with a non-GAAP diluted loss per share of $0.06 for the prior year.

"EA is performing well, with quality, sales and segment share up so far this
year," said John Riccitiello, Chief Executive Officer. "We are making tough
calls to cut cost in targeted areas and investing more in our biggest games and
digital businesses."

"We met our second quarter expectations and delivered a record quarter for
revenue," said Eric Brown, Chief Financial Officer. "Today we are announcing a
significant cut in our operating expenses and the acquisition of a leader in
social games, Playfish."

Acquisition of Playfish

EA has announced that it has acquired Playfish Limited, a leading social games
company, for approximately $275 million in cash and approximately $25 million in
equity retention arrangements. In addition, the sellers are entitled to up to an
additional $100 million in consideration upon the achievement of certain
performance milestones. The acquisition accelerates EA`s growth in social
entertainment and strengthens its focus on the transition to digital and social
gaming.

Playfish will operate within EA Interactive, a division of EA focused on the web
and wireless space. Playfish`s industry-leading talent and critically acclaimed
games join EA to capture the exciting opportunities for social gaming and
networking across a mass-market audience.

Cost Reduction Plan

EA has announced a plan to narrow its product portfolio to provide greater focus
on titles with higher margin opportunities.

This action will result in the closure of several facilities and a headcount
reduction of approximately 1,500 positions, of which 1,300 are included in a
restructuring plan. The majority of these actions will be completed by March 31,
2010. This plan will result in annual cost savings of at least $100 million and
restructuring charges of $130 to $150 million.

EA remains committed to delivering high quality games for consumers and leading
the industry in the growing digital direct gaming sector.

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

* EA was the #1 publisher in North America and Europe fiscal year to date, with
21% segment share - up four points. EA had four of the top-ten games in both
North America and Europe.
* Eight EA titles launched this quarter with a Metacritic rating of 80 or above,
including: NHL 10, The Beatles: Rock Band, FIFA 10, Battlefield 1943, Madden NFL
10, NCAA Football 10, Dead Space Extraction, and Need for Speed SHIFT. Calendar
year-to-date, EA has 17 titles rated at 80 or above.
* FIFA 10, with a Metacritic rating of 91 on the Xbox 360 and PlayStation3, was
EA`s strongest European title launch in its history - selling 4.5 million copies
in week one.
* Madden NFL 10 was the #1 title in North America for the quarter, according to
NPD.
* Need for Speed SHIFT, with a 22 point increase in quality as measured by
Metacritic, sold over 2.5 million copies in the quarter.
* Digital non-GAAP net revenue was an all time quarter high at $138 million - up
23 percent year-over-year.
* EA recently signed five new advertising partners - Johnson & Johnson, Doritos,
Apple, Pfizer and Renault -- for $7 million in incremental advertising bookings.

* EA Mobile, the world`s leading publisher of games for phones, delivered $50
million of non-GAAP net revenue in the quarter - up nine percent year-over-year.
EA is the #1 publisher of games on the iPhone with seven of the top 10 games;
and #1 on Verizon with eight of the top 10 games.

Business Outlook

The following forward-looking statements, as well as those made above, reflect
expectations as of November 9, 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
the Playfish acquisition and 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 $3.6 and $3.9 billion.
* Non-GAAP net revenue is expected to be approximately $4.2 to $4.4 billion.
* GAAP diluted loss per share is expected to be between $1.20 and $2.05.
* Non-GAAP diluted earnings per share is expected to be between $0.70 and $1.00
and EA expects to be profitable in both Q3 and Q4.
* For purposes of calculating fiscal year 2010 GAAP loss per share, the Company
estimates a share count of 324 million and for non-GAAP EPS, the Company
estimates a share count of 326 million.
* Expected non-GAAP net income excludes the following items from expected GAAP
net income:

* $500 to $600 million for the impact of the change in deferred net revenue
(packaged goods and digital content);
* $170 to $175 million of estimated stock-based compensation;
* $55 million of amortization of intangible assets;
* $120 to $145 million of restructuring charges;
* $24 million of losses on strategic investments;
* $14 million loss on lease obligation; and
* ($120) to ($170) million in the difference between the Company`s GAAP and
non-GAAP tax expenses.

The above fiscal 2010 expectations do not reflect the financial impact of the
acquisition of Playfish Limited, which is expected to be roughly neutral to
non-GAAP expectations and increase GAAP loss per share by $0.15 to $0.25, due
primarily to acquisition-related tax expenses, deferred revenue adjustments,
additional stock-based compensation, and amortization of intangible assets.
These preliminary estimates are based on currently available information and are
subject to change.

Conference Call

Electronic Arts will host a conference call today at 2:00 pm PT (5:00 pm ET) to
review its results for the fiscal second quarter ended September 30, 2009 and
its outlook for the future. During the course of the call, Electronic Arts may
also disclose material developments affecting its business and/or financial
performance. Listeners may access the conference call live through the following
dial-in number: (888) 455-2238, access code 220497, or via webcast:
http://investor.ea.com.

A dial-in replay of the conference call will be provided until November 16, 2009
at (719) 457-0820, access code 220497. A webcast archive of the conference call
will be available for one year at http://investor.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:

* Acquired in-process technology
* Amortization of intangibles
* Certain abandoned acquisition-related costs
* Change in deferred net revenue (packaged goods and digital content)
* Goodwill impairment
* Loss on lease obligation and facilities acquisition
* Loss on licensed intellectual property commitment
* Losses (gains) 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:

Amortization of Intangibles. 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) without taking into consideration
any allocations made for accounting purposes. Because the purchase price for an
acquisition necessarily reflects the accounting value assigned to intangible
assets (including acquired in-process technology and goodwill), when analyzing
the operating performance of an acquisition in subsequent periods, the Company`s
management excludes the GAAP impact of acquired intangible assets to its
financial results. Electronic Arts believes that such an approach is useful in
understanding the long-term return provided by an acquisition and that investors
benefit from a supplemental non-GAAP financial measure that excludes the
accounting expense associated with acquired intangible assets.

In addition, in accordance with GAAP, Electronic Arts generally recognizes
expenses for internally-developed intangible assets as they are incurred,
notwithstanding the potential future benefit such assets may provide. Unlike
internally-developed intangible assets, however, and also in accordance with
GAAP, the Company generally capitalizes the cost of acquired intangible assets
and recognizes that cost as an expense over the useful lives of the assets
acquired (other than goodwill, which is not amortized, and acquired in-process
technology, which is expensed immediately, as required under GAAP). As a result
of their GAAP treatment, there is an inherent lack of comparability between the
financial performance of internally-developed intangible assets and acquired
intangible assets. Accordingly, Electronic Arts believes it is useful to
provide, as a supplement to its GAAP operating results, a non-GAAP financial
measure that excludes the amortization of acquired intangibles.

Certain Abandoned Acquisition-Related Costs. Electronic Arts incurred
significant legal, banking and other consulting fees related to the Company`s
proposed acquisition and related cash tender offer for all of the outstanding
shares of Take-Two Interactive Software, Inc.On August 18, 2008, the Company
allowed the tender offer to expire without purchasing any shares of Take-Two
and, on September 14, 2008, the Company announced that it had terminated
discussions with Take-Two. The costs incurred in connection with the abandoned
proposal and tender offer were outside the ordinary course of business and were
excluded by the Company when assessing the performance of its management team.
As such, the Company believes it is appropriate to exclude such expenses from
its non-GAAP financial measures.

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 as a multiple element arrangement
and recognize the revenue on a straight-line basis over the estimated life of
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.

Goodwill Impairment. Adverse economic conditions, including the decline in the
Company`s market capitalization and expected financial performance, indicated
that a potential impairment of goodwill existed during the three months ended
December 31, 2008. As a result, the Company performed goodwill impairment tests
for its reporting units and determined that goodwill related to its mobile
reporting unit was impaired. As the Company excludes the GAAP impact of acquired
intangible assets (such as goodwill) from its financial results when analyzing
the operating performance of an acquisition in subsequent periods, Electronic
Arts believes it is appropriate to exclude goodwill impairment charges from its
non-GAAP financial measures.

Loss on Lease Obligation and Facilities Acquisition. During the second quarter
of fiscal 2010, Electronic Arts completed the acquisition of its headquarters
facilities in Redwood City, California pursuant to the terms of the loan
financing agreements underlying the build-to-suit leases for the facilities.
These leases 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. In addition,
Electronic Arts recorded a tax benefit of approximately $31 million, consisting
of approximately $6 million related to the loss on our lease obligation, and a
$25 million reduction in our valuation allowance due to the acquisition. As a
result of this lease obligation and facility acquisition, on an after-tax basis,
Electronic Arts incurred a positive net income effect of $17 million. Electronic
Arts` management excluded the effect of this transaction when evaluating the
Company`s operating performance and when assessing the performance of its
management team during this period and will continue to do so, when it plans,
forecasts and analyzes future periods.

Loss on Licensed Intellectual Property Commitment. During the fourth quarter of
fiscal 2009, Electronic Arts amended an agreement with a content licensor. This
amendment resulted in the termination of our rights to use the licensor`s
intellectual property in certain products and we incurred a related estimated
loss of $38 million. This significant non-recurring loss is excluded from our
Non-GAAP financial measures in order to provide comparability between periods.
Further, the Company excluded this loss 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.

Losses (Gains) 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.

Video game platforms have historically had a life cycle of four to six years,
which causes the video game software market to be cyclical. The Company`s
management analyzes its business and operating performance in the context of
these business cycles, comparing Electronic Arts` performance at similar stages
of different cycles. For comparability purposes, Electronic Arts believes it is
useful to provide a non-GAAP financial measure that excludes stock-based
compensation in order to better understand the long-term performance of its core
business.

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 estimates relating to
EA`s cost reduction plan and fiscal year 2010 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 during fiscal year 2010; the general health of the U.S.
and global economy and the related impact on discretionary consumer spending;
fluctuations in foreign exchange rates; consumer spending trends; 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 consumer demand
for, and the availability of an adequate supply of console hardware units
(including the Xbox 360 video game and entertainment system, the PLAYSTATION3
computer entertainment system and the Wii); the Company`s ability to predict
consumer preferences among competing hardware platforms; the financial impact of
the Playfish acquisition and potential future acquisitions by EA; the Company`s
ability to realize the anticipated benefits of acquisitions; the seasonal and
cyclical nature of the interactive game segment; the Company`s ability to
attract and retain key personnel; changes in the Company`s effective tax rates;
the performance of strategic investments; the impact of certain accounting
requirements, such as the Company`s ability to estimate and recognize goodwill
impairment charges and make tax valuation allowances; adoption of new accounting
regulations and standards; potential regulation of the Company`s products in key
territories; developments in the law regarding protection of the Company`s
products; the Company`s ability to secure licenses to valuable entertainment
properties on favorable terms; the stability of the Company`s key customers, and
other factors described in the Company`s Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2009. These forward-looking statements speak only
as of November 9, 2009. 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 September 30, 2009. 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 September 30, 2009.

About Electronic Arts

Electronic Arts Inc. (EA), headquartered in Redwood City, California, is a
leading global interactive entertainment software company. Founded in 1982, the
Company develops, publishes, and distributes interactive software worldwide for
video game systems, personal computers, wireless devices and the Internet.
Electronic Arts markets its products under four brand names: EA SPORTSTM, EATM,
EA MobileTM and POGOTM. In fiscal 2009, EA posted GAAP net revenue of $4.2
billion and had 31 titles that sold more than one million copies. EA's homepage
and online game site is www.ea.com. More information about EA's products and
full text of press releases can be found on the Internet at http://info.ea.com.

EA, EA SPORTS, EA Mobile, POGO, Need for Speed, and Dead Space are trademarks or
registered trademarks of Electronic Arts Inc. in the U.S. and/or other
countries.Battlefield 1943 is a trademark or registered trademark of EA Digital
Illusions CE AB in the U.S. and/or other countries. The Beatles is a trademark
of Apple Corps Ltd. Rock Band is a trademark of Harmonix Music Systems, Inc., an
MTV Networks company. John Madden, NFL, NCAA, FIFA and NHL are trademarks or
registered trademarks of their respective owners and used with permission. Xbox
and Xbox 360 are trademarks of the Microsoft group of companies and are used
under license from Microsoft. "PlayStation" is a registered trademark of Sony
Computer Entertainment Inc. 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 Six Months Ended
September 30, September 30,
2009 2008 2009 2008

Net revenue $ 788 $ 894 $ 1,432 $ 1,698
Cost of goods sold 593 557 914 853
Gross profit 195 337 518 845

Operating expenses:
Marketing and sales 187 197 351 325
General and administrative 91 92 157 176
Research and development 316 372 628 729
Acquired in-process technology - - - 2
Amortization of intangibles 12 16 24 30
Certain abandoned acquisition-related costs - 21 - 21
Restructuring charges 6 3 20 23
Total operating expenses 612 701 1,180 1,306

Operating loss (417 ) (364 ) (662 ) (461 )

Losses on strategic investments (8 ) (34 ) (24 ) (40 )
Interest and other income, net 7 7 10 23

Loss before benefit from income taxes (418 ) (391 ) (676 ) (478 )

Benefit from income taxes (27 ) (81 ) (51 ) (73 )

Net loss $ (391 ) $ (310 ) $ (625 ) $ (405 )

Loss per share
Basic and diluted $ (1.21 ) $ (0.97 ) $ (1.93 ) $ (1.27 )

Number of shares used in computation
Basic and diluted 324 319 324 319

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 (loss) and non-GAAP diluted earnings (loss) per share.

Three Months Ended Six Months Ended
September 30, September 30,
2009 2008 2009 2008

Net loss $ (391 ) $ (310 ) $ (625 ) $ (405 )

Acquired in-process technology - - - 2
Amortization of intangibles 12 16 24 30
Certain abandoned acquisition-related costs - 21 - 21
Change in deferred net revenue (packaged goods and digital content) 359 232 531 37
COGS amortization of intangibles 3 4 6 7
Loss on lease obligation (G&A) 14 - 14 -
Loss on licensed intellectual property commitment (COGS) (2 ) - (2 ) -
Losses on strategic investments 8 34 24 40
Restructuring charges 6 3 20 23
Stock-based compensation 44 53 77 103
Income tax adjustments (34 ) (73 ) (56 ) (13 )

Non-GAAP net income (loss) $ 19 $ (20 ) $ 13 $ (155 )

Non-GAAP diluted earnings (loss) per share $ 0.06 $ (0.06 ) $ 0.04 $ (0.49 )

Number of shares used in computation
Basic 324 319 324 319
Diluted 325 319 325 319

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in millions)

September 30, March 31,
2009 2009 (a)

ASSETS

Current assets:
Cash and cash equivalents $ 1,042 $ 1,621
Short-term investments 583 534
Marketable equity securities 387 365
Receivables, net of allowances of $194 and $217, respectively 646 116
Inventories 250 217
Deferred income taxes, net 74 51
Other current assets 245 216
Total current assets 3,227 3,120

Property and equipment, net 569 354
Goodwill 817 807
Acquisition-related intangibles, net 194 221
Deferred income taxes, net 71 61
Other assets 124 115

TOTAL ASSETS $ 5,002 $ 4,678

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 273 $ 152
Accrued and other current liabilities 848 723
Deferred net revenue (packaged goods and digital content) 792 261
Total current liabilities 1,913 1,136

Income tax obligations 316 268
Deferred income taxes, net 28 42
Other liabilities 89 98
Total liabilities 2,346 1,544

Common stock 3 3
Paid-in capital 2,181 2,142
Retained earnings 175 800
Accumulated other comprehensive income 297 189
Total stockholders' equity 2,656 3,134

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,002 $ 4,678

(a) Derived from audited consolidated financial statements.

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

Three Months Ended Six Months Ended
September 30, September 30,
2009 2008 2009 2008

OPERATING ACTIVITIES

Net loss $ (391 ) $ (310 ) $ (625 ) $ (405 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Acquired in-process technology - - - 2
Depreciation, amortization and accretion, net 46 54 94 104
Net losses on investments and sale of property and equipment 8 34 23 40
Non-cash restructuring charges - - 7 16
Stock-based compensation 44 53 77 103
Change in assets and liabilities:
Receivables, net (266 ) (291 ) (518 ) (253 )
Inventories (34 ) (107 ) (30 ) (163 )
Other assets 1 25 (34 ) 18
Accounts payable 115 137 123 104
Accrued and other liabilities 155 145 73 104
Deferred income taxes, net (31 ) (96 ) (43 ) (122 )
Deferred net revenue (packaged goods and digital content) 359 232 531 37
Net cash provided by (used in) operating activities 6 (124 ) (322 ) (415 )

INVESTING ACTIVITIES

Purchase of headquarters facilities (233 ) - (233 ) -
Capital expenditures (26 ) (32 ) (34 ) (63 )
Proceeds from maturities and sales of investments 191 375 359 510
Purchase of short-term investments (136 ) (155 ) (405 ) (313 )
Acquisition of subsidiaries, net of cash acquired - - (3 ) (42 )
Net cash provided by (used in) investing activities (204 ) 188 (316 ) 92

FINANCING ACTIVITIES

Proceeds from issuance of common stock 22 44 25 69
Excess tax benefit from stock-based compensation - 7 - 16
Net cash provided by financing activities 22 51 25 85

Effect of foreign exchange on cash and cash equivalents 13 (17 ) 34 (18 )
Increase (decrease) in cash and cash equivalents (163 ) 98 (579 ) (256 )
Beginning cash and cash equivalents 1,205 1,199 1,621 1,553
Ending cash and cash equivalents $ 1,042 $ 1,297 $ 1,042 $ 1,297

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

Q2 Q3 Q4 Q1 Q2 YOY %
FY09 FY09 FY09 FY10 FY10 Change

QUARTERLY RECONCILIATION OF RESULTS

Net Revenue
GAAP net revenue $ 894 $ 1,654 $ 860 $ 644 $ 788 (12 %)
Change in deferred net revenue (packaged goods and digital content) 232 88 (251 ) 172 359
Non-GAAP net revenue $ 1,126 $ 1,742 $ 609 $ 816 $ 1,147 2 %

Gross Profit
GAAP gross profit $ 337 $ 729 $ 511 $ 323 $ 195 (42 %)
Change in deferred net revenue (packaged goods and digital content) 232 88 (251 ) 172 359
COGS amortization of intangibles 4 4 3 3 3
Loss on licensed intellectual property commitment (COGS) - - 38 - (2 )
Stock-based compensation - - 1 1 -
Non-GAAP gross profit $ 573 $ 821 $ 302 $ 499 $ 555 (3 %)
GAAP gross profit % (as a % of GAAP net revenue) 38 % 44 % 59 % 50 % 25 %
Non-GAAP gross profit % (as a % of non-GAAP net revenue) 51 % 47 % 50 % 61 % 48 %

Operating Income (Loss)
GAAP operating loss $ (364 ) $ (304 ) $ (62 ) $ (245 ) $ (417 ) (15 %)
Acquired in-process technology - 1 - - -
Amortization of intangibles 16 15 12 12 12
Certain abandoned acquisition-related costs 21 - - - -
Change in deferred net revenue (packaged goods and digital content) 232 88 (251 ) 172 359
COGS amortization of intangibles 4 4 3 3 3
Goodwill impairment - 368 - - -
Loss on lease obligation (G&A) - - - - 14
Loss on licensed intellectual property commitment (COGS) - - 38 - (2 )
Restructuring charges 3 18 39 14 6
Stock-based compensation 53 44 56 33 44
Non-GAAP operating income (loss) $ (35 ) $ 234 $ (165 ) $ (11 ) $ 19 154 %
GAAP operating loss % (as a % of GAAP net revenue) (41 %) (18 %) (7 %) (38 %) (53 %)
Non-GAAP operating income (loss) % (as a % of non-GAAP net revenue) (3 %) 13 % (27 %) (1 %) 2 %

Net Income (Loss)
GAAP net loss $ (310 ) $ (641 ) $ (42 ) $ (234 ) $ (391 ) (26 %)
Acquired in-process technology - 1 - - -
Amortization of intangibles 16 15 12 12 12
Certain abandoned acquisition-related costs 21 - - - -
Change in deferred net revenue (packaged goods and digital content) 232 88 (251 ) 172 359
COGS amortization of intangibles 4 4 3 3 3
Goodwill impairment - 368 - - -
Loss on lease obligation (G&A) - - - - 14
Loss on licensed intellectual property commitment (COGS) - - 38 - (2 )
Losses (gains) on strategic investments 34 27 (5 ) 16 8
Restructuring charges 3 18 39 14 6
Stock-based compensation 53 44 56 33 44
Income tax adjustments (73 ) 255 30 (22 ) (34 )
Non-GAAP net income (loss) $ (20 ) $ 179 $ (120 ) $ (6 ) $ 19 195 %
GAAP net loss % (as a % of GAAP net revenue) (35 %) (39 %) (5 %) (36 %) (50 %)
Non-GAAP net income (loss) % (as a % of non-GAAP net revenue) (2 %) 10 % (20 %) (1 %) 2 %

Diluted Earnings (Loss) Per Share
GAAP loss per share $ (0.97 ) $ (2.00 ) $ (0.13 ) $ (0.72 ) $ (1.21 ) (25 %)
Non-GAAP diluted earnings (loss) per share $ (0.06 ) $ 0.56 $ (0.37 ) $ (0.02 ) $ 0.06 200 %

Number of shares used in computation
Basic 319 321 322 323 324
Diluted 319 322 322 323 325

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

Q2 Q3 Q4 Q1 Q2 YOY %
FY09 FY09 FY09 FY10 FY10 Change

QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP

Geography Net Revenue
North America 555 957 471 343 479 (14 %)
Europe 301 623 336 258 268 (11 %)
Asia 38 74 53 43 41 8 %
Total GAAP Net Revenue 894 1,654 860 644 788 (12 %)
North America 191 (47 ) (105 ) 106 159
Europe 37 123 (133 ) 61 191
Asia 4 12 (13 ) 5 9
Change In Deferred Net Revenue (Packaged Goods and Digital Content) 232 88 (251 ) 172 359
North America 746 910 366 449 638 (14 %)
Europe 338 746 203 319 459 36 %
Asia 42 86 40 48 50 19 %
Total Non-GAAP Net Revenue 1,126 1,742 609 816 1,147 2 %

North America 62 % 58 % 55 % 53 % 61 %
Europe 34 % 38 % 39 % 40 % 34 %
Asia 4 % 4 % 6 % 7 % 5 %
Total GAAP Net Revenue % 100 % 100 % 100 % 100 % 100 %
North America 66 % 52 % 60 % 55 % 56 %
Europe 30 % 43 % 33 % 39 % 40 %
Asia 4 % 5 % 7 % 6 % 4 %
Total Non-GAAP Net Revenue % 100 % 100 % 100 % 100 % 100 %

Publisher Net Revenue (a)
Publishing 708 1,225 744 579 553 (22 %)
Distribution 186 429 116 65 235 26 %
Total GAAP Net Revenue 894 1,654 860 644 788 (12 %)
Publishing 232 88 (251 ) 172 359
Distribution - - - - -
Change In Deferred Net Revenue (Packaged Goods and Digital Content) 232 88 (251 ) 172 359
Publishing 940 1,313 493 751 912 (3 %)
Distribution 186 429 116 65 235 26 %
Total Non-GAAP Net Revenue 1,126 1,742 609 816 1,147 2 %

Publishing 79 % 74 % 87 % 90 % 70 %
Distribution 21 % 26 % 13 % 10 % 30 %
Total GAAP Net Revenue % 100 % 100 % 100 % 100 % 100 %
Publishing 84 % 75 % 81 % 92 % 80 %
Distribution 16 % 25 % 19 % 8 % 20 %
Total Non-GAAP Net Revenue % 100 % 100 % 100 % 100 % 100 %

Net Revenue Composition
Packaged Goods 770 1,480 705 495 636 (17 %)
Wireless, Internet-derived, and Advertising (Digital) 104 126 112 117 128 23 %
Licensing and Other 20 48 43 32 24 20 %
Total GAAP Net Revenue 894 1,654 860 644 788 (12 %)
Packaged Goods 224 97 (248 ) 165 349
Wireless, Internet-derived, and Advertising (Digital) 8 (9 ) (2 ) 7 10
Licensing and Other - - (1 ) - -
Change In Deferred Net Revenue (Packaged Goods and Digital Content) 232 88 (251 ) 172 359
Packaged Goods 994 1,577 457 660 985 (1 %)
Wireless, Internet-derived, and Advertising (Digital) 112 117 110 124 138 23 %
Licensing and Other 20 48 42 32 24 20 %
Total Non-GAAP Net Revenue 1,126 1,742 609 816 1,147 2 %

Packaged Goods 86 % 89 % 82 % 77 % 81 %
Wireless, Internet-derived, and Advertising (Digital) 12 % 8 % 13 % 18 % 16 %
Licensing and Other 2 % 3 % 5 % 5 % 3 %
Total GAAP Net Revenue % 100 % 100 % 100 % 100 % 100 %
Packaged Goods 88 % 90 % 75 % 81 % 86 %
Wireless, Internet-derived, and Advertising (Digital) 10 % 7 % 18 % 15 % 12 %
Licensing and Other 2 % 3 % 7 % 4 % 2 %
Total Non-GAAP Net Revenue % 100 % 100 % 100 % 100 % 100 %

(a) Publishing includes all net revenue other than Distribution.

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

Q2 Q3 Q4 Q1 Q2 YOY %
FY09 FY09 FY09 FY10 FY10 Change

QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP

Platform Net Revenue
Xbox 360 290 448 132 73 171 (41 %)
Wii 94 254 126 161 142 51 %
PLAYSTATION 3 120 297 197 121 142 18 %
PlayStation 2 77 179 53 27 40 (48 %)
Xbox 1 - - - - (100 %)
Total Consoles 582 1,178 508 382 495 (15 %)
Wireless 47 49 49 50 51 9 %
Nintendo DS 44 118 38 28 22 (50 %)
PSP 36 36 44 38 20 (44 %)
Total Mobile 127 203 131 116 93 (27 %)
PC 164 215 180 124 173 5 %
Other 21 58 41 22 27 29 %
Total GAAP Net Revenue 894 1,654 860 644 788 (12 %)
Xbox 360 - - 3 63 189
Wii 28 27 (32 ) 23 (2 )
PLAYSTATION 3 68 58 (113 ) (22 ) 180
PlayStation 2 22 (11 ) (20 ) (7 ) 14
Wireless (1 ) 1 (1 ) - (1 )
PSP (3 ) 34 (23 ) (16 ) 19
PC 117 (21 ) (65 ) 131 (40 )
Other 1 - - - -
Change in Deferred Net Revenue (Packaged Goods and Digital Content) 232 88 (251 ) 172 359
Xbox 360 290 448 135 136 360 24 %
PLAYSTATION 3 188 355 84 99 322 71 %
Wii 122 281 94 184 140 15 %
PlayStation 2 99 168 33 20 54 (45 %)
Xbox 1 - - - - (100 %)
Total Consoles 700 1,252 346 439 876 25 %
Wireless 46 50 48 50 50 9 %
PSP 33 70 21 22 39 18 %
Nintendo DS 44 118 38 28 22 (50 %)
Total Mobile 123 238 107 100 111 (10 %)
PC 281 194 115 255 133 (53 %)
Other 22 58 41 22 27 23 %
Total Non-GAAP Net Revenue 1,126 1,742 609 816 1,147 2 %

Xbox 360 32 % 27 % 15 % 11 % 22 %
Wii 11 % 15 % 15 % 25 % 18 %
PLAYSTATION 3 13 % 18 % 23 % 19 % 18 %
PlayStation 2 9 % 11 % 6 % 4 % 5 %
Total Consoles 65 % 71 % 59 % 59 % 63 %
Wireless 5 % 3 % 6 % 8 % 6 %
Nintendo DS 5 % 7 % 4 % 4 % 3 %
PSP 4 % 2 % 5 % 6 % 3 %
Total Mobile 14 % 12 % 15 % 18 % 12 %
PC 18 % 13 % 21 % 19 % 22 %
Other 3 % 4 % 5 % 4 % 3 %
Total GAAP Net Revenue % 100 % 100 % 100 % 100 % 100 %
Xbox 360 26 % 26 % 22 % 17 % 31 %
PLAYSTATION 3 16 % 20 % 14 % 12 % 28 %
Wii 11 % 16 % 16 % 23 % 12 %
PlayStation 2 9 % 10 % 5 % 2 % 5 %
Total Consoles 62 % 72 % 57 % 54 % 76 %
Wireless 4 % 3 % 8 % 6 % 5 %
PSP 3 % 4 % 3 % 3 % 3 %
Nintendo DS 4 % 7 % 6 % 3 % 2 %
Total Mobile 11 % 14 % 17 % 12 % 10 %
PC 25 % 11 % 19 % 31 % 12 %
Other 2 % 3 % 7 % 3 % 2 %
Total Non-GAAP Net Revenue % 100 % 100 % 100 % 100 % 100 %

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

Q2 Q3 Q4 Q1 Q2 YOY %
FY09 FY09 FY09 FY10 FY10 Change

CASH FLOW DATA

Operating cash flow (124 ) 212 215 (328 ) 6 105 %
Operating cash flow - TTM 219 82 12 (25 ) 105 (52 %)
Capital expenditures 32 27 25 8 26 (19 %)
Capital expenditures - TTM 110 112 115 92 86 (22 %)
Purchase of headquarters facilities - - - - 233 -

BALANCE SHEET DATA

Cash and cash equivalents 1,297 1,379 1,621 1,205 1,042 (20 %)
Short-term investments 528 580 534 634 583 10 %
Marketable equity securities 640 302 365 440 387 (40 %)
Receivables, net 547 794 116 375 646 18 %
Inventories 328 295 217 215 250 (24 %)
Deferred net revenue (packaged goods and digital content)
End of the quarter 424 512 261 433 792
Less: Beginning of the quarter 192 424 512 261 433
Change in deferred net revenue (packaged goods and digital content) 232 88 (251 ) 172 359

STOCK-BASED COMPENSATION

Cost of goods sold - - 1 1 -
Marketing and sales 5 5 5 3 5
General and administrative 13 11 13 5 10
Research and development 35 28 37 24 29
Total Stock-Based Compensation 53 44 56 33 44

EMPLOYEES 9,671 9,760 9,106 8,948 8,829 (9 %)

PLATFORM SKU RELEASES (Excludes Co-Publishing, Distribution and Wireless)

Xbox 360 7 8 6 4 8
PLAYSTATION 3 7 7 5 4 8
Wii 3 12 4 6 5
PlayStation 2 4 7 1 2 4
Xbox 1 - - - -
Total Consoles 22 34 16 16 25
PSP 3 3 1 2 5
Nintendo DS 6 9 7 2 4
Total Mobile 9 12 8 4 9
PC 3 10 6 3 4
Total SKUs 34 56 30 23 38

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Fact Sheet

PRODUCT RELEASES
Q2 FY10

Xbox Wire-
360 PS3 Wii PS2 less PSP NDS PC

Publishing

Battlefield 1943TM X X
BOGGLE X
Command & ConquerTM Red AlertTM 3: Commander's Challenge X X
Command & Conquer Red Alert Mobile X
Dead SpaceTM: Extraction X
FIFA 10 X X X X X X X
FIGHT NIGHT Round 4 X
G.I. JOETM The Rise of CobraTM X X X X X X X
Harry Potter and the Half-Blood Prince X
LITTLEST PET SHOP Online X
Madden NFL 10 X X X X X X
MySimsTM Agents X X
NCAA FOOTBALL 10 X X X X
Need for Speed Shift X X X X X
NHL 10 X X
SporeTM Hero Arena X X
Zombies & Me X

Distribution

Rock BandTM X
The BeatlesTM: Rock BandTM X X X

Electronic Arts
Mary Vegh, 650-628-3916
Manager, Investor Relations
mvegh@ea.com
Jeff Brown, 650-628-7922
Vice President, Corporate Communications
jbrown@ea.com

Copyright Business Wire 2009