Electronic Arts ReportsQ3 FY13 Financial Results

Wed Jan 30, 2013 4:01pm EST

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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
REDWOOD CITY, Calif.--(Business Wire)--
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 SPORTSFIFA 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.

 (in millions of $, except per share amounts)                Quarter              Quarter            
                                                             Ended                Ended              
                                                             12/31/12             12/31/11           
                                                                                                     
 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 Revenue          742                  1,225        
 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:                                         
                                                                                           
 (in millions of $)                                    TTM              TTM                
                                                       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:                                                                  
                                                                                           
 (in millions)                                         Quarter          Quarter            
                                                       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 consideration             (45         )         (11         )      (65         )         8                
 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 (expense), net                 (8          )         (10         )      (17         )         (13         )    
 Loss before provision for (benefit from) income taxes    (33         )         (193        )      (191        )         (343        )    
 Provision for (benefit from) income taxes                12                    12                 34                    (19         )    
 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 content)    260                  590               165                  434             
 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, respectively    382                    366                
 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 content)        1,213                  1,048              
 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 consideration                                                 (45         )         (11         )      (65         )         8                
 Depreciation, amortization and accretion, net                                                66                    54                 178                   148              
 Net gains on investments and sale of property and equipment                                  (12         )         -                  (12         )         (12         )    
 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 goods and digital content)                                    260                   590                165                   434              
 Net cash provided by (used in) operating activities                                          363                   475                91                    (10         )    
 INVESTING ACTIVITIES                                                                                                                                                         
 Capital expenditures                                                                         (25         )         (44         )      (81         )         (128        )    
 Proceeds from sale of property and equipment                                                 -                     -                  -                     26               
 Proceeds from sale of marketable equity securities                                           25                    -                  25                    -                
 Proceeds from maturities and sales of short-term investments                                 124                   144                404                   463              
 Purchase of short-term investments                                                           (47         )         (195        )      (244        )         (374        )    
 Acquisition-related restricted cash                                                          -                     -                  25                    -                
 Acquisition of subsidiaries, net of cash acquired                                            -                     (19         )      (10         )         (676        )    
 Net cash provided by (used in) investing activities                                          77                    (114        )      119                   (689        )    
 FINANCING ACTIVITIES                                                                                                                                                         
 Payment of debt issuance costs                                                               -                     -                  (2          )         -                
 Proceeds from borrowings on convertible senior notes, net of issuance costs                  -                     -                  -                     617              
 Proceeds from issuance of warrants                                                           -                     -                  -                     65               
 Purchase of convertible note hedge                                                           -                     -                  -                     (107        )    
 Proceeds from issuance of common stock                                                       1                     4                  19                    39               
 Excess tax benefit from stock-based compensation                                             -                     1                  -                     4                
 Repurchase and retirement of common stock                                                    (157        )         (41         )      (336        )         (230        )    
 Acquisition-related contingent consideration payment                                         (2          )         -                  (28         )         -                
 Net cash provided by (used in) financing activities                                          (158        )         (36         )      (347        )         388              
 Effect of foreign exchange on cash and cash equivalents                                      5                     (13         )      2                     (26         )    
 Increase (decrease) in cash and cash equivalents                                             287                   312                (135        )         (337        )    
 Beginning cash and cash equivalents                                                          871                   930                1,293                 1,579            
 Ending cash and cash equivalents                                                             $    1,158            $    1,242         $    1,158            $    1,242       


                                                                                                                                                                            
 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 (packaged goods and digital content)    590               (391        )     (464        )     369              260                          
 Non-GAAP net revenue                                                   $    1,651        $    977          $    491          $   1,080        $   1,182        (28   %)    
 Gross Profit                                                                                                                                                               
 GAAP gross profit                                                      $    509          $    994          $    750          $   266          $   493          (3    %)    
 Acquisition-related expenses                                           14                27                15                14               23                           
 Change in deferred net revenue (packaged goods and digital content)    590               (391        )     (464        )     369              260                          
 Stock-based compensation                                               -                 1                 1                 -                -                            
 Non-GAAP gross profit                                                  $    1,113        $    631          $    302          $   649          $   776          (30   %)    
 GAAP gross profit % (as a % of GAAP net revenue)                       48%               73%               79%               37%              53%                          
 Non-GAAP gross profit % (as a % of non-GAAP net revenue)               67%               65%               62%               60%              66%                          
 Operating Income (Loss)                                                                                                                                                    
 GAAP operating income (loss)                                           $    (183   )     $    365          $    215          $   (364   )     $   (39    )     79    %     
 Acquisition-related expenses                                           14                36                2                 21               (15        )                 
 Certain non-recurring litigation expenses                              -                 27                -                 -                -                            
 Change in deferred net revenue (packaged goods and digital content)    590               (391        )     (464        )     369              260                          
 Restructuring and other                                                -                 (1          )     27                (2         )     2                            
 Stock-based compensation                                               48                41                39                44               39                           
 Non-GAAP operating income (loss)                                       $    469          $    77           $    (181   )     $   68           $   247          (47   %)    
 GAAP operating income (loss) % (as a % of GAAP net revenue)            (17%)             27%               23%               (51%)            (4%)                         
 Non-GAAP operating income (loss) % (as a % of non-GAAP net revenue)    28%               8%                (37%)             6%               21%                          
 Net Income (Loss)                                                                                                                                                          
 GAAP net income (loss)                                                 $    (205   )     $    400          $    201          $   (381   )     $   (45    )     78    %     
 Acquisition-related expenses                                           14                36                2                 21               (15        )                 
 Amortization of debt discount                                          5                 5                 5                 5                5                            
 Certain non-recurring litigation expenses                              -                 27                -                 -                -                            
 Change in deferred net revenue (packaged goods and digital content)    590               (391        )     (464        )     369              260                          
 Gain on strategic investments                                          -                 -                 -                 -                (14        )                 
 Restructuring and other                                                -                 (1          )     27                (2         )     2                            
 Stock-based compensation                                               48                41                39                44               39                           
 Income tax adjustments                                                 (118        )     (61         )     60                (7         )     (56        )                 
 Non-GAAP net income (loss)                                             $    334          $    56           $    (130   )     $   49           $   176          (47   %)    
 GAAP net income (loss) % (as a % of GAAP net revenue)                  (19%)             29%               21%               (54%)            (5%)                         
 Non-GAAP net income (loss) % (as a % of non-GAAP net revenue)          20%               6%                (26%)             5%               15%                          
 Diluted Earnings (Loss) Per Share                                                                                                                                          
 GAAP earnings (loss) per share                                         $    (0.62  )     $    1.20         $    0.63         $   (1.21  )     $   (0.15  )     76    %     
 Non-GAAP earnings (loss) per share                                     $    0.99         $    0.17         $    (0.41  )     $   0.15         $   0.57         (42   %)    
                                                                                                                                                                            
 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 Revenue                                                 1,061         1,368         955          711           922           (13   %)    
 North America                                                          310           (188   )      (265  )      179           80                        
 Europe                                                                 235           (187   )      (174  )      171           166                       
 Asia                                                                   45            (16    )      (25   )      19            14                        
 Change In Deferred Net Revenue (Packaged Goods and Digital Content)    590           (391   )      (464  )      369           260                       
 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 Revenue                                             1,651         977           491          1,080         1,182         (28   %)    
 North America                                                          47%           48%           47%          46%           44%                       
 Europe                                                                 48%           46%           46%          47%           51%                       
 Asia                                                                   5%            6%            7%           7%            5%                        
 Total GAAP Net Revenue %                                               100%          100%          100%         100%          100%                      
 North America                                                          49%           48%           38%          47%           42%                       
 Europe                                                                 45%           45%           53%          47%           53%                       
 Asia                                                                   6%            7%            9%           6%            5%                        
 Total Non-GAAP Net Revenue %                                           100%          100%          100%         100%          100%                      
                                                                                                                                                         
 Net Revenue Composition                                                                                                                                 
 Publishing and Other                                                   738           926           592          365           568           (23   %)    
 Wireless, Internet-derived, and Advertising (Digital)                  274           419           342          324           321           17    %     
 Distribution                                                           49            23            21           22            33            (33   %)    
 Total GAAP Net Revenue                                                 1,061         1,368         955          711           922           (13   %)    
 Publishing and Other                                                   487           (397   )      (446  )      379           174                       
 Wireless, Internet-derived, and Advertising (Digital)                  103           6             (18   )      (10    )      86                        
 Change In Deferred Net Revenue (Packaged Goods and Digital Content)    590           (391   )      (464  )      369           260                       
 Publishing and Other                                                   1,225         529           146          744           742           (39   %)    
 Wireless, Internet-derived, and Advertising (Digital)                  377           425           324          314           407           8     %     
 Distribution                                                           49            23            21           22            33            (33   %)    
 Total Non-GAAP Net Revenue                                             1,651         977           491          1,080         1,182         (28   %)    
 Publishing and Other                                                   69%           68%           62%          51%           62%                       
 Wireless, Internet-derived, and Advertising (Digital)                  26%           30%           36%          46%           35%                       
 Distribution                                                           5%            2%            2%           3%            3%                        
 Total GAAP Net Revenue %                                               100%          100%          100%         100%          100%                      
 Publishing and Other                                                   74%           54%           30%          69%           63%                       
 Wireless, Internet-derived, and Advertising (Digital)                  23%           44%           66%          29%           34%                       
 Distribution                                                           3%            2%            4%           2%            3%                        
 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 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 Handhelds                                                  14            6             10           14            15            7     %     
 Nintendo Handhelds                                                     15            5             9            8             9             (40   %)    
 Total Mobile and Handhelds                                             99            98            88           97            110           11    %     
 PC                                                                     214           334           276          214           186           (13   %)    
 Other                                                                  47            27            22           23            37            (21   %)    
 Total GAAP Net Revenue                                                 1,061         1,368         955          711           922           (13   %)    
 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 Handhelds                                                  (2     )      10            (4    )      7             11                        
 Nintendo Handhelds                                                     9             (5     )      (4    )      (2     )      13                        
 PC                                                                     214           (48    )      (90   )      (16    )      56                        
 Change in Deferred Net Revenue (Packaged Goods and Digital Content)    590           (391   )      (464  )      369           260                       
 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 Handhelds                                                  12            16            6            21            26            117   %     
 Nintendo Handhelds                                                     24            -             5            6             22            (8    %)    
 Total Mobile and Handhelds                                             119           100           89           115           147           24    %     
 PC                                                                     428           286           186          198           242           (43   %)    
 Other                                                                  47            27            22           23            37            (21   %)    
 Total Non-GAAP Net Revenue                                             1,651         977           491          1,080         1,182         (28   %)    
 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 Handhelds                                                  1%            1%            1%           2%            2%                        
 Nintendo Handhelds                                                     1%            -             1%           1%            1%                        
 Total Mobile and Handhelds                                             9%            7%            9%           14%           12%                       
 PC                                                                     20%           25%           29%          30%           20%                       
 Other                                                                  5%            2%            2%           3%            4%                        
 Total GAAP Net Revenue %                                               100%          100%          100%         100%          100%                      
 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 Handhelds                                                  1%            2%            1%           2%            2%                        
 Nintendo Handhelds                                                     1%            -             1%           1%            2%                        
 Total Mobile and Handhelds                                             7%            10%           18%          11%           12%                       
 PC                                                                     26%           29%           38%          18%           21%                       
 Other                                                                  3%            3%            4%           2%            3%                        
 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 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 - TTM                                              243           277           307           490           378           56    %     
 Capital expenditures                                                   44            44            31            25            25            (43   %)    
 Capital expenditures - TTM                                             149           172           171           144           125           (16   %)    
 BALANCE SHEET DATA                                                                                                                                       
 Cash and cash equivalents                                              1,242         1,293         919           871           1,158         (7    %)    
 Short-term investments                                                 406           437           444           351           275           (32   %)    
 Marketable equity securities                                           143           119           76            93            59            (59   %)    
 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 the quarter                                         849           1,439         1,048         584           953                       
 Change in deferred net revenue (packaged goods and digital content)    590           (391   )      (464   )      369           260                       
 STOCK-BASED COMPENSATION                                                                                                                                 
 Cost of goods sold                                                     -             1             1             -             -                         
 Marketing and sales                                                    7             8             7             8             7                         
 General and administrative                                             11            7             9             9             7                         
 Research and development                                               30            25            22            27            25                        
 Total Stock-Based Compensation                                         48            41            39            44            39                        
 EMPLOYEES                                                              9,043         9,158         9,225         9,224         9,370         4     %     


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



Copyright Business Wire 2013

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