Exhibit 99.1

 

		ELECTRONIC ARTS REPORTS Q3 FY12 FINANCIAL RESULTS

Q3 Non-GAAP Revenue and EPS Ahead of Expectations

Highest Operating Cash Flow in 31 Quarters

More Than $1 Billion in Non-GAAP Digital Revenue in Calendar Year 2011

Battlefield 3 and FIFA 12 Each Sells-Through Over 10 Million Units

Origin Generates $100 Million in Calendar Year 2011

Star Wars: The Old Republic Has More Than 1.7 Million Active Subscribers

REDWOOD CITY, CA – February 1, 2012 – Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its third fiscal quarter ended December 31, 2011.

“We are pleased to report a strong holiday quarter driven by Battlefield 3, FIFA12 and a strong showing by our digital games and services,” said Chief Executive Officer John Riccitiello. “Star Wars: The Old Republic is developing a committed community of players with more than 1.7 million active subscribers and growing.”

“We recorded our highest operating cash flow in 31 quarters and grew segment share in both Europe and North America,” said Eric Brown, Chief Financial Officer. “Third quarter non-GAAP digital revenue grew 79% year-over year, and we achieved our goal of generating over $1 billion in non-GAAP digital revenue on a trailing-twelve-month basis.”

Selected Operating Highlights and Metrics:

 

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Star Wars®: The Old Republic™ has generated 1.7 million active subscribers and sold through more than 2 million units in a little over one month.

 

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Battlefield 3™ and FIFA 12 each sold through more than 10 million units. Madden NFL 12 has sold through almost 5 million units life-to-date.

 

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EA was the number one publisher by segment share in Western markets for the calendar year, where EA segment share grew by 3% to 20% in Europe and by 1% to 17% in North America.

 

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PopCap – which joined EA in August has grown revenue by 30 percent on a trailing-twelve-month basis.

 

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EA’s Playfish social gaming network released Risk™: Factions in partnership with Hasbro.

 

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EA was the number one game publisher in the Apple App StoreSM in December. In December, EA’s first free-to-play mobile game, The Sims™: FreePlay, reached the number one position on the list of top-grossing iPad® Apps.

 

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EA’s Nucleus registration system now has a database of more than 168 million consumers.

 

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Origin™ – EA’s direct-to-consumer digital service has registered more than 9.3 million consumers and generated more than $100 million in non-GAAP revenue since launch. Origin has publishing agreements with Warner Brothers, THQ, CapCom and recently added 11 new publishing partners including Trion and Robot Entertainment.

 

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Non-GAAP digital revenue exceeded $1 billion in calendar year 2011 and continues to grow significantly with new subscriptions, micro-transactions and advertising.

 

 

Investors: Rob Sison, 650-628-7787		Media: Jeff Brown, 650-628-7922

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Q3 FY12 Financial Highlights:

Non-GAAP net revenue of $1,651 million exceeded our guidance of $1,550 million to $1,650 million. Non-GAAP diluted earnings per share of $0.99 exceeded our guidance of $0.85 to $0.95. Non-GAAP net revenue in Q3 fiscal 2012 was higher as compared to Q3 fiscal 2011 driven by digital growth and by the successful launches of Battlefield 3 and Star Wars: The Old Republic.

 

(in millions of $ except per share amounts)		Quarter Ended 12/31/11				Quarter Ended 12/31/10
Net Digital Revenue		$	274			$	195
Net Publishing Packaged Goods and Other Revenue			738				767
Net Distribution Packaged Goods Revenue			49				91
GAAP Total Net Revenue			1,061				1,053
Non-GAAP Net Digital Revenue		$	377			$	211
Non-GAAP Net Publishing Packaged Goods and Other Revenue			1,225				1,108
Non-GAAP Net Distribution Packaged Goods Revenue			49				91
Non-GAAP Total Net Revenue			1,651				1,410
GAAP Net Loss			(205	)			(322	)
Non-GAAP Net Income			334				196
GAAP Diluted Loss Per Share			(0.62	)			(0.97	)
Non-GAAP Diluted Earnings Per Share			0.99				0.59
Cash Flow from Operations			475				349

Trailing Twelve Month (TTM) Financial Highlights:

 

(in millions of $ except per share data)		TTM Ended 12/31/11				TTM Ended 12/31/10
GAAP Net Revenue		$	3,865			$	3,478
GAAP Net Loss			(173	)			(397	)
GAAP Diluted Loss Per Share			(0.54	)			(1.20	)
Non-GAAP Net Revenue			4,204				3,683
Non-GAAP Net Income			311				173
Non-GAAP Diluted Earnings Per Share			0.92				0.52
Cash Flow from Operations			243				320

 

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Q3 FY12 Digital Metrics:

 

(in millions)		Quarter Ended 12/31/11				Quarter Ended 12/31/10
GAAP Net Mobile Revenue		$	70			$	59
Non-GAAP Net Mobile Revenue		$	83			$	64
Monthly Active Users (MAU) in Social Games			52				39
Core Registered Users			160				98

Business Outlook as of February 1, 2012

The following forward-looking statements, as well as those made above, reflect expectations as of February 1, 2012. 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 2012 Expectations – Ending March 31, 2012

 

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GAAP net revenue is expected to be approximately $1.425 billion to $1.475 billion.

 

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Non-GAAP net revenue is expected to be approximately $925 million to $975 million.

 

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GAAP diluted earnings per share is expected to be approximately $1.45 to $1.59.

 

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Non-GAAP diluted earnings per share is expected to be approximately $0.10 to $0.20.

 

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For purposes of calculating fourth quarter fiscal year 2012 diluted earnings per share, the Company estimates a share count of 338 million.

 

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Expected non-GAAP net income excludes the following from expected GAAP net income:

 

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Non-GAAP net revenue is expected to be approximately $500 million lower than GAAP net revenue due to the impact of the change in deferred net revenue (packaged goods and digital content);

 

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Approximately $45 million of estimated stock-based compensation;

 

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Approximately $20 million of acquisition-related expenses;

 

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Approximately $2 million of restructuring charges;

 

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Approximately $5 million from the amortization of debt discount; and

 

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Non-GAAP tax expense is expected to be $28 million to $41 million higher than GAAP tax benefit.

 

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Fiscal Year 2012 Key Titles by Label and Platform

 

Q1		Games		Alice: Madness Returns(2)		Console				PC
				Portal 2(1)		Console				PC
				Shadows of the Damned(2)		Console
		Maxis		Darkspore						PC
Q2		Sports		FIFA 12		Console		Handheld/Mobile		PC
				Madden NFL 12		Console		Handheld/Mobile
				NCAA Football 12		Console
				NHL 12		Console
		Maxis		Harry Potter And The Deathly Hallows Part 2		Console		Handheld/Mobile		PC
Q3		Games		Battlefield 3		Console				PC
				Need for Speed The Run		Console		Handheld/Mobile		PC
		Sports		FIFA Manager 12						PC
		Maxis		The Sims 3 Pets		Console		Handheld/Mobile		PC
		EAi		Hasbro Family Game Night 4		Console
		BioWare		Star Wars: The Old Republic						PC
Q4		Games		Kingdoms of Amalur: Reckoning(2)		Console				PC
				Syndicate(2)		Console				PC
		BioWare		Mass Effect 3		Console		Handheld/Mobile		PC
		Sports		SSX		Console
				EA SPORTS Grand Slam Tennis 2		Console
				FIFA Street		Console
				Tiger Woods PGA TOUR 13		Console

Note: (1) Distribution Title, (2) Co-Published Title.

This Key Titles Schedule is current as of February 1, 2012 and is subject to change. Electronic Arts assumes no obligation to update this schedule.

 

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Conference Call and Supporting Documents

Electronic Arts will host a conference call on February 1, 2012 at 2:00 pm PT (5:00 pm ET) to review its results for the third quarter ended December 31, 2011 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 15, 2012 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:

 

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Acquisition-related expenses

 

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Amortization of debt discount

 

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Change in deferred net revenue (packaged goods and digital content)

 

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Loss on licensed intellectual property commitment

 

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Loss (gain) on strategic investments

 

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Restructuring charges

 

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Stock-based compensation

 

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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.

 

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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 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.

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 period of game play. 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.

 

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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.

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 estimates relating to EA’s fourth quarter guidance information under the heading “Business Outlook”, and the fiscal year 2012 key title slate, 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.

 

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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, 2011.

These forward-looking statements are current as of February 1, 2012. 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, 2011. 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, 2011.

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 100 million registered players and operates in 75 countries. In fiscal year 2011, EA posted GAAP net revenue of $3.6 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.

For additional information, please contact:

 

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

The Sims Social, Need for Speed, The Sims, Pogo, EA SPORTS, Alice: Madness Returns, SSX, Darkspore, Origin and Syndicate are trademarks of Electronic Arts Inc. Mass Effect is a trademark of EA International (Studio and Publishing) Ltd. Battlefield 3 is a trademarks of EA Digital Illusions CE AB. Playfish is a trademark of Electronic Arts Ltd. FAMILY GAME NIGHT is a trademark of Hasbro and used with permission. GRAND SLAM is a registered Trademark jointly owned by Tennis Australia, French Tennis Federation, All England Lawn Tennis Club (AELTC) and the United States Tennis Association. GRAND SLAM is used by EA with the permission of the GSTP. HARRY POTTER characters, names and related indicia are trademarks of and ^© Warner Bros. Entertainment Inc. STAR WARS and related properties are trademarks in the United States and/or other countries of Lucasfilm Ltd. and/or its affiliates. Shadows of the Damned is a trademark of GRASSHOPPER MANUFACTURE INC. RISK is a trademark of Hasbro and is used with permission. John Madden, NFL, NCAA, NHL, FIFA, Tiger Woods, PGA TOUR are trademarks of their

 

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respective owners and used with permission. App Store is at service mark of Apple Inc. iPad is a trademark of Apple Inc., registered in the U.S. and other countries. All other trademarks are the property of their respective owners.

 

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in millions, except per share data)

 

		Three Months Ended December 31,								Nine Months Ended December 31,
		2011				2010				2011				2010
Net revenue		$	1,061			$	1,053			$	2,775			$	2,499
Cost of goods sold			552				586				1,224				1,171
Gross profit			509				467				1,551				1,328
Operating expenses:
Marketing and sales			269				253				631				553
General and administrative			98				75				260				226
Research and development			325				273				928				825
Acquisition-related contingent consideration			(11	)			1				8				(25	)
Amortization of intangibles			11				14				37				44
Restructuring and other			—				154				17				162
Total operating expenses			692				770				1,881				1,785
Operating loss			(183	)			(303	)			(330	)			(457	)
Gain on strategic investments, net			—				—				—				23
Interest and other income (expense), net			(10	)			—				(13	)			6
Loss before provision for (benefit from) income taxes			(193	)			(303	)			(343	)			(428	)
Provision for (benefit from) income taxes			12				19				(19	)			(1	)
Net loss		$	(205	)		$	(322	)		$	(324	)		$	(427	)
Loss per share
Basic and Diluted		$	(0.62	)		$	(0.97	)		$	(0.98	)		$	(1.29	)
Number of shares used in computation
Basic and diluted			332				332				331				330

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 December 31,								Nine Months Ended December 31,
		2011				2010				2011				2010
Net loss		$	(205	)		$	(322	)		$	(324	)		$	(427	)
Acquisition-related expenses			14				18				70				28
Amortization of debt discount			5				—				9				—
Change in deferred net revenue (packaged goods and digital content)			590				357				434				334
Gain on strategic investments			—				—				—				(23	)
Loss on licensed intellectual property commitment (COGS)			—				—				—				(1	)
Restructuring and other			—				154				17				162
Stock-based compensation			48				46				129				136
Income tax adjustments			(118	)			(57	)			(107	)			(59	)
Non-GAAP net income		$	334			$	196			$	228			$	150
Non-GAAP earnings per share
Basic		$	1.01			$	0.59			$	0.69			$	0.45
Diluted		$	0.99			$	0.59			$	0.67			$	0.45
Number of shares used in Non-GAAP computation
Basic			332				332				331				330
Diluted			338				335				338				333

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in millions)

 

		December 31,				March 31,
		2011				2011 (a)
ASSETS
Current assets:
Cash and cash equivalents		$	1,242			$	1,579
Short-term investments			406				497
Marketable equity securities			143				161
Receivables, net of allowances of $295 and $304, respectively			526				335
Inventories			69				77
Deferred income taxes, net			92				56
Other current assets			328				327
Total current assets			2,806				3,032
Property and equipment, net			547				513
Goodwill			1,716				1,110
Acquisition-related intangibles, net			402				144
Deferred income taxes, net			44				49
Other assets			181				80
TOTAL ASSETS		$	5,696			$	4,928
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	112			$	228
Accrued and other current liabilities			846				768
Deferred net revenue (packaged goods and digital content)			1,439				1,005
Total current liabilities			2,397				2,001
0.75% convertible senior notes due 2016, net			534				—
Income tax obligations			183				192
Deferred income taxes, net			82				37
Other liabilities			235				134
Total liabilities			3,431				2,364
Common stock			3				3
Paid-in capital			2,549				2,495
Accumulated deficit			(477	)			(153	)
Accumulated other comprehensive income			190				219
Total stockholders’ equity			2,265				2,564
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	5,696			$	4,928

 

(a)	Derived from audited consolidated financial statements.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions)

 

		Three Months Ended December 31,								Nine Months Ended December 31,
		2011				2010				2011				2010
OPERATING ACTIVITIES
Net loss		$	(205	)		$	(322	)		$	(324	)		$	(427	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Acquisition-related contingent consideration			(11	)			1				8				(25	)
Depreciation, amortization and accretion, net			54				44				148				138
Net gains on investments and sale of property and equipment			—				—				(12	)			(24	)
Other non-cash restructuring charges			(3	)			2				(3	)			1
Stock-based compensation			48				48				129				138
Change in assets and liabilities:
Receivables, net			39				57				(176	)			(180	)
Inventories			22				51				11				(4	)
Other assets			(18	)			(23	)			(81	)			(9	)
Accounts payable			(93	)			(47	)			(150	)			59
Accrued and other liabilities			48				176				50				34
Deferred income taxes, net			4				5				(44	)			32
Deferred net revenue (packaged goods and digital content)			590				357				434				334
Net cash provided by (used in) operating activities			475				349				(10	)			67
INVESTING ACTIVITIES
Capital expenditures			(44	)			(15	)			(128	)			(38	)
Proceeds from sale of property			—				—				26				—
Proceeds from sale of marketable equity securities			—				—				—				132
Proceeds from maturities and sales of short-term investments			144				85				463				282
Purchase of short-term investments			(195	)			(105	)			(374	)			(367	)
Acquisition of subsidiaries, net of cash acquired			(19	)			(16	)			(676	)			(16	)
Net cash used in investing activities			(114	)			(51	)			(689	)			(7	)
FINANCING ACTIVITIES
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			4				—				39				17
Excess tax benefit from stock-based compensation			1				—				4				—
Repurchase and retirement of common stock			(41	)			—				(230	)			—
Net cash provided by (used in) financing activities			(36	)			—				388				17
Effect of foreign exchange on cash and cash equivalents			(13	)			(1	)			(26	)			3
Increase (decrease) in cash and cash equivalents			312				297				(337	)			80
Beginning cash and cash equivalents			930				1,056				1,579				1,273
Ending cash and cash equivalents		$	1,242			$	1,353			$	1,242			$	1,353

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in millions, except per share data, SKU count and headcount)

 

		Q3 FY11				Q4 FY11				Q1 FY12				Q2 FY12				Q3 FY12				YOY % Change
QUARTERLY RECONCILIATION OF RESULTS
Net Revenue
GAAP net revenue		$	1,053			$	1,090			$	999			$	715			$	1,061				1	%
Change in deferred net revenue (packaged goods and digital content)			357				(95	)			(475	)			319				590
Non-GAAP net revenue		$	1,410			$	995			$	524			$	1,034			$	1,651				17	%
Gross Profit
GAAP gross profit		$	467			$	762			$	759			$	283			$	509				9	%
Acquisition-related expenses			3				3				3				8				14
Change in deferred net revenue (packaged goods and digital content)			357				(95	)			(475	)			319				590
Stock-based compensation			1				—				1				—				—
Non-GAAP gross profit		$	828			$	670			$	288			$	610			$	1,113				34	%
GAAP gross profit % (as a % of GAAP net revenue)			44	%			70	%			76	%			40	%			48	%
Non-GAAP gross profit % (as a % of non-GAAP net revenue)			59	%			67	%			55	%			59	%			67	%
Operating Income (Loss)
GAAP operating income (loss)		$	(303	)		$	145			$	227			$	(374	)		$	(183	)			(40	%)
Acquisition-related expenses			18				24				18				38				14
Change in deferred net revenue (packaged goods and digital content)			357				(95	)			(475	)			319				590
Restructuring and other			154				(1	)			18				(1	)			—
Stock-based compensation			46				38				38				43				48
Non-GAAP operating income (loss)		$	272			$	111			$	(174	)		$	25			$	469				72	%
GAAP operating income (loss) % (as a % of GAAP net revenue)			(29	%)			13	%			23	%			(52	%)			(17	%)
Non-GAAP operating income (loss) % (as a % of non-GAAP net revenue)			19	%			11	%			(33	%)			2	%			28	%
Net Income (Loss)
GAAP net income (loss)		$	(322	)		$	151			$	221			$	(340	)		$	(205	)			(36	%)
Acquisition-related expenses			18				24				18				38				14
Amortization of debt discount			—				—				—				4				5
Change in deferred net revenue (packaged goods and digital content)			357				(95	)			(475	)			319				590
Restructuring and other			154				(1	)			18				(1	)			—
Stock-based compensation			46				38				38				43				48
Income tax adjustments			(57	)			(34	)			57				(46	)			(118	)
Non-GAAP net income (loss)		$	196			$	83			$	(123	)		$	17			$	334				70	%
GAAP net income (loss) % (as a % of GAAP net revenue)			(31	%)			14	%			22	%			(48	%)			(19	%)
Non-GAAP net income (loss) % (as a % of non-GAAP net revenue)			14	%			8	%			(23	%)			2	%			20	%
Diluted Earnings (Loss) Per Share
GAAP earnings (loss) per share		$	(0.97	)		$	0.45			$	0.66			$	(1.03	)		$	(0.62	)			(36	%)
Non-GAAP earnings (loss) per share		$	0.59			$	0.25			$	(0.37	)		$	0.05			$	0.99				68	%
Number of diluted shares used in computation
GAAP			332				336				337				331				332
Non-GAAP			335				336				331				337				338

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in millions, except per share data, SKU count and headcount)

 

		Q3 FY11				Q4 FY11				Q1 FY12				Q2 FY12				Q3 FY12				YOY % Change
QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP
Geography Net Revenue
North America			528				530				501				337				500				(5	%)
Europe			477				507				438				328				505				6	%
Asia			48				53				60				50				56				17	%
Total GAAP Net Revenue			1,053				1,090				999				715				1,061				1	%
North America			169				(56	)			(240	)			144				310
Europe			163				(45	)			(215	)			174				235
Asia			25				6				(20	)			1				45
Change In Deferred Net Revenue (Packaged Goods and Digital Content)			357				(95	)			(475	)			319				590
North America			697				474				261				481				810				16	%
Europe			640				462				223				502				740				16	%
Asia			73				59				40				51				101				38	%
Total Non-GAAP Net Revenue			1,410				995				524				1,034				1,651				17	%
North America			50	%			49	%			50	%			47	%			47	%
Europe			45	%			46	%			44	%			46	%			48	%
Asia			5	%			5	%			6	%			7	%			5	%
Total GAAP Net Revenue %			100	%			100	%			100	%			100	%			100	%
North America			50	%			48	%			50	%			46	%			49	%
Europe			45	%			46	%			42	%			49	%			45	%
Asia			5	%			6	%			8	%			5	%			6	%
Total Non-GAAP Net Revenue %			100	%			100	%			100	%			100	%			100	%
Net Revenue Composition
Publishing and Other			767				838				647				450				738				(4	%)
Wireless, Internet-derived, and Advertising (Digital)			195				211				232				234				274				41	%
Distribution			91				41				120				31				49				(46	%)
Total GAAP Net Revenue			1,053				1,090				999				715				1,061				1	%
Publishing and Other			341				(152	)			(452	)			337				487
Wireless, Internet-derived, and Advertising (Digital)			16				57				(23	)			(18	)			103
Distribution			—				—				—				—				—
Change In Deferred Net Revenue (Packaged Goods and Digital Content)			357				(95	)			(475	)			319				590
Publishing and Other			1,108				686				195				787				1,225				11	%
Wireless, Internet-derived, and Advertising (Digital)			211				268				209				216				377				79	%
Distribution			91				41				120				31				49				(46	%)
Total Non-GAAP Net Revenue			1,410				995				524				1,034				1,651				17	%
Publishing and Other			73	%			77	%			65	%			63	%			69	%
Wireless, Internet-derived, and Advertising (Digital)			18	%			19	%			23	%			33	%			26	%
Distribution			9	%			4	%			12	%			4	%			5	%
Total GAAP Net Revenue %			100	%			100	%			100	%			100	%			100	%
Publishing and Other			79	%			69	%			37	%			76	%			74	%
Wireless, Internet-derived, and Advertising (Digital)			15	%			27	%			40	%			21	%			23	%
Distribution			6	%			4	%			23	%			3	%			3	%
Total Non-GAAP Net Revenue %			100	%			100	%			100	%			100	%			100	%

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in millions, except per share data, SKU count and headcount)

 

		Q3 FY11				Q4 FY11				Q1 FY12				Q2 FY12				Q3 FY12				YOY % Change
QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON – GAAP
Platform Net Revenue
Xbox 360			285				336				345				213				331				16	%
PLAYSTATION 3			282				357				308				169				314				11	%
Wii			130				71				42				35				49				(62	%)
PlayStation 2			20				4				3				15				7				(65	%)
Total Consoles			717				768				698				432				701				(2	%)
Mobile			59				70				57				55				70				19	%
PSP			22				16				11				17				14				(36	%)
Nintendo DS			49				28				8				7				15				(69	%)
Total Mobile and Handhelds			130				114				76				79				99				(24	%)
PC			155				171				205				178				214				38	%
Other			51				37				20				26				47				(8	%)
Total GAAP Net Revenue			1,053				1,090				999				715				1,061				1	%
Xbox 360			126				(12	)			(193	)			140				174
PLAYSTATION 3			131				(75	)			(197	)			205				179
Wii			39				(44	)			(26	)			(1	)			3
PlayStation 2			(1	)			—				—				—				—
Mobile			5				(3	)			—				—				13
PSP			—				(6	)			(6	)			—				(2	)
Nintendo DS			8				(6	)			(2	)			—				9
PC			49				51				(51	)			(25	)			214
Change in Deferred Net Revenue (Packaged Goods and Digital Content)			357				(95	)			(475	)			319				590
Xbox 360			411				324				152				353				505				23	%
PLAYSTATION 3			413				282				111				374				493				19	%
Wii			169				27				16				34				52				(69	%)
PlayStation 2			19				4				3				15				7				(63	%)
Total Consoles			1,012				637				282				776				1,057				4	%
Mobile			64				67				57				55				83				30	%
PSP			22				10				5				17				12				(45	%)
Nintendo DS			57				22				6				7				24				(58	%)
Total Mobile and Handhelds			143				99				68				79				119				(17	%)
PC			204				222				154				153				428				110	%
Other			51				37				20				26				47				(8	%)
Total Non-GAAP Net Revenue			1,410				995				524				1,034				1,651				17	%
Xbox 360			27	%			31	%			35	%			30	%			31	%
PLAYSTATION 3			27	%			33	%			31	%			23	%			29	%
Wii			12	%			6	%			4	%			5	%			5	%
PlayStation 2			2	%			—				—				2	%			1	%
Total Consoles			68	%			70	%			70	%			60	%			66	%
Mobile			5	%			6	%			6	%			8	%			7	%
PSP			2	%			1	%			1	%			2	%			1	%
Nintendo DS			5	%			3	%			1	%			1	%			1	%
Total Mobile and Handhelds			12	%			10	%			8	%			11	%			9	%
PC			15	%			16	%			20	%			25	%			20	%
Other			5	%			4	%			2	%			4	%			5	%
Total GAAP Net Revenue %			100	%			100	%			100	%			100	%			100	%
Xbox 360			29	%			33	%			29	%			34	%			31	%
PLAYSTATION 3			30	%			28	%			21	%			36	%			30	%
Wii			12	%			3	%			3	%			4	%			3	%
PlayStation 2			1	%			—				1	%			1	%			—
Total Consoles			72	%			64	%			54	%			75	%			64	%
Mobile			4	%			7	%			11	%			5	%			5	%
PSP			2	%			1	%			1	%			2	%			1	%
Nintendo DS			4	%			2	%			1	%			1	%			1	%
Total Mobile and Handhelds			10	%			10	%			13	%			8	%			7	%
PC			14	%			22	%			29	%			15	%			26	%
Other			4	%			4	%			4	%			2	%			3	%
Total Non-GAAP Net Revenue %			100	%			100	%			100	%			100	%			100	%

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in millions, except per share data, SKU count and headcount)

 

		Q3				Q4				Q1				Q2				Q3				YOY %
		FY11				FY11				FY12				FY12				FY12				Change
CASH FLOW DATA
Operating cash flow			349				253				(274	)			(211	)			475				36	%
Operating cash flow – TTM			320				320				194				117				243				(24	%)
Capital expenditures			15				21				32				52				44				193	%
Capital expenditures – TTM			60				59				80				120				149				148	%
BALANCE SHEET DATA
Cash and cash equivalents			1,353				1,579				1,173				930				1,242				(8	%)
Short-term investments			511				497				503				355				406				(21	%)
Marketable equity securities			107				161				172				214				143				34	%
Receivables, net			390				335				30				562				526				35	%
Inventories			105				77				75				90				69				(34	%)
Deferred net revenue (packaged goods and digital content)
End of the quarter			1,100				1,005				530				849				1,439
Less: Beginning of the quarter			743				1,100				1,005				530				849
Change in deferred net revenue (packaged goods and digital content)			357				(95	)			(475	)			319				590
STOCK-BASED COMPENSATION
Cost of goods sold			1				—				1				—				—
Marketing and sales			6				5				5				6				7
General and administrative			10				8				9				9				11
Research and development			29				25				23				28				30
Total Stock-Based Compensation (excluding restructuring and other)			46				38				38				43				48
Restructuring and other			2				—				—				—				—
Total Stock-Based Compensation (including restructuring and other)			48				38				38				43				48
EMPLOYEES			7,742				7,645				7,973				8,687				9,043				17	%