EA Reports Third Quarter Fiscal Year 2010 Results

Electronic Arts Inc. (NASDAQ: ERTS) today announced preliminary financial results for its third quarter ended December 31, 2009.

Fiscal Third Quarter Results (comparisons are to the quarter ended December 31, 2008)

GAAP net revenue for the quarter, which includes the impact of deferred net revenue adjustments, was $1.243 billion as compared with $1.654 billion for the prior year. During the quarter, EA had a net revenue deferral of $103 million related to certain online-enabled packaged goods and digital content as compared with $88 million in the third quarter of the prior year. This $103 million deferral will be recognized in future quarters.

Non-GAAP net revenue for the quarter was $1.346 billion, down 23 percent as compared with $1.742 billion for the prior year. The decline is due to several factors, including fewer titles this holiday quarter versus the 2008 holiday quarter, and a weak overall packaged goods sector in Europe. Sales were driven by the launches of Dragon Age™: Origins, Left 4 Dead 2, and NBA Live, and catalog sales of FIFA 10, Madden NFL 10, and The Sims™ 3.

GAAP net loss for the quarter, including the impact of deferred net revenue, was $82 million as compared with a net loss of $641 million for the prior year. GAAP diluted loss per share was $0.25 as compared with GAAP diluted loss per share of $2.00 for the prior year.

Non-GAAP net income was $109 million as compared with a non-GAAP net income of $179 million a year ago. Non-GAAP diluted earnings per share was $0.33 as compared with a non-GAAP diluted earnings per share of $0.56 for the prior year.

"EA is growing share in our packaged goods business and our digital businesses continue to grow rapidly,” said John Riccitiello, Chief Executive Officer. "Mass Effect 2 is the first blockbuster of 2010 and we are looking forward to the launch of Dante’s Inferno and Battlefield Bad Company 2.”

"We are expecting an increase in FY11 full year non-GAAP earnings per share on the basis of strong cost controls and growth in our digital businesses,” said Eric Brown, Chief Financial Officer.

Highlights:

• Fiscal year-to-date, EA was the #1 packaged goods publisher in North America and Europe – #1 publisher on the PlayStation® 3, PC, and PSP®; #2 publisher on Xbox 360® and Wii™ from Nintendo.
• Digital non-GAAP net revenue was an all time quarter high at $152 million – up 30 percent fiscal year-to-date versus last year.
• EA has reduced operating costs and projects fiscal year 2011 non-GAAP costs down $100 million versus fiscal year 2010.
• Five titles launched this quarter with a Metacritic rating of 80 or above – including: Dragon Age: Origins, EA SPORTS Active™ More Workouts, The Sims 3 World Adventures, Brütal Legend™, and Left 4 Dead 2. EA has 19 titles rated at 80 or above in calendar 2009.
• FIFA 10 has sold over 9.7 million copies since launch.
• EA’s Pogo™ is the #1 online game site worldwide measured by user engagement.
• EA’s online games subscribers totaled 1.9 million in the quarter – this includes Pogo, as well as massively multiplayer online (MMO) subscribers.
• EA Mobile™, the world’s leading publisher of games for phones, generated $57 million of non-GAAP net revenue in the quarter, an increase of 14 percent year-over-year. EA mobile had seven of the top eleven games on the iPhone®/iPod touch™ in December and seven of the top ten games on Verizon for the quarter.
• Playfish had two of the top ten Facebook games for the quarter.

Business Outlook

The following forward-looking statements, as well as those made above, reflect expectations as of February 8, 2010. Results may be materially different and are affected by many factors, including: development delays on EA’s products; competition in the industry; the health of the economy in the U.S. and abroad and the related impact on discretionary consumer spending; changes in anticipated costs; expected savings and impact on EA’s operations of the Company’s cost reduction plan; consumer demand for console hardware and the ability of the console manufacturers to produce an adequate supply of consoles to meet that demand; changes in foreign exchange rates; the financial impact of the Playfish acquisition and potential future acquisitions by EA; the popular appeal of EA’s products; EA’s effective tax rate; and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

EA is providing updated guidance for fiscal year 2010 and initial guidance for fiscal year 2011.

Fourth Quarter Fiscal Year 2010 Expectations – Ending March 31, 2010

• GAAP net revenue is expected to be approximately $925 million to $1.0 billion.
• Non-GAAP net revenue is expected to be approximately $800 to $850 million.
• The Company expects GAAP diluted earnings per share to be approximately $0.05 to $0.23.
• Non-GAAP diluted earnings per share is expected to be approximately $0.02 to $0.06.
• For purposes of calculating fourth quarter fiscal year 2010 earnings per share, the Company estimates a share count of 328 million to compute both GAAP and non-GAAP earnings per share.
• Expected non-GAAP net income excludes the following items from expected GAAP net income:

* Non-GAAP net revenue is expected to be $125 to $150 million lower due to the impact of the change in deferred net revenue (packaged goods and digital content);

* Approximately $50 million of estimated stock-based compensation;

* Approximately $20 million of amortization of intangible assets;

* Approximately $35 million of restructuring charges; and

* ($10) to $10 million in the difference between the Company’s GAAP and non-GAAP tax expenses, excluding the impact of tax-related charges that may arise in connection with the Playfish integration.

First Quarter Fiscal Year 2011 Expectations – Ending June 30, 2010

• GAAP net revenue is expected to be approximately $710 to $750 million.
• Non-GAAP net revenue is expected to be approximately $460 to $500 million.
• GAAP diluted earnings/(loss) per share is expected to be approximately a ($0.05) loss to a $0.05 profit.
• Non-GAAP diluted loss per share is expected to be approximately ($0.35) to ($0.40).
• For purposes of calculating first quarter fiscal year 2011 earnings/(loss) per share, the Company estimates a share count of 327 million for GAAP losses and 329 million for GAAP profits; for non-GAAP loss per share, the Company estimates a share count of 327 million.
• Expected non-GAAP net income excludes the following items from expected GAAP net income:

* Non-GAAP net revenue is expected to be approximately $250 million lower due to the impact of the change in deferred net revenue (packaged goods and digital content);

* Approximately $50 million of estimated stock-based compensation;

* Approximately $15-20 million of amortization of intangible assets;

* Approximately $5 million of restructuring charges; and

* $50 to $60 million in the difference between the Company’s GAAP and non-GAAP tax expenses.

Fiscal Year 2011 Expectations – Ending March 31, 2011

• GAAP net revenue is expected to be approximately $3.45 to $3.70 billion.
• Non-GAAP net revenue is expected to be approximately $3.65 to $3.90 billion.
• GAAP diluted loss per share is expected to be approximately ($0.60) to ($0.90).
• Non-GAAP diluted earnings per share is expected to be approximately $0.50 to $0.70.
• For purposes of calculating fiscal year 2011 GAAP loss per share, the Company estimates a share count of 328 million and for non-GAAP earnings per share, the Company estimates a share count of 330 million.
• Expected non-GAAP net income excludes the following items from expected GAAP net income:

* Non-GAAP net revenue is expected to be approximately $200 million higher due to the impact of the change in deferred net revenue (packaged goods and digital content);

* Approximately $195 million of estimated stock-based compensation;

* Approximately $75 million of amortization of intangible assets;

* $10 to $15 million of restructuring charges; and

* ($24) to ($54) million in the difference between the Company’s GAAP and non-GAAP tax expenses.

• The fiscal year 2011 launch schedule is expected to be more consistent with years prior to fiscal year 2010, with non-GAAP revenue to be allocated as follows during the fiscal year:

* Q1: approximately 13%

* Q2: approximately 25%

* Q3: approximately 40% and

* Q4: approximately 20% to 25%

Key Titles – Fiscal Year 2011:
Quarter		Label		Title		Console		Handheld (1)			PC
Q1
		Games		Skate 3		X
				Need for Speed World							X
		SPORTS		2010 FIFA World Cup South Africa		X		X
				Tiger Woods PGA TOUR 11		X		X
Q2
		Games		APB/All Points Bulletin (2)							X
				Medal of Honor Title TBA		X		X			X
		SPORTS		NCAA Football 11		X		X
				EA SPORTS FIFA Online							X
				Madden NFL 11		X		X
				FIFA 11		X		X			X
				NHL 11		X
		Play		Monopoly Title TBA		X		X
				MySims Title TBA		X		X
Q3
		Games		Crysis 2 (3)		X					X
				Need For Speed Title TBA		X		X			X
				DTC Game For Console Online (4)		X
		SPORTS		FIFA Manager 11							X
				NBA Jam		X
				NBA LIVE 11		X		X
				EA SPORTS Active Title TBA		X
				EA SPORTS Active Title TBA		X
				EA SPORTS MMA		X		X
		Play		Hasbro Family Game Night Title TBA		X
				Hasbro Littlest Pet Shop Title TBA				X
				Harry Potter Title TBA		X		X			X
				The Sims 3 on Console Title TBA		X		X
				TBA		X		X			X
Q4
		Games		Dead Space 2		X		X
				Dragon Age Title TBA		X		X			X
				Shooter from Epic TBA (3)		X					X
				Need For Speed Title TBA		X					X
				Action Title TBA (4)		X
		SPORTS		Fighting Title TBA		X
		Play		Hasbro Title TBA (4)		X
				New Sims Title TBA							X
				Spore Title TBA		X					X

The Key Titles Schedule for Fiscal Year 2011 speaks only as of February 8, 2010 and is subject to change. Electronic Arts assumes no obligation to update this schedule.

(1) Handhelds include mobile handsets

(2) Distribution Title

(3) Co-Published Title

(4) Console Full Game Download

Conference Call

Electronic Arts will host a conference call today at 2:00 pm PT (5:00 pm ET) to review its results for the fiscal third quarter ended December 31, 2009 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: (877) 857-6176, access code 220497, or via webcast: http://investor.ea.com.

A dial-in replay of the conference call will be provided until February 15, 2010 at (719) 457-0820, access code 220497. A webcast archive of the conference call will be available for one year at http://investor.ea.com.

Non-GAAP Financial Measures

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

• Acquired in-process technology
• Amortization of intangibles
• Certain abandoned acquisition-related costs
• Change in deferred net revenue (packaged goods and digital content)
• Goodwill impairment
• Loss on lease obligation and facilities acquisition
• Loss on licensed intellectual property commitment
• Losses (gains) on strategic investments
• Restructuring charges
• Stock-based compensation
• Income tax adjustments

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

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

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

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

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

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

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

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

Loss on Lease Obligation and Facilities Acquisition. During the second quarter of fiscal 2010, Electronic Arts completed the acquisition of its headquarters facilities in Redwood City, California pursuant to the terms of the loan financing agreements underlying the build-to-suit leases for the facilities. These leases expired in July 2009, and had previously been accounted for as operating leases. The total amount paid under the terms of the leases was $247 million, of which $233 million related to the purchase price of the facilities and $14 million was for the loss on our lease obligation. In addition, Electronic Arts recorded a tax benefit of approximately $31 million, consisting of approximately $6 million related to the loss on our lease obligation, and a $25 million reduction in our valuation allowance due to the acquisition. As a result of this lease obligation and facility acquisition, on an after-tax basis, Electronic Arts incurred a positive net income effect of $17 million. Electronic Arts’ management excluded the effect of this transaction when evaluating the Company’s operating performance and when assessing the performance of its management team during this period and will continue to do so, when it plans, forecasts and analyzes future periods.

Loss on Licensed Intellectual Property Commitment. During the fourth quarter of fiscal 2009, Electronic Arts amended an agreement with a content licensor. This amendment resulted in the termination of our rights to use the licensor’s intellectual property in certain products and we incurred a related estimated loss of $38 million. This significant non-recurring loss is excluded from our Non-GAAP financial measures in order to provide comparability between periods. Further, the Company excluded this loss when evaluating its operating performance and the performance of its management team during this period and will continue to do so when it plans, forecasts and analyzes future periods.

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

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

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

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

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

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

Forward-Looking Statements

Some statements set forth in this release, including the estimates relating to EA’s fiscal years 2010 and 2011 guidance information under the heading "Business Outlook”, and the fiscal year 2011 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. 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 general health of the U.S. and global economy and the related impact on discretionary consumer spending; fluctuations in foreign exchange rates; consumer spending trends; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; the effectiveness of the Company’s sales and marketing programs; timely development and release of Electronic Arts’ products; the consumer demand for, and the availability of an adequate supply of console hardware units (including the Xbox 360® video game and entertainment system, the PLAYSTATION®3 computer entertainment system and the Wii™); the Company’s ability to predict consumer preferences among competing hardware platforms; the financial impact of the Playfish acquisition and potential future acquisitions by EA; the Company’s ability to realize the anticipated benefits of acquisitions; the seasonal and cyclical nature of the interactive game segment; the Company’s ability to attract and retain key personnel; changes in the Company’s effective tax rates; the performance of strategic investments; the impact of certain accounting requirements, such as the Company’s ability to estimate and recognize goodwill impairment charges and make tax valuation allowances; adoption of new accounting regulations and standards; potential regulation of the Company’s products in key territories; developments in the law regarding protection of the Company’s products; the Company’s ability to secure licenses to valuable entertainment properties on favorable terms; the stability of the Company’s key customers, and other factors described in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2009. These forward-looking statements speak only as of February 8, 2010. 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, 2009. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended December 31, 2009.

About Electronic Arts

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

EA, EA SPORTS, EA Mobile, POGO, Dante’s Inferno, Dead Space, EA SPORTS Active, Medal of Honor, MySims, Need for Speed, Skate, Spore and The Ripper are trademarks of Electronic Arts Inc. Dragon Age is a trademark of EA International (Studio and Publishing) Ltd. LITTLEST PET SHOP, HASBRO FAMILY GAME NIGHT and BATTLESHIP are trademarks of Hasbro and used with permission. Brütal Legend is a trademark of Double Fine Productions, Inc. Crysis is a registered trademark of Crytek. Harry Potter is a trademark and copyright of Warner Bros. Entertainment Inc. John Madden, NFL, NBA, NCAA, 2010 FIFA World Cup South Africa, FIFA, Tiger Woods, PGA TOUR and NHL are trademarks or other intellectual property of their respective owners and used with permission. Xbox and Xbox 360 are trademarks of the Microsoft group of companies and are used under license from Microsoft. "PlayStation” and "PSP are registered trademarks of Sony Computer Entertainment Inc. Wii is a trademark of Nintendo. iPhone and iPod touch are trademark of Apple Inc. All other trademarks are the property of their respective owners.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in millions, except per share data)
		Three Months Ended December 31,									Nine Months Ended December 31,
		2009				2008					2009				2008
Net revenue		$	1,243			$	1,654				$	2,675			$	3,352
Cost of goods sold			654				925					1,568				1,778
Gross profit			589				729					1,107				1,574
Operating expenses:
Marketing and sales			208				250					559				575
General and administrative			84				82					241				258
Research and development			290				299					918				1,027
Acquired in-process technology			-				1					-				3
Amortization of intangibles			14				15					38				46
Certain abandoned acquisition-related costs			-				-					-				21
Goodwill impairment			-				368					-				368
Restructuring charges			100				18					120				41
Total operating expenses			696				1,033					1,876				2,339
Operating loss			(107	)			(304	)				(769	)			(765	)
Losses on strategic investments			(1	)			(27	)				(25	)			(67	)
Interest and other income (expense), net			(2	)			14					8				36
Loss before provision for (benefit from) income taxes			(110	)			(317	)				(786	)			(796	)
Provision for (benefit from) income taxes			(28	)			324					(79	)			250
Net loss		$	(82	)		$	(641	)			$	(707	)		$	(1,046	)
Loss per share
Basic and diluted		$	(0.25	)		$	(2.00	)			$	(2.18	)		$	(3.28	)
Number of shares used in computation
Basic and diluted			325				321					324				319
Non-GAAP Results (in millions, except per share data)
The following tables reconcile the Company's net loss and loss per share as presented in its Unaudited Condensed Consolidated Statements of Operations and prepared in accordance with Generally Accepted Accounting Principles ("GAAP") to its non-GAAP net income and non-GAAP diluted earnings per share.
		Three Months Ended December 31,									Nine Months Ended December 31,
		2009				2008					2009				2008
Net loss		$	(82	)		$	(641	)			$	(707	)		$	(1,046	)
Acquired in-process technology			-				1					-				3
Amortization of intangibles			14				15					38				46
Certain abandoned acquisition-related costs			-				-					-				21
Change in deferred net revenue (packaged goods and digital content)			103				88					634				125
COGS amortization of intangibles			2				4					8				11
Goodwill impairment			-				368					-				368
Loss on lease obligation (G&A)			-				-					14				-
Loss on licensed intellectual property commitment (COGS)			-				-					(2	)			-
Losses on strategic investments			1				27					25				67
Restructuring charges			100				18					120				41
Stock-based compensation			42				44					119				147
Income tax adjustments			(71	)			255					(127	)			241
Non-GAAP net income		$	109			$	179				$	122			$	24
Non-GAAP diluted earnings per share		$	0.33			$	0.56				$	0.37			$	0.07
Number of diluted shares used in computation			327				322					326				325

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in millions)
					December 31, 2009				March 31, 2009 (a)
	ASSETS
		Current assets:
			Cash and cash equivalents		$	1,114			$	1,621
			Short-term investments			352				534
			Marketable equity securities			318				365
			Receivables, net of allowances of $267 and $217, respectively			495				116
			Inventories			144				217
			Deferred income taxes, net			95				51
			Other current assets			264				216
				Total current assets		2,782				3,120
		Property and equipment, net				550				354
		Goodwill				1,097				807
		Acquisition-related intangibles, net				215				221
		Deferred income taxes, net				74				61
		Other assets				221				115
			TOTAL ASSETS		$	4,939			$	4,678
	LIABILITIES AND STOCKHOLDERS' EQUITY
		Current liabilities:
			Accounts payable		$	186			$	152
			Accrued and other current liabilities			790				723
			Deferred net revenue (packaged goods and digital content)			895				261
				Total current liabilities		1,871				1,136
		Income tax obligations				281				268
		Deferred income taxes, net				49				42
		Other liabilities				139				98
			Total liabilities			2,340				1,544
		Common stock				3				3
		Paid-in capital				2,265				2,142
		Retained earnings				93				800
		Accumulated other comprehensive income				238				189
			Total stockholders' equity			2,599				3,134
			TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	4,939			$	4,678
(a)	Derived from audited consolidated financial statements.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
							Three Months Ended December 31,									Nine Months Ended December 31,
							2009				2008					2009				2008
OPERATING ACTIVITIES
	Net loss						$	(82	)		$	(641	)			$	(707	)		$	(1,046	)
		Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
			Acquired in-process technology					-				1					-				3
			Depreciation, amortization and accretion, net					48				48					142				152
			Goodwill impairment					-				368					-				368
			Net (gains) losses on investments and sale of property and equipment					(3	)			27					20				67
			Other non-cash restructuring charges					20				2					27				18
			Stock-based compensation					68				44					145				147
			Change in assets and liabilities:
				Receivables, net				162				(223	)				(356	)			(476	)
				Inventories				107				35					77				(128	)
				Other assets				(19	)			12					(53	)			30
				Accounts payable				(87	)			(2	)				36				102
				Accrued and other liabilities				(115	)			73					(42	)			177
				Deferred income taxes, net				19				380					(24	)			258
				Deferred net revenue (packaged goods and digital content)				103				88					634				125
					Net cash provided by (used in) operating activities			221				212					(101	)			(203	)
INVESTING ACTIVITIES
	Purchase of headquarters facilities							-				-					(233	)			-
	Capital expenditures							(16	)			(27	)				(50	)			(90	)
	Proceeds from sale of marketable equity securities							6				-					10				-
	Proceeds from maturities and sales of short-term investments							302				100					657				610
	Purchase of short-term investments							(72	)			(146	)				(477	)			(459	)
	Acquisition-related restricted cash							(100	)			-					(100	)			-
	Acquisition of subsidiaries, net of cash acquired							(275	)			(16	)				(278	)			(58	)
					Net cash provided by (used in) investing activities			(155	)			(89	)				(471	)			3
FINANCING ACTIVITIES
	Proceeds from issuance of common stock							-				6					25				75
	Excess tax benefit from stock-based compensation							13				(14	)				13				2
					Net cash provided by (used in) financing activities			13				(8	)				38				77
Effect of foreign exchange on cash and cash equivalents								(7	)			(33	)				27				(51	)
Increase (decrease) in cash and cash equivalents								72				82					(507	)			(174	)
Beginning cash and cash equivalents								1,042				1,297					1,621				1,553
Ending cash and cash equivalents								1,114				1,379					1,114				1,379

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and headcount)
					Q3 FY09				Q4 FY09				Q1 FY10				Q2 FY10				Q3 FY10				YOY % Change
QUARTERLY RECONCILIATION OF RESULTS
Net Revenue
	GAAP net revenue				$	1,654			$	860			$	644			$	788			$	1,243			(25%)
		Change in deferred net revenue (packaged goods and digital content)				88				(251)				172				359				103
	Non-GAAP net revenue				$	1,742			$	609			$	816			$	1,147			$	1,346			(23%)
Gross Profit
	GAAP gross profit				$	729			$	511			$	323			$	195			$	589			(19%)
		Change in deferred net revenue (packaged goods and digital content)				88				(251)				172				359				103
		COGS amortization of intangibles				4				3				3				3				2
		Loss on licensed intellectual property commitment (COGS)				-				38				-				(2)				-
		Stock-based compensation				-				1				1				-				-
	Non-GAAP gross profit				$	821			$	302			$	499			$	555			$	694			(15%)
		GAAP gross profit % (as a % of GAAP net revenue)				44%				59%				50%				25%				47%
		Non-GAAP gross profit % (as a % of non-GAAP net revenue)				47%				50%				61%				48%				52%
Operating Income (Loss)
	GAAP operating loss				$	(304)			$	(62)			$	(245)			$	(417)			$	(107)			(65%)
		Acquired in-process technology				1				-				-				-				-
		Amortization of intangibles				15				12				12				12				14
		Change in deferred net revenue (packaged goods and digital content)				88				(251)				172				359				103
		COGS amortization of intangibles				4				3				3				3				2
		Goodwill impairment				368				-				-				-				-
		Loss on lease obligation (G&A)				-				-				-				14				-
		Loss on licensed intellectual property commitment (COGS)				-				38				-				(2)				-
		Restructuring charges				18				39				14				6				100
		Stock-based compensation				44				56				33				44				42
	Non-GAAP operating income (loss)				$	234			$	(165)			$	(11)			$	19			$	154			(34%)
		GAAP operating loss % (as a % of GAAP net revenue)				(18%)				(7%)				(38%)				(53%)				(9%)
		Non-GAAP operating income (loss) % (as a % of non-GAAP net revenue)				13%				(27%)				(1%)				2%				11%
Net Income (Loss)
	GAAP net loss				$	(641)			$	(42)			$	(234)			$	(391)			$	(82)			(87%)
		Acquired in-process technology				1				-				-				-				-
		Amortization of intangibles				15				12				12				12				14
		Change in deferred net revenue (packaged goods and digital content)				88				(251)				172				359				103
		COGS amortization of intangibles				4				3				3				3				2
		Goodwill impairment				368				-				-				-				-
		Loss on lease obligation (G&A)				-				-				-				14				-
		Loss on licensed intellectual property commitment (COGS)				-				38				-				(2)				-
		(Gains) losses on strategic investments				27				(5)				16				8				1
		Restructuring charges				18				39				14				6				100
		Stock-based compensation				44				56				33				44				42
		Income tax adjustments				255				30				(22)				(34)				(71)
	Non-GAAP net income (loss)				$	179			$	(120)			$	(6)			$	19			$	109			(39%)
		GAAP net loss % (as a % of GAAP net revenue)				(39%)				(5%)				(36%)				(50%)				(7%)
		Non-GAAP net income (loss) % (as a % of non-GAAP net revenue)				10%				(20%)				(1%)				2%				8%
Diluted Earnings (Loss) Per Share
	GAAP loss per share				$	(2.00)			$	(0.13)			$	(0.72)			$	(1.21)			$	(0.25)			(88%)
	Non-GAAP diluted earnings (loss) per share				$	0.56			$	(0.37)			$	(0.02)			$	0.06			$	0.33			(41%)
	Number of shares used in computation
		Basic				321				322				323				324				325
		Diluted				322				322				323				325				327
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and headcount)
					Q3 FY09				Q4 FY09				Q1 FY10				Q2 FY10				Q3 FY10				YOY % Change
QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP
Geography Net Revenue
	North America					957				471				343				479				693			(28%)
	Europe					623				336				258				268				489			(22%)
	Asia					74				53				43				41				61			(18%)
		Total GAAP Net Revenue				1,654				860				644				788				1,243			(25%)
	North America					(47)				(105)				106				159				87
	Europe					123				(133)				61				191				8
	Asia					12				(13)				5				9				8
		Change In Deferred Net Revenue (Packaged Goods and Digital Content)				88				(251)				172				359				103
	North America					910				366				449				638				780			(14%)
	Europe					746				203				319				459				497			(33%)
	Asia					86				40				48				50				69			(20%)
		Total Non-GAAP Net Revenue				1,742				609				816				1,147				1,346			(23%)
	North America					58%				55%				53%				61%				56%
	Europe					38%				39%				40%				34%				39%
	Asia					4%				6%				7%				5%				5%
		Total GAAP Net Revenue %				100%				100%				100%				100%				100%
	North America					52%				60%				55%				56%				58%
	Europe					43%				33%				39%				40%				37%
	Asia					5%				7%				6%				4%				5%
		Total Non-GAAP Net Revenue %				100%				100%				100%				100%				100%
Publisher Net Revenue (a)
	Publishing					1,225				744				579				553				978			(20%)
	Distribution					429				116				65				235				265			(38%)
		Total GAAP Net Revenue				1,654				860				644				788				1,243			(25%)
	Publishing					88				(251)				172				359				103
	Distribution					-				-				-				-				-
		Change In Deferred Net Revenue (Packaged Goods and Digital Content)				88				(251)				172				359				103
	Publishing					1,313				493				751				912				1,081			(18%)
	Distribution					429				116				65				235				265			(38%)
		Total Non-GAAP Net Revenue				1,742				609				816				1,147				1,346			(23%)
	Publishing					74%				87%				90%				70%				79%
	Distribution					26%				13%				10%				30%				21%
		Total GAAP Net Revenue %				100%				100%				100%				100%				100%
	Publishing					75%				81%				92%				80%				80%
	Distribution					25%				19%				8%				20%				20%
		Total Non-GAAP Net Revenue %				100%				100%				100%				100%				100%
Net Revenue Composition
	Packaged Goods					1,480				705				495				636				1,055			(29%)
	Wireless, Internet-derived, and Advertising (Digital)					126				112				117				128				133			6%
	Licensing and Other					48				43				32				24				55			15%
		Total GAAP Net Revenue				1,654				860				644				788				1,243			(25%)
	Packaged Goods					97				(248)				165				349				84
	Wireless, Internet-derived, and Advertising (Digital)					(9)				(2)				7				10				19
	Licensing and Other					-				(1)				-				-				-
		Change In Deferred Net Revenue (Packaged Goods and Digital Content)				88				(251)				172				359				103
	Packaged Goods					1,577				457				660				985				1,139			(28%)
	Wireless, Internet-derived, and Advertising (Digital)					117				110				124				138				152			30%
	Licensing and Other					48				42				32				24				55			15%
		Total Non-GAAP Net Revenue				1,742				609				816				1,147				1,346			(23%)
	Packaged Goods					89%				82%				77%				81%				85%
	Wireless, Internet-derived, and Advertising (Digital)					8%				13%				18%				16%				11%
	Licensing and Other					3%				5%				5%				3%				4%
		Total GAAP Net Revenue %				100%				100%				100%				100%				100%
	Packaged Goods					90%				75%				81%				86%				85%
	Wireless, Internet-derived, and Advertising (Digital)					7%				18%				15%				12%				11%
	Licensing and Other					3%				7%				4%				2%				4%
		Total Non-GAAP Net Revenue %				100%				100%				100%				100%				100%
(a)	Publishing includes all net revenue other than Distribution.
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and headcount)
					Q3 FY09				Q4 FY09				Q1 FY10				Q2 FY10				Q3 FY10				YOY % Change
QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP
Platform Net Revenue
		Xbox 360				448				132				73				171				348			(22%)
		Wii				254				126				161				142				196			(23%)
		PLAYSTATION 3				297				197				121				142				236			(21%)
		PlayStation 2				179				53				27				40				44			(75%)
			Total Consoles			1,178				508				382				495				824			(30%)
		Wireless				49				49				50				51				56			14%
		Nintendo DS				118				38				28				22				63			(47%)
		PSP				36				44				38				20				30			(17%)
			Total Mobile			203				131				116				93				149			(27%)
		PC				215				180				124				173				212			(1%)
		Other				58				41				22				27				58			-
			Total GAAP Net Revenue			1,654				860				644				788				1,243			(25%)
		Xbox 360				-				3				63				189				29
		Wii				27				(32)				23				(2)				1
		PLAYSTATION 3				58				(113)				(22)				180				49
		PlayStation 2				(11)				(20)				(7)				14				-
		Wireless				1				(1)				-				(1)				1
		PSP				34				(23)				(16)				19				3
		PC				(21)				(65)				131				(40)				8
		Nintendo DS				-				-				-				-				12
		Other				-				-				-				-				-
			Change in Deferred Net Revenue (Packaged Goods and Digital Content)			88				(251)				172				359				103
		Xbox 360				448				135				136				360				377			(16%)
		PLAYSTATION 3				355				84				99				322				285			(20%)
		Wii				281				94				184				140				197			(30%)
		PlayStation 2				168				33				20				54				44			(74%)
			Total Consoles			1,252				346				439				876				903			(28%)
		Wireless				50				48				50				50				57			14%
		PSP				70				21				22				39				33			(53%)
		Nintendo DS				118				38				28				22				75			(36%)
			Total Mobile			238				107				100				111				165			(31%)
		PC				194				115				255				133				220			13%
		Other				58				41				22				27				58			-
			Total Non-GAAP Net Revenue			1,742				609				816				1,147				1,346			(23%)
		Xbox 360				27%				15%				11%				22%				28%
		Wii				15%				15%				25%				18%				16%
		PLAYSTATION 3				18%				23%				19%				18%				19%
		PlayStation 2				11%				6%				4%				5%				3%
			Total Consoles			71%				59%				59%				63%				66%
		Wireless				3%				6%				8%				6%				5%
		Nintendo DS				7%				4%				4%				3%				5%
		PSP				2%				5%				6%				3%				2%
			Total Mobile			12%				15%				18%				12%				12%
		PC				13%				21%				19%				22%				17%
		Other				4%				5%				4%				3%				5%
			Total GAAP Net Revenue %			100%				100%				100%				100%				100%
		Xbox 360				26%				22%				17%				31%				28%
		PLAYSTATION 3				20%				14%				12%				28%				21%
		Wii				16%				16%				23%				12%				15%
		PlayStation 2				10%				5%				2%				5%				3%
			Total Consoles			72%				57%				54%				76%				67%
		Wireless				3%				8%				6%				5%				4%
		PSP				4%				3%				3%				3%				2%
		Nintendo DS				7%				6%				3%				2%				6%
			Total Mobile			14%				17%				12%				10%				12%
		PC				11%				19%				31%				12%				17%
		Other				3%				7%				3%				2%				4%
			Total Non-GAAP Net Revenue %			100%				100%				100%				100%				100%
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and headcount)
					Q3 FY09				Q4 FY09				Q1 FY10				Q2 FY10				Q3 FY10				YOY % Change
CASH FLOW DATA
	Operating cash flow					212				215				(328)				6				221			4%
	Operating cash flow - TTM					82				12				(25)				105				114			39%
	Capital expenditures					27				25				8				26				16			(41%)
	Capital expenditures - TTM					112				115				92				86				75			(33%)
	Purchase of headquarters facilities					-				-				-				233				-			-
BALANCE SHEET DATA
	Cash and cash equivalents					1,379				1,621				1,205				1,042				1,114			(19%)
	Short-term investments					580				534				634				583				352			(39%)
	Marketable equity securities					302				365				440				387				318			5%
	Receivables, net					794				116				375				646				495			(38%)
	Inventories					295				217				215				250				144			(51%)
	Deferred net revenue (packaged goods and digital content)
		End of the quarter				512				261				433				792				895
		Less: Beginning of the quarter				424				512				261				433				792
		Change in deferred net revenue (packaged goods and digital content)				88				(251)				172				359				103
STOCK-BASED COMPENSATION
	Cost of goods sold					-				1				1				-				-
	Marketing and sales					5				5				3				5				4
	General and administrative					11				13				5				10				9
	Research and development					28				37				24				29				29
		Total Stock-Based Compensation (excluding restructuring charges)				44				56				33				44				42
	Restructuring charges					-				-				-				-				26
		Total Stock-Based Compensation (including restructuring charges)				44				56				33				44				68
EMPLOYEES						9,760				9,106				8,948				8,829				8,537			(13%)
PLATFORM SKU RELEASES (Excludes Co-Publishing, Distribution and Wireless)
	Xbox 360					8				6				4				8				6
	PLAYSTATION 3					7				5				4				8				6
	Wii					12				4				6				6				8
	PlayStation 2					7				1				2				4				-
	Xbox					-				-				-				-				-
		Total Consoles				34				16				16				25				20
	PSP					3				1				2				5				1
	Nintendo DS					9				7				2				4				11
		Total Mobile				12				8				4				9				12
	PC					10				6				3				3				4
			Total SKUs			56				30				23				38				36

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Fact Sheet

PRODUCT RELEASES

Q3 FY10

Xbox 360

PS3

Wii

Wire- less

PSP

NDS

PC

Publishing

Auditorium

X

Brütal Legend™

X

X

Charm Girls Club™ My Fashion Mall

X

Charm Girls Club™ My Fashion Show

X

Charm Girls Club™ My Perfect Prom

X

Charm Girls Club™ Pajama Party

X

Doom II RPG™

X

Dragon Age™: Origins

X

X

X

EA SPORTS Active™ More Workouts

X

FIFA 10

X

FIFA Manager 10

X

Foto Face™: The Face Stealer Strikes

X

HASBRO FAMILY GAME NIGHT 2

X

X

LITTLEST PET SHOP

X

LITTLEST PET SHOP Friends

X

LITTLEST PET SHOP™ Beach Friends

X

LITTLEST PET SHOP™ City Friends

X

LITTLEST PET SHOP™ Country Friends

X

Madden NFL Arcade

X

X

Marble Madness

X

Mirror's Edge™ 2D

X

NBA LIVE 10

X

X

X

NBA Live by EA SPORTS™

X

NCAA® Basketball 10

X

X

Need for Speed™ Nitro

X

X

Nerf N-Strike™ Elite

X

Saboteur™

X

X

X

SimAnimals™ Africa

X

X

SPORE™ Creatures

X

Spore™ Hero

X

X

Tetris® Revolution

X

The Simpsons™ Arcade

X

Distribution

Left 4 Dead™ 2

X

X

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