Electronic Arts Reports Q3 FY13 Financial Results

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.

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