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 second quarter and full fiscal year 2012 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.

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; general economic conditions; and other factors described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011.

These forward-looking statements are current as of July 26, 2011. 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 June 30, 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 June 30, 2011.

About Electronic Arts

Electronic Arts (NASDAQ: ERTS) 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.

EA SPORTS, Dead Space, Need for Speed, Alice: Madness Returns, SSX, Darkspore and The Sims are trademarks of Electronic Arts Inc. Dragon Age and Mass Effect are trademarks of EA International (Studio and Publishing) Ltd. Battlefield: Bad Company and Battlefield 3 are trademarks of EA Digital Illusions CE AB. FAMILY GAME NIGHT is a trademark of Hasbro and used with permission. Crysis is a registered trademark of Crytek. 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. John Madden is a trademark or other intellectual property of Red Bear, Inc. or John Madden. NFL is a trademark of the National Football League. NCAA is a registered trademark of the National Collegiate Athletic Association. NHL is a registered trademark of National Hockey League. The name of Tiger Woods is a trademark, copyrighted design and/or other form of intellectual property that is the exclusive property of ETW Corp. or Tiger Woods and may not be used, in whole or in part, without the prior written consent of ETW Corp. or Tiger Woods. PGA TOUR is a trademark of PGA TOUR, INC. and used by permission. “Masters” is a trademark and trade name of Augusta National, Inc. and such trademark and trade name appears courtesy Augusta National, Inc. iPhone and iPad are trademarks 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
							June 30,
								2011						2010
	Net revenue						$	999					$	815
		Cost of goods sold						240						222
	Gross profit							759						593
	Operating expenses:
		Marketing and sales						140						127
		General and administrative						74						74
		Research and development						285						275
		Acquisition-related contingent consideration						2						2
		Amortization of intangibles						13						15
		Restructuring and other						18						2
			Total operating expenses					532						495
	Operating income							227						98
	Loss on strategic investments							-						(5	)
	Interest and other income, net							3						-
	Income before provision for (benefit from) income taxes							230						93
	Provision for (benefit from) income taxes							9						(3	)
	Net income						$	221					$	96
	Earnings per share
		Basic					$	0.67					$	0.29
		Diluted					$	0.66					$	0.29
	Number of shares used in computation
		Basic						331						328
		Diluted						337						332
	Non-GAAP Results (in millions, except per share data)
	The following tables reconcile the Company's net income and earnings 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 loss and non-GAAP diluted loss per share.
							Three Months Ended
							June 30,
								2011						2010
	Net income						$	221					$	96
		Acquisition-related expenses						18						20
		Change in deferred net revenue (packaged goods and digital content)						(475	)					(276	)
		Loss on strategic investments						-						5
		Restructuring and other						18						2
		Stock-based compensation						38						47
		Income tax adjustments						57						28
	Non-GAAP net loss						$	(123	)				$	(78	)
	Non-GAAP diluted loss per share						$	(0.37	)				$	(0.24	)
	Number of shares used in Non-GAAP computation
		Diluted						331						328

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in millions)
								June 30,					March 31,
									2011				2011 (a)
	ASSETS
		Current assets:
			Cash and cash equivalents					$	1,173				$	1,579
			Short-term investments						503					497
			Marketable equity securities						172					161
			Receivables, net of allowances of $227 and $304, respectively						30					335
			Inventories						75					77
			Deferred income taxes, net						58					56
			Other current assets						343					327
				Total current assets					2,354					3,032
		Property and equipment, net							516					513
		Goodwill							1,132					1,110
		Acquisition-related intangibles, net							134					144
		Deferred income taxes, net							49					49
		Other assets							170					80
			TOTAL ASSETS					$	4,355				$	4,928
	LIABILITIES AND STOCKHOLDERS' EQUITY
		Current liabilities:
			Accounts payable					$	91				$	228
			Accrued and other current liabilities						604					768
			Deferred net revenue (packaged goods and digital content)						530					1,005
				Total current liabilities					1,225					2,001
		Income tax obligations							192					192
		Deferred income taxes, net							42					37
		Other liabilities							146					134
			Total liabilities						1,605					2,364
		Common stock							3					3
		Paid-in capital							2,439					2,495
		Retained earnings (accumulated deficit)							68					(153	)
		Accumulated other comprehensive income							240					219
			Total stockholders' equity						2,750					2,564
			TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY					$	4,355				$	4,928
(a)	Derived from audited consolidated financial statements.

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
									Three Months Ended
									June 30,
										2011						2010
OPERATING ACTIVITIES
	Net income								$	221					$	96
		Adjustments to reconcile net income to net cash used in operating activities:
			Acquisition-related contingent consideration							2						2
			Depreciation, amortization and accretion, net							43						48
			Net losses on investments and sale of property and equipment							-						5
			Stock-based compensation							38						47
			Change in assets and liabilities:
				Receivables, net						307						97
				Inventories						4						16
				Other assets						(101	)					(37	)
				Accounts payable						(133	)					(40	)
				Accrued and other liabilities						(181	)					(109	)
				Deferred income taxes, net						1						3
				Deferred net revenue (packaged goods and digital content)						(475	)					(276	)
					Net cash used in operating activities					(274	)					(148	)
INVESTING ACTIVITIES
	Capital expenditures									(32	)					(11	)
	Proceeds from sale of marketable equity securities									-						8
	Proceeds from maturities and sales of short-term investments									83						98
	Purchase of short-term investments									(90	)					(148	)
	Acquisition of subsidiaries, net of cash acquired									(25	)					-
					Net cash used in investing activities					(64	)					(53	)
FINANCING ACTIVITIES
	Proceeds from issuance of common stock									14						1
	Excess tax benefit from stock-based compensation									2						-
	Repurchase and retirement of common stock									(91	)					-
					Net cash provided by (used in) financing activities					(75	)					1
Effect of foreign exchange on cash and cash equivalents										7						(16	)
Decrease in cash and cash equivalents										(406	)					(216	)
Beginning cash and cash equivalents										1,579						1,273
Ending cash and cash equivalents									$	1,173					$	1,057

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and headcount)
							Q1					Q2					Q3					Q4					Q1					YOY %
							FY11					FY11					FY11					FY11					FY12					Change
QUARTERLY RECONCILIATION OF RESULTS
Net Revenue
	GAAP net revenue						$	815				$	631				$	1,053				$	1,090				$	999				23	%
		Change in deferred net revenue (packaged goods and digital content)						(276	)				253					357					(95	)				(475	)
	Non-GAAP net revenue						$	539				$	884				$	1,410				$	995				$	524				(3	%)
Gross Profit
	GAAP gross profit						$	593				$	268				$	467				$	762				$	759				28	%
		Acquisition-related expenses						3					3					3					3					3
		Change in deferred net revenue (packaged goods and digital content)						(276	)				253					357					(95	)				(475	)
		Loss on licensed intellectual property commitment (COGS)						-					(1	)				-					-					-
		Stock-based compensation						1					-					1					-					1
	Non-GAAP gross profit						$	321				$	523				$	828				$	670				$	288				(10	%)
		GAAP gross profit % (as a % of GAAP net revenue)						73	%				42	%				44	%				70	%				76	%
		Non-GAAP gross profit % (as a % of non-GAAP net revenue)						60	%				59	%				59	%				67	%				55	%
Operating Income (Loss)
	GAAP operating income (loss)						$	98				$	(252	)			$	(303	)			$	145				$	227				132	%
		Acquisition-related expenses						20					(10	)				18					24					18
		Change in deferred net revenue (packaged goods and digital content)						(276	)				253					357					(95	)				(475	)
		Loss on licensed intellectual property commitment (COGS)						-					(1	)				-					-					-
		Restructuring and other						2					6					154					(1	)				18
		Stock-based compensation						47					43					46					38					38
	Non-GAAP operating income (loss)						$	(109	)			$	39				$	272				$	111				$	(174	)			60	%
		GAAP operating income (loss) % (as a % of GAAP net revenue)						12	%				(40	%)				(29	%)				13	%				23	%
		Non-GAAP operating income (loss) % (as a % of non-GAAP net revenue)						(20	%)				4	%				19	%				11	%				(33	%)
Net Income (Loss)
	GAAP net income (loss)						$	96				$	(201	)			$	(322	)			$	151				$	221				130	%
		Acquisition-related expenses						20					(10	)				18					24					18
		Change in deferred net revenue (packaged goods and digital content)						(276	)				253					357					(95	)				(475	)
		Loss on licensed intellectual property commitment (COGS)						-					(1	)				-					-					-
		Loss (gain) on strategic investments						5					(28	)				-					-					-
		Restructuring and other						2					6					154					(1	)				18
		Stock-based compensation						47					43					46					38					38
		Income tax adjustments						28					(30	)				(57	)				(34	)				57
	Non-GAAP net income (loss)						$	(78	)			$	32				$	196				$	83				$	(123	)			58	%
		GAAP net income (loss) % (as a % of GAAP net revenue)						12	%				(32	%)				(31	%)				14	%				22	%
		Non-GAAP net income (loss) % (as a % of non-GAAP net revenue)						(14	%)				4	%				14	%				8	%				(23	%)
Diluted Earnings (Loss) Per Share
	GAAP earnings (loss) per share						$	0.29				$	(0.61	)			$	(0.97	)			$	0.45				$	0.66				128	%
	Non-GAAP earnings (loss) per share						$	(0.24	)			$	0.10				$	0.59				$	0.25				$	(0.37	)			54	%
	Number of diluted shares used in computation
		GAAP						332					329					332					336					337
		Non-GAAP						328					333					335					336					331

ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and headcount)
							Q1				Q2				Q3				Q4				Q1				YOY %
							FY11				FY11				FY11				FY11				FY12				Change
QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP
Geography Net Revenue
	North America						451				327				528				530				501				11	%
	Europe						317				262				477				507				438				38	%
	Asia						47				42				48				53				60				28	%
		Total GAAP Net Revenue					815				631				1,053				1,090				999				23	%
	North America						(184	)			142				169				(56	)			(240	)
	Europe						(81	)			122				163				(45	)			(215	)
	Asia						(11	)			(11	)			25				6				(20	)
		Change In Deferred Net Revenue (Packaged Goods and Digital Content)					(276	)			253				357				(95	)			(475	)
	North America						267				469				697				474				261				(2	%)
	Europe						236				384				640				462				223				(6	%)
	Asia						36				31				73				59				40				11	%
		Total Non-GAAP Net Revenue					539				884				1,410				995				524				(3	%)
	North America						55	%			52	%			50	%			49	%			50	%
	Europe						39	%			41	%			45	%			46	%			44	%
	Asia						6	%			7	%			5	%			5	%			6	%
		Total GAAP Net Revenue %					100	%			100	%			100	%			100	%			100	%
	North America						49	%			53	%			50	%			48	%			50	%
	Europe						44	%			43	%			45	%			46	%			42	%
	Asia						7	%			4	%			5	%			6	%			8	%
		Total Non-GAAP Net Revenue %					100	%			100	%			100	%			100	%			100	%
Net Revenue Composition
	Publishing and Other						586				441				767				838				647				10	%
	Wireless, Internet-derived, and Advertising (Digital)						176				161				195				211				232				32	%
	Distribution						53				29				91				41				120				126	%
		Total GAAP Net Revenue					815				631				1,053				1,090				999				23	%
	Publishing and Other						(288	)			248				341				(152	)			(452	)
	Wireless, Internet-derived, and Advertising (Digital)						12				5				16				57				(23	)
	Distribution						-				-				-				-				-
		Change In Deferred Net Revenue (Packaged Goods and Digital Content)					(276	)			253				357				(95	)			(475	)
	Publishing and Other						298				689				1,108				686				195				(35	%)
	Wireless, Internet-derived, and Advertising (Digital)						188				166				211				268				209				11	%
	Distribution						53				29				91				41				120				126	%
		Total Non-GAAP Net Revenue					539				884				1,410				995				524				(3	%)
	Publishing and Other						72	%			70	%			73	%			77	%			65	%
	Wireless, Internet-derived, and Advertising (Digital)						21	%			26	%			18	%			19	%			23	%
	Distribution						7	%			4	%			9	%			4	%			12	%
		Total GAAP Net Revenue %					100	%			100	%			100	%			100	%			100	%
	Publishing and Other						55	%			78	%			79	%			69	%			37	%
	Wireless, Internet-derived, and Advertising (Digital)						35	%			19	%			15	%			27	%			40	%
	Distribution						10	%			3	%			6	%			4	%			23	%
		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)
							Q1				Q2				Q3				Q4				Q1				YOY %
							FY11				FY11				FY11				FY11				FY12				Change
QUARTERLY NET REVENUE PRESENTATIONS - GAAP AND NON-GAAP
Platform Net Revenue
		Xbox 360					262				172				285				336				345				32	%
		PLAYSTATION 3					209				152				282				357				308				47	%
		Wii					40				25				130				71				42				5	%
		PlayStation 2					11				29				20				4				3				(73	%)
			Total Consoles				522				378				717				768				698				34	%
		Mobile					52				49				59				70				57				10	%
		PSP					19				17				22				16				11				(42	%)
		Nintendo DS					11				8				49				28				8				(27	%)
			Total Mobile and Handhelds				82				74				130				114				76				(7	%)
		PC					186				157				155				171				205				10	%
		Other					25				22				51				37				20				(20	%)
			Total GAAP Net Revenue				815				631				1,053				1,090				999				23	%
		Xbox 360					(121	)			96				126				(12	)			(193	)
		PLAYSTATION 3					(89	)			150				131				(75	)			(197	)
		Wii					(5	)			24				39				(44	)			(26	)
		PlayStation 2					(5	)			1				(1	)			-				-
		Mobile					-				-				5				(3	)			-
		PSP					(1	)			4				-				(6	)			(6	)
		Nintendo DS					(4	)			1				8				(6	)			(2	)
		PC					(51	)			(23	)			49				51				(51	)
			Change in Deferred Net Revenue (Packaged Goods and Digital Content)				(276	)			253				357				(95	)			(475	)
		Xbox 360					141				268				411				324				152				8	%
		PLAYSTATION 3					120				302				413				282				111				(8	%)
		Wii					35				49				169				27				16				(54	%)
		PlayStation 2					6				30				19				4				3				(50	%)
			Total Consoles				302				649				1,012				637				282				(7	%)
		Mobile					52				49				64				67				57				10	%
		PSP					18				21				22				10				5				(72	%)
		Nintendo DS					7				9				57				22				6				(14	%)
			Total Mobile and Handhelds				77				79				143				99				68				(12	%)
		PC					135				134				204				222				154				14	%
		Other					25				22				51				37				20				(20	%)
			Total Non-GAAP Net Revenue				539				884				1,410				995				524				(3	%)
		Xbox 360					32	%			27	%			27	%			31	%			35	%
		PLAYSTATION 3					26	%			24	%			27	%			33	%			31	%
		Wii					5	%			4	%			12	%			6	%			4	%
		PlayStation 2					1	%			5	%			2	%			-				-
			Total Consoles				64	%			60	%			68	%			70	%			70	%
		Mobile					7	%			8	%			5	%			6	%			6	%
		PSP					2	%			3	%			2	%			1	%			1	%
		Nintendo DS					1	%			1	%			5	%			3	%			1	%
			Total Mobile and Handhelds				10	%			12	%			12	%			10	%			8	%
		PC					23	%			25	%			15	%			16	%			20	%
		Other					3	%			3	%			5	%			4	%			2	%
			Total GAAP Net Revenue %				100	%			100	%			100	%			100	%			100	%
		Xbox 360					26	%			30	%			29	%			33	%			29	%
		PLAYSTATION 3					22	%			34	%			30	%			28	%			21	%
		Wii					7	%			6	%			12	%			3	%			3	%
		PlayStation 2					1	%			3	%			1	%			-				1	%
			Total Consoles				56	%			73	%			72	%			64	%			54	%
		Mobile					10	%			6	%			4	%			7	%			11	%
		PSP					3	%			2	%			2	%			1	%			1	%
		Nintendo DS					1	%			1	%			4	%			2	%			1	%
			Total Mobile and Handhelds				14	%			9	%			10	%			10	%			13	%
		PC					25	%			15	%			14	%			22	%			29	%
		Other					5	%			3	%			4	%			4	%			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)
							Q1				Q2				Q3			Q4				Q1				YOY %
							FY11				FY11				FY11			FY11				FY12				Change
CASH FLOW DATA
	Operating cash flow						(148	)			(134	)			349			253				(274	)			85	%
	Operating cash flow - TTM						332				192				320			320				194				(42	%)
	Capital expenditures						11				12				15			21				32				191	%
	Capital expenditures - TTM						75				61				60			59				80				7	%
BALANCE SHEET DATA
	Cash and cash equivalents						1,057				1,056				1,353			1,579				1,173				11	%
	Short-term investments						480				495				511			497				503				5	%
	Marketable equity securities						193				106				107			161				172				(11	%)
	Receivables, net						103				444				390			335				30				(71	%)
	Inventories						82				155				105			77				75				(9	%)
	Deferred net revenue (packaged goods and digital content)
		End of the quarter					490				743				1,100			1,005				530
		Less: Beginning of the quarter					766				490				743			1,100				1,005
		Change in deferred net revenue (packaged goods and digital content)					(276	)			253				357			(95	)			(475	)
STOCK-BASED COMPENSATION
	Cost of goods sold						1				-				1			-				1
	Marketing and sales						4				6				6			5				5
	General and administrative						12				10				10			8				9
	Research and development						30				27				29			25				23
		Total Stock-Based Compensation (excluding restructuring and other)					47				43				46			38				38
	Restructuring and other						-				-				2			-				-
		Total Stock-Based Compensation (including restructuring and other)					47				43				48			38				38
EMPLOYEES							7,758				7,820				7,742			7,645				7,973				3	%

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