8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) May 3, 2005

ELECTRONIC ARTS INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

0-17948	94-2838567
(Commission File Number)	(IRS Employer Identification No.)

209 Redwood Shores Parkway, Redwood City, California 94065-1175

(Address of Principal Executive Offices) (Zip Code)

(650) 628-1500

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On May 3, 2005, Electronic Arts Inc. issued a press release announcing its financial results for the fiscal quarter and year ended March 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1. Neither the information in this Form 8-K nor the information in the press release shall be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press release dated May 3, 2005, relating to Electronic Arts Inc.’s financial results for the fiscal quarter and year ended March 31, 2005.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ELECTRONIC ARTS INC.
Dated: May 3, 2005	By:	/s/ Warren C. Jenson
		Warren C. Jenson
		Executive Vice President, Chief Financial
		and Administrative Officer

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press release dated May 3, 2005, relating to Electronic Arts Inc.’s financial results for the fiscal quarter and year ended March 31, 2005.

EX-99.1

EXHIBIT 99.1

EA REPORTS FOURTH QUARTER AND FISCAL YEAR 2005 RESULTS

Record $3.1 Billion Revenue Driven by 31 Platinum Titles

REDWOOD CITY, CA – May 3, 2005 – Electronic Arts (NASDAQ: ERTS) today announced preliminary financial results for the fourth quarter and fiscal year ended March 31, 2005.

Full Year Results

Net revenue for the fiscal year ended March 31, 2005 was $3.129 billion, up 6 percent as compared with $2.957 billion for the prior year. EA had 31 platinum titles (over one million units sold) in fiscal 2005 compared to 27 a year ago. Six franchises sold more than five million units: The Sims^™, Need for Speed^™, Madden NFL Football, FIFA, The Lord of the Rings^™ and Harry Potter^™.

Net income for the year was $504 million as compared with $577 million for the prior year. Diluted earnings per share were $1.59 as compared with $1.87 for the prior year.

Non-GAAP net income for the year, which excludes certain items, was $543 million as compared with $566 million for the prior year. Non-GAAP diluted earnings per share were $1.71 as compared with $1.84 for the prior year. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)

Operating cash flow was $634 million as compared with $669 million a year ago.

“As we begin the new fiscal year, we are focused on successfully navigating through the console transition,” said Larry Probst, Chairman and Chief Executive Officer. “EA has the people, franchises and strategies to extend our leadership on next generation platforms.”

“This is a year of execution and investment,” said Warren Jenson, Chief Financial and Administrative Officer. “We have a strong title line up that allows us to make investments for long-term leadership.”

Highlights for the Year (comparisons are to the fiscal year ended March 31, 2004)

· Net revenue surpassed $3 billion for the first time in EA’s history.

· Net revenue: North America – up 3 percent to $1.7 billion; total international – up 9 percent to $1.5 billion. The increase in total international net revenue was driven by: Europe – up 9 percent to $1.3 billion; Asia Pacific, including Japan – up 8 percent to $180 million. Movement in foreign currency rates contributed $95 million or 3 percent of the increase in total net revenue.

· Operating income was $669 million – compared to $776 million. Operating margin was 21 percent – compared to 26 percent a year ago.

· EA entered into long-term exclusive agreements with the NFL, NFLPA, ESPN, NCAA and AFL.

· The Sims franchise sold more than 16 million copies.

· The Need for Speed franchise sold more than 15 million copies.

· Need for Speed^™ Rivals was the #1 title on the PSP^™ handheld entertainment system in North America. All EA releases on the PSP charted in the top 10.

· EA completed the acquisition of Criterion Software, bringing the award-winning Burnout^™ and Black^™ franchises and RenderWare^™ technology.

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· EA completed its tender offer for Digital Illusions, creators of the award-winning Battlefield franchise.

Fourth Quarter Results

Net revenue for the fourth quarter was $553 million, down 8 percent as compared with $598 million for the prior year. Sales were driven by NBA STREET 3, EA SPORTS^™ Fight Night Round 2, Need for Speed^™ Underground 2, FIFA STREET and Time Splitters Future Perfect^™.

Net income for the quarter was $8 million, as compared with $90 million for the prior year. Diluted earnings per share were $0.02 for the quarter, as compared with $0.29 for the prior year. The decrease in net income was driven by lower net revenues at a lower gross margin and higher operating costs.

Non-GAAP net income was $30 million as compared with $77 million for the prior year. Non-GAAP net income excludes a $21 million pretax charge associated with employment-related litigation. Non-GAAP net income also excludes $9 million primarily attributable to pretax acquisition-related charges. Non-GAAP net income for the prior year excludes a $20 million non-recurring income tax benefit and $10 million primarily related to pretax restructuring charges.

Non-GAAP diluted earnings per share were $0.09, as compared with $0.25 for the prior year. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)

Business Outlook

The following forward-looking statements reflect expectations as of May 3, 2005. Results may be materially different and are affected by many factors, such as changes in foreign exchange rates, the overall global economy, the popular appeal of EA’s products, competition in the industry, the ability of console manufacturers to meet demand, EA’s effective tax rate, development delays, EA’s ability to secure key licenses and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

Fiscal Year Expectations – Ending March 31, 2006

· Net revenue is expected to be between $3.4 and $3.5 billion – up 9 to 12 percent year-over-year.

· Diluted earnings per share are expected to be between $1.55 and $1.70 – as compared with $1.59 for fiscal 2005.

Fiscal First Quarter Expectations – Ending June 30, 2005

· Net revenue is expected to be between $300 and $340 million – as compared with $432 million for the prior year.

· Diluted net loss per share is expected to be between $0.22 and $0.28 – as compared with diluted net income per share of $0.08 for the comparable period in fiscal 2005.

2

Non-GAAP Financial Measures

Electronic Arts uses non-GAAP measures of operating income, net income and diluted earnings per share. These non-GAAP measures exclude the following items, including any related tax effect, from the Company’s statement of operations:

· Amortization of intangibles

· Employee stock-based compensation

· Restructuring and asset impairment charges

· Acquired in-process technology

· Certain non-recurring litigation expenses

· Other-than-temporary impairment of investments in affiliates

In addition, other significant unforeseeable and non-recurring items may occur from time to time that require an adjustment to these non-GAAP measures. For example, during the fourth quarter of fiscal 2004, a $20 million non-recurring benefit to the Company’s income tax expense was included in the GAAP results but excluded from the non-GAAP results. When these items occur, the accounting impact will become a reconciling item between the GAAP results and these non-GAAP measures.

The Company believes that excluding these items is useful for illustrating and explaining operating results and comparisons to prior periods. Management considers these non-GAAP measures in its decision-making to facilitate more relevant operating comparisons.

A reconciliation of GAAP operating income to non-GAAP operating income; GAAP net income to non-GAAP net income; and GAAP diluted earnings per share to non-GAAP diluted earnings per share is included as part of the supplemental disclosures to this release.

Conference Call

Electronic Arts will host a conference call on May 3, 2005 at 2:00 pm PT (5:00 pm ET) to review the results for the Company’s fourth quarter and fiscal year ended March 31, 2005. Listeners may access the conference call live via webcast (http://investor.ea.com). A webcast archive of the conference call will be available for one year at http://investor.ea.com.

Some statements set forth in this release, including the estimates under the heading “Business Outlook,” contain forward-looking statements that are subject to change. Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are subject to 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: competition in the interactive entertainment industry; the availability of an adequate supply of hardware platforms; the Company’s ability to predict consumer preferences among competing hardware platforms; consumer spending trends; the seasonal and cyclical nature of the interactive game segment; timely development and release of Electronic Arts’ products; the Company’s ability to manage expenses during fiscal year 2006; the Company’s ability to secure licenses to valuable entertainment properties on favorable terms; the Company’s ability to attract and retain key personnel; changes in the Company’s effective tax rates; 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; fluctuations in foreign exchange rates; and other factors

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described in the Company’s annual report on Form 10-K for the year ended March 31, 2004 and quarterly report on Form 10-Q for the quarter ended December 31, 2004. Electronic Arts does not intend to update these forward-looking statements, including those made under the “Business Outlook” heading.

Note to Editors: Need for Speed, The Sims, John Madden Football, Burnout and Black are trademarks or registered trademarks of Electronic Arts Inc. in the U.S. and/or other countries. RenderWare is a trademark or registered trademark of Criterion Software Ltd. The Lord of the Rings and the names of the characters, items, events and places therein are trademarks of the Saul Zaentz Company d/b/a Tolkien Enterprises under license to New Line Productions, Inc. HARRY POTTER and all related characters and elements are trademarks of and ^© Warner Bros. Entertainment Inc. TimeSplitters Future Perfect is a trademark of Free Radical Design Ltd. NBA, NFL, and FIFA are trademarks of their respective owners and used with permission. PSP is a trademark of Sony Computer Entertainment Inc. All other trademarks are the property of their respective owners.

For additional information, please contact:
Tricia Gugler	Jeff Brown
Director, Investor Relations	Vice President, Corporate Communications
650-628-7327	650-628-7922

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in millions, except per share data)

	Three Months Ended March 31,				Year Ended March 31,
	2005		2004		2005		2004 (a)
Net revenue	$	553	$	598	$	3,129	$	2,957
Cost of goods sold		233		226		1,197		1,103
Gross profit		320		372		1,932		1,854
Operating expenses:
Marketing and sales		87		67		391		370
General and administrative		66		46		221		185
Research and development		161		155		633		511
Amortization of intangibles		1		1		3		3
Acquired in-process technology		4		—		13		—
Restructuring charges		1		9		2		9
Total operating expenses		320		278		1,263		1,078
Operating income		—		94		669		776
Interest and other income, net		12		6		56		21
Income before provision for income taxes and minority interest		12		100		725		797
Provision for income taxes		4		10		221		220
Income before minority interest		8		90		504		577
Minority interest		—		—		—		—
Net income	$	8	$	90	$	504	$	577
Net income:
Basic	$	8	$	90	$	504	$	577
Diluted	$	8	$	90	$	504	$	577
Earnings per share:
Basic	$	0.02	$	0.30	$	1.65	$	1.95
Diluted	$	0.02	$	0.29	$	1.59	$	1.87
Number of shares used in computation:
Basic		309		300		305		295
Diluted		322		313		318		308

^(a) Derived from audited financial statements.

Non-GAAP Results (in millions, except per share data)

The following table shows the Company’s non-GAAP results reconciled to the Generally Accepted Accounting Principles (“GAAP”) Condensed Consolidated Statements of Operations. The Company’s non-GAAP results do not include amortization of intangibles, employee stock-based compensation, acquired in-process technology, restructuring charges, asset impairment charges, certain non-recurring litigation expenses and other-than-temporary impairment of investments in affiliates and their related income tax effect. The three months and year ending March 31, 2004 also exclude the impact of a one-time income tax benefit.

	Three Months Ended March 31,						Year Ended March 31,
	2005			2004			2005			2004
Net income	$	8		$	90		$	504		$	577
Amortization of intangibles		1			1			3			3
COGS amortization of intangibles		2			—			3			—
Employee stock-based compensation		2			—			6			—
Acquired in-process technology		3			—			13			—
Restructuring charges		1			9			1			10
Certain non-recurring litigation expenses		21			—			21			—
Income taxes effect on the above items		(8	)		(3	)		(8	)		(4	)
Income tax adjustment		—			(20	)		—			(20	)
Non-GAAP net income	$	30		$	77		$	543		$	566
Non-GAAP diluted earnings per share	$	0.09		$	0.25		$	1.71		$	1.84
Number of shares used in diluted earnings per share computation		322			313			318			308

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in millions)

	March 31, 2005		March 31, 2004 (a)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	2,958	$	2,414
Marketable equity securities		140		1
Receivables, net of allowances of $162 million and $155 million, respectively		296		212
Inventories		62		55
Deferred income taxes		86		84
Other current assets		164		163
Total current assets		3,706		2,929
Property and equipment, net		353		298
Investment in affiliates		10		14
Goodwill		153		92
Other intangibles, net		36		18
Deferred income taxes		19		41
Other assets		93		72
Total Assets	$	4,370	$	3,464
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	134	$	114
Accrued and other liabilities		694		630
Total current liabilities		828		744
Other liabilities		33		42
Total liabilities		861		786
Minority interest		11		—
Stockholders’ equity:
Common stock		3		3
Paid-in capital		1,434		1,154
Retained earnings		2,005		1,501
Accumulated other comprehensive income		56		20
Total stockholders’ equity		3,498		2,678
Total Liabilities, Minority Interest and Stockholders’ Equity	$	4,370	$	3,464

^(a) Derived from audited financial statements.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions)

	Three Months Ended March 31,						Year Ended March 31,
	2005			2004			2005			2004 (a)
OPERATING ACTIVITIES
Net income	$	8		$	90		$	504		$	577
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		22			18			75			78
Non-cash restructuring and asset impairment charges		—			1			—			2
Other-than-temporary impairment of investments in affiliates		—			(1	)		—			—
Realized losses on investments and sale of property and equipment		2			2			(8	)		2
Stock-based compensation		2			—			6			1
Tax benefit from exercise of stock options		40			27			75			69
Acquired in-process technology		4			—			13			—
Other operating activities		(2	)		—			—			(2	)
Change in assets and liabilities:
Receivables, net		608			593			(80	)		(194	)
Inventories		17			3			(14	)		(23	)
Other assets		(20	)		(68	)		(35	)		(61	)
Accounts payable		(56	)		(31	)		28			23
Accrued and other liabilities		(176	)		(21	)		46			191
Deferred income taxes		25			(51	)		24			6
Net cash provided by operating activities		474			562			634			669
INVESTING ACTIVITIES
Capital expenditures		(44	)		(34	)		(126	)		(90	)
Proceeds from sale of property and equipment		—			1			16			1
Proceeds from sale of marketable equity securities		—			2			4			2
Purchase of marketable equity securities		(90	)		—			(90	)		—
Purchase of investment in affiliates		—			—			(2	)		(1	)
Proceeds from sale of investment in affiliates		—			—			—			8
Proceeds from maturities and sales of short-term investments		99			1,610			996			2,883
Purchase of short-term investments		(194	)		(620	)		(2,442	)		(2,511	)
Acquisition of subsidiary, net of cash acquired		(22	)		(2	)		(81	)		(3	)
Other investing activities		1			(1	)		(1	)		(1	)
Net cash provided by (used in) investing activities		(250	)		956			(1,726	)		288
FINANCING ACTIVITIES
Proceeds from sale of common stock through employee stock plans and other plans		94			62			241			228
Repurchase and retirement of common stock		(10	)		—			(41	)		—
Other financing activities		—			—			—			(3	)
Net cash provided by financing activities		84			62			200			225
Effect of foreign exchange on cash and cash equivalents		(1	)		(3	)		12			18
Increase (decrease) in cash and cash equivalents		307			1,577			(880	)		1,200
Beginning cash and cash equivalents		963			573			2,150			950
Ending cash and cash equivalents		1,270			2,150			1,270			2,150
Short-term investments		1,688			264			1,688			264
Ending cash, cash equivalents and short-term investments	$	2,958		$	2,414		$	2,958		$	2,414

^(a) Derived from audited financial statements.

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations

(in millions, except per share data)

The following tables show the Company’s non-GAAP results reconciled to the Generally Accepted Accounting Principles (“GAAP”) Condensed Consolidated Statements of Operations. The Company’s non-GAAP results do not include amortization of intangibles, employee stock-based compensation, acquired-in-process technology, restructuring charges, asset impairment charges, certain non-recurring litigation expenses, and other-than-temporary impairment of investments in affiliates, and their related income tax effect. The three months and year ended March 31, 2004 also exclude the impact of a one-time income tax adjustment.

	Q4 FY04			Q1 FY05			Q2 FY05			Q3 FY05			Q4 FY05
QUARTERLY RESULTS
Operating Income
GAAP operating income	$	94		$	25		$	125		$	519		$	—
Adjustments:
Amortization of intangibles		1			1			—			1			1
COGS amortization of intangibles		—			—			—			1			2
Employee stock-based compensation		—			—			—			4			2
Acquired-in-process technology		—			—			—			10			4
Restructuring charges		9			—			—			—			1
Asset impairment charges		—			—			—			—			—
Certain non-recurring litigation expenses		—			—			—			—			21
Total adjustments		10			1			—			16			31
Non-GAAP operating income	$	104		$	26		$	125		$	535		$	31
Non-GAAP operating income margin - % of net revenue		17	%		6	%		18	%		37	%		6	%
Net Income
GAAP net income	$	90		$	24		$	97		$	375		$	8
Adjustments:
Amortization of intangibles		1			1			1			1			1
COGS amortization of intangibles		—			—			—			1			2
Employee stock-based compensation		—			—			—			4			2
Acquired-in-process technology		—			—			—			10			3
Restructuring charges		9			—			—			—			1
Asset impairment charges		—			—			—			—			—
Certain non-recurring litigation expenses		—			—			—			—			21
Other-than-temporary impairment of investment in affiliates		—			—			—			—			—
Income taxes effect on the above items		(3	)		—			—			—			(8	)
Income tax adjustment		(20	)		—			—			—			—
Total adjustments		(13	)		1			1			16			22
Non-GAAP net income	$	77		$	25		$	98		$	391		$	30
Non-GAAP net income margin - % of net revenue		13	%		6	%		14	%		27	%		5	%
GAAP diluted earnings per share	$	0.29		$	0.08		$	0.31		$	1.18		$	0.02
Non-GAAP diluted earnings per share	$	0.25		$	0.08		$	0.31		$	1.23		$	0.09
Shares used in diluted earnings per share computation		313			316			316			317			322
TRAILING TWELVE MONTH RESULTS
Operating Income
GAAP operating income	$	776		$	779		$	802		$	763		$	669
Adjustments:
Amortization of intangibles		3			4			3			3			3
COGS amortization of intangibles		—			—			—			1			3
Employee stock-based compensation		—			—			—			4			6
Acquired-in-process technology		—			—			—			10			14
Restructuring charges		9			9			9			9			1
Asset impairment charges		—			—			—			—			—
Certain non-recurring litigation expenses		—			—			—			—			21
Total adjustments		12			13			12			27			48
Non-GAAP operating income	$	788		$	792		$	814		$	790		$	717
Non-GAAP operating income margin - % of net revenue		27	%		26	%		25	%		25	%		23	%

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ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations

(in millions, except per share data)

The following tables show the Company’s non-GAAP results reconciled to the Generally Accepted Accounting Principles (“GAAP”) Condensed Consolidated Statements of Operations. The Company’s non-GAAP results do not include amortization of intangibles, employee stock-based compensation, acquired-in-process technology, restructuring charges, asset impairment charges, certain non-recurring litigation expenses, and other-than-temporary impairment of investments in affiliates, and their related income tax effect. The three months and year ended March 31, 2004 also exclude the impact of a one-time income tax adjustment.

	Q4 FY04			Q1 FY05			Q2 FY05			Q3 FY05			Q4 FY05
TRAILING TWELVE MONTH RESULTS
Net Income
GAAP net income	$	577		$	583		$	604		$	587		$	504
Adjustments:
Amortization of intangibles		3			3			4			3			3
COGS amortization of intangibles		—			—			—			1			3
Employee stock-based compensation		—			—			—			4			6
Acquired-in-process technology		—			—			—			10			13
Restructuring charges		10			9			9			9			1
Asset impairment charges		—			—			—			—			—
Certain non-recurring litigation expenses		—			—			—			—			21
Other-than-temporary impairment of investment in affiliates		—			—			—			—			—
Income taxes effect on the above items		(4	)		(3	)		(4	)		(4	)		(8	)
Income tax adjustment		(20	)		(20	)		(20	)		(20	)		—
Total adjustments		(11	)		(11	)		(11	)		3			39
Non-GAAP net income	$	566		$	572		$	593		$	590		$	543
Non-GAAP net income margin - % of net revenue		19	%		19	%		18	%		19	%		17	%
GAAP diluted earnings per share	$	1.87		$	1.88		$	1.94		$	1.86		$	1.59
Non-GAAP diluted earnings per share	$	1.84		$	1.84		$	1.90		$	1.87		$	1.71

9

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

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

	Q4 FY04			Q1 FY05			Q2 FY05			Q3 FY05			Q4 FY05			YOY % Growth
CONSOLIDATED FINANCIAL DATA
Net revenue		598			432			716			1,428			553		(8	)%
Net revenue - trailing twelve months (“TTM”)		2,957			3,035			3,221			3,174			3,129		6	%
Gross profit		372			255			432			925			320		(14	)%
Gross margin - % of net revenue		62	%		59	%		60	%		65	%		58	%
Gross profit - TTM		1,854			1,906			2,021			1,984			1,932		4	%
Gross margin - TTM % of net revenue		63	%		63	%		63	%		63	%		62	%
Operating income		94			25			125			519			—		(100	)%
Operating income margin - % of net revenue		16	%		6	%		17	%		36	%		—
Operating income - TTM		776			779			802			763			669		(14	)%
Operating income margin - TTM % of net revenue		26	%		26	%		25	%		24	%		21	%
Net income		90			24			97			375			8		(92	)%
Diluted earnings per share	$	0.29		$	0.08		$	0.31		$	1.18		$	0.02		(93	)%
Net income - TTM		577			583			604			587			504		(13	)%
Diluted earnings per share - TTM	$	1.87		$	1.88		$	1.94		$	1.86		$	1.59		(15	)%
Non-GAAP operating income (a)		104			26			125			535			31		(71	)%
Non-GAAP operating income margin - % of net revenue		17	%		6	%		18	%		37	%		6	%
Non-GAAP operating income - TTM (a)		788			792			814			790			717		(9	)%
Non-GAAP operating income margin - TTM % of net revenue		27	%		26	%		25	%		25	%		23	%
Non-GAAP net income (a)		77			25			98			391			30		(61	)%
Non-GAAP diluted earnings per share (a)	$	0.25		$	0.08		$	0.31		$	1.23		$	0.09		(64	)%
Non-GAAP net income - TTM (a)		566			572			593			590			543		(4	)%
Non-GAAP diluted earnings per share - TTM (a)	$	1.84		$	1.84		$	1.90		$	1.87		$	1.71		(7	)%
CASH FLOW DATA
Operating cash flow		562			(66	)		89			137			474		(16	)%
Operating cash flow - TTM		669			638			664			722			634		(5	)%
Capital expenditures		34			26			19			37			44		30	%
Capital expenditures - TTM		90			104			106			116			126		41	%
BALANCE SHEET DATA
Cash, cash equivalents and short term investments		2,414			2,369			2,490			2,565			2,958		23	%
Marketable equity securities		1			2			—			4			140		11353	%
Receivables, net		212			170			379			892			296		40	%
Inventories		55			53			79			84			62		12	%
OTHER
Employees		4,773			4,813			5,104			5,669			6,122		28	%
Diluted weighted-average shares		313			316			316			317			322

^(a) Please see attached Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations.

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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)

	Q4 FY04		Q1 FY05		Q2 FY05		Q3 FY05		Q4 FY05		YOY % Growth
GEOGRAPHIC REVENUE MIX
North America Revenue	299		211		473		692		288		(4	)%
International Revenue	299		221		243		736		265		(11	)%
Europe Revenue	249		190		210		666		218		(12	)%
Asia Pacific Revenue	50		31		33		70		47		(7	)%
Net Revenue	598		432		716		1,428		553		(8	)%
GEOGRAPHIC REVENUE MIX - as a % of Net Revenue
North America Revenue	50	%	49	%	66	%	48	%	52	%
International Revenue	50	%	51	%	34	%	52	%	48	%
Europe Revenue	41	%	44	%	29	%	47	%	40	%
Asia Pacific Revenue	9	%	7	%	5	%	5	%	8	%
Net Revenue	100	%	100	%	100	%	100	%	100	%
PLATFORM REVENUE MIX
Sony PlayStation 2	244		162		312		661		196		(20	)%
Xbox	80		57		142		233		83		5	%
Nintendo GameCube	50		26		38		109		37		(25	)%
Other consoles	3		2		1		6		1		(80	)%
Total Consoles	377		247		493		1,009		317		(16	)%
PC	76		67		141		239		85		12	%
PSP	—		—		—		—		18		N/A
Game Boy Advance	14		18		10		39		9		(32	)%
Nintendo DS	—		—		—		16		7		N/A
Game Boy Color	—		—		—		—		—		(100	)%
Total Mobility	14		18		10		55		34		140	%
Co-publishing and Distribution	112		67		49		79		89		(21	)%
Subscription Services	13		13		13		14		16		27	%
Licensing, Advertising & Other	6		20		10		32		12		85	%
Total Internet Services, Licensing & Other	19		33		23		46		28		46	%
Net Revenue	598		432		716		1,428		553		(8	)%
PLATFORM REVENUE MIX - as a % of Net Revenue
Sony PlayStation 2	41	%	38	%	43	%	46	%	35	%
Xbox	13	%	13	%	20	%	16	%	15	%
Nintendo GameCube	9	%	6	%	5	%	8	%	7	%
Other consoles	0	%	0	%	0	%	1	%	0	%
Total Consoles	63	%	57	%	68	%	71	%	57	%
PC	13	%	15	%	20	%	17	%	16	%
PSP	0	%	0	%	0	%	0	%	3	%
Game Boy Advance	2	%	4	%	1	%	3	%	2	%
Nintendo DS	0	%	0	%	0	%	1	%	1	%
Game Boy Color	0	%	0	%	0	%	0	%	0	%
Total Mobility	2	%	4	%	1	%	4	%	6	%
Co-publishing and Distribution	19	%	16	%	7	%	5	%	16	%
Subscription Services	2	%	3	%	2	%	1	%	3	%
Licensing, Advertising & Other	1	%	5	%	2	%	2	%	2	%
Total Internet Services, Licensing & Other	3	%	8	%	4	%	3	%	5	%
Net Revenue	100	%	100	%	100	%	100	%	100	%

11

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

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

	Q4 FY04	Q1 FY05	Q2 FY05	Q3 FY05	Q4 FY05	YOY % Growth
Platform SKU Release Mix
Sony PlayStation 2	4	3	9	9	6	50	%
Xbox	3	3	8	9	6	100	%
Nintendo GameCube	3	1	7	7	5	67	%
Other consoles	—	—	1	1	—	N/A
Total Consoles	10	7	25	26	17	70	%
PC	1	3	6	7	5	400	%
PSP	—	—	—	—	3	N/A
Game Boy Advance	—	1	2	4	—	N/A
Nintendo DS	—	—	—	3	—	N/A
Total Mobility	—	1	2	7	3	N/A
Total SKUs	11	11	33	40	25	127	%

12

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Fact Sheet for Q4 Fiscal 2005

Q4 Product Releases	Platform
· MVP Baseball™ 2005	PlayStation® 2
· UEFA Champions League 2004/2005	PlayStation 2
· FIFA Street	PlayStation 2
· EA SPORTS™ Fight Night Round 2	PlayStation 2
· NBA STREET V3	PlayStation 2
· EA SPORTS™ Rugby 2005	PlayStation 2
· MVP Baseball 2005	Xbox®
· UEFA Champions League 2004/2005	Xbox
· FIFA Street	Xbox
· EA SPORTS Fight Night Round 2	Xbox
· NBA STREET V3	Xbox
· EA SPORTS Rugby 2005	Xbox
· MVP Baseball 2005	Nintendo GameCube™
· UEFA Champions League 2004/2005	Nintendo GameCube
· FIFA Street	Nintendo GameCube
· EA SPORTS Fight Night Round 2	Nintendo GameCube
· NBA STREET V3	Nintendo GameCube
· MVP Baseball 2005	PC
· UEFA Champions League 2004/2005	PC
· NASCAR® SimRacing™	PC
· EA SPORTS Rugby 2005	PC
· The Sims™ 2 University	PC
· Need for Speed™ Underground Rivals	PSP™
· NFL STREET 2: Unleashed	PSP
· Tiger Woods PGA TOUR® 2005	PSP
Co-pub, International only and Others (not in SKU count)
TimeSplitters Future Perfect™	PlayStation 2
TimeSplitters Future Perfect	Nintendo GameCube
TimeSplitters Future Perfect	Xbox
Oddworld Stranger’s Wrath™	Xbox
All trademarks are the property of their respective owners.

13

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Schedule of Earnings Adjusted for Stock-Based Compensation

(in millions, except per share data)

Had the Company’s stock-based compensation plans been measured on the estimated fair value at the grant dates in accordance with the provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, we estimate that our reported net income (loss) and net earnings (loss) per share would have been the pro forma amounts indicated below:

	Three Months Ended March 31,						Year Ended March 31,
	2005			2004			2005			2004
Net income - as reported	$	8		$	90		$	504		$	577
Stock-based compensation		(19	)		(28	)		(79	)		(97	)
Net income (loss) - pro forma	$	(11	)	$	62		$	425		$	480
Net earnings (loss) per share:
As reported - basic	$	0.02		$	0.30		$	1.65		$	1.95
Pro forma - basic	$	(0.04	)	$	0.21		$	1.39		$	1.63
As reported - diluted	$	0.02		$	0.29		$	1.59		$	1.87
Pro forma - diluted	$	(0.04	)	$	0.20		$	1.35		$	1.58

14