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Electronic Arts Inc.
Fiscal Year 2012
Proxy Statement and Annual Report

Table of contents

  • Page 1
    Electronic Arts Inc. Fiscal Year 2012 Proxy Statement and Annual Report

  • Page 2

  • Page 3
    Proxy Statement Notice of 2012 Annual Meeting and Proxy Statement

  • Page 4
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 5
    ...our Annual Report for the fiscal year ended March 31, 2012 with this Proxy Statement. We encourage you to read our Annual Report. It includes our audited financial statements and provides information about our business. Your vote is important. Whether or not you plan to attend the Annual Meeting, we...

  • Page 6
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 7
    Notice of 2012 Annual Meeting of Stockholders DATE: TIME: July 26, 2012 2:00 p.m. local time PLACE: ELECTRONIC ARTS' HEADQUARTERS Building 250* 209 Redwood Shores Parkway Redwood City, CA 94065 * Please note: Building 250 is located on the headquarters campus at 250 Shoreline Drive MATTERS TO BE ...

  • Page 8
    ... Page PROXY STATEMENT ...VOTING YOUR SHARES ...COMMONLY ASKED QUESTIONS AND ANSWERS ...PROPOSALS TO BE VOTED ON ...PROPOSAL 1: ELECTION OF DIRECTORS ...Director Biographies ...Director Independence ...Board of Directors, Board Meetings, and Committees ...Director Compensation and Stock Ownership...

  • Page 9
    ... the U.S. Securities and Exchange Commission (the "SEC"), we are providing stockholders with access to our proxy materials by providing such documents on the internet. The Notice of 2012 Annual Meeting of Stockholders, Proxy Statement, our 2012 Annual Report and form of proxy were distributed and/or...

  • Page 10
    ...ñas to the Board of Directors to hold office for a one-year term; • Approve amendments to the Company's 2000 Equity Incentive Plan to increase the number of shares of common stock authorized under the Equity Plan by 6,180,000 shares, and to increase the limit on the number of shares that may be...

  • Page 11
    ... such a statement to the Company's Secretary at our corporate headquarters address listed on the Notice of 2012 Annual Meeting of Stockholders); • Signing another proxy with a later date; • Voting by telephone or on the internet at any time prior to 11:59 p.m. Eastern Time on July 25, 2012 (your...

  • Page 12
    ...sign and return your proxy without voting instructions, your shares will be voted as recommended by the Board of Directors. What is the effect of a "broker non-vote" on the proposals to be voted on at the 2012 Annual Meeting? If your shares are not registered in your name and you do not provide your...

  • Page 13
    ... days after the Annual Meeting. Once filed, you can request a copy of the Form 8-K by contacting our Investor Relations department at (650) 628-7352 or the SEC at (800) SEC-0330 for the location of its nearest public reference room. You can also get a copy on the internet at http://investor.ea.com...

  • Page 14
    ... of the 2012 Annual Meeting of Stockholders, and therefore will not stand for re-election. Accordingly, immediately upon Ms. Srere's retirement at the commencement of the 2012 Annual Meeting, the authorized size of the Board of Directors will be reduced to ten directors. The Board of Directors has...

  • Page 15
    ...a board member on numerous companies, both public and private, and is familiar with a full range of corporate and board functions. His many years of experience in helping companies shape and implement strategy provide the Board of Directors with useful perspectives on matters such as risk management...

  • Page 16
    ... service provider, from 2000 until June 2005. Mr. Maffei was the Chief Financial Officer for Microsoft Corporation from 1997 to 2000. Mr. Maffei currently serves on the Board of Directors of Liberty Interactive Corporation, Liberty Media Corporation, Barnes & Noble, Inc., Live Nation Entertainment...

  • Page 17
    ...a director. Richard A. Simonson Director since 2006, Lead Director since 2009 Mr. Simonson, age 53, served as President, Business Operations and Chief Financial Officer of Rearden Commerce from April 2011 through May 2012. From 2001 to 2010, Mr. Simonson held a number of executive 9 Proxy Statement

  • Page 18
    ... of Mobile Phones and Sourcing, Chief Financial Officer, and Vice President & Head of Customer Finance of Nokia. In 2001, Mr. Simonson was Managing Director of the Telecom & Media Investment Banking Group of Barclays Capital. Prior to joining Barclays Capital, Mr. Simonson spent 16 years at Bank of...

  • Page 19
    ...Mr. Simonson has served as Lead Director since 2009. Mr. Simonson was chosen by the independent directors of the Board of Directors to serve as Lead Director following the 2012 Annual Meeting of Stockholders for an additional one-year term ending with our 2013 Annual Meeting, subject to Mr. Simonson...

  • Page 20
    ...Stock Market Rules, as well as the independence requirements of the SEC. In the opinion of the Board of Directors, Mr. Maffei meets the criteria for an "audit committee financial expert" as set forth in applicable SEC rules. The Audit Committee met eight times in fiscal 2012. For further information...

  • Page 21
    ... Board of Directors meets the independence requirements of the NASDAQ Stock Market Rules. The Nominating and Governance Committee met seven times in fiscal 2012. In evaluating nominees for director to recommend to the Board of Directors, the Nominating and Governance Committee will take into account...

  • Page 22
    ... in writing to EA's Corporate Secretary not less than 120 calendar days prior to the anniversary of the date on which EA's proxy statement was released to stockholders in connection with the previous year's annual meeting (on or about February 8, 2013, for our 2013 Annual Meeting of Stockholders...

  • Page 23
    ... with the Board of Directors EA stockholders may communicate with the Board of Directors as a whole, with a committee of the Board of Directors, or with an individual director by sending a letter to EA's Corporate Secretary at Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065...

  • Page 24
    ... fiscal 2012, 10,000 restricted stock units were granted under the Equity Plan to each of our non-employee directors who were re-elected at the 2011 Annual Meeting of Stockholders on July 28, 2011. Mr. Hoag, who was appointed to the Board of Directors as of September 6, 2011, was granted a pro-rated...

  • Page 25
    ... year ended March 31, 2012. Each non-employee director standing for re-election at the 2011 Annual Meeting received an RSU grant of 10,000 shares of EA common stock with a grant date fair value of $225,600 based on a closing price of $22.56 for our common stock on the NASDAQ Global Select Market...

  • Page 26
    ... and Employee Benefit Plans," of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012. The aggregate number of unexercised stock options held by each of our non-employee directors as of March 31, 2012 (the last day of fiscal 2012) was...

  • Page 27
    ..., officers and directors. Since the Equity Plan's adoption, 114,685,000 shares of common stock have been reserved for issuance. For more information regarding the Equity Plan, please read the summary of its material terms, as proposed to be amended, included as Appendix B of this Proxy Statement...

  • Page 28
    ... of the Annual RSU Limit from the Equity Plan: with respect to Mr. Gibeau, the Committee has approved an award consisting of 100,000 RSUs vesting as to one-third of the shares on each of May 18, 2013, May 18, 2014, and May 18, 2015 provided Mr. Gibeau remains employed with the Company at each...

  • Page 29
    ... year is required to be reported to our stockholders under applicable securities rules by reason of such employee being among the three highest compensated officers for the taxable year (other than our principal executive officer or the principal financial officer). Accordingly, Electronic Arts...

  • Page 30
    ...of revenue; net income; earning per share; total stockholder return; market share; return on assets or net assets; the company's stock price; growth in stockholder value relative to a pre-determined index; return on equity; return on invested capital; cash flow (including free cash flow or operating...

  • Page 31
    ... amendments to the Executive Bonus Plan are subject to stockholder approval. Federal Income Tax Consequences Under present federal income tax law, an Executive Bonus Plan participant will be taxed at ordinary income rates on the cash bonus in the year in which such cash is received. If a participant...

  • Page 32
    ... executive officer other than Mr. Riccitiello, for whom this maximum is 1.0% of non-GAAP net income. Required Vote and Board of Directors' Recommendation Approval of this proposal requires the affirmative vote of a majority of the voting shares present at the meeting in person or by proxy and...

  • Page 33
    ... strategic objectives and create long-term stockholder value. The fiscal 2012 compensation of our NEOs reflected these core principles: • A significant portion of each NEO's cash compensation was based on the annual financial and operational performance of the Company and the NEO's business unit...

  • Page 34
    ... Company's 0.75% Convertible Senior Notes due 2016. In fiscal 2011, these fees relate to acquisition-related financial due diligence. Tax Fees: This category includes compliance services rendered for U.S. and foreign tax compliance and returns, and transfer pricing documentation, as well as planning...

  • Page 35
    ...them address the relevant issues and improves the quality of the audit. In appointing KPMG LLP as our independent auditors for fiscal 2013, the Audit Committee and the Board of Directors have considered the performance of KPMG LLP in fiscal 2012, as well as in prior years and have taken into account...

  • Page 36
    ...audit-related services paid to KPMG LLP in fiscal 2012 are compatible with maintaining KPMG LLP's independence. Required Vote and Board of Directors' Recommendation Approval of this proposal requires the affirmative vote of a majority of the voting shares present at the meeting in person or by proxy...

  • Page 37
    ... the Board of Directors in its oversight responsibilities relating to the integrity of EA's accounting policies, internal controls and financial reporting. The Audit Committee reviews EA's quarterly and annual financial statements prior to public earnings releases and submission to the SEC; reviews...

  • Page 38
    ... recommended to the Board of Directors that the audited consolidated balance sheets of the Company as of each of the last two years ended March 31, 2012 and the audited consolidated statements of operations, stockholders' equity and comprehensive loss, and cash flows of the Company for each of...

  • Page 39
    ...as otherwise indicated, the address for each of our directors and executive officers is c/o Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065. Shares Owned(1) Right to Acquire(2) Percent of Outstanding Shares(3) Stockholder Name Primecap Management Company(4) ...The Vanguard...

  • Page 40
    ... LP, of which Mr. Probst is a partner. Includes 1,700 shares of common stock held in trust for Mr. Riccitiello's minor children. Brown served as EA's Chief Financial Officer until his resignation on February 17, 2012. all executive officers and directors of EA as of May 18, 2012. (9) (10) Mr. (11...

  • Page 41
    ... Executive Vice President, Chief Financial Officer. FISCAL YEAR OVERVIEW In fiscal 2012, the Company continued to execute successfully on our multi-year strategy to transform from a business predominately based on packaged goods sales to a business that is centered on the digital distribution of...

  • Page 42
    ...Company's performance. We also set and achieved a number of operational and structural goals in fiscal 2012. These were: • Digital Expansion: We expanded the distribution of key products and our core brands into new markets, including mobile gaming on smart phones and social gaming on the internet...

  • Page 43
    ...on the number of months in fiscal 2012 that he was employed with the Company. A detailed explanation of the criteria used by the Committee to determine the actual fiscal 2012 bonus awards for each of our NEOs is provided below in the section titled "Individual NEO Compensation." Principle 2 - Equity...

  • Page 44
    ...the companies in the NASDAQ-100 Index on April 3, 2011 ("NASDAQ-100") over one-year (fiscal 2012), two-year (fiscal 2012 through 2013), and three-year (fiscal 2012 through 2014) measurement periods. TSR is determined based on a 90-day trailing average of the closing stock prices of the NASDAQ-100 at...

  • Page 45
    ...on the Company's financial performance, each NEO's business unit financial (if applicable), strategic and operational performance, market trends, and other factors unique to each individual, such as their role and experience. The Committee also considers the aggregate value of all three total direct...

  • Page 46
    ...The financial, strategic and operational performance of the Company and the NEO's relevant business unit (as applicable) during the prior fiscal year, fiscal 2011; • Each NEO's individual performance, as evaluated by our Chief Executive Officer with assistance from our Chief Talent Officer; • An...

  • Page 47
    ... FISCAL 2012 CEO COMPENSATION VALUATION Base Bonus Equity Total Proxy Statement Grant Date Fair Value of Total Direct Compensation Equity values reported in the "Summary Compensation" table ...Closing Stock Price Value of Total Direct Compensation Equity value of target RSUs granted in fiscal 2012...

  • Page 48
    ...both fiscal 2011 and 2012 and still employed by the Company at the end of fiscal 2012. The charts illustrate the portion of compensation that is linked to performance. Equity awards are shown using grant date fair value, as reported in the "Summary Compensation" table. Mr. Riccitiello 100% 100% Time...

  • Page 49
    ...the Company's total stockholder return to rank at the 60th percentile of the companies in the NASDAQ-100 in order to vest the target share amount. Based on the equity values reported in the "Summary Compensation" table, which value the performance-based RSUs at a premium above their closing price on...

  • Page 50
    .... Barker's cash bonus, the Committee took into account the Company's strong financial performance, including the non-GAAP net revenue and non-GAAP diluted earnings per share results for the fiscal year, as well as an overall evaluation of his fiscal 2012 strategic and operational achievements. Those...

  • Page 51
    ... for the product development, worldwide product management and marketing for all packaged goods and online offerings within the Company for EA SPORTS, EA Games, Maxis, BioWare, PopCap, and our Social/Mobile Studios. Previously, Mr. Gibeau had served for four years as head of the EA Games label. Base...

  • Page 52
    ... Officer of Electronic Arts. He had previously served as the President of the EA SPORTS label for nearly four years. As Chief Operating Officer, Mr. Moore provides strategic leadership for all global operations that enable the Company to bring products to market via retail and digital direct...

  • Page 53
    ... Vice President and Chief Technology Officer. In that role, he oversees the organization that is building and managing the Company's technological infrastructure for providing products and services directly to our consumers. Hiring Mr. Taneja was an important step in the business transformation...

  • Page 54
    ... Executive Bonus Plan for fiscal 2012. In his position as Senior Vice President, Chief Accounting Officer, Mr. Barker reported directly to the Company's Chief Financial Officer at the beginning of fiscal 2012 and did not participate in the Executive Bonus Plan for fiscal 2012. Cash bonuses payable...

  • Page 55
    ... per share guidance range. In addition, this funding reflected operational successes such as the development of blockbuster titles such as Battlefield 3, Mass Effect 3 and FIFA 12, the successful launch of Star Wars: The Old Republic, and our position as the number one publisher in Western markets...

  • Page 56
    ... of each of the companies in the NASDAQ-100 over one-year (fiscal 2012), two-year (fiscal 2012 through 2013), and three-year (fiscal 2012 through 2014) measurement periods. TSR is determined based on a 90-day trailing average of the closing stock prices of the NASDAQ-100 at the end of each...

  • Page 57
    ... the Company's business without being distracted by concerns about their job security in the event of a change of control and acts as an additional incentive for our executive officers to comply with their post-termination covenants. The Electronic Arts Inc. Key Employee Continuity Plan provides for...

  • Page 58
    ... have access to material, non-public information about the Company are prohibited from buying or selling shares of the Company's common stock during periods when the Company's trading window is closed (unless such transactions are made pursuant to a pre-approved Exchange Act Rule 10b5-1 trading plan...

  • Page 59
    ...Commission nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that EA specifically incorporates it by reference into a filing. The Committee has reviewed...

  • Page 60
    ... Officers" or "NEOs". Stock Awards ($)(1) Non-Equity Option Incentive Plan All Other Awards Compensation Compensation ($)(3) ($)(4) ($)(5) Name and Principal Position Fiscal Salary Year ($) Bonus ($) Total ($) JOHN S. RICCITIELLO ...2012 865,538 Chief Executive Officer 2011 800,000 2010...

  • Page 61
    ... 2010, 2011 and 2012 that were each paid during the subsequent fiscal year. Amount includes tax reimbursement with respect to a computer equipment bonus provided to each of the NEOs. Includes tax reimbursement related to relocation costs incurred in fiscal 2012 related to Mr. Moore's fiscal 2009...

  • Page 62
    ... RSUs multiplied by the closing price of our stock on the date of grant of $22.42 per share. Represents a sign-on bonus provided to Mr. Taneja at the time of hire. Mr. Brown resigned as EA's Chief Financial Officer and his employment terminated effective February 17, 2012. Represents the aggregate...

  • Page 63
    ... range from zero to 200% of the target award based on the Company's total stockholder return ("TSR") relative to the performance of each of the companies in the NASDAQ-100 Index on April 3, 2011 ("NASDAQ-100") over one-year (fiscal 2012), two-year (fiscal 2012 through 2013), and three-year (fiscal...

  • Page 64
    ... methodology and assumptions used to calculate fair value, see Note 14, "Stock-Based Compensation and Employee Benefit Plans", of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012. For additional information regarding the specific...

  • Page 65
    ... pursuant to EA's 2000 Equity Incentive Plan. The market value of the unvested time-based and performance-based RSU awards is determined by multiplying the number of unvested RSUs by $16.485, the closing price of the Company's common stock on March 30, 2012, the last trading day of fiscal 2012. For...

  • Page 66
    ... of each of the companies in the NASDAQ-100 over one-year (fiscal 2012), two-year (fiscal 2012 through 2013), and three-year (fiscal 2012 through 2014) measurement periods. TSR is determined based on a 90-day trailing average of the closing stock prices of the NASDAQ-100 at the end of each...

  • Page 67
    ... months from grant date and then one-fourth of the units on each of the first three anniversaries of the grant date. Mr. Brown resigned effective February 17, 2012. Pursuant to the terms of his RSU agreement, Mr. Brown's RSUs were cancelled upon his termination of employment. (9) Proxy Statement...

  • Page 68
    ...of RSUs is calculated by multiplying the number of RSUs vested by the prior day's closing price of EA common stock on the vest date. (2) (3) POTENTIAL PAYMENTS UPON CHANGE OF CONTROL Electronic Arts Key Employee Continuity Plan All employees at the level of Vice President and above are eligible to...

  • Page 69
    ... time-based restricted stock units, which will vest on June 30, 2013, subject to two exceptions. If the recipient's employment is terminated without "cause" by the Company or if the recipient resigns for "good reason" (as such terms are defined in the grant agreement), within one year of the change...

  • Page 70
    ... 30, 2012, the last trading day of our fiscal year and have excluded Mr. Brown who resigned effective February 17, 2012, and was not employed by the Company on the last day of fiscal 2012. The closing market price of our common stock on March 30, 2012 was $16.485 per share. Cash Award ($)(1) Stock...

  • Page 71
    ... the weighted-average exercise price. Includes (a) 10,270,930 shares available for issuance under the 2000 Equity Incentive Plan and (b) 5,671,885 shares available for purchase by our employees under the 2000 Employee Stock Purchase Plan. The total number of securities to be issued upon exercise of...

  • Page 72
    ..., with members of our Board of Directors: Google Inc., Film Roman, and Live Nation Worldwide, Inc. Mr. Huber is a Senior Vice President at Google. Mr. Maffei is Chief Executive Officer of Liberty Media Corporation which has an equity interest in Live Nation Worldwide's parent company. Film Roman is...

  • Page 73
    ... executive office no later than February 8, 2013. Stockholders who otherwise wish to present a proposal at the 2013 Annual Meeting of Stockholders must deliver written notice of the proposal to our Corporate Secretary c/o Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065...

  • Page 74
    ... be directed as follows: Stock Administration Department, Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065 - telephone number (650) 628-1500. OTHER BUSINESS The Board of Directors does not know of any other matter that will be presented for consideration at the Annual Meeting...

  • Page 75
    ... share data, unaudited) 2012 2011 2010 2009 GAAP net revenue ...$4,143 Change in deferred net revenue (packaged goods and digital content) . . 43 Non-GAAP net revenue ...$4,186 GAAP Wireless, Internet-derived, and Advertising (Digital) net revenue ...$1,159 Change in deferred net revenue (packaged...

  • Page 76
    ...'s core business, operating results or future outlook. Our 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...

  • Page 77
    ... period of game play. Internally, our 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 our operating performance, when planning, forecasting and analyzing future periods, and...

  • Page 78
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  • Page 79
    ... SEC on or about June 8, 2012. Unless otherwise indicated, capitalized terms used in this Appendix B shall have the meanings set forth in the text of the Equity Plan. Shares Subject to the Equity Plan The stock subject to issuance under the Equity Plan consists of shares of the Company's authorized...

  • Page 80
    ... or accrued for services rendered; (e) with respect only to purchases upon exercise of an option, and provided that a public market for the Company's stock exists: (1) subject to applicable laws, by a "same-day sale" commitment from the optionee and a National Association of Securities Dealers, Inc...

  • Page 81
    ... to exercise a SAR, but simply receives the net amount of the increase in stock price in the form of cash or stock. The exercise price for a SAR must be no less than 100% of the "fair market value" (as defined in the Equity Plan) of a share of common stock at the time the SAR is granted. In addition...

  • Page 82
    ...(n) total stockholder return; (o) market share; (p) return on assets or net assets; (q) the Company's stock price; (r) growth in stockholder value relative to a pre-determined index; (s) return on equity; (t) return on invested capital; (u) cash flow (including free cash flow or operating cash flows...

  • Page 83
    2012 Annual Report on Form 10-K Annual Report

  • Page 84
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  • Page 85
    ... the Act: Title of Each Class Common Stock, $0.01 par value Name of Each Exchange on Which Registered Annual Report NASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in...

  • Page 86
    ELECTRONIC ARTS INC. 2012 FORM 10-K ANNUAL REPORT Table of Contents Page PART I Item 1 Business ...Item 1A Risk Factors ...Item 1B Unresolved Staff Comments ...Item 2 Properties ...Item 3 Legal Proceedings ...Item 4 Mine Safety Disclosures ...PART II Item 5 Market for Registrant's Common Equity, ...

  • Page 87
    ... download our PC games (and those of other publishers) directly through our Origin online platform, as well as through third party online download stores and services, including through Sony's PlayStation Network and Microsoft's Xbox LIVE Marketplace; We provide games for mobile devices and Internet...

  • Page 88
    ... popular sports product, FIFA Soccer, is released each year for consoles, PCs, mobile phones, tablets and Facebook. Other products, such as The Sims and Battlefield are sequeled on a less-frequent basis. Platforms Our ability to publish games across multiple platforms, through multiple distribution...

  • Page 89
    ... free-to-play games and game sites. In addition, we offer our consumers the ability to play a game across platforms on multiple devices. On a non-GAAP basis, our digital revenue has grown significantly from fiscal year 2009 to fiscal year 2012 and the average revenue of our ten best-selling brands...

  • Page 90
    ... our studios and Global Publishing on digital marketing, customer acquisition and the cross promotion of products and services. EA Games EA Games is home to the largest number of our studios and development teams, which together create an expansive and diverse portfolio of games and related content...

  • Page 91
    ... and Android. Playfish generates revenue through sales of digital content and Internet-based advertising. Pogo. Through our Pogo online service, we offer casual games such as card, puzzle and word games on www.pogo.com, as well as on Facebook and other platforms. In addition to paid subscriptions...

  • Page 92
    MMO game business, our primary competitor is Activision Blizzard. Competing providers of other kinds of online games include Big Fish, Nexon, Tencent and Zynga and other providers of games on social networking platforms such as Facebook. Intellectual Property Like other entertainment companies, our ...

  • Page 93
    ... mass market retailers (such as Wal-Mart), electronics specialty stores (such as Best Buy) or game software specialty stores (such as GameStop). Our direct sales to GameStop Corp. represented approximately 15 percent, 16 percent and 16 percent of total net revenue in fiscal years 2012, 2011 and 2010...

  • Page 94
    ...Vice President, Chief Accounting Officer President, EA Labels Chief Operating Officer Chief Technology Officer Executive Vice President, EA Games Label Executive Vice President, EA SPORTS Executive Vice President, Digital Executive Vice President, Global Publishing Executive Vice President, Business...

  • Page 95
    ... was named President, Chief Operating Officer in August 2011. Prior to that time, he served as President, EA SPORTS, from September 2007. From January 2003 until he joined Electronic Arts, Mr. Moore was with Microsoft where he served as head of Xbox marketing and was later named as Corporate Vice...

  • Page 96
    ... available free of charge on the Investor Relations section of our website at http://ir.ea.com as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission ("SEC"). Except as expressly set forth in this Form 10-K annual report, the...

  • Page 97
    ...distribute: in fiscal year 2011, we published 36 primary packaged goods titles, and in fiscal year 2012, we published 22 primary packaged goods titles, including our MMO role-playing game Star Wars: The Old Republic. In fiscal year 2013, we expect to release 14 primary packaged goods titles and plan...

  • Page 98
    ... of new platforms and business models, including online distribution of full games and additional content, free-to-play games supported by advertising and/or micro-transactions on social networking services and subscription services such as our MMO role-playing game Star Wars: The Old Republic...

  • Page 99
    ... key business partners also face these same risks and any security breaches of their system could adversely impact our ability to offer our products and services through their platforms, resulting in a loss of meaningful revenues. In addition, the rate of privacy law-making is accelerating globally...

  • Page 100
    ... marketing for our products and services fail to resonate with our customers, particularly during the critical holiday season or during other key selling periods, or if advertising rates or other media placement costs increase, these factors could have a material adverse impact on our business and...

  • Page 101
    ... and provided to customers. For our digital products and services delivered direct to the consumers via Sony's PlayStation Network and Microsoft's Xbox LIVE Marketplace, the hardware licensor controls the distribution of these titles. These hardware licensors are also among our chief competitors...

  • Page 102
    ... many of our other key franchises, such as Star Wars: The Old Republic, are based on film and literary licenses and our Hasbro products are based on a license for certain of Hasbro's toy and game properties. In addition, some of our successful products in fiscal year 2011, Bulletstorm, Crysis 2, and...

  • Page 103
    ... to combat piracy, protect intellectual property and prohibit the circumvention of technological protection measures could make it more difficult for us to adequately protect against piracy. These factors could have a negative effect on our growth and profitability in the future. 19 Annual Report

  • Page 104
    ... are a fundamental part of our business. For the fiscal year ended March 31, 2012, international net revenue comprised 52 percent of our total net revenue. We expect international sales to continue to account for a significant portion of our total net revenue. Such sales may be subject to unexpected...

  • Page 105
    ... general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; and • place us at a competitive disadvantage relative to our competitors with less debt. Further, the Notes are subject to a net share settlement feature, which means...

  • Page 106
    ..., as well as other factors. Beginning in fiscal year 2009, we recorded a valuation allowance against most of our U.S. deferred tax assets. We expect to provide a valuation allowance on future U.S. tax benefits until we can sustain a level of profitability or until other significant positive evidence...

  • Page 107
    ... of the online service period may change and we could be required to recognize revenue over a longer period of time. As we enhance, expand and diversify our business and product offerings, the application of existing or future financial accounting standards, particularly those relating to the...

  • Page 108
    ...material), to changes in securities analysts' earnings estimates or ratings, to our results or future financial guidance falling below our expectations and analysts' and investors' expectations, to factors affecting the entertainment, computer, software, Internet, media or electronics industries, to...

  • Page 109
    ...000-square-foot Redwood Shores headquarters facilities located in Redwood City, California which includes a product development studio and administrative and sales functions. We also own a 418,000square-foot product development studio facility in Burnaby, Canada. In addition to the properties we own...

  • Page 110
    ...and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol "EA". Our symbol changed from "ERTS" to "EA" on December 20, 2011. The following table sets forth the quarterly high and low sales price per share of our common...

  • Page 111
    ... $100 $80 Annual Report $60 $40 $20 $0 3/07 3/08 3/09 3/10 3/11 3/12 Electronic Arts, Inc. NASDAQ Composite S&P 500 RDG Technology Composite * Based on $100 invested on March 31, 2007 in stock or index, including reinvestment of dividends. March 31, 2009 2010 2007 2008 2011 2012 Electronic...

  • Page 112
    ..., except per share data) STATEMENTS OF OPERATIONS DATA 2012 2011 Year Ended March 31, 2010(a) 2009 2008 Net revenue ...Cost of revenue ...Gross profit ...Operating expenses: Research and development ...Marketing and sales ...General and administrative ...Acquisition-related contingent consideration...

  • Page 113
    ... from others (e.g., FIFA, Madden NFL, and Star Wars: The Old Republic). Our goal is to turn our core intellectual properties into year-round businesses available on a range of platforms. Our products and services may be purchased through physical and online retailers, platform providers such as...

  • Page 114
    ... products, such as our MMO role-playing game Star Wars: The Old Republic. The revenues we derive from these services has become increasingly more significant year-over-year. Our service revenue represented 13 percent, 8 percent, and 6 percent of total net revenue in fiscal year 2012, 2011, and 2010...

  • Page 115
    ... pre-arranged stock trading plans. During the fiscal year 2012, we repurchased and retired approximately 25 million shares of our common stock for approximately $471 million, net of commissions. International Operations and Foreign Currency Exchange Impact. International sales (revenue derived from...

  • Page 116
    ... product and relating offerings for one combined price. Generally, we do not have VSOE for the software-related offerings and thus, we defer net revenue from sales of these games and recognize the revenue from the bundled sales games over the period the offering will be provided (the "offering...

  • Page 117
    ... selling prices and related discounts, market conditions, customer classes, sales channels and other factors. As the result of adopting ASU 2009-13 and ASU 2009-14, for the year ended March 31, 2012, we recognized $23 million more revenue than would have been recognized under previous accounting...

  • Page 118
    ... which operating platforms will be successful in the marketplace. Also, our revenue and earnings are dependent on our ability to meet our product release schedules. On January 1, 2012, we adopted ASU 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08...

  • Page 119
    ... stock of publicly traded companies, both are accounted for as available-for-sale securities. Unrealized gains and losses on our short-term investments and marketable equity securities are recorded as a component of accumulated other comprehensive income in stockholders' equity, net of tax, until...

  • Page 120
    ...in U.S. GAAP and IFRSs. The guidance limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums...

  • Page 121
    ... changes in our international corporate structure, changes in the geographic location of business functions or assets, changes in the geographic mix and amount of income, as well as changes in our agreements with tax authorities, valuation allowances, applicable accounting rules, applicable tax laws...

  • Page 122
    ... month-end. Comparison of Fiscal Year 2012 to Fiscal Year 2011 Net Revenue Net revenue consists of sales generated from (1) video games sold as packaged goods or as digital downloads and designed for play on video game consoles (such as the PLAYSTATION 3, Xbox 360 and Wii), and PCs, (2) video games...

  • Page 123
    ... with the FIFA and The Sims franchises, as well as Star Wars: The Old Republic. This increase was partially offset by a $31 million decrease in service revenue generated by our Pogo-branded online game services and the Warhammer and Ultima Online MMO franchises. In fiscal year 2013, we expect...

  • Page 124
    ... fiscal year. Our total net revenue by revenue composition for the fiscal years ended March 31, 2012 and 2011 was as follows (in millions): 2012 Year Ended March 31, 2011 $ Change % Change Publishing and other ...Wireless, Internet-derived, and advertising (digital) ...Distribution ...Net Revenue...

  • Page 125
    ... fiscal year 2012, digital Net Revenue before Deferral was $1,227 million, an increase of $394 million, or 47 percent, as compared to fiscal year 2011. This increase was driven by a $452 million increase in sales primarily from the FIFA and The Sims franchises, as well as Star Wars: The Old Republic...

  • Page 126
    ...and service and other revenue by revenue composition for the fiscal years 2012 and 2011 was as follows (in millions): Year Ended March 31, 2012 2011 Product revenue: Publishing and other ...Wireless, Internet-derived, and advertising (digital) ...Distribution ...Total product revenue ...Service and...

  • Page 127
    ... costs related to our website advertising business. Cost of service and other revenue increased by $132 million, or 143.5 percent in fiscal year 2012, as compared to fiscal year 2011. The increase was primarily due to increased server and support costs due to the release of more online-connected and...

  • Page 128
    ...18 million increase in contracted service costs related to online and customer relationship initiatives. Marketing and sales expenses included vendor reimbursements for advertising expenses of $39 million and $31 million in fiscal years 2012 and 2011, respectively. General and Administrative General...

  • Page 129
    ... 31, 2011 % of Net Revenue $ Change % Change Annual Report $- - $23 1% $(23) (100%) We did not recognize any impairment charges or losses during the year ended March 31, 2012. During the year ended March 31, 2011, we realized a gain of $28 million, net of costs to sell, from the sale of our...

  • Page 130
    ... by tax benefits related to the expiration of statutes of limitations and resolution of examination by taxing authorities. Our effective income tax rates for fiscal year 2013 and future periods will depend on a variety of factors, including changes in the deferred tax valuation allowance, as well as...

  • Page 131
    ... Change % Change Net Revenue: Product ...Service and other ...Total net revenue ...Product Revenue $3,181 408 $3,589 $3,332 322 $3,654 $(151) 86 $ (65) (5%) (27%) (2%) Annual Report For fiscal year 2011, product revenue was $3,181 million, primarily driven by FIFA 11, Battlefield: Bad Company...

  • Page 132
    ... Live, and Godfather franchises, as well as Dante's Inferno. This decrease was offset by a $741 million increase in sales primarily from the Medal of Honor, FIFA World Cup, and Crysis franchises. Wireless, Internet-derived, and Advertising (Digital) Revenue For fiscal year 2011, digital Net Revenue...

  • Page 133
    ... franchises. Our product and service and other revenue by revenue composition for the fiscal years 2011 and 2010 was as follows (in millions): Year Ended March 31, 2011 2010 Annual Report Product revenue: Publishing and other ...Wireless, Internet-derived, and advertising (digital) ...Distribution...

  • Page 134
    ... revenue related to certain online-enabled packaged goods and digital content for fiscal year 2011 as compared to fiscal year 2010, which positively impacted gross profit as a percent of total net revenue by 3.7 percent and (2) a greater percentage of net revenue from EA studio and digital products...

  • Page 135
    ... developer agreements, and (3) $13 million in employee-related expenses. Fiscal 2010 Restructuring In connection with our fiscal 2010 restructuring plan, during fiscal year 2011, we incurred $13 million of restructuring charges primarily due to costs to assist in the reorganization of our business...

  • Page 136
    ..., net of costs to sell, from the sale of our investment in Ubisoft. We recognized a $26 million impairment charge on our investment in The9 in fiscal year 2010. Income Taxes Benefit from income taxes for fiscal years 2011 and 2010 was as follows (in millions): March 31, 2011 Effective Tax Rate March...

  • Page 137
    ... of fiscal 2013. We do not expect the adoption of ASU 2011-05, as amended by ASU 2011-12 to have a material impact on our Consolidated Financial Statements. In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities, which creates new disclosure requirements...

  • Page 138
    ... percentage of net revenue from our digital products, which have a higher margin than our other products. Investing Activities. Cash used in investing activities increased $674 million during the fiscal year ended March 31, 2012 as compared to the fiscal year ended March 31, 2011 primarily due...

  • Page 139
    ... fiscal year 2010, in connection with our Playfish acquisition, we deposited $100 million into an escrow account related to the contingent consideration. During the three months ended March 31, 2012, $25 million was paid to settle performance milestones earned through December 31, 2011 in connection...

  • Page 140
    ...Statements for additional information related to our 0.75% Convertible Senior Notes due 2016. Financial Condition We believe that cash, cash equivalents, short-term investments, marketable equity securities, cash generated from operations and available financing facilities will be sufficient to meet...

  • Page 141
    ... of Hasbro's toy and game intellectual properties); and LucasArts and Lucas Licensing (Star Wars: The Old Republic). These developer and content license commitments represent the sum of (1) the cash payments due under non-royaltybearing licenses and services agreements and (2) the minimum guaranteed...

  • Page 142
    ... to tax authorities for issues pending resolution. For the remaining liability, we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur. In addition to what is included in the table above as of March 31, 2012, primarily in connection with...

  • Page 143
    ... of three months or less at the time of purchase. We also do not currently hedge our market price risk relating to our marketable equity securities and we do not enter into derivatives or other financial instruments for trading or speculative purposes. Foreign Currency Exchange Rate Risk Cash Flow...

  • Page 144
    ... dollar; however, all foreign currency exchange rates do not always move in such manner and actual results may differ materially. Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to our short-term investment portfolio. We manage our interest rate risk...

  • Page 145
    ... of our marketable equity securities in publicly-traded companies is subject to market price volatility and foreign currency risk for investments denominated in foreign currencies. As of March 31, 2012 and 2011, our marketable equity securities were classified as available-for-sale securities and...

  • Page 146
    ... the public stock markets. At any time, a sharp change in market prices in our investments in marketable equity securities could have a significant impact on the fair value of our investments. The following table presents hypothetical changes in the fair value of our marketable equity securities as...

  • Page 147
    ... Financial Statements ...Reports of Independent Registered Public Accounting Firm ...Financial Statement Schedule: The following financial statement schedule of Electronic Arts Inc. and Subsidiaries for the years ended March 31, 2012, 2011 and 2010 is filed as part of this report and should be read...

  • Page 148
    ...Property and equipment, net ...Goodwill ...Acquisition-related intangibles, net ...Deferred income taxes, net ...Other assets ...TOTAL ASSETS ...LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ...Accrued and other current liabilities ...Deferred net revenue (packaged goods...

  • Page 149
    ... and other income (expense), net ...Income (loss) before benefit from income taxes ...Benefit from income taxes ...Net income (loss) ...Net income (loss) per share: Basic ...Diluted ...Number of shares used in computation: Basic ...Diluted ...$ Year Ended March 31, 2012 2011 2010 $3,415 728 4,143...

  • Page 150
    ... ...Issuance of common stock ...Stock-based compensation ...Tax benefit from exercise of stock options ...Equity issued in connection with acquisition ...Balances as of March 31, 2010 ...Net loss ...Change in unrealized gains on available-for-sale securities, net ...Reclassification adjustment for...

  • Page 151
    ELECTRONIC ARTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended March 31, (In millions) 2012 2011 2010 OPERATING ACTIVITIES Net income (loss) ...$ 76 $ (276) $ (677) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, ...

  • Page 152
    ... from others (e.g., FIFA, Madden NFL, and Star Wars: The Old Republic). Our goal is to turn our core intellectual properties into year-round businesses available on a range of platforms. Our products and services may be purchased through physical and online retailers, platform providers such as...

  • Page 153
    ...traded companies and are accounted for as available-for-sale securities and are recorded at fair value. Unrealized gains and losses on our short-term investments and marketable equity securities are recorded as a component of accumulated other comprehensive income in stockholders' equity, net of tax...

  • Page 154
    ...each reporting unit is estimated using the market approach, which utilizes comparable companies' data, the income approach, which utilizes discounted cash flows, or a combination thereof. During the fiscal years ended March 31, 2012, 2011 and 2010, we completed our annual goodwill impairment testing...

  • Page 155
    ... Annual Report Service and other revenue. Our service revenue includes revenue recognized from games or related content that requires our hosting support to provide substantial gaming experience and time-based subscriptions. This includes (1) subscriptions for our Pogo-branded online game services...

  • Page 156
    ... we sell both the software product and relating offerings for one combined price. Generally we do not have vendor specific objective evidence ("VSOE") for the software-related offerings and thus, we defer net revenue from sales of these games and recognize the revenue from the bundled sales games...

  • Page 157
    ... of cost of revenue as the related revenue is recognized. Vendor reimbursements of advertising costs of $39 million, $31 million, and $39 million reduced marketing and sales expense for the fiscal years ended March 31, 2012, 2011 and 2010, respectively. For the fiscal years ended 73 Annual Report

  • Page 158
    ...of our market-based restricted stock units is determined using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model are the risk-free interest rate, expected volatility, expected dividends and correlation coefficient. • Stock Options and Employee Stock Purchase Plan...

  • Page 159
    ...in U.S. GAAP and IFRSs. The guidance limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums...

  • Page 160
    ...Level 2) (Level 3) Balance Sheet Classification Assets Money market funds ...$ 490 Available-for-sale securities: U.S. Treasury securities ...170 Corporate bonds ...Marketable equity securities ...U.S. agency securities ...Commercial paper ...Deferred compensation plan assets(a) ...Foreign currency...

  • Page 161
    ... discounted cash flow models, and applied a discount rate that appropriately captures a market participant's view of the risk associated with the obligations. During the fiscal year 2012, the discount rate used had a weighted average of 12 percent. During the fiscal year 2011, the discount rate used...

  • Page 162
    ... fiscal year 2012, we became aware of facts and circumstances that indicated that the carrying value of some of our acquisition-related intangible assets were not recoverable. This impairment is included in cost of product revenue on our Consolidated Statement of Operations. During fiscal year 2011...

  • Page 163
    ... securities consist of investments in common stock of publicly-traded companies and are accounted for as available-for-sale securities and are recorded at fair value. Unrealized gains and losses are recorded as a component of accumulated other comprehensive income in stockholders' equity, net of tax...

  • Page 164
    ... equity investments in, Neowiz Corporation and a related online gaming company, Neowiz Games. We refer to Neowiz Corporation and Neowiz Games collectively as "Neowiz." Based in Korea, Neowiz is an online media and gaming company with which we partnered in 2006 to launch EA SPORTS FIFA Online...

  • Page 165
    ... option contracts in our Consolidated Statements of Operations for the fiscal years ended March 31, 2012, 2011 and 2010 were immaterial. Balance Sheet Hedging Activities Our foreign currency forward contracts are not designated as hedging instruments, and are accounted for as derivatives whereby the...

  • Page 166
    ... restricted stock unit awards and options to acquire our common stock. These awards and options are accounted for as stockbased compensation in accordance with ASC 718, Compensation - Stock Compensation. PopCap is a leading developer of games for mobile phones, tablets, PCs, and social network sites...

  • Page 167
    ... Statements of Operations. KlickNation and Other Fiscal 2012 Acquisitions In November 2011, we acquired KlickNation, a developer of social role-playing games. During the fiscal year ended March 31, 2012, we completed three other acquisitions. These business combinations were completed for total cash...

  • Page 168
    ... was not material to our Consolidated Statements of Operations. Fiscal Year 2011 Acquisition In October 2010, we acquired all of the outstanding shares of Chillingo in cash. Chillingo publishes games and software for various mobile platforms. In addition, in connection and with the acquisition, we...

  • Page 169
    ... on goodwill in fiscal years 2012, 2011 and 2010. Acquisition-related intangible assets, net of accumulated amortization, as of March 31, 2012 and 2011, were $369 million and $144 million, respectively, and include costs for obtaining (1) developed and core technology, (2) trade names and trademarks...

  • Page 170
    ... of intangibles for the fiscal years ended March 31 2012, 2011 and 2010 are classified in the Consolidated Statement of Operations as follows (in millions): Year Ended March 31, 2012 2011 2010 Cost of product ...Cost of service and other ...Research and development ...Total ... $35 17 43...

  • Page 171
    ...29 161 (70) (3) 117 16 Annual Report (55) $ - $ 78 In fiscal year 2011, we announced a plan focused on the restructuring of certain licensing and developer agreements in an effort to improve the long-term profitability of our packaged goods business. Under this plan, we amended certain licensing...

  • Page 172
    ... to the amendment of certain developer agreements, and (3) $12 million in employee-related expenses. The $75 million restructuring accrual as of March 31, 2012 related to the fiscal 2011 restructuring is expected to be settled by June 2016. In fiscal year 2013 and thereafter, we anticipate incurring...

  • Page 173
    ... impairment generally using undiscounted cash flows when impairment indicators exist. Unrecognized minimum royalty-based commitments are accounted for as executory contracts and, therefore, any losses on these commitments are recognized when the underlying intellectual property is 89 Annual Report

  • Page 174
    ... to use the intellectual property are terminated. During fiscal year 2012, we recognized losses of $21 million, representing an adjustment to our fiscal 2011 restructuring. During fiscal year 2011, we recognized losses of $85 million, inclusive of $75 million related to the fiscal 2011 restructuring...

  • Page 175
    ... assets on our Consolidated Balance Sheets as of March 31, 2012 and 2011 was $31 million and $100 million, respectively, of acquisition-related restricted cash. In connection with our acquisition of Playfish in fiscal year 2010, we deposited $100 million into an escrow account to pay the former...

  • Page 176
    ... 2012 and 2011, respectively. Deferred net revenue (packaged goods and digital content) includes the unrecognized revenue from (1) bundled sales of certain online-enabled packaged goods and digital content for which either we do not have VSOE for the online service that we provide in connection with...

  • Page 177
    ...Year Ended March 31, 2012 2011 2010 Statutory federal tax expense (benefit) rate ...State taxes, net of federal benefit ...Differences between statutory rate and foreign effective tax rate ...Valuation allowance ...Research and development credits ...Non-deductible acquisition-related costs and tax...

  • Page 178
    ... March 31, 2011. Accrued interest expense related to estimated obligations for unrecognized tax benefits decreased by approximately $3 million during fiscal year 2012. There is no material change in accrued penalties during fiscal year 2012. We file income tax returns in the United States, including...

  • Page 179
    ... Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. The conversion rate is subject to customary anti-dilution adjustments (for example, certain dividend distributions or tender or exchange offer of our common stock), but will...

  • Page 180
    ...-dilution adjustments, provide us with the option to acquire, on a net settlement basis, approximately 19.9 million shares of our common stock at a strike price of $31.74, which corresponds to the conversion price of the Notes and is equal to the number of shares of our common stock that notionally...

  • Page 181
    ...of Hasbro's toy and game intellectual properties); and LucasArts and Lucas Licensing (Star Wars: The Old Republic). These developer and content license commitments represent the sum of (1) the cash payments due under non-royalty-bearing licenses and services agreements and (2) the minimum guaranteed...

  • Page 182
    ... 31, 2012 and 2011, we had 10,000,000 shares of preferred stock authorized but unissued. The rights, preferences, and restrictions of the preferred stock may be designated by our Board of Directors without further action by our stockholders. (14) STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS...

  • Page 183
    ...2012 Risk-free interest rate ...Expected volatility ...Weighted-average volatility ...Expected dividends ... 0.2 - 0.6% 14 - 83% 35% None There were no market-based restricted stock units granted during the fiscal years ended March 31, 2011 and 2010. Stock-Based Compensation Expense Employee stock...

  • Page 184
    ... from stock options, restricted stock, restricted stock units and the ESPP included in our Consolidated Statements of Operations (in millions): Year Ended March 31, 2012 2011 2010 Cost of revenue ...Marketing and sales ...General and administrative ...Research and development ...Restructuring...

  • Page 185
    ... and $3 million, respectively. The total estimated fair values (determined as of the grant date) of stock options vested during fiscal years 2012, 2011 and 2010 were $15 million, $24 million and $26 million, respectively. We issue new common stock from our authorized shares upon the exercise of...

  • Page 186
    ... by dividing the options in the related range of exercise prices by 320 million shares of common stock, which were issued and outstanding as of March 31, 2012. Restricted Stock Rights We grant restricted stock rights under our Equity Plan to employees worldwide (except in certain countries where...

  • Page 187
    ...Report Balance as of March 31, 2011 ...Granted ...Forfeited or cancelled ...Balance as of March 31, 2012 ... - 670 (150) 520 $ - 34.77 34.77 34.77 As of March 31, 2012, the maximum number of common shares that could vest is 1,040,000 for market-based restricted stock units granted in fiscal year...

  • Page 188
    ... of the market price of our common stock on the date of commencement of the offering or on the last day of each six-month purchase period. At our Annual Meeting of Stockholders, held on July 28, 2011, our stockholders approved amendments to the ESPP to increase the number of shares authorized under...

  • Page 189
    ...(loss) ...Shares used to compute net income (loss) per share: Weighted-average common stock outstanding - basic ...Dilutive potential common shares ...Weighted-average common stock outstanding - diluted ...Net income (loss) per share: Basic ...Diluted ...105 Year Ended March 31, 2012 2011 2010 $ 76...

  • Page 190
    ...a President of EA Labels reporting directly to our CODM. In addition, our EAI business reported directly to our CODM (previously our EAI business reported into our Chief Operating Officer). Through the third quarter of fiscal year 2012, the President of the EA Labels and the Executive Vice President...

  • Page 191
    ...rather than net revenue by platform. Information about our total net revenue by revenue composition for the fiscal years ended March 31, 2012, 2011 and 2010 is presented below (in millions): Year Ended March 31, 2012 2011 2010 Publishing and other ...Wireless, Internet-derived, advertising (digital...

  • Page 192
    ...31, 2011 and 2010, respectively. Our direct sales to Wal-Mart Stores, Inc. did not exceed 10 percent of net revenue for the fiscal year ended March 31, 2012. (19) QUARTERLY FINANCIAL AND MARKET INFORMATION (UNAUDITED) (In millions, except per share data) Fiscal 2012 Consolidated Net revenue ...Gross...

  • Page 193
    ...common stock is traded on the NASDAQ Global Select Market under the symbol "EA". Our symbol changed from "ERTS" to "EA" on December 20, 2011. The prices for the common stock in the table above represent the high and low sales prices as reported on the NASDAQ Global Select Market. Annual Report 109

  • Page 194
    ... PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders Electronic Arts Inc.: We have audited the accompanying consolidated balance sheets of Electronic Arts Inc and subsidiaries (the Company) as of March 31, 2012 and April 2, 2011, and the related consolidated statements of operations...

  • Page 195
    ... the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Electronic Arts Inc. and subsidiaries as of March 31, 2012 and April 2, 2011, and the related consolidated statements of operations, stockholders' equity and comprehensive income (loss), and cash flows...

  • Page 196
    ...). Based on this assessment, our management believes that, as of the end of our most recently completed fiscal year, our internal control over financial reporting was effective. KPMG LLP, our independent registered public accounting firm, has issued an auditors' report on the effectiveness of our...

  • Page 197
    ... over financial reporting identified in connection with our evaluation that occurred during the fiscal year ended March 31, 2012 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting. Item 9B: Other Information None. Annual Report...

  • Page 198
    ... to be included in our Proxy Statement for our 2012 Annual Meeting of Stockholders (the "Proxy Statement") under the headings "Proposal 1: Election of Directors," "Global Code of Conduct," and "Report of the Audit Committee of the Board of Directors." The information regarding Section 16 compliance...

  • Page 199
    ... A. Ubiñas 115 Chief Executive Officer Interim Chief Financial Officer and Senior Vice President, Chief Accounting Officer (Principal Financial and Accounting Officer) Chairman of the Board Director Director Director Director Director Director Director Director Director Director Annual Report

  • Page 200
    ELECTRONIC ARTS INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS Years Ended March 31, 2012, 2011 and 2010 (In millions) Balance at Beginning of Period Charged to Revenue, Costs and Expenses Charged (Credited) to Other Accounts(a) Balance at End of Period Allowance for Doubtful ...

  • Page 201
    ...amended and restated. EA Bonus Plan. Form of 2011 Performance-Based Restricted Stock Unit Agreement. Electronic Arts Bonus Plan Addendum. 2000 Equity Incentive Plan, as amended, and related documents 2000 Employee Stock Purchase Plan, as amended Offer Letter for Employment at Electronic Arts Inc. to...

  • Page 202
    ... Property Limited Partnership, a Pennsylvania limited partnership and Electronic Arts - Tiburon, a Florida corporation f/k/a Tiburon Entertainment, Inc. Agreement for Underlease relating to Onslow House, Guildford, Surrey, dated 7 February 2006, by and between The Standard Life Assurance Company...

  • Page 203
    ...18, 2011 between EA and each Option Counterparty. Form of 2012 Performance-Based Restricted Stock Unit Agreement Subsidiaries of the Registrant. Consent of KPMG LLP, Independent Registered Public Accounting Firm. Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act...

  • Page 204
    ... year ended March 31, 2012 are the following formatted in eXtensible Business Reporting Language ("XBRL"): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations, (3) Consolidated Statements of Stockholders Equity and Comprehensive Loss, (5) Consolidated Statements of Cash Flows...

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    Electronic Arts Inc. 209 Redwood Shores Parkway Redwood City, CA 94065 (650) 628-1500 www.ea.com Investor Relations (650) 628-7352 http://investor.ea.com