UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2019
OR
- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to
Commission File No. 000-17948
ELECTRONIC ARTS INC.
(Exact name of registrant as specified in its charter)
Delaware | 94-2838567 | |||||
(State or other jurisdiction of | (I.R.S. Employer | |||||
incorporation or organization) | Identification No.) | |||||
209 Redwood Shores Parkway | 94065 | |||||
Redwood City California | ||||||
(Address of principal executive offices) | (Zip Code) | |||||
(650) 628-1500 | ||||||
(Registrant's telephone number, including area code) | ||||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||
Common Stock, $0.01 par value | EA | NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☑ Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
Emerging growth company | ☐ | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of November 1, 2019, there were 291,978,913 shares of the Registrant's Common Stock, par value $0.01 per share, outstanding.
1
ELECTRONIC ARTS INC.
FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2019
Table of Contents
Page | |||
Item 1. | |||
Condensed Consolidated Balance Sheets as of September 30, 2019 and March 31, 2019 | |||
Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended September 30, 2019 and | 6 | ||
2018 | |||
Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2019 and 2018 | 7 | ||
Notes to Condensed Consolidated Financial Statements | 8 | ||
Report of Independent Registered Public Accounting Firm | 31 | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 32 | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 49 | |
Item 4. | Controls and Procedures | 51 | |
Part II - OTHER INFORMATION | |||
Item 1. | Legal Proceedings | 52 | |
Item 1A. | Risk Factors | 52 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 63 | |
Item 3. | Defaults Upon Senior Securities | 63 | |
Item 4. | Mine Safety Disclosures | 63 | |
Item 6. | Exhibits | 63 | |
Exhibit Index | 64 | ||
Signature | 65 | ||
2 | |||
PART I - FINANCIAL INFORMATION | ||||||
Item 1. | Condensed Consolidated Financial Statements (Unaudited) | |||||
ELECTRONIC ARTS INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | September 30, 2019 | March 31, 2019 (a) | ||||
(In millions, except par value data) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 2,940 | $ | 4,708 | ||
Short-term investments | 1,943 | 737 | ||||
Receivables, net | 856 | 623 | ||||
Other current assets | 301 | 313 | ||||
Total current assets | 6,040 | 6,381 | ||||
Property and equipment, net | 442 | 448 | ||||
Goodwill | 1,890 | 1,892 | ||||
Acquisition-related intangibles, net | 72 | 87 | ||||
Deferred income taxes, net | 1,835 | 35 | ||||
Other assets | 314 | 114 | ||||
TOTAL ASSETS | $ | 10,593 | $ | 8,957 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 148 | $ | 113 | ||
Accrued and other current liabilities | 1,024 | 1,052 | ||||
Deferred net revenue (online-enabled games) | 646 | 1,100 | ||||
Total current liabilities | 1,818 | 2,265 | ||||
Senior notes, net | 995 | 994 | ||||
Income tax obligations | 361 | 233 | ||||
Deferred income taxes, net | 2 | 2 | ||||
Other liabilities | 259 | 132 | ||||
Total liabilities | 3,435 | 3,626 | ||||
Commitments and contingencies (See Note 12) | ||||||
Stockholders' equity: | ||||||
Common stock, $0.01 par value. 1,000 shares authorized; 293 and 298 shares issued and outstanding, | ||||||
respectively | 3 | 3 | ||||
Additional paid-in capital | - | - | ||||
Retained earnings | 7,165 | 5,358 | ||||
Accumulated other comprehensive loss | (10) | (30) | ||||
Total stockholders' equity | 7,158 | 5,331 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 10,593 | $ | 8,957 | ||
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited). | ||||||
(a) Derived from audited Consolidated Financial Statements.
3
ELECTRONIC ARTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) | Three Months Ended | Six Months Ended | |||
September 30, | September 30, | ||||
(In millions, except per share data) | 2019 | 2018 | 2019 | 2018 |
Net revenue: | |
Product | $ |
Service and other | |
Total net revenue | |
Cost of revenue: | |
Product | |
Service and other | |
Total cost of revenue | |
Gross profit | |
Operating expenses: | |
Research and development | |
Marketing and sales | |
General and administrative | |
Acquisition-related contingent consideration | |
Amortization of intangibles | |
Total operating expenses | |
Operating income | |
Interest and other income (expense), net | |
Income before provision for (benefit from) income taxes | |
Provision for (benefit from) income taxes | |
Net income | $ |
Earnings per share: | |
Basic | $ |
Diluted | $ |
Number of shares used in computation: | |
Basic | |
Diluted | |
568 | $ | 623 | $ | 734 | $ | 825 | ||||
780 | 663 | 1,823 | 1,598 | |||||||
1,348 | 1,286 | 2,557 | 2,423 | |||||||
193 | 222 | 228 | 290 | |||||||
212 | 196 | 364 | 343 | |||||||
405 | 418 | 592 | 633 | |||||||
943 | 868 | 1,965 | 1,790 | |||||||
387 | 339 | 768 | 701 | |||||||
152 | 146 | 262 | 286 | |||||||
128 | 117 | 238 | 231 | |||||||
2 | 2 | 3 | 2 | |||||||
6 | 6 | 11 | 12 | |||||||
675 | 610 | 1,282 | 1,232 | |||||||
268 | 258 | 683 | 558 | |||||||
16 | 18 | 37 | 37 | |||||||
284 | 276 | 720 | 595 | |||||||
(570) | 21 | (1,555) | 47 | |||||||
854 | $ | 255 | $ | 2,275 | $ | 548 | ||||
2.89 | $ | 0.84 | $ | 7.69 | $ | 1.80 | ||||
2.89 | $ | 0.83 | $ | 7.66 | $ | 1.77 | ||||
295 | 305 | 296 | 305 | |||||||
296 | 307 | 297 | 309 | |||||||
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
4
ELECTRONIC ARTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||
September 30, | September 30, | |||||||||||
(In millions) | 2019 | 2018 | 2019 | 2018 | ||||||||
Net income | $ | 854 | $ | 255 | $ | 2,275 | $ | 548 | ||||
Other comprehensive income, net of tax: | ||||||||||||
Net gains on available-for-sale securities | - | 1 | 3 | 1 | ||||||||
Net gains on derivative instruments | 16 | 3 | 25 | 96 | ||||||||
Foreign currency translation adjustments | (9) | 3 | (8) | (12) | ||||||||
Total other comprehensive income, net of tax | 7 | 7 | 20 | 85 | ||||||||
Total comprehensive income | $ | 861 | $ | 262 | $ | 2,295 | $ | 633 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited). 5
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Electronic Arts Inc. published this content on 06 November 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 November 2019 11:34:09 UTC