Electronic Arts

Electronic Arts Inc.
Fiscal Year 2020
Proxy Statement and Annual Report

Notice of 2020 Annual Meeting
and Proxy Statement

P
r
o
x
y
S
t
a
t
e
m
e
n
t

[THIS PAGE INTENTIONALLY LEFT BLANK]

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Electronic Arts Inc. Notice of 2020 Annual Meeting of Stockholders

DATE:
TIME:
PLACE: ELECTRONIC ARTS’ HEADQUARTERS

August 6, 2020
2:00 p.m. (Pacific)

Building 250*
209 Redwood Shores Parkway
Redwood City, CA 94065
* Please note: Building 250 is located on the headquarters’ campus at 250 Shoreline Drive. We intend to
hold our annual meeting in person. However, the health and safety of our stockholders are important to
us and as part of our precautions regarding the COVID-19 pandemic, we are planning for the possibility
that the meeting may be held solely as a virtual meeting. If we take this step, we will announce the
decision to do so in advance, and details on how to participate will be posted on our Investor Relations
website at http://ir.ea.com and filed with the SEC as additional proxy materials. If you are planning to
attend our meeting, please check our website in the days leading up to the meeting date.

MATTERS TO BE VOTED UPON:

Agenda Item

1. The election of nine members of the Board of Directors to hold office

for a one-year term.

2. Advisory vote to approve named executive officer compensation.
3. Ratification of the appointment of KPMG LLP as our independent

public registered accounting firm for the fiscal year ending March 31,
2021.

4. To consider and vote upon a stockholder proposal, if properly

presented at the Annual Meeting, on whether to allow stockholders to
act by written consent.

5. Any other matters that may properly come before the meeting.

Board of Directors Recommendation

FOR ALL

FOR

FOR

AGAINST

Any action on the items of business described above may be considered at the 2020 Annual Meeting of
Stockholders (the “Annual Meeting”) at the time and on the date specified above or at any time and date to which
the Annual Meeting may be properly adjourned or postponed.

Stockholders of record as of the close of business on June 12, 2020 are entitled to notice of the Annual Meeting
and to attend and vote at the Annual Meeting. A live audio webcast of the Annual Meeting will also be made
available at http://ir.ea.com.

Your vote is important. You do not need to attend the Annual Meeting to vote if you have submitted your proxy in
advance of the meeting. Whether or not you plan to attend the Annual Meeting, we encourage you to read this
Proxy Statement and submit your proxy or voting instructions as soon as possible, so that your shares may be
represented at the Annual Meeting. You may vote on the Internet, by attending the Annual Meeting, by telephone,
or, if you requested to receive printed proxy materials, by mailing a proxy card or voting instruction card. For
specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet
Availability of Proxy Materials (“Notice”) you received in the mail, the section titled “Commonly Asked Questions
and Answers” beginning on page 57 of this Proxy Statement or, if you requested to receive printed proxy
materials, your enclosed proxy card. Please note that this Proxy Statement, as well as our Annual Report on Form
10-K (the “Annual Report”) for fiscal year ended March 31, 2020, is available at http://ir.ea.com.

By Order of the Board of Directors,

Jacob J. Schatz
Executive Vice President, General Counsel
and Corporate Secretary

[THIS PAGE INTENTIONALLY LEFT BLANK]

TABLE OF CONTENTS

2020 PROXY STATEMENT SUMMARY AND HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2020 Summary of EA’s Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Diversity and Refreshment
Corporate Governance Highlights and Report
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Outreach and Special Meeting Right
Corporate Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Biographies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board of Directors, Board Meetings and Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual Board and Committee Self-Evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consideration of Director Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global Code of Conduct and Corporate Governance Guidelines . . . . . . . . . . . . . . . . . . . . . . . . .
Oversight of Risk Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insider Trading, Anti-Hedging and Anti-Pledging Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related Person Transactions Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Attendance at Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Communications with the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of the Audit Committee of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES . . . . . . . . . . . . . . . . . . .
Fiscal 2020 Director Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPENSATION DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Report on Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2020 Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2020 Grants of Plan-Based Awards Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding Equity Awards at Fiscal 2020 Year-End Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2020 Option Exercises and Stock Vested Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Payments Upon Termination or Change in Control
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2020 Pay Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity Compensation Plan Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . .
PROPOSALS TO BE VOTED ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal One: Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal Two: Advisory Vote to Approve Named Executive Officer Compensation . . . . . . . . . .
Proposal Three: Ratification of the Appointment of KPMG LLP, Independent Registered Public
Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Proposal Four: Stockholder Proposal on Whether to Allow Stockholders to Act by Written

Page

1
1
3
4
5
6
6
7
9
9
12
12
14
14
14
15
15
16
16
17
17
17
18
20
21
23
39
40
40
41
42
44
44
47
48
49
50
50
51

52

Consent

54
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
COMMONLY ASKED QUESTIONS AND ANSWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX A: Supplemental Information for the Compensation Discussion and Analysis . . . . . . . A-1

P
r
o
x
y
S
t
a
t
e
m
e
n
t

i

[THIS PAGE INTENTIONALLY LEFT BLANK]

P
r
o
x
y
S
t
a
t
e
m
e
n
t

In this Proxy Statement, we may make forward-looking statements regarding future events or the
future financial performance of the Company. We use words such as “anticipate,” “believe,” “expect,”
“intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the
negative of any of these terms), “future” and similar expressions to identify forward-looking statements.
In addition, any statements that refer to projections of our future financial performance, trends in our
business, projections of markets relevant to our business, our response to the COVID-19 pandemic or
the impact of the pandemic to our business, uncertain events and assumptions and other
characterizations of future events or circumstances are forward-looking statements. These forward-
looking statements are not guarantees of future performance and reflect management’s current
expectations. Our actual results could differ materially from those discussed in the forward-looking
statements. Please refer to the Annual Report for a discussion of important factors that could cause
actual events or actual results to differ materially from those discussed in this Proxy Statement. These
forward-looking statements speak only as of the date of this Proxy Statement; we assume no obligation
to revise or update any forward-looking statement for any reason, except as required by law.

2020 PROXY STATEMENT SUMMARY AND
HIGHLIGHTS
This summary highlights information contained in this Proxy Statement, and it is qualified in its entirety
by the remainder of this Proxy Statement which was distributed and/or made available via the Internet
to stockholders on or about June 19, 2020 along with the Electronic Arts Inc. Notice of 2020 Annual
Meeting of Stockholders, Annual Report and form of proxy. You are encouraged to read the entire
Proxy Statement carefully before voting. In this Proxy Statement, the terms “EA,” “we,” “our” and
“the Company” refer to Electronic Arts Inc.

FISCAL 2020 SUMMARY OF EA’S BUSINESS

During fiscal 2020, we delivered award winning games and services to our players and saw deep
player engagement. With our continued focus on execution, we generated strong financial results.
During fiscal 2020, we released eight new games, including Star Wars Jedi: Fallen OrderTM, which won
several awards, including the award for best adventure game at the 2020 D.I.C.E. awards, and
Madden NFL 20, which was the most successful game in the 30-year history of the franchise, setting
multiple records for player engagement. Our broad and deep portfolio, combined with dynamic live
services for FIFA, Madden NFL, Apex LegendsTM, and The SimsTM 4, among others, drove net revenue
and earnings per share above our fiscal 2020 guidance. We generated net revenue of $5.537 billion,
diluted earnings per share of $10.30 (including the impact of $5.97 of one-time tax benefits), drove
higher gross margins, increased our cash provided by operations, and invested in products and
services for the future. In addition, during fiscal 2020 we repurchased 12.3 million shares, returning
nearly $1.2 billion to stockholders.

We delivered these achievements against the background of the global challenge of the COVID-19
pandemic, which impacted our operations during the last quarter of fiscal 2020. Beginning with the
impact to our Asian operations, and subsequently impacting substantially all of our global business
operations, our primary focus was, and continues to be, the health and safety of our employees. We
mobilized quickly to support our global workforce by enabling employees to work from home,
enhancing our information technology systems to support our distributed workforce, mitigating the
disruption to operations brought about by stay-at-home orders and by continuing to deliver on our
objectives. During this extraordinary time, our talented and dedicated teams worked to deliver new
experiences for our players, including our “Stay & Play” program, designed to bring our global gaming
community together virtually during a time when physical distancing has become the norm. We are
proud of the efforts that we have achieved in the rapidly evolving situation of the pandemic in
maintaining business continuity, mitigating risks, and delivering for our players.

1

Fiscal 2020 GAAP Financial Results and Operating Highlights

(cid:129) We generated $5.537 billion of net revenue and $10.30 diluted earnings per share (including the

impact of $5.97 of one-time tax benefits).

(cid:129) Our digital net revenue increased to $4.314 billion and represented 78% of our total net

revenue.

(cid:129) We delivered net income of $3.039 billion and operating cash flow of $1.797 billion.

(cid:129) Operating profit margins were 26%.

(cid:129) We generated net bookings for the fiscal year of $5.211 billion.

(cid:129) We repurchased 12.3 million shares during fiscal 2020 for $1.2 billion.

(cid:129) We launched eight major games during fiscal 2020, including FIFA 20, Madden NFL 20, NHL

20, Plants vs. Zombies: Battle for NeighborvilleTM, Need for SpeedTM Heat and Star Wars Jedi:
Fallen OrderTM.

(cid:129) Star Wars Jedi: Fallen OrderTM has more than 10 million unique players to date.

(cid:129) FIFA 20 has more than 25 million unique players to date.

(cid:129) In every quarter of fiscal 2020, monthly average players in The SimsTM 4 were higher than the

comparable period in the prior year.

The financial performance, operational achievements and other fiscal year events summarized above
provide context for the compensation decisions made by the Compensation Committee and Board of
Directors in fiscal 2020. The Company’s executive compensation program is designed to reward our
named executive officers for the achievement of Company-wide financial and operational objectives
and the creation of long-term stockholder value.

2

EXECUTIVE COMPENSATION HIGHLIGHTS

Compensation Principles — Promoting Pay-for-Performance

The design of our compensation program is guided by a compensation philosophy based on three core
principles intended to attract and retain high-performing executives and promote a pay-for-performance
approach to executive compensation:

(cid:129) Principle 1 — Cash Compensation: A significant portion of each NEO’s cash compensation

should be at risk, based on the annual financial and operational performance of the Company, in
addition to the NEO’s individual performance;

(cid:129) Principle 2 — Equity Compensation: A significant portion of each NEO’s target total direct

compensation should be provided in the form of long-term equity to enhance alignment between
the interests of our NEOs and our stockholders and to promote long-term retention of a strong
leadership team in an industry and geographic area that is highly competitive for executive
talent; and

(cid:129) Principle 3 — Target Total Direct Compensation: The target total direct compensation

package for each NEO should be consistent with market practices for executive talent and
reflect each NEO’s individual experience, responsibilities and performance.

Our executive compensation program is designed to align the interests of our executives with the
interests of our stockholders.

What We Do

Í Incorporate both performance-based

restricted stock units (“PRSUs”) and time-
based restricted stock units (“RSUs”)

What We Don’t Do
È Have a “single-trigger” change in control

plan

Í Require our executives to satisfy stock

È Provide excise tax gross-ups upon a

holding requirements

change in control

Í Prohibit all employees and directors from

engaging in hedging transactions in EA
stock and prohibit executive officers and
directors from pledging EA common stock

È Have executive employment contracts
(other than as required by local
jurisdictions)

Í Conduct annual “say-on-pay” advisory votes È Reprice options without stockholder

P
r
o
x
y
S
t
a
t
e
m
e
n
t

approval

È Provide excessive perquisites

Í Recover (clawback) equity compensation
for misconduct in the event of a financial
restatement

Í Align performance-based equity vesting

with stockholder interests

Í Engage an independent compensation
consultant to provide input into the
Compensation Committee’s decisions
Í Evaluate our compensation peer group at

least annually to ensure ongoing relevance
of each member

3

BOARD NOMINEES

The following table provides summary information about our director nominees, each of whom is a
current director of the Company.

Name

Principal Occupation

Mr. Leonard S. Coleman

Mr. Jay C. Hoag

Mr. Jeffrey T. Huber

Former President of The National
League of Professional Baseball
Clubs

Founding General Partner,
TCV

Vice Chairman,
GRAIL, Inc.

Mr. Lawrence F. Probst III

(Chairman)

Former Chairman,
United States Olympic Committee

Ms. Talbott Roche

Mr. Richard A. Simonson

Mr. Luis A. Ubiñas
(Lead Director*)

Ms. Heidi J. Ueberroth

Mr. Andrew Wilson

President and Chief Executive
Officer, Blackhawk Network
Holdings, Inc.

Managing Partner, Specie Mesa
L.L.C.; Former Chief Financial
Officer,
Sabre Corporation

Former President,
Ford Foundation

President,
Globicon

Chief Executive Officer,
Electronic Arts Inc.

Director
Since

2001

2011

2009

1991

2016

2006

2010

2017

2013

Independent

Committee
Memberships

X

X

X

X

X

X

X

X

NG, C

C (chair)

A

A

A (chair)

NG (chair)

C

* Elected by independent directors

NG: Nominating and Governance Committee

C: Compensation Committee

A: Audit Committee

4

BOARD DIVERSITY AND REFRESHMENT

The Board of Directors routinely assesses its composition and believes that stockholder value can be
driven by a board that balances the knowledge and understanding of the Company’s business that
results from long-term service with the fresh perspective and ideas driven by the addition of new
members. In addition, the Board of Directors believes that complementary and diverse perspectives,
whether based on business experience, diversity of gender, ethnicity, culture or other factors,
contribute to the Board of Directors’ effectiveness as a whole. The Board of Directors has regularly
added new members — 22% of our director nominees have served for fewer than five years — and the
two most recent additions to the Board of Directors, Ms. Talbott Roche and Ms. Heidi Ueberroth,
represent an increase in the Board of Directors’ gender diversity.

Director Tenure
Median Tenure – 9 years
Average Tenure – 11.3 years

Director Age
Median Age – 57 years old
Average Age – 58.3 years old

More than 10 years
45%

Fewer than
6 years
22%

65 to 75 years old
22%

55 to 65 years old
33%

6-10 years
33%

Director Diversity

44%

Female / Underrepresented
Minority: 4*

56%

Other: 5

* Mr. Coleman, Ms. Roche, Mr. Ubiñas, Ms. Ueberroth

Less than 55 years old
45%

P
r
o
x
y
S
t
a
t
e
m
e
n
t

5

CORPORATE GOVERNANCE HIGHLIGHTS AND REPORT

Board Independence

Independent director nominees

Independent Lead Director

Independent Board committees

Conflict of Interest Policy
Director Elections

Frequency of Board elections

8 of 9

Luis A. Ubiñas

All

Yes

Annual

Voting standard for uncontested elections

Majority of votes cast

Stockholder proxy access
Board Operations

Number of incumbent directors that attended at least 86% of all
applicable meetings

Board evaluations

Committee evaluations

Yes

9 of 9

Annual

Annual

Director stock ownership requirement

Yes, 5x annual retainer

Chairman/CEO role

Code of Conduct applies to all Board members
Stockholder Rights

Voting rights for all shares

Voting rights restrictions (e.g., non-voting shares, golden
shares)

Poison pill

Supermajority voting provisions

Right to call special meetings

Split

Yes

One share, one vote

None

No

None

Yes, 25% threshold

In-person annual stockholders’ meeting with live broadcast

Yes, absent unusual circumstances

Access to directors and officers during annual stockholders’
meeting

Yes

STOCKHOLDER OUTREACH AND SPECIAL MEETING RIGHT

In August 2019, in response to investor feedback and in consideration of the voting results at the 2019
annual meeting, we amended our Certificate of Incorporation and Bylaws to provide stockholders
holding 25% or more of our shares with the right to call a special meeting of stockholders. As
discussed below, the Nominating and Governance Committee and Board of Directors believe this right
is consistent with the views of a substantial majority of our stockholders and is in EA’s best interests.

(cid:129) Stockholder outreach: In connection with the 2019 annual meeting, we reached out to holders
of approximately 41% of our common stock, primarily to solicit feedback regarding the adoption
of a special meeting right. Our stockholders overwhelmingly supported the right for stockholders
to call a special meeting generally but had divergent views regarding the threshold of
outstanding stock required to exercise the special meeting right. Many of our largest
stockholders expressed a preference for the 25% threshold, while some preferred a 15% or
lower threshold and others expressed their support for a special meeting right but no preference
with respect to any threshold 25% or lower.

6

P
r
o
x
y
S
t
a
t
e
m
e
n
t

(cid:129) Voting results: The Nominating and Governance Committee and Board of Directors believe
that the voting results at our 2019 annual meeting support the feedback we received from our
investor outreach. An overwhelming majority of our stockholders — 97.70% of the votes cast
and 72.86% of EA’s outstanding shares — voted in favor of the Board-supported proposal to
adopt a special meeting right with a 25% threshold. In contrast, the stockholder proposal that
contained a 15% threshold received substantially lower support — 57.49% of votes cast and
45.64% of EA’s outstanding shares.

The Nominating and Governance Committee and Board of Directors continue to believe that a 25%
special meeting threshold is in the best interests of EA and its stockholders. In coming to that
conclusion, the Nominating and Governance Committee and Board of Directors considered the results
of EA’s stockholder outreach efforts detailed above and that a significantly higher percentage of EA’s
stockholders voted for the Board-supported special meeting right proposal rather than the stockholder
proposal at the 2019 annual meeting. They also considered that a minority of EA’s outstanding shares
entitled to vote on the proposal voted in favor of the 15% threshold. The adoption of a special meeting
right, or any changes to EA’s special meeting right, requires amending EA’s Certificate of
Incorporation, which, under the General Corporation Law of the State of Delaware, requires the
affirmative vote of a majority of EA’s outstanding shares entitled to vote on the proposal. Thus, the
15% threshold did not receive support from the requisite number of shares required to enact the right in
our Certificate of Incorporation. Lastly, the Nominating and Governance Committee and Board of
Directors believe that a 25% threshold sets an appropriate level that ensures a stockholder right in the
event of an important, time-sensitive issue and adds to EA’s strong corporate governance practices
and procedures, as summarized on page 6 of this Proxy Statement, while still adequately protecting
the long-term interests of EA and its stockholders.

CORPORATE RESPONSIBILITY

People Practices. Attracting, developing and retaining the best creative and technical talent in the
industry is critical to EA’s short and long-term success. We cultivate and maintain a healthy culture by:

(cid:129) Providing timely feedback through meaningful one-on-one conversations between employees

and their managers. These conversations are focused through our Managing for Results
framework, which sets a cadence for establishing annual goals, regularly measuring progress
against those goals, receiving actionable feedback and discussing career development.

(cid:129) Investing in programs to develop EA’s future generation of leaders. We provide training to
current and future leaders to encourage growth in support of their teams and EA. We also
provide job specific development training and materials to engage and grow our employees’
capabilities, including the creation of a catalog of learning tools for Frostbite, our proprietary
game engine, that can be accessed by over 2,500 game developers.

(cid:129) Frequently soliciting feedback on our employees’ job satisfaction, including with respect to EA’s

culture, career opportunities, compensation and benefits and management through our
engagement surveys, the results of which are reviewed by executive management and shared
with our employees.

(cid:129) Providing a comprehensive benefits and awards package that supports the needs and lifestyles
of our employees, including competitive compensation (including bonus and equity opportunities
that give employees an opportunity to share in EA’s financial success), retirement benefits, paid
time off, leaves of absence in connection with significant life events, on-site fitness and daycare
services, and more.

Diversity and Inclusion. We believe in creating games and experiences for our global player
community that reflect a diverse world. As we aim to inspire the world to play, a diverse and inclusive
workforce enables us to deliver the games and experiences that inspire and delight our diverse player
community. We are investing in internal and external initiatives that empower our employees, celebrate
diversity and foster inclusion within EA and our communities, including employee resource groups and
inclusion training courses.

7

Equal Pay for Equal Work. EA believes in equal pay for equal work, and we have made efforts across
our global organization to promote equal pay practices. We are committed to continuing to assess pay
equity and aim for equal pay for equal work across our global organization.

Sustainability. We aim to integrate environmental responsibility and sustainability into our operational
and product strategies. We reduce our carbon footprint by the manner through which we bring our
games and services to players and by making environmentally-conscious choices in our offices
worldwide.

Our players are continuing to engage with our games and services digitally instead of purchasing disc-
based products through retailers. Delivering digital games to our players does not require the
manufacturing, packaging, and distribution of physical discs, which reduces our carbon footprint and
the waste generated by our operations. We recognize that reliably delivering digital products and
operating our increasingly digital business has increased our reliance on data centers, and the
associated energy consumption. As a result, we aim to manage a significant portion of our data center
usage through partners that have made a commitment to increasing the amount of renewable energy
in their electricity supply.

8

P
r
o
x
y
S
t
a
t
e
m
e
n
t

BOARD OF DIRECTORS AND CORPORATE
GOVERNANCE
Each of the following directors has been nominated for re-election at the Annual Meeting. As set forth
below, we believe each of these directors brings a valuable and unique perspective to the Board of
Directors and has the necessary experience, skills and attributes to serve on the Board of Directors
and contribute to its overall effectiveness, and the Board of Directors has concluded that each is
qualified to serve as a director based on the experiences, qualifications and attributes set forth below.

Leonard S. Coleman
Director since 2001
Mr. Coleman, age 71, served as Senior Advisor to Major League Baseball from 1999 until 2005 and,
from 2001 to 2002, was the Chairman of ARENACO, a subsidiary of Yankees/Nets. Mr. Coleman was
President of The National League of Professional Baseball Clubs from 1994 to 1999. Mr. Coleman also
serves on the board of directors of Hess Corporation and Omnicom Group Inc. and has served as a
director of Aramark and Avis Budget Group, Inc. during the past five years.

Mr. Coleman brings a wealth of corporate governance, public sector and international experience to
the Board of Directors from his years of service on the boards of directors for numerous large, public
companies and his involvement in diverse public-service organizations, as well as his extensive
knowledge of the sports industry. Mr. Coleman also provides valuable insight and strategic direction
into our inclusion and diversity practices and programs.

Jay C. Hoag
Director since 2011
Mr. Hoag, age 62, co-founded TCV, a leading provider of growth capital to technology companies, in
1995 and serves as its Founding General Partner. Mr. Hoag also serves on the board of directors of
Netflix, Inc., Peloton Interactive, Inc., TripAdvisor, Inc. and Zillow Group, Inc. and several private
companies. Mr. Hoag also serves on the Boards of Trustees of Northwestern University and Vanderbilt
University, and on the Investment Advisory Board of the University of Michigan. Mr. Hoag has served
as a director of TechTarget, Inc. during the past five years. Mr. Hoag holds a B.A. from Northwestern
University and an M.B.A. from the University of Michigan.

As a venture capital investor, Mr. Hoag brings strategic insight and financial experience to the Board of
Directors. He has evaluated, invested in and served as a board member and compensation committee
member at 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,
compensation program structure and design, corporate governance, talent selection and management.

Jeffrey T. Huber
Director since 2009
Mr. Huber, age 52, is the Vice Chairman of GRAIL, Inc., a life sciences company. Previously,
Mr. Huber served as Senior Vice President of Alphabet Inc. (formerly Google Inc.), where he worked
from 2003 to 2016. From 2001 to 2003, Mr. Huber served as Vice President of Architecture and
Systems Development at eBay Inc. Mr. Huber has served on the board of directors of Illumina, Inc.
during the past five years. Mr. Huber holds a B.S. degree in Computer Engineering from the University
of Illinois and a master’s degree from Harvard University. Mr. Huber serves as a visiting scholar at
Stanford University.

Mr. Huber has extensive operational and management experience at companies that apply rapidly-
changing technology. Mr. Huber’s experience at Alphabet and eBay, in particular, provide background
and experience, including risk management experience, with respect to consumer online companies
that deploy large-scale technological infrastructure.

9

Lawrence F. Probst III
Director since 1991, Chairman since 1994
Mr. Probst, age 70, has been our Chairman of the Board of Directors since July 1994. He was
employed by EA from 1984 to 2008, as well as from March 2013 until December 2014, serving as our
Chief Executive Officer from 1991 until 2007 and as our interim Chief Executive Officer from March
2013 until September 2013. Mr. Probst served as the Chairman of the board of directors of the U.S.
Olympic Committee from 2008 to 2018 and was a member of the International Olympic Committee
from 2013 to 2018. Mr. Probst has served as a director of Blackhawk Network Holdings, Inc. during the
past five years. Mr. Probst holds a B.S. degree from the University of Delaware.

Mr. Probst served as the Company’s Chief Executive Officer for more than 15 years and has served as
the Chairman of the Board of Directors for over 25 years. Mr. Probst contributes to the Board of
Directors his deep understanding of the Company’s operational and strategic business goals through
his direct experience with Company as well as valuable perspective on industry-specific opportunities
and challenges.

Talbott Roche
Director since June 2016
Ms. Roche, age 53, has served as Chief Executive Officer and a member of the board of directors of
Blackhawk Network Holdings, Inc., a privately-held company that operates in the prepaid, gift card and
payments industries, since February 2016, and as President since November 2010. Ms. Roche has
held several positions at Blackhawk Network Holdings since joining in 2001, including Senior Vice
President, Marketing, Product and Business Development and Assistant Vice President. Prior to joining
Blackhawk Network Holdings, Ms. Roche served as a Branding Consultant and Director of New
Business Development for Landor Associates, a marketing consulting firm, and held executive
positions at News Corporation, a media and marketing services company. Ms. Roche served as a
member of the board of directors of publicly-traded Blackhawk Network Holdings, Inc. during the past
five years and has also previously served as a member of the board of directors of the Network
Branded Prepaid Card Association, a trade association. Ms. Roche holds a B.A. in economics from
Stanford University.

Ms. Roche brings to the Board of Directors extensive operational and management experience as well
as significant corporate governance and risk management experience as the Chief Executive Officer of
a global organization, including during Blackhawk Network Holdings’ time as a public company. In
addition, Ms. Roche’s understanding and experience with digital commerce, marketing and consumer
trends provide the Board of Directors with valuable perspective.

Richard A. Simonson
Director since 2006
Mr. Simonson, age 61, has served as Managing Partner of Specie Mesa L.L.C., an investment and
advisory firm since July 2018. From July 2018 to June 2019, Mr. Simonson served as Senior Advisor to
the CEO of Sabre Corporation, and from March 2013 until July 2018, Mr. Simonson was Sabre
Corporation’s Executive Vice President and Chief Financial Officer. Previously, Mr. Simonson 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 positions at Nokia
Corporation, including Executive Vice President, Head of Mobile Phones and Sourcing, Chief Financial
Officer, and Vice President and Head of Customer Finance. Mr. Simonson also serves as Chairman of
the Executive Board of the SMU Lyle School of Engineering. Mr. Simonson has served as a director of
Silver Spring Networks, Inc. during the past five years. Mr. Simonson holds a B.S. degree from the
Colorado School of Mines and an M.B.A. from Wharton School of Business at the University of
Pennsylvania.

Mr. Simonson brings to the Board of Directors extensive financial expertise, corporate governance and
risk management experience as a former public company Chief Financial Officer. He also has
extensive experience with the strategic and operational challenges of leading global companies as well
as partnering with, and overseeing, relationships with independent public registered accounting firms.

10

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Luis A. Ubiñas
Director since 2010, Lead Director since 2015
Mr. Ubiñas, age 57, served as President of the Ford Foundation from 2008 to 2013. Prior to joining the
Ford Foundation, Mr. Ubiñas spent 18 years with McKinsey & Company, where he held various
positions, including Senior Partner of the firm’s west coast media practice working with technology,
telecommunications and media companies. Mr. Ubiñas also serves on the board of directors of Boston
Private Financial Holdings, Inc., Tanger Factory Outlet Centers Inc. and on the boards of several
non-profit organizations. Mr. Ubiñas has served as a director of CommerceHub, Inc. during the past
five years. He holds a B.A. degree from Harvard College and an M.B.A. from Harvard Business
School, is a fellow of the American Academy of Arts and Sciences and is a member of the Council on
Foreign Relations.

Mr. Ubiñas has extensive experience in business management, operations and community
engagement programs from his work as an investor and advisor to companies across sectors and from
his years of overseeing more than $12 billion in assets and over $500 million in annual giving at the
Ford Foundation. In addition, through his prior experience as a Senior Partner at McKinsey &
Company, he has worked with technology, telecommunications and media companies in
understanding the challenges and opportunities presented by digital distribution platforms and
applications. Mr. Ubiñas has worked extensively with companies managing the transition from physical
to digital distribution and business models. Mr. Ubiñas also provides valuable insight and strategic
direction into our inclusion and diversity practices and programs.

Heidi J. Ueberroth
Director since 2017
Ms. Ueberroth, age 54, is the President of Globicon, a private investment and advisory firm focused on
the media, sports, entertainment and hospitality industries. Prior to Globicon, Ms. Ueberroth served in
several positions at the National Basketball Association between 1994 and 2013, including as
President of NBA International from 2009 to 2013 and as President of Global Marketing Partnerships
and International Business Operations from 2006 to 2009. Ms. Ueberroth is the Co-Chair of the board
of directors of the privately-held Pebble Beach Company and also serves on the board of directors of
the privately-held Four Seasons Hotels and Resorts as well as on the boards of several non-profit
organizations. Ms. Ueberroth has served as a director of Santander Consumer USA Holdings Inc.
during the past five years. Ms. Ueberroth holds a B.A. degree from Vanderbilt University and serves on
its Arts and Science College Board of Advisors and is a member of the Council on Foreign Relations.

Ms. Ueberroth brings to the Board of Directors extensive global experience in the sports, media and
entertainment industries, including with respect to developing and marketing products and services in
Asian markets. In addition, Ms. Ueberroth’s past and present board service bring the experience of
overseeing strategic and operational challenges of a global company.

Andrew Wilson
Director since 2013
Mr. Wilson, age 45, has served as EA’s Chief Executive Officer and as a director of EA since
September 2013. Prior to his appointment as our Chief Executive Officer, Mr. Wilson held several
positions within the Company since joining EA in May 2000, including Executive Vice President, EA
SPORTS from August 2011 to September 2013 and Senior Vice President, EA SPORTS from March
2010 to August 2011. Mr. Wilson also serves as a director of Intel Corporation, is chairman of the
board of the privately-held World Surf League and is a member of the Board of Trustees of the Paley
Center for Media.

Mr. Wilson has served as the Company’s Chief Executive Officer since September 2013 and has been
employed by EA in several roles since 2000. In addition to Mr. Wilson’s extensive experience and
knowledge of the Company and the industry, we believe it is crucial to have the perspective of the
Company’s Chief Executive Officer represented on the Board of Directors to provide direct insight into
the Company’s day-to-day operation and strategic vision.

11

DIRECTOR INDEPENDENCE

Our Board of Directors has determined that each of our non-employee directors qualifies as an
“independent director” as that term is used in the NASDAQ Stock Market Rules and that each member
of our standing committees is independent in accordance with those standards. Mr. Wilson, our CEO,
does not qualify as independent. The NASDAQ Stock Market Rules have both objective tests and a
subjective test for determining independence. The Board of Directors has not established categorical
standards or guidelines to make these subjective determinations but considers all relevant facts and
circumstances.

In addition to the board-level standards for director independence, the directors who serve on the
Nominating and Governance, Audit and Compensation Committees each satisfy requirements
established by the Securities and Exchange Commission (“SEC”) and the NASDAQ Stock Market to
qualify as “independent” for the purposes of membership on those committees.

BOARD OF DIRECTORS, BOARD MEETINGS AND COMMITTEES

In fiscal 2020, the Board of Directors met 9 times. At regularly scheduled meetings, the independent
members of the Board of Directors meet in executive session separately without management present.

Board of Directors Leadership Structure

Mr. Wilson serves as our CEO, and Mr. Probst serves as our Chairman. In addition, Mr. Ubiñas, our
Lead Director, was elected by the independent directors and is responsible for chairing executive
sessions of the Board of Directors and other meetings of the Board of Directors in the absence of the
Chairman, serving as a liaison between the Chairman and the other independent directors, and
overseeing the Board of Directors’ stockholder communication policies and procedures (including,
under appropriate circumstances, meeting with stockholders). Mr. Ubiñas also may call meetings of the
independent directors. Mr. Ubiñas has served as our Lead Director since 2015. At our 2019 annual
meeting, Mr. Ubiñas was chosen by the independent directors to serve as Lead Director for an
additional two-year term that ends with our 2021 annual meeting, subject to Mr. Ubiñas’ re-election to
the Board of Directors.

The Board of Directors believes that this leadership structure with Mr. Wilson serving as CEO,
Mr. Probst serving as Chairman and Mr. Ubiñas serving as Lead Director is the appropriate leadership
structure for the Company. Mr. Probst, an independent director, was an employee of the Company for
25 years, more than 15 of which were in service as CEO and Executive Chairman. As a result of his
many years of service to the Company, Mr. Probst has invaluable knowledge regarding the Company
and the interactive entertainment industry and is uniquely positioned to lead the Board of Directors in
its review of management’s strategic plans. Given Mr. Probst’s past service with the Company, the
Board of Directors believes that a strong and empowered Lead Director provides an essential
mechanism for independent viewpoints, and as the Chairman of the Nominating and Governance
Committee, Mr. Ubiñas is well suited for this role because, among other things, he is not affiliated with
the Company under any applicable rules or guidelines.

Board Committees

The Board of Directors currently has a standing Audit Committee, Compensation Committee and
Nominating and Governance Committee. Each of these standing committees operates under a written
charter adopted by the Board of Directors. These charters are available in the Investor Relations
section of our website at http://ir.ea.com.

12

All members of these committees are independent directors. During fiscal 2020, all nine directors
attended or participated in 86% or more of the aggregate of (1) the number of applicable meetings of
the Board or Directors and (2) the number of applicable meetings held by each committee on which
such director was a member. The members of our standing committees are set forth below:

Audit Committee:

Richard A. Simonson (Chair), Jeffrey T. Huber and Talbott
Roche
Nominating and Governance Committee: Luis A. Ubiñas (Chair) and Leonard S. Coleman
Compensation Committee:

Jay C. Hoag (Chair), Leonard S. Coleman and Heidi J.
Ueberroth

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Audit Committee

The Audit Committee assists the Board of Directors in its oversight of the Company’s financial
reporting and is directly responsible for the appointment, compensation and oversight of our
independent auditors. The Audit Committee also is responsible for establishing and maintaining
complaint procedures with respect to internal and external concerns regarding accounting or auditing
matters, oversight of tax and treasury policies and practices and oversight of the Company’s internal
audit function. The Audit Committee has the authority to obtain advice and assistance from outside
advisors without seeking approval from the Board of Directors, and the Company will provide
appropriate funding for payment of compensation to advisors engaged by the Audit Committee. The
Audit Committee currently is comprised of three directors, each of whom in the opinion of the Board of
Directors meets the independence requirements and the financial literacy standards of the NASDAQ
Stock Market Rules, as well as the independence requirements of the SEC. While the Board of
Directors retains ultimate risk management oversight with respect to privacy and cybersecurity issues,
the Audit Committee is provided quarterly updates from EA’s information security team and reviews the
steps taken by management to monitor and control these risks. The Board of Directors has determined
that Mr. Simonson meets the criteria for an “audit committee financial expert” as set forth in applicable
SEC rules. The Audit Committee met 8 times in fiscal 2020. For further information about the Audit
Committee, please see the “Report of the Audit Committee of the Board of Directors” below.

Nominating and Governance Committee

The Nominating and Governance Committee is responsible for recommending to the Board of
Directors nominees for director and committee memberships. The Nominating and Governance
Committee also is responsible for reviewing developments in corporate governance, recommending
formal governance standards to the Board of Directors, applying the criteria outlined in our Corporate
Governance Guidelines to recommend nominees for director and for reviewing from time to time the
appropriate skills, characteristics and experience required of the Board of Directors as a whole, as well
as its individual members, including such factors as business experience and diversity. In addition, the
Nominating and Governance Committee is responsible for overseeing the CEO’s annual performance
review. The Nominating and Governance Committee manages the process for emergency planning in
the event the CEO is unable to fulfill the responsibilities of the role and also periodically evaluates
internal and external CEO candidates for succession planning purposes. The Nominating and
Governance Committee also reviews with management matters of corporate responsibility, including
inclusion and diversity policies and practices, environmental sustainability and political activities. The
Nominating and Governance Committee currently is comprised of two directors, each of whom in the
opinion of the Board of Directors meets the independence requirements of the NASDAQ Stock Market
Rules. The Nominating and Governance Committee met 4 times in fiscal 2020.

Compensation Committee

The Compensation Committee is responsible for setting the overall compensation strategy for the
Company, recommending the compensation of the CEO to the Board of Directors, determining the
compensation of our other executive officers and overseeing the Company’s bonus and equity
incentive plans and other benefit plans. For further information about the role of our executive officers

13

in recommending the amount or form of executive compensation, please see “The Process for
Determining our NEOs’ Compensation” in the “Compensation Discussion and Analysis” section of this
Proxy Statement. In addition, the Compensation Committee is responsible for reviewing and
recommending to the Board of Directors compensation for non-employee directors and compensation
for employees that would qualify as a “Related Person Transaction” under our Related Person
Transaction Policy. The Compensation Committee currently is comprised of three directors, each of
whom in the opinion of the Board of Directors meets the independence requirements of the NASDAQ
Stock Market Rules and the SEC rules. The Compensation Committee may delegate any of its
authority and duties to subcommittees, individual committee members or management, as it deems
appropriate in accordance with applicable laws, rules and regulations. During fiscal 2020, the
Compensation Committee met 5 times and also acted by written consent. The Compensation
Committee has the authority to engage the services of outside advisors, after first conducting an
independence assessment in accordance with applicable laws, regulations and exchange listing
standards. During fiscal 2020, the Compensation Committee engaged and directly retained
Compensia, Inc. (“Compensia”) and Frederick W. Cook & Co (“FWC”), each a national compensation
consulting firm, to assist the Compensation Committee. Compensia assisted the Compensation
Committee’s analysis and review of the compensation of our executive officers and other aspects of
our total compensation strategy, and FWC assisted with the Compensation Committee’s review of our
non-employee director compensation. Neither Compensia nor FWC performed other services for the
Company and its management team during fiscal 2020. The Compensation Committee has reviewed
the independence of Compensia and FWC and has determined that neither Compensia’s nor FWC’s
engagement raise any conflicts of interest.

ANNUAL BOARD AND COMMITTEE SELF-EVALUATIONS

Our Board of Directors and each of our committees conducts an annual evaluation, which includes a
qualitative assessment by each director of the performance of the Board of Directors, as a whole, and
the committee or committees on which each director sits. The evaluation is intended to determine
whether the Board of Directors and each committee are functioning effectively, and to provide them
with an opportunity to reflect upon and improve processes and effectiveness. The evaluations are led
by Mr. Ubiñas, our Lead Director and Chairman of the Nominating and Governance Committee. A
summary of the results is presented to the Nominating and Governance Committee and the Board of
Directors on an aggregated basis, noting any themes or common issues.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 2020, no member of the Compensation Committee was an employee or current or former
officer of EA, nor did any member of the Compensation Committee have a relationship requiring
disclosure by EA under Item 404 of Regulation S-K. No EA officer serves or has served since the
beginning of fiscal 2020 as a member of the board of directors or the compensation committee of a
company at which a member of EA’s Board of Directors and Compensation Committee is an employee
or officer.

CONSIDERATION OF DIRECTOR NOMINEES

In evaluating nominees for director to recommend to the Board of Directors, the Nominating and
Governance Committee will take into account many factors within the context of the characteristics and
the needs of the Board of Directors as a whole and EA’s business and strategy at that time. While the
specific needs of the Board of Directors may change from time to time, all nominees for director are
considered on the basis of the following minimum qualifications:

(cid:129) The highest level of personal and professional ethics and integrity, including a commitment to

EA’s purpose and beliefs;

(cid:129) Practical wisdom and mature judgment;

14

(cid:129) Broad training and significant leadership experience in business, entertainment, technology,
finance, corporate governance, public interest or other disciplines relevant to EA’s long-term
success;

(cid:129) The ability to gain an in-depth understanding of EA’s business; and

(cid:129) A willingness to represent the best interests of all EA stockholders and objectively appraise

management performance.

While there is no formal policy with regard to diversity, when considering candidates as potential
members of the Board of Directors, the Nominating and Governance Committee considers the skills,
background and experience of each candidate to evaluate his or her ability to contribute diverse
perspectives to the Board of Directors. The goal of the Nominating and Governance Committee is to
select candidates that have complementary and diverse perspectives, whether based on business
experience, diversity of gender, ethnicity, culture, or other factors, which together contribute to the
Board of Directors’ effectiveness as a whole. The primary consideration is to identify candidates who
will best fulfill the Board of Directors’ and the Company’s needs at the time of the search. Therefore,
the Nominating and Governance Committee does not believe it is appropriate to either nominate or
exclude from nomination an individual based on gender, ethnicity, race, age, or similar factors.

The Nominating and Governance Committee will evaluate candidates proposed by our stockholders
under similar criteria, except that it also may consider as one of the factors in its evaluation the amount
of EA voting stock held by the stockholder and the length of time the stockholder has held such stock.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

GLOBAL CODE OF CONDUCT AND CORPORATE GOVERNANCE GUIDELINES

We have adopted a Global Code of Conduct that applies to our directors, and all employees, including
our principal executive officer, principal financial officer, principal accounting officer, and other senior
financial officers, as well as Corporate Governance Guidelines. These documents, along with our
organizational documents and committee charters, form the framework of our corporate governance.
Our Global Code of Conduct, Corporate Governance Guidelines and committee charters are available
in the Investor Relations section of our website at http://ir.ea.com. We post amendments to or waivers
from our Global Code of Conduct in the Investor Relations section of our website.

OVERSIGHT OF RISK ISSUES

Board of Directors

Our Board of Directors oversees our risk management. The Board of Directors exercises this oversight
responsibility directly and through its committees. The oversight responsibility of the Board of Directors
and its committees is informed by reports from our management team that are designed to provide
visibility into our key risks and our risk mitigation strategies. Material business and strategic risks are
reviewed by the full Board of Directors. While the Board of Directors has ultimate risk oversight with
respect to risks related to privacy and cybersecurity and receives periodic updates on these risks and
mitigation strategies, the Audit Committee also receives quarterly updates from EA’s information
security team that review the steps taken by management to monitor and control these risks. In
addition, the Board of Directors has oversight with respect to risks related to the COVID-19 pandemic.
While its committees are addressing COVID-19 risks specific to their delegated duties, the Board of
Directors has reviewed, overseen and continues to monitor the identification of COVID-19 risks and
mitigation strategies related to the Company’s return-to-work procedures, business strategy, business
continuity, and the impact on the Company’s financial planning.

Committees

Risks related to financial reporting, internal controls and procedures, investments, tax and treasury
matters and compliance issues are reviewed regularly by the Audit Committee, which oversees the

15

financial reporting, global audit and legal compliance functions. The Audit Committee has overseen
risks from the COVID-19 pandemic to the Company’s internal controls over financial reporting,
disclosure controls and procedures and independent audit, as well as the way in which business risks
related to COVID-19 are communicated in the Company’s SEC filings. The Audit Committee also
oversees our enterprise risk management program, which identifies and prioritizes material risks for the
Company, including, if material, risks related to corporate responsibility matters, and the mitigation
steps needed to address them. The Nominating and Governance Committee reviews risks related to
director and CEO succession and monitors the effectiveness of our corporate governance policies. The
Compensation Committee oversees risks related to our people practices, including employee
engagement, retention and pay equity. It also reviews compensation-related risks with members of
management that are responsible for structuring the Company’s compensation programs, including
compensation-related risks resulting from the short-term and long-term uncertainties to the Company’s
financial planning as a result of the COVID-19 pandemic. Each of the committees regularly report to
the full Board of Directors on matters relating to the specific areas of risk that each committee
oversees.

Compensation Risk Assessment

As part of their risk oversight efforts, the Compensation Committee evaluates our compensation
programs to determine whether the design and operation of our policies and practices could encourage
executives or employees to take excessive or inappropriate risks that would be reasonably likely to
have a material adverse effect on the Company and have concluded that they do not.

In making that determination, the Compensation Committee considered the design, size and scope of
our cash and equity incentive programs and program features that mitigate against potential risks, such
as payout caps, equity award clawbacks, the quality and mix of performance-based and “at risk”
compensation, and, with regard to our equity incentive programs, the stock ownership requirements
applicable to our executives. The Compensation Committee reviewed the results of their evaluation
with management and Compensia. The Compensation Committee has concluded that our
compensation policies and practices strike an appropriate balance of risk and reward in relation to our
overall business strategy, and do not create risks that are reasonably likely to have a material adverse
effect on the Company.

The “Compensation Discussion and Analysis” section below generally describes the compensation
policies and practices applicable to our named executive officers.

INSIDER TRADING, ANTI-HEDGING AND ANTI-PLEDGING POLICIES

We maintain an insider trading policy designed to promote compliance by our employees and directors
with both federal and state insider trading laws. In addition, our insider trading policy prohibits our
directors, executive officers, employees and family members of any director, executive officer or
employee or others living in their respective households, from engaging in any hedging transaction with
the Company’s securities, buying the Company’s securities on margin, or otherwise trading in any
derivative of the Company’s securities (including put and/or call options, swaps, forwards or futures
contracts, short sales or collars). Our directors and Section 16 officers also are prohibited from
pledging our stock as collateral for any loan.

RELATED PERSON TRANSACTIONS POLICY

Our Board of Directors has adopted a written Related Person Transactions Policy that describes the
procedures used to process, evaluate, and, if necessary, disclose transactions between the Company
and its directors, officers, director nominees, greater than 5% beneficial owners, or an immediate
family member of any of the foregoing. We review any transaction or series of transactions which
exceeds $120,000 in a single fiscal year and in which any related person has a direct or indirect
interest, as well as any transaction for which EA’s Global Code of Conduct or Conflict of Interest Policy
would require approval of the Board of Directors.

16

Once a transaction has been identified, the Audit Committee (if the transaction involves an executive
officer) or the Nominating and Governance Committee (if the transaction involves a director) will review
the transaction at the next scheduled meeting of such committee. Transactions involving our CEO also
will be reviewed by our independent Chairman or independent Lead Director if the Chairman is not
independent. If it is not practicable or desirable to wait until the next scheduled meeting, the
chairperson of the applicable committee considers the matter and reports back to the relevant
committee at the next scheduled meeting. In determining whether to approve or ratify a transaction, the
Audit Committee or Nominating and Governance Committee (or the relevant chairperson of such
committee) considers all of the relevant facts and circumstances available and transactions are
approved only if they are in, or not inconsistent with, the best interests of EA and its stockholders. No
member of the Audit Committee or Nominating and Governance Committee may participate in any
review, consideration or approval of any transaction if the member or their immediate family member is
the related person.

DIRECTOR ATTENDANCE AT ANNUAL MEETING

Our directors are expected to make every effort to attend the Annual Meeting. All of the nine directors
who were elected at the 2019 annual meeting attended the meeting.

STOCKHOLDER COMMUNICATIONS 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, or by sending an email
to StockholderCommunications@ea.com. Our Corporate Secretary will forward to the Board of
Directors all communications that are appropriate for the Board of Directors’ consideration. For further
information regarding the submission of stockholder communications, please visit the Investor
Relations section of our website at http://ir.ea.com.

OTHER BUSINESS

The Board of Directors does not know of any other matter that will be presented for consideration at
the Annual Meeting except as specified in the notice of the Annual Meeting. If any other matter does
properly come before the Annual Meeting, or at any adjournment or postponement of the Annual
Meeting, it is intended that the proxies will be voted in respect thereof in accordance with the judgment
of the persons voting the proxies.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

17

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The following Report of the Audit Committee shall not be deemed to be “soliciting material” or to be
“filed” with the SEC nor shall this information be incorporated by reference into any future filing under
the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), except to the extent that EA specifically incorporates it by reference
into a filing.

The Audit Committee of the Board of Directors operates under a written charter, which was most recently
amended in May 2018. The Audit Committee is currently comprised of three non-employee directors,
each of whom in the opinion of the Board of Directors meets the current independence requirements
and financial literacy standards of the NASDAQ Stock Market Rules, as well as the independence
requirements of the SEC. During fiscal 2020, the Audit Committee consisted of Richard A. Simonson,
Jeffrey T. Huber and Talbott Roche. The Board of Directors has determined that Mr. Simonson meets the
criteria for an “audit committee financial expert” as set forth in applicable SEC rules.

The Company’s management is primarily responsible for the preparation, presentation and integrity of
the Company’s financial statements. EA’s independent registered public accounting firm, KPMG LLP
(the “independent auditors”), is responsible for performing an independent audit of the Company’s
(1) financial statements and expressing an opinion as to the conformity of the financial statements with
U.S. generally accepted accounting principles, and (2) internal control over financial reporting in
accordance with the auditing standards of the Public Company Accounting Oversight Board (the
“PCAOB”) and issuing an opinion thereon.

The Audit Committee assists the Board of Directors in its oversight responsibility with respect to the
integrity of EA’s accounting policies, internal control function and financial reporting processes. The
Audit Committee reviews EA’s quarterly and annual financial statements prior to public earnings
releases and submission to the SEC; oversees EA’s internal audit function; consults with the
independent auditors and EA’s internal audit function regarding internal controls and the integrity of the
Company’s financial statements; oversees tax and treasury matters; oversees EA’s enterprise risk
management program; assesses the independence of the independent auditors; and is directly
responsible for the appointment, retention, compensation and oversight of the independent auditors. In
this context, the Audit Committee has met and held discussions with members of management, EA’s
internal audit function and the independent auditors. Company management has represented to the
Audit Committee that the Company’s consolidated financial statements for the most recently completed
fiscal year were prepared in accordance with accounting principles generally accepted in the United
States, and the Audit Committee has reviewed and discussed the consolidated financial statements
with Company management and the independent auditors. Company management also has
represented to the Audit Committee that the Company’s internal control over financial reporting was
effective as of the end of the Company’s most recently completed fiscal year, and the Audit Committee
has reviewed and discussed the Company’s internal control over financial reporting with management
and the independent auditors. The Audit Committee also discussed with the independent auditors
matters required to be discussed by the applicable requirements of the PCAOB, including the quality
and acceptability of the Company’s financial reporting and internal control processes. The Audit
Committee also has discussed with the Company’s independent auditors the scope and plans for their
annual audit and reviewed the results of that audit with management and the independent auditors.

In addition, the Audit Committee received and reviewed the written disclosures and the letter from the
independent auditors required by the applicable requirements of the PCAOB regarding their
communications with the Audit Committee concerning independence and has discussed with the
independent auditors the auditors’ independence from the Company and its management. The Audit
Committee also has considered whether the provision of any non-audit services (as described on
page 52 of this Proxy Statement under the heading “Proposal Three: Ratification of the Appointment of
KPMG LLP, Independent Registered Public Accounting Firm” — “Fees of Independent Auditors”) and
the employment of former KPMG LLP employees by the Company are compatible with maintaining the
independence of KPMG LLP.

18

The members of the Audit Committee are not engaged in the practice of auditing or accounting. In
performing its functions, the Audit Committee necessarily relies on the work and assurances of the
Company’s management and the independent auditors.

In reliance on the reviews and discussions referred to in this report and in light of its role and
responsibilities, the Audit Committee recommended to the Board of Directors that the Company’s
audited financial statements for fiscal 2020 be included for filing with the SEC in the Company’s Annual
Report. The Audit Committee also has approved the selection of KPMG LLP as the Company’s
independent auditors for fiscal 2021.

AUDIT COMMITTEE

Richard A. Simonson (Chairman)

Jeffrey T. Huber

Talbott Roche

P
r
o
x
y
S
t
a
t
e
m
e
n
t

19

DIRECTOR COMPENSATION AND STOCK
OWNERSHIP GUIDELINES
Our Compensation Committee is responsible for reviewing and recommending to our Board of
Directors the compensation paid to our non-employee directors. Non-employee directors are paid a
mix of cash and equity compensation consisting of (1) an annual board retainer, (2) committee fees,
and committee chair, chairman and lead director fees, as applicable, and (3) an annual equity award,
as described below.

The Compensation Committee currently reviews our director compensation every two years, most
recently in February 2020 in consultation with FWC. For information on the independence of FWC, see
the section of this Proxy Statement under the subheading “Compensation Committee” beginning on
page 13. As part of this review, FWC conducted a competitive analysis of our non-employee director
compensation against our compensation peer group (as defined in the “Compensation Discussion and
Analysis” below). Based on the Compensation Committee’s review, no changes to the compensation
paid to our non-employee directors were recommended to our Board of Directors for 2020. The
Compensation Committee expects to conduct its next review of our director compensation in 2022.

Cash Compensation

Our non-employee directors receive an annual cash retainer for service on the Board of Directors, plus
fees for service on the Audit, Compensation and/or Nominating and Governance Committee, as
applicable. In addition to those fees, the Chairman of the Board, Lead Director and Chairs of the Audit,
Compensation and Nominating and Governance Committees receive additional fees for their service in
such roles. The table below reflects the annualized components of cash compensation for
non-employee directors that were in place during fiscal 2020. For more information regarding the
specific compensation received by each non-employee director during fiscal 2020, see the “Fiscal 2020
Director Compensation Table” table below.

Annual Board Retainer

Amount ($)

Annual Board Retainer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60,000

Committee Fees

Amount ($)

Service on the Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service on the Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service on the Nominating and Governance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,000
12,500
10,000

Chairman of the Board, Lead Director and Committee Chair Fees

Amount ($)

Chairman of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lead Director
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chair of the Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chair of the Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chair of the Nominating and Governance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50,000
25,000
15,000
12,500
10,000

In addition, individual directors are eligible to earn up to $1,000 per day, with the approval of the Board
of Directors, for special assignments, which may include providing oversight to management in areas
such as sales, marketing, public relations, technology and finance (provided, however, no independent
director is eligible for a special assignment if the assignment or payment for the assignment would
prevent the director from being considered independent under applicable NASDAQ Stock Market or
SEC rules). No non-employee directors earned any compensation for special assignments during fiscal
2020.

20

Equity Compensation

In fiscal 2020, non-employee directors also received an annual equity award of restricted stock units
(“RSUs”) with a grant date fair value of approximately $260,000. These RSUs were granted upon
re-election to the Board of Directors at our 2019 annual meeting and vest in full on the first anniversary
of the grant date (or, if earlier, the date of the next annual meeting of stockholders following the grant
date), subject to the non-employee director’s continuous service as a member of the Board of Directors
through such date. The receipt of shares underlying vested RSUs may be deferred until the fifth or tenth
anniversary of the original vesting date or the date the director terminates service with the Company.

Under the terms of our equity incentive plan, non-employee directors may elect to receive all or part of
their cash compensation (as described above) in the form of shares of our common stock. As an
incentive for our non-employee directors to increase their stock ownership in EA, non-employee
directors making such an election receive vested shares of common stock valued at 110% of the cash
compensation they otherwise would have received. These shares are awarded via the grant and
immediate exercise of a stock option having an exercise price equal to the fair market value of our
common stock on the date of grant, which is the first trading day of each quarter of the Board year.
Mr. Hoag, Mr. Huber, Ms. Roche, Mr. Simonson, Mr. Ubiñas, and Ms. Ueberroth received all or part of
their cash compensation in the form of our common stock during fiscal 2020.

Other Benefits

Non-employee directors who are not employed with any other company are offered an opportunity to
purchase certain EA health, dental and vision insurance while serving as a director. Participating
directors pay 100% of their own insurance premiums.

Stock Ownership Guidelines

Each non-employee director is required, within five years of becoming a director, to own a number of
shares of EA common stock having a value of at least five years’ annual retainer for service on our
Board of Directors.

Non-employee directors are permitted to include the value of vested, but deferred, RSUs toward their
ownership requirement. As of the end of fiscal 2020, each of our directors had fulfilled his or her
ownership requirements. Mr. Hoag is eligible to satisfy his ownership requirements through holdings of
EA common stock by TCV, where he serves as the Founding General Partner. Mr. Huber is eligible to
satisfy his ownership requirements through holdings of EA common stock through certain trusts over
which Mr. Huber maintains investment control and pecuniary interest.

FISCAL 2020 DIRECTOR COMPENSATION TABLE

The following table shows compensation information for each of our non-employee directors during fiscal
2020. Mr. Wilson, our CEO, does not receive any compensation for his service as a member of our Board
of Directors. For information regarding the compensation paid to Mr. Wilson during fiscal 2020, refer to
the “Fiscal 2020 Summary Compensation Table” below, and the related explanatory tables.

Name

Fees Earned or
Paid in Cash
($)(1)

Stock
Awards
($)(2)

Option
Awards
($)(3)

Total
($)

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Leonard S. Coleman . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jay C. Hoag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jeffrey T. Huber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lawrence F. Probst III . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Talbott Roche . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Richard A. Simonson . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Luis A. Ubiñas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heidi Ueberroth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82,500
85,000
75,000
110,000
75,000
90,000
105,000
72,586

259,978
259,978
259,978
259,978
259,978
259,978
259,978
259,978

8,474
7,475

— 342,478
353,452
342,453
— 369,978
342,463
358,889
375,430
334,273

7,485
8,911
10,452
1,709

(1) As discussed above, non-employee directors may elect to receive all or a portion of their cash fees in the form of EA common stock. See

footnote 3 for additional information regarding the number of shares received in lieu of cash compensation by those non-employee directors
who made such an election.

21

(2) Represents the aggregate grant date fair value of the annual equity award of RSUs granted to the non-employee directors and is calculated
based on a closing price of $95.23 per share for our common stock on the date of grant, August 8, 2019. Grant date fair value is determined
for financial statement reporting purposes in accordance with FASB ASC Topic 718. For additional information regarding the valuation
methodology for RSUs, see Note 15, “Stock-Based Compensation and Employee Benefit Plans,” to the Consolidated Financial Statements in
our Annual Report. Each of our non-employee directors held 2,730 unvested RSUs as of March 28, 2020 (the last day of fiscal 2020).

(3) Non-employee directors may elect to receive all or part of their cash compensation in the form of EA common stock, and directors making
such an election receive common stock valued at 110% of the cash compensation they would have otherwise received. These shares are
awarded via the grant and immediate exercise of a stock option having an exercise price equal to the fair market value of our common stock
on the date of grant. The values represent the premium received for shares in lieu of compensation. As of March 28, 2020 (the last day of
fiscal 2020), the aggregate number of outstanding and unexercised shares of our common stock subject to stock options beneficially owned by
our non-employee directors was as follows: Mr. Hoag, 11,872; Mr. Huber, 11,872; Mr. Probst, 76,861; Mr. Simonson, 11,872; and Mr. Ubiñas,
4,872.

The following table presents information regarding the shares received upon immediate exercise of the option(s) granted to each director who
elected to receive all or part of his or her cash compensation in the form of EA common stock during fiscal 2020:

Shares
Subject to
Immediately
Exercised
Stock
Option
Grants

Exercise Price
($)

Grant Date
Fair Value
($)

23,336
23,366
23,349
23,424

93,475

20,585
20,623
20,680
20,588

82,476

20,585
20,623
20,585
20,693

82,486

24,664
24,785
24,778
24,684

98,911

28,837
28,948
28,781
28,886

115,452

19,921

246
247
245
223

217
218
217
196

217
218
216
197

260
262
260
235

304
306
302
275

210

Name

Jay C. Hoag . . . . . . . . . . . . . . . . . . . . .

Jeffrey T. Huber . . . . . . . . . . . . . . . . . .

Talbott Roche . . . . . . . . . . . . . . . . . . . .

Richard A. Simonson . . . . . . . . . . . . . .

Luis A. Ubiñas . . . . . . . . . . . . . . . . . . .

Grant Date

5/1/2019
8/1/2019
11/1/2019
2/3/2020

5/1/2019
8/1/2019
11/1/2019
2/3/2020

5/1/2019
8/1/2019
11/1/2019
2/3/2020

5/1/2019
8/1/2019
11/1/2019
2/3/2020

5/1/2019
8/1/2019
11/1/2019
2/3/2020

94.86
94.60
95.30
105.04

94.86
94.60
95.30
105.04

94.86
94.60
95.30
105.04

94.86
94.60
95.30
105.04

94.86
94.60
95.30
105.04

Heidi Ueberroth . . . . . . . . . . . . . . . . . .

5/1/2019

94.86

22

P
r
o
x
y
S
t
a
t
e
m
e
n
t

COMPENSATION DISCUSSION AND ANALYSIS
OVERVIEW

Our Compensation Discussion and Analysis describes and discusses the fiscal 2020 compensation
paid to our named executive officers (“NEOs”), and is organized into six sections:

(cid:129) Executive Summary

(cid:129) Compensation Practices, Principles and Say-on-Pay Vote

(cid:129) The Process for Determining Our NEOs’ Compensation

(cid:129) Our Elements of Pay

(cid:129) Our NEOs’ Fiscal 2020 Compensation

(cid:129) Other Compensation Information

For fiscal 2020, EA’s NEOs were:

(cid:129) Andrew Wilson, Chief Executive Officer;

(cid:129) Blake Jorgensen, Chief Operating Officer and Chief Financial Officer;

(cid:129) Laura Miele, Chief Studios Officer;

(cid:129) Kenneth Moss, Chief Technology Officer; and

(cid:129) Chris Bruzzo, Chief Marketing Officer.

EXECUTIVE SUMMARY

Fiscal 2020 Summary of EA’s Business

During fiscal 2020, we delivered award winning games and services to our players and saw deep
player engagement. With our continued focus on execution, we generated strong financial results.
During fiscal 2020, we released eight new games, including Star Wars Jedi: Fallen OrderTM, which won
several awards, including the award for best adventure game at the 2020 D.I.C.E. awards, and
Madden NFL 20, which was the most successful game in the 30-year history of the franchise, setting
multiple records for player engagement. Our broad and deep portfolio, combined with dynamic live
services for FIFA, Madden NFL, Apex LegendsTM, and The SimsTM 4, among others, drove net revenue
and earnings per share above our fiscal 2020 guidance. We generated net revenue of $5.537 billion,
diluted earnings per share of $10.30 (including the impact of $5.97 of one-time tax benefits), drove
higher gross margins, increased our cash provided by operations, and invested in products and
services for the future. In addition, during fiscal 2020 we repurchased 12.3 million shares, returning
nearly $1.2 billion to stockholders.

We delivered these achievements against the background of the global challenge of the COVID-19
pandemic, which impacted our operations during the last quarter of fiscal 2020. Beginning with the
impact to our Asian operations, and subsequently impacting substantially all of our global business
operations, our primary focus was, and continues to be, the health and safety of our employees. We
mobilized quickly to support our global workforce by enabling employees to work from home,
enhancing our information technology systems to support our distributed workforce, mitigating the
disruption to operations brought about by stay-at-home orders and by continuing to deliver on our
objectives. During this extraordinary time, our talented and dedicated teams worked to deliver new
experiences for our players, including our “Stay & Play” program, designed to bring our global gaming
community together virtually during a time when physical distancing has become the norm. We are
proud of the efforts that we have achieved in the rapidly evolving situation of the pandemic in
maintaining business continuity, mitigating risks, and delivering for our players.

23

Fiscal 2020 GAAP Financial Results and Operating Highlights

(cid:129) We generated $5.537 billion of net revenue and $10.30 diluted earnings per share (including the

impact of $5.97 of one-time tax benefits).

(cid:129) Our digital net revenue increased to $4.314 billion and represented 78% of our total net revenue.
(cid:129) We delivered net income of $3.039 billion and operating cash flow of $1.797 billion.
(cid:129) Operating profit margins were 26%.
(cid:129) We generated net bookings for the fiscal year of $5.211 billion.
(cid:129) We repurchased 12.3 million shares during fiscal 2020 for $1.2 billion.
(cid:129) We launched eight major games during fiscal 2020, including FIFA 20, Madden NFL 20, NHL 20,
Plants vs. Zombies: Battle for NeighborvilleTM, Need for SpeedTM Heat and Star Wars Jedi: Fallen
OrderTM.

(cid:129) Star Wars Jedi: Fallen OrderTM has more than 10 million unique players to date.
(cid:129) FIFA 20 has more than 25 million unique players to date.
(cid:129) In every quarter of fiscal 2020, monthly average players in The SimsTM 4 were higher than the

comparable period in the prior year.

The financial performance, operational achievements and other fiscal year events summarized above
provide context for the compensation decisions made by the Compensation Committee and Board of
Directors in fiscal 2020. The Company’s executive compensation program is designed to reward our
named executive officers for the achievement of Company-wide financial and operational objectives
and the creation of long-term stockholder value.

COMPENSATION PRACTICES, PRINCIPLES AND SAY-ON-PAY VOTE
Compensation Design
Our executive compensation program is designed to align the interests of our executives with the
interests of our stockholders.

What We Do

Í Incorporate both PRSUs and RSUs

What We Don’t Do
È Have a “single-trigger” change in control

plan

Í Require our executives to satisfy stock

È Provide excise tax gross-ups upon a

holding requirements

change in control

Í Prohibit all employees and directors from

engaging in hedging transactions in EA
stock and prohibit executive officers and
directors from pledging EA common stock

È Have executive employment contracts
(other than as required by local
jurisdictions)

Í Conduct annual “say-on-pay” advisory votes È Reprice options without stockholder

approval

È Provide excessive perquisites

Í Recover (clawback) equity compensation
for misconduct in the event of a financial
restatement

Í Align performance-based equity vesting

with stockholder interests

Í Engage an independent compensation
consultant to provide input into the
Compensation Committee’s decisions
Í Evaluate our compensation peer group at

least annually to ensure ongoing relevance
of each member

24

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Compensation Principles — Promoting Pay-for-Performance

The design of our compensation program is guided by a compensation philosophy based on three core
principles intended to attract and retain high-performing executives and promote a pay-for-performance
approach to executive compensation:

(cid:129) Principle 1 — Cash Compensation: A significant portion of each NEO’s cash compensation

should be at risk, based on the annual financial and operational performance of the Company, in
addition to the NEO’s individual performance;

(cid:129) Principle 2 — Equity Compensation: A significant portion of each NEO’s target total direct

compensation should be provided in the form of long-term equity to enhance alignment between
the interests of our NEOs and our stockholders and to promote long-term retention of a strong
leadership team in an industry and geographic area that is highly competitive for executive
talent; and

(cid:129) Principle 3 — Target Total Direct Compensation: The target total direct compensation

package for each NEO should be consistent with market practices for executive talent and
reflect each NEO’s individual experience, responsibilities and performance.

Fiscal 2019 Say-On-Pay Vote

We received a favorable 94% of the votes cast for our annual say-on-pay advisory proposal at our
2019 annual meeting. EA’s management, the Compensation Committee and the Board of Directors are
committed to maintaining a pay-for-performance alignment in our executive compensation program
and value the opinions of our stockholders regarding our program. The Board of Directors and
Compensation Committee believe the voting results at the 2019 annual meeting reflect stockholder
support for our executive compensation program and philosophy, and the Board of Directors and
Compensation Committee intend to continue their practice of designing our executive compensation
program to promote pay-for-performance.

THE PROCESS FOR DETERMINING OUR NEOS’ COMPENSATION

Role of the Board of Directors, Compensation Committee and Management

Our Board of Directors approves the target total direct compensation and makes compensation
decisions for our CEO, in consultation with the Compensation Committee and the Compensation
Committee’s independent compensation consultant, Compensia. The Compensation Committee
approves the target total direct compensation and makes compensation decisions for all other NEOs
after input, at the Compensation Committee’s request, from our CEO, our Chief People Officer, and
Compensia. For information on the independence of Compensia, see the section of this Proxy
Statement under the subheading “Compensation Committee” beginning on page 13.

Compensation decisions made by the Board of Directors and the Compensation Committee are based
on several factors, including the Company’s financial performance, individual performance, market
trends, internal compensation alignment, incentive and retention considerations, and other factors
unique to each individual, such as the level of responsibilities, scope and complexity of the role, and
the executive officer’s experience and tenure. The impact of the Company’s financial performance and
individual considerations in our fiscal 2020 compensation decisions are described in detail in the
section of this Compensation Discussion and Analysis entitled “Our NEOs’ Fiscal 2020 Compensation”
below. The Compensation Committee and the Board of Directors also reference certain market-based
considerations, such as peer group data, benchmarking and percentile rankings when making
compensation decisions.

Selection and Use of Peer Group

To assess market compensation practices, each year the Compensation Committee selects a group of
companies (“peer group”) comparable to us with respect to several quantitative factors, which may
include revenue, market capitalization, total stockholder return (“TSR”), net income margin and number

25

of employees, as well as qualitative factors including competition for talent, to better understand the
competitive market for executive talent and use as a reference for compensation decisions.

As discussed in our fiscal 2019 proxy statement, the Compensation Committee selected the following
peer group to use as a reference for fiscal 2020 compensation decisions. This peer group was
consistent with the prior year’s peer group. In selecting this group, the Compensation Committee
engaged in a quantitative and qualitative assessment of companies, to identify companies: (1) that are
similarly situated, based on the quantitative factors described above; (2) in the gaming and
entertainment sector, as well as companies in adjacent industries; (3) with which we compete for
executive talent; and (4) based on other factors, including the number of current peer companies that
identify EA as a peer and the percentage of shared peers. Where some companies may not be similar
in size to us based on quantitative factors, they still may be included in our peer group based on the
qualitative factors described above. Based on public filings through June 1, 2020, the Company was at
the 30th percentile with respect to annual revenues and at the 53rd percentile with respect to market
capitalization.

FISCAL 2020 PEER GROUP

Video Game

Technology/Internet

Entertainment

Toys/Games

Activision Blizzard
Take-Two Interactive Software
Zynga

Adobe
Autodesk
Booking Holdings
eBay
Expedia
IAC/Interactive Corp.
Intuit
NVIDIA
Salesforce.com
Symantec(1)
VMware

AMC Networks
CBS(2)
Discovery Communications
Netflix

Hasbro

(1) As in existence prior to the sale of its enterprise security business to Broadcom Inc. in November 2019.

(2) As in existence prior to its merger with Viacom, which was completed in December 2019.

In November 2019, for purposes of benchmarking fiscal 2021 compensation, the Compensation
Committee assessed our peer group to determine whether any changes were necessary. Based on an
evaluation of the factors discussed above, the Compensation Committee determined that the current
composition continued to reflect appropriate peers and no changes were necessary.

Compensation Benchmarking and the Role of Consultant

In February 2020, Compensia conducted a comprehensive analysis of our executive compensation
program using publicly available compensation information on our peer group, as set forth above.
Symantec and CBS were included in this analysis because executive compensation data was available
for these companies, each as in existence prior to the fundamental changes noted above. However, in
February 2020, the Compensation Committee determined that these companies no longer met the
peer group criteria described above and would be removed from our peer group once relevant
predecessor executive compensation data was no longer available. Compensia’s analysis included a
comparison of the base salary, target total cash compensation, long-term incentives and target total
direct compensation of each of our senior vice president level positions and above against similar
positions in our peer group. Where sufficient market data for our peer group was not available,
Compensia used compensation survey data from a broader group of similarly-sized technology
companies. Compensia provided the Compensation Committee with its findings in February 2020 to be
used as a reference for making bonus decisions for fiscal 2020 and base salary, bonus target and
equity decisions for fiscal 2021.

26

Use of Percentiles

When setting the fiscal 2020 base salaries and bonus targets for our executive officers during its
annual review, the Compensation Committee and the Board of Directors referenced the 50th to 75th
percentiles of the market range of comparable companies, and for target guidelines for annual equity
awards, the Compensation Committee and the Board of Directors referenced the 75th percentile. We
believe these percentiles are appropriate to recruit and retain a strong leadership team in an industry
and geographic area that is highly competitive for executive talent. Our guidelines for annual equity
awards reference a higher percentile because of the important retention and incentive value of the
awards. While we consider each component, the actual base salary, bonus, and equity compensation
awarded to a NEO may be above these targets and is determined based on our financial performance,
individual performance, market trends, internal compensation alignment, incentive and retention
considerations and other factors unique to each individual.

As part of the annual review of executive compensation, the Compensation Committee and the Board
of Directors also considered the aggregate value of the target total direct compensation components
(i.e., base salary, bonus and annual equity awards), and referenced the 50th to 75th percentiles of the
market for target total direct compensation. When necessary for new hires, retention and incentive
considerations, succession planning, or other factors, the Compensation Committee and the Board of
Directors may approve compensation for select key executives that could result in target total direct
compensation above the referenced range.

OUR ELEMENTS OF PAY

We believe that our compensation programs reflect our three compensation principles described above
under the heading “Compensation Principles — Promoting Pay-for-Performance” and are designed to
reward achievement of Company-wide financial objectives, individual operational and strategic
objectives and the creation of long-term value for our stockholders, while also recognizing the dynamic
and highly competitive nature of our business and the market for top executive talent. For fiscal 2020,
approximately 93% of our CEO’s target total direct compensation opportunity and 90% of the average
of our NEOs’ (excluding our CEO) target total direct compensation opportunity was “at-risk” in the form
of an annual performance cash bonus opportunity, and long-term annual equity awards comprised of
PRSUs and RSUs, excluding the special PRSU awards granted in November 2019 to Ms. Miele and
Messrs. Jorgensen and Moss (as described below under “Our NEOs’ Fiscal 2020 Compensation —
Special Performance-Based Restricted Stock Unit Awards Granted in November 2019”) because we
do not consider them to be part of their annual target total direct compensation.

Our compensation structure puts at risk a significant portion of our NEOs’ target total direct
compensation, as set forth below:

Target Total Direct Compensation for Fiscal 2020

CEO
Base
7%

Bonus
Opportunity 13%

PRSU
40%

NEOs (Excluding CEO)

Base
10%

Bonus
Opportunity 10%

PRSU
40%

P
r
o
x
y
S
t
a
t
e
m
e
n
t

RSU
40%

27

RSU
40%

Base Salary

Base salary is the fixed cash component that is market competitive for the role to attract and retain
high-performing executives. On an annual basis, the Compensation Committee (and the Board of
Directors, in the case of our CEO) reviews and approves any base salary adjustments considering
factors such as individual performance, a competitive market analysis for similar positions prepared by
Compensia, level of responsibilities, complexity of role, and internal compensation alignment. For
information on base salaries paid to our NEOs in fiscal 2020, please see the information below under
the heading entitled “Our NEOs’ Fiscal 2020 Compensation — Fiscal 2020 Annual Base Salary.”

Performance Cash Bonus Awards

Our annual cash bonus program is designed to motivate our executives to achieve challenging short-
term performance goals that are important to the Company’s long-term growth. Our NEOs participate
in the Executive Bonus Plan, which governs bonuses paid to our Section 16 officers and operates in
conjunction with the EA Bonus Plan, our Company-wide bonus plan for eligible employees. Each year,
the Compensation Committee (and the Board of Directors, in the case of our CEO) sets the NEOs’
bonus targets as a percentage of base salary based on factors such as individual performance, the
market for similar positions, level of responsibilities, complexity of role, pay practices at our peer group
for comparable positions and internal compensation alignment. This determination is made during the
first quarter of the fiscal year, typically in May.

The final payout of annual performance cash bonus awards to the NEOs is determined as follows:

Base
Salary

X

Bonus Target
Percentage (%
of Base Salary)

X

Company Bonus
Funding
Percentage

X

Individual
Performance
Modifier

=

NEO Bonus
Payout

For fiscal 2020, the annual performance cash bonuses represented approximately 67% of our CEO’s
annual target total cash compensation and 52% of the average of our NEOs’ (excluding our CEO)
annual target total cash compensation.

Executive Bonus Plan: During the first quarter of each fiscal year, the Compensation Committee
selects the Executive Bonus Plan participants, performance period, performance measures, and the
formula used to determine the maximum bonus funding under the plan for each participating NEO. In
fiscal 2020, all NEOs were selected to participate in the Executive Bonus Plan.

The Compensation Committee selected non-GAAP net income as the performance measure to
determine the maximum bonus funding for each NEO, because profitability (as measured by net
income) is a key business focus in any year. The performance period was established as fiscal 2020,
and the formula to determine the maximum bonus funding for each NEO was the lower of: (1) 600% of
each respective NEO’s annual base salary, not to exceed $5,000,000, and (2) 0.5% of our fiscal 2020
non-GAAP net income for each NEO other than our CEO, for whom the maximum was 1.0% of our
fiscal 2020 non-GAAP net income. For fiscal 2020, the Company’s non-GAAP net income was
$1,418 million, which resulted in maximum bonus award funding of 600% of each respective NEO’s
annual base salary, not to exceed $5,000,000. The Board of Directors in Mr. Wilson’s case, and the
Compensation Committee in the case of all other NEOs, then exercised their discretion to reduce
actual bonus awards for each NEO based on the Company’s overall financial performance, the terms
of the Executive Bonus Plan and EA Bonus Plan, target bonus percentages and individual
performance against strategic and operational objectives, as discussed below under “Our NEOs’ Fiscal
2020 Compensation — Fiscal 2020 Performance Cash Bonus Awards.”

When making compensation decisions for our executives, we use non-GAAP financial measures to
evaluate the Company’s financial performance and the performance of our management team against
non-GAAP targets. Appendix A to this Proxy Statement provides a reconciliation between our
non-GAAP financial measures and our audited financial statements. For more information regarding

28

our use of non-GAAP financial measures for our compensation programs, please refer to the
information provided under the heading “Use of Non-GAAP Financial Measures” below.

Equity Compensation

Annual Equity Awards

PRSUs

The Compensation Committee grants PRSUs to senior vice president level employees and above as
part of their annual equity awards. To encourage our executives to focus on long-term stock price
performance and to foster retention, the PRSUs generally vest over a three-year performance period;
however, the Compensation Committee may consider a different performance measurement period
when appropriate for new hires, retention, succession planning or other factors. The number of PRSUs
that can be earned is adjusted based upon changes in our TSR relative to the TSR of the companies in
the NASDAQ-100 Index (the “Relative NASDAQ-100 TSR Percentile”) measured over the vesting
measurement periods, which generally are 12-month, 24-month cumulative and 36-month cumulative
periods (each such period, a “Vesting Measurement Period”) that correspond to our fiscal year. For
each Vesting Measurement Period, the number of PRSUs eligible to be earned will be determined as
to one-third of the target PRSUs (each, a “Tranche”) and can range from 0% to 200% of the target
PRSUs for such period, as described below. Earned PRSUs generally will vest and be converted into
shares one month prior to the first, second and third anniversaries of the date of grant (which we call
“Vesting Opportunities”). For fiscal 2020, 50% of the total target value of our NEOs’ annual equity
awards was made in the form of PRSUs.

The illustration below depicts how the number of shares earned is calculated:

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Target PRSUs X

Relative
NASDAQ-100
TSR Percentile Modifier

= Shares Earned

The Relative NASDAQ-100 TSR Percentile Modifier, which can range from 0% to 200%, is based on
the change in our stock price during a Vesting Measurement Period (i.e., approximately the 12-month
period, 24-month cumulative period and 36-month cumulative period following of the date of grant),
using a 90-day trailing average stock price. If the Company’s Relative NASDAQ-100 TSR Percentile is
at the 60th percentile at the end of a Vesting Measurement Period, 100% of target PRSUs will be
earned. Thus, target vesting is tied to above-median performance compared to the NASDAQ-100
Index. The percentage of PRSUs earned will be adjusted upward by 3% or downward by 2% for each
percentile above or below the 60th percentile, respectively. The number of PRSUs that can be earned
is capped at 200% of the target PRSUs available for vesting at a Vesting Opportunity. If the Company’s
TSR at the end of a Vesting Measurement Period is negative on an absolute basis, the number of
PRSUs that can be earned is capped at 100% of the target PRSUs available to vest at the
corresponding Vesting Opportunity, regardless of whether the Company’s Relative NASDAQ-100 TSR
Percentile is ranked above the 60th percentile at the end of a Vesting Measurement Period.

The following table illustrates the percentage of target PRSUs that could be earned at a Vesting
Opportunity, based on the Company’s Relative NASDAQ-100 TSR Percentile:

Relative NASDAQ-100 TSR Percentile

Relative NASDAQ-100 TSR Multiplier

1st to
10th

0%

25th

40th

60th

75th

90th

30% 60% 100% 145% 190%

94th to
100th

200%

In addition, as an incentive to keep our executives focused on long-term TSR performance and to
balance the overall payout opportunity, our PRSU program provides an opportunity for our executives
to earn PRSUs at the second and third Vesting Opportunities that were not earned at the first and

29

second Vesting Opportunities, in an amount capped at 100% of the target number of PRSUs unearned
from the previous Vesting Opportunities (“Remaining Award Units”). Shares subject to any Remaining
Award Units are earned only if the Company’s Relative NASDAQ-100 TSR Percentile improves over
the subsequent cumulative 24-month and/or 36-month Vesting Measurement Periods for the award.
Under this scenario, all unearned PRSUs in excess of the target number of PRSUs eligible to be
earned are forfeited.

The following table illustrates the percentage of PRSUs subject to outstanding awards that were
earned at the end of fiscal 2020:

PRSU Grant Date

Performance Period

PRSU Award Tranche

June 2017
June 2019
June 2018
Fiscal 18-20 Fiscal 19-21 Fiscal 20-22

Tranche 3

Tranche 2

Tranche 1

90-day average stock price(at start of Vesting
Measurement Period)

Length of Vesting Measurement Period

90-day average stock price(at end of Vesting

Measurement Period)

EA’s TSR

EA’s Relative NASDAQ-100 TSR Percentile

Percentage of Target PRSUs Vested in May 2020

$102.99

3 Years

$95.27

1 Year

$129.87

2 Years

$105.51

2.4%

27th

34%

-18.8%

10.7%

12th

4%(1)

59th

98%

(1)

The June 2018 PRSU award delivered shares in respect of Remaining Award Units that did not
vest at the first Vesting Opportunity for such award. Specifically, 4% of the target number of
Tranche 1 PRSUs were earned at the second Vesting Opportunity for such award. This is the first
time that Remaining Award Units have delivered shares under our PRSU program.

For information on PRSUs awarded to our NEOs in June 2019, please see the information below under
the heading entitled “Our NEOs’ Fiscal 2020 Compensation — Fiscal 2020 Annual Equity Awards
Granted in June 2019.”

RSUs

RSUs reward absolute long-term stock price appreciation and promote retention. Annual RSU awards
cliff vest as to one-third of the award eleven months following the grant date, with the remainder of the
award vesting in approximately equal increments every six months thereafter. Annual RSU awards that
were granted to our NEOs prior to fiscal 2019 vest annually over 35 months from the grant date in
approximately equal increments each May. The Compensation Committee may also grant RSUs with
different vesting schedules when necessary for new hires, retention, succession planning, or other
factors.

For fiscal 2020, 50% of the total target value of our NEOs’ annual equity awards were made in the form
of RSUs. For information on RSUs awarded to our NEOs in fiscal 2020, please see the information
below under the heading entitled “Our NEOs’ Fiscal 2020 Compensation — Fiscal 2020 Annual Equity
Awards Granted in June 2019.”

Other Performance-Based Equity Awards

As discussed above under “Compensation Principles — Promoting Pay-for-Performance,” we believe
a significant portion of each NEO’s total compensation should be provided in the form of long-term
equity to enhance alignment between the interests of our NEOs and our stockholders and to promote
long-term retention of a strong leadership team in an industry and geographic area that are highly
competitive for executive talent. From time to time, the Board of Directors and the Compensation

30

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Committee may determine that it is necessary to grant performance-based awards outside of our
annual equity program to incentivize and retain key executives, including our NEOs, who are critical to
our continued strong growth and success.

As described in our fiscal 2018 proxy statement, in fiscal 2018, Mr. Wilson, Mr. Jorgensen and
Mr. Moss were granted special equity awards comprised of performance-based incremental restricted
stock units (“PIRSUs”) that were approved by the Compensation Committee and the Board of Directors
(in the case of Mr. Wilson). The PIRSUs were designed to incentivize and retain these key executives
by (1) establishing a four-year performance period beginning in fiscal 2018 and ending in fiscal 2021,
which is a longer performance period than the period applicable to our annual equity awards, and
(2) tying vesting of the PIRSUs to the achievement of aggressive growth targets in the Company’s
non-GAAP net revenue and free cash flow (“FCF”), weighted equally, over the four-year performance
period. Achievement of the performance targets at threshold, target or maximum levels will result in
payouts of 50%, 100% or 200% of the portion of the target award allocated to each metric,
respectively, with linear interpolation applying to attainment between these levels. If the applicable
targets are not met, the portion of the award associated with that performance target does not pay out
and will be forfeited. For the reasons described in the “Compensation Discussion and Analysis” section
of our fiscal 2018 proxy statement, we have not disclosed our non-GAAP net revenue and FCF targets
due to competitive concerns. The PIRSUs, or a portion thereof, will cliff vest on May 26, 2021, provided
one or both of the performance targets are achieved at threshold levels and the NEO remains
employed on the vesting date. For additional information about the PIRSUs, including information on
the performance metrics, please refer to the “Compensation Discussion and Analysis” section of our
fiscal 2018 proxy statement.

Use of Non-GAAP Financial Measures

The Company uses certain adjusted non-GAAP financial measures when establishing performance-
based bonus targets and vesting criteria for certain equity awards, such as non-GAAP net revenue,
non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP diluted
earnings per share, non-GAAP diluted shares, and free cash flow. We believe that these non-GAAP
financial measures provide meaningful supplemental information about the Company’s operating
results primarily because they exclude amounts that we do not consider part of ongoing operating
results when planning and forecasting for future periods and when assessing the performance of the
organization. These non-GAAP financial measures exclude the following items as applicable, in each
reporting period: acquisition-related expenses, change in deferred net revenue (online-enabled
games), platform fees, income tax rate adjustments, and stock-based compensation. In addition, for
purposes of assessing non-GAAP earnings per share for our cash bonus program, we adjust to
exclude bonus expense.

OUR NEOS’ FISCAL 2020 COMPENSATION

Fiscal 2020 Annual Base Salary

Base salaries for our NEOs are reviewed annually by the Compensation Committee and the Board of
Directors. To determine an executive’s base salary, the Compensation Committee and the Board of
Directors (in Mr. Wilson’s case), with assistance from Compensia, consider factors such as individual
performance, the market for similar positions, including the pay practices for comparable positions at
the companies in our peer group, level of responsibilities, complexity of role, experience, and internal
compensation alignment.

As part of its May 2019 annual compensation review, the Compensation Committee approved fiscal
2020 base salary increases, effective June 1, 2019, of 3% for each of Ms. Miele and Messrs. Moss and
Bruzzo, bringing each such NEO’s annual base salary to $695,250. These increases in base salary for
fiscal 2020 were made in recognition of their performance and contributions and were in line with
Company-wide base salary merit increases for strong performers. The Board of Directors and the
Compensation Committee made no changes to the base salaries for Messrs. Wilson and Jorgensen.

31

Fiscal 2020 Performance Cash Bonus Awards

Each fiscal year, the Compensation Committee, and the Board of Directors for Mr. Wilson, sets the
amounts of the target annual performance cash bonus awards as a percentage of each executive’s
base salary (“target bonus”) based on factors including individual performance, the market for similar
positions, including the pay practices of our peer group for comparable positions, level of
responsibilities, complexity of role, and internal compensation alignment.

The Board of Directors, in the case of Mr. Wilson, and the Compensation Committee, in the case of the
other NEOs, determined that there would be no increases in the target bonus percentages for the
NEOs for fiscal 2020.

Base Salary for Fiscal 2020
($)

Target Bonus Percentage
for Fiscal 2020

Mr. Wilson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Jorgensen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ms. Miele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Moss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Bruzzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,200,000
850,000
691,875
691,875
691,875

200%
125%
100%
100%
100%

Performance cash bonus awards represented approximately 55% of the average of our NEOs’ annual
target total cash compensation, thus putting at risk a significant portion of our NEOs’ cash
compensation.

Fiscal 2020 Company Bonus Funding Percentage: In order to align our NEOs’ bonus payouts to the
performance of the Company, each NEO’s annual performance cash bonus award is tied to the bonus
funding percentage applied to our overall Company bonus pool. Funding of the Company-wide bonus
pool is based 50% on Company financial performance, with equal weighting given to our non-GAAP
net revenue and non-GAAP diluted earnings per share, and 50% on our business performance. In
addition, the Compensation Committee may exercise discretion (upwards, subject to the maximum
payouts, or downwards) to adjust the bonus pool funding percentage further.

In fiscal 2020, our non-GAAP net revenue of $5.21 billion was approximately 102.2% of our
$5.10 billion target and reflected a 5.4% increase from our actual fiscal 2019 non-GAAP net revenue of
$4.94 billion. Our non-GAAP diluted earnings per share of $4.81 for fiscal 2020 was approximately
109.3% of our $4.40 target and reflected a 13.2% increase from our actual fiscal 2019 non-GAAP
earnings per share of $4.25. The Company’s financial performance resulted in a bonus pool funding
percentage of 128.0%, based on the equal weighting of non-GAAP net revenue and non-GAAP diluted
earnings per share. After reviewing and considering the Company’s business performance for fiscal
2020, as highlighted above under “Fiscal 2020 Summary of EA’s Business” and “Fiscal 2020 GAAP
Financial Results and Operating Highlights,” the Compensation Committee determined to fund the
business performance component of the Company bonus pool at the same percentage as the financial
performance component. The Company bonus pool was funded at 128.0% of aggregate employee
target bonuses.

Appendix A to this Proxy Statement provides a reconciliation between our non-GAAP financial
measures and our audited financial statements.

32

Fiscal 2020 Individual Performance Measures and Achievements: The Board of Directors (in the
case of Mr. Wilson) and the Compensation Committee, in consultation with Mr. Wilson and our Chief
People Officer (in the case of all other NEOs), assessed the individual performance of our NEOs in
determining the final performance cash bonus payouts for fiscal 2020, as set forth below:

FISCAL 2020 PERFORMANCE CASH BONUSES

Target Annual Bonus
Award

Company Bonus
Funding Percentage (128.0%)

Mr. Wilson . . . . . . . . . . . . . . . . . . . . .
Mr. Jorgensen . . . . . . . . . . . . . . . . . .
Ms. Miele . . . . . . . . . . . . . . . . . . . . . .
Mr. Moss . . . . . . . . . . . . . . . . . . . . . .
Mr. Bruzzo . . . . . . . . . . . . . . . . . . . . .

$2,400,000
$1,062,500
$ 691,875
$ 691,875
$ 691,875

$3,072,000
$1,360,000
$ 885,600
$ 885,600
$ 885,600

Actual Fiscal 2020
Performance Cash
Bonus

$4,000,000
$1,700,000
$1,175,000
$1,125,000
$1,125,000

Performance Cash Bonus Award for the CEO: In determining Mr. Wilson’s actual performance cash
bonus award, the Board of Directors considered the weighting and achievement of Mr. Wilson’s fiscal
2020 objectives set forth below.

Fiscal 2020 CEO Objectives

Target

Actual(1)

Non-GAAP Financial Objectives (60% weight):
(in millions, except earnings per share and percentages)
Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,100 $5,211
Gross Profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,940 $4,019
Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,370 $2,353
Diluted Earnings Per Share (based on share count of 303 million shares(2)) . . . . . . . . $ 4.40 $ 4.68
Operating Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,620 $1,797
Strategic and Operative Objectives (40% weight):
Execution of fiscal 2020 objectives to create great games and services, including

P
r
o
x
y
S
t
a
t
e
m
e
n
t

metrics related to title launches, growth in live services, service availability, player
experience and subscriber growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Execution of fiscal 2020 objectives to foster effective player engagement through

in-game services and competitive gaming initiatives, including metrics related to
engagement, retention and viewership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Organizational health, including metrics relating to succession planning, employee
engagement, performance management, and increasing diversity of women and
underrepresented minorities within EA’s global workforce . . . . . . . . . . . . . . . . . . . . .

(1) Appendix A to this Proxy Statement provides a reconciliation between our non-GAAP financial measures and our audited financial statements.

(2) For purpose of measuring achievement of Mr. Wilson’s diluted earnings per share objective, a share count of 303 million was used to be

consistent with the fiscal 2020 financial plan approved by the Board of Directors.

Factors that the Board of Directors considered in determining Mr. Wilson’s individual performance
included: his leadership of the Company’s fiscal 2020 game portfolio and ongoing development of new
IP, including the launch of Star Wars Jedi: Fallen OrderTM, and continued success in top franchises,
with Madden NFL 20 being the most successful game ever in the franchise to date, setting multiple
records for player engagement; his leadership in growing and delivering live services to expand reach
and deepen player engagement, including growing player bases for Battlefield and FIFA, with the
release of FIFA 20 and updates to FIFA Ultimate Team; reaching over 20 million unique players
worldwide in The SimsTM 4 life-to-date; leading the successful turnaround of Star WarsTM BattlefrontTM
II with critics re-reviewing the game to high scores and exceptional player sentiment; and achieving
record live services net bookings of $2,779 million for the fiscal year. Mr. Wilson’s focus on fostering
diverse and inclusive talent within the Company, succession planning, and the implementation of his
strategy and direction for the Company for fiscal 2020, also were considered.

33

Fiscal 2020 Performance Cash Bonus Award Determination for the Other NEOs

Mr. Jorgensen, Chief Operating Officer and Chief Financial Officer

To determine Mr. Jorgensen’s actual performance cash bonus award, the Compensation Committee
took into account that the Company exceeded its non-GAAP net revenue target and its non-GAAP
earnings per share target in fiscal 2020, as well as Mr. Jorgensen’s individual performance, including:
his role helping the Company achieve record cash flow provided by operations in fiscal 2020 of
$1,797 million, while continuing to efficiently manage the Company’s operating expenses; his
leadership growing sales across EA’s broad portfolio and diverse business models, including live
services, for which we achieved record net bookings of $2,779 million for the fiscal year; his
management of the Company’s stock repurchase program, including the repurchase of 12.3 million
shares, returning over $1.2 billion to stockholders; and effectively managing communications with
investors and stockholders.

Ms. Miele, Chief Studios Officer

To determine Ms. Miele’s actual performance cash bonus award, the Compensation Committee took
into account that the Company exceeded its non-GAAP net revenue target and its non-GAAP earnings
per share target in fiscal 2020, as well as Ms. Miele’s individual performance, including: the successful
launch of eight new games during fiscal 2020, including, Star Wars Jedi: Fallen OrderTM, which won
several awards, including the award for best adventure game at the 2020 D.I.C.E. awards; Madden
NFL 20, our most successful game ever in the franchise to date, setting multiple records for player
engagement; growth in our FIFA franchise with the release of FIFA 20, with VOLTA Football bringing
an all-new dimension to the game, and deepening player engagement with updates to FIFA Ultimate
Team; the release of Need for SpeedTM Heat and Plants vs. Zombies: Battle for NeighborvilleTM; the
successful turnaround of Star WarsTM BattlefrontTM II with critics re-reviewing the game to high scores
and exceptional player sentiment; the continued expansion and success of BattlefieldTM V, The SimsTM
4 and Apex LegendsTM, which won Best Multiplayer at the 2020 BAFTA Game Awards; improved
player engagement with our products and the increase in digital revenue driven by live service
engagement, including for FIFA, Madden NFL, Apex LegendsTM, and The SimsTM 4; and Ms. Miele’s
overall leadership of our worldwide studios.

Mr. Moss, Chief Technology Officer

To determine Mr. Moss’ actual performance cash bonus award, the Compensation Committee took into
account that the Company exceeded its non-GAAP net revenue target and its non-GAAP earnings per
share target in fiscal 2020, as well as Mr. Moss’ individual performance, including: the successful
scaling and enhancement of EA’s digital platform, the technology supporting our growing digital
business; his leadership of EA’s proprietary game engine technology, Frostbite; his team’s support of
the Company’s products and services, such as ensuring the platform performance, security, stability,
availability and timely delivery of the Company’s games, all of which was critical to the strong execution
exhibited in fiscal 2020 with the launch of eight major games; and leading development of EA’s new
technological innovations.

Mr. Bruzzo, Chief Marketing Officer

To determine Mr. Bruzzo’s actual performance cash bonus award, the Compensation Committee took
into account that the Company exceeded its non-GAAP net revenue target and its non-GAAP earnings
per share target in fiscal 2020, as well as Mr. Bruzzo’s individual performance, including: successful
multichannel global marketing campaigns for EA’s major titles, including Star Wars Jedi: Fallen
OrderTM and Madden NFL 20; broadening the reach of EA’s subscription services, which are now
available on three major platforms; his leadership growing sales across EA’s broad portfolio and
diverse business models, including live services; the expansion and execution of EA PLAY in June
2019, the Company’s annual games showcase event; deepening EA’s player relationships with a focus
on engagement and retention; and his overall leadership of our marketing, publishing and analytics
organization.

34

P
r
o
x
y
S
t
a
t
e
m
e
n
t

In addition to the achievements described above for our CEO and other NEOs, the Compensation
Committee considered the NEOs’ leadership in response to the unprecedented challenges of the
COVID-19 pandemic. During the last quarter of fiscal 2020, beginning with the impact to our Asian
operations and subsequently impacting substantially all of our business, our NEOs executed strategies
addressing employee health and safety, business continuity, risk mitigation, and information
technology to respond to the rapidly evolving situation of the pandemic. Among other things, we
mobilized quickly to support our global workforce by enabling employees to work from home,
enhancing our information technology systems to support our distributed workforce, mitigating the
disruption to operations brought about by stay-at-home orders, and by continuing to deliver on our
objectives. During this extraordinary time, our talented and dedicated teams worked to deliver new
experiences for our players, including our “Stay & Play” program, designed to bring our global gaming
community together virtually during a time when physical distancing has become the norm.

Fiscal 2020 Annual Equity Awards Granted in June 2019

The NEOs’ annual equity awards for fiscal 2020 were comprised of 50% PRSUs with vesting tied to the
Company’s TSR relative to those companies listed in the NASDAQ-100 Index, and 50% RSUs with a
35-month vesting schedule, each as described above under “Our Elements of Pay — Equity
Compensation — Annual Equity Awards.” The award mix serves to align the interests of our NEOs and
our stockholders and to promote long-term retention of a strong leadership team in an industry and
geographic area that is highly competitive for executive talent. Our executives are highly desirable
candidates for competitors in the gaming industry, as well as broader technology companies, including
those pursuing interactive entertainment.

In making the determinations for the size of each NEO’s annual equity award, the Board of Directors, in
the case of Mr. Wilson, and the Compensation Committee, in the case of all other NEOs, reviewed and
considered various factors and information, including Company performance, each NEO’s role,
individual performance, the value of their unvested equity awards for retention considerations, the
grant date fair-value of the award, competitive market practices, including benchmarking data for the
position, and internal compensation alignment among our executive officers.

Approximately 80% of our NEOs’ average aggregate annual target total direct compensation for fiscal
2020 was delivered in the form of long-term equity awards (excluding the special performance-based
restricted stock unit awards granted to Ms. Miele and Messrs. Jorgensen and Moss in November 2019,
as described below under “Special Performance-Based Restricted Stock Unit Awards Granted in
November 2019” because we do not consider these awards to be part of their annual target total direct
compensation).

The following table shows the target value of the annual equity awards granted to our NEOs in fiscal
2020:

Target PRSUs(1)(2)
($)

RSUs(1)(2)
($)

Mr. Wilson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Jorgensen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ms. Miele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Moss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Bruzzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,500,000
3,750,000
2,750,000
2,750,000
2,500,000

7,500,000
3,750,000
2,750,000
2,750,000
2,500,000

(1) Represents the target value of the awards approved by the Compensation Committee on May 15, 2019 and the Board of

Directors on May 16, 2019, in the case of Mr. Wilson. On the date of grant, the values above were converted into a number
of PRSUs or RSUs, as applicable, based on the closing price of our common stock on the grant date of $92.44, rounded
down to the nearest whole unit.

(2) Awards granted on June 17, 2019.

35

Special Performance-Based Restricted Stock Unit Awards Granted in November 2019

In November 2019, the Compensation Committee approved the grant of special performance-based
restricted stock unit awards (the “November 2019 PRSUs”) to Ms. Miele and Messrs. Jorgensen and
Moss. The November 2019 PRSUs were granted to retain and incentivize these key executives, whom
the Compensation Committee believes are critical to the Company’s ability to achieve its long-term
strategic plan and to further align the incentives of our key executives with stockholder interests. The
Compensation Committee considered the Company’s increased financial and operating performance
and outlook and the competitive landscape for executive talent in the industry, including among
broader technology companies with significantly greater resources pursuing interactive entertainment.
No other member of the Company’s executive team, including our CEO, received such awards.

The terms of the November 2019 PRSUs are substantially the same as the PRSUs granted as part of
the NEOs’ annual equity awards, as described above under “Our Elements of Pay — Equity
Compensation — Annual Equity Awards — PRSUs,” with key differences described below:

(cid:129) a four-year performance period beginning September 29, 2019 and ending on September 30,

2023;

(cid:129) two vesting measurement periods, with the first period beginning on September 29, 2019 and
ending on October 2, 2021; and the second period beginning on September 29, 2019 and
ending on September 30, 2023; and

(cid:129) two tranches with one-half of the target number of November 2019 PRSUs eligible to be earned
at each vesting measurement period, with the payout ranging from 0% to 200% of the target
November 2019 PRSUs for the applicable tranche, based on the Company’s Relative
NASDAQ-100 TSR Percentile, as described above under “Our Elements of Pay — Equity
Compensation — Annual Equity Awards — PRSUs.”

The Compensation Committee determined the size of the November 2019 PRSUs as a means to
provide significant retention and incentive motivations to the participants. The following table shows the
target value of the November 2019 PRSUs granted to Ms. Miele and Messrs. Jorgensen and Moss in
fiscal 2020:

Target November 2019
PRSUs(1)(2)
($)

Mr. Jorgensen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ms. Miele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Moss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,500,000
7,000,000
5,500,000

(1) Represents the target value of the awards approved by the Compensation Committee on November 5, 2019. On the date of grant, the values
above were converted into a number of November 2019 PRSUs based on the closing price of our common stock on the grant date of $97.39,
rounded down to the nearest whole unit.

(2) Awards were granted on November 18, 2019.

For each of Messrs. Jorgensen and Moss, the award reflected a target value of PRSUs equivalent to
his prior annual equity award. For Ms. Miele, her award reflected an increase from the value of her
prior annual equity award, as the Compensation Committee considered her increased responsibilities
within her role as Chief Studios Officer.

OTHER COMPENSATION INFORMATION

Benefits and Retirement Plans

We provide a wide array of significant employee benefit programs to all of our regular, full-time
employees, including our NEOs, including medical, dental, prescription drug, vision care, disability
insurance, life insurance, accidental death and dismemberment (“AD&D”) insurance, a flexible
spending plan, business travel accident insurance, an educational reimbursement program, an
adoption assistance program, an employee assistance program, an employee stock purchase plan,
paid time off, and relocation assistance.

36

P
r
o
x
y
S
t
a
t
e
m
e
n
t

We offer retirement plans to our employees based upon their country of employment. In the United
States, our employees, including our NEOs, are eligible to participate in a tax-qualified 401(k) plan,
with a Company discretionary matching contribution of up to 6% of eligible compensation. The amount
of the total matching contribution is determined based on the Company’s fiscal year performance. We
also maintain a nonqualified deferred compensation plan in which executive-level employees, including
our NEOs and our directors, are eligible to participate. None of our NEOs participated in the deferred
compensation plan during fiscal 2020.

Perquisites and Other Personal Benefits

While our NEOs generally receive the same benefits that are available to our other regular, full-time
employees, they also receive certain additional benefits, including access to a Company-paid physical
examination program, and greater maximum benefit levels for life insurance, AD&D, and long-term
disability coverage. We consider these benefits to be standard components of a competitive executive
compensation package. Our officers with a ranking of vice president and above and certain worldwide
studio organization employees are also eligible to participate in the EA Executive and Studio
Leadership Digital Game Benefit program. Company reimbursed air and ground transportation
generally is limited to business travel.

Change in Control Arrangements and Severance

Our executives with a ranking of senior vice president and above are eligible to participate in the
Electronic Arts Inc. Change in Control Plan (the “CiC Plan”), which is a “double-trigger” change in
control plan that provides our executives with payments and benefits if they incur a qualifying
termination of employment in connection with a change in control. For more information on the CiC
Plan, please refer to the information included under the heading “Potential Payments Upon
Termination or Change in Control” below.

We also maintain an ERISA-regulated severance plan (the “Severance Plan”) that applies generally to
our regular full-time U.S.-based employees. Under the Severance Plan, eligible employees (including
our executive officers) whose employment is involuntarily terminated in connection with a reduction in
force may receive a cash severance payment and premiums for continued health benefits, if such
benefits are continued pursuant to COBRA. Any severance arrangements with our NEOs, whether paid
pursuant to the Severance Plan or otherwise, require the prior approval of the Compensation
Committee. In the event of a change in control of the Company, any cash severance payable under the
Severance Plan may be reduced, in whole or in part, by any amount paid under the CiC Plan.

Stock Ownership Holding Requirements

We maintain stock ownership holding requirements for our Section 16 officers. Our Section 16 officers
who hold the title of senior vice president must maintain stock ownership equal to at least 1x their base
salary. The stock ownership multiple increases to 2x base salary for Section 16 officers who are
executive vice presidents and 5x base salary for our CEO. We test the stock ownership holding
requirement on an annual basis, and any Section 16 officer not in compliance with these guidelines
must hold 50% of any net after-tax shares vesting from equity awards until the applicable requirement
is met.

As of March 28, 2020, the last day of fiscal 2020, each of our executive officers had either met his or
her then-applicable stock ownership holding requirement or had not yet reached the date on which he
or she is required to meet his or her ownership requirement, which is generally 50 months from the
date of hire or appointment.

Insider Trading, Anti-Hedging and Anti-Pledging Policies

Please see page 16 of this Proxy Statement under the heading “Insider Trading, Anti-Hedging and
Anti-Pledging Policies.” These policies are also applicable to our NEOs.

37

Compensation Recovery (Clawbacks)

Our equity award agreements provide that if an employee engages in fraud or other misconduct that
contributes to an obligation to restate the Company’s financial statements, the Compensation
Committee may terminate the equity award and recapture any equity award proceeds received by the
employee within the 12-month period following the public issuance or filing of the financial statements
required to be restated.

Risk Considerations

The Compensation Committee considers, in establishing and reviewing our compensation programs,
whether the programs encourage unnecessary or excessive risk taking and has concluded that they do
not. See the section of this Proxy Statement entitled “Oversight of Risk Issues — Compensation Risk
Assessment” above for an additional discussion of risk considerations.

Impact of Tax Treatment

Historically, Section 162(m) of the Internal Revenue Code precluded a public company from taking a
tax deduction for annual compensation in excess of $1 million paid to its chief executive officer and the
three most highly paid executive officers other than the chief financial officer (“covered employees”);
this limitation did not apply to compensation that satisfied tax code requirements for qualifying
performance-based compensation. However, effective for taxable years beginning on or after
January 1, 2018, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) repealed the performance-based
compensation exception, revised the definition of covered employees to include any individual who
served as the chief executive officer or chief financial officer at any time during the taxable year, and
provides that once an individual is considered a covered employee for any taxable year beginning after
December 31, 2016, he or she will be considered a covered employee for all future years, including
following any termination of employment. As a result, compensation paid to covered employees in
excess of $1 million generally will be nondeductible, regardless of whether it is performance-based.
Transition rules under the Tax Act allow payments made pursuant to written binding contracts in effect
as of November 2, 2017 (if they are not materially modified after that date), to be deductible based on
the pre-Tax Act rules. To the extent applicable to our existing contracts and awards, we intend to
deduct such payments as appropriate, but there is no guarantee that such payments will be deductible.

We do not intend to change our pay-for-performance approach to awarding executive pay even though
the Tax Act effectively eliminated the tax benefits of awarding qualifying performance-based
compensation. At the same time, the Compensation Committee believes it is important to retain
discretion and maximum flexibility in designing appropriate executive compensation programs and
establishing competitive forms and levels of executive compensation that are in the best interests of
the Company and our stockholders.

We do not provide any executive officer, including any NEO, with any excise tax “gross-up” or other
reimbursement payment for any tax liability that he or she might owe as a result of the application of
Sections 280G or 4999 of the Internal Revenue Code. Section 409A of the Internal Revenue Code
imposes additional significant taxes and penalties on the individual if an executive officer, director or
other service provider is entitled to “deferred compensation” that does not comply with the
requirements of Section 409A of the Internal Revenue Code. We have structured deferred
compensation in a manner intended to comply with or be exempt from Section 409A of the Code, and
the regulations and other guidance promulgated thereunder.

38

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The following Compensation Committee Report on Executive Compensation shall not be deemed to be
“soliciting material” or to be “filed” with the SEC nor shall this information be incorporated by reference
into any future filing under the Securities Act or the Exchange Act except to the extent that EA
specifically incorporates it by reference into a filing.

The Compensation Committee has reviewed and discussed with management the Compensation
Discussion and Analysis. Based on its review and discussions with management, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement.

COMPENSATION COMMITTEE MEMBERS

Jay C. Hoag (Chair)

Leonard S. Coleman

Heidi Ueberroth

P
r
o
x
y
S
t
a
t
e
m
e
n
t

39

EXECUTIVE COMPENSATION
FISCAL 2020 SUMMARY COMPENSATION TABLE

The following table shows information concerning the compensation earned by or awarded to our Chief
Executive Officer, our Chief Operating and Financial Officer, and our next three most highly
compensated executive officers, in each case, for fiscal 2020, and, where applicable, fiscal 2019 and
fiscal 2018. For purposes of the compensation tables that follow, we refer to these individuals
collectively as the “Named Executive Officers” or “NEOs.”

Name and Principal Position for Fiscal 2020

Fiscal
Year

Salary
($)

Stock
Awards
($)(1)

Non-Equity
Incentive Plan
Compensation
($)(2)

All Other
Compensation
($)(3)

Total
($)

Andrew Wilson . . . . . . . . . . . . . . . . . . . . . . . . . 2020 1,200,000 16,022,956
2019 1,192,308 17,090,597
2018 1,141,731 32,025,759

Chief Executive Officer

Blake Jorgensen . . . . . . . . . . . . . . . . . . . . . . . 2020
2019
2018

Chief Operating and
Financial Officer

850,000 16,864,334
850,000
8,545,299
794,211 17,377,775

Laura Miele . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020
2019

Chief Studios Officer

691,745 14,137,880
6,266,288
675,000

Kenneth Moss . . . . . . . . . . . . . . . . . . . . . . . . . 2020
2019
2018

Chief Technology Officer

691,745 12,367,266
675,000
6,266,288
645,865 13,242,574

Chris Bruzzo . . . . . . . . . . . . . . . . . . . . . . . . . . 2020
2019
2018

Chief Marketing Officer

691,745
675,000
620,865

5,340,920
5,696,866
4,539,994

4,000,000
—
2,500,000

1,700,000
—
1,100,000

1,175,000
—

1,125,000
—
630,000

1,125,000
—
530,000

142,795
37,166
61,274

96,247
16,564
14,055

79,900
11,544

79,710
13,592
14,327

71,597
15,326
22,433

21,365,751
18,320,071
35,728,764

19,510,581
9,411,863
19,286,041

16,084,525
6,952,832

14,263,721
6,954,880
14,532,766

7,229,262
6,387,192
5,713,292

(1) Represents the aggregate grant date fair value of RSUs, PRSUs, November 2019 PRSUs (with respect to fiscal 2020), and PIRSUs (with

respect to fiscal 2018). Grant date fair value is determined for financial statement reporting purposes in accordance with FASB ASC Topic 718
and the amounts shown may not reflect the actual value realized by the recipient. For RSUs and PIRSUs, grant date fair value is calculated
using the closing price of our common stock on the grant date, with the PIRSUs being valued at target. For the PRSUs and November 2019
PRSUs, which are subject to market conditions related to total stockholder return, the grant date fair value reported is based upon the
probable outcome of such conditions using a Monte-Carlo simulation model. For additional information regarding the valuation methodology
for RSUs, PRSUs, November 2019 PRSUs, and PIRSUs, see Note 15, “Stock-Based Compensation and Employee Benefit Plans,” to the
Consolidated Financial Statements in our Annual Report. The PRSUs and November 2019 PRSUs granted to our NEOs in fiscal 2020 are
referred to as “Market-Based Restricted Stock Units” in Note 15, “Stock-Based Compensation and Employee Benefit Plans,” to the
Consolidated Financial Statements in our Annual Report.

The actual vesting of the PRSUs and the November 2019 PRSUs will be between 0% and 200% of the target number of PRSUs and
November 2019 PRSUs granted. The value of the PRSUs on the date of grant assuming the highest level of performance conditions will be
achieved is $14,999,869 for Mr. Wilson, $7,499,842 for Mr. Jorgensen, $5,499,995 for Ms. Miele, $5,499,995 for Mr. Moss, and $4,999,895 for
Mr. Bruzzo, which is based on maximum vesting of the PRSUs multiplied by the closing price of our common stock on the grant date. The
value of the November 2019 PRSUs on the date of grant assuming the highest level of performance conditions will be achieved is
$14,999,813 for Mr. Jorgensen, $13,999,813 for Ms. Miele, and $10,999,811 for Mr. Moss, which is based on maximum vesting of the
November 2019 PRSUs multiplied by the closing price of our common stock on the grant date. For additional information regarding the specific
terms of the PRSUs and November 2019 PRSUs granted to our NEOs in fiscal 2020, see the “Fiscal 2020 Grants of Plan-Based Awards
Table” below.

(2) Represents amounts awarded to each NEO under the Executive Bonus Plan for fiscal 2020. For additional information about the bonuses paid

to our NEOs in fiscal 2020, see “Our NEOs’ Fiscal 2020 Compensation — Fiscal 2020 Performance Cash Bonus Awards” in the
“Compensation Discussion and Analysis” above.

40

(3)

Name

Fiscal 2020 All Other Compensation

Insurance
Premiums
($)(A)

401(k)
Contributions
($)(B)

Andrew Wilson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blake Jorgensen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laura Miele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kenneth Moss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chris Bruzzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,270
1,270
1,270
1,270
1,270

12,600
12,600
12,736
12,709
12,709

Other
($)(C)

128,925
82,377
65,894
65,731
57,618

(A) Amounts shown represent premiums paid on behalf of our NEOs under Company sponsored group life insurance, AD&D and long-term

disability programs.

(B) Amounts shown reflect Company matching contributions under the Company’s 401(k) plan.

(C) For each NEO, amounts include the value of a one-time payment of accrued paid time off in connection with the transition in fiscal 2020
to a flexible time-off policy for executives in the amount of $101,360 for Mr. Wilson, $81,731 for Mr. Jorgensen, $64,904 for Ms. Miele,
$64,904 for Mr. Moss, and $57,015 for Mr. Bruzzo. For Mr. Wilson, the amount also includes imputed income of $1,084 attributable to
personal air travel; membership dues of $25,000 for an executive organization; and $743 for video game codes and a leadership team
event gift.

FISCAL 2020 GRANTS OF PLAN-BASED AWARDS TABLE

The following table shows information regarding non-equity incentive and equity plan-based awards
granted to our NEOs during fiscal 2020.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Estimated Possible
Payouts Under
Non-Equity
Incentive Plan
Awards(2)

Estimated Future
Payouts Under
Equity Incentive
Plan Awards(3)

Grant
Date

Approval
Date(1)

Target
($)

Maximum
($)

Target
(#)

Maximum
(#)

6/17/2019 5/16/2019
6/17/2019 5/16/2019

— 2,400,000 5,000,000
—
—

—
— 81,133
—
—

6/17/2019 5/15/2019
11/18/2019 11/5/2019
6/17/2019 5/15/2019

— 1,062,500 3,187,500
—
—
—

—
— 40,566
— 77,009
—
—

6/17/2019 5/15/2019
11/18/2019 11/5/2019
6/17/2019 5/15/2019

— 691,875 2,075,625
—
—
—

—
— 29,749
— 71,875
—
—

6/17/2019 5/15/2019
11/18/2019 11/5/2019
6/17/2019 5/15/2019

— 691,875 2,075,625
—
—
—

—
— 29,749
— 56,473
—
—

—

—

—

—

—

6/17/2019 5/15/2019
6/17/2019 5/15/2019

— 691,875 2,075,625
—
—

—
— 27,044
—
—

—
162,266
—

—
81,132
154,018
—

—
59,498
143,750
—

—
59,498
112,946
—

—
54,088
—

All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units(4)
(#)

Grant
Date Fair
Value of
Stock
and Option
Awards
($)(5)

—
—
81,133

—
—
—
40,566

—
—
—
29,749

—
—
—
29,749

—
—
27,044

—
8,523,022
7,499,935

—
4,261,458
8,852,955
3,749,921

—
3,125,132
8,262,750
2,749,998

—
3,125,132
6,492,136
2,749,998

—
2,840,972
2,499,947

Name

Andrew Wilson . . . . . . . . . . . .
Annual Bonus Opportunity
PRSUs
RSUs

Blake Jorgensen . . . . . . . . . .
Annual Bonus Opportunity
PRSUs
November 2019 PRSUs
RSUs

Laura Miele . . . . . . . . . . . . . .
Annual Bonus Opportunity
PRSUs
November 2019 PRSUs
RSUs

Kenneth Moss . . . . . . . . . . . .
Annual Bonus Opportunity
PRSUs
November 2019 PRSUs
RSUs

Chris Bruzzo . . . . . . . . . . . . .
Annual Bonus Opportunity
PRSUs
RSUs

(1) Each grant was approved on the approval date indicated above by our Compensation Committee or the Board of Directors, in the case of our

CEO, for the grant on the specific grant date indicated above.

41

(2) The amounts shown represent the target and maximum amount of cash bonus plan awards provided for under the Executive Bonus Plan for

all NEOs. The target amounts are pre-established as a percentage of salary and the maximum amounts represent the greatest payout that
could be made under the Executive Bonus Plan. For more information regarding our NEOs’ bonus targets for fiscal 2020, an explanation of the
amount of salary and bonus targets in proportion to total compensation and the actual cash bonus earned by each NEO for fiscal 2020, see
the sections titled “Our Elements of Pay” and “Our NEOs’ Fiscal 2020 Compensation” in the “Compensation Discussion and Analysis” above.

(3) Represents awards of PRSUs granted to each of our NEOs under our 2000 EIP and awards of November 2019 PRSUs granted to certain of

our NEOs under our 2019 EIP.

The PRSUs are earned over a three-year performance period. The number of PRSUs that may be earned and eligible to vest is based on EA’s
Relative NASDAQ-100 TSR Percentile measured over 12-month, 24-month cumulative and 36-month cumulative periods, subject to the
NEO’s continuous employment with us through the applicable vesting date(s). The November 2019 PRSUs are earned over a four-year
performance period. The number of November 2019 PRSUs that may be earned and eligible to vest is based on EA’s Relative NASDAQ-100
TSR Percentile measured over 8-quarter and cumulative 16-quarter periods, subject to the NEO’s continuous employment with us through the
applicable vesting date(s).

For additional information regarding the specific terms of the PRSUs and the November 2019 PRSUs granted in fiscal 2020, see the sections
titled “Our NEOs’ Fiscal 2020 Compensation — Annual Equity Awards — PRSUs” and “Our NEOs’ Fiscal 2020 Compensation — Special
Performance-Based Restricted Stock Unit Awards Granted in November 2019” in the “Compensation Discussion and Analysis” above.

(4) Represents awards of RSUs granted to our NEOs under our 2000 EIP. RSUs vested as to one-third of the units on May 17, 2020; the

remainder of the units will vest in approximately equal increments every six months thereafter until the award is fully vested on May 17, 2022,
subject to the NEO’s continued employment with us through each applicable vesting date. For additional information regarding the specific
terms of the RSUs granted to our NEOs in fiscal 2020, see the section titled “Equity Compensation — Annual Equity Awards — RSUs” in the
“Compensation Discussion and Analysis” above.

(5) Amounts determined pursuant to FASB ASC Topic 718. For grants of RSUs, represents the aggregate grant date fair value of RSUs

calculated using the closing price of our common stock on the date of grant. For grants of PRSUs and November 2019 PRSUs that are subject
to market conditions related to total stockholder return, the grant date fair value reported is based upon the probable outcome of such
conditions using a Monte-Carlo simulation method. For a more detailed discussion of the valuation methodology and assumptions used to
calculate grant date fair value, see Note 15 “Stock-Based Compensation and Employee Benefit Plans,” to the Consolidated Financial
Statements in our Annual Report; the PRSUs and November 2019 PRSUs granted to our NEOs in fiscal 2020 are referred to as “Market-
Based Restricted Stock Units” in Note 15 to the Consolidated Financial Statements in our Annual Report.

OUTSTANDING EQUITY AWARDS AT FISCAL 2020 YEAR-END TABLE

The following tables show information regarding outstanding stock options, RSUs, PRSUs, November
2019 PRSUs and PIRSUs held by our NEOs as of the end of fiscal 2020.

All stock options, RSUs, PRSUs and PIRSUs were granted pursuant to our 2000 EIP. The November
2019 PRSUs were granted pursuant to our 2019 EIP. The market value of the unvested RSUs,
PRSUs, November 2019 PRSUs and PIRSUs is determined by multiplying the number of unvested
RSUs by $95.37, the per share closing price of the Company’s common stock on March 27, 2020, the
last trading day of fiscal 2020.

Name

Outstanding Option Awards(1)

Number of Securities
Underlying
Unexercised Options (#)

Exercisable Unexercisable

Option
Exercise
Price
($)

Option
Grant
Date

Andrew Wilson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10/31/2013
6/16/2014

550,000
166,389

Blake Jorgensen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6/16/2014

24,275

Laura Miele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6/16/2014

13,706

Kenneth Moss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7/16/2014

122,850

Chris Bruzzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9/16/2014

38,402

—
—

—

—

—

—

26.25
35.70

35.70

35.70

37.12

37.02

(1) All outstanding options were vested and exercisable as of March 28, 2020, the last day of fiscal 2020.

Option
Expiration
Date

10/31/2023
6/16/2024

6/16/2024

6/16/2024

7/16/2024

9/16/2024

42

Outstanding Stock Awards

Time-Based Vesting
Awards

Performance-Based Vesting
Awards

Number of
Shares or
Units of
Stock
That Have
Not
Vested
(#)

—
—
—
—

22,623(3)
25,887(4)
81,133(4)

—
—
—
—
—
9,803(3)
12,943(4)
40,566(4)

—
—
—
—
5,279(3)
9,492(4)
29,749(4)

—
—
—
—
—
8,295(3)
9,492(4)
29,749(4)

—
—
—
6,033(3)
8,629(4)
27,044(4)

Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($)

—
—
—
—
2,157,556
2,468,843
7,737,654

—
—
—
—
—
934,912
1,234,374
3,868,779

—
—
—
—
503,458
905,252
2,837,162

—
—
—
—
—
791,094
905,252
2,837,162

—
—
—
575,367
822,948
2,579,186

Grant
Date

6/16/2017
6/18/2018
6/17/2019
6/16/2017
6/16/2017
6/18/2018
6/17/2019

6/16/2017
6/18/2018
6/17/2019
6/16/2017
11/18/2019
6/16/2017
6/18/2018
6/17/2019

6/16/2017
6/18/2018
6/17/2019
11/18/2019
6/16/2017
6/18/2018
6/17/2019

6/16/2017
6/18/2018
6/17/2019
6/16/2017
11/18/2019
6/16/2017
6/18/2018
6/17/2019

6/16/2017
6/18/2018
6/17/2019
6/16/2017
6/18/2018
6/17/2019

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)

39,364(1)
51,774(1)
81,133(1)
135,734(2)

—
—
—

Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)

3,754,145
4,937,686
7,737,654
12,944,952
—
—
—

17,058(1)
25,887(1)
40,566(1)
90,489(2)
77,009(5)

—
—
—

9,186(1)
18,983(1)
29,749(1)
71,875(5)

—
—
—

14,434(1)
18,983(1)
29,749(1)
63,342(2)
56,473(5)

—
—
—

10,498(1)
17,258(1)
27,044(1)

—
—
—

1,626,821
2,468,843
3,868,779
8,629,936
7,344,348
—
—
—

876,069
1,810,409
2,837,162
6,854,719
—
—
—

1,376,571
1,810,409
2,837,162
6,040,927
5,385,830
—
—
—

1,001,194
1,645,895
2,579,186
—
—
—

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Name

Andrew Wilson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Blake Jorgensen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Laura Miele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Kenneth Moss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chris Bruzzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1) Represents PRSUs assuming target achievement levels of 100%. One-third of the PRSUs from each grant (plus, if applicable, any Remaining
Award Units), are available to be earned and converted into shares one month prior to each of the first three anniversaries of the grant date
(each such date a “Vesting Opportunity”). The number of PRSUs that are earned and eligible to vest for a given Vesting Opportunity is based
on EA’s Relative NASDAQ-100 TSR Percentile for the applicable measurement period. For additional information regarding the specific terms
of the PRSUs granted to our NEOs, including the actual percentage attainment for the outstanding PRSUs that were earned at the end of fiscal
2020 and vested in May 2020, see the discussion under the section titled “Equity Compensation — Annual Equity Awards — PRSUs” in the
“Compensation Discussion and Analysis” above.

(2) Represents PIRSUs, assuming target achievement levels of 100%. The number of PIRSUs that may vest is based on the achievement of one
or both of the non-GAAP net revenue and FCF goals over the four-year performance period. For additional information regarding the specific
terms of the PIRSUs granted to certain of our NEOs, see the discussion under the section titled “Equity Compensation — Other Performance-
Based Equity Awards” in the “Compensation Discussion and Analysis” above. Any earned PIRSUs will vest in full on May 26, 2021.

(3) Represents an award of RSUs that vested as to one-third of the units one month prior to each of the first three anniversaries of the grant date.

43

(4) Represents an award of RSUs that vested or will vest as to one-third of the units one month prior to the first anniversary of the grant date, with
the remainder of the units to vest in approximately equal increments every six months thereafter until the award is fully vested one month prior
to the third anniversary of the grant date.

(5) The amounts shown assume target achievement levels of 100%. The November 2019 PRSUs may be earned at up to 200% of target,

assuming maximum achievement. One-half of the November 2019 PRSUs are available to be earned and converted into shares on each of the
second and fourth anniversaries of the grant date (each, a “vest date”). The number of November 2019 PRSUs that are earned and eligible to
vest on a given vest date is based on EA’s Relative NASDAQ-100 TSR Percentile for the applicable measurement period. For additional
information regarding the specific terms of the November 2019 PRSUs granted to certain of our NEOs, see the discussion of “Our NEOs’ Fiscal
2020 Compensation — Special Performance-Based Restricted Stock Unit Awards Granted in November 2019” in the “Compensation
Discussion and Analysis” above.

FISCAL 2020 OPTION EXERCISES AND STOCK VESTED TABLE

The following table shows all stock options exercised and the value realized upon exercise, as well as
all RSUs and PRSUs vested and the value realized upon vesting by our NEOs during fiscal 2020.

Option Awards

Stock Awards

Name

Number of Shares
Acquired on
Exercise
(#)

Value Realized
on Exercise
($)(1)

Number of Shares
Acquired on
Vesting
(#)(2)

Andrew Wilson . . . . . . . . . . . . . . . . . .
Blake Jorgensen . . . . . . . . . . . . . . . . .
Laura Miele . . . . . . . . . . . . . . . . . . . . .
Kenneth Moss . . . . . . . . . . . . . . . . . . .
Chris Bruzzo . . . . . . . . . . . . . . . . . . . .

120,000
—
—
—
45,000

9,314,600
—
—
—
3,272,062

111,577
51,792
26,452
40,383
32,533

Value Realized
on Vesting
($)(3)

10,812,407
5,019,463
2,565,297
3,913,399
3,153,252

(1) The value realized upon the exercise of stock options is calculated by: (a) subtracting the option exercise price from the market value of EA
common stock on the date of exercise to determine the realized value per share, and (b) multiplying the realized value per share by the
number of shares of EA common stock underlying the options exercised.

(2) Represents shares of EA common stock released upon vesting of RSUs and PRSUs during fiscal 2020.

(3) The value realized upon vesting of RSUs and PRSUs is calculated by multiplying the number of RSUs and PRSUs vested by the closing price

of EA common stock on the trading day prior to the vesting date.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Termination of Employment

Our NEOs have not entered into employment agreements with the Company. In connection with a
termination of employment, all outstanding equity awards held by our NEOs will be forfeited upon
termination unless the applicable NEO’s employment is terminated for reasons due to death, disability
or a change in control of the Company.

Electronic Arts Change in Control Plan

Our NEOs participate in the Electronic Arts Inc. Change in Control Plan (the “CiC Plan”). The CiC Plan
is filed as Exhibit 10.4 on the Company’s current report on Form 8-K dated May 18, 2018. The CiC
Plan is a “double-trigger” plan, which provides those serving as Senior Vice Presidents and above with
payments and benefits if their employment is terminated without “cause” or if they resign for “good
reason” (each, as defined in the CiC Plan) during the three-month period preceding or 18-month period
following a change in control of the Company (and the Compensation Committee determines the
termination of employment was made in connection with the change in control). The CiC Plan
payments and benefits include a lump sum cash severance payment, consisting of 1.5 times (or 2
times, in the case of the CEO) the sum of the NEO’s annual base salary, as in effect immediately prior
to the date of termination, and the NEO’s target annual cash bonus opportunity for the year of
termination, continued health benefits or equivalent payments for up to 18 months (or 24 months for
our CEO) and full vesting of all outstanding and unvested equity awards, other than performance-
based equity awards, the vesting of which is governed by the terms of the applicable equity award
agreements, as described below.

The CiC Plan does not provide for any additional payments or benefits (for example, tax gross-ups or
reimbursements) in the event that the payments under the CiC Plan and other arrangements offered by

44

the Company or its affiliates cause an executive officer to owe an excise tax under Sections 280G and
4999 of the Code (“Section 280G”). However, the CiC Plan provides that, if an executive officer would
receive a greater net after-tax benefit by having his or her CiC Plan payments reduced to an amount
that would avoid the imposition of the Section 280G excise tax, his or her payment will be reduced
accordingly.

As a condition to our NEOs’ right to receive the payments and benefits provided under the CiC Plan,
the NEO is required to execute a waiver of claims against the Company (unless the requirement is
waived) that includes a no defamation provision.

PRSUs and November 2019 PRSUs

Pursuant to the terms of the PRSUs and November 2019 PRSUs, if a change in control of the
Company occurs prior to the expiration of the performance period and the NEO remains employed by
the Company, or the Company’s successor entity, the PRSUs and November 2019 PRSUs may vest
on their scheduled vesting date(s) following a change in control of the Company. The Company’s
Relative NASDAQ-100 TSR Percentile as of the effective date of the change in control will be applied
to determine the number of PRSUs and November 2019 PRSUs earned and eligible to vest (the
“Eligible Units”) at each remaining vesting opportunity in the applicable vesting measurement period(s).
If the employment of the NEO is terminated without “cause” or the NEO resigns for “good reason”
during the three-month period preceding or 18-month period following a change in control of the
Company, and the Compensation Committee determines the termination of employment was made in
connection with the change in control, the Eligible Units will vest in full upon the date of such qualifying
termination, subject to the timely execution of a severance agreement and release of claims against
the Company. The reduction of the recipient’s awards in respect of Section 280G is applied in the
same manner with respect to the PRSUs and November 2019 PRSUs as under the CiC Plan.

PIRSUs

In the event of a change in control of the Company prior to the completion of the performance period,
the Compensation Committee will proportionally adjust the FCF and non-GAAP net revenue targets
based on the length of the performance period between April 2, 2017 and the most recently completed
fiscal quarter to determine the number of PIRSUs that can be earned on a pro rata basis. The
Compensation Committee shall determine and certify in writing, as of the effective date of the change
in control, the extent to which the adjusted FCF and non-GAAP net revenue performance measures
have been achieved. In the unlikely scenario where the achievement of the performance targets cannot
be ascertained as of the effective date of the change in control, the NEO will be eligible to vest in the
amount of the adjusted target PIRSUs. If the NEO remains employed by the Company, or the
Company’s successor entity, the PIRSUs will vest in full on their scheduled vesting date. If the
employment of the NEO is terminated without “cause” or the NEO resigns for “good reason” during the
three-month period preceding or 18-month period following a change in control of the Company (and
the Compensation Committee determines the termination of employment was made in connection with
the change in control), the PIRSUs will vest in full upon the later to occur of the NEO’s termination date
and the date of the change in control, subject to the NEO’s timely execution of a severance agreement
and release of claims against the Company.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

45

The following table sets forth an estimate of the potential payments and benefits under the CiC Plan
and the terms of the PRSUs, November 2019 PRSUs and PIRSUs, as described above, that would be
payable to our NEOs assuming they incurred a termination of employment without “cause” or for “good
reason” in connection with a change in control of the Company, and both events occurred on
March 28, 2020, the last day of fiscal 2020. For purposes of the estimates below, we used the closing
price of our common stock on March 27, 2020 (the last trading day of fiscal 2020) of $95.37 per share.

Name

Andrew Wilson . . . . . . . . . . . . . . . . . . .
Blake Jorgensen . . . . . . . . . . . . . . . . . .
Laura Miele . . . . . . . . . . . . . . . . . . . . . .
Kenneth Moss . . . . . . . . . . . . . . . . . . . .
Chris Bruzzo . . . . . . . . . . . . . . . . . . . . .

Cash
Severance
Award
($)(1)

RSUs
($)(2)

PRSUs and
November
2019
PRSUs
($)(3)

PIRSUs
($)(4)

Other
($)(5)

Total
($)

7,200,000 12,364,053
2,868,750
2,085,750
2,085,750
2,085,750

8,513,775 9,708,666 56,735 37,843,229
6,038,065 13,755,501 6,472,380 27,562 29,162,258
4,245,872 11,934,983
— 43,091 18,309,696
4,533,508 10,123,239 4,530,647 43,091 21,316,235
8,895,342
3,977,501

— 43,091

2,789,000

(1) Represents the sum of each NEO’s annual base salary as of March 28, 2020 and target cash bonus opportunity for fiscal 2020, respectively,

multiplied by 2 with respect to Mr. Wilson and by 1.5 with respect to Mr. Jorgensen, Ms. Miele, Mr. Moss and Mr. Bruzzo.

(2) Represents the value of unvested RSUs that would accelerate and vest on a qualifying termination of employment in connection with a change
in control occurring on March 28, 2020, based on the closing price of our common stock on March 27, 2020, the last trading day of fiscal 2020.

(3) Represents the value of unvested PRSUs and November 2019 PRSUs that would accelerate and vest on a qualifying termination of

employment in connection with a change in control occurring on March 28, 2020. For purposes of the table, we have used EA’s Relative
NASDAQ-100 TSR Percentiles as of March 28, 2020, which was in the 27th percentile with respect to PRSUs granted in June 2017, the 12th
percentile with respect to PRSUs granted in June 2018, the 59th percentile with respect to PRSUs granted in June 2019, and the 70th
percentile with respect to the November 2019 PRSUs. Based on these percentiles, (a) the PRSUs granted in June 2017 would accelerate and
vest as to 34% of the target number of units for the third tranche of the award, (b) the PRSUs granted in June 2018 would accelerate and vest
as to 4% of the target number of units for the first, second and third tranches of the award, (c) the PRSUs granted in June 2019 would
accelerate and vest as to 98% of the target number of units for the full award, and (d) the November 2019 PRSUs would accelerate and vest
as to 130% of the target number of units for the full award.

(4) Represents the estimated value of unvested PIRSUs that would accelerate and vest at target on a qualifying termination of employment in
connection with a change in control occurring on March 28, 2020. For purposes of the table, we have used the estimated target number of
PIRSUs that would accelerate and vest based on the completion of 75% of the four-year performance period. If we estimated the value of the
unvested PIRSUs at maximum based on the completion of 75% of the four-year performance-period, the value of the PIRSUs would be
$19,417,427 for Mr. Wilson; $12,944,856 for Mr. Jorgensen; and $9,061,390 for Mr. Moss.

(5) Includes 24 months of post-termination health benefits for Mr. Wilson and 18 months of post-termination health benefits for Messrs. Jorgensen,

Moss and Bruzzo, and Ms. Miele.

46

FISCAL 2020 PAY RATIO

For fiscal 2020, the annual total compensation of our median employee was $97,986, and the annual
total compensation of Mr. Wilson, was $21,365,751. The ratio of these amounts is 218 to 1. This ratio
is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under
the Exchange Act.

Since there have been no significant changes to our employee population or employee compensation
programs during fiscal 2020 that would affect our pay ratio disclosure, we used the same median
employee who was identified as of January 1, 2018, as permitted by SEC rules. In determining that it
was still appropriate to utilize our fiscal 2018 median employee for fiscal 2020, we considered that
there were no material changes to that employee’s job description or compensation structure during
fiscal 2020.

As described in our fiscal 2018 proxy statement, to identify our median employee, we used a
consistently applied compensation measure consisting of base salary, discretionary bonuses
(performance or other bonuses), and the grant date fair market value of equity awards, as obtained
from internal payroll records. We did not exclude any employees or, other than annualizing base salary
for permanent employees, make any compensation adjustments whether for cost of living or otherwise
in the identification process.

Our median employee was identified to be a software engineer employed in Canada. The median
employee’s annual total compensation for fiscal 2020 was calculated in Canadian dollars and
determined using the same methodology as used to determine Mr. Wilson’s annual total compensation
set forth in the “Fiscal 2020 Summary Compensation Table.” The median employee’s annual total
compensation was then converted to U.S. dollars based on the average of the Canadian dollar to U.S.
dollar exchange rates on the last day of each month during fiscal 2020 of 0.754479.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

47

EQUITY COMPENSATION PLAN INFORMATION

The following table shows information, as of March 28, 2020, regarding shares of our common stock
authorized for issuance under our 2019 EIP, our 2000 EIP, which terminated on August 8, 2019, and
our 2000 Employee Stock Purchase Plan, as amended (the “ESPP”).

Number of Securities to
be Issued upon
Exercise
of Outstanding Options,
Warrants and Rights

Weighted-Average
Exercise Price
of Outstanding Options,
Warrants and Rights

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))

(a)

(b)

(c)

Plan Category

Equity compensation plans

approved by security holders . .

9,768,077(1)

$30.85(2)

21,234,479(3)

Equity compensation plans not

approved by security holders . .
. . . . . . . . . . . . . . . . . . . . . . . .

Total

—
9,768,077

—

—
21,234,479

(1) Includes (a) 1,073,723 shares of common stock issuable upon exercise of outstanding options under the 2000 EIP with a weighted-average

exercise price of $30.85; (b) 7,453,335 unvested time-based and performance-based restricted stock unit awards outstanding under the 2000
EIP; and (c) 1,241,019 unvested time-based and performance-based restricted stock unit awards outstanding under the 2019 EIP.

(2) Outstanding restricted stock unit awards subject to time-based and/or performance-based vesting (e.g., RSUs, PRSUs, November 2019

PRSUs and PIRSUs) do not have an exercise price and therefore are not included in the calculation of the weighted-average exercise price.

(3) Each full value award granted under the 2019 EIP reduces the number of shares available for issuance under our 2019 EIP by 1.43 shares and
each stock option granted reduces the number of shares available for issuance by 1 share. The 21,234,479 shares remaining available for
future issuance under our 2019 EIP and ESPP includes (a) 15,670,519 shares available for issuance under the 2019 EIP based on the 1.43
reduction for full-value awards, and (b) 5,563,960 shares available for purchase by our employees under the ESPP.

48

P
r
o
x
y
S
t
a
t
e
m
e
n
t

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows, as of June 11, 2020, the number of shares of our common stock owned by
our directors, NEOs, our directors and executive officers as a group, and beneficial owners known to us
holding more than 5% of our common stock. As of June 11, 2020, there were 288,714,378 shares of our
common stock outstanding. Except 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.

Stockholder Name

Shares
Owned(1)

Right to
Acquire(2)

Percent of
Outstanding
Shares(3)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,153,592
Vanguard Group Inc.(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,532,178
Blackrock, Inc.(5)
125,549
Andrew Wilson(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83,060
Blake Jorgensen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,688
Laura Miele . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
166,459
Kenneth Moss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29,038
Chris Bruzzo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,371
Leonard S. Coleman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
321,346
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jay C. Hoag(7)
82,573
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jeffrey T. Huber(8)
527,816
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lawrence F. Probst III(9)
11,173
Talbott Roche . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38,927
Richard A. Simonson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Luis A. Ubiñas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Heidi J. Ueberroth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,563
All executive officers and directors as a group

—
—
676,389
—
13,706
122,850
38,402
17,784
14,602
14,602
79,591
2,730
68,836
58,136
2,730

8.02%
6.77%
*
*
*
*
*
*
*
*
*
*
*
*
*

(18) persons(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,551,799 1,111,556

0.92%

*

Less than 1%

(1) Unless otherwise indicated in the footnotes, includes shares of common stock for which the named person has sole or shared voting and

investment power. This column excludes shares of common stock that may be acquired through stock option exercises, which are included in
the column “Right to Acquire.”

(2)

Includes (a) shares of common stock that may be acquired through stock option exercises and releases of RSUs within 60 days of June 11,
2020, (b) in the case of Mr. Simonson, reflects 54,234 RSUs that have vested but have been deferred, (c) in the case of Mr. Coleman, reflects
15,054 RSUs that have vested but have been deferred and (d) in the case of Mr. Ubiñas, reflects 50,534 RSUs that have vested but have
been deferred.

(3) Calculated based on the total number of shares owned plus the number of shares that may be acquired through stock option exercises and

the release of vested RSUs within 60 days of June 11, 2020.

(4) As of March 31, 2020, based on information contained in a report on Form 13F-HR filed with the SEC on May 15, 2020 by Vanguard Group

Inc. The address for Vanguard Group Inc. is PO Box 2600, V26, Valley Forge, PA 19482-2600.

(5) As of March 31, 2020, based on information contained in a report on Form 13F-HR filed with the SEC on May 1, 2020 by Blackrock, Inc. The

address for Blackrock, Inc. is 55 East 52nd Street, New York, NY 10055.

(6) Shares of common stock are held by Mr. Wilson’s family trust and Mr. Wilson has investment power over, and pecuniary interest in, all such

shares.

(7) Represents 206 shares of common stock held directly by Mr. Hoag and 321,140 shares of common stock held by entities affiliated with

Mr. Hoag, including TCV as follows: (a) 4,924 shares of common stock held by TCV Management 2004, L.L.C. (“TCV Management 2004”), (b)
4,924 shares of common stock held by TCV VI Management, L.L.C. (“TCV VI Management”), (c) 16,553 shares of common stock held by TCV
VII Management, L.L.C. (“TCV VII Management,” and together with TCV Management 2004 and TCV VI Management, the “Management
Companies”), (d) 185,359 shares held by the Hoag Family Trust U/A Dtd 8/2/94 (the “Hoag Family Trust”) and (e) 109,380 shares held by
Hamilton Investments Limited Partnership. Mr. Hoag, a director of the Company, is a member of each of the Management Companies but
disclaims beneficial ownership of the shares held or beneficially owned by such entities except to the extent of his pecuniary interest therein.
Mr. Hoag is a trustee of Hoag Family Trust and a general partner and limited partner of Hamilton Investments Limited Partnership but
disclaims beneficial ownership of the shares held or beneficially owned by such entities except to the extent of his pecuniary interest therein.

The address for each of Mr. Hoag and the Management Companies is c/o TCV, 250 Middlefield Road, Menlo Park, CA 94025.

(8)

(9)

Includes 10,159 shares of common stock held directly by Mr. Huber, 67,412 shares of common stock held by Mr. Huber’s family trust and
5,002 shares of common stock and 11,872 vested options held by the Maywood Trust U/A/D 9/19/2012 of which Mr. Huber is the sole trustee.

Includes 70,817 shares of common stock held directly by Mr. Probst, 43,942 shares of common stock held by Mr. Probst’s grantor’s retained
annuity trust, in which 14,647 shares are held in trust for Lawrence F. Probst IV and 29,295 shares are held in trust for Scott Probst; and
413,057 shares of common stock held by the Probst Family L.P. of which Mr. Probst is a partner.

(10) Includes all executive officers and directors of EA as of the date of this filing.

49

PROPOSALS TO BE VOTED ON
PROPOSAL ONE

ELECTION OF DIRECTORS

At the Annual Meeting, stockholders will elect nine directors to hold office for a one-year term until the
next annual meeting (or until their respective successors are appointed). All nominees have consented
to serve a one-year term, if elected. For additional information regarding the nominees and our
corporate governance practices, including our director resignation policies and refreshment practices,
please see the sections of this Proxy Statement entitled “2020 Proxy Statement Summary and
Highlights,” “Commonly Asked Questions and Answers” and “Board of Directors and Corporate
Governance.”

The 2020 election of directors will be uncontested. Accordingly, EA’s Amended and Restated Bylaws
provide that in an uncontested election of directors each nominee must receive more votes cast “for”
than “against” his or her re-election in order to be re-elected to the Board of Directors.

The Board of Directors has nominated the following directors to stand for re-election:

(cid:129) Leonard S. Coleman

(cid:129) Jay C. Hoag

(cid:129) Jeffrey T. Huber

(cid:129) Lawrence F. Probst III

(cid:129) Talbott Roche

(cid:129) Richard A. Simonson

(cid:129) Luis A. Ubiñas

(cid:129) Heidi J. Ueberroth

(cid:129) Andrew Wilson

The Board of Directors recommends a vote FOR each of the nominees.

50

PROPOSAL TWO

ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

In accordance with the SEC’s proxy rules, we seek an advisory, non-binding stockholder vote with
respect to the compensation of our NEOs for fiscal 2020. This vote, which is undertaken by us
annually, is not intended to address any specific item of compensation, but rather the overall
compensation of our NEOs and the compensation philosophy, policies and practices, as disclosed in
this Proxy Statement.

Approval of this proposal, commonly known as a “say-on-pay” proposal, requires the affirmative vote of
a majority of the voting shares present at the Annual Meeting in person or by proxy and voting for or
against the proposal.

We previously have submitted advisory say-on-pay proposals for each fiscal year beginning with fiscal
2011 and have received majority stockholder support for the compensation of our NEOs for each of
these years.

EA’s management, the Compensation Committee and the Board of Directors are committed to
maintaining a pay-for-performance alignment in our executive compensation programs. We received a
favorable 94% of votes cast for our annual say-on-pay advisory proposal at our 2019 annual meeting.

We encourage you to read the “Compensation Discussion and Analysis” for additional details on our
executive compensation programs and the fiscal 2020 compensation of our NEOs.

We believe our compensation programs and policies for fiscal 2020 were consistent with our core
compensation principles, supported by strong compensation governance practices and are worthy of
continued stockholder support. Accordingly, we ask for our stockholders to indicate their support for the
compensation paid to our NEOs, by voting “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on a non-binding, advisory basis, the
compensation of the named executive officers for fiscal 2020, as disclosed in the
Compensation Discussion and Analysis, the compensation tables and the related narrative
disclosures in this Proxy Statement.”

Although the vote is advisory and non-binding, our Board of Directors and Compensation Committee
value the opinions of our stockholders and will consider the outcome of the vote, along with other
relevant factors, in evaluating the future compensation of our NEOs.

The Board of Directors recommends a vote FOR the approval of the foregoing resolution.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

51

PROPOSAL THREE

RATIFICATION OF THE APPOINTMENT OF KPMG LLP, INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

The Audit Committee is directly responsible for the appointment, retention, compensation and oversight
of the Company’s independent registered public accounting firm. The Audit Committee has appointed
KPMG LLP as the Company’s independent auditors for the fiscal year ending March 31, 2021. KPMG
LLP has audited the financial statements of the Company and its consolidated subsidiaries since fiscal
1987. The Audit Committee and the Board of Directors believe that KPMG LLP’s long-term knowledge
of EA and its subsidiaries is valuable to the Company as discussed further below. Representatives of
KPMG LLP have direct access to members of the Audit Committee and the Board of Directors. We
expect one or more representatives of KPMG LLP to attend the Annual Meeting in order to respond to
appropriate questions from stockholders and make a statement if they desire to do so.

Ratification of the appointment of KPMG LLP as our independent auditors is not required by our
Amended and Restated Bylaws or otherwise. The Board of Directors has determined to submit this
proposal to the stockholders as a matter of good corporate practice. 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
voting for or against the proposal. If the stockholders do not ratify the appointment, the Audit Committee
will review its future selection of auditors. Even if the appointment is ratified, the Audit Committee may,
in its discretion, direct the appointment of different independent auditors at any time during the year if it
determines that such a change would be in the best interests of the Company and the stockholders.

Fees of Independent Auditors

The aggregate fees billed for the last two fiscal years for each of the following categories of services
are set forth below:

Description of Fees

Year Ended
March 31, 2020

Year Ended
March 31, 2019

Audit Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax — Compliance Fees(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,669,000
276,000
57,000

$4,514,000
137,000
386,000

Total All Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,002,000

$5,037,000

(1) Audit Fees: This category includes the annual audit of the Company’s financial statements and internal controls over financial reporting

(including quarterly reviews of financial statements included in the Company’s quarterly reports on Form 10-Q), and services normally
provided by the independent auditors in connection with regulatory filings. This category also includes consultation on matters that arose
during, or as a result of the audit or review of financial statements, statutory audits required for our non-U.S. subsidiaries, and other
documents filed with the SEC, as well as Sarbanes-Oxley Section 404 compliance consultation.

(2) Audit-Related Fees: This category consists of fees for assurance and related services that are reasonably related to the performance of the

audit or review of the Company’s financial statements and are not reported under “Audit Fees.” In fiscal 2020, these fees were for accounting
consultations and services in the U.S. and in connection with other regulatory filings in our international jurisdictions.

(3) Tax — Compliance Fees: This category includes compliance services rendered for U.S. and foreign tax compliance and returns, and transfer

pricing documentation.

Services Provided by the Independent Auditor

KPMG LLP audits our consolidated operations and provides statutory audits for legal entities within our
international corporate structure. Having one audit firm with a strong global presence responsible for
these audits ensures that a coordinated approach is used to address issues that may impact our
businesses across multiple geographies and legal entities. Few audit firms have the knowledge of our
sector and the capability of servicing our global audit requirements. KPMG LLP has the geographical
scope that our operations require and the accounting expertise in the matters relevant to our sector. In
addition, KPMG LLP’s experience working with the Company gives them the institutional knowledge to
understand our operations and processes, which we believe helps them address the relevant issues
and improves the quality of the audit.

52

P
r
o
x
y
S
t
a
t
e
m
e
n
t

In appointing KPMG LLP as our independent auditors for fiscal 2021, the Audit Committee and the
Board of Directors have considered the performance of KPMG LLP in fiscal 2020, as well as in prior
years, and have taken into account the alternative options available to the Company. The Audit
Committee and the Board of Directors have determined that it is in the best interest of the Company to
continue KPMG LLP’s engagement.

We believe the experience and expertise held by the members of the Audit Committee give them the
necessary skills to evaluate the relationship between the Company and its independent auditors and to
oversee auditor independence. The Audit Committee periodically considers whether there should be
rotation of our independent external audit firm. The Audit Committee is empowered under its charter to
obtain advice and assistance from outside legal, accounting and other advisors as it deems appropriate.

At each meeting of the Audit Committee, Company management is provided the opportunity to meet in
private session with the Audit Committee to discuss any issues relating to KPMG LLP’s engagement.
Similarly, KPMG LLP regularly meets in private session with the Audit Committee with no members of
Company management present.

Audit Partner Rotation

Our KPMG LLP lead audit partner has been working on the Company’s audit since the first quarter of
fiscal 2016 and completed her rotation upon the filing of the Annual Report. The Audit Committee
approved a new lead audit partner, who commenced work on the Company’s audit in the first quarter
of fiscal 2021. Our KPMG LLP concurring audit partner has been working on the Company’s audit
since the first quarter of fiscal 2020. Each audit partner may serve a maximum of five years on the
Company’s audit. Candidates are proposed by KPMG LLP based on their expertise and experience
and are vetted by Company management and a recommendation is made to the Audit Committee. The
Audit Committee has final approval of the lead audit partner and the concurring audit partner.

Pre-approval Procedures

The Audit Committee is required to pre-approve the engagement of, and fees incurred by, KPMG LLP
to perform audit and other services for the Company and its subsidiaries. The Company’s procedures
for the pre-approval by the Audit Committee of all services provided by KPMG LLP and the related fees
comply with SEC regulations regarding pre-approval of services. Services subject to these SEC
requirements include audit services, audit-related services, tax services and other services. In some
cases, pre-approval for a particular category or group of services and the related fees are provided by
the Audit Committee for up to a year, subject to a specific budget and to regular management
reporting. In other cases, the Chairman of the Audit Committee has the delegated authority from the
Audit Committee to pre-approve additional services and the related fees up to a specified dollar limit,
and such pre-approvals are then communicated to the full Audit Committee. The Audit Committee
reviews quarterly the status of all pre-approved services and the related fees to date and approves any
new services and the related fees to be provided.

In determining whether to grant a pre-approval, the Audit Committee considers the level of non-audit
fees incurred to date as a percentage of the total annual fees paid to KPMG LLP. In addition, the Audit
Committee considers additional factors to assess the potential impact on auditor independence of
KPMG LLP performing such services, including whether the services are permitted under the rules and
recommendations of the Public Company Accounting Oversight Board, the American Institute of
Certified Public Accountants, and the NASDAQ Stock Market, whether the proposed services are
permitted under EA’s policies, and whether the proposed services are consistent with the principles of
the SEC’s auditor independence rules. The Company also annually confirms with each of its directors
and executive officers whether there are any relationships that they are aware of with KPMG LLP that
may impact the auditor independence evaluation. The Audit Committee considered and determined
that fees for services other than audit and audit-related services paid to KPMG LLP during fiscal 2020
are compatible with maintaining KPMG LLP’s independence.

The Board of Directors recommends a vote FOR the ratification of KPMG LLP as our
independent auditors for the fiscal year ending March 31, 2021.

53

PROPOSAL FOUR

STOCKHOLDER PROPOSAL ON WHETHER TO ALLOW STOCKHOLDERS TO ACT BY WRITTEN
CONSENT

The Company has been advised that James McRitchie and Myra Young, 9295 Yorkship Court, Elk
Grove, CA 95758, who have indicated that they are beneficial owners of at least $2,000 in market
value of EA’s common stock, intend to submit the following proposal at the Annual Meeting.

Proposal 4 — Right to Act by Written Consent

Resolved, Electronic Arts Inc (“Electronic Arts”) shareholders request our board of directors undertake
steps as necessary to permit written consent by shareholders entitled to cast the minimum number of
votes necessary to authorize action at a meeting at which all shareholders entitled to vote are present
and voting. This written consent is to be consistent with giving shareholders the fullest power to act by
written consent consistent with applicable law, including the ability to initiate any topic for written
consent consistent with applicable law.

Supporting Statement: Shareholder rights to act by written consent and special meetings are
complimentary ways to bring urgent matters to the attention of management and shareholders outside
the annual meeting cycle.

Many assume a false equivalency between rights of written consent and special meetings. However,
any shareholder, regardless how many (or few) shares she owns, can seek to solicit written consents
on a proposal.

By contrast, calling a special meeting may require a two-step process. A shareholder who does not
own the minimum shares required must first obtain the support of other shareholders. Once that
meeting is called, the shareholder must distribute proxies asking shareholders to vote on the proposal
to be presented at the special meeting. This two-step process can take more time and expense than
the one-step process of soliciting written consents, especially when Electronic Arts requires a 25%
threshold (adopted after my request for a 15% threshold), instead of 10% as provided for in Delaware
law.

BlackRock’s proxy voting guidelines for 2019 include the following:

In exceptional circumstances and with sufficiently broad support, shareholders should have the
opportunity to raise issues of substantial importance without having to wait for management to
schedule a meeting. We therefore believe that shareholders should have the right to solicit votes by
written consent provided that: 1) there are reasonable requirements to initiate the consent solicitation
process (in order to avoid the waste of corporate resources in addressing narrowly supported
interests); and 2) shareholders receive a minimum of 50% of outstanding shares to effectuate the
action by written consent.

This topic is trending positively. Written consent won 47% support at United Rentals in 2018; 51%
support in 2019. At Flowserve 43% support in 2018; 51% support in 2019. At Capital One Financial
44% support in 2018; 56% support in 2019. The topic also recently won majorities at JetBlue, Cigna,
Applied Materials, Nuance Communications, Netflix, Newell Brands, Gilead Sciences, L3
Technologies, Eastern Chemical Company, Kansas City Southern and HP.

Also consider that, as of the day I submitted this proposal, Electronic Arts stock has lagged the
NASDQ for the latest one-, two- and five-year periods.

Electronic Arts should join hundreds of that enable shareholders to act by written consent.

Increase Shareholder Value

Vote for Right to Act by Written Consent — Proposal 4

54

P
r
o
x
y
S
t
a
t
e
m
e
n
t

The Company’s Statement in Opposition to Proposal Four

Our Board of Directors recommends a vote “AGAINST” this proposal because it is not in the best
interests of the Company or its stockholders.

The Company has a special meeting right with a 25% threshold

The Board of Directors is committed to robust corporate governance and believes in maintaining
policies and practices that serve the interests of the Company and all of its stockholders. The Board of
Directors understands that corporate governance is not static — and continually monitors trends and
developments in corporate governance practices and, when appropriate, makes changes to our
practices and disclosures. In connection with the 2019 annual meeting, we reached out to holders of
approximately 41% of our common stock, primarily to solicit feedback regarding the adoption of a
special meeting right. Our stockholders overwhelmingly supported the right for stockholders to call a
special meeting. Consistent with those views, we adopted a special meeting right with a 25%
threshold.

EA’s special meeting right, along with our established stockholder communication and engagement
practices, provides stockholders with meaningful opportunities to raise important matters and propose
actions for stockholder consideration outside the annual meeting process. As a result, we believe that
the written consent right requested by the stockholder proposal is unnecessary. In addition,
stockholder meetings provide a number of protections for both stockholders and the Company
compared to action by written consent, including:

(cid:129) A meeting and the stockholder vote take place in a transparent manner on a specified date that
is publicly announced well in advance, giving all interested stockholders a chance to evaluate
the issues, express their views, and cast their votes.

(cid:129) Absent unusual circumstances, the Company generally holds in-person meetings, which fosters

great transparency by granting stockholders access to directors and officers.

(cid:129) A meeting provides stockholders with a forum for open discussion and to ask questions while
considering the proposed stockholder action, providing stockholders with the opportunity to
participate in a better decision-making process.

(cid:129) The Board of Directors is able to analyze and provide a recommendation with respect to actions

proposed to be taken at a stockholder meeting.

(cid:129) EA’s Certificate of Incorporation and Bylaws contain procedural and informational safeguards

designed to provide stockholders a reasonable amount of time and relevant information prior to
casting a vote.

The written consent process does not promote transparent decision making and could
disenfranchise stockholders.

Proposal Four would allow holders of a bare majority of shares to approve critical actions on their own
without an opportunity for discussion at a stockholder meeting. As a result, many stockholders could be
excluded not only from voting but from even having the opportunity to influence other stockholders who
do get to vote.

Proposal Four could disenfranchise many stockholders and may deprive them of rights, while
increasing the risk that a small group of stockholders (such as special interest investors and those who
accumulate a short-term voting position through the borrowing of shares), with no fiduciary duties to
the other stockholders, approve their own proposed actions. Such a group of stockholders may not act
in the interests of longer-term holders of EA’s common stock, which may lead to fundamental corporate
changes that cater to special or short-term interests.

Additionally, the written consent process could lead to stockholder confusion because multiple groups
of stockholders could solicit written consents at any time, as frequently as they choose or on an

55

ongoing basis, which could cover a wide range of issues, some of which may be duplicative or
conflicting. Addressing such actions would impose significant administrative and financial burdens on
the Company with no corresponding benefit to stockholders. The Board of Directors believes that these
risks are contrary to principles of stockholder democracy, fair and accurate disclosure, and good
corporate governance.

EA’s strong corporate governance practices promote Board accountability and responsiveness
to stockholders.

The Board of Directors recognizes that it is accountable to EA’s stockholders and believes that EA’s
governance practices demonstrate and promote accountability and advance long-term value creation.
EA’s key substantive stockholder rights and strong corporate governance practices include:

(cid:129) 25% Special Meeting Right: Our special meeting right allows stockholders owning at least 25%

or more of our outstanding shares to call special meetings.

(cid:129) Active Stockholder Engagement Program: We regularly engage with our stockholders to

solicit their feedback regarding issues including executive compensation and corporate
governance and have taken actions to implement stockholder feedback when warranted.

(cid:129) Robust Lead Director Structure: Our Lead Director, who is selected by the independent

directors, has clearly enumerated powers and authorities, such as chairing executive sessions
of the Board of Directors and other meetings of the Board of Directors in the absence of the
Chairman and the ability to call meetings of the independent directors.

(cid:129) Majority-Independent Board of Directors: 8 of our 9 directors are independent under
NASDAQ rules and have deep expertise in gaming, technology, finance, media, sports,
investments, and stockholder value creation.

(cid:129) Strong Director Succession and Refreshment Practices: Our Board of Directors is not stale.

22% of our independent directors have joined within the last five years.

(cid:129) Diverse Board of Directors: Our Board of Directors reflects diversity in experience, skills, race,

ethnicity, age and gender. 44% of our Board of Directors identifies as female or an
underrepresented minority.

(cid:129) Annual Elections of Board of Directors: We do not have a classified Board of Directors. All of

our directors are elected annually by our stockholders.

(cid:129) Majority Voting: We have a majority voting standard for the election of directors in uncontested

elections.

(cid:129) No Dual Class: We have a single class of common stock, with equal voting rights (one vote per

share) for all stockholders.

(cid:129) Proxy Access: We have adopted a proxy access right applying corporate best practices,

allowing stockholders holding 3% or more of our common stock for 3 or more years to include
director nominations in our proxy statement.

(cid:129) No Supermajority Provisions: Our governance documents do not contain provisions requiring

a supermajority stockholder vote on any issue.

(cid:129) No Stockholder Rights Plan: We do not maintain a stockholder rights plan.

The Board of Directors recommends a vote AGAINST the stockholder proposal for EA to grant
stockholders the right to act by written consent.

Required Vote

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 voting for or against the proposal.

56

COMMONLY ASKED QUESTIONS AND ANSWERS

1. Why am I receiving these materials?

You are receiving these materials in connection with the Company’s solicitation of proxies for use at
our Annual Meeting, which will take place on Thursday, August 6, 2020 at 2:00 p.m. local time, at our
corporate headquarters in Redwood City, California unless we hold the Annual Meeting solely as a
virtual meeting as part of our precautions regarding the COVID-19 pandemic. This Proxy Statement
describes proposals on which you, as a stockholder, are being asked to vote. It also gives you
information on the proposals that will be considered at the Annual Meeting, as well as other information
so that you can make an informed decision. As a stockholder, you are invited to attend the Annual
Meeting and are requested to vote on the items of business described in this Proxy Statement.

2. Could the COVID-19 pandemic impact the Annual Meeting?

We intend to hold our Annual Meeting in person. However, the health and safety of our stockholders
are important to us and as part of our precautions regarding the COVID-19 pandemic, we are planning
for the possibility that our Annual Meeting may be held solely as a virtual meeting. If we take this step,
we will announce the decision to do so in advance, and details on how to participate will be posted on
our investor relations website at http://ir.ea.com and filed with the SEC as additional proxy materials. If
you are planning to attend our meeting, please check our website in the days leading up to the meeting
date.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

3. Why did I receive a Notice in the mail regarding the Internet availability of proxy materials

instead of a full set of proxy materials?

In accordance with rules adopted by the SEC, we may furnish proxy materials, including this Proxy
Statement and our Annual Report, to our stockholders by providing access on the Internet instead of
mailing printed copies. Stockholders will receive printed copies of the proxy materials only if they
request them. Instead, the Notice, which was mailed to our stockholders, provides instructions on how
to access and review all of the proxy materials on the Internet. The Notice also describes how you may
submit your proxy on the Internet. If you would like to receive a paper or email copy of our proxy
materials, you should follow the instructions for requesting those materials in the Notice or you may
contact the Company directly. The Company will provide you without charge, upon request, a paper or
email copy of our proxy materials (paper copies will be sent by first class mail). Any such request
should be directed as follows: Corporate Secretary, Electronic Arts Inc., 209 Redwood Shores
Parkway, Redwood City, CA 94065 or call (650) 628-1500.

4. How can I get electronic access to the proxy materials?

The proxy card provides instructions on how to inform us to send future proxy materials to you
electronically by email. If you choose to receive future proxy materials by email, you will receive an
email next year with instructions containing a link to those materials and a link to our proxy website.
Your election to receive proxy materials by email will remain in effect until you terminate it. We
encourage you to receive future proxy materials by email. Doing so will allow us to provide you
with the information you need in a timelier manner, will save us the cost of printing and mailing
documents to you, and will help conserve natural resources.

5. Can I vote my shares by filling out and returning the Notice?

No. However, the Notice provides instructions on how to vote on the Internet, by telephone, by mail or
by submitting a ballot at the Annual Meeting.

57

6. Who can vote at the Annual Meeting?

Stockholders who owned common stock as of the close of business on June 12, 2020 may attend and
vote at the Annual Meeting. If your shares are registered directly in your name with our transfer agent,
Computershare, you are considered, with respect to those shares, the stockholder of record. As the
stockholder of record, you have the right to vote at the Annual Meeting. If your shares are held in a
brokerage account or by another nominee or trustee, you are considered the beneficial owner of
shares held in “street name.” As the beneficial owner, you are also invited to attend the Annual
Meeting. As a beneficial owner, you are not the stockholder of record and may not vote these shares at
the Annual Meeting unless you obtain a “legal proxy” from your broker, nominee, or trustee that holds
your shares, giving you the right to vote the shares at the meeting. Each share of common stock is
entitled to one vote. There were 288,714,378 shares of common stock outstanding on the record date,
June 12, 2020.

A quorum is required to conduct business at the Annual Meeting. A quorum exists if a majority of EA’s
outstanding voting shares, or at least 144,357,190 shares, as of June 12, 2020 is present or
represented by proxies at the Annual Meeting. On June 12, 2020, a total of 288,714,378 shares of
common stock were outstanding and entitled to vote.

Shares are counted as present or represented at the Annual Meeting if:

(cid:129) They are entitled to vote at the Annual Meeting and are present at the Annual Meeting, or

(cid:129) The stockholder has voted on the Internet, by telephone or a properly submitted proxy card prior

to 11:59 p.m. Eastern Time on August 5, 2020.

If a quorum is not present, we may propose to adjourn the Annual Meeting to solicit additional proxies
and reconvene the Annual Meeting at a later date.

7. What am I voting on?

We are asking you to:

(cid:129) Elect Leonard S. Coleman, Jay C. Hoag, Jeffrey T. Huber, Lawrence F. Probst III, Talbott

Roche, Richard A. Simonson, Luis A. Ubiñas, Heidi J. Ueberroth and Andrew Wilson to the
Board of Directors to hold office for a one-year term (Proposal 1);

(cid:129) Cast an advisory vote to approve named executive officer compensation (Proposal 2);

(cid:129) Ratify the appointment of KPMG LLP as the Company’s independent public registered

accounting firm for the fiscal year ending March 31, 2021 (Proposal 3); and

(cid:129) Consider and vote upon a stockholder proposal, if properly presented at the Annual Meeting, on

whether to allow stockholders to act by written consent (Proposal 4).

8. How do I vote my shares if I won’t be able to attend the Annual Meeting?

You do not need to attend the Annual Meeting in order to vote. You may, instead, vote on the Internet,
by telephone or by mail (if you have received printed proxy materials) prior to 11:59 p.m. Eastern Time
on August 5, 2020. By doing so, you are giving a proxy appointing Andrew Wilson (the Company’s
Chief Executive Officer), Blake Jorgensen (the Company’s Chief Operating Officer and Chief Financial
Officer) and Jacob Schatz (the Company’s General Counsel and Corporate Secretary) or any of them,
each with power of substitution, to vote your shares at the Annual Meeting, or any adjournment thereof,
as you have instructed. If a proposal comes up for a vote at the Annual Meeting for which you have not
indicated an instruction, Mr. Wilson, Mr. Jorgensen and Mr. Schatz, or any one of them, will vote your
shares in the manner recommended by the Board of Directors and according to their best judgment.
Even if you currently plan to attend the Annual Meeting, it is a good idea to vote on the Internet, by

58

P
r
o
x
y
S
t
a
t
e
m
e
n
t

telephone or, if you received printed proxy materials, to complete and return your proxy card before the
meeting date, in case your plans change.

(cid:129) On the Internet or by Telephone — If you have Internet access, you may submit your proxy

online by following the instructions provided in the Notice or, if you receive printed proxy
materials, the proxy card. You may also vote by telephone by following the instructions provided
on your proxy card or voting instruction card.

(cid:129) By Mail — If you receive printed proxy materials, you may submit your proxy by mail by signing
your proxy card or, for shares held in street name, by following the voting instructions included
by your broker, trustee or nominee, and mailing it in the enclosed, postage-paid envelope. If you
provide specific voting instructions, your shares will be voted as you have instructed.

9. What does it mean if I receive more than one Notice or proxy card?

It means that you have multiple accounts at the transfer agent or with brokers. Please complete and
return all proxy cards or follow the instructions on each proxy card to vote on the Internet or by
telephone, to ensure that all your shares are voted.

10.

I share an address with another stockholder, and we received only one paper copy of the
proxy materials. How can I obtain an additional copy of the proxy materials?

The Company has adopted an SEC-approved procedure called “householding.” Under this procedure,
the Company may deliver a single copy of the Notice, Annual Report and this Proxy Statement to
multiple stockholders who share the same last name and address and who have consented to
householding, unless the Company has received contrary instructions from one or more of those
stockholders. This procedure reduces the environmental impact of the Company’s annual meetings
and reduces the Company’s printing and mailing costs. Stockholders who participate in householding
will continue to receive separate proxy cards. Upon written or oral request, the Company will deliver
promptly a separate copy of the Notice, Annual Report and this Proxy Statement to any stockholder at
a shared address to which the Company delivered a single copy of any of these documents.

To receive free of charge a separate copy of the Notice, Annual Report and this Proxy Statement, or
separate copies of these documents in the future, stockholders may write to our Corporate Secretary at
209 Redwood Shores Parkway, Redwood City, CA 94065 or call (650) 628-1500.

If you are receiving more than one copy of the proxy materials at a single address and would like to
participate in householding, please contact the Company using the mailing address or phone number
above. Stockholders who hold shares in street name may contact their brokerage firm, bank, broker-
dealer or other similar organization to request information about householding.

11. What if I change my mind after I give my proxy?

You may revoke your proxy and change your vote at any time before the polls close at the Annual
Meeting. You may do this by:

(cid:129) Sending a signed statement to the Company that the proxy is revoked (you may send such a
statement to the Corporate Secretary at our corporate headquarters address listed above);

(cid:129) Signing and returning another proxy with a later date;

(cid:129) Voting on the Internet or by telephone at any time prior to 11:59 p.m. Eastern Time on August 5,

2020 (your latest vote is counted); or

(cid:129) Voting at the Annual Meeting.

(cid:129) If your shares are held by a broker, bank or other nominee or trustee, you may contact the

record holder of your shares directly.

Your proxy will not be revoked if you attend the Annual Meeting but do not vote.

59

12. Who will count the votes?

A representative of Broadridge Financial Solutions will tabulate the votes and act as the inspector of
election for our Annual Meeting.

13. How are votes counted?

You may vote “for,” “against” or “abstain” with respect to each of the nominees for re-election to the
Board of Directors and on each of the proposals. A share voted “abstain” with respect to any proposal
is considered present at the Annual Meeting for purposes of establishing a quorum and entitled to vote
with respect to that proposal but is not considered a vote cast with respect to that proposal. Thus,
abstentions will not affect the outcome of Proposals 1, 2, 3 or 4. If you sign and return your proxy
without voting instructions, your shares will be voted as recommended by the Board of Directors and
according to the best judgment of Mr. Wilson, Mr. Jorgensen and Mr. Schatz, or any one of them.

14. What is the effect of a “broker non-vote” on the proposals to be voted on at the Annual

Meeting?

If your shares are held by a broker, bank or other nominee or trustee and you do not provide your
broker, bank or other nominee or trustee with voting instructions, your shares may constitute “broker
non-votes.” Broker non-votes occur on a matter when a broker is not permitted to vote on that matter
without instructions from the beneficial owners and instructions are not given. These matters are
referred to as “non-routine” matters. Proposals 1, 2 and 4 are “non-routine”. In tabulating the voting
results for any particular proposal, shares that constitute broker non-votes are considered present at
the Annual Meeting for purposes of establishing a quorum and entitled to vote with respect to that
proposal but are not considered votes cast on that proposal. Broker non-votes will not affect the
outcome of Proposals 1, 2 and 4. Proposal 3, the ratification of KPMG LLP as our independent auditor
for fiscal 2021, is a “routine” proposal and no broker non-votes are expected in connection with
Proposal 3. If your shares are held of record by a bank, broker, or other nominee, we urge you to give
instructions to your bank, broker or other nominee as to how you wish your shares to be voted.

15. How many votes must the nominees receive to be elected as directors?

In an uncontested election, our Amended and Restated Bylaws require each nominee to receive more
votes cast “for” than “against” his or her re-election in order to be re-elected to the Board of Directors.
Since we are not aware of any intention by any stockholder to nominate one or more candidates to
compete with the Board of Directors’ nominees for re-election at the Annual Meeting, the 2020 election
will be uncontested.

In accordance with our Corporate Governance Guidelines, the Board of Directors expects an
incumbent director to tender his or her resignation if he or she fails to receive the required number of
votes for re-election in an uncontested election. In such an event, the Nominating and Governance
Committee will act on an expedited basis to determine whether to accept the director’s resignation and
will submit such recommendation for prompt consideration by the Board of Directors. The director
whose resignation is under consideration will abstain from participating in any decision regarding his or
her resignation. The Nominating and Governance Committee and the Board of Directors may consider
any factors they deem relevant in deciding whether to recommend and accept, as applicable, a
director’s resignation. The Board of Directors will act on the Nominating and Governance Committee’s
recommendation within 90 days from the date of the certification of election results and will publicly
disclose its decision promptly thereafter.

Shares represented by your proxy will be voted by EA’s management “for” the re-election of the nine
nominees recommended by EA’s Board of Directors unless you vote against any or all of such
nominees or you mark your proxy to “abstain” from so voting.

60

P
r
o
x
y
S
t
a
t
e
m
e
n
t

16. What happens if one or more of the nominees is unable to serve or for good cause will not

serve?

If, prior to the Annual Meeting, one or more of the nominees notifies us that he or she is unable to
serve, or for good cause will not serve, as a member of the Board of Directors, the Board of Directors
may reduce the number of directors or select a substitute nominee or substitute nominees, as the case
may be. In the latter case, if you have completed and returned your proxy card, Mr. Wilson,
Mr. Jorgensen and Mr. Schatz, or any of them, may vote for any nominee designated by the incumbent
Board of Directors to fill the vacancy. They cannot vote for more than nine nominees.

17. How many votes are required to approve each of the other proposals?

The advisory vote to approve named executive officer compensation (Proposal 2), the ratification of
KPMG LLP as our independent auditor (Proposal 3) and the stockholder proposal to allow stockholders
to act by written consent (Proposal 4) must receive a “for” vote from a majority of the voting shares
present at the Annual Meeting in person or by proxy and voting for or against these proposals. As
advisory votes, the results of voting on Proposals 2 and 4 are non-binding. Although these votes are
non-binding, the Board of Directors, Compensation Committee and Nominating and Governance
Committee, as the case may be, value the opinions of our stockholders and will consider the outcome
of these votes, along with other relevant factors, in evaluating the compensation program for our
named executive officers and evaluating the matter presented by the stockholder proposal.

Shares represented by your proxy will be voted by EA’s management in accordance with the Board of
Directors’ recommendation unless you vote otherwise on your proxy or you mark your proxy to
“abstain” from voting.

18. What is the deadline to propose matters for consideration at the 2021 annual meeting of

stockholders?

Proposals to be considered for inclusion in our proxy materials: No later than February 19, 2021.
All proposals must comply with Rule 14a-8 under the Exchange Act.

Other proposals to be brought at our 2021 annual meeting: No earlier than April 8, 2021 and no
later than May 8, 2021. The submission must include certain information concerning the stockholder
and the proposal, as specified in the Company’s Amended and Restated Bylaws.

19. What is the deadline to nominate individuals for election as directors at the 2021 annual

meeting of stockholders?

Director nominations for inclusion in our proxy materials (proxy access nominees): No earlier
than March 9, 2021 and no later than April 8, 2021. The nomination must include certain information
concerning the stockholder or stockholder group and the nominee, as specified in Section 1.6 of the
Company’s Amended and Restated Bylaws.

Director brought pursuant to our advance notice bylaws: No earlier than April 8, 2021 and no later
than May 8, 2021. The nomination must include certain information concerning the stockholder and the
nominee, as specified in Section 1.5 of the Company’s Amended and Restated Bylaws.

20. Where should I send proposals and director nominations for the 2021 annual meeting of

stockholders?

Stockholder proposals and director nominations should be sent in writing to Jacob Schatz, Corporate
Secretary at Electronic Arts Inc., 209 Redwood Shores Parkway, Redwood City, CA 94065.

21. How can I obtain a copy of the Company’s Amended and Restated Bylaws?

Our Amended and Restated Bylaws are included as an exhibit to a Current Report on Form 8-K we
filed with the SEC on August 9, 2019, which you may access through the SEC’s electronic data system
called EDGAR at www.sec.gov. You may also request a copy of our Amended and Restated Bylaws by
contacting our Corporate Secretary at the address above.

61

22. How can I listen to the live audio webcast of the Annual Meeting?

You can listen to the live audio webcast of the Annual Meeting by going to the Investor Relations
section of our website at http://ir.ea.com. An archived copy of the webcast will also be available on our
website for one year following the Annual Meeting. Please note that participation in the question and
answer portion of the Annual Meeting will be limited to those attending.

23. Where do I find the voting results of the meeting?

We may announce preliminary voting results at the Annual Meeting. We will also publish the final
results on Form 8-K, which we will file with the SEC within four business 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) 628-0406. You can also get a copy on the Internet at http://ir.ea.com or through
the SEC’s electronic data system called EDGAR at www.sec.gov.

24. Who will pay for this proxy solicitation?

We will bear the costs of soliciting proxies from our stockholders. These costs include preparing,
assembling, printing, mailing and distributing the notices, proxy statements, proxy cards and annual
reports. If you choose to access the proxy materials and/or vote on the Internet, you are responsible
for the Internet access charges you may incur. If you choose to vote by telephone, you are responsible
for the telephone charges you may incur. In addition, some of our officers, directors, employees and
other agents may also solicit proxies personally, by telephone and by electronic and regular mail, and
we will pay these costs. EA will also reimburse brokerage houses and other custodians for their
reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to the beneficial
owners of the Company’s common stock.

25. How is the Company’s fiscal year calculated?

The Company’s fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest
March 31. Our results of operations for fiscal 2020 contained 52 weeks and ended on March 28, 2020.
For simplicity of disclosure, fiscal periods are referred to as ending on a calendar month end, even if
the technical end of a fiscal period was not the last day of a calendar month. Thus, in this Proxy
Statement, “fiscal 2021,” “fiscal 2020,” “fiscal 2019” and “fiscal 2018” refer to our fiscal years ending or
ended (as the case may be) on March 31, 2021, 2020, 2019 and 2018 respectively.

26. Who can I call with any questions about my shares?

If you hold shares in street name, you may contact your broker. If you are a stockholder of record, you
may call our transfer agent, Computershare, at (800) 736-3001 or (781) 575-3100 for international
callers or visit their website at www.computershare.com/investor.

62

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Appendix A

Supplemental Information for the Compensation Discussion and Analysis

The Compensation Discussion and Analysis beginning on page 23 contains certain non-GAAP
financial measures, which are used internally by our management and Board of Directors in our
compensation programs. The table below reconciles these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with Generally Accepted Accounting
Principles (“GAAP”).

CALCULATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except earnings per share)

GAAP net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in deferred net revenue (online-enabled games) . . . . . . . . . . . . . . . . . . . .
Platform fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-GAAP net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GAAP gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in deferred net revenue (online-enabled games) . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-GAAP gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GAAP operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-GAAP operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

GAAP net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in deferred net revenue (online-enabled games) . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax rate adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-GAAP net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GAAP diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-GAAP diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GAAP diluted shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-GAAP diluted shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended
March 31, 2020

$ 5,537
(165)
(161)

$ 5,211
$ 4,168
12
(165)
4

$ 4,019
$ 2,723
(27)
(343)

$ 2,353

$ 3,039
39
(165)
347
(1,842)

$ 1,418
$ 10.30
$ 4.81
295
295

About Non-GAAP Financial Measures

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures
of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do
not reflect a comprehensive system of accounting, differ from GAAP measures with the same names
and may differ from non-GAAP financial measures with the same or similar names that are used by
other companies.

We compute non-GAAP financial measures using the same consistent method. We may consider
whether other significant items that arise in the future should be excluded from our non-GAAP financial
measures. The Company uses certain non-GAAP financial measures when establishing performance-
based targets. These measures adjust for certain items that may not be indicative of the Company’s
core business, operating results or future outlook. We believe that these non-GAAP financial measures
provide meaningful supplemental information about the Company’s operating results primarily because
they exclude amounts that we do not consider part of ongoing operating results when planning and

A-1

forecasting for future periods and when assessing the performance of the organization. When making
compensation decisions for our executives, we utilize non-GAAP financial measures to evaluate the
Company’s financial performance and the performance of our management team.

The Company’s target and actual non-GAAP financial measures are calculated with reference to
adjustments to GAAP financial measures. These adjustments exclude the following items:

(cid:129) Change in deferred net revenue (online-enabled games)

(cid:129) Platform fees

(cid:129) Acquisition-related expenses

(cid:129) Stock-based compensation

(cid:129) Income tax rate adjustments

We believe it is appropriate to exclude these items for the following reasons:

Change in Deferred Net Revenue (Online-enabled Games). The majority of our games, and related
extra-content and services have online connectivity whereby a consumer may be able to download
updates on a when-and-if-available basis (“future update rights”) for use with the original game
software. In addition, we may also offer a hosted connection for online playability (“online hosted
service”), that permits consumers to play against each other without a separate fee. Because the
majority of our sales of our online-enabled games include future update rights and/or online hosted
service performance obligations, GAAP requires us to allocate a portion or all of the transaction price
to these performance obligations which are recognized ratably over an estimated offering period. Our
deferred net revenue balance is increased by the revenue being deferred for current sales and is
reduced by the recognition of revenue from prior sales (this is referred to as the “change in the
deferred revenue” balance). Our management excludes the impact of the net change in deferred net
revenue related to online-enabled games in its non-GAAP financial measures for the reasons stated
above and also to facilitate an understanding of our operations because all related costs of revenue
are expensed as incurred instead of deferred and recognized ratably.

Platform Fees. For transactions after April 1, 2018, GAAP requires companies to assess whether a
third-party partner for sales transactions (such as the Apple App Store and Google Play Store) is an
“agent” or a “principal” to determine if revenue should be reported net or gross of the fees retained by
that third-party. In certain relationships, our management has determined that we (and not the third-
party partner) are the principal for sales transactions. Thus, for GAAP reporting purposes, we report
revenue from these third-party partners on a gross basis and the related platform fees as cost of
revenue. As a result, both revenue and cost of revenue increase by the amount of these platform fees.
Our management classifies all platform fees as a reduction of revenue, regardless of whether we or the
third-party partner is the principal to the transaction, providing a consistent comparison of the amount
of money received from our third-party partner. In addition, platform fees from our non-GAAP financial
metrics allows management to report these metrics in a way that is comparable to prior periods.

Acquisition-Related Expenses. GAAP requires expenses to be recognized for various types of events
associated with a business acquisition. These events include expensing acquired intangible assets,
including acquired in-process technology, post-closing adjustments associated with changes in the
estimated amount of contingent consideration to be paid in an acquisition, and the impairment of
accounting goodwill created as a result of an acquisition when future events indicate there has been a
decline in its value. When analyzing the operating performance of an acquired entity, our management
focuses on the total return provided by the investment (i.e., operating profit generated from the
acquired entity as compared to the purchase price paid including the final amounts paid for contingent
consideration) without taking into consideration any allocations made for accounting purposes. When
analyzing the operating performance of an acquisition in subsequent periods, the Company’s
management excludes the GAAP impact of any adjustments to the fair value of these acquisition-
related balances to its financial results.

A-2

Stock-Based Compensation. When evaluating the performance of its individual business units, the
Company does not consider stock-based compensation charges. Likewise, the Company’s
management teams exclude stock-based compensation expense from their short and long-term
operating plans. In contrast, the Company’s management teams are held accountable for cash-based
compensation and such amounts are included in their operating plans. Further, when considering the
impact of equity award grants, we place a greater emphasis on overall stockholder dilution rather than
the accounting charges associated with such grants.

Income Tax Rate Adjustments. The Company uses a fixed, long-term projected tax rate internally to
evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the
performance of its management team. Accordingly, the Company applies the same tax rate to its
non-GAAP financial results and generally does not include one-time tax benefits. During fiscal 2020,
the Company applied a tax rate of 18% to determine the non-GAAP income tax expense, which
excluded, among other items, a one-time tax benefit of $1.760 billion.

A-3

[THIS PAGE INTENTIONALLY LEFT BLANK]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

Í

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2020
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
(State or other jurisdiction of
incorporation or organization)

209 Redwood Shores Parkway
Redwood City, California
(Address of principal executive offices)

94-2838567
(I.R.S. Employer
Identification No.)

94065
(Zip Code)

Registrant’s telephone number, including area code:
(650) 628-1500
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Common Stock, $0.01 par value

EA

Name of Each Exchange on
Which Registered

NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act:
None

No Í

No ‘

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes Í
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ‘
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 Í
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 Í
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 Í
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 ‘
The aggregate market value of the registrant’s common stock, $0.01 par value, held by non-affiliates of the registrant as of
September 27, 2019, the last business day of our second fiscal quarter, was $27,568 million.
As of May 18, 2020, there were 288,687,620 shares of the registrant’s common stock, $0.01 par value, outstanding.

Accelerated filer ‘ Non-accelerated filer ‘

Smaller reporting company ‘

No Í

No ‘

No ‘

Documents Incorporated by Reference

Portions of the registrant’s definitive proxy statement for its 2020 Annual Meeting of Stockholders (the “2020 Proxy”) are
incorporated by reference into Part III hereof. The 2020 Proxy is expected to be filed not later than 120 days after the
registrant’s fiscal year end. Except with respect to information specifically incorporated by reference into this Form 10-K, the
2020 Proxy is not deemed to be filed as part hereof.

A
n
n
u
a
l

R
e
p
o
r
t

[THIS PAGE INTENTIONALLY LEFT BLANK]

ELECTRONIC ARTS INC.
2020 FORM 10-K ANNUAL REPORT

Table of Contents

PART I

Item 1

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1A Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1B Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 2

Item 3

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 4 Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 6

Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . .

Item 7A Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 8

Item 9

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . .

Item 9A Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9B Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

Item 10 Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 13 Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . .

Item 14

Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15 Exhibits and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

Page

2

9

22

22

22

22

23
25

26

41

43

90

90

91

92

92

92

92

92

92

94

97

A
n
n
u
a
l

R
e
p
o
r
t

1

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements. We use words such as
“anticipate,” “believe,” “expect,” “intend,” “estimate”, “plan”, “predict”, “seek”, “goal”, “will”, “may”,
“likely”, “should”, “could” (and the negative of any of these terms), “future” and similar expressions to
identify forward-looking statements. In addition, any statements that refer to projections of our future
financial performance, trends in our business, projections of markets relevant to our business, uncertain
events and assumptions and other characterizations of future events or circumstances are forward-looking
statements. Forward-looking statements consist of, among other things, statements related to the impact of
the COVID-19 pandemic to our business, operations and financial results, industry prospects, our future
financial performance, and our business plans and objectives, and may include certain assumptions that
underlie the forward-looking statements. These forward-looking statements are not guarantees of future
performance and reflect management’s current expectations. Our actual results could differ materially
from those discussed in the forward-looking statements. Factors that might cause or contribute to such
differences include those discussed in Part I, Item 1A of this Annual Report under the heading “Risk
Factors” beginning on page 9. We assume no obligation to revise or update any forward-looking statement
for any reason, except as required by law.

Item 1:

Business

Overview

PART I

Electronic Arts is a global leader in digital interactive entertainment. We develop, market, publish and deliver
games, content and services that can be played and watched on game consoles, PCs, mobile phones and tablets.

Our Strategic Pillars

Our strategy is to create amazing games and content, powered by services, delivered to a large, global audience.
We believe that the breadth and depth of our portfolio, live services offerings, and our use of multiple business
models and distribution channels provide us with strategic advantages. These advantages include the opportunity
to engage an increasing number of players across more distribution channels and geographies, and dependable
sources of revenue from our annualized sports franchises (e.g., FIFA, Madden NFL), our console, PC and mobile
catalog titles (i.e., titles that did not launch in the current fiscal year), and our live services.

Amazing Games and Content, Powered by Services

Our foundation is a portfolio of intellectual property from which we create innovative games and content that
enables us to build on-going and meaningful relationships with communities of players, creators and viewers.
Our portfolio includes brands that we either wholly own (such as Battlefield, The Sims, Apex Legends, Need for
Speed and Plants v. Zombies) or license from others (such as FIFA, Madden NFL and Star Wars).

We develop and publish games and services across diverse genres, such as sports, first-person shooter, action,
role-playing and simulation. We have added to the breadth of our portfolio in recent years by, among other
things, launching Star Wars Jedi: Fallen Order, a single-player action-adventure game based in the Star Wars
universe, and Apex Legends, our first free-to-play console game, as well as by expanding the ways in which
players can engage with The Sims 4. The depth of our portfolio is demonstrated by providing players with
opportunities for choice within genres and franchises. For example, our sports portfolio includes the FIFA
(soccer), Madden NFL (American football), NHL (ice hockey), and UFC (ultimate fighting) franchises, among
others. And within our franchises we have innovated by providing multiple modalities of play designed to satisfy
the various motivations of our players. For example, within FIFA 20, in addition to the professional soccer
simulation base game, players can also engage with FIFA Ultimate Team, designed for players motivated by
competition and self-improvement as well as VOLTA FOOTBALL, designed for players that play for social
connection and self-expression. FIFA is our largest and most popular game and franchise, and the annualized
console and PC game is consistently one of the best-selling games in the marketplace. Net revenue from
FIFA 20, FIFA 19, and FIFA 18 represented approximately 12 percent of our total net revenue in fiscal year
2020, approximately 14 percent of our total net revenue in fiscal year 2019 and approximately 11 percent of our
total net revenue in fiscal year 2018, respectively.

2

We seek to add to the breadth and depth of our portfolio by investing in developing and establishing new brands
as well as investing in our partnerships with external game developers to create games and content that we bring
to market.

In addition, through our live services offerings, we offer our players high-quality experiences designed to provide
value to players and extend and enhance gameplay. These live services include extra content, subscription
offerings and other revenue generated outside of the sale of our base games. Our digital live services net revenue
represented 51 percent of our total net revenue during fiscal year 2020. We expect that live services net revenue,
particularly extra content net revenue, will continue to be material to our business. Our most popular live service
is the extra content purchased within the Ultimate Team mode associated with our sports franchises. Ultimate
Team allows players to collect current and former professional players in order to build, and compete as, a
personalized team. Net revenue from Ultimate Team represented approximately 27 percent, 28 percent and
23 percent of our total net revenue during fiscal year 2020, 2019 and 2018, respectively, a substantial portion of
which was derived from FIFA Ultimate Team. In addition, in fiscal year 2020, we provided players with
additional engagement opportunities through new maps, vehicles and more in Battlefield V, new ways to play
across eras in Star Wars Battlefront II, launched four seasons of content for Apex Legends and released five
additional content packs for The Sims 4 on PC.

Within our games and live services, we offer additional services that are designed to connect players to their
friends and to the games they love, such as access to online marketplaces and in-game player rewards and
achievements, which such services do not directly monetize. We also are investing in a number of long-term
service-based initiatives that we believe will allow us to better serve and deepen our engagement with our
players, such as an infrastructure that will enable us to better deliver content that will resonate with players and
provide more choice in the way that players connect with their games, with each other, and with new types of
content, and our esports initiatives. We believe that the interest and enthusiasm that surrounds esports will drive
engagement and monetization in our products and services in addition to providing revenue opportunities through
partnerships with sponsors and broadcasters.

Delivered to a Large, Global Audience

We are focused on reaching more players whenever and wherever they want to play. We believe that we can add
value to our network by making it easier for players to connect to a world of play by offering choice of business
model, distribution channel and device. Our games and services can be played and watched on consoles, PCs,
mobile phones, tablets, and reach our players through both digital distribution channels and retail channels.
Players can access our games and services through traditional single-game purchase or through our subscription
offerings; and certain of our games and services are available through a “free-to-play” model whereby players
download the game for free and engage with services provided on an ongoing basis. For example, we develop
products and services within the FIFA franchise that allow players to engage with FIFA through multiple
business models, distribution channels and devices, including: (1) our annualized console and PC games and
associated services, which can be purchased through both digital distribution and retail channels and also is
available through our subscription services; (2) FIFA Mobile, a mobile free-to-play offering; and (3) FIFA
Online, a PC free-to-play game available in certain Asian countries.

Digitally, our console games and live services can be purchased through third-party storefronts, such as the
digital stores of our console partners Sony, Microsoft and Nintendo. Our direct sales to Sony and Microsoft
represented approximately 32 percent and 17 percent of total net revenue, respectively, in fiscal year 2020;
approximately 29 percent and 16 percent of total net revenue, respectively, in fiscal year 2019; and
approximately 27 percent and 16 percent of total net revenue, respectively, in fiscal year 2018. Our mobile and
tablet games and services are available through third-party application storefronts such as the Apple App Store
and Google Play. Our PC games and services can be downloaded directly through Origin, EA’s digital storefront,
as well as through third-party online download stores, such as Steam. We also partner with third parties to
publish our mobile and PC games and services in certain Asian territories, such as our partnerships with Tencent
Holdings Limited and Nexon Co. Ltd. for FIFA Online in China and Korea, respectively. From time to time,
third parties will publish mobile and tablet games and services under a license to certain of our intellectual
property assets.

3

A
n
n
u
a
l

R
e
p
o
r
t

We also offer subscription services, such as EA Access on consoles and Origin Access and Origin Access
Premier on PC as we look to build deeper relationships with our players and offer increased choice and flexibility
for our players to try new games. These subscription services allow players access to a selection of our console
and PC games and services for a monthly or annual fee. In fiscal year 2020, we expanded our subscription
offerings by bringing our EA Access subscription service to the Sony distribution channel and expect to expand
our Origin Access subscription service to more distribution channels in fiscal year 2021.

Our packaged goods games are sold directly to mass market retailers, specialty stores and through distribution
arrangements.

New distribution methods and business models are expected to continue to emerge in the future, and we intend to
evaluate these opportunities on a case-by-case basis.

Significant Relationships

Sony & Microsoft. Under the terms of agreements we have entered into with Sony Computer Entertainment Inc.
and its affiliates and with Microsoft Corporation and its affiliates, we are authorized to develop and distribute
disc-based and digitally-delivered software products and services compatible with PlayStation and Xbox
consoles, respectively. Under these agreements with Sony and Microsoft, we have the non-exclusive right to use,
for a fixed term and in a designated territory, technology that is owned or licensed by them to publish our games
on their respective consoles. With respect to our digitally-delivered products and services, the console
manufacturers pay us either a wholesale price or a royalty percentage on the revenue they derive from their sales
of our products and services. Our transactions for packaged goods products are made pursuant to individual
purchase orders, which are accepted on a case-by case basis by Sony or Microsoft (or their designated
replicators), as the case may be. For packaged goods products, we pay the console manufacturers a per-unit
royalty for each unit manufactured. Many key commercial terms of our relationships with Sony and Microsoft —
such as manufacturing terms, delivery times, policies and approval conditions — are determined unilaterally, and
are subject to change by the console manufacturers.

The license agreements also require us to indemnify the console manufacturers for any loss, liability and expense
resulting from any claim against the console manufacturer regarding our games and services, including any
claims for patent, copyright or trademark infringement brought against the console manufacturer. Each license
may be terminated by the console manufacturer if a breach or default by us is not cured after we receive written
notice from the console manufacturer, or if we become insolvent. The console manufacturers are not obligated to
enter into license agreements with us for any future consoles, products or services.

Apple, Google and Other App Stores. We have agreements to distribute our mobile applications and additional
content through distributors such as Apple and Google. Our applications are downloaded for mobile devices from
third party application storefronts. The distributor charges consumers for content purchased within the
application or charges consumers a one-time fee to download the application. Our distribution agreements
establish the amounts that are retained by the distributor and the amounts passed through to us. These
arrangements are typically terminable on short notice. The agreements generally do not obligate the distributors
to market or distribute any of our applications.

Publishing Partners in Asia. We have entered into agreements whereby we partner with certain companies,
including Tencent Holdings Limited and Nexon Co., Ltd. or their respective affiliates, pursuant to which these
companies publish our mobile and PC free-to-play games in certain Asian territories, including China and Korea.
Our players access games from the publishers’ online storefronts and are charged for additional content
purchased within our game environment. The agreements generally establish the amounts that are retained by the
publisher, and the amounts passed through to us.

Competition

The market for interactive entertainment is intensely competitive and changes rapidly as new products, business
models and distribution channels are introduced. We also face competition for the right to use certain intellectual

4

property included in our products. In order to remain successful, we are required to anticipate, sometimes years
in advance, the ways in which our products and services will compete in the market. We face significant
competition from companies such as Activision Blizzard, Take-Two Interactive, Ubisoft, Bethesda, Epic Games,
NetEase, Tencent, Sony, Microsoft and Nintendo, primarily with respect to developing games and services that
operate on consoles, PCs and/or mobile devices. In addition, broader technology companies with significant
resources, including Google, Apple and Amazon, are pursuing initiatives in our industry that may compete with
us.

More broadly, we compete against providers of different sources of entertainment, such as movies, television,
social networking, online casual entertainment and music that our players could enjoy in their free time.
Important competitive factors in our industry include the ability to attract creative and technical talent, game
quality and ease of use, innovation, compatibility of products with certain consoles and other distribution
channels, brand recognition, reputation, reliability, security, creativity, price, marketing, and quality of customer
service.

Intellectual Property and Technology

To establish and protect our intellectual property, we rely on a combination of copyrights, trademarks, patents,
patent applications, trade secrets, know-how, license agreements, confidentiality provisions and procedures and
other contractual provisions. We actively engage in enforcement and other activities to protect our intellectual
property, but the laws of some countries in which we operate, particularly in Asia, either do not protect our
intellectual property to the same extent as the laws of the United States or are poorly enforced. As our digital
business has grown, our games and services increasingly depend on the reliability, availability and security of our
technological infrastructure. Our industry is prone to, and our systems and networks are subject to actions by
malfeasant actors, such as cyber-attacks and other information security incidents. While we devote financial and
operational resources to implement systems, processes and technologies to guard against cyber events and to help
protect our intellectual property, employee and consumer data and information technology systems against
intrusions or other security breaches, we have experienced such events in the past and expect future events to
occur. In addition, we engage in activities designed to limit the impact of abuse of our digital products and
services, including monitoring our games for evidence of exploitation and re-balancing our game environments
in the event that such abuse is discovered.

Governmental Regulation

We are a global company subject to various and complex laws and regulations domestically and internationally,
including laws and regulations related to user privacy, data collection and retention, consumer protection,
protection of minors, content, advertising, localization, information security, intellectual property, competition
and taxation, among others. Many of these laws and regulations are continuously evolving and developing, and
the application to, and impact on, us is uncertain. Certain of our business models are subject to new laws or
regulations or evolving interpretations and application of existing laws and regulations, including those related to
gambling. The growth and development of electronic commerce, virtual items and virtual currency has prompted
calls for new laws and regulations and resulted in the application of existing laws or regulations that have limited
or restricted the sale of our products and services in certain territories.

Seasonality

We have historically experienced the highest percentage of our net bookings in our third fiscal quarter due to
seasonal holiday demand and the launch timing of our games. While we expect this trend to continue in fiscal
year 2021, there is no assurance that it will.

Employees

As of March 31, 2020, we had approximately 9,800 regular, full-time employees, over 6,000 of whom were
outside the United States. We believe that our ability to attract, train, motivate and retain qualified employees is a

5

A
n
n
u
a
l

R
e
p
o
r
t

critical factor in the successful development of our products and services and that our future success will depend,
in large measure, on our ability to continue attracting, training, motivating and retaining qualified employees.
Approximately 7 percent of our employees, all of whom work for our DICE development studio in Sweden, are
represented by a union.

Investor Information

Our website address is www.ea.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K, and any amendments to those reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act, as amended, are 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”). We announce material financial information and business
updates through our SEC filings, press releases, public conference calls and webcasts, the Investor Relations
section of our website at http://ir.ea.com, our blog at https://www.ea.com/news and through our Twitter account
@EA. Except as expressly set forth in this Form 10-K annual report, the contents of our website and/or social
media accounts are not incorporated into, or otherwise to be regarded as part of this report.

Company Information

We were incorporated originally in California in 1982. In September 1991, we were reincorporated under the
laws of Delaware. Our principal executive offices are located at 209 Redwood Shores Parkway, Redwood City,
California 94065 and our telephone number is (650) 628-1500.

6

Information About Our Executive Officers

The following table sets forth information regarding our executive officers as of May 20, 2020:

Name

Age

Position

Andrew Wilson . . . . . . . . . . . . . . . . . . . .

45 Chief Executive Officer

Blake Jorgensen . . . . . . . . . . . . . . . . . . . .

60 Chief Operating Officer and Chief Financial Officer

Laura Miele . . . . . . . . . . . . . . . . . . . . . . .

50 Chief Studios Officer

Kenneth Moss . . . . . . . . . . . . . . . . . . . . .

54 Chief Technology Officer

Christopher Bruzzo . . . . . . . . . . . . . . . . .

50 Chief Marketing Officer

Joel Linzner . . . . . . . . . . . . . . . . . . . . . . .

68 Executive Vice President, Worldwide Business Affairs

Mala Singh . . . . . . . . . . . . . . . . . . . . . . . .

49 Chief People Officer

Matthew Bilbey . . . . . . . . . . . . . . . . . . . .

44 Executive Vice President of Strategic Growth

Kenneth A. Barker . . . . . . . . . . . . . . . . . .

53

Senior Vice President, Chief Accounting Officer

Jacob J. Schatz . . . . . . . . . . . . . . . . . . . . .

51 Executive Vice President, General Counsel and Corporate

Secretary

Mr. Wilson has served as EA’s Chief Executive Officer and as a director of EA since September 2013. Prior to
his appointment as our Chief Executive Officer, Mr. Wilson held several positions within the Company since
joining EA in May 2000, including Executive Vice President, EA SPORTS from August 2011 to September
2013. Mr. Wilson also serves as a director of Intel Corporation, is chairman of the board of the privately-held
World Surf League and is a member of the Board of Trustees of the Paley Center for Media.

Mr. Jorgensen has served as EA’s Chief Financial Officer since September 2012 and as EA’s Chief Operating
Officer since April 2018. Prior to joining EA, he served as Executive Vice President, Chief Financial Officer of
Levi Strauss & Co. from July 2009 to August 2012. From June 2007 to June 2009, Mr. Jorgensen served as
Executive Vice President, Chief Financial Officer of Yahoo! Inc. Mr. Jorgensen earned his M.B.A. from Harvard
Business School and his undergraduate degree from Stanford University.

Ms. Miele has served as EA’s Chief Studios Officer since April 2018. Ms. Miele joined EA in March 1996 and
has held several positions at the Company, including Executive Vice President, Global Publishing from April
2016 to April 2018, Senior Vice President of Americas Publishing from June 2014 to April 2016, and several
senior roles in the Company’s marketing organization.

Mr. Moss has served as EA’s Chief Technology Officer since July 2014. He served as Vice President of Market
Places Technology, Science and Data at eBay Inc. from November 2011 to July 2014. Prior to joining eBay, he
co-founded CrowdEye, Inc. and served as its Chief Executive Officer from October 2008 to November 2011.
Mr. Moss graduated from Princeton University.

Mr. Bruzzo has served as EA’s Chief Marketing Officer since September 2014. Prior to joining EA, he served as
Senior Vice President at Starbucks Corporation from June 2011 to August 2014. Mr. Bruzzo graduated from
Whitworth University.

Mr. Linzner has served as EA’s Executive Vice President, Worldwide Business Affairs since April 2016. From
March 2005 until April 2016, Mr. Linzner was EA’s Executive Vice President, Business and Legal Affairs. Prior
to joining EA in July 1999, Mr. Linzner served as outside litigation counsel to EA and several other companies in
the video game industry. Mr. Linzner earned his J.D. from Boalt Hall at the University of California, Berkeley,
after graduating from Brandeis University.

Ms. Singh has served as EA’s Chief People Officer since October 2016. Ms. Singh was previously employed by
EA from 2009 to 2013, serving as Vice President, Human Resources, EA Labels from 2011 to 2013. Prior to
rejoining EA, Ms. Singh served as the Chief People Officer of Minted, LLC from January 2014 to October 2016.
Ms. Singh earned both her undergraduate and graduate degrees from Rutgers University — New Brunswick.

7

A
n
n
u
a
l

R
e
p
o
r
t

Mr. Bilbey has served as EA’s Executive Vice President of Strategic Growth since April 2018. Mr. Bilbey
joined EA in 1995 and has held several positions within the Company, including Chief Operating Officer,
Worldwide Studios from August 2016 to April 2018 and Senior Vice President, Group General Manager from
November 2013 to January 2017.

Mr. Barker has served as the Company’s Chief Accounting Officer since June 2003. From February 2012 to
September 2012, he also served as Interim Chief Financial Officer. Prior to joining EA, Mr. Barker was at Sun
Microsystems, Inc., as its Vice President and Corporate Controller and at Deloitte & Touche as an audit partner.
Mr. Barker serves on the Board of Directors of Gatepath, a non-profit organization, and on the Accounting
Advisory Board for the University of Notre Dame. Mr. Barker graduated from the University of Notre Dame.

Mr. Schatz has served as EA’s General Counsel and Corporate Secretary since June 2014. Mr. Schatz joined EA
in 1999, and prior to his current role, he served as Deputy General Counsel and as Vice President from 2006 to
2014. Mr. Schatz earned his J.D. from Georgetown University Law Center, and received his undergraduate
degree from Pomona College. Mr. Schatz is a member of the Bar of the State of California and is admitted to
practice in the United States Supreme Court, the Ninth Circuit Court of Appeals and several United States
District Courts.

8

Item 1A: Risk Factors

Our business is subject to many risks and uncertainties, which may affect our future financial performance. In the
past, we have experienced certain of the events and circumstances described below, which adversely impacted
our business and financial performance. If any of the events or circumstances described below occurs, our
business or financial performance could be harmed, our actual results could differ materially from our
expectations and the market value of our stock could decline. The risks and uncertainties discussed below are not
the only ones we face. There may be additional risks and uncertainties not currently known to us or that we
currently do not believe could be material that may harm our business or financial performance.

Our business is intensely competitive. We may not deliver successful and engaging products and services,
or consumers may prefer our competitors’ products or services over our own.

Competition in our business is intense. Many new products and services are regularly introduced, but only a
relatively small number of products and associated services drive significant engagement and account for a
significant portion of total revenue. Our competitors range from established interactive entertainment companies
and diversified media companies to emerging start-ups, and we expect new competitors to continue to emerge
throughout the world. If our competitors develop and market more successful and engaging products or services,
offer competitive products or services at lower price points, or if we do not continue to develop consistently
high-quality, well-received and engaging products and services, our revenue, margins, and profitability will
decline.

We strive to create innovative and high-quality products and services that allow us to build on-going and
meaningful relationships with our community. However, innovative and high-quality titles, even if highly-
reviewed, may not meet our expectations. Many financially successful products and services within our industry
are iterations of prior titles with large established consumer bases and significant brand recognition, which makes
competing in certain categories challenging. In addition, products or services of our direct competitors or other
entertainment companies may take a larger portion of consumer spending or time than we anticipate, which could
cause our products and services to underperform relative to our expectations. A significant portion of our revenue
historically has been derived from products and services based on a few popular franchises, and the
underperformance of a single major title has had, and could in the future have, a material adverse impact on our
financial results. For example, we have historically derived a significant portion of our net revenue from sales
related to our largest and most popular game, FIFA, annualized versions of which are consistently one of the
best-selling games in the marketplace. Any events or circumstances that negatively impact our FIFA franchise,
such as product or service quality, competing products that take a portion of consumer spending and time, the
delay or cancellation of a product or service launch, or real or perceived security risks could negatively impact
our financial results to a disproportionate extent.

The increased importance of live services, including extra content, to our business heightens the risks associated
with the products for which such live services are offered. Live services that are either poorly-received or
provided in connection with underperforming games may generate lower than expected sales. Any lapse, delay or
failure in our ability to provide high-quality live services content to consumers over an extended period of time
could materially and adversely affect our financial results, consumer engagement with our live services, and
cause harm to our reputation and brand. Our most popular live service is the extra content available for the
Ultimate Team mode associated with our sports franchises. Any events or circumstances that negatively impact
our ability to reliably provide content or sustain engagement for Ultimate Team, particularly FIFA Ultimate
Team, would negatively impact our financial results to a disproportionate extent.

Our business is subject to economic, market and geopolitical conditions.

Our business is subject to economic, market, public health and geopolitical conditions, which are beyond our
control. The United States and other international economies have experienced cyclical downturns from time to
time. Worsening economic conditions that negatively impact discretionary consumer spending and consumer
demand, including inflation, slower growth, recession and other macroeconomic conditions, including those

9

A
n
n
u
a
l

R
e
p
o
r
t

resulting from public health outbreaks such as the COVID-19 pandemic and geopolitical issues could have a
material adverse impact on our business and operating results. In addition, the United Kingdom’s departure from
the European Union has caused economic and legal uncertainty in the region and may result in macroeconomic
conditions that adversely affect our business.

We are particularly susceptible to market conditions and risks associated with the entertainment industry, which,
in addition to general macroeconomic downturns, also include the popularity, price and timing of our games,
changes in consumer demographics, the availability and popularity of other forms of entertainment, and critical
reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted.

Catastrophic events may disrupt our business.

Natural disasters, cyber-incidents, weather events, wildfires, power disruptions, telecommunications failures,
public health outbreaks, failed upgrades of existing systems or migrations to new systems, acts of terrorism or
other events could cause outages, disruptions and/or degradations of our infrastructure, including our or our
partners’ information technology and network systems, a failure in our ability to conduct normal business
operations, or the closure of public spaces in which players engage with our games and services. The health and
safety of our employees, players, third-party organizations with whom we partner or regulatory agencies on
which we rely could be also affected, which may prevent us from executing against our business strategies or
cause a decrease in consumer demand for our products and services. System redundancy may be ineffective and
our disaster recovery and business continuity planning may not be sufficient for all eventualities. Such failures,
disruptions, closures, or inability to conduct normal business operations could also prevent access to our
products, services or online stores selling our products and services, cause delay or interruption in our product or
live services offerings, allow breaches of data security or result in the loss of critical data. Several of our key
locations are closed as a result of the COVID-19 pandemic, including our global headquarters in Redwood
Shores, California and key studios across North America, Europe and Asia, and the distribution of our workforce
could disrupt out ability to conduct normal business operations. Our corporate headquarters and several of our
key studios also are located in seismically active regions. An event that results in the disruption or degradation of
any of our critical business functions or information technology systems, harms our ability to conduct normal
business operations or causes a decreased in consumer demand for our products and services could materially
impact our reputation and brand, financial condition and operating results.

We may not meet our product and live service development schedules and key events, sports seasons and/
or movies that are tied to our product and live service release schedule may be delayed, cancelled or poorly
received.

Our ability to meet product and live service development schedules is affected by a number of factors both within
and outside our control, including feedback from our players, the creative processes involved, the coordination of
large and sometimes geographically dispersed development teams, the complexity of our products and the
platforms for which they are developed, the need to fine-tune our products prior to their release and, in certain
cases, approvals from third parties. During the worldwide COVID-19 pandemic, our ability to meet product and
live service development schedules will be challenged as we have closed key studios across North America,
Europe and Asia and moved to a distributed workforce for certain of our development teams. We have
experienced development delays for our products in the past, which caused us to delay or cancel release dates.
Any failure to meet anticipated production or release schedules likely would result in a delay of revenue and/or
possibly a significant shortfall in our revenue, increase our development and/or marketing expenses, harm our
profitability, and cause our operating results to be materially different than anticipated. If we miss key selling
periods for products or services, particularly the fiscal quarter ending in December, for any reason, including
product delays or product cancellations our sales likely will suffer significantly.

We also seek to release certain products and extra content for our live services — such as our sports franchises
and the associated Ultimate Team live service — in conjunction with key events, such as the beginning of a
sports season, events associated with the sports calendar, or the release of a related movie. If such seasons or
events were delayed, cancelled or poorly received, our sales could suffer materially. For example, the worldwide

10

COVID-19 pandemic has resulted in the disruption, postponement and cancellation of sports seasons and
sporting events. Continued disruption, postponement and cancellation of sports seasons and sporting events
around which we seek to launch our games and provide live services could have a material adverse impact on our
business and operating results.

Our industry changes rapidly and we may fail to anticipate or successfully implement new or evolving
technologies, or adopt successful business strategies, distribution methods or services.

Rapid changes in our industry require us to anticipate, sometimes years in advance, the ways in which our
products and services will be competitive in the market. We have invested, and in the future may invest, in new
business strategies, technologies, distribution methods, products, and services. There can be no assurance that
these strategic investments will achieve expected returns. For example, we are investing in the technological
infrastructure that we expect will enable us to deliver content that will resonate with players and provide more
choice in the way that players connect with their games, with each other, and with new types of content. Such
endeavors involve significant risks and uncertainties. No assurance can be given that the technology we choose to
implement, the business strategies we choose to adopt and the products and services that we pursue will achieve
financial results that meet or exceed our expectations. Our reputation and brand could also be adversely affected.
We also may miss opportunities or fail to respond quickly enough to adopt technology or distribution methods or
develop products, services or new ways to engage with our games that become popular with consumers, which
could adversely affect our financial results.

Our development process usually starts with particular platforms and distribution methods in mind, and a range
of technical development, feature and ongoing goals that we hope to be able to achieve. We may not be able to
achieve these goals, or our competition may be able to achieve them more quickly and in a way that better
engages consumers. In either case, our products and services may be technologically inferior to those of our
competitors, less appealing to consumers, or both. If we cannot achieve our goals within the original
development schedule for our products and services, then we may delay their release until these goals can be
achieved, which may delay or reduce revenue and increase our development expenses. Alternatively, we may
increase the resources employed in research and development in an attempt to accelerate our development of new
technologies, either to preserve our product or service launch schedule or to keep up with our competition, which
would increase our development expenses.

We may experience security breaches and cyber threats.

The integrity of our and our partners’ information technology networks and systems is critical to our ongoing
operations, products, and services. Our industry is prone to, and our systems and networks are subject to actions
by malfeasant actors, such as cyber-attacks and other information security incidents that seek to exploit, disable,
damage, and/or disrupt our networks, business operations, products and services and supporting technological
infrastructure, or gain access to consumer and employee personal information, our intellectual property and other
assets. In addition, our systems and networks could be harmed or improperly accessed due to error by employees
or third parties that are authorized to access to these networks and systems. We also rely on technological
infrastructure provided by third-party business partners to support the online functionality of our products and
services, who are also subject to these same cyber risks. Both our partners and we have expended, and expect to
continue to expend, financial and operational resources to guard against cyber risks and to help protect our data
and systems. However, the techniques used by malfeasant actors changes frequently, continue to evolve in
sophistication and volume, and often are not detected for long periods of time. As a result of the COVID-19
pandemic, remote access to our networks and systems has increased substantially. While we have taken steps to
secure our networks and systems, we may be more vulnerable to a successful cyber-attack or information
security incident while our workforce remains distributed. The costs to respond to, mitigate, and/or notify
affected parties of cyber-attacks and other security vulnerabilities are significant. In addition, such events could
compromise the confidentiality, integrity, or accessibility of these networks and systems or result in the
compromise or loss of the data, including personal data, processed by these systems. Consequences of such
events have included, and could in the future include, the loss of proprietary and personal data and interruptions
or delays in our business operations, as well as loss of player confidence and damage to our brand and reputation.

11

A
n
n
u
a
l

R
e
p
o
r
t

In addition, such events could cause us to be non-compliant with applicable regulations, subject us to legal
claims or penalties under laws protecting the privacy or security of personal information or proprietary material
information. We have experienced such events in the past and expect future events to occur.

In addition, the virtual economies that we have established in many of our games are subject to abuse,
exploitation and other forms of fraudulent activity that can negatively impact our business. Virtual economies
involve the use of virtual currency and/or virtual assets that can be used or redeemed by a player within a
particular game or service. The abuse or exploitation of our virtual economies have included the illegitimate
generation and sale of virtual items, including in black markets. Our online services have been impacted by
in-game exploits and the use of automated or other fraudulent processes to generate virtual item or currency
illegitimately, and such activity may continue. These abuses and exploits, and the steps that we take to address
these abuses and exploits may result in a loss of anticipated revenue, increased costs to protect against or
remediate these issues, interfere with players’ enjoyment of a balanced game environment and cause harm to our
reputation and brand.

Our business is subject to complex and prescriptive regulations regarding consumer protection and data
privacy practices, and could be adversely affected if our consumer protection, data privacy and security
practices are not adequate, or perceived as being inadequate.

We are subject to global data privacy, data protection, localization, security and consumer-protection laws and
regulations worldwide. These laws and regulations are emerging and evolving and the interpretation and
application of these laws and regulations often are uncertain, contradictory and changing. The failure to maintain
data practices that are compliant with applicable laws and regulations, or evolving interpretations of applicable
laws and regulations, could result in inquiries from enforcement agencies or direct consumer complaints,
resulting in civil or criminal penalties, and could adversely impact our reputation and brand. In addition, the
operational costs of compliance with these regulations is high and will likely continue to increase.

Even if we remain in strict compliance with applicable laws and regulations, consumer sensitivity to the
collection and processing of their personal information continues to increase. Any real or perceived failures in
maintaining acceptable data privacy practices, including allowing improper or unauthorized access, acquisition or
misuse and/or uninformed disclosure of consumer, employee and other information, or a perception that we do
not adequately secure this information or provide consumers with adequate notice about the information that they
authorize us to collect and disclose could result in brand, reputational, or other harms to the business, result in
costly remedial measures, deter current and potential customers from using our products and services and cause
our financial results to be materially affected.

Third party vendors and business partners receive access to certain information that we collect. These vendors
and business partners may not prevent data security breaches with respect to the information we provide them or
fully enforce our policies, contractual obligations and disclosures regarding the collection, use, storage, transfer
and retention of personal data. A data security breach of one of our vendors or business partners could cause
reputational and financial harm to them and us, negatively impact our ability to offer our products and services,
and could result in legal liability, costly remedial measures, governmental and regulatory investigations, harm
our profitability, reputation and brand, and cause our financial results to be materially affected.

We also are subject to payment card association rules and obligations pursuant to contracts with payment card
processors. Under these rules and obligations, if information is compromised, we could be liable to payment card
issuers for the cost of associated expenses and penalties. In addition, if we fail to follow payment card industry
security standards, even if no consumer information is compromised, we could incur significant fines or
experience a significant increase in payment card transaction costs.

We may experience outages, disruptions or degradations in our services, products and/or technological
infrastructure.

The reliable performance of our products and services depends on the continuing operation and availability of
our information technology systems and those of our external service providers, including third-party “cloud”

12

computing services. Our games and services are complex software products and maintaining the sophisticated
internal and external technological infrastructure required to reliably deliver these games and services is
expensive and complex. The reliable delivery and stability of our products and services has been, and could in
the future be, adversely impacted by outages, disruptions, failures or degradations in our network and related
infrastructure, as well as in the online platforms or services of key business partners that offer, support or host
our products and services. The reliability and stability of our products and services has been affected by events
outside of our control as well as by events within our control, such as the migration of data among data centers
and to third-party hosted environments, the performance of upgrades and maintenance on our systems, and online
demand for our products and services that exceeds the capabilities of our technological infrastructure.

If we or our external business partners were to experience an event that caused a significant system outage,
disruption or degradation or if a transition among data centers or service providers or an upgrade or maintenance
session encountered unexpected interruptions, unforeseen complexity or unplanned disruptions, our products and
services may not be available to consumers or may not be delivered reliably and stably. As a result, our
reputation and brand may be harmed, consumer engagement with our products and services may be reduced, and
our revenue and profitability could be negatively impacted. We do not have redundancy for all our systems,
many of our critical applications reside in only one of our data centers, and our disaster recovery planning may
not account for all eventualities.

As our digital business grows, we will require an increasing amount of internal and external technical
infrastructure, including network capacity and computing power to continue to satisfy the needs of our players.
We are investing, and expect to continue to invest, in our own technology, hardware and software and the
technology, hardware and software of external service providers to support our business. It is possible that we
may fail to scale effectively and grow this technical infrastructure to accommodate increased demands, which
may adversely affect the reliable and stable performance of our games and services, therefore negatively
impacting engagement, reputation, brand and revenue growth.

Government regulations applicable to us may negatively impact our business.

We are a global company subject to various and complex laws and regulations domestically and internationally,
including laws and regulations related to consumer protection, protection of minors, content, advertising,
localization, information security, intellectual property, competition and taxation, among others. Many of these
laws and regulations are continuously evolving and developing, and the application to, and impact on, us is
uncertain. For example, the World Health Organization recently included “gaming disorder” in the 11th Revision
of the International Classification of Diseases, prompting discussion and consideration of legislation and policies
aimed at mitigating the risk of overuse of, and overspending within, video games. These laws could harm our
business by limiting the products and services we can offer consumers or the manner in which we offer them.
The costs of compliance with these laws may increase in the future as a result of changes in applicable laws or
changes to interpretation. Any failure on our part to comply with these laws or the application of these laws in an
unanticipated manner may harm our business and result in penalties or significant legal liability.

Certain of our business models are subject to new laws or regulations or evolving interpretations and application
of existing laws and regulations, including those related to gambling. The growth and development of electronic
commerce, virtual items and virtual currency has prompted calls for new laws and regulations and resulted in the
application of existing laws or regulations that have limited or restricted the sale of our products and services in
certain territories. For example, governmental organizations have applied existing laws and regulations to certain
mechanics commonly included within our games, including the Ultimate Team mode associated with our sports
franchises. In addition, we include modes in our games that allow players to compete against each other and
manage player competitions that are based on our products and services. Although we structure and operate our
skill-based competitions with applicable laws in mind, including those related to gambling, our skill-based
competitions in the future could become subject to evolving laws and regulations. New laws related to these
business models or the interpretation or application of current laws that impact these business models — each of
which could vary significantly across jurisdictions — could subject us to additional regulation and oversight,
cause us to further limit or restrict the sale of our products and services or otherwise impact our products and
services, lessen the engagement with, and growth of, profitable business models, and expose us to increased
compliance costs, significant liability, fines, penalties and harm to our reputation and brand.

13

A
n
n
u
a
l

R
e
p
o
r
t

We are subject to laws in certain foreign countries, and adhere to industry standards in the United States, that
mandate rating requirements or set other restrictions on the advertisement or distribution of interactive
entertainment software based on content. In addition, certain foreign countries allow government censorship of
interactive entertainment software products. Adoption of ratings systems, censorship or restrictions on
distribution of interactive entertainment software based on content could harm our business by limiting the
products we are able to offer to our consumers. In addition, compliance with new and possibly inconsistent
regulations for different territories could be costly, delay or prevent the release of our products in those
territories.

Negative perceptions about our business, products and services and the communities within our products
and services may damage our business, and we may incur costs to address concerns.

Expectations regarding the quality, performance and integrity of our products and services are high. Players have
sometimes been critical of our brands, products, services, online communities, business models and/or business
practices for a wide variety of reasons, including perceptions about gameplay fun, fairness, game content,
features or services, or objections to certain of our business practices. These negative responses may not be
foreseeable. We also may not effectively manage these responses because of reasons within or outside of our
control. For example, we have included in certain games the ability for players to purchase digital items,
including in some instances virtual “packs”, “boxes” or “crates” that contain variable digital items. The inclusion
of variable digital items in certain games has attracted the attention of our community and if the future
implementation of these features creates a negative perception of gameplay fairness or other negative
perceptions, our reputation and brand could be harmed and revenue could be negatively impacted. In addition, we
have taken actions, including delaying the release of our games and delaying or discontinuing features and
services for our games, after taking into consideration, among other things, feedback from our community even if
those decisions negatively impacted our operating results in the short term. We expect to continue to take actions
to address concerns as appropriate, including actions that may result in additional expenditures and the loss of
revenue.

In addition, we aim to offer our players safe, inclusive and fulfilling online communities. We may not be able to
maintain healthy, long-term online communities within our games and services as a result of the use of those
communities as forums for harassment or bullying, our inability to successfully discourage overuse of our games
and services or overspending within our games and services, or the successful implementation of cheating
programs. Although we expend resources, and expect to continue to expend resources, to maintain healthy online
communities, our efforts may not be successful due to scale, limitations of existing technologies or other factors.

Negative sentiment about gameplay fairness, our online communities, our business practices, business models or
game content also can lead to investigations or increased scrutiny from governmental bodies and consumer
groups, as well as litigation, which, regardless of their outcome, may be costly, damaging to our reputation and
harm our business.

Our business depends on the success and availability of consoles, systems and devices developed by third
parties and our ability to develop commercially successful products and services for those consoles,
systems and devices.

The success of our business is driven in part by the commercial success and adequate supply of third-party
consoles, systems and devices for which we develop our products and services or through which our products
and services are distributed. Our success depends on our ability to reach a large, global audience by accurately
predicting which consoles, systems and devices will be successful in the marketplace, our ability to develop
commercially successful products and services that reach players across multiple channels, our ability to
simultaneously manage products and services on multiple consoles, systems and devices and our ability to
effectively transition our products and services to new consoles, systems and devices. We must make product
development decisions and commit significant resources well in advance of the commercial availability of new
consoles, systems and devices, and we may incur significant expense to adjust our product portfolio and
development efforts in response to changing consumer preferences. Additionally, we may enter into certain

14

exclusive licensing arrangements that affect our ability to deliver or market products or services on certain
consoles, systems or devices. A console, system or device for which we are developing products and services
may not succeed as expected or new consoles, systems or devices may take market share and interactive
entertainment consumers away from those for which we have devoted significant resources. If consumer demand
for the consoles, systems or devices for which we are developing products and services is lower than our
expectations, we may be unable to fully recover the investments we have made in developing our products and
services, and our financial performance will be harmed. Alternatively, a console, system or device for which we
have not devoted significant resources could be more successful than we initially anticipated, causing us to not be
able to reach our intended audience and take advantage of meaningful revenue opportunities.

External game developers may not meet product development schedules or otherwise honor their
obligations.

We contract with external game developers to develop our games or to publish or distribute their games. While
we maintain contractual protections, we have less control over the product development schedules of games
developed by external developers. We depend on their ability to meet product development schedules which
could be negatively affected by, among other things, the shift to a distributed workforce model resulting from the
COVID-19 pandemic. In addition, disputes occasionally arise with external developers, including with respect to
game content, launch timing, achievement of certain milestones, the game development timeline, marketing
campaigns, contractual terms and interpretation. If we have disputes with external developers or they cannot
meet product development schedules, acquire certain approvals or are otherwise unable or unwilling to honor
their obligations to us, we may delay or cancel previously announced games, alter our launch schedule or
experience increased costs and expenses, which could result in a delay or significant shortfall in anticipated
revenue, harm our profitability and reputation, and cause our financial results to be materially affected.

We may not attract, train, motivate and retain key personnel.

Our business depends on our ability to attract, train, motivate and retain executive, technical, creative, marketing
and other personnel that are essential to the development, marketing and support of our products and services.
The market for highly-skilled workers and leaders in our industry is extremely competitive, particularly in the
geographic locations in which many of our key personnel are located. In addition, our leading position within the
interactive entertainment industry makes us a prime target for recruiting our executives, as well as key creative
and technical talent. We may experience significant compensation costs to hire and retain senior executives and
other personnel that we deem critical to our success. If we cannot successfully recruit, train, motivate and retain
qualified employees, develop and maintain a diverse and inclusive work environment, or replace key employees
following their departure, our ability to develop and manage our business will be impaired.

A
n
n
u
a
l

R
e
p
o
r
t

Our marketing and advertising efforts may fail to resonate with consumers.

Our products and services are marketed worldwide through a diverse spectrum of advertising and promotional
programs. An increasing portion of our marketing activity is taking place on social media platforms and through
streaming networks, influencers and content creators that are outside of our direct control. Our ability to engage
players with our products and services is dependent in part upon the success of these programs, and changes to
player preferences, the impact of athletes, celebrities, influencers or content creators, marketing regulations,
technology changes or service disruptions may negatively impact our ability to reach and engage our players or
otherwise negatively impact our marketing campaigns or the franchises associated with those marketing
campaigns. Moreover, if the marketing for our products and services is not innovative or fails to resonate with
players, particularly during key selling periods, or if advertising rates or other media placement costs increase,
our business and operating results could be harmed.

We may experience declines or fluctuations in the recurring portion of our business.

Our business model includes revenue that we deem recurring in nature, such as revenue from our annualized
sports franchises (e.g., FIFA, Madden NFL), our console, PC and mobile catalog titles (i.e., titles that did not

15

launch in the current fiscal year), and our live services. While we have been able to forecast the revenue from
these areas of our business with greater relative confidence than for new games, services and business models,
we cannot provide assurances that consumer demand will remain consistent, including in connection with
circumstances outside of our control. Furthermore, we may cease to offer games and services that we previously
had deemed to be recurring in nature. Consumer demand has declined and fluctuated, and could in the future
decline or fluctuate, as a result of a number of factors, including their level of satisfaction with our games and
services, our ability to improve and innovate our annualized titles, our ability to adapt our games and services to
new distribution channels and business models, outages and disruptions of online services, the games and
services offered by our competitors, our marketing and advertising efforts or declines in consumer activity
generally as a result of economic downturns, among others. The reception to our sports games also depends, in
part, on the popularity, reputation and brand of the leagues, organizations and individual athletes with whom we
partner. Events and circumstances outside of our control that have a negative impact on the accessibility,
popularity, reputation and brand of these partners has impacted, and could in the future negatively impact, sales
related to our annualized sports games. Any decline or fluctuation in the recurring portion of our business may
have a negative impact on our financial and operating results.

We could fail to successfully adopt new business models.

From time to time we seek to establish and implement new business models. Forecasting the success of any new
business model is inherently uncertain and depends on a number of factors both within and outside of our control.
Our actual revenue and profit for these businesses may be significantly greater or less than our forecasts. In
addition, these new business models could fail, resulting in the loss of our investment in the development and
infrastructure needed to support these new business models, as well as the opportunity cost of diverting
management and financial resources away from more successful and established businesses. For example, we
have devoted financial and operational resources to our subscription offerings without any assurance that these
businesses will be financially successful. While we anticipate growth in this area of our business, consumer
demand is difficult to predict as a result of a number of factors, including satisfaction with our products and
services, our ability to provide engaging products and services, third parties offering their products and services
within our subscription, partners that provide, or don’t provide, access to our subscription, products and services
offered by our competitors, reliability of our infrastructure and the infrastructure of our partners, pricing, the
actual or perceived security of our and our partners information technology systems and reductions in consumer
spending levels. In addition, if our subscription offerings are successful, sales could be diverted from established
business models. If we do not select a target price that is optimal for our subscription services, maintain our
target pricing structure or correctly project renewal rates, our financial results may be harmed.

Acquisitions, investments, divestitures and other strategic transactions could result in operating difficulties
and other negative consequences.

We have made and may continue to make acquisitions or enter into other strategic transactions including
(1) acquisitions of companies, businesses, intellectual properties, and other assets, (2) minority investments in
strategic partners, and (3) investments in new interactive entertainment businesses as part of our long-term
business strategy. These transactions involve significant challenges and risks including that the transaction does
not advance our business strategy, that we do not realize a satisfactory return on our investment, that we acquire
liabilities, that our due diligence process does not identify significant issues, liabilities or other challenges,
diversion of management’s attention from our other businesses, the incurrence of debt, contingent liabilities or
amortization expenses, write-offs of goodwill, intangibles, or acquired in-process technology, or other increased
cash and non-cash expenses. In addition, we may not integrate these businesses successfully or achieve expected
synergies. For example, we may experience difficulties with the integration of business systems and
technologies, the integration and retention of new employees, the implementation of our internal control and
compliance procedures and/or the remediation of the internal control and compliance environment of the
acquired entity, or the maintenance of key business and customer relationships. These events could harm our
operating results or financial condition.

16

We may fund strategic transactions with (1) cash, which would reduce cash available for other corporate
purposes, (2) debt, which would increase our interest expense and leverage and/or (3) equity which would dilute
current shareholders’ percentage ownership and also dilute our earnings per share. We also may divest or sell
assets or a business and we may have difficulty selling such assets or business on acceptable terms in a timely
manner. This could result in a delay in the achievement of our strategic objectives, cause us to incur additional
expense, or the sale of such assets or business at a price or on terms that are less favorable than we anticipated.

We may be unable to maintain or acquire licenses to include intellectual property owned by others in our
games, or to maintain or acquire the rights to publish or distribute games developed by others.

Many of our products and services are based on or incorporate intellectual property owned by others. For
example, our EA Sports products include rights licensed from major sports leagues, teams and players’
associations and our Star Wars products include rights licensed from Disney. Competition for these licenses and
rights is intense. If we are unable to maintain these licenses and rights or obtain additional licenses or rights with
significant commercial value, our ability to develop successful and engaging products and services may be
adversely affected and our revenue, profitability and cash flows may decline significantly. Competition for these
licenses has increased, and may continue to increase, the amounts that we must pay to licensors and developers,
through higher minimum guarantees or royalty rates, which could significantly increase our costs and reduce our
profitability.

We rely on the consoles, systems and devices of partners who have significant influence over the products
and services that we offer in the marketplace.

A significant percentage of our digital net revenue is attributable to sales of products and services through our
significant partners, including Sony, Microsoft, Apple and Google. The concentration of a material portion of our
digital sales in these partners exposes us to risks associated with these businesses. Any deterioration in the
businesses of our significant partners could disrupt and harm our business, including by limiting the methods
through which our digital products and services are offered and exposing us to collection risks.

In addition, our license agreements typically provide these partners with significant control over the approval and
distribution of the products and services that we develop for their consoles, systems and devices. For products
and services delivered via digital channels, each respective partner has policies and guidelines that control the
promotion and distribution of these titles and the features and functionalities that we are permitted to offer
through the channel. In addition, we are dependent on these partners to invest in, and upgrade, the capabilities of
their systems in a manner than corresponds to the preferences of consumers. Failure by these partners to keep
pace with consumer preferences could have an adverse impact the engagement with our products and services
and our ability to merchandise and commercialize our products and services which could harm our business and/
or financial results.

Moreover, certain significant partners can determine and change unilaterally certain key terms and conditions,
including the ability to change their user and developer policies and guidelines. In many cases these partners also
set the rates that we must pay to provide our games and services through their online channels, and retain
flexibility to change their fee structures or adopt different fee structures for their online channels, which could
adversely impact our costs, profitability and margins. These partners also control the information technology
systems through which online sales of our products and service channels are captured. If our partners establish
terms that restrict our offerings, significantly impact the financial terms on which these products or services are
offered to our customers, or their information technology systems experiences outages that impact our players’
ability to access our games or purchase extra content or cause an unanticipated delay in reporting, our business
and/or financial results could be materially affected.

During the transition period to new console systems, our operating results may be more volatile.

New console systems historically have been developed and released several years apart. In periods of transition,
sales of products for legacy generation consoles typically slow or decline in response to the anticipated and
actual introduction of new consoles, and sales of products for new generation consoles typically stabilize only

17

A
n
n
u
a
l

R
e
p
o
r
t

after new consoles are widely-established with the consumer base. Sony and Microsoft have announced new
generation consoles, but such consoles have not yet been released. Consistent with historical transition periods,
we expect consumers to purchase fewer products for the Sony PlayStation 4 and Microsoft Xbox One consoles
during the upcoming transition period. The console transition may have a comparable impact on our live services
business, potentially increasing the impact on our financial results. The transition could accelerate faster than
anticipated and may put downward pressure on legacy generation pricing, which could negatively affect our
operating results. Our revenue from sales for the new generation consoles from Sony and Microsoft may not
offset the negative effects of the transition on our operating results. Alternatively, adoption of the new generation
consoles in which we have made significant investments may be slower than we anticipate or consumer
availability may be delayed because of, among other things, business disruptions resulting from the COVID-19
pandemic. We do not control the release dates or unit volumes of consoles made available for sale, the pricing or
appeal of new generation consoles, or the rates at which consumers purchase these consoles. As a result, our
operating results during this transition may be more volatile and difficult to predict.

Our business partners may be unable to honor their obligations to us or their actions may put us at risk.

We rely on various business partners, including third-party service providers, vendors, licensing partners,
development partners, and licensees in many areas of our business. Their actions may put our business and our
reputation and brand at risk. For example, we may have disputes with our business partners that may impact our
business and/or financial results. In many cases, our business partners may be given access to sensitive and
proprietary information in order to provide services and support to our teams, and they may misappropriate our
information and engage in unauthorized use of it. In addition, the failure of these third parties to provide adequate
services and technologies, or the failure of the third parties to adequately maintain or update their services and
technologies, could result in a disruption to our business operations. Further, disruptions in the financial markets,
economic downturns including related to the COVID-19 pandemic, poor business decisions, or reputational harm
may adversely affect our business partners and they may not be able to continue honoring their obligations to us
or we may cease our arrangements with them. Alternative arrangements and services may not be available to us
on commercially reasonable terms or we may experience business interruptions upon a transition to an alternative
partner or vendor. If we lose one or more significant business partners, our business could be harmed and our
financial results could be materially affected.

The products or services we release may contain defects, bugs or errors.

Our products and services are extremely complex software programs and are difficult to develop and distribute.
We have quality controls in place to detect defects, bugs or other errors in our products and services before they
are released. Nonetheless, these quality controls are subject to human error, overriding, and resource or technical
constraints. In addition, the effectiveness of our quality controls and preventative measures may be negatively
affected by the distribution of our workforce resulting from the COVID-19 pandemic. As such, these quality
controls and preventative measures may not be effective in detecting all defects, bugs or errors in our products
and services before they have been released into the marketplace. In such an event, the technological reliability
and stability of our products and services could be below our standards and the standards of our players and our
reputation, brand and sales could be adversely affected. In addition, we could be required to, or may find it
necessary to, offer a refund for the product or service, suspend the availability or sale of the product or service or
expend significant resources to cure the defect, bug or error each of which could significantly harm our business
and operating results.

We may be subject to claims of infringement of third-party intellectual property rights.

From time to time, third parties may claim that we have infringed their intellectual property rights. Although we
take steps to avoid knowingly violating the intellectual property rights of others, it is possible that third parties
still may claim infringement. Existing or future infringement claims against us may be expensive to defend and
divert the attention of our employees from business operations. Such claims or litigation could require us to pay
damages and other costs. We also could be required to stop selling, distributing or supporting products, features
or services which incorporate the affected intellectual property rights, redesign products, features or services to
avoid infringement, or obtain a license, all of which could be costly and harm our business.

18

In addition, many patents have been issued that may apply to potential new modes of delivering, playing or
monetizing products and services such as those that we produce or would like to offer in the future. We may
discover that future opportunities to provide new and innovative modes of game play and game delivery may be
precluded by existing patents that we are unable to acquire or license on reasonable terms.

From time to time we may become involved in other legal proceedings.

We are currently, and from time to time in the future may become, subject to legal proceedings, claims, litigation
and government investigations or inquiries, which could be expensive, lengthy, disruptive to normal business
operations and occupy a significant amount of our employees’ time and attention. In addition, the outcome of any
legal proceedings, claims, litigation, investigations or inquiries may be difficult to predict and could have a
material adverse effect on our business, reputation, operating results, or financial condition.

Our products and brands are subject to intellectual property infringement, including in jurisdictions that
do not adequately protect our products and intellectual property rights.

We regard our products, brands and intellectual property as proprietary and take measures to protect our assets
from infringement. We are aware that some unauthorized copying of our products and brands occurs, and if a
significantly greater amount were to occur, it could negatively impact our business. Further, our products and
services are available worldwide and the laws of some countries, particularly in Asia, either do not protect our
products, brands and intellectual property to the same extent as the laws of the United States or are poorly
enforced. Legal protection of our rights may be ineffective in countries with weaker intellectual property
enforcement mechanisms. In addition, certain third parties have registered our intellectual property rights without
authorization in foreign countries. Successfully registering such intellectual property rights could limit or restrict
our ability to offer products and services based on such rights in those countries. Although we take steps to
enforce and police our rights, our practices and methodologies may not be effective against all eventualities.

A significant portion of our packaged goods sales are made to a relatively small number of retail and
distribution partners, and these sales may be disrupted.

We derive a significant percentage of our net revenue attributable to sales of our packaged goods products to our
top retail and distribution partners. The concentration of a significant percentage of these sales through a few
large partners could lead to a short-term disruption to our business if certain of these partners significantly
reduced their purchases or ceased to offer our products. The financial position of certain partners has deteriorated
and while we maintain protections such as monitoring the credit extended to these partners, we could be
vulnerable to collection risk if one or more of these partners experienced continued deterioration of their business
or declared bankruptcy. The COVID-19 pandemic has resulted in closures of the retail stores of certain partners,
which could negatively impact the sales of our packaged goods products and accelerate deterioration of the
financial position of such partners. Additionally, receivables from these partners generally increase in our
December fiscal quarter as sales of our products generally increase in anticipation of the holiday season which
expose us to heightened risk at that time of year. Having a significant portion of our packaged goods sales
concentrated in a few partners could reduce our negotiating leverage with them. If one or more of these partners
experience deterioration in their business or become unable to obtain sufficient financing to maintain their
operations, our business could be harmed.

Our financial results are subject to currency and interest rate fluctuations.

International sales are a fundamental part of our business. For our fiscal year ended March 31, 2020, international
net revenue comprised 59 percent of our total net revenue, and we expect our international business to continue
to account for a significant portion of our total net revenue. As a result of our international sales, and also the
denomination of our foreign investments and our cash and cash equivalents in foreign currencies, we are exposed
to the effects of fluctuations in foreign currency exchange rates, and volatility in foreign currency exchange rates
has increased in connection with the macroeconomic uncertainty caused by the COVID-19 pandemic.
Strengthening of the U.S. dollar, particularly relative to the Euro, British pound sterling, Australian dollar,

19

A
n
n
u
a
l

R
e
p
o
r
t

Chinese yuan, South Korean won and Polish zloty, has a negative impact on our reported international net
revenue but a positive impact on our reported international operating expenses (particularly when the U.S. dollar
strengthens against the Swedish krona and the Canadian dollar) because these amounts are translated at lower
rates. We use foreign currency hedging contracts to mitigate some foreign currency risk. However, these
activities are limited in the protection they provide us from foreign currency fluctuations and can themselves
result in losses. In addition, interest rate volatility, including lower interest rates resulting from actions taken in
connection with the COVID-19 pandemic, can decrease the amount of interest earned on our cash, cash
equivalents and short-term investment portfolio.

We utilize debt financing and such indebtedness could adversely impact our business and financial
condition.

We have $1 billion in senior unsecured notes outstanding as well as an unsecured $500 million revolving credit
facility. While the facility is currently undrawn, we may use the proceeds of any future borrowings for general
corporate purposes. We may also enter into other financial instruments in the future.

Our indebtedness could affect our financial condition and future financial results by, among other things:

• Requiring the dedication of a substantial portion of any cash flow from operations to the payment of
principal of, and interest on, our indebtedness, thereby reducing the availability of such cash flow to
fund our growth strategy, working capital, capital expenditures and other general corporate purposes

• Limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and

•

Increasing our vulnerability to adverse changes in general economic and industry conditions.

The agreements governing our indebtedness impose restrictions on us and require us to maintain compliance with
specified covenants. In particular, the revolving credit facility requires us to maintain compliance with a debt to
EBITDA ratio. Our ability to comply with these covenants may be affected by events beyond our control. If we
breach any of these covenants and do not obtain a waiver from the lenders or noteholders, then, subject to
applicable cure periods, our outstanding indebtedness may be declared immediately due and payable. In addition,
changes by any rating agency to our credit rating may negatively impact the value and liquidity of both our debt
and equity securities, as well as the potential costs associated with any potential refinancing our indebtedness.
Downgrades in our credit rating could also restrict our ability to obtain additional financing in the future and
could affect the terms of any such financing.

Changes in our tax rates or exposure to additional tax liabilities, and changes to tax laws and
interpretations of tax laws could adversely affect our earnings and financial condition.

We are subject to taxes in the United States and in various foreign jurisdictions. Significant judgment is required
in determining our worldwide income tax provision, tax assets, and accruals for other taxes, and there are many
transactions and calculations where the ultimate tax determination is uncertain. Our effective income tax rate is
based in part on our corporate operating structure and the manner in which we operate our business and develop,
value and use our intellectual property. Taxing authorities in jurisdictions in which we operate have, and may
continue to, challenge and audit our methodologies for calculating our income taxes, which could increase our
effective income tax rate and have an adverse impact on our results of operations and cash flows. In addition, our
provision for income taxes is materially affected by our profit levels, changes in our business, changes in the mix
of earnings in countries with differing statutory tax rates, changes in the elections we make, changes in the
valuation of our deferred tax assets and liabilities, or changes in applicable tax laws or interpretations of existing
income and withholding tax laws, as well as other factors. For example, the outcome of future guidance related to
the U.S. Tax Act could cause us to change our analysis and materially impact our previous estimates and
consolidated financial statements.

In addition, changes to U.S. federal, state or international tax laws or their applicability to corporate
multinationals in the countries in which we do business, particularly in Switzerland, where our international
business is headquartered, and actions we have taken in our business with respect to such laws, have affected our

20

effective tax rates and cash taxes, cause us to change the way in which we structure our business and resulted in
other costs. Our effective tax rate also could be adversely affected by changes in our valuation allowances for
deferred tax assets. In particular, the partial valuation allowance against our Swiss deferred tax assets could be
affected by changes in future Swiss taxable income, expected growth rates of future Swiss taxable income, which
are based primarily on third party market and industry growth data, and changes in Swiss interest rates. The
partial valuation allowance is due to the limited seven-year carry forward period and our scheduling of future
Swiss taxable income. Significant judgment is involved in determining the amount of the partial valuation
allowance, particularly in estimating future Swiss taxable income over the period in which the Swiss deferred tax
assets will reverse and assumptions related to expected growth rates. Actual financial results also may differ
materially from our current estimates and could have a material impact on our assessment of the valuation
allowance.

We are required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth,
property, transfer, and goods and services taxes, in both the United States and foreign jurisdictions. Several
foreign jurisdictions have introduced new digital services taxes on revenue of companies that provide certain
digital services or expanded their interpretation of existing tax laws with regard to other non-income taxes. There
is limited guidance about the applicability of these new taxes or changing interpretations to our business and
significant uncertainty as to what will be deemed in scope. If these foreign taxes are applied to the Company, it
could have an adverse and material impact on our business and financial performance.

Our reported financial results could be adversely affected by changes in financial accounting standards.

Our reported financial results are impacted by the accounting standards promulgated by the SEC and national
accounting standards bodies and the methods, estimates, and judgments that we use in applying our accounting
policies. These methods, estimates, and judgments are subject to risks, uncertainties, assumptions and changes
that could adversely affect our reported financial position and financial results. In addition, changes to applicable
financial accounting standards could impact our reported financial position and financial results. For more
information on recently adopted accounting standards and recently issued accounting standards applicable to us,
see Part II, Item 8 of this Form 10-K in the Notes to the Consolidated Financial Statements in Note 1 —
Description of Business and Basis of Presentation under the subheadings “Recently Adopted Accounting
Standards” and “Other Recently Issued Accounting Standards”.

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 way we account for revenue, costs and taxes,
could have an adverse effect on our reported results although not necessarily on our cash flows.

Our stock price has been volatile and may continue to fluctuate significantly.

The market price of our common stock historically has been, and we expect will continue to be, subject to
significant fluctuations. These fluctuations may be due to our operating results or factors specific to our operating
results (including those discussed in the risk factors above, as well as others not currently known to us or that we
currently do not believe are material), changes in securities analysts’ estimates of our future financial
performance, ratings or recommendations, our results or future financial guidance falling below our expectations
and analysts’ and investors’ expectations, the announcement and integration of any acquisitions we may make,
departure of key personnel, cyberattacks, or factors largely outside of our control including, those affecting
interactive gaming, entertainment, and/or technology companies generally, national or international economic
conditions, investor sentiment or other factors related or unrelated to our operating performance. In particular,
economic downturns may contribute to the public stock markets experiencing extreme price and trading volume
volatility. These broad market fluctuations could adversely affect the market price of our common stock.

A
n
n
u
a
l

R
e
p
o
r
t

21

Item 1B: Unresolved Staff Comments

None.

Item 2: Properties

Not applicable.

Item 3: Legal Proceedings

We are subject to claims and litigation arising in the ordinary course of business. We do not believe that any
liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the
aggregate, would have a material adverse effect on our Consolidated Financial Statements.

Item 4: Mine Safety Disclosures

Not applicable.

22

PART II

Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Holders

There were approximately 784 holders of record of our common stock as of May 18, 2020. In addition, a
significant number of beneficial owners of our common stock hold their shares in street name. Our common
stock is traded on the NASDAQ Global Select Market under the symbol “EA”.

Dividends

We have not paid any cash dividends and do not anticipate paying cash dividends in the foreseeable future.

Issuer Purchases of Equity Securities

In May 2018, a Special Committee of our Board of Directors, on behalf of the full Board of Directors, authorized
a program to repurchase up to $2.4 billion of our common stock. We repurchased approximately 12.3 million and
10.4 million shares for approximately $1,207 million and $1,116 million under this program, respectively, during
the fiscal years ended March 31, 2020 and 2019. The May 2018 program was scheduled to expire on May 31,
2020, however we completed repurchases under the May 2018 program in April 2020.

The following table summarizes the number of shares repurchased in the fourth quarter of the fiscal year ended
March 31, 2020:

Fiscal Month

Total Number
of Shares
Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased as
part of Publicly
Announced Programs

December 29, 2019 — January 25, 2020 . . . .
January 26, 2020 — February 22, 2020 . . . . .
February 23, 2020 — March 28, 2020 . . . . . .

797,785
750,646
1,209,537

$109.32
$109.73
$100.15

2,757,968

$105.41

797,785
750,646
1,209,537

2,757,968

Maximum Dollar
Value that May
Still Be Purchased
Under the
Programs (in
millions)

$282
$199
$ 78

A
n
n
u
a
l

R
e
p
o
r
t

Stock Performance Graph

The following information shall not be deemed to be “filed” with the SEC nor shall this information be
incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange
Act, as amended, except to the extent that we specifically incorporate it by reference into a filing.

The following graph shows a five-year comparison of cumulative total returns during the period from March 31,
2015 through March 31, 2020, for our common stock, the S&P 500 Index (to which EA was added in July 2002),
the NASDAQ Composite Index, and the RDG Technology Composite Index, each of which assumes an initial
value of $100. Each measurement point is as of the end of each fiscal year. The performance of our stock
depicted in the following graph is not necessarily indicative of the future performance of our stock.

23

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Electronic Arts Inc., the S&P 500 Index, the NASDAQ Composite Index,
and the RDG Technology Composite Index

$250

$200

$150

$100

$50

$0

3/15

3/16

3/17

3/18

3/19

3/20

Electronic Arts Inc.

S&P 500

NASDAQ Composite

RDG Technology Composite

* Based on $100 invested on March 31, 2015 in stock or index, including reinvestment of dividends.

Electronic Arts Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NASDAQ Composite Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RDG Technology Composite Index . . . . . . . . . . . . . . . . . . . . . . . . . .

$100
100
100
100

$112
102
101
100

$152
119
124
127

$206
136
149
163

$173
149
165
192

$170
138
166
204

March 31,

2015

2016

2017

2018

2019

2020

24

Item 6: Selected Financial Data

ELECTRONIC ARTS INC. AND SUBSIDIARIES

SELECTED FIVE-YEAR CONSOLIDATED FINANCIAL DATA

(In millions, except per share data)

Year Ended March 31,

STATEMENTS OF OPERATIONS DATA

2020

2019

2018

2017

2016

Net revenue(a)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,537
1,369

$4,950
1,322

$5,150
1,277

$4,845
1,298

$4,396
1,354

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and other income (expense), net . . . . . . . . . . . . . . . . . .

4,168
2,723

1,445
63

3,628
2,632

996
83

Income before provision for (benefit from) income taxes . . .
Provision for (benefit from) income taxes . . . . . . . . . . . . . . . . .

1,508
(1,531)(b)

1,079
60

3,873
2,439

1,434
15

1,449

406(c)

3,547
2,323

1,224
(14)

1,210
243

3,042
2,144

898
(21)

877
(279)(d)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,039

$1,019

$1,043

$ 967

$1,156

Earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 10.37
$ 10.30

$ 3.36
$ 3.33

$ 3.39
$ 3.34

$ 3.19
$ 3.08

$ 3.73
$ 3.50

Number of shares used in computation:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

293
295

303
306

308
312

303
314

310
330

As of March 31,

BALANCE SHEETS DATA

2020

2019

2018

2017

2016

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Working capital
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior notes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,708
$ 3,768
1,967
737
3,853(e) 4,116
8,957
11,112
994
397
367
590
3,626
3,651
5,331
7,461

$4,258
1,073
3,513
8,584
992
506
3,989
4,595

$2,565
1,967
2,784
7,718
990
253
3,658
4,060

$2,493
1,341
1,936(e)
7,050
989
245
3,652
3,396

(a) On April 1, 2018, at the beginning of fiscal year 2019, we adopted the New Revenue Standard, which

significantly changed how we recognize and report net revenue. Financial data for periods prior to April 1,
2018 has not been restated. For more information on the impact of adoption of the New Revenue Standard,
please see Part II, Item 8, Notes to Consolidated Financial Statements in Note 1 under the heading “Recently
Adopted Accounting Standards” included in our Annual Report on Form 10-K for our fiscal year ended
March 31, 2019.

(b) During the fiscal year ended March 31, 2020, we recognized total one-time tax benefits of $1.760 billion
related to the $1.840 billion Swiss Deferred Tax Asset, partially offset by the $80 million one-time Altera
opinion charge. Please see Part II, Item 8 of this Form 10-K in the Notes to the Consolidated Financial
Statements in Note 2 — Summary of Significant Accounting Policies — Income Taxes, for more information.

(c)

(d)

For the fiscal year ended March 31, 2018, we recognized a tax expense of $235 million due to the
application of the U.S. Tax Act, enacted on December 22, 2017.

For the fiscal year ended March 31, 2016, we recognized a tax benefit of $453 million for the reversal of a
significant portion of our deferred tax valuation allowance.

(e) Working capital for the fiscal year ended March 31, 2020 includes the current portion of the 3.70% Senior

Notes due March 1, 2021. Working capital for the fiscal year ended March 31, 2016 includes the current
portion of 0.75% convertible senior notes due 2016.

25

A
n
n
u
a
l

R
e
p
o
r
t

Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

The following overview is a high-level discussion of our operating results, as well as some of the trends and
drivers that affect our business. Management believes that an understanding of these trends and drivers provides
important context for our results for the fiscal year ended March 31, 2020, as well as our future prospects. This
summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and
analysis provided elsewhere in this Form 10-K, including in the “Business” section and the “Risk Factors” above,
the remainder of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations
(“MD&A”)” or the Consolidated Financial Statements and related Notes.

About Electronic Arts

Electronic Arts is a global leader in digital interactive entertainment. We develop, market, publish and deliver
games, content and services that can be played and watched on game consoles, PCs, mobile phones and tablets.
We believe that the breadth and depth of our portfolio, live services offerings, and our use of multiple business
models and distribution channels provide us with strategic advantages. Our foundation is a collection of
intellectual property from which we create innovative games and content that enables us to build on-going and
meaningful relationships with a community of players, creators and viewers. Our portfolio includes brands that
we either wholly own (such as Battlefield, The Sims, Apex Legends, Need for Speed and Plants v. Zombies) or
license from others (such as FIFA, Madden NFL and Star Wars). We also offer our players high-quality
experiences designed to provide value to players and extend and enhance gameplay. Our live services
experiences include extra content, subscription offerings and other revenue generated outside of the sale of our
base games. In addition, we are focused on reaching more players whenever and wherever they want to play. We
believe that we can add value to our network by making it easier for players to connect to a world of play by
offering choice of business model, distribution channel and device.

Financial Results

Our key financial results for our fiscal year ended March 31, 2020 were as follows:

• Total net revenue was $5,537 million, up 12 percent year-over-year. On a constant currency basis, we

estimate total net revenue would have been $5,610 million, up 13 percent year-over-year.

• Digital net revenue was $4,314 million, up 16 percent year-over-year.

• Gross margin was 75.3 percent, up 2 percentage points year-over-year.

• Operating expenses were $2,723 million, up 3 percent year-over-year. On a constant currency basis, we

estimate that operating expenses would have been $2,754 million, up 5 percent year-over-year.

• Operating income was $1,445 million, up 45 percent year-over-year.

• Net income was $3,039 million, including a one-time net tax benefit of $1,760 million. Excluding the
one-time tax benefit, net income would have been $1,279 million, up 26 percent year-over-year.

• Diluted earnings per share was $10.30, including a one-time net tax benefit of $5.97. Excluding the

one-time tax benefit, diluted earnings per share would have been $4.33, up 30 percent year-over-year.

• Operating cash flow was $1,797 million, up 16 percent year-over-year.

• Total cash, cash equivalents and short-term investments were $5,735 million.

• We repurchased 12.3 million shares of our common stock for $1,207 million.

26

From time to time, we make comparisons of current periods to prior periods with reference to constant currency.
Constant currency comparisons are based on translating local currency amounts in the current period at actual
foreign exchange rates from the prior comparable period. We evaluate our financial performance on a constant
currency basis in order to facilitate period-to-period comparisons without regard to the impact of changing
foreign currency exchange rates. For additional information on the one-time net tax benefit excluded above from
net income and diluted earnings per share, please see Part II, Item 8 of this Form 10-K in the Notes to the
Consolidated Financial Statements in Note 2 — Summary of Significant Accounting Policies — Income Taxes.

Trends in Our Business

COVID-19 Impact. We are closely monitoring the impact of the COVID-19 pandemic to our people and our
business. Since the outbreak of COVID-19, we have focused on actions to support our people, our players, and
communities around the world that have been affected by the COVID-19 pandemic.

Our People: First, we have focused on the health and wellbeing of our people and their families. During the

fiscal quarter ending March 31, 2020, we shifted nearly all of our global workforce to work from home in
response to the growing threat of the pandemic. Our IT, security and digital platform teams mobilized to add
capacity to our remote working systems to scale to a distributed workforce and support business continuity. To
date, substantially all of our people outside of Shanghai are continuing to work from home. We have developed a
detailed protocol for how we will evaluate the readiness to return to work for each of our offices around the
world, accounting for guidance from health authorities and government, the comfort level of our employees, and
preparation of our facilities for continued physical distancing.

Our Business: Throughout this time, we have also focused on what we can do for our players. We launched

our “Stay Home, Play Together” initiative to bring our players together when physical distancing is keeping us
apart, and dozens of Stay & Play programs have been delivered to date. With more people staying at home we
have experienced, and are continuing to experience, heightened levels of engagement and live services net
bookings growth during the three months ended March 31, 2020 and during the current fiscal quarter to date.

Future Outlook: The full extent of the impact of the COVID-19 pandemic to our business, operations and
financial results will depend on numerous evolving factors that we may not be able to predict. For example, we
do not know when stay-at-home orders will be eased and lifted, and how our products and services will be
impacted when that occurs. Engagement and net bookings could subside. Additional factors that could impact our
business — particularly if stay-at-home orders remain in place for the longer term or a second wave of
stay-at-home orders is necessary — include: our ability to deliver new games and services in a distributed work
environment, macroeconomic challenges that impact consumer demand, the status of sports seasons on which our
products and live services are based, impacts to our key business partners, foreign exchange rate fluctuations, and
other factors included in Part I, Item 1A of this Annual Report under the heading “Risk Factors”.

Live Services Business. We offer our players high-quality experiences designed to provide value to players and
to extend and enhance gameplay. These live services include extra content, subscription offerings and other
revenue generated outside of the sale of our base games. Our net revenue attributable to digital live services for
console and PC was $2,813 million, $2,216 million and $2,083 million during fiscal years 2020, 2019 and 2018,
respectively, and we expect that live services net revenue will continue to be material to our business. Net
revenue attributable to extra content, which includes extra content within digital live services for console and PC
as well as extra content within our mobile business was $2,763 million, $2,309 million and $2,033 million during
fiscal years 2020, 2019 and 2018, respectively. Extra content net revenue has increased as players engage with
our games and services over longer periods of time, and purchase additional content designed to provide value to
players and extend and enhance gameplay. Our most popular live service is the extra content purchased for the
Ultimate Team mode associated with our sports franchises. Ultimate Team allows players to collect current and
former professional players in order to build and compete as a personalized team. Net revenue from extra content
sales for Ultimate Team was $1,491 million, $1,369 million and $1,180 million during fiscal years 2020, 2019
and 2018, respectively, a substantial portion of which was derived from FIFA Ultimate Team.

27

A
n
n
u
a
l

R
e
p
o
r
t

In our industry, players increasingly purchase games digitally as opposed to

Digital Delivery of Games.
purchasing physical discs. While this trend, as applied to our business, may not be linear because of product mix
during a fiscal year, consumer buying patterns and other factors, over time we expect players to purchase an
increasingly higher proportion of our games digitally; therefore we expect net revenue attributable to digital full
game downloads to increase over time and net revenue attributable to sales of packaged goods to decrease. Our
net revenue attributable to digital full game downloads was $809 million, $680 million and $707 million during
fiscal years 2020, 2019 and 2018, respectively; while our net revenue attributable to packaged goods sales
decreased from $1,700 million in fiscal year 2018 to $1,240 million in fiscal year 2019 and $1,223 million in
fiscal year 2020. In addition, as measured based on total units sold on Microsoft’s Xbox One and Sony’s
PlayStation 4 rather than by net revenue, we estimate that 49 percent, 49 percent, and 39 percent of our total units
sold during fiscal years 2020, 2019 and 2018 were sold digitally. Digital full game units are based on sales
information provided by Microsoft and Sony; packaged goods units sold through are estimated by obtaining data
from significant retail partners in North America, Europe and Asia, and applying internal sales estimates with
respect to retail partners from which we do not obtain data. We believe that these percentages are reasonable
estimates of the proportion of our games that are digitally downloaded in relation to our total number of units
sold for the applicable period of measurement. We expect the long-term trends in revenue and in the percentage
of games digitally downloaded to continue. Increases in consumer adoption of digital purchase of games
combined with increases in our live services revenue generally results in expansion of our gross margin, as costs
associated with selling a game digitally is generally less than selling the same game through traditional retail and
distribution channels.

Free-to-Play Games. The global adoption of mobile devices and a business model for those devices that allows
consumers to try new games with no up-front cost, and that are monetized through a live service associated with
the game, particularly extra content sales, has led to significant sales growth in the mobile gaming industry.
Similarly, sales of extra content are the primary driver of our mobile business. We expect the mobile gaming
industry to continue to grow during our 2021 fiscal year. Likewise, the consumer acceptance of free-to-play, live
service-based, online PC games has broadened our consumer base and has begun to expand into the console
market. For example, within our business, we offer Apex Legends as a free-to-play, live service-based PC and
console game. We expect extra content revenue generated from mobile, PC and console free-to-play games to
remain an important part of our business.

Concentration of Sales Among the Most Popular Games.
portion of games sales concentrated on the most popular titles. Similarly, a significant portion of our revenue
historically has been derived from games based on a few popular franchises, several of which we have released
on an annual or bi-annual basis. In particular, we have historically derived a significant portion of our net
revenue from our largest and most popular game, FIFA, the annualized version of which is consistently one of
the best-selling games in the marketplace.

In all major segments of our industry, we see a large

Recurring Revenue Sources. Our business model includes revenue that we deem recurring in nature, such as
revenue from our annualized sports franchises (e.g., FIFA, Madden NFL), our console, PC and mobile catalog
titles (i.e., titles that did not launch in the current fiscal year), and our live services. We have been able to forecast
revenue from these areas of our business with greater relative confidence than for new games, services and
business models. As we continue to incorporate new business models and modalities of play into our games, our
goal is to continue to look for opportunities to expand the recurring portion of our business.

In order to improve transparency into our business, we disclose an operating performance metric,

Net Bookings.
net bookings. Net bookings is defined as the net amount of products and services sold digitally or sold-in
physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net
revenue for online-enabled games and platform fees.

28

The following is a calculation of our total net bookings for the periods presented:

(In millions)

Year Ended March 31,

2020

2019

Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in deferred net revenue (online-enabled games) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Platform fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,537
(165)
(161)

$4,950
182
(188)

Net bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,211

$4,944

Net bookings were $5,211 million for fiscal year 2020 driven by sales related to FIFA 20, Madden NFL 20 and
Star Wars Jedi: Fallen Order. Net bookings increased $267 million or 5 percent as compared to fiscal year 2019
due primarily to Star Wars Jedi: Fallen Order, Apex Legends and Need for Speed Heat, partially offset by
Battlefield V and Anthem. Digital net bookings were $4,052 million for fiscal year 2020, an increase of
$330 million or 9 percent as compared to fiscal year 2019. The increase in digital net bookings was primarily
driven by our live services which grew $372 million or 15 percent year-over-year, primarily due to sales of extra
content for Apex Legends, FIFA Ultimate Team and Madden Ultimate Team; and full game downloads which
grew $18 million or 2 percent due to net bookings associated with Star Wars Jedi: Fallen Order and Need for
Speed Heat, partially offset by Battlefield V. These increases were partially offset by a decrease of $60 million or
10 percent in our mobile business due to declines from aging titles.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally
accepted in the United States (“U.S. GAAP”). The preparation of these Consolidated Financial Statements
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
contingent assets and liabilities, and revenue and expenses during the reporting periods. The policies discussed
below are considered by management to be critical because they are not only important to the portrayal of our
financial condition and results of operations, but also because application and interpretation of these policies
requires both management judgment and estimates of matters that are inherently uncertain and unknown,
including uncertainty in the current economic environment due to the recent outbreak of COVID-19. As a result,
actual results may differ materially from our estimates.

For a complete discussion of our critical accounting policies and estimates with respect to revenue recognition
for revenue transactions occurring prior to April 1, 2018, which were accounted for under ASC 605, Revenue
Recognition (the “Old Revenue Standard” or “ASC 605”), refer to Part II, Item 7 “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” under the subheading Critical Accounting Policies
and Estimates included in our Annual Report on Form 10-K for our fiscal year ended March 31, 2018, filed with
the SEC on May 23, 2018. With respect to revenue transactions occurring on April 1, 2018 and onward, our
revenue recognition accounting policy is set forth below and follows ASC 606, Revenue from Contracts with
Customers (the “New Revenue Standard” or “ASC 606”).

Revenue Recognition

We derive revenue principally from sales of our games, and related extra content and services that can be played
on game consoles, PCs, mobile phones and tablets. Our product and service offerings include, but are not limited
to, the following:

•

full games with both online and offline functionality (“Games with Services”), which generally
includes (1) the initial game delivered digitally or via physical disc at the time of sale and typically
provide access to offline core game content (“software license”); (2) updates on a
when-and-if-available basis, such as software patches or updates, and/or additional free content to be
delivered in the future (“future update rights”); and (3) a hosted connection for online playability
(“online hosting”);

29

A
n
n
u
a
l

R
e
p
o
r
t

•

•

•

•

full games with online-only functionality which require an Internet connection to access all gameplay
and functionality (“Online-Hosted Service Games”);

extra content related to Games with Services and Online-Hosted Service Games which provides access
to additional in-game content;

subscriptions, such as Origin Access, Origin Access Premier and EA Access, that generally offers
access to a selection of full games, in-game content, online services and other benefits typically for a
recurring monthly or annual fee; and

licensing to third parties to distribute and host our games and content.

We evaluate and recognize revenue by:

•

•

•

•

•

identifying the contract(s) with the customer;

identifying the performance obligations in the contract;

determining the transaction price;

allocating the transaction price to performance obligations in the contract; and

recognizing revenue as each performance obligation is satisfied through the transfer of a promised
good or service to a customer (i.e., “transfer of control”).

Certain of our full game and/or extra content are sold to resellers with a contingency that the full game and/or
extra content cannot be resold prior to a specific date (“Street Date Contingency”). We recognize revenue for
transactions that have a Street Date Contingency when the Street Date Contingency is removed and the full game
and/or extra content can be resold by the reseller. For digital full game and/or extra content downloads sold to
customers, we recognize revenue when the full game and/or extra content is made available for download to the
customer.

Online-Enabled Games

Games with Services. Our sales of Games with Services are evaluated to determine whether the software
license, future update rights and the online hosting are distinct and separable. Sales of Games with Services are
generally determined to have three distinct performance obligations: software license, future update rights, and
the online hosting.

Since we do not sell the performance obligations on a stand-alone basis, we consider market conditions and other
observable inputs to estimate the stand-alone selling price for each performance obligation. For Games with
Services, generally 75 percent of the sales price is allocated to the software license performance obligation and
recognized at a point in time when control of the license has been transferred to the customer (which is usually at
or near the same time as the booking of the transaction). The remaining 25 percent is allocated to the future
update rights and the online hosting performance obligations and recognized ratably as the service is provided
(over the Estimated Offering Period).

Online-Hosted Service Games. Sales of our Online-Hosted Service Games are determined to have one distinct
performance obligation: the online hosting. We recognize revenue from these arrangements as the service is
provided.

Extra Content. Revenue received from sales of downloadable content are derived primarily from the sale of
virtual currencies and digital in-game content that enhance players’ game experience. Sales of extra content are
accounted for in a manner consistent with the treatment for our Games with Services and Online-Hosted Service
Games as discussed above, depending upon whether or not the extra content has offline functionality. That is, if
the extra content has offline functionality, then the extra content is accounted for similarly to Games with
Services (generally determined to have three distinct performance obligations: software license, future update
rights, and the online hosting). If the extra content does not have offline functionality, then the extra content is
determined to have one distinct performance obligation: the online-hosted service offering.

30

Subscriptions

Sales of our subscriptions are deemed to be one performance obligation and we recognize revenue from these
arrangements ratably over the subscription term as the performance obligation is satisfied.

Licensing Revenue

In certain countries, we utilize third-party licensees to distribute and host our games and content in accordance
with license agreements, for which the licensees typically pay us a fixed minimum guarantee and/or sales-based
royalties. These arrangements typically include multiple performance obligations, such as a time-based license of
software and future update rights. We recognize as revenue a portion of the minimum guarantee when we
transfer control of the license of software (generally upon commercial launch) and the remaining portion ratably
over the contractual term in which we provide the licensee with future update rights. Any sales-based royalties
are generally recognized as the related sales occur by the licensee.

Significant Judgments around Revenue Arrangements

Identifying performance obligations. Performance obligations promised in a contract are identified based on the
goods and services that will be transferred to the customer that are both capable of being distinct, (i.e., the
customer can benefit from the goods or services either on its own or together with other resources that are readily
available), and are distinct in the context of the contract (i.e., it is separately identifiable from other goods or
services in the contract). To the extent a contract includes multiple promises, we must apply judgment to
determine whether those promises are separate and distinct performance obligations. If these criteria are not met,
the promises are accounted for as a combined performance obligation.

Determining the transaction price. The transaction price is determined based on the consideration that we will
be entitled to receive in exchange for transferring our goods and services to the customer. Determining the
transaction price often requires judgment, based on an assessment of contractual terms and business practices. It
further includes review of variable consideration such as discounts, sales returns, price protection, and rebates,
which is estimated at the time of the transaction. In addition, the transaction price does not include an estimate of
the variable consideration related to sales-based royalties. Sales-based royalties are recognized as the sales occur.

Allocating the transaction price. Allocating the transaction price requires that we determine an estimate of the
relative stand-alone selling price for each distinct performance obligation. Determining the relative stand-alone
selling price is inherently subjective, especially in situations where we do not sell the performance obligation on
a stand-alone basis (which occurs in the majority of our transactions). In those situations, we determine the
relative stand-alone selling price based on various observable inputs using all information that is reasonably
available. Examples of observable inputs and information include: historical internal pricing data, cost plus
margin analyses, third-party external pricing of similar or same products and services such as software licenses
and maintenance support within the enterprise software industry. The results of our analysis resulted in a specific
percentage of the transaction price being allocated to each performance obligation.

Determining the Estimated Offering Period. The offering period is the period in which we offer to provide the
future update rights and/or online hosting for the game and related extra content sold. Because the offering period
is not an explicitly defined period, we must make an estimate of the offering period for the service related
performance obligations (i.e., future update rights and online hosting). Determining the Estimated Offering
Period is inherently subjective and is subject to regular revision. Generally, we consider the average period of
time customers are online when estimating the offering period. We also consider the estimated period of time
between the date a game unit is sold to a reseller and the date the reseller sells the game unit to the customer (i.e.,
time in channel). Based on these two factors, we then consider the method of distribution. For example, games
sold at retail would have a composite offering period equal to the online gameplay period plus time in channel as
opposed to digitally-distributed software licenses which are delivered immediately via digital download and
therefore, the offering period is estimated to be only the online gameplay period.

31

A
n
n
u
a
l

R
e
p
o
r
t

Additionally, we consider results from prior analyses, known and expected online gameplay trends, as well as
disclosed service periods for competitors’ games in determining the Estimated Offering Period for future sales.
We believe this provides a reasonable depiction of the transfer of future update rights and online hosting to our
customers, as it is the best representation of the time period during which our games are played. We recognize
revenue for future update rights and online hosting performance obligations ratably on a straight-line basis over
this period as there is a consistent pattern of delivery for these performance obligations. These performance
obligations are generally recognized over an estimated nine-month period beginning in the month after shipment
for software licenses sold through retail and an estimated six-month period for digitally-distributed software
licenses beginning in the month of sale.

Principal Agent Considerations

We evaluate sales to end customers of our full games and related content via third-party storefronts, including
digital storefronts such as Microsoft’s Xbox Store, Sony’s PlayStation Store, Apple App Store, and Google Play
Store, in order to determine whether or not we are acting as the principal in the sale to the end customer, which
we consider in determining if revenue should be reported gross or net of fees retained by the third-party
storefront. An entity is the principal if it controls a good or service before it is transferred to the end customer.
Key indicators that we evaluate in determining gross versus net treatment include but are not limited to the
following:

•

the underlying contract terms and conditions between the various parties to the transaction;

• which party is primarily responsible for fulfilling the promise to provide the specified good or service

to the end customer;

• which party has inventory risk before the specified good or service has been transferred to the end

customer; and

• which party has discretion in establishing the price for the specified good or service.

Based on an evaluation of the above indicators, except as discussed below, we have determined that generally the
third party is considered the principal to end customers for the sale of our full games and related content. We
therefore report revenue related to these arrangements net of the fees retained by the storefront. However, for
sales arrangements via Apple App Store and Google Play Store, EA is considered the principal to the end
customer and thus, we report revenue on a gross basis and mobile platform fees are reported within cost of
revenue.

Income Taxes

We recognize deferred tax assets and liabilities for both (1) the expected impact of differences between the
financial statement amount and the tax basis of assets and liabilities and (2) the expected future tax benefit to be
derived from tax losses and tax credit carryforwards. We record a valuation allowance against deferred tax assets
when it is considered more likely than not that all or a portion of our deferred tax assets will not be realized. In
making this determination, we are required to give significant weight to evidence that can be objectively verified.
It is generally difficult to conclude that a valuation allowance is not needed when there is significant negative
evidence, such as cumulative losses in recent years. Forecasts of future taxable income are considered to be less
objective than past results. Therefore, cumulative losses weigh heavily in the overall assessment.

In addition to considering forecasts of future taxable income, we are also required to evaluate and quantify other
possible sources of taxable income in order to assess the realization of our deferred tax assets, namely the
reversal of existing deferred tax liabilities, the carryback of losses and credits as allowed under current tax law,
and the implementation of tax planning strategies. Evaluating and quantifying these amounts involves significant
judgments. Each source of income must be evaluated based on all positive and negative evidence and; this
evaluation may involve assumptions about future activity. Certain taxable temporary differences that are not
expected to reverse during the carry forward periods permitted by tax law cannot be considered as a source of
future taxable income that may be available to realize the benefit of deferred tax assets.

32

Every quarter, we perform a realizability analysis to evaluate whether it is more likely than not that all or a
portion of our deferred tax assets will not be realized. As of March 31, 2020, we have recognized a $131 million
valuation allowance related to our Swiss deferred tax assets. Our Swiss deferred tax asset realizability analysis
relies upon future Swiss taxable income as the primary source of taxable income but considers all available
sources of Swiss income based on the positive and negative evidence. We give more weight to evidence that can
be objectively verified. However, there is significant judgment involved in estimating future Swiss taxable
income over the 20-year period over which the Swiss deferred tax assets will reverse, specifically related to
assumptions about expected growth rates of future Swiss taxable income, which are based primarily on third
party market and industry growth data. Actual results that differ materially from those estimates could have a
material impact on our valuation allowance assessment. Although objectively verifiable, Swiss interest rates have
an impact on the valuation allowance and are based on published Swiss guidance. Any significant changes to
such interest rates could result in a material impact to the valuation allowance. Switzerland has a seven-year
carryforward period and does not permit the carry back of losses. We do not recognize any deferred taxes related
to the U.S. taxes on foreign earnings as we recognize these taxes as a period cost.

As part of the process of preparing our Consolidated Financial Statements, we are required to estimate our
income taxes in each jurisdiction in which we operate prior to the completion and filing of tax returns for such
periods. This process requires estimating both our geographic mix of income and our uncertain tax positions in
each jurisdiction where we operate. These estimates involve complex issues and require us to make judgments
about the likely application of the tax law to our situation, as well as with respect to other matters, such as
anticipating the positions that we will take on tax returns prior to our preparing the returns and the outcomes of
disputes with tax authorities. The ultimate resolution of these issues may take extended periods of time due to
examinations by tax authorities and statutes of limitations. In addition, changes in our business, including
acquisitions, 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 and regulations,
rulings and interpretations thereof, developments in tax audit and other matters, and variations in the estimated
and actual level of annual pre-tax income can affect the overall effective tax rate.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The information under the subheading “Impact of Recently Issued Accounting Standards” in Note 1 —
Description of Business and Basis of Presentation to the Consolidated Financial Statements in this Form 10-K is
incorporated by reference into this Item 7.

RESULTS OF OPERATIONS

Our fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest March 31. Our results of
operations for the fiscal years ended March 31, 2020, 2019 and 2018 contained 52 weeks each and ended on
March 28, 2020, March 30, 2019 and March 31, 2018, respectively. For simplicity of disclosure, all fiscal periods
are referred to as ending on a calendar month end.

Net Revenue

Net revenue consists of sales generated from (1) full games sold as digital downloads or as packaged goods and
designed for play on game consoles and PCs, (2) full games for mobile phones and tablets, (3) live services
associated with these games, such as extra content, (4) subscriptions that generally offer access to a selection of
full games, in-game content, online services and other benefits, and (5) licensing our games to third parties to
distribute and host our games.

A
n
n
u
a
l

R
e
p
o
r
t

33

Comparison of Fiscal Year 2020 to Fiscal Year 2019

Net Revenue

Net revenue for fiscal year 2020 was $5,537 million, primarily driven by FIFA 20, FIFA 19, The Sims 4, Apex
Legends and Madden NFL 20. Net revenue for fiscal year 2020 increased $587 million, as compared to fiscal
year 2019. This increase was driven by a $924 million increase in revenue primarily from Apex Legends, Star
Wars Jedi: Fallen Order and Anthem. This increase was partially offset by a $337 million decrease in revenue
primarily from the Battlefield franchise.

Net Revenue by Composition

As our business has evolved and more of our products are delivered to consumers digitally, we have placed a
significant emphasis and focus on assessing our business performance through a review of net revenue by
composition, which is primarily based on method of distribution.

Our net revenue by composition for fiscal years 2020 and 2019 was as follows (in millions):

Year Ended March 31,

2020

2019

$ Change % Change

Net revenue:

Full game downloads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Live services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 809
2,813
692

$ 680
2,216
814

$ 129
597
(122)

Total Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,314

$3,710

$ 604

Packaged goods and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,223

$1,240

$ (17)

Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,537

$4,950

$ 587

19%
27%
(15)%

16%

(1)%

12%

Digital Net Revenue

Digital net revenue includes full game downloads, live services, and mobile revenue. Full game downloads
includes revenue from digital sales of full games on console and PC. Live services includes revenue from sales of
extra content for console, PC, browser games, game software licensed to our third-party publishing partners who
distribute our games digitally, subscriptions, and advertising. Mobile primarily includes revenue from the sale of
extra content for our mobile games. It also includes revenue from the sale of full games and advertising on
mobile phones and tablets.

Digital net revenue for fiscal year 2020 was $4,314 million, primarily driven by extra content sales for FIFA
Ultimate Team, Apex Legends and The Sims 4. Digital net revenue for fiscal year 2020 increased $604 million, as
compared to fiscal year 2019. This increase was due to a $597 million increase in live services revenue primarily
driven by sales of extra content for Apex Legends, FIFA Ultimate Team and Madden Ultimate Team, and a
$129 million increase in full game downloads revenue primarily driven by Star Wars Jedi: Fallen Order,
partially offset by a $122 million decrease in mobile revenue primarily driven by lower extra content sales for
Star Wars: Galaxy of Heroes and Madden Mobile.

Packaged Goods and Other Net Revenue

Packaged goods net revenue includes revenue from software that is distributed physically. This includes (1) net
revenue from game software distributed physically through traditional channels such as brick and mortar
retailers, and (2) our software licensing revenue from third parties (for example, makers of console platforms,
personal computers or computer accessories) who include certain of our products for sale with their products (for
example, OEM bundles). Other net revenue includes our non-software licensing revenue.

34

Packaged goods and other net revenue for fiscal year 2020 was $1,223 million, primarily driven by FIFA 20, Star
Wars Jedi: Fallen Order, Madden NFL 20, and FIFA 19. Packaged goods and other net revenue remained
relatively consistent for fiscal year 2020, as compared to fiscal year 2019.

Cost of Revenue

Cost of revenue for fiscal years 2020 and 2019 was as follows (in millions):

March 31,
2020

$1,369

% of Net
Revenue

25%

March 31,
2019

$1,322

% of Net
Revenue

27%

% Change

4%

Change as a
% of Net
Revenue

(2)%

Cost of revenue consists of (1) manufacturing royalties, net of volume discounts and other vendor
reimbursements, (2) certain royalty expenses for celebrities, professional sports leagues, movie studios and other
organizations, and independent software developers, (3) data center, bandwidth and server costs associated with
hosting our online games and websites, (4) inventory costs, (5) payment processing fees, (6) mobile platform fees
associated with our mobile revenue (for transactions in which we are acting as the principal in the sale to the end
customer), (7) expenses for defective products, (8) write-offs of post launch prepaid royalty costs and losses on
previously unrecognized licensed intellectual property commitments, (9) amortization of certain intangible
assets, (10) personnel-related costs, and (11) warehousing and distribution costs. We generally recognize volume
discounts when they are earned from the manufacturer (typically in connection with the achievement of unit-
based milestones); whereas other vendor reimbursements are generally recognized as the related revenue is
recognized.

Cost of Revenue

Cost of revenue increased by $47 million, or 4 percent during fiscal year 2020, as compared to fiscal year 2019.
This increase was primarily due to an increase in inventory and royalty costs associated with Star Wars Jedi:
Fallen Order, an increase in royalty costs driven by higher sales associated with Madden franchise, a higher
royalty rate associated with the FIFA franchise, and data center, bandwidth and server usage costs associated
with Apex Legends, partially offset by a decrease in inventory costs associated with Battlefield V and the FIFA
franchise, and data center, bandwidth and server usage costs associated with Anthem, which launched as online-
only title during fiscal year 2019.

A
n
n
u
a
l

R
e
p
o
r
t

Cost of revenue as a percentage of total net revenue decreased by 2 percent during fiscal year 2020, as compared
to fiscal year 2019. This decrease was primarily due to an increase in the proportion of our digital net revenues to
packaged goods and other net revenues, which generally have higher costs than our digital games.

Research and Development

Research and development expenses consist of expenses incurred by our production studios for personnel-related
costs, related overhead costs, external third-party development costs, contracted services, depreciation and any
impairment of prepaid royalties for pre-launch products. Research and development expenses for our online
products include expenses incurred by our studios consisting of direct development and related overhead costs in
connection with the development and production of our online games. Research and development expenses also
include expenses associated with our digital platform, software licenses and maintenance, and management
overhead.

Research and development expenses for fiscal years 2020 and 2019 were as follows (in millions):

March 31,
2020

$1,559

% of Net
Revenue

28%

March 31,
2019

$1,433

% of Net
Revenue

29%

$ Change

$126

% Change

9%

35

Research and development expenses increased by $126 million, or 9 percent, in fiscal year 2020, as compared to
fiscal year 2019. This increase was primarily due to a $67 million increase in personnel-related costs resulting
from an increase in variable compensation and related expenses, a $45 million increase in stock-based
compensation, and an $18 million increase in third-party development expense.

Marketing and Sales

Marketing and sales expenses consist of personnel-related costs, related overhead costs, advertising, marketing
and promotional expenses, net of qualified advertising cost reimbursements from third parties.

Marketing and sales expenses for fiscal years 2020 and 2019 were as follows (in millions):

March 31,
2020

$631

% of Net
Revenue

11%

March 31,
2019

$702

% of Net
Revenue

14%

$ Change

$(71)

% Change

(10)%

Marketing and sales expenses decreased by $71 million, or 10 percent, in fiscal year 2020, as compared to fiscal
year 2019. This decrease was primarily due to a $66 million decrease in advertising and promotional spending
resulting from fewer frontline title launches in fiscal year 2020, as compared to fiscal year 2019.

General and Administrative

General and administrative expenses consist of personnel and related expenses of executive and administrative
staff, corporate functions such as finance, legal, human resources, and information technology, related overhead
costs, fees for professional services such as legal and accounting, and allowances for doubtful accounts.

General and administrative expenses for fiscal years 2020 and 2019 were as follows (in millions):

March 31,
2020

$506

% of Net
Revenue

9%

March 31,
2019

$460

% of Net
Revenue

9%

$ Change

% Change

$46

10%

General and administrative expenses increased by $46 million, or 10 percent, in fiscal year 2020, as compared to
fiscal year 2019. This increase was primarily due to a $24 million increase in personnel-related costs driven by
an increase in variable compensation and related expenses, and a $14 million increase in stock-based
compensation.

Income Taxes

Provision for (benefit from) income taxes for fiscal years 2020 and 2019 was as follows (in millions):

March 31,
2020

$(1,531)

Effective
Tax
Rate

(101.5)%

March 31,
2019

$60

Effective
Tax
Rate

5.6%

Our effective tax rate for the fiscal year ended March 31, 2020 was negative 101.5 percent as compared to
5.6 percent for the same period in fiscal year 2019. During the fiscal year ended March 31, 2020, we completed
an intra-entity sale of some of our intellectual property rights to our Swiss subsidiary, where our international
business is headquartered (the “Swiss intra-entity sale”). The transaction did not result in a taxable gain. Under
U.S. GAAP, any profit resulting from this intercompany transaction will be eliminated upon consolidation.
However, the transaction resulted in a step-up of the Swiss tax-deductible basis in the transferred intellectual
property rights and, accordingly, created a temporary difference between the book basis and the tax basis of such
intellectual property rights (the “Swiss Deferred Tax Asset”). Our effective tax rate and resulting provision for
income taxes for the fiscal year ended March 31, 2020 were significantly impacted by our recognition of the
Swiss Deferred Tax Asset related to the Swiss intra-entity sale.

36

During the fiscal year ended March 31, 2020, we recognized a $1.840 billion Swiss Deferred Tax Asset, which is
net of the impact of a $131 million valuation allowance and a $393 million reduction due to the impact of the
decision of the Ninth Circuit Court of Appeals in Altera Corp. v Commissioner (“the Altera opinion”). The Altera
opinion also requires related parties in an intercompany cost-sharing arrangement to share stock-based
compensation expenses. The Altera opinion resulted in the recognition of a one-time charge of $80 million
related to prior period U.S. uncertain tax positions during the fiscal year ended March 31, 2020. In total, during
the fiscal year ended March 31, 2020, we recognized total one-time tax benefits of $1.760 billion related to the
$1.840 billion Swiss Deferred Tax Asset, partially offset by the $80 million one-time Altera opinion charge.

Excluding the impacts of the Swiss Deferred Tax Asset and Altera opinion, our effective tax rate for the year
ended March 31, 2020 would have been 15.0 percent, which was higher than the same periods in fiscal year 2019
primarily due to an increase in U.S. taxes on foreign earnings in fiscal year 2020.

Our effective tax rates for fiscal year 2021 and future periods will continue to depend on a variety of factors,
including changes in our business, such as acquisitions and intercompany transactions, our corporate structure,
the geographic location of business functions or assets, the geographic mix of income, our agreements with tax
authorities, applicable accounting rules, applicable tax laws and regulations, rulings and interpretations thereof,
developments in tax audit and other matters, and variations in our annual pre-tax income or loss. We anticipate
that the impact of excess tax benefits and tax deficiencies may result in significant fluctuations to our effective
tax rate in the future.

Comparison of Fiscal Year 2019 to Fiscal Year 2018

For the comparison of fiscal year 2019 to fiscal year 2018, refer to Part II, Item 7 “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for our fiscal
year ended March 31, 2019, filed with the SEC on May 24, 2019 under the subheading “Comparison of Fiscal
Year 2019 to Fiscal Year 2018.”

A
n
n
u
a
l

R
e
p
o
r
t

37

LIQUIDITY AND CAPITAL RESOURCES

(In millions)

As of March 31,

2020

2019

Increase/(Decrease)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,768
1,967

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,735

$ 4,708
737

$ 5,445

$ (940)
1,230

$ 290

Percentage of total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

52%

61%

(In millions)

Year Ended March 31,

2020

2019

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign exchange on cash and cash equivalents . . . . . . . . . . .

$ 1,797
(1,357)
(1,358)
(22)

$ 1,547
169
(1,253)
(13)

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . .

$ (940)

$

450

Change

$

250
(1,526)
(105)
(9)

$(1,390)

For the comparison of fiscal year 2019 to fiscal year 2018, refer to Part II, Item 7 “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for our fiscal
year ended March 31, 2019, filed with the SEC on May 24, 2019 under the subheading “Liquidity and Capital
Resources”.

Changes in Cash Flow

Operating Activities. Net cash provided by operating activities increased by $250 million during fiscal year 2020
as compared to fiscal year 2019 primarily driven by business performance related to the sales of Star Wars Jedi:
Fallen Order, Need for Speed Heat, and Apex Legends, and improved collections during fiscal year 2020. The
increase was partially offset by larger marketing and advertising payments for new titles, particularly Apex
Legends and Anthem, higher cash payments for income taxes, and higher royalty payments.

Investing Activities. Net cash used in investing activities increased by $1,526 million during fiscal year 2020 as
compared to fiscal year 2019 primarily driven by a $2,017 million increase in purchases of short-term
investments. The increase was partially offset by a $454 million increase in proceeds from sales and maturities of
short-term investments during fiscal year 2020 as compared to fiscal year 2019 and the payment of $58 million in
connection with mergers and acquisitions activity during fiscal year 2019.

Financing Activities. Net cash used in financing activities increased by $105 million during fiscal year 2020 as
compared to fiscal year 2019 primarily driven by the payment of $122 million of contingent consideration in
connection with our acquisition of Respawn Entertainment, LLC and a $15 million increase in the repurchase and
retirement of our common stock. These increases were partially offset by a $31 million decrease in cash paid to
taxing authorities in connection with withholding taxes for stock-based compensation.

Short-term Investments

Due to our mix of fixed and variable rate securities, our short-term investment portfolio is susceptible to changes
in short-term interest rates. As of March 31, 2020, our short-term investments had gross unrealized losses of
$8 million, or less than 1 percent of the total in short-term investments, and gross unrealized gains of $5 million,
or less than 1 percent of the total in short-term investments. From time to time, we may liquidate some or all of
our short-term investments to fund operational needs or other activities, such as capital expenditures, business
acquisitions or stock repurchase programs.

38

Senior Notes

In February 2016, we issued $600 million aggregate principal amount of the 2021 Notes and $400 million
aggregate principal amount of the 2026 Notes. The effective interest rate is 3.94% for the 2021 Notes and 4.97%
for the 2026 Notes. Interest is payable semiannually in arrears, on March 1 and September 1 of each year. The
2021 Notes are due on March 1, 2021. See Note 11 — Financing Arrangements to the Consolidated Financial
Statements in this Form 10-K as it relates to our Senior Notes, which is incorporated by reference into this
Item 7.

Credit Facility

On August 29, 2019, we entered into a $500 million unsecured revolving credit facility (“Credit Facility”) with a
syndicate of banks. The Credit Facility terminates on August 29, 2024 unless the maturity is extended in
accordance with its terms. As of March 31, 2020, no amounts were outstanding under the Credit Facility. See
Note 11 — Financing Arrangements to the Consolidated Financial Statements in this Form 10-K as it relates to
our Credit Facility, which is incorporated by reference into this Item 7.

Financial Condition

We believe that our cash, cash equivalents, short-term investments, cash generated from operations and available
financing facilities will be sufficient to meet our operating requirements for at least the next 12 months, including
working capital requirements, capital expenditures, debt repayment obligations, and potentially, future
acquisitions, stock repurchases, or strategic investments. We may choose at any time to raise additional capital to
repay debt, strengthen our financial position, facilitate expansion, repurchase our stock, pursue strategic
acquisitions and investments, and/or to take advantage of business opportunities as they arise. The COVID-19
pandemic has caused disruption to capital markets and any additional capital could be difficult to obtain,
expensive and/or not available to us on favorable terms, if at all. Such additional capital could also result in
substantial dilution to our existing stockholders.

Our foreign subsidiaries will generally be subject to U.S. tax, and to the extent earnings from these subsidiaries
can be repatriated without a material tax cost, such earnings will not be indefinitely reinvested. As of March 31,
2020, approximately $4.4 billion of our cash, cash equivalents, and short-term investments were domiciled in
foreign tax jurisdictions, of which approximately $2.7 billion is available for repatriation without a material tax
cost.

We have a “shelf” registration statement on Form S-3 on file with the SEC. This shelf registration statement,
which includes a base prospectus, allows us at any time to offer any combination of securities described in the
prospectus in one or more offerings. Unless otherwise specified in a prospectus supplement accompanying the
base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the shelf
registration statement for general corporate purposes, which may include funding for working capital, financing
capital expenditures, research and development, marketing and distribution efforts, and if opportunities arise, for
acquisitions or strategic alliances. Pending such uses, we may invest the net proceeds in interest-bearing
securities. In addition, we may conduct concurrent or other financings at any time.

Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties including, but not
limited to, those related to the impact of the COVID-19 pandemic on our business and on the business of our key
partners, customer demand and acceptance of our products, our ability to collect our accounts receivable as they
become due, successfully achieving our product release schedules and attaining our forecasted sales objectives,
economic conditions in the United States and abroad, the impact of acquisitions and other strategic transactions
in which we may engage, the impact of competition, the seasonal and cyclical nature of our business and
operating results, and the other risks described in the “Risk Factors” section, included in Part I, Item 1A of this
report.

39

A
n
n
u
a
l

R
e
p
o
r
t

Contractual Obligations and Commercial Commitments

See Note 13 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-K as it
relates to our contractual obligations and commercial commitments, which is incorporated by reference into this
Item 7.

OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of
Regulation S-K promulgated by the SEC, that have or are reasonably likely to have a current or future effect on
our financial condition, changes in financial condition, revenues and expenses, results of operations, liquidity,
capital expenditures, or capital resources that are material to investors.

INFLATION

We believe the impact of inflation on our results of operations has not been significant in any of the past three
fiscal years.

40

Item 7A: Quantitative and Qualitative Disclosures About Market Risk

MARKET RISK

We are exposed to various market risks, including changes in foreign currency exchange rates, interest rates and
market prices, which have experienced significant volatility, including increased volatility in connection with the
COVID-19 pandemic. Market risk is the potential loss arising from changes in market rates and market prices.
We employ established policies and practices to manage these risks. Foreign currency forward contracts are used
to hedge anticipated exposures or mitigate some existing exposures subject to foreign exchange risk as discussed
below. While we do not hedge our short-term investment portfolio, we protect our short-term investment
portfolio against different market risks, including interest rate risk as discussed below. Our cash and cash
equivalents portfolio consists of highly liquid investments with insignificant interest rate risk and original or
remaining maturities of three months or less at the time of purchase. We do not enter into derivatives or other
financial instruments for speculative trading purposes and do not hedge our market price risk relating to
marketable equity securities, if any.

Foreign Currency Exchange Risk

International sales are a fundamental part of our business, and the

Foreign Currency Exchange Rates.
strengthening of the U.S. dollar (particularly relative to the Euro, British pound sterling, Australian dollar,
Chinese yuan, South Korean won and Polish zloty) has a negative impact on our reported international net
revenue, but a positive impact on our reported international operating expenses (particularly the Swedish krona
and Canadian dollar) because these amounts are translated at lower rates as compared to periods in which the
U.S. dollar is weaker. While we use foreign currency hedging contracts to mitigate some foreign currency
exchange risk, these activities are limited in the protection that they provide us and can themselves result in
losses.

Cash Flow Hedging Activities. We hedge a portion of our foreign currency risk related to forecasted foreign-
currency-denominated sales and expense transactions by purchasing foreign currency forward contracts that
generally have maturities of 18 months or less. These transactions are designated and qualify as cash flow
hedges. Our hedging programs are designed to reduce, but do not entirely eliminate, the impact of currency
exchange rate movements in net revenue and research and development expenses.

Balance Sheet Hedging Activities. We use foreign currency forward contracts to mitigate foreign currency
exchange risk associated with foreign-currency-denominated monetary assets and liabilities, primarily
intercompany receivables and payables. These foreign currency forward contracts generally have a contractual
term of three months or less and are transacted near month-end.

We believe the counterparties to our foreign currency forward contracts are creditworthy multinational
commercial banks. While we believe the risk of counterparty nonperformance is not material, a sustained decline
in the financial stability of financial institutions as a result of disruption in the financial markets could affect our
ability to secure creditworthy counterparties for our foreign currency hedging programs.

Notwithstanding our efforts to mitigate some foreign currency exchange risks, there can be no assurance that our
hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. As of
March 31, 2020, a hypothetical adverse foreign currency exchange rate movement of 10 percent or 20 percent
would have resulted in potential declines in the fair value on our foreign currency forward contracts used in cash
flow hedging of $160 million or $320 million, respectively. As of March 31, 2020, a hypothetical adverse foreign
currency exchange rate movement of 10 percent or 20 percent would have resulted in potential losses in the
Consolidated Statements of Operations on our foreign currency forward contracts used in balance sheet hedging
of $65 million or $130 million, respectively. This sensitivity analysis assumes an adverse shift of all foreign
currency exchange rates; however, all foreign currency exchange rates do not always move in the same manner
and actual results may differ materially. See Note 5 — Derivative Financial Instruments to the Consolidated
Financial Statements in this Form 10-K as it relates to our derivative financial instruments, which is incorporated
by reference into this Item 7A.

41

A
n
n
u
a
l

R
e
p
o
r
t

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 by maintaining an investment portfolio generally consisting of debt instruments
of high credit quality and relatively short maturities. However, because short-term investments mature relatively
quickly and, if reinvested, are invested at the then-current market rates, interest income on a portfolio consisting
of short-term investments is subject to market fluctuations to a greater extent than a portfolio of longer term
investments. Additionally, the contractual terms of the investments do not permit the issuer to call, prepay or
otherwise settle the investments at prices less than the stated par value. Our investments are held for purposes
other than trading. We do not use derivative financial instruments in our short-term investment portfolio.

As of March 31, 2020, our short-term investments were classified as available-for-sale securities and,
consequently, were recorded at fair value with unrealized gains or losses resulting from changes in fair value
reported as a separate component of accumulated other comprehensive income (loss), net of tax, in stockholders’
equity.

Notwithstanding our efforts to manage interest rate risks, there can be no assurance that we will be adequately
protected against risks associated with interest rate fluctuations. Changes in interest rates affect the fair value of
our short-term investment portfolio. To provide a meaningful assessment of the interest rate risk associated with
our short-term investment portfolio, we performed a sensitivity analysis to determine the impact a change in
interest rates would have on the value of the portfolio assuming a 150 basis point parallel shift in the yield curve.
As of March 31, 2020, a hypothetical 150 basis point increase in interest rates would have resulted in a
$24 million, or 1% decrease in the fair market value of our short-term investments.

42

Item 8: Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Consolidated Financial Statements of Electronic Arts Inc. and Subsidiaries:

Consolidated Balance Sheets as of March 31, 2020 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Years Ended March 31, 2020, 2019 and 2018 . . . . . . . . .
Consolidated Statements of Comprehensive Income for the Years Ended March 31, 2020, 2019 and

Page

44
45

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46

Consolidated Statements of Stockholders’ Equity for the Years Ended March 31, 2020, 2019 and

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Years Ended March 31, 2020, 2019 and 2018 . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47
48
49
87

Financial Statement Schedule:

The following financial statement schedule of Electronic Arts Inc. and Subsidiaries for the years ended
March 31, 2020, 2019 and 2018 is filed as part of this report and should be read in conjunction with
the Consolidated Financial Statements of Electronic Arts Inc. and Subsidiaries:

Schedule II — Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93

Other financial statement schedules have been omitted because the information called for in them is not required
or has already been included in either the Consolidated Financial Statements or the Notes thereto.

A
n
n
u
a
l

R
e
p
o
r
t

43

ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except par value data)

ASSETS
Current assets:

March 31,
2020

March 31,
2019

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,768
1,967
461
321

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related intangibles, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,517

449
1,885
53
1,903
305

$4,708
737
623
313

6,381

448
1,892
87
35
114

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$11,112

$8,957

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred net revenue (online-enabled games) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior notes, current, net

$

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Senior notes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68
1,052
945
599

2,664

397
373
1
216

$ 113
1,052
1,100
—

2,265

994
233
2
132

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,651

3,626

Commitments and contingencies (See Note 13)

Stockholders’ equity:

Preferred stock, $0.01 par value. 10 shares authorized . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $0.01 par value. 1,000 shares authorized; 288 and 298 shares issued and
outstanding, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

3
—
7,508
(50)

7,461

3
—
5,358
(30)

5,331

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . .

$11,112

$8,957

See accompanying Notes to Consolidated Financial Statements.

44

ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

Year Ended March 31,

2020

2019

2018

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,537
1,369

$4,950 $5,150
1,277

1,322

Gross profit

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,168

3,628

3,873

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,559
631
506
5
22

2,723

1,445
63

Income before provision for (benefit from) income taxes . . . . . . . . . . . . . . . . . . .
Provision for (benefit from) income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,508
(1,531)

1,433
702
460
14
23

2,632

996
83

1,079
60

1,320
641
469
—
9

2,439

1,434
15

1,449
406

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,039

$1,019 $1,043

Earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 10.37
$ 10.30

$ 3.36 $ 3.39
$ 3.34
$ 3.33

Number of shares used in computation:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

293
295

303
306

308
312

See accompanying Notes to Consolidated Financial Statements.

A
n
n
u
a
l

R
e
p
o
r
t

45

ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

Year Ended March 31,

2020

2019

2018

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,039

$1,019

$1,043

Other comprehensive income (loss), net of tax:

Net gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . .
Net gains (losses) on derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . . . .

(3)
17
(34)

(20)

7
88
(21)

74

(5)
(121)
18

(108)

Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,019

$1,093

$ 935

See accompanying Notes to Consolidated Financial Statements.

46

ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, share data in thousands)

Common Stock

Shares

Amount

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total
Stockholders’
Equity

308,367

$ 3

$1,049

$3,027

$ (19)

$ 4,060

Balances as of March 31, 2017 . . . . .
Cumulative-effect adjustment from
the adoption of ASU 2016-09 . . .

Total comprehensive income

(loss) . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . .
Issuance of common stock . . . . . . .
Repurchase and retirement of

—

—
—
3,332

common stock . . . . . . . . . . . . . . .

(5,329)

Balances as of March 31, 2018 . . . . .
Cumulative-effect adjustment from
the adoption of ASC 606 . . . . . . .
Cumulative-effect adjustment from
the adoption of ASU 2018-02 . . .
Total comprehensive income . . . . .
Stock-based compensation . . . . . . .
Issuance of common stock . . . . . . .
Repurchase and retirement of

306,370

—

—
—
—
2,722

common stock . . . . . . . . . . . . . . .

(10,985)

Balances as of March 31, 2019 . . . . .

298,107

Total comprehensive income

(loss) . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . .
Issuance of common stock . . . . . . .
Repurchase and retirement of

—
—
2,623

common stock . . . . . . . . . . . . . . .

(12,317)

Balances as of March 31, 2020 . . . . .

288,413

—

—
—
—

—

$ 3

—

—
—
—
—

—

$ 3

—
—
—

—

$ 3

9

(8)

—

—
242
(42)

1,043
—
—

(601)

—

(108)
—
—

—

1

935
242
(42)

(601)

$ 657

$4,062

$(127)

$ 4,595

—

590

—
—
284
(61)

(1)
1,019
—
—

(880)

(312)

22

1
74
—
—

—

$ — $5,358

$ (30)

—
347
(29)

3,039
—
—

(318)

(889)

(20)
—
—

—

$ — $7,508

$ (50)

612

—
1,093
284
(61)

(1,192)

$ 5,331

3,019
347
(29)

(1,207)

$ 7,461

A
n
n
u
a
l

R
e
p
o
r
t

See accompanying Notes to Consolidated Financial Statements.

47

ELECTRONIC ARTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

OPERATING ACTIVITIES

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating

activities:
Depreciation, amortization and accretion . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related contingent consideration . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in assets and liabilities:

Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred net revenue (online-enabled games) . . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31,

2020

2019

2018

$ 3,039

$ 1,019

$ 1,043

150
5
347

164
35
(36)
119
(1,871)
(155)

145
14
284

(88)
(24)
59
3
(16)
151

136
—
242

(25)
10
(44)
43
204
83

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . .

1,797

1,547

1,692

INVESTING ACTIVITIES

Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from maturities and sales of short-term investments . . . . . . . . . . . . .
Purchase of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(140)
2,142
(3,359)
—

(119)
1,688
(1,342)
(58)

(107)
3,166
(2,287)
(150)

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . .

(1,357)

169

622

FINANCING ACTIVITIES

Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid to taxing authorities for shares withheld from employees . . . . . . . .
Repurchase and retirement of common stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related contingent consideration payments . . . . . . . . . . . . . . . . . .

62
(91)
(1,207)
(122)

61
(122)
(1,192)
—

Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,358)

(1,253)

Effect of foreign exchange on cash and cash equivalents . . . . . . . . . . . . . . . . . . .

Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .
Beginning cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(22)

(940)
4,708

(13)

450
4,258

78
(120)
(601)
—

(643)

22

1,693
2,565

Ending cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,768

$ 4,708

$ 4,258

Supplemental cash flow information:
Cash paid during the year for income taxes, net

. . . . . . . . . . . . . . . . . . . . . . . . . .

Cash paid during the year for interest

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

170

42

$

$

100

42

$

$

57

42

See accompanying Notes to Consolidated Financial Statements.

48

ELECTRONIC ARTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Electronic Arts is a global leader in digital interactive entertainment. We develop, market, publish and deliver
games, content and services that can be played and watched on game consoles, PCs, mobile phones and tablets.
We believe that the breadth and depth of our portfolio, live services offerings, and our use of multiple business
models and distribution channels provide us with strategic advantages. Our foundation is a collection of
intellectual property from which we create innovative games and content that enables us to build on-going and
meaningful relationships with a community of players, creators and viewers. Our portfolio includes brands that
we either wholly own (such as Battlefield, The Sims, Apex Legends, Need for Speed and Plants v. Zombies) or
license from others (such as FIFA, Madden NFL and Star Wars). We also offer our players high-quality
experiences designed to provide value to players and to extend and enhance gameplay. These live services
include extra content, subscription offerings and other revenue generated outside of the sale of our base games.
And we are focused on reaching more players whenever and wherever they want to play. We believe that we can
add value to our network by making it easier for players to connect to a world of play by offering choice of
business model, distribution channel and device.

Consolidation

The accompanying Consolidated Financial Statements include the accounts of Electronic Arts Inc. and its
wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

Fiscal Year

Our fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest March 31. Our results of
operations for the fiscal years ended March 31, 2020, 2019 and 2018 contained 52 weeks each and ended on
March 28, 2020, March 30, 2019 and March 31, 2018 respectively. For simplicity of disclosure, all fiscal periods
are referred to as ending on a calendar month end.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted
in the United States (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts
reported in our consolidated financial statements and the accompanying notes. Such estimates include sales
returns and allowances, provisions for doubtful accounts, accrued liabilities, offering periods for deferred net
revenue, relative stand-alone selling price for identified performance obligations in our revenue transactions,
losses on royalty commitments, estimates regarding the recoverability of prepaid royalties, inventories, long-
lived assets, discount rates used in the measurement and recognition of lease liabilities, assets acquired and
liabilities assumed in business combinations, certain estimates related to the measurement and recognition of
costs resulting from our stock-based payment awards, unrecognized tax benefits, deferred income tax assets and
associated valuation allowances, as well as estimates used in our goodwill, intangibles and short-term investment
impairment tests. These estimates generally involve complex issues and require us to make judgments, involve
analysis of historical and future trends, can require extended periods of time to resolve, and are subject to change
from period to period. In all cases, actual results could differ materially from our estimates.

Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards
Codification (“ASC”) Topic 842, Leases (the “New Lease Standard” or “ASC 842”). The FASB issued this
standard to increase transparency and comparability among organizations by recognizing right-of-use (“ROU”)
lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements.

49

A
n
n
u
a
l

R
e
p
o
r
t

We adopted the New Lease Standard on April 1, 2019, the beginning of fiscal year 2020, using the optional
transition method which allows us to use the effective date of the New Lease Standard as the date of initial
application on transition, instead of at the beginning of the earliest comparative period presented. Accordingly,
we did not adjust prior periods for the effects of the New Lease Standard. Additionally, we elected to apply the
package of practical expedients, which allows us to carryforward our historical lease classification, our
assessment on whether a contract is or contains a lease, and our assessment of initial direct costs for any leases
that exist prior to adoption of the new lease standard.

The adoption of the New Lease Standard on April 1, 2019 resulted in the recognition of operating lease ROU
assets of $215 million, current operating lease liabilities of $50 million, and noncurrent operating lease liabilities
of $197 million on our Consolidated Balance Sheets. In addition, upon transition, we eliminated prepaid rent
assets of $6 million and deferred rent liabilities of $38 million. Operating lease ROU assets, operating lease
liabilities, and noncurrent operating lease liabilities are included in other assets, accrued and other current
liabilities, and other liabilities, respectively. The adoption of the New Lease Standard did not have an impact on
our Consolidated Statements of Operations or Cash Flows.

BALANCE SHEETS
(In millions)

Balance at
March 31, 2019

Adjustments due
to New Lease
Standard
Adoption

Balance at
April 1, 2019

Assets
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liabilities
Accrued and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 313
114

$1,052
132

$ (6)
215

$ 47
162

$ 307
329

$1,099
294

See Note 12 — Leases for additional information on leases.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements
to Accounting for Hedging Activities. This update is intended to make more financial and nonfinancial hedging
strategies eligible for hedge accounting, simplify the application of hedge accounting by eliminating the
requirement to separately measure and report hedge ineffectiveness, and increase transparency around the scope
and results of hedging programs. We adopted ASU 2017-12 in the first quarter of fiscal 2020, using a modified-
retrospective approach. Upon adoption of ASU 2017-12, we no longer measure and report hedge ineffectiveness
separately. We instead present the entire change in the fair value of a hedging instrument in the same
Consolidated Statements of Operations line as the hedged item. Additionally, the amount historically excluded
from the assessment of hedge effectiveness for our cash flow hedges is now recognized into the Consolidated
Statements of Operations in the period when the forecasted transaction is recognized. The cumulative-effect
adjustment from the adoption had a de minimis impact on our Consolidated Financial Statements. See Note 5 —
Derivative Financial Instruments.

Other Recently Issued Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). The update
changes the methodology for measuring credit losses on financial instruments and the timing of when such losses
are recorded. This update replaces the existing incurred loss impairment model with an expected loss model. It
also requires credit losses related to available-for-sale debt securities to be recognized as an allowance for credit
losses rather than as a reduction to the carrying value of the securities. This update is effective for us beginning
in the first quarter of fiscal year 2021. We continue to monitor the economic implications of the COVID-19
pandemic; however based on current market conditions, we do not expect the adoption to have a material impact
on our Consolidated Financial Statements and related disclosures.

50

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—
Changes to the Disclosure Requirements for Fair Value Measurement. This update eliminates, adds, and
modifies certain fair value measurement disclosure requirements. This update is effective for us beginning in the
first quarter of fiscal 2021. We do not expect the adoption to have a material impact on our Consolidated
Financial Statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use
Software (Subtopic 350-40). This update requires a customer in a cloud computing service arrangement to follow
the internal-use software guidance in order to determine which implementation costs to defer and recognize as an
asset. This update is effective for us beginning in the first quarter of fiscal year 2021. We do not expect the
adoption to have a material impact on our Consolidated Financial Statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740).
The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the
general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for
other areas of Topic 740 by clarifying and amending existing guidance. This update is effective for us beginning
in the first quarter of fiscal year 2022. Early adoption is permitted. We are currently evaluating the impact of this
new standard on our Consolidated Financial Statements and related disclosures.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash, Cash Equivalents, and Short-Term Investments

Cash equivalents consist of highly liquid investments with insignificant interest rate risk and original or
remaining maturities of three months or less at the time of purchase.

Short-term investments consist of debt securities with original or remaining maturities of greater than three
months at the time of purchase, and are accounted for as available-for-sale securities and are recorded at fair
value. Cash, cash equivalents and short-term investments are available for use in current operations or other
activities such as capital expenditures, business combinations and share repurchases.

Unrealized gains and losses on our short-term investments are recorded as a component of accumulated other
comprehensive income (loss) in stockholders’ equity, net of tax, until either (1) the security is sold, (2) the
security has matured, or (3) we determine that the fair value of the security has declined below its adjusted cost
basis and the decline is other-than-temporary. Realized gains and losses on our short-term investments are
calculated based on the specific identification method and are reclassified from accumulated other
comprehensive income (loss) to interest and other income (expense), net. Determining whether a decline in fair
value is other-than-temporary requires management judgment based on the specific facts and circumstances of
each security. The ultimate value realized on these securities is subject to market price volatility until they are
sold.

Our short-term investments are evaluated for impairment quarterly. We consider various factors in determining
whether we should recognize an impairment charge, including the credit quality of the issuer, the duration that
the fair value has been less than the adjusted cost basis, severity of the impairment, reason for the decline in
value and potential recovery period, the financial condition and near-term prospects of the investees, our intent to
sell and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in
market value, and any contractual terms impacting the prepayment or settlement process. If we conclude that an
investment is other-than-temporarily impaired, we recognize an impairment charge at that time in our
Consolidated Statements of Operations. Based on our evaluation, we did not consider any of our investments to
be other-than-temporarily impaired as of March 31, 2020 and 2019.

A
n
n
u
a
l

R
e
p
o
r
t

51

Property and Equipment, Net

Property and equipment, net, are stated at cost. Depreciation is calculated using the straight-line method over the
following useful lives:

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer equipment and software . . . . . . . . . . . . . . . . .
Equipment, furniture and fixtures, and other . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . Lesser of the lease term or the estimated useful lives

20 to 25 years
3 to 6 years
3 to 5 years

of the improvements, generally 1 to 15 years

We capitalize costs associated with internal-use software development once a project has reached the application
development stage. Such capitalized costs include external direct costs utilized in developing or obtaining the
software, and payroll and payroll-related expenses for employees who are directly associated with the
development of the software. Capitalization of such costs begins when the preliminary project stage is complete
and ceases at the point in which the project is substantially complete and is ready for its intended purpose. Once
the internal-use software is ready for its intended use, the assets are depreciated on a straight-line basis over each
asset’s estimated useful life, which is generally three years. The net book value of capitalized costs associated
with internal-use software was $56 million and $37 million as of March 31, 2020 and 2019, respectively.

Acquisition-Related Intangibles and Other Long-Lived Assets

We recognize acquisition-related intangible assets, such as acquired developed and core technology, in
connection with business combinations. We amortize the cost of acquisition-related intangible assets that have
finite useful lives on a straight-line basis over the lesser of their estimated useful lives or the agreement terms,
currently from one to five years. We evaluate acquisition-related intangibles and other long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to future
undiscounted net cash flows expected to be generated by the asset group. This includes assumptions about future
prospects for the business that the asset relates to and typically involves computations of the estimated future
cash flows to be generated by these businesses. Based on these judgments and assumptions, we determine
whether we need to take an impairment charge to reduce the value of the asset stated on our Consolidated
Balance Sheets to reflect its estimated fair value. When we consider such assets to be impaired, the amount of
impairment we recognize is measured by the amount by which the carrying amount of the asset exceeds its fair
value.

Goodwill Impairment

In assessing impairment on our goodwill, we first analyze qualitative factors to determine whether it is more
likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining
whether it is necessary to perform a goodwill impairment test. The qualitative factors we assess include long-
term prospects of our performance, share price trends and market capitalization, and Company specific events. If
we conclude it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, we do
not need to perform an impairment test. If based on that assessment, we believe it is more likely than not that the
fair value of the reporting unit is less than its carrying value we will measure goodwill for impairment by
applying fair value-based tests at the reporting unit level. Reporting units are determined by the components of
operating segments that constitute a business for which (1) discrete financial information is available,
(2) segment management regularly reviews the operating results of that component, and (3) whether the
component has dissimilar economic characteristics to other components. As of March 31, 2020, we have only
one reportable segment, which represents our only operating segment.

Revenue Recognition

We adopted ASC Topic 606, Revenue From Contracts with Customers (the “New Revenue Standard” or “ASC
606”), on April 1, 2018, the beginning of fiscal year 2019, using the modified retrospective method. The
comparative information for periods prior to April 1, 2018 has not been restated and continues to be reported
under the accounting standards in effect for those periods.

52

We derive revenue principally from sales of our games, and related extra content and services that can be played
by customers on a variety of platforms which include game consoles, PCs, mobile phones and tablets. Our
product and service offerings include, but are not limited to, the following:

•

•

•

•

•

full games with both online and offline functionality (“Games with Services”), which generally
includes (1) the initial game delivered digitally or via physical disc at the time of sale and typically
provide access to offline core game content (“software license”); (2) updates on a
when-and-if-available basis, such as software patches or updates, and/or additional free content to be
delivered in the future (“future update rights”); and (3) a hosted connection for online playability
(“online hosting”);

full games with online-only functionality which require an Internet connection to access all gameplay
and functionality (“Online-Hosted Service Games”);

extra content related to Games with Services and Online-Hosted Service Games which provides access
to additional in-game content;

subscriptions, such as Origin Access, Origin Access Premier and EA Access, that generally offers
access to a selection of full games, in-game content, online services and other benefits typically for a
recurring monthly or annual fee; and

licensing to third parties to distribute and host our games and content.

We evaluate and recognize revenue by:

•

•

•

•

•

identifying the contract(s) with the customer;

identifying the performance obligations in the contract;

determining the transaction price;

allocating the transaction price to performance obligations in the contract; and

recognizing revenue as each performance obligation is satisfied through the transfer of a promised
good or service to a customer (i.e., “transfer of control”).

Certain of our full game and/or extra content are sold to resellers with a contingency that the full game and/or
extra content cannot be resold prior to a specific date (“Street Date Contingency”). We recognize revenue for
transactions that have a Street Date Contingency when the Street Date Contingency is removed and the full game
and/or extra content can be resold by the reseller. For digital full game and/or extra content downloads sold to
customers, we recognize revenue when the full game and/or extra content is made available for download to the
customer.

Online-Enabled Games

Games with Services. Our sales of Games with Services are evaluated to determine whether the software license,
future update rights and the online hosting are distinct and separable. Sales of Games with Services are generally
determined to have three distinct performance obligations: software license, future update rights, and the online
hosting.

Since we do not sell the performance obligations on a stand-alone basis, we consider market conditions and other
observable inputs to estimate the stand-alone selling price for each performance obligation. For Games with
Services, generally 75 percent of the sales price is allocated to the software license performance obligation and
recognized at a point in time when control of the license has been transferred to the customer (which is usually at
or near the same time as the booking of the transaction). The remaining 25 percent is allocated to the future
update rights and the online hosting performance obligations and recognized ratably as the service is provided
(over the Estimated Offering Period).

Online-Hosted Service Games. Sales of our Online-Hosted Service Games are determined to have one distinct
performance obligation: the online hosting. We recognize revenue from these arrangements as the service is
provided.

53

A
n
n
u
a
l

R
e
p
o
r
t

Extra Content. Revenue received from sales of downloadable content are derived primarily from the sale of
virtual currencies and digital in-game content designed to provide value to players and to extend and enhance
gameplay. Sales of extra content are accounted for in a manner consistent with the treatment for our Games with
Services and Online-Hosted Service Games as discussed above, depending upon whether or not the extra content
has offline functionality. That is, if the extra content has offline functionality, then the extra content is accounted
for similarly to Games with Services (generally determined to have three distinct performance obligations:
software license, future update rights, and the online hosting). If the extra content does not have offline
functionality, then the extra content is determined to have one distinct performance obligation: the online-hosted
service offering.

Subscriptions

Sales of our subscriptions are deemed to be one performance obligation and we recognize revenue from these
arrangements ratably over the subscription term as the performance obligation is satisfied.

Licensing Revenue

In certain countries, we utilize third-party licensees to distribute and host our games and content in accordance
with license agreements, for which the licensees typically pay us a fixed minimum guarantee and/or sales-based
royalties. These arrangements typically include multiple performance obligations, such as a time-based license of
software and future update rights. We recognize as revenue a portion of the minimum guarantee when we
transfer control of the license of software (generally upon commercial launch) and the remaining portion ratably
over the contractual term in which we provide the licensee with future update rights. Any sales-based royalties
are generally recognized as the related sales occur by the licensee.

Significant Judgments around Revenue Arrangements

Identifying performance obligations. Performance obligations promised in a contract are identified based on the
goods and services that will be transferred to the customer that are both capable of being distinct, (i.e., the
customer can benefit from the goods or services either on its own or together with other resources that are readily
available), and are distinct in the context of the contract (i.e., it is separately identifiable from other goods or
services in the contract). To the extent a contract includes multiple promises, we must apply judgment to
determine whether those promises are separate and distinct performance obligations. If these criteria are not met,
the promises are accounted for as a combined performance obligation.

Determining the transaction price. The transaction price is determined based on the consideration that we will be
entitled to receive in exchange for transferring our goods and services to the customer. Determining the
transaction price often requires judgment, based on an assessment of contractual terms and business practices. It
further includes review of variable consideration such as discounts, sales returns, price protection, and rebates,
which is estimated at the time of the transaction. See below for additional information regarding our sales returns
and price protection reserves. In addition, the transaction price does not include an estimate of the variable
consideration related to sales-based royalties. Sales-based royalties are recognized as the sales occur.

Allocating the transaction price. Allocating the transaction price requires that we determine an estimate of the
relative stand-alone selling price for each distinct performance obligation. Determining the relative stand-alone
selling price is inherently subjective, especially in situations where we do not sell the performance obligation on
a stand-alone basis (which occurs in the majority of our transactions). In those situations, we determine the
relative stand-alone selling price based on various observable inputs using all information that is reasonably
available. Examples of observable inputs and information include: historical internal pricing data, cost plus
margin analyses, third-party external pricing of similar or same products and services such as software licenses
and maintenance support within the enterprise software industry. The results of our analysis resulted in a specific
percentage of the transaction price being allocated to each performance obligation.

54

Determining the Estimated Offering Period. The offering period is the period in which we offer to provide the
future update rights and/or online hosting for the game and related extra content sold. Because the offering period
is not an explicitly defined period, we must make an estimate of the offering period for the service related
performance obligations (i.e., future update rights and online hosting). Determining the Estimated Offering
Period is inherently subjective and is subject to regular revision. Generally, we consider the average period of
time customers are online when estimating the offering period. We also consider the estimated period of time
between the date a game unit is sold to a reseller and the date the reseller sells the game unit to the customer (i.e.,
time in channel). Based on these two factors, we then consider the method of distribution. For example, games
sold at retail would have a composite offering period equal to the online gameplay period plus time in channel as
opposed to digitally-distributed software licenses which are delivered immediately via digital download and
therefore, the offering period is estimated to be only the online gameplay period.

Additionally, we consider results from prior analyses, known and expected online gameplay trends, as well as
disclosed service periods for competitors’ games in determining the Estimated Offering Period for future sales.
We believe this provides a reasonable depiction of the transfer of future update rights and online hosting to our
customers, as it is the best representation of the time period during which our games are played. We recognize
revenue for future update rights and online hosting performance obligations ratably on a straight-line basis over
this period as there is a consistent pattern of delivery for these performance obligations. These performance
obligations are generally recognized over an estimated nine-month period beginning in the month after shipment
for software licenses sold through retail and an estimated six-month period for digitally-distributed software
licenses beginning in the month of sale.

Deferred Net Revenue

Because the majority of our sales transactions include future update rights and online hosting performance
obligations, which are subject to a recognition period of generally six to nine months, our deferred net revenue
balance is material. This balance increases from period to period by the revenue being deferred for current sales
with these service obligations and is reduced by the recognition of revenue from prior sales that were deferred.
Generally, revenue is recognized as the services are provided.

Principal Agent Considerations

We evaluate sales to end customers of our full games and related content via third-party storefronts, including
digital storefronts such as Microsoft’s Xbox Store, Sony’s PlayStation Store, Apple App Store, and Google Play
Store, in order to determine whether or not we are acting as the principal in the sale to the end customer, which
we consider in determining if revenue should be reported gross or net of fees retained by the third-party
storefront. An entity is the principal if it controls a good or service before it is transferred to the end customer.
Key indicators that we evaluate in determining gross versus net treatment include but are not limited to the
following:

•

the underlying contract terms and conditions between the various parties to the transaction;

• which party is primarily responsible for fulfilling the promise to provide the specified good or service

to the end customer;

• which party has inventory risk before the specified good or service has been transferred to the end

customer; and

• which party has discretion in establishing the price for the specified good or service.

Based on an evaluation of the above indicators, except as discussed below, we have determined that generally the
third party is considered the principal to end customers for the sale of our full games and related content. We
therefore report revenue related to these arrangements net of the fees retained by the storefront. However, for
sales arrangements via Apple App Store and Google Play Store, EA is considered the principal to the end
customer and thus, we report revenue on a gross basis and mobile platform fees are reported within cost of
revenue.

55

A
n
n
u
a
l

R
e
p
o
r
t

Payment Terms

Substantially all of our transactions have payment terms, whether customary or on an extended basis, of less than
one year; therefore, we generally do not adjust the transaction price for the effects of any potential financing
components that may exist.

Sales and Value-Added Taxes

Revenue is recorded net of taxes assessed by governmental authorities that are imposed at the time of the specific
revenue-producing transaction between us and our customer, such as sales and value-added taxes.

Sales Returns and Price Protection Reserves

Sales returns and price protection are considered variable consideration under ASC 606. We reduce revenue for
estimated future returns and price protection which may occur with our distributors and retailers (“channel
partners”). Price protection represents our practice to provide our channel partners with a credit allowance to
lower their wholesale price on a particular game unit that they have not resold to customers. The amount of the
price protection for permanent markdowns is the difference between the old wholesale price and the new reduced
wholesale price. Credits are also given for short-term promotions that temporarily reduce the wholesale price. In
certain countries we also have a practice for allowing channel partners to return older products in the channel in
exchange for a credit allowance.

When evaluating the adequacy of sales returns and price protection reserves, we analyze the following: historical
credit allowances, current sell-through of our channel partners’ inventory of our products, current trends in retail
and the video game industry, changes in customer demand, acceptance of our products, and other related factors.
In addition, we monitor the volume of sales to our channel partners and their inventories, as substantial
overstocking in the distribution channel could result in high returns or higher price protection in subsequent
periods.

Taxes Collected from Customers and Remitted to Governmental Authorities

Taxes assessed by a government authority that are both imposed on and concurrent with specific revenue
transactions between us and our customers are presented on a net basis in our Consolidated Statements of
Operations.

Concentration of Credit Risk and Significant Customers

We extend credit to various customers. Collection of trade receivables may be affected by changes in economic
or other industry conditions and may, accordingly, impact our overall credit risk. Although we generally do not
require collateral, we perform ongoing credit evaluations of our customers and maintain reserves for potential
credit losses. Invoices are aged based on contractual terms with our customers. The provision for doubtful
accounts is recorded as a charge to general and administrative expense when a potential loss is identified. Losses
are written off against the allowance when the receivable is determined to be uncollectible. At March 31, 2020,
we had two customers who accounted for approximately 31 percent and 27 percent of our consolidated gross
receivables, respectively. At March 31, 2019, we had two customers who accounted for 34 percent and
33 percent of our consolidated gross receivables, respectively.

A majority of our sales are made via digital resellers, channel and platform partners. During the fiscal years
2020, 2019, and 2018, approximately 68 percent, 65 percent, and 67 percent, respectively, of our net revenue was
derived from our top ten customers and/or platform partners.

Currently, a majority of our revenue is derived through sales of products and services playable on hardware
consoles from Sony and Microsoft. For the fiscal years ended March 31, 2020, 2019 and 2018, our net revenue
for products and services on Sony’s PlayStation 3 and 4, and Microsoft’s Xbox 360 and One consoles (combined

56

across all four platforms) was 67 percent, 66 percent, and 70 percent, respectively. These platform partners have
significant influence over the products and services that we offer on their platforms. Our agreements with Sony
and Microsoft typically give significant control to them over the approval, manufacturing and distribution of our
products and services that are distributed through their platform, which could, in certain circumstances, leave us
unable to get our products and services approved, manufactured or distributed to customers.

Short-term investments are placed with high quality financial institutions or in short-duration, investment-grade
securities. We limit the amount of credit exposure in any one financial institution or type of investment
instrument.

Royalties and Licenses

Royalty-based obligations with content licensors and distribution affiliates are either paid in advance and
capitalized as prepaid royalties or are accrued as incurred and subsequently paid. These royalty-based obligations
are generally expensed to cost of revenue generally at the greater of the contractual rate or an effective royalty
rate based on the total projected net revenue for contracts with guaranteed minimums. Prepayments made to
thinly capitalized independent software developers and co-publishing affiliates are generally made in connection
with the development of a particular product, and therefore, we are generally subject to development risk prior to
the release of the product. Accordingly, payments that are due prior to completion of a product are generally
expensed to research and development over the development period as the services are incurred. Payments due
after completion of the product (primarily royalty-based in nature) are generally expensed as cost of revenue.

Our contracts with some licensors include minimum guaranteed royalty payments, which are initially recorded as
an asset and as a liability at the contractual amount when no performance remains with the licensor. When
performance remains with the licensor, we record guarantee payments as an asset when actually paid and as a
liability when incurred, rather than recording the asset and liability upon execution of the contract.

Each quarter, we also evaluate the expected future realization of our royalty-based assets, as well as any
unrecognized minimum commitments not yet paid to determine amounts we deem unlikely to be realized through
future revenue. Any impairments or losses determined before the launch of a product are generally charged to
research and development expense. Impairments or losses determined post-launch are charged to cost of revenue.
We evaluate long-lived royalty-based assets for impairment using undiscounted cash flows when impairment
indicators exist. If an impairment exists, then the related assets are written down to fair value. 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 abandoned (i.e., cease use) or the
contractual rights to use the intellectual property are terminated.

A
n
n
u
a
l

R
e
p
o
r
t

Advertising Costs

We generally expense advertising costs as incurred, except for production costs associated with media
campaigns, which are recognized as prepaid assets (to the extent paid in advance) and expensed at the first run of
the advertisement. Cooperative advertising costs are recognized when incurred and are classified as marketing
and sales expense if there is a separate identifiable benefit for which we can reasonably estimate the fair value of
the benefit identified. Otherwise, they are classified as a reduction of revenue and are generally accrued when
revenue is recognized. We then reimburse the channel partner when qualifying claims are submitted.

We are also reimbursed by our vendors for certain advertising costs incurred by us that benefit our vendors. Such
amounts are recognized as a reduction of marketing and sales expense if the advertising (1) is specific to the
vendor, (2) represents an identifiable benefit to us, and (3) represents an incremental cost to us. Otherwise,
vendor reimbursements are recognized as a reduction of the cost incurred with the same vendor. Vendor
reimbursements of advertising costs of $38 million, $46 million, and $45 million reduced marketing and sales
expense for the fiscal years ended March 31, 2020, 2019 and 2018, respectively. For the fiscal years ended
March 31, 2020, 2019 and 2018, advertising expense, net of vendor reimbursements, totaled approximately
$195 million, $271 million, and $261 million, respectively.

57

Software Development Costs

Research and development costs, which consist primarily of software development costs, are expensed as
incurred. We are required to capitalize software development costs incurred for computer software to be sold,
leased or otherwise marketed after technological feasibility of the software is established or for development
costs that have alternative future uses. Under our current practice of developing new games, the technological
feasibility of the underlying software is not established until substantially all product development and testing is
complete, which generally includes the development of a working model. Software development costs that have
been capitalized to date have been insignificant.

Foreign Currency Translation

Generally, the functional currency for our foreign operating subsidiaries is its local currency. Assets and
liabilities of foreign operations are translated into U.S. dollars using month-end exchange rates, and revenue and
expenses are translated into U.S. dollars using average exchange rates. The effects of foreign currency translation
adjustments are included as a component of accumulated other comprehensive income (loss) in stockholders’
equity.

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions
denominated in currencies other than the functional currency. Net foreign currency transaction gains (losses) of
$11 million, $(9) million, and $18 million for the fiscal years ended March 31, 2020, 2019 and 2018,
respectively, are included in interest and other income (expense), net, in our Consolidated Statements of
Operations. These net foreign currency transaction gains (losses) are partially offset by net gains (losses) on our
foreign currency forward contracts of $(4) million, $50 million, and $(16) million for the fiscal years ended
March 31, 2020, 2019 and 2018, respectively. See Note 5 for additional information on our foreign currency
forward contracts.

Income Taxes

We recognize deferred tax assets and liabilities for both the expected impact of differences between the financial
statement amount and the tax basis of assets and liabilities and for the expected future tax benefit to be derived
from tax losses and tax credit carryforwards.

During the fiscal year ended March 31, 2020, we completed an intra-entity sale of some of our intellectual
property rights to our Swiss subsidiary, where our international business is headquartered (the “Swiss intra-entity
sale”). The transaction did not result in a taxable gain. Under U.S. GAAP, any profit resulting from this
intercompany transaction will be eliminated upon consolidation. However, the transaction resulted in a step-up of
the Swiss tax-deductible basis in the transferred intellectual property rights and, accordingly, created a temporary
difference between the book basis and the tax basis of such intellectual property rights (“Swiss Deferred Tax
Asset”). The Swiss Deferred Tax Asset and the one-time tax benefit was measured and will be periodically
remeasured based on the Swiss tax rate in effect for the years the asset will be recovered.

During the fiscal year ended March 31, 2020, we recognized $1.840 billion of tax benefits related to the Swiss
Deferred Tax Asset, which is net of the impact of a $131 million valuation allowance and a $393 million
reduction due to the impact of the decision of the Ninth Circuit Court of Appeals in Altera Corp. v Commissioner
(“the Altera opinion”). The Altera opinion also resulted in the recognition of a one-time charge of $80 million
related to prior period U.S. uncertain tax positions during the fiscal year ended March 31, 2020. In total, during
the fiscal year ended March 31, 2020, we recognized one-time tax benefits of $1.760 billion related to the
$1.840 billion Swiss Deferred Tax Asset, partially offset by the $80 million one-time Altera opinion charge.

Every quarter, we perform a realizability analysis to evaluate whether it is more likely than not that all or a
portion of our deferred tax assets will not be realized. As of March 31, 2020, we have recognized a $131 million
valuation allowance related to our Swiss deferred tax assets. Our Swiss deferred tax asset realizability analysis
relies upon future Swiss taxable income as the primary source of taxable income but considers all available

58

sources of Swiss income based on the positive and negative evidence. We give more weight to evidence that can
be objectively verified. However, there is significant judgment involved in estimating future Swiss taxable
income over the 20-year period over which the Swiss deferred tax asset will reverse, specifically related to
assumptions about expected growth rates of future Swiss taxable income, which are based primarily on third
party market and industry growth data. Actual results that differ materially from those estimates could have a
material impact on our valuation allowance assessment. Although objectively verifiable, Swiss interest rates have
an impact on the valuation allowance and are based on published Swiss guidance. Any significant changes to
such interest rates could result in a material impact to the valuation allowance. Switzerland has a seven-year
carryforward period and does not permit the carry back of losses. We do not recognize any deferred taxes related
to the U.S. taxes on foreign earnings as we recognize these taxes as a period cost.

Share Repurchases

Shares of our common stock repurchased pursuant to our repurchase program, if any, are retired. The purchase
price of such repurchased shares of common stock is recorded as a reduction to additional paid-in capital. If the
balance in additional paid-in capital is exhausted, the excess is recorded as a reduction to retained earnings.

(3) FAIR VALUE MEASUREMENTS

There are various valuation techniques used to estimate fair value, the primary one being the price that would be
received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. When determining fair value, we consider the principal or most advantageous market in
which we would transact and consider assumptions that market participants would use when pricing the asset or
liability. We measure certain financial and nonfinancial assets and liabilities at fair value on a recurring and
nonrecurring basis.

Fair Value Hierarchy

The three levels of inputs that may be used to measure fair value are as follows:

• Level 1. Quoted prices in active markets for identical assets or liabilities.

• Level 2. Observable inputs other than quoted prices included within Level 1, such as quoted prices for

similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions
(less active markets), or model-derived valuations in which all significant inputs are observable or can be
derived principally from or corroborated with observable market data for substantially the full term of the
assets or liabilities.

• Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the

fair value of assets or liabilities.

A
n
n
u
a
l

R
e
p
o
r
t

59

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of March 31, 2020 and 2019, our assets and liabilities that were measured and recorded at fair value on a
recurring basis were as follows (in millions):

Fair Value Measurements at Reporting Date Using

Quoted
Prices in
Active
Markets for
Identical
Financial
Instruments

Significant
Other
Observable
Inputs

Significant
Unobservable
Inputs

(Level 1)

(Level 2)

(Level 3)

Balance Sheet Classification

As of
March 31,
2020

$

78
1,599

$
78
1,599

Assets

Bank and time deposits . . . . . . . . .
Money market funds . . . . . . . . . . .
Available-for-sale securities:

Corporate bonds . . . . . . . . . . . .

U.S. Treasury securities . . . . . .

U.S. agency securities . . . . . . . .
Commercial paper . . . . . . . . . . .

Foreign government

securities . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . .
Certificates of deposit . . . . . . . .
Foreign currency derivatives . . . .

687

603

8
414

42
269
56
76

Deferred compensation plan

assets(a)

. . . . . . . . . . . . . . . . . . .

13

Total assets at fair value . . . . . .

$3,845

$2,293

Liabilities

—

603

—
—

—
—
—
—

13

$ —
—

687

8
414

42
269
56
76

$ — Cash equivalents
— Cash equivalents

— Short-term investments and

cash equivalents

— Short-term investments and

cash equivalents
— Short-term investments
— Short-term investments and

cash equivalents

— Short-term investments
— Short-term investments
— Short-term investments
— Other current assets and

other assets

—

$1,552

— Other assets

$ —

Foreign currency derivatives . . . .

$

36

$ —

$

36

$ — Accrued and other current

Deferred compensation plan

liabilities(a) . . . . . . . . . . . . . . . . .

Total liabilities at fair value . . .

$

14

50

14

14

$

—

36

$

— Other liabilities

$ —

liabilities and other
liabilities

60

Fair Value Measurements at Reporting Date Using

Quoted
Prices in
Active
Markets for
Identical
Financial
Instruments

Significant
Other
Observable
Inputs

Significant
Unobservable
Inputs

(Level 1)

(Level 2)

(Level 3)

Balance Sheet Classification

As of
March 31,
2019

$

23
2,704

$
23
2,704

Assets

Bank and time deposits . . . . . . . .
Money market funds . . . . . . . . . .
Available-for-sale securities:

Corporate bonds . . . . . . . . . . .

U.S. Treasury securities . . . . .

U.S. agency securities . . . . . . .

327

294

57

Commercial paper . . . . . . . . . .

233

Foreign government

securities . . . . . . . . . . . . . . .
Asset-backed securities . . . . . .

Certificates of deposit . . . . . . . . .

Foreign currency derivatives . . .

Deferred compensation plan

assets(a)

. . . . . . . . . . . . . . . . . .

58
55

2

33

11

—

294

—

—

—
—

—

—

11

Total assets at fair value . . . . .

$3,797

$3,032

Liabilities

Contingent consideration(b) . . . . .

$ 136

$ —

Foreign currency derivatives . . .

16

Deferred compensation plan

liabilities(a) . . . . . . . . . . . . . . . .

12

Total liabilities at fair value . .

$ 164

$

—

12

12

$ —
—

327

—

57

233

58
55

2

33

—

$765

$ —

16

—

$ 16

$ —
—

Cash equivalents
Cash equivalents

—

—

—

—

—
—

—

—

—

$ —

$136

—

—

$136

Short-term investments and
cash equivalents
Short-term investments and
cash equivalents
Short-term investments and
cash equivalents
Short-term investments and
cash equivalents
Short-term investments and
cash equivalents
Short-term investments and
cash equivalents
Short-term investments and
cash equivalents
Other current assets and
other assets

Other assets

Accrued and other current
liabilities
Accrued and other current
liabilities and other
liabilities

Other liabilities

A
n
n
u
a
l

R
e
p
o
r
t

(a)

(b)

The Deferred Compensation Plan assets consist of various mutual funds. See Note 15 for additional
information regarding our Deferred Compensation Plan.

The contingent consideration represented the estimated fair value of the additional variable cash
consideration payable in connection with our acquisition of Respawn Entertainment, LLC (“Respawn”) that
was contingent upon the achievement of certain performance milestones. At March 31, 2019, we estimated
fair value using a probability-weighted income approach combined with a real options methodology, and
applied a discount rate that appropriately captures the risk associated with the obligation, ranging from
2.9 percent to 3.1 percent. As of March 31, 2020, all performance milestones have been achieved and a total
of $140 million in payments for performance milestones was made. See Note 7 in our Annual Report on
Form 10-K for the fiscal year ended March 31, 2019 for additional information regarding the Respawn
acquisition.

61

(4) FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

As of March 31, 2020 and 2019, our cash and cash equivalents were $3,768 million and $4,708 million,
respectively. Cash equivalents were valued using quoted market prices or other readily available market
information.

Short-Term Investments

Short-term investments consisted of the following as of March 31, 2020 and 2019 (in millions):

As of March 31, 2020

As of March 31, 2019

Cost or
Amortized
Cost

Gross Unrealized

Gains

Losses

Cost or
Amortized
Cost

Gross Unrealized

Gains

Losses

Corporate bonds . . . . . . . . . . . . . . . .
U.S. Treasury securities . . . . . . . . . .
U.S. agency securities . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . .
Foreign government securities . . . . .
Asset-backed securities . . . . . . . . . . .
Certificates of deposit . . . . . . . . . . . .

$ 684
530
8
377
42
273
56

Short-term investments . . . . . . . . .

$1,970

$ 1
4
—
—
—
—
—

$ 5

Fair
Value

$ 681
534
8
377
42
269
56

$ (4)
—
—
—
—
(4)
—

$325
153
44
112
50
53
1

$738

Fair
Value

$324
153
44
112
50
53
1

$— $ (1)
—
—
—
—
—
—
—
—
—
—
—
—

$ (8)

$1,967

$— $ (1)

$737

The following table summarizes the amortized cost and fair value of our short-term investments, classified by
stated maturity as of March 31, 2020 and 2019 (in millions):

As of March 31, 2020 As of March 31, 2019

Amortized
Cost

Fair
Value

Amortized
Cost

Fair
Value

Short-term investments

Due within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due 1 year through 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,568
395
7

$1,567
393
7

Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,970

$1,967

$449
287
2

$738

$448
287
2

$737

(5) DERIVATIVE FINANCIAL INSTRUMENTS

Assets or liabilities associated with our derivative instruments and hedging activities are recorded at fair value in
other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our
Consolidated Balance Sheets. As discussed below, the accounting for gains and losses resulting from changes in
fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge
accounting.

We transact business in various foreign currencies and have significant international sales and expenses
denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency forward
contracts, generally with maturities of 18 months or less, to reduce the volatility of cash flows primarily related
to forecasted revenue and expenses denominated in certain foreign currencies. Our cash flow risks are primarily
related to fluctuations in the Euro, British pound sterling, Canadian dollar, Swedish krona, Australian dollar,
Chinese yuan, South Korean won and Polish zloty. In addition, we utilize foreign currency forward contracts to
mitigate foreign currency exchange risk associated with foreign-currency-denominated monetary assets and

62

liabilities, primarily intercompany receivables and payables. The foreign currency forward contracts not
designated as hedging instruments generally have a contractual term of approximately three months or less and
are transacted near month-end. We do not use foreign currency forward contracts for speculative trading
purposes.

Cash Flow Hedging Activities

Certain of our forward contracts are designated and qualify as cash flow hedges. The effectiveness of the cash
flow hedge contracts, including time value, is assessed monthly using regression analysis, as well as other timing
and probability criteria. To qualify for hedge accounting treatment, all hedging relationships are formally
documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows
on hedged transactions. The derivative assets or liabilities associated with our hedging activities are recorded at
fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively,
on our Consolidated Balance Sheets. The gains or losses resulting from changes in the fair value of these hedges
is initially reported, net of tax, as a component of accumulated other comprehensive income (loss) in
stockholders’ equity. The gross amount of gains or losses resulting from changes in the fair value of these hedges
is subsequently reclassified into net revenue or research and development expenses, as appropriate, in the period
when the forecasted transaction is recognized in our Consolidated Statements of Operations. In the event that the
underlying forecasted transactions do not occur, or it becomes remote that they will occur, within the defined
hedge period, the gains or losses on the related cash flow hedges are reclassified from accumulated other
comprehensive income (loss) to net revenue or research and development expenses, in our Consolidated
Statements of Operations.

Total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting
designation are as follows (in millions):

Forward contracts to purchase . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward contracts to sell

As of March 31, 2020

As of March 31, 2019

Notional
Amount

$ 316
$1,371

Fair Value

Asset Liability

$ 1
$61

$19
$ 1

Notional
Amount

$ 295
$1,355

Fair Value

Asset Liability

$— $10
$ 4
$31

The effects of cash flow hedge accounting in our Consolidated Statements of Operations for the fiscal years
ended March 31, 2020 and 2019 are as follows (in millions):

Amount of Gain (Loss) Recognized in the Statements of Operations

Year Ended March 31,

2020

2019

2018

Net
revenue

Research
and
development

Net
revenue

Research
and
development

Net
revenue

Research
and
development

Total amounts presented in our Consolidated
Statements of Operations in which the
effects of cash flow hedges are
recorded . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gains (losses) on foreign currency forward

contracts designated as cash flow
hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,537

$1,559

$4,950

$1,433

$5,150

$1,320

$

71

$

(9)

$

18

$ (10)

$ (10)

$

5

The amount excluded from the assessment of hedge effectiveness and recognized in interest and other income
(expense) was a gain of $25 million and $10 million during fiscal year ended March 31, 2019 and 2018.

A
n
n
u
a
l

R
e
p
o
r
t

63

Balance Sheet Hedging Activities

Our foreign currency forward contracts that are not designated as hedging instruments are accounted for as
derivatives whereby the fair value of the contracts are reported as other current assets or accrued and other
current liabilities on our Consolidated Balance Sheets, and gains and losses resulting from changes in the fair
value are reported in interest and other income (expense), net, in our Consolidated Statements of Operations. The
gains and losses on these foreign currency forward contracts generally offset the gains and losses in the
underlying foreign-currency-denominated monetary assets and liabilities, which are also reported in interest and
other income (expense), net, in our Consolidated Statements of Operations.

Total gross notional amounts and fair values for currency derivatives that are not designated as hedging
instruments are accounted for as follows (in millions):

As of March 31, 2020

As of March 31, 2019

Notional
Amount

Fair Value

Asset Liability

Notional
Amount

Fair Value

Asset Liability

Forward contracts to purchase . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward contracts to sell

$388
$292

$ 1
$13

$16
$—

$449
$394

$— $ 2
$—
$ 2

The effect of foreign currency forward contracts not designated as hedging instruments in our Consolidated
Statements of Operations for the fiscal years ended March 31, 2020, 2019 and 2018, was as follows (in millions):

Total amounts presented in our Consolidated Statements of Operations in

which the effects of balance sheet hedges are recorded . . . . . . . . . . . . . . .

Gain (losses) on foreign currency forward contracts not designated as

hedging instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amount of Gain (Loss) Recognized in the
Statements of Operations

Year Ended March 31,

2020

2019

2018

Interest and other income (expense), net

$63

$ (4)

$83

$25

$ 15

$(26)

64

(6) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the fiscal years
ended March 31, 2020, 2019 and 2018 are as follows (in millions):

Unrealized Net
Gains (Losses) on
Available-for-Sale
Securities

Unrealized Net
Gains (Losses) on
Derivative
Instruments

Foreign Currency
Translation
Adjustments

Balances as of March 31, 2017 . . . . . . . . . . . . . . . .

$ (3)

$ 32

$(48)

Other comprehensive income (loss) before

reclassifications . . . . . . . . . . . . . . . . . . . . . . . .

Amounts reclassified from accumulated other

comprehensive income (loss) . . . . . . . . . . . . .

Total other comprehensive income (loss), net of

tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances as of March 31, 2018 . . . . . . . . . . . . . . . .

Cumulative-effect adjustment from the adoption
of ASC 606 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative-effect adjustment from the adoption
of ASU 2018-02 . . . . . . . . . . . . . . . . . . . . . . .

(9)

4

(5)

$ (8)

—

—

(126)

5

(121)

$ (89)

22

1

28

(10)

18

$(30)

—

—

Total

$ (19)

(107)

(1)

(108)

$(127)

22

1

Balances as of April 1, 2018 . . . . . . . . . . . . . . . . . .

$ (8)

$ (66)

$(30)

$(104)

Other comprehensive income (loss) before

reclassifications . . . . . . . . . . . . . . . . . . . . . . . .

Amounts reclassified from accumulated other

comprehensive income (loss) . . . . . . . . . . . . .

Total other comprehensive income (loss), net of

tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

1

7

Balances as of March 31, 2019 . . . . . . . . . . . . . . . .

$ (1)

Other comprehensive income (loss) before

reclassifications . . . . . . . . . . . . . . . . . . . . . . . .

Amounts reclassified from accumulated other

comprehensive income (loss) . . . . . . . . . . . . .

Total other comprehensive income (loss), net of

tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balances as of March 31, 2020 . . . . . . . . . . . . . . . .

(1)

(2)

(3)

$ (4)

96

(8)

88

$ 22

79

(62)

17

$ 39

A
n
n
u
a
l

R
e
p
o
r
t

(21)

—

(21)

$(51)

(34)

—

(34)

$(85)

81

(7)

74

$ (30)

44

(64)

(20)

$ (50)

65

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) for the
fiscal years ended March 31, 2020, 2019 and 2018 were as follows (in millions):

Statement of Operations Classification

(Gains) losses on available-for-sale securities:

Amount Reclassified From Accumulated
Other Comprehensive Income (Loss)

Year Ended March 31,

2020

2019

2018

Interest and other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (2)

Total, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

(Gains) losses on foreign currency forward contracts designated as cash

flow hedges
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development

Total, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Gains) losses on foreign currency translation:

Interest and other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(71)
9

(62)

—

—

$ 1

1

(18)
10

(8)

—

—

Total net (gain) loss reclassified, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(64)

$ (7)

$ 4

4

10
(5)

5

(10)

(10)

$ (1)

(7) GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET

The changes in the carrying amount of goodwill for the fiscal year ended March 31, 2020 are as follows (in
millions):

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,260
(368)

$1,892

$—
—

$—

$ (7)
—

$ (7)

$2,253
(368)

$1,885

As of

March 31, 2019 Activity

Effects of Foreign
Currency
Translation

As of
March 31, 2020

The changes in the carrying amount of goodwill for the fiscal year ended March 31, 2019 are as follows (in
millions):

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated impairment . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,251
(368)

$1,883

$14
—

$14

$ (5)
—

$ (5)

$2,260
(368)

$1,892

As of

March 31, 2018 Activity

Effects of Foreign
Currency
Translation

As of
March 31, 2019

Goodwill represents the excess of the purchase price over the fair value of the underlying acquired net tangible
and intangible assets.

66

Acquisition-related intangibles consisted of the following (in millions):

As of March 31, 2020

As of March 31, 2019

Gross
Carrying
Amount

Accumulated
Amortization

Acquisition-
Related
Intangibles, Net

Gross
Carrying
Amount

Accumulated
Amortization

Acquisition-
Related
Intangibles, Net

Developed and core technology . . . . . . . . $474
161
Trade names and trademarks . . . . . . . . . .
5
Registered user base and other intangibles
85
Carrier contracts and related . . . . . . . . . . .
In-process research and development . . . . —

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . $725

$(450)
(132)
(5)
(85)
—

$(672)

$24
29
—
—
—

$53

$469
161
5
85
5

$725

$(427)
(121)
(5)
(85)
—

$(638)

$42
40
—
—
5

$87

Amortization of intangibles for the fiscal years ended March 31, 2020, 2019 and 2018 are classified in the
Consolidated Statements of Operations as follows (in millions):

Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31,

2020

$12
22

$34

2019

$ 4
23

$27

2018

$ 2
9

$11

There were no impairment charges for acquisition-related intangible assets during fiscal years 2020, 2019 and
2018.

Acquisition-related intangible assets are amortized using the straight-line method over the lesser of their
estimated useful lives or the agreement terms, currently from 1 to 5 years. As of March 31, 2020 and 2019, the
weighted-average remaining useful life for acquisition-related intangible assets was approximately 2.4 and 3.2
years, respectively.

As of March 31, 2020, future amortization of finite-lived acquisition-related intangibles that will be recorded in
the Consolidated Statements of Operations is estimated as follows (in millions):

A
n
n
u
a
l

R
e
p
o
r
t

Fiscal Year Ending March 31,

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$22
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
9
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$53

(8) ROYALTIES AND LICENSES

Our royalty expenses consist of payments to (1) content licensors, (2) independent software developers, and
(3) co-publishing and distribution affiliates. License royalties consist of payments made to celebrities,
professional sports organizations, movie studios and other organizations for our use of their trademarks,
copyrights, personal publicity rights, content and/or other intellectual property. Royalty payments to independent
software developers are payments for the development of intellectual property related to our games.
Co-publishing and distribution royalties are payments made to third parties for the delivery of products.

During fiscal years 2020, 2019 and 2018 we did not recognize any material losses or impairment charges on
royalty-based commitments.

67

The current and long-term portions of prepaid royalties and minimum guaranteed royalty-related assets, included
in other current assets and other assets, consisted of (in millions):

Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Royalty-related assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of March 31,

2020

$74
25

$99

2019

$53
30

$83

At any given time, depending on the timing of our payments to our co-publishing and/or distribution affiliates,
content licensors, and/or independent software developers, we classify any recognized unpaid royalty amounts
due to these parties as accrued liabilities. The current and long-term portions of accrued royalties, included in
accrued and other current liabilities and other liabilities, consisted of (in millions):

Accrued royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Royalty-related liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of March 31,

2020

$171
26

$197

2019

$144
51

$195

As of March 31, 2020, we were committed to pay approximately $665 million to content licensors, independent
software developers, and co-publishing and/or distribution affiliates, but performance remained with the
counterparty (i.e., delivery of the product or content or other factors) and such commitments were therefore not
recorded in our Consolidated Financial Statements. See Note 13 for further information on our developer and
licensor commitments.

(9) BALANCE SHEET DETAILS

Property and Equipment, Net

Property and equipment, net, as of March 31, 2020 and 2019 consisted of (in millions):

As of March 31,

2020

2019

Computer, equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment, furniture and fixtures, and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 722
340
161
83
65
20

$ 710
343
139
80
66
21

Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,391
(942)

1,359
(911)

Property and equipment, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 449

$ 448

Depreciation expense associated with property and equipment was $120 million, $121 million and $120 million
for the fiscal years ended March 31, 2020, 2019 and 2018, respectively.

68

Accrued and Other Current Liabilities

Accrued and other current liabilities as of March 31, 2020 and 2019 consisted of (in millions):

As of March 31,

2020

2019

Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales returns and price protection reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred net revenue (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities (See Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 273
326
171
109
—
104
69

$ 290
238
144
150
136
94
—

Accrued and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,052

$1,052

Deferred net revenue (other) includes the deferral of subscription revenue, advertising revenue, licensing
arrangements, and other revenue for which revenue recognition criteria has not been met.

Deferred net revenue

Deferred net revenue as of March 31, 2020 and 2019, consisted of (in millions):

. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred net revenue (online-enabled games)
Deferred net revenue (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred net revenue (noncurrent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Deferred net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of
March 31, 2020

As of
March 31, 2019

$ 945
104
8

$1,057

$1,100
94
23

$1,217

During the fiscal years ended March 31, 2020 and 2019, we recognized $1,178 million and $1,054 million of
revenues, respectively, that were included in the deferred revenue balance at the beginning of the period.

A
n
n
u
a
l

R
e
p
o
r
t

Remaining Performance Obligations

As of March 31, 2020, revenue allocated to remaining performance obligations consists of our deferred revenue
balance of $1,057 million. These balances exclude any estimates for future variable consideration as we have
elected the optional exemption to exclude sales-based royalty revenue. We expect to recognize substantially all
of these balances as revenue over the next 12 months.

(10)

INCOME TAXES

The components of our income before provision for (benefit from) income taxes for the fiscal years ended
March 31, 2020, 2019 and 2018 are as follows (in millions):

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 380
1,128

$ 170
909

$ 440
1,009

Income before provision for (benefit from) income taxes . . . . . . . . . . . . . . . . . .

$1,508

$1,079

$1,449

Year Ended March 31,

2020

2019

2018

69

Provision for (benefit from) income taxes for the fiscal years ended March 31, 2020, 2019 and 2018 consisted of
(in millions):

Year Ended March 31, 2020

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31, 2019

Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31, 2018

Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Current

Deferred

Total

$258
39
48

$345

$ 29
5
42

$ 76

$138
4
61

$203

$

(14)
(2)
(1,860)

$

244
37
(1,812)

$(1,876)

$(1,531)

$

$

$

$

$

$

(18)
—
2

(16)

197
9
(3)

$

203

$

11
5
44

60

335
13
58

406

The differences between the statutory tax rate and our effective tax rate, expressed as a percentage of income
before provision for (benefit from) income taxes, for the fiscal years ended March 31, 2020, 2019 and 2018 were
as follows:

Year Ended March 31,

2020

2019

2018

Statutory federal tax expense rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Differences between statutory rate and foreign effective tax rate . . . . . . . . . . . . .
Tax reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Swiss Deferred Tax Asset
The Altera opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.0 % 21.0 % 31.5 %
1.0 %
0.8 %
0.7 %
(8.4)% (14.4)% (19.1)%
— % (0.4)% 16.2 %
(0.1)% (1.9)% (3.0)%
(1.2)% (2.4)% (1.4)%
— %
— %
— %
— %
2.7 %
2.3 %
0.3 %
0.7 %

(122.1)%
5.4 %
2.3 %
0.6 %

Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(101.5)%

5.6 % 28.0 %

Our effective tax rate and resulting provision for income taxes for the fiscal year ended March 31, 2020 were
significantly impacted by the Swiss Deferred Tax Asset. During the fiscal year ended March 31, 2020, we
recognized total one-time tax benefits of $1.760 billion related to the $1.840 billion Swiss Deferred Tax Asset,
partially offset by the $80 million one-time Altera opinion charge.

We generated income in lower tax jurisdictions primarily related to our European, Latin American, and Asia
Pacific businesses that are headquartered in Switzerland.

Our effective tax rate and resulting provision for income taxes for the fiscal year ended March 31, 2018 were
significantly impacted by the U.S. Tax Cuts and Jobs Act (the “U.S. Tax Act”), enacted on December 22, 2017.
The U.S. Tax Act significantly revised the U.S. corporate income tax system by, among other things, lowering
U.S. corporate income tax rate to 21 percent, generally implementing a territorial tax system and imposing a
one-time transition tax on the deemed repatriation of undistributed earnings of foreign subsidiaries (the
“Transition Tax”).

70

Our foreign subsidiaries will generally be subject to U.S. tax, and to the extent earnings from these subsidiaries
can be repatriated without a material tax cost, such earnings will not be indefinitely reinvested. As of March 31,
2020, approximately $4.4 billion of our cash, cash equivalents, and short-term investments were domiciled in
foreign tax jurisdictions, of which approximately $2.7 billion is available for immediate repatriation without a
material tax cost.

The components of net deferred tax assets, as of March 31, 2020 and 2019 consisted of (in millions):

As of March 31,

2020

2019

Deferred tax assets:

Accruals, reserves and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss and capital loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Swiss intra-entity tax asset

$ 141
137
37
195
1,818

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,328
(288)

Deferred tax assets, net of valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,040

$ 101
140
33
22
—

296
(162)

134

Deferred tax liabilities:

Amortization and depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ASC 606 Revenue Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

(85)
(43)
(10)

(28)
(66)
(7)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(138)

(101)

Deferred tax assets, net of valuation allowance and deferred tax liabilities . . . . . . . . . . .

$1,902

$ 33

As of March 31, 2020, the ending Swiss intra-entity tax asset balance is $1.818 billion, which is net of a
$393 million reduction due to the Altera opinion.

As of March 31, 2020, we maintained a total valuation allowance of $288 million related to certain U.S. state
deferred tax assets, Swiss deferred tax assets, and foreign capital loss carryovers, due to uncertainty about the
future realization of these assets.

Every quarter, we perform a realizability analysis to evaluate whether it is more likely than not that all or a
portion of our deferred tax assets will not be realized. As of March 31, 2020, we have recognized a $131 million
valuation allowance related to our Swiss deferred tax assets. Our Swiss deferred tax assets realizability analysis
relies upon future Swiss taxable income as the primary source of taxable income but considers all available
sources of Swiss income based on the positive and negative evidence. We give more weight to evidence that can
be objectively verified. However, there is significant judgment involved in estimating future Swiss taxable
income over the 20-year period over which the Swiss deferred tax assets will reverse, specifically related to
assumptions about expected growth rates of future Swiss taxable income, which are based primarily on third
party market and industry growth data. Actual results that differ materially from those estimates could have a
material impact on our valuation allowance assessment. Although objectively verifiable, Swiss interest rates have
an impact on the valuation allowance and are based on published Swiss guidance. Any significant changes to
such interest rates could result in a material impact to the valuation allowance. Switzerland has a seven-year
carryforward period and does not permit the carry back of losses. We do not recognize any deferred taxes related
to the U.S. taxes on foreign earnings as we recognize these taxes as a period cost.

As of March 31, 2020, we have net operating loss carry forwards of approximately $1.5 billion of which
approximately $5 million is attributable to various acquired companies. These carryforwards, if not fully
realized, will begin to expire in 2027. Switzerland has a seven-year carryforward period and does not permit the
carry back of losses. We also have California and Canada tax credit carryforwards of $131 million and
$5 million, respectively. The California and Canada tax credit carryforwards can be carried forward indefinitely.

71

A
n
n
u
a
l

R
e
p
o
r
t

The total unrecognized tax benefits as of March 31, 2020, 2019 and 2018 were $983 million, $417 million and
$457 million, respectively. A reconciliation of the beginning and ending balance of unrecognized tax benefits is
summarized as follows (in millions):

Balance as of March 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
Decreases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
Increases in unrecognized tax benefits related to current year tax positions . . . . . . . . . . . . . . . . . . . . . . .
Decreases in unrecognized tax benefits related to settlements with taxing authorities . . . . . . . . . . . . . . .
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations . . . . . . . . . . . .
Changes in unrecognized tax benefits due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . .

$389
10
(12)
75
(7)
(2)
4

Balance as of March 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

457

Increases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
Decreases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
Increases in unrecognized tax benefits related to current year tax positions . . . . . . . . . . . . . . . . . . . . . . .
Decreases in unrecognized tax benefits related to settlements with taxing authorities . . . . . . . . . . . . . . .
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations . . . . . . . . . . . .
Changes in unrecognized tax benefits due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of March 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
Decreases in unrecognized tax benefits related to prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
Increases in unrecognized tax benefits related to current year tax positions . . . . . . . . . . . . . . . . . . . . . . .
Decreases in unrecognized tax benefits related to settlements with taxing authorities . . . . . . . . . . . . . . .
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations . . . . . . . . . . . .
Changes in unrecognized tax benefits due to foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . .

—
(41)
43
(16)
(21)
(5)

417

111
(4)
468
—
(5)
(4)

Balance as of March 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$983

As of March 31, 2020, approximately $722 million of the unrecognized tax benefits would affect our effective
tax rate, a portion of which would be impacted by a valuation allowance.

Interest and penalties related to estimated obligations for tax positions taken in our tax returns are recognized in
income tax expense in our Consolidated Statements of Operations. The combined amount of accrued interest and
penalties related to tax positions taken on our tax returns and included in non-current other liabilities was
approximately $34 million as of March 31, 2020 and $17 million as of March 31, 2019.

We file income tax returns in the United States, including various state and local jurisdictions. Our subsidiaries
file tax returns in various foreign jurisdictions, including Sweden, Italy, Canada, France, Germany, Switzerland
and the United Kingdom. We remain subject to income tax examination by the IRS for fiscal years after 2015. In
addition, as of the period ended March 31, 2020, we remain subject to income tax examination for several other
jurisdictions including in Sweden for fiscal years after 2013, Italy for fiscal years after 2015, Germany for fiscal
years after 2012, France for fiscal years after 2016, the United Kingdom for fiscal years after 2017, Canada for
fiscal years after 2012, and Switzerland for fiscal years after 2010.

We are also currently under income tax examination in the United States for fiscal year 2017, Germany for fiscal
years 2013 through 2016, Sweden for fiscal years 2016 through 2017, and Italy for fiscal year 2016.

We are subject to income tax examinations in various jurisdictions with respect to fiscal years after 2010. The
timing and potential resolution of income tax examinations is highly uncertain. While we continue to measure
our uncertain tax positions, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing
authorities may differ materially from the amounts accrued. A final determination of Altera is reasonably
possible within the next 12 months. If the Altera opinion stands, it would result in a $541 million reduction of our
gross unrecognized tax benefits; approximately $148 million of which relates to gross U.S. uncertain tax
positions recognized as of March 31, 2020 and approximately $393 million of which reduced the Swiss Deferred
Tax Asset recognized as of March 31, 2020.

72

It is also reasonably possible that an additional reduction of up to $25 million of unrecognized tax benefits may
occur within the next 12 months, unrelated to the Altera opinion, a portion of which would impact our effective
tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any
settlements and tax interpretations.

(11) FINANCING ARRANGEMENTS

Senior Notes

In February 2016, we issued $600 million aggregate principal amount of 3.70% Senior Notes due March 1, 2021
(the “2021 Notes”) and $400 million aggregate principal amount of 4.80% Senior Notes due March 1, 2026 (the
“2026 Notes,” and together with the 2021 Notes, the “Senior Notes”). Our proceeds were $989 million, net of
discount of $2 million and issuance costs of $9 million. Both the discount and issuance costs are being amortized
to interest expense over the respective terms of the 2021 Notes and the 2026 Notes using the effective interest
rate method. The effective interest rate is 3.94% for the 2021 Notes and 4.97% for the 2026 Notes. Interest is
payable semiannually in arrears, on March 1 and September 1 of each year.

The carrying and fair values of the Senior Notes are as follows (in millions):

Senior Notes:
3.70% Senior Notes due 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.80% Senior Notes due 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total principal amount

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unaccreted discount
Unamortized debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net carrying value of Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of
March 31,
2020

As of
March 31,
2019

$ 600
400

$1,000
(1)
(3)
$ 996

$ 600
400

$1,000
(1)
(5)
$ 994

Fair value of Senior Notes (Level 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,030

$1,039

As of March 31, 2020, the remaining life of the 2021 Notes and 2026 Notes is approximately 0.9 years and 5.9
years, respectively.

The Senior Notes are senior unsecured obligations and rank equally with all our other existing and future
unsubordinated obligations and any indebtedness that we may incur from time to time under our Credit Facility.

The 2021 Notes and the 2026 Notes are redeemable at our option at any time prior to February 1, 2021 or
December 1, 2025, respectively, subject to a make-whole premium. Within one and three months of maturity, we
may redeem the 2021 Notes or the 2026 Notes, respectively, at a redemption price equal to 100% of the
aggregate principal amount plus accrued and unpaid interest. In addition, upon the occurrence of a change of
control repurchase event, the holders of the Senior Notes may require us to repurchase all or a portion of the
Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of
repurchase. The Senior Notes also include covenants that limit our ability to incur liens on assets and to enter into
sale and leaseback transactions, subject to certain allowances.

Credit Facility

On August 29, 2019, we entered into a $500 million unsecured revolving credit facility (“Credit Facility”) with a
syndicate of banks. The Credit Facility terminates on August 29, 2024 unless the maturity is extended in
accordance with its terms. The Credit Facility contains an option to arrange with existing lenders and/or new
lenders to provide up to an aggregate of $500 million in additional commitments for revolving loans. Proceeds of
loans made under the Credit Facility may be used for general corporate purposes.

73

A
n
n
u
a
l

R
e
p
o
r
t

The loans bear interest, at our option, at the base rate plus an applicable spread or an adjusted LIBOR rate plus an
applicable spread, in each case with such spread being determined based on our debt credit ratings. We are also
obligated to pay other customary fees for a credit facility of this size and type. Interest is due and payable in
arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three
month interval in the case of loans with interest periods greater than three months) in the case of loans bearing
interest at the adjusted LIBOR rate. Principal, together with all accrued and unpaid interest, is due and payable at
maturity. We may prepay the loans and terminate the commitments, in whole or in part, at any time without
premium or penalty, subject to certain conditions.

The credit agreement contains customary affirmative and negative covenants, including covenants that limit or
restrict our ability to, among other things, incur subsidiary indebtedness, grant liens, and dispose of all or
substantially all assets, in each case subject to customary exceptions for a credit facility of this size and type. We
are also required to maintain compliance with a debt to EBITDA ratio. As of March 31, 2020, we were in
compliance with the debt to EBITDA ratio.

The credit agreement contains customary events of default, including among others, non-payment defaults,
covenant defaults, cross-defaults to material indebtedness, bankruptcy and insolvency defaults, material
judgment defaults and a change of control default, in each case, subject to customary exceptions for a credit
facility of this size and type. The occurrence of an event of default could result in the acceleration of the
obligations under the Credit Facility and an increase in the applicable interest rate.

As of March 31, 2020 and 2019, no amounts were outstanding under the Credit Facility. $2 million of debt
issuance costs that were paid in connection with obtaining this credit facility are being amortized to interest
expense over the 5-year term of the Credit Facility.

Interest Expense

The following table summarizes our interest expense recognized for fiscal years 2020, 2019, and 2018 that is
included in interest and other income (expense), net on our Consolidated Statements of Operations (in millions):

Year Ended
March 31,

2020

2019

2018

Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Coupon interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(42)
Other interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

$ — $ (1)
(2)
(41)

$ —
(2)
(42)
(1) —

Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(44)

$(45)

$(44)

(12) LEASES

Our leases primarily consist of facility leases for our offices and development studios, data centers, and server
equipment, with remaining lease terms up to 15 years. Our lease terms may include options to extend or
terminate the lease. When it is reasonably certain that we will exercise that option, we include the renewals or
reduced lease terms in our calculation of operating lease liabilities. All of our leases are classified as operating
leases.

We determine if an arrangement is or contains a lease at contract inception. The contract is or contains a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. In determining if a contract is or contains a lease, we apply judgment whether the contract
provides the right to obtain substantially all of the economic benefits, the right to direct, or control the use of the
identified asset throughout the period of use.

74

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value
of future lease payments over the lease term. In determining the present value of the future lease payments, we
use our incremental borrowing rate as none of our leases provide an implicit rate. Our incremental borrowing rate
is an assumed rate based on our credit rating, credit history, current economic environment, and the lease term.
Operating lease ROU assets are further adjusted for any payments made, incentives received, and initial direct
costs incurred prior to the commencement date.

Operating lease ROU assets are amortized on a straight-line basis over the lease term and recognized as lease
expense within cost of revenue or operating expenses on our Consolidated Statements of Operations. Operating
lease liabilities decrease by lease payments we make over the lease term. Leases with an initial term of 12
months or less are not recorded on the balance sheet.

Some of our operating leases contain lease and non-lease components. Non-lease components primarily include
fixed payments for common area maintenance and utilities. We elected to account for lease and non-lease
components as a single lease component. Variable lease and non-lease components are recognized on our
Consolidated Statements of Operations as incurred.

The components of lease expense are as follows (in millions):

Operating lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental cash and noncash information related to our operating leases are as follows (in millions):

Year Ended
March 31,
2020

$ 70
37
14

$121

Year Ended
March 31,
2020

Cash paid for amounts included in the measurement of lease liability . . . . . . . . . . . . . . . . . . . . . . . . .
ROU assets obtained in exchange for new lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$69
$52

Weighted average remaining lease term and discount rate are as follows:

Lease term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

At
March 31,
2020

4.5 years

3.2%

Operating lease ROU assets and liabilities recorded on our Consolidated Balance Sheets as of April 1, 2019 and
March 31, 2020 are as follows (in millions):

Balance at
April 1,
2019

Balance as of
March 31,
2020

Balance Sheet Classification

Operating lease ROU assets . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 215

$ 193

Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent operating lease liabilities . . . . . . . . . . . . . . . . . . . .

Total operating lease liabilities . . . . . . . . . . . . . . . . . . . .

$ 50
197

$247

$ 69
155

$224

Other assets
Accrued and other
current liabilities
Other liabilities

75

A
n
n
u
a
l

R
e
p
o
r
t

Future minimum lease payments under operating leases as of March 31, 2020 were as follows (in millions):

Fiscal Years Ending March 31,

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 74
58
33
28
21
28

Total future lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

242
(18)

Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$224

Future minimum lease payments as of March 31, 2019, prior to our adoption of the New Lease Standard, were as
follows (in millions):

Fiscal Years Ending March 31,

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter

$ 52
54
44
36
28
50

Total future lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$264

As of March 31, 2020, we have entered into two office leases that have not yet commenced with aggregate future
lease payments of approximately $169 million. These office leases are expected to commence in fiscal year 2021
and 2023, and will have lease terms of 15 and 12 years, respectively.

(13) COMMITMENTS AND CONTINGENCIES

Development, Celebrity, League and Content Licenses: Payments and Commitments

The products we produce in our studios are designed and created by our employee designers, artists, software
programmers and by non-employee software developers (“independent artists” or “third-party developers”). We
typically advance development funds to the independent artists and third-party developers during development of
our games, usually in installment payments made upon the completion of specified development milestones.
Contractually, these payments are generally considered advances against subsequent royalties on the sales of the
products. These terms are set forth in written agreements entered into with the independent artists and third-party
developers.

In addition, we have certain celebrity, league and content license contracts that contain minimum guarantee
payments and marketing commitments that may not be dependent on any deliverables. Celebrities and
organizations with whom we have contracts include, but are not limited to: FIFA (Fédération Internationale de
Football Association), FIFPRO Foundation, FAPL (Football Association Premier League Limited), and DFL
Deutsche Fußball Liga E.V. (German Soccer League) (professional soccer); Liga Nacional De Futbol Profesional
(professional soccer); National Basketball Association and National Basketball Players Association (professional
basketball); National Hockey League and NHL Players’ Association (professional hockey); National Football
League Properties and PLAYERS Inc. (professional football); William Morris Endeavor Entertainment LLC
(professional mixed martial arts); ESPN (content in EA SPORTS games); Disney Interactive (Star Wars); and
Fox Digital Entertainment, Inc. (The Simpsons). 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 payments and advances against royalties due under royalty-bearing licenses and services
agreements, the majority of which are conditional upon performance by the counterparty. These minimum
guarantee payments and any related marketing commitments are included in the table below.

76

The following table summarizes our minimum contractual obligations as of March 31, 2020 (in millions):

Total

2021

2022

2023

2024

2025

Thereafter

Fiscal Year Ending March 31,

Unrecognized commitments

Developer/licensor commitments . . . . . . . . . . . . . .
Marketing commitments . . . . . . . . . . . . . . . . . . . . .
Senior Notes interest . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease imputed interest
. . . . . . . . . . . . . .
Operating leases not yet commenced . . . . . . . . . . .
Other purchase obligations . . . . . . . . . . . . . . . . . . .

$ 665
282
134
18
169
105

$ 178
95
38
6
—
46

$248
85
20
4
—
45

$ 90
39
19
3
8
10

$ 87
37
19
2
12
2

$ 58
26
19
1
12
2

$

4
—
19
2
137
—

Total unrecognized commitments . . . . . . . . . . .

1,373

363

402

169

159

118

162

Recognized commitments

Senior Notes principal and interest . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transition Tax and other taxes . . . . . . . . . . . . . . . .
Licensing commitments . . . . . . . . . . . . . . . . . . . . .

Total recognized commitments . . . . . . . . . . . . .

1,003
224
66
53

1,346

603
68
22
26

719

—
54
24
27

105

—
30
3
—

33

—
26
4
—

30

—
20
4
—

24

400
26
9
—

435

Total Commitments . . . . . . . . . . . . . . . . . . . . . .

$2,719

$1,082

$507

$202

$189

$142

$597

The unrecognized amounts represented in the table above reflect our minimum cash obligations for the respective
fiscal years, but do not necessarily represent the periods in which they will be recognized and expensed in our
Consolidated Financial Statements.

In addition, the amounts in the table above are presented based on the dates the amounts are contractually due as
of March 31, 2020; however, certain payment obligations may be accelerated depending on the performance of
our operating results. Furthermore, up to $20 million of the unrecognized amounts in the table above may be
payable, at the licensor’s election, in shares of our common stock, subject to a $10 million maximum during any
fiscal year. The number of shares to be issued will be based on their fair market value at the time of issuance.

In addition to what is included in the table above, as of March 31, 2020, we had a liability for unrecognized tax
benefits and an accrual for the payment of related interest totaling $352 million, of which we are unable to make
a reasonably reliable estimate of when cash settlement with a taxing authority will occur.

A
n
n
u
a
l

R
e
p
o
r
t

Legal Proceedings

We are subject to claims and litigation arising in the ordinary course of business. We do not believe that any
liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the
aggregate, would have a material adverse effect on our Consolidated Financial Statements.

(14) PREFERRED STOCK

As of March 31, 2020 and 2019, we had 10 million 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.

(15) STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS

Valuation Assumptions

We recognize compensation cost for stock-based awards to employees based on the awards’ estimated grant-date
fair value using a straight-line approach over the service period for which such awards are expected to vest. We
account for forfeitures as they occur.

77

The estimation of the fair value of market-based restricted stock units, stock options and ESPP purchase rights is
affected by assumptions regarding subjective and complex variables. Generally, our assumptions are based on
historical information and judgment is required to determine if historical trends may be indicators of future
outcomes. We estimate the fair value of our stock-based awards as follows:

• Restricted Stock Units and Performance-Based Restricted Stock Units. The fair value of restricted stock
units and performance-based restricted stock units (other than market-based restricted stock units) is
determined based on the quoted market price of our common stock on the date of grant.

• Market-Based Restricted Stock Units. Market-based restricted stock units consist of grants of

performance-based restricted stock units to certain members of executive management that vest
contingent upon the achievement of pre-determined market and service conditions (referred to herein
as “market-based restricted stock units”). The fair value of our market-based restricted stock units is
estimated 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. The fair value of stock options and stock purchase
rights granted pursuant to our equity incentive plans and our 2000 Employee Stock Purchase Plan, as
amended (“ESPP”), respectively, is estimated using the Black-Scholes valuation model based on the
multiple-award valuation method. Key assumptions of the Black-Scholes valuation model are the risk-
free interest rate, expected volatility, expected term and expected dividends. The risk-free interest rate
is based on U.S. Treasury yields in effect at the time of grant for the expected term of the option.
Expected volatility is based on a combination of historical stock price volatility and implied volatility
of publicly-traded options on our common stock. An expected term is estimated based on historical
exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise
behavior.

There were an insignificant number of stock options granted during fiscal years 2020, 2019, and 2018.

The estimated assumptions used in the Black-Scholes valuation model to value our ESPP purchase rights were as
follows:

ESPP Purchase Rights

Year Ended March 31,

2020

2019

2018

Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.5 - 1.9%
23 - 37%
26%
6 - 12 months
None

2.2 - 2.5%
29 - 33%
33%
6 - 12 months
None

1.1 - 2.0%
28 - 30%
29%
6 - 12 months
None

The assumptions used in the Monte-Carlo simulation model to value our market-based restricted stock units were
as follows:

Year Ended March 31,

2020

2019

2018

Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Summary of Plans and Plan Activity

Equity Incentive Plans

1.6 - 1.8%

2.6% 1.5 - 1.6%
14 - 65% 16 - 47% 17 - 46%
28%
None

28%
None

29%
None

At our Annual Meeting of Stockholders, held on August 8, 2019, our stockholders approved the 2019 Equity
Incentive Plan (the “2019 Equity Plan”), which replaced our 2000 Equity Incentive Plan, as amended (the “2000
Equity Plan”). Our 2019 Equity Plan allows us to grant options to purchase our common stock and to grant

78

restricted stock, restricted stock units and stock appreciation rights to our employees, officers, and directors, up
to a maximum of 13.5 million shares, plus any shares authorized for grant or subject to awards under the 2000
Equity Plan that are not delivered to participants for any reason. Pursuant to the 2019 Equity Plan, incentive
stock options may be granted to employees and officers and non-qualified options may be granted to employees,
officers, and directors, at not less than 100 percent of the fair market value on the date of grant.

Approximately 22.4 million options or 15.7 million restricted stock units were available for grant under our 2019
Equity Plan as of March 31, 2020.

Stock Options

Options granted under the 2019 Equity Plan and the 2000 Equity Plan generally expire ten years from the date of
grant. All outstanding options are fully vested and exercisable.

The following table summarizes our stock option activity for the fiscal year ended March 31, 2020:

Options
(in thousands)

Weighted-
Average
Exercise Prices

Weighted-
Average
Remaining
Contractual
Term (in years)

Aggregate
Intrinsic Value
(in millions)

Outstanding as of March 31, 2019 . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited, cancelled or expired . . . . . . . . . . . . . .

Outstanding as of March 31, 2020 . . . . . . . . . . . . .

Vested and expected to vest . . . . . . . . . . . . . . . . . .

Exercisable as of March 31, 2020 . . . . . . . . . . . . .

1,375
5
(306)
—

1,074

1,074

1,074

$30.63
97.16
30.96
—

$30.85

$30.85

$30.85

3.89

3.89

3.89

$69

$69

$69

The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price as of
March 31, 2020, which would have been received by the option holders had all the option holders exercised their
options as of that date. The total intrinsic values of stock options exercised during fiscal years 2020, 2019, and
2018 were $22 million, $24 million and $43 million, respectively. We issue new common stock from our
authorized shares upon the exercise of stock options.

The following table summarizes outstanding and exercisable stock options as of March 31, 2020:

A
n
n
u
a
l

R
e
p
o
r
t

Range of
Exercise Prices

$11.53-$22.42
26.25-26.25
33.60-37.12

$11.53-$37.12

Options Outstanding and Exercisable

Number
of Shares
(in thousands)

Weighted-
Average
Remaining
Contractual
Term (in years)

7
550
517

1,074

1.81
3.59
4.23

3.89

Weighted-
Average
Exercise
Prices

$16.80
26.25
35.92

$30.85

Potential
Dilution

—%
0.2%
0.2%

0.4%

Potential dilution is computed by dividing the options in the related range of exercise prices by 288 million
shares of common stock, which were issued and outstanding as of March 31, 2020.

79

Restricted Stock Units

We grant restricted stock units under our 2019 Equity Plan to employees worldwide. Restricted stock units are
unfunded, unsecured rights to receive common stock upon the satisfaction of certain vesting criteria. Upon
vesting, a number of shares of common stock equivalent to the number of restricted stock units is typically issued
net of required tax withholding requirements, if any. Restricted stock units are subject to forfeiture and transfer
restrictions. Vesting for restricted stock units is based on the holders’ continued employment with us through
each applicable vest date. If the vesting conditions are not met, unvested restricted stock units will be forfeited.
Our restricted stock units generally vest over 35 months to four years.

Each restricted stock unit granted reduces the number of shares available for grant by 1.43 shares under our 2019
Equity Plan. The following table summarizes our restricted stock units activity, excluding performance-based
and market-based restricted stock unit activity which is discussed below, for the fiscal year ended March 31,
2020:

Restricted
Stock Units
(in thousands)

Weighted-
Average Grant
Date Fair Values

Outstanding as of March 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,960
4,297
(2,445)
(595)

Outstanding as of March 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,217

$111.03
93.52
108.42
106.22

$100.42

The grant date fair value of restricted stock units is based on the quoted market price of our common stock on the
date of grant. The weighted-average grant date fair values of restricted stock units granted during fiscal years
2020, 2019, and 2018 were $93.52, $128.76 and $110.05 respectively. The fair values of restricted stock units
that vested during fiscal years 2020, 2019, and 2018 were $240 million, $300 million and $289 million,
respectively.

Performance-Based Restricted Stock Units

Our performance-based restricted stock units cliff vest after a four-year performance period contingent upon the
achievement of pre-determined performance-based milestones based on our non-GAAP net revenue and free cash
flow as well as service conditions. If these performance-based milestones are not met but service conditions are
met, the performance-based restricted stock units will not vest, in which case any compensation expense we have
recognized to date will be reversed. Each quarter, we update our assessment of the probability that the
non-GAAP net revenue and free cash flow performance milestones will be achieved. We amortize the fair values
of performance-based restricted stock units over the requisite service period. The performance-based restricted
stock units contain threshold, target and maximum milestones for each of non-GAAP net revenue and free cash
flow. The number of shares of common stock to be issued at vesting will range from zero to 200 percent of the
target number of performance-based restricted stock units attributable to each performance-based milestone
based on the company’s performance as compared to these threshold, target and maximum performance-based
milestones. Each performance-based milestone is weighted evenly where 50 percent of the total performance-
based restricted stock units that vest will be determined based on non-GAAP net revenue and the other
50 percent will be determined based on free cash flow. The number of shares that vest based on each
performance-based milestone is independent from the other.

80

The following table summarizes our performance-based restricted stock unit activity, presented with the
maximum number of shares that could potentially vest, for the fiscal year ended March 31, 2020:

Performance-
Based Restricted
Stock Units
(in thousands)

Weighted-
Average Grant
Date Fair Value

Outstanding as of March 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding as of March 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

579
—
—

579

$110.51
—
—

$110.51

Market-Based Restricted Stock Units

Our market-based restricted stock units vest contingent upon the achievement of pre-determined market and
service conditions. If these market conditions are not met but service conditions are met, the market-based
restricted stock units will not vest; however, any compensation expense we have recognized to date will not be
reversed. The number of shares of common stock to be issued at vesting will range from zero to 200 percent of
the target number of market-based restricted stock units based on our total stockholder return (“TSR”) relative to
the performance of companies in the NASDAQ-100 Index for each measurement period, over either a one-year,
two-year cumulative, three-year cumulative period or a two-year and four-year cumulative period.

The following table summarizes our market-based restricted stock unit activity, presented with the maximum
number of shares that could potentially vest, for the year ended March 31, 2020:

Market-Based
Restricted Stock
Units
(in thousands)

Weighted-
Average Grant
Date Fair Value

Outstanding as of March 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding as of March 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

958
1,313
(93)
(280)

1,898

$155.64
109.04
109.05
137.08

$128.41

The weighted-average grant date fair values of market-based restricted stock units granted during fiscal years
2020, 2019, and 2018 were $109.04, $185.24, and $140.93, respectively. The fair values of market-based
restricted stock units that vested during fiscal years 2020, 2019, and 2018 were $9 million, $54 million, and
$48 million, respectively.

ESPP

Pursuant to our ESPP, eligible employees may authorize payroll deductions of between 2 percent and 10 percent
of their compensation to purchase shares of common stock at 85 percent of the lower of the market price of our
common stock on the date of commencement of the applicable offering period or on the last day of each
six-month purchase period.

A
n
n
u
a
l

R
e
p
o
r
t

81

The following table summarizes our ESPP activity for fiscal years ended March 31, 2020, 2019 and 2018:

Shares Issued
(in millions)

Exercise Prices for
Purchase Rights

Weighted-
Average
Fair Values of
Purchase Rights

Fiscal Year 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.6
0.5
0.7

$67.56 - $ 99.82
$89.46 - $107.51
$74.70 - $ 74.89

$21.57
$31.88
$29.05

The fair values were estimated on the date of grant using the Black-Scholes valuation model. We issue new
common stock out of the ESPP’s pool of authorized shares. As of March 31, 2020, 5.6 million shares were
available for grant under our ESPP.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense resulting from stock options, restricted stock
units, market-based restricted stock units, performance-based restricted stock units, and the ESPP purchase rights
included in our Consolidated Statements of Operations (in millions):

Year Ended March 31,

2020

2019

2018

Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

4
229
37
77

$

4
184
33
63

$

3
146
32
61

Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$347

$284

$242

During the fiscal years ended March 31, 2020, 2019 and 2018, we recognized $43 million, $40 million and
$29 million, respectively, of deferred income tax benefit related to our stock-based compensation expense.

As of March 31, 2020, our total unrecognized compensation cost related to restricted stock units, market-based
restricted stock units, and performance-based restricted stock units was $534 million and is expected to be
recognized over a weighted-average service period of 1.8 years. Of the $534 million of unrecognized
compensation cost, $452 million relates to restricted stock units, $75 million relates to market-based restricted
stock units, and $7 million relates to performance-based restricted stock units at a 68 percent average payout. As
of March 31, 2020, there were no unrecognized compensation cost related to stock options as they were fully
vested.

Deferred Compensation Plan

We have a Deferred Compensation Plan (“DCP”) for the benefit of a select group of management or highly
compensated employees and directors, which is unfunded and intended to be a plan that is not qualified within
the meaning of section 401(a) of the Internal Revenue Code. The DCP permits the deferral of the annual base
salary and/or director cash compensation up to a maximum amount. The deferrals are held in a separate trust,
which has been established by us to administer the DCP. The trust is a grantor trust and the specific terms of the
trust agreement provide that the assets of the trust are available to satisfy the claims of general creditors in the
event of our insolvency. The assets held by the trust are classified as trading securities and are held at fair value
on our Consolidated Balance Sheets. The assets and liabilities of the DCP are presented in other assets and other
liabilities on our Consolidated Balance Sheets, respectively, with changes in the fair value of the assets and in the
deferred compensation liability recognized as compensation expense. The estimated fair value of the assets was
$13 million and $11 million as of March 31, 2020 and 2019, respectively. As of March 31, 2020 and 2019,
$14 million and $12 million were recorded, respectively, to recognize undistributed deferred compensation due
to employees.

82

401(k) Plan, Registered Retirement Savings Plan and ITP Plan

We have a 401(k) plan covering substantially all of our U.S. employees, a Registered Retirement Savings Plan
covering substantially all of our Canadian employees, and an ITP pension plan covering substantially all our
Swedish employees. These plans may permit us to make discretionary contributions to employees’ accounts
based on our financial performance. We contributed an aggregate of $29 million, $43 million and $31 million to
these plans in fiscal years 2020, 2019, and 2018, respectively.

Stock Repurchase Program

In May 2015, our Board of Directors authorized a two-year program to repurchase up to $1 billion of our
common stock. We repurchased approximately 0.3 million for approximately $31 million under this program
during the fiscal year ended March 31, 2018. In May 2017, a Special Committee of our Board of Directors, on
behalf of the full Board of Directors, authorized a two-year program to repurchase up to $1.2 billion of our
common stock. We repurchased approximately 0.6 million and 5.0 million shares for approximately $76 million
and $570 million under this program, respectively, during the fiscal years ended March 31, 2019 and 2018. In
May 2018, a Special Committee of our Board of Directors, on behalf of the full Board of Directors, authorized a
program to repurchase up to $2.4 billion of our common stock. We repurchased approximately 12.3 million and
10.4 million shares for approximately $1,207 million and $1,116 million under this program, respectively, during
the fiscal years ended March 31, 2020 and 2019. The May 2018 program was scheduled to expire on May 31,
2020, however we completed repurchases under the May 2018 program in April 2020.

The following table summarizes total shares repurchased during fiscal years 2020, 2019, and 2018:

May 2015 Program

May 2017 Program

May 2018 Program

Total

(In millions)

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Fiscal Year 2018 . . . . . . .
Fiscal Year 2019 . . . . . . .
Fiscal Year 2020 . . . . . . .

0.3
—
—

$ 31
$ —
$ —

5.0
0.6
—

$570
$ 76
$ —

— $ —
$1,116
$1,207

10.4
12.3

5.3
11.0
12.3

$ 601
$1,192
$1,207

(16) INTEREST AND OTHER INCOME (EXPENSE), NET

Interest and other income (expense), net, for the fiscal years ended March 31, 2020, 2019 and 2018 consisted of
(in millions):

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain (loss) on foreign currency transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain (loss) on foreign currency forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(44)
100
11
(4)
—

(45)
88
(9)
50
(1)

(44)
50
18
(16)
7

Interest and other income (expense), net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 63

$ 83

$ 15

Year Ended March 31,

2020

2019

2018

(17) EARNINGS PER SHARE

The following table summarizes the computations of basic earnings per share (“Basic EPS”) and diluted earnings
per share (“Diluted EPS”). Basic EPS is computed as net income divided by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from
common shares issuable through stock-based compensation plans including stock options, restricted stock,
restricted stock units and ESPP purchase rights using the treasury stock method.

83

A
n
n
u
a
l

R
e
p
o
r
t

(In millions, except per share amounts)

Year Ended March 31,

2020

2019

2018

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,039

$1,019

$1,043

Shares used to compute earnings per share:

Weighted-average common stock outstanding — basic . . . . . . . . . . . . . . . . . . . . . .
Dilutive potential common shares related to stock award plans and from assumed

exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted-average common stock outstanding — diluted . . . . . . . . . . . . . . . . . . . . .

293

2

295

303

3

306

308

4

312

Earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10.37
$10.30

$ 3.36
$ 3.33

$ 3.39
$ 3.34

For the fiscal years ended March 31, 2020 and 2019, two million restricted stock units and market-based
restricted stock units were excluded from the treasury stock method computation of diluted shares as their
inclusion would have had an antidilutive effect. For the fiscal year ended March 31, 2018, an immaterial amount
of restricted stock units and market-based restricted stock units were excluded from the treasury stock method
computation of diluted shares as their inclusion would have had an antidilutive effect.

Our performance-based restricted stock units, which are considered contingently issuable shares, are also
excluded from the treasury stock method computation because the related performance-based milestones were
not achieved as of the end of the fiscal years ended March 31, 2020, 2019 and 2018.

(18) SEGMENT AND REVENUE INFORMATION

Our reporting segment is based upon: our internal organizational structure; the manner in which our operations
are managed; the criteria used by our Chief Executive Officer, our Chief Operating Decision Maker (“CODM”),
to evaluate segment performance; the availability of separate financial information; and overall materiality
considerations. Our CODM currently reviews total company operating results to assess overall performance and
allocate resources. As of March 31, 2020, we have only one reportable segment, which represents our only
operating segment.

Information about our total net revenue by timing of recognition for the fiscal years ended March 31, 2020 and
2019 is presented below (in millions):

Year Ended March 31,

2020

2019

Net revenue by timing of recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue recognized at a point in time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue recognized over time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,043
3,494

$1,902
3,048

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,537

$4,950

Generally, performance obligations that are recognized upfront upon transfer of control are classified as revenue
recognized at a point in time, while performance obligations that are recognized over the Estimated Offering
Period or subscription period as the services are provided are classified as revenue recognized over time.

Revenue recognized at a point in time includes revenue allocated to the software license performance obligation.
This also includes revenue from the licensing of software to third-parties.

Revenue recognized over time includes service revenue allocated to the future update rights and the online
hosting performance obligations. This also includes service revenue allocated to the future update rights from the
licensing of software to third-parties, software that offers an online-only service such as our Ultimate Team game
mode, and subscription services.

84

Information about our total net revenue by composition for the fiscal years ended March 31, 2020, 2019 and
2018 is presented below (in millions):

Net revenue by composition

Full game downloads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Live services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Packaged goods and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31,

2020

2019

2018

$ 809
2,813
692

4,314

1,223

$ 680
2,216
814

3,710

1,240

$ 707
2,083
660

3,450

1,700

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,537

$4,950

$5,150

Digital net revenue includes full game downloads, live services, and mobile revenue. Full game downloads
includes revenue from digital sales of full games on console and PC. Live services includes revenue from sales of
extra content for console, PC, browser games, game software licensed to our third-party publishing partners who
distribute our games digitally, subscriptions, and advertising. Mobile includes revenue from the sale of full
games and extra content on mobile phones and tablets.

Packaged goods net revenue includes revenue from software that is sold physically. This includes (1) net revenue
from game software sold physically through traditional channels such as brick and mortar retailers, and (2) our
software licensing revenue from third parties (for example, makers of console platforms, personal computers or
computer accessories) who include certain of our products for sale with their products (for example, OEM
bundles). Other revenue includes our non-software licensing revenue.

Information about our total net revenue by platform for the fiscal years ended March 31, 2020, 2019 and 2018 is
presented below (in millions):

Year Ended March 31,

2020

2019

2018

Platform net revenue

Console . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PC / Browser
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,774
1,017
727
19

$3,333
780
824
13

$3,635
827
672
16

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,537

$4,950

$5,150

Information about our operations in North America and internationally for the fiscal years ended March 31, 2020,
2019 and 2018 is presented below (in millions):

Net revenue from unaffiliated customers

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,270
3,267

$1,906
3,044

$2,090
3,060

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,537

$4,950

$5,150

Year Ended March 31,

2020

2019

2018

Long-lived assets

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International

$375
74

$371
77

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$449

$448

As of March 31,

2020

2019

85

A
n
n
u
a
l

R
e
p
o
r
t

We attribute net revenue from external customers to individual countries based on the location of the legal entity
that sells the products and/or services. Note that revenue attributed to the legal entity that makes the sale is often
not the country where the consumer resides. For example, revenue generated by our Swiss legal entity includes
digital revenue from consumers who reside outside of Switzerland, including consumers who reside outside of
Europe. Revenue generated by our Swiss legal entity during fiscal years 2020, 2019, and 2018 represents
$2,586 million, $2,303 million and $2,272 million or 47 percent, 47 percent and 44 percent of our total net
revenue, respectively. Revenue generated in the United States represents over 99 percent of our total North
America net revenue. There were no other countries with net revenue greater than 10 percent.

In fiscal year 2020, our direct sales to Sony and Microsoft represented approximately 32 percent and 17 percent
of total net revenue, respectively. In fiscal year 2019, our direct sales to Sony and Microsoft represented
approximately 29 percent and 16 percent of total net revenue, respectively. In fiscal year 2018, our direct sales to
Sony and Microsoft represented approximately 27 percent and 16 percent of total net revenue, respectively.

(19) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

(In millions, except per share data)

June 30

September 30 December 31 March 31

Quarter Ended

Year
Ended

Fiscal 2020 Consolidated
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,209
1,022
415
1,421(a)

$1,348
943
268
854(a)

Common Stock

Earnings per share — Basic . . . . . . . . . . . . . . . . . . . . . .
Earnings per share — Diluted . . . . . . . . . . . . . . . . . . . . .
Fiscal 2019 Consolidated
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4.78
$ 4.75

$1,137
922
300
293

Common Stock

Earnings per share — Basic . . . . . . . . . . . . . . . . . . . . . .
Earnings per share — Diluted . . . . . . . . . . . . . . . . . . . . .

$ 0.96
$ 0.95

$ 2.89
$ 2.89

$1,286
868
258
255

$ 0.84
$ 0.83

$1,593
1,085
361
346

$ 1.18
$ 1.18

$1,289
876
242
262

$ 0.87
$ 0.86

$1,387
1,118
401
418

$5,537
4,168
1,445
3,039

$ 1.44
$ 1.43

$10.37
$10.30

$1,238
962
196
209

$4,950
3,628
996
1,019

$ 0.70
$ 0.69

$ 3.36
$ 3.33

(a) During the fiscal year ended March 31, 2020, we recognized total one-time tax benefits of $1.760 billion
related to the $1.840 billion Swiss Deferred Tax Asset, partially offset by the $80 million one-time Altera
opinion charge. Of this amount, we recognized tax benefits of $1.17 billion and $630 million, during the
quarters ended June 30, 2019 and September 30, 2019, respectively. See Note 2 — Summary of Significant
Accounting Policies — Income Taxes for more information on the Swiss intra-entity sale.

86

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Electronic Arts Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Electronic Arts Inc. and subsidiaries (the
Company) as of March 28, 2020 and March 30, 2019, the related consolidated statements of operations,
comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended
March 28, 2020, and the related notes and Schedule II (collectively, the consolidated financial statements). We
also have audited the Company’s internal control over financial reporting as of March 28, 2020, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of March 28, 2020 and March 30, 2019, and the results of its operations and
its cash flows for each of the years in the three-year period ended March 28, 2020, in conformity with U.S.
generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of March 28, 2020 based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.

Change in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of
accounting for leases as of March 31, 2019, due to the adoption of Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases. As discussed in Note 2 to the
consolidated financial statements, the Company has changed its method of accounting for revenue recognition as
of April 1, 2018, due to the adoption of FASB ASC Topic 606, Revenue From Contracts with Customers.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management’s Report on Internal Control over Financial
Reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company’s consolidated
financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.

87

A
n
n
u
a
l

R
e
p
o
r
t

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the audit
committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements
and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matters below, providing separate opinions on the critical
audit matters or on the accounts or disclosures to which they relate.

Assessment of the Estimated Offering Period

As discussed in Note 2 to the consolidated financial statements, revenue for transactions that include future
update rights and/or online hosting performance obligations are subject to deferral and recognized over the
Estimated Offering Period. Determining the Estimated Offering Period is inherently subjective because it is not
an explicitly defined period. The Company’s methodology and model to determine the Estimated Offering Period
considers the following inputs and assumptions:

•

•

•

•

the average period of time customers are online,

for physical games sold at retail, the period of time between the date a game unit is sold to a reseller
and the date the reseller sells the game unit to the customer,

known and expected online gameplay trends, and

disclosed service periods for competitors’ games.

We identified the assessment of the Estimated Offering Period as a critical audit matter. Due to the complexity
and subjectivity of the methods and assumptions used within the Company’s model, challenging auditor
judgment was required to evaluate the results of the procedures performed over the Estimated Offering Period.

The primary procedures we performed to address this critical audit matter included the following. We tested
certain internal controls over the Company’s process to determine the Estimated Offering Period, including
controls over the relevance and reliability of data used to estimate the inputs and assumptions, and the
Company’s review of the Estimated Offering Period concluded for use in recognizing revenue. We evaluated the
method and model the Company used to develop the Estimated Offering Period against the accounting
requirements and considered potential management bias in developing or applying their methodology. We
computed the average period of time customers are online as well as the period of time between the date a game
unit is sold to a reseller and the date the reseller sells the game unit to the customer by using the Company’s

88

internal data. We compared the results of this computation against the periods used by the Company in their
Estimated Offering Period model. We evaluated other third-party data, such as publicly available competitor data
and compared it against the third-party data used by the Company in their model. We evaluated known and
expected online gameplay trends and performed a sensitivity analysis of the Company’s Estimated Offering
Period to assess the impact of potential changes in the Estimated Offering Period on revenue. We evaluated the
overall results of the procedures performed over the Estimated Offering Period.

Evaluation of the realizability of the Swiss deferred tax assets

As discussed in Notes 2 and 10 to the consolidated financial statements, during the year ended March 28, 2020,
the Company recognized $1.840 billion of deferred tax benefits related to an intra-entity sale of some of its
intellectual property rights to its Swiss subsidiary, which is net of the impact of a $131 million valuation
allowance and a $393 million reduction due to the Altera opinion. The Company periodically performs an
analysis to determine whether it is more likely than not that all or a portion of its Swiss deferred tax assets will be
realized. The Company’s realizability analysis considers whether sufficient taxable income will be generated by
the Swiss subsidiary over the 20-year period over which the Swiss deferred tax assets will generally reverse. The
Company determined that there is a greater than 50% likelihood that its Swiss deferred tax assets will not be fully
realized. As a result, the Company reduced the Swiss deferred tax assets by a valuation allowance of
approximately $131 million as of March 28, 2020.

We identified the evaluation of the realizability of the Company’s Swiss deferred tax assets as a critical audit
matter. This evaluation required especially challenging auditor judgment to assess the Company’s estimated
future Swiss taxable income over the 20-year period over which the Swiss deferred tax assets will generally
reverse. Specifically, the Company’s assumptions of expected future growth rates of Swiss taxable income were
based primarily on third-party market and industry growth data. Changes in assumptions regarding estimated
future Swiss taxable income could have a significant impact on the realization of the Company’s Swiss deferred
tax assets and the amount of the valuation allowance.

The primary procedures we performed to address this critical audit matter included the following. We tested
certain internal controls over the Company’s income tax process over the valuation allowance, including controls
over the process to develop estimates of future Swiss taxable income. We performed a sensitivity analysis of the
valuation allowance to assess the impact of reasonably possible changes in expected future growth rates. We
compared the Company’s estimated future Swiss taxable income to historical growth rates and other projected
financial information prepared by the Company. We involved valuation professionals with specialized skills and
knowledge, who assisted in evaluating the Company’s benchmarking study of third-party market and industry
growth data by assessing the relevance and reliability of the benchmarking data.

A
n
n
u
a
l

R
e
p
o
r
t

/s/ KPMG LLP

We have served as the Company’s auditor since 1987.

Santa Clara, California
May 20, 2020

89

Item 9:

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A: Controls and Procedures

Definition and Limitations of Disclosure Controls

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
are controls and other procedures that are designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed to
ensure that such information is accumulated and communicated to our management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure. Our management evaluates these controls and procedures on an ongoing basis.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. These
limitations include the possibility of human error, the circumvention or overriding of the controls and procedures
and reasonable resource constraints. In addition, because we have designed our system of controls based on
certain assumptions, which we believe are reasonable, about the likelihood of future events, our system of
controls may not achieve its desired purpose under all possible future conditions. Accordingly, our disclosure
controls and procedures provide reasonable assurance, but not absolute assurance, of achieving their objectives.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of our disclosure
controls and procedures, believe that as of the end of the period covered by this report, our disclosure controls
and procedures were effective in providing the requisite reasonable assurance that material information required
to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding the required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Our internal control over financial reporting is designed to provide reasonable, but not absolute, assurance
regarding the reliability of financial reporting and the preparation of financial statements in accordance with
generally accepted accounting principles. There are inherent limitations to the effectiveness of any system of
internal control over financial reporting. These limitations include the possibility of human error, the
circumvention or overriding of the system and reasonable resource constraints. Because of its inherent
limitations, our internal control over financial reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate
because of changes in conditions, or that the degree of compliance with our policies or procedures may
deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of the end of our
most recently completed fiscal year. In making its assessment, management used the criteria set forth in Internal
Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). 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 internal control over financial reporting. That report appears on page 87.

90

Changes in Internal Control over Financial Reporting

There has been no change in our internal controls over financial reporting identified in connection with our
evaluation that occurred during the fiscal quarter ended March 31, 2020 that has materially affected or is
reasonably likely to materially affect our internal control over financial reporting.

Item 9B: Other Information

None.

A
n
n
u
a
l

R
e
p
o
r
t

91

PART III

Item 10: Directors, Executive Officers and Corporate Governance

The information required by Item 10, other than the information regarding executive officers, which is included
in Part I, Item 1 of this report, is incorporated herein by reference to the information to be included in our 2020
Proxy under the heading “Board of Directors & Corporate Governance.”

Item 11: Executive Compensation

The information required by Item 11 is incorporated herein by reference to the information to be included in the
2020 Proxy under the headings “Director Compensation and Stock Ownership Guidelines” and “Compensation
Discussion and Analysis” and “Executive Compensation” and the subheadings “Compensation Committee
Report on Executive Compensation” and “Compensation Committee Interlocks and Insider Participation.”

Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

The information required by Item 12 is incorporated herein by reference to the information to be included in the
2020 Proxy under the heading “Security Ownership of Certain Beneficial Owners and Management” and the
subheading “Equity Compensation Plan Information.”

Item 13: Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is incorporated herein by reference to the information to be included in the
2020 Proxy under the subheadings “Director Independence,” and “Related Person Transaction Policy.”

Item 14: Principal Accounting Fees and Services

The information required by Item 14 is incorporated herein by reference to the information to be included in
Proposal 3 of the 2020 Proxy under the subheadings “Fees of Independent Auditors” and “Pre-approval
Procedures.”

Item 15: Exhibits and Financial Statements

(a) Documents filed as part of this report

PART IV

1. Financial Statements: See Index to Consolidated Financial Statements under Item 8 on Page 43 of this report.

2. Financial Statement Schedule: See Schedule II on Page 93 of this report.

3. Exhibits: The exhibits listed in the accompanying index to exhibits on Page 94 are filed or incorporated by
reference as part of this report.

92

ELECTRONIC ARTS INC. AND SUBSIDIARIES

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

Years Ended March 31, 2020, 2019 and 2018
(In millions)

Allowance for Doubtful Accounts,
Price Protection and Returns

Balance at
Beginning
of Period

Charged to
Revenue,
Costs and
Expenses

Charged
(Credited)
to Other
Accounts

Deductions

Year Ended March 31, 2020 . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31, 2019 . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31, 2018 . . . . . . . . . . . . . . . . . . . . .

$

7

$165

$145

(1)

—

288

—

(158)(a)

—

—

35 (b)

(303)(c)

$165

Balance at
End of
Period

$

$

6

7

(a) Upon adoption of the New Revenue Standard, allowances for sales returns and price protection were

reclassified to current liabilities as these reserve balances are considered refund liabilities. For additional
information on the adoption impact, see Note 1 under the heading “Recently Adopted Accounting
Standards” included in our Annual Report on Form 10-K for our fiscal year ended March 31, 2019, filed
with the SEC on May 24, 2019.

(b)

Primarily other reclassification adjustments and the translation effect of using the average exchange rate for
expense items and the year-end exchange rate for the balance sheet item (allowance account).

(c)

Primarily the utilization of returns allowance and price protection reserves.

A
n
n
u
a
l

R
e
p
o
r
t

93

ELECTRONIC ARTS INC.

2020 FORM 10-K ANNUAL REPORT

EXHIBIT INDEX

Number

Exhibit Title

Incorporated by Reference

Form

File No.

Filing Date

Filed
Herewith

3.01

Amended and Restated Certificate of Incorporation

8-K 000-17948

8/9/2019

3.02

4.01

4.02

4.03

4.04

Amended and Restated Bylaws

8-K 000-17948

8/9/2019

Specimen Certificate of Registrant’s Common Stock

10-Q 000-17948

2/6/2018

Description of Securities

Indenture, dated as of February 24, 2016 by and
between Electronic Arts Inc. and U.S. Bank National
Association, as Trustee

First Supplemental Indenture, dated as of
February 24, 2016, between Electronic Arts Inc. and
U.S. Bank National Association, as Trustee

10-K 000-17948

5/24/2019

8-K 000-17948

2/24/2016

8-K 000-17948

2/24/2016

10.01*

Form of Indemnity Agreement with Directors

10-K 000-17948

6/4/2004

10.02*

Electronic Arts Inc. Executive Bonus Plan

8-K 000-17948

5/18/2018

10.03*

Electronic Arts Inc. Deferred Compensation Plan

10-Q 000-17948

8/6/2007

10.04*

Electronic Arts Inc. Change in Control Plan

8-K 000-17948

5/18/2018

10.05*

First Amendment to the Electronic Arts Deferred
Compensation Plan, as amended and restated

10-K 000-17948

5/22/2009

10.06*

EA Bonus Plan

8-K 000-17948

5/18/2018

10.07*

EA Bonus Plan Fiscal Year 2020 Addendum

8-K 000-17948

5/20/2019

10.08*

10.09*

10.10*

10.11*

10.12*

10.13*

10.14*

Form of 2018 Performance-Based Restricted Stock
Unit Agreement

Form of 2019 Performance-Based Restricted Stock
Unit Agreement

Form of Performance-Based Restricted Stock Unit
Agreement (3-Year)

Form of November 2019 Performance-Based
Restricted Stock Unit Agreement (4-Year)

Form of 2017 Performance-Based Incremental
Restricted Stock Unit Agreement

8-K 000-17948

5/18/2018

8-K 000-17948

5/20/2019

X

8-K 000-17948

11/12/2019

8-K 000-17948

6/7/2017

Form of Restricted Stock Unit Award Agreement for
Outside Directors

10-Q 000-17948

11/7/2017

2000 Equity Incentive Plan, as amended, and related
documents

8-K 000-17948

8/1/2016

10.15*

2000 Employee Stock Purchase Plan, as amended

8-K 000-17948

8/1/2016

10.16*

2019 Equity Incentive Plan, and related documents

8-K 000-17948

8/9/2019

94

Number

10.17*

10.18*

10.19*

10.20*

10.21*

10.22**

10.23**

10.24

21.1

23.1

31.1

31.2

Exhibit Title

Offer Letter for Employment at Electronic Arts Inc.
to Andrew Wilson, dated September 15, 2013

Offer Letter for Employment at Electronic Arts Inc.
to Blake Jorgensen, dated July 25, 2012

Offer Letter for Employment at Electronic Arts Inc.
to Ken Moss, dated June 6, 2014

Offer Letter for Employment at Electronic Arts Inc.
to Chris Bruzzo, dated July 21, 2014

Offer Letter for Employment at Electronic Arts Inc.
to Mala Singh, dated August 27, 2016

Durango Publisher License Agreement, dated
June 29, 2012, by and among Electronic Arts Inc.,
EA International (Studio & Publishing) Ltd.,
Microsoft Licensing, GP and Microsoft Corporation

Playstation Global Developer & Publisher
Agreement, dated April 1, 2018, by and among
Electronic Arts Inc., EA International (Studio &
Publishing) Ltd., Sony Interactive Entertainment
Inc., Sony Interactive Entertainment LLC, and Sony
Interactive Entertainment Europe Ltd

Credit Agreement, dated August 29, 2019, by and
among Electronic Arts Inc., the lenders from time to
time party thereto, and JPMorgan Chase Bank, N.A.,
as Administrative Agent

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, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002

Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) of the Exchange Act, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002

Additional exhibits furnished with this report:

32.1

32.2

Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

101.INS† XBRL Instance Document

101.SCH† XBRL Taxonomy Extension Schema Document

95

Incorporated by Reference

Form

File No.

Filing Date

Filed
Herewith

8-K 000-17948

9/17/2013

8-K 000-17948

7/31/2012

10-Q 000-17948

8/5/2014

10-Q 000-17948

11/4/2014

10-Q 000-17948

11/8/2016

10-K 000-17948

5/21/2014

10-Q 000-17948

8/8/2018

8-K 000-17948

8/29/2019

A
n
n
u
a
l

R
e
p
o
r
t

X

X

X

X

X

X

X

X

Incorporated by Reference

Form

File No.

Filing Date

Filed
Herewith

X

X

X

X

Number

Exhibit Title

101.CAL† XBRL Taxonomy Extension Calculation Linkbase

Document

101.DEF† XBRL Taxonomy Extension Definition Linkbase

Document

101.LAB† XBRL Taxonomy Extension Label Linkbase

Document

101.PRE† XBRL Taxonomy Extension Presentation Linkbase

Document

*

**

†

Management contract or compensatory plan or
arrangement.

Confidential portions of these documents have been
omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for
confidential treatment that was granted in accordance
with Exchange Act Rule 24b-2.

Attached as Exhibit 101 to this Annual Report on
Form 10-K for the year ended March 31, 2020 are
the following formatted in eXtensible Business
Reporting Language (“XBRL”): (1) Consolidated
Balance Sheets, (2) Consolidated Statements of
Operations, (3) Consolidated Statements of
Comprehensive Income (Loss), (4) Consolidated
Statements of Stockholders’ Equity, (5) Consolidated
Statements of Cash Flows, and (6) Notes to
Consolidated Financial Statements.

96

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

ELECTRONIC ARTS INC.

By: /s/ Andrew Wilson
Andrew Wilson
Chief Executive Officer
Date: May 20, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated and on the 20th of May 2020.

Name

/s/ Andrew Wilson
Andrew Wilson

/s/ Blake Jorgensen
Blake Jorgensen

/s/ Kenneth A. Barker
Kenneth A. Barker

Directors:

/s/ Lawrence F. Probst III
Lawrence F. Probst III

/s/ Leonard S. Coleman
Leonard S. Coleman

Jay C. Hoag

/s/
Jay C. Hoag

Jeffrey T. Huber

/s/
Jeffrey T. Huber

/s/ Talbott Roche
Talbott Roche

/s/ Richard A. Simonson
Richard A. Simonson

/s/ Luis A. Ubiñas
Luis A. Ubiñas

/s/ Heidi Ueberroth
Heidi Ueberroth

/s/ Andrew Wilson
Andrew Wilson

A
n
n
u
a
l

R
e
p
o
r
t

Title

Chief Executive Officer

Chief Operating Officer and
Chief Financial Officer

Chief Accounting Officer
(Principal Accounting Officer)

Chairman of the Board

Director

Director

Director

Director

Director

Director

Director

Director

97

[THIS PAGE INTENTIONALLY LEFT BLANK]

Electronic Arts Inc.
209 Redwood Shores Parkway
Redwood City, CA 94065
(650) 628-1500
www.ea.com

Investor Relations
(650) 628-0406
http://ir.ea.com