Earlier this year, EA announced that NBA Elite 11 was delayed until 2011, but during its financial conference call today, EA revealed that it has canceled NBA Elite 11 and moved the franchise from EA Canada to EA Tiburon.

Using the design principles from some of EA SPORTS top rated franchises, NBA Elite 11 introduces several significant gameplay changes that center around user control. The new ‘Hands-On Control’ scheme allows for one-to-one responsiveness of a player’s movement and actions on the court, as opposed to traditional predetermined animations that require users to wait while a scenario played out before making the next move. Hands-on Control applies to everything within a player’s offensive and defensive arsenal, including: dribble moves, dunks, drives to the basket, fadeaways, mid-air adjustments, blocks, steals and more.

The new real-time physics system in NBA Elite 11 allows each player on the court to move independently of one another, removing the two-man interactions that have long taken the user control out of basketball simulation videogames. In addition, a new skill-based shooting system requires accurate user input, based on a player’s position on the court, versus the randomly generated dice rolls that have driven shooting in basketball videogames in the past.

Selected Quarterly Operating Highlights and Metrics:

• EA is the #1 publisher on high-definition consoles with 25% segment share calendar year-to date, two points higher than the same period a year ago.
• In North America and Europe, the high-definition console software market is growing strongly with the combined PlayStation3 and Xbox 360 segments up 23% calendar year-to-date. The PlayStation 3 software market is up 36% calendar year-to-date.
• EA is the #1 PC publisher with 27% segment share at retail calendar year-to-date and strong growth in digital downloads of full-game software.
• For the quarter, EA had six of the top 20 selling games in Western markets with FIFA 11, Madden NFL 11, NCAA Football 11, NHL11, Battlefield: Bad Company™ 2 and FIFA 10.
• FIFA 11 was the #1 title in Europe in the second quarter, and life to date, the FIFA franchise has sold over 100 million units worldwide.
• EA was the #1 publisher across all platforms on the Apple App Store in the quarter.
• At GamesCom, EA won more nominations (10) and awards (five) than any other publisher. Winners included: Crysis™ 2 for Best PC Game; Dead Space™ 2 for Best Survival Game; Rock Band™ 3 for Best Music Game (with MTV/Harmonix); Star Wars: The Old Republic™ for Best MMO Game; and FIFA 11 for Best of GamesCom.
• On October 19, 2010, EA acquired Chillingo, a publisher of top iOS titles including Cut the Rope and Angry Birds. Chillingo extends EA’s App Store leadership and adds an open social gaming platform to EAi’s publishing capabilities.
• Medal of Honor™ is off to a strong start, selling-through 2 million units in just two weeks in October.

Q2 FY11 Financial Highlights:

Non-GAAP net revenue of $884 million exceeded guidance of $775 million to $825 million. Non-GAAP EPS of $0.10 exceeded guidance of ($0.15) to ($0.10). As expected, non-GAAP net revenue in Q2 fiscal 11 was lower compared to Q2 fiscal 10 due to lower distribution revenues and a reduced title slate, which went from nine major titles in Q2 fiscal 10 to seven in Q2 fiscal 11. This was partially offset by digital revenue growth.

EA has announced a plan to restructure key licensing and developer agreements to improve the long-term profitability of its packaged goods portfolio, and expects to incur one-time GAAP restructuring charges of up to approximately $180 million in the second half of fiscal year 2011. Benefits of the restructuring are expected starting in fiscal 2012 and beyond.

The following forward-looking statements, as well as those made above, reflect expectations as of November 2, 2010. Electronic Arts assumes no obligation to update these statements. Results may be materially different and are affected by many factors, including: product development delays; competition in the industry; the health of the economy in the U.S. and abroad and the related impact on discretionary consumer spending; changes in anticipated costs; expected savings and impact on EA’s operations of the Company’s cost reduction plan; consumer demand for console hardware and the ability of the console manufacturers to produce an adequate supply of consoles to meet that demand; changes in foreign exchange rates; the financial impact of potential future acquisitions by EA; the popular appeal of EA’s products; EA’s effective tax rate; and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

Third Quarter Fiscal Year 2011 Expectations – Ending December 31, 2010

• GAAP net revenue is expected to be approximately $940 to $1,065 million.
• Non-GAAP net revenue is expected to be approximately $1.375 to $1.5 billion.
• GAAP diluted loss per share is expected to be approximately ($0.70) to ($0.85).
• Non-GAAP diluted earnings per share is expected to be approximately $0.50 to $0.60.
• For purposes of calculating third quarter fiscal year 2011 earnings/(loss) per share, the Company estimates a share count of 331 million for loss per share computations and 334 million for earnings per share computations.
• Expected non-GAAP net income excludes the following items from expected GAAP net income:
  • Non-GAAP net revenue is expected to be approximately $435 million higher than GAAP net revenue due to the impact of the change in deferred net revenue (packaged goods and digital content);
  • Approximately $45 million of estimated stock-based compensation;
  • Approximately $17 million of acquisition-related expenses;
  • Approximately $5 million of restructuring charges; and
  • Non-GAAP tax expenses are expected to be $54 to $68 million higher than GAAP tax expenses.

Fourth Quarter Fiscal Year 2011 Expectations – Ending March 31, 2011

• GAAP net revenue is expected to be approximately $960 to $1,085 million.
• Non-GAAP net revenue is expected to be approximately $850 to $975 million.
• GAAP diluted earnings per share is expected to be approximately $0.30 to $0.45.
• Non-GAAP diluted earnings per share is expected to be approximately $0.13 to $0.23.
• For purposes of calculating third quarter fiscal year 2011 earnings per share, the Company estimates a share count of 335 million.

• Expected non-GAAP net income excludes the following items from expected GAAP net income:
  • Non-GAAP net revenue is expected to be approximately $110 million lower than GAAP net revenue due to the impact of the change in deferred net revenue (packaged goods and digital content);
  • Approximately $40 million of estimated stock-based compensation;
  • Approximately $17 million of acquisition-related expenses;
  • Approximately zero to $5 million of restructuring charges; and
  • Non-GAAP tax expenses are expected to be $7 to $20 million higher than GAAP tax expenses.

Fiscal Year 2011 Expectations – Ending March 31, 2011

EA is affirming its full year FY11 non-GAAP guidance for both net revenue and earnings per share.

• GAAP net revenue is expected to be approximately $3.35 to $3.60 billion and non-GAAP net revenue is expected to be approximately $3.65 to $3.90 billion, both consistent with the Company’s previously provided guidance.

• GAAP operating expense is expected to be approximately $2.2 billion and non-GAAP operating expense is expected to be approximately $2 billion.
• GAAP diluted loss per share is expected to be approximately ($0.55) to ($0.85).
• Non-GAAP diluted earnings per share are expected to be approximately $0.50 to $0.70.
• For purposes of calculating fiscal year 2011 earnings/(loss) per share, the Company estimates a share count of 330 million for loss per share computations and 334 million for earnings per share computations.
• Expected non-GAAP net income excludes the following items from expected GAAP net loss:
  • Non-GAAP net revenue is expected to be approximately $300 million higher than GAAP revenue due to the impact of the change in deferred net revenue (packaged goods and digital content);
  • Approximately $175 million of estimated stock-based compensation;
  • Approximately $45 million of acquisition-related expenses;
  • Approximately $10 to $15 million of restructuring charges;
  • Approximately $23 million from net gains on sale of strategic investments; and
  • Non-GAAP tax expenses are expected to be $65 to $91 million higher than GAAP tax expenses.

Note: GAAP expectations for all periods set forth above do not reflect the financial impact of the cost reduction plan announced today.