EX-99.1 2 dex991.htm PRESS RELEASE DATED JANUARY 25, 2005 Press Release dated January 25, 2005

Exhibit 99.1

 

ELECTRONIC ARTS REPORTS FISCAL THIRD QUARTER RESULTS

Long-Term Exclusives with NFL and ESPN

Record Cash Flows for Last 12 months

 

REDWOOD SHORES, CA—January 25, 2005—Electronic Arts (NASDAQ: ERTS) today announced financial results for the fiscal third quarter ended December 31, 2004.

 

Net revenue was $1.428 billion, down 3.2 percent as compared with $1.475 billion for the fiscal quarter ended December 31, 2003. Sales were driven by Need for Speed Underground 2, FIFA 2005, The Lord of the Rings, The Third Age, NBA LIVE 2005, The Urbz: Sims in the City, Golden Eye: Rogue Agent and The Lord of the Rings: Battle for Middle- eartheach reaching platinum status in the quarter. Madden NFL 2005, The Sims 2 and Tiger Woods PGA TOUR® 2005 had continued strong sales each selling over one million copies in the quarter.

 

EA entered into long-term agreements with both the National Football League and ESPN. In addition, the Company agreed to purchase shares representing approximately 19.9 percent of Ubisoft Entertainment, a leading developer and publisher of interactive entertainment.

 

Net income was $375 million, a 4.4 percent decrease year-over-year. Diluted earnings per share were $1.18 as compared to $1.26 a year ago.

 

Non-GAAP net income, excluding certain items, was $391 million, roughly flat year-over-year. Non-GAAP diluted earnings per share were $1.23 as compared to $1.26. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)

 

Trailing twelve month operating cash flow was a record $722 million as compared to $538 million for the same period a year ago – an increase of $184 million.

 

“This quarter, EA further strengthened its long term leadership position,” said Larry Probst, Chairman and Chief Executive Officer. “Our exclusive agreements with the NFL, NFLPA and ESPN, along with our strategic investment in Ubisoft will help provide the framework for continued growth in the future.”

 

“We expect calendar 2005 to be a defining year,” said Warren Jenson, Chief Financial and Administrative Officer. “While the year ahead will certainly be a year of investment for EA, we expect to see growth through new exciting platforms, a rich slate of great entertainment and further globalization of our business.”

 

Current Highlights (comparisons are to the quarter ended December 31, 2003, unless otherwise stated)

 

    Net revenue for the quarter: North America—down 8 percent to $692 million; Europe—up 1 percent to $666 million; Asia Pacific, including Japan, up 9 percent to $70 million. Reported net revenue increased by approximately $47 million or 3 percent due to changes in foreign currency rates.
    Need for Speed Underground 2 sold over 8.4 million copies. The Need for Speed franchise has now surpassed $1 billion in life-to-date sales.
    FIFA 2005 sold over 4.5 million copies.
    EA repurchased 656 thousand shares of its common stock during the quarter.
    The Company had 27 platinum titles in the calendar year.

 

1


    The Sims franchise sold more than 16 million copies in the calendar year.
    The Need for Speed franchise sold more than 15 million copies in the calendar year.
    The Company completed its acquisition of Criterion Software.
    EA entered into an agreement to purchase approximately 19.9 percent of Ubisoft for a purchase price of 19.69 Euros per share or approximately $90 million in total.
    EA has recently completed its tender offer for shares of Digital Illusions, C.E. at 61 Swedish Kroners or approximately $8.71 per share.

 

Business Outlook

 

The following forward-looking statements reflect expectations as of January 25, 2005. Results may be materially different and are affected by many factors, such as changes in foreign exchange rates, the overall global economy, the popular appeal of our products, our effective tax rate, development delays, our ability to secure key licenses and other factors detailed in this release and in our annual and quarterly SEC filings.

 

Fiscal Year Expectations—Ending March 31, 2005

 

    Net revenue is expected to be between $3.275 and $3.325 billion—as compared to $2.957 billion for fiscal 2004.
    Non-GAAP diluted earnings per share are expected to be between $1.90 and $1.95—as compared to $1.84 for fiscal 2004. This range does not factor in eight cents of estimated charges related principally to our acquisition of Criterion Software and tender offer for Digital Illusions C.E.
    GAAP diluted earnings per share are expected to be between $1.82 and $1.87—as compared to $1.87 for fiscal 2004.

 

Our expected results include the projected impact of our share repurchase program.

 

Non-GAAP Financial Measures

 

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

 

    Amortization of intangibles
    Employee stock-based compensation
    Restructuring and asset impairment charges
    Acquired in-process technology
    Other-than-temporary impairment of investments in affiliates

 

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

 

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

 

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

 

2


Conference Call

 

Electronic Arts will host a conference call on January 25, 2005 at 2:00 pm PT (5:00 pm ET) to review the results for the Company’s third quarter ended December 31, 2004. Listeners may access the conference call live via webcast (http://investor.ea.com). A webcast archive of the conference call will be available for one year at http://investor.ea.com.

 

Some statements set forth in this release, including those under the heading “Business Outlook,” contain forward-looking statements that involve risks and uncertainties. Statements including words such as “anticipate”, “believe” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are subject to business and economic risks and actual events or actual future results could differ materially from those set forth in the forward-looking statements due to such risks and uncertainties. Some of the factors which could cause our results to differ materially from our expectations include the following: our ability to predict consumer preferences among competing hardware platforms; the seasonality and cyclical nature of the interactive game segment; timely development and release of our products; our ability to secure licenses to valuable entertainment properties on favorable terms; consumer spending trends; competition in our industry; our ability to attract and retain key personnel; changes in effective tax rates; adoption of new accounting regulations and standards; potential regulation of our products in key territories; developments in the law regarding protection of our products; fluctuations in foreign exchange rates; and other factors described in our Annual Report on Form 10-K for the year ended March 31, 2004 and in our Form 10-Q for the quarter ended September 30, 2004. We do not intend to update these forward-looking statements, including those made under the “Business Outlook” heading.

 

Note to Editors: Need for Speed, The Sims, The Urbz, Sims in the City and John Madden Football are trademarks or registered trademarks of Electronic Arts Inc. in the U.S. and/or other countries. The Lord of the Rings and the names of the characters, items, events and places therein are trademarks of the Saul Zaentz Company d/b/a Tolkien Enterprises under license to New Line Productions, Inc. GoldenEye Rogue Agent is a trademark of Danjaq, LLC and United Artists Corporation. NBA, NFL, Tiger Woods, PGA TOUR and FIFA are trademarks of their respective owners and used with permission. All other trademarks are the property of their respective owners.

 

For additional information, please contact:

 

Tricia Gugler

Director, Investor Relations

650-628-7327

 

Jeff Brown

Vice President, Corporate Communications

650-628-7922

 

3


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)

 

    

Three Months Ended

December 31,


  

Nine Months Ended

December 31,


     2004

   2003

   2004

   2003

Net revenue

   $ 1,427,851    $ 1,475,323    $ 2,575,220    $ 2,358,709

Cost of goods sold

     502,763      513,255      963,429      876,980
    

  

  

  

Gross profit

     925,088      962,068      1,611,791      1,481,729

Operating expenses:

                           

Marketing and sales

     132,422      180,174      303,160      303,299

General and administrative

     77,998      71,992      155,095      138,784

Research and development

     185,155      151,175      472,636      355,790

Amortization of intangibles

     830      623      2,075      2,113

Acquired in-process technology

     9,400      —        9,400      —  

Restructuring charges

     —        596      388      596
    

  

  

  

Total operating expenses

     405,805      404,560      942,754      800,582
    

  

  

  

Operating income

     519,283      557,508      669,037      681,147

Interest and other income, net

     22,649      948      43,991      14,927
    

  

  

  

Income before provision for income taxes

     541,932      558,456      713,028      696,074

Provision for income taxes

     166,832      166,160      216,450      208,822
    

  

  

  

Net income

   $ 375,100    $ 392,296    $ 496,578    $ 487,252
    

  

  

  

Net income:

                           

Basic

   $ 375,100    $ 392,296    $ 496,578    $ 487,252

Diluted

   $ 375,100    $ 392,296    $ 496,578    $ 487,252

Earnings per share:

                           

Basic

   $ 1.23    $ 1.32    $ 1.63    $ 1.66

Diluted

   $ 1.18    $ 1.26    $ 1.57    $ 1.59

Number of shares used in computation:

                           

Basic

     305,632      297,787      303,932      294,001

Diluted

     316,833      311,463      316,157      306,737

 

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

 

The following table shows the Company’s non-GAAP results reconciled to the Generally Accepted Accounting Principles (“GAAP”) Condensed Consolidated Statements of Operations. The Company’s non-GAAP results do not include amortization of intangibles, employee stock-based compensation, acquired in-process technology, restructuring charges, asset impairment charges, and other-than-temporary impairment of investments in affiliates and their related income tax effect.

 

    

Three Months Ended

December 31,


   

Nine Months Ended

December 31,


 
     2004

   2003

    2004

    2003

 

Net income

   $ 375,100    $ 392,296     $ 496,578     $ 487,252  

Amortization of intangibles

     830      623       2,075       2,113  

COGS amortization of intangibles

     1,046      —         1,046       —    

Employee stock-based compensation

     4,020      —         4,020       —    

Acquired in-process technology

     9,400      —         9,400       —    

Restructuring charges

     —        596       388       596  

Income taxes effect on the above items

     236      (351 )     (238 )     (813 )
    

  


 


 


Non-GAAP net income

   $ 390,632    $ 393,164     $ 513,269     $ 489,148  
    

  


 


 


Non-GAAP diluted earnings per share

   $ 1.23    $ 1.26     $ 1.62     $ 1.59  

Number of shares used in diluted earnings per share computation

     316,833      311,463       316,157       306,737  

 

4


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

    

December 31,

2004


  

March 31,

2004 (a)


ASSETS

             

Current assets:

             

Cash, cash equivalents and short-term investments

   $ 2,564,801    $ 2,414,346

Marketable equity securities

     4,347      1,225

Receivables, net of allowances of $206,272 and $154,682, respectively

     892,133      211,916

Inventories

     84,424      55,143

Deferred income taxes

     86,449      84,312

Other current assets

     183,229      161,867
    

  

Total current assets

     3,815,383      2,928,809

Property and equipment, net

     329,010      298,073

Investment in affiliates

     24,918      14,332

Goodwill

     122,166      91,977

Other intangibles, net

     37,563      18,468

Long-term deferred income taxes

     46,666      40,755

Other assets

     60,375      71,612
    

  

Total Assets

   $ 4,436,081    $ 3,464,026
    

  

LIABILITIES AND STOCKHOLDERS’ EQUITY

             

Current liabilities:

             

Accounts payable

   $ 196,409    $ 114,087

Accrued and other liabilities

     867,814      630,138
    

  

Total current liabilities

     1,064,223      744,225

Other liabilities

     36,996      41,443
    

  

Total liabilities

     1,101,219      785,668

Stockholders’ equity:

             

Common stock

     3,070      3,015

Paid-in capital

     1,310,305      1,153,680

Retained earnings

     1,997,762      1,501,184

Accumulated other comprehensive income

     23,725      20,479
    

  

Total stockholders’ equity

     3,334,862      2,678,358
    

  

Total Liabilities and Stockholders’ Equity

   $ 4,436,081    $ 3,464,026
    

  


(a) Derived from audited financial statements.

 

5


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

    

Three Months Ended

December 31,


   

Nine Months Ended

December 31,


 
     2004

    2003

    2004

    2003

 

OPERATING ACTIVITIES

                                

Net income

   $ 375,100     $ 392,296     $ 496,578     $ 487,252  

Adjustments to reconcile net income to net cash used in operating activities:

                                

Depreciation and amortization

     19,744       29,068       52,911       59,915  

Equity in net income of investment in affiliates

     (155 )     (292 )     (742 )     (405 )

Non-cash restructuring and asset impairment charges

     —         596       —         596  

Other-than-temporary impairment of investments in affiliate

     —         —         —         589  

Realized (gains)/ losses on investments and sale of property and equipment

     (5,760 )     538       (9,666 )     583  

Stock-based compensation

     4,086       237       4,359       666  

Tax benefit from exercise of stock options

     9,776       1,676       34,914       41,845  

Acquired in-process technology

     9,400       —         9,400       —    

Change in assets and liabilities:

                                

Receivables, net

     (519,402 )     (653,561 )     (687,619 )     (786,595 )

Inventories

     (6,892 )     (25,651 )     (30,989 )     (26,057 )

Other assets

     (41,225 )     (12,521 )     (14,635 )     6,542  

Accounts payable

     26,238       28,815       84,123       54,124  

Accrued and other liabilities

     265,996       317,644       221,398       268,037  
    


 


 


 


Net cash provided by operating activities

     136,906       78,845       160,032       107,092  
    


 


 


 


INVESTING ACTIVITIES

                                

Capital expenditures

     (37,240 )     (27,247 )     (82,579 )     (55,937 )

Proceeds from sale of property and equipment

     130       25       15,680       113  

Proceeds from sale of marketable equity securities

     46       2       3,161       2  

Purchase of investment in affiliates

     (2,150 )     (350 )     (2,400 )     (350 )

Proceeds from sale of investment in affiliate

     —         —         —         8,467  

Proceeds from maturities and sales of short-term investments

     84,438       725,606       896,959       1,273,398  

Purchase of short-term investments

     (589,503 )     (620,200 )     (2,247,608 )     (1,890,779 )

Purchase of minority interest

     —         —         —         (2,513 )

Acquisition of subsidiary, net of cash acquired

     (59,490 )     (958 )     (59,502 )     (958 )
    


 


 


 


Net cash provided by (used in) investing activities

     (603,769 )     76,878       (1,476,289 )     (668,557 )
    


 


 


 


FINANCING ACTIVITIES

                                

Proceeds from sale of common stock through employee stock plans and other plans

     61,264       26,385       146,772       166,260  

Repurchase and retirement of common stock

     (30,794 )     —         (30,794 )     —    

Repurchase of Class B common stock

     —         —         —         (225 )

Repayment of Class B notes receivable

     —         —         —         128  

Dividend to joint venture

     —         —         —         (2,587 )
    


 


 


 


Net cash provided by financing activities

     30,470       26,385       115,978       163,576  
    


 


 


 


Effect of foreign exchange on cash and cash equivalents

     13,606       14,777       13,633       20,904  
    


 


 


 


Increase (decrease) in cash and cash equivalents

     (422,787 )     196,885       (1,186,646 )     (376,985 )

Beginning cash and cash equivalents

     1,386,026       376,125       2,149,885       949,995  
    


 


 


 


Ending cash and cash equivalents

     963,239       573,010       963,239       573,010  

Short-term investments

     1,601,562       1,251,659       1,601,562       1,251,659  
    


 


 


 


Ending cash, cash equivalents and short-term investments

   $ 2,564,801     $ 1,824,669     $ 2,564,801     $ 1,824,669  
    


 


 


 


 

6


ELECTRONIC ARTS INC. AND SUBSIDIARIES

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

(in millions, except per share data)

 

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

 

     Q3
FY04


    Q4
FY04


    Q1
FY05


    Q2
FY05


   

Q3

FY05


 

QUARTERLY RESULTS

                                        

Operating Income

                                        

GAAP operating income

   $ 558     $ 94     $ 25     $ 125     $ 519  

Adjustments:

                                        

Amortization of intangibles

     1       1       1       —         1  

COGS amortization of intangibles

     —         —         —         —         1  

Employee stock-based compensation

     —         —         —         —         4  

Acquired-in-process technology

     —         —         —         —         10  

Restructuring charges

     —         9       —         —         —    

Asset impairment charges

     —         —         —         —         —    
    


 


 


 


 


Total adjustments

     1       10       1       —         16  

Non-GAAP operating income

   $ 559     $ 104     $ 26     $ 125     $ 535  
    


 


 


 


 


Non-GAAP operating income margin - % of net revenue

     38 %     17 %     6 %     18 %     37 %

Net Income

                                        

GAAP net income

   $ 392     $ 90     $ 24     $ 97     $ 375  

Adjustments:

                                        

Amortization of intangibles

     1       1       1       1       1  

COGS amortization of intangibles

     —         —         —         —         1  

Employee stock-based compensation

     —         —         —         —         4  

Acquired-in-process technology

     —         —         —         —         10  

Restructuring charges

     —         9       —         —         —    

Asset impairment charges

     —         —         —         —         —    

Other-than-temporary impairment of investment in affiliates

     —         —         —         —         —    

Income taxes effect on the above items

     —         (3 )     —         —         —    

Income tax adjustment

     —         (20 )     —         —         —    
    


 


 


 


 


Total adjustments

     1       (13 )     1       1       16  

Non-GAAP net income

   $ 393     $ 77     $ 25     $ 98     $ 391  
    


 


 


 


 


Non-GAAP net income margin - % of net revenue

     27 %     13 %     6 %     14 %     27 %

GAAP diluted earnings per share

   $ 1.26     $ 0.29     $ 0.08     $ 0.31     $ 1.18  

Non-GAAP diluted earnings per share

   $ 1.26     $ 0.25     $ 0.08     $ 0.31     $ 1.23  

Shares used in diluted earnings per share computation

     311       313       316       316       317  

TRAILING TWELVE MONTH RESULTS

                                        

Operating Income

                                        

GAAP operating income

   $ 691     $ 776     $ 779     $ 802     $ 763  

Adjustments:

                                        

Amortization of intangibles

     4       3       4       3       3  

COGS amortization of intangibles

     —         —         —         —         1  

Employee stock-based compensation

     —         —         —         —         4  

Acquired-in-process technology

     —         —         —         —         10  

Restructuring charges

     7       9       9       9       9  

Asset impairment charges

     64       —         —         —         —    
    


 


 


 


 


Total adjustments

     75       12       13       12       27  

Non-GAAP operating income

   $ 766     $ 788     $ 792     $ 814     $ 790  
    


 


 


 


 


Non-GAAP operating income margin - % of net revenue

     27 %     27 %     26 %     25 %     25 %

 

7


ELECTRONIC ARTS INC. AND SUBSIDIARIES

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

(in millions, except per share data)

 

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

 

     Q3
FY04


    Q4
FY04


    Q1
FY05


    Q2
FY05


   

Q3

FY05


 

TRAILING TWELVE MONTH RESULTS

                                        

Net Income

                                        

GAAP net income

   $ 496     $ 577     $ 583     $ 604     $ 587  

Adjustments:

                                        

Amortization of intangibles

     4       3       3       4       3  

COGS amortization of intangibles

     —         —         —         —         1  

Employee stock-based compensation

     —         —         —         —         4  

Acquired-in-process technology

     —         —         —         —         10  

Restructuring charges

     7       10       9       9       9  

Asset impairment charges

     64       —         —         —         —    

Other-than-temporary impairment of investment in affiliates

     —         —         —         —         —    

Income taxes effect on the above items

     (22 )     (4 )     (3 )     (4 )     (4 )

Income tax adjustment

     —         (20 )     (20 )     (20 )     (20 )
    


 


 


 


 


Total adjustments

     53       (11 )     (11 )     (11 )     3  

Non-GAAP net income

   $ 549     $ 566     $ 572     $ 593     $ 590  
    


 


 


 


 


Non-GAAP net income margin - % of net revenue

     19 %     19 %     19 %     18 %     19 %

GAAP diluted earnings per share

   $ 1.60     $ 1.87     $ 1.88     $ 1.94     $ 1.86  

Non-GAAP diluted earnings per share

   $ 1.77     $ 1.84     $ 1.84     $ 1.90     $ 1.87  

 

8


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

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

 

     Q3
FY04


    Q4
FY04


    Q1
FY05


    Q2
FY05


    Q3
FY05


   

YOY%

Growth


 

CONSOLIDATED FINANCIAL DATA

                                              

Net revenue

     1,475       598       432       716       1,428     (3 )%

Net revenue - trailing twelve months (“TTM”)

     2,822       2,957       3,035       3,221       3,174     12 %

Gross profit

     962       372       255       432       925     (4 )%

Gross margin - % of net revenue

     65 %     62 %     59 %     60 %     65 %      

Gross profit - TTM

     1,780       1,854       1,906       2,021       1,984     11 %

Gross margin - TTM % of net revenue

     63 %     63 %     63 %     63 %     63 %      

Operating income

     558       94       25       125       519     (7 )%

Operating income margin - % of net revenue

     38 %     16 %     6 %     17 %     36 %      

Operating income - TTM

     691       776       779       802       763     11 %

Operating income margin - TTM % of net revenue

     24 %     26 %     26 %     25 %     24 %      

Net income

     392       90       24       97       375     (4 )%

Diluted earnings per share

   $ 1.26     $ 0.29     $ 0.08     $ 0.31     $ 1.18     (6 )%

Net income - TTM

     496       577       583       604       587     18 %

Diluted earnings per share - TTM

   $ 1.60     $ 1.87     $ 1.88     $ 1.94     $ 1.86     16 %

Non-GAAP operating income (a)

     559       104       26       125       535     (4 )%

Non-GAAP operating income margin - % of net revenue

     38 %     17 %     6 %     18 %     37 %      

Non-GAAP operating income - TTM (a)

     766       788       792       814       790     3 %

Non-GAAP operating income margin - TTM % of net revenue

     27 %     27 %     26 %     25 %     25 %      

Non-GAAP net income (a)

     393       77       25       98       391     (1 )%

Non-GAAP diluted earnings per share (a)

   $ 1.26     $ 0.25     $ 0.08     $ 0.31     $ 1.23     (2 )%

Non-GAAP net income - TTM (a)

     549       566       572       593       590     8 %

Non-GAAP diluted earnings per share - TTM (a)

   $ 1.77     $ 1.84     $ 1.84     $ 1.90     $ 1.87     6 %

CASH FLOW DATA

                                              

Operating cash flow

     79       562       (66 )     89       137     74 %

Operating cash flow - TTM

     538       669       638       664       722     34 %

Capital expenditures

     27       34       26       19       37     37 %

Capital expenditures - TTM

     81       90       104       106       116     44 %

BALANCE SHEET DATA

                                              

Cash, cash equivalents and short term investments

     1,825       2,414       2,369       2,490       2,565     41 %

Marketable equity securities

     2       1       2       —         4     108 %

Receivables, net

     837       212       170       379       892     7 %

Inventories

     65       55       53       79       84     30 %

OTHER

                                              

Employees

     4,528       4,773       4,813       5,104       5,669     25 %

Diluted weighted-average shares

     311       313       316       316       317        

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

 

9


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

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

 

     Q3
FY04


    Q4
FY04


    Q1
FY05


    Q2
FY05


    Q3
FY05


   

YOY
%

Growth


 

GEOGRAPHIC REVENUE MIX

                                    

North America Revenue

   753     299     211     473     692     (8 )%

International Revenue

   722     299     221     243     736     2 %

Europe Revenue

   658     249     190     210     666     1 %

Asia Pacific Revenue

   43     22     18     21     46     7 %

Japan Revenue

   21     28     13     12     24     15 %
    

 

 

 

 

     

Net Revenue

   1,475     598     432     716     1,428     (3 )%

GEOGRAPHIC REVENUE MIX - as a % of Net Revenue

                                    

North America Revenue

   51 %   50 %   49 %   66 %   48 %      

International Revenue

   49 %   50 %   51 %   34 %   52 %      

Europe Revenue

   45 %   41 %   44 %   29 %   47 %      

Asia Pacific Revenue

   3 %   4 %   4 %   3 %   3 %      

Japan Revenue

   1 %   5 %   3 %   2 %   2 %      
    

 

 

 

 

     

Net Revenue

   100 %   100 %   100 %   100 %   100 %      

PLATFORM REVENUE MIX

                                    

Sony PlayStation 2

   732     244     162     312     661     (10 )%

PC

   220     76     67     141     239     9 %

Xbox

   205     80     57     142     233     14 %

Nintendo GameCube

   104     50     26     38     109     5 %

Mobile Platforms

   57     14     18     10     55     (4 )%

Co-publishing and Distribution

   122     112     67     49     79     (36 )%

Subscription Services

   12     13     13     13     14     17 %

Advertising, Programming, Licensing and Other

   23     9     22     11     38     59 %
    

 

 

 

 

     

Net Revenue

   1,475     598     432     716     1,428     (3 )%

PLATFORM REVENUE MIX - as a % of Net Revenue

                                    

Sony PlayStation 2

   49 %   41 %   38 %   43 %   46 %      

PC

   15 %   13 %   15 %   20 %   17 %      

Xbox

   14 %   13 %   13 %   20 %   16 %      

Nintendo GameCube

   7 %   9 %   6 %   5 %   8 %      

Mobile Platforms

   4 %   2 %   4 %   1 %   4 %      

Co-publishing and Distribution

   8 %   19 %   16 %   7 %   5 %      

Subscription Services

   1 %   2 %   3 %   2 %   1 %      

Advertising, Programming, Licensing and Other

   2 %   1 %   5 %   2 %   3 %      
    

 

 

 

 

     

Net Revenue

   100 %   100 %   100 %   100 %   100 %      

Platform SKU Release Mix

                                    

Sony PlayStation 2

   11     4     3     9     9     (18 )%

PC

   7     1     3     6     7     0 %

Xbox

   11     3     3     8     9     (18 )%

Nintendo GameCube

   9     3     1     7     7     (22 )%

Mobile Platforms

   9     —       1     2     7     (22 )%

Online and Other

   1     —       —       1     1     0 %
    

 

 

 

 

     

Total SKUs

   48     11     11     33     40     (17 )%
    

 

 

 

 

     

 

 

 

10


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Fact Sheet for Q3 Fiscal 2005

 

Q3 Product Releases    Platform

· FIFA Soccer 2005

   PlayStation®2

· NBA LIVE 2005

   PlayStation 2

· NCAA® March Madness® 2005

   PlayStation 2

· Need for Speed Underground 2

   PlayStation 2

· TOTAL CLUB MANAGER 2005

   PlayStation 2

· The Lord of the Rings, The Third Age

   PlayStation 2

· NFL STREET 2: Unleashed

   PlayStation 2

· GoldenEye: Rogue Agent

   PlayStation 2

· The Urbz: Sims in the City

   PlayStation 2

· FIFA Soccer 2005

   PlayStation®

· FIFA Soccer 2005

   Xbox®

· NBA LIVE 2005

   Xbox

· NCAA March Madness 2005

   Xbox

· Need for Speed Underground 2

   Xbox

· TOTAL CLUB MANAGER 2005

   Xbox

· The Lord of the Rings, The Third Age

   Xbox

· NFL STREET 2: Unleashed

   Xbox

· GoldenEye: Rogue Agent

   Xbox

· The Urbz: Sims in the City

   Xbox

· FIFA Soccer 2005

   Nintendo GameCube

· NBA LIVE 2005

   Nintendo GameCube

· Need for Speed Underground 2

   Nintendo GameCube

· The Lord of the Rings, The Third Age

   Nintendo GameCube

· NFL STREET 2: Unleashed

   Nintendo GameCube

· GoldenEye: Rogue Agent

   Nintendo GameCube

· The Urbz: Sims in the City

   Nintendo GameCube

· FIFA Soccer 2005

   PC

· NBA LIVE 2005

   PC

· Need for Speed Underground 2

   PC

· TOTAL CLUB MANAGER 2005

   PC

· Medal of Honor Pacific Assault

   PC

· Medal of Honor Pacific Assault Director’s Edition

   PC

· The Lord of the Rings, The Battle for Middle-earth

   PC

· FIFA Soccer 2005

   Game Boy® Advance

· Need for Speed Underground 2

   Game Boy Advance

· The Lord of the Rings, The Third Age

   Game Boy Advance

· The Urbz: Sims in the City

   Game Boy Advance

· Tiger Woods PGA TOUR® 2005

   Nintendo DS

· Madden NFL 2005

   Nintendo DS

· The Urbz: Sims in the City

   Nintendo DS
Co-pub, International only and Others (not in SKU count)     

· FIFA Soccer 2005

   Ngage

· Total Football (Japanese Soccer)

   PlayStation 2

 

All trademarks are the property of their respective owners.

 

11


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Schedule of Earnings Adjusted for Stock-Based Compensation

(in millions, except per share data)

 

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

 

    

Three Months Ended

December 31,


   

Nine Months Ended

December 31,


 
     2004

    2003

    2004

    2003

 

Net income - as reported

   $ 375     $ 392     $ 497     $ 487  

Stock-based compensation

     (17 )     (25 )     (60 )     (69 )
    


 


 


 


Net income - pro forma

   $ 358     $ 367     $ 437     $ 418  
    


 


 


 


Net earnings per share:

                                

As reported - basic

   $ 1.23     $ 1.32     $ 1.63     $ 1.66  

Pro Forma - basic

   $ 1.17     $ 1.23     $ 1.44     $ 1.42  

As reported - diluted

   $ 1.18     $ 1.26     $ 1.57     $ 1.59  

Pro Forma - diluted

   $ 1.14     $ 1.19     $ 1.39     $ 1.38