EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

EA REPORTS SECOND QUARTER RESULTS

Madden NFL 06 Number One Title in North America

Five Titles Ready for Xbox 360 Launch

 

REDWOOD CITY, CA – November 1, 2005 – Electronic Arts (NASDAQ: ERTS) today announced financial results for the second quarter ended September 30, 2005.

 

Net revenue for the second quarter was $675 million, down 6 percent as compared with $716 million for the prior year. Sales were driven by Madden NFL 06, NCAA® Football 06, Burnout™ Revenge, FIFA 06, NBA Live 06 and The Sims™ 2 Nightlife each reaching platinum status (over one million copies sold) in the quarter – and to a lesser extent, Tiger Woods PGA TOUR® 06, NHL® 06 and NASCAR® 06: Total Team Control, each selling over 500 thousand copies.

 

Net income for the quarter was $51 million as compared with $97 million for the prior year. Diluted earnings per share were $0.16 as compared with $0.31 for the prior year.

 

Non-GAAP net income for the quarter, excluding certain items, was $46 million as compared with $98 million for the prior year. Non-GAAP diluted earnings per share were $0.15 as compared with $0.31 for the prior year. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)

 

Trailing twelve month operating cash flow was $592 million as compared with $664 million for the same period a year ago.

 

“We are well prepared for the launch of Xbox 360,” said Larry Probst, Chairman and Chief Executive Officer. “We plan to release five blockbuster games – FIFA 06, Madden NFL 06, NBA Live 06, Need for Speed Most Wanted and Tiger Woods PGA TOUR 06 on this exciting new platform. These titles will demonstrate to consumers the amazing capabilities of next-generation hardware.”

 

“This will be a great holiday for gamers,” said Warren Jenson, Chief Financial and Administrative Officer. “This quarter we plan to launch more than twelve titles, including Need for Speed Most Wanted, Harry Potter and the Goblet of Fire, The Sims 2 on consoles and handhelds, Battlefield 2 Modern Combat and James Bond From Russia with Love.

 

Current Highlights (comparisons are to the quarter ended September 30, 2004)

 

    Year to date, Madden NFL 06 is the number one title on current generation consoles in North America.
    FIFA 06 sales at retail are up over 30 percent year-over-year in the first four weeks since launch.
    The NBA Live franchise has generated over one billion dollars in life-to-date revenue.
    EA has two of the top-ten-rated games for the year – Battlefield 2 and Burnout Revenge.
    EA’s revenue share hit a record 75 percent in the sports category in North America – up seven points year-over-year.
    EA has 26 percent revenue share on the PSP™ (PlayStation® Portable) system in North America since launch and 16 percent revenue share in Europe. EA had two of the top-ten titles in Europe for September.
    EA signed a deal with Steven Spielberg to create three new video game franchises out of its LA studio.

 

1


    A distribution agreement was signed with Vodafone to deliver games to mobile phones in Europe, Egypt, South Africa, Australia and New Zealand.
    The Company completed its $750 million stock repurchase program during the quarter.

 

Business Outlook

 

The following forward-looking statements reflect expectations as of November 1, 2005. Results may be materially different and are affected by many factors, such as consumer spending trends, the popular appeal of EA’s products, development delays, current-generation and next-generation hardware availability, the seasonal and cyclical nature of the interactive entertainment industry, the overall economy, competition, changes in foreign exchange rates, EA’s effective tax rate, and other factors detailed in this release and EA’s annual and quarterly SEC filings.

 

Fiscal Third Quarter Expectations – Ending December 31, 2005

 

    Net revenue is expected to be between $1.475 and $1.575 billion.
    Non-GAAP diluted earnings per share are expected to be between $1.18 and $1.28.
    GAAP diluted earnings per share are expected to be between $1.15 and $1.25. This range includes up to $0.03 of estimated charges related principally to the Company’s European reorganization and establishment of an International Publishing Headquarters in Geneva.

 

Fiscal Year Expectations – Ending March 31, 2006

 

    Net revenue is expected to be between $3.250 and $3.400 billion.
    Non-GAAP diluted earnings per share are expected to be between $1.45 and $1.60.
    GAAP diluted earnings per share are expected to be between $1.40 and $1.55. This range includes up to $0.05 of estimated charges related principally to the Company’s European reorganization and establishment of an International Publishing Headquarters in Geneva.

 

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
    Certain non-recurring litigation expenses
    Other-than-temporary impairment of investments in affiliates

 

In addition, the Company’s non-GAAP results exclude the impact of one-time tax adjustments.

 

Other significant non-recurring items may occur from time to time that require an adjustment to these non-GAAP measures. When these items occur, the accounting impact will become a reconciling item between the GAAP results and these non-GAAP measures.

 

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.

 

2


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 is included as part of the supplemental disclosures to this release.

 

Conference Call

 

Electronic Arts will host a conference call on November 1, 2005 at 2:00 pm PT (5:00 pm ET) to review the results for the Company’s second quarter ended September 30, 2005. 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 the estimates under the heading “Business Outlook,” contain forward-looking statements that are subject to change. Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: consumer spending trends; the seasonal and cyclical nature of the interactive game segment; timely development and release of Electronic Arts’ products; competition in the interactive entertainment industry; the Company’s ability to manage expenses during fiscal year 2006; the timely release of next-generation hardware; the availability of an adequate supply of current-generation and next-generation hardware units; the Company’s ability to predict consumer preferences among competing hardware platforms; the Company’s ability to secure licenses to valuable entertainment properties on favorable terms; the Company’s ability to attract and retain key personnel; changes in the Company’s effective tax rates; adoption of new accounting regulations and standards; potential regulation of the Company’s products in key territories; developments in the law regarding protection of the Company’s products; fluctuations in foreign exchange rates; and other factors described in the Company’s annual report on Form 10-K for the year ended March 31, 2005 and Form 10-Q for the quarter ended June 30, 2005. Electronic Arts does not intend to update these forward-looking statements, including those made under the “Business Outlook” heading.

 

For additional information, please contact:

 

Tricia Gugler

  Jeff Brown

Director, Investor Relations

  Vice President, Corporate Communications

650-628-7327

  650-628-7922

 

3


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in millions, except per share data)

 

     Three Months Ended
September 30,


   Six Months Ended
September 30,


     2005

    2004

   2005

    2004

Net revenue

   $ 675     $ 716    $ 1,040     $ 1,147

Cost of goods sold

     284       284      434       460
    


 

  


 

Gross profit

     391       432      606       687

Operating expenses:

                             

Marketing and sales

     107       107      182       171

General and administrative

     52       42      103       77

Research and development

     182       157      365       288

Amortization of intangibles

     1       1      2       1
    


 

  


 

Total operating expenses

     342       307      652       537
    


 

  


 

Operating income (loss)

     49       125      (46 )     150

Interest and other income, net

     13       12      30       21
    


 

  


 

Income (loss) before provision for (benefit from) income taxes and minority interest

     62       137      (16 )     171

Provision for (benefit from) income taxes

     9       40      (13 )     50
    


 

  


 

Income (loss) before minority interest

     53       97      (3 )     121

Minority interest

     (2 )     —        (4 )     —  
    


 

  


 

Net income (loss)

   $ 51     $ 97    $ (7 )   $ 121
    


 

  


 

Earnings (loss) per share:

                             

Basic

   $ 0.17     $ 0.32    $ (0.02 )   $ 0.40

Diluted

   $ 0.16     $ 0.31    $ (0.02 )   $ 0.38

Number of shares used in computation:

                             

Basic

     302       304      305       303

Diluted

     314       316      305       316

 

Non-GAAP Results (in millions, 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, certain litigation expense and other-than-temporary impairment of investments in affiliates and their related income tax effect. In addition, the Company’s non-GAAP results also exclude the impact of one-time income tax adjustments.

 

     Three Months Ended
September 30,


   Six Months Ended
September 30,


     2005

    2004

   2005

    2004

Net income (loss)

   $ 51     $ 97    $ (7 )   $ 121

Amortization of intangibles

     1       1      2       1

COGS amortization of intangibles

     2       —        4       —  

Employee stock-based compensation

     1       —        1       —  

Certain litigation expense

     1       —        1       —  

Other

     —         —        1       1

Income tax effect on the above items

     (1 )     —        (2 )     0

Income tax adjustments

     (9 )     —        (9 )     —  
    


 

  


 

Non-GAAP net income (loss)

   $ 46     $ 98    $ (9 )   $ 123
    


 

  


 

Non-GAAP diluted earnings (loss) per share

   $ 0.15     $ 0.31    $ (0.03 )   $ 0.39

Number of shares used in diluted earnings (loss) per share computation

     314       316      305       316

 

4


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets 

(in millions) 

 

     September 30,
2005


   March 31,
2005 (a)


ASSETS

             

Current assets:

             

Cash, cash equivalents and short-term investments

   $ 2,230    $ 2,958

Marketable equity securities

     182      140

Receivables, net of allowances of $137 million and $162 million, respectively

     328      296

Inventories

     74      62

Deferred income taxes

     85      86

Other current assets

     208      164
    

  

Total current assets

     3,107      3,706

Property and equipment, net

     364      353

Investment in affiliates

     10      10

Goodwill

     155      153

Other intangibles, net

     30      36

Deferred income taxes

     16      19

Other assets

     72      93
    

  

Total Assets

   $ 3,754    $ 4,370
    

  

LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY

             

Current liabilities:

             

Accounts payable

   $ 171    $ 134

Accrued and other liabilities

     558      694
    

  

Total current liabilities

     729      828

Other liabilities

     29      33
    

  

Total liabilities

     758      861

Minority interest

     12      11

Stockholders’ equity:

             

Common stock

     3      3

Paid-in capital

     877      1,434

Retained earnings

     1,998      2,005

Accumulated other comprehensive income

     106      56
    

  

Total stockholders’ equity

     2,984      3,498
    

  

Total Liabilities, Minority Interest and Stockholders’ Equity

   $ 3,754    $ 4,370
    

  


(a) Derived from audited financial statements.

 

5


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions)

 

     Three Months Ended
September 30,


    Six Months Ended
September 30,


 
     2005

    2004

    2005

    2004

 

OPERATING ACTIVITIES

                                

Net income (loss)

   $ 51     $ 97     $ (7 )   $ 121  

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

                                

Depreciation and amortization

     23       17       46       33  

Minority interest

     2       —         4       —    

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

     1       (2 )     2       (4 )

Tax benefit from exercise of stock options

     87       12       92       25  

Other operating activities

     —         1       —         —    

Change in assets and liabilities:

                                

Receivables, net

     (162 )     (205 )     (20 )     (168 )

Inventories

     (10 )     (25 )     (9 )     (24 )

Other assets

     (4 )     27       (16 )     27  

Accounts payable

     59       106       34       58  

Accrued and other liabilities

     (35 )     61       (145 )     (45 )
    


 


 


 


Net cash provided by (used in) operating activities

     12       89       (19 )     23  
    


 


 


 


INVESTING ACTIVITIES

                                

Capital expenditures

     (23 )     (19 )     (56 )     (45 )

Proceeds from sale of property and equipment

     —         —         —         15  

Proceeds from sale of marketable equity securities

     —         3       4       3  

Proceeds from maturities and sales of short-term investments

     187       240       321       812  

Purchase of short-term investments

     (143 )     (101 )     (281 )     (1,658 )

Acquisition of subsidiary, net of cash acquired

     —         —         (3 )     —    

Other investing activities

     —         —         (1 )     —    
    


 


 


 


Net cash provided by (used in) investing activities

     21       123       (16 )     (873 )
    


 


 


 


FINANCING ACTIVITIES

                                

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

     41       42       60       86  

Repurchase and retirement of common stock

     (372 )     —         (709 )     —    
    


 


 


 


Net cash provided by (used in) financing activities

     (331 )     42       (649 )     86  
    


 


 


 


Effect of foreign exchange on cash and cash equivalents

     (1 )     (1 )     (11 )     —    
    


 


 


 


Increase (decrease) in cash and cash equivalents

     (299 )     253       (695 )     (764 )

Beginning cash and cash equivalents

     874       1,133       1,270       2,150  
    


 


 


 


Ending cash and cash equivalents

     575       1,386       575       1,386  

Short-term investments

     1,655       1,104       1,655       1,104  
    


 


 


 


Ending cash, cash equivalents and short-term investments

   $ 2,230     $ 2,490     $ 2,230     $ 2,490  
    


 


 


 


 

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, certain litigation expense, and other-than-temporary impairment of investments in affiliates, and their related income tax effect. In addition, the Company’s non-GAAP results also exclude the impact of one-time income tax adjustments.

 

     Q2
FY05


    Q3
FY05


    Q4
FY05


    Q1
FY06


    Q2
FY06


 

QUARTERLY RESULTS

                                        

Operating Income (loss)

                                        

GAAP operating income (loss)

   $ 125     $ 519     $ —       $ (96 )   $ 49  

Adjustments:

                                        

Amortization of intangibles

     —         1       1       1       1  

COGS amortization of intangibles

     —         1       2       2       2  

Employee stock-based compensation

     —         4       2       —         1  

Acquired-in-process technology

     —         10       4       1       —    

Restructuring charges

     —         —         1       —         —    

Certain litigation expense

     —         —         21       —         1  
    


 


 


 


 


Total adjustments

     —         16       31       4       5  

Non-GAAP operating income (loss)

   $ 125     $ 535     $ 31     $ (92 )   $ 54  
    


 


 


 


 


Non-GAAP operating income (loss) margin - % of net revenue

     18 %     37 %     6 %     (25 )%     8 %

Net Income (loss)

                                        

GAAP net income (loss)

   $ 97     $ 375     $ 8     $ (58 )   $ 51  

Adjustments:

                                        

Amortization of intangibles

     1       1       1       1       1  

COGS amortization of intangibles

     —         1       2       2       2  

Employee stock-based compensation

     —         4       2       —         1  

Acquired-in-process technology

     —         10       3       1       —    

Restructuring charges

     —         —         1       —         —    

Certain litigation expense

     —         —         21       —         1  

Income tax effect on the above items

     —         —         (8 )     (1 )     (1 )

Income tax adjustments

     —         —         —         —         (9 )
    


 


 


 


 


Total adjustments

     1       16       22       3       (5 )

Non-GAAP net income (loss)

   $ 98     $ 391     $ 30     $ (55 )   $ 46  
    


 


 


 


 


Non-GAAP net income (loss) margin - % of net revenue

     14 %     27 %     5 %     (15 )%     7 %

GAAP diluted earnings (loss) per share

   $ 0.31     $ 1.18     $ 0.02     $ (0.19 )   $ 0.16  

Non-GAAP diluted earnings (loss) per share

   $ 0.31     $ 1.23     $ 0.09     $ (0.18 )   $ 0.15  

Shares used in diluted earnings (loss) per share computation

     316       317       322       308       314  

TRAILING TWELVE MONTH RESULTS

                                        

Operating Income

                                        

GAAP operating income

   $ 802     $ 763     $ 669     $ 548     $ 472  

Adjustments:

                                        

Amortization of intangibles

     3       3       3       3       4  

COGS amortization of intangibles

     —         1       3       5       7  

Employee stock-based compensation

     —         4       6       6       7  

Acquired-in-process technology

     —         10       14       15       15  

Restructuring charges

     9       9       1       1       1  

Certain litigation expense

     —         —         21       21       22  
    


 


 


 


 


Total adjustments

     12       27       48       51       56  

Non-GAAP operating income

   $ 814     $ 790     $ 717     $ 599     $ 528  
    


 


 


 


 


Non-GAAP operating income margin - % of net revenue

     25 %     25 %     23 %     20 %     17 %

 

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, certain litigation expense , and other-than-temporary impairment of investments in affiliates, and their related income tax effect. In addition, the Company’s non-GAAP results also exclude the impact of one-time income tax adjustments.

 

     Q2
FY05


    Q3
FY05


    Q4
FY05


    Q1
FY06


    Q2
FY06


 

TRAILING TWELVE MONTH RESULTS

                                        

Net Income

                                        

GAAP net income

   $ 604     $ 587     $ 504     $ 422     $ 376  

Adjustments:

                                        

Amortization of intangibles

     4       3       3       4       4  

COGS amortization of intangibles

     —         1       3       5       7  

Employee stock-based compensation

     —         4       6       6       7  

Acquired-in-process technology

     —         10       13       14       14  

Restructuring charges

     9       9       1       1       1  

Certain litigation expense

     —         —         21       21       22  

Income tax effect on the above items

     (4 )     (4 )     (8 )     (9 )     (10 )

Income tax adjustments

     (20 )     (20 )     —         —         (9 )
    


 


 


 


 


Total adjustments

     (11 )     3       39       42       36  

Non-GAAP net income

   $ 593     $ 590     $ 543     $ 464     $ 412  
    


 


 


 


 


Non-GAAP net income margin - % of net revenue

     18 %     19 %     17 %     15 %     14 %

GAAP diluted earnings per share

   $ 1.94     $ 1.86     $ 1.59     $ 1.32     $ 1.17  

Non-GAAP diluted earnings per share

   $ 1.90     $ 1.87     $ 1.71     $ 1.45     $ 1.29  

 

8


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

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

 

     Q2
FY05


    Q3
FY05


    Q4
FY05


    Q1
FY06


    Q2
FY06


    YOY %
Growth


 

CONSOLIDATED FINANCIAL DATA

                                              

Net revenue

     716       1,428       553       365       675     (6 )%

Net revenue - trailing twelve months (“TTM”)

     3,221       3,174       3,129       3,062       3,021     (6 )%

Gross profit

     432       925       320       214       391     (9 )%

Gross margin - % of net revenue

     60 %     65 %     58 %     59 %     58 %      

Gross profit - TTM

     2,021       1,984       1,932       1,891       1,850     (8 )%

Gross margin - TTM % of net revenue

     63 %     63 %     62 %     62 %     61 %      

Operating income (loss)

     125       519       —         (96 )     49     (61 )%

Operating income (loss) margin - % of net revenue

     17 %     36 %     0 %     (26 )%     7 %      

Operating income - TTM

     802       763       669       548       472     (41 )%

Operating income margin - TTM % of net revenue

     25 %     24 %     21 %     18 %     16 %      

Net income (loss)

     97       375       8       (58 )     51     (47 )%

Diluted earnings (loss) per share

   $ 0.31     $ 1.18     $ 0.02     $ (0.19 )   $ 0.16     (48 )%

Net income - TTM

     604       587       504       422       376     (38 )%

Diluted earnings per share - TTM

   $ 1.94     $ 1.86     $ 1.59     $ 1.32     $ 1.17     (40 )%

Non-GAAP operating income (loss) (a)

     125       535       31       (92 )     54     (57 )%

Non-GAAP operating income (loss) margin - % of net revenue

     18 %     37 %     6 %     (25 )%     8 %      

Non-GAAP operating income - TTM (a)

     814       790       717       599       528     (35 )%

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

     25 %     25 %     23 %     20 %     17 %      

Non-GAAP net income (loss) (a)

     98       391       30       (55 )     46     (53 )%

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

   $ 0.31     $ 1.23     $ 0.09     $ (0.18 )   $ 0.15     (52 )%

Non-GAAP net income - TTM (a)

     593       590       543       464       412     (31 )%

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

   $ 1.90     $ 1.87     $ 1.71     $ 1.45     $ 1.29     (32 )%

CASH FLOW DATA

                                              

Operating cash flow

     89       137       474       (31 )     12     (87 )%

Operating cash flow - TTM

     664       722       634       669       592     (11 )%

Capital expenditures

     19       37       44       33       23     21 %

Capital expenditures - TTM

     106       116       126       133       137     29 %

BALANCE SHEET DATA

                                              

Cash, cash equivalents and short term investments

     2,490       2,565       2,958       2,573       2,230     (10 )%

Marketable equity securities

     —         4       140       176       182     N/M  

Receivables, net

     379       892       296       167       328     (13 )%

Inventories

     79       84       62       66       74     (6 )%

OTHER

                                              

Employees

     5,104       5,669       6,122       6,365       6,608     29 %

Diluted weighted-average shares

     316       317       322       308       314        

(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)

 

     Q2
FY05


    Q3
FY05


    Q4
FY05


    Q1
FY06


    Q2
FY06


    YOY %
Growth


 

GEOGRAPHIC REVENUE MIX

                                    

North America Revenue

   473     692     288     184     443     (6 )%

International Revenue

   243     736     265     181     232     (5 )%

Europe Revenue

   210     666     218     144     191     (9 )%

Asia Revenue

   33     70     47     37     41     24 %
    

 

 

 

 

     

Net Revenue

   716     1,428     553     365     675     (6 )%

GEOGRAPHIC REVENUE MIX - as a % of Net Revenue

                                    

North America Revenue

   66 %   48 %   52 %   50 %   66 %      

International Revenue

   34 %   52 %   48 %   50 %   34 %      

Europe Revenue

   29 %   47 %   40 %   40 %   28 %      

Asia Revenue

   5 %   5 %   8 %   10 %   6 %      
    

 

 

 

 

     

Net Revenue

   100 %   100 %   100 %   100 %   100 %      

PLATFORM REVENUE MIX

                                    

Sony PlayStation 2

   312     661     196     117     304     (3 )%

Xbox

   142     233     83     44     136     (4 )%

Nintendo GameCube

   38     109     37     22     27     (29 )%

Other consoles

   1     6     1     —       —       (100 )%
    

 

 

 

 

     

Total Consoles

   493     1,009     317     183     467     (5 )%

PC

   141     239     85     74     91     (35 )%

PSP

   —       —       18     33     45     N/M  

Nintendo DS

   —       16     7     12     8     N/M  

Game Boy Advance

   10     39     9     6     7     (30 )%

Cellular Handsets

   —       —       —       1     2     N/M  
    

 

 

 

 

     

Total Mobility

   10     55     34     52     62     520 %

Co-publishing and Distribution

   49     79     89     30     32     (35 )%

Subscription Services

   13     14     16     15     14     8 %

Licensing, Advertising & Other

   10     32     12     11     9     (10 )%
    

 

 

 

 

     

Total Internet Services, Licensing & Other

   23     46     28     26     23     0 %
    

 

 

 

 

     

Net Revenue

   716     1,428     553     365     675     (6 )%

PLATFORM REVENUE MIX - as a % of Net Revenue

                                    

Sony PlayStation 2

   44 %   46 %   36 %   32 %   45 %      

Xbox

   20 %   16 %   15 %   12 %   20 %      

Nintendo GameCube

   5 %   8 %   7 %   6 %   4 %      

Other consoles

   0 %   1 %   0 %   0 %   0 %      
    

 

 

 

 

     

Total Consoles

   69 %   71 %   58 %   50 %   69 %      

PC

   20 %   17 %   15 %   21 %   14 %      

PSP

   0 %   0 %   3 %   9 %   7 %      

Nintendo DS

   0 %   1 %   1 %   3 %   1 %      

Game Boy Advance

   1 %   3 %   2 %   2 %   1 %      

Cellular Handsets

   0 %   0 %   0 %   0 %   0 %      
    

 

 

 

 

     

Total Mobility

   1 %   4 %   6 %   14 %   9 %      

Co-publishing and Distribution

   7 %   5 %   16 %   8 %   5 %      

Subscription Services

   2 %   1 %   3 %   4 %   2 %      

Licensing, Advertising & Other

   1 %   2 %   2 %   3 %   1 %      
    

 

 

 

 

     

Total Internet Services, Licensing & Other

   3 %   3 %   5 %   7 %   3 %      
    

 

 

 

 

     

Net Revenue

   100 %   100 %   100 %   100 %   100 %      

 

10


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

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

 

     Q2
FY05


   Q3
FY05


   Q4
FY05


   Q1
FY06


   Q2
FY06


   YOY %
Growth


 

Platform SKU Release Mix

                               

Sony PlayStation 2

   9    9    6    3    9    0 %

Xbox

   8    9    6    3    9    13 %

Nintendo GameCube

   7    7    5    2    6    (14 )%

Other consoles

   1    1    —      —      —      (100 )%
    
  
  
  
  
      

Total Consoles

   25    26    17    8    24    (4 )%

PC

   6    7    5    2    6    0 %

PSP

   —      —      3    3    3    N/M  

Nintendo DS

   —      3    —      2    2    N/M  

Game Boy Advance

   2    4    —      1    2    0 %
    
  
  
  
  
      

Total Mobility

   2    7    3    6    7    250 %
    
  
  
  
  
      

Total SKUs

   33    40    25    16    37    12 %
    
  
  
  
  
      

 

11


ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Fact Sheet for Q2 Fiscal 2006

 

Q2 Product Releases

   Platform

· BurnoutTM Revenge

  

PlayStation® 2

· FIFA 06

  

PlayStation 2

· Madden NFL 06

  

PlayStation 2

· Marvel NemesisTM: Rise of the ImperfectsTM

  

PlayStation 2

· NASCAR® 06: Total Team Control

  

PlayStation 2

· NBA Live 06

  

PlayStation 2

· NCAA® FOOTBALL 06

  

PlayStation 2

· NHL® 06

  

PlayStation 2

· Tiger Woods PGA TOUR® 06

  

PlayStation 2

· Burnout Revenge

  

Xbox®

· FIFA 06

  

Xbox

· Madden NFL 06

  

Xbox

· Marvel Nemesis: Rise of the Imperfects

  

Xbox

· NASCAR 06: Total Team Control

  

Xbox

· NBA Live 06

  

Xbox

· NCAA FOOTBALL 06

  

Xbox

· NHL 06

  

Xbox

· Tiger Woods PGA TOUR 06

  

Xbox

· FIFA 06

  

Nintendo GameCube™

· Madden NFL 06

  

Nintendo GameCube

· Marvel Nemesis: Rise of the Imperfects

  

Nintendo GameCube

· NBA Live 06

  

Nintendo GameCube

· NHL 06

  

Nintendo GameCube

· Tiger Woods PGA TOUR 06

  

Nintendo GameCube

· FIFA 06

  

PC

· Madden NFL 06

  

PC

· NBA Live 06

  

PC

· NHL 06

  

PC

· The SimsTM 2 Nightlife

  

PC

· Tiger Woods PGA TOUR 06

  

PC

· FIFA 06

  

Game Boy® Advance

· Madden NFL 06

  

Game Boy Advance

· FIFA 06

  

Nintendo DSTM

· Madden NFL 06

  

Nintendo DS

· BurnoutTM Legends

  

PSP™

· Madden NFL 06

  

PSP

· Tiger Woods PGA TOUR 06

  

PSP

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

    

· Counter-StrikeTM : SourceTM

  

PC

· Counter-StrikeTM 1 Anthology

  

PC

· Half-Life® 1 Anthology

  

PC

· Half-Life® 2: Game of the Year Edition

  

PC

 

All trademarks are the property of their respective owners.

 

12


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 inaccordance with the provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, we estimate that our reported net income (loss) and net earnings (loss) per share would have been the pro forma amounts indicated below:

 

     Three Months Ended
September 30,


    Six Months Ended
September 30,


 
     2005

    2004

    2005

    2004

 

Net income (loss) - as reported

   $ 51     $ 97     $ (7 )   $ 121  

Stock-based compensation

     (26 )     (23 )     (51 )     (42 )
    


 


 


 


Net income (loss) - pro forma

   $ 25     $ 74     $ (58 )   $ 79  
    


 


 


 


Net earnings (loss) per share:

                                

As reported - basic

   $ 0.17     $ 0.32     $ (0.02 )   $ 0.40  

Pro forma - basic

   $ 0.08     $ 0.24     $ 0.19     $ 0.26  

As reported - diluted

   $ 0.16     $ 0.31     $ (0.02 )   $ 0.38  

Pro forma - diluted

   $ 0.08     $ 0.24     $ (0.19 )   $ 0.25  

 

13