Electronic Arts Announces First Quarter Fiscal 2003 Results.Business Editors/High-Tech Writers REDWOOD CITY Redwood City, city (1990 pop. 66,072), seat of San Mateo co., W Calif., on San Francisco Bay; inc. 1868. Manufactures include commmunications, electrical, electronic, and medical equipment. , Calif.--(BUSINESS WIRE)--July 25, 2002 Electronic Arts (Nasdaq:ERTS ERTS Electronic Arts, Inc. (stock symbol) ERTS Earth Resources Technology Satellite (US NASA) ERTS Embedded Real Time Systems ERTS Enhanced Remote Transit Shed ) today announced its results for the first fiscal quarter ended June June: see month. 30, 2002. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Results Consolidated net revenues for the quarter were $331.9 million, an increase of 82% over the $182.0 million reported in the same quarter of the prior year. Consolidated net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the quarter were $7.4 million and $0.05, respectively, compared to a consolidated net loss and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per share of $45.3 million and $0.33, respectively, in the prior year. As a consequence of adopting Statement of Financial Accounting Standards ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") No. 142 as of April 1, 2002, the non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. decreased from $6.5 million in the prior year to $2.2 million in the current year. Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Consolidated Results Pro forma(a) consolidated net income for the quarter was $9.0 million compared to a pro forma net loss of $40.8 million in the prior year. Excluded from pro forma consolidated net income was a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta amortization of intangibles charge of $2.2 million compared to $6.5 million in the prior year. Pro forma diluted earnings per share for the quarter was $0.06, compared to a loss of $0.30 per share in the prior year. (a)Pro Forma Basis (a)Pro Forma Basis: The Company believes the disclosure of pro forma net income (loss) and earnings (loss) per share on a pro forma basis more clearly illustrates and explains its operating results and comparisons to the prior year. Accordingly, pro forma net income (loss) and earnings (loss) per share exclude unusual events or transactions, such as restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. costs and charges for acquired in-process technology, and also excludes amortization of intangibles. In addition, the company separately reports the results of its core business from EA.com both on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis and a pro forma basis. In addition to the excluded items described above, pro forma net income (loss) and earnings (loss) per share for the core business and EA.com provide for the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of income taxes on a proportional proportional values expressed as a proportion of the total number of values in a series. proportional dwarf the patient is a miniature without disproportionate reductions or enlargements of body parts. basis to the respective income or loss from each of these segments. A reconciliation of GAAP to pro forma operating results is included in the attached financial statements. Results by Business Segments Core Business: Net revenues for Electronic Arts' core business, which excludes the results of EA.com, were $312.4 million for the quarter, an increase of 88% compared to $166.1 million in the prior year. Pro forma(a) net income was $21.8 million compared to a pro forma net loss of $16.0 million in the prior year. A pre-tax charge for amortization of intangibles excluded from pro forma net income (loss) totaled $0.9 million compared to $3.2 million last year. EA.com: Net revenues for EA.com were $19.8 million for the quarter, an increase of 21% compared to $16.4 million in the prior year. Pro forma(a) net loss was $12.8 million compared to $24.8 million in the prior year. A pre-tax charge for amortization of intangibles excluded from pro forma net loss totaled $1.3 million compared to $3.3 million last year. Product Highlights We released 12 games on six different platforms during the quarter, including four on the PlayStation A video game console from Sony that was introduced in the U.S. in 1995. CD-ROM based and using a 32-bit MIPS CPU, the original PlayStation was the first of a family of desktop and handheld units. (R)2 computer entertainment system, two on the Xbox A video game console from Microsoft that was designed to compete with Sony's PlayStation and Nintendo's GameCube. Introduced in 2001 with a 733 MHz Pentium III CPU, 5x DVD drive and custom-designed graphics processor, the Xbox also includes four game controller ports, Ethernet networking (TM) video game system from Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. (R), two on the Nintendo GameCube The Nintendo GameCube (GCN) is Nintendo's fourth home video game console, belonging to the sixth generation era. The system itself is the most compact and least expensive, next to the Dreamcast, of the sixth generation era consoles. (TM), two on the PC, one on the PlayStation(R) and one on the Game Boy(R) Advance. Top selling titles released in the quarter included Medal of Honor Medal of Honor highest American military decoration for wartime gallantry. [Am. Hist.: Misc.] See : Bravery Frontline front·line also front line n. 1. A front or boundary, especially one between military, political, or ideological positions. 2. Basketball See frontcourt. 3. Football The linemen of a team. (TM) on the PlayStation 2; 2002 FIFA FIFA International Association Football Federation [French Fédération Internationale de Football Association] FIFA n abbr (= Fédération Internationale de Football Association) → FIFA f World Cup on the PlayStation 2, PC, Xbox, Nintendo GameCube and the PlayStation; and F1 2002 on the PlayStation 2, PC and Xbox. Other top selling titles in the quarter included: The Sims(TM) Vacation VACATION. That period of time between the end of one term and beginning of another. During vacation, rules and orders are made in such cases as are urgent, by a judge at his chambers. Expansion Pack, The Sims(TM) and Medal of Honor Allied Assault(TM) on PC; and James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. Bond 007 in...Agent Under Fire(TM) on Nintendo GameCube, the PlayStation 2 and Xbox. Discussion Consolidated net revenues increased over 82% primarily due to higher sales on the PlayStation 2 and PC; sales on the Xbox and Nintendo GameCube; and increased sales of affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: label products. On a geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. basis, revenue increased in all territories compared to the prior year: up 68% in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , 112% in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , 84% in Japan and
51% in Asia Pacific."Electronic Arts achieved record first quarter revenue based on the strength of our new releases, our broad portfolio, our multi-platform support and a growing installed hardware base," said Larry Probst Larry Probst (Lawrence F. Probst III) was previously the CEO of the world's largest video game publisher, Electronic Arts (EA). He was succeeded by John Riccitiello on April 2, 2007. , Chairman and Chief Executive Officer of Electronic Arts. "New titles released this past quarter that sold exceptionally well included Medal of Honor Frontline and 2002 FIFA World Cup, each of which sold two million units. During the quarter, our catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. of leading titles enjoyed continued success, including The Sims and its expansion packs which have sold in excess of 16 million units to date." "As the hardware installed base grows, our ability to cost-effectively support multiple platforms Refers to two or more operating environments, which typically include the CPU family and operating system. For example, if versions of a program run on Windows and the Macintosh, the software is said to support multiple platforms. is key. While we increased net revenues over 82% for the quarter, we kept pro forma(a) operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. growth under 18%. We're we're Contraction of we are. we're we are realizing substantial operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. by driving top-line revenue while working hard to control costs in our core business and reduce costs in our EA.com business. As a result, our pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share in the quarter increased by $0.36." "Looking ahead, we are excited about the industry's and Electronic Arts' growth prospects. We're still in the early stages of the new console (1) The physical control panel on a computer or electronic device. (2) A terminal or desktop computer used to monitor and control a network. (3) Any display terminal. cycle and we're seeing consumers enthusiastically embrace the new systems. We have a strong portfolio of products to be released during the year including our unparalleled sports franchises such as Madden NFL Madden NFL is an American football video game series developed by Electronic Arts Tiburon for EA Sports. The game is named after Pro Football Hall of Famer John Madden, a well-known color commentator for NBC Sports and formerly a successful Super Bowl-winning coach during 2003 and FIFA Soccer 2003 as well as The Lord of the Rings, The Lord of the Rings, The “feigned history” of the Hobbits; epic trilogy written by J. R. R. Tolkein. [Br. Lit.: Benét, 1013] See : Fantasy Two Towers, Harry Potter A potter is someone who makes pottery. Potter may also refer to: People
Webcast Electronic Arts will host a webcast at 2:00 pm PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT (5:00 pm EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) at http://info.ea.com to review the results for the first fiscal quarter and discuss the Company's outlook for the future. A replay of the webcast will be available until August 1, 2002. Some statements set forth in this release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. Statements including words such as "anticipate", "believe" or "expect" and statements in the future tense future tense n. A verb tense expressing future time. Noun 1. future tense - a verb tense that expresses actions or states in the future future 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 include the following: timely development and release of our products; consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. trends; retention of key personnel; risks associated with major platform transitions; the limited operating history and experience of EA.com; subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. acceptance of our online products; potential regulation of our products in key territories; developments in the law regarding protection of our products; and other factors described in our Annual Report on Form 10K for the year ended March 31, 2002. If any of these risks or uncertainties materializes, our results could differ materially from our expectations described in these forward-looking statements. We do not intend to update these forward-looking statements. Note to Editors: Electronic Arts, EA SPORTS, John Madden mad·den v. mad·dened, mad·den·ing, mad·dens v.tr. 1. To make angry; irritate. 2. To drive insane. v.intr. To become infuriated. Football, The Sims, The Sims Online, SimCity, Medal of Honor Frontline, Medal of Honor Allied Assault, Command & Conquer and Need for Speed are trademarks or registered trademarks of Electronic Arts Inc. in the U.S. and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. other countries. Medal of Honor is a trademark or registered trademark of Electronic Arts Inc. in the U.S. and/or countries for computer game software. EA.com is a service mark of EA.com Inc. The Lord of The Rings and the characters, names, and places therein, TM The Saul Saul, first king of the ancient Hebrews. He was a Benjamite and anointed king by Samuel. Saul's territory was probably limited to the hill country of Judah and the region to the north, and his proximity to the Philistines brought him into constant conflict with them. Zaentz Company d/b/a Tolkien Enterprises Tolkien Enterprises (TE), a trading name for the Saul Zaentz Company, owns the worldwide exclusive rights to certain elements of J. R. R. Tolkien's two most famous literary works; The Lord of the Rings and The Hobbit. under license to New Line Productions, Inc. James Bond and 007 are trademarks of Danjaq Danjaq, LLC (formerly Danjaq S.A.) is the holding company responsible for the copyright and trademarks to the characters, elements, and other material related to James Bond on screen. It is currently owned and managed by the family of Albert R. , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Agent Under Fire is a trademark of Danjaq, LLC and United Artist Corporation. HARRY POTTER, names and related indicia Signs; indications. Circumstances that point to the existence of a given fact as probable, but not certain. For example, indicia of partnership are any circumstances which would induce the belief that a given person was in reality, though not technically, a member of a given are trademarks of and (c) Warner Bros BROS Brothers BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) . NFL NFL abbr. National Football League NFL (US) n abbr (= National Football League) → Fußball-Nationalliga , F1 and FIFA are trademarks of their respective owners and used with permission. PlayStation is a registered trademark of Sony SONY Standard Oil of New York (common, but untrue; it's an urban legend) Computer Entertainment Inc. Nintendo GameCube and Game Boy Advance are trademarks of Nintendo. Microsoft and Xbox are either registered trademarks or trademarks of Microsoft Corporation (company) Microsoft Corporation - The biggest supplier of operating systems and other software for IBM PC compatibles. Software products include MS-DOS, Microsoft Windows, Windows NT, Microsoft Access, LAN Manager, MS Client, SQL Server, Open Data Base Connectivity (ODBC), MS Mail, in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and/or other countries and are used under license from Microsoft. All other trademarks are the property of their respective owners.
ELECTRONIC ARTS
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(In thousands, except per share data)
---------------------------------------------------------------------
Three Months Ended June 30, 2002
-------------------------------------
EA Core
(excl. Electronic
EA.com) EA.com Elim. (1) Arts
---------------------------------------------------------------------
Net revenues from unaffiliated
customers $ 312,119 $ 19,779 $ - $ 331,898
Group sales 324 - (324) -
---------------------------------------------------------------------
Total net revenues 312,443 19,779 (324) 331,898
---------------------------------------------------------------------
Cost of goods sold from
unaffiliated customers 138,819 2,546 - 141,365
Group cost of goods sold - 324 (324) -
---------------------------------------------------------------------
Total cost of goods sold 138,819 2,870 (324) 141,365
---------------------------------------------------------------------
Gross profit 173,624 16,909 - 190,533
Operating expenses:
Marketing and sales 57,442 3,466 4,466 65,374
General and administrative 23,515 2,148 - 25,663
Research and development 65,601 11,048 14,320 90,969
Network development and
support - 12,113 (12,113) -
CRMD - 2,207 (2,207) -
Carriage fee - 4,466 (4,466) -
Amortization of intangibles 926 1,319 - 2,245
---------------------------------------------------------------------
Total operating expenses 147,484 36,767 - 184,251
---------------------------------------------------------------------
Operating income (loss) 26,140 (19,858) - 6,282
Interest and other income
(expense), net 3,221 (74) - 3,147
---------------------------------------------------------------------
Income (loss) before provision for
(benefit from) income
taxes and minority
interest 29,361 (19,932) - 9,429
Provision for (benefit from)
income taxes 2,923 - - 2,923
---------------------------------------------------------------------
Income (loss) before minority
interest 26,438 (19,932) - 6,506
Minority interest in
consolidated joint venture 898 - - 898
---------------------------------------------------------------------
Net income (loss) before
retained interest in EA.com 27,336 (19,932) - 7,404
Net loss related to retained
interest in EA.com (Note 2) (16,942) 16,942 - -
---------------------------------------------------------------------
Net income (loss) $ 10,394 $ (2,990) $ - $ 7,404
=====================================================================
Earnings (loss) per share -
Class A Stockholders
--------------------------------
Diluted $ 0.05
-------------------------------- ----------
Basic $ 0.07
-------------------------------- ----------
Number of shares used in diluted
earnings (loss) per share
computation (Note 4) 145,222
--------------------------------
Number of shares used in basic
earnings (loss) per share
computation 138,748
================================
Loss per share - Class B
Stockholders
-------------------------------- ----------
Diluted $ (0.49)
-------------------------------- ----------
Basic $ (0.49)
-------------------------------- ----------
Number of shares used in diluted
loss per share computation 6,043
--------------------------------
Number of shares used in basic
loss per share computation 6,043
--------------------------------
Three Months Ended June 30, 2001
-------------------------------------
EA Core
(excl. Electronic
EA.com) EA.com Elim. (1) Arts
------------------------------- -------------------------------------
Net revenues from unaffiliated
customers $ 165,551 $ 16,399 $ - $ 181,950
Group sales 518 - (518) -
------------------------------- -------------------------------------
Total net revenues 166,069 16,399 (518) 181,950
------------------------------- -------------------------------------
Cost of goods sold from
unaffiliated customers 85,937 3,092 - 89,029
Group cost of goods sold - 518 (518) -
------------------------------- -------------------------------------
Total cost of goods sold 85,937 3,610 (518) 89,029
------------------------------- -------------------------------------
Gross profit 80,132 12,789 - 92,921
Operating expenses:
Marketing and sales 30,831 5,507 4,466 40,804
General and administrative 20,267 2,948 - 23,215
Research and development 55,383 15,633 19,789 90,805
Network development and
support - 16,875 (16,875) -
CRMD - 2,914 (2,914) -
Carriage fee - 4,466 (4,466) -
Amortization of
intangibles 3,205 3,270 - 6,475
------------------------------- -------------------------------------
Total operating
expenses 109,686 51,613 - 161,299
------------------------------- -------------------------------------
Operating income (loss) (29,554) (38,824) - (68,378)
Interest and other income
(expense), net 3,089 (372) - 2,717
------------------------------- -------------------------------------
Income (loss) before provision
for (benefit from) income
taxes and minority interest (26,465) (39,196) - (65,661)
Provision for (benefit from)
income taxes (20,355) - - (20,355)
------------------------------- -------------------------------------
Income (loss) before minority
interest (6,110) (39,196) - (45,306)
Minority interest in
consolidated joint venture 52 - - 52
------------------------------- -------------------------------------
Net income (loss) before
retained interest in EA.com (6,058) (39,196) - (45,254)
Net loss related to retained
interest in EA.com (Note 2) (33,317) 33,317 - -
------------------------------- -------------------------------------
Net income (loss) $ (39,375)$ (5,879) $ - $ (45,254)
=============================== =====================================
Earnings (loss) per share -
Class A Stockholders
------------------------------- ----------
Diluted $ (0.33)
------------------------------- ----------
Basic $ (0.29)
------------------------------- ----------
Number of shares used in
diluted earnings (loss) per
share computation (Note 4) 136,382
-------------------------------
Number of shares used in basic
earnings (loss) per share
computation 135,730
===============================
Loss per share - Class B
Stockholders
------------------------------- ----------
Diluted $ (0.98)
------------------------------- ----------
Basic $ (0.98)
------------------------------- ----------
Number of shares used in diluted
loss per share computation 6,020
-------------------------------
Number of shares used in basic
loss per share computation 6,020
-------------------------------
Pro forma Results (In thousands, except per share data)
The following table shows the Company's pro forma results reconciled
to the Generally Accepted Accounting Principles ("GAAP") Consolidated
Statements of Operations. The Company's pro forma results do not
include amortization of intangibles. In addition, income taxes are
allocated to EA Core and EA.com at the consolidated effective tax rate
(31%) on a pro rata basis.
Three Months Ended June 30, 2002
-------------------------------------
EA Core
(excl. Electronic
EA.com) EA.com Elim. (1) Arts
---------------------------------------------------------------------
Reconciliation of GAAP
to Pro Forma net
income (loss)
Net income (loss) - GAAP $ 10,394 $(2,990) $ 7,404
=====================================
Net loss related to
retained interest in
EA.com (Note 2) 16,942 (16,942) -
Pro forma allocation
of income taxes
(Note 3) (6,179) 6,179 -
-------------------------------------
Pro forma net income (loss) 21,157 (13,753) 7,404
Amortization of intangibles 926 1,319 2,245
Income tax effect
on the above item (287) (409) (696)
---------------------------------------------------------------------
Pro forma net income
(loss) less above item $21,796 $(12,843) $8,953
-------------------------------------
& diluted earnings
(loss) per share $0.15 $(0.09) $0.06
-------------------------------------
Number of shares used in
diluted earnings
(loss) per share
computation (Note 4) 145,222 145,222 145,222
---------------------------------------------------------------------
Three Months Ended June 30, 2001
-------------------------------------
EA Core
(excl. Electronic
EA.com) EA.com Elim. (1) Arts
---------------------------------------------------------------------
Reconciliation of GAAP
to Pro Forma
net income (loss)
Net income (loss) - GAAP $(39,375) $(5,879) $(45,254)
=====================================
Net loss related to
retained interest
in EA.com (Note 2) 33,317 (33,317) -
Pro forma allocation
of income taxes
(Note 3) (12,151) 12,151 -
-------------------------------------
Pro forma net income (loss) (18,209) (27,045) (45,254)
Amortization of intangibles 3,205 3,270 6,475
Income taxes effect
on the above item (993) (1,014) (2,007)
---------------------------------------------------------------------
Pro forma net income
(loss) less above item $(15,997) $(24,789) $(40,786)
--------------------------------------
& diluted earnings
(loss) per share $(0.12) $(0.18) $(0.30)
--------------------------------------
Number of shares used in
diluted earnings
(loss) per share
computation (Note 4) 136,382 136,382 136,382
---------------------------------------------------------------------
Notes:
1) Represents elimination of intercompany sales of Electronic Arts
packaged goods products to EA.com, and represents elimination
of royalties paid to Electronic Arts by EA.com for
intellectual property rights. In addition, Carriage Fee is
reclassified to Marketing, and CRMD and Network Development
are reclassified to Product Development.
2) EA Core maintains approximately 85% retained interest in EA.com
and is reflected in the Net income (loss) - GAAP for EA Core.
The pro forma statements exclude the retained interest
allocation.
3) The provision for (benefit from) income taxes was allocated
between EA Core and EA.com at the worldwide effective tax rate
(31%) based on each segments' pro rata share of income or
loss. The sum of tax provision (benefit) for EA Core and
EA.com is the same as consolidated tax provision.
4) Due to the net loss for the three months ended June 30, 2001,
stock options have been excluded from the Diluted EPS
calculation as their inclusion would have been antidilutive.
Had net income been reported for this period, an additional
6,115,000 shares would have been added to diluted common
shares for Class A common stock for the three months ended
June 30, 2001.
EA CORE - EXCLUDING EA.COM (PRO FORMA)
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(In thousands)
Three Months Ended
June 30,
--------------------
2002 2001
---------------------------------------------------------------------
Net revenues from unaffiliated customers $ 312,119 $ 165,551
Group sales (Note 1) 324 518
---------------------------------------------------------------------
Total net revenues 312,443 166,069
Cost of goods sold from unaffiliated customers 138,819 85,937
---------------------------------------------------------------------
Gross profit 173,624 80,132
Operating expenses:
Marketing and sales 57,442 30,831
General and administrative 23,515 20,267
Research and development 65,601 55,383
Amortization of intangibles (Note 2) - -
---------------------------------------------------------------------
Total operating expenses 146,558 106,481
---------------------------------------------------------------------
Operating income (loss) 27,066 (26,349)
Interest and other income (expense), net 3,221 3,089
---------------------------------------------------------------------
Income (loss) before provision for (benefit
from) income taxes and minority interest 30,287 (23,260)
Provision for (benefit from) income taxes
(Note 3) 9,389 (7,211)
---------------------------------------------------------------------
Income (loss) before minority interest 20,898 (16,049)
Minority interest in consolidated joint venture 898 52
---------------------------------------------------------------------
Pro forma net income (loss) (before amortization
of intangibles) $ 21,796 $ (15,997)
-------------------------------------------------====================
Notes:
1) Revenue includes Intercompany Revenue of $324K for Q1'03 and
$518K for Q1'02. These amounts correspond to "Group cost of
goods sold" in the EA.com pro forma.
2) Excludes EA Core amortization of intangibles of $926K for
Q1'03 and $3,205K for Q1'02.
3) Consolidated taxes have been allocated to EA Core and EA.com
based on a pro rata basis. The sum of tax provision (benefit)
for EA Core and tax benefit for EA.com is the same as
consolidated tax provision (benefit).
EA.COM (PRO FORMA)
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(In thousands)
Three Months Ended
June 30,
--------------------
2002 2001
---------------------------------------------------------------------
Total net revenues 19,779 16,399
---------------------------------------------------------------------
Cost of goods sold from unaffiliated customers 2,546 3,092
Group cost of goods sold (Note 1) 324 518
---------------------------------------------------------------------
Total cost of goods sold 2,870 3,610
---------------------------------------------------------------------
Gross profit 16,909 12,789
Operating expenses:
Marketing and sales 3,466 5,507
General and administrative 2,148 2,948
Research and development 11,048 15,633
Network development and support 12,113 16,875
CRMD 2,207 2,914
Carriage fee 4,466 4,466
Amortization of intangibles (Note 2) - -
---------------------------------------------------------------------
Total operating expenses 35,448 48,343
---------------------------------------------------------------------
Operating loss (18,539) (35,554)
Interest and other income (expense), net (74) (372)
---------------------------------------------------------------------
Loss before benefit from income taxes (18,613) (35,926)
Benefit from income taxes (Note 3) (5,770) (11,137)
---------------------------------------------------------------------
Pro forma net loss (before amortization of
intangibles) $ (12,843)$ (24,789)
=====================================================================
Notes:
1) Cost of goods sold includes intercompany balances of $324K for
Q1'03 and $518K for Q1'02. These amounts correspond to "Group
sales" in the EA Core pro forma.
2) Excludes EA.com amortization of intangibles of $1,319K for
Q1'03 and $3,270K for Q1'02.
3) Consolidated taxes have been allocated to EA Core and EA.com
based on a pro rata basis. The sum of tax provision (benefit)
for EA Core and tax benefit for EA.com is the same as
consolidated tax provision (benefit).
4) EA.com, a division of Electronic Arts Inc. ("Electronic
Arts"), represents Electronic Arts' online and e-Commerce
businesses. The statement of operations includes all revenues
and costs directly and indirectly attributable to EA.com,
including charges for shared facilities, functions and
services used by EA.com and provided by Electronic Arts.
Certain costs and expenses have been allocated based on
management's estimates of the cost of services provided to
EA.com by Electronic Arts.
ELECTRONIC ARTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, March 31,
2002 2002
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ASSETS
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Cash, cash equivalents and short-term
investments $826,866 $796,936
Marketable securities 5,403 6,869
Accounts receivable, net 118,347 190,495
Inventories 24,074 23,780
Other current assets 155,582 134,463
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Total current assets 1,130,272 1,152,543
Property and equipment, net 309,892 308,827
Investment in affiliates 18,999 19,077
Intangibles and other assets 214,702 218,927
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Total Assets $1,673,865 $1,699,374
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LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
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Accounts payable $86,326 $88,563
Accrued and other liabilities 298,964 364,419
----------------------
Total current liabilities 385,290 452,982
Minority interest in consolidated joint
venture 2,462 3,098
Common stock 1,453 1,446
Paid-in capital 675,960 649,777
Retained earnings 614,199 606,795
Accumulated other comprehensive loss (5,499) (14,724)
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Total Liabilities, Minority Interest and
Stockholders' Equity $1,673,865 $1,699,374
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ELECTRONIC ARTS FACT SHEET Q1' FY03 - June 30, 2002
($ in millions)
Geographic
Revenue Mix Q1'03 Q1'02 % sales % chg
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North America 173.6 103.1 52% 68%
International 158.3 78.9 48% 101%
Europe 126.5 59.8 38% 112%
Japan 16.6 9.0 5% 84%
Asia Pacific 15.2 10.1 5% 51%
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Total Revenues $ 331.9 $ 182.0 100% 82%
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Platform Revenue Mix
PC 75.9 69.7 23% 9%
Sony PlayStation 2 134.5 50.5 40% 166%
Sony PlayStation 13.2 14.0 4% -6%
Nintendo GameCube 15.0 0.0 5% N/A
Xbox 20.1 0.0 6% N/A
N64 0.5 2.4 0% -79%
Game Boy Advance 2.1 0.0 1% N/A
Game Boy Color 1.4 0.0 0% N/A
License/OEM 2.4 3.6 1% -33%
Affiliated label 46.9 25.0 14% 88%
Other 0.1 0.4 0% N/A
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Total EA Core Revenues $ 312.1 $ 165.6 94% 88%
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Subscription 8.1 8.0 3% 2%
Advertising 10.5 7.7 3% 37%
Product Sales 0.4 0.2 0% 79%
Direct Sales 0.4 0.5 0% -16%
License/OEM 0.4 0.0 0% N/A
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Total EA.com Revenues $ 19.8 $ 16.4 6% 21%
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Total Worldwide Revenues $ 331.9 $ 182.0 100% 82%
===========================================
Platform Sku Release Mix
PC 2 1
Sony PlayStation 2 4 2
Xbox 2 0
Nintendo GameCube 2 0
Sony PlayStation 1 0
Game Boy Advance 1 0
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Total skus 12 3
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Q1 Product Releases:
Titles Platforms
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2002 FIFA WORLD CUP GAMECUBE
2002 FIFA WORLD CUP PC
2002 FIFA WORLD CUP SONY
2002 FIFA WORLD CUP SONY 2
2002 FIFA WORLD CUP XBOX
DESERT STRIKE ADVANCE GBA
F1 2002 GAMECUBE
F1 2002 PC
F1 2002 SONY 2
F1 2002 XBOX
FREEKSTYLE SONY 2
MEDAL OF HONOR FRONTLINE SONY 2
International only and Others (not in SKU release count)
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SOCCER MANIA GBA
SOCCER MANIA PC
SOCCER MANIA SONY 2
PROJECT FIFA WORLD CUP SONY 2
Note: These revenue break-outs do not reflect inter-company
transactions for reporting purposes.
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