Exhibit 99.1
EA REPORTS RECORD FISCAL YEAR RESULTS
Net Revenue up 19 Percent to $2.96 Billion Driven by 27 Platinum Titles
REDWOOD CITY, CA – April 29, 2004 – Electronic Arts (NASDAQ: ERTS) today announced financial results for the fiscal year and quarter ended March 31, 2004.
Full Year Results
Net revenue for the fiscal year ended March 31, 2004 was $2.957 billion, up 19 percent as compared with $2.482 billion for the prior year. EA had twenty-seven platinum titles (over one million units sold) in fiscal 2004. Six franchises sold more than five million units:The Sims™, Need for Speed™, Medal of Honor™, FIFA Soccer, The Lord of the Rings™and Madden NFL™ Football.
Net income for the year was $577 million, an 82 percent increase over the prior year. Diluted earnings per share increased 73 percent to $1.87 as compared with $1.08 for the prior year. The growth in earnings was driven by higher sales volume and increased gross margin.
Non-GAAP net income for the year, excluding certain items, was up 47 percent to $566 million. Non-GAAP diluted earnings per share were up 39 percent to $1.84. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)
Operating cash flow was $669 million as compared with $714 million for the prior fiscal year. The decline was primarily a result of the timing of sales during the fourth quarter.
“This was another outstanding year for EA,” said Larry Probst, Chairman and Chief Executive Officer. “We delivered record revenue, twenty-seven platinum titles and record net income. We enter our next fiscal year with excellent momentum.”
“We look forward to the year ahead,” said Warren Jenson, Chief Financial and Administrative Officer. “We expect to once again deliver a strong performance while at the same time investing in new technologies for the future.”
Highlights for the Year (comparisons are to the fiscal year ended March 31, 2003)
| • | Net revenue: North America – up 12 percent to $1.6 billion; Europe – up 34 percent to $1.2 billion; Asia Pacific – up 10 percent to $97 million; Japan – down 12 percent to $71 million. Reported net revenue increased by $156 million or 6 percent due to changes in foreign currency rates. |
| • | European net revenue topped $1 billion for the first time in EA’s history. |
| • | Gross margin was 62.7 percent – up 6 points from 56.8 percent. |
| • | Operating income was $776 million – up 70 percent. Operating margin increased 8 points year-over-year to 26 percent. |
| • | EA was the number one publisher in the U.S. on current generation consoles and on the PC. Based on dollar sales in the U.S., EA had five of the top-ten-selling current generation console titles and three of the top-ten-selling PC games. |
| • | EA was ranked as one of the top-50 best-performing major companiesbyBusiness Week. |
| • | EA won eleven awards at the Seventh Annual Academy of Interactive Arts and Sciences (“AIAS”) ceremonyforNeed for Speed Underground; Madden NFL 2004; |
The Sims™ Superstar; The Sims™ Bustin’ Out; Command & Conquer™ Generals; Medal of Honor™ Rising Sun; The Lord of the Rings™, The Return of the King™;and SSX 3.
| • | EA announced a long-term partnership with the USC School of Cinema-Televisioncreating the EA Interactive Entertainment Program to advance interactive entertainment education and create a launch pad for the next generation of talent in our industry. |
Fourth Quarter Results
Net revenue for the fourth quarter was $598 million, up 29 percent as compared with $463 million for the prior year. Sales were driven byJames Bond 007: Everything or Nothing™; Need for Speed Underground; NFL STREET; MVP Baseball™ 2004and Final Fantasy® X-2.
Net income for the quarter was $90 million, as compared with $9 million for the prior year. Diluted earnings per share were $0.29 for the quarter, as compared with $0.03 for the prior year. Restructuring charges in the quarter totaled $9 million and were primarily a result of studio consolidations. Prior year results included asset impairment and restructuring charges of $72 million.
The effective income tax rate for the quarter was 10.4 percent as compared with 31 percent for the prior year. In the quarter, certain tax-related issues were resolved. The resolution of these matters lowered income tax expense by $20 million. This non-recurring event improved diluted earnings per share by $0.06. Excluding the $20 million benefit, the tax rate would have been 30 percent.
Non-GAAP net income, excluding certain items, was up 30 percent to $77 million. Non-GAAP diluted earnings per share were up 25 percent to $0.25. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)
Business Outlook
The following forward-looking statements reflect expectations as of April 29, 2004. Results may be materially different and are affected by many factors, such as changes in foreign exchange rates, development delays, the overall global economy, the popular appeal of our products, our ability to secure key licenses and other risk factors detailed in this release and in our annual and quarterly SEC filings.
Fiscal First Quarter Expectations – Ending June 30, 2004
| • | Net revenue is expected to be between $390 and $430 million – as compared with $353 million for the prior year. |
| • | Diluted earnings per share are expected to be between breakeven and $0.05 – as compared with $0.06 for the comparable period in fiscal 2004. |
Fiscal Year Expectations – Ending March 31, 2005
| • | Net revenue is expected to be between $3.25 and $3.40 billion – up 10 to 15 percent year-over-year. |
| • | Diluted earnings per share are expected to be between $1.95 and $2.10 – as compared with $1.87 for fiscal 2004. |
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 the related tax effect, from the Company’s statement of operations:
| • | Amortization of intangibles |
| • | Restructuring and asset impairment charges |
| • | Other-than-temporary impairment of investments in affiliates |
| • | Charges for acquired in-process technology |
In addition, for the three and twelve months ended March 31, 2004, reported non-GAAP net income excludes a $20 million non-recurring benefit to the Company’s income tax expense.
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.
Conference Call
Electronic Arts will host a conference call on April 29, 2004 at 2:00 pm PT (5:00 pm ET) to review the results of the Company’s fiscal year and fourth quarter ended March 31, 2004. Listeners may access the conference call live via webcast (http://investor.ea.com). A dial-in replay of the conference call will be available until May 6, 2004 at (719) 457-0820, access code 220497. The 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 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; retention of key personnel; adoption of new accounting regulations and standards; 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 10-K for the year ended March 31, 2003 and Quarterly Report on Form 10-Q for the quarter ended December 31, 2003. 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, including those made under the “Business Outlook” heading.
Note to Editors: Need for Speed, The Sims, Medal of Honor, Command & Conquer and MVP Baseball are trademarks or registered trademarks of Electronic Arts Inc. in the U.S. and/or other countries. The Lord of the Rings and The Return of the King are trademarks of The Saul Zaentz Company d/b/a Tolkien
Enterprises under license to New Line Productions, Inc. EVERYTHING OR NOTHING TM Danjaq, LLC and United Artists. All James Bond trademarks TM Danjaq, NFL, FIFA and Final Fantasy 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:
| | |
Karen Sansot | | Jeff Brown |
Director, Investor Relations | | Vice President, Corporate Communications |
650-628-5597 | | 650-628-7922 |
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
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| | Three Months Ended March 31
| | | Years Ended March 31
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| | 2004
| | 2003
| | | 2004
| | 2003
| |
Net revenue | | $ | 598,432 | | $ | 463,130 | | | $ | 2,957,141 | | $ | 2,482,244 | |
Cost of goods sold | | | 225,970 | | | 164,370 | | | | 1,102,950 | | | 1,072,802 | |
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Gross profit | | | 372,462 | | | 298,760 | | | | 1,854,191 | | | 1,409,442 | |
Operating expenses: | | | | | | | | | | | | | | |
Marketing and sales | | | 67,169 | | | 72,073 | | | | 370,468 | | | 332,453 | |
General and administrative | | | 46,041 | | | 35,493 | | | | 184,825 | | | 130,859 | |
Research and development | | | 155,068 | | | 108,819 | | | | 510,858 | | | 400,990 | |
Amortization of intangibles | | | 622 | | | 746 | | | | 2,735 | | | 7,482 | |
Restructuring charges | | | 9,112 | | | 7,176 | | | | 9,708 | | | 15,102 | |
Asset impairment charges | | | — | | | 64,877 | | | | — | | | 66,329 | |
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Total operating expenses | | | 278,012 | | | 289,184 | | | | 1,078,594 | | | 953,215 | |
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Operating income | | | 94,450 | | | 9,576 | | | | 775,597 | | | 456,227 | |
Interest and other income, net | | | 6,036 | | | 5,337 | | | | 20,963 | | | 5,222 | |
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Income before provision for income taxes and minority interest | | | 100,486 | | | 14,913 | | | | 796,560 | | | 461,449 | |
Provision for income taxes | | | 10,446 | | | 4,623 | | | | 219,268 | | | 143,049 | |
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Income before minority interest | | | 90,040 | | | 10,290 | | | | 577,292 | | | 318,400 | |
Minority interest in consolidated joint venture | | | — | | | (1,050 | ) | | | — | | | (1,303 | ) |
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Net income | | $ | 90,040 | | $ | 9,240 | | | $ | 577,292 | | $ | 317,097 | |
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Class A common stock: | | | | | | | | | | | | | | |
Net income: | | | | | | | | | | | | | | |
Diluted | | $ | 90,040 | | $ | 9,240 | | | $ | 577,292 | | $ | 317,097 | |
Basic | | $ | 90,040 | | $ | 11,717 | | | $ | 577,292 | | $ | 329,212 | |
Earnings per share: | | | | | | | | | | | | | | |
Diluted | | $ | 0.29 | | $ | 0.03 | | | $ | 1.87 | | $ | 1.08 | |
Basic | | $ | 0.30 | | $ | 0.04 | | | $ | 1.95 | | $ | 1.17 | |
Number of shares used in computation: | | | | | | | | | | | | | | |
Diluted | | | 312,532 | | | 294,110 | | | | 308,233 | | | 292,891 | |
Basic | | | 299,642 | | | 286,942 | | | | 295,396 | | | 281,978 | |
Class B common stock: | | | | | | | | | | | | | | |
Net loss, net of retained interest in EA.com | | | N/A | | $ | (2,477 | ) | | | N/A | | $ | (12,115 | ) |
Net loss per share: | | | | | | | | | | | | | | |
Diluted | | | N/A | | $ | (1.18 | ) | | | N/A | | $ | (2.77 | ) |
Basic | | | N/A | | $ | (1.18 | ) | | | N/A | | $ | (2.77 | ) |
Number of shares used in computation: | | | | | | | | | | | | | | |
Diluted | | | N/A | | | 2,092 | | | | N/A | | | 4,368 | |
Basic | | | N/A | | | 2,092 | | | | N/A | | | 4,368 | |
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, restructuring charges, asset impairment charges, other-than-temporary impairment of investments in affiliates and charges for acquired in-process technology. The three months and year ended March 31, 2004 also exclude the impact of a one-time income tax adjustment. The tax impact of the remaining items is calculated on a consolidated effective tax rate of 30% and 31% for fiscal 2004 and 2003, respectively.
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| | Three Months Ended March 31
| | | Years Ended March 31
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| | 2004
| | | 2003
| | | 2004
| | | 2003
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Net income | | $ | 90,040 | | | $ | 9,240 | | | $ | 577,292 | | | $ | 317,097 | |
Amortization of intangibles | | | 622 | | | | 746 | | | | 2,735 | | | | 7,482 | |
Restructuring charges | | | 9,112 | | | | 7,176 | | | | 9,708 | | | | 15,102 | |
Asset impairment charges | | | — | | | | 64,877 | | | | — | | | | 66,329 | |
Other-than-temporary impairment of investment in affiliates | | | — | | | | — | | | | — | | | | 10,119 | |
Income taxes effect on the above items | | | (2,920 | ) | | | (22,568 | ) | | | (3,733 | ) | | | (30,700 | ) |
Income tax adjustment | | | (19,700 | ) | | | — | | | | (19,700 | ) | | | — | |
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Non-GAAP net income | | $ | 77,154 | | | $ | 59,471 | | | $ | 566,302 | | | $ | 385,429 | |
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Class A common stock: | | | | | | | | | | | | | | | | |
Non-GAAP diluted earnings per share | | $ | 0.25 | | | $ | 0.20 | | | $ | 1.84 | | | $ | 1.32 | |
Number of shares used in diluted earnings per share computation | | | 312,532 | | | | 294,110 | | | | 308,233 | | | | 292,891 | |
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| | | | | | |
| | March 31 2004
| | March 31, 2003 (a)
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ASSETS | | | | | | |
Current assets: | | | | | | |
Cash, cash equivalents and short-term investments | | $ | 2,414,346 | | $ | 1,587,618 |
Marketable equity securities | | | 1,225 | | | 1,111 |
Receivables, net of allowances of $154,682 and $164,634, respectively | | | 211,916 | | | 82,083 |
Inventories, net | | | 55,143 | | | 39,679 |
Deferred income taxes | | | 84,312 | | | 117,180 |
Other current assets | | | 143,865 | | | 83,466 |
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Total current assets | | | 2,910,807 | | | 1,911,137 |
Property and equipment, net | | | 298,073 | | | 262,252 |
Investment in affiliates | | | 14,332 | | | 20,277 |
Goodwill | | | 91,977 | | | 86,031 |
Other intangibles, net | | | 18,468 | | | 21,301 |
Long-term deferred income taxes | | | 40,755 | | | 13,523 |
Other assets | | | 26,199 | | | 45,012 |
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Total Assets | | $ | 3,400,611 | | $ | 2,359,533 |
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LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | 114,087 | | $ | 106,329 |
Accrued and other liabilities | | | 608,166 | | | 464,547 |
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Total current liabilities | | | 722,253 | | | 570,876 |
Minority interest in consolidated joint venture | | | — | | | 3,918 |
Stockholders' equity: | | | | | | |
Common stock | | | 3,015 | | | 2,885 |
Paid-in capital | | | 1,153,680 | | | 856,428 |
Retained earnings | | | 1,501,184 | | | 923,892 |
Accumulated other comprehensive income | | | 20,479 | | | 1,534 |
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Total stockholders' equity | | | 2,678,358 | | | 1,784,739 |
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Total Liabilities, Minority Interest and Stockholders' Equity | | $ | 3,400,611 | | $ | 2,359,533 |
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(a) | Derived from audited financial statements. |
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
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| | Three Months Ended March 31
| | | Years Ended March 31
| |
| | 2004
| | | 2003
| | | 2004
| | | 2003
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OPERATING ACTIVITIES | | | | | | | | | | | | | | | | |
Net income | | $ | 90,040 | | | $ | 9,240 | | | $ | 577,292 | | | $ | 317,097 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 17,598 | | | | 17,310 | | | | 77,513 | | | | 91,639 | |
Equity in net income of investment in affiliates | | | (250 | ) | | | (1,254 | ) | | | (655 | ) | | | (5,467 | ) |
Non-cash restructuring and asset impairment charges | | | 8,542 | | | | 64,977 | | | | 9,138 | | | | 66,329 | |
Other-than-temporary impairment of investment in affiliates | | | — | | | | — | | | | — | | | | 10,590 | |
Loss on sale of property, equipment and marketable equity securities | | | 2,341 | | | | 854 | | | | 3,513 | | | | 1,233 | |
Stock-based compensation | | | 361 | | | | 42 | | | | 1,027 | | | | 906 | |
Tax benefit from exercise of stock options | | | 26,787 | | | | 37,855 | | | | 68,632 | | | | 74,620 | |
Minority interest in consolidated joint venture | | | — | | | | 1,050 | | | | — | | | | 1,303 | |
Change in assets and liabilities: | | | | | | | | | | | | | | | | |
Account receivables, net | | | 592,914 | | | | 526,946 | | | | (193,681 | ) | | | 110,183 | |
Inventories, net | | | 2,735 | | | | 14,175 | | | | (23,322 | ) | | | (4,911 | ) |
Other assets | | | (61,476 | ) | | | (34,464 | ) | | | (66,816 | ) | | | (30,895 | ) |
Accounts payable | | | (31,376 | ) | | | (40,487 | ) | | | 22,748 | | | | 17,735 | |
Accrued and other liabilities | | | (86,023 | ) | | | (165,303 | ) | | | 193,896 | | | | 64,089 | |
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Net cash provided by operating activities | | | 562,193 | | | | 430,941 | | | | 669,285 | | | | 714,451 | |
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INVESTING ACTIVITIES | | | | | | | | | | | | | | | | |
Capital expenditures | | | (33,658 | ) | | | (24,638 | ) | | | (89,595 | ) | | | (59,108 | ) |
Proceeds from sale of property and equipment | | | 1,333 | | | | 59 | | | | 1,446 | | | | 738 | |
Purchase of investments in affiliates | | | (175 | ) | | | (8,792 | ) | | | (525 | ) | | | (9,323 | ) |
Proceeds from sale of investment in affiliate | | | — | | | | — | | | | 8,467 | | | | — | |
Purchase of short-term investments | | | (620,282 | ) | | | (452,920 | ) | | | (2,511,061 | ) | | | (1,049,765 | ) |
Proceeds from maturities and sales of short-term investments | | | 1,609,501 | | | | 214,302 | | | | 2,882,899 | | | | 659,517 | |
Proceeds from sale of marketable equity securities | | | 1,873 | | | | — | | | | 1,875 | | | | 4,794 | |
Purchase of minority interest | | | — | | | | — | | | | (2,513 | ) | | | — | |
Distribution from investment in affiliate | | | — | | | | — | | | | — | | | | 3,000 | |
Acquisition of subsidiary, net of cash required | | | (2,073 | ) | | | — | | | | (3,031 | ) | | | (12,868 | ) |
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Net cash provided by (used in) investing activities | | | 956,519 | | | | (271,989 | ) | | | 287,962 | | | | (463,015 | ) |
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FINANCING ACTIVITIES | | | | | | | | | | | | | | | | |
Proceeds from sale of common stock through employee stock plans and other plans | | | 61,559 | | | | 21,819 | | | | 227,819 | | | | 131,696 | |
Purchase of Class B common stock | | | — | | | | — | | | | (225 | ) | | | — | |
Repayment of Class B notes receivable | | | — | | | | 1,176 | | | | 128 | | | | 1,176 | |
Dividend to joint venture | | | — | | | | — | | | | (2,587 | ) | | | (751 | ) |
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Net cash provided by financing activities | | | 61,559 | | | | 22,995 | | | | 225,135 | | | | 132,121 | |
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Effect of foreign exchange on cash and cash equivalents | | | (3,396 | ) | | | 1,980 | | | | 17,508 | | | | 13,612 | |
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Increase in cash and cash equivalents | | | 1,576,875 | | | | 183,927 | | | | 1,199,890 | | | | 397,169 | |
Beginning cash and cash equivalents | | | 573,010 | | | | 766,068 | | | | 949,995 | | | | 552,826 | |
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Ending cash and cash equivalents | | | 2,149,885 | | | | 949,995 | | | | 2,149,885 | | | | 949,995 | |
Short-term investments | | | 264,461 | | | | 637,623 | | | | 264,461 | | | | 637,623 | |
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Ending cash, cash equivalents and short-term investments | | $ | 2,414,346 | | | $ | 1,587,618 | | | $ | 2,414,346 | | | $ | 1,587,618 | |
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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, restructuring charges, asset impairment charges, other-than-temporary impairment of investments in affiliates, charges for acquired in-process technology 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.
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| | Q4 FY03
| | | Q1 FY04
| | | Q2 FY04
| | | Q3 FY04
| | | Q4 FY04
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QUARTERLY RESULTS | | | | | | | | | | | | | | | | | | | | |
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Operating Income | | | | | | | | | | | | | | | | | | | | |
GAAP operating income | | $ | 10 | | | $ | 22 | | | $ | 102 | | | $ | 558 | | | $ | 94 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | |
Amortization of intangibles | | | 1 | | | | — | | | | 1 | | | | 1 | | | | 1 | |
Restructuring charges | | | 7 | | | | — | | | | — | | | | — | | | | 9 | |
Asset impairment charges | | | 64 | | | | — | | | | — | | | | — | | | | — | |
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Total adjustments | | | 72 | | | | — | | | | 1 | | | | 1 | | | | 10 | |
Non-GAAP operating income | | $ | 82 | | | $ | 22 | | | $ | 103 | | | $ | 559 | | | $ | 104 | |
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Non-GAAP operating income margin—% of net revenue | | | 18 | % | | | 6 | % | | | 19 | % | | | 38 | % | | | 17 | % |
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Net Income | | | | | | | | | | | | | | | | | | | | |
GAAP net income | | $ | 9 | | | $ | 18 | | | $ | 77 | | | $ | 392 | | | $ | 90 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | |
Amortization of intangibles | | | 1 | | | | 1 | | | | — | | | | 1 | | | | 1 | |
Restructuring charges | | | 7 | | | | — | | | | — | | | | — | | | | 9 | |
Asset impairment charges | | | 64 | | | | — | | | | — | | | | — | | | | — | |
Other-than-temporary impairment of investment in affiliates | | | — | | | | — | | | | — | | | | — | | | | — | |
Income taxes effect on the above items | | | (22 | ) | | | — | | | | — | | | | — | | | | (3 | ) |
Income tax adjustment | | | — | | | | — | | | | — | | | | — | | | | (20 | ) |
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Total adjustments | | | 50 | | | | 1 | | | | — | | | | 1 | | | | (13 | ) |
Non-GAAP net income | | $ | 59 | | | $ | 19 | | | $ | 77 | | | $ | 393 | | | $ | 77 | |
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Non-GAAP net income margin—% of net revenue | | | 13 | % | | | 5 | % | | | 15 | % | | | 27 | % | | | 13 | % |
GAAP diluted earnings per share | | $ | 0.03 | | | $ | 0.06 | | | $ | 0.25 | | | $ | 1.26 | | | $ | 0.29 | |
Non-GAAP diluted earnings per share | | $ | 0.20 | | | $ | 0.06 | | | $ | 0.25 | | | $ | 1.26 | | | $ | 0.25 | |
Number of shares used in diluted earnings per share computation | | | 294 | | | | 300 | | | | 308 | | | | 311 | | | | 313 | |
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TRAILING TWELVE MONTH RESULTS | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Operating Income | | | | | | | | | | | | | | | | | | | | |
GAAP operating income | | $ | 456 | | | $ | 472 | | | $ | 503 | | | $ | 691 | | | $ | 776 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | |
Amortization of intangibles | | | 8 | | | | 6 | | | | 5 | | | | 4 | | | | 3 | |
Restructuring charges | | | 15 | | | | 15 | | | | 15 | | | | 7 | | | | 9 | |
Asset impairment charges | | | 66 | | | | 66 | | | | 66 | | | | 64 | | | | — | |
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Total adjustments | | | 89 | | | | 87 | | | | 86 | | | | 75 | | | | 12 | |
Non-GAAP operating income | | $ | 545 | | | $ | 559 | | | $ | 589 | | | $ | 766 | | | $ | 788 | |
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Non-GAAP operating income margin—% of net revenue | | | 22 | % | | | 22 | % | | | 23 | % | | | 27 | % | | | 27 | % |
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Net Income | | | | | | | | | | | | | | | | | | | | |
GAAP net income | | $ | 317 | | | $ | 328 | | | $ | 354 | | | $ | 496 | | | $ | 577 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | |
Amortization of intangibles | | | 8 | | | | 7 | | | | 5 | | | | 4 | | | | 3 | |
Restructuring charges | | | 15 | | | | 15 | | | | 15 | | | | 7 | | | | 10 | |
Asset impairment charges | | | 66 | | | | 66 | | | | 66 | | | | 64 | | | | — | |
Other-than-temporary impairment of investment in affiliates | | | 10 | | | | 10 | | | | 10 | | | | — | | | | — | |
Income taxes effect on the above items | | | (31 | ) | | | (31 | ) | | | (30 | ) | | | (22 | ) | | | (4 | ) |
Income tax adjustment | | | — | | | | — | | | | — | | | | — | | | | (20 | ) |
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Total adjustments | | | 68 | | | | 67 | | | | 66 | | | | 53 | | | | (11 | ) |
Non-GAAP net income | | $ | 385 | | | $ | 395 | | | $ | 420 | | | $ | 549 | | | $ | 566 | |
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Non-GAAP net income margin—% of net revenue | | | 16 | % | | | 16 | % | | | 16 | % | | | 19 | % | | | 19 | % |
GAAP diluted earnings per share | | $ | 1.08 | | | $ | 1.11 | | | $ | 1.19 | | | $ | 1.60 | | | $ | 1.87 | |
Non-GAAP diluted earnings per share | | $ | 1.32 | | | $ | 1.34 | | | $ | 1.41 | | | $ | 1.77 | | | $ | 1.84 | |
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
($ in millions, except per share data, SKU count and Headcount)
| | | | | | | | | | | | | | | | | | | | | | | |
| | Q4 FY03
| | | Q1 FY04
| | | Q2 FY04
| | | Q3 FY04
| | | Q4 FY04
| | | YOY% Growth
| |
CONSOLIDATED FINANCIAL DATA | | | | | | | | | | | | | | | | | | | | | | | |
Net revenue | | | 463 | | | | 353 | | | | 530 | | | | 1,475 | | | | 598 | | | 29 | % |
Net revenue - trailing twelve months (“TTM”) | | | 2,482 | | | | 2,503 | | | | 2,580 | | | | 2,822 | | | | 2,957 | | | 19 | % |
| | | | | | |
Gross profit | | | 299 | | | | 203 | | | | 316 | | | | 962 | | | | 372 | | | 25 | % |
Gross margin - % of net revenue | | | 65 | % | | | 58 | % | | | 60 | % | | | 65 | % | | | 62 | % | | | |
Gross profit -TM | | | 1,409 | | | | 1,423 | | | | 1,486 | | | | 1,780 | | | | 1,854 | | | 32 | % |
Gross margin - TTM% of net revenue | | | 57 | % | | | 57 | % | | | 58 | % | | | 63 | % | | | 63 | % | | | |
| | | | | | |
Operating income | | | 10 | | | | 22 | | | | 102 | | | | 558 | | | | 94 | | | 886 | % |
Operating income margin - % of net revenue | | | 2 | % | | | 6 | % | | | 19 | % | | | 38 | % | | | 16 | % | | | |
Operating income - TTM | | | 456 | | | | 472 | | | | 503 | | | | 691 | | | | 776 | | | 70 | % |
Operating income margin - TTM% of net revenue | | | 18 | % | | | 19 | % | | | 19 | % | | | 24 | % | | | 26 | % | | | |
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Net income | | | 9 | | | | 18 | | | | 77 | | | | 392 | | | | 90 | | | 874 | % |
Diluted earnings per share | | $ | 0.03 | | | $ | 0.06 | | | $ | 0.25 | | | $ | 1.26 | | | $ | 0.29 | | | 867 | % |
Net income - TTM | | | 317 | | | | 328 | | | | 354 | | | | 496 | | | | 577 | | | 82 | % |
Diluted earnings per share - TTM | | $ | 1.08 | | | $ | 1.11 | | | $ | 1.19 | | | $ | 1.60 | | | $ | 1.87 | | | 73 | % |
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Non-GAAP operating income(a) | | | 82 | | | | 22 | | | | 103 | | | | 559 | | | | 104 | | | 26 | % |
Non-GAAP operating income margin - % of net revenue | | | 18 | % | | | 6 | % | | | 19 | % | | | 38 | % | | | 17 | % | | | |
Non-GAAP operating income - TTM(a) | | | 545 | | | | 559 | | | | 589 | | | | 766 | | | | 788 | | | 45 | % |
Non-GAAP operating income margin - TTM% of net revenue | | | 22 | % | | | 22 | % | | | 23 | % | | | 27 | % | | | 27 | % | | | |
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Non-GAAP net income(a) | | | 59 | | | | 19 | | | | 77 | | | | 393 | | | | 77 | | | 30 | % |
Non-GAAP diluted earnings per share(a) | | $ | 0.20 | | | $ | 0.06 | | | $ | 0.25 | | | $ | 1.26 | | | $ | 0.25 | | | 25 | % |
Non-GAAP net income - TTM(a) | | | 385 | | | | 395 | | | | 420 | | | | 549 | | | | 566 | | | 47 | % |
Non-GAAP diluted earnings per share - TTM(a) | | $ | 1.32 | | | $ | 1.34 | | | $ | 1.41 | | | $ | 1.77 | | | $ | 1.84 | | | 39 | % |
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CASH FLOW DATA | | | | | | | | | | | | | | | | | | | | | | | |
Operating cash flow | | | 431 | | | | (34 | ) | | | 63 | | | | 79 | | | | 562 | | | 30 | % |
Operating cash flow - TTM | | | 714 | | | | 673 | | | | 657 | | | | 538 | | | | 669 | | | (6 | )% |
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Capital expenditures | | | 25 | | | | 12 | | | | 17 | | | | 27 | | | | 34 | | | 37 | % |
Capital expenditures - TTM | | | 59 | | | | 63 | | | | 65 | | | | 81 | | | | 90 | | | 52 | % |
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BALANCE SHEET DATA | | | | | | | | | | | | | | | | | | | | | | | |
Cash, cash equivalents and short term investments | | | 1,588 | | | | 1,622 | | | | 1,734 | | | | 1,825 | | | | 2,414 | | | 52 | % |
Marketable equity securities | | | 1 | | | | 1 | | | | 1 | | | | 2 | | | | 1 | | | 10 | % |
Account receivables, net | | | 82 | | | | 37 | | | | 203 | | | | 837 | | | | 212 | | | 158 | % |
Inventories, net | | | 40 | | | | 26 | | | | 39 | | | | 65 | | | | 55 | | | 39 | % |
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OTHER | | | | | | | | | | | | | | | | | | | | | | | |
Employees | | | 3,938 | | | | 4,017 | | | | 4,180 | | | | 4,528 | | | | 4,773 | | | 21 | % |
Diluted Class A weighted average shares outstanding | | | 294 | | | | 300 | | | | 308 | | | | 311 | | | | 313 | | | | |
(a) | Please see attached Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations. |
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
($ in millions, except per share data, SKU count and Headcount)
| | | | | | | | | | | | | | | | | | |
| | Q4 FY03
| | | Q1 FY04
| | | Q2 FY04
| | | Q3 FY04
| | | Q4 FY04
| | | YOY% Growth
| |
GEOGRAPHIC REVENUE MIX | | | | | | | | | | | | | | | | | | |
North America Revenue | | 253 | | | 199 | | | 358 | | | 753 | | | 299 | | | 18 | % |
Revenue outside North America | | 210 | | | 154 | | | 172 | | | 722 | | | 299 | | | 42 | % |
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Europe Revenue | | 165 | | | 128 | | | 145 | | | 658 | | | 249 | | | 51 | % |
Asia Pacific Revenue | | 20 | | | 14 | | | 18 | | | 43 | | | 22 | | | 7 | % |
Japan Revenue | | 25 | | | 12 | | | 9 | | | 21 | | | 28 | | | 15 | % |
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Net Revenue | | 463 | | | 353 | | | 530 | | | 1,475 | | | 598 | | | 29 | % |
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GEOGRAPHIC REVENUE MIX - as a % of Net Revenue | | | | | | | | | | | | | | | | | | |
North America Revenue | | 55 | % | | 56 | % | | 68 | % | | 51 | % | | 50 | % | | | |
Revenue outside North America | | 45 | % | | 44 | % | | 32 | % | | 49 | % | | 50 | % | | | |
| | | | | | |
Europe Revenue | | 36 | % | | 36 | % | | 27 | % | | 45 | % | | 41 | % | | | |
Asia Pacific Revenue | | 4 | % | | 4 | % | | 3 | % | | 3 | % | | 4 | % | | | |
Japan Revenue | | 5 | % | | 4 | % | | 2 | % | | 1 | % | | 5 | % | | | |
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Net Revenue | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | |
| | | | | | |
PLATFORM REVENUE MIX | | | | | | | | | | | | | | | | | | |
Sony PlayStation 2 | | 158 | | | 118 | | | 221 | | | 732 | | | 244 | | | 54 | % |
PC | | 122 | | | 80 | | | 93 | | | 220 | | | 76 | | | (37 | )% |
Xbox | | 45 | | | 31 | | | 69 | | | 205 | | | 80 | | | 77 | % |
Nintendo GameCube | | 23 | | | 21 | | | 25 | | | 104 | | | 50 | | | 121 | % |
Game Boy Advance | | 5 | | | 2 | | | 4 | | | 57 | | | 14 | | | 169 | % |
Sony PlayStation | | 9 | | | 6 | | | 8 | | | 13 | | | 3 | | | (69 | )% |
Co-publishing and Distribution | | 75 | | | 72 | | | 92 | | | 122 | | | 112 | | | 49 | % |
Subscription Services | | 17 | | | 14 | | | 11 | | | 12 | | | 13 | | | (22 | )% |
Advertising, Programming, Licensing and Other | | 9 | | | 9 | | | 7 | | | 10 | | | 6 | | | (29 | )% |
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Net Revenue | | 463 | | | 353 | | | 530 | | | 1,475 | | | 598 | | | 29 | % |
| | | | | | |
PLATFORM REVENUE MIX - as a % of Net Revenue | | | | | | | | | | | | | | | | | | |
Sony PlayStation 2 | | 34 | % | | 33 | % | | 42 | % | | 49 | % | | 41 | % | | | |
PC | | 26 | % | | 23 | % | | 18 | % | | 15 | % | | 13 | % | | | |
Xbox | | 10 | % | | 9 | % | | 13 | % | | 14 | % | | 13 | % | | | |
Nintendo GameCube | | 5 | % | | 6 | % | | 5 | % | | 7 | % | | 9 | % | | | |
Game Boy Advance | | 1 | % | | 1 | % | | 1 | % | | 4 | % | | 2 | % | | | |
Sony PlayStation | | 2 | % | | 2 | % | | 1 | % | | 1 | % | | 0 | % | | | |
Co-publishing and Distribution | | 16 | % | | 20 | % | | 17 | % | | 8 | % | | 19 | % | | | |
Subscription Services | | 4 | % | | 4 | % | | 2 | % | | 1 | % | | 2 | % | | | |
Advertising, Programming, Licensing and Other | | 2 | % | | 2 | % | | 1 | % | | 1 | % | | 1 | % | | | |
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Net Revenue | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | |
| | | | | | |
Platform Sku Release Mix | | | | | | | | | | | | | | | | | | |
Sony PlayStation 2 | | 2 | | | 3 | | | 6 | | | 11 | | | 4 | | | 100 | % |
PC | | 3 | | | 2 | | | 10 | | | 7 | | | 1 | | | (67 | )% |
Xbox | | 3 | | | 2 | | | 5 | | | 11 | | | 3 | | | 0 | % |
Nintendo GameCube | | 2 | | | 3 | | | 4 | | | 9 | | | 3 | | | 50 | % |
Game Boy Advance | | 1 | | | — | | | 1 | | | 9 | | | — | | | (100 | )% |
Sony PlayStation | | — | | | — | | | 2 | | | 1 | | | — | | | N/A | |
Online and Other | | 1 | | | — | | | — | | | — | | | — | | | (100 | )% |
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Total Skus | | 12 | | | 10 | | | 28 | | | 48 | | | 11 | | | (8 | )% |
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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Fact Sheet for Q4 Fiscal 2004
| | |
Q4 Product Releases | | Platform |
| |
• James Bond 007™: Everything or Nothing™ | | PlayStation®2 |
• FIFA Total Football™ | | PlayStation 2 |
• MVP Baseball™2004 | | PlayStation 2 |
• NFL STREET | | PlayStation 2 |
• James Bond 007: Everything or Nothing | | Xbox® |
• MVP Baseball 2004 | | Xbox |
• NFL STREET | | Xbox |
• James Bond 007: Everything or Nothing | | Nintendo GameCube™ |
• MVP Baseball 2004 | | Nintendo GameCube |
• NFL STREET | | Nintendo GameCube |
• MVP Baseball 2004 | | PC |
| |
Co-pub, International only and Others (not in SKU count) | | |
| |
• EA SPORTS™ Cricket 2004 | | PlayStation 2 |
• Battlefield Vietnam | | PC |
• EA SPORTS Cricket 2004 | | PC |
• The Sims™ | | N-Gage™ |
• Tiger Woods PGA TOUR®2004 | | N-Gage™ |
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