Exhibit 99.1
ELECTRONIC ARTS REPORTS SECOND QUARTER RESULTS
Net Revenue up 35 Percent; Net Income up 27 Percent
Announces $750 Million Share Repurchase Program
REDWOOD CITY, CA – October 19, 2004 – Electronic Arts (NASDAQ: ERTS) today announced financial results for the fiscal second quarter ended September 30, 2004.
Net revenue was $716 million, up 35 percent as compared with $530 million for the fiscal quarter ended September 30, 2003. Sales were driven byMadden NFL 2005, The Sims™2, Burnout™ 3: Takedown™ and NCAA® Football 2005– each reaching platinum status (over one million copies sold) in the quarter.
Madden NFL 2005has sold over 4 million copies since launch.
The Sims 2 andBurnout 3: Takedown have each sold over one million copies in Europe alone.
Net income for the second quarter was $97 million, a 27 percent increase year-over-year. Diluted earnings per share were $0.31 as compared to $0.25 a year ago.
Non-GAAP net income for the second quarter was $98 million, a 27 percent increase. Non-GAAP diluted earnings per share were $0.31 as compared to $0.25 a year ago. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)
Trailing twelve month operating cash flow was $664 million as compared to $657 million for the same period a year ago.
EA’s Board of Directors has authorized a share repurchase program of up to $750 million. EA may purchase the Company’s common stock from time to time in the open market or through privately negotiated transactions over the next 12 months.
“We enter the holidays with strong momentum in North America, Europe and Asia,” said Larry Probst, Chairman and Chief Executive Officer. “EA SPORTS is having its best year ever and The Sims 2 had the strongest PC launch in EA’s history. In the December quarter, the breadth and quality of our global line-up is exceptional, with eleven new releases expected to achieve platinum status.”
“We are fortunate to be in a strong financial position,” said Warren Jenson, Chief Financial and Administrative Officer. “We have the financial strength to invest for the long term, maintain strategic flexibility and at the same time return capital to our shareholders through our share repurchase program.”
Current Highlights (comparisons are to the quarter ended September 30, 2003)
| | • | The Sims 2sold through more than one million copies worldwide within the first ten days of release – the biggest PC launch in EA’s history. |
| | • | Madden NFL 2005became the #1 selling game of the year in North America – in just one month. |
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| | • | Net revenue: North America – up 32 percent to $473 million; Europe – up 45 percent to $210 million; Asia Pacific – up 21 percent to $21 million; Japan – up 29 percent to $12 million. Reported net revenue increased by approximately $23 million or 4 percent due to changes in foreign currency rates. |
| | • | Gross margin was 60.3 percent – compared to 59.7 percent a year ago. |
| | • | Operating income was $125 million – compared to $102 million.Operating margin was 17.4 percent – compared to 19.2 percent a year ago. |
| | • | The acquisition of Criterion Software was completed in October, bringing the Burnout™ and Black franchises and RenderWare® technology to EA. |
| | • | The Company announced plans to build a studio in Chinafocused on creating games for this market. |
| | • | EA received 4 out of the “Top Five PC Games with the Highest Expectations” awards and 2 out of the “Top Five Most Popular PC Games” awards at China Joy,China’s equivalent to E3. |
Business Outlook
The following forward-looking statements reflect expectations as of October 19, 2004. Results may be materially different and are affected by many factors, such as changes in foreign exchange rates, the overall global economy, the popular appeal of our products, our effective tax rate, development delays, our ability to secure key licenses and other factors detailed in this release and in our annual and quarterly SEC filings.
Fiscal Third Quarter Expectations – Ending December 31, 2004
| | • | Net revenue is expected to be between $1.4 and $1.475 billion – as compared to $1.475 billion for the prior year. |
| | • | Non-GAAP diluted earnings per share are expected to be between $1.16 and $1.26 – as compared to $1.26 for the prior year. This range does not factor in five cents of estimated charges related principally to our acquisition of Criterion Software. |
| | • | GAAP diluted earnings per share are expected to be between $1.11 and $1.21 – as compared to $1.26 for the prior year. |
Fiscal Year Expectations – Ending March 31, 2005
| | • | Net revenue is expected to be between $3.275 and $3.4 billion – as compared to $2.957 billion for fiscal 2004. |
| | • | Non-GAAP diluted earnings per share are expected to be between $1.90 and $2.10 – as compared to $1.84 for fiscal 2004. This range does not factor in six cents of estimated charges related principally to our acquisition of Criterion Software. |
| | • | GAAP diluted earnings per share are expected to be between $1.84 and $2.04 – as compared to $1.87 for fiscal 2004. |
Our expected results include the projected impact of our share repurchase program.
Non-GAAP Financial Measures
Electronic Arts uses non-GAAP measures of operating income, net income and diluted earnings per share. These non-GAAP measures exclude the following items, including any related tax effect, from the Company’s statement of operations:
| | • | Amortization of intangibles and employee stock-based compensation |
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| | • | Restructuring and asset impairment charges |
| | • | Other-than-temporary impairment of investments in affiliates |
| | • | Charges for acquired in-process technology |
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 October 19, 2004 at 2:00 pm PT (5:00 pm ET) to review the results for the Company’s second quarter ended September 30, 2004. Listeners may access the conference call live via webcast (http://investor.ea.com). A webcast archive of the conference call will be available for one year at http://investor.ea.com.
Some statements set forth in this release, including those under the heading “Business Outlook,” contain forward-looking statements that involve risks and uncertainties. Statements including words such as “anticipate”, “believe” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are subject to business and economic risks and actual events or actual future results could differ materially from those set forth in the forward-looking statements due to such risks and uncertainties. Some of the factors which could cause our results to differ materially from our expectations include the following: our ability to predict consumer preferences among competing hardware platforms; the seasonality and cyclical nature of the interactive game segment; timely development and release of our products; our ability to secure licenses to valuable entertainment properties on favorable terms; consumer spending trends; our ability to attract and retain key personnel; changes in effective tax rates; adoption of new accounting regulations and standards; potential regulation of our products in key territories; developments in the law regarding protection of our products; fluctuations in foreign exchange rates; and other factors described in our Annual Report on Form 10-K for the year ended March 31, 2004 and in our Form 10-Q for the quarter ended June 30, 2004. We do not intend to update these forward-looking statements, including those made under the “Business Outlook” heading.
Note to Editors: The Sims and John Madden Football are trademarks or registered trademarks of Electronic Arts Inc. in the U.S. and/or other countries. Burnout, TakeDown and RenderWare are trademarks of Criterion Software Limited. NFL, NCAA, Tiger Woods & PGA TOUR 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 or Tricia Gugler | | Jeff Brown |
| Directors, Investor Relations | | Vice President, Corporate Communications |
| 650-628-5597 or 650-628-7327 | | 650-628-7922 |
3
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
| | | | | | | | | | | | |
| | | Three Months Ended
September 30,
| | Six Months Ended
September 30,
|
| | | 2004
| | 2003
| | 2004
| | 2003
|
Net revenue | | $ | 715,728 | | $ | 530,005 | | $ | 1,147,369 | | $ | 883,386 |
Cost of goods sold | | | 283,911 | | | 213,762 | | | 460,666 | | | 363,725 |
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|
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Gross profit | | | 431,817 | | | 316,243 | | | 686,703 | | | 519,661 |
Operating expenses: | | | | | | | | | | | | |
Marketing and sales | | | 107,518 | | | 64,041 | | | 170,738 | | | 123,125 |
General and administrative | | | 42,043 | | | 36,032 | | | 77,097 | | | 66,792 |
Research and development | | | 156,839 | | | 113,493 | | | 287,481 | | | 204,615 |
Amortization of intangibles | | | 623 | | | 810 | | | 1,245 | | | 1,490 |
Restructuring charges | | | — | | | — | | | 388 | | | — |
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Total operating expenses | | | 307,023 | | | 214,376 | | | 536,949 | | | 396,022 |
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| |
|
| |
|
| |
|
|
Operating income | | | 124,794 | | | 101,867 | | | 149,754 | | | 123,639 |
| | | | |
Interest and other income, net | | | 12,183 | | | 9,130 | | | 21,342 | | | 13,979 |
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| |
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Income before provision for income taxes | | | 136,977 | | | 110,997 | | | 171,096 | | | 137,618 |
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Provision for income taxes | | | 39,724 | | | 34,409 | | | 49,618 | | | 42,662 |
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Net income | | $ | 97,253 | | $ | 76,588 | | $ | 121,478 | | $ | 94,956 |
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Net income: | | | | | | | | | | | | |
Basic | | $ | 97,253 | | $ | 76,588 | | $ | 121,478 | | $ | 94,956 |
Diluted | | $ | 97,253 | | $ | 76,588 | | $ | 121,478 | | $ | 94,956 |
| | | | |
Earnings per share: | | | | | | | | | | | | |
Basic | | $ | 0.32 | | $ | 0.26 | | $ | 0.40 | | $ | 0.32 |
Diluted | | $ | 0.31 | | $ | 0.25 | | $ | 0.38 | | $ | 0.31 |
| | | | |
Number of shares used in computation: | | | | | | | | | | | | |
Basic | | | 304,076 | | | 294,836 | | | 303,127 | | | 292,263 |
Diluted | | | 316,049 | | | 307,779 | | | 315,778 | | | 304,013 |
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 and employee stock-based compensation, restructuring charges, asset impairment charges, other-than-temporary impairment of investments in affiliates and charges for acquired in-process technology. The tax impact of the remaining items is calculated on a consolidated effective tax rate of 29% and 31% for the three and six months ending September 30, 2004 and 2003, respectively.
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30,
| | | Six Months Ended
September 30,
| |
| | | 2004
| | | 2003
| | | 2004
| | | 2003
| |
Net income | | $ | 97,253 | | | $ | 76,588 | | | $ | 121,478 | | | $ | 94,956 | |
Amortization | | | 623 | | | | 810 | | | | 1,245 | | | | 1,490 | |
Restructuring charges | | | — | | | | — | | | | 388 | | | | — | |
Income taxes effect on the above items | | | (181 | ) | | | (251 | ) | | | (474 | ) | | | (462 | ) |
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Non-GAAP net income | | $ | 97,695 | | | $ | 77,147 | | | $ | 122,637 | | | $ | 95,984 | |
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Non-GAAP diluted earnings per share | | $ | 0.31 | | | $ | 0.25 | | | $ | 0.39 | | | $ | 0.32 | |
Number of shares used in diluted earnings per share computation | | | 316,049 | | | | 307,779 | | | | 315,778 | | | | 304,013 | |
4
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| | | | | | |
| | | September 30,
2004
| | March 31, 2004(a)
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ASSETS | | | | | | |
Current assets: | | | | | | |
Cash, cash equivalents and short-term investments | | $ | 2,489,659 | | $ | 2,414,346 |
Marketable equity securities | | | 259 | | | 1,225 |
Receivables, net of allowances of $122,577 and $154,682, respectively | | | 379,389 | | | 211,916 |
Inventories | | | 79,272 | | | 55,143 |
Deferred income taxes | | | 80,804 | | | 84,312 |
Other current assets | | | 140,883 | | | 161,867 |
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|
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Total current assets | | | 3,170,266 | | | 2,928,809 |
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Property and equipment, net | | | 297,485 | | | 298,073 |
Investment in affiliates | | | 15,341 | | | 14,332 |
Goodwill | | | 92,648 | | | 91,977 |
Other intangibles, net | | | 17,215 | | | 18,468 |
Long-term deferred income taxes | | | 43,639 | | | 40,755 |
Other assets | | | 66,061 | | | 71,612 |
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Total Assets | | $ | 3,702,655 | | $ | 3,464,026 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | 172,017 | | $ | 114,087 |
Accrued and other liabilities | | | 587,275 | | | 630,138 |
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Total current liabilities | | | 759,292 | | | 744,225 |
| | |
Other liabilities | | | 36,615 | | | 41,443 |
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Total liabilities | | | 795,907 | | | 785,668 |
| | |
Stockholders’ equity: | | | | | | |
Common stock | | | 3,051 | | | 3,015 |
Paid-in capital | | | 1,264,563 | | | 1,153,680 |
Retained earnings | | | 1,622,662 | | | 1,501,184 |
Accumulated other comprehensive income | | | 16,472 | | | 20,479 |
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Total stockholders’ equity | | | 2,906,748 | | | 2,678,358 |
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| |
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Total Liabilities and Stockholders’ Equity | | $ | 3,702,655 | | $ | 3,464,026 |
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| (a) | Derived from audited financial statements. |
5
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30,
| | | Six Months Ended
September 30,
| |
| | | 2004
| | | 2003
| | | 2004
| | | 2003
| |
OPERATING ACTIVITIES | | | | | | | | | | | | | | | | |
Net income | | $ | 97,253 | | | $ | 76,588 | | | $ | 121,478 | | | $ | 94,956 | |
Adjustments to reconcile net income to net cash used in operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 16,960 | | | | 17,624 | | | | 33,167 | | | | 30,847 | |
Equity in net income of investment in affiliates | | | (104 | ) | | | (113 | ) | | | (587 | ) | | | (113 | ) |
Other-than-temporary impairment of investments in affiliate | | | — | | | | 589 | | | | — | | | | 589 | |
Loss (gain) on sale of property, equipment and marketable equity securities | | | (1,560 | ) | | | (8 | ) | | | (3,893 | ) | | | 45 | |
Stock-based compensation | | | 48 | | | | 235 | | | | 273 | | | | 429 | |
Tax benefit from exercise of stock options | | | 12,360 | | | | 20,026 | | | | 25,138 | | | | 40,169 | |
Change in assets and liabilities: | | | | | | | | | | | | | | | | |
Receivables, net | | | (205,040 | ) | | | (188,832 | ) | | | (168,217 | ) | | | (133,034 | ) |
Inventories | | | (25,053 | ) | | | (13,928 | ) | | | (24,097 | ) | | | (406 | ) |
Other assets | | | 26,665 | | | | 17,892 | | | | 26,590 | | | | 19,063 | |
Accounts payable | | | 105,443 | | | | 71,372 | | | | 57,885 | | | | 25,309 | |
Accrued and other liabilities | | | 62,003 | | | | 61,113 | | | | (44,598 | ) | | | (49,607 | ) |
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Net cash provided by operating activities | | | 88,975 | | | | 62,558 | | | | 23,139 | | | | 28,247 | |
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INVESTING ACTIVITIES | | | | | | | | | | | | | | | | |
Capital expenditures | | | (19,230 | ) | | | (16,503 | ) | | | (45,339 | ) | | | (28,690 | ) |
Proceeds from sale of property and equipment | | | 104 | | | | 50 | | | | 15,537 | | | | 88 | |
Proceeds from sale of marketable equity securities | | | 3,115 | | | | — | | | | 3,115 | | | | — | |
Purchase of investment in affiliate | | | — | | | | — | | | | (250 | ) | | | — | |
Proceeds from sale of investment in affiliate | | | — | | | | — | | | | — | | | | 8,467 | |
Change in short-term investments, net | | | 139,468 | | | | (549,357 | ) | | | (845,584 | ) | | | (722,787 | ) |
Purchase of minority interest | | | — | | | | — | | | | — | | | | (2,513 | ) |
Acquisition of subsidiary, net of cash acquired | | | — | | | | — | | | | (12 | ) | | | — | |
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Net cash provided by (used in) investing activities | | | 123,457 | | | | (565,810 | ) | | | (872,533 | ) | | | (745,435 | ) |
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FINANCING ACTIVITIES | | | | | | | | | | | | | | | | |
Proceeds from sale of common stock through employee stock plans and other plans | | | 41,232 | | | | 67,010 | | | | 85,508 | | | | 139,875 | |
Repurchase of Class B common stock | | | — | | | | (225 | ) | | | — | | | | (225 | ) |
Repayment of Class B notes receivable | | | — | | | | (7 | ) | | | — | | | | 128 | |
Dividend to joint venture | | | — | | | | — | | | | — | | | | (2,587 | ) |
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Net cash provided by financing activities | | | 41,232 | | | | 66,778 | | | | 85,508 | | | | 137,191 | |
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Effect of foreign exchange on cash and cash equivalents | | | (809 | ) | | | 1,902 | | | | 27 | | | | 6,127 | |
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Increase (decrease) in cash and cash equivalents | | | 252,855 | | | | (434,572 | ) | | | (763,859 | ) | | | (573,870 | ) |
Beginning cash and cash equivalents | | | 1,133,171 | | | | 810,697 | | | | 2,149,885 | | | | 949,995 | |
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Ending cash and cash equivalents | | | 1,386,026 | | | | 376,125 | | | | 1,386,026 | | | | 376,125 | |
Short-term investments | | | 1,103,633 | | | | 1,358,049 | | | | 1,103,633 | | | | 1,358,049 | |
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Ending cash, cash equivalents and short-term investments | | $ | 2,489,659 | | | $ | 1,734,174 | | | $ | 2,489,659 | | | $ | 1,734,174 | |
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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 and employee stock-based compensation, 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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| | | Q2
FY04
| | | Q3
FY04
| | | Q4
FY04
| | | Q1
FY05
| | | Q2 FY05
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QUARTERLY RESULTS | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Operating Income | | | | | | | | | | | | | | | | | | | | |
GAAP operating income | | $ | 102 | | | $ | 558 | | | $ | 94 | | | $ | 25 | | | $ | 125 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | |
Amortization | | | 1 | | | | 1 | | | | 1 | | | | 1 | | | | — | |
Restructuring charges | | | — | | | | — | | | | 9 | | | | — | | | | — | |
Asset impairment charges | | | — | | | | — | | | | — | | | | — | | | | — | |
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Total adjustments | | | 1 | | | | 1 | | | | 10 | | | | 1 | | | | — | |
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Non-GAAP operating income | | $ | 103 | | | $ | 559 | | | $ | 104 | | | $ | 26 | | | $ | 125 | |
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Non-GAAP operating income margin - % of net revenue | | | 19 | % | | | 38 | % | | | 17 | % | | | 6 | % | | | 18 | % |
Net Income | | | | | | | | | | | | | | | | | | | | |
GAAP net income | | $ | 77 | | | $ | 392 | | | $ | 90 | | | $ | 24 | | | $ | 97 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | |
Amortization | | | — | | | | 1 | | | | 1 | | | | 1 | | | | 1 | |
Restructuring charges | | | — | | | | — | | | | 9 | | | | — | | | | — | |
Asset impairment charges | | | — | | | | — | | | | — | | | | — | | | | — | |
Other-than-temporary impairment of investment in affiliates | | | — | | | | — | | | | — | | | | — | | | | — | |
Income taxes effect on the above items | | | — | | | | — | | | | (3 | ) | | | — | | | | — | |
Income tax adjustment | | | — | | | | — | | | | (20 | ) | | | — | | | | — | |
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Total adjustments | | | — | | | | 1 | | | | (13 | ) | | | 1 | | | | 1 | |
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Non-GAAP net income | | $ | 77 | | | $ | 393 | | | $ | 77 | | | $ | 25 | | | $ | 98 | |
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Non-GAAP net income margin - % of net revenue | | | 15 | % | | | 27 | % | | | 13 | % | | | 6 | % | | | 14 | % |
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GAAP diluted earnings per share | | $ | 0.25 | | | $ | 1.26 | | | $ | 0.29 | | | $ | 0.08 | | | $ | 0.31 | |
Non-GAAP diluted earnings per share | | $ | 0.25 | | | $ | 1.26 | | | $ | 0.25 | | | $ | 0.08 | | | $ | 0.31 | |
Number of shares used in diluted earnings per share computation | | | 308 | | | | 311 | | | | 313 | | | | 316 | | | | 316 | |
TRAILING TWELVE MONTH RESULTS | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Operating Income | | | | | | | | | | | | | | | | | | | | |
GAAP operating income | | $ | 503 | | | $ | 691 | | | $ | 776 | | | $ | 779 | | | $ | 802 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | |
Amortization | | | 5 | | | | 4 | | | | 3 | | | | 4 | | | | 3 | |
Restructuring charges | | | 15 | | | | 7 | | | | 9 | | | | 9 | | | | 9 | |
Asset impairment charges | | | 66 | | | | 64 | | | | — | | | | — | | | | — | |
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Total adjustments | | | 86 | | | | 75 | | | | 12 | | | | 13 | | | | 12 | |
Non-GAAP operating income | | $ | 589 | | | $ | 766 | | | $ | 788 | | | $ | 792 | | | $ | 814 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Non-GAAP operating income margin - % of net revenue | | | 23 | % | | | 27 | % | | | 27 | % | | | 26 | % | | | 25 | % |
Net Income | | | | | | | | | | | | | | | | | | | | |
GAAP net income | | $ | 354 | | | $ | 496 | | | $ | 577 | | | $ | 583 | | | $ | 604 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | |
Amortization | | | 5 | | | | 4 | | | | 3 | | | | 3 | | | | 4 | |
Restructuring charges | | | 15 | | | | 7 | | | | 10 | | | | 9 | | | | 9 | |
Asset impairment charges | | | 66 | | | | 64 | | | | — | | | | — | | | | — | |
Other-than-temporary impairment of investment in affiliates | | | 10 | | | | — | | | | — | | | | — | | | | — | |
Income taxes effect on the above items | | | (30 | ) | | | (22 | ) | | | (4 | ) | | | (3 | ) | | | (4 | ) |
Income tax adjustment | | | — | | | | — | | | | (20 | ) | | | (20 | ) | | | (20 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total adjustments | | | 66 | | | | 53 | | | | (11 | ) | | | (11 | ) | | | (11 | ) |
| | | | | |
Non-GAAP net income | | $ | 420 | | | $ | 549 | | | $ | 566 | | | $ | 572 | | | $ | 593 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Non-GAAP net income margin - % of net revenue | | | 16 | % | | | 19 | % | | | 19 | % | | | 19 | % | | | 18 | % |
| | | | | |
GAAP diluted earnings per share | | $ | 1.19 | | | $ | 1.60 | | | $ | 1.87 | | | $ | 1.88 | | | $ | 1.94 | |
Non-GAAP diluted earnings per share | | $ | 1.41 | | | $ | 1.77 | | | $ | 1.84 | | | $ | 1.84 | | | $ | 1.90 | |
7
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
($ in millions, except per share data, SKU count and Headcount)
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Q2
FY04
| | | Q3
FY04
| | | Q4
FY04
| | | Q1
FY05
| | | Q2
FY05
| | | YOY % Growth
| |
CONSOLIDATED FINANCIAL DATA | | | | | | | | | | | | | | | | | | | | | | | |
Net revenue | | | 530 | | | | 1,475 | | | | 598 | | | | 432 | | | | 716 | | | 35 | % |
Net revenue - trailing twelve months (“TTM”) | | | 2,580 | | | | 2,822 | | | | 2,957 | | | | 3,035 | | | | 3,221 | | | 25 | % |
| | | | | | |
Gross profit | | | 316 | | | | 962 | | | | 372 | | | | 255 | | | | 432 | | | 37 | % |
Gross margin - % of net revenue | | | 60 | % | | | 65 | % | | | 62 | % | | | 59 | % | | | 60 | % | | | |
Gross profit - TTM | | | 1,486 | | | | 1,780 | | | | 1,854 | | | | 1,906 | | | | 2,021 | | | 36 | % |
Gross margin - TTM% of net revenue | | | 58 | % | | | 63 | % | | | 63 | % | | | 63 | % | | | 63 | % | | | |
| | | | | | |
Operating income | | | 102 | | | | 558 | | | | 94 | | | | 25 | | | | 125 | | | 23 | % |
Operating income margin - % of net revenue | | | 19 | % | | | 38 | % | | | 16 | % | | | 6 | % | | | 17 | % | | | |
Operating income - TTM | | | 503 | | | | 691 | | | | 776 | | | | 779 | | | | 802 | | | 60 | % |
Operating income margin - TTM% of net revenue | | | 19 | % | | | 24 | % | | | 26 | % | | | 26 | % | | | 25 | % | | | |
| | | | | | |
Net income | | | 77 | | | | 392 | | | | 90 | | | | 24 | | | | 97 | | | 27 | % |
Diluted earnings per share | | $ | 0.25 | | | $ | 1.26 | | | $ | 0.29 | | | $ | 0.08 | | | $ | 0.31 | | | 24 | % |
Net income - TTM | | | 354 | | | | 496 | | | | 577 | | | | 583 | | | | 604 | | | 70 | % |
Diluted earnings per share - TTM | | $ | 1.19 | | | $ | 1.60 | | | $ | 1.87 | | | $ | 1.88 | | | $ | 1.94 | | | 63 | % |
| | | | | | |
Non-GAAP operating income(a) | | | 103 | | | | 559 | | | | 104 | | | | 26 | | | | 125 | | | 22 | % |
Non-GAAP operating income margin - % of net revenue | | | 19 | % | | | 38 | % | | | 17 | % | | | 6 | % | | | 18 | % | | | |
Non-GAAP operating income - TTM(a) | | | 589 | | | | 766 | | | | 788 | | | | 792 | | | | 814 | | | 38 | % |
Non-GAAP operating income margin - TTM% of net revenue | | | 23 | % | | | 27 | % | | | 27 | % | | | 26 | % | | | 25 | % | | | |
| | | | | | |
Non-GAAP net income(a) | | | 77 | | | | 393 | | | | 77 | | | | 25 | | | | 98 | | | 27 | % |
Non-GAAP diluted earnings per share(a) | | $ | 0.25 | | | $ | 1.26 | | | $ | 0.25 | | | $ | 0.08 | | | $ | 0.31 | | | 24 | % |
Non-GAAP net income - TTM(a) | | | 420 | | | | 549 | | | | 566 | | | | 572 | | | | 593 | | | 41 | % |
Non-GAAP diluted earnings per share - TTM(a) | | $ | 1.41 | | | $ | 1.77 | | | $ | 1.84 | | | $ | 1.84 | | | $ | 1.90 | | | 35 | % |
| | | | | | |
CASH FLOW DATA | | | | | | | | | | | | | | | | | | | | | | | |
Operating cash flow | | | 63 | | | | 79 | | | | 562 | | | | (66 | ) | | | 89 | | | 42 | % |
Operating cash flow - TTM | | | 657 | | | | 538 | | | | 669 | | | | 638 | | | | 664 | | | 1 | % |
| | | | | | |
Capital expenditures | | | 17 | | | | 27 | | | | 34 | | | | 26 | | | | 19 | | | 17 | % |
Capital expenditures - TTM | | | 65 | | | | 81 | | | | 90 | | | | 104 | | | | 106 | | | 65 | % |
| | | | | | |
BALANCE SHEET DATA | | | | | | | | | | | | | | | | | | | | | | | |
Cash, cash equivalents and short term investments | | | 1,734 | | | | 1,825 | | | | 2,414 | | | | 2,369 | | | | 2,490 | | | 44 | % |
Marketable equity securities | | | 1 | | | | 2 | | | | 1 | | | | 2 | | | | — | | | (66 | )% |
Receivables, net | | | 203 | | | | 837 | | | | 212 | | | | 170 | | | | 379 | | | 87 | % |
Inventories | | | 39 | | | | 65 | | | | 55 | | | | 53 | | | | 79 | | | 102 | % |
| | | | | | |
OTHER | | | | | | | | | | | | | | | | | | | | | | | |
Employees | | | 4,180 | | | | 4,528 | | | | 4,773 | | | | 4,813 | | | | 5,104 | | | 22 | % |
Diluted weighted-average shares | | | 308 | | | | 311 | | | | 313 | | | | 316 | | | | 316 | | | | |
| (a) | Please see attached Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations. |
8
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
($ in millions, except per share data, SKU count and Headcount)
| | | | | | | | | | | | | | | | | | |
| | | Q2
FY04
| | | Q3
FY04
| | | Q4
FY04
| | | Q1
FY05
| | | Q2
FY05
| | | YOY % Growth
| |
GEOGRAPHIC REVENUE MIX | | | | | | | | | | | | | | | | | | |
North America Revenue | | 358 | | | 753 | | | 299 | | | 211 | | | 473 | | | 32 | % |
Revenue outside North America | | 172 | | | 722 | | | 299 | | | 221 | | | 243 | | | 41 | % |
| | | | | | |
Europe Revenue | | 145 | | | 658 | | | 249 | | | 190 | | | 210 | | | 45 | % |
Asia Pacific Revenue | | 18 | | | 43 | | | 22 | | | 18 | | | 21 | | | 21 | % |
Japan Revenue | | 9 | | | 21 | | | 28 | | | 13 | | | 12 | | | 29 | % |
| | |
|
| |
|
| |
|
| |
|
| |
|
| | | |
Net Revenue | | 530 | | | 1,475 | | | 598 | | | 432 | | | 716 | | | 35 | % |
| | | | | | |
GEOGRAPHIC REVENUE MIX - as a % of Net Revenue | | | | | | | | | | | | | | | | | | |
North America Revenue | | 68 | % | | 51 | % | | 50 | % | | 49 | % | | 66 | % | | | |
Revenue outside North America | | 32 | % | | 49 | % | | 50 | % | | 51 | % | | 34 | % | | | |
| | | | | | |
Europe Revenue | | 27 | % | | 45 | % | | 41 | % | | 44 | % | | 29 | % | | | |
Asia Pacific Revenue | | 3 | % | | 3 | % | | 4 | % | | 4 | % | | 3 | % | | | |
Japan Revenue | | 2 | % | | 1 | % | | 5 | % | | 3 | % | | 2 | % | | | |
| | |
|
| |
|
| |
|
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|
| |
|
| | | |
Net Revenue | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | |
| | | | | | |
PLATFORM REVENUE MIX | | | | | | | | | | | | | | | | | | |
Sony PlayStation 2 | | 221 | | | 732 | | | 244 | | | 162 | | | 312 | | | 41 | % |
PC | | 93 | | | 220 | | | 76 | | | 67 | | | 141 | | | 51 | % |
Xbox | | 69 | | | 205 | | | 80 | | | 57 | | | 142 | | | 107 | % |
Nintendo GameCube | | 25 | | | 104 | | | 50 | | | 26 | | | 38 | | | 56 | % |
Game Boy Advance | | 4 | | | 57 | | | 14 | | | 18 | | | 10 | | | 165 | % |
Co-publishing and Distribution | | 92 | | | 122 | | | 112 | | | 67 | | | 49 | | | (47 | )% |
Subscription Services | | 11 | | | 12 | | | 13 | | | 13 | | | 13 | | | 13 | % |
Advertising, Programming, Licensing and Other | | 15 | | | 23 | | | 9 | | | 22 | | | 11 | | | (24 | )% |
| | |
|
| |
|
| |
|
| |
|
| |
|
| | | |
Net Revenue | | 530 | | | 1,475 | | | 598 | | | 432 | | | 716 | | | 35 | % |
| | | | | | |
PLATFORM REVENUE MIX - as a % of Net Revenue | | | | | | | | | | | | | | | | | | |
| | | | | | |
Sony PlayStation 2 | | 42 | % | | 49 | % | | 41 | % | | 38 | % | | 43 | % | | | |
PC | | 18 | % | | 15 | % | | 13 | % | | 15 | % | | 20 | % | | | |
Xbox | | 13 | % | | 14 | % | | 13 | % | | 13 | % | | 20 | % | | | |
Nintendo GameCube | | 5 | % | | 7 | % | | 9 | % | | 6 | % | | 5 | % | | | |
Game Boy Advance | | 1 | % | | 4 | % | | 2 | % | | 4 | % | | 1 | % | | | |
Co-publishing and Distribution | | 17 | % | | 8 | % | | 19 | % | | 16 | % | | 7 | % | | | |
Subscription Services | | 2 | % | | 1 | % | | 2 | % | | 3 | % | | 2 | % | | | |
Advertising, Programming, Licensing and Other | | 2 | % | | 2 | % | | 1 | % | | 5 | % | | 2 | % | | | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| | | |
Net Revenue | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | |
| | | | | | |
Platform SKU Release Mix | | | | | | | | | | | | | | | | | | |
| | | | | | |
Sony PlayStation 2 | | 6 | | | 11 | | | 4 | | | 3 | | | 9 | | | 50 | % |
PC | | 10 | | | 7 | | | 1 | | | 3 | | | 6 | | | (40 | )% |
Xbox | | 5 | | | 11 | | | 3 | | | 3 | | | 8 | | | 60 | % |
Nintendo GameCube | | 4 | | | 9 | | | 3 | | | 1 | | | 7 | | | 75 | % |
Game Boy Advance | | 1 | | | 9 | | | — | | | 1 | | | 2 | | | 100 | % |
Online and Other | | 2 | | | 1 | | | — | | | — | | | 1 | | | (50 | )% |
| | |
|
| |
|
| |
|
| |
|
| |
|
| | | |
Total SKUs | | 28 | | | 48 | | | 11 | | | 11 | | | 33 | | | 18 | % |
| | |
|
| |
|
| |
|
| |
|
| |
|
| | | |
9
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Fact Sheet for Q2 Fiscal 2005
| | |
Q2 Product Releases
| | Platform
|
• Def Jam® Fight For NY™ | | PlayStation®2 |
| |
• Madden NFL 2005 | | PlayStation 2 |
| |
• Madden NFL 2005 Special Collector’s Edition | | PlayStation 2 |
| |
• NASCAR® 2005: Chase For The Cup™ | | PlayStation 2 |
| |
• NCAA® Football 2005 | | PlayStation 2 |
| |
• NHL® 2005 | | PlayStation 2 |
| |
• Tiger Woods PGA TOUR® 2005 | | PlayStation 2 |
| |
• Burnout™ 3: Takedown™ | | PlayStation 2 |
| |
• Catwoman™ | | PlayStation 2 |
| |
• Madden NFL 2005 | | PlayStation® |
| |
• Def Jam Fight For NY | | Xbox® |
| |
• Madden NFL 2005 | | Xbox |
| |
• Nascar 2005: Chase For The Cup | | Xbox |
| |
• NCAA Football 2005 | | Xbox |
| |
• NHL 2005 | | Xbox |
| |
• Tiger Woods PGA TOUR 2005 | | Xbox |
| |
• Burnout 3: Takedown | | Xbox |
| |
• Catwoman | | Xbox |
| |
• Def Jam Fight For NY | | Nintendo GameCube™ |
| |
• Madden NFL 2005 | | Nintendo GameCube |
| |
• Nascar 2005: Chase For The Cup | | Nintendo GameCube |
| |
• NCAA Football 2005 | | Nintendo GameCube |
| |
• NHL 2005 | | Nintendo GameCube |
| |
• Tiger Woods PGA TOUR 2005 | | Nintendo GameCube |
| |
• Catwoman | | Nintendo GameCube |
| |
• Madden NFL 2005 | | PC |
| |
• NHL 2005 | | PC |
| |
• The Sims™ 2 | | PC |
| |
• The Sims 2 Special Edition DVD | | PC |
| |
• Tiger Woods PGA TOUR 2005 | | PC |
| |
• Catwoman | | PC |
| |
• Madden NFL 2005 | | Game Boy® Advance |
| |
• Catwoman | | Game Boy Advance |
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10
