Exhibit 99.1
EA REPORTS FIRST QUARTER FISCAL 2007 RESULTS
Net Revenue up 13 Percent Driven by FIFA World Cup
NCAA Football Sell-Through Up More Than 10 Percent Year-Over-Year
REDWOOD CITY, CA – August 1, 2006 – Electronic Arts (NASDAQ: ERTS) today announced preliminary financial results for its first fiscal quarter ended June 30, 2006.
First Quarter Results
Net revenue for the first quarter was $413 million, up 13 percent as compared with $365 million for the prior year. Sales were driven primarily by2006 FIFA World Cup™, Battlefield 2: Modern Combat™, Need for Speed™ Most Wanted, The Sims™ 2and EA SPORTS™ Fight Night Round 3.
Gross profit for the quarter was $245 million up 14 percent year-over-year. This increase was more than offset by the expensing of stock-based compensation. The Company adopted Statement of Financial Accounting Standards (SFAS) No. 123R “Share-Based Payment” in the quarter.
Net loss for the quarter was $81 million as compared with $58 million for the prior year. Diluted loss per share was $0.26 as compared with $0.19.
Non-GAAP net loss was $38 million as compared with $55 million a year ago. Non-GAAP diluted loss per share was $0.12 as compared with $0.18. (Please see Non-GAAP Financial Measures and reconciliation information included in this release.)
Trailing twelve month operating cash flow was $589 million as compared with $669 million a year ago. The Company ended the quarter with cash, cash equivalents and marketable securities of $2.4 billion.
“We’re pleased to be the leading publisher on the Xbox 360,” said Larry Probst, Chairman and Chief Executive Officer. “We are on schedule with strong support for the launch of PlayStation 3 and we have increased our development efforts for the Nintendo DS and Wii.”
“We look forward to our slate of fall launches and the excitement surrounding next-generation software,” said Warren Jenson, Chief Financial and Administrative Officer. “While the risks of this technology transition remain very real – our franchises are well-positioned for the opportunities ahead.”
Highlights (comparisons are to the quarter ended June 30, 2005)
| • | Net revenue: North America – up 14 percent to $209 million; Europe – up 17 percent to $169 million; Asia – down five percent to $35 million. Movements in foreign currency rates negatively impacted net revenue by $10 million, or three percent. |
| • | Cellular handset net revenue was $33 million– up $32 million. |
| • | 2006 FIFA World Cup was the numberone title in the UK and Germany across all platforms for the months of May and June. |
| • | SPORE™ won three Game Critic Awards at E3– Best Original Game, Best PC Game and Best Simulation Game. |
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| • | Life-to-date, EA is the number one publisher on the Xbox 360™video game and entertainment system in both North America and Europe. |
| • | EA extended its exclusive relationship with the PGA TOUR® and its non-exclusive licenses with the NHL® and NHL Players Association. |
| • | EA completed its acquisition of Mythic Entertainment, the critically acclaimed developer of massively multiplayer online games, in July. |
Business Outlook
The following forward-looking statements, as well as those made above, reflect expectations as of August 1, 2006. Results may be materially different and are affected by many factors, such as: the timely release of next-generation hardware and the ability of console manufacturers to produce an adequate supply of consoles to meet demand, development delays on EA’s products, changes in foreign exchange rates, the overall global economy, the popular appeal of EA’s products, competition in the industry, EA’s effective tax rate and other factors detailed in this release and in EA’s annual and quarterly SEC filings. For example, EA’s expectations for the fiscal year ending March 31, 2007 are dependent on the successful launch of the PlayStation®3 computer entertainment system and the Wii™ in the 2006 holiday season.
Fiscal Second Quarter Expectations – Ending September 30, 2006
| • | Net revenue is expected to be between $635 and $685 million. |
| • | GAAP diluted loss per share is expected to be between ($0.28) and ($0.22). |
| • | Non-GAAP diluted loss per share is expected to be roughly breakeven. Expected non-GAAP diluted loss per share excludes the following items from expected GAAP diluted loss per share: approximately $0.10 of estimated stock-based compensation, approximately $0.04 of amortization of intangible assets, approximately $0.02 of estimated restructuring charges related to the reorganization and establishment of an International Publishing Headquarters in Geneva and approximately $0.09 related to our acquisitions of Mythic Entertainment and Digital Illusions. |
Fiscal Year Expectations – Ending March 31, 2007
| • | Net revenue is expected to be between $2.8 and $3.0 billion. |
| • | GAAP diluted loss per share is expected to be between ($0.30) and breakeven. |
| • | Non-GAAP diluted earnings per share are expected to be between $0.35 and $0.65. Expected non-GAAP diluted earnings per share excludes the following items from expected GAAP diluted loss per share: approximately $0.31 of estimated stock-based compensation, approximately $0.15 of amortization of intangible assets, approximately $0.05 of estimated restructuring charges related to the reorganization and establishment of an International Publishing Headquarters in Geneva and approximately $0.14 related to our acquisitions of Mythic Entertainment and Digital Illusions. |
Non-GAAP Financial Measures
To supplement the Company’s unaudited condensed consolidated financial statements presented in accordance with GAAP, Electronic Arts uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures used by
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Electronic Arts include non-GAAP operating income (loss), non-GAAP net income (loss) and historical and estimated non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures exclude the following items from the Company’s statement of operations:
| • | Acquired in-process technology |
| • | Amortization of intangibles |
| • | Employee stock-based compensation |
| • | Restructuring charges |
| • | Certain litigation expense |
| • | Income tax adjustments (consisting of the income tax effect of the items listed above and one-time income tax adjustments) |
In addition, Electronic Arts may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.
Electronic Arts believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding the Company’s performance by excluding certain items that may not be indicative of the Company’s core business, operating results or future outlook. Electronic Arts’ management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing the Company’s operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of the Company’s performance to prior periods. Electronic Arts further believes that where the adjustments used in calculating non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share are based on specific, identifiable charges that impact different line items in the Company’s statements of operations (including cost of goods sold, marketing and sales, general and administrative, research and development expense and income tax expense), it is useful for investors to understand how these specific line items are affected by these adjustments.
In the financial tables below, Electronic Arts has provided a reconciliation of the most comparable GAAP financial measure to each of the historical non-GAAP financial measures used in this press release.
Conference Call
Electronic Arts will host a conference call today at 2:00 pm PT (5:00 pm ET) to review its results for the first quarter of fiscal 2007 and to discuss its outlook for the future. During the course of the call, Electronic Arts may also disclose material developments affecting its business and/or financial performance.Listeners may access the conference call live through the following dial-in number (800) 500-0311, access code 220497, or a webcast:http://investor.ea.com.
A dial-in replay of the conference call will be provided until August 8, 2006 at (719) 457-0820, access code 220497. The webcast archive of the conference call will be available for one year athttp://investor.ea.com.
Some statements set forth in this release, including the estimates under the heading “Business Outlook,” contain forward-looking statements that are subject to change. Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-
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looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: the timely release of next-generation hardware; the availability of an adequate supply of current-generation and next-generation hardware units (including the Microsoft Xbox 360, Sony PlayStation 3 and Nintendo Wii); the Company’s ability to predict consumer preferences among competing hardware platforms; consumer spending trends; the seasonal and cyclical nature of the interactive game segment; timely development and release of Electronic Arts’ products; competition in the interactive entertainment industry; the Company’s ability to manage expenses during fiscal year 2007; the Company’s ability to attract and retain key personnel; changes in the Company’s effective tax rates; adoption of new accounting regulations and standards; potential regulation of the Company’s products in key territories; developments in the law regarding protection of the Company’s products; fluctuations in foreign exchange rates; the Company’s ability to secure licenses to valuable entertainment properties on favorable terms and other factors described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2006. These forward-looking statements speak only as of August 1, 2006. Electronic Arts assumes no obligation and does not intend to update these forward-looking statements, including those made under the “Business Outlook” heading. In addition, the financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2006. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended June 30, 2006.
About Electronic Arts
Electronic Arts Inc. (EA), headquartered in Redwood City, California, is the world’s leading interactive entertainment software company. Founded in 1982, the company develops, publishes, and distributes interactive software worldwide for videogame systems, personal computers, cellular handsets and the Internet. Electronic Arts markets its products under four brand names: EA SPORTS™, EA™, EA SPORTS BIG™ and POGO™. In fiscal 2006, EA posted revenue of $2.95 billion and had 27 titles that sold more than one million copies. EA’s homepage and online game site iswww.ea.com. More information about EA’s products and full text of press releases can be found on the Internet athttp://info.ea.com.
All trademarks are the property of their respective owners.
For additional information, please contact:
Tricia Gugler | Jeff Brown | |
Director, Investor Relations | Vice President, Corporate Communications | |
650-628-7327 | 650-628-7922 |
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ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in millions, except per share data)
| Three Months Ended June 30, | ||||||||
| 2006 | 2005 | |||||||
Net revenue | $ | 413 | $ | 365 | ||||
Cost of goods sold | 168 | 151 | ||||||
Gross profit | 245 | 214 | ||||||
Operating expenses: | ||||||||
Marketing and sales | 77 | 75 | ||||||
General and administrative | 59 | 51 | ||||||
Research and development | 216 | 183 | ||||||
Amortization of intangibles | 6 | 1 | ||||||
Restructuring charges | 6 | — | ||||||
Total operating expenses | 364 | 310 | ||||||
Operating loss | (119 | ) | (96 | ) | ||||
Interest and other income, net | 21 | 17 | ||||||
Loss before benefit from income taxes and minority interest | (98 | ) | (79 | ) | ||||
Benefit from income taxes | (17 | ) | (23 | ) | ||||
Loss before minority interest | (81 | ) | (56 | ) | ||||
Minority interest | — | (2 | ) | |||||
Net loss | $ | (81 | ) | $ | (58 | ) | ||
Loss per share: | ||||||||
Basic | $ | (0.26 | ) | $ | (0.19 | ) | ||
Diluted | $ | (0.26 | ) | $ | (0.19 | ) | ||
Number of shares used in computation: | ||||||||
Basic | 306 | 308 | ||||||
Diluted | 306 | 308 | ||||||
Non-GAAP Results (in millions, except per share data)
The following table reconciles the Company’s net loss and diluted loss per share as presented in its Unaudited Condensed Consolidated Statements of Operations as prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) with its non-GAAP net loss and non-GAAP loss per share. The Company’s non-GAAP net loss and non-GAAP loss per share exclude acquired in-process technology, amortization of intangibles, stock-based compensation, restructuring charges, and certain litigation expense. In addition, the Company’s non-GAAP net loss and non-GAAP loss per share also exclude income tax adjustments consisting of the income tax expense associated with the foregoing excluded items and the impact of one-time income tax adjustments.
| Three Months Ended June 30, | ||||||||
| 2006 | 2005 | |||||||
Net loss | $ | (81 | ) | $ | (58 | ) | ||
Acquired in-process technology | — | 1 | ||||||
Amortization of intangibles | 6 | 1 | ||||||
COGS amortization of intangibles | 6 | 2 | ||||||
Stock-based compensation | 37 | — | ||||||
Restructuring charges | 6 | — | ||||||
Income tax adjustments | (12 | ) | (1 | ) | ||||
Non-GAAP net loss | $ | (38 | ) | $ | (55 | ) | ||
Non-GAAP diluted loss per share | $ | (0.12 | ) | $ | (0.18 | ) | ||
Number of shares used in non-GAAP diluted loss per share computation | 306 | 308 | ||||||
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in millions)
| June 30, 2006 | March 31, 2006 (a) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash, cash equivalents and short-term investments | $ | 2,231 | $ | 2,272 | ||||
Marketable equity securities | 166 | 160 | ||||||
Receivables, net of allowances of $184 million and $232 million, respectively | 41 | 199 | ||||||
Inventories | 59 | 61 | ||||||
Deferred income taxes | 86 | 86 | ||||||
Other current assets | 231 | 234 | ||||||
Total current assets | 2,814 | 3,012 | ||||||
Property and equipment, net | 418 | 392 | ||||||
Investment in affiliates | 11 | 11 | ||||||
Goodwill | 646 | 647 | ||||||
Other intangibles, net | 220 | 232 | ||||||
Other assets | 84 | 92 | ||||||
Total Assets | $ | 4,193 | $ | 4,386 | ||||
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 114 | $ | 163 | ||||
Accrued and other liabilities | 561 | 706 | ||||||
Total current liabilities | 675 | 869 | ||||||
Deferred income taxes | 18 | 29 | ||||||
Other liabilities | 58 | 68 | ||||||
Total liabilities | 751 | 966 | ||||||
Minority interest | 13 | 12 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 3 | 3 | ||||||
Paid-in capital | 1,159 | 1,081 | ||||||
Retained earnings | 2,160 | 2,241 | ||||||
Accumulated other comprehensive income | 107 | 83 | ||||||
Total stockholders’ equity | 3,429 | 3,408 | ||||||
Total Liabilities, Minority Interest and Stockholders’ Equity | $ | 4,193 | $ | 4,386 | ||||
| (a) | Derived from audited financial statements. |
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
| Three Months Ended June 30, | ||||||||
| 2006 | 2005 | |||||||
OPERATING ACTIVITIES | ||||||||
Net loss | $ | (81 | ) | $ | (58 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 35 | 23 | ||||||
Stock-based compensation | 37 | — | ||||||
Minority interest | — | 2 | ||||||
Realized net losses on investments and sale of property and equipment | — | 1 | ||||||
Tax benefit from exercise of stock options | — | 5 | ||||||
Change in assets and liabilities: | ||||||||
Receivables, net | 159 | 142 | ||||||
Inventories | 3 | 1 | ||||||
Other assets | 12 | (12 | ) | |||||
Accounts payable | (50 | ) | (25 | ) | ||||
Accrued and other liabilities | (153 | ) | (110 | ) | ||||
Net cash used in operating activities | (38 | ) | (31 | ) | ||||
INVESTING ACTIVITIES | ||||||||
Capital expenditures | (38 | ) | (33 | ) | ||||
Proceeds from sale of marketable equity securities | — | 4 | ||||||
Proceeds from maturities and sales of short-term investments | 196 | 134 | ||||||
Purchase of short-term investments | (149 | ) | (138 | ) | ||||
Acquisition of subsidiary, net of cash acquired | — | (3 | ) | |||||
Other investing activities | 2 | (1 | ) | |||||
Net cash provided by (used in) investing activities | 11 | (37 | ) | |||||
FINANCING ACTIVITIES | ||||||||
Proceeds from sale of common stock throughemployee stock plans and other plans | 37 | 19 | ||||||
Excess tax benefit from stock-based compensation | 4 | — | ||||||
Repayment of note assumed in connection with acquisition | (14 | ) | — | |||||
Repurchase and retirement of common stock | — | (337 | ) | |||||
Net cash provided by (used in) financing activities | 27 | (318 | ) | |||||
Effect of foreign exchange on cash and cash equivalents | 6 | (10 | ) | |||||
Increase (decrease) in cash and cash equivalents | 6 | (396 | ) | |||||
Beginning cash and cash equivalents | 1,242 | 1,270 | ||||||
Ending cash and cash equivalents | 1,248 | 874 | ||||||
Short-term investments | 983 | 1,699 | ||||||
Ending cash, cash equivalents and short-term investments | $ | 2,231 | $ | 2,573 | ||||
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and Headcount)
Q1 FY06 | Q2 FY06 | Q3 FY06 | Q4 FY06 | Q1 FY07 | YOY % Change | ||||||||||||||||
CONSOLIDATED FINANCIAL DATA | |||||||||||||||||||||
Net revenue | 365 | 675 | 1,270 | 641 | 413 | 13% | |||||||||||||||
Net revenue - trailing twelve months (“TTM”) | 3,062 | 3,021 | 2,863 | 2,951 | 2,999 | (2)% | |||||||||||||||
Gross profit | 214 | 391 | 768 | 397 | 245 | 14% | |||||||||||||||
Gross margin - % of net revenue | 59% | 58% | 60% | 62% | 59% | ||||||||||||||||
Gross profit - TTM | 1,891 | 1,850 | 1,693 | 1,770 | 1,801 | (5)% | |||||||||||||||
Gross margin - TTM % of net revenue | 62% | 61% | 59% | 60% | 60% | ||||||||||||||||
Operating income (loss) | (96) | 49 | 347 | 25 | (119) | (24)% | |||||||||||||||
Operating income (loss) margin - % of net revenue | (26)% | 7% | 27% | 4% | (29)% | ||||||||||||||||
Operating income - TTM | 548 | 472 | 300 | 325 | 302 | (45)% | |||||||||||||||
Operating income margin - TTM % ofnet revenue | 18% | 16% | 10% | 11% | 10% | ||||||||||||||||
Net income (loss) | (58) | 51 | 259 | (16) | (81) | (40)% | |||||||||||||||
Diluted earnings (loss) per share | $ | (0.19) | $ | 0.16 | $ | 0.83 | $ | (0.05) | $ | (0.26) | (37)% | ||||||||||
Net income (loss) - TTM | 422 | 376 | 260 | 236 | 213 | (50)% | |||||||||||||||
Diluted earnings per share - TTM | $ | 1.32 | $ | 1.17 | $ | 0.82 | $ | 0.75 | $ | 0.68 | (48)% | ||||||||||
Non-GAAP operating income (loss)(a) | (92) | 54 | 359 | 58 | (64) | 30% | |||||||||||||||
Non-GAAP operating income (loss) margin - % of net revenue | (25)% | 8% | 28% | 9% | (15)% | ||||||||||||||||
Non-GAAP operating income - TTM (a) | 599 | 528 | 352 | 378 | 407 | (32)% | |||||||||||||||
Non-GAAP operating income margin - TTM % of net revenue | 20% | 17% | 12% | 13% | 14% | ||||||||||||||||
Non-GAAP net income (loss)(a) | (55) | 46 | 268 | 43 | (38) | 31% | |||||||||||||||
Non-GAAP diluted earnings (loss) per share(a) | $ | (0.18) | $ | 0.15 | $ | 0.86 | $ | 0.14 | $ | (0.12) | 33% | ||||||||||
Non-GAAP net income - TTM(a) | 464 | 412 | 289 | 301 | 319 | (31)% | |||||||||||||||
Non-GAAP diluted earnings per share - TTM(a) | $ | 1.45 | $ | 1.29 | $ | 0.92 | $ | 0.96 | $ | 1.03 | (29)% | ||||||||||
CASH FLOW DATA | |||||||||||||||||||||
Operating cash flow | (31) | 12 | 278 | 337 | (38) | (23)% | |||||||||||||||
Operating cash flow - TTM | 669 | 592 | 733 | 596 | 589 | (12)% | |||||||||||||||
Capital expenditures | 33 | 23 | 31 | 36 | 38 | 15% | |||||||||||||||
Capital expenditures - TTM | 133 | 137 | 131 | 123 | 128 | (4)% | |||||||||||||||
BALANCE SHEET DATA | |||||||||||||||||||||
Cash, cash equivalents and short term investments | 2,573 | 2,230 | 2,556 | 2,272 | 2,231 | (13)% | |||||||||||||||
Marketable equity securities | 176 | 182 | 167 | 160 | 166 | (6)% | |||||||||||||||
Receivables, net | 167 | 328 | 567 | 199 | 41 | (75)% | |||||||||||||||
Inventories | 66 | 74 | 76 | 61 | 59 | (11)% | |||||||||||||||
STOCK-BASED COMPENSATION | |||||||||||||||||||||
Cost of goods sold | — | — | — | — | — | ||||||||||||||||
Marketing and sales | — | — | — | — | 5 | ||||||||||||||||
General and administrative | — | — | — | 1 | 11 | ||||||||||||||||
Research and development | — | 1 | — | 1 | 21 | ||||||||||||||||
Total Stock-Based Compensation | — | 1 | — | 2 | 37 | ||||||||||||||||
STOCK-BASED COMPENSATION - as a % of Net Revenue | |||||||||||||||||||||
Cost of goods sold | — | — | — | — | — | ||||||||||||||||
Marketing and sales | — | — | — | — | 1% | ||||||||||||||||
General and administrative | — | — | — | — | 3% | ||||||||||||||||
Research and development | — | — | — | — | 5% | ||||||||||||||||
Total Stock-Based Compensation | — | — | — | — | 9% | ||||||||||||||||
OTHER | |||||||||||||||||||||
Employees | 6,365 | 6,608 | 6,819 | 7,175 | 7,116 | 12% | |||||||||||||||
Diluted weighted-average shares | 308 | 314 | 311 | 304 | 306 | ||||||||||||||||
| (a) | Please see Unaudited Reconciliation of GAAP to Non-GAAP Results on the following page. |
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Reconciliation of GAAP to Non-GAAP Results
(in millions, except per share data)
The following tables reconcile the Company’s operating income (loss), net income (loss) and diluted earnings (loss) per share as presented in its Unaudited Condensed Consolidated Statements of Operations as prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) with its non-GAAP operating income (loss), non-GAP net income (loss), and non-GAAP earnings (loss) per share. The Company’s non-GAAP operating income (loss), net income (loss) and non-GAAP earnings (loss) per share exclude acquired in-process technology, amortization of intangibles, stock-based compensation, restructuring charges, and certain litigation expense. In addition, the Company’s non-GAAP net income (loss) and non-GAAP earnings (loss) per share also exclude income tax adjustments consisting of the income tax expense associated with the foregoing excluded items and the impact of one-time income tax adjustments.
| Q1 FY06 | Q2 FY06 | Q3 FY06 | Q4 FY06 | Q1 FY07 | YOY % Change | ||||||||||||
QUARTERLY RECONCILIATION OF RESULTS | |||||||||||||||||
GAAP operating income (loss) | $ | (96) | $ | 49 | $ | 347 | $ | 25 | $ | (119) | (24)% | ||||||
Acquired-in-process technology | 1 | — | — | 7 | — | ||||||||||||
Amortization of intangibles | 1 | 1 | 1 | 4 | 6 | ||||||||||||
Certain litigation expense | — | 1 | — | (1) | — | ||||||||||||
COGS amortization of intangibles | 2 | 2 | 2 | 4 | 6 | ||||||||||||
Stock-based compensation | — | 1 | — | 2 | 37 | ||||||||||||
Restructuring charges | — | — | 9 | 17 | 6 | ||||||||||||
Non-GAAP operating income (loss) | $ | (92) | $ | 54 | $ | 359 | $ | 58 | $ | (64) | 30% | ||||||
Non-GAAP operating income (loss) margin - % of net revenue | (25)% | 8% | 28% | 9% | (15)% | ||||||||||||
GAAP net income (loss) | $ | (58) | $ | 51 | $ | 259 | $ | (16) | $ | (81) | (40)% | ||||||
Acquired-in-process technology | 1 | — | — | 7 | — | ||||||||||||
Amortization of intangibles | 1 | 1 | 1 | 4 | 6 | ||||||||||||
Certain litigation expense | — | 1 | — | (1) | — | ||||||||||||
COGS amortization of intangibles | 2 | 2 | 2 | 4 | 6 | ||||||||||||
Stock-based compensation | — | 1 | — | 2 | 37 | ||||||||||||
Restructuring charges | — | — | 9 | 17 | 6 | ||||||||||||
Income tax adjustments | (1) | (10) | (3) | 26 | (12) | ||||||||||||
Non-GAAP net income (loss) | $ | (55) | $ | 46 | $ | 268 | $ | 43 | $ | (38) | 31% | ||||||
Non-GAAP net income (loss) margin - % of net revenue | (15)% | 7% | 21% | 7% | (9)% | ||||||||||||
GAAP diluted earnings (loss) per share | $ | (0.19) | $ | 0.16 | $ | 0.83 | $ | (0.05) | $ | (0.26) | (37)% | ||||||
Non-GAAP diluted earnings (loss) per share | $ | (0.18) | $ | 0.15 | $ | 0.86 | $ | 0.14 | $ | (0.12) | 33% | ||||||
Shares used in non-GAAP diluted earnings (loss) per share computation | 308 | 314 | 311 | 312 | 306 | ||||||||||||
TRAILING TWELVE MONTH RECONCILIATION OF RESULTS | |||||||||||||||||
GAAP operating income | $ | 548 | $ | 472 | $ | 300 | $ | 325 | $ | 302 | (45)% | ||||||
Acquired-in-process technology | 15 | 15 | 5 | 8 | 7 | ||||||||||||
Amortization of intangibles | 3 | 4 | 4 | 7 | 12 | ||||||||||||
Certain litigation expense | 21 | 22 | 22 | — | — | ||||||||||||
COGS amortization of intangibles | 5 | 7 | 8 | 9 | 14 | ||||||||||||
Stock-based compensation | 6 | 7 | 3 | 3 | 40 | ||||||||||||
Restructuring charges | 1 | 1 | 10 | 26 | 32 | ||||||||||||
Non-GAAP operating income | $ | 599 | $ | 528 | $ | 352 | $ | 378 | $ | 407 | (32)% | ||||||
Non-GAAP operating income margin - % of net revenue | 20% | 17% | 12% | 13% | 14% | ||||||||||||
GAAP net income | $ | 422 | $ | 376 | $ | 260 | $ | 236 | $ | 213 | (50)% | ||||||
Acquired-in-process technology | 14 | 14 | 4 | 8 | 7 | ||||||||||||
Amortization of intangibles | 4 | 4 | 4 | 7 | 12 | ||||||||||||
Certain litigation expense | 21 | 22 | 22 | — | — | ||||||||||||
COGS amortization of intangibles | 5 | 7 | 8 | 9 | 14 | ||||||||||||
Stock-based compensation | 6 | 7 | 3 | 3 | 40 | ||||||||||||
Restructuring charges | 1 | 1 | 10 | 26 | 32 | ||||||||||||
Income tax adjustments | (9) | (19) | (22) | 12 | 1 | ||||||||||||
Non-GAAP net income | $ | 464 | $ | 412 | $ | 289 | $ | 301 | $ | 319 | (31)% | ||||||
Non-GAAP net income margin - % of net revenue | 15% | 14% | 10% | 10% | 11% | ||||||||||||
GAAP diluted earnings per share | $ | 1.32 | $ | 1.17 | $ | 0.82 | $ | 0.75 | $ | 0.68 | (48)% | ||||||
Non-GAAP diluted earnings per share | $ | 1.45 | $ | 1.29 | $ | 0.92 | $ | 0.96 | $ | 1.03 | (29)% | ||||||
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and Headcount)
| Q1 FY06 | Q2 FY06 | Q3 FY06 | Q4 FY06 | Q1 FY07 | YOY % Change | ||||||||||||
GEOGRAPHIC REVENUE MIX | |||||||||||||||||
North America Revenue | 184 | 443 | 618 | 340 | 209 | 14% | |||||||||||
International Revenue | 181 | 232 | 652 | 301 | 204 | 13% | |||||||||||
Europe Revenue | 144 | 191 | 577 | 262 | 169 | 17% | |||||||||||
Asia Revenue | 37 | 41 | 75 | 39 | 35 | (5)% | |||||||||||
Net Revenue | 365 | 675 | 1,270 | 641 | 413 | 13% | |||||||||||
GEOGRAPHIC REVENUE MIX - as a % of Net Revenue | |||||||||||||||||
North America Revenue | 50 | % | 66 | % | 49 | % | 53 | % | 51 | % | |||||||
International Revenue | 50 | % | 34 | % | 51 | % | 47 | % | 49 | % | |||||||
Europe Revenue | 40 | % | 28 | % | 45 | % | 41 | % | 41 | % | |||||||
Asia Revenue | 10 | % | 6 | % | 6 | % | 6 | % | 8 | % | |||||||
Net Revenue | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
PLATFORM REVENUE MIX | |||||||||||||||||
Sony PlayStation 2 | 117 | 304 | 495 | 211 | 99 | (15)% | |||||||||||
Xbox 360 | — | — | 76 | 64 | 61 | N/M | |||||||||||
Xbox | 44 | 136 | 152 | 68 | 23 | (48)% | |||||||||||
Nintendo GameCube | 22 | 27 | 69 | 17 | 11 | (50)% | |||||||||||
Other consoles | — | — | 1 | — | — | N/M | |||||||||||
Total Consoles | 183 | 467 | 793 | 360 | 194 | 6% | |||||||||||
PC | 74 | 91 | 148 | 104 | 66 | (11)% | |||||||||||
PSP | 33 | 45 | 120 | 54 | 37 | 12% | |||||||||||
Nintendo DS | 12 | 8 | 36 | 11 | 8 | (33)% | |||||||||||
Game Boy Advance | 6 | 7 | 35 | 8 | 7 | 17% | |||||||||||
Cellular Handsets | 1 | 2 | 1 | 15 | 33 | N/M | |||||||||||
Total Mobility | 52 | 62 | 192 | 88 | 85 | 63% | |||||||||||
Co-publishing and Distribution | 30 | 32 | 99 | 52 | 42 | 40% | |||||||||||
Subscription Services | 15 | 14 | 16 | 17 | 16 | 7% | |||||||||||
Licensing, Advertising & Other | 11 | 9 | 22 | 20 | 10 | (9)% | |||||||||||
Total Internet Services, Licensing & Other | 26 | 23 | 38 | 37 | 26 | — | |||||||||||
Net Revenue | 365 | 675 | 1,270 | 641 | 413 | 13% | |||||||||||
PLATFORM REVENUE MIX - as a % of Net Revenue | |||||||||||||||||
Sony PlayStation 2 | 32 | % | 45 | % | 39 | % | 33 | % | 24 | % | |||||||
Xbox 360 | — | — | 6 | % | 10 | % | 15 | % | |||||||||
Xbox | 12 | % | 20 | % | 12 | % | 10 | % | 5 | % | |||||||
Nintendo GameCube | 6 | % | 4 | % | 5 | % | 3 | % | 3 | % | |||||||
Total Consoles | 50 | % | 69 | % | 62 | % | 56 | % | 47 | % | |||||||
PC | 21 | % | 14 | % | 12 | % | 16 | % | 16 | % | |||||||
PSP | 9 | % | 7 | % | 9 | % | 9 | % | 9 | % | |||||||
Nintendo DS | 3 | % | 1 | % | 3 | % | 2 | % | 2 | % | |||||||
Game Boy Advance | 2 | % | 1 | % | 3 | % | 1 | % | 2 | % | |||||||
Cellular Handsets | — | — | — | 2 | % | 8 | % | ||||||||||
Total Mobility | 14 | % | 9 | % | 15 | % | 14 | % | 21 | % | |||||||
Co-publishing and Distribution | 8 | % | 5 | % | 8 | % | 8 | % | 10 | % | |||||||
Subscription Services | 4 | % | 2 | % | 1 | % | 3 | % | 4 | % | |||||||
Licensing, Advertising & Other | 3 | % | 1 | % | 2 | % | 3 | % | 2 | % | |||||||
Total Internet Services, Licensing & Other | 7 | % | 3 | % | 3 | % | 6 | % | 6 | % | |||||||
Net Revenue | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Financial Information and Business Metrics
(in millions, except per share data, SKU count and Headcount)
| Q1 FY06 | Q2 FY06 | Q3 FY06 | Q4 FY06 | Q1 FY07 | YOY % Change | |||||||||||
Platform SKU Release Mix | ||||||||||||||||
Sony PlayStation 2 | 3 | 9 | 8 | 8 | 2 | (33)% | ||||||||||
Xbox 360 | — | — | 5 | 2 | 2 | N/M | ||||||||||
Xbox | 3 | 9 | 8 | 8 | 2 | (33)% | ||||||||||
Nintendo GameCube | 2 | 6 | 5 | 1 | 1 | (50)% | ||||||||||
Total Consoles | 8 | 24 | 26 | 19 | 7 | (13)% | ||||||||||
PC | 2 | 6 | 7 | 7 | 5 | 150% | ||||||||||
PSP | 3 | 3 | 8 | 2 | 2 | (33)% | ||||||||||
Nintendo DS | 2 | 2 | 5 | 1 | 1 | (50)% | ||||||||||
Game Boy Advance | 1 | 2 | 3 | — | 1 | — | ||||||||||
Total Mobility | 6 | 7 | 16 | 3 | 4 | (33)% | ||||||||||
Total SKUs | 16 | 37 | 49 | 29 | 16 | — | ||||||||||
ELECTRONIC ARTS INC. AND SUBSIDIARIES
Unaudited Supplemental Fact Sheet for Q1 Fiscal 2007
Q1 Product Releases | Platform | |
• 2006 FIFA World Cup™ | PlayStation®2 | |
• NFL Head Coach | PlayStation 2 | |
• 2006 FIFA World Cup | XBOX 360™ | |
• Battlefield 2: Modern Combat™ | XBOX 360 | |
• 2006 FIFA World Cup | Xbox® | |
• NFL Head Coach | Xbox | |
• 2006 FIFA World Cup | Nintendo GameCube™ | |
• 2006 FIFA World Cup | PC | |
• Battlefield 2: Armored Fury™ | PC | |
• Battlefield 2™ Deluxe Edition | PC | |
• NFL Head Coach | PC | |
• The Sims™ 2 Family Fun Stuff | PC | |
• 2006 FIFA World Cup | PSP™ | |
• From Russia With Love™ | PSP | |
• 2006 FIFA World Cup | Nintendo DS™ | |
• 2006 FIFA World Cup | Game Boy® Advance | |
Co-pub, International only and Others (not in SKU count) | ||
• Black & White® 2: Battle of the Gods* | PC | |
• Half-Life® 2: Episode One** | PC | |
• SiN Episodes™: Emergence** | PC | |
*Co-Publishing Deals
**Distribution Deals
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