REDWOOD CITY, CA May 04, 2000 Electronic Arts (NASDAQ: ERTS), today announced its results for the fourth fiscal quarter and year ended March 31, 2000. Consolidated Fourth Quarter Review: Consolidated net revenues for the fourth quarter were $294.3 million compared to $277.7 million reported for the same quarter of the prior fiscal year. Pro-forma consolidated net income in the quarter was $10.8 million, before pre-tax acquisition amortization expense of $4.2 million and one-time, pre-tax charges of $6.5 million related to the acquisitions of Kesmai Corporation ("Kesmai") and DreamWorks Interactive, LLC ("DreamWorks"). This compares to pro-forma net income of $23.6 million reported in the prior year, before pre-tax acquisition amortization expense of $2.5 million. Pro-forma consolidated diluted earnings per share were $0.16, excluding acquisition amortization and one- time charges, compared to $0.37 reported in the same quarter of the prior fiscal year. On an as reported basis, consolidated net income and diluted earnings per share were $3.4 million and $0.05, respectively in the quarter, compared to $21.9 million and $0.35 in the same period of the prior year. The operations of newly acquired Kesmai and DreamWorks reduced operating income by $0.8 million in the quarter.
Consolidated Twelve Month Review: For the twelve-month period, consolidated net revenues were $1,420.0 million, an increase of 16 percent compared to $1,221.9 million reported for the same period a year ago. Pro-forma consolidated net income increased 13 percent to $129.5 million for the twelve months before pre-tax acquisition amortization expense of $12.0 million and the one-time, pre-tax merger related charges of $6.5 million. This compares to $114.4 million reported last year, before pre-tax acquisition amortization of $5.9 million and a one-time, pre-tax merger related charge of $44.1 million. Pro-forma consolidated diluted earnings per share excluding acquisition amortization and one-time charges was $1.95 per share compared to $1.81 reported in the prior year. On an as reported basis, consolidated net income increased 60 percent, to $116.8 million for fiscal 2000 compared to $72.9 million in fiscal 1999, and consolidated diluted earnings per share increased 53 percent to $1.76 per share for fiscal 2000 from $1.15 for fiscal 1999.
Electronic Arts ("EA") Core Fourth Quarter Review: During the quarter, EA's core business, which excludes the results of EA.com SM, reported pro-forma net revenues of $288.0 million, compared to $273.3 million in the same quarter of the prior fiscal year. EA's core business reported pro-forma net income in the quarter of $23.9 million, before pre-tax acquisition amortization expense of $3.1 million and a one-time, pre-tax charge of $2.7 million related to the acquisition of DreamWorks. This compares to $25.6 million reported for the prior year on the same basis. EA Core Twelve Month Review: For the twelve month period, EA's core business reported pro-forma net revenues of $1,401.1 million, an increase of 16 percent compared to $1,205.7 million in the prior fiscal year. EA's core business reported a 36 percent increase in pro-forma net income in the year to $163.8 million, before pre-tax acquisition amortization expense of $10.9 million and the one- time, pre-tax charge of $2.7 million related to the acquisition of DreamWorks. This compares to $120.4 million reported for the prior year excluding acquisition amortization and one-time charges.
EA.com Fourth Quarter Review: During the quarter, Electronic Arts shareholders approved a proposal to create a tracking stock intended to reflect the performance of EA.com. In the fourth quarter, EA.com reported pro-forma net revenues of $6.8 million, an increase of 42 percent compared to $4.8 million reported in the same quarter of the prior fiscal year. During the quarter, EA.com reported a pro-forma net loss of $13.1 million before pre-tax acquisition amortization expense of $1.1 million and a one- time, pre-tax charge of $3.9 million related to the acquisition of Kesmai.
EA.com Twelve Month Review: For the twelve month period, EA.com reported pro-forma net revenues of $20.9 million, an increase of 22 percent compared to $17.2 million reported in the prior fiscal year. EA.com reported a pro-forma net loss of $34.2 million before pre-tax acquisition amortization expense of $1.1 million and the one-time, pre-tax charge of $3.9 million related to the acquisition of Kesmai. During the quarter, the Company released 21 new products on three different platforms. New products shipped included ten for the PC, ten for the PlayStation(R) and one for the Nintendo(R) 64. Top selling new releases during the quarter included: The Sims(TM), the No. 1 PC game in North America in the quarter, F1 2000 and Nox(TM) for the PC; and F1 2000, Triple Play 2001, Need for Speed(TM): Porsche(R) Unleashed, and Road Rash(TM) Jailbreak(TM) for the PlayStation.
On a geographic basis, net revenues for the fourth quarter in North America were $152.5 million and international net revenues were $141.8 million. North American revenues were supported by strong sales of PC products, particularly The Sims and Nox, and the release of more PC titles in the quarter. Strength in the North American PC business was offset by an expected decline in sales of Nintendo 64 products. Revenues in Europe increased moderately on both PlayStation and PC on the strength of F1 2000 on both platforms, and The Sims on PC, but were down significantly, as expected, on N64. Overall European revenues were adversely impacted by a devaluation of the Euro compared to the same quarter last year, which negatively impacted net revenues by $9 million. Asia Pacific revenues were $10.1 million with strong Affiliated Label sales, in particular Final Fantasy(R) VIII for the PC. Japanese revenues increased 95 percent to $11.9 million due to strong PC sales from FIFA 2000, Ultima(TM): Ascension and SimCity 3000(TM). Sales of Affiliated Label products in Japan were also strong in the quarter, including Final Fantasy VIII for the PC.
"Electronic Arts turned in a solid performance in Fiscal 2000," said Larry Probst, chairman and chief executive officer. "With the signs of technology transition in the console market occurring sooner than expected, EA grew consolidated net revenues by 16 percent and pro- forma consolidated net income 13 percent for the year. We strengthened our position in the PC market with the No. 1 and No. 4 best-selling PC titles in 1999. In addition, we reached a significant agreement with AOL to be the exclusive provider of games on all AOL online sites. In the fourth quarter, through the success of innovative new releases like The Sims and Nox, and the continued strength of favorites like SimCity 3000 and Command & Conquer(TM): Tiberian Sun(TM), EA achieved the No. 1 position in the PC market for the March quarter."
"Looking ahead, the transition from the current slate of console platforms to next generation technology presents a challenging market environment but we are very excited about the opportunities available on new systems like the PlayStation 2," added Probst. "We continue to focus on being the leading third party publisher on PlayStation 2, with more than 20 products currently in development. We look forward to the expected launch of that platform in North America and Europe later this year. In addition to intensifying our efforts on the PC platform, we are continuing to invest aggressively in pursuit of our goal to be the No. 1 provider of interactive entertainment on the internet, with an initial launch of the new EA/AOL game service this summer."
Note on financial presentation: EA.com, a division of Electronic Arts Inc. ("Electronic Arts") represents Electronic Arts' online and e-commerce business. The statement of income includes all revenues and costs directly and indirectly attributable to EA.com, including charges for shared facilities, functions and services used by EA.com and provided by Electronic Arts. Certain costs and expenses have been allocated based on management's estimates of the cost of services provided to EA.com by Electronic Arts.
This release contains forward looking statements which are subject to certain risks including those described in the Company's 1999 annual report, Form 10-K, Definitive Proxy Statement and other documents filed with the SEC.
Electronic Arts, headquartered in Redwood City, California, is the world's leading interactive entertainment software company. Founded in 1982, Electronic Arts posted revenues of more than $1.4 billion for fiscal 2000. The company develops, publishes and distributes software worldwide for personal computers and video game systems. Electronic Arts markets its products under eight brand names: Electronic Arts(TM), EA SPORTS(TM), Maxis(TM), ORIGIN(TM), Bullfrog(TM) Productions, Westwood Studios(TM) Gonzo Games(TM) and Jane's(R) Combat Simulations. More information about EA's products and full text of press releases can be found on the Internet at http://www.ea.com.Electronic Arts, EA SPORTS, EA.com, ORIGIN, Bullfrog, Maxis, Westwood Studios, Gonzo Games, Command & Conquer, Tiberian Sun, The Sims, Nox, Triple Play Baseball, Need For Speed, Road Rash, Jailbreak, Ultima and SimCity 3000 are trademarks, registered trademarks or service marks of Electronic Arts Inc. in the U.S. and/or other countries. Jane's is a registered trademark of Jane's Information Group Ltd. Porsche and FIFA are trademarks of their respective owners and used with permission. Final Fantasy is a registered trademark of Square Co., Ltd. PlayStation is a registered trademark and PlayStation 2 is a trademark of Sony Computer Entertainment Inc. Nintendo 64 and N64 are trademarks of Nintendo of America Inc. AOL is a registered trademark of America Online, Inc. All other trademarks are the property of their respective owners.
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