NEWS - Tuesday, October 19, 2004

EA Sees Good Quarterly Earnings

REDWOOD CITY, Calif. --(Business Wire)-- Oct. 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 by Madden NFL 2005, The Sims(TM) 2, Burnout(TM) 3: Takedown(TM) and NCAA(R) Football 2005 -- each reaching platinum status (over one million copies sold) in the quarter. Madden NFL 2005 has sold over 4 million copies since launch. The Sims 2 and Burnout 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 2 sold through more than one million copies worldwide within the first ten days of release - the biggest PC launch in EA’s history. -- Madden NFL 2005 became the #1 selling game of the year in North America -- in just one month. -- 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(TM) and Black franchises and RenderWare(R) technology to EA. -- The Company announced plans to build a studio in China focused 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.


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