Electronic Arts 1999 Annual Report Download - page 19

State of Readiness Our business is dependent on the operation of numerous systems that could potentially
be impacted by Year 2000 related problems. Those systems include, among others: hardware and software systems used
to deliver products to our customers; communications networks such as the Internet and private intranets, which we
depend on to receive orders for products from our customers; the internal systems of our customers and suppliers;
products sold to customers; the hardware and software systems used internally in the management of our business;
and non-information technology systems and services used in the management of our business, such as power, telephone
systems and building systems.
Based on an analysis of the systems potentially impacted by conducting business in the twenty-first century, we are applying
a phased approach to making such systems, and accordingly, our operations, ready for the year 2000. Beyond awareness
of the issues and scope of systems involved, the phases of activities in progress include: an assessment of specific under-
lying computer systems, programs and hardware; renovation, replacement or redeployment of Year 2000 non-compliant
technology; validation and testing of technologically compliant Year 2000 solutions; and implementation of the Year 2000
compliant systems.
As a third party providing software products, we are dependent on the hardware and software products used to deliver
such products and services. If such products are inoperable due to Year 2000 issues, our business, financial condition and
results of operations could be adversely affected. An inventory of our internal business systems has been completed and
planned software and hardware upgrades to ensure Year 2000 compliance are in process. The upgrades to these systems
are expected to be completed by June 1999.
Costs To date we have not incurred significant costs directly related to Year 2000 issues, even in cases where non-
compliant information technology systems were redeployed or replaced.
We believe that future expenditures to upgrade internal systems and applications will not have a material adverse effect
on our business, financial condition and results of operations and are primarily included within our ongoing system
development plan. In addition, while the potential costs of redeploying personnel and of any delays in implementing
other projects are not known, the costs are anticipated to be immaterial.
Risks of the Year 2000 Issues Our financial information systems include an integrated suite of business
applications developed and supported by Oracle Corporation. These applications systems are in place and currently support
daily operations in the United States and in Europe. Based on representations made by Oracle Corporation and upon our
limited tests, we believe these systems to be Year 2000 compliant.
We believe our software products are Year 2000 compliant; however, success of our Year 2000 compliance efforts may
depend on the success of our customers dealing with their Year 2000 issues. Customer difficulties with Year 2000 issues
might require us to devote additional resources to resolve underlying problems. Failures of our and/or third parties’ com-
puter systems could have a material adverse impact on our ability to conduct business. For example, a significant percent-
age of purchase orders received from our customers are computer generated and electronically transmitted. In addition,
the Year 2000 could affect the ability of consumers to use our PC based products. If the computer systems on which the
consumers use our products are not Year 2000 compliant, such noncompliance could affect the consumers’ ability to use
such products.