Electronic Arts 1999 Annual Report Download - page 3

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When Electronic Arts was founded in 1982, interactive entertainment software
was barely more than an interesting idea. Most observers believed that computer
games had only limited consumer appeal and would never be more than a niche
market comprised of arcade enthusiasts. Today that “niche market” has grown into
a $15 billion industry that is the very definition of mainstream entertainment.
At EA, we have always considered this popularity and rapid market growth as more
than an opportunity. We see it as a challenge. Never content to merely ride the
rising tide of our industry, EA has continually sought to acquire or collaborate with
the best available development talent, build popular product franchises, establish
a steady stream of top-selling titles, and create an unsurpassed global distribution
presence — all with a goal of solidifying the Company’s position as the world’s
leading interactive entertainment software publisher.
In fiscal 1999 we were again successful in each of these areas, with progress
reflected in our financial results as net revenues rose 34% to $1,221.9 million and
net income* was up 53% to $110.4 million or $1.74 per diluted share. This strong
performance reflects our continuing focus on the three key drivers of EA’s growth:
reinforcing our leadership on the PlayStation®platform; increasing our presence
on the rapidly growing PC platform; and extending EA’s already potent global
distribution capabilities.
Strength on the PlayStation
Sony’s PlayStation is the dominant hardware platform in our industry with a world-
wide installed base of more than 50 million units at fiscal year end. With a 21%
share of the PlayStation software market, EA trails only Sony in total dollar sales
on this leading console system. In fiscal 1999 we introduced a total of 21 new
PlayStation titles, including well-established top-sellers from EA SPORTS™ such
as FIFA 99, World Cup 98, NASCAR®99, NBA Live 99, and Madden NFL™ 99, the #1
football game on the PlayStation in North America. Each of these illustrates EA’s
ability to create enduring franchise properties that can generate strong sales with
each new updated release. During this past year we both strengthened these proven
franchise properties and established valuable new ones.
For example, we signed an exclusive eight-year agreement extending our license
for the most recognizable and sought-after brand in international football, FIFA and
FIFA World Cup. We also acquired interactive rights to leading European football
97 98 99
97 98 99
97 98 99
$673
$909
$1,222
Net Revenues
(In millions)
$51
$72
$110
Net Income*
(In millions)
$0.86
$1.19
$1.74
Net Income**
Per Share —
Diluted
* For 1999, the amount excludes one-time charges of $37.5 million. For 1998, the amount excludes one-time items
netting to a gain of $0.2 million.
** For 1999, the amount excludes 59 cents of one-time charges. For 1998, the net impact of the one-time items had
no impact to net income per share.
To Our Stockholders