Electronic Arts 1999 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 1999 Electronic Arts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 49

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49

The non-recurring charge for in-process research and development reduced diluted earnings per share by approximately
$0.59 in the fiscal year 1999. The results of the operations of Westwood and the estimated fair value of assets acquired
and liabilities assumed are included in the Company’s financial statements from the date of acquisition.
In conjunction with the merger of Westwood, the Company accrued approximately $1,500,000 related to direct transaction
costs and other related accruals. At March 31, 1999, there were $725,000 in accruals remaining related to these items.
In connection with the Westwood acquisition, the purchase price has been allocated to the assets and liabilities assumed
based upon the fair values on the date of acquisition, as follows (in thousands):
Current assets $ 4,500
Property and equipment 3,257
In-process technology 41,836
Other intangible assets 86,737
Current liabilities (13,642)
Total purchase price $ 122,688
The following table reflects unaudited pro forma combined results of operations of the Company and Westwood on the
basis that the acquisition had taken place at the beginning of the fiscal year for each of the periods presented:
(In thousands, except per share data) 1999 1998
Revenues $ 1,229,055 $ 1,011,234
Net income $ 111,308 $ 64,604
Net income per share—basic $1.83 $1.10
Net income per share—diluted $1.76 $1.06
Number of shares used in computation—basic 60,748 58,867
Number of shares used in computation—diluted 63,272 60,958
In management’s opinion, the unaudited pro forma combined results of operations are not indicative of the actual results
that would have occurred had the acquisition been consummated at the beginning of fiscal 1998 or at the beginning of
fiscal 1999 or of future operations of the combined companies under the ownership and management of the Company.
(b) ABC Software
In July 1998, the Company acquired ABC Software AG and ABC Software GmbH (collectively “ABC”), independent distrib-
utors of entertainment, edutainment and application software in Switzerland and Austria, respectively, for approximately
$9,466,000 in cash (net of cash acquired of $5,099,000) and $570,000 in other consideration. The transaction has been
accounted for under the purchase method. The excess purchase price over the fair value of the net tangible assets
acquired of approximately $7,377,000 was allocated to goodwill and is being amortized over 7 years.