Electronic Arts 2000 Annual Report Download - page 4

STRONGLY POSITIONED ON KEY PLATFORMS We had multi-
ple successes on the PC platform in fiscal year 2000. SimCity
3000™
and Command & Conquer™: Tiberian Sun™ each achieved
No.1 status on the PC best-seller list. For calendar year 1999,
both products finished in the Top Ten, representing our best
performance ever on the PC platform. In addition, we created
an outstanding new franchise property— The Sims™ —which
was named Game of the Year by the Academy of Interactive
Arts and Sciences.
On the console platforms, our EA SPORTS™titles maintained
a leadership position, with Madden NFL
™2000
once again
winning the all-important football battle in North America.
FIFA 2000 dominated the European “football” category, with
NBA Live 2000, NHL
®
2000, NASCAR
®
2000, Triple Play 2001,
Knockout Kings™2000
and Tiger Woods PGA TOUR
®
Golf 2000
all leading in their respective categories. In addition, we bol-
stered our impressive motorsports lineup by signing a long-
term license with Formula One. In March 2000, we released
our first F1 products, rounding out the strongest collection of
sports properties in our industry. We also secured an exclu-
sive five-year agreement for the James Bond license and will
release The World Is Not Enough on multiple platforms in the
coming year. In 1999, Tomorrow Never Dies was one of the
leading products on the PlayStation®platform.
We further strengthened our Studio organization with the
acquisition of DreamWorks Interactive, LLC. DreamWorks
developed and published Jurassic Park: The Lost World and
released Medal Of Honor™ , a best-selling title during the most
CHAIRMAN’S LETTER
02
recent holiday season. We expect to have an ongoing collab-
oration with DreamWorks SKG, allowing us to create unique
and commercially viable content for the interactive entertain-
ment market.
Given this unique combination of assets, we believe that
Electronic Arts is well positioned to navigate successfully
through the transition to the next generation of console tech-
nology. Equally important, we view cyclical transition as an
opportunity to strengthen and streamline the company, and
to clearly establish EA as the market leader of the future.
INVESTING FOR ONLINE LEADERSHIP While still in its infancy,
analysts project that online interactive entertainment will
generate revenues of up to $2 billion in 2002(5) ,an increase of
more than 500 percent from $300 million in 1999. During the
year, we made a significant investment in EA.com, which we
believe will help to establish us as the leading provider of
interactive entertainment in the emerging online market.
EA.com pro-forma revenues(1) totaled $21 million in fiscal year
2000, with investment spending of $63 million, resulting in a
pro-forma net loss(6) of $34 million. We expect that the online
portion of our business will continue to generate a net loss in
the coming fiscal year, as we position ourselves for this sig-
nificant new opportunity.
In November 1999, we announced a wide-ranging strategic
alliance with America Online. The agreement provides
Electronic Arts with control of all programming, pricing and
promotion on the AOL®games channel. This is an unprece-
dented
Consolidated pro-forma net income,
(2) excluding goodwill and one-time acquisition-related
charges in both years, increased 14 percent to $130 million. Consolidated pro-forma diluted
earnings per share(2) increased 8 percent to $1.95. Our core business, which excludes the
results of EA.com, grew pro-forma net revenues(3) 16 percent to $1,401 million. Pro-forma core
net income(4) increased 37 percent to $164 million for the core business.