Electronic Arts 2001 Annual Report Download - page 60

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58
2001 AR
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 on April 1, 1997 (in thousands, except per share data):
1999
Revenues $ 1,229,055
Net income $ 111,308
Net income per share – basic $ 0.92
Net income per share – diluted $ 0.88
Number of shares used in computation – basic 121,495
Number of shares used in computation – diluted 126,545
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 man-
agement of the Company.
(d) Square Co., Ltd.
In May 1998, the Company and Square Co., Ltd. (“Square”), a leading developer and publisher
of entertainment software in Japan, completed the formation of two new joint ventures in North America and
Japan. In North America, the companies formed Square Electronic Arts, LLC (“Square EA”), which has exclusive pub-
lishing rights in North America for future interactive entertainment titles created by Square. Additionally, the
Company has the exclusive right to distribute in North America products published by this joint venture. The
Company contributed $3,000,000 and owns a 30% minority interest in this joint venture while Square owns 70%.
This joint venture is accounted for under the equity method.
In Japan, the companies established Electronic Arts Square KK (“EA Square KK”), which will localize and publish
in Japan the Company’s properties originally created in North America and Europe, as well as develop and publish
original video games in Japan. The Company contributed cash and has a 70% majority ownership interest, while
Square contributed cash and owns 30%. Accordingly, the assets, liabilities and results of operations for EA Square
KK are included in the Company’s Consolidated Balance Sheets and Results of Operations since June 1, 1998, the
date of formation. Square’s 30% interest in EA Square KK has been reflected as “Minority interest in consolidated
joint venture” on the Company’s Consolidated Financial Statements.
(e) Other Business Combinations
Additionally, during the year ended March 31, 2000, the Company acquired two
software development companies. In connection with these acquisitions, the Company incurred a charge of
$2,670,000 for acquired in-process technology. The charge was made after the Company concluded that the in-
process technology had not reached technological feasibility and had no alternative future use after taking into
consideration the potential for usage of the software in different products and resale of the software.