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The following table reflects unaudited pro forma combined results of operations of the Company and Kesmai
on the basis that the acquisition had taken place on April 1, 1999 (in thousands, except per share data):
YEAR ENDED MARCH 31, 2000
Net revenues $1,421,313
Net income $113,996
Net income per share – basic $ 0.91
Net income per share – diluted $ 0.86
Number of shares used in computation – basic 125,660
Number of shares used in computation – diluted 132,742
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 2000
or of future operations of the combined companies under the ownership and management of the Company.
(c) Square Co., Ltd.
In May 1998, the Company and Square Co., Ltd. (“Square”), a leading developer and publisher of enter-
tainment 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 publishing 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. Either party may terminate the existence of Square EA and the distribution agreement effec-
tive March 31, 2003.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 finan-
cial statements.
(d) Other Business Combinations
Additionally, during the fiscal year ended March 31, 2000, the Company acquired two software develop-
ment 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 tech-
nology 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.
(14) INCOME TAXES
The Company’s pretax income (loss) from operations for the fiscal years ended March 31, 2002, 2001 and
2000 consisted of the following components:
(In thousands) 2002 2001 2000
Domestic $17,020 $(27,166) $ 104,096
Foreign 131,267 13,736 65,718
Total pretax income (loss) $148,287 $(13,430) $ 169,814
EA 2002 AR 61