Electronic Arts 2005 Annual Report Download - page 89

of evaluating whether we will change our intentions regarding a portion of our foreign earnings and take
advantage of the repatriation provisions of the Jobs Act, and if so, the amount that we would repatriate. We
may not take advantage of the new law at all. In addition to not having made a decision to repatriate any
foreign earnings, we are not yet in a position to accurately determine the impact of a qualifying repatriation,
should we choose to make one, on our income tax expense for Ñscal 2006. If we decide to repatriate a portion
of our foreign earnings, we would be required to recognize income tax expense related to the federal, state,
local and foreign taxes that we would incur on the repatriated earnings when the decision is made. We
estimate that the reasonably possible amount of the income tax expense could be up to $35 million. We expect
to be in a position to Ñnalize our analysis no later than February 2006.
Net Income
Net income for Ñscal years 2005 and 2004 was (in millions):
March 31, % of Net March 31, % of Net
2005 Revenue 2004 Revenue $ Change % Change
$504 16.1% $577 19.5% $(73) (12.7%)
Reported net income decreased in Ñscal 2005 as compared to Ñscal 2004 primarily due to growth in our
expenses, especially research and development, as we prepared for the adoption of next-generation technology
within our industry while at the same time we continued to devote resources to the development of products
for current-generation consoles.
Comparison of Fiscal 2004 to Fiscal 2003
Net Revenue
From a geographical perspective, our net revenue for the Ñscal years ended March 31, 2004 and 2003 was as
follows (in millions):
Year Ended March 31, %
2004 2003 Increase Change
North America ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,610 54.4% $1,436 57.8% $174 12.1%
Europe ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,180 39.9% 879 35.4% 301 34.3%
Asia PaciÑc ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 167 5.7% 167 6.8% Ì (0.2%)
International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,347 45.6% 1,046 42.2% 301 28.8%
Annual Report
Consolidated Net Revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $2,957 100.0% $2,482 100.0% $475 19.1%
North America
For Ñscal 2004, net revenue in North America increased by 12.1 percent as compared to Ñscal 2003. From a
franchise perspective, the net revenue increase was primarily driven by higher sales of products released during
the year ended March 31, 2004 in the following eight franchises: Need for Speed, NBA STREET, NFL
STREET, Madden NFL, Def Jam, SSX, Tiger Woods/PGA TOUR and MVP Baseball. Increased sales in
these franchises resulted in an increase in net revenue of $353 million for the year ended March 31, 2004 as
compared to the year ended March 31, 2003. Increases in net revenue from these franchises were partially
oÅset by (1) a decrease in our Harry Potter franchise, as the Ñscal 2004 title, Harry Potter
TM
:Quidditch
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World Cup, had no associated movie release, while our Ñscal 2003 product, Harry Potter and the Chamber of
Secrets, was released in conjunction with the blockbuster movie of the same title, (2) the termination of our
Square EA joint venture agreement, and (3) a decrease in net revenue in our Bond franchise as a result of the
timing of the release of James Bond 007: Everything or Nothing (on all platforms except the Game Boy
Advance) in the fourth quarter of Ñscal 2004, as compared to the strong sales of James Bond 007:
NIGHTFIRE, which was released in the third quarter of Ñscal 2003. Together, lower sales in these franchises
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