EA Reports Strong Q1 ResultsJuly 22, 2004- Electronic Arts (Nasdaq:ERTS) today announced financial results for the fiscal first quarter ended June 30, 2004. Net revenue for the first quarter was $432 million, up 22 percent as compared with $353 million for the fiscal quarter ended June 30, 2003. Sales were driven by Harry Potter and the Prisoner of Azkaban(TM), EA SPORTS(TM) Fight Night 2004 and UEFA Euro 2004, each reaching platinum status (over one million units sold) in the quarter. Need for Speed(TM) Underground and MVP Baseball(TM) 2004 had continued strong sales. Life-to-date sales of Need for Speed Underground have now exceeded 7 million units. Net income for the quarter was $24 million, a 32 percent increase compared to the same period a year ago. Diluted earnings per share were $0.08 as compared with $0.06 for the prior year. Trailing twelve month operating cash flow was $638 million as compared to $673 million for the same period a year ago. The decline was primarily a result of the timing of sales during the quarter. "We are off to a great start in our new fiscal year," said Larry Probst, Chairman and Chief Executive Officer. "We received five Game Critics Awards for Best of E3 -- a record for any company and three of our first quarter releases went platinum. NCAA Football's week one sales are tracking over 50 percent ahead of last year, and Madden NFL's pre-orders are at record levels. We continue to extend our lead by creating great entertainment while building for the next generation of technology." "EA delivered on both the top and bottom lines while making significant investments in next generation technology," said Warren Jenson, Chief Financial and Administrative Officer. "Even with a 43 percent increase in research and development expense, we were able to increase our net income by over 30 percent in the quarter." Highlights for the Quarter (comparisons are to the quarter ended June 30, 2003) -- EA won five Game Critics Awards: Best of E3 2004: Best Fighting Game -- Def Jam(R) Fight for NY(TM); Best Racing Game -- Burnout(R) 3: Takedown(TM); Best Simulation Game -- The Sims(TM) 2; Best Sports Game -- Madden NFL 2005; Best Strategy Game -- The Lord of the Rings(TM): The Battle for Middle-earth(TM). -- EA reached an agreement with Microsoft whereby EA SPORTS and EA GAMES(TM) Nation will support Xbox Live(TM). -- Net revenue: North America -- up 6 percent to $211 million; Europe -- up 49 percent to $190 million; Asia Pacific -- up 22 percent to $18 million; Japan -- up 6 percent to $13 million. Reported net revenue increased by approximately $13 million or 4 percent due to changes in foreign currency rates. -- Gross margin was 59.1 percent -- up 1.5 points from 57.6 percent. -- Operating income was $25 million -- compared to $22 million. Operating margin was 6 percent -- flat year-over-year. -- EA was the number one publisher in the U.S. on current generation consoles. Based on dollar sales in the U.S., EA had three of the top-ten-selling titles.