<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended June 30, 1999
EIDOS PLC
Wimbledon Bridge House
1 Hartfield Road
Wimbledon, London
SW19 3RU United Kingdom
44 181 636 3000
(Address and telephone number of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--------- ------------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
--------- ------------
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82 - N/A
-----------
<PAGE>
EIDOS plc
Form 6-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheets as of June 30, 1999 and March 31, 1999 2
Consolidated Statements of Operations for the three months ended June 30, 1999 and 3
1998
Statements of Recognised Gains and Losses for the three months ended June 30, 1999 4
and 1998
Consolidated Statements of Cash Flows for the three months ended June 30, 1999 and 5
1998
Consolidated Statements of Changes in Shareholders' Equity for the three months 6
ended June 30, 1999
Notes to Unaudited Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition and Results of Operations for the 12
three months ended June 30, 1999
Exhibits
The following documents were filed as part of this Form 6-K:
Press release dated July 30, 1999 - acquisition of interests in E-1
Proein SA and Pyro SA
U.K. press release dated September 3, 1999 - results for the
three months ended June 30, 1999 E-2
U.S. press release dated September 3, 1999 - results for the
three months ended June 30, 1999 E-3
</TABLE>
The information contained in this Form 6-K is hereby incorporated by reference
into the Company's Registration Statement on Form F-3 (File No. 333-8274).
Page 1
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EIDOS PLC
CONSOLIDATED BALANCE SHEETS RECONCILED TO US GAAP
<TABLE>
<CAPTION>
JUNE 30, 1999 March 31, 1999
U.K. GAAP (UNAUDITED)
-------------- --------------
(pound)000 (pound)000
<S> <C> <C>
FIXED ASSETS
Intangible assets (net of amortisation of(pound)6,584,000) 23,999 25,939
Tangible assets 5,331 5,668
Investments 12,164 12,164
-------------- --------------
Total fixed assets 41,494 43,771
-------------- --------------
CURRENT ASSETS
Stocks 6,618 5,666
Debtors 33,369 57,737
Cash at bank and in hand 27,195 48,220
-------------- --------------
TOTAL CURRENT ASSETS 67,182 111,623
CREDITORS: AMOUNT FALLING DUE WITHIN ONE YEAR (23,480) (58,049)
-------------- --------------
NET CURRENT ASSETS 43,702 53,574
-------------- --------------
TOTAL ASSETS LESS CURRENT LIABILITIES 85,196 97,345
-------------- --------------
CREDITORS DUE AFTER MORE THAN ONE YEAR:
US $ convertible bonds (20,660) (30,333)
Other creditors (155) (480)
-------------- --------------
(20,815) (30,813)
-------------- --------------
NET ASSETS 64,381 66,532
-------------- --------------
-------------- --------------
CAPITAL AND RESERVES
Called up share capital 1,855 1,728
Share premium account 62,251 50,165
Other reserves 707 707
Profit and loss account (432) 13,932
-------------- --------------
SHAREHOLDERS' FUNDS 64,381 66,532
-------------- --------------
-------------- --------------
RECONCILIATION TO US GAAP
Shareholders' funds (prepared under U.K. GAAP) 64,381 66,532
Goodwill 19,449 19,449
Less in process research and development (2,368) (2,368)
Less amortisation (17,135) (16,856)
Deferred tax 1,993 1,993
-------------- --------------
SHAREHOLDERS' FUNDS IN ACCORDANCE WITH US GAAP 66,320 68,750
-------------- --------------
-------------- --------------
</TABLE>
NOTES:
1. The accompanying notes are an integral part of these consolidated financial
statements.
Page 2
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILED TO US GAAP
<TABLE>
<CAPTION>
U.K. GAAP THREE MONTHS ENDED JUNE 30,
------------------------
1999 1998
---------- ---------
(pound)000 (pound)000
<S> <C> <C>
TURNOVER - CONTINUING OPERATIONS 16,810 25,801
Cost of goods sold (8,345) (11,177)
---------- ----------
GROSS PROFIT 8,465 14,624
Selling and marketing (8,867) (5,858)
Research and development (11,779) (7,065)
General and administrative
Amortization of goodwill (2,514) -
Other (6,169) (4,002)
---------- ----------
OPERATING EXPENSES (29,329) (16,925)
---------- ----------
LOSS ON ORDINARY ACTIVITIES BEFORE INTEREST (20,864) (2,301)
Net interest and similar charges (85) 19
---------- ----------
LOSS ON ORDINARY ACTIVITIES BEFORE TAX (20,949) (2,282)
TAXATION 6,915 867
---------- ----------
NET LOSS AFTER TAX (PREPARED UNDER U.K. GAAP) (14,034) (1,415)
---------- ----------
LOSS PER SHARE (79.9P) (8.3p)
RECONCILIATION TO US GAAP
NET LOSS AFTER TAX (PREPARED UNDER U.K. GAAP) (14,034) (1,415)
Amortisation of goodwill (279) (1,629)
---------- ----------
NET LOSS IN ACCORDANCE WITH US GAAP (14,313) (3,044)
---------- ----------
LOSS PER SHARE IN ACCORDANCE WITH US GAAP
Basic and diluted (81.5P) (17.8p)
</TABLE>
NOTES:
1. The accompanying notes are an integral part of these consolidated financial
statements.
Page 3
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EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-------------------------
1999 1998
---------- ---------
(pound)000 (pound)000
<S> <C> <C>
NET LOSS FOR THE PERIOD (14,034) (1,415)
Translation differences on foreign currency net investments (330) 72
---------- ---------
TOTAL GAINS AND LOSSES IN THE PERIOD (14,364) (1,343)
---------- ---------
CUMULATIVE TRANSLATION DIFFERENCES
Balance brought forward (199) 390
Before tax translation differences (524) 116
Tax benefit/(expense) 194 (44)
---------- ---------
After tax translation differences (330) 72
---------- ---------
BALANCE CARRIED FORWARD (529) 462
---------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
THREE MONTHS ENDED Three months ended
JUNE 30, June 30,
1999 1998
(pound)000 (pound)000
---------------- ----------------
<S> <C> <C>
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (7,035) 6,543
---------------- ----------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 335 576
Interest paid on bond (243) -
Interest paid on finance leases (15) (32)
Other interest paid (117) -
---------------- ----------------
(40) 544
---------------- ----------------
TAXATION
Overseas tax paid (938) (5,436)
---------------- ----------------
(938) (5,436)
---------------- ----------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (554) (620)
Sale of tangible fixed assets - 34
Purchase of other investments - (669)
---------------- ----------------
(554) (1,255)
---------------- ----------------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings (14,327) -
---------------- ----------------
(14,327) -
---------------- ----------------
NET CASH (OUTFLOW) / INFLOW BEFORE FINANCING (22,894) 396
FINANCING
Issue of ordinary share capital 1,897 3
Repayment of principal under finance leases (91) (221)
---------------- ----------------
1,806 (218)
---------------- ----------------
(DECREASE)/INCREASE IN CASH IN THE PERIOD (21,088) 178
---------------- ----------------
---------------- ----------------
</TABLE>
NOTES:
1. Net cash inflow from operating activities is derived from operating loss of
(pound)20,864,000 (1998: (pound)2,301,000) adjusted for depreciation of
(pound)820,000(1998: (pound)756,000), loss on disposal of Fixed assets of
(pound)7,000 (1998: (pound)5,000), goodwill amortisation of
(pound)2,514,000 (1998: (pound)nil) and a Decrease in working capital of
(pound)10,488,000 (1998: (pound)8,083,000).
2. The accompanying notes are an integral part of these consolidated financial
statements.
Page 5
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EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
ORDINARY SHARES
-------------------------------
(POUND)000 (EXCEPT SHARE NUMBERS) SHARE PROFIT AND
PREMIUM OTHER LOSS
U.K. GAAP NO. OF SHARES AMOUNT ACCOUNT RESERVES ACCOUNT TOTAL
--------- -------------- ------------ -------------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance as at April 1, 1999 17,282,280 1,728 50,165 707 13,932 66,532
Loss for the period -- -- -- -- (14,034) (14,034)
Translation adjustment -- -- -- -- (330) (330)
Arising on conversion of bond 932,399 93 10,223 -- -- 10,316
Exercise of warrants and options 338,957 34 1,863 -- -- 1,897
---------- ---------- ---------- --------- ---------- ---------
BALANCE AS AT JUNE 30, 1999 18,553,636 1,855 62,251 707 (432) 64,381
---------- ---------- ---------- --------- ---------- ---------
US GAAP
-------
Balance at April 1, 1999 17,282,280 1,728 79,691 707 (13,376) 68,750
Loss for the period -- -- -- -- (14,313) (14,313)
Translation adjustment -- -- -- -- (330) (330)
Arising on conversion of bond 932,399 93 10,223 -- -- 10,316
Exercise of warrants and options 338,957 34 1,863 -- -- 1,897
---------- ---------- ---------- ---------- --------- ---------
BALANCE AT JUNE 30, 1999 18,553,636 1,855 91,777 707 (28,019) 66,320
---------- ---------- ---------- ---------- --------- ---------
</TABLE>
NOTES:
1. The accompanying notes are an integral part of these consolidated financial
statements.
Page 6
<PAGE>
EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of Eidos plc (the Company) have been prepared
in accordance with applicable Accounting Standards in the United
Kingdom.
a. UNAUDITED RESULTS
The interim consolidated financial statements are unaudited. In the
opinion of management, all adjustments considered necessary to present
fairly the consolidated financial position, results of operations and
cash flows for such interim periods have been made. In the opinion of
management, the unaudited interim consolidated financial statements
have been prepared on a basis consistent with Eidos' audited
consolidated financial statements at March 31, 1999 apart from changes
required by recently released Financial Reporting Standards.
b. LOSS PER SHARE
The loss per share is calculated in accordance with Financial Reporting
Standard No.14 and based on a weighted average number of ordinary
shares in issue of 17,568,376 for the three months ended June 30, 1999
(1998: 17,110,838). None of the potential ordinary shares is dilutive
and therefore a separate diluted loss per share is not given.
The weighted average number of shares used to calculate the basic
earnings per share under U.S. GAAP is the same as for U.K. GAAP.
c. SUMMARY OF DIFFERENCES BETWEEN U.K. GAAP AND U.S. GAAP
A summary of the most significant differences applicable to Eidos plc
and its subsidiaries (Eidos) is set out below:
(1) BUSINESS COMBINATIONS
Under U.S. GAAP, goodwill arising on acquisitions accounted for under
the purchase method is amortized over the estimated useful life of the
goodwill, with amortized amounts being included in general and
administrative expenses. Each of the Company's acquisitions has been
accounted for using the purchase method for U.S. GAAP purposes. Each of
the businesses acquired by the Company was involved in the development
of computer games software. The Company acquired such businesses for
their established names in the computer games software market, for the
experience of their personnel in the development of computer game
software, and for an aggregate of in excess of 25 games (together with
underlying technologies) that were under development by or on behalf of
such businesses. Upon review of the acquired companies' technology, the
Company determined that a portion of such technology had neither
reached technological feasibility nor had alternative future uses and
that completion of the games under development would require
substantial additional effort and expenditure by the Company.
Page 7
<PAGE>
EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED.../
Accordingly, for U.S. GAAP purposes, the Company treated an aggregate
of (pound)24.4 million as in-process research and development, all of
which was expensed in the periods in which the related acquisitions
were completed (fiscal year 1996: (pound)8.2 million, fiscal year 1997:
(pound)13.8 million and fiscal year 1999: (pound)2.4 million).
The Company also has recorded (pound)49.4 million of goodwill for U.S.
GAAP purposes in connection with acquisitions (fiscal year 1996:
(pound)7.4 million, fiscal year 1997: (pound)11.1 million, fiscal year
1998: (pound)4.0 million and fiscal year 1999: (pound)26.9 million).
The Company recognizes the fast changing industry in which it is
involved and believes the remaining goodwill has a useful life of 3
years.
Under U.K. GAAP, goodwill arising on consolidation of acquisitions
(which represents the excess of the fair value of the consideration
paid in the acquisition over the fair value of the identifiable net
assets acquired) prior to April 1, 1998 was written-off immediately
against related reserves, and had no impact upon the Company's
statement of operations until disposal. Goodwill arising after April 1,
1998 is being capitalized and amortized in a method similar to U.S.
GAAP; however there is no charge for in-process research and
development. The Company is therefore recording different amounts of
capitalized goodwill and amortization under U.K. GAAP than it is under
U.S. GAAP. Currently the amortization charge under U.S. GAAP exceeds
that under U.K. GAAP because of the charges for companies acquired
prior to April 1, 1998. It is anticipated that in the future the
difference will decrease and eventually the U.K. GAAP charge will
exceed the U.S. GAAP charge because of the one-off in-process research
and development charges.
Additionally U.K. GAAP requires that on subsequent disposal or closure
of a previously acquired business, any goodwill previously taken
directly to shareholders' equity is reflected in the income or loss on
disposal. Under U.S. GAAP the appropriate balance to be written off on
the disposal of the business is the remaining unamortized balance of
goodwill.
For acquisitions prior to April 1, 1998, the benefit of acquired tax
losses, as they are recognised in periods subsequent to the
acquisition, are credited to goodwill for U.S. GAAP purposes and
credited to income under U.K. GAAP. There is no difference in treatment
for acquisitions after April 1, 1998.
(2) DEFERRED TAXATION
U.K. GAAP requires that no provision for deferred taxation should be
made if there is reasonable evidence that such taxation will not be
payable within the foreseeable future. U.S. GAAP requires full
provision for deferred taxation liabilities, and permits deferred tax
assets to be recognised if their realisation is considered to be more
likely than not.
(3) INVESTMENTS
Unlike U.K. GAAP, which recognises gains and losses in the periodic
performance statements; U.S. GAAP requires unrealised changes in the
value of listed investments to be recognised as a separate component of
shareholders' equity until realised.
Eidos has an equity investment in Opticom ASA, a Norwegian listed
company. This is shown in the balance sheet at cost ((pound)11.2
million). The market value at June 30, 1999 was (pound)21.5 million.
Page 8
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EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED.../
3. SEGMENTAL ANALYSIS
The analysis by class of business of turnover, loss before tax and assets for
Eidos on a consolidated basis is given below.
<TABLE>
<CAPTION>
TURNOVER LOSS BEFORE TAXATION GROSS ASSETS
------------------------------------------------------------ ------------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, March 31,
------------------------------------------------------------ -----------------------------
1999 1998 1999 1998 1999 1999
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS OF BUSINESS (pound)000 (pound)000 (pound)000 (pound)000 (pound)000 (pound)000
Computer software 15,886 24,787 (20,849) (2,245) 105,273 152,393
Video editing 924 1,014 (100) (37) 3,403 3,000
-------------- -------------- -------------- -------------- -------------- --------------
16,810 25,801 (20,949) (2,282) 108,676 155,393
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
The geographical analysis of turnover, loss before tax and assets for Eidos on a
consolidated basis is given below.
<TABLE>
<CAPTION>
TURNOVER TO UNAFFILIATED CUSTOMERS
-------------------------------------------------------------
BY DESTINATION BY ORIGINATION
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
GEOGRAPHICAL SEGMENT (pound)000 (pound)000 (pound)000 (pound)000
United Kingdom 4,863 4,426 7,416 7,673
Germany 2,296 3,205 2,612 3,700
France 1,709 2,616 2,155 3,707
Rest of Europe 2,292 3,707 - -
U.S. 4,554 10,203 4,248 10,721
Rest of World 1,096 1,644 379 -
-------------- -------------- -------------- --------------
16,810 25,801 16,810 25,801
-------------- -------------- -------------- --------------
<CAPTION>
INTER-SEGMENT SALES
---------------------------------------------------------------
BY DESTINATION BY ORIGINATION
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
GEOGRAPHICAL SEGMENT (pound)000 (pound)000 (pound)000 (pound)000
United Kingdom - 329 3,432 6,277
Germany 1,120 2,773 36 -
France 1,284 2,333 - -
Rest of Europe - - - -
U.S. 969 842 - -
Rest of World 97 - 2 -
-------------- -------------- -------------- --------------
3,470 6,277 3,470 6,277
-------------- -------------- -------------- --------------
</TABLE>
Page 9
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EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED.../
3. SEGMENTAL ANALYSIS (CONTINUED)
NET LOSS BEFORE TAX
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
GEOGRAPHICAL SEGMENT (pound)000 (pound)000
United Kingdom (8,760) (1,480)
Germany (305) (370)
France (452) 154
U.S. (11,136) (586)
Rest of World (296) -
-------------- --------------
(20,949) (2,282)
-------------- --------------
</TABLE>
<TABLE>
<CAPTION>
ASSETS GROSS ASSETS
JUNE 30, March 31,
-------------- --------------
1999 1999
-------------- --------------
<S> <C> <C>
GEOGRAPHICAL SEGMENT (pound)000 (pound)000
United Kingdom 53,728 63,441
Germany 10,851 17,102
France 4,308 8,576
USA 39,102 64,471
Rest of World 687 1,803
-------------- --------------
108,676 155,393
-------------- --------------
</TABLE>
4. STOCKS
<TABLE>
<CAPTION>
JUNE 30, March 31,
1999 1999
-------------- --------------
<S> <C> <C>
Raw materials 644 371
Finished goods 5,974 5,295
-------------- --------------
6,618 5,666
-------------- --------------
</TABLE>
Stocks are stated net of provisions of (pound)789,000 at June 30,1999
and (pound)764,000 at March 31, 1999.
5. BORROWINGS
In April 1998, Eidos issued U.S.$50 million of 6.25% convertible bonds.
The bonds are convertible after August 31, 1998 and on or prior to July
24, 2002 into ordinary shares of
Page 10
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EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED.../
10p each of Eidos at an initial conversion price of (pound)10.95 per
share and with a fixed rate of exchange on conversion of $1.5965 =
(pound)1. The convertible bonds have been stated net of issue costs. As
at June 30, 1999, bonds representing $16.4 million had been converted
(March 31, 1999: $0.1 million).
<TABLE>
<CAPTION>
JUNE 30, 1999 March 31, 1999
----------------------------------------------------------
DUE WITHIN DUE AFTER Due within Due after
ONE YEAR ONE YEAR One year One year
------------- ------------- ------------- -------------
(pound)000 (pound)000 (pound)000 (pound)000
<S> <C> <C> <C> <C>
BORROWINGS
Convertible bonds - 20,660 - 30,333
Bank loans and overdrafts 187 - - -
Obligations under finance leases 368 58 363 152
------------- ------------- ------------- -------------
555 20,718 363 30,485
------------- ------------- ------------- -------------
OTHER CREDITORS
Trade creditors 6,719 - 9,692 -
Royalty creditors 2,391 - 4,968 -
Other tax and social security - - 3,815 -
Other creditors 1,495 97 16,556 328
Accruals and deferred income 6,553 - 8,967 -
Corporation tax 5,767 - 13,688 -
------------- ------------- ------------- -------------
22,925 97 57,686 328
------------- ------------- ------------- -------------
23,480 20,815 58,049 30,813
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
As at June 30, 1999 the Eidos had contracts to make future payments totalling
(pound)18.2 million to various licensors and developers involved in providing
games software for Eidos' use. Eidos also has annual commitments under operating
leases of (pound)2.3 million, (pound)1.8 million relating to land and buildings
and (pound)0.5 million for motor vehicles and equipment. The leases for office
premises are as described in the Company's Annual Report on Form 20-F filed with
the Securities and Exchange Commission on July 27, 1999. The largest office is
in Menlo Park, California, which has an eight year lease and annual commitment
of $1.3 million.
Page 11
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EIDOS PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that involve risks and
uncertainties. Eidos' actual results could differ materially from the results
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and those discussed in the "Risk Factors" section of Eidos' Annual Report
on Form 20-F filed with the Securities and Exchange Commission on July 27, 1999.
The following discussion is based on the Unaudited Consolidated Financial
Statements of Eidos, which have been prepared in accordance with U.K. GAAP. See
the Unaudited Consolidated Financial Statements of Eidos for information on the
differences between U.K. GAAP and U.S. GAAP that affect Eidos' net income and
shareholders' equity.
OVERVIEW
Eidos has experienced, and expects to continue to experience, significant
fluctuations in operating results due to a variety of factors including, among
others: (i) the timing and success of product introductions; (ii) the market
acceptance of Eidos' products; (iii) delays in product completion; (iv) order
cancellations; (v) product returns; (vi) projected and actual changes in
platforms; (vii) changes in pricing policies by Eidos and its competitors;
(viii) development and promotional expenses relating to the introduction of new
products or new versions of existing products; (ix) changes in the value of the
pound sterling in relation to other currencies; and (x) the size and rate of
growth of the interactive software market. In response to competitive pressures,
Eidos may take certain pricing or marketing actions that could materially
adversely affect Eidos' business, results of operations and financial condition.
Products are generally shipped as orders are received; accordingly Eidos
operates with little backlog. Furthermore, the interactive software business is
highly seasonal. Net revenues are typically significantly higher during the
second half of Eidos' financial year, due primarily to the increased demand for
interactive software products during the year-end holiday buying season. Net
revenues in other periods are generally lower and vary significantly as a result
of new product introductions and other factors. As a very significant percentage
of Eidos' total sales arise in the second half, Eidos has limited ability to
compensate for shortfalls in second half sales by changes in its operations or
strategies in the first half. Eidos' expense levels are based, in part, on its
expectations regarding future sales, and, as a result, operating results would
be disproportionately and adversely affected by a decrease in sales or a failure
to meet Eidos' sales expectations.
Eidos publishes its consolidated financial statements in pounds sterling. A
significant portion of Eidos' assets and net revenues are generated in foreign
currency, primarily U.S. dollars, French Francs and Deutschmarks. In translating
the results of its overseas operations Eidos is subject to fluctuations in the
exchange rates between pound sterling and the overseas currency. Accordingly,
depreciation in the weighted average value of the overseas currency against the
pound sterling could decrease reported revenues and appreciation in the weighted
average value of the overseas currency against the pound sterling could increase
reported revenues.
Page 12
<PAGE>
EIDOS PLC
As a result of the foregoing, results of operations can be expected to fluctuate
significantly from period to period.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30,
1998
NET REVENUE
Net revenue decreased 35% from (pound)25.8 million in the three months ended
June 30, 1998 to (pound)16.8 million in the three months ended June 30, 1999.
Three new titles were launched in the period, Warzone 2100 and FA Manager on PSX
and Official Formula One Racing on PC CD, compared to five titles in the
corresponding period last year. Last year's releases included three of the most
popular titles of the year (Deathtrap Dungeon, Final Fantasy VII and Commandos:
Behind Enemy Lines) and accounted for over two thirds of the revenue for the
quarter, whereas this year's new releases only accounted for 42% of the revenue
for the quarter.
63% of games revenue was from sales of PC products compared 55% for the
corresponding period of last year. This is mainly due to the increasing
proportion of catalogue and budget priced sales (which are more commonly sold on
PC). In addition the average selling price was only (pound)9.84 compared to
(pound)13.66 last year reflecting the higher proportion of PC, catalogue and
budget priced sales.
The total number of units shipped in the quarter was 1.9 million compared to 2.1
million in the corresponding period of 1998.
COST OF SALES
Cost of sales includes manufacturing, distribution costs and royalties payable.
Royalties payable comprise three elements: royalties payable to third party
software licensors, royalties payable to third party developers and royalties
payable to internal development teams.
For the three months ended June 30, 1999, cost of sales was (pound)8.3 million.
This represented 49.6% of net revenue, compared to (pound)11.1 million, or 43.3%
of net revenue, in the corresponding period. Gross margin for the quarter was
50.4% compared to 56.7% in the corresponding period last year. The decrease in
margin results from a combination of factors including increased distribution
and internal royalty costs and a shift in the sales mix for the quarter compared
to the corresponding period when there were more premium priced new releases as
discussed above.
SELLING AND MARKETING
Selling and marketing expenses comprise product marketing and advertising
expenditure as well as salaries, bonuses and commissions paid to sales and
marketing personnel. They consist of a variable element, product advertising and
commissions, and a fixed element, which includes amortisation costs of
games-related licences, payroll and associated expenses of the workforce.
Advertising costs for the three months ended June 30, 1999 were (pound)3.9
million (23.4% of revenue) compared to (pound)3.0 million (11.7% of revenue) in
the corresponding period. This reflects increased
Page 13
<PAGE>
EIDOS PLC
expenditure on catalogue titles and the costs associated with building brand
awareness through print advertising, the internet and other interactive media.
The fixed element of selling and marketing costs was (pound)4.9 million (1998:
(pound)2.8 million) and reflects the costs of additional headcount and the
amortisation of licence fees.
RESEARCH AND DEVELOPMENT
Research and development primarily consists of software development costs. These
costs include:
- internal development costs,
- development fees paid under publishing agreements to external
developers; and
- advance royalties paid under licensing arrangements.
Research and development represents the Company's investment in product
development of (pound)10.9 million for the three months ended June 30, 1999
(1998: (pound)6.6 million). Also included in the category is pure research and
development of (pound)0.9 million (1998: (pound)0.5 million). The product
development charge for the quarter includes (pound)7.7 million invested in a
pipeline of 37 titles that have yet to be released.
GENERAL AND ADMINISTRATIVE
General and administrative expenses comprise primarily personnel costs for
finance, administrative and general management as well as property, accounting
and legal expenses. It also includes goodwill amortisation charges.
General and administrative costs were (pound)8.7 million or 51.7% of revenues
(1998: (pound)4.0 million or 15.5%) for the three months ended June 30, 1999.
The total excluding goodwill was (pound)6.2 million (36.7%), reflecting the
increased administrative infrastructure required to run Eidos' expanded
operations.
TAXATION
A tax credit of (pound)6.9m has been applied to the loss on ordinary activities
of (pound)20.9m. This reflects the projected underlying tax rate for the year to
March 31, 2000 of 37%.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999 Eidos had cash and cash equivalents of (pound)27.2 million and
Eidos' working capital was (pound)67.2 million. Holders of $16.4 million of
Eidos' convertible bonds converted to equity during the period.
Eidos utilised cash of (pound)7.0 million from its operating activities in the
three months ended June 30, 1999. The final instalment for Crystal Dynamics
((pound)14.3 million) was paid in April 1999. This represented the only other
significant outflow of cash in the quarter. Tax payments and capital expenditure
of (pound)1.5 million were offset by (pound)1.9 million received from employees
exercising their share options in the quarter.
Page 14
<PAGE>
EIDOS PLC
YEAR 2000
The Year 2000 presents potential problems for all companies using computers,
software and other electronic equipment. At the year 2000 issues may arise for
one of the following reasons. The use of "00" may imply that there is no current
date. Any system using date based functionality for processing may fail due to
calculation errors. Any interfaces using date based data storage must be
unambiguous i.e. store all 4 digits of the date. The Year 2000 must be
recognised as a leap year. The following sections describe what steps Eidos have
made to minimise the risk of exposure to these problems.
STATE OF READINESS
Eidos commenced its Year 2000 compliance project in late 1997. A co-ordinator
was appointed who liaised with local management and IT personnel across the
Group, and reported directly to the Board on progress made. A global strategy
and policy for the Group was developed and implemented. Responsibilities were
assigned to ensure timeliness of response and co-ordination of effort at all
levels.
THE COMPANY'S SYSTEMS. Testing and replacement of hardware at all sites
proceeded as planned and all business critical systems are now believed to be
compliant. Financial and operational software was inventoried, certified by the
suppliers and tested internally. The Company believes that game related
development software and tools, which comprise the majority of Eidos' systems,
are not adversely affected by Year 2000 problems. In addition the hardware used
is updated frequently because of rapid changes in technology and the computer
games industry.
The main financial and logistic system used in the U.K. and U.S. offices has
been fully tested internally. In addition the supplier has provided
certification of the system's compliance, and compliant Microsoft service packs
have been applied. Systems used within the other offices have been upgraded and
it is believed that they are now compliant.
However comprehensive, no program of testing can provide absolute assurance that
problems will not be encountered, especially given the many inter-dependencies
on suppliers and developers. Eidos has made best endeavors to gain assurances
from key companies in the supply chain.
THE COMPANY'S PRODUCTS. Eidos' products do not contain date-related processes
and therefore the Company believes that they do not pose significant Year 2000
problems. However the Company may be adversely affected if there are significant
problems with hardware used to run its products (in particular video games
consoles). Due to the broad range and location of personal computer vendors, the
Company does not believe that the supply of personal computers will be
significantly affected.
THIRD PARTY COMPLIANCE. Eidos began to contact all its major customers and
suppliers in order to ascertain the steps they had taken to minimise Year 2000
problems. In general the Company has limited control over the actions taken by
these third parties and not all have actually provided written guarantees that
they addressed all potential Year 2000 issues. However the Company has been in
regular contact with a number of key suppliers, including the fulfilment
warehouses used by the main manufacturing locations which have supplied written
confirmation of compliance. The Company uses a number of different suppliers for
its PC product and printed material and could switch suppliers at relatively
short notice if necessary. However the Company is entirely
Page 15
<PAGE>
EIDOS PLC
dependent on Sony for the manufacture of its PlayStation products as are all
other game developers for this platform. The final phase of compliance checks
will follow up with major suppliers to collate their final Year 2000 positions.
COSTS TO THE COMPANY
To date the costs of implementing the Year 2000 compliance program have been
indistinguishable from the normal costs incurred by Eidos in the regular
maintenance and upgrading of all computer hardware and software. Some additional
marginal costs have been incurred (for example, purchasing specific testing
software and Year 2000 literature, travel expenses) but these have been
negligible (less than (pound)50,000).
The only further cost envisaged will be from the results of Business Continuity
Planning . This may highlight the need for standby arrangements to be made in
the event of loss of facilities (power, light etc.) See contingency plans below.
RISKS TO THE COMPANY
Eidos believes it has taken reasonable steps to ensure it is not adversely
affected by the Year 2000 problems however it would be impossible to give full
assurance that operations will be unaffected considering the supply chain it
operates within. Eidos is a very seasonal business and the majority of the
Company's sales occur in period leading up to Thanksgiving and Christmas.
Therefore a disruption in business in January would not normally have a
significant impact on the Company's annual results. However the Company's
current release schedule has a relatively large number of titles due for release
in the first few months of 2000. Consequently delays in development completion,
manufacturing or despatch caused by Year 2000 problems (internal or third party)
may have an impact on the results for the year ended March 31, 2000. It is
likely that this would only be a timing difference unless there were found to be
irrevocable problems with any of the business critical systems or equipment. In
addition, at January 1, 2000 most of Eidos' customers will not have paid for the
stock they bought for the Christmas season and hence any Year 2000 problems they
experience may have an adverse affect on Eidos' cash flow in the early part of
2000.
CONTINGENCY PLANS
Eidos is currently developing a Business Continuity Plan with the help of an
external consultant. This includes risk management, physical security and
disaster recovery planning. This will also provide alternative resources should
the main Eidos U.K. offices be unable to operate or experience any loss of IT
capability or data. It is planned to extend this to offices in Europe and the
U.S. Although it is possible that a completely comprehensive plan will not be in
place in Europe and the U.S. before the year 2000, a number of steps will be
taken to ensure any disruption caused by the year 2000 is minimised.
THE EURO
The Board is currently assessing the implications for the European operations of
the introduction of a common European currency ("The Euro"). The Euro was
launched on January 1, 1999 and now runs in parallel with the French Franc,
Deutschmark and other participating currencies until the local currencies are
phased out by January 1, 2001.
The financial information systems used in the European offices are all capable
of operating in multiple currencies including the Euro.
Page 16
<PAGE>
EIDOS PLC
There have been negligible external costs relating to the introduction of the
Euro to date (less than (pound)10,000). It is anticipated that once the Euro is
implemented there will be some costs involved in changing to the new currency
(for example, staff training and minor software and hardware changes).
These are not expected to be material.
One of the main issues for the Company is the possible erosion of margin
resulting from changes in the retail price point. As existing price points are
translated to the Euro they may be rounded down by the retailer who may pass
this reduction on to the Company. At this stage it is not possible to predict
the impact of this but Eidos will seek to maintain its margin wherever it can.
In addition, price transparency may erode margins in certain countries; however,
the fact that most games are translated to the local language should help to
reduce "gray imports" (games bought in one territory and sold in another with a
higher retail price) and minimize this risk.
Currently the offices in France and Germany remit Euros back to the Head
Office in the U.K. These receipts are translated to Sterling and the currency
risk is hedged in accordance with Company policies. Should the U.K. convert
to the Euro this currency risk will be eliminated and the U.S. dollar will
become the only significant currency exposure.
MARKET RISK
A full discussion of Eidos' exposure to market risk is given in the Company's
Annual Report on Form 20-F filed with the Securities and Exchange Commission on
July 27, 1999. Since that date the only significant change in exposure has been
resulting from the conversion of 6.25% convertible bonds.
FOREIGN EXCHANGE RISK
The Company's Sterling balance sheet was partially protected from the movements
in the U.S. dollar exchange rate by the hedging effect of the bond. Dollar
assets comprising cash and inter-company balances were matched against the bond
liability. Since the year end over eighty percent of the bond has been converted
and the Company has had to take other steps to hedge its exposure to the U.S.
dollar. Accordingly in July 1999 the Company took out a forward contract to sell
U.S. $50 million at a rate of $1.5637. This forward expires on March 31, 2000.
The exchange movement is calculated every month and set off against the movement
in U.S. dollar assets.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorised.
EIDOS PLC
By: /s/ Jeremy MJ Lewis September 10, 1999
-------------------- ------------------
Jeremy MJ Lewis
Chief Financial Officer
Page 17
<PAGE>
FOR IMMEDIATE RELEASE
ACQUISITION OF INTERESTS IN PROEIN AND PYRO
-------------------------------------------
LONDON, JULY 30, 1999 -- EIDOS PLC (NASDAQ: EIDSY), one of the world's leading
publishers and developers of entertainment software, announces the acquisition,
on July 29, 1999 of an effective 25% of the share capital of the Spanish
developer Pyro Studios SL ("Pyro") and 75% of the share capital of the related
Spanish distributor, Proein SA ("Proein"). The total consideration is
approximately $23 million ((pound)14.5 million) together with an additional
amount up to $5 million contingent on the net asset value of Proein. The
acquisition is to be financed from existing cash resources and banking
facilities and is due in full on completion.
SUMMARY
- - Pyro is the Madrid based developer of Commandos: Behind Enemy Lines and
its subsequent mission disk, Commandos: Beyond the Call of Duty. These
two products combined have sold in excess of 1.3 million units
world-wide since June 1998. Commandos: Behind Enemy lines was the
second largest selling PC CD-Rom title Europe in 1998 in revenue terms,
behind Tomb Raider III.
- - Proein is a well established Spanish distributor based also in Madrid.
The existing management team will continue to be responsible for
operational matters.
- - The acquisition of a minority interest in Pyro will enhance Eidos'
strength in software development for the future.
- - The Directors of Eidos expect that the enlarged group will benefit
from:
- long-term content partnership on franchise titles,
- a stronger publishing presence in one of Europe's fastest
growing markets,
- the extension of the Eidos studio model to Pyro, and
- - The Directors expect that the deal will be earnings enhancing, before
amortisation of goodwill, in the year to March 31, 2000.
Commenting on the acquisition, Charles Cornwall, CEO of Eidos, said:
"We are delighted to have this opportunity to build on our relationship with
Proein and Pyro. The global success of the Commandos titles demonstrates the
management team's ability to create hit products. We have every faith in their
ability to continue that development success whilst maintaining the integrity of
their distribution business."
Juan Antonio Perez Ramirez, President of Proein and Pyro, said:
"We are very excited about this opportunity to strengthen our links with Eidos.
Their financial strength and global sales and marketing network will enable us
to significantly expand our development capabilities. Also, the company will
retain and build on its status as an independent and neutral distributor in the
Spanish entertainment software market. The existing management team and business
philosophy will remain in place."
INFORMATION ON PYRO AND PROEIN
Pyro Studios, founded in Madrid, Spain in March 1997, is a leading European
developer of interactive entertainment software for the PC market. Its only
titles released to date have been Commandos: Behind Enemy Lines and its mission
disk Commandos: Beyond the Call of Duty. Commandos: Behind Enemy Lines was the
second largest selling title in Europe in 1998 by revenue terms.
Exhibit E-1
<PAGE>
Pyro currently employs in excess of 75 development staff working on three
products due for release over the next 18 months. These titles include a sequel
to Commandos for release on PC and PlayStation, whilst the two other titles are
for release on PC and next-generation consoles.
SUMMARY FINANCIAL INFORMATION
The net assets of Proein as at December 31, 1998 were Ptas 639 million
((pound)2.56 million) and the profit before tax for the year then ended was Ptas
549 million ((pound)2.2 million). The net assets of Pyro as at December 31, 1998
were Ptas 17 million ((pound)0.07 million) and the profit before tax for the
year then ended was Ptas 27 million ((pound)0.1 million).
BACKGROUND TO AND REASONS FOR THE ACQUISITION
- ---------------------------------------------
The Directors feel that Eidos will benefit from the following:
LONG TERM CONTENT PARTNERSHIP WITH PYRO
The interactive entertainment software market is "hit driven" with participants
making much of their profit from a relatively small number of very successful
products. Commandos is Eidos' second biggest selling product behind the Tomb
Raider franchise. Commandos: Behind Enemy Lines was the second largest PC
selling title by revenue in Europe in 1998, behind the largest selling PC title,
Tomb Raider III. The title and its mission disc have now sold in excess of 1.3
million units world-wide. Eidos already has the publishing rights to Commandos 2
and this deal will secure long term content partnership with Pyro for this
extremely valuable franchise.
STRONGER PUBLISHING PRESENCE IN ONE OF EUROPE'S FASTEST GROWING MARKETS
The acquisition of the stakes in Proein and Pyro will strengthen Eidos'
publishing activitieswith a direct presence in Europe's sixth largest market. As
the entertainment market continues to expand, territories such as Spain,
Australia, Scandinavia and Italy are now viable markets for a publishing
presence.
EXTENSION OF THE EIDOS STUDIO MODEL TO PYRO
Eidos believes that its model of partnering with independent development studios
establishes a creative and inspiring working environment that attracts and keeps
top quality, proven development groups for long term relationships. Eidos is
taking a minority interest in Pyro with the intention of allowing Pyro to
benefit from the upside of their work whilst being able to benefit from the
centralised support available from Eidos.
INFORMATION ABOUT EIDOS
Eidos is one of Europe's largest publishers and developers of entertainment
software. The Company develops and publishes a diverse mix of titles for the
Sony PlayStation and multimedia PC markets in the US, the UK, Europe and Asia.
Eidos' original roots lay in software research and development in the field of
video compression technology.
On May 27, 1999 Eidos announced its results for the year ended March 31, 1999.
Sales for the year were (pound)226.3 million (1997: 137.2 million) and profit
before tax was (pound)37.9 million (1997: (pound)16.5 million).
CONTACT:
Charles Cornwall, CEO: 011 44 181 636 3000
Mike McGarvey, COO: 011 44 181 636 3000
Jeremy Lewis, CFO: 011 44 181 636 3000
Exhibit E-1
<PAGE>
Neil Camp, Binns & Co: 011 44 171 786 9600
Ryan Barr / Lenny Santiago, Brainerd Communicators: 212 986 6667
Exhibit E-1
<PAGE>
THIS PRESS RELEASE IS NOT INTENDED FOR AND MAY NOT BE DISTRIBUTED IN THE UNITED
STATES, OR TO US PERSONS.
FOR IMMEDIATE RELEASE 3 SEPTEMBER 1999
EIDOS PLC
1999 FIRST QUARTER RESULTS
FIRST QUARTER REVENUES (POUND)16.8MILLION
FIRST QUARTER LOSS BEFORE TAX AND GOODWILL (POUND)18.4MILLION
Eidos plc ("Eidos"), one of the world's leading publishers and developers of
entertainment software, announces results for the quarter ended 30 June 1999.
MR CHARLES CORNWALL, CHIEF EXECUTIVE OFFICER, SAYS:
"Our results for the three months to June, traditionally a quiet quarter for our
industry, reflect the slippage of two key titles as we took the decision to
delay the launch of Braveheart and Legacy of Kain: Soul Reaver until our second
quarter, ensuring they were fully ready for release. Both titles have since been
successfully released. We are satisfied with the progress made and are pleased
to have secured recently a number of exciting new publishing and license deals.
We remain on course to achieve the growth targets we set ourselves for the full
year."
HIGHLIGHTS OF THE CHAIRMAN'S STATEMENT
- - Three new titles launched in the quarter
- - Acquisition of 25% stake in Pyro Studios SL, Spanish developers of the
Commandos series of games, and 75% stake in Proein SA, the related Spanish
distributor
- - Acquisition of 5% stake in Elixir Studios
- - Long term publishing deal with Capcom for Resident Evil 3 extended. Capcom
now granted Japanese and Asian rights to the next game in the Tomb Raider
series
- - Eidos also granted European and Australian rights to publish Capcom's Power
Stone on Dreamcast
- - Publishing deal signed with Enix for the Game Boy rights to Dragon Warrior
Monsters
- - European and Australian PC CD rights for Final Fantasy VIII secured under
extension to existing publishing deal with Squaresoft
- - License agreement signed with International Sports Multimedia for the
International Olympic Committee's exclusive rights to the Sydney 2000 and
Athens 2004 Olympic Games and the Salt Lake City 2002 Winter Games
- - Following conversions by the holders, convertible bond liability has fallen
from $49.9m at 31 March 1999 to $33.6m at 30 June 1999 and to $9.8m as at
today's date further strengthening the balance sheet
RESULTS HIGHLIGHTS (FOR THE QUARTER TO 30 JUNE 1999)
<TABLE>
<S> <C> <C> <C>
- - Turnover: (pound)16.8m (1998: (pound)25.8m)
- - EBITDA: ((pound)17.5m) (1998: ((pound)1.5m))
- - Loss before tax and goodwill: ((pound)18.4m) (1998: ((pound)2.3m))
- - Loss before tax: ((pound)20.9m) (1998: ((pound)2.3m))
- - Loss per share: (79.9p) (1998: (8.3p))
- - Loss per share before goodwill: (65.6p) (1998: (8.3p))
</TABLE>
Exhibit E-2
<PAGE>
NOTE 1: EIDOS PREPARES FINANCIAL STATEMENTS IN ACCORDANCE WITH APPLICABLE UK
ACCOUNTING STANDARDS (UK GAAP). THE RECONCILIATION TO US GAAP IS
AVAILABLE FROM EIDOS ON REQUEST.
Exhibit E-2
<PAGE>
EIDOS/FIRST QUARTER RESULTS.... PAGE 2
REGARDING CURRENT TRADING AND PROSPECTS MR IAN LIVINGSTONE, CHAIRMAN, SAYS:
"During the first quarter we released Warzone 2100 and FA Manager on PSX and
Official Formula One Racing on PC CD. However, we made the decision to postpone
the launch of Braveheart and Legacy of Kain: Soul Reaver to the second quarter
to ensure that the products were ready for release to our consumers. Both titles
have now been released and we have been very pleased with their performance. In
particular, Legacy of Kain: Soul Reaver, the latest title from Crystal Dynamics,
which we acquired in November 1998, has to date shipped in excess of 750,000
units world wide.
Extending our model of investing in developers with proven records of
achievement, July saw us take a 25% stake in Pyro Studios SL, the developers of
the highly successful titles Commandos: Behind Enemy Lines and Commandos: Beyond
the Call of Duty. Combined sales of these titles exceeded 1.3 million units
world wide since June 1998. As part of this investment deal we also took a 75%
stake in Proein SA, the related Spanish distributor, securing a firm foothold
for our products in one of Europe's fastest growing software markets. In August,
following our publishing deal in February with Elixir Studios, we acquired a 5%
stake in the London-based developer, as a further sign of our belief in their
creative and technical abilities.
In Japan, we have extended our existing co-publishing arrangements with Capcom
whereby we have the exclusive rights to Resident Evil 3 on PSX in Europe and
Australia. Under the extension Capcom has been given exclusive rights to publish
the PSX version of the next game in the Tomb Raider series in Japan and Asia.
Further, we have been granted the European and Australian publishing rights to
Capcom's Power Stone title on the Sega Dreamcast. The release of Power Stone is
set to coincide with the European release of Dreamcast later this year.
A deal with Enix to publish titles from the Dragon Warrior Monsters series of
games in Europe on the Game Boy further extends the range of platforms we will
be publishing on during the current fiscal year. It is particularly gratifying
that we have been able to secure two such high profile titles for our first
releases on the Game Boy and Dreamcast platforms.
The recent signings of the PC CD publishing rights for Final Fantasy VIII in
Europe and Australia and of the rights to the Sydney 2000 and Athens 2004
Olympic Games and the Salt Lake City 2002 Winter Games serve to underline the
strength of the Eidos brand in attracting the highest quality licenses and
publishing deals in the face of strong competition.
During the quarter, Eidos was informed that it had been dismissed voluntarily by
the plaintiffs from the so-called "Basketball Diaries" case currently being
pursued in Paducah, Kentucky, USA on the grounds that the game published by
Eidos and alleged to have inspired the underlying acts at issue in the case in
fact had not yet been released at the time those acts occurred. Eidos made no
payment or other consideration for the dismissal.
Though the quiet trading conditions we experienced in the first quarter look set
to continue during the summer months, we already have two successful new
releases behind us in the second quarter. We are also looking forward to
releasing the PC CD titles Cutthroats and Abomination, prior to the quarter end.
Other quality titles such as Power Stone, Daikatana, Urban Chaos, Anachronox,
The Nomad Soul, Fear Effect, Resident Evil 3, Final Fantasy VIII and new
releases from the Core Design franchises Tomb Raider and Fighting Force are also
due for release in the current fiscal year."
CONTACT:
Charles Cornwall, CEO: 0181 636 3000
Jeremy Lewis, CFO: 0181 636 3000
Neil Camp, Binns & Co: 0171 786 9600
Ryan Barr, Brainerd Communicators: 001 212 986 6667
Exhibit E-2
<PAGE>
EIDOS/FIRST QUARTER RESULTS.... PAGE 3
CHAIRMAN'S STATEMENT
RESULTS AND TRADING REVIEW
Eidos reports a loss before tax of (pound)20.9 million for the three months
ended 30 June 1999 compared to (pound)2.3 million in the corresponding period
last year. Turnover decreased 35% from (pound)25.8 million to (pound)16.8
million. This gives a loss per share of 79.9p compared to 8.3p in the same
period last year based on a weighted average number of shares outstanding in the
period of 17,568,376 (1998:17,110,838).
Net cash outflow from operating activities was (pound)7.0 million compared to an
inflow of (pound)6.5 million in the corresponding period last year. The cash
outflow for the period includes the second and final instalment of the
consideration payable for Crystal Dynamics of (pound)14.3m, which was paid on 1
April 1999. Following conversion by the holders, the convertible bond fell from
an outstanding amount of $49.9m at 31 March 1999 to $33.6m at 30 June 1999 and
to $9.8m at today's date.
Three new titles were launched in the three months ended 30 June 1999; Warzone
2100 and FA Manager on PSX and Official Formula One Racing on PC CD.
Gross margin for the quarter was 50.4% compared to 56.7% in the corresponding
period last year. The decrease in margin results from a combination of factors
including a shift in the sales mix and increased internal royalty costs for the
quarter compared to the corresponding period when there were more premium priced
new releases.
SELLING AND MARKETING
Advertising costs for the three months ended 30 June 1999 were (pound)3.9
million (23.4% of revenues) compared to (pound)3.0 million (11.7% of revenues)
in the corresponding period. This reflects increased expenditure on catalogue
titles and the costs associated with building brand awareness through print
advertising, the internet and other interactive media.
The fixed element of selling and marketing costs was (pound)4.9 million (1998:
(pound)2.8 million) and reflects the costs of additional headcount and the
amortisation of licence fees.
RESEARCH AND DEVELOPMENT
Research and development spend represents the Company's investment in product
development of (pound)10.9 million for the three months ended 30 June 1999
(1998: (pound)6.6 million). Also included is pure research and development of
(pound)0.9 million (1998: (pound)0.5 million). The product development charge
for the quarter includes (pound)7.7 million invested in a pipeline of 37 titles
which have yet to be released.
GENERAL AND ADMINISTRATIVE
General and administrative costs were (pound)8.7 million or 51.7% of revenues
(1998: (pound)4.0 million or 15.5%) for the three months ended 30 June 1999. The
total, excluding goodwill of (pound)2.5m, was (pound)6.2 million (36.7%),
reflecting the increased administrative infrastructure required to run the
expanded operations of the Group.
TAXATION
A tax credit of (pound)6.9m has been applied to the loss on ordinary activities
of (pound)20.9m. This reflects the projected underlying tax rate for the year to
31 March 2000 of 37%.
Exhibit E-2
<PAGE>
EIDOS/FIRST QUARTER RESULTS.... PAGE 4
CURRENT TRADING AND PROSPECTS
During the first quarter we released Warzone 2100 and FA Manager on PSX and
Official Formula One Racing on PC CD. However, we made the decision to postpone
the launch of Braveheart and Legacy of Kain: Soul Reaver to the second quarter
to ensure that the products were ready for release to our consumers. Both titles
have now been released and we have been very pleased with their performance. In
particular, Legacy of Kain: Soul Reaver, the latest title from Crystal Dynamics,
which we acquired in November 1998, has to date shipped in excess of 750,000
units world wide.
Extending our model of investing in developers with proven records of
achievement, July saw us take a 25% stake in Pyro Studios SL, the developers of
the highly successful titles Commandos: Behind Enemy Lines and Commandos: Beyond
the Call of Duty. Combined sales of these titles have exceeded 1.3 million units
world wide since June 1998. As part of this investment we also took a 75% stake
in Proein SA, the related Spanish distributor, securing a firm foothold for our
products in one of Europe's fastest growing software markets. In August,
following our publishing deal in February with Elixir Studios, we acquired a 5%
stake in the London-based developer, as a further sign of our belief in their
creative and technical abilities.
In Japan, we have extended our existing co-publishing arrangements with Capcom
whereby we have the exclusive rights to Resident Evil 3 on PSX in Europe and
Australia. Under the extension Capcom has been given exclusive rights to publish
the PSX version of the next game in the Tomb Raider series in Japan and Asia.
Further, we have been granted the European and Australian publishing rights to
Capcom's Power Stone title on the Sega Dreamcast. The release of Power Stone is
set to coincide with the European release of Dreamcast later this year.
A deal with Enix to publish titles from the Dragon Warrior Monsters series of
games in Europe on the Game Boy further extends the range of platforms we will
be publishing on during the current fiscal year. It is particularly gratifying
that we have been able to secure two such high profile titles for our first
releases on the Game Boy and Dreamcast platforms.
The recent signings of the PC CD publishing rights for Final Fantasy VIII in
Europe and Australia and of the rights to the Sydney 2000 and Athens 2004
Olympic Games and the Salt Lake City 2002 Winter Games serve to underline the
strength of the Eidos brand in attracting the highest quality licenses and
publishing deals in the face of strong competition.
During the quarter, Eidos was informed that it had been dismissed voluntarily by
the plaintiffs from the so-called "Basketball Diaries" case currently being
pursued in Paducah, Kentucky, USA on the grounds that the game published by
Eidos and alleged to have inspired the underlying acts at issue in the case in
fact had not yet been released at the time those acts occurred. Eidos made no
payment or other consideration for the dismissal.
Though the quiet trading conditions we experienced in the first quarter look set
to continue during the summer months, we already have two successful new
releases behind us in the second quarter. We are also looking forward to
releasing the PC CD titles Cutthroats and Abomination, prior to the quarter end.
Other quality titles such as Power Stone, Daikatana, Urban Chaos, Anachronox,
The Nomad Soul, Fear Effect, Resident Evil 3, Final Fantasy VIII and new
releases from the Core Design franchises Tomb Raider and Fighting Force are also
due for release in the current fiscal year.
IAN LIVINGSTONE
CHAIRMAN
3 SEPTEMBER 1999
Exhibit E-2
<PAGE>
EIDOS/FIRST QUARTER RESULTS.... PAGE 5
EIDOS PLC
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
THREE MONTHS Three months
ENDED 30 JUNE ended 30 June
1999 1998
(pound)000 (pound)000
<S> <C> <C>
TURNOVER -
CONTINUING OPERATIONS 16,810 25,801
Cost of goods sold (8,345) (11,177)
---------------- ----------------
GROSS PROFIT 8,465 14,624
Selling and marketing (8,867) (5,858)
Research and development (11,779) (7,065)
General and administrative
Goodwill amortisation (2,514) -
Other (6,169) (4,002)
---------------- ----------------
Operating expenses (29,329) (16,925)
---------------- ----------------
OPERATING LOSS (20,864) (2,301)
Net interest and similar charges (85) 19
---------------- ----------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAX (20,949) (2,282)
Taxation 6,915 867
---------------- ----------------
NET LOSS AFTER TAX (14,034) (1,415)
---------------- ----------------
Loss per share (79.9P) (8.3p)
Loss per share before goodwill (65.6P) (8.3p)
--------- ---------
</TABLE>
NOTES:
1. The loss per share is based on a weighted average number of ordinary shares
in issue of 17,568,376 for the quarter ended 30 June 1999 (1998:
17,110,838).
MORE../
Exhibit E-2
<PAGE>
EIDOS/FIRST QUARTER RESULTS.... PAGE 6
EIDOS PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
30 JUNE 30 June
1999 1998
(pound)000 (pound)000
<S> <C> <C>
FIXED ASSETS
Intangible assets 23,999 -
Tangible assets 5,331 6,559
Investments 12,164 12,251
---------------- ----------------
Total fixed assets 41,494 18,810
---------------- ----------------
CURRENT ASSETS
Stocks 6,618 4,182
Debtors 33,369 26,323
Cash at bank and in hand 27,195 42,691
---------------- ----------------
TOTAL CURRENT ASSETS 67,182 73,196
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (23,480) (22,994)
---------------- ----------------
NET CURRENT ASSETS 43,702 50,202
---------------- ----------------
TOTAL ASSETS LESS CURRENT LIABILITIES 85,196 69,012
---------------- ----------------
CREDITORS DUE AFTER MORE THAN ONE YEAR:
US$ convertible bonds (20,660) (29,054)
Other creditors (155) (365)
---------------- ----------------
(20,815) (29,419)
---------------- ----------------
NET ASSETS 64,381 39,593
---------------- ----------------
---------------- ----------------
CAPITAL AND RESERVES
Called up share capital 1,855 1,711
Share premium account 62,251 49,349
Other reserves 707 167
Profit and Loss account (432) (11,634)
---------------- ----------------
EQUITY SHAREHOLDERS' FUNDS 64,381 39,593
---------------- ----------------
---------------- ----------------
</TABLE>
NOTES:
1. Eidos plc is registered in England and Wales (number 2501949) and its
registered office is Wimbledon Bridge House, 1 Hartfield Road, Wimbledon,
London SW19 3RU.
2. The balance sheet at 30 June 1998 has been restated to reflect the
reclassification of the goodwill reserve required by Financial Reporting
Standard No. 10.
MORE ../
Exhibit E-2
<PAGE>
EIDOS/FIRST QUARTER RESULTS.... PAGE 7
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
THREE MONTHS ENDED Three months ended
30 JUNE 30 June
1999 1998
(pound)000 (pound)000
---------------- ----------------
<S> <C> <C>
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (7,035) 6,543
---------------- ----------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 335 576
Interest paid on bond (243) -
Interest paid on finance leases (15) (32)
Other interest paid (117) -
---------------- ----------------
(40) 544
---------------- ----------------
TAXATION
Overseas tax paid (938) (5,436)
---------------- ----------------
(938) (5,436)
---------------- ----------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (554) (620)
Sale of tangible fixed assets - 34
Purchase of other investments - (669)
---------------- ----------------
(554) (1,255)
---------------- ----------------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings (14,327) -
---------------- ----------------
(14,327) -
---------------- ----------------
NET CASH (OUTFLOW) / INFLOW BEFORE FINANCING (22,894) 396
FINANCING
Issue of ordinary share capital 1,897 3
Repayment of principal under finance leases (91) (221)
---------------- ----------------
1,806 (218)
---------------- ----------------
(DECREASE)/INCREASE IN CASH IN THE PERIOD (21,088) 178
---------------- ----------------
---------------- ----------------
</TABLE>
NOTES:
1. Net cash inflow from operating activities is derived from operating loss of
(pound)20,864,000 (1998: (pound)2,301,000) adjusted for depreciation of
(pound)820,000(1998: (pound)756,000), loss on disposal of fixed assets of
(pound)7,000 (1998: (pound)5,000), goodwill amortisation of
(pound)2,514,000 (1998: (pound)nil) and a decrease in working capital of
(pound)10,488,000 (1998: (pound)8,083,000).
..ENDS.
Exhibit E-2
<PAGE>
FOR IMMEDIATE RELEASE
EIDOS PLC ANNOUNCES FINANCIAL RESULTS FOR THE THREE MONTHS
----------------------------------------------------------
ENDED JUNE 30, 1999
-------------------
FIRST QUARTER REVENUES (POUND)16.8 MILLION ($26.6 MILLION)
FIRST QUARTER LOSS BEFORE TAX AND GOODWILL (POUND)18.4 MILLION ($29.1 MILLION)
LONDON, SEPTEMBER 3, 1999 -- Eidos plc (NASDAQ: EIDSY), one of the world's
leading publishers and developers of entertainment software, announced today
results for the quarter ended June 30, 1999. Revenues were (pound)16.8 million
($26.6 million) for the quarter, a decrease of 35% from the same period LASt
year. On a US GAAP basis the Company's loss before tax for the quarter ended
June 30, 1999 was (pound)21.2 million ($33.5 million) compared to (pound)3.9
million in the corresponding period last year. This resULTEd in a loss per share
of 81.5p (128.8c) for the quarter compared to a loss of 17.8p in the
corresponding period last year.
Commenting on Eidos' current trading and prospects, Ian Livingstone, Chairman,
stated,
"During the first quarter we released Warzone 2100 and FA Manager on PSX and
Official Formula One Racing on PC CD. However, we made the decision to postpone
the launch of Braveheart and Legacy of Kain: Soul Reaver to the second quarter
to ensure that the products were ready for release to our consumers. Both titles
have now been released and we have been very pleased with their performance. In
particular, Legacy of Kain: Soul Reaver, the latest title from Crystal Dynamics,
which we acquired in November 1998, has to date shipped in excess of 750,000
units world wide.
Extending our model of investing in developers with proven records of
achievement, July saw us take a 25% stake in Pyro Studios SL, the developers of
the highly successful titles Commandos: Behind Enemy Lines and Commandos: Beyond
the Call of Duty. Combined sales of these titles have exceeded 1.3 million units
world wide since June 1998. As part of the same deal we also took a 75% stake in
Proein SA, the related Spanish distributor, securing a firm foothold for our
products in one of Europe's fastest growing software markets. In August,
following our publishing deal in February with Elixir Studios, we acquired a 5%
stake in the London-based developer, as a further sign of our belief in their
creative and technical abilities.
In Japan, we have extended our existing co-publishing arrangements with Capcom
whereby we have the exclusive rights to Resident Evil 3 on PSX in Europe and
Australia. Under the extension Capcom has been given exclusive rights to publish
the PSX version of the next game in the Tomb Raider series in Japan and Asia.
Further, we have been granted the European and Australian publishing rights to
Capcom's Power Stone title on the Sega Dreamcast. The release of Power Stone is
set to coincide with the European release of Dreamcast later this year.
A deal with Enix to publish titles from the Dragon Warrior Monsters series of
games in Europe on the Game Boy further extends the range of platforms we will
be publishing on during the current fiscal year. It is particularly gratifying
that we have been able to secure two such high profile titles for our first
releases on the Game Boy and Dreamcast platforms.
The recent signings of the PC CD publishing rights for Final Fantasy VIII in
Europe and Australia and of the rights to the Sydney 2000 and Athens 2004
Olympic Games and the Salt Lake City 2002 Winter Games serve to underline the
strength of the Eidos brand in attracting the highest quality licenses and
publishing deals in the face of strong competition.
Exhibit E-3
<PAGE>
EIDOS PLC: ANNOUNCES FIRST QUARTER RESULTS PAGE 2
During the quarter, Eidos was informed that it had been dismissed voluntarily by
the plaintiffs from the so-called "Basketball Diaries" case currently being
pursued in Paducah, Kentucky, USA on the grounds that the game published by
Eidos and alleged to have inspired the underlying acts at issue in the case in
fact had not yet been released at the time those acts occurred. Eidos made no
payment or other consideration for the dismissal.
Though the quiet trading conditions we experienced in the first quarter look set
to continue during the summer months, we already have two successful new
releases behind us in the second quarter. We are also looking forward to
releasing the PC CD titles Cutthroats and Abomination, prior to the quarter end.
Other quality titles such as Power Stone, Daikatana, Urban Chaos, Anachronox,
The Nomad Soul, Fear Effect, Resident Evil 3, Final Fantasy VIII and new
releases from the Core Design franchises Tomb Raider and Fighting Force are also
due for release in the current fiscal year."
Charles Cornwall, Chief Executive Officer, added, "Our results for the three
months to June, traditionally a quiet quarter for our industry, reflect the
slippage of two key titles as we took the decision to delay the launch of
Braveheart and Legacy of Kain: Soul Reaver until our second quarter, ensuring
they were fully ready for release. Both titles have since been successfully
released. We are satisfied with the progress made and are pleased to have
secured recently a number of exciting new publishing and licensing deals. We
remain on course to achieve the growth targets we set ourselves for the full
year."
<TABLE>
<CAPTION>
US GAAP
QUARTER ENDED JUNE 30
1999 1998
$000* (pound)000 (pound)000
<S> <C> <C> <C>
NET SALES 26,560 16,810 25,801
EBITDA (27,603) (17,470) (1,542)
LOSS BEFORE TAX (33,541) (21,228) (3,911)
NET LOSS (22,615) (14,313) (3,044)
LOSS PER SHARE (128.8c) (81.5p) (17.8p)
LOSS PER SHARE BEFORE GOODWILL (103.6c) (65.6p) (8.3p)
WEIGHTED AVERAGE SHARES 17,568,376 17,568,376 17,110,838
</TABLE>
* THE COMPANY'S FINANCIAL STATEMENTS ARE EXPRESSED IN POUNDS STERLING.
REFERENCES TO "POUNDS STERLING" OR "(POUND)" ARE TO THE CURRENCY OF THE UNITED
KINGDOM AND REFERENCES TO "$", "US DOLLARS" OR "US$" ARE TO UNITED STATES
CURRENCY. SOLELY FOR CONVENIENCE THIS PRESS RELEASE CONTAINS TRANSLATIONS OF
CERTAIN POUNDS STERLING AMOUNTS INTO US DOLLARS AT SPECIFIED RATES. THESE
TRANSLATIONS SHOULD NOT BE CONSTRUED AS REPRESENTATIONS THAT THE POUNDS STERLING
AMOUNTS ACTUALLY REPRESENT SUCH US DOLLAR AMOUNTS OR COULD BE CONVERTED INTO US
DOLLARS AT THE RATE INDICATED OR ANY OTHER RATE. UNLESS OTHERWISE INDICATED, THE
TRANSLATIONS OF POUNDS STERLING AMOUNTS INTO US DOLLARS HAVE BEEN MADE AT THE
RATE OF $1.58 TO (POUND)1.00, THE EXCHANGE RATE PUBLISHED BY DATASTREAM FOR JUNE
30, 1999.
Exhibit E-3
<PAGE>
EIDOS PLC: ANNOUNCES FIRST QUARTER RESULTS PAGE 3
RECENT DEVELOPMENTS
- - Three new titles launched in the quarter
- - Acquisition of 25% stake in Pyro Studios SL, Spanish developers of the
Commandos series of games, and 75% stake in Proein SA, the related Spanish
distributor
- - Acquisition of 5% stake in Elixir Studios
- - Long term publishing deal with Capcom for Resident Evil 3 extended. Capcom
now granted Japanese and Asian rights to the next game in the Tomb Raider
series
- - Eidos granted European and Australian rights to publish Capcom's Power
Stone on Dreamcast
- - Publishing deal signed with Enix for the Game Boy rights to Dragon Warrior
Monsters
- - European and Australian PC CD rights for Final Fantasy VIII secured under
extension to existing publishing deal with Squaresoft
- - License agreement signed with International Sports Multimedia for the
International Olympic Committee's exclusive rights to the Sydney 2000 and
Athens 2004 Olympic Games and the Salt Lake City 2002 Winter Games
- - Following conversions by the holders, convertible bond liability has fallen
from $49.9m at March 31, 1999 to $33.6m at June 30, 1999 and to $9.8m as at
today's date further strengthening the balance sheet
UK GAAP FINANCIAL SUMMARY
Eidos reports a loss before tax of (pound)20.9 million for the three months
ended June 30, 1999 compared to (pound)2.3 million in the corresponding period
last year. Turnover decreased 35% from (pound)25.8 million to (pound)16.8
million. This gives a loss per share of 79.9p compared to 8.3p in the same
period last year based on a weighted average number of shares outstanding in the
period of 17,568,376 (1998:17,110,838).
Net cash outflow from operating activities was (pound)7.0 million compared to an
inflow of (pound)6.5 million in the corresponding period last year. The cash
outflow for the period includes the second and final instalment of the
consideration payable for Crystal Dynamics of (pound)14.3m, which was paid on
April 1, 1999. Following conversion by the holders, the convertible bond fell
from an outstanding amount of $49.9m at March 31, 1999 to $33.6m at June 30,
1999 to $9.8m at today's date.
Three new titles were launched in the three months ended June 30 1999; Warzone
2100 and FA Manager on PSX and Official Formula One Racing on PC CD.
Gross margin for the quarter was 50.4% compared to 56.7% in the corresponding
period last year. The decrease in margin results from a combination of factors
including a shift in the sales mix and increased internal royalty costs for the
quarter compared to the corresponding period when there were more premium priced
new releases.
SELLING AND MARKETING
Advertising costs for the three months ended June 30, 1999 were (pound)3.9
million (23.4% of revenues) compared to (pound)3.0 million (11.7% of revenues)
in the corresponding period. This
Exhibit E-3
<PAGE>
EIDOS PLC: ANNOUNCES FIRST QUARTER RESULTS PAGE 4
reflects increased expenditure on catalogue titles and the costs associated with
building brand awareness through print advertising, the internet and other
interactive media.
The fixed element of selling and marketing costs was (pound)4.9 million (1998:
(pound)2.8 million) and reflects the costs of additional headcount and the
amortisation of licence fees.
RESEARCH AND DEVELOPMENT
Research and development spend represents the Company's investment in product
development of (pound)10.9 million for the three months ended June 30, 1999
(1998: (pound)6.6 million). Also included is pure research and development of
(pound)0.9 million (1998: (pound)0.5 million). The product development charge
for THE quarter includes (pound)7.7 million invested in a pipeline of 37 titles
which have yet to be released.
GENERAL AND ADMINISTRATIVE
General and administrative costs were (pound)8.7 million or 51.7% of revenues
(1998: (pound)4.0 million OR 15.5%) for the three months ended June 30, 1999.
The total, excluding goodwill of (pound)2.5m, was (pound)6.2 million (36.7%),
reflecting the increased administrative infrastructure required to run the
expanded operations of the Group.
TAXATION
A tax credit of (pound)6.9m has been applied to the loss on ordinary activities
of (pound)20.9m. This reflects the projected underlying tax rate for the year to
March 31, 2000 of 37%.
Eidos plc is one of the world's leading publishers and developers of
entertainment software. The Company develops and publishes a diverse mix of
titles for the Sony PSX, Sega Dreamcast, Nintendo Game Boy and multimedia PC
markets in the US, the UK, Europe and Asia. The Company's shares are traded on
the NASDAQ Stock Market under the symbol EIDSY.
Certain statements contained in this press release may be deemed
forward-looking, and involve a number of risks and uncertainties. The Company's
actual results may differ materially from the expectations expressed in such
forward looking statements. Among the factors that could cause actual results to
differ materially are world-wide business and industry conditions, including
consumer buying and retailer ordering patterns, product delays, changes in
research and development spending, company consumer relations, in particular,
levels of sales to mass merchants, retail acceptance of the company's published
and third party titles, competitive conditions and other risks detailed, from
time to time, in the company's SEC filings, including, but not limited to, the
Company's form 20-F for the period ended March 31, 1999.
# # #
CONTACT:
Charles Cornwall, CEO: 011 44 181 636 3000
Jeremy Lewis, CFO: 011 44 181 636 3000
Ryan Barr, Brainerd Communicators: 212 986 6667
Neil Camp, Binns & Co: 011 44 171 786 9600
Exhibit E-3
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILED TO US GAAP FOR THE
QUARTER ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30,
UK GAAP 1999 1999 1998
- ------- $000 (pound)000 (pound)000
<S> <C> <C> <C>
TURNOVER ..CONTINUING OPERATIONS 26,560 16,810 25,801
Cost of goods sold (13,185) (8,345) (11,177)
---------- ---------- ----------
GROSS PROFIT 13,375 8,465 14,624
Selling and marketing (14,010) (8,867) (5,858)
Research and development (18,611) (11,779) (7,065)
General and administrative
Goodwill amortisation (3,972) (2,514) -
Other (9,747) (6,169) (4,002)
---------- ---------- ----------
OPERATING EXPENSES (46,340) (29,329) (16,925)
---------- ---------- ----------
OPERATING LOSS (32,965) (20,864) (2,301)
Net interest and similar charges (135) (85) 19
---------- ---------- ----------
LOSS ON ORDINARY ACTIVITIES BEFORE TAX (33,100) (20,949) (2,282)
TAXATION 10,926 6,915 867
---------- ---------- ----------
NET LOSS AFTER TAX (PREPARED UNDER UK GAAP) (22,174) (14,034) (1,415)
---------- ---------- ----------
LOSS PER SHARE (126.2C) (79.9P) (8.3p)
RECONCILIATION TO US GAAP
- -------------------------
NET LOSS AFTER TAX (PREPARED UNDER UK GAAP) (22,174) (14,034) (1,415)
Amortisation of goodwill (441) (279) (1,629)
---------- ---------- ----------
NET LOSS IN ACCORDANCE WITH US GAAP (22,615) (14,313) (3,044)
---------- ---------- ----------
LOSS PER SHARE IN
ACCORDANCE WITH US GAAP
BASIC (128.8C) (81.5P) (17.8p)
</TABLE>
NOTES:
1. The Company's financial statements are expressed in Pounds Sterling.
References to "Pounds Sterling" or "(pound)" are to the currency of the
United Kingdom and references to "$", "US dollars" OR "US$" are to United
States currency. Solely for convenience this press release contains
translations of certain Pounds Sterling amounts into US dollars at
specified rates. These translations should not be construed as
representations that the Pounds Sterling amounts actually represent such US
dollar amounts or could be converted into US dollars at the rate indicated
or any other rate. Unless otherwise indicated, the translations of Pounds
Sterling amounts into US dollars have been made at the rate of $1.58
to (pound)1.00, the exchange rate published by Datastream for June 30,
1999.
Exhibit E-3
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED BALANCE SHEETS RECONCILED TO US GAAP
<TABLE>
<CAPTION>
UK GAAP JUNE 30, 1999 March 31, 1999
- ------- $000 (pound)000 (pound)000
<S> <C> <C> <C>
FIXED ASSETS
Intangible assets (net of amortisation of(pound)6,584,000) 37,918 23,999 25,939
Tangible assets 8,423 5,331 5,668
Investments 19,219 12,164 12,164
-------------- -------------- --------------
Total fixed assets 65,560 41,494 43,771
-------------- -------------- --------------
CURRENT ASSETS
Stocks 10,456 6,618 5,666
Debtors 52,723 33,369 57,737
Cash at bank and in hand 42,968 27,195 48,220
-------------- -------------- --------------
TOTAL CURRENT ASSETS 106,147 67,182 111,623
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (37,098) (23,480) (58,049)
-------------- -------------- --------------
NET CURRENT ASSETS 69,049 43,702 53,574
-------------- -------------- --------------
TOTAL ASSETS LESS CURRENT LIABILITIES 134,609 85,196 97,345
-------------- -------------- --------------
CREDITORS DUE AFTER MORE THAN ONE YEAR:
US$ convertible bonds (32,643) (20,660) (30,333)
Other creditors (245) (155) (480)
-------------- -------------- --------------
(32,888) (20,815) (30,813)
-------------- -------------- --------------
NET ASSETS 101,721 64,381 66,532
-------------- -------------- --------------
-------------- -------------- --------------
CAPITAL AND RESERVES
- --------------------
Called up share capital 2,931 1,855 1,728
Share premium account 98,356 62,251 50,165
Other reserves 1,117 707 707
Profit and Loss account (683) (432) 13,932
-------------- -------------- --------------
SHAREHOLDERS' FUNDS 101,721 64,381 66,532
-------------- -------------- --------------
-------------- -------------- --------------
RECONCILIATION TO US GAAP
- -------------------------
Shareholders' funds (prepared under UK GAAP) 101,721 64,381 66,532
Goodwill 30,729 19,449 19,449
Less in process research and development (3,741) (2,368) (2,368)
Less amortisation (27,073) (17,135) (16,856)
Deferred tax 3,149 1,993 1,993
-------------- -------------- --------------
SHAREHOLDERS' FUNDS IN ACCORDANCE WITH US GAAP 104,785 66,320 68,750
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
NOTES:
1. Eidos plc is registered in England and Wales (number 2501949) and its
registered office is Wimbledon Bridge House, 1 Hartfield Road, Wimbledon,
London SW19 3RU.
Exhibit E-3
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
QUARTER ENDED Quarter ended
JUNE 30, 1999 June 30, 1998
$000 (pound)000 (pound)000
---------------- ---------------- ----------------
<S> <C> <C> <C>
NET CASH (OUTFLOW)/ INFLOW FROM OPERATING ACTIVITIES (11,115) (7,035) 6,543
---------------- ---------------- ----------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 529 335 576
Interest paid on bond (384) (243) -
Interest paid on finance leases (23) (15) (32)
Other interest paid (185) (117) -
---------------- ---------------- ----------------
(63) (40) 544
---------------- ---------------- ----------------
TAXATION
Overseas tax paid (1,482) (938) (5,436)
---------------- ---------------- ----------------
(1,482) (938) (5,436)
---------------- ---------------- ----------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (875) (554) (620)
Sale of tangible fixed assets - - 34
Purchase of other investments - - (669)
---------------- ---------------- ----------------
(875) (554) (1,255)
---------------- ---------------- ----------------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings (22,637) (14,327) -
---------------- ----------------- ----------------
(22,637) (14,327) -
---------------- ----------------- ----------------
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (36,172) (22,894) 396
FINANCING
Issue of ordinary share capital 2,997 1,897 3
Repayment of principal under finance leases (144) (91) (221)
---------------- ---------------- ----------------
2,853 1,806 (218)
---------------- ---------------- ----------------
(DECREASE)/INCREASE IN CASH IN THE YEAR (33,319) (21,088) 178
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
NOTES:
1. Net cash inflow from operating activities is derived from operating loss of
(pound)20,864,000 (1998: (pound)2,301,000) adjusted for depreciation of
(pound)820,000 (1998: (pound)756,000), loss on disposal of fixed assets of
(pound)7,000 (1998: (pound)5,000), goodwill amortisation and write offs of
(pound)2,514,000 (1998: (pound)nil) and a decrease in working capital of
(pound)10,488,000 (1998: (pound)8,083,000).
Exhibit E-3
<PAGE>
EIDOS PLC STATISTICAL INFORMATION FOR THE PERIOD ENDED JUNE 30, 1999
GEOGRAPHICAL REVENUE MIX
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter ended June 30, Quarter ended June 30,
1999 1998
(pound)000s % of Total (pound)000s % of Total
<S> <C> <C> <C> <C>
North America 4,554 27.1% 10,203 39.5%
UK/Europe 11,160 66.4% 13,954 54.1%
Rest of World 1,096 6.5% 1,644 6.4%
----------- ----------- ----------- -----------
Total net revenues 16,810 100.0% 25,801 100.0%
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Percentage Decrease
Quarter
<S> <C>
North America (55.4%)
UK/Europe (20.0%)
Rest of World (33.3%)
-----------
Total net revenue (34.8%)
-----------
</TABLE>
PLATFORM REVENUE MIX (GAMES REVENUE ONLY)
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter ended June 30, Quarter ended June 30,
1999 1998
(pound)000s % of Total (pound)000s % of Total
<S> <C> <C> <C> <C>
Console 5,897 37.2% 11,165 45.1%
PC 9,954 62.8% 13,591 54.9%
----------- ------------ ----------- -----------
Total net revenues 15,851 100.0% 24,756 100.0%
----------- ------------ ----------- -----------
</TABLE>
<TABLE>
Percentage Decrease
Quarter
<S> <C>
Console (47.2%)
PC (26.8%)
-----------
Total net revenues (36.0%)
-----------
</TABLE>
Exhibit E-3
