<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 December 31, 1998
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 December 31, 1998 and March 31, 1998 2
Consolidated Statements of Operations for the three and nine months ended December 3
31, 1998 and 1997
Statements of Recognised Gains and Losses for the three and nine months ended 5
December 31, 1998 and 1997
Consolidated Statements of Cash Flows for the nine months ended December 31, 1998 6
and 1997
Consolidated Statements of Changes in Shareholders' Equity for the nine months 7
ended December 31, 1998
Notes to Unaudited Consolidated Financial Statements 9
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the three and nine months ended December 31, 1998 15
Exhibits
The following documents were filed as part of this Form 6-K:
UK press release dated February 25, 1999 - results for the E-1
nine months ended December 31, 1998
US press release dated February 25, 1999 - results for the
nine months ended December 31, 1998 E-2
</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
<PAGE>
EIDOS PLC
CONSOLIDATED BALANCE SHEETS RECONCILED TO US GAAP
<TABLE>
<CAPTION>
DECEMBER 31, March 31,
1998 1998
UK GAAP (UNAUDITED) (restated)
- ------- ------------ -----------
<S> <C> <C>
L000 L000
FIXED ASSETS
Intangible assets (net of amortisation of L1,513,000) 28,403 -
Tangible assets 6,331 6,734
Investments 9,164 11,582
------------ -----------
Total fixed assets 43,898 18,316
------------ -----------
CURRENT ASSETS
Stocks 6,477 5,118
Debtors 119,058 30,770
Cash at bank and in hand 2,369 42,513
------------ -----------
TOTAL CURRENT ASSETS 127,904 78,401
CREDITORS: AMOUNT FALLING DUE WITHIN ONE YEAR (76,910) (26,327)
------------ -----------
NET CURRENT ASSETS 50,994 52,074
------------ -----------
TOTAL ASSETS LESS CURRENT LIABILITIES 94,892 70,390
------------ -----------
CREDITORS DUE AFTER MORE THAN ONE YEAR:
US $50 million convertible bonds (29,344) (28,995)
Other creditors (4,308) (459)
------------ -----------
(33,652) (29,454)
------------ -----------
NET ASSETS 61,240 40,936
------------ -----------
------------ -----------
CAPITAL AND RESERVES
- -----------------------
Called up share capital 1,717 1,711
Share premium account 49,552 49,349
Other reserves 707 167
Profit and loss account 9,264 (10,291)
------------ -----------
SHAREHOLDERS' FUNDS 61,240 40,936
------------ -----------
------------ -----------
RECONCILIATION TO US GAAP L000 L000
- -------------------------
Shareholders' funds (prepared under UK GAAP) 61,240 40,936
Goodwill 19,439 19,605
Less in process research and development (2,173) -
Less amortisation (16,436) (12,388)
Deferred tax 2,003 2,003
------------ -----------
SHAREHOLDERS' FUNDS IN ACCORDANCE WITH US GAAP 64,073 50,156
------------ -----------
------------ -----------
</TABLE>
NOTES:
1. The accompanying notes are an integral part of these consolidated financial
statements.
2. The balance sheet at March 31, 1998 has been restated to reflect the
reclassification of the goodwill reserve required by Financial Reporting
Standard No. 10.
Page 2
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILED TO US GAAP
<TABLE>
<CAPTION>
UK GAAP THREE MONTHS ENDED NINE MONTHS ENDED
- ------- DECEMBER 31, DECEMBER 31,
------------------------ -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
L000 L000 L000 L000
TURNOVER - CONTINUING OPERATIONS 121,525 81,252 169,111 103,069
Cost of goods sold (37,260) (27,674) (59,763) (36,802)
---------- --------- ---------- ----------
GROSS PROFIT 84,265 53,578 109,348 66,267
Selling and marketing (13,451) (10,840) (25,902) (17,429)
Research and development (13,812) (7,100) (29,941) (23,072)
General and administrative (7,227) (4,319) (17,350) (12,513)
---------- --------- ---------- ----------
OPERATING EXPENSES (34,490) (22,259) (73,193) (53,014)
---------- --------- ---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 49,775 31,319 36,155 13,253
Amounts written off investments 2,250 - (3,000) -
Profit on sale of operations - 500 - 500
Net interest and similar charges (713) (502) (771) (767)
---------- --------- ---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 51,312 31,317 32,384 12,986
TAXATION (18,291) (10,823) (13,159) (4,482)
---------- --------- ---------- ----------
NET PROFIT AFTER TAX (PREPARED UNDER UK GAAP)
33,021 20,494 19,225 8,504
---------- --------- ---------- ----------
EARNINGS PER SHARE 192.8p 121.0p 112.3p 50.2p
FULLY DILUTED EARNINGS PER SHARE 164.5p 103.9p 100.1p 47.1p
</TABLE>
NOTES:
1. The accompanying notes are an integral part of these consolidated financial
statements.
2. The UK GAAP fully diluted earnings per share for the three and nine months
ended December 31, 1997 have been restated in accordance with Financial
Reporting Standard No.14.
Page 3
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILED
TO US GAAP (CONTINUED)
<TABLE>
<CAPTION>
RECONCILIATION TO US GAAP THREE MONTHS ENDED NINE MONTHS ENDED
- ------------------------- DECEMBER 31, DECEMBER 31,
------------------------ -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
L000 L000 L000 L000
NET PROFIT AFTER TAX (PREPARED UNDER UK GAAP)
33,021 20,494 19,225 8,504
Amortisation of goodwill (771) (2,224) (4,047) (6,061)
In process research and development (2,173) - (2,173) -
Amounts written off investments (2,250) - 3,000 -
Computer games software - - - (10,125)
---------- --------- --------- ---------
NET INCOME/(LOSS) IN ACCORDANCE WITH US GAAP 27,827 18,270 16,005 (7,682)
---------- --------- --------- ---------
EARNINGS/(LOSS) PER SHARE IN ACCORDANCE WITH US GAAP
BASIC 162.5p 107.8p 93.5p (45.4p)
DILUTED 138.9p 92.8p 84.1p (45.4p)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------- -------------------------
UK GAAP 1998 1997 1998 1997
- ------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
L000 L000 L000 L000
NET PROFIT AFTER TAX 33,021 20,494 19,225 8,504
Currency translation differences on foreign currency
net investments (3) 3 163 (21)
---------- --------- ---------- ----------
TOTAL GAINS AND LOSSES IN THE PERIOD 33,018 20,497 19,388 8,483
---------- --------- ---------- ----------
US GAAP
NET INCOME/(LOSS) 27,827 18,270 16,005 (7,682)
Other comprehensive income:
Foreign currency translation adjustments (3) 3 163 (21)
Unrealised gain/(loss) on investments 2,250 - (3,000) -
---------- --------- ---------- ----------
TOTAL COMPREHENSIVE NET INCOME/(LOSS) 30,074 18,273 13,168 (7,703)
---------- --------- ---------- ----------
</TABLE>
The cumulative consolidation foreign currency translation adjustments were
L553,000 at December 31, 1998 and L343,000 at December 31, 1997.
The accompanying notes are an integral part of these consolidated financial
statements.
Page 5
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
NINE MONTHS ENDED Nine months ended
DECEMBER 31, 1998 December 31, 1997
L000 L000
---------------- ----------------
<S> <C> <C>
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (17,472) (24,952)
---------------- ----------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 1,558 869
Dividend income received 124 -
Expenses paid in connection with bond issue - (1,102)
Bond interest paid (951) (563)
Other interest paid (629) (171)
Interest paid on finance leases (100) (118)
---------------- ----------------
2 (1,085)
---------------- ----------------
TAXATION
UK tax paid (1,866) (609)
Overseas tax paid (6,725) (723)
Overseas tax refunded 2,956 -
---------------- ----------------
(5,635) (1,332)
---------------- ----------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (1,824) (4,572)
Sale of tangible fixed assets 75 3
Purchase of other investments (570) (11,824)
---------------- ----------------
(2,319) (16,393)
---------------- ----------------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings (15,200) -
Purchase of associated undertakings - (166)
Cash acquired with subsidiary undertakings 459 -
Sale of business held for resale - 500
----------------- ----------------
(14,741) 334
----------------- ----------------
NET CASH OUTFLOW BEFORE FINANCING (40,165) (43,428)
FINANCING
Issue of ordinary share capital 209 -
Expenses paid in connection with share issue - (140)
Proceeds from bond issue - 30,864
Repayment of principal under finance leases (625) (704)
---------------- ----------------
(416) 30,020
---------------- ----------------
DECREASE IN CASH IN THE PERIOD (40,581) (13,408)
---------------- ----------------
---------------- ----------------
</TABLE>
NOTES:
1. Net cash outflow from operating activities is derived from operating profit
of L36,155,000 (1997: L13,253,000) adjusted for depreciation of
L2,475,000 (1997: L1,991,000), goodwill amortisation and
write-offs of L1,680,000 (1997: Lnil) and an increase in working
capital of L57,782,000 (1997: L40,196,000).
2. The accompanying notes are an integral part of these consolidated financial
statements.
Page 6
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
ORDINARY SHARES
----------------------------------------
L 000 (EXCEPT SHARE NUMBERS) SHARE PROFIT AND
NO. OF PREMIUM OTHER LOSS
US GAAP SHARES AMOUNT ACCOUNT RESERVES ACCOUNT TOTAL
- ------- -------------- ---------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance as at April 1, 1998 17,110,073 1,711 49,349 167 (10,291) 40,936
Profit for the period -- -- -- -- 19,225 19,225
Goodwill written off on associated companies -- -- -- -- 167 167
Arising on the issue of options -- -- -- 540 -- 540
Translation adjustment -- -- -- -- 163 163
Issue of shares net of expenses 56,710 6 203 -- -- 209
-------------- ---------- -------------- ----------- -------------- -----------
BALANCE AS AT DECEMBER 31, 1998 17,166,783 1,717 49,552 707 9,264 61,240
-------------- ---------- -------------- ----------- -------------- -----------
</TABLE>
NOTES:
1. The accompanying notes are an integral part of these consolidated
financial statements.
2. The UK GAAP reserves at April 1, 1998 have been restated to reflect the
reclassification of the goodwill reserve required by Financial Reporting
Standard No. 10.
Page 7
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
ORDINARY SHARES
----------------------------------------
L 000 (EXCEPT SHARE NUMBERS) ADDITIONAL
NO. OF PAID IN OTHER RETAINED
US GAAP SHARES AMOUNT CAPITAL RESERVES EARNINGS TOTAL
- ------- -------------- ---------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at April 1, 1998 17,110,073 1,711 78,875 167 (30,597) 50,156
Loss for the period -- -- -- -- (3,044) (3,044)
Translation adjustment -- -- -- -- 72 72
Issue of shares net of expenses 800 -- 3 -- -- 3
-------------- ---------- -------------- ----------- -------------- -----------
BALANCE AT JUNE 30, 1998 17,110,873 1,711 78,878 167 (33,569) 47,187
Loss for the period -- -- -- -- (8,778) (8,778)
Translation adjustment -- -- -- -- 94 94
Unrealised loss on investments -- -- -- -- (5,250) (5,250)
-------------- ---------- -------------- ----------- -------------- -----------
BALANCE AT SEPTEMBER 30, 1998 17,110,873 1,711 78,878 167 (47,503) 33,253
Profit for the period -- -- -- -- 27,827 27,827
Arising on the issue of options -- -- -- 540 -- 540
Translation adjustment -- -- -- -- (3) (3)
Issue of shares net of expenses 55,910 6 200 -- -- 206
Unrealised gain on investments -- -- -- -- 2,250 2,250
-------------- ---------- -------------- ----------- -------------- -----------
BALANCE AT DECEMBER 31, 1998 17,166,783 1,717 79,078 707 (17,429) 64,073
-------------- ---------- -------------- ----------- -------------- -----------
</TABLE>
NOTES:
1. The accompanying notes are an integral part of these consolidated financial
statements.
2. The above information for the quarters ended June 30, 1998 and
September 30, 1998 supersedes information given in the form 6-K for those
quarters which contained a classification error between additional paid in
capital and retained earnings.
Page 8
<PAGE>
EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements 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, 1998 apart from changes
required by recently released Financial Reporting Standards.
b. EARNINGS PER SHARE
The earnings 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 17,125,579 and 17,115,781 for the three and
nine months ended December 31, 1998, respectively (1997: 16,943,355 and
16,937,132). The fully diluted earnings per share incorporates the
shares issuable upon conversion of the US $50 million bonds and stock
options and warrants outstanding at December 31, 1998. The fully
diluted weighted average number of shares for the three and nine months
ended December 31, 1998 was 20,275,663 and 20,199,383, respectively
(1997: 20,030,880 and 20,035,600).
The weighted average number of shares used to calculate the basic and
diluted earnings per share under US GAAP is the same as for UK GAAP.
c. LICENCE FEES
Licence fees payable to celebrities and professional sports
organisations for use of their name over a number of years or for a
range of products (a franchise), including sub-licence arrangements and
fees payable through intermediaries, are charged to income as sales and
marketing expenditure over the life of the licence. Licence fees are
classified as current and non-current assets based on the remaining
life of the licence. Management regularly reviews the carrying value of
such licences and will accelerate the amortisation should circumstances
require it.
d. GOODWILL
In accordance with Financial Reporting Standard No. 10, purchased
goodwill arising after April 1, 1998 is capitalised and amortised over
its useful economic life. The unamortized balance of goodwill at each
reporting date is reviewed. Given the fast changing industry in which
it is involved, Eidos believes that the goodwill arising to date is
unlikely to have a useful life in excess of 3 years.
Page 9
<PAGE>
EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED.../
e. SUMMARY OF DIFFERENCES BETWEEN UK GAAP AND US GAAP
A summary of the most significant differences applicable to the Group
is set out below:
(1) BUSINESS COMBINATIONS
Under UK GAAP goodwill arising prior to April 1, 1998 has been written
off directly to reserves. This goodwill has not been reinstated in the
balance sheet, and in accordance with Financial Reporting Standard
No.10, has been offset against the merger reserve with the balance
being offset against the profit and loss account reserve. The balance
sheet as at March 31, 1998 has been restated to reflect this
presentational change.
For US GAAP purposes, the aggregate excess purchase price over the fair
value of net assets is allocated to in-process research and development
or goodwill. The in-process research and development amounts recorded
in connection with each acquisition were expensed in the period of the
related acquisition. The Company has assessed the recoverability of
goodwill using projected future earnings and cash flows and has
concluded that goodwill is recoverable. It has also taken into account
the assets, knowledge and reputation of the organisations which it has
acquired. However, the Company recognises the fast changing industry in
which it is involved and believes the remaining goodwill has a useful
life of 3 years.
Additionally UK 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 US GAAP the appropriate balance to be written off on the disposal
of the business is the remaining unamortized balance of goodwill.
The benefit of acquired tax losses recognised in periods subsequent to
the acquisition are credited to income under UK GAAP and credited to
goodwill for US GAAP purposes.
(2) DEFERRED TAXATION
UK 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. US 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 UK GAAP that recognises gains and losses in the periodic
performance statements; US GAAP requires unrealised changes in the
value of listed investments to be recognised as a separate component of
shareholders' equity until realised.
2. ACQUISITIONS
On November 5, 1998, Eidos acquired Crystal Dynamics, Inc., a software
developer based in Palo Alto, California. Total consideration was $47
million, of which $46.1 million was in cash and $0.9 million was in the
form of assumption of stock options. Half of the cash consideration was
paid on acquisition with the balance due on April 1, 1999.
Page 10
<PAGE>
EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED.../
2. ACQUISITIONS (CONTINUED)
The acquisition has been accounted for using the purchase method.
Eidos' results for the three and nine months ending December 31, 1998
include those of Crystal Dynamics from the date of acquisition.
Goodwill arising on the transaction of $49.7m has been capitalised as
an intangible asset and is being amortised in accordance with Eidos'
accounting policy.
The purchase price included in-process research and development valued
at $3.6 million which, under US GAAP, has been expensed rather than
capitalised as part of goodwill. This in-process research and
development includes products in the development stage which are not
considered to have reached technological feasibility. It is anticipated
that they will do so within the next three years.
Page 11
<PAGE>
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 and its subsidiaries on a consolidated basis is given below.
<TABLE>
<CAPTION>
TURNOVER PROFIT BEFORE TAXATION GROSS ASSETS NET ASSETS
----------------------- ----------------------- ------------------------ -------------------------
NINE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, March 31, DECEMBER 31, March 31,
----------------------- ----------------------- ------------ ---------- ------------ ----------
1998 1997 1998 1997 1998 1998 1998 1998
---------- ---------- ---------- ---------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS OF BUSINESS L000 L000 L000 L000 L000 L000 L000 L000
Computer software 166,444 100,863 32,855 14,607 182,516 93,304 62,681 43,561
Video editing 2,667 2,165 (471) (591) 3,510 3,413 (1,441) (971)
Record company - 41 - (1,030) - - - (1,654)
---------- ---------- ---------- ---------- ----------- ---------- ---------- ----------
169,111 103,069 32,384 12,986 186,026 96,717 61,240 40,936
---------- ---------- ---------- ---------- ----------- ---------- ---------- ----------
</TABLE>
The geographical analysis of turnover, loss before tax and assets for Eidos and
its subsidiaries on a consolidated basis is given below.
<TABLE>
<CAPTION>
TURNOVER TO UNAFFILIATED CUSTOMERS INTER-SEGMENT SALES
-------------------------------------------------- ------------------------------------------------
BY DESTINATION BY ORIGINATION BY DESTINATION BY ORIGINATION
NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
----------------------- ----------------------- ----------------------- -----------------------
1998 1997 1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GEOGRAPHICAL SEGMENT L000 L000 L000 L000 L000 L000 L000 L000
United Kingdom 24,217 18,846 44,168 33,878 7,627 5,323 59,169 33,457
Rest of Europe 75,905 41,722 60,174 31,772 37,793 17,372 - -
USA 60,570 37,677 64,178 37,419 13,803 10,762 54 -
Rest of World 8,419 4,824 591 - - - - -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
169,111 103,069 169,111 103,069 59,223 33,457 59,223 33,457
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
Page 12
<PAGE>
EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED.../
3. SEGMENTAL ANALYSIS (CONTINUED)
NET PROFIT/(LOSS) BEFORE TAX
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
GEOGRAPHICAL SEGMENT L000 L000
United Kingdom 22,426 5,614
Rest of Europe 7,886 5,196
USA 2,183 2,176
Rest of World (111) -
---------- -----------
32,384 12,986
---------- -----------
</TABLE>
<TABLE>
<CAPTION>
ASSETS NET ASSETS GROSS ASSETS
DECEMBER 31, March 31, DECEMBER 31, March 31,
------------ ---------- ------------ ----------
1998 1998 1998 1998
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
GEOGRAPHICAL SEGMENT L000 L000 L000 L000
United Kingdom 60,738 50,331 61,894 59,000
Rest of Europe 7,878 1,354 44,918 11,864
USA (7,741) (10,749) 78,167 25,853
Rest of World 365 - 1,047 -
------------ ----------- ------------ ----------
61,240 40,936 186,026 96,717
------------ ----------- ------------ ----------
</TABLE>
4. STOCKS
<TABLE>
<CAPTION>
DECEMBER 31, March 31,
1998 1998
------------ ---------
<S> <C> <C>
Raw materials 486 109
Finished goods 5,991 5,009
------------ ---------
6,477 5,118
------------ ---------
</TABLE>
Stocks are stated net of provisions of L1,048,000 at December 31, 1998
and L520,000 at March 31, 1998.
5. BORROWINGS
In April 1997 Eidos issued US$50 million of 6.25% convertible bonds.
The bonds are convertible after August 31, 1997 and on or prior to July
24, 2002 into ordinary shares of 10p each of Eidos at an initial
conversion price of L10.95 per share and with a fixed rate of exchange
on conversion of $1.5965 = L1. The convertible bonds have been stated
net of issue costs.
Page 13
<PAGE>
EIDOS PLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED.../
5. BORROWINGS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 March 31, 1998
------------------------ ------------------------
DUE WITHIN DUE AFTER Due within Due after
ONE YEAR ONE YEAR one year One year
---------- ---------- ---------- ----------
L000 L000 L000 L000
<S> <C> <C> <C> <C>
BORROWINGS
Convertible bonds - 29,344 - 28,995
Obligations under finance leases 449 202 757 459
---------- ---------- ---------- ----------
449 29,546 757 29,454
---------- ---------- ---------- ----------
OTHER CREDITORS
Trade creditors 21,732 - 9,407 -
Royalty creditors 5,912 - 990 -
Accruals and deferred income 7,929 - 3,165 -
Corporation tax 14,344 - 9,775 -
Other creditors 26,544 4,106 2,233 -
---------- ---------- ---------- ----------
76,461 4,106 25,570 -
---------- ---------- ---------- ----------
76,910 33,652 26,327 29,454
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
Other creditors includes the balance of the consideration due for
Crystal Dynamics, Inc. which was acquired by Eidos on November 5, 1998.
This is due on April 1, 1999.
6. COMMITMENTS AND CONTINGENCIES
As at December 31, 1998 Eidos had contracts to make future payments
totalling L12.3 million to various licensors and developers
involved in providing games software for Eidos' use. Eidos also has
annual commitments under operating leases of L1.2 million,
L0.8 million relating to land and buildings and L0.4 million for
motor vehicles and equipment. The largest lease is for Wimbledon
Bridge House, Eidos' head office, a nine year lease with rent of
L0.4 million per annum.
Page 14
<PAGE>
EIDOS PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1998
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 9, 1998.
The following discussion is based on the Unaudited Consolidated Financial
Statements of Eidos, which have been prepared in accordance with UK GAAP. See
the Unaudited Consolidated Financial Statements of Eidos for information on
the differences between UK GAAP and US 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 US 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 15
<PAGE>
EIDOS PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS CONTINUED.../
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 DECEMBER 31, 1998 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1997
NET REVENUE
Net revenue increased 49.6% from L81.3 million in the 1997 quarter to L121.5
million for the 1998 quarter. There were six (1997: seven) new games released
in the three months ended December 31, 1998. This included the worldwide
release of Tomb Raider 3, Gangsters, Ninja and Thief: The Dark Project and
Michael Owen's World League Soccer and Links 99 in the UK and Europe. Tomb
Raider 3 and Ninja were internally developed games; Gangsters, Thief: The
Dark Project and Michael Owen's World League Soccer were developed for Eidos
by external developers and Links 99 was a licensed product. This product mix
is similar to that of last year (although there was one additional externally
developed game last year).
68.7% of games revenue was from sales of console products compared to 68.9%
for the corresponding period of last year. This is as expected because
console games are traditionally more popular than PC games during the
Christmas season.
74.3% of net revenue was generated in currencies other than pounds sterling
(predominantly US dollars, French Francs and Deutschmarks), compared to 69.5%
in the corresponding period of 1997. This includes revenue from the newly
opened Eidos offices in Japan and Singapore.
The total number of units sold was 7.0 million compared to 5.0 million in the
corresponding period of 1997. The average price (L18.27) was marginally lower
than last year (L18.53).
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 December 31, 1998, cost of sales was L37.3
million. This represented 30.7% of net revenue, compared to L27.7 million, or
34.1% of net revenue, in the corresponding period. Royalty costs were L5.5
million, compared to L2.8 million in the corresponding period of 1997,
reflecting the relative success and higher sales of the 1998 titles. The
gross margin EXCLUDING royalty costs was 73.9% compared to 69.4% last year.
The increase in gross margin is largely due to reduced manufacturing and
distribution costs and to increased economies of scale.
Page 16
<PAGE>
EIDOS PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS CONTINUED.../
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.
Variable costs in the quarter were L8.7 million (7.1% of revenue) compared to
L8.2 million (10.1% of revenue) in the corresponding period of 1997.
The fixed element of selling and marketing costs was L4.8 million compared to
L2.6 million in the 1997 period. Costs have continued to rise in line with
the general expansion of Eidos.
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
- advance royalties paid under licensing arrangements.
Research and development represents the Company's investment in product
development of L12.8 million (1997: L6.8 million) and pure research and
development of L1.0 million (1997: L0.3m). Costs have risen in line with the
number of projects in which Eidos is involved. Research and development
includes the costs of the teams at Crystal Dynamics, which Eidos has funded
since September 1998.
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 for the period were L7.2 million,
or 5.9% of revenue (L5.7M OR 4.7% EXCLUDING goodwill), compared to L4.3
million, or 5.3% of revenue, in 1997 period.
TAXATION
An estimated tax charge in the 1998 period of L18.3 million has been applied
to the profit on ordinary activities of L51.3 million. This reflects the
projected underlying tax rate for the full year to March 31, 1999, adjusted
to exclude exceptional items.
Page 17
<PAGE>
EIDOS PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS CONTINUED.../
FOR THE NINE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO THE NINE MONTHS ENDED
DECEMBER 31, 1997
NET REVENUE
Net revenue increased 64.1% from L103.1 million in the nine months ended
December 31, 1997 to L169.1 million for the nine months ended December 31,
1998. There were thirteen (1997: seventeen) new games released in the nine
months ended December 31, 1998. These included Tomb Raider 3, Deathtrap
Dungeon, Final Fantasy VII, Commandos: Behind Enemy Lines, Michael Owen's
World League Soccer, Ninja, Gangsters and The Unholy War. Five titles
achieved sales in excess of 350,000 units.
The thirteen titles included four internally developed products, seven
externally developed products and two licensed products compared to four
internally developed products, eight externally developed products and five
licensed products in the corresponding period of 1997.
60.3% of games revenue was from sales of console products compared to 63.1%
for the corresponding period of 1997. The increase in the proportion of PC
based games reflects the popularity of the PC based games released in the
period.
73.9% of net revenue was generated in currencies other than pounds sterling
(predominantly US dollars, French Francs and Deutschmarks), compared to 66.5%
in the corresponding period of 1997. This increase reflects the continuing
growth of Eidos as a brand within the games industry worldwide.
The total number of units sold was 10.3 million compared to 6.6 million in
the corresponding period of 1997. The average price in the 1998 period
(L16.70) is slightly lower than the average price in the corresponding period
of 1997 (L16.86) reflecting the strength of the back catalogue (which has a
lower average price) rather than any significant reduction in the selling
price of new releases.
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 nine months ended December 31, 1998, cost of sales was L59.8 million.
For this period, cost of sales represented 35.3% of net revenue, compared to
L36.8 million, or 35.7% of net revenue, in the corresponding period. Royalty
costs were L11.6 million compared to L4.6 million in the corresponding period
of 1997 reflecting the success of the titles released this year. The gross
margin EXCLUDING royalty costs was 71.5% compared to 68.8% in 1997.
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.
Page 18
<PAGE>
EIDOS PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS CONTINUED.../
Variable costs in the period were L15.0 million (8.9% of revenue) compared to
L10.6 million (10.3% of revenue) in the corresponding period of 1997. The
increase reflects the growing use of TV advertising to promote Eidos'
valuable franchises.
The fixed element of selling and marketing costs was L10.9 million compared
to L6.8 million in the 1997 period. Costs have continued to rise in line with
the general expansion of Eidos and also reflect amortisation costs of new
licences obtained in the third quarter.
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
- advance royalties paid under licensing arrangements.
Research and development represents the Company's investment in product
development of L27.8 million (1997: L22.1 million) and pure research and
development of L2.1 million (1997: L1.0 million). Product development
includes L20.3 million invested in a pipeline of over 40 titles to be
released over the next two years.
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
from the third quarter. General and administrative costs for the period were
L17.4 million or 10.3% of revenue (L15.8 million or 9.4% EXCLUDING goodwill)
compared to L12.5 million, or 12.1% of revenue, in the 1997 period.
TAXATION
An estimated tax charge of L13.2 million has been applied to the profit on
ordinary activities of L32.4 million. This reflects the projected underlying
tax rate for the full year to March 31, 1999, adjusted to exclude exceptional
items.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998 Eidos had cash and cash equivalents of L2.4 million and
Eidos' working capital was L51.0 million.
Eidos utilised cash of L17.5 million from its operating activities after
incurring research and development costs of L26.1 million in the nine months
ended December 31, 1998.
The acquisition of Crystal Dynamics utilised L14.7 million of cash. This
includes half of the agreed cash consideration and related acquisition costs
less L0.5m cash acquired with Crystal.
Page 19
<PAGE>
EIDOS PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS CONTINUED.../
Capital expenditure and financial investment activities utilised L2.3
million in the nine months ended December 31, 1998, comprising L1.7
million for the purchase of tangible fixed assets and L0.6 million for
other fixed asset investments.
L5.6 million was paid in tax (net of a L3.0 million repayment in the
US), and L0.6 million reduced principal under finance leases. In addition
Eidos generated L0.2 million from the exercise of share options issued to
employees.
ACQUISITIONS
The results for period ended December 31, 1998 reflect the acquisition of
Crystal Dynamics on November 5, 1998. This has added L2.6 million to
operating costs for the three and nine months ended December 31, 1998, of which
L1.5 million represents amortisation on the L29.9 million goodwill
arising from the transaction.
YEAR 2000
The importance and urgency of the Year 2000 issue was recognised early by Eidos
and the Company took steps to ensure the timely completion of its compliance
project. Fortunately, development software and tools, which comprise the
majority of Eidos' systems, are not adversely affected by Year 2000 problems,
and the hardware used is often being upgraded because of rapid changes in
technology. Moreover, because Eidos products do not contain date-related
processes, the Company believes that such products do not pose significant Year
2000 concerns.
Regarding the rest of Eidos' systems, especially financial and operational
systems,
- - 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
- - testing and replacement of hardware at all sites proceeded as estimated
and all business critical systems are now fully compliant
- - financial and operational software was inventoried, certified by the
suppliers and tested internally
For example, the main financial and logistical system used in the UK and US
offices, AGRESSO, has been fully certified and tested to conform to Year 2000
requirements. All non-compliant systems used in other offices have been upgraded
or are in the process of being upgraded now.
Third party compliance is now the largest issue still in progress, and the
estimated date of completion is March 31, 1999. Eidos' major suppliers have
already given confirmation of their readiness for the Year 2000 and are
regularly inspected for compliance. Eidos is also currently developing a
Business Continuity Plan with the help of an external consultant, and this
project will include risk management, physical security and disaster recovery
planning.
Although it would be impossible to give a full assurance that operations will be
unaffected considering the supply chain all businesses operate within, Eidos
does not believe that business will be adversely affected by the Year 2000. The
Company will continue its efforts to ensure that this possibility is reduced as
much as possible.
Page 20
<PAGE>
EIDOS PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS CONTINUED.../
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) but these have been negligible (less than
L50,000). It is anticipated that there will be no further significant
costs.
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,
German Mark 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. The systems will not be
capable of performing the "triangulation" exercise required for the accurate
translation of local currencies into the Euro until the next routine upgrades
which are not due to be completed until mid-1999. The Company believes that this
is not a serious risk since none of the European offices intend to convert to
the Euro in the short term.
There have been negligible external costs relating to the introduction of the
Euro to date (less than L10,000). 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.
The Company has established a task force comprising senior representatives from
finance, operations, sales and marketing in France, Germany and the UK to
consider the wider issues relating to the Euro and the Company's response. It
will be difficult to establish a Europe-wide policy until the UK's position with
regard to the Euro becomes clearer.
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 then possibly rounded down by the retailer). 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 "grey imports" and minimise this
risk.
Currently the offices in France and Germany remit francs and marks back to the
Head Office in the UK. These receipts are translated to Sterling and the
currency risk is hedged in accordance with Company policies. The introduction of
the Euro will initially create an additional currency to hedge against and may
thus increase costs. However, should the UK convert to the Euro this risk will
be eliminated and the US dollar will become the only significant currency
exposure.
Page 21
<PAGE>
EIDOS PLC
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 APRIL 30, 1999
------------------- --------------
Jeremy MJ Lewis
Finance Director
Page 22
<PAGE>
THIS PRESS RELEASE IS NOT INTENDED FOR AND MAY NOT BE DISTRIBUTED
IN THE UNITED STATES, OR TO US PERSONS.
FOR IMMEDIATE RELEASE 25 FEBRUARY 1999
EIDOS PLC
THIRD QUARTER AND YEAR-TO-DATE RESULTS
THIRD QUARTER REVENUES INCREASE 50% TO L121.5 MILLION
THIRD QUARTER PROFIT BEFORE TAX INCREASES 64% TO L51.3 MILLION
Eidos plc ("Eidos"), one of Europe's largest publishers and developers of
entertainment software, announces results for the three and nine months ended 31
December 1998.
MR CHARLES CORNWALL, CHIEF EXECUTIVE OFFICER, SAYS:
"Our third quarter results have once again surpassed expectations with turnover
for the nine month period increasing from L103 million to L169
million, and operating profits up from L13 million to L36 million.
Our sustained growth in revenues and earnings is firmly underpinned by our clear
focus on the high quality of titles published. We remain confident that this
approach maximises our ability to build sustained shareholder value."
HIGHLIGHTS OF THE CHAIRMAN'S STATEMENT
- - Three months turnover up 50% to L121.5 million from L81.3 million
- - Nine months turnover up 64% to L169.1 million from L103.1 million
- - Thirteen titles launched in the nine months
- - Seven titles including catalogue achieved sales in excess of 350,000 units
- - Tomb Raider III launched on 20 November to considerable acclaim and
commercial success
- - Three months profit before tax up 64% to L51.3 million from L31.3
million
- - Nine months profit before tax up 149% to L32.4 million from L13.0
million
- - New offices opened in Japan and Singapore
- - Licence/sponsorship deals signed with UEFA and the English Football
Association
- - Three year distribution deal signed with Japanese publisher Video System for
FIA Formula One racing games
- - Publishing agreement signed with London based Elixir Studios
- - Eidos and Easynet launch a free of subscription internet service called
Eidosnet
RESULTS HIGHLIGHTS (FOR THE NINE MONTHS TO 31 DECEMBER 1998)
<TABLE>
<S> <C> <C>
- - Turnover: L169.1m (1997: L103.1m)
- - EBITDA: L 40.3m (1997: L 15.2m)
- - Profit before tax and goodwill amortisation: L 33.9m (1997: L 13.0m)
- - Profit before tax: L 32.4m (1997: L 13.0m)
- - Earnings per share: 112.3p (1997: 50.2p)
- - Earnings per share before exceptional items: 129.9p (1997: 50.2p)
- - Fully diluted earnings per share: 100.1p (1997: 47.1p)
</TABLE>
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.
<PAGE>
EIDOS/THIRD QUARTER RESULTS....PAGE 2
REGARDING PROSPECTS AND CURRENT TRADING MR IAN LIVINGSTONE, CHAIRMAN, SAYS:
"We look forward to building on the Company's exceptional performance with a
consistent pipeline of premium releases in the final quarter of our current
fiscal year and beyond. The current quarter sees the release of Akuji: The
Heartless, Gex III: Deep Cover Gecko, Warzone 2100, UEFA Champions League, FA
Manager, Official Formula 1 Racing and Championship Manager 3, sequel to the
UK's most successful PC CD game of 1997. The first two of these products being
further releases from Crystal Dynamics which was acquired on 5 November 1998.
The UEFA Champions League, FA Manager and Official Formula 1 Racing should prove
valuable additions to our catalogue of successfully branded sports titles.
We believe that our release schedule is one of the strongest in the industry,
with other releases for 1999 to include Legacy of Kain : Soul Reaver, Daikatana,
Omikron, Braveheart, Urban Chaos and a further iteration from the Tomb Raider
franchise. Advance coverage of these titles in the speciality press has been
very encouraging. We are also delighted to have signed recently a publishing
agreement with Elixir Studios to supplement further our future release schedule.
In addition, Eidos' new service Eidosnet, will provide high quality multi-player
computer gaming across the internet.
Our programme of structured and controlled investment in product development and
selected high profile licenses is designed to ensure that the depth and quality
of the release schedule is maintained. We believe that the integrity of our
publishing decisions will continue to translate into successful growth for the
Group."
<TABLE>
<S> <C>
CONTACT:
CHARLES CORNWALL, CEO: 0181 636 3000
JEREMY LEWIS, CFO: 0181 636 3000
NEIL CAMP/LISA KRAMER, BINNS & CO: 0171 786 9600
RYAN BARR, BRAINERD COMMUNICATORS: 001 212 986 6667
</TABLE>
ISSUED BY BINNS & CO: 0171 786 9600
<PAGE>
EIDOS/THIRD QUARTER RESULTS ... PAGE 3
CHAIRMAN'S STATEMENT
RESULTS AND TRADING REVIEW
Eidos reported a profit after tax of L19.2 million for the nine months
ended 31 December 1998 compared to L8.5 million for the corresponding
period last year. This profit is after the non-operating charge of L3.0
million to reflect the fall in the market price of Opticom as at 31 December
1998 in which Eidos has an investment. Turnover increased 64% from L103.1
million to L169.1 million. The earnings per share was 112.3p (or 129.9p
excluding exceptional items) compared to 50.2p last year. The fully diluted
earnings per share was 100.1p compared to 47.1p for the corresponding period of
1997 (this number has been restated in accordance with Financial Reporting
Standard No.14).
The net cash outflow from operating activities was L17.5 million compared
to L25.0 million in the corresponding period of 1997. This is after Eidos'
investment in product development and pure research and development of
L29.9 million (1997: L23.1 million).
There were thirteen (1997: seventeen) new games released in the nine
months ended 31 December 1998. These included Tomb Raider 3, Deathtrap
Dungeon, Final Fantasy VII, Commandos: Behind Enemy Lines, Michael
Owen's World League Soccer, Ninja, Gangsters, Thief: The Dark Project, Links
99 and The Unholy War.
Gross margin was 64.7% for the nine months compared to 64.3% for the
corresponding period last year. Cost of sales includes royalties paid to
developers in excess of development advances paid. Royalty costs in the period
were L11.6 million compared to L4.6 million in the corresponding
period of 1997 reflecting the success of the titles released this year.
SELLING AND MARKETING
Advertising costs in the nine months were L15.0 million (8.9% of revenues)
compared to L10.6 million (10.3% of revenues) in the corresponding period
of 1997. The increase reflects the growing use of TV advertising to promote
Eidos' valuable franchises.
The fixed element of selling and marketing costs was L10.9 million
compared to L6.8 million in the prior year. Costs have continued to rise
in line with the general expansion of Eidos.
RESEARCH AND DEVELOPMENT
Research and development represents the Company's investment in product
development of L27.8 million (1997: L22.1 million) and pure research
and development of L2.1 million (1997: L1.0 million). Product
development includes L20.3 million invested in a pipeline of over 40
titles scheduled to be released over the next two years.
GENERAL AND ADMINISTRATIVE
General and administrative costs for the period were L17.4 million or
10.3% of revenues (L15.9 million or 9.4% excluding goodwill amortisation)
compared to L12.5 million or 12.1% of revenues in 1997. The current charge
includes L1.6m attributable to costs investigating potential acquisitions
during the summer.
<PAGE>
EIDOS/THIRD QUARTER RESULTS ... PAGE 4
TAXATION
An estimated tax charge of L13.2 million has been applied to the profit on
ordinary activities of L32.4 million. This reflects the projected
underlying tax rate for the year to 31 March 1999, adjusted to exclude
exceptional items.
ACQUISITIONS/INVESTMENTS
Eidos holds approximately 15% of the share capital of Opticom ASA, a Norwegian
listed company and a leader in the research and development of polymer based
optical storage and processing technologies. In common with other technology
stocks, the Opticom share price has experienced large fluctuations in the last
nine months. These fluctuations caused the market price of Eidos' investment at
31 December 1998 to fall below cost.
Eidos has reduced the carrying value by L3.0 million down to the market
price at 31 December 1998. Since that date the share price has recovered
substantially and as at 24 February 1999 the market value was significantly
higher than cost.
On 5 November 1998, Eidos acquired Crystal Dynamics, Inc., a software developer
based in Palo Alto, California. Total consideration was $47.0 million, of which
$46.1 million was cash and $0.9 million the assumption of stock options. Eidos'
results for the nine months ended 31 December 1998 include those of Crystal
Dynamics from the date of acquisition. Goodwill arising on the transaction of
$49.7 million has been capitalised as an intangible asset and is being amortised
in accordance with Eidos' accounting policy. In the nine months ended 31
December 1998 this lead to an amortisation charge of L1.5 million.
During the period offices were opened in Tokyo and Singapore. This is in
recognition of the growing importance of those markets for the Company and the
increasing demand for the Company's products from the Far East.
CURRENT TRADING AND FUTURE PROSPECTS
We look forward to building on the Company's exceptional performance with a
consistent pipeline of premium releases in the final quarter of our current
fiscal year and beyond. The current quarter sees the release of Akuji: The
Heartless, Gex III: Deep Cover Gecko, Warzone 2100, UEFA Champions League, FA
Manager, Official Formula 1 Racing and Championship Manager 3, sequel to the
UK's most successful PC CD game of 1997. The first two of these products being
further releases from Crystal Dynamics which was acquired on 5 November 1998.
The UEFA Champions League, FA Manager and Official Formula 1 Racing should prove
valuable additions to our catalogue of successfully branded sports titles.
We believe that our release schedule is one of the strongest in the industry,
with other releases for 1999 to include Legacy of Kain : Soul Reaver, Daikatana,
Omikron, Braveheart, Urban Chaos and a further iteration from the Tomb Raider
franchise. Advance coverage of these titles in the speciality press has been
very encouraging. We are also delighted to have signed recently a publishing
agreement with Elixir Studios to supplement further our future release schedule.
In addition, Eidos' new service Eidosnet, will provide high quality multi-player
computer gaming across the internet.
<PAGE>
EIDOS/THIRD QUARTER RESULTS ... PAGE 5
Our programme of structured and controlled investment in product development and
selected high profile licenses is designed to ensure that the depth and quality
of the release schedule is maintained. We believe that the integrity of our
publishing decisions will continue to translate into successful growth for the
Group.
IAN LIVINGSTONE
CHAIRMAN
25 FEBRUARY 1999
<PAGE>
EIDOS/THIRD QUARTER RESULTS ... PAGE 6
EIDOS PLC
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
NINE MONTHS Nine months
ENDED 31 ended 31
DECEMBER December
1998 1997
L000 L000
<S> <C> <C>
TURNOVER -
CONTINUING OPERATIONS 169,111 103,069
Cost of goods sold (59,763) (36,802)
---------- ----------
GROSS PROFIT 109,348 66,267
Selling and marketing (25,902) (17,429)
Research and development (29,941) (23,072)
General and administrative (17,350) (12,513)
---------- ----------
Operating expenses (73,193) (53,014)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 36,155 13,253
Amounts written off investments (3,000) -
Profit on sale of operations - 500
Net interest and similar charges (771) (767)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 32,384 12,986
Taxation (13,159) (4,482)
---------- ----------
NET PROFIT AFTER TAX 19,225 8,504
---------- ----------
Earnings per share 112.3p 50.2p
Earnings per share before exceptional items 129.9p 50.2p
Fully diluted earnings per share 100.1p 47.1p
----------- -----------
</TABLE>
NOTES:
1. The earnings per share is based on a weighted average number of ordinary
shares in issue of 17,115,781 (1997: 16,937,132) for the period ended
31 December 1998. The fully diluted earnings per share is based on a
weighted average number of ordinary shares in issue of 20,199,383
(1997: 20,035,600) for the period ended 31 December 1998.
2. The fully diluted earnings per share for the nine months ended 31 December
1997 has been restated in accordance with Financial Reporting
Standard No.14.
MORE../
<PAGE>
EIDOS/THIRD QUARTER RESULTS ... PAGE 7
EIDOS PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
31 DECEMBER 31 December
1998 1997
(restated)
L000 L000
<S> <C> <C>
FIXED ASSETS
Intangible assets 28,403 -
Tangible assets 6,331 7,164
Investments 9,164 11,195
---------------- ----------------
Total fixed assets 43,898 18,359
---------------- ----------------
CURRENT ASSETS
Stocks 6,477 2,333
Debtors 119,058 82,066
Cash at bank and in hand 2,369 4,117
---------------- ----------------
TOTAL CURRENT ASSETS 127,904 88,516
CREDITORS: AMOUNT FALLING DUE WITHIN ONE YEAR (76,910) (41,717)
---------------- ----------------
NET CURRENT ASSETS 50,994 46,799
- ------------------
---------------- ----------------
TOTAL ASSETS LESS CURRENT LIABILITIES 94,892 65,158
- -------------------------------------
---------------- ----------------
CREDITORS DUE AFTER MORE THAN ONE YEAR:
US $50 million convertible bonds (29,344) (29,185)
Other creditors (4,308) (575)
---------------- ----------------
(33,652) (29,760)
---------------- ----------------
NET ASSETS 61,240 35,398
---------------- ----------------
---------------- ----------------
CAPITAL AND RESERVES
Called up share capital 1,717 1,694
Share premium account 49,552 48,978
Other reserves 707 167
Profit and Loss account 9,264 (15,441)
---------------- ----------------
EQUITY SHAREHOLDERS' FUNDS 61,240 35,398
---------------- ----------------
---------------- ----------------
</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 31 December 1997 has been restated to reflect the
reclassification of the goodwill reserve required by Financial Reporting
Standard No. 10.
MORE ../
<PAGE>
EIDOS/THIRD QUARTER RESULTS ... PAGE 8
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Nine months Nine months
ended Ended
31 December 1998 31 December 1997
L000 L000
---------------- ----------------
<S> <C> <C>
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (17,472) (24,952)
---------------- ----------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 1,558 869
Dividend income received 124 -
Expenses paid in connection with bond issue - (1,102)
Bond interest paid (951) (563)
Other interest paid (629) (171)
Interest paid on finance leases (100) (118)
---------------- ----------------
2 (1,085)
---------------- ----------------
TAXATION
UK tax paid (1,866) (609)
Overseas tax paid (6,725) (723)
Overseas tax repaid 2,956 -
---------------- ----------------
(5,635) (1,332)
---------------- ----------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (1,824) (4,572)
Sale of tangible fixed assets 75 3
Purchase of other investments (570) (11,824)
---------------- ----------------
(2,319) (16,393)
---------------- ----------------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings (15,200) -
Purchase of associated undertakings - (166)
Cash acquired with subsidiary undertakings 459 -
Sale of business held for resale - 500
---------------- ----------------
(14,741) 334
---------------- ----------------
NET CASH OUTFLOW BEFORE FINANCING (40,165) (43,428)
FINANCING
Issue of ordinary share capital 209 -
Expenses paid in connection with share issue - (140)
Proceeds from bond issue - 30,864
Repayment of principal under finance leases (625) (704)
---------------- ----------------
(416) 30,020
---------------- ----------------
(DECREASE)/INCREASE IN CASH IN THE PERIOD (40,581) (13,408)
---------------- ----------------
</TABLE>
..ENDS..
<PAGE>
FOR IMMEDIATE RELEASE
EIDOS PLC ANNOUNCES FINANCIAL RESULTS FOR THE THREE MONTHS
ENDED DECEMBER 31, 1998
THIRD QUARTER REVENUES INCREASE 50% TO L121.5 MILLION
($201.7 MILLION)
THIRD QUARTER PROFIT BEFORE TAX INCREASES 64% TO L51.3 MILLION
($85.2 MILLION)
LONDON, FEBRUARY 25, 1999 -- Eidos plc (NASDAQ: EIDSY), one of Europe's
largest publishers and developers of entertainment software, announced today
results for the three and nine months ended December 31, 1998. Revenues for
the quarter were L121.5 million ($201.7m), up from L81.3 million for the
corresponding period last year. On a US GAAP basis the Company's profit
before tax for the quarter ended December 31, 1998 was L46.1 million ($76.6m)
compared to L29.1 million for 1997, yielding an earnings per share of L1.63
($2.70), compared to L1.08 in the corresponding period last year.
Commenting on Eidos' current trading and future prospects, Ian Livingstone,
Chairman, stated, "We look forward to building on the Company's exceptional
performance with a consistent pipeline of premium releases in the final
quarter of our current fiscal year and beyond. The current quarter sees the
release of Akuji: The Heartless, Gex III: Deep Cover Gecko, Warzone 2100,
UEFA Champions League, FA Manager, Official Formula 1 Racing and Championship
Manager 3, sequel to the UK's most successful PC CD game of 1997. The first
two of these products being further releases from Crystal Dynamics which was
acquired on November 5, 1998.
The UEFA Champions League, FA Manager and Official Formula 1 Racing should
prove valuable additions to our catalogue of successfully branded sports
titles.
We believe that our release schedule is one of the strongest in the industry,
with other releases for 1999 to include Legacy of Kain: Soul Reaver,
Daikatana, Omikron, Braveheart, Urban Chaos and a further iteration from the
Tomb Raider franchise. Advance coverage of these titles in the speciality
press has been very encouraging. We are also delighted to have signed
recently a publishing agreement with Elixir Studios to supplement further our
future release schedule. In addition, Eidos' new service Eidosnet, will
provide high quality multi-player computer gaming across the internet.
Our programme of structured and controlled investment in product development
and selected high profile licenses is designed to ensure that the depth and
quality of the release schedule is maintained. We believe that the integrity
of our publishing decisions will continue to translate into successful growth
for the Group."
Charles Cornwall, Chief Executive Officer, added, "Our third quarter results
have once again surpassed expectations with turnover for the nine month
period increasing from L103 million to L169 million, and operating profits up
from L13 million to L36 million. Our sustained growth in revenues and
earnings is firmly underpinned by our clear focus on the high quality of
titles published. We remain confident that this approach maximises our
ability to build sustained shareholder value."
<PAGE>
EIDOS PLC: ANNOUNCES THIRD QUARTER RESULTS PAGE 2
<TABLE>
<CAPTION>
--------------------------------------- ------------------------------------------
US GAAP US GAAP
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31 DECEMBER 31
---------------------- ----------- ----------------------- -----------
1998 1997 1998 1997
---------------------- ----------- ----------------------- ----------
$000* L000 L000 $000* L 000 L000
----------- ---------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET SALES 201,732 121,525 81,252 280,724 169,111 103,069
EBITDA 83,287 50,173 32,064 63,307 38,137 5,119
PROFIT BEFORE TAX 76,556 46,118 29,093 48,412 29,164 (3,200)
NET INCOME 46,193 27,827 18,270 26,568 16,005 (7,682)
EARNINGS PER SHARE $2.70 L1.63 L1.08 $1.55 L0.94 (L0.45)
DILUTED EARNINGS PER SHARE $2.31 L1.39 L0.93 $1.40 L0.84 (L0.45)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE SHARES 17,125,579 16,943,355 17,115,781 16,937,132
WEIGHTED AVERAGE
DILUTED SHARES 20,275,663 20,030,880 20,199,383 20,035,600
----------- ---------- ----------- ----------
</TABLE>
* THE COMPANY'S FINANCIAL STATEMENTS ARE EXPRESSED IN POUNDS STERLING.
REFERENCES TO 'POUNDS STERLING' OR 'L' ARE TO THE CURRENCY OF THE
UNITED KINGDOM AND REFERENCES TO '$', '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 $1.66 TO L1.00, THE EXCHANGE RATE
PUBLISHED BY DATASTREAM FOR DECEMBER 31, 1998.
RECENT DEVELOPMENTS
- - Three months turnover up 50% to L121.5 million ($201.7 million) from
L81.3 million
- - Thirteen titles launched in the nine months
- - Seven titles including catalogue achieved sales in excess of 350,000 units
- - Tomb Raider III launched on November 20 to considerable acclaim and
commercial success
- - Three months operating profit up 59% to L49.8 million ($82.6 million)
from L31.3 million
- - Three months profit before tax up 64% to L51.3 million ($85.2 million)
from L31.3 million
- - New offices opened in Japan and Singapore
- - Licence/sponsorship deals signed with UEFA and the English Football
Association
- - Three year distribution deal signed with Japanese publisher Video System for
FIA Formula One racing games
- - Publishing agreement signed with London based Elixir Studios
- - Eidos and Easynet launch a free of subscription internet service
called Eidosnet
<PAGE>
EIDOS PLC: ANNOUNCES THIRD QUARTER RESULTS PAGE 3
ACQUISITIONS/INVESTMENTS
Eidos holds approximately 15% of the share capital of Opticom ASA, a
Norwegian listed company and a leader in the research and development of
polymer based optical storage and processing technologies. In common with
other technology stocks, the Opticom share price has experienced large
fluctuations in the last nine months. These fluctuations caused the market
price of Eidos' investment at December 31, 1998 to fall below cost.
The carrying value has been reduced by (pound)3.0 million down to the market
price at December 31, 1998. The carrying VALUE had been reduced by (pound)5.3
million at September 30, 1998 and hence there was a write back of (pound)2.3m
in the QUARter to December 31, 1998. Under US GAAP both the original charge
and the write back have been taken directly to equity. Since that date the
share price has recovered substantially and as at February 24, 1999 the
market value was significantly higher than cost.
On November 5, 1998, Eidos acquired Crystal Dynamics, Inc., a software
developer based in Palo Alto, California. Total consideration was $47.0
million, of which $46.1 million was cash and $0.9 million the assumption of
stock options. Eidos' results for the three and nine months ended December
31, 1998 include those of Crystal Dynamics from the date of acquisition.
Goodwill arising on the transaction of $49.7 million has been capitalised as
an intangible asset and is being amortised in accordance with Eidos'
accounting policy. Under US GAAP in the three months ended December 31, 1998,
there was an amortisation charge of (pound)1.4 million for Crystal Dynamics
as well as a (pound)0.9 million CHARge for amortisation of other goodwill.
During the period offices were opened in Tokyo and Singapore. This is in
recognition of the growing importance of those markets for the Company and
the increasing demand for the Company's products from the Far East.
UK GAAP FINANCIAL SUMMARY
Eidos reported a profit after tax of (pound)19.2 million for the nine months
ended December 31, 1998 compared to (POUnd)8.5 million for the corresponding
period last year. This profit is after the non-operating charge of (pound)3.0
milliON TO reflect the fall in the market price of Opticom as at December 31,
1998 in which Eidos has an investment. Turnover increased 64% from
(pound)103.1 million to (pound)169.1 million. The earnings per share was
112.3p (or 129.9p EXCluding exceptional items) compared to 50.2p last year.
The fully diluted earnings per share was 100.1p compared to 47.1p for the
corresponding period of 1997 (this number has been restated in accordance
with Financial Reporting Standard No.14).
The net cash outflow from operating activities was (pound)17.5 million
compared to (pound)25.0 million in the correspondING period of 1997. This is
after Eidos' investment in product development and pure research and
development of (pound)29.9 miLLION (1997: (pound)23.1 million).
There were thirteen (1997: seventeen) new games released in the nine
months ended December 31, 1998. These included Tomb Raider 3, Deathtrap
Dungeon, Final Fantasy VII, Commandos: Behind Enemy Lines, Michael
Owen's World League Soccer, Ninja, Gangsters, Thief: The Dark Project, Links
99 and The Unholy War.
Gross margin was 64.7% for the nine months compared to 64.3% for the
corresponding period last year. Cost of sales includes royalties paid to
developers in excess of development advances paid. Royalty costs in the
period were (pound)11.6 million compared to (pound)4.6 million in the
corresponding period of 1997 reflecting the success of the titles relEASED
this year.
<PAGE>
EIDOS PLC: ANNOUNCES THIRD QUARTER RESULTS PAGE 4
SELLING AND MARKETING
Advertising costs in the nine months were (pound)15.0 million (8.9% of
revenues) compared to (pound)10.6 million (10.3% of revenues) in the
corresponding period of 1997. The increase reflects the growing use of TV
advertising to promote Eidos' valuable franchises.
The fixed element of selling and marketing costs was (pound)10.9 million
compared to (pound)6.8 million in the prior yEAR. Costs have continued to
rise in line with the general expansion of Eidos.
RESEARCH AND DEVELOPMENT
Research and development represents the Company's investment in product
development of (pound)27.8 million (1997: (POUNd)22.1 million) and pure
research and development of (pound)2.1 million (1997: (pound)1.0 million).
Product development incLUDES (pound)20.3 million invested in a pipeline of
over 40 titles scheduled to be released over the next two years.
GENERAL AND ADMINISTRATIVE
General and administrative costs for the period were (pound)17.4 million or
10.3% of revenues ((pound)15.8 millION Or 9.4% excluding goodwill) compared
to (pound)12.5 million or 12.1% of revenues in 1997. The current charge
includes (POUNd)1.6m attributable to costs investigating potential
acquisitions during the summer.
TAXATION
An estimated tax charge of (pound)13.2 million has been applied to the profit
on ordinary activities of (pound)32.4 milLION. This reflects the projected
underlying tax rate for the year to March 31, 1999, adjusted to exclude
exceptional items.
Eidos plc 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. 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 THAT 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, 1998.
# # #
CONTACT:
- --------
Charles Cornwall, CEO: 011 44 181 636 3000
Jeremy Lewis, CFO: 011 44 181 636 3000
Ryan Barr/Chris Plunkett, Brainerd Communicators: 212 986 6667
Neil Camp/ Lisa Kramer, Binns & Co: 011 44 171 786 9600
<PAGE>
EIDOS PLC
CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILED TO US GAAP FOR THE THREE
AND NINE MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, NINE MONTHS ENDED DECEMBER 31,
-------------------------------- --------------------------------
UK GAAP 1998 1998 1997 1998 1998 1997
$000 L000 L000 $000 L000 L000
<S> <C> <C> <C> <C> <C> <C>
TURNOVER ..CONTINUING OPERATIONS 201,732 121,525 81,252 280,724 169,111 103,069
Cost of goods sold (61,852) (37,260) (27,674) (99,207) (59,763) (36,802)
---------- ---------- ---------- ---------- ---------- ----------
GROSS PROFIT 139,880 84,265 53,578 181,517 109,348 66,267
Selling and marketing (22,329) (13,451) (10,840) (42,997) (25,902) (17,429)
Research and development (22,928) (13,812) (7,100) (49,702) (29,941) (23,072)
General and administrative (11,997) (7,227) (4,319) (28,801) (17,350) (12,513)
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES (57,254) (34,490) (22,259) (121,500) (73,193) (53,014)
---------- ---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE
INTEREST 82,626 49,775 31,319 60,017 36,155 13,253
Amounts written off investments 3,735 2,250 - (4,980) (3,000) -
Profit on sale of operations - - 500 - - 500
Net interest and similar charges (1,183) (713) (502) (1,280) (771) (767)
---------- ---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAX 85,178 51,312 31,317 53,757 32,384 12,986
TAXATION (30,363) (18,291) (10,823) (21,844) (13,159) (4,482)
---------- ---------- ---------- ---------- ---------- ----------
NET PROFIT AFTER TAX (PREPARED UNDER
UK GAAP) 54,815 33,021 20,494 31,913 19,225 8,504
---------- ---------- ---------- ---------- ---------- ----------
EARNINGS PER SHARE 320.0c 192.8p 121.0p 186.4c 112.3p 50.2p
FULLY DILUTED EARNINGS PER SHARE 273.1c 164.5p 103.9p 166.2c 100.1p 47.1p
RECONCILIATION TO US GAAP
NET PROFIT AFTER TAX (PREPARED UNDER
UK GAAP) 54,815 33,021 20,494 31,913 19,225 8,504
Amortisation of goodwill (1,280) (771) (2,224) (6,718) (4,047) (6,061)
In process research and development
(3,607) (2,173) - (3,607) (2,173) -
Amounts written off investments (3,735) (2,250) - 4,980 3,000 -
Computer games software - - - - - (10,125)
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME/(LOSS) IN ACCORDANCE WITH
US GAAP 46,193 27,827 18,270 26,568 16,005 (7,682)
---------- ---------- ---------- ---------- ---------- ----------
EARNINGS/(LOSS) PER SHARE IN
ACCORDANCE WITH US GAAP
BASIC 269.8c 162.5p 107.8p 155.2c 93.5p (45.4p)
DILUTED 230.6c 138.9p 92.8p 139.6c 84.1p (45.4p)
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
NOTES:
1. The UK GAAP fully diluted earnings per share for the three and nine
months ended December 31, 1997 has been restated in accordance with
Financial Reporting Standard No.14.
2. The Company's financial statements are expressed in Pounds Sterling.
References to 'Pounds Sterling' or 'L' are to the currency of
the UnitedKingdom 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 $1.66
to L1.00, the exchange rate published by Datastream for
December 31, 1998.
<PAGE>
EIDOS PLC
CONSOLIDATED BALANCE SHEETS RECONCILED TO US GAAP
<TABLE>
<CAPTION>
March 31,
UK GAAP DECEMBER 31, 1998 1998
(UNAUDITED) (restated)
$000 L000 L000
<S> <C> <C> <C>
FIXED ASSETS
Intangible assets (net of amortisation of(pound)1,513,000) 47,149 28,403 -
Tangible assets 10,509 6,331 6,734
Investments 15,212 9,164 11,582
-------- -------- --------
Total fixed assets 72,870 43,898 18,316
-------- -------- --------
CURRENT ASSETS
Stocks 10,752 6,477 5,118
Debtors 197,636 119,058 30,770
Cash at bank and in hand 3,933 2,369 42,513
-------- -------- --------
TOTAL CURRENT ASSETS 212,321 127,904 78,401
CREDITORS: AMOUNT FALLING DUE WITHIN ONE YEAR (127,671) (76,910) (26,327)
-------- -------- --------
NET CURRENT ASSETS 84,650 50,994 52,074
-------- -------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES 157,520 94,892 70,390
-------- -------- --------
CREDITORS DUE AFTER MORE THAN ONE YEAR:
US $50 million convertible bonds (48,711) (29,344) (28,995)
Other creditors (7,151) (4,308) (459)
-------- -------- --------
(55,862) (33,652) (29,454)
-------- -------- --------
NET ASSETS 101,658 61,240 40,936
-------- -------- --------
-------- -------- --------
CAPITAL AND RESERVES
Called up share capital 2,850 1,717 1,711
Share premium account 82,257 49,552 49,349
Other reserves 1,173 707 167
Profit and Loss account 15,378 9,264 (10,291)
-------- -------- --------
SHAREHOLDERS' FUNDS 101,658 61,240 40,936
-------- -------- --------
-------- -------- --------
RECONCILIATION TO US GAAP
Shareholders' funds (prepared under UK GAAP) 101,658 61,240 40,936
Goodwill 32,269 19,439 19,605
Less in process research and development (3,607) (2,173) -
Less amortisation (27,284) (16,436) (12,388)
Deferred tax 3,325 2,003 2,003
-------- -------- --------
SHAREHOLDERS' FUNDS IN ACCORDANCE WITH
US GAAP 106,361 64,073 50,156
-------- -------- --------
-------- -------- --------
</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 March 31, 1998 has been restated to reflect the
reclassification of the goodwill reserve required by Financial Reporting
Standard No. 10.
<PAGE>
EIDOS PLC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Nine months
ended
NINE MONTHS ENDED December, 31
DECEMBER 31, 1998 1997
$000 L000 L000
-------- -------- --------
<S> <C> <C> <C>
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (29,004) (17,472) (24,952)
-------- -------- --------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 2,586 1,558 869
Dividend income received 206 124 -
Expenses paid in connection with bond issue - - (1,102)
Bond interest paid (1,579) (951) (563)
Other interest paid (1,044) (629) (171)
Interest paid on finance leases (166) (100) (118)
-------- -------- --------
3 2 (1,085)
-------- -------- --------
TAXATION
UK tax paid (3,098) (1,866) (609)
Overseas tax paid (11,163) (6,725) (723)
Overseas tax repaid 4,907 2,956 -
-------- -------- --------
(9,354) (5,635) (1,332)
-------- -------- --------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (3,028) (1,824) (4,572)
Sale of tangible fixed assets 125 75 3
Purchase of other investments (946) (570) (11,824)
-------- -------- --------
(3,849) (2,319) (16,393)
-------- -------- --------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings (25,232) (15,200) -
Purchase of associated undertakings - - (166)
Cash acquired with subsidiary undertakings 762 459 -
Sale of business held for resale - - 500
-------- -------- --------
(24,470) (14,741) 334
-------- -------- --------
NET CASH OUTFLOW BEFORE FINANCING (66,674) (40,165) (43,428)
FINANCING
Issue of ordinary share capital 347 209 -
Expenses paid in connection with share issue - - (140)
Proceeds from bond issue - - 30,864
Repayment of principal under finance leases (1,038) (625) (704)
-------- -------- --------
(691) (416) 30,020
-------- -------- --------
(DECREASE)/INCREASE IN CASH IN THE PERIOD (67,365) (40,581) (13,408)
-------- -------- --------
-------- -------- --------
</TABLE>
NOTES:
1. Net cash outflow from operating activities is derived from operating profit
of L36,155,000 (1997: L13,253,000) adjusted for depreciation of
L2,475,000 (1997:L)1,991,000), goodwill amortisation and Write-offs of
L1,680,000 (1997:Lnil) and an increase in working capital of L57,782,000
(1997:L40,196,000).
<PAGE>
EIDOS PLC STATISTICAL INFORMATION FOR THE PERIOD ENDED DECEMBER 31, 1998
GEOGRAPHICAL REVENUE MIX
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter
December 31, 1998 December 31, 1997
L000s % of Total L000s % of Total
<S> <C> <C> <C> <C>
North America 43,814 36.1% 31,589 38.9%
UK/Europe 71,725 59.0% 46,121 56.8%
Rest of World 5,986 4.9% 3,542 4.3%
----------- ----------- ----------- -----------
Total net revenues 121,525 100.0% 81,252 100.0%
----------- ----------- ----------- -----------
Nine Months
December 31, 1998 December 31, 1997
L000s % of Total L000s % of Total
North America 60,570 35.8% 37,677 36.5%
UK/Europe 100,122 59.2% 60,568 58.8%
Rest of World 8,419 5.0% 4,824 4.7%
----------- ----------- ----------- -----------
Total net revenues 169,111 100.0% 103,069 100.0%
----------- ----------- ----------- -----------
Percentage Increase Percentage Increase
Quarter Nine Months
North America 38.7% 60.8%
UK/Europe 55.5% 65.3%
Rest of World 69.0% 74.5%
----------- -----------
Total net revenue 49.6% 64.1%
----------- -----------
PLATFORM REVENUE MIX (GAMES REVENUE ONLY)
(UNAUDITED)
Quarter
December 31, 1998 December 31, 1997
L000s % of Total L000s % of Total
Console 82,936 68.7% 55,382 68.9%
PC 37,786 31.3% 25,034 31.1%
----------- ------------ ----------- -----------
Total net revenues 120,722 100.0% 80,416 100.0%
----------- ------------ ----------- -----------
Nine Months
December 31, 1998 December 31, 1997
L000s % of Total L000s % of Total
Console 100,310 60.3% 63,374 63.1%
PC 66,134 39.7% 36,995 36.9%
----------- ----------- ----------- -----------
Total net revenues 166,444 100.0% 100,369 100.0%
----------- ----------- ----------- -----------
Percentage Increase Percentage Increase
Quarter Nine Months
Console 49.7% 58.3%
PC 50.9% 78.8%
----------- -----------
Total net revenues 50.1% 65.8%
----------- -----------
</TABLE>
