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, 1999
EIDOS plc
Wimbledon Bridge House
1, Hartfield Road
Wimbledon, London
SW19 3RU United Kingdom
(Address 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 and March 31, 1999 2
Consolidated Statements of Operations for the three and nine months ended December 3
31, 1999
Statements of Recognised Gains & Losses for the three and nine months ended 4
December 31, 1999 and 1998
Consolidated Statements of Cash Flows for the nine months ended December 31, 1999 5
and 1998
Consolidated Statements of Changes in Shareholders' Equity for the nine months 6
ended December 31, 1999
Notes to Unaudited Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the three and nine months ended December 31, 1999 13
Exhibits
The following documents were filed as part of this Form 6-K:
Press release dated 18 January 2000 - Trading update E-1
Press release dated 25 January 2000 - Shareholders approve five for one share E-2
split
UK press release dated 28 February 2000 - Results for the nine months ended 31
December 1999 E-3
US press release dated February 28, 2000 - Results for the three and nine months
ended December 31, 1999 E-4
</TABLE>
1
<PAGE>
EIDOS plc
Consolidated Balance Sheets Reconciled to US GAAP
<TABLE>
<CAPTION>
UK GAAP December 31, 1999 March 31, 1999
-------
(unaudited)
------------------------ --------------------
(pound)000 (pound)000
<S> <C> <C>
Fixed assets
Intangible assets (net of amortisation of (pound)13,753,000; March
31, 1999,(pound)4,070,000) 31,737 25,939
Tangible assets 5,552 5,668
Investments
Joint ventures 2,413 -
Other investments 48,722 12,164
-------------- --------------
51,135 12,164
-------------- --------------
Total fixed assets 88,424 43,771
-------------- --------------
Current assets
Stocks 8,411 5,666
Debtors: amounts falling due within one year 119,964 57,737
Cash at bank and in hand 14,950 48,220
-------------- --------------
Total current assets 143,325 111,623
Creditors: amounts falling due within one year (142,770) (58,049)
-------------- --------------
Net current assets 555 53,574
-------------- --------------
Total assets less current liabilities 89,979 97,345
-------------- --------------
Creditors due after more than one year (129) (30,813)
-------------- --------------
Net assets 88,850 66,532
-------------- --------------
-------------- --------------
Capital and reserves
Called up share capital 2,056 1,728
Share premium account 83,645 50,165
Other reserves 707 707
Profit and loss account 2,442 13,932
-------------- --------------
Shareholders' funds 88,850 66,532
-------------- --------------
-------------- --------------
Reconciliation to US GAAP
Shareholders' funds (prepared under UK GAAP) 88,850 66,532
Goodwill 19,052 19,449
Less in process research and development (2,368) (2,368)
Less amortisation (17,185) (16,856)
Deferred tax 993 1,993
-------------- --------------
Shareholders' funds in accordance with
US GAAP 89,342 68,750
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Operations Reconciled to US GAAP
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
----------------------- -----------------------
UK GAAP 1999 1998 1999 1998
- -------
--------- ---------- --------- ----------
(pound)000 (pound)000 (pound)000 (pound)000
<S> <C> <C> <C> <C>
Turnover: Group and share of joint ventures' 104,573 121,525 148,633 169,111
Less: share of joint ventures' (6,041) - (6,041) -
--------- ---------- --------- ----------
Group turnover - continuing operations 98,532 121,525 142,592 169,111
Costs of goods sold (34,192) (37,260) (53,884) (59,763)
--------- ---------- --------- ----------
Gross profit 64,340 84,265 88,708 109,348
--------- ---------- --------- ----------
Selling and marketing (15,669) (13,451) (33,999) (25,902)
Research and development (12,130) (13,812) (35,688) (29,941)
General and administrative
Goodwill amortisation (3,693) (1,513) (9,683) (1,513)
Other (6,920) (5,714) (20,336) (15,837)
--------- ---------- --------- ----------
Operating expenses (38,412) (34,490) (99,706) (73,193)
--------- ---------- --------- ----------
Operating profit/(loss) - continuing operations 25,928 49,775 (10,998) 36,155
Share of operating profit of joint ventures 568 - 568 -
--------- ---------- --------- ----------
26,496 49,775 (10,430) 36,155
Amounts written off investments - 2,250 - (3,000)
Net interest and similar charges
Group (1,162) (713) (2,144) (771)
Joint ventures (19) - (19) -
--------- ---------- --------- ----------
Profit/(loss) on ordinary activities before tax 25,315 51,312 (12,593) 32,384
Taxation
Group (9,702) (18,291) 1,211 (13,159)
Joint ventures (192) - (192) -
--------- ---------- --------- ----------
Net profit/(loss) after tax (under UK GAAP) 15,421 33,021 (11,574) 19,225
--------- ---------- --------- ----------
Earnings/(loss) per share
Basic 15.2p 38.6p (12.1p) 22.5p
Diluted 14.3p 32.9p (12.1p) 20.0p
Reconciliation to US GAAP
Net profit/(loss) after tax (under UK GAAP) 15,421 33,021 (11,574) 19,225
Amortisation of goodwill (185) (771) (329) (4,047)
In process research and development - (2,173) - (2,173)
Deferred taxation (1,000) - (1,000) -
Amounts written off investments - (2,250) - 3,000
--------- ---------- --------- ---------
Net income/(loss) in accordance with US GAAP 14,236 27,827 (12,903) 16,005
--------- ---------- --------- ---------
Earnings /(loss) per share in accordance with US GAAP
Basic 14.1p 32.5p (13.5p) 18.7p
Diluted 13.2p 27.8p (13.5p) 16.8p
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<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 1999 1998 1999 1998
- -------
----------- ----------- ----------- -----------
(pound)000 (pound)000 (pound)000 (pound)000
<S> <C> <C> <C> <C>
Net profit/(loss) after tax 15,421 33,021 (11,574) 19,225
Currency translation differences on foreign currency net
investments (922) (3) (313) 163
----------- ----------- ----------- -----------
Total gains and losses in the period 14,499 33,018 (11,887) 19,388
----------- ----------- ----------- -----------
US GAAP
Net income/(loss) 14,236 27,827 (12,903) 16,005
Other comprehensive income:
Foreign currency translation adjustments (922) (3) (313) 163
Unrealised gain/(loss) on investments - 2,250 - (3,000)
----------- ----------- ----------- -----------
Total comprehensive net income/(loss) 13,314 30,074 (13,216) 13,168
----------- ----------- ----------- -----------
Cumulative translation differences
Balance brought forward 410 556 (199) 390
Before tax translation differences (1,418) (4) (481) 253
Tax benefit/(expense) 496 1 168 (90)
----------- ----------- ----------- -----------
After tax translation differences (922) (3) (313) 163
----------- ----------- ----------- -----------
Balance carried forward (512) 553 (512) 553
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Nine months ended Nine months ended
December 31, 1999 December, 31 1998
(pound)000 (pound)000
---------------- ----------------
<S> <C> <C>
Net cash outflow from operating activities (41,628) (17,472)
---------------- ----------------
Returns on investments and servicing of finance
Interest received 671 1,558
Dividend income received - 124
Bond interest paid (897) (951)
Interest paid on finance leases (34) (100)
Other interest paid (881) (629)
---------------- ----------------
(1,141) 2
---------------- ----------------
Taxation
UK taxation paid (1,640) (1,866)
Overseas tax paid (6,807) (3,769)
---------------- ----------------
(8,447) (5,635)
---------------- ----------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,366) (1,824)
Sale of tangible fixed assets 3 75
Purchase of other investments (36,555) (570)
---------------- ----------------
(38,918) (2,319)
---------------- ----------------
Acquisitions and disposals
Purchase of subsidiary undertakings (14,327) (15,200)
Net cash acquired with subsidiary undertakings - 459
Purchase of associated undertakings (17,874) -
---------------- -----------------
(32,201) (14,741)
---------------- -----------------
Net cash outflow before financing (122,335) (40,165)
Financing
Issue of ordinary share capital 2,560 209
Repayment of principal under finance leases (275) (625)
---------------- ----------------
2,285 (416)
---------------- ----------------
Decrease in cash in the period (120,050) (40,581)
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
EIDOS plc
Unaudited Consolidated Statement of Changes in Shareholders' Equity
For the nine months ended December 31, 1999
<TABLE>
<CAPTION>
(pound)000 (except share numbers) Ordinary shares Share
Premium
UK GAAP No. of shares Amount account
-------
-------------- -------------- --------------
<S> <C> <C> <C>
Balance as at April 1, 1999 86,411,400 1,728 50,165
Loss for the period - - -
Translation adjustment - - -
Arising on exercise of share options 2,097,255 42 2,518
Arising on conversion of bond 14,272,015 286 30,962
Goodwill written off on associated companies - - -
--------------- -------------- --------------
Balance as at December 31, 1999 102,780,670 2,056 83,645
--------------- -------------- --------------
US GAAP
Balance as at April 1, 1999 86,411,400 1,728 79,691
Loss for the period - - -
Translation adjustment - - -
Arising on exercise of share options 2,097,255 42 2,518
Arising on conversion of bond 14,272,015 286 30,962
--------------- -------------- --------------
Balance at December 31, 1999 102,780,670 2,056 113,171
--------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
(pound)000 (except share numbers) Profit
Other and loss
UK GAAP reserves account Total
-------
-------------- -------------- --------------
<S> <C> <C> <C>
Balance as at April 1, 1999 707 13,932 66,532
Loss for the period - (11,574) (11,574)
Translation adjustment - (313) (313)
Arising on exercise of share options - - 2,560
Arising on conversion of bond - - 31,248
Goodwill written off on associated companies - 397 397
--------------- -------------- --------------
Balance as at December 31, 1999 707 2,442 88,850
--------------- -------------- --------------
US GAAP
Balance as at April 1, 1999 707 (13,376) 68,750
Loss for the period - (12,903) (12,903)
Translation adjustment - (313) (313)
Arising on exercise of share options - - 2,560
Arising on conversion of bond - - 31,248
--------------- -------------- --------------
Balance at December 31, 1999 707 (26,592) 89,342
--------------- -------------- --------------
</TABLE>
The share numbers are stated after the five for one share split which took place
on January 26, 2000. The accompanying notes are an integral part of these
consolidated financial statements.
6
<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, 1999.
b. Earnings/(loss) per share
The earnings/(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 101,220,390 and 95,265,820 for
the three and nine months ended December 31, 1999 respectively (1998:
85,627,895 and 85,578,905). The diluted earnings per share incorporates
the shares issuable upon conversion of the US$ bond and stock options
and warrants outstanding during the period. The diluted weighted
average number of shares for the three months ended December 31, 1999
was 107,966,595 (1998: 101,378,315). None of the potential ordinary
shares were dilutive for the nine months ended December 31, 1999 and
hence a separate fully diluted loss per share is not given for that
period (1998: weighted average diluted shares 100,996,915).
The above share numbers are stated after the five for one share split
which took place on January 26, 2000.
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.
7
<PAGE>
EIDOS plc
Notes to Unaudited Consolidated Financial Statements continued.../
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 games
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.
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)65.3 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, fiscal year 1999: (pound)26.9 million and
fiscal year 2000: (pound)15.9m). 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 amortisation under U.K. GAAP than it is under
U.S. GAAP. Currently the amortisation 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.
8
<PAGE>
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.
On July 29, 1999 Eidos acquired 75% of the share capital of Spanish
distributor, Proein, S.L. Due to the nature of the ongoing relationship
between Eidos and the current management of Proein (who are the
minority shareholders), the investment is being treated as a joint
venture under U.K. GAAP and accounted for using the equity method.
Under U.S. GAAP the conditions for non-consolidation of a majority
investment are not met and the results of Proein have been consolidated
using the purchase method. Under U.K. GAAP Eidos' share of the
operating results, interest and tax of Proein are added to those of
Eidos. Eidos' share of the net assets of Proein is included within
investments. Under U.S. GAAP the results and assets are combined on a
line by line basis. After the deduction of the minority interest under
U.S. GAAP there is no difference between net contribution from Proein
under either method. Consequently this difference in treatment does not
appear as a reconciling item in either the profit and loss account or
balance sheet. The calculation of goodwill is also unaffected. There
was no in-process research and development identified at acquisition.
(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 December 31, 1999 was (pound)193.8
million.
9
<PAGE>
2. 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 Profit/(loss) before tax Gross assets
---------------------------------------------------------------------------------------
Nine months ended Nine months ended
December 31, December 31, December 31, 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 139,342 166,602 (12,475) 32,855 232,964 152,393
Video editing 3,255 2,667 (118) (471) 3,135 3,000
-------------- -------------- ------------- -------------- ------------- --------------
142,597 169,269 (12,593) 32,384 236,099 155,393
Inter segment (5) (158) ------------- -------------- ------------- --------------
-------------- --------------
142,592 169,111
-------------- --------------
</TABLE>
The geographical analysis of the Group's turnover, loss before taxation and
gross assets is set out below.
<TABLE>
<CAPTION>
Turnover to unaffiliated customers
------------------------------------------------------------
By destination By origination
Nine months ended Nine months ended
December 31, December 31,
------------------------------------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Geographical segment (pound)000 (pound)000 (pound)000 (pound)000
United Kingdom 24,632 24,217 45,404 44,168
Germany 21,435 29,152 23,304 33,079
France 16,033 21,582 19,910 27,095
Rest of Europe 22,641 25,171 - -
U.S. 50,079 60,570 52,119 64,178
Rest of World 7,772 8,419 1,855 591
-------------- -------------- -------------- --------------
142,592 169,111 142,592 169,111
-------------- -------------- -------------- --------------
</TABLE>
10
<PAGE>
2. Segmental analysis (continued)
<TABLE>
<CAPTION>
Inter-segment sales
------------------------------------------------------------
By destination By origination
Nine months ended Nine months ended
December 31, December 31,
------------------------------------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Geographical segment (pound)000 (pound)000 (pound)000 (pound)000
United Kingdom 8,125 7,627 48,792 59,169
Germany 16,216 19,104 89 -
France 14,487 18,689 - -
U.S. 15,871 13,803 6,480 54
Rest of World 694 - 32 -
-------------- -------------- -------------- --------------
55,393 59,223 55,393 59,223
-------------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
Profit/(loss) before tax Gross assets
--------------------------------------------- --------------
Nine months ended
December 31, December 31, March 31,
-------------- -------------- -------------- --------------
1999 1998 1999 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Geographical segment (pound)000 (pound)000 (pound)000 (pound)000
United Kingdom 2,798 22,426 118,887 63,441
Germany 855 4,177 25,052 17,102
France 183 3,709 15,586 8,576
Spain 549 - 6,763 -
U.S. (16,713) 2,183 68,514 64,471
Rest of World (265) (111) 1,297 1,803
-------------- -------------- -------------- --------------
(12,593) 32,384 236,099 155,393
-------------- -------------- -------------- --------------
</TABLE>
3. Stocks
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
-------------- --------------
<S> <C> <C>
Raw materials 268 371
Finished goods 8,143 5,295
-------------- --------------
8,411 5,666
-------------- --------------
</TABLE>
Stocks are stated net of provisions of(pound)1,515,000 at December 31, 1999
and (pound)764,000 at March 31, 1999.
11
<PAGE>
4. Borrowings
In April 1998, Eidos issued U.S.$50 million of 6.25% convertible bonds.
As at December 31, 1999, all the bonds had been converted (March 31,
1999: $0.1 million converted).
<TABLE>
<CAPTION>
December 31, 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 - - - 30,333
Bank loans and overdrafts 86,823 - - -
Obligations under finance leases 222 17 363 152
------------- ------------- ------------- -------------
87,045 17 363 30,485
------------- ------------- ------------- -------------
Other creditors
Trade creditors 23,742 - 9,692 -
Royalty creditors 3,068 - 4,968 -
Other creditors 12,469 112 20,371 328
Accruals and deferred income 14,386 - 8,967 -
Corporation tax 2,060 - 13,688 -
------------- ------------- ------------- -------------
55,725 112 57,686 328
------------- ------------- ------------- -------------
142,770 129 58,049 30,813
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
5. Commitments and contingencies
As at December 31, 1999 Eidos had contracts to make future payments
totalling (pound)13.4 million to various licensors and developers
involved in providing games software for Eidos' use. Eidos also has
annual commitments under operating leases of (pound)2.4 million,
(pound)1.9 million relating to land and buildings and (pound)0.5
million for motor vehicles and equipment. The principal 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.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 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
Fluctuating operating results
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 pounds Sterling and the overseas currency. Accordingly,
depreciation in the weighted average value of the overseas currency against
pounds Sterling could decrease reported revenues and appreciation in the
weighted average value of the overseas currency against pounds sterling could
increase reported revenues.
As a result of the foregoing, results of operations can be expected to fluctuate
significantly from period to period.
13
<PAGE>
RESULTS OF OPERATIONS
For the three months ended December 31, 1999 compared to the three months ended
December 31, 1998
Net revenue
Net revenue decreased 19% from (pound)121.5 million in the three months ended
December 31, 1998 to (pound)98.5 million in the three months ended December 31,
1999. Ten new titles were launched in the period compared to six titles in the
corresponding period last year. The total number of units shipped was 7.1
million compared to 7.3 million last year. The main reason for the decrease in
net revenue was the drop in average selling price from (pound)18.27 last year to
(pound)15.98. This is partly due to sales of lower priced products such as Game
Boy Color but mainly due to a decrease in the selling price and proportion of
PSX products. Last year console titles accounted for 69% of the quarter's
revenue whereas this year they were only 64%. Console products usually have a
higher selling price than PC products.
This quarter Eidos launched its first products for the Dreamcast (Powerstone and
Fighting Force 2) and Game Boy Color (Gex 3: Deep Cover Gecko) and shipped in
excess of 400,000 units on these new formats.
Other notable releases for the quarter were Tomb Raider: The Last Revelation on
PC and PSX, Fighting Force 2 on PSX and Dreamcast, and Championship Manager
Season 99/00 on PC. The Tomb Raider franchise has now shipped in excess of 20
million units since the original Tomb Raider was released in November 1996.
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, 1999, cost of sales was (pound)34.2
million. This represented 34.7% of net revenue, compared to 30.7% of net
revenue, in the corresponding period last year. Gross margin for the quarter was
65.3% compared to 69.3% in the corresponding period last year. The decrease in
margin is a direct result of the fall in average selling prices mentioned above
not matched by a corresponding decrease in manufacturing costs.
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 December 31, 1999 were (pound)10.2
million (10.3% of revenue) compared to (pound)8.7 million (7.1% of revenue) in
the corresponding period of 1998. This reflects the higher number of titles
released in the period (ten compared to six last year) of which half were
completely new brands and therefore did not benefit from existing market
awareness. It also reflects the costs of maintaining existing franchises and the
increasing use of TV advertising. In addition, the fall in average selling price
and therefore net revenue has resulted in advertising forming a higher
proportion of revenue.
14
<PAGE>
The fixed element of selling and marketing costs was (pound)5.5 million (1998:
(pound)4.8 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)11.7 million for the three months ended December 31, 1999
(1998: (pound)12.8 million). Also included in the category is pure research and
development of (pound)0.4 million (1998: (pound)1.0 million). The product
development charge for the quarter includes (pound)5.9 million invested in a
pipeline of around thirty five titles that have yet to be released. The slightly
lower development cost this quarter is due to differences in the timing of
funding and not any significant decrease in the level of development being
undertaken by the Group.
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)10.6 million or 10.8% of revenue
(1998: (pound)7.2 million or 5.4%) for the three months ended December 31, 1999.
Goodwill amortisation was (pound)3.7 million compared to (pound)1.5 in 1998
million reflecting a full quarter's charge for two acquisitions this year rather
than the two month charge for Crystal Dynamics last year. The total excluding
goodwill was (pound)6.9 million or 7.0% of revenue (1998: (pound)5.7 million or
4.7%), reflecting the increased administrative infrastructure required to run
Eidos' expanded operations.
Income from Joint Ventures
Results for the three months to December 31, 1999 reflect Eidos' investment in
Proein and Pyro Studios which were acquired in July 1999 and have been accounted
for as joint ventures. They contributed a pre-tax profit of (pound)0.6 million
((pound)0.4 million after tax, or 0.4p per share).
Taxation
A tax charge of (pound)9.9 million has been applied to the profit on ordinary
activities of (pound)25.3 million. This reflects the projected underlying tax
rate for the year to March 31, 2000 of 35%.
For the nine months ended December 31, 1999 compared to the nine months ended
December 31, 1998
Net revenue
Net revenue decreased 15.7% from (pound)169.1 million in the nine months ended
December 31, 1998 to (pound)142.6 million in the nine months ended December 31,
1999. There were fifteen (1998: thirteen) new games released in the nine months
ended December 31, 1999. These included Legacy of Kain: Soul Reaver on PC CD and
PSX, Tomb Raider: The Last Revelation on PC and PSX, Fighting Force 2 on PSX and
Dreamcast, Championship Manager Season 99/00 on PC, and two Formula One games.
15
<PAGE>
The total number of units shipped was 11.0 million - almost exactly the same as
last year. The main reason for the decrease in net revenue was the drop in
average selling price from (pound)16.84 last year to (pound)15.03. This is
partly due to sales of lower priced products such as Game Boy Color but mainly
due to a 10% decrease in the average selling price of new releases. There was no
change in the proportion of new releases to catalogue sales.
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, 1999, cost of sales was (pound)53.9
million. This represented 37.8% of net revenue, compared to (pound)59.8 million,
or 35.3% of net revenue, in the corresponding period of 1998. Gross margin was
62.2% for the period compared to 64.7% for the corresponding period last year.
The decrease in margin is a direct result of the lower selling price offset in
part by lower royalty costs (the most successful titles this year being
internally developed and having lower royalty rates).
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 in the year to date were (pound)18.0 million (12.7% of
revenue) compared to (pound)15.0 million (8.9% of revenue) in the corresponding
period of 1998. This reflects the higher number of titles released in the period
and the costs involved in launching a new brand and maintaining existing
franchises and the increasing use of TV advertising. The fixed element of
selling and marketing costs was (pound)16.0 million compared to (pound)10.9
million in the prior year. This reflects the amortisation cost of promotional
licences and the world-wide departmental headcount increases.
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)33.8 million (1998: (pound)27.8 million) and pure research
and development of (pound)2.0 million (1998: (pound)2.1 million). Product
development includes (pound)18.7 million (1998: (pound)20.3 million) invested in
a pipeline of around thirty five titles to be released over the next two years.
The year to date increase partly reflects the additional development resource
now available to Eidos following the investments in Crystal Dynamics and Pyro
Studios.
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.
16
<PAGE>
General and administrative costs for the period were (pound)30.0 million
compared to (pound)17.4 million in 1998. Goodwill amortisation was (pound)9.7
million compared to (pound)1.5 million reflecting nine months' charge for
Crystal Dynamics and five months' charge for Proein this year compared the two
months' charge for Crystal Dynamics last year. The total excluding goodwill was
(pound)20.3 million or 14.3% of revenue (1998: (pound)15.8 million or 9.4%),
reflecting the increased administrative infrastructure required to run the
expanded operations of the Group.
Income from Joint Ventures
Results for the nine months to December 31, 1999 reflect Eidos' investment in
Proein SA and Pyro Studios SL which were acquired in July 1999 and have been
accounted for as joint ventures. They contributed a pre-tax profit of (pound)0.6
million ((pound)0.4 million after tax, or 0.4p per share).
Taxation
A tax credit of (pound)1.0 million has been applied to the loss on ordinary
activities of (pound)12.6 million. This reflects the projected underlying tax
rate for the year to March 31, 2000 of 35%.
Liquidity and capital resources
At December 31, 1999 Eidos had cash and cash equivalents of (pound)15.0 million
and bank loans and overdrafts of (pound)86.8 million. Holders of the remaining
U.S.$49.9 million of Eidos' U.S.$50 million convertible bond converted to equity
during the period. At December 31, 1999 Eidos' working capital was (pound)1.5
million (which includes the bank borrowings).
Eidos utilised cash of (pound)41.6 million from its operating activities in the
nine months ended December 31, 1999. The final instalment for Crystal Dynamics
((pound)14.3 million) was paid in April 1999. In addition Eidos paid (pound)17.8
million to acquire its equity stakes in Pyro Studios and Proein in July 1999 and
(pound)36.6 million for its investments in Maximum Holdings, Inc. and Top Cow
Productions, Inc. These, together with tax payments of (pound)8.4 million,
represented the only significant other outflows of cash in the period. Interest
costs, capital expenditure and finance costs of (pound)3.8 million were largely
offset by (pound)2.6 million received from employees exercising their share
options in the period.
The Euro
The Board is 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.
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 seek to
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
17
<PAGE>
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 Europe remit Euros back to the Head Office in the U.K.
These receipts are translated to pounds 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
arisen 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 March 31, 1999 the entire 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 March 13, 2000
--------------------------- ---------------------
Jeremy MJ Lewis
Chief Financial Officer
18
<PAGE>
For Immediate Release 18 January 2000
Eidos plc
Trading Update
Eidos experiences slower than expected Christmas trading period
Eidos plc ("Eidos"), one of the world's leading publishers and developers of
entertainment software, will announce its results for the quarter ended 31
December 1999 on 28 February 2000. Preliminary estimates for the quarter are
that total units shipped were 5.9 million (1999 - 6.2 million) after making a
provision for returns. This is significantly below the Company's expectations.
The main influences on performance were:
Key Products
Tomb Raider: The Last Revelation and Championship Manager 99/00 performed well
in the quarter ended 31 December 1999. However, performances from certain
titles, principally F1 World Grand Prix (PSX), Urban Chaos (PC), The Nomad Soul
and Abomination, were weaker than anticipated.
Delayed Release Dates
The Company experienced greater than expected slippage which the Board believes
to be due in part to the consequences of the growth in the number of products
under development. The Board now anticipates the release of thirteen titles
before the year end with an additional four being delayed to the next financial
year. Three titles, F1 World Grand Prix (PSX), Urban Chaos (PC) and Fighting
Force 2 (Dreamcast, PSX) were released in the quarter ended 31 December 1999,
but at a later date than anticipated. A further three, F1 World Grand Prix (PC),
Urban Chaos (PSX) and Daikatana have been delayed until the quarter ended 31
March 2000.
Market Conditions
In the quarter ended 31 December 1999 the Company generally experienced weaker
than forecast sales, particularly in the French and German territories, which
have traditionally been two of its strongest markets in continental Europe.
While comprehensive market data for calendar 1999 is not available, Eidos
believes that there has been a significant downturn in these markets compared to
the previous year.
Outlook for full year
The combination of product delays and, in some instances, disappointing
performance has led the Board to revise downwards its expectations for the
quarter and full year ending 31 March 2000. Although it is too early to forecast
results for the year, the Board currently expects that the second half operating
profit pre-goodwill amortisation will be broadly comparable with that achieved
in the second half of the 1999 financial year. This implies the results for the
financial year ending 31 March 2000 will be significantly below those of the
previous year.
Future Development
The Board continues to believe in its business model and the positive prospects
for the entertainment software market. Eidos anticipates releasing in excess of
25 titles over the next 12 months, including sequels to UEFA Champions League,
Commandos, Thief, Gangsters and Final Fantasy VII.
<PAGE>
Key franchises such as Tomb Raider, Championship Manager and Soul Reaver have
performed well in the 9 months to 31 December 1999 and further iterations of
each are currently under development. The Company continues to expand its
release schedule with increased support for the Dreamcast and GameBoy Color;
platforms which both performed strongly through the Christmas period.
In addition, the company is poised to capitalise on the launch of the next
generation platforms especially PlayStation 2 with 7 titles currently under
development for release within the next 18 months.
..........ends..........
Contact:
Charles Cornwall, CEO: 0181 636 3000
Mike McGarvey, COO: 0181 636 3000
Jeremy Lewis, CFO: 0181 636 3000
Neil Camp, Binns & Co: 0171 786 9600
Ryan Barr/Lenny Santiago, Brainerd Communicators: 001 212 986 6667
Issued by Binns & Co: 0171 786 9600
<PAGE>
For Immediate Release 25 January 2000
Eidos plc
Shareholders approve five for one share split
Eidos plc ("Eidos"), one of the world's leading publishers and developers of
entertainment software, announces that following an Extraordinary General
Meeting held today at 10am at its offices in Wimbledon, shareholders have
approved the Board's recommendation that the company's 10p Ordinary shares be
split into five 2p Ordinary shares. Trading in the split shares will become
effective at 8am, Wednesday 26 January 2000.
Eidos is one of the world's largest publishers and developers of entertainment
software. Eidos develops and publishes a diverse mix of titles for the Sony
PlayStation(R), Dreamcast(TM), Nintendo(R) Game Boy(R) Color and multimedia PC
markets in the US, the UK, Europe and Asia.
Contact:
Charles Cornwall, CEO: 0181 636 3000
Jeremy Lewis, CFO: 0181 636 3000
Neil Camp, Binns & Co: 0171 786 9600
Ryan Barr/Lenny Santiago, Brainerd Communicators: 001 212 986 6667
Issued by Binns & Co: 0171 786 9600
<PAGE>
This press release is not intended for and may not be distributed in the United
States, or to US persons.
For Immediate Release 28 February 2000
Eidos plc
Third Quarter and Year-to-date Results
Third Quarter revenues decrease 19% to (pound)98.5 million
Third Quarter profit before tax and goodwill decreases 45% to
(pound)29.0 million
Eidos plc ("Eidos"), one of the world's leading publishers and developers of
entertainment software, announces results for the three and nine months ended 31
December 1999.
Mr Charles Cornwall, Chief Executive Officer, says:
"As announced on 18 January 2000, the third quarter results are below original
expectations with turnover for the nine month period decreasing from
(pound)169.1 million to (pound)142.6 million resulting in a year to date
operating loss of (pound)11.0 million compared to a profit of (pound)36.2
million last year. This has mainly been due to delayed product releases and some
under performance in key markets, particularly in France and Germany.
We remain confident that the quality and depth of the release schedule will
enable Eidos to meet the challenges facing all market participants in the next
twelve months as the existing platforms begin to be replaced by the next
generation of technology".
Highlights of the Chairman's Statement
Three months turnover down 19% to (pound)98.5 million from (pound)121.5
million
Three months operating profit down 48% to (pound)25.9 million from
(pound)49.8 million
Nine months turnover down 16% to (pound)142.6 million from
(pound)169.1 million
Nine months operating loss of (pound)11.0 million
compared to profit of (pound)36.2 million last year
Fifteen titles launched so far compared to thirteen last year, including
Dreamcast and Game Boy Color titles
Tomb Raider: The Last Revelation, the fourth instalment in the franchise,
launched on PSX and PC CD. Tomb Raider franchise sales now in excess of 20
million units
Tomb Raider to appear soon on Sega Dreamcast and Game Boy Color
Strong product line up for fourth quarter and beyond of sequels for key
franchises including Resident Evil 3, Thief 2, Final Fantasy VIII and UEFA
Champions League
Five for one share split approved by shareholders in January 2000
Jeremy Heath-Smith recently appointed Global Head of Development
Results Highlights (for the nine months to 31 December 1999)
<TABLE>
<CAPTION>
<S> <C> <C>
Turnover: (pound)142.6m (1998:(pound)169.1m)
EBITDA: (pound)1.7m (1998: (pound)40.3m)
(Loss)/profit before tax and goodwill: (pound)(2.9m) (1998: (pound)33.9m)
(Loss)/profit before tax (pound)(12.6m) (1998: (pound)32.4m)
(Loss)/earnings per share before goodwill: (2.0p) (1998: 24.2p)
(Loss)/earnings per share: (12.1p) (1998: 22.5p)
Diluted (loss)/earnings per share: (12.1p) (1998: 20.0p)
</TABLE>
The above losses and earnings per share are stated after the five for one share
split approved by shareholders on 25 January 2000.
Notes:
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>
Regarding current trading and prospects Mr Ian Livingstone, Chairman, says:
"On 18 January 2000, we issued a trading update in which we reported that the
third quarter and full year results would be significantly below original
expectations due to generally disappointing Christmas sales and product delays.
These results are in line with the revised expectations. The Board continues to
believe in its business model and the positive prospects for the entertainment
software market in spite of anticipated retail price pressure on the maturing
platforms. Steps have been taken to strengthen Eidos' development and
forecasting processes. As part of this process, Jeremy Heath-Smith has taken on
the new, additional role of Global Head of Development (whilst remaining as
Managing Director of Core Design) and will be responsible for both internal and
external teams with an aggressive plan to set out new relationships for the
development of next generation software.
Although the overall market is in a period of transition as new platforms are
introduced, Eidos currently has a strong product line up for release over the
fourth quarter of the current year and next year. The publishing schedule
includes sequels to some of the industry's largest franchises led by Tomb Raider
for which sales are now in excess of 20 million units (including over 3.5
million units for the latest version). Tomb Raider III will shortly be released
on the budget labels for PSX and PC CD. The spring will see the release of Tomb
Raider on Dreamcast and Game Boy Color for the first time. A further iteration
of the franchise is expected for release on PSX and PC CD in time for the coming
Christmas selling season.
Other major planned sequel releases include Final Fantasy VIII, Resident Evil 3,
UEFA Champions League, Thief 2 and later in the year Commandos 2, Soul Reaver 2,
Gangsters 2 and a further instalment of Championship Manager. Eidos is also
supporting new platforms with major titles for Dreamcast, Game Boy Color and
PlayStation 2.
In addition to supporting existing franchises, Eidos is continuing to invest in
new titles and new development talent. The next few months will see the release
of Daikatana, the first major title from Ion Storm, together with the eagerly
anticipated Fear Effect from Kronos. There are currently over thirty-five titles
in development, a number of which will be supported by major licences such as
Walt Disney World Quest, 102 Dalmatians, Formula One, the Olympics and the UEFA
Champions League."
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
Issued by Binns & Co: 0171 786 9600
more.../
<PAGE>
CHAIRMAN'S STATEMENT
Results and Trading Review
Eidos reports a loss after tax before goodwill of (pound)1.9 million for the
nine months ended 31 December 1999 compared to a profit of (pound)20.7m for the
corresponding period last year. This loss is before a goodwill amortisation
charge of (pound)9.7 million (1998: (pound)1.5 million). Turnover decreased from
(pound)169.1 million to (pound)142.6 million. The loss per share was 12.1p or
2.0p excluding goodwill, compared to an earnings per share of 22.5p (24.2p
excluding goodwill) last year. This is based on a weighted average number of
shares outstanding in the period of 95,265,820 (1998: 85,578,905). These share
numbers are stated after the five for one share split which took place following
approval by shareholders on 25 January 2000.
Results for the nine months to 31 December 1999 reflect Eidos' investment in
Proein SA and Pyro Studios SL which were acquired in July 1999 and have been
accounted for as joint ventures. They contributed a pre-tax profit of (pound)0.6
million ((pound)0.4 million after tax or 0.4p per share).
The net cash outflow from operating activities was (pound)41.6 million compared
to (pound)17.5 million in the corresponding period of 1998. This is after Eidos'
investment in product development and pure research and development of
(pound)35.7 million (1998: (pound)29.9 million). The other material outflows
were the investment in Maximum Holdings in November 1999 of (pound)35.5 million,
the second and last instalment of (pound)14.3 million for Crystal Dynamics paid
in April 1999 and the investment of (pound)17.9 million in Proein and Pyro
Studios.
There were fifteen (1998: thirteen) new games released in the nine months ended
31 December 1999. These included Legacy of Kain: Soul Reaver on PC CD and PSX,
Tomb Raider: The Last Revelation on PC and PSX, Fighting Force 2 on PSX and
Dreamcast, Championship Manager Season 99/00 on PC, and two Formula One games.
Gross margin was 62.2% for the period compared to 64.7% for the corresponding
period last year. The decrease in margin is a result of the lower average
selling price this year offset in part by lower royalty costs (the most
successful titles this year being internally developed and having lower royalty
rates).
Selling and Marketing
Advertising costs in the year to date were (pound)18.0 million (12.7% of
revenue) compared to (pound)15.0 million (8.9% of revenue) in the corresponding
period of 1998. This reflects the higher number of titles released in the
period, the increasing costs involved in launching a new brand and maintaining
existing franchises and the increased use of TV advertising.
The fixed element of selling and marketing costs was (pound)16.0 million
compared to (pound)10.9 million in the prior year. This reflects the
amortisation cost of promotional licences and the world-wide departmental
headcount increases.
Research and Development
Research and development represents the Group's investment in product
development of (pound)33.7 million (1998: (pound)27.8 million) and pure research
and development of (pound)2.0 million (1998: (pound)2.1 million). Product
development includes (pound)18.7 million (1998: (pound)20.3 million) invested in
a pipeline of over thirty-five titles to be released over the next two years.
The year
<PAGE>
to date increase partly reflects the additional development resource
now available to Eidos following the investments in Crystal Dynamics and Pyro
Studios.
General and Administrative
General and administrative costs for the period were (pound)30.0 million
compared to (pound)17.4 million in 1998. Goodwill amortisation was (pound)9.7
million compared to (pound)1.5 million in 1998 reflecting nine months' charge
for Crystal Dynamics and five months' charge for Proein and Pyro Studios this
year compared to two months' charge for Crystal Dynamics last year. The total
excluding goodwill was (pound)20.3 million or 14.3% of revenue (1998:
(pound)15.9 million or 9.4%), reflecting the increased administrative
infrastructure required to run the expanded operations of the Group including
the acquisition of Crystal Dynamics and the opening of offices in Tokyo and
Singapore.
Taxation
A tax credit of (pound)1.0 million has been applied to the loss on ordinary
activities of (pound)12.6 million. This reflects the projected underlying tax
rate for the year to 31 March 2000 of 35%.
Balance Sheet
The investments in the balance sheet reflect the acquisition of the interests in
Proein and Pyro Studios as well as the acquisition of the stake in Maximum
Holdings.
Creditors falling due within one year includes (pound)86.8 million of bank
overdrafts and loans. The fall in creditors due after one year and the increase
in share capital and share premium reflect the full conversion of the bond in
the period.
Current Trading and Prospects
On 18 January 2000, we issued a trading update in which we reported that the
third quarter and full year results would be significantly below original
expectations due to generally disappointing Christmas sales and product delays.
These results are in line with the revised expectations. The Board continues to
believe in its business model and the positive prospects for the entertainment
software market in spite of anticipated retail price pressure on the maturing
platforms. Steps have been taken to strengthen Eidos' development and
forecasting processes. As part of this process, Jeremy Heath-Smith has taken on
the new, additional role of Global Head of Development (whilst remaining as
Managing Director of Core Design) and will be responsible for both internal and
external teams with an aggressive plan to set out new relationships for the
development of next generation software.
Although the overall market is in a period of transition as new platforms are
introduced, Eidos currently has a strong product line up for release over the
fourth quarter of the current year and next year. The publishing schedule
includes sequels to some of the industry's largest franchises led by Tomb Raider
for which sales are now in excess of 20 million units (including over 3.5
million units for the latest version). Tomb Raider III will shortly be released
on the budget labels for PSX and PC CD. The spring will see the release of Tomb
Raider on Dreamcast and Game Boy Color for the first time. A further iteration
of the franchise is expected for release on PSX and PC CD in time for the coming
Christmas selling season.
Other major planned sequel releases include Final Fantasy VIII, Resident Evil 3,
UEFA Champions League, Thief 2 and later in the year Commandos 2, Soul Reaver 2,
Gangsters 2
<PAGE>
and a further instalment of Championship Manager. Eidos is also
supporting new platforms with major titles for Dreamcast, Game Boy Color and
PlayStation 2.
In addition to supporting existing franchises, Eidos is continuing to invest in
new titles and new development talent. The next few months will see the release
of Daikatana, the first major title from Ion Storm, together with the eagerly
anticipated Fear Effect from Kronos. There are currently over thirty-five titles
in development, a number of which will be supported by major licences such as
Walt Disney World Quest, 102 Dalmatians, Formula One, the Olympics and the UEFA
Champions League.
Ian Livingstone
Chairman
28 February 2000
<PAGE>
EIDOS plc
Unaudited Consolidated Profit and Loss Account
<TABLE>
<CAPTION>
Nine months to Nine months to
31 December 1999 31 December 1998
(pound)000 (pound)000
<S> <C> <C>
Turnover: Group and share of joint ventures 148,633 169,111
Less: share of joint ventures' turnover (6,041) -
---------- ----------
Group turnover - continuing operations 142,592 169,111
Costs of goods sold (53,884) (59,763)
---------- ----------
Gross profit 88,708 109,348
---------- ----------
Selling and marketing (33,999) (25,902)
Research and development (35,688) (29,941)
General and administrative
Goodwill amortisation (9,683) (1,513)
Other (20,336) (15,837)
---------- ----------
Operating expenses (99,706) (73,193)
---------- ----------
Group operating (loss)/profit (10,998) 36,155
Share of operating profit of joint ventures 568 -
---------- ----------
(10,430) 36,155
Amounts written off investments - (3,000)
Net interest and similar charges
Group (2,144) (771)
Joint ventures (19) -
---------- ----------
(Loss)/profit on ordinary activities before tax (12,593) 32,384
Taxation
Group 1,211 (13,159)
Joint ventures (192) -
---------- ----------
Net (loss)/profit after tax (11,574) 19,225
---------- ----------
(Loss)/earnings per share (12.1p) 22.5p
(Loss)/earnings per share before goodwill (2.0p) 24.2p
Diluted (loss)/earnings per share (12.1p) 20.0p
</TABLE>
Notes:
1. The (loss)/earnings per share is based on a weighted average number of
ordinary shares in issue of 95,265,820 for the nine months ended 31
December 1999 (1998: 85,578,905).
more../
<PAGE>
EIDOS plc
Unaudited Consolidated Balance Sheet
<TABLE>
<CAPTION>
31 December 1999 31 December 1998
(pound)000 (pound)000
<S> <C> <C>
Fixed assets
Intangible assets 31,737 28,403
Tangible assets 5,552 6,331
Investments
Joint ventures 2,413 -
Other investments 48,722 9,164
----------- -----------
51,135 9,164
----------- -----------
Total fixed assets 88,424 43,898
----------- -----------
Current assets
Stocks 8,411 6,477
Debtors 119,964 119,058
Cash at bank and in hand 14,950 2,369
----------- -----------
Total current assets 143,325 127,904
Creditors: amounts falling due within one year
(142,770) (76,910)
----------- -----------
Net current assets 555 50,994
----------- -----------
Total assets less current liabilities 88,979 94,892
Creditors due after more than
one year (129) (33,652)
----------- -----------
Net assets 88,850 61,240
----------- -----------
----------- -----------
Capital and reserves
Called up share capital 2,056 1,717
Share premium account 83,645 49,552
Other reserves 707 707
Profit and loss account 2,442 9,264
------------ ------------
Equity shareholders' funds 88,850 61,240
------------ ------------
------------ ------------
</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 investment in joint ventures comprises share of gross assets of
(pound)6,763,000 less share of gross liabilities of (pound)4,350,000.
more ../
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Nine months to Nine months to
31 December 1999 31 December 1998
(pound)000 (pound)000
<S> <C> <C>
Net cash outflow from operating activities (41,628) (17,472)
------------ -----------
Returns on investments and servicing of finance
Interest received 671 1,558
Dividend income received - 124
Interest paid on bond (897) (951)
Interest paid on finance leases (34) (100)
Other interest paid (881) (629)
----------- ----------
(1,141) 2
----------- ----------
Taxation
UK tax paid (1,640) (1,866)
Overseas tax paid (6,807) (3,769)
----------- -----------
(8,447) (5,635)
----------- -----------
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,366) (1,824)
Sale of tangible fixed assets 3 75
Purchase of other investments (36,555) (570)
----------- -----------
(38,918) (2,319)
----------- -----------
Acquisitions and disposals
Purchase of subsidiary undertakings (14,327) (15,200)
Net cash acquired with subsidiary undertakings - 459
Purchase of joint ventures (17,874) -
----------- -----------
(32,201) (14,741)
----------- -----------
Net cash outflow before financing (122,335) (40,165)
Financing
Issue of ordinary share capital 2,560 209
Repayment of principal under finance leases (275) (625)
----------- -----------
2,285 (416)
----------- -----------
Decrease in cash in the period (120,050) (40,581)
----------- -----------
----------- -----------
</TABLE>
Notes:
1. Net cash outflow from operating activities is derived from an operating
loss of (pound)10,998,000 (1998: profit (pound)36,155,000), adjusted for
depreciation of (pound)2,397,000 (1998: (pound)2,481,000), loss on
disposal of fixed assets of (pound)55,000 (1998: profit (pound)6,000),
goodwill amortisation and write offs of (pound)10,080,000 (1998:
(pound)1,680,000) and an increase in working capital of (pound)43,162,000
(1998: (pound)57,782,000).
..ends.
<PAGE>
FOR IMMEDIATE RELEASE
Eidos plc announces financial results for the THREE MONTHS ended
December 31, 1999
Third quarter revenues decrease 19% to (pound)98.5 million
($159.6 million) Third quarter profit before tax and goodwill decreases
45% to (pound)29.0 million ($47.0 million)
LONDON, February 28, 2000 -- Eidos plc (NASDAQ: EIDSY), one of the world's
leading publishers and developers of entertainment software, announced today
results for the three and nine months ended December 31, 1999. On a US GAAP
basis net revenue for the quarter was (pound)104.3 million ($169.0 million),
down from (pound)121.5 million for the corresponding period last year. On a US
GAAP basis the company's profit before tax for the quarter ended December 31,
1999 was (pound)25.3 million ($41.0 million), giving a net income of (pound)14.2
million ($23.1 million) and an earnings per share of 14.1 pence (22.8 c),
compared to a net income of (pound)27.8 million and earnings per share of 32.5
pence in the corresponding period last year.
On a US GAAP basis net revenue for the nine months was (pound)148.4 million
($240.4 million), compared to (pound)169.1 million for the corresponding period
last year. On a US GAAP basis the company's loss before tax for the nine months
was (pound)12.7 million ($20.6 million), giving a net loss of (pound)12.9
million ($20.9 million) and a loss per share of 13.5 pence (21.9 c), compared to
a net income of (pound)16.0 million and earnings per share of 18.7 pence in the
corresponding period last year. Earnings and losses per share are stated after
the five for one share split approved by shareholders on January 25, 2000.
Commenting on Eidos' current trading and prospects, Ian Livingstone, Chairman,
stated, "On January 18, 2000 we issued a trading update in which we reported
that the third quarter and full year results would be significantly below
original expectations due to generally disappointing Christmas sales and product
delays. These results are in line with the revised expectations. The Board
continues to believe in its business model and the positive prospects for the
entertainment software market in spite of the anticipated retail price pressure
on the maturing platforms. Steps have been taken to strengthen Eidos'
development and forecasting processes. As part of this process, Jeremy
Heath-Smith has taken on the new, additional role of Global Head of Development
(whilst remaining as Managing Director of Core Design) and will be responsible
for both internal and external teams with an aggressive plan to set out new
relationships for the development of next generation software.
Although the overall market is in a period of transition as new platforms are
introduced, Eidos currently has a strong product line up for release over the
fourth quarter of the current year and next year. The publishing schedule
includes sequels to some of the industry's largest franchises led by Tomb Raider
for which sales are now in excess of 20 million units (including over 3.5
million units for the latest version). Tomb Raider III will shortly be released
on the budget labels for PSX and PC CD. The spring will see the release of Tomb
Raider on Dreamcast and Game Boy Color for the first time. A further iteration
of the franchise is expected for release on PSX and PC CD in time for the coming
Christmas selling season.
Other major planned sequel releases include Final Fantasy VIII, Resident Evil 3,
UEFA Champions League, Thief 2 and later in the year Commandos 2, Soul Reaver 2,
Gangsters 2 and a further instalment of Championship Manager. Eidos is also
supporting new platforms with major titles for Dreamcast, Game Boy Color and
PlayStation 2.
<PAGE>
In addition to supporting existing franchises, Eidos is continuing to invest in
new titles and new development talent. The next few months will see the release
of Daikatana, the first major title from Ion Storm, together with the eagerly
anticipated Fear Effect from Kronos. There are currently over thirty-five titles
in development, a number of which will be supported by major licences such as
Walt Disney World Quest, 102 Dalmatians, Formula One, the Olympics and the UEFA
Champions League."
Charles Cornwall, Chief Executive Officer, added, "As announced on January 18,
2000, the third quarter results are below original expectations with turnover
for the nine month period decreasing from (pound)169.1 million to (pound)142.6
million resulting in a year to date operating loss of (pound)11.0 million
compared to a profit of (pound)36.2 million last year. This has mainly been due
to delayed product releases and some under performance in key markets,
particularly in France and Germany.
We remain confident that the quality and depth of the release schedule will
enable Eidos to meet the challenges facing all market participants in the next
twelve months as the existing platforms begin to be replaced by the next
generation of technology".
<TABLE>
<CAPTION>
- ------------------------------- ------------------------------------------- ----------------------------------------
US GAAP US GAAP
Three Months Ended Nine Months Ended
December 31, December 31,
- ------------------------------- ------------------------------------------- ----------------------------------------
- ------------------------------- ---------------------------- -------------- --------------------------- ------------
1999 1998 1999 1998
- ------------------------------- ---------------------------- -------------- --------------------------- ------------
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
$000* (pound)000 (pound)000 $000* (pound)000 (pound)000
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue 169,034 104,342 121,525 240,411 148,402 169,111
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
EBITDA 50,547 31,202 50,173 3,652 2,254 38,137
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
Profit/(loss) before tax 41,005 25,312 46,118 (20,637) (12,739) 29,164
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
Net income/(loss) 23,062 14,236 27,827 (20,903) (12,903) 16,005
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
Earnings/(loss) per share 22.8c 14.1p 32.5p (21.9c) (13.5p) 18.7p
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
Earnings/(loss) per share 29.0c 17.9p 35.2p (4.2c) (2.6p) 25.2p
before goodwill
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
Diluted earnings/(loss) per 21.4c 13.2p 27.8p (21.9c) (13.5p) 16.8p
share
- ------------------------------- -------------- ------------- -------------- --------------- ----------- ------------
- -------------------------------------------- --------------- --------------- --------------- -----------------------
Weighted average shares 101,220,390 85,627,895 95,265,820 85,578,905
- -------------------------------------------- --------------- --------------- --------------- -----------------------
- -------------------------------------------- --------------- --------------- --------------- -----------------------
Weighted average diluted shares 107,966,595 101,378,315 95,265,820 100,996,915
- -------------------------------------------- --------------- --------------- --------------- -----------------------
</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 $1.62 to (pound)1.00, the exchange rate published by Datastream for
December 31, 1999.
Recent developments
Three months turnover down 19% to (pound)98.5 million ($159.6 million) from
(pound)121.5 million
Three months operating profit down 48% to (pound)25.9 million ($42.0 million)
from (pound)49.8 million
Nine months turnover down 16% to (pound)142.6 million ($231.0 million) from
(pound)169.1 million
Nine months operating loss of (pound)11.0 million ($17.8 million) compared
to profit of (pound)36.2 million last year
Fifteen titles launched so far compared to thirteen last year, including
Dreamcast and Game Boy Color titles
<PAGE>
Tomb Raider: The Last Revelation, the fourth instalment in the franchise,
launched on PSX and PC CD. Tomb Raider franchise sales now in excess of 20
million units
Tomb Raider to appear soon on Sega Dreamcast and Game Boy Color
Strong product line up for fourth quarter and beyond including sequels for
key franchises including Resident Evil 3, Thief 2, Final Fantasy VIII and
UEFA Champions League
Five for one share split approved by shareholders in January 2000
Jeremy Heath-Smith recently appointed Global Head of Development
UK GAAP Financial Summary
Eidos reports a loss after tax before goodwill of (pound)1.9 million for the
nine months ended December 31, 1999 compared to a profit of (pound)20.7m for the
corresponding period last year. This loss is before a goodwill amortisation
charge of (pound)9.7 million (1998: (pound)1.5 million). Turnover decreased from
(pound)169.1 million to (pound)142.6 million. The loss per share was 12.1p or
2.0p excluding goodwill, compared to an earnings per share of 22.5p (24.2p
excluding goodwill) last year. This is based on a weighted average number of
shares outstanding in the period of 95,265,820 (1998: 85,578,905). These share
numbers are stated after the five for one share split which took place following
approval by shareholders on January 25, 2000.
Results for the nine months to December 31, 1999 reflect Eidos' investment in
Proein SA and Pyro Studios SL which were acquired in July 1999 and have been
accounted for as joint ventures. They contributed a pre-tax profit of (pound)0.6
million ((pound)0.4 million after tax or 0.4p per share).
The net cash outflow from operating activities was (pound)41.6 million compared
to (pound)17.5 million in the corresponding period of 1998. This is after Eidos'
investment in product development and pure research and development of
(pound)35.7 million (1998: (pound)29.9 million). The other material outflows
were the investment in Maximum Holdings in November 1999 of (pound)35.5 million,
the second and last instalment of (pound)14.3 million for Crystal Dynamics paid
in April 1999 and the investment of (pound)17.9 million in Proein and Pyro
Studios.
There were fifteen (1998: thirteen) new games released in the nine months ended
December 31, 1999. These included Legacy of Kain: Soul Reaver on PC CD and PSX,
Tomb Raider: The Last Revelation on PC and PSX, Fighting Force 2 on PSX and
Dreamcast, Championship Manager Season 99/00 on PC, and two Formula One games.
Gross margin was 62.2% for the period compared to 64.7% for the corresponding
period last year. The decrease in margin is a result of the lower average
selling price this year offset in part by lower royalty costs (the most
successful titles this year being internally developed and having lower royalty
rates).
Selling and Marketing
Advertising costs in the year to date were (pound)18.0 million (12.7% of
revenue) compared to (pound)15.0 million (8.9% of revenue) in the corresponding
period of 1998. This reflects the higher number of titles released in the
period, the increasing costs involved in launching a new brand and maintaining
existing franchises and the increased use of TV advertising.
The fixed element of selling and marketing costs was (pound)16.0 million
compared to (pound)10.9 million in the prior year. This reflects the
amortisation cost of promotional licences and the world-wide departmental
headcount increases.
Research and Development
Research and development represents the Group's investment in product
development of (pound)33.7 million (1998: (pound)27.8 million) and pure research
and development of (pound)2.0 million (1998: (pound)2.1 million). Product
development includes (pound)18.7 million (1998: (pound)20.3 million) invested in
a pipeline of over thirty-five titles to be released over the next two years.
The year
<PAGE>
to date increase partly reflects the additional development resource
now available to Eidos following the investments in Crystal Dynamics and Pyro
Studios.
General and Administrative
General and administrative costs for the period were (pound)30.0 million
compared to (pound)17.4 million in 1998. Goodwill amortisation was (pound)9.7
million compared to (pound)1.5 million in 1998 reflecting nine months' charge
for Crystal Dynamics and five months' charge for Proein and Pyro Studios this
year compared to two months' charge for Crystal Dynamics last year. The total
excluding goodwill was (pound)20.3 million or 14.3% of revenue (1998:
(pound)15.8 million or 9.4%), reflecting the increased administrative
infrastructure required to run the expanded operations of the Group including
the acquisition of Crystal Dynamics and the opening of offices in Tokyo and
Singapore.
Taxation
A tax credit of (pound)1.0 million has been applied to the loss on ordinary
activities of (pound)12.6 million. This reflects the projected underlying tax
rate for the year to March 31, 2000 of 35%.
Balance Sheet
The investments in the balance sheet reflect the acquisition of the interests in
Proein and Pyro Studios as well as the acquisition of the stake in Maximum
Holdings.
Creditors falling due within one year includes (pound)86.8 million of bank
overdrafts and loans. The fall in creditors due after one year and the increase
in share capital and share premium reflect the full conversion of the bond in
the period.
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 PlayStation, Sega Dreamcast, Nintendo Game Boy Color and
multimedia PC markets in the US, UK, Europe and Asia. The company's American
depository shares are traded on the NASDAQ National 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, products 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.
# # #
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Operations Reconciled to US GAAP for the
three and nine months ended December 31, 1999
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
UK GAAP 1999 1999 1998 1999 1999 1998
- ------- $000 (pound)000 (pound)000 $000 (pound)000 (pound)000
<S> <C> <C> <C> <C> <C> <C>
Turnover: Group and share of joint ventures'
169,408 104,573 121,525 240,785 148,633 169,111
Less: share of joint ventures turnover (9,786) (6,041) - (9,786) (6,041) -
--------- --------- --------- --------- --------- ---------
Group turnover - continuing operations 159,622 98,532 121,525 230,999 142,592 169,111
Costs of goods sold (55,391) (34,192) (37,260) (87,292) (53,884) (59,763)
--------- --------- --------- --------- --------- ---------
Gross profit 104,231 64,340 84,265 143,707 88,708 109,348
--------- --------- --------- --------- --------- ---------
Selling and marketing (25,384) (15,669) (13,451) (55,078) (33,999) (25,902)
Research and development (19,651) (12,130) (13,812) (57,815) (35,688) (29,941)
General and administrative
Goodwill amortisation (5,983) (3,693) (1,513) (15,686) (9,683) (1,513)
Other (11,210) (6,920) (5,714) (32,944) (20,336) (15,837)
---------- ---------- ---------- --------- --------- ---------
Operating expenses (62,228) (38,412) (34,490) (161,523) (99,706) (73,193)
---------- ---------- ---------- --------- --------- ---------
Group operating profit/(loss) 42,003 25,928 49,775 (17,816) (10,998) 36,155
Share of operating profit of joint ventures 920 568 - 920 568 -
---------- ---------- ---------- --------- --------- ---------
42,923 26,496 49,775 (16,896) (10,430) 36,155
Amounts written off investments - - 2,250 - - (3,000)
Net interest and similar charges
Group (1,882) (1,162) (713) (3,474) (2,144) (771)
Joint ventures (31) (19) - (31) (19) -
---------- ---------- ---------- --------- --------- ---------
Profit/(loss) on ordinary activities before 41,010 25,315 51,312 (20,401) (12,593) 32,384
tax
Taxation
Group (15,717) (9,702) (18,291) 1,962 1,211 (13,159)
Joint ventures (311) (192) - (311) (192) -
---------- ---------- ---------- --------- --------- ---------
Net profit/(loss) after tax (prepared under
UK GAAP) 24,982 15,421 33,021 (18,750) (11,574) 19,225
---------- ---------- ---------- --------- --------- ---------
(Loss)/earnings per share 24.6c 15.2p 38.6p (19.6c) (12.1p) 22.5p
(Loss)/earnings per share before goodwill 30.6c 18.9p 40.3p (3.2c) (2.0p) 24.2p
Diluted (loss)/earnings per share 23.2c 14.3p 32.9p (19.6c) (12.1p) 20.0p
</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 $1.62
to(pound)1.00, the exchange rate published by Datastream for December 31,
1999.
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Operations Reconciled to US GAAP for the
three and nine months ended December 31, 1999 (continued...)
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
Reconciliation to US GAAP 1999 1999 1998 1999 1999 1998
- -------------------------
$000 (pound)000 (pound)000 $000 (pound)000 (pound)000
<S> <C> <C> <C> <C> <C> <C>
Net profit/(loss) after tax (prepared under
UK GAAP) 24,982 15,421 33,021 (18,750) (11,574) 19,225
Amortisation of goodwill (300) (185) (771) (533) (329) (4,047)
In process research and development - - (2,173) - - (2,173)
Deferred taxation (1,620) (1,000) - (1,620) (1,000) -
Amounts written off investments - - (2,250) - - 3,000
--------- --------- --------- --------- --------- ---------
Net profit/(loss) in accordance with
US GAAP 23,062 14,236 27,827 (20,903) (12,903) 16,005
--------- --------- --------- --------- --------- ---------
(Loss)/earnings per share in accordance with
US GAAP 22.8c 14.1p 32.5p (21.9c) (13.5p) 18.7p
(Loss)/earnings per share before goodwill 29.0c 17.9p 35.2p (4.2c) (2.6p) 25.2p
Diluted (loss)/earnings per share 21.4c 13.2p 27.8p (21.9c) (13.5p) 16.8p
</TABLE>
Notes:
1. The company's financial statements are expressed in Pounds Sterling.
References to 'Pounds Sterling' or '(pound)' are to the currency of the
United Kingdom and references to '$', '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 $1.62
to(pound)1.00, the exchange rate published by Datastream for December 31,
1999.
<PAGE>
EIDOS plc
Unaudited Consolidated Balance Sheets Reconciled to US GAAP
<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999
UK GAAP $000 (pound)000 (pound)000
<S> <C> <C> <C>
Fixed assets
Intangible assets (net of amortisation of(pound)13,753,000; 51,414 31,737 25,939
March 31, 1999 (pound)4,070,000)
Tangible assets 8,994 5,552 5,668
Investments
Joint ventures 3,909 2,413 -
Other investment 78,930 48,722 12,164
-------------- -------------- --------------
82,839 51,135 12,164
-------------- -------------- --------------
Total fixed assets 143,247 88,424 43,771
-------------- -------------- --------------
Current assets
Stocks 13,626 8,411 5,666
Debtors 194,341 119,964 57,737
Cash at bank and in hand 24,219 14,950 48,220
-------------- -------------- --------------
Total current assets 232,186 143,325 111,623
Creditors: amount falling due within one year (231,287) (142,770) (58,049)
-------------- -------------- --------------
Net current assets 899 555 53,574
-------------- -------------- --------------
Total assets less current liabilities 144,146 88,979 97,345
-------------- -------------- --------------
Creditors due after more than one year (209) (129) (30,813)
-------------- -------------- --------------
Net assets 143,937 88,850 66,532
-------------- -------------- --------------
-------------- -------------- --------------
Capital and reserves
Called up share capital 3,331 2,056 1,728
Share premium account 135,505 83,645 50,165
Other reserve 1,145 707 707
Profit and loss account 3,956 2,442 13,932
-------------- -------------- --------------
Shareholders' funds 143,937 88,850 66,532
-------------- -------------- --------------
-------------- -------------- --------------
Reconciliation to US GAAP
Shareholders' funds (prepared under UK GAAP) 143,937 88,850 66,532
Goodwill 30,864 19,052 19,449
Less in process research and development (3,836) (2,368) (2,368)
Less amortisation (27,840) (17,185) (16,856)
Deferred tax 1,609 993 1,993
-------------- -------------- --------------
Shareholders' funds in accordance with
US GAAP 144,734 89,342 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.
2. The investment in joint ventures comprises share of gross assets of
(pound)6,763,000 less share of gross liabilities of (pound)4,350,000.
<PAGE>
EIDOS plc
Unaudited Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Nine months ended December Nine months
31, 1999 ended
December 31, 1998
$000 (pound)000 (pound)000
<S> <C> <C> <C>
Net cash outflow from operating activities (67,437) (41,628) (17,472)
-------------- -------------- ---------------
Returns on investments and servicing of finance
Interest received 1,087 671 1,558
Dividend income received - - 124
Interest paid on bond (1,453) (897) (951)
Interest paid on finance leases (55) (34) (100)
Other interest paid (1,427) (881) (629)
-------------- -------------- ---------------
(1,848) (1,141) 2
-------------- -------------- ---------------
Taxation
UK tax paid (2,657) (1,640) (1,866)
Overseas tax paid (11,027) (6,807) (3,769)
-------------- -------------- ---------------
(13,684) (8,447) (5,635)
-------------- -------------- --------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (3,833) (2,366) (1,824)
Sale of tangible fixed assets 5 3 75
Purchase of other investments (59,219) (36,555) (570)
-------------- -------------- ---------------
(63,047) (38,918) (2,319)
-------------- -------------- ---------------
Acquisitions and disposals
Purchase of associated undertakings (23,210) (14,327) (15,200)
Net cash acquired with subsidiary undertakings - - 459
Purchase of joint ventures (28,956) (17,874) -
-------------- -------------- ---------------
(52,166) (32,201) (14,741)
-------------- -------------- ---------------
Net cash outflow before financing (198,182) (122,335) (40,165)
Financing
Issue of ordinary share capital 4,147 2,560 209
Repayment of principal under finance leases (446) (275) (625)
-------------- -------------- ---------------
3,701 2,285 (416)
-------------- -------------- ---------------
Decrease in cash in the period (194,481) (120,050) (40,581)
-------------- -------------- ---------------
-------------- -------------- ---------------
</TABLE>
Notes:
1. Net cash outflow from operating activities is derived from an operating
loss of (pound)10,998,000 (1998: profit (pound)36,155,000), adjusted for
depreciation of (pound)2,397,000 (1998: (pound)2,481,000), loss on disposal
of fixed assets of (pound)55,000 (1998: profit (pound)6,000), goodwill
amortisation and write offs of (pound)10,080,000 (1998: (pound)1,680,000)
and an increase in working capital of (pound)43,162,000
(1998:(pound)57,782,000).
<PAGE>
Eidos plc Statistical Information for the Period Ended December 31, 1999
Geographical Revenue Mix (unaudited)
Quarter
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
(pound)000s % of Total (pound)000s % of Total
<S> <C> <C> <C> <C>
North America 33,100 33.6% 43,814 36.1%
UK/Europe 60,367 61.3% 71,725 59.0%
Rest of World 5,065 5.1% 5,986 4.9%
----------- ----------- ----------- -----------
Total net revenues 98,532 100.0% 121,525 100.0%
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Nine Months
December 31, 1999 December 31, 1998
(pound)000s % of Total (pound)000s % of Total
<S> <C> <C> <C> <C>
North America 50,079 35.1% 60,570 35.8%
UK/Europe 84,741 59.4% 100,122 59.2%
Rest of World 7,772 5.5% 8,419 5.0%
----------- ----------- ----------- -----------
Total net revenues 142,592 100.0% 169,111 100.0%
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Percentage Change Percentage Change
Quarter Nine Months
<S> <C> <C>
North America (24.5%) (17.3%)
UK/Europe (15.8%) (15.4%)
Rest of World (15.4%) (7.7%)
----------- -----------
Total net revenues (18.9%) (15.7%)
----------- -----------
</TABLE>
Platform Revenue Mix (Games Revenue only) (unaudited)
<TABLE>
<CAPTION>
Quarter
December 31, 1999 December 31, 1998
(pound)000s % of Total (pound)000s % of Total
<S> <C> <C> <C> <C>
Console 62,254 63.9% 82,936 68.7%
PC 35,193 36.1% 37,786 31.3%
----------- ----------- ----------- -----------
Total net revenues 97,447 100.0% 120,722 100.0%
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Nine Months
December 31, 1999 December 31, 1998
(pound)000s % of Total (pound)000s % of Total
<S> <C> <C> <C> <C>
Console 85,894 61.7% 100,310 60.3%
PC 53,319 38.3% 66,134 39.7%
----------- ----------- ----------- -----------
Total net revenues 139,213 100.0% 166,444 100.0%
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Percentage Change Percentage Change
Quarter Nine Months
<S> <C> <C>
Console (24.9%) (14.4%)
PC (6.9%) (19.4%)
----------- -----------
(19.3%) (16.4%)
----------- -----------
</TABLE>
