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25
Results of Operations
Comparison of Fiscal2005 to Fiscal 2004
Net income for fiscal 2005 was $62.8 million, or $1.56 per diluted share, as compared to $35.8 million, or
$0.92 per diluted share in fiscal 2004.
Net Sales
We derive revenue principally from sales of packaged interactive software games designed for play on
videogame consoles, handheld devices and personal computers. We also derive revenue through
downloads by mobile phone users of our wireless games.
Our consolidated net sales in fiscal 2005 increased 18% over fiscal 2004, from $640.8 million to $756.7
million. The increase in net sales for fiscal 2005 was primarily attributable to the following factors:
•Growth from our established licensed brands and franchises: Disney/Pixar, SpongeBob SquarePants
and WWE SmackDown!, all performing better than the prior fiscal year. Two of the titles this fiscal
year, Disney/Pixar’s The Incredibles and The SpongeBob SquarePants Movie, were based upon
successful holiday movies.
•The successful launch of new properties targeted to the core gamer and high-end PC market:Full
Spectrum Warrior on Xbox, PlayStation2, and PC, The Punisher on Xbox, PlayStation2 and PC, and
Warhammer40,000: Dawn of War onPC.
•International net sales increased 53% in fiscal 2005 as compared to fiscal 2004 primarily due to
(i) our continued sales and marketing expansion in the international markets, (ii) content that has
more international appeal, (iii) growth of the installed base for current generation console and
handheld platforms, and (iv) the strengthening of foreign exchange rates.
•The continued success of the fiscal 2004 releases of Disney/Pixar’s Finding Nemo and SpongeBob
SquarePants:Battle for Bikini Bottom which shipped two million and one millionunits, respectively,
in fiscal 2005.
The following table details our net sales by territory for fiscal 2005 and 2004 (in thousands):
Fiscal Year Ended March 31, Increase/
2005 2004 (Decrease) % Change
NorthAmerica..... $470,619 62.2%$453,426 70.8%$ 17,193 3.8%
Europe........... 245,083 32.4 161,857 25.2 83,226 51.4%
Asia Pacific. ....... 41,029 5.4 25,563 4.0 15,466 60.5%
International ...... 286,112 37.8 187,420 29.2 98,692 52.7%
Consolidated net
sales ............ $ 756,731100.0%$ 6 40,846 100.0% $ 115,88518.1%
North America
For fiscal 2005, North American net sales increased to $470.6 million from $453.4 million in fiscal 2004
driven by:
•the performance of Disney/Pixar’s The Incredibles, The SpongeBob SquarePants Movie, and WWE
SmackDown! Vs. Raw;
•strong sales of original titles: Full Spectrum Warrior, MX v. ATV Unleashed, The Punisher and
Tak 2: The Staff of Dreams;