Electronic Arts, Inc. and Subsidiaries - Page 11




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               At all times during the manufacture of the video games in              
          Puerto Rico, EAPR owned all materials and components, work in               
          process inventory, and finished products relating to the video              
          games that EA bought.                                                       
               EA bought from EAPR the video games in dispute in the                  
          instant cases.  EAPR was not a sham corporation.                            
          C.  Manufacturing Process                                                   
               Video games were manufactured in the leased space covered by           
          the Lease, that is, the leased portion of the facilities owned by           
          PPI in Santa Isabel.  The following general steps were used in              
          manufacturing these video games:  The raw materials and                     
          components necessary for a production run were procured from the            
          warehouse space covered by the Lease and placed in the production           
          area as needed.  The leads on various components for each video             
          game (including capacitors, resistors, and integrated circuits)             
          were formed (i.e., bent and cut, as required) using various types           
          of formers.  The formed components were then supplied to a “push-           
          along” assembly line in which they were inserted, along with ROM            
          chips and any batteries or other required components, into bare             
          printed circuit boards.                                                     
               The circuit boards with the inserted items4 were then placed           
          on the automatic conveyer in a wave solder machine, where flux              


               4We assume that that is what the parties mean by their                 
          stipulated--but undefined--term “populated boards”.                         





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Last modified: May 25, 2011