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Various EA corporate officers served as directors or
corporate officers of EAPR. As with various officers and
directors of other EA affiliates, they were not separately
compensated for serving as officers of EAPR. The compensation
paid to EA’s officers (including those who were officers of EAPR)
was included in EA’s general administrative expense. EA’s
general administrative expense was included in the computation of
the combined profit for purposes of applying the profit split
computation under section 936(h).
G. EAPR’s Finances
EAPR’s cost of goods sold with respect to video games
included direct costs and period costs. Direct costs included
materials and labor. Labor costs included amounts paid to PPI
pursuant to the Agreement. Period costs included materials and
labor for “rework” (a stipulated, but undefined, term).
Table 3 shows EAPR’s total cost of goods sold relating to
the video games it sold to EA, and net sales of video games to EA
(without regard to the profit split allocation under section
936(h)(5)).
Table 3
Fiscal Year Cost of Goods Sold Net Sales
1993 $21,119,356 $22,488,000
1994 56,807,000 59,211,000
1995 76,429,990 79,559,000
1996 42,500,108 45,004,000
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