Electronic Arts 2002 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2002 Electronic Arts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 74

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74

NETWORK DEVELOPMENT AND SUPPORT
The increase in network development and support expenses was primarily due to increased spending for the
network infrastructure, and the Games Channel on the AOL service and the amortization of capitalized
costs as required under Statement of Position 98-1,
“Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use”
,associated with the pre-launch network infrastructure build.
CUSTOMER RELATIONSHIP MANAGEMENT
Customer relationship management increased due to increased headcount-related costs associated with the
formation of our customer relationship management organization for the live game site.
Amortization of Intangibles
% OF NET % OF NET
2001 REVENUES 2000 REVENUES % CHANGE
$19,323,000 1.5% $ 11,989,000 0.8% 61.2%
The amortization of intangibles resulted primarily from the acquisitions of Westwood, Kesmai, DreamWorks
Interactive, ABC Software, Pogo and other acquisitions. Amortization of intangibles was $12,829,000 for
EA Core and $6,494,000 for EA.com for fiscal 2001. Amortization of intangibles was $10,866,000 for
EA Core and $1,123,000 for EA.com for fiscal 2000.
Charge for Acquired In-Process Technology
% OF NET % OF NET
2001 REVENUES 2000 REVENUES % CHANGE
$2,719,000 0.2% $ 6,539,000 0.5% (58.4%)
FISCAL 2001:
In connection with the acquisition of Pogo in the fourth quarter of fiscal 2001, we allocated and expensed
$2,719,000 of the $43,333,000 purchase price to acquired in-process technology. At the date of acquisi-
tion, this amount was expensed as a non-recurring charge as the in-process technology had not yet reached
technological feasibility and had no alternative future uses. Pogo had various projects in progress at the
time of the acquisition. As of the acquisition date, costs to complete Pogo projects acquired were expected
to be approximately $1,200,000 in future periods. During fiscal 2002, all of these development projects
were completed and launched on Pogo gamesites. In conjunction with the acquisition of Pogo, we accrued
approximately $100,000 related to direct transaction and other related costs.
FISCAL 2000:
|•••»In connection with the acquisition of Kesmai by EA.com in the fourth quarter of fiscal 2000, we allo-
cated and expensed $3,869,000 of the purchase price to acquired in-process technology.
|•••»In connection with the acquisitions of two development companies by EA Core, made in the second and
fourth quarters of fiscal 2000, we allocated and expensed $2,670,000 of the purchase price to
acquired in-process technology.
These charges were made after we concluded that the in-process technology had not reached technological
feasibility and had no alternative future use after taking into consideration the potential for usage of the
software in different products and resale of the software.
Interest and Other Income, Net
% OF NET % OF NET
2001 REVENUES 2000 REVENUES % CHANGE
$16,886,000 1.3% $ 16,028,000 1.1% 5.4%
Interest and other income, net, increased in absolute dollars primarily due to higher interest income as a
result of higher average cash balances and investing in higher yielding taxable securities in fiscal 2001.
Those gains were partially offset by realized gains on sales of marketable securities in fiscal 2000.
EA 2002 AR
34