Electronic Arts 2004 Annual Report Download - page 54

The decrease in amortization in Ñscal 2003 of $17.9 million was primarily due to:
䡵Adoption of SFAS No. 142 in Ñscal 2003, which required us to stop amortizing goodwill. For Ñscal
2002, amortization of goodwill totaled $13.1 million.
䡵Certain identiÑable intangible assets related to Westwood and DreamWorks were amortized in Ñscal
2002, resulting in a decrease of $3.5 million.
䡵Impairment of Pogo and Kesmai Ñnite-lived intangible assets as a result of the restructuring of the
EA.com segment in Ñscal 2003 and 2002, resulting in lower amortization expense of $2.9 million.
In addition, we recorded intangible impairment charges relating to our restructuring of the EA.com business
segment of $12.4 million in Ñscal 2003 and $1.6 million in Ñscal 2002. For further information, please see our
discussion under ""Restructuring and Asset Impairment Charges'' below.
Restructuring and Asset Impairment Charges
Restructuring and asset impairment charges for Ñscal years 2003 and 2002 (in thousands):
March 31, % of Net March 31, % of Net
2003 Revenue 2002 Revenue % Change
Restructuring Charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $15,102 0.6% $ 7,485 0.4% 101.8%
Asset Impairment Charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $66,329 2.7% $12,818 0.8% 417.5%
For a discussion of our Fiscal 2003 restructurings, please refer to ""Comparison of Fiscal 2004 to Fiscal 2003''
above.
Fiscal 2002 Restructuring
In October 2001, we announced a restructuring plan for EA.com. The restructuring initiatives involved
strategic decisions to discontinue certain product oÅerings and focus only on key online priorities that aligned
with our Ñscal 2003 operational objectives. A concurrent workforce reduction resulted in the termination of
approximately 270 positions.
During Ñscal 2002, we recorded restructuring charges of $20.3 million, consisting of $4.2 million for workforce
reductions, $3.3 million for consolidation of facilities and other administrative charges, and $12.8 million for
the write-oÅ of non-current assets and facilities. The estimated costs for workforce reduction included
severance charges for terminated employees and costs for certain outplacement service contracts. The
consolidation of facilities resulted in the closure of EA.com's San Diego studio and consolidation of its
San Francisco and Virginia facilities. The estimated costs for consolidation of facilities included contractual
rental commitments under real estate leases for unutilized oÇce space oÅset by estimated future sub-lease
income, costs to close or consolidate facilities, and costs to write oÅ a portion of the assets from these
facilities. Impairment charges on long-lived assets amounted to $12.8 million and included $11.2 million
relating to abandoned technologies consisting of customized internal-use software systems for the EA.com
infrastructure, $1.0 million of Kesmai intangibles impairment because associated products and services were
discontinued and $0.6 million of goodwill charges relating to EA.com's San Diego studio closure. The
remaining portion of Kesmai assets as of March 31, 2002 was $15.9 million, consisting of $13.1 million of
goodwill and $2.8 million of intangibles relating to Kesmai's developed and core technology and acquired
workforce.
For further discussion on our restructurings and asset impairment charges, please see Note 6 in our
Consolidated Financial Statements, included in item 8 hereof.
Interest and Other Income, Net
Interest and other income, net, for Ñscal years 2003 and 2002 (in thousands):
March 31, % of Net March 31, % of Net
2003 Revenue 2002 Revenue $ Change % Change
$5,222 0.2% $12,848 0.7% $(7,626) (59.4%)
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