Electronic Arts 2004 Annual Report Download - page 88

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fair value based tests did not indicate an impairment of our recorded goodwill and certain indeÑnite-lived
intangibles at the EA.com reporting unit level as of January 1, 2003. The remaining portion of Kesmai
goodwill assets as of March 31, 2003 was $13.8 million. The remaining portion of Pogo goodwill assets as of
March 31, 2003 was $15.9 million. There are no assurances that future impairment tests will not result in a
charge to earnings and a corresponding write down of goodwill and certain indeÑnite-lived intangibles.
Fiscal 2002 Online 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.
All restructuring charges recorded prior to December 31, 2002 were recorded in accordance with EITF
No. 94-3, ""Liability Recognition for Certain Employee Termination BeneÑts and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring)'', EITF No. 95-03, ""Recognition of Liabilities
in Connection with a Purchase Business Combination'', and SAB No. 100, ""Restructuring and Impairment
Charges''. For all restructuring charges recorded subsequent to December 31, 2002, we recorded them in
accordance with SFAS No. 146, ""Accounting for Costs Associated with Exit or Disposal Activities''.
Adjustments to the restructuring reserves will be made in future periods, if necessary, based upon the then-
current events and circumstances.
73