Electronic Arts 2005 Annual Report Download - page 132

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(5) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill information is as follows (in millions):
Year Ended
March 31,
2005 2004
Goodwill Ì beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 92 $86
Acquired ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 58 4
EÅects of Foreign Currency TranslationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3 2
Goodwill Ì end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $153 $92
We completed our annual impairment test in the fourth quarter of Ñscal 2005, 2004 and 2003 with
measurement dates of January 1, 2005, January 1, 2004 and January 1, 2003, respectively, and found no
indicators of impairment of our recorded goodwill. There can be no assurance that future impairment tests will
not result in a charge to earnings and there is a potential for a write down of goodwill in connection with the
annual impairment test in future periods.
Finite-lived intangible assets, net of accumulated amortization, as of March 31, 2005 and 2004, were
$36 million and $18 million, respectively, and include costs for obtaining trade names and developed
technologies. Amortization of intangibles for the Ñscal years ended March 31, 2005, 2004 and 2003 was
$6 million (of which $3 million was recognized in cost of goods sold), $3 million and $8 million, respectively.
Finite-lived intangible assets are amortized using the straight-line method over the lesser of their estimated
useful lives or the agreement terms, typically from two to twelve years. As of March 31, 2005 and 2004, the
weighted-average remaining useful life for Ñnite-lived intangible assets was approximately 4.3 years and
7.5 years, respectively.
When indicators are present and circumstances warrant, we perform impairment tests under SFAS No. 144 to
evaluate the recoverability of our long-lived assets and remaining Ñnite-lived identiÑable intangibles utilized in
our business. This test was performed in the fourth quarter of Ñscal 2003 in conjunction with the overall
valuation of the EA.com legal entity and our Class B common stock and resulted in an impairment of
$12 million. See Note 6 of the Notes to Consolidated Financial Statements.
Finite-lived intangibles consist of the following (in millions):
As of March 31, 2005
Gross Other
Carrying Accumulated Intangibles,
Amount Amortization Impairment Other Net
Developed/Core Technology ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $47 $(22) $ (9) $ 1 $17
Trade name ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 37 (18) (1) Ì 18
Subscribers and Other Intangibles ÏÏÏÏÏÏÏÏÏÏÏÏÏ 11 (7) (2) (1) 1
TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $95 $(47) $(12) $Ì $36
As of March 31, 2004
Gross Other
Carrying Accumulated Intangibles,
Amount Amortization Impairment Other Net
Developed/Core Technology ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $28 $(19) $ (9) $Ì $Ì
Trade name ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35 (16) (1) Ì 18
Subscribers and Other Intangibles ÏÏÏÏÏÏÏÏÏÏÏÏÏ 9 (6) (2) (1) Ì
TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $72 $(41) $(12) $(1) $18
76