Electronic Arts 2005 Annual Report Download - page 134

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Fiscal 2004 Studio Restructuring
During the fourth quarter of Ñscal 2004, we closed the majority of our leased studio facility in Walnut Creek,
California and our entire owned studio facility in Austin, Texas in order to consolidate local development
eÅorts in Redwood City, California. We recorded total pre-tax charges of $9 million, consisting of $7 million
for consolidation of facilities (net of expected future sublease income), $2 million for workforce reductions of
approximately 117 personnel and less than $1 million for the write-oÅ of non-current assets, primarily
leasehold improvements.
Fiscal 2003 Studio Restructuring
During the third quarter of Ñscal 2003, we closed our oÇce located in San Francisco, California and our studio
located in Seattle, Washington in order to consolidate local development eÅorts in Redwood City, California
and Vancouver, British Columbia, Canada. We recorded total pre-tax charges of $9 million, consisting of
$7 million for consolidation of facilities (net of expected future sublease income), $1 million for the write-oÅ
of non-current assets, primarily leasehold improvements, and $1 million for workforce reductions of
approximately 33 personnel.
Additionally, during the fourth quarter of Ñscal 2003, we approved a plan to consolidate the Los Angeles,
California, Irvine, California and Las Vegas, Nevada, studios into one major game studio in Los Angeles. We
recorded a total pre-tax restructuring charge of $5 million, including $2 million for the shutdown of facilities
and associated costs, $2 million for the write-oÅ of non-current assets, primarily leasehold improvements and
$1 million for workforce reductions.
Fiscal 2003 Online Restructuring
In March 2003, we consolidated the operations of EA.com into our core business, and eliminated separate
reporting for our Class B common stock for all future reporting periods after Ñscal 2003. We recorded
restructuring charges, including asset impairment, of $67 million, consisting of $2 million for workforce
reductions of approximately 50 personnel, $2 million for consolidation of facilities and $63 million for the
write-oÅ of non-current assets. The consolidation of facilities resulted in the closure of EA.com's Chicago and
Virginia facilities and an adjustment for the closure of EA.com's San Diego studio in Ñscal 2002.
As part of the restructuring eÅorts, we performed impairment tests under SFAS No. 144, ""Accounting for the
Impairment or Disposal of Long-Lived Assets'', to evaluate the recoverability of our long-lived assets and
remaining Ñnite-lived identiÑable intangible assets utilized in the EA.com 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 its
Class B common stock. As of March 31, 2003, the unit sales and the number of subscribers for The Sims
Online, our Öagship EA.com product, and overall EA.com performance was signiÑcantly below our expecta-
tions, which we considered to be a triggering event under SFAS No. 144. These results caused us to cancel
most of our plans to develop similar online products that would have utilized the long-lived assets associated
with the EA.com business. Impairment charges on long-lived assets amounted to $63 million and included
$25 million relating to impaired customized internal-use software systems for the EA.com infrastructure,
$26 million for other long-lived assets and $12 million of Ñnite-lived intangibles impairment charges relating to
EA.com's acquisitions of Kesmai Corporation and Pogo Corporation.
Fiscal 2002 Online Restructuring
In October 2001, we announced restructuring initiatives involving EA.com and the closure of EA.com's
San Diego studio and consolidation of our San Francisco and Virginia facilities. As a result, we recorded
restructuring charges of $20 million, consisting of $4 million for workforce reductions, $3 million for
consolidation of facilities and other administrative charges and $13 million for the write-oÅ of non-current
assets and facilities.
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
78