Electronic Arts 2006 Annual Report Download - page 154

Balance Sheet Hedging Activities
Our foreign exchange forward contracts are not designated as hedging instruments under SFAS No. 133.
Accordingly, any gains or losses resulting from changes in the fair value of the forward contracts are
reported in interest and other income, net. The gains and losses on these forward contracts generally oÅset
the gains and losses associated with the underlying foreign-currency-denominated assets and liabilities,
which are also reported in interest and other income, net, in our Consolidated Statements of Operations.
(4) BUSINESS COMBINATIONS
JAMDAT Mobile Inc., Criterion Software Group Ltd. and Digital Illusions C.E.
The following table summarizes the estimated fair values of assets acquired and liabilities assumed in
connection with our acquisitions of JAMDAT Mobile Inc. (""JAMDAT'') and Criterion Software Group
Ltd. (""Criterion'') and the preliminary allocation of the Digital Illusions C.E. (""DICE'') assets acquired
and liabilities assumed for the Ñscal years ended March 31, 2006 and 2005 (in millions):
JAMDAT Criterion DICE Total
Current assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 50 $ 21 $35 $ 106
Property and equipment, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2 1 2 5
Long-term deferred tax asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 3 Ì 3
Acquired in-process technology ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7 9 4 20
Stock-based employee compensationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 6 Ì 6
Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 495 23 36 554
Finite-lived intangibles ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 212 21 2 235
Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (82) (16) (9) (107)
Minority interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì (8) (8)
Total consideration ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $684 $ 68 $62 $ 814
JAMDAT
On February 15, 2006, we acquired all outstanding shares of JAMDAT. Based in Los Angeles, California,
JAMDAT is a global publisher of wireless games and other wireless entertainment applications. This
acquisition positions us for further growth in the mobile entertainment market. We paid $27 per share in
cash in exchange for each share of JAMDAT common stock and assumed outstanding stock options and
restricted stock units under certain JAMDAT equity plans for an aggregate purchase price of $684 million,
including transaction costs.
Prior to our acquisition of JAMDAT, on April 20, 2005, JAMDAT entered into a purchase agreement
with the shareholders of Blue Lava Wireless, LLC (""Blue Lava''). In connection with JAMDAT's
acquisition of Blue Lava, JAMDAT stock was placed in escrow to satisfy certain indemniÑcation
provisions under the Blue Lava purchase agreement. Upon completion of our acquisition of JAMDAT, we
assumed JAMDAT's contingent liability and replaced the JAMDAT stock in escrow with $27 million also
placed in escrow. The $27 million is included in our purchase price of JAMDAT as a pre-acquisition
contingency. We are required to pay $9 million on each of the three anniversaries beginning on April 20,
2006, less any claims we may have pursuant to the indemniÑcation provisions of the Blue Lava purchase
agreement. On April 20, 2006, we made the Ñrst payment of approximately $9 million. The preliminary
purchase price allocation, including the allocation of goodwill, will be updated in the Ñrst quarter of Ñscal
2007 as additional information becomes available related to certain accrued liabilities.
The results of operations of JAMDAT and the estimated fair market values of the acquired assets and
assumed liabilities have been included in our Consolidated Financial Statements since the date of
acquisition.
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