Electronic Arts 2006 Annual Report Download - page 155

Except for acquired in-process technology, which is discussed below, the acquired Ñnite-lived intangible
assets are being amortized on a straight-line basis over estimated lives ranging from two to twelve years.
The intangible assets that make up that amount as of the date of the acquisition include:
Gross Carrying Weighted-Average
Amount Useful Life
(in millions) (Years)
Developed and Core Technology ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $122 10
Carrier Contracts and Related ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 85 5
Other Intangibles ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5 3
Total Finite-Lived Intangibles ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $212 8
We recorded $495 million of goodwill, substantially none of which is tax deductible.
Acquired in-process technology includes the value of products in the development stage that are not
considered to have reached technological feasibility or have alternative future use. Accordingly, we
expensed acquired in-process technology in our Consolidated Statement of Operations upon consummation
of the acquisition.
Criterion
On October 19, 2004, we acquired all outstanding shares of Criterion for an aggregate purchase price of
approximately $68 million, including transaction costs and the assumption of outstanding stock options
under certain Criterion stock option plans. Based in England, Criterion is a developer of video games and a
provider of middleware solutions for the game development and publishing industry. The results of
operations of Criterion 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. Except for
acquired in-process technology, which is discussed below, the acquired Ñnite-lived intangible assets are
being amortized on a straight-line basis over estimated lives ranging from two to four years.
Acquired in-process technology includes the value of products in the development stage that are not
considered to have reached technological feasibility or have alternative future use. Accordingly, the
acquired in-process technology was expensed in our Consolidated Statement of Operations upon
consummation of the acquisition. Stock-based employee compensation represents the intrinsic value of
certain unvested employee stock options that were assumed as part of the transaction. The stock options
were considered modiÑed for accounting purposes and were fully amortized over the remaining vesting
period in our Consolidated Statement of Operations for the year ended March 31, 2005.
Annual Report
DICE
In 2003 we acquired: (1) approximately 1,911,403 shares of Class B common stock representing a
19 percent equity interest in DICE and (2) a warrant to acquire an additional 2,327,602 shares of to-be-
issued Class A common stock at an exercise price of SEK 43.23. Based in Sweden, DICE develops games
for personal computers and video game consoles. DICE's products are primarily sold through co-publishing
agreements with us. The transactions between DICE and us have been recorded on an arm's length basis.
Prior to our tender oÅer in the fourth quarter of Ñscal 2005, we accounted for our Class B common stock
investment in DICE under the equity method of accounting, as prescribed by APB No. 18. Separately, the
warrant valued at $5 million as of March 31, 2006 was included in investments in aÇliates in our
Consolidated Balance Sheets. See Note 2 of the Notes to Consolidated Financial Statements.
On January 27, 2005 we completed a tender oÅer by acquiring 3,235,053 shares of Class A common stock
at a price of SEK 61 per share, representing 32 percent of the outstanding Class A common stock of
DICE. During the tender oÅer period and through the end of Ñscal 2005, we acquired, through open
market purchases at an average price of SEK 60.33, an additional 1,190,658 shares of Class A common
stock, representing approximately 12 percent of the outstanding Class A common stock of DICE. During
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