Electronic Arts 2007 Annual Report Download - page 116

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expenses in our cellular handset business resulting from our acquisition of JAMDAT, and (5) an increase of
$45 million in facilities-related expenses in support of our research and development functions worldwide.
We expect research and development expenses to increase in absolute dollars in fiscal 2008 primarily to
support our development of titles for the new generation of consoles.
Amortization of Intangibles
Amortization of intangibles for fiscal years 2007 and 2006 were as follows (in millions):
March 31,
2007
%ofNet
Revenue
March 31,
2006
%ofNet
Revenue $ Change % Change
$27 1% $7 — $20 286%
For fiscal 2007, amortization of intangibles resulted from our acquisitions of JAMDAT, Mythic and others. For
fiscal 2006, amortization of intangibles resulted from our acquisitions of JAMDAT, Criterion and others.
Amortization of intangibles increased by $20 million, or 286 percent, in fiscal 2007 as compared to fiscal
2006 primarily due to the amortization of intangibles related to our acquisitions of JAMDAT and Mythic. See
Note 4 of the Notes to Consolidated Financial Statements included in Item 8 of this report.
We expect amortization of intangible expenses to increase slightly in fiscal 2008 primarily due to the
amortization of intangibles related to our acquisition of Mythic, which will be included in our results for a full
year in fiscal 2008.
Acquired In-process Technology
Acquired in-process technology charges for fiscal years 2007 and 2006 were as follows (in millions):
March 31,
2007
%ofNet
Revenue
March 31,
2006
%ofNet
Revenue $ Change % Change
$3 — $8 — $(5) (63%)
The acquired in-process technology charge we incurred in fiscal 2007 resulted from our acquisitions of Mythic
and the remaining minority interest in DICE. The acquired in-process technology charge we incurred in fiscal
2006 resulted primarily from our acquisition of JAMDAT. Acquired in-process technology includes the value
of products in the development stage that are not considered to have reached technological feasibility or have
an alternative future use. Accordingly, upon consummation of these acquisitions, we incurred a charge for the
acquired in-process technology, as reflected in our Consolidated Statement of Operations. See Note 4 of the
Notes to Consolidated Financial Statements included in Item 8 of this report.
Restructuring Charges
Restructuring charges for fiscal years 2007 and 2006 were as follows (in millions):
March 31,
2007
%ofNet
Revenue
March 31,
2006
%ofNet
Revenue $ Change % Change
$15 — $26 1% $(11) (42%)
During the fourth quarter of fiscal 2006, we recorded a total pre-tax restructuring charge of $10 million,
consisting entirely of one-time benefits related to headcount reductions, which is included in restructuring
charges in our Consolidated Statement of Operations. These headcount reductions related to our decision in
the fourth quarter of fiscal 2006 to realign our resources with our product plan for fiscal 2007 and strategic
opportunities for the new generation of consoles, online and mobile platforms.
During fiscal 2006, restructuring charges related to the establishment of our international publishing headquar-
ters in Geneva, Switzerland were approximately $14 million, of which $8 million was for the closure of
certain United Kingdom facilities. During fiscal 2007, restructuring charges related to the establishment of our
international publishing headquarters in Geneva, Switzerland were approximately $15 million, of which
$10 million was for employee-related expenses.
42