Electronic Arts 2007 Annual Report Download - page 154

JAMDAT Mobile Inc.
On February 15, 2006, we acquired all of the outstanding shares of JAMDAT Mobile Inc. Based in Los
Angeles, California, JAMDAT was a global publisher of wireless games and other wireless entertainment
applications. 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. The following table summarizes the
estimated fair values of assets acquired and liabilities assumed in connection with our acquisition of JAMDAT
for the fiscal year ended March 31, 2006 and the subsequent adjustment to the purchase price allocation for
the fiscal year ended March 31, 2007 (in millions):
Current assets ................................................................... $ 52
Property and equipment, net ........................................................ 2
Acquired in-process technology ...................................................... 7
Goodwill....................................................................... 491
Finite-lived intangibles ............................................................ 212
Deferred income tax liabilities ....................................................... (45)
Other liabilities .................................................................. (35)
Total consideration ............................................................. $684
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 indemnification 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 in cash, 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 of the Blue Lava acquisition, beginning on April 20, 2006,
less any claims we may have pursuant to the indemnification provisions of the Blue Lava purchase agreement.
In April 2007 and 2006, we made the first two payments of approximately $9 million in each period.
In fiscal 2007, we adjusted the purchase price allocation, including the allocation of goodwill, related to our
acquisition of JAMDAT. As a result, we reduced goodwill and the liability balance assumed from JAMDAT by
$4 million.
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.
Except for acquired in-process technology, which is discussed below, the acquired finite-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
Amount
(in millions)
Weighted-Average
Useful Life
(Years)
Developed and Core Technology ................................. $122 10
Carrier Contracts and Related ................................... 85 5
Other Intangibles ............................................ 5 3
Total Finite-Lived Intangibles ................................. $212 8
We recorded $491 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.
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