Electronic Arts 2008 Annual Report Download - page 155

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. 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 2008 and 2007
(in millions):
Current assets ................................................................... $ 52
Property and equipment, net ........................................................ 2
Acquired in-process technology ...................................................... 7
Goodwill....................................................................... 490
Finite-lived intangibles ............................................................ 212
Deferred income tax liabilities ....................................................... (45)
Other liabilities .................................................................. (34)
Total purchase price............................................................. $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 were 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 2008, 2007 and 2006, we made payments of approximately $9 million in each period,
thereby completing our payment of $27 million to Blue Lava.
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, acquired finite-lived intangible assets are
being amortized on a straight-line basis over their 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
Substantially none of the goodwill recognized upon acquisition is deductible for tax purposes. We expensed
$7 million of acquired in-process technology in our Consolidated Statement of Operations upon consummation
of the acquisition.
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