Electronic Arts 2008 Annual Report Download - page 156

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(5) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill information is as follows (in millions):
2008 2007
Year Ended
March 31,
Goodwill — beginning of year ............................................... $ 734 $647
Acquired . ............................................................ 414 87
Effects of Foreign Currency Translation ...................................... 4 —
Goodwill — end of year .................................................... $1,152 $734
SFAS No. 142, “Goodwill and Other Intangible Assets” requires that purchased goodwill and indefinite-lived
intangibles not be amortized. Rather, goodwill and indefinite-lived intangible assets are subject to at least an
annual assessment for impairment by applying a fair-value-based test.
SFAS No. 142 requires a two-step approach to testing goodwill for impairment for each reporting unit. Our
reporting units are determined by the components that constitute a business for which both (1) discreet
financial information is available and (2) management of the reporting unit regularly reviews the operating
results of that component. The first step tests for impairment by applying fair value-based tests at the reporting
unit level. The second step (if necessary) measures the amount of impairment by applying fair value-based
tests to individual assets and liabilities within each reporting unit. We completed the first step of the annual
goodwill impairment testing in the fourth quarter of fiscal 2008 and found no indicators of impairment of our
recorded goodwill. We did not recognize an impairment loss on goodwill in fiscal 2008, 2007 or 2006.
Finite-lived intangible assets, net of accumulated amortization, as of March 31, 2008 and 2007, were
$265 million and $210 million, respectively, and include costs for obtaining (1) developed technologies,
(2) carrier contracts and related, (3) trade names, and (4) subscribers and other intangibles. Amortization of
intangibles for fiscal 2008, 2007 and 2006 was $60 million (of which $26 million was recognized in cost of
goods sold), $54 million (of which $27 million was recognized in cost of goods sold) and $16 million (of
which $9 million was recognized in cost of goods sold), respectively. Finite-lived intangible assets are
amortized using the straight-line method over the lesser of their estimated useful lives or the agreement terms,
typically from two to twelve years. As of March 31, 2008 and 2007, the weighted-average remaining useful
life for finite-lived intangible assets was approximately 5.2 years and 6.3 years, respectively.
Finite-lived intangibles consisted of the following (in millions):
Gross
Carrying
Amount
Accumulated
Amortization
Other
Intangibles,
Net
Gross
Carrying
Amount
Accumulated
Amortization
Other
Intangibles,
Net
As of March 31, 2008 As of March 31, 2007
Developed and Core Technology ..... $234 $ (95) $139 $183 $ (62) $121
Carrier Contracts and Related ....... 85 (36) 49 85 (19) 66
Trade Name . . .................. 86 (30) 56 44 (24) 20
Subscribers and Other Intangibles .... 38 (17) 21 16 (13) 3
Total........................ $443 $(178) $265 $328 $(118) $210
80