Electronic Arts 2009 Annual Report Download - page 123

Annual Report
Amortization of Intangibles
Amortization of intangibles for fiscal years 2009 and 2008 was as follows (in millions):
March 31,
2009
% of Net
Revenue
March 31,
2008
% of Net
Revenue $ Change % Change
$58 1% $34 1% $24 71%
Amortization of intangibles increased by $24 million, or 71 percent, in fiscal year 2009, as compared to fiscal
year 2008, primarily due to the amortization of intangibles related to our acquisition of VGH.
Certain Abandoned Acquisition-Related Costs
Certain abandoned acquisition-related costs consist of costs we incurred in connection with the abandoned
acquisition of Take-Two. On August 18, 2008, we allowed our tender offer for Take-Two shares to expire and on
September 14, 2008, we announced that we had terminated discussions with Take-Two. As a result, during the
fiscal year ended March 31, 2009, we recognized $21 million in related costs consisting of legal, banking and
other consulting fees.
Goodwill Impairment
Adverse economic conditions, including the decline in our market capitalization and our expected financial
performance, indicated that a potential impairment of goodwill existed during the fiscal year ended March 31,
2009. Therefore, we performed goodwill impairment tests for our reporting units in accordance with SFAS
No. 142. As a result of the goodwill impairment analysis, we determined that our EA Mobile reporting unit’s
goodwill was impaired. Substantially all of our goodwill associated with our EA Mobile reporting unit was
derived from our acquisition of JAMDAT Mobile Inc. in February 2006. During the fiscal year ended March 31,
2009, we recorded a goodwill impairment charge of $368 million related to our EA Mobile reporting unit.
Restructuring Charges
Restructuring charges for fiscal years 2009 and 2008 were as follows (in millions):
March 31,
2009
% of Net
Revenue
March 31,
2008
% of Net
Revenue $ Change % Change
$80 2% $103 3% $(23) (22%)
Fiscal 2009 Restructuring
In fiscal year 2009, we announced details of a cost reduction plan as a result of our performance combined with
the current economic environment. This plan includes a narrowing of our product portfolio, a reduction in our
worldwide workforce of approximately 11 percent, or 1,100 employees, the closure of 10 facilities, and
reductions in other variable costs and capital expenditures.
During fiscal year 2009, we incurred approximately $41 million of restructuring charges, of which $32 million
was for employee-related expenses and $7 million was for facilities-related expenses. Including charges incurred
through March 31, 2009, we expect to incur cash and non-cash charges between $55 million and $60 million by
March 2010. These charges will consist primarily of employee-related costs (approximately $35 million), facility
exit costs (approximately $25 million), as well as other costs including asset impairment costs (approximately $5
million).
Fiscal 2008 Reorganization
During fiscal year 2009, we incurred approximately $34 million of charges associated with our fiscal 2008
reorganization, of which $22 million was for facilities-related expenses and $12 million related to other
expenses, including contracted services costs to assist in the reorganization of our business support functions.
43