Electronic Arts 2010 Annual Report Download - page 131

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Annual Report
Goodwill Impairment
Adverse economic conditions, including the decline in our market capitalization and our expected financial
performance at the time, indicated that a potential impairment of goodwill existed during the fiscal year ended
March 31, 2009. As a result, we performed goodwill impairment tests for our reporting units. 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 fiscal 2006
acquisition of JAMDAT Mobile Inc. 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 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 $41 million of restructuring charges, of which $32 million was for
employee-related expenses and $7 million was for facilities-related expenses.
Fiscal 2008 Reorganization
During fiscal year 2009, we incurred $34 million of reorganization charges, 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. During the fiscal year 2008, we incurred $97 million of
reorganization charges, of which $58 million was for facilities-related expenses, $27 million was other expenses
including contracted services costs to assist in the reorganization of our business support functions, and $12
million was employee-related expenses.
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.
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