Electronic Arts 2010 Annual Report Download - page 162

Fiscal Year 2010 Acquisitions
Playfish
On November 9, 2009, we acquired all of the outstanding shares of Playfish for an aggregate purchase price of
approximately $308 million in cash and equity. Playfish is a developer of free-to-play social games that can be
played on social networking platforms. This acquisition accelerates our participation in social gaming and
contributes to our digital business. The following table summarizes the acquisition date fair value of the
consideration transferred which consisted of the following (in millions):
Cash ................................................................................. $297
Equity ............................................................................... 11
Total purchase price .................................................................. $308
The equity included in the consideration above consisted of restricted stock and restricted stock units, using the
quoted market price of our common stock on the date of grant.
In addition, we may be required to pay additional variable cash consideration that is contingent upon the
achievement of certain performance milestones through December 31, 2011. The additional consideration is
limited to a maximum of $100 million based on tiered revenue targets over a two-year period. The final fair value
of the contingent consideration arrangement at the acquisition date was $63 million. We estimated the fair value
of the contingent consideration using probability assessments of expected future cash flows over the period in
which the obligation is expected to be settled, and applied a discount rate that appropriately captures a market
participant’s view of the risk associated with the obligation. This fair value is based on significant inputs not
observable in the market. As of March 31, 2010, there were no significant changes in the range of outcomes for
the contingent consideration.
The final allocation of the purchase price was based upon valuations for certain assets and was completed during
the fourth quarter of fiscal year 2010. The following table summarizes the final fair values of assets acquired and
liabilities assumed at the date of acquisition (in millions):
Current assets ......................................................................... $ 32
Deferred income taxes, net ............................................................... 20
Property and equipment, net .............................................................. 1
Goodwill ............................................................................. 274
Finite-lived intangibles assets ............................................................. 53
Contingent consideration ................................................................. (63)
Other liabilities ........................................................................ (9)
Total purchase price .................................................................. $308
All of the goodwill was assigned to our Playfish operating segment. None of the goodwill recognized upon
acquisition is deductible for tax purposes. See Note 6 for additional information related to the changes in the
carrying amount of goodwill and Note 17 for segment information.
The results of operations of Playfish and the estimated fair market values of the assets acquired and liabilities
assumed have been included in our Consolidated Financial Statements since the date of acquisition.
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