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Business Combinations
12 Months Ended
Mar. 31, 2011
Business Combinations  
Business Combinations

(5) BUSINESS COMBINATIONS

 

Fiscal Year 2011 Acquisition

 

In October 2010, we acquired all of the outstanding shares of Chillingo Limited in cash. Chillingo publishes games and software for various mobile platforms. In addition, we may be required to pay additional variable cash that is contingent upon the achievement of certain performance milestones through March 31, 2014. This acquisition did not have a significant impact on our Consolidated Financial Statements.

 

Fiscal Year 2010 Acquisitions

 

Playfish

 

In November 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. 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 and is limited to a maximum of $100 million based on tiered revenue targets. The estimated 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.

 

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 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 initially assigned to our Playfish operating segment, but subsequently a portion was re-allocated to other operating segments. 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.

 

Other acquisition-related intangibles acquired in this transaction are finite-lived and are being amortized on a straight-line basis over their estimated lives ranging from two to five years. The intangible assets as of the date of the acquisition include:

Gross Carrying Amount

Weighted-Average Useful Life

(in millions)

(in years)

Registered user base

 

 $                            33

 

2

Developed and core technology

 

                               13

 

5

Trade names and trademarks

 

                                 4

 

5

Other intangibles

 

                                 3

 

4

     Total finite-lived intangibles

 

 $                            53

 

3

 

 

Other Fiscal Year 2010 Acquisitions

 

During the fiscal year ended March 31, 2010, we completed three additional acquisitions that did not have a significant impact on our Consolidated Financial Statements.