(6) GOODWILL AND ACQUISITION-RELATED INTANGIBLES, NET
The changes in the carrying amount of goodwill for the fiscal year ended March 31, 2013 are as follows (in millions): |
| | | | | | | | | | | | | | | |
| As of March 31, 2012 | | Activity | | Effects of Foreign Currency Translation | | As of March 31, 2013 |
Goodwill | $ | 2,086 |
| | $ | 3 |
| | $ | — |
| | $ | 2,089 |
|
Accumulated impairment | (368 | ) | | — |
| | — |
| | (368 | ) |
Total | $ | 1,718 |
| | $ | 3 |
| | $ | — |
| | $ | 1,721 |
|
The changes in the carrying amount of goodwill for the fiscal year ended March 31, 2012 are as follows (in millions):
|
| | | | | | | | | | | | | | | |
| As of March 31, 2011 | | Activity | | Effects of Foreign Currency Translation | | As of March 31, 2012 |
Goodwill | $ | 1,478 |
| | $ | 610 |
| | $ | (2 | ) | | $ | 2,086 |
|
Accumulated impairment | (368 | ) | | — |
| | — |
| | (368 | ) |
Total | $ | 1,110 |
| | $ | 610 |
| | $ | (2 | ) | | $ | 1,718 |
|
Goodwill represents the excess of the purchase price over the fair value of the underlying acquired net tangible and intangible assets. The factors that contributed to the recognition of goodwill included securing buyer-specific synergies that increase revenue and profits and are not otherwise available to a marketplace participant, acquiring a talented workforce, and cost saving opportunities. Goodwill is not amortized, but rather subject to at least an annual assessment for impairment by applying a fair value-based test. Our goodwill is fully attributed to the EA Labels segment.
Acquisition-related intangibles, consisted of the following (in millions):
|
| | | | | | | | | | | | | | | | | | | | | | | |
| As of March 31, 2013 | | As of March 31, 2012 |
| Gross Carrying Amount | | Accumulated Amortization | | Acquisition- Related Intangibles, Net | | Gross Carrying Amount | | Accumulated Amortization | | Acquisition- Related Intangibles, Net |
Developed and core technology | $ | 527 |
| | $ | (324 | ) | | $ | 203 |
| | $ | 518 |
| | $ | (229 | ) | | $ | 289 |
|
Trade names and trademarks | 130 |
| | (99 | ) | | 31 |
| | 131 |
| | (84 | ) | | 47 |
|
Registered user base and other intangibles | 87 |
| | (84 | ) | | 3 |
| | 90 |
| | (80 | ) | | 10 |
|
Carrier contracts and related | 85 |
| | (73 | ) | | 12 |
| | 85 |
| | (67 | ) | | 18 |
|
In-process research and development | 4 |
| | — |
| | 4 |
| | 5 |
| | — |
| | 5 |
|
Total | $ | 833 |
| | $ | (580 | ) | | $ | 253 |
| | $ | 829 |
| | $ | (460 | ) | | $ | 369 |
|
Amortization of intangibles and impairment charges recognized for our acquisition-related intangible assets for the fiscal years ended March 31, 2013, 2012 and 2011 are classified in the Consolidated Statement of Operations as follows (in millions):
|
| | | | | | | | | | | |
| Year Ended March 31, |
| 2013 | | 2012 | | 2011 |
Cost of product | $ | 55 |
| | $ | 35 |
| | $ | 9 |
|
Cost of service and other | 38 |
| | 17 |
| | 3 |
|
Operating expenses | 30 |
| | 43 |
| | 57 |
|
Total | $ | 123 |
| | $ | 95 |
| | $ | 69 |
|
Acquisition-related intangible assets are amortized using the straight-line method over the lesser of their estimated useful lives or the agreement terms, typically from 2 to 14 years. As of March 31, 2013 and 2012, the weighted-average remaining useful life for acquisition-related intangible assets was approximately 3.9 years and 5.7 years for each period, respectively.
As of March 31, 2013, future amortization of finite-lived intangibles that will be recorded in cost of revenue and operating expenses is estimated as follows (in millions):
|
| | | |
Fiscal Year Ending March 31, | |
2014 | $ | 74 |
|
2015 | 66 |
|
2016 | 53 |
|
2017 | 32 |
|
2018 | 13 |
|
Thereafter | 15 |
|
Total | $ | 253 |
|
