2K Sports 2009 Annual Report Download - page 91

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titles, and achievements based on sales of specific titles. The goodwill recorded in connection with this
acquisition is deductible for tax purposes.
In December 2007, we acquired all of the outstanding capital stock of 2K Czech, formerly known as
Illusion Softworks, a.s. (‘‘2K Czech’’), the Czech Republic developer of the Mafia video game franchise.
The acquisition reflects our strategy to add high-value intellectual property and development studios to our
portfolio. Total consideration paid upon acquisition was $32,908, consisting primarily of 1,496,647 shares of
our unregistered common stock and $4,645 of development advances paid prior to the acquisition. The
terms of the transaction also include additional contingent deferred payments in cash and stock of up to
$10,000, which is expected to be allocated between purchase price and employee compensation expense
when the conditions requiring their payment are met. The goodwill recorded in connection with this
acquisition is not deductible for tax purposes.
5. INVENTORY
As of October 31, 2009 and 2008, inventory consisted of:
October 31, October 31,
2009 2008
Finished products $83,637 $ 96,139
Parts and supplies 10,359 8,096
Inventory $93,996 $104,235
Estimated product returns included in inventory at October 31, 2009 and 2008 were $7,089 and $9,394,
respectively.
6. SOFTWARE DEVELOPMENT COSTS AND LICENSES
Details of our capitalized software development costs and licenses were as follows:
October 31, 2009 October 31, 2008
Current Non-current Current Non-current
Software development costs, internally developed $123,018 $46,574 $ 72,381 $39,508
Software development costs, externally developed 42,306 27,202 37,422 20,495
Licenses 2,017 1,745 3,633 1,988
Software development costs and licenses $167,341 $75,521 $113,436 $61,991
Software development costs and licenses as of October 31, 2009 and October 31, 2008 included $212,939
and $136,687, respectively, related to titles that have not been released.
Amortization and impairment of software development costs and licenses for the years ended October 31,
2009, 2008 and 2007 were as follows:
October 31,
2009 2008 2007
Amortization and impairment of software development costs and
licenses $111,615 $159,563 $109,891
Less: Portion representing stock-based compensation (6,094) (13,461) (3,216)
Amortization and impairment, net of stock-based compensation $105,521 $146,102 $106,675
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