Electronic Arts 2006 Annual Report Download - page 123

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Marketing and sales expenses increased by 6 percent, but remained Öat as a percentage of net revenue, in
Ñscal 2005 as compared to Ñscal 2004 primarily due to:
‚ An increase of $21 million in headcount and facilities-related expenses, both to help support the
growth of our marketing and sales functions worldwide.
‚ An increase of $12 million in marketing-related costs to support our Ñscal 2005 releases.
The increase in marketing and sales expenses was partially oÅset by the following:
‚ A decrease of $9 million in advertising expense for Ñscal 2005 as compared to Ñscal 2004.
‚ A decrease of $4 million in bonus expense for Ñscal 2005 as compared to Ñscal 2004.
Marketing and sales expenses included vendor reimbursements for advertising expenses of $42 million and
$45 million in Ñscal 2005 and Ñscal 2004, respectively.
General and Administrative
General and administrative expenses for Ñscal years 2005 and 2004 were as follows (in millions):
March 31, % of Net March 31, % of Net
2005 Revenue 2004 Revenue $ Change % Change
$221 7% $185 6% $36 19%
General and administrative expenses increased by 19 percent, or 1 percent of net revenue, in Ñscal 2005
compared to Ñscal 2004 primarily due to:
‚ An increase of $48 million in employee-related costs primarily due to (1) charges taken in
connection with certain employee-related litigation matters and (2) an increase in headcount and
other personnel-related costs to help support our administrative functions worldwide.
‚ An increase of $20 million in professional and contracted services, such as Sarbanes-Oxley
compliance costs, business development expenses and legal fees, along with other costs to support
our business.
The increase in general and administrative expenses was partially oÅset by the following:
‚ A decrease of $17 million in facilities-related expenses primarily due to accelerated depreciation on
equipment and software that were replaced and due to write-oÅs of assets that were taken out of
service in Ñscal 2004.
Annual Report
‚ A decrease of $8 million in bonus expense for Ñscal 2005 as compared to Ñscal 2004.
‚ A decrease of $8 million in our investment in strategic university relationships.
Research and Development
Research and development expenses for Ñscal years 2005 and 2004 were as follows (in millions):
March 31, % of Net March 31, % of Net
2005 Revenue 2004 Revenue $ Change % Change
$633 20% $511 17% $122 24%
Research and development expenses increased by 24 percent, or 3 percent of net revenue, in Ñscal 2005 as
compared to Ñscal 2004 primarily due to:
‚ An increase of $103 million in personnel-related costs resulting from a 30 percent increase in
employee headcount primarily in our Canadian and European studios, which included $6 million of
stock-based employee compensation related to our acquisition of Criterion. These increases were
partially oÅset by a $20 million reduction in bonus expense for Ñscal 2005 as compared to Ñscal
2004.
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