Electronic Arts 2007 Annual Report Download - page 123

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increase in personnel-related expenses due to an increase in headcount costs as well as an increase in
professional and contracted services to support our business.
Research and Development
Research and development expenses for fiscal years 2006 and 2005 were as follows (in millions):
March 31,
2006
%ofNet
Revenue
March 31,
2005
%ofNet
Revenue $ Change % Change
$758 26% $633 20% $125 20%
Research and development expenses increased by $125 million, or 20 percent, in fiscal 2006 as compared to
fiscal 2005. The increase is primarily due to an increase of $124 million in personnel-related costs resulting
from an increase in employee headcount in our Canadian and European studios as we increased our internal
development efforts and invested in next-generation tools, technologies and titles, as well as consolidation of
DICE. To a lesser extent, these increases were also due to higher facilities-related costs offset by lower third-
party development costs.
Amortization of Intangibles
Amortization of intangibles for fiscal years 2006 and 2005 were as follows (in millions):
March 31,
2006
%ofNet
Revenue
March 31,
2005
%ofNet
Revenue $ Change % Change
$7 — $3 — $4 133%
For fiscal 2006, amortization of intangibles resulted from our acquisitions of JAMDAT, Criterion and others.
For fiscal 2005, amortization of intangibles resulted from our acquisition of Criterion and others. See Note 5
of the Notes to Consolidated Financial Statements included in Item 8 of this report.
Acquired In-process Technology
Acquired in-process technology charges for fiscal years 2006 and 2005 were as follows (in millions):
March 31,
2006
%ofNet
Revenue
March 31,
2005
%ofNet
Revenue $ Change % Change
$8 — $13 1% $(5) (38%)
The acquired in-process technology charge we incurred in fiscal 2006 was primarily the result of our
acquisition of JAMDAT. The acquired in-process technology charge we incurred in fiscal 2005 was the result
of our acquisitions of Criterion and a majority stake of the outstanding shares of DICE. Acquired in-process
technology includes the value of products in the development stage that are not considered to have reached
technological feasibility or have an alternative future use. Accordingly, upon consummation of these acquisi-
tions, we incurred a charge for the acquired in-process technology, as reflected in our Consolidated Statement
of Operations. See Note 4 of the Notes to Consolidated Financial Statements included in Item 8 of this report.
Restructuring Charges
Restructuring charges for fiscal years 2006 and 2005 were as follows (in millions):
March 31,
2006
%ofNet
Revenue
March 31,
2005
%ofNet
Revenue $ Change % Change
$26 1% $2 — $24 1,200%
In November 2005, we announced plans to establish an international publishing headquarters in Geneva,
Switzerland. Through our quarter ended September 30, 2006, we relocated certain employees to our new
facility in Geneva, closed certain facilities in the United Kingdom, and made other related changes in our
international publishing business.
Annual Report
49