Electronic Arts 2009 Annual Report Download - page 122

General and administrative expenses decreased by $7 million, or 2 percent, in fiscal year 2009, as compared to
fiscal year 2008 primarily due to a decrease in facilities-related expenses of $14 million, partially offset by an
increase of $9 million in stock-based compensation expense.
We expect general and administrative expenses to decrease in absolute dollars in fiscal year 2010 as compared to
fiscal year 2009 primarily due to a decrease in personnel-related costs.
Research and Development
Research and development expenses consist of expenses incurred by our production studios for personnel-related
costs, related overhead costs, contracted services, equipment depreciation and any impairment of prepaid
royalties for pre-launch products. Research and development expenses for our online business include expenses
incurred by our studios consisting of direct development and related overhead costs in connection with the
development and production of our online games. Research and development expenses also include expenses
associated with the development of web site content, software licenses and maintenance, network infrastructure
and management overhead.
Research and development expenses for fiscal years 2009 and 2008 were as follows (in millions):
March 31,
2009
% of Net
Revenue
March 31,
2008
% of Net
Revenue $ Change % Change
$1,359 32% $1,145 31% $214 19%
Research and development expenses increased by $214 million, or 19 percent, in fiscal year 2009, as compared
to fiscal year 2008. The increase was primarily due to (1) higher external development costs of $120 million due
to a greater number of projects in development as compared to the prior year, (2) an increase of $66 million in
additional personnel-related costs primarily resulting from an increase in headcount prior to actions taken under
our fiscal year 2009 restructuring, (3) an increase of $43 million in stock-based compensation expense, and
(4) an increase in facilities-related expenses of $8 million to support our research and development functions
worldwide. These increases were partially offset by a decrease of $26 million in incentive-based compensation
expense.
We expect research and development expenses to decrease in absolute dollars in fiscal year 2010 as compared to
fiscal year 2009 primarily due to a decrease in personnel-related costs.
Acquired In-Process Technology
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
an acquisition, we generally incur a charge for the related acquired in-process technology, as reflected in our
Consolidated Statements of Operations. See Note 5 of the Notes to Consolidated Financial Statements included
in Item 8 of this report.
Acquired in-process technology charges for fiscal years 2009 and 2008 were as follows (in millions):
March 31,
2009
% of Net
Revenue
March 31,
2008
% of Net
Revenue $ Change % Change
$3 — $138 4% $(135) (98%)
Acquired in-process technology decreased by $135 million, or 98 percent, in fiscal year 2009 as compared to
fiscal year 2008, primarily due to the charge of $138 million related to our acquisition of VGH in fiscal year
2008. The development of a majority of the projects for which we incurred an acquired in-process technology
charge in connection with our acquisition of VGH continued to be in-progress as of March 31, 2009.
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