Electronic Arts 2010 Annual Report Download - page 122

Marketing and Sales
Marketing and sales expenses consist of personnel-related costs, related overhead costs and advertising,
marketing and promotional expenses, net of qualified advertising cost reimbursements from third parties.
Marketing and sales expenses for fiscal years 2010 and 2009 were as follows (in millions):
March 31,
2010
% of Net
Revenue
March 31,
2009
% of Net
Revenue $ Change % Change
$730 20% $691 16% $39 6%
Marketing and sales expenses increased by $39 million, or 6 percent, in fiscal year 2010, as compared to fiscal
year 2009. The increase was primarily due to an increase of $56 million in marketing, advertising and
promotional expenses primarily to support our launch of new franchises and incremental spending on established
franchises. This increase was partially offset by an $15 million decrease in personnel-related costs primarily
resulting from a decrease in headcount as a result of our cost reduction initiatives.
Marketing and sales expenses included vendor reimbursements for advertising expenses of $39 million and $31
million in fiscal years 2010 and 2009, respectively.
We expect marketing and sales expenses to remain flat in absolute dollars during fiscal year 2011 as compared to
fiscal year 2010.
General and Administrative
General and administrative expenses consist of personnel and related expenses of executive and administrative
staff, related overhead costs, fees for professional services such as legal and accounting, and allowances for
doubtful accounts.
General and administrative expenses for fiscal years 2010 and 2009 were as follows (in millions):
March 31,
2010
% of Net
Revenue
March 31,
2009
% of Net
Revenue $ Change % Change
$320 9% $332 8% $(12) (4%)
General and administrative expenses decreased by $12 million, or 4 percent, in fiscal year 2010, as compared to
fiscal year 2009 primarily due to (1) a decrease of $14 million in stock-based compensation expense and (2) a
decrease of $7 million in additional personnel-related costs resulting from our cost reduction initiatives. These
decreases were partially offset by an increase in facilities related expenses primarily due to a $14 million loss on
our lease obligation related to the purchase of our Redwood Shores headquarters facilities.
We expect general and administrative expenses to decrease in absolute dollars during fiscal year 2011 as
compared to fiscal year 2010, primarily due to lower contracted services and facilities-related expenses, partially
offset by higher personnel-related expenses.
Research and Development
Research and development expenses consist of expenses incurred by our production studios for personnel-related
costs, related overhead costs, contracted services, 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.
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