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Annual Report
Cost of Goods Sold
Cost of goods sold for fiscal years 2010 and 2009 was as follows (in millions):
March 31,
2010
% of Net
Revenue
March 31,
2009
% of Net
Revenue % Change
Change as a
% of Net
Revenue
$1,866 51.1% $2,127 50.5% (12.3%) 0.6%
During fiscal year 2010, cost of goods sold increased by 0.6 percent as a percentage of total net revenue as
compared to fiscal year 2009. This increase was primarily due to a $631 million increase in the change in
deferred net revenue related to certain online-enabled packaged goods and digital content for the fiscal year
ended March 31, 2010, as compared to the fiscal year ended March 31, 2009. Overall, we estimate the increase in
the change in deferred net revenue related to certain online-enabled packaged goods and digital content
negatively impacted cost of goods sold as a percent of total net revenue by 7.7 percentage points. The overall
increase in cost of goods sold as a percentage of net revenue was partially mitigated by (1) a greater percentage
of net revenue from EA studio products, which have a higher margin than our co-publishing and distribution
products, which positively impacted cost of goods sold as a percentage of total revenue by approximately 3.1
percent and (2) EA Studio products that we sold which had previously been written down to a lower cost basis
and lower inventory write downs on our fiscal year 2010 releases as compared to our fiscal year 2009 releases,
which positively impacted cost of goods sold as a percentage of total revenue by approximately 2.1 percent.
Marketing and Sales
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.
General and Administrative
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.
Research and Development
Research and development 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
$1,229 34% $1,359 32% $(130) (10%)
47