Electronic Arts 2015 Annual Report Download - page 112

General and Administrative
General and administrative expenses consist of personnel and related expenses of executive and administrative
staff, corporate functions such as finance, legal, human resources, and information technology (“IT”), related
overhead costs, fees for professional services such as legal and accounting, and allowances for doubtful accounts.
General and administrative expenses for fiscal years 2015 and 2014 were as follows (in millions):
March 31,
2015
% of Net
Revenue
March 31,
2014
% of Net
Revenue $ Change % Change
$386 9% $410 11% $(24) (6)%
General and administrative expenses decreased by $24 million, or 6 percent, in fiscal year 2015, as compared to
fiscal year 2014, primarily due to a $30 million expense related to the settlement of a litigation matter during the
fiscal year ended March 31, 2014 and an $23 million decrease in costs incurred on a license, both related to our
college football franchise. This was partially offset by an $11 million increase primarily related to other litigation
matters and a $16 million increase in personnel-related costs during the fiscal year ended March 31, 2015.
Acquisition-Related Contingent Consideration
Acquisition-related contingent consideration for fiscal years 2015 and 2014 were as follows (in millions):
March 31,
2015
% of Net
Revenue
March 31,
2014
% of Net
Revenue $ Change % Change
(3) —% (35) (1)% $32 91%
During fiscal year 2015, acquisition-related contingent consideration credits decreased by $32 million, or 91
percent, as compared to fiscal year 2014, primarily resulting from changes in the fair market value of the
acquisition-related contingent consideration of our PopCap acquisition during fiscal year 2014. The PopCap
earn-out expired on December 31, 2013. No payments were made under this earn-out.
Income Taxes
Provision for (benefit from) income taxes for fiscal years 2015 and 2014 was as follows (in millions):
March 31,
2015
Effective
Tax
Rate
March 31,
2014
Effective
Tax Rate
$50 5.4% $(1) (14.3)%
Our effective tax rate for fiscal year 2015 was a tax expense of 5.4 percent. The fiscal year 2015 effective tax rate
differs from the statutory rate of 35.0 percent primarily due to the utilization of U.S. deferred tax assets, which
were subject to a valuation allowance, excess tax benefits from stock-based compensation deductions allocated
directly to contributed capital, and non-U.S. profits subject to a reduced or zero tax rates. The provision for
income taxes for fiscal year 2015 differs from the benefit from income taxes for fiscal year 2014 primarily due to
benefits related to the expiration of statutes of limitations and the resolution of examinations by taxing authorities
recorded in fiscal year 2014.
Our effective tax rate for the fiscal year 2014 differs from the statutory rate of 35.0 percent as a result of the
utilization of U.S. deferred tax assets subject to a valuation allowance and tax benefits related to the expiration of
statutes of limitations and the resolution of examinations by taxing authorities.
Our effective income tax rates for fiscal year 2016 and future periods will depend on a variety of factors,
including changes in the deferred tax valuation allowance, changes in our business such as acquisitions and
intercompany transactions, changes in our international structure, changes in the geographic location of business
functions or assets, changes in the geographic mix of income, changes in or termination of our agreements with
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