Microsoft 2009 Annual Report Download - page 27

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PAGE 27
Fiscal year 2009 compared with fiscal year 2008
Sales and marketing expenses decreased, primarily driven by the resource management program implemented in
January 2009.
Fiscal year 2008 compared with fiscal year 2007
Sales and marketing expenses increased, primarily reflecting increased headcount-related expenses and increased
corporate marketing and advertising campaigns. Headcount-related expenses increased 14%, driven by an increase
in headcount from the prior year-end.
General and Administrative
(In millions, except percentages) 2009 2008 2007
Percentage
Change 2009
Versus 2008
Percentage
Change 2008
Versus 2007
General and administrative $3,700 $5,127 $3,329 (28)% 54%
As a percent of revenue 6% 8% 7% (2)ppt 1ppt
General and administrative costs include payroll, employee benefits, stock-based compensation expense and other
headcount-related expenses associated with finance, legal, facilities, certain human resources and other
administrative headcount, and legal and other administrative fees.
Fiscal year 2009 compared with fiscal year 2008
General and administrative expenses decreased primarily reflecting decreased costs for legal settlements and legal
contingencies. We incurred legal charges of $283 million in current year, as compared with $1.8 billion during fiscal
year 2008. The fiscal year 2008 legal costs were primarily related to the European Commission fine of $1.4 billion
(€899 million).
Fiscal year 2008 compared with fiscal year 2007
General and administrative expenses increased reflecting increased costs for legal settlements and legal
contingencies, increased consulting and professional fees, and increased headcount-related expenses. We incurred
$1.8 billion of legal charges during fiscal year 2008, primarily related to the European Commission fine, as compared
with $511 million of legal charges during fiscal year 2007. Headcount-related expenses increased 7%, reflecting an
increase in headcount from the prior year-end.
Employee Severance
In January 2009, we announced and implemented a resource management program to reduce discretionary
operating expenses, employee headcount, and capital expenditures. As part of this program, we announced the
elimination of up to 5,000 positions in research and development, marketing, sales, finance, legal, human resources,
and information technology by June 30, 2010. During the current year, we recorded employee severance charges of
$330 million for the expected reduction in employee headcount.