Microsoft 2012 Annual Report Download - page 27

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Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other
headcount-related expenses associated with product development. Research and development expenses also include
third-party development and programming costs, localization costs incurred to translate software for international markets,
and the amortization of purchased software code and services content.
Fiscal year 2012 compared with fiscal year 2011
Research and development expenses increased, primarily reflecting a 10% increase in headcount-related expenses.
Fiscal year 2011 compared with fiscal year 2010
Research and development expenses increased primarily due to a 5% increase in headcount-related expenses and the
capitalization of certain software development costs in the prior year.
Sales and Marketing
(In millions, except percentages)
2012
2011
2010
Percentage
Change 2012
Versus 2011
Percentage
Change 2011
Versus 2010
Sales and marketing
$
13,857
$
13,940
$
13,214
(1)%
5%
As a percent of revenue
19%
20%
21%
(1)ppt
(1)ppt
Sales and marketing expenses include payroll, employee benefits, stock-based compensation expense, and other
headcount-related expenses associated with sales and marketing personnel and the costs of advertising, promotions,
trade shows, seminars, and other programs.
Fiscal year 2012 compared with fiscal year 2011
Sales and marketing expenses decreased slightly, primarily reflecting decreased advertising and marketing of the Xbox
360 platform, Windows Phone, and Bing, offset in part by a 5% increase in headcount-related expenses.
Fiscal year 2011 compared with fiscal year 2010
Sales and marketing expenses increased, primarily as a result of increased advertising and marketing of the Xbox 360
platform, Windows Phone, and Windows and Windows Live, a 5% increase in headcount-related expenses, and
increased fees paid to third-party enterprise software advisors.
General and Administrative
(In millions, except percentages)
2012
2011
2010
Percentage
Change 2012
Versus 2011
Percentage
Change 2011
Versus 2010
General and administrative
$
4,569
$
4,222
$
4,063
8%
4%
As a percent of revenue
6%
6%
7%
0ppt
(1)ppt
General and administrative expenses include payroll, employee benefits, stock-based compensation expense, severance
expense, and other headcount-related expenses associated with finance, legal, facilities, certain human resources and
other administrative personnel, certain taxes, and legal and other administrative fees.
Fiscal year 2012 compared with fiscal year 2011
General and administrative expenses increased, primarily due to a 10% increase in headcount-related expenses and a full
year of Puerto Rican excise taxes, offset in part by a decrease in legal charges.