Yahoo 2004 Annual Report Download - page 42

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$17 million of costs related to acquisitions, $19 million to outside services and $12 million in compensation related
expenses.
General and administrative expenses as a percentage of revenues were 7 percent, 10 percent, and 11 percent in 2004,
2003, and 2002, respectively. The decrease is a result of the overall increase in revenues and savings as a result of our
overall effort to manage discretionary costs.
We currently believe that general and administrative expenses in absolute dollars will increase in 2005 compared to 2004,
as we continue to invest in our infrastructure to support our continued organic growth and as we incur a full year of
costs in 2005 related to acquisitions completed in 2004.
Stock Compensation. Stock compensation expense relates to the amortization of the intrinsic value of Yahoo! stock options
issued and assumed in connection with business combinations and other equity-based awards. This expense is generally
being amortized using the accelerated amortization method in accordance with Financial Accounting Standards Board
Interpretation No. 28 ‘‘Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans’’.
The increase in stock compensation expense for the year ended December 31, 2004, was primarily a result of a full year
of amortization expense relating to stock options assumed in acquisitions, as well as an increase in the issuance of
restricted stock awards during the year. The increase from 2002 to 2003 was due to the stock compensation expense
associated with acquisitions. Stock compensation expense was allocated as follows (in thousands):
Years Ended December 31,
2002 2003 2004
Sales and marketing $1,424 $ 5,785 $ 9,620
Product development 1,702 10,526 12,010
General and administrative 5,276 5,718 10,660
Total stock compensation expense $8,402 $22,029 $32,290
We believe that stock compensation expenses in absolute dollars will increase in 2005 compared to 2004. See Note 1 –
‘‘The Company and Summary of Significant Accounting Policies’’ in the consolidated financial statements for a discussion
of the impact of the adoption of Financial Accounting Standards Board (‘‘FASB’’) Statement No. 123R, ‘‘Share Based
Payment’’ which will be effective July 1, 2005.
Amortization of Intangibles. We have purchased, and expect to continue purchasing, assets or businesses, which may include
the purchase of intangible assets.
Amortization of intangibles was approximately $146 million, or four percent of revenues for the year ended Decem-
ber 31, 2004, compared to $54 million or three percent of revenues for 2003 and $21 million or two percent of
revenues for 2002. The year-over-year increases in amortization of intangibles were the result of our continued acquisition
activity which has resulted in increased amortizable intangible assets. As of December 31, 2004, we had net amortizable
intangible assets of $481 million on our consolidated balance sheets.
36