Yahoo 2011 Annual Report Download - page 45

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The changes in operating costs and expenses for the year ended December 31, 2010 compared to the year ended
December 31, 2009 are comprised of the following (in thousands):
Compensation
Information
Technology
Depreciation and
Amortization TAC Facilities Other Total
Cost of revenue ......... $ (26,404) $(69,357) $(79,220) $(41,403) $ 1,780 $ (29,597) $(244,201)
Sales and marketing ..... 950 (2,129) (740) — (10,519) 31,579 19,141
Product development .... (142,980) 12,516 6,509 — (15,376) 11,339 (127,992)
General and
administrative ........ (36,943) (293) (1,526) — 7,628 (60,886) (92,020)
Amortization of
intangibles ........... — — (7,480) — — — (7,480)
Restructuring charges,
net ................. — — — — — (68,944) (68,944)
Total ................. $(205,377) $(59,263) $(82,457) $(41,403) $(16,487) $(116,509) $(521,496)
Compensation Expense. Total compensation expense decreased $101 million for the year ended December 31,
2011, compared to 2010. Excluding the impact of Microsoft reimbursements, compensation expense for the year
ended December 31, 2011 decreased $150 million compared to 2010, primarily due to decreased stock-based
compensation expense and the capitalization of otherwise expensed compensation costs in product development
associated with increased efforts in the development of our technology platform and specific products. The
decrease in stock-based compensation expense is primarily due to increased cancellations for stock options and
increased forfeitures for stock-based awards in the year ended December 31, 2011, compared to 2010. The
decline in compensation expense was offset by decreased Microsoft reimbursements of $49 million during the
year ended December 31, 2011, compared to 2010. The decrease in Microsoft reimbursements for the year ended
December 31, 2011 was due to the transition of paid search to Microsoft platforms.
Total compensation expense decreased $205 million for the year ended December 31, 2010, compared to 2009.
Excluding the impact of Microsoft reimbursements, compensation expense decreased $86 million compared to
2009. The decrease was primarily driven by a decrease in stock-based compensation expense and the
capitalization of otherwise expensed compensation costs in product development. The decrease in stock-based
compensation expense is due to recently granted stock-based compensation awards having a lower grant date fair
value than stock-based compensation awards currently vesting. The decline in stock-based compensation was
offset by increased salaries and wages from increased average headcount, primarily in the product development
and sales and marketing functions. The decline in compensation expense was offset by increased Microsoft
reimbursements of $119 million during the year ended December 31, 2010, for which there were no similar
reimbursements 2009.
Information Technology Expenses. Information technology expenses increased $13 million for the year ended
December 31, 2011, compared to 2010. Excluding the impact of Microsoft reimbursements, information
technology expense for the year ended December 31, 2011 increased $9 million compared to 2010, due to
increased data center operating costs. Information technology expense was impacted by decreased
reimbursements from Microsoft of $4 million for the year ended December 31, 2011, compared to 2010.
Information technology expenses decreased $59 million for the year ended December 31, 2010, compared to
2009. Excluding the impact of Microsoft reimbursements, information technology expense for the year ended
December 31, 2010 increased $36 million compared to 2009. The decline for the year ended December 31, 2010
was primarily due to reimbursements recorded from Microsoft for information technology costs, for which there
were no similar reimbursements in 2009. For the year ended December 31, 2010, the net impact of the
reimbursements by Microsoft for our cost of running search was a reduction in information technology expense
of $95 million compared to 2009.
Depreciation and Amortization Expenses. Depreciation and amortization expenses decreased $31 million for the
year ended December 31, 2011, compared to 2010. Excluding the impact of Microsoft reimbursements,
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