Yahoo 2015 Annual Report Download - page 60

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The following table presents product development expenses and those expenses as a percentage of
revenue for the periods presented (dollars in thousands):
Years Ended December 31,
2013 2014 2015
Product development expenses
$ 957,587 $ 1,156,386 $ 1,177,923
Product development expenses as a percentage of
revenue
21% 24% 24%
Product development expenses for the year ended December 31, 2015 increased $22 million, or 2
percent, compared to 2014, primarily attributable to an increase of $51 million in stock-based
compensation expense, as well as an increase in investment activities supporting our search,
communications and other product initiatives of $35 million. This increase was partially offset by a
decline in depreciation and amortization expense of $37 million, facilities and equipment expense of
$15 million and compensation costs of $11 million. The increase in stock-based compensation expense
was due to an increase in the number of awards granted at a higher fair value. The decline in
compensation costs is primarily attributable to a 17 percent decline in headcount year-over-year, as
well as a decline in transition and relocation costs.
Product development expenses for the year ended December 31, 2014 increased $199 million, or 21
percent, compared to 2013, primarily attributable to increases in compensation costs of $141 million,
stock-based compensation expense of $56 million, and a decline in capitalizable projects of $38
million, partially offset by declines in depreciation and amortization expense of $12 million, outside
service provider expense of $14 million, and travel and entertainment expense of $10 million. The
increase in compensation costs for the year ended December 31, 2014 was primarily attributable to a
6 percent increase in headcount year-over-year, including incremental headcount for mobile and
search as well as merit-based increases in salaries, increases in costs from a shift in location of
employees, increases in benefits, increased headcount from acquisitions, and increases in incentive
compensation. The increase in stock-based compensation expense for the year ended December 31,
2014 was attributable to an increase in the number of awards being expensed at a higher fair value
and an increase in expense related to equity assumed and granted related to acquisitions.
General and Administrative
General and administrative expenses consist primarily of compensation-related expenses (including
stock-based compensation expense) related to other corporate departments and fees for
professional services.
The following table presents general and administrative expenses and those expenses as a
percentage of revenue for the periods presented (dollars in thousands):
Years Ended December 31,
2013 2014 2015
General and administrative expenses
$ 667,403 $ 686,272 $ 687,804
General and administrative expenses as a percentage of
revenue
14% 15% 14%
General and administrative expenses for the year ended December 31, 2015 increased $2 million,
compared to 2014, primarily attributable to increases of $26 million due to net gains on disposal of
assets, business tax refunds received and legal settlements in 2014 for which there are no similar
56