Google 2008 Annual Report Download - page 66

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General and administrative expenses consist primarily of compensation and related costs for personnel and
facilities related to our finance, human resources, facilities, information technology and legal organizations, and
fees for professional services. Professional services are principally comprised of outside legal, audit, information
technology consulting and outsourcing services.
General and administrative expenses decreased $95.7 million from the three months ended September 30,
2008 to the three months ended December 31, 2008. This decrease was primarily related to the settlement
agreement with the Authors Guild and the Association of American Publishers (AAP) under which we recognized a
$95.1 million of expense in the three months ended September 30, 2008.
General and administrative expenses increased $523.3 million from the year ended December 31, 2007 to the
year ended December 31, 2008. This increase was primarily related to an increase in professional services of
$243.0 million, the majority of which were related to legal costs, including the aforementioned legal settlement
with the Authors Guild and the AAP. In addition, there was an increase in labor and facilities related costs of $137.8
million, primarily as a result of a 9% increase in general administrative headcount from 2007 to 2008, and an
increase in bad debt expense of $96.1 million due to increased risk in this area as a result of the current general
economic downturn.
General and administrative expenses increased $527.5 million from the year ended December 31, 2006 to
the year ended December 31, 2007. This increase was primarily due to an increase in labor and facilities related
costs of $306.4 million, primarily as a result of a 72% increase in general and administrative headcount from
2006 to 2007, including an increase in stock-based compensation expense of $51.3 million and an increase in
professional services fees of $95.1 million. In addition, there was an increase in bad debt expense of $35.6 million.
The additional personnel, professional services and bad debt expenses are primarily the result of the growth of our
business.
Stock-Based Compensation
The following table presents our stock-based compensation and stock-based compensation as a percentage
of revenues for the periods presented (dollars in millions):
Year Ended December 31, Three Months Ended
2006 2007 2008 September 30,
2008 December 31,
2008
(unaudited)
Stock-based compensation ....................... $458.1 $868.6 $1,119.8 $280.0 $286.2
Stock-based compensation as a percentage of
revenues ..................................... 4.3% 5.2% 5.1% 5.1% 5.0%
Stock-based compensation increased $6.2 million from the three months ended September 30, 2008 to the
three months ended December 31, 2008.
Stock-based compensation increased $251.2 million from the year ended December 31, 2007 to the year
ended December 31, 2008. This increase was primarily due to additional stock awards issued to existing and new
employees.
Stock-based compensation increased $410.5 million from the year ended December 31, 2006 to the year
ended December 31, 2007. The increase was primarily due to additional stock-based compensation associated
with unvested stock awards issued as a result of our acquisition of YouTube in the fourth quarter of 2006, the
modification charge recognized as a result of the launch of our TSO program in the second quarter of 2007, as
well as additional awards granted in 2007 to new and existing employees.
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