Google 2012 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2012 Google annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

32 GOOGLE INC. |Form10-K
PART II
ITEM7.Management’s Discussion and Analysis of Financial Condition and Results ofOperations
Sales and marketing expenses consist primarily of compensation and related costs for personnel engaged in customer service,
sales, and sales support functions, as well as advertising and promotional expenditures.
Sales and marketing expenses increased $1,554million from 2011 to 2012, which includes $678million related to Motorola Mobile.
Theremaining increase of $876million was primarily due to an increase in labor and facilities-related costs of $390million, largely
as a result of a 14% increase in sales and marketing headcount, as well as an increase in advertising and promotional expenses
of $288million. In addition, there was an increase in stock-based compensation expense of $87million.
Sales and marketing expenses increased $1,790million from 2010 to 2011. This increase was primarily due to an increase in
labor and facilities-related costs of $787million, largely as a result of a 36% increase in sales and marketing headcount, including
headcount from acquisitions, as well as an increase in employee base salaries of approximately 10%. In addition, there was an
increase in advertising and promotional expenses of $700million.
We expect that sales and marketing expenses will increase in dollar amount and may increase as a percentage of total revenues
in 2013 and future periods, as we expand our business globally, increase advertising and promotional expenditures in connection
with new and existing products, and increase the level of service we provide to our advertisers, Google Network Members, and
other partners.
General and Administrative
The following table presents our general and administrative expenses, and general and administrative expenses as a percentage
of total revenues for the periods presented (dollars in millions):
Year Ended December31,
2010 2011 2012
General and administrative expenses $1,962 $2,724 $3,845
General and administrative expenses as a percentage of total revenues 6.8% 7.2% 7.8%
General and administrative expenses consist primarily of compensation and related costs for personnel and facilities, and include
costs related to our facilities, fi nance, human resources, 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 also include amortization of certain acquired intangible assets.
General and administrative expenses increased $1,121million from 2011 to 2012, which includes $364million related to Motorola
Mobile. Theremaining increase of $757million was primarily due to an increase in amortization of acquired intangible assets
of $274million, an increase in professional services expense of $147million, the majority of which was related to legal costs, an
increase in labor and facilities-related costs of $122million, primarily as a result of a 11% increase in general and administrative
headcount, as well as an increase in stock-based compensation expense of $89million.
General and administrative expenses increased $762million from 2010 to 2011. This increase was primarily due to an increase in
labor and facilities-related costs of $350million, primarily as a result of a 37% increase in general and administrative headcount
and an increase in employee base salaries of approximately 10%, as well as an increase in expense related to professional services
of $260million, the majority of which were related to consulting services and legal costs. In addition, there was an increase in
stock-based compensation of $116million.
As we expand our business and incur additional expenses, we expect general and administrative expenses will increase in dollar
amount and may increase as a percentage of total revenues in 2013 and future periods.
Charge Related to the Resolution of Department of Justice Investigation
In connection with a resolution of an investigation by the United States Department of Justice into the use of Google advertising by
certain advertisers, we accrued $500million during the fi rst quarter of 2011, which was paid in August2011 upon fi nal resolution
of that matter.
Contents
44