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Eleven Months
Ended€
€December 31,
Twelve Months
Ended€
€December 31,
Twelve Months Ended€
€December 31,
2013 2014 $€Change 2014 2015 $€Change
(in€thousands) (in€thousands)
General and
administrative $69,300 $112,443 $43,143 $112,443 $153,943 $41,500
€
General and administrative consists primarily of employee-related and facilities and equipment costs, including salaries
and benefits for finance, accounting, legal, internal information technology and other administrative personnel. In addition,
general and administrative expenses include professional services costs for outside legal and accounting services, infrastructure
costs and credit card fees. We expect general and administrative expenses to increase in future periods as we continue to invest
in corporate infrastructure, including adding personnel and systems to our administrative functions.
€
For the twelve months ended December€31, 2015 compared to 2014, general and administrative expenses increased $41.5
million or 37%, primarily due to a $22.4 million increase in employee-related, facilities and equipment costs, which were
driven by an approximate 45% increase in headcount, a $13.8 million increase in professional services costs primarily due to
royalty and other legal matters and a $3.0 million increase in credit card fees.
For the twelve months ended December 31, 2014 compared to the eleven months ended December 31, 2013, general and
administrative expenses increased by $43.1 million €or€62%, primarily due to a $26.4 million increase in employee-related and
facilities and equipment costs, which were driven by an approximate 40% increase in headcount, a $5.5 million increase in
professional services costs primarily due to royalty-related legal matters, a $1.2 million increase in credit card fees and a $1.0
million increase in infrastructure costs. In addition, the remaining increase in general and administrative expenses was due to
the€twelve months ended December€31, 2014€having one additional month as compared to the€eleven months ended December
31, 2013.
Other income (expense), net
Other income (expense), net in the twelve months ended December€31, 2015 consists primarily of interest expense on our
1.75% Convertible Senior Notes due 2020, offset by interest income from available-for-sale securities. We expect interest
expense to grow significantly as a result of the issuance of our Notes in December 2015. Refer to Note€7 “Debt Instruments” in
the Notes to Consolidated Financial Statements for further details on our Notes.
Provision for (Benefit from) Income Taxes
€
We have historically been subject to income taxes in the United States, Australia and New Zealand. As we expand our
operations outside of these locations, we become subject to taxation based on the applicable foreign statutory rates and our
effective tax rate could fluctuate accordingly.
€
Our provision for (benefit from) income taxes is computed using the asset and liability method, under which deferred tax
assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and
liabilities using enacted statutory income tax rates in effect for the year in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be
realized.
During the year ended December 31, 2015, we released $1.8 million of our valuation allowance as a result of
acquisitions. Deferred tax liabilities were established for the book-tax basis difference related to acquired intangible assets. The
net deferred tax liabilities provided an additional source of income to support the realizability of pre-existing deferred tax
assets.
€
Liquidity and Capital Resources
As of December€31, 2015, we had cash, cash equivalents and investments totaling $416.9 million, which consisted of
cash and money market funds held at major financial institutions, commercial paper, investment-grade corporate debt securities
and U.S. government and government agency debt securities.
On December 9, 2015, we completed an unregistered Rule 144A offering of $345.0 million aggregate principal amount
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