VMware 2015 Annual Report Download - page 39
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Researchanddevelopmentexpensesincreasedin2014comparedto2013.Theincreasewasprimarilyduetogrowthincash-basedemployee-relatedexpenses
of$125millionandincreasesinstock-basedcompensationof$17million,drivenbyincrementalgrowthinheadcount,bothorganicandthroughacquisitions.
Equipmentanddepreciationexpensesincreasedby$27millionin2014.Theincreasein2014waspartiallyoffsetbyadecreaseof$15millioninresearchand
developmentexpensesrelatedtoPivotal.
Sales and Marketing Expenses
Oursalesandmarketingexpensesincludepersonnelcosts,salescommissionsandrelatedoverheadassociatedwiththesaleandmarketingofourlicenseand
servicesofferings,aswellasthecostofproductlaunches.Salescommissionsaregenerallyearnedandexpensedwhenafirmorderisreceivedfromthecustomer.
Salesandmarketingexpensesalsoincludethenetimpactfromtheexpensesincurredandfeesgeneratedbycertainmarketinginitiatives,suchasourannual
VMworldU.S.andVMworldEuropeconferences.
OursalesandmarketingexpensesduringtheyearsendedDecember31,2015,2014and2013wereasfollows(dollarsinmillions):
For the Year Ended December 31,
2015 vs. 2014
2014 vs. 2013
2015
2014
2013
$ Change
% Change
$ Change
% Change
Salesandmarketing $ 2,099
$ 1,969
$ 1,671
$ 130
7%
$ 298
18%
Stock-basedcompensation 168
172
144
(4)
(2)
29
20
Totalexpenses $ 2,267
$ 2,141
$ 1,815
$ 126
6
$ 327
18
%ofTotalrevenues 35%
35%
35%
Salesandmarketingexpensesincreasedin2015comparedto2014.Theincreasewasprimarilydrivenbygrowthincash-basedemployee-relatedexpensesof
$158million,duetoincrementalgrowthinheadcount,andhighercommissionexpenseresultingfromincreasedsalesvolume.Inaddition,equipment,depreciation
andfacilities-relatedcostsincreased$24million.Costsincurredformarketingprogramsandrelatedinitiativesincreased$20million,andcostsincurredfor
contractorsincreased$19million.Theseincreaseswerepartiallyoffsetbythefavorableimpactof$109millionfromfluctuationsintheexchangeratebetweenthe
U.S.dollarandtheforeigncurrenciesinwhichweincurexpenses.
Salesandmarketingexpensesincreasedin2014comparedto2013primarilydrivenbygrowthincash-basedemployee-relatedexpensesof$240millionand
anincreaseinstock-basedcompensationexpenseof$29millionduetoincrementalgrowthinheadcount,bothorganicandthroughacquisitions.Costsincurredfor
travelandmarketingprogramsalsoincreasedby$48millionin2014compared2013.Theincreaseinexpensesin2014waspartiallyoffsetbyadecreaseof$10
millioninsalesandmarketingexpensesrelatedtoPivotal.
General and Administrative Expenses
Ourgeneralandadministrativeexpensesincludepersonnelandrelatedoverheadcoststosupporttheoverallbusiness.Theseexpensesincludethecosts
associatedwithourfinance,humanresources,ITinfrastructureandlegal,aswellasexpensesrelatedtocorporatecostsandinitiatives.
OurgeneralandadministrativeexpensesduringtheyearsendedDecember31,2015,2014and2013wereasfollows(dollarsinmillions):
For the Year Ended December 31,
2015 vs. 2014
2014 vs. 2013
2015
2014
2013
$ Change
% Change
$ Change
% Change
Generalandadministrative $ 702
$ 626
$ 363
$ 76
12%
$ 263
72%
Stock-basedcompensation 64
69
56
(5)
(7)
12
22
Totalexpenses $ 766
$ 695
$ 419
$ 71
10
$ 276
66
%ofTotalrevenues 12%
12%
8%
Generalandadministrativeexpensesincreasedin2015comparedto2014.Theincreasewasprimarilydrivenbyanincreaseinequipment,depreciationand
facilities-relatedcostsof$37millionandanincreaseincash-basedemployee-relatedexpensesof$30million,duetoincrementalgrowthinheadcount.Inaddition,
professionalservices-relatedcostsincreased$18million.Wehavemadeandwillcontinuetomake,throughthefirstquarterof2016,installmentpaymentsto
certainkeyemployeesofAirWatchsubjecttotheachievementofspecifiedfutureemploymentconditions.Werecognizedcompensationexpenseof$145million
during2015relatingtotheseinstallmentpayments,andexpecttorecognize$14millionduringthe
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