Juno 2014 Annual Report Download - page 98

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Table of Contents




license fees; costs related to providing customer support; costs related to customer billing and billing support for the Company's pay accounts; domain name
registration fees; and personnel and overhead-related costs associated with operating the Company's networks and data centers.
—Sales and marketing expenses include expenses associated with promoting the Company's brands, services and products and with
generating advertising revenues. Expenses associated with promoting the Company's brands, services and products include advertising and promotion
expenses; fees paid to distribution partners, third-party advertising networks and co-registration partners to acquire new pay and free accounts; personnel and
overhead-related expenses for marketing, merchandising, customer service, and sales personnel; and telemarketing costs incurred to acquire and retain pay
accounts and up-sell pay accounts to additional services. Expenses associated with generating advertising revenues include sales commissions and
personnel-related expenses. The Company has expended significant amounts on sales and marketing, including branding and customer acquisition
campaigns consisting of television, Internet, public relations, sponsorships, print, and outdoor advertising, and on retail and other performance-based
distribution relationships. Marketing and advertising costs to promote the Company's services and products are expensed in the period incurred. Advertising
and promotion expenses include media, agency and promotion expenses. Media production costs are expensed the first time the advertisement is run. Media
and agency costs are expensed over the period the advertising runs. Advertising and promotion expenses for the years ended December 31, 2014, 2013 and
2012 were $29.7 million, $34.1 million and $40.5 million, respectively. At December 31, 2014, and 2013, the Company did not have any prepaid advertising
and promotion expenses.
—Technology and development expenses include expenses for product development, maintenance of existing software,
technology and websites, and development of new or improved software and technology, including personnel-related expenses for the Company's
technology group in various office locations. Costs incurred by the Company to manage and monitor the Company's technology and development activities
are expensed as incurred.
—The Company accounts for costs incurred to develop software for internal use in accordance with ASC 350, which
requires such costs be capitalized and amortized over the estimated useful life of the software. The Company capitalizes costs associated with customized
internal- use software systems that have reached the application development stage. Such capitalized costs include external direct costs utilized in
developing or obtaining the applications and payroll and payroll-related expenses for employees who are directly associated with the applications.
Capitalization of such costs begins when the preliminary project stage is complete and ceases at the point in which the project is substantially complete and
ready for its intended purpose. The Company capitalized costs associated with internal-use software totaling $6.8 million and $5.6 million in the years ended
December 31, 2014 and 2013, respectively, which are being depreciated on a straight-line basis over each project's estimated useful life, which is generally
three years. Capitalized internal-use software is included in the computer software and equipment category within property and equipment, net, in the
consolidated balance sheets.
—General and administrative expenses, which include unallocated corporate expenses, consist of personnel-related expenses
for executive, finance, legal, human resources, facilities, internal audit, investor relations, internal customer support personnel, and personnel
F-16