Annual Report 2009 (1 MB, pdf) - Vasco

In addition to headcount, the comparison of operating expenses in 2009 to 2008 was impacted
significantly by our non-cash compensation expenses. Non-cash compensation expenses generally relate to stockbased,
long-term performance incentives. For the full year of 2009, operating expenses included a benefit of $309
related to stock-based incentive plans. In 2009, we reversed $2,002 of accruals that had been established in prior
years for long-term performance incentives where it is no longer likely that the performance targets will be met.
Stock-based incentive plan expenses for full year 2008 were $3,117.
With the expected growth of revenues in 2010, we have removed the hiring freeze and other cost
containment initiatives. In addition, to ensure that we are in the best competitive position possible, we have
developed hiring and other investment plans for 2010 that are expected to help accelerate our revenue growth in
years beyond 2010. As a result of those hiring and other investment plans, and the fact that the benefit we
received in 2009 from the reversal of long-term performance incentives is unlikely to recur in 2010, we expect
that growth in operating expenses in 2010 will exceed growth in our revenues in 2010.
Sales and Marketing Expenses
2009 Compared to 2008
Consolidated sales and marketing expenses for the year ended December 31, 2009 were $30,299, a
decrease of $5,053, or 14%, from $35,352 reported for 2008. This decrease in sales and marketing expenses is
primarily related to:
• the benefit of a stronger U.S. Dollar compared to the Euro;
• lower compensation expenses;
• lower marketing expenses; and
• lower travel expenses.
We estimate that the strengthening of the U.S. dollar to other currencies, primarily the Euro and
Australian dollar, reduced sales and marketing expenses by approximately $1,730 in 2009 compared to 2008.
While our average headcount increased, our compensation expenses declined as a result of the changes
in currency rates and the benefit from the reduction of the accruals for long-term incentive plans. The average
full-time sales, marketing and operations employee headcount increased 5% to 161 in 2009 from 153 in 2008. At
year-end 2009, the company employed 156 sales, marketing and operations employees.
Given the difficult economic environment in 2009, we reduced our spending on marketing activities
and travel as part of our cost containment programs.
For 2010, we plan to increase our spending in each of the core sales, marketing and operations
functions. We plan to add sales staff to strengthen our position in key countries, to target new vertical
applications and increase our focus on the indirect sales channel. We also plan to increase our marketing
expenses to target areas that we believe provide substantial further growth opportunities. With our plan to
increase our headcount, we expect that our other marketing related expenses, such as recruiting and travel, will
also increase in 2010.
2008 Compared to 2007
Consolidated sales and marketing expenses for the year ended December 31, 2008 were $35,352, an
increase of $8,171, or 30%, from $27,181 reported for 2007.
The increase was primarily due to an increase in average headcount and related compensation
expenses, costs related to opening sales offices in new geographies, an increase in marketing programs and
materials, and an increase in travel expenses.
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