The following table sets forth information on general and administrative expenses (in thousands):
Year Ended
December 31,
2014
2013
General and administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,600 $13,173
Non-cash compensation expense related to equity awards. . . . . . . . . . . . . . . .
5,540 1,745
Total general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,140 $14,918
General and administrative expenses for the year ended December 31, 2014 were $14.6 million and
increased compared to $13.2 million for 2013. The increase was due to consulting expenses we incurred. All
amounts exclude non-cash compensation expense related to equity awards.
Investment Income
Investment income for the year ended December 31, 2014 totaled $2.7 million compared to $2.1 million for
2013. The increase in investment income was primarily due to a higher average cash balance and increased
yields.
Interest Expense
Interest expense includes non-cash amortization of the debt discount and debt issuance costs plus interest
expense payable in cash for our 1 percent and 2¾ percent convertible notes, non-cash interest expense related to
the long-term financing liability for our primary facility and other miscellaneous debt.
The following table sets forth information on interest expense (in thousands):
Year Ended
December 31,
2014
2013
2¾% convertible notes:
Non-cash amortization of the debt discount and debt issuance costs . . . $ 7,211 $ 6,758
Interest expense payable in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,074 5,534
1% convertible notes:
Non-cash amortization of the debt discount and debt issuance costs . . .
2,365
—
Interest expense payable in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
597
—
Non-cash interest expense for long-term financing liability . . . . . . . . . . . . . .
6,622 6,568
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
340 495
Total interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,209 $19,355
Interest expense for the year ended December 31, 2014 was $22.2 million compared to $19.4 million in
2013. The increase in interest expense was primarily due to a higher average carrying value of the liability
portion of our debt and a slight increase in interest expense payable in cash because we had more debt
outstanding in 2014 compared to 2013. In November 2014, we completed a $500 million convertible debt
offering. The notes mature in 2021 and bear interest at 1 percent. We used a substantial portion of the net
proceeds from the issuance of the 1 percent notes to repurchase $140 million in principal of our 2¾ percent
notes. The new principal balance of the 2¾ percent notes is $61.2 million. We record non-cash amortization of
the debt discount on our convertible notes because we account for our convertible notes by separating the
liability and equity components of the instruments in a manner that reflects our nonconvertible debt borrowing
rate. As a result, we assigned a value to the debt component of our convertible notes equal to the estimated fair
value of similar debt instruments without the conversion feature. This means we recorded our convertible notes
at a discount that we are amortizing over the life of the notes as non-cash interest expense.
Gain on Investments, Net
Net gain on investments for the year ended December 31, 2014 was $1.3 million compared to $2.4 million
for 2013. The net gain on investments in 2014 was primarily due to the $1.3 million gain we realized when we
sold the common stock of Achaogen we owned. During 2013, the gain consisted of sales of stock we held in
several satellite companies.
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