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Research and Development (“R&D”), Sales and Marketing, and General and Administrative (“G&A”) Expenses
R&D, sales and marketing, and G&A expenses are summarized in the following table (in millions, except percentages):
Years Ended 2015 vs. 2014 2014 vs. 2013
July 25,
2015
July 26,
2014
July 27,
2013
Variance
in Dollars
Variance
in Percent
Variance
in Dollars
Variance
in Percent
Research and development ........... $ 6,207 $ 6,294 $ 5,942 $ (87) (1.4)% $ 352 5.9 %
Percentage of revenue ................ 12.6% 13.4% 12.2%
Sales and marketing .................. 9,821 9,503 9,538 318 3.3 % (35) (0.4)%
Percentage of revenue ................ 20.0% 20.2% 19.6%
General and administrative ........... 2,040 1,934 2,264 106 5.5 % (330) (14.6)%
Percentage of revenue ................ 4.1% 4.1% 4.7%
Total ............................ $ 18,068 $ 17,731 $ 17,744 $ 337 1.9 % $ (13) (0.1)%
Percentage of revenue ........... 36.8% 37.6% 36.5%
R&D Expenses
Fiscal 2015 Compared with Fiscal 2014
The decrease in R&D expenses for fiscal 2015, as compared with fiscal 2014, was primarily due to higher compensation expense
recorded in fiscal 2014 in connection with our acquisition of the remaining interest in Insieme. See Note 12 to the Consolidated
Financial Statements. Efficiencies arising from our restructuring action announced in August 2014 also contributed to the
decrease. These decreases were partially offset by higher contracted services and higher share-based compensation expense.
We continue to invest in R&D in order to bring a broad range of products to market in a timely fashion. If we believe that we are
unable to enter a particular market in a timely manner with internally developed products, we may purchase or license technology
from other businesses, or we may partner with or acquire businesses as an alternative to internal R&D.
Fiscal 2014 Compared with Fiscal 2013
R&D expenses increased for fiscal 2014, as compared with fiscal 2013, primarily due to compensation expense recorded in fiscal
2014 in connection with our acquisition of the remaining interest in Insieme. Higher share-based compensation expense and higher
contracted services also contributed to the increase. These increases were partially offset by reduced variable compensation expense
as a result of our financial performance and efficiencies related to our workforce reduction plan announced in August 2013.
Sales and Marketing Expenses
Fiscal 2015 Compared with Fiscal 2014
Sales and marketing expenses increased for fiscal 2015, as compared with fiscal 2014, due to higher headcount-related expenses,
driven by increased variable compensation expense and higher discretionary spending, partially offset by lower compensation
expense from acquisitions.
Fiscal 2014 Compared with Fiscal 2013
Sales and marketing expenses for fiscal 2014, as compared with fiscal 2013, decreased slightly due to lower advertising expenses,
reductions in other discretionary spending, and lower expenses in other areas such as depreciation expense. These decreases were
substantially offset by higher share based compensation expense and higher acquisition- related costs.
G&A Expenses
Fiscal 2015 Compared with Fiscal 2014
G&A expenses increased in fiscal 2015, as compared with fiscal 2014, primarily due to increased variable compensation expense
as a result of our financial performance, higher share-based compensation expense and the timing of corporate-level expenses.
Corporate-level expenses, which tend to vary from period to period, included operational infrastructure activities such as IT
project implementations, which included investments in our global data center infrastructure, and investments related to
operational and financial systems.
Fiscal 2014 Compared with Fiscal 2013
G&A expenses decreased in fiscal 2014, as compared with fiscal 2013, due to lower contracted services, lower corporate-level
expenses, and lower headcount-related expenses. The lower headcount-related expenses were due to efficiencies related to our
workforce reduction plan announced in August 2013, and also due to reduced variable compensation expense as a result of our
lower financial performance.
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