Crucial 2012 Annual Report Download - page 37

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Operating Expenses and Other
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses for 2012 increased 5% as compared to 2011 primarily due to a $13
million contribution to a university program and stock-based compensation and other amounts related to the death benefits of
our former Chief Executive Officer in 2012.
SG&A expenses for 2011 increased 12% as compared to 2010 primarily due to increased costs associated with Numonyx
operations and higher payroll costs, partially offset by a reduction in legal costs. The reduction in legal costs from 2010 to
2011 was primarily due to $64 million of costs in 2010 for settlements of an indirect purchasers antitrust case and other matters.
We expect that SG&A expenses will approximate $135 million to $145 million for the first quarter of 2013.
Research and Development
R&D expenses for 2012 increased 16% from 2011 primarily due to a higher volume of development wafers processed,
higher personnel costs associated with increased salary and wage rates and additional headcount for our expanded R&D
operations, and higher software and materials costs.
R&D expenses for 2011 increased 27% from 2010 primarily due to increased costs associated with R&D activities for
acquired Numonyx operations, higher payroll costs, and a higher volume of pre-qualification wafers processed.
As a result of amounts reimbursable from Nanya under a DRAM R&D cost-sharing arrangement, R&D expenses were
reduced by $138 million, $141 million and $51 million for 2012, 2011 and 2010, respectively. The April 6, 2012 agreements
with Intel expanded our NAND Flash R&D cost-sharing agreement to include certain emerging memory technologies, but did
not change the cost-sharing percentage. As a result of amounts reimbursable from Intel, R&D expenses were reduced by $87
million, $95 million and $104 million for 2012, 2011 and 2010, respectively. We expect that R&D expenses, net of amounts
reimbursable from our R&D partners, will be approximately $220 million to $230 million for the first quarter of 2013.
Our process technology R&D efforts are focused primarily on development of successively smaller line-width process
technologies which are designed to facilitate our transition to next generation memory products. Additional process technology
R&D efforts focus on the enablement of advanced computing and mobile memory architectures, the investigation of new
opportunities that leverage our core semiconductor expertise and the development of new manufacturing materials. Product
design and development efforts include our high density DDR3 and DDR4 DRAM and Mobile Low Power DDR DRAM
products as well as high density and mobile NAND Flash memory (including multi-level and triple-level cell technologies),
NOR Flash memory, specialty memory, phase-change memory, solid-state drives and other memory technologies and systems.
Interest Income (Expense)
Interest expense for 2012, 2011 and 2010, included aggregate amounts of non-cash amortization of debt discount and other
costs of $83 million, $60 million and $76 million, respectively. Interest expense for 2012 also included $9 million of "make-
whole premium" paid to holders of our 2013 Notes. (See "Item 8. Financial Statements – Notes to Consolidated Financial
Statements – Debt" note.)
Other
Further discussion of other operating and non-operating income and expenses can be found in the following notes
contained in "Item 8. Financial Statements – Notes to Consolidated Financial Statements":
• Equity Method Investments
• Equity Plans
• Patent Cross-License Agreement
• Other Operating (Income) Expense, Net
• Other Non-Operating Income (Expense), Net
• Income Taxes
• TECH Semiconductor Singapore Pte. Ltd.