SanDisk 2013 Annual Report Download - page 150

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Research and Development.
Percent Percent
FY 2013 Change FY 2012 Change FY 2011
(In millions, except percentages)
Research and development ............... $ 742.3 23% $ 602.7 10% $ 547.4
Percent of revenue .................... 12.0% 11.9% 9.7%
The increase in our research and development expense for fiscal year 2013, compared to fiscal year
2012, was due primarily to higher employee-related costs of $119 million, which includes an increase in
incentive compensation of $59 million due to improved financial and operational performance, and
increases in salary and benefits of $49 million and share-based compensation of $11 million due to
increased head count. In addition, fiscal year 2013 expenses included an increase of $25 million for
technology acquisition, prototype expenditures and non-recurring engineering costs.
The increase in research and development expense for fiscal year 2012, compared to fiscal year 2011,
was due primarily to a net compensation expense increase of $27 million driven by higher headcount,
partially offset by lower incentive compensation. In addition, we incurred higher third-party engineering
costs of $14 million and technology license and equipment expense of $13 million.
Sales and Marketing.
Percent Percent
FY 2013 Change FY 2012 Change FY 2011
(In millions, except percentages)
Sales and marketing ................... $ 276.3 23% $ 224.1 12% $ 199.4
Percent of revenue .................... 4.5% 4.4% 3.5%
The increase in our sales and marketing expense for fiscal year 2013, compared to fiscal year 2012, was
due primarily to higher employee-related costs of $47 million, which includes an increase in incentive
compensation of $22 million, an increase in salary and benefits of $20 million and an increase in share-
based compensation of $5 million. The increase in incentive compensation expense was due to improved
financial and operational performance and the increase in salary and benefit costs was due primarily to
increased headcount. In addition, branding, merchandising and other expenses increased by $5 million.
The increase in our sales and marketing expense for fiscal 2013, compared to fiscal year 2011, was due
primarily to a net compensation expense increase of $14 million driven by higher headcount, partially
offset by lower incentive compensation. In addition, we incurred higher marketing and promotional costs
of $11 million.
General and Administrative.
Percent Percent
FY 2013 Change FY 2012 Change FY 2011
(In millions, except percentages)
General and administrative .............. $ 192.3 28% $ 150.4 (5%) $ 157.8
Percent of revenue .................... 3.1% 3.0% 2.8%
The increase in our general and administrative expense for fiscal year 2013, compared to fiscal year
2012, was due primarily to higher employee-related costs of $20 million, which includes increases in
incentive compensation expense of $14 million due to improved financial and operational performance,
and salary and benefits of $6 million, higher charitable expense of $10 million and outside service expenses
of $5 million. Expenses in fiscal year 2012 were reduced by insurance recoveries of $5 million that did not
recur in fiscal year 2013.
Our fiscal year 2012 general and administrative expense decreased from fiscal year 2011 primarily due
to insurance recoveries of $5 million.
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