Crucial 2011 Annual Report Download - page 37

R&D expenses for 2010 decreased 4% from 2009 primarily due to the following:
Decreases in R&D costs for 2010 from the above factors was partially offset by higher payroll expenses resulting from the accrual of
incentive-based compensation costs and additional $79 million of R&D expenses in connection with the May 7, 2010 acquisition of Numonyx.
As a result of amounts reimbursable from Intel under a NAND Flash R&D cost-sharing arrangement, R&D expenses were reduced by $95
million, $104 million and $107 million for 2011, 2010 and 2009 respectively. We expect that R&D expenses, net of amounts reimbursable from
our R&D partners, will be approximately $200 million to $230 million for the first quarter of 2012.
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 are concentrated on our high density DDR3 DRAM and
LP-DDR2 Mobile Low Power DRAM products as well as high density and mobile NAND Flash memory (including multi-level cell technology),
NOR Flash memory, specialty memory, phase change and memory systems.
Interest Income (Expense)
Interest expense for 2011, 2010 and 2009, included aggregate amounts of non-cash amortization of debt discount and issuance costs of $60
million, $76 million and $71 million, respectively. Net proceeds received at inception from some of our convertible notes were allocated between
a liability component (issued at a discount) and an equity component. The debt discount is being amortized from issuance through the expected
maturity dates of such convertible notes, with the amortization recorded as additional non-
cash interest expense. Included in the aggregate noncash
interest expense is amortization on the convertible notes of $54 million for 2011, $56 million for 2010 and $52 million for 2009. (See "Item 1.
Financial Statements – Notes to Consolidated Financial Statements – Debt" note.)
Other Non-Operating Income (Expense), Net
Other non-operating expense for 2011 included a $111 million loss recognized in the first quarter of 2011 in connection with a series of debt
restructure transactions with certain holders of our convertible notes. (See "Item 1. Financial Statements – Notes to Consolidated Financial
Statements – Debt" note.)
Other non-operating income for 2011 also included $15 million in connection with the release of our guarantee of debt in a joint venture in
which we previously participated. (See "Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt" note.)
Other non-operating income for 2010 included a gain of $56 million recognized in the first quarter of 2010 in connection with an issuance of
common shares in a public offering by Inotera Memories, Inc. ("Inotera"). As a result of the issuance, our interest in Inotera decreased from
35.5% to 29.8%. (See "Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity Method Investments – Inotera and
MeiYa DRAM joint ventures with Nanya" note.)
Other Operating and Non-operating Income and Expenses
Further discussion of operating and non-operating income and expenses can be found in the following notes contained in "Item 8. Financial
Statements and Supplementary Data – Notes to Consolidated Financial Statements":
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• a DRAM cost-sharing arrangement with Nanya that commenced in 2010; and
• a reduction in R&D costs for imaging products as a result of the sale of a 65% interest in Aptina in the fourth quarter of 2009.
• Other Operating (Income) Expense, Net
• TECH Semiconductor Singapore Pte. Ltd.
• Income Taxes
• Equity Method Investments
• Equity Plans