Crucial 2013 Annual Report Download - page 44

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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. We expect that SG&A expenses will approximate $185 million to $195 million for the first quarter of 2014, which
includes costs from Elpida.
Research and Development
R&D expenses for 2013 increased 1% from 2012 primarily due to lower reimbursements from Nanya under partnering
arrangements offset by lower payroll costs primarily resulting from the suspension of variable pay plans and a lower volume of
development wafers processed.
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.
As a result of amounts reimbursable from Nanya under a DRAM R&D cost-sharing arrangement, R&D expenses were
reduced by $19 million, $138 million and $141 million for 2013, 2012 and 2011, 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 $127
million, $87 million and $95 million for 2013, 2012 and 2011, respectively. Effective January 1, 2013, Nanya ceased
participating in the joint development program. We expect that R&D expenses, net of amounts reimbursable from our R&D
partners, will be approximately $340 million to $350 million for the first quarter of 2014, which includes costs from Elpida.
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, solid-state drives, Hybrid Memory Cubes and other memory technologies and systems.
Restructure and Asset Impairments
For the year ended 2013 2012 2011
Loss on impairment of MIT assets $ 62 $ — $ —
Loss on impairment of LED assets 33 — —
Loss on restructure of ST consortium agreement 26 — —
Gain on termination of lease to Transform (25) — —
Gain from disposition of Japan Fabrication Facility — — (54)
Other 30 10 (21)
$ 126 $ 10 $ (75)
We have taken actions to dispose of 200mm wafer manufacturing facilities and optimize operations including our
workforce. For 2013, ESG, WSG, NSG and DSG recognized restructure and impairment costs of $12 million, $11 million, $11
million and $6 million, respectively. The remaining restructure and impairment costs for 2013 were allocated to segments that
do not meet the quantitative thresholds of a reportable segment and are reported under All Other. As of August 29, 2013, the
only significant remaining amount accrued but unpaid for these restructure activities was $12 million related to workforce
optimization. As of August 29, 2013, we do not anticipate incurring any significant additional costs for these restructure
activities. (See "Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements –
Restructure and Asset Impairments.")
Interest Income (Expense)
Interest expense for 2013, 2012 and 2011, included aggregate amounts of amortization of debt discount and other interest
amortization expense of $120 million, $95 million and $60 million, respectively. (See "Item 8. Financial Statements and
Supplementary Data – Notes to Consolidated Financial Statements – Debt" note.)