Crucial 2014 Annual Report Download - page 38

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Sales of NOR Flash products for 2013 declined as compared to 2012 primarily due to decreases in sales of wireless NOR
Flash products as a result of weakness in demand from certain customers and the continued transition of wireless applications
to NAND Flash products, which led to significant declines in average selling prices. Our gross margin percentage on sales of
NOR Flash products for 2013 improved as compared to 2012 primarily due to cost reductions.
Operating Expenses and Other
Selling, General and Administrative
SG&A expenses for 2014 increased 26% as compared to 2013 primarily due to the incremental costs resulting from the
MMJ Acquisition and higher payroll costs resulting primarily from the reinstatement of variable pay plans. We expect that
SG&A expenses will approximate $195 million to $205 million for the first quarter of 2015.
SG&A expenses for 2013 decreased 9% as compared to 2012 primarily due to a reduction in legal costs and lower variable
pay costs partially offset by $50 million of consulting and other costs incurred in connection with the MMJ Acquisition.
Research and Development
R&D expenses for 2014 increased 47% from 2013 primarily due to the incremental costs resulting from the MMJ
Acquisition, higher payroll costs resulting primarily from the reinstatement of variable pay plans and increased resources
dedicated to development efforts. We expect that R&D expenses, net of amounts reimbursable from our R&D partners, will be
approximately $395 million to $405 million for the first quarter of 2015.
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.
As a result of amounts reimbursable from Intel under a joint development program for NAND Flash and certain emerging
memory technologies, R&D expenses were reduced by $137 million, $127 million and $87 million for 2014, 2013 and 2012,
respectively. As a result of amounts reimbursable from Nanya under a DRAM R&D joint development program, R&D
expenses were reduced by $19 million and $138 million for 2013 and 2012, respectively. Effective January 1, 2013, Nanya
ceased participating in the DRAM joint development program.
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, Mobile LPDRAM products, high density
NAND Flash memory (including 3D NAND and MLC and TLC technologies), SSDs, Hybrid Memory Cubes, specialty
memory, NOR Flash memory, and other memory technologies and systems.
Restructure and Asset Impairments
For the year ended 2014 2013 2012
Loss on impairment of LED assets $ (6) $ 33 $ —
Loss on impairment of MIT assets (5) 62 —
Gain on termination of lease to Transform — (25) —
Loss on restructure of ST consortium agreement — 26 —
Other 51 30 10
$ 40 $ 126 $ 10