Intel 2012 Annual Report Download - page 41

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Operating Expenses
Operating expenses for the three years ended December 29, 2012 were as follows:
(Dollars In Millions)
2012
2011
2010
Research and development................................................................................
$ 10,148
$ 8,350
$ 6,576
Marketing, general and administrative................................................................
$ 8,057
$ 7,670
$ 6,309
R&D and MG&A as percentage of net revenue..................................................
34%
30%
30%
Amortization of acquisition-related intangibles ...................................................
$ 308
$ 260
$ 18
Research and Development. R&D spending increased by $1.8 billion, or 22%, in 2012 compared to 2011, and increased
by $1.8 billion, or 27%, in 2011 compared to 2010. The increase in 2012 compared to 2011 was driven by increased
investments in our products for smartphones, tablets, Ultrabook systems, and data centers. Additionally, R&D spending
increased due to higher process development costs for our next-generation 14nm process technology, higher
compensation expenses mainly due to annual salary increases, the full first quarter expenses of IMC and McAfee in 2012
(both acquired in the first quarter of 2011), and higher costs related to the development of 450mm wafer technology. The
increase in 2011 compared to 2010 was primarily due to the expenses of McAfee and IMC, and to higher compensation
expenses based on an increase in the number of employees. In addition, lower overall process development costs due to
the transition to manufacturing start-up costs related to our 22nm process technology were mostly offset by higher
process development costs due to R&D of our next-generation 14nm process technology.
Marketing, General and Administrative. Marketing, general and administrative expenses increased by $387 million, or
5%, in 2012 compared to 2011, and increased by $1.4 billion, or 22%, in 2011 compared to 2010. The increase in 2012
compared to 2011 was primarily due to the full first quarter expenses of McAfee in 2012 and higher compensation
expenses mainly due to annual salary increases as well as an increase in the number of employees. The increase in 2011
compared to 2010 was primarily due to the expenses of McAfee and IMC, higher compensation expenses based on an
increase in the number of employees, and higher advertising expenses (including cooperative advertising expenses).
Amortization of Acquisition-Related Intangibles. The increase in 2012 compared to 2011 of $48 million was primarily due
to the full year of amortization of intangibles in 2012 related to the acquisitions of McAfee and the WLS business of
Infineon, both completed in the first quarter of 2011. The increase in 2011 compared to 2010 of $242 million was primarily
due to the amortization of intangibles related to the acquisitions of McAfee and the WLS business of Infineon in 2011. For
further information, see “Note 13: Acquisitions” and “Note 16: Identified Intangible Assets” in Part II, Item 8 of this
Form 10-K.
Share-Based Compensation
Share-based compensation totaled $1.1 billion in 2012 ($1.1 billion in 2011 and $917 million in 2010). Share-based
compensation was included in cost of sales and operating expenses.
As of December 29, 2012, unrecognized share-based compensation costs and the weighted average periods over which
the costs are expected to be recognized were as follows:
(Dollars in Millions)
Unrecognized
Share-Based
Compensation
Costs
Weighted
Average
Period
Stock options.......................................................................................................
$ 96
1.0 years
Restricted stock units ..........................................................................................
$ 1,523
1.3 years
As of December 29, 2012, there was $13 million in unrecognized share-based compensation costs related to the rights to
acquire common stock under our stock purchase plan. We expect to recognize those costs over a period of approximately
one and a half months.