NVIDIA 2012 Annual Report Download - page 49

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Table of Contents
Operating Expenses
Year Ended Year Ended
January 29,
2012 January 30,
2011 $
Change %
Change January 30,
2011 January 31,
2010 $
Change %
Change
(In millions) (In millions)
Research and development expenses $ 1,002.6 $ 848.8 $ 153.8 18.1% $ 848.8 $ 908.9 $ (60.1) (6.6)%
Sales, general and administrative expenses 405.6 361.5 44.1 12.2% 361.5 367.0 (5.5) (1.5)%
Legal settlement — (57.0) 57.0 100.0% (57.0) — (57.0) (100.0)%
Total operating expenses $ 1,408.2 $ 1,153.3 $ 254.9 22.1% $ 1,153.3 $ 1,275.9 $(122.6) (9.6)%
Research and development as a percentage of
net revenue 25.1% 24.0% 24.0% 27.3%
Sales, general and administrative as a
percentage of net revenue 10.1% 10.2% 10.2% 11.0%
Research and Development
Fiscal Year 2012 vs. Fiscal Year 2011
Research and development expenses increased by $153.8 million , or 18.1% , year over year. Compensation and benefits increased by $83.7 million
primarily related to growth in headcount. Stock based compensation increased by $22.5 million primarily due to a combination of a higher outlay of equity
awards as a result of the increase in headcount, a higher average fair value for the awards that were granted during the year and higher expense from the
employee stock purchase program. Development expenses increased by $9.0 million related to the ramp of our next-generation GPU architecture, Kepler,
designed for 28nm technology and our next generation mobile computing architecture, Tegra 3. Depreciation and amortization increased by $8.8 million,
driven primarily by amortization of new licenses acquired during the year. Also contributing to the increase were other acquisition-related costs of $12.4
million for compensation charges related to the retention program we have established for employees from our acquisition of Icera in June 2011 and $6.0
million of amortization expense for intangible assets associated with this acquisition.
Fiscal Year 2011 vs. Fiscal Year 2010
Research and development expenses decreased by $60.1 million, or 6.6%. The majority of the decrease was caused by stock-based compensation
charges recorded during fiscal year 2010 of $90.5 million related to a tender offer that closed in March 2009. Depreciation and amortization decreased by $8.9
million due to assets being fully depreciated. These decreases were partially offset by an increase in compensation and benefits of $23.5 million primarily due
to growth in headcount and an increase of $7.6 million for development expenses.
Sales, General and Administrative
Fiscal Year 2012 vs. Fiscal Year 2011
Sales, general and administrative expenses increased by $44.1 million, or 12.2%, year over year. Compensation and benefits increased by $29.5 million
primarily attributable to headcount growth. Stock-based compensation increased by $10.5 million primarily due to a combination of a higher outlay of equity
awards as a result of the increase in headcount, a higher average fair value for the awards that were granted during the year and higher expense from the
employee stock purchase program. Also contributing to the increase were $4.4 million for transaction costs related to the acquisition of Icera, Inc., $3.5
million for compensation charges related to the retention program we have established for employees from the Icera acquisition and $2.2 million of
amortization expense for intangible assets associated with this acquisition. Offsetting these increases were decreases in outside professional fees of $4.0
million due to lower litigation-related costs in the current year and a decrease in depreciation and amortization of $9.2 million due to certain software and
lease hold improvements of headquarters buildings that became fully depreciated during the year.
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