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Table of Contents
Operating Expenses
Research and Development Expense
Research and development expenses consist primarily of personnel expenses, payments to suppliers for design services, safety and regulatory
testing, product certification expenditures to qualify our products for sale into specific markets, prototypes and other consulting fees. Research and
development expenses are recognized as they are incurred. We have invested in building our research and development organization to enhance our
ability to introduce innovative and easy-to-
use products. In the future, we expect research and development expenses will increase in absolute dollars
and as a percentage of revenue as we broaden our core competencies and expand into new software and networking product technologies. The following
table presents research and development expense, for the periods indicated:
2013 vs 2012
Research and development expenses increased $24.1 million , or 39.5% , to $85.2 million for the year ended December 31, 2013 , from
$61.1
million for the year ended December 31, 2012
. Additionally, research and development expenses increased as a percentage of net revenue to 6.2% for
the year ended December 31, 2013 , from 4.8% for the year ended December 31, 2012
. These increases were primarily due to significant growth in
research and development headcount as a result of our acquisitions during the second quarter of 2013. Personnel and facility-
related expenses increased
by $22.9 million, and expenses related to projects and outside professional services also increased by $2.3 million. These increases were partially offset
by a decrease in variable compensation of $0.9 million. Research and development headcount increased by 104 employees to 355
employees at
December 31, 2013 compared to 251 employees at December 31, 2012 .
2012 vs 2011
Research and development expenses increased $12.4 million, or 25.4%, to $61.1 million for the year ended December 31, 2012, from $48.7
million for the year ended December 31, 2011. The increase was primarily attributable to higher personnel-
related expenses of $7.1 million attributable
to headcount growth and increased expenses of $6.0 million primarily related to our increased investment in research and development projects for
software development, and acquisition-
related research and development. These expenses were offset by a benefit of $3.0 million due to a decrease in
variable compensation. Research and development headcount increased by 27 employees to 251 employees at December 31, 2012 compared to 224
employees at December 31, 2011. Furthermore, the increase was attributable to higher facilities expenses of $2.1 million, primarily related to our
acquisition-related expansions.
Sales and Marketing Expense
Sales and marketing expenses consist primarily of advertising, trade shows, corporate communications and other marketing expenses, product
marketing expenses, outbound freight costs, personnel expenses for sales and marketing staff and technical support expenses. The following table
presents sales and marketing expense, for the periods indicated:
45
Year Ended December 31,
2013
% Change
2012
% Change
2011
(In thousands, except percentage data)
Research and development expense
$
85,168
39.5
%
$
61,066
25.4
%
$
48,699
Percentage of net revenue
6.2
%
4.8
%
4.1
%
Year Ended December 31,
2013
% Change
2012
% Change
2011
(In thousands, except percentage data)
Sales and marketing expense
$
153,804
2.7
%
$
149,766
(3.1
)%
$
154,562
Percentage of net revenue
11.2
%
11.9
%
13.1
%