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Table of Contents
Operating Expenses
Product Development Expense. Product development expenses for fiscal year 2014 increased from fiscal year 2013 due to increased
investments in HDD and alternative storage technologies of approximately $35 million and headcount related costs of approximately
$36 million, net of a decrease in variable performance based compensation expenses of $26 million. In addition, the consolidation of Xyratex,
acquired on March 31, 2014 contributed approximately $23 million to Product development expense.
Marketing and Administrative Expense. Marketing and administrative expenses for fiscal year 2014 increased from fiscal year 2013 due
to a $40 million increase in headcount related expenses due to annual focal increases and increased investments in certain strategic initiatives as
well as enhancement of core businesses of $25 million. In addition, the consolidation of Xyratex contributed approximately $15 million to
Marketing and administrative expense.
Amortization of Intangibles. Amortization of intangibles for fiscal year 2014 increased from fiscal year 2013 due to the commencement
of amortization of certain in-process research and development assets acquired from Samsung's HDD business in December of 2011 and LaCie
in August of 2012.
Restructuring and Other, net. Restructuring and other, net for fiscal years 2014 increased from fiscal year 2013 primarily due to a
restructuring charge recorded during the December 2013 quarter associated with a reduction in work force.
Other Expense, net
Other expense, net. Other expense, net for fiscal year 2014 decreased by $40 million from fiscal year 2013 due to a $60 million decrease
in losses from the early redemption and repurchase of debt and a decrease of $18 million in interest expense due to a reduction in the average
interest rate on our outstanding debt. These decreases were partially offset by insurance proceeds of $25 million received during fiscal year 2013
for equipment damaged during the severe flooding in Thailand in October of 2011 and $17 million lower gains on sales of our available for sale
securities and strategic investments.
Income Taxes
48
Fiscal Years Ended
(Dollars in millions)
June 27,
2014
June 28,
2013
Change
%
Change
Product development
$
1,226
$
1,133
$
93
%
Marketing and administrative
722
635
87
14
%
Amortization of intangibles
98
79
19
24
%
Restructuring and other, net
24
22
1,100
%
1
1
1
1
1
1
1
1
1
1
Operating expenses
$
2,070
$
1,849
$
221
1
1
1
1
1
1
1
1
1
1
Fiscal Years Ended
(Dollars in millions)
June 27,
2014
June 28,
2013
Change
%
Change
Other expense, net
$
(220
)
$
(260
)
$
40
(15
)%
Fiscal Years Ended
(Dollars in millions)
June 27,
2014
June 28,
2013
Change
%
Change
(Benefit from) provision for income
taxes
$
(14
)
$
(7
)
$
(7
)
100
%