Avid 2005 Annual Report Download - page 47

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33
The increase in research and development expenditures in 2005, as compared to 2004, was primarily the result of higher personnel-
related costs as well as higher facility costs, all in large part due to the acquisitions of Pinnacle during 2005 and M-Audio during
the third quarter of 2004. These costs were somewhat offset by decreased expenses under our employee bonus plan in 2005
as compared to 2004. The decrease in research and development expenses as a percentage of revenues relates primarily to the
acquisitions of M-Audio and Pinnacle, in particular the Consumer Video portion, whose research and development costs are
proportionately lower than the other businesses within Avid.
Years Ended December 31, 2004 and 2003
(dollars in thousands)
2004
Expenses
2003
Expenses Change % Change
Research and Development: $94,940 $85,552 $9,388 11.0%
Percentage of Net Revenues: 16.1% 18.1% (2.0%)
The increase in research and development expenditures in 2004, as compared to 2003, was primarily the result of higher personnel-
related costs partly due to the acquisitions of NXN and M-Audio during 2004 as well as to our 2004 bonus plan. These costs were
somewhat offset by reduced consulting fees. The decrease in research and development expenses as a percentage of revenues is
primarily a result of the higher revenue base in 2004.
Marketing and Selling
Marketing and selling expenses consist primarily of employee salaries and benefits for sales, marketing and pre-sales customer
support personnel, commissions, travel expenses, advertising and promotional expenses and facilities costs.
Years Ended December 31, 2005 and 2004
(dollars in thousands)
2005
Expenses
2004
Expenses Change % Change
Marketing and Selling: $170,787 $130,123 $40,664 31.3%
Percentage of Net Revenues: 22.0% 22.1% (0.1%)
The increase in marketing and selling expenditures during 2005, as compared to 2004, was primarily due to higher personnel-
related costs, including salaries and related taxes, benefits and commissions, as well as higher facilities costs, all in large part due
to the acquisitions of Pinnacle in August 2005 and M-Audio and Avid Nordic in the third quarter of 2004. We also spent more on
advertising, trade shows and other marketing programs during 2005 than in 2004.
Years Ended December 31, 2004 and 2003
(dollars in thousands)
2004
Expenses
2003
Expenses Change % Change
Marketing and Selling: $130,123 $105,735 $24,388 23.1%
Percentage of Net Revenues: 22.1% 22.4% (0.3%)
The increase in marketing and selling expenditures during 2004, as compared to 2003, was primarily due to higher personnel-
related costs, including salaries and related taxes and benefits, partly due to the acquisitions of NXN, M-Audio and Avid Nordic
during 2004, expenses associated with our 2004 bonus plan and commissions expense (due to higher revenues). Various marketing
programs and increased advertising also contributed to the increase.