Avid 2011 Annual Report Download - page 39

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Year-Over-Year Change in Marketing and Selling Expenses for Years Ended December 31, 2011 and 2010
(dollars in thousands)
Consulting and outside services
Tradeshow and other promotional expenses
Personnel-related expenses
Bad debt expense
Facilities and information technology expenses
Foreign exchange (gains) losses
Other expenses
Total marketing and selling expenses increase
2011 Increase
(Decrease)
From 2010
$
$ 6,949
2,065
1,892
1,378
(2,471)
(1,340)
(1,786)
$ 6,687
%
54.3%
17.0%
1.2%
710.3%
(7.1)%
(152.8)%
(4.0)%
3.8%
2010 Increase
(Decrease)
From 2009
$
$ 69
(5,791)
7,455
(1,725)
2,555
2,298
(1,284)
$ 3,577
%
0.5%
(30.3)%
4.8%
(89.9)%
7.9%
161.7%
(2.9)%
2.1%
The higher consulting and outside services costs, tradeshow and other promotional expenses, and personnel-related expenses for
2011, compared to 2010, resulted from our increased investment in marketing activities designed to capture incremental revenues,
while the increase in bad debt expenses was largely the result of increased allowances required for higher write-offs recorded
during 2011. The decrease in facilities and information technology infrastructure costs for 2011 was largely the result of our
continued efforts to reduce overhead, while the decrease in other expenses for 2011 was primarily related to increased services
costs that are billable to customers and, therefore, allocated to cost of services. During 2011, net foreign exchange gains
(specifically, foreign exchange transaction and remeasurement gains and losses on net monetary assets denominated in foreign
currencies, offset by non-designated foreign currency hedging gains and losses), which are included in marketing and selling
expenses, were $0.4 million, compared to losses of $0.9 million in 2010, resulting in a $1.3 million change in the offset to
expense. Marketing and selling expenses as a percentage of revenues increased to 27.1% in 2011, compared to 26.1% in 2010,
primarily as a result of the increased marketing investments in 2011 as described above.
The increase in personnel-related costs for 2010, compared to 2009, was primarily the result of higher compensation and benefits
costs, including salaries and benefits costs for programs reinstated in 2010 that were suspended during much of 2009, and the
expenses added by our 2010 acquisitions. The higher facilities and information technology infrastructure costs were primarily the
result of expenses added by our 2010 acquisitions. During 2010, net foreign exchange losses (specifically, foreign exchange
transaction and remeasurement gains and losses on net monetary assets denominated in foreign currencies, offset by non-
designated foreign currency hedging gains and losses), which are included in marketing and selling expenses, were $0.9 million,
compared to gains of $1.4 million for 2009, resulting in a $2.3 million decrease in the offset to expense. The decrease in
tradeshow and other promotional expenses was the result of our continued emphasis on controlling costs, while the lower bad
debt expense was primarily the result of a lease default in the first quarter of 2009 that initiated an increase in our lease recourse
reserves during that period. Marketing and selling expenses as a percentage of revenues decreased to 26.1% in 2010, from 27.6%
in 2009, as a result of the increase in revenues for 2010, partially offset by the effect of the increase in expenses.
General and Administrative Expenses
General and administrative expenses consist primarily of employee salaries and benefits for administrative, executive, finance and
legal personnel; audit, legal and strategic consulting fees; and insurance, information systems and facilities costs. Information
systems and facilities costs reported within general and administrative expenses are net of allocations to other expenses
categories. We expect our 2012 general and administrative expenses to be slightly higher than those incurred in 2011.