Avid 2008 Annual Report Download - page 40

35
Comparison of 2008 to 2007
Years Ended December 31, 2008 and 2007
(dollars in thousands)
2008 Expenses 2007 Expenses Change % Change
Research and development $148,598 $150,707 (2,109) (1.4%)
As a percentage of net revenues 17.6% 16.2% 1.4%
The decrease in research and development expenses during 2008 was primarily due to lower hardware development and
computer equipment costs, partially offset by higher corporate allocations of facility and information technology
infrastructure costs. Hardware development and computer equipment costs decreased $3.4 million, due to our increased
focus on the development of high-end video-editing products during 2007, and the infrastructure allocations increased
by $1.4 million. The increase in research and development expenses as a percentage of revenues in 2008 was the result
of lower 2008 revenues.
Comparison of 2007 to 2006
Years Ended December 31, 2007 and 2006
(dollars in thousands)
2007 Expenses 2006 Expenses Change % Change
Research and development $150,707 $141,363 $9,344 6.6%
As a percentage of net revenues 16.2% 15.5% 0.7%
The increase in research and development expenses during 2007 was primarily due to higher personnel costs of $6.3
million and increased hardware development and computer equipment costs of $2.9 million. The increase in personnel
costs was primarily the result of our 2006 acquisitions and a decrease in the amount of research and development costs
transferred to cost of product revenues in connection with work performed on complex solution sales. The increase in
hardware development and computer equipment costs was primarily the result of expenses for the development of high-
end video-editing products during 2007. The increase in research and development expense as a percentage of revenues
for 2007 was related to the spending increases noted.
Marketing and Selling
Marketing and selling expenses consist primarily of employee salaries and benefits for selling, marketing and pre-sales
customer support personnel; commissions; travel expenses; advertising and promotional expenses; and facilities costs.
Comparison of 2008 to 2007
Years Ended December 31, 2008 and 2007
(dollars in thousands)
2008 Expenses 2007 Expenses Change % Change
Marketing and selling $208,735 $210,456 ($1,721) (0.8%)
As a percentage of net revenues 24.7% 22.7% 2.0%
The decrease in marketing and selling expenses during 2008 was largely due to lower advertising, tradeshow and other
promotional expenses and lower corporate facility and information technology infrastructure allocations, partially offset
by increased bad debt expenses and unfavorable foreign exchange translations in 2008. The decrease in advertising,
tradeshow and other promotional expenses was $3.7 million, largely attributable to decreased spending on trade shows,
while the decrease in corporate infrastructure allocations was $2.0 million. The increase in bad debt expense was $2.6
million, primarily due to increased payment defaults. Also during 2008, net foreign exchange losses (specifically,