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Research and Development—otherThe $16.9 million increase in other research and development expense in our 2005 fiscal yearcompared to our 2004 fiscal year includes increased investment of approximately $6.5 million in anumber of projects to enhance the technology content and broaden the range of our storagesubsystems, including $1.6 million in connection with a new Application Storage System product linerelated to the in-process research and development expense described below. Of the remainingincrease, $0.8 million related to approximately three months expense resulting from our acquisition ofnStor, $2.4 million related to media cleaning technology as a result of our acquisition of Oliver Design,$4.2 million related to investment in new Storage Infrastructure products including automation andoptical inspection technologies following our acquisitions of ZT Automation and Beyond3 and$2.6 million related to changes in exchange rates. In addition, in November 2005 we ceased investmentin silicon based switch architecture which resulted in an expense of $0.8 million, primarily beingemployee termination expenses. This decision will reduce expenditure in our 2006 fiscal year byapproximately $4.0 million.Selling, General and Administrative—otherThe $10.0 million increase in our selling, general and administrative expense in our 2005 fiscal yearcompared to our 2004 fiscal year includes the effects of our acquired businesses. $1.5 million resultingfrom our acquisition of nStor, $1.8 million resulting from our acquisition of Oliver Design and$0.5 million resulting from our acquisition of ZT Automation. The increase also included $2.1 millionrelated to changes in exchange rates and a $2.1 million increase in insurance and other costs followingour IPO. Additionally, we have increased the number of employees engaged in sales activities insupport of the increase in the level of business.In process research and developmentIn April 2005 we purchased intellectual property for $2.2 million consisting of a software suitewhich we intend to incorporate into a new Application Storage System product line within our Storageand Network Systems segment. The purchase price was recorded as an operating expense because theacquired software had not reached technological feasibility and had no alternative uses.Amortization of Intangible AssetsThe $2.0 million increase in amortization of intangible assets in our 2005 fiscal year includes$0.8 million and $1.1 million respectively from the amortization of intangible assets purchased as partour acquisitions of nStor on September 9, 2005 and Oliver Design on May 23, 2005.Other CostsIn our 2004 fiscal year we incurred professional fees of $2.4 million in preparation for our initialpublic offering.Interest Income, NetWe recorded net interest income of $1.2 million in our 2005 fiscal year compared to $1.1 million inour 2004 fiscal year. The interest income in the prior period includes the recognition of $1.1 millioninterest received on the loan made to Chaparral as part of the development arrangement describedabove. Excluding this amount, the recording of interest income in our 2005 fiscal year resulted from anincrease in average cash balances, primarily related to the net proceeds from the issuance of commonshares in connection with our IPO.48