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Selling, General and AdministrativeThe $5.6 million increase in our selling, general and administrative expense in our 2004 fiscal yearcompared to our 2003 fiscal year includes a $0.9 million increase in the exchange loss on theretranslation of U.K. pound net liabilities, $2.1 million related to automation technology following theacquisition of the business of ZT Automation LLC, and a $0.8 million increase in insurance costsfollowing the initial public offering. The remaining increase generally reflects the growth in ourbusiness, including $1.0 million attributable to an increase in the number of employees engaged in salesand marketing activities in support of actual and anticipated growth in the number of our OEMcustomers.In-process research and developmentThe in-process research and development expense in our 2004 fiscal year relates to the acquisitionof the intellectual property of Beyond3 in September 2004 and is based on an appraisal of the value ofthe acquired assets including the identification of intangible assets and their remaining useful lives.Amortization of Intangible AssetsThe amortization of intangible assets in our 2004 fiscal year relates primarily to the acquisition ofthe business of ZT Automation LLC in February 2004 and is based on an appraisal of the fair values ofthe assets acquired and liabilities assumed which included the identification of intangible assets andtheir remaining useful lives.Other CostsIn our 2004 fiscal year we incurred $2.4 million in professional fees related to our initial publicoffering. In our 2003 fiscal year we incurred other costs of $11.6 million in connection with the privateequity transaction with HgCapital, described above.Interest Income (Expense), NetWe recorded net interest income of $1.1 million in our 2004 fiscal year compared to a net interestexpense of $0.2 million in our 2003 fiscal year. The interest income relates primarily to the recognitionof $1.1 million interest received on the loan made to Chaparral as part of the developmentarrangement described above.Benefit for Income TaxesWe recorded a benefit for income taxes of $6.2 million in our 2004 fiscal year compared to abenefit for income taxes of $11.8 million in our 2003 fiscal year. The benefit in our 2004 fiscal yearincludes a benefit of $12.3 million related to the equity compensation expense described above. Thebenefit for our 2003 fiscal year included a $13.7 million reversal of the valuation allowance takenagainst a deferred tax asset following the expectation of utilization of the U.K. net operating losscarryforwards offset by taxable income related to our Malaysian and U.S. operations. In addition tobeing affected by these items, the benefit for income taxes decreased compared with the prior periodby $9.0 million due to an increase in income from continuing operations before income taxes andexcluding non-cash equity compensation and by $1.3 million as a result of a reduction in the valuationallowance in the United Kingdom in our 2003 fiscal year. The reduction in tax benefit was partiallyoffset by $4.6 million due to the fact that the benefit relating to the development arrangement with asupplier and the other costs are not taxable items. The inclusion of an exchange gain of $0.9 million onthe U.K. pound denominated deferred tax asset in our 2004 fiscal year also offset the reduction inbenefit.52