Morning Chuzz,..Re:. It is hard to imagine General and Administrative as covering this area.
From the 1998 annual report.
Another increasingly significant part of the revenue picture nowadays is that from customer service, which amounted to more than $74 million in 1998, well over double that of any prior year. Customer service rev-enue comes primarily from activities involving installation and testing of large systems, primarily the TITAN family of products. The growth of this revenue, and particularly its effect on cost-of-goods-sold, mandates a change in the way we have historically calculated gross margin. In past years, we have calculated gross margin by including customer service revenue but not the costs of deriving that revenue. Beginning in 1999, we will be including those costs in the cost-of-goods-sold line, and because customer service costs generally exceed revenue, the effect will be a reduction in gross margin by several percentage points. (This will be offset by a corresponding drop in SG&A expense, of course.) Gross margin for 1998, calculated the old way, was a remarkable 65 percent and would have been somewhat lower had it been based on this accounting reclassification.
tellabs.com
Cheers,
Lee |
