tions, our overall headcount was reduced by approximately  130  employees, the majority of which were employees at our  U.S. headquarters. These restructuring expenses consisted primarily of severance and other compensation charges. The  savings associated with these reductions in force have been refocused on revenue growth initiatives throughout the com- pany. In connection with these restructuring charges, we also completed the divestiture of our professional employer orga- nization operated through Big Planet resulting in a charge of approximately $ 0 . 5  million. Other income (expense), net was $ 0 . 4  million of income in  2003  compared to $ 2 . 9  million of expense in  2002 . This increase  in other income (expense), net of $ 3 . 3  million is primarily related to the foreign exchange fluctuations to the U.S. dollar on  the translation of yen based bank debt and other foreign denominated intercompany balances into U.S. dollars for financial  reporting purposes.  Provision for income taxes increased to $ 39 . 9  million in  2003  from $ 38 . 1  million in  2002 . This increase was largely due to  the increase in operating income as compared to the prior year. The effective tax rate remained at  37 . 0 % of pre-tax income  for  2003  and  2002 .  As a result of the foregoing factors, net income increased to $ 67 . 9  million in  2003  from $ 64 . 8  million in  2002 . Earnings  per share were positively impacted by the repurchase of  10 . 8  million shares of our Class A common stock, which occurred  in October  2003 . Historically, our principal needs for funds have been for operating expenses including selling expenses, working capital  (principally inventory purchases), capital expenditures and the development of operations in new markets. We have gener- ally relied on cash flow from operations to meet our cash needs and business objectives without incurring long-term debt  to fund operating activities.  We typically generate positive cash flow from operations due to favorable gross margins, the variable nature of selling  expenses (which constitute a significant percentage of operating expenses), and minimal capital requirements. We gener- ated $ 130 . 4  million in cash from operations in  2004  compared to $ 109 . 0  million in  2003 . This increase in cash generated  from operations in  2004  compared to the prior-year period is primarily related to the increase in net income, which includes  higher non-cash amortization charges in  2004 , and the reduction in cash payments for income taxes during  2004  compared  to the prior year.  As of December  31 ,  2004 , working capital was $ 117 . 4  million compared to $ 149 . 3  million as of December  31 ,  2003 .  Our working capital decreased primarily due to an increase in accrued selling expenses as a result of higher December  revenue for the year ended December  31 ,  2004 , an increase in accrued contingent liabilities and a decrease in our current  deferred tax assets at December  31 ,  2004  due to the timing of payments from foreign affiliates, which we do not expect to  recur in future years. Cash and cash equivalents at December  31 ,  2004  were $ 109 . 9  million and were $ 122 . 6  million at  December  31 ,  2003 . Our cash balance was positively impacted by $ 130 . 4  million in cash flows from operations during  2004 as well as $ 16 . 6  million from the exercise of employee stock options and was offset by the use of approximately $ 35 . 0  mil- lion for capital expenditures, $ 72 . 3  million for repurchases of shares of our common stock, $ 22 . 6  million for the payment  of dividends, $ 16 . 2  million for the repayment of long-term debt and $ 10 . 2  million of net purchases of investments. Our capital expenditures have been primarily focused on: Capital expenditures were $ 35 . 0  million in  2004 , and we anticipate capital expenditures in  2005  of approximately $ 40 . 0 million to $ 50 . 0  million relating primarily to the items listed above. We maintain a $ 25 . 0  million revolving credit facility that expires in May  2007 . Drawings on this revolving credit  facility may be used for working capital, capital expenditures and other purposes including repurchases of our outstanding  shares of Class A common stock. As of December  31 ,  2004 , there were no outstanding balances under our revolving  credit facility.  We also have a $ 125 . 0  million multi-currency private uncommitted shelf facility with Prudential Investment Manage- ment, Inc. As of December  31 ,  2004 , we had $ 70 . 0  million outstanding under this shelf facility, $ 5 . 0  million of which is  45 • purchases of BioPhotonic Scanners; • computer systems and software; and • the build-out of manufacturing facilities and additional retail stores in  China, as well as other leasehold improvements in our various markets. Other income (expense), net Provision for income taxes Net income LIQUIDITY AND CAPITAL RESOURCES