Enterprise Networks cost of sales increased from 46.1% of sales in 2012 to 46.3% of sales in 2013. The increase in Enterprise Networks cost of sales as a percentage of sales was primarily attributable to customer price movements to achieve  market share position and the impact of cost allocations between divisions, partially offset by higher cost absorption due to the higher production volumes. An important part of our strategy is to reduce the product cost of each succeeding product generation and then to lower  the product’s price based on the cost savings achieved. This may cause variations in our gross profit percentage due to timing  differences between the recognition of cost reductions and the lowering of product selling prices. Selling, general and administrative expenses decreased 3.8% from $134.5 million in 2012 to $129.4 million in 2013. Selling, general and administrative expenses include personnel costs for administration, finance, information systems, human resources, sales and marketing, and general management, as well as rent, utilities, legal and accounting expenses, bad debt  expense, advertising, promotional material, trade show expenses, and related travel costs. The decrease in selling, general and administrative expenses is primarily related to decreases in professional services, legal services and travel expenses, which were higher in 2012 due to pre-acquisition activities related to the acquired broadband access business, and decreased  independent contractor expense. Selling, general and administrative expenses as a percentage of sales decreased from 21.7% for the year ended December  31, 2012 to 20.2% for the year ended December 31, 2013. Selling, general and administrative expenses as a percentage of sales  will generally fluctuate whenever there is a significant fluctuation in revenues for the periods being compared.  Research and development expenses increased 4.1% from $126.0 million in 2012 to $131.1 million in 2013. The increase in  research and development expenses is primarily attributable to increases in staffing and fringe benefit costs due to increased  headcount related to the broadband access business acquired on May 4, 2012, increases in amortization of acquired intangible  assets and depreciation of acquired fixed assets, partially offset by a decrease in independent contractor expenses. Research and development expenses as a percentage of sales increased from 20.3% for the year ended December 31, 2012  to 20.4% for the year ended December 31, 2013. Research and development expenses as a percentage of sales will fluctuate  whenever there are incremental product development activities or a significant fluctuation in revenues for the periods being  compared. We expect to continue to incur research and development expenses in connection with our new and existing products and  our expansion into international markets. We continually evaluate new product opportunities and engage in intensive research  and product development efforts which provide for new product development, enhancement of existing products and product  cost reductions. We may incur significant research and development expenses prior to the receipt of revenues from a major  new product group. Interest and dividend income decreased from $7.7 million in 2012 to $7.0 million in 2013. The decrease in interest and dividend income is primarily attributable to a reduction in the average rate of return on our investments as well as a decrease in our average investment balances. Interest expense remained consistent at $2.3 million in 2012 and 2013, as we had no substantial change in our fixed rate borrowings. See “Liquidity and Capital Resources” below for additional information. Selling, General and Administrative Expenses Research and Development Expenses Interest and Dividend Income Interest Expense Financial Results 25 Net realized investment gain decreased from $9.6 million in 2012 to $8.6 million in 2013. The decrease in realized investment gains is primarily attributable to lower gains from the sale of equity securities in 2013. See “Investing Activities” in “Liquidity and Capital Resources” below for additional information. Other income (expense), net, comprised primarily of miscellaneous income, gains and losses on foreign currency transactions,  investment account management fees, and gains or losses on the disposal of property, plant and equipment occurring in the  normal course of business, changed from $0.2 million of income in 2012 to $0.9 million of expense in 2013. Net Realized Investment Gain Other Income (Expense), net