This excerpt taken from the WSTL 10-K filed Jun 14, 2005.
Research and Development. Research and development expenses were $16.5 million, $17.4 million and $15.9 million in fiscal 2003, 2004 and 2005, respectively, constituting 7.8%, 7.4% and 5.9% of revenues, respectively. Research and development expenses are incurred primarily in the equipment segment of the business. Research and development expenses increased by $900,000 in fiscal year 2004. The increase was due primarily to increases in employee-related expenses and increases in outside consulting offset in part by lower depreciation expense. Research and development expenses decreased by $1.5 million in fiscal year 2005. The decrease is due primarily to software capitalization of $1.9 million. In addition, the Company received $900,000 from customers to fund engineering projects which was offset in part by a $300,000 expense for engineering performed by a third party in fiscal 2005. There were no customer funded engineering projects in fiscal 2003 or fiscal 2004. The Company believes that research and development expenses will increase in fiscal year 2006 as the Company continues to expand its product offering to include networking, wireless, managed services and other broadband applications.