due to lower expenses during fiscal year 2009 related to our variable compensation programs when compared to fiscal year 2008.

 

         Restructuring Charges and Other



         We announced a workforce reduction to allow for continued investment in strategic growth areas during fiscal year 2009. As a result, we eliminated approximately 360 positions worldwide, or about 6.5% of our global workforce.  During fiscal year 2009, expenses associated with the workforce reduction, which were comprised primarily of severance and benefits payments to these employees, totaled $8.0 million.



  Restructuring and other expenses in fiscal year 2009 also included a non-recurring charge of $18.9 million associated with the termination of a development contract related to a new campus construction project that has been put on hold.  There were no restructuring related charges in fiscal years 2010 or 2008.



Interest Income and Interest Expense

 

 Interest income, net of interest expense consists of interest earned on cash, cash equivalents and marketable securities. Interest income decreased to $19.8 million in fiscal year 2010, from $42.5 million in fiscal year 2009 primarily due to the result of lower interest rates and interest expense recorded on a capital lease for a data center in Santa Clara, California during fiscal year 2010.  Interest income decreased to $42.5 million in fiscal year 2009 from $64.2 million in fiscal year 2008 primarily due to the result of lower average balances of cash, cash equivalents and marketable securities and lower interest rates in fiscal year 2009 compared to fiscal year 2008.



Other Income (Expense), net



         Other income and expense primarily consists of realized gains and losses on the sale of marketable securities and foreign currency translation.  Other (expense), net of other income was ($3.1) million, ($14.7) million, and $0.8 million in fiscal years 2010, 2009, and 2008, respectively. The fluctuation between these years was primarily due to other than temporary impairment charges of $9.9 million that we recorded during fiscal year 2009.  These charges included $5.6 million related to an other than temporary impairment of our investment in the money market funds held by the Reserve International Liquidity Fund, Ltd., or International Reserve Fund, $2.5 million related to a decline in the value of publicly traded equity securities and $1.8 million related to debt securities held by us that were issued by companies that had filed for bankruptcy.  Please refer to Note 18 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for further discussion.

  

Income Taxes

 

    We recognized income tax expense (benefit) of $(14.3) million, $(12.9) million and $103.7 million during fiscal years 2010, 2009 and 2008, respectively. Income tax expense (benefit) as a percentage of income (loss) before taxes, or our annual effective tax rate, was 17.4 % in fiscal year 2010, 30.0% in fiscal year 2009 and 11.5% in fiscal year 2008.

 

    The difference in the effective tax rates amongst the three years was primarily a result of changes in our geographic mix of income