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in this market. Our focus on our monthly product subscription programs, growth in our nutrition business, and the BioPho- tonic Scanner contributed to the revenue increases in Malaysia and Singapore. The revenue increases in these markets were slightly offset by a decrease in revenue in combined Australia/New Zealand. 

We anticipate that, in connection with our planned opening of the Indonesian market in 2005 , some of our distributors in our other South Asia/Pacific and Greater China markets may focus some of their energies on this new market. We expect this could have some negative impact on these markets during 2005 . 

Other Markets.  The following table sets forth revenue for our Other Markets: 

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The 16 % increase in Other Markets was primarily due to a 14 % increase in revenue in Europe, which was mostly attributed to the favorable impact of foreign currency fluctuations in 2004  compared to 2003 . We experienced higher local currency growth in Europe during the second half of 2004 , and in 2004  active distributors and executive dis- tributors grew 25 % and 17 %, respectively over 2003 . Although our Latin America business accounts for a small part of our business, we are making efforts to grow our business there as well as in other developing countries around the world. As a result of these efforts, revenue in Mexico was up 54 % in local currency in 2004  compared to 2003 , and the execu- tive distributor count grew by 149 %. 

## Gross profit 

Gross profit as a percentage of revenue increased to 83 . 2 % in 2004  compared to 82 . 1 % in 2003 . Our gross profit was positively impacted by the shift away from low margin Big Planet revenue to higher margin Nu Skin and Pharmanex prod- ucts, strong gross margins in China resulting from in-house manufacturing in that market, and the positive impact of fluc- tuations in foreign currency exchange rates in 2004  compared to 2003 . During 2004 , we continued to expand the BioPhotonic Scanner program in the United States and in our international markets. Lease revenue from BioPhotonic Scanners has significantly lower margins than our personal care and nutritional supplement products, as we lease them on essentially a break-even basis. We expect gross margins to be slightly lower in 2005  compared to 2004  as a result of our expansion of the BioPhotonic Scanner program this year. 

## Selling expenses 

Selling expenses as a percentage of revenue increased to 42 . 9 % in 2004  from 41 . 3 % in 2003 . Selling expenses increased to $ 487 . 6  million in 2004  from $ 407 . 1  million in 2003 . The increase in selling expenses as a percentage of revenue is due in part to higher costs associated with our employed sales representatives in China. We currently pay approximately 8 % to 10 % of local revenue in additional labor costs, including unemployment and benefits to our sales representatives in China. The increase in selling expenses as a percent of revenue was also due to a short-term increase in distributor incen- tives in Japan in the fourth quarter of 2004 . This increase in incentives resulted from the implementation of new components to our compensation plan in this market while certain existing components were transitioned out over several months. Completion of this transition will positively impact selling expenses as a percentage of revenue going forward. We expect selling expenses as a percentage of revenue to be slightly lower in 2005  compared to 2004 , due in part also to our continued expansion of the BioPhotonic Scanner program, as no commissions are paid on the lease revenue from these machines. 

## General and administrative expenses 

General and administrative expenses as a percentage of revenue decreased slightly to 29 . 3 % in 2004  from 29 . 4 % in 2003 . General and administrative expenses increased to $ 333 . 3  million in 2004  from $ 289 . 9  million in 2003 . The U.S. dollar increase during 2004  in general and administrative expenses was primarily due to the incremental costs associated with significantly larger retail operations in China versus the prior year, stronger foreign currencies against the U.S. dollar, and higher distributor convention expenses. We anticipate incurring expenses of approximately $ 6 . 5  million in 2005  for our global distributor convention versus $ 10 . 5  million in 2004  relating to our global distributor convention and Japan dis- tributor convention. General and administrative expenses will also be negatively impacted in 2005  by new accounting rules requiring us to begin expensing stock-based compensation granted to employees starting in the third quarter of 2005 . Had 

