Adobe 2003 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2003 Adobe annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 107

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107

37
Operating Expenses
Research and Development
Year Ended
November 28, 2003
% Change
2002 to 2003
Year Ended
November 29, 2002
% Change
2001 to 2002
Year Ended
November 30, 2001
Expenses..................................... 277.0 13% $ 246.1 10% $ 224.1
Percentage of total revenues ... 21% 21% 18%
Research and development expenses consist principally of salary and benefit expenses for software developers,
contracted development efforts, related facilities costs, and expenses associated with computer equipment used in
software development.
Research and development expenses increased during fiscal 2003 as compared to fiscal 2002. Of the 13% total
increase in research and development expenses during fiscal 2003, 7 percentage points of the increase were due to
compensation and related benefits associated with headcount growth and higher incentive compensation and 2
percentage points were due to an accrual for major product releases. The remaining 4 percentage points of the
increase were due to various individually insignificant items.
Research and development expenses increased in fiscal 2002 compared to fiscal 2001, primarily due to higher
compensation and related benefits associated to headcount growth from the acquisition of Accelio to support product
development efforts.
We believe that investments in research and development, including the recruiting and hiring of software
developers, are critical to remain competitive in the marketplace and are directly related to continued timely
development of new and enhanced products. We will continue to focus on long-term opportunities available in our
end markets and make significant investments in the development of our desktop application and server-based
software products.
Sales and Marketing
Year Ended
November 28, 2003
% Change
2002 to 2003
Year Ended
November 29, 2002
% Change
2001 to 2002
Year Ended
November 30, 2001
Expenses..................................... 423.4 11% $ 380.4 (6)% $ 403.7
Percentage of total revenues ... 33% 33% 33%
Sales and marketing expenses include salary and benefit expenses, sales commissions, travel expenses, and
related facilities costs for our sales, marketing, customer support, order management and order fulfillment personnel.
Sales and marketing expenses also include the costs of programs aimed at increasing revenue, such as advertising,
trade shows, public relations and other market development programs.
Sales and marketing expenses increased during fiscal 2003 as compared to fiscal 2002. Of the 11% total
increase in sales and marketing expenses, 9 percentage points of the increase were due to compensation and related
benefits associated with headcount growth, higher incentive compensation and higher sales commissions. The
remaining 2 percentage points of the increase were due to various individually insignificant items.
Sales and marketing expenses decreased in fiscal 2002 compared to fiscal 2001, primarily due to decreased
marketing and advertising spending.