Adobe 2004 Annual Report Download - page 38

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38
Operating Expenses
Research and Development
Fiscal
2004
% Change
2004 to 2003
Fiscal
2003
% Change
2003 to 2002 Fiscal
2002
Expenses ................................... $ 311.3 12% $ 277.0 13% $ 246.1
Percentage of total revenues.. 19% 21% 21%
Research and development expenses consist principally of compensation 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 8% during fiscal 2004 as compared to fiscal 2003 due to
compensation and related benefits associated with headcount growth and higher incentive compensation. The
remaining increase in research and development expenses for fiscal 2004 was due to various individually
insignificant items.
Research and development expenses increased 7% during fiscal 2003 as compared to fiscal 2002 due to
compensation and related benefits associated with headcount growth and higher incentive compensation and
increased 2% due to an accrual for major product releases. The remaining increase in research and development
expenses during fiscal 2003 was due to various individually insignificant items.
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
Fiscal
2004
% Change
2004 to 2003
Fiscal
2003
% Change
2003 to 2002 Fiscal
2002
Expenses ................................... $ 521.1 23% $ 423.4 11% $ 380.4
Percentage of total revenues.. 31% 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 and order management. 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 12% during fiscal 2004 as compared to fiscal 2003 due to
compensation and related benefits associated with headcount growth and higher incentive compensation. Sales and
marketing expenses also increased 9% due to increased marketing spending related to overall marketing efforts to
further increase revenues. The remaining increase in sales and marketing expenses during fiscal 2004 was due to
various individually insignificant items.
Sales and marketing expenses increased 9% during fiscal 2003 as compared to fiscal 2002 due to compensation
and related benefits associated with headcount growth and higher incentive compensation. The remaining increase in
sales and marketing expenses during fiscal 2003 was due to various individually insignificant items.