Adobe 2006 Annual Report Download - page 51

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51
Research and development expenses fluctuated due to the following:
% Change
2006 to 2005
% Change
2005 to 2004
Increased compensation and related benefits associated with headcount
growth related to the Macromedia acquisition, higher incentive
compensation, amortization of deferred stock compensation related to
the acquisition of Macromedia and stock-based compensation costs as
a result of adopting SFAS 123R at the beginning of fiscal 2006 ............
.
37%
—
Compensation and related benefits associated with headcount growth
and higher incentive compensation..........................................................
.
—
10%
Increased facility costs related to acquisition of Macromedia ....................
.
5 —
Increased use of contractors........................................................................
.
1 1
Increased repairs and maintenance .............................................................
.
1 —
Increased purchases of equipment and software licenses ...........................
.
1 2
Various individually insignificant items .....................................................
.
3 4
Total change............................................................................................
.
48% 17%
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
2006
% Change
2006 to 2005
Fiscal
2005
% Change
2005 to 2004 Fiscal
2004
Expenses.................................... $ 867.1 46% $ 593.3 14% $ 521.1
Percentage of total revenues .. 34% 30% 31%
Sales and marketing expenses primarily include salary and benefit expenses, sales commissions, travel
expenses and related facilities costs for our sales, marketing, order management and global supply chain
management 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 fluctuated due to the following:
% Change
2006 to 2005
% Change
2005 to 2004
Increased compensation and related benefits associated with headcount
growth related to the Macromedia acquisition, higher incentive
compensation, amortization of deferred stock compensation related to
the acquisition of Macromedia and stock-based compensation costs as
a result of adopting SFAS 123R at the beginning of fiscal 2006 ..........
33%
—
Compensation and related benefits associated with headcount growth
and higher incentive compensation........................................................
—
7%
Increased contractor costs......................................................................... 3 —
Increased professional fees ....................................................................... 3 —
Increased facility costs related to acquisition of Macromedia .................. 3 —
Increased marketing spending related to product launches and overall
marketing efforts to further increase revenues.......................................
4
4
Various individually insignificant items ................................................... — 3
Total change.......................................................................................... 46% 14%