Autodesk 2001 Annual Report Download - page 22

19
Autodesk, Inc. FY 01
protection locks in certain foreign markets, and cost of
service contracts.
When expressed as a percentage of net revenues, cost of
revenues were 16 percent in fiscal 2001 compared to
17 percent of net revenues in fiscal 2000. This difference
was primarily due to reduced royalty costs of $4.1 million
that resulted from the expiration of some of our royalty
arrangements in fiscal 2000 and reduced software amorti-
zation costs, offset in part by higher employee-related
expenses and professional fees.
Cost of revenues were 17 percent of net revenues in
fiscal 2000 as compared to 15 percent of net revenues in
fiscal 1999. This difference was primarily due to (1)
increases in royalties; (2) amortization of capitalized soft-
ware for AutoCAD 2000, which was introduced in fiscal
2000; and (3) the April 1999 acquisition of VISION*
Solutions, or VISION, which has relatively higher cost of
revenues as a percentage of net revenues than our other
products.
In the future, cost of revenues as a percentage of net rev-
enues will continue to be impacted by the mix of product
sales, software amortization costs, royalty rates for
licensed technology embedded in our products and the
geographic distribution of sales.
Marketing and Sales
Marketing and sales expenses include salaries, dealer and
sales commissions, travel and facility costs for our market-
ing, sales, dealer training and support personnel. These
expenses also include programs aimed at increasing rev-
enues,such as advertising,trade shows and expositions, as
well as various sales and promotional programs designed
for specific sales channels and end users.
Marketing and sales expenses were 34 percent of net rev-
enues in fiscal 2001 compared to 40 percent of net
revenues in the prior fiscal year.This difference was due to
lower employee-related expenses of approximately
$2.8 million and some $16.0 million less in advertising and
promotion costs related to fewer launches of new or
enhanced products.
Marketing and sales expenses were 40 percent of net rev-
enues in fiscal 2000 compared to 35 percent in fiscal 1999.
The increase was largely due to (1) increased advertising
and promotional costs associated with the launch of sev-
eral new and enhanced products introduced during
fiscal 2000; (2) higher employee costs; and (3) incremental
costs due to the acquisition of VISION.
We expect to continue to invest in marketing and sales of
our products, to develop market opportunities and to pro-
mote our competitive position. Accordingly, we expect
marketing and sales expenses to continue to be signifi-
cant, both in absolute dollars and as a percentage of net
revenues.
Research and Development
Research and development expenses consist primarily of
salaries and benefits for software engineers, contract
development fees and costs of computer equipment used
in software development. Research and development
expenses were $170.5 million in fiscal 2001 compared to
$164.0 million in the prior fiscal year. Lower facilities costs
were offset by additional spending by acquired
businesses.
Research and development costs were $164.0 million in
fiscal 2000 compared to $157.1 million in fiscal 1999. The
difference was primarily due to higher employee-related
costs; higher costs related primarily to the Design 2000
family of products and incremental costs due to the acqui-
sition of VISION.
We expect that research and development spending will
continue to be significant in fiscal 2002 as we continue to
support product development efforts by our market
groups.
General and Administrative
General and administrative expenses include our informa-
tion systems, finance, human resources, legal and other
administrative operations. General and administrative
expenses were 14 percent of net revenues in fiscal 2001 as
compared to 16 percent of net revenues in the prior fiscal
year. This difference was primarily due to lower employee-
related spending and lower spending related to
information systems.
General and administrative expenses were 16 percent of
net revenues in fiscal 2000 compared to 13 percent in
fiscal 1999. The difference was primarily due to higher
(1) employee-related expenses; (2) costs incurred to
ensure that our infrastructure was year 2000 compliant;
(3) consulting fees related to enhancing the information sys-
tems infrastructure; and (4) incremental costs related to
acquisitions. We currently expect that in the coming year
general and administrative expenses, as a percentage of net
revenues, will remain consistent with the level experienced
in fiscal 2001.
Amortization of Goodwill and Purchased
Intangibles
Amortization of goodwill and purchased intangibles was
$26.5 million in fiscal 2001, $30.6 million in fiscal 2000 and
$28.7 million in fiscal 1999. The difference between fiscal