Autodesk 2002 Annual Report Download - page 23

Net revenues for the Design Solutions Segment increased 10 percent in fiscal 2001 as compared to the prior
fiscal year. Net revenues from sales of GIS products increased to $97.5 million in fiscal 2001 from $71.0 million
in fiscal 2000. Net revenues from sales of Building Industry products increased to $57.6 million in fiscal 2001 as
compared to $51.2 million in fiscal 2000. Net revenues from sales of Manufacturing products increased to
$134.0 million in fiscal 2001 from $112.0 million in fiscal 2000. Net revenues from sales of Platform
Technology products increased to $454.0 million in fiscal 2001 from $440.2 million in fiscal 2000. These
increases resulted from greater demand for our products, especially Autodesk Inventor and primarily all GIS
product offerings. Sales of AutoCAD and AutoCAD upgrades, which are reflected in the net revenues for the
Platform Technology division, accounted for approximately 33 percent of our consolidated net revenues in fiscal
2001 and 37 percent of our consolidated net revenues in fiscal 2000.
The value of the U.S. dollar, relative to international currencies, had a negative impact on net revenues in
fiscal 2001 compared to fiscal 2000. International sales, including exports from the U.S., accounted for
approximately 64 percent of our net revenues in fiscal 2001 as compared to 65 percent in fiscal 2000.
Product returns, consisting principally of stock rotation, are recorded as a reduction of revenues. Over the
past three years, product returns as a percentage of revenues have ranged from 3 to 5 percent annually. We
anticipate that the level of product returns in future periods will continue to be impacted by channel inventory
levels, the timing of new product releases, as well as the quality and market acceptance of new products.
Cost of Revenues. Cost of revenues includes the cost of compact discs, cost of hardware sold (mainly
workstations manufactured by Silicon Graphics), costs associated with transferring Autodesk’s software to
electronic media, printing of user manuals and packaging materials, shipping and handling costs, royalties,
amortization of purchased technology and capitalized software, and cost of service contracts.
When expressed as a percentage of net revenues, cost of revenues was 16 percent in fiscal 2002 and fiscal
2001. Lower material costs, as a result of product mix, and lower software amortization costs were offset by
higher royalty expenses.
Cost of revenues were 16 percent of net revenues in fiscal 2001 as compared to 17 percent of net revenues
in fiscal 2000. This lower percentage in fiscal 2001 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
amortization costs, offset in part by higher employee-related expenses and professional fees.
In the future, cost of revenues as a percentage of net revenues is likely to continue to be impacted by the mix
of product sales, increased consulting and hosted service costs, software amortization costs, royalty rates for
licensed technology embedded in our products and the geographic distribution of sales. However, we expect
future cost of revenues as a percentage of net revenues to remain within an historical range of 16 to 20 percent.
Marketing and Sales. Marketing and sales expenses include salaries, dealer and sales commissions, and
travel and facility costs for our marketing, sales, dealer training and support personnel. These expenses also
include programs aimed at increasing revenues, 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 36 percent of net revenues in fiscal 2002 compared to 34 percent of net
revenues in the prior fiscal year. This difference was primarily due to higher employee-related expenses,
resulting from an increasing focus on direct sales to major accounts.
Marketing and sales expenses were 34 percent of net revenues in fiscal 2001 compared to 40 percent of net
revenues in fiscal 2000. This lower percentage in fiscal 2001 was partially due to lower employee-related
expenses of approximately $2.8 million and some $16.0 million less in advertising and promotion costs.
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