Autodesk 2002 Annual Report Download - page 24

We expect to continue to invest in marketing and sales of our products, to develop market opportunities and
to promote our competitive position. Accordingly, we expect marketing and sales expenses to continue to be
significant, 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 depreciation of computer equipment used in software
development. Research and development expenses were $168.6 million in fiscal 2002 compared to $170.5
million in the prior fiscal year. General reductions in spending were partially offset by higher employee related
costs, efforts associated with our location services initiatives and research and development costs incurred by
RedSpark, prior to its dissolution in October 2001.
Research and development costs were $170.5 million in fiscal 2001 compared to $164.0 million in fiscal
2000. The higher expenditures in fiscal 2001 were primarily due to additional spending by acquired businesses,
offset in part by lower facilities costs.
We expect that research and development spending will continue to be significant in fiscal 2003 as we
continue to support product development efforts by our market groups.
General and Administrative. General and administrative expenses include our information systems,
finance, human resources, legal and other administrative operations. General and administrative expenses were
14 percent of net revenues in fiscal 2002 and fiscal 2001. Higher employee-related costs were offset by lower
professional fees and depreciation costs.
General and administrative expenses were 14 percent in fiscal 2001 compared to 16 percent in fiscal 2000.
The lower percentage in fiscal 2001 was primarily due to lower employee-related spending and lower spending
related to information systems.
We currently expect that in the coming year general and administrative expenses, as a percentage of net
revenues, will remain generally consistent with the level experienced in fiscal 2002.
Amortization of goodwill and purchased intangibles. Amortization of goodwill and purchased intangibles
was $20.9 million in fiscal 2002, $26.5 million in fiscal 2001 and $30.6 million in fiscal 2000. The steady decline
between years was due to some intangibles becoming fully amortized. Of the $20.9 million fiscal 2002
amortization expense, $19.9 million related to goodwill amortization. Beginning in fiscal 2003, goodwill will no
longer be amortized. See “Recently Issued Accounting Standards” for further discussion.
Restructuring and other. During fiscal 2002 Autodesk recognized $33.6 million of restructuring and other
charges. These charges resulted from restructuring activities ($24.5 million), in-process research and
development expenses related to the acquisition of Media 100 ($3.2 million), the wind-down costs associated
with the dissolution of RedSpark ($3.6 million), and a goodwill write-off of $2.3 million. The write-off of
goodwill primarily related to an acquired GIS business and resulted from a strategic decision to abandon the
underlying product line.
The restructuring costs, which were part of a formal exit plan approved by our Board of Directors during the
second quarter of fiscal 2002, were in connection with our effort to reduce operating expense levels. During that
same quarter, we reduced our revenue estimates for the remainder of fiscal 2002. As a result of the restructuring
we expect to realize immediate pretax savings of $6.0 million per quarter and increased cash flows of $4.0
million per quarter. These savings are expected to last for the next several quarters and the pretax savings will be
reflected in each on-going cost and expense line item in the consolidated statements of income. Both the pretax
and cash flow savings will be re-invested in other parts of the business.
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