Autodesk 2004 Annual Report Download - page 34

International sales accounted for approximately 61% of our net revenues in fiscal 2003 as compared to
66% in the prior fiscal year.
Costs and Expenses
Autodesk previously classified Information Technology and other corporate service costs that benefit
the entire organization as General and Administrative expenses in our Consolidated Statements of Income.
During the fourth quarter of fiscal 2004, Autodesk re-evaluated its cost allocation methodology and
reclassified these costs to other functional areas of the business that benefit from these services. As a result,
fiscal 2004 General and Administrative expenses have been reduced by $46.4 million and fiscal 2004 total
Cost of Revenues, Marketing and Sales and Research and Development have been increased by $5.1 million,
$23.6 million and $17.7 million, respectively. This reclassification has no impact on Autodesk’s income from
operations or net income. Fiscal 2003 and 2002 balances have been reclassified to conform to the 2004
presentation. For a more detailed discussion, see Note 1, “Business and Significant Accounting Policies,” in
the Notes to the Consolidated Financial Statements.
Cost of Revenues
Increase
(decrease)
compared to
prior
fiscal year
Increase
(decrease)
compared to
prior
fiscal year
Fiscal 2004 $ percent Fiscal 2003 $ percent Fiscal 2002
(in millions)
Cost of revenues:
License and other ................ $132.7 $(3.0) (2)% $135.7 $(13.6) (9)% $149.3
Maintenance .................... 15.4 5.3 52% 10.1 1.8 22% 8.3
$148.1 $ 2.3 2% $145.8 $(11.8) (7)% $157.6
As a percentage of net revenues .... 16% 18% 17%
Cost of license and other revenues includes direct material and overhead charges, royalties,
amortization of purchased technology and capitalized software and the labor cost of processing orders and
fulfilling service contracts. Direct material and overhead charges include the cost of hardware sold
(mainly workstations manufactured by SGI for the Discreet Segment), costs associated with transferring
our software to electronic media, printing of user manuals and packaging materials and shipping and
handling costs.
Cost of license and other revenues decreased 2% during fiscal 2004, or $3.0 million, as compared to fiscal
2003 due primarily to reduced royalty expense and changes in product mix. Cost of license and other
revenues in fiscal year 2003 was $13.6 million lower than fiscal year 2002 due primarily to the mix of product
sales and overall lower revenue between years.
Cost of maintenance revenues includes direct program costs, amortization of capitalized software and
overhead charges. Cost of maintenance revenues increased $5.3 million for fiscal 2004 as compared to fiscal
2003 primarily due to higher amortization of capitalized software related to underlying support systems and
incremental direct program costs incurred as part of the expansion of the subscription program. Cost of
maintenance revenues in fiscal 2003 increased $1.8 million as compared to fiscal 2002 due primarily to
additional amortization of capitalized software related to underlying support systems.
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.
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