Autodesk 2004 Annual Report Download - page 35

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Marketing and Sales Expenses
Increase
compared to
prior
fiscal year
Decrease
compared to
prior
fiscal year
Fiscal 2004 $ percent Fiscal 2003 $ percent Fiscal 2002
(in millions)
Marketing and sales ................ $393.2 $35.5 10% $357.7 $(10.2) (3)% $367.9
As a percentage of net revenues .... 41% 43% 39%
Marketing and sales expenses include salaries, dealer and sales commissions, travel and facility costs for
our marketing, sales, dealer training and support personnel and overhead charges. 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.
The increase of $35.5 million between fiscal years 2004 and 2003 was due primarily to increased
commission, bonus and other incentive compensation expenses of $21.3 million related to the increased
sales volume as well as higher marketing costs related to new product introductions.
The decrease of $10.2 million between fiscal years 2003 and 2002 was due primarily to lower dealer and
sales commissions of $4.6 million due to lower revenue, lower rent and occupancy charges of $1.4 million,
which resulted from cost saving initiatives, and lower professional services of $4.5 million.
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 Expenses
Increase
compared to
prior
fiscal year
Increase
compared to
prior
fiscal year
Fiscal 2004 $ percent Fiscal 2003 $ percent Fiscal 2002
(in millions)
Research and development ........ $209.3 $19.0 10% $190.3 $5.2 3% $185.1
As a percentage of net revenues .... 22% 23% 20%
Research and development expenses consist primarily of salaries and benefits for software engineers,
contract development fees, depreciation of computer equipment used in software development and
overhead charges.
The increase of $19.0 million between fiscal years 2004 and 2003 was due to higher bonus accruals
based on current financial performance, higher costs associated with localizing our products for different
markets worldwide and incremental development costs resulting from our acquisitions of Linius
Technologies and Via Development Corporation during the first quarter of fiscal 2004.
The increase of $5.2 million between fiscal years 2003 and 2002 was primarily due to incremental costs
resulting from our acquisitions of Revit Technology Corporation in April 2002 and CAiCE Software
Corporation in September 2002 and our continued funding of location based services and product lifecycle
management initiatives. Research and development expenses for fiscal year 2003 were offset by $3.6 million
of capitalized development costs mostly associated with AutoCAD 2004, which was released in March 2003.
We expect that research and development spending will continue to be significant in fiscal 2005 as we
continue to invest in product development.
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