Autodesk 2005 Annual Report Download - page 40

International sales accounted for approximately 63% of our net revenues in fiscal 2004 as compared to 61%
in the prior fiscal year. Ignoring the effects of changes in foreign currencies during fiscal 2004, international sales
would have remained consistent at 61% of net revenues.
Cost of Revenues
Increase
compared to
prior
fiscal year
Increase
(decrease)
compared to
prior
fiscal year
Fiscal 2005 $ percent Fiscal 2004 $ percent Fiscal 2003
(in millions)
Cost of revenues:
License and other ................... $152.4 $19.7 15% $132.7 $(3.0) (2)% $ 135.7
Maintenance ........................ 17.0 1.6 10% 15.4 5.3 52% 10.1
$169.4 $21.3 14% $148.1 $ 2.3 2% $145.8
As a percentage of net revenues ........ 14% 16% 18%
Cost of license and other revenues includes direct material and overhead charges, royalties, amortization
of purchased technology and capitalized software, hosting costs and the labor cost of 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 increased 15% or $19.7 million during fiscal 2005, as compared to fiscal
2004, due primarily to increased volume and changes in product mix and slightly higher royalty expenses for
licensed technology embedded in our products. Cost of license and other revenues decreased 2% or $3.0 million
during fiscal 2004, as compared to fiscal 2003, due primarily to changes in product mix.
Cost of maintenance revenues includes direct costs of our subscription program, amortization of capitalized
software and overhead charges. Cost of maintenance revenues increased 10% during fiscal 2005, or $1.6 million
as compared to fiscal 2004 due primarily to incremental direct program costs incurred as part of the expansion
of the subscription program. Cost of maintenance revenues increased 52% during fiscal 2004, or $5.3 million as
compared to fiscal 2003 primarily due to higher amortization ofcapitalized software related to underlying support
systems and incremental direct program costs incurred as part of the expansion of the subscription program.
In the future, cost of revenues as a percentage of net revenues is likely to continue to be impacted by the
volume and mix of product sales, changing consulting and hosted service costs, software amortization costs,
royalty rates for licensed technology embedded in our products, new customer support offerings and the
geographic distribution of sales. In addition, we expect the impact of expensing employee stock-based
compensation as required under SFAS 123R to further increase cost of sales in future periods.
Marketing and Sales Expenses
Increase
compared to
prior
fiscal year
Increase
compared to
prior
fiscal year
Fiscal 2005 $ percent Fiscal 2004 $ percent Fiscal 2003
(in millions)
Marketing and sales ................... $461.9 $68.7 17% $393.2 $35.5 10% $357.7
As a percentage of net revenues ........ 37% 41% 43%
Marketing and sales expenses include salaries, dealer and sales commissions, bonus, travel and facility costs
for our marketing, sales, order processing, dealer training and support personnel and overhead charges. These
expenses also include costs of programs aimed at increasing revenues, such as advertising, trade shows and
expositions, and various sales and promotional programs designed for specific sales channels and end users.
The increase of $68.7 million between fiscal years 2005 and 2004 was due primarily to approximately $40.2
million of increased commission, bonus and other incentive compensation expenses related to the increased
28