Autodesk 2006 Annual Report Download - page 82

Cost of Revenues
Increase
(decrease)
compared to
prior
fiscal year
Increase
compared to
prior
fiscal year
Fiscal 2006 $ percent Fiscal 2005 $ percent Fiscal 2004
(in millions)
Cost of revenues:
License and other ................... $157.8 $ 5.3 3% $152.5 $19.8 15% $132.7
Maintenance ........................ 13.1 (3.9) (23)% 17.0 1.6 10% 15.4
$170.9 $ 1.4 1% $169.5 $21.4 14% $148.1
As a percentage of net revenues ........ 11% 14% 16%
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 costs of fulfilling service contracts.
Direct material and overhead charges include the cost of hardware sold (mainly workstations manufactured by
SGI and IBM for the Media and Entertainment 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 slightly in dollar amount during fiscal 2006, as compared to
fiscal 2005, due to higher direct material, overhead and royalty expenses for licensed technology embedded in
our products, all of which result from increased volumes. These increases were partially offset by a reduction
in amortization of purchased technology and capitalized software. The increase in cost of license and other
revenues during fiscal 2005, as compared to fiscal 2004, was primarily due to increased volume and changes
in product mix and slightly higher royalty expenses.
Cost of maintenance revenues includes direct costs of our subscription program, amortization of capitalized
software and overhead charges. The decrease in cost of maintenance revenues during fiscal 2006, as compared
to fiscal 2005, was due primarily to the cessation of amortization for an information technology system supporting
our subscription program. The amortization reduction was partially offset by incremental direct program costs
incurred as part of the growth of the subscription program. The increase in cost of maintenance revenues during
fiscal 2005, as compared to fiscal 2004, was primarily due to incremental direct program costs incurred as part
of the expansion of the subscription program.
Overall cost of revenues continues to decline as a percentage of net revenues due to the amount of fixed
costs that are not directly impacted by the growth in our sales volumes as well as productivity measures in
distribution and order management. However, despite this trend, we expect the cost of revenues as a percentage
of net revenues to increase in future periods as a result of recording stock-based compensation expense beginning
in fiscal 2007, as required by SFAS 123R. Absent stock-based compensation expense, we expect cost of revenues
as a percentage of net revenues to remain relatively consistent with fiscal 2006. Cost of revenues, at least over
the near term, are affected 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 and new customer
support offerings.
Marketing and Sales
Increase
compared to
prior
fiscal year
Increase
compared to
prior
fiscal year
Fiscal 2006 $ percent Fiscal 2005 $ percent Fiscal 2004
(in millions)
Marketing and sales ................... $553.8 $91.9 20% $461.9 $68.7 17% $393.2
As a percentage of net revenues ........ 36% 37% 41%
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
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