Autodesk 2007 Annual Report Download - page 117

57
2007 Annual Report
Net revenues for the Media and Entertainment Segment increased during fiscal 2006, as compared
to fiscal 2005, primarily from revenue increases in our Animation business line due to new seats and
maintenance revenues derived from 3ds Max. Net revenues from our Advanced Systems business line
increased from $110.4 million during fiscal 2005 to $112.3 million during fiscal 2006. This increase resulted
from growth in the sales of our Linux-based Advanced Systems Products, which were offset in part by
recent declines in Advanced Systems sales on the SGI platform.
Cost of Revenues
Increase
(decrease)
compared to
prior
fiscal year
Increase
(decrease)
compared to
prior
fiscal year
Fiscal 2007 $ % Fiscal 2006 $ % Fiscal 2005
As Restated (1) As Restated (1)
(in millions)
Cost of revenues:
License and other. . . . . . . . . . . . . . . . . . $207.9 $49.9 32% $158.0 $ 5.3 3% $ 152.7
Maintenance. . . . . . . . . . . . . . . . . . . . . . 8.7 (4.4) (34)% 13.1 (3.9) (23)% 17.0
$ 216.6 $ 45.5 27% $ 171.1 $ 1.4 1% $169.7
As a percentage of net revenues . . . . . . 12% 11% 14%
(1) See the “Explanatory Note” immediately preceding Part I, Item 1 and Note 2, “Restatement of
Consolidated Financial Statements,” in the Notes to Consolidated Financial Statements of this
Form 10-K.
Cost of license and other revenues includes direct material and overhead charges, royalties,
amortization of purchased technology, hosting costs, labor costs of fulfilling service contracts and order
processing and, beginning at the start of fiscal 2007, stock-based compensation expense under SFAS 123R.
Direct material and overhead charges include the cost of hardware sold (mainly workstations manufactured
by IBM and SGI 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 during fiscal 2007, as compared to fiscal 2006, due to
higher amortization of purchased technology resulting from recent acquisitions, stock-based compensation
expense under SFAS 123R, and an increase in our allowance for excess and obsolete inventory, which
together represented 1% of revenues. The increase in cost of license and other revenues during fiscal 2006,
as compared to fiscal 2005, was primarily due to higher direct material, overhead and royalty expenses
for licensed technology embedded in our products, all of which resulted from increased volumes, partially
offset by a reduction in amortization of purchased technology and capitalized software.
Cost of maintenance revenues includes direct costs of fulfilling our subscription contracts as well as
indirect overhead charges. The decrease in cost of maintenance revenues during fiscal 2007, as compared
to fiscal 2006, was due primarily to the cessation of amortization for an information technology system
supporting our Subscription Program, which became fully amortized during the second quarter of fiscal
2006. The amortization reduction was partially offset by incremental direct program costs incurred as part
of the growth of our Subscription Program. The decrease in cost of maintenance revenues during fiscal
2006, as compared to fiscal 2005, was due primarily to the cessation of amortization for our 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.