Autodesk 2007 Annual Report Download - page 118

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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, new customer support offerings and the impact of expensing
employee stock-based compensation as required under SFAS 123R. Absent stock-based compensation
expense, we expect cost of revenues as a percentage of net revenues to remain relatively consistent with
fiscal 2007.
Marketing and Sales
Increase
compared to
prior
fiscal year
Increase
compared to
prior
fiscal year
Fiscal 2007 $ % Fiscal 2006 $ % Fiscal 2005
As Restated (1) As Restated (1)
(in millions)
Marketing and sales . . . . . . . . . . . . . . . . . . . $696.1 $140.1 25% $556.0 $91.3 20% $464.7
As a percentage of net revenues . . . . . . . . 38% 36% 38%
(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.
Marketing and sales expenses include salaries, dealer and sales commissions, bonus, travel and
facility costs for our marketing, sales, 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. Marketing and sales expense from the beginning of fiscal 2007 also includes stock-based
compensation expense for stock awards granted to marketing and sales employees.
The increase of marketing and sales expenses during fiscal 2007, as compared to fiscal 2006, was
due primarily to a $55.8 million increase in employee-related costs driven by increased marketing and
sales headcount, $41.9 million of stock-based compensation expense under SFAS 123R, and $29.6 million of
increased marketing and promotion costs related to product launches, trade shows, branding, and demand
generation. Marketing and sales expense for fiscal 2007 also included $3.8 million in one-time ESPP bonus
payments incurred in connection with our voluntary stock option review. Marketing and sales headcount
increased as a result of organic growth as well as the acquisition of Alias.
The increase of marketing and sales expenses during fiscal 2006, as compared to fiscal 2005, was
due primarily to $56.5 million of increased marketing and promotion costs related to product launches,
trade shows and branding and $14.3 million of higher employee-related costs reflecting increased
headcount, which were partially offset by a reduction in commissions and bonus accruals, and an increase
in information technology costs.
We expect to continue to invest in marketing and sales of our products to develop market
opportunities, to promote our competitive position and to strengthen our channel support. As a result,
we expect marketing and sales expenses to continue to be significant, both in absolute dollars and as a
percentage of net revenues.