Autodesk 2008 Annual Report Download - page 117

Net revenue for the Media and Entertainment Segment increased during fiscal 2007, as compared to fiscal
2006, primarily from revenue increases in our Animation business line, from both our January 2006 acquisition
of Alias and the introduction of new versions of 3ds Max and Maya products during the second quarter of fiscal
2007. Although net revenue from Advanced Systems sales did not increase significantly during fiscal 2007
compared to the same period in the prior fiscal year, such sales progressively improved during each quarter of
fiscal 2007 as a result of substantial progress made in the transition of our Advanced Systems product portfolio
from SGI hardware to PC-based hardware systems.
Cost of Revenue
Fiscal Year
Ended
January 31,
2008
Increase (decrease)
compared to
prior fiscal year
Fiscal Year
Ended
January 31,
2007
Increase (decrease)
compared to
prior fiscal year
Fiscal Year
Ended
January 31,
2006
$ % $ %
(in millions)
Cost of revenue:
License and other ............. $198.3 $(9.6) -5% $207.9 $49.9 32% $158.0
Maintenance ................. 8.6 (0.1) -1% 8.7 (4.4) -34% 13.1
$206.9 $(9.7) -4% $216.6 $45.5 27% $171.1
As a percentage of net revenue ...... 10% 12% 11%
Cost of license and other revenue includes direct material and overhead charges, labor costs of fulfilling
service contracts and order processing, royalties, amortization of purchased technology, and stock-based
compensation expense under SFAS 123R. Direct material and overhead charges include the cost of hardware
sold (mainly PC-based workstations for Advanced Systems in the Media and Entertainment Segment in fiscal
2008, and SGI hardware for Advanced Systems in the Media and Entertainment Segment in fiscal 2007 and
2006), 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 revenue decreased 5% during fiscal 2008, as compared to fiscal 2007, due
primarily to a shift in Advanced Systems from SGI hardware to PC-based hardware. The increase in cost of
license and other revenue during fiscal 2007, as compared to fiscal 2006, was primarily due to higher
amortization of purchased technology resulting from recent acquisitions and stock-based compensation expense
under SFAS 123R, which together represented 1% of revenue.
Cost of maintenance revenue includes costs of sales associated with maintenance under our Subscription
Program. Costs of maintenance revenue remained relatively flat during fiscal 2008 as compared to the prior fiscal
year. The decrease in cost of maintenance revenue 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 and which was retired from
operation in the third quarter of fiscal 2008. The amortization reduction was partially offset by incremental direct
program costs incurred as part of the growth of our Subscription Program.
Cost of revenue, at least over the near term, is affected by the volume and mix of product sales, changing
consulting costs, software amortization costs, royalty rates for licensed technology embedded in our products,
new customer support offerings and the effect of expensing employee stock-based compensation expense. We
expect cost of revenue to increase in absolute dollars, but remain relatively consistent as a percentage of net
revenue during fiscal 2009, as compared to fiscal 2008.
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2008 Annua
l Report