Autodesk 2013 Annual Report Download - page 108

Recently Issued Accounting Standards
See Part II, Item 8, Note 1, “Business and Summary of Significant Accounting Policies,” in the Notes to Consolidated
Financial Statements for a full description of recent accounting pronouncements, including the expected dates of adoption and
estimated effects on results of operations and financial condition, which is incorporated herein by reference.
Overview of Fiscal 2013
Fiscal Year
Ended As a % of Net
Revenue
Fiscal Year
Ended As a % of Net
RevenueJanuary 31, 2013 January 31, 2012
(in millions)
Net Revenue $ 2,312.2 100% $ 2,215.6 100%
Cost of revenue 238.5 10% 229.1 10%
Gross Profit 2,073.7 90% 1,986.5 90%
Operating expenses 1,767.8 76% 1,630.9 74%
Income from Operations $ 305.9 13% $ 355.6 16%
We experienced mixed results in fiscal 2013. During fiscal 2013, as compared to fiscal 2012, net revenue increased 4%
and gross profit increased 4%, while income from operations decreased 14%. Contributing to the year over year increases in
revenue during fiscal 2013 were increases in revenue from maintenance and new seat license revenue. We experienced
increases in revenue for many of our major products, reportable segments and geographic areas during fiscal 2013 as compared
to the same period in the prior fiscal year. The reasons for these increases are discussed below under the heading "Results from
Operations."
Revenue from flagship products was 56% of total net revenue during fiscal 2013, an increase of 1% as compared to fiscal
2012. Revenue from suites was 30% of total net revenue for fiscal 2013, an increase of 16% as compared to fiscal 2012.
Revenue from new and adjacent products was 15% of total net revenue during the fiscal 2013, a decreased of 3% as compared
to fiscal 2012. We anticipate that, as our new and existing customers migrate from our stand-alone products, our revenue from
suites will increase as a percentage of revenue and that our revenue from our flagship and new and adjacent products will
decline as a percentage of revenue.
While net revenue increased $96.6 million or 4% for fiscal 2013, as compared to fiscal 2012, our operating expenses
increased $136.9 million or 8% for fiscal 2013. The increase in operating expenses was primarily due to higher employee
related costs and restructuring charges incurred in fiscal 2013 as a result of the Fiscal 2013 Plan. Similarly, income from
operations decreased 14% in fiscal 2013, as compared to fiscal 2012, and our total operating margin decreased from 16% for
fiscal 2012 to 13% for fiscal 2013 primarily due to higher employee related costs and restructuring charges during fiscal 2013.
We believe net revenue for fiscal 2014 will increase by approximately 6% compared to fiscal 2013. We anticipate fiscal
2014 operating margin will increase by approximately 455 to 480 basis points compared to fiscal 2013.
We generate a significant amount of our revenue in the U.S., Japan, Germany, Canada, and the United Kingdom. Our
revenue was negatively impacted from foreign exchange rate changes during fiscal 2013, as compared to fiscal 2012. Had
applicable exchange rates from fiscal 2012 been in effect during fiscal 2013 and had we excluded foreign exchange hedge gains
and losses from fiscal 2013, (“on a constant currency basis”), net revenue would have increased 5% compared to the prior
fiscal year. During fiscal 2013, total spend, defined as cost of revenue plus operating expenses, increased 8% both as reported
and on a constant currency basis compared to the prior fiscal year. Changes in the value of the U.S. dollar may have a
significant effect on net revenue, total spend and income from operations in future periods. We use foreign currency contracts
to reduce the exchange rate effect on a portion of the net revenue of certain anticipated transactions but do not attempt to
completely mitigate the impact of fluctuation of such foreign currency against the U.S. dollar.
We rely significantly upon major distributors and resellers in both the U.S. and international regions, including Tech Data
Corporation and its global affiliates (collectively, “Tech Data”). Tech Data accounted for 23% and 17% of our consolidated net
revenue during fiscal year 2013 and 2012, respectively. On October 27, 2011, Tech Data purchased certain assets of Mensch
und Maschine Software (“MuM”), which has been a distributor of our products in Europe. The acquisition concentrates
additional sales through Tech Data, which on a consolidated basis would have accounted for 21% of our net revenue for fiscal
years 2012 if the acquisition had taken place at the beginning of fiscal 2012.We believe our business is not substantially
36