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Table of Contents
Operating Expenses, GAAP and Non-GAAP
Information about our operating expenses with and without stock-based compensation is as follows (table in millions):
Costs of revenues without stock-based compensation are non-GAAP financial measures. See—“Non-GAAP Financial Measures” below.
Cost of Revenues
Our cost of revenues were $218.7 in 2007, $123.4 in 2006 and $65.2 in 2005, representing year-over-year increases of $95.3 or 77% in
2007 and $58.2 or 89% in 2006. The increases in our cost of revenues were primarily attributable to increased direct support, professional
services personnel and third-party professional services costs to support the increased services revenues. These costs accounted for $74.4 and
$43.3 of the increase in 2007 and 2006, respectively. Included in the cost of revenues is the amortization of capitalized software development
costs which were $36.4 in 2007, $22.3 in 2006 and $6.2 in 2005, representing year-over-year increases of $14.1 in 2007 and $16.1 in 2006.
44
For the Year Ended December 31,
2007
2006
2005
GAAP
Stock-
Based
Compen-
sation
Non-
GAAP,
As
Adjusted
GAAP
Stock-
Based
Compen-
sation
Non-
GAAP,
As
Adjusted
GAAP
Stock-
Based
Compen-
sation
Non-
GAAP,
As
Adjusted
Operating expenses:
Cost of license revenues
(1)
$
80.9
$
(0.6
)
$
80.3
$
59.2
$
(0.1
)
$
59.1
$
40.3
$
—
$
40.3
Cost of services revenues
137.8
(6.1
)
131.7
64.2
(2.4
)
61.8
24.9
(1.3
)
23.6
Research and development
285.9
(42.9
)
243.0
148.3
(26.3
)
122.0
72.6
(14.7
)
57.9
Sales and marketing
450.2
(26.2
)
424.0
238.3
(12.0
)
226.3
125.0
(5.3
)
119.7
General and administrative
135.7
(16.6
)
119.1
69.6
(10.4
)
59.2
30.8
(5.8
)
25.0
In
-
process research and development
—
—
—
3.7
—
3.7
—
—
—
Total operating expenses
$
1,090.5
$
(92.4
)
$
998.1
$
583.3
$
(51.2
)
$
532.1
$
293.6
$
(27.1
)
$
266.5
Percentage of revenues:
Cost of license revenues
6.1
%
6.1
%
8.4
%
8.4
%
10.4
%
10.4
%
Cost of services revenues
10.4
9.9
9.1
8.8
6.4
6.1
Research and development
21.6
18.3
21.1
17.3
18.8
15.0
Sales and marketing
34.0
32.0
33.9
32.1
32.3
30.9
General and administrative
10.2
9.0
9.9
8.4
8.0
6.5
In
-
process research and development
—
—
0.5
0.5
—
—
Total operating expenses
82.3
%
75.3
%
82.9
%
75.5
%
75.9
%
68.9
%
(1) Included in the cost of license revenues is the amortization of capitalized software development costs of $36.4 in 2007, $22.3 in 2006 and
$6.2 in 2005.