Autodesk 2000 Annual Report Download - page 20

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Autodesk, Inc. FY 00
Autodesk anticipates that research and development
spending will increase in fiscal 2001 as a result of
product development efforts by Autodesk’s market
groups and incremental personnel costs.
General and Administrative
General and administrative expenses include
Autodesk’s information systems, finance, human
resources, legal and other administrative operations.
As a percentage of net revenues, general and admin-
istrative expenses were 16 percent, 13 percent and
11 percent in fiscal 2000, 1999 and 1998, respectively.
The increases between years were primarily due
to higher (1) employee-related expenses, (2) costs
incurred to ensure that Autodesk’s infrastructure was
year 2000 compliant, (3) consulting fees related to
enhancing the information systems infrastructure,and
(4) incremental costs related to acquisitions.Autodesk
currently expects that in the coming year general and
administrative expenses, as a percentage of net reve-
nues, will remain relatively the same as in fiscal 2000.
Amortization of Goodwill and Purchased Intangibles
Amortization of goodwill and purchased intangibles
increased from $28.7 million in fiscal 1999 to $30.6 mil-
lion in fiscal 2000, primarily as a result of increased
amortization expense arising from the April 1999
acquisition of VISION. Amortization of goodwill and
purchased intangibles increased from $22.0 million in
fiscal 1998 to $28.7 million in fiscal 1999, primarily as
a result of the increased amortization expense arising
from the May 1998 acquisition of Genius and other
acquisitions that occurred during the middle of fiscal
1998. See “Business Combinations” below for addi-
tional discussion.
Nonrecurring Charges
Nonrecurring charges in fiscal 2000 ($34.7 million)
consisted primarily of Discreet and VISION acquisition-
related charges and a corporate restructuring that
occurred during the third quarter. As a result of the
restructuring, which involved the elimination of
approximately 350 positions and related office clo-
sures,Autodesk is currently realizing quarterly savings
of approximately $9.0 million. These savings are
expected to last through the end of fiscal 2001 and will
be reflected in each on-going cost and expense line
item in the consolidated statement of operations.The
savings will be offset over time by costs associated
with, among other things, recent acquisitions and
investments in related Internet entities.
Nonrecurring charges in fiscal 1999 ($19.7 million)
consisted primarily of Genius acquisition-related
charges and other charges that involved the consoli-
dation of certain development centers, write-off of
purchased technologies associated with these devel-
opment centers and the elimination of 87 positions in
Asia Pacific.The savings resulting from these activities
were offset by costs associated with new businesses.
Nonrecurring charges in fiscal 1998 ($26.8 million)
consisted primarily of Softdesk, Inc. (“Softdesk”),
D-Vision Systems,Inc.(“D-Vision”) and other acquisition-
related charges.These charges were offset by a gain on
the sale of Autodesk’s interest in a network technology
company and the reversal of certain lease-related
reserves related to Discreet’s 1996 restructuring.
For additional information regarding the nonrecurring
charges recorded over the past three fiscal years,
see Note 10. Nonrecurring Charges in the Notes to
Consolidated Financial Statements.
Litigation Accrual Reversal
In fiscal 1999, Autodesk reversed $18.6 million of
accruals associated with litigation matters. Of the
amount, $18.2 million related to final adjudication of
a claim involving a trade-secret misappropriation
brought by Vermont Microsystems, Inc.
Interest and Other Income
Interest and other income, net was $23.2 million,
$17.1 million and $11.7 million in fiscal 2000,1999 and
1998, respectively. The fiscal 1999 balance includes
Autodesk’s $2.7 million reversal of an interest accrual
resulting from the closure of the Vermont Microsystems
litigation matter, and a $1.3 million gain associated
with the sale of various technical programs and intan-
gible assets. Excluding these fiscal 1999 amounts, the
increases in interest and other income, net between
fiscal 2000 and 1999 and between fiscal 1999 and
1998 were largely due to increases in average cash
and marketable securities balances resulting from
cash provided by operating activities and common
stock issuances.
Provision for Income Taxes
Autodesk’s effective income tax rate, excluding the
impact of nonrecurring charges, was 32.0 percent,
36.6 percent and 38.3 percent in fiscal 2000, 1999 and
1998, respectively.The effective tax rate for fiscal 2000
is less than the federal statutory rate of 35 percent due
to the benefits associated with Autodesk’s foreign
earnings which are taxed at rates different from the
federal statutory rate,research credits and tax-exempt