Autodesk 2008 Annual Report Download

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Annual Report
Fiscal Year 2008
Notice of  Annual Meeting and Proxy Statement

Table of contents

  • Page 1
    Notice of 2008 Annual Meeting and Proxy Statement Annual Report Fiscal Year 2008

  • Page 2

  • Page 3
    ... created 3D solutions for industrial design and manufacturing, architecture, civil and structural engineering, construction, as well as media and entertainment. Today, we stand as the world's leader in 3D software-and we're still growing strong. Fiscal 2008 was another successful year for Autodesk...

  • Page 4
    ... purchasing maintenance under our subscription program. There are many benefits when customers renew maintenance annually, such as freeing channel partners to focus their efforts on new customers. Increasing our maintenance base also creates a more predictable revenue stream for Autodesk, partially...

  • Page 5
    ... of 3D modeling solutions. Our Inventor family of products is still the world's best-selling 3D mechanical design software. AutoCAD Mechanical software also posted very strong year-over-year growth. x Media & Entertainment revenue increased 10 percent to $259 million, compared to fiscal 2007. This...

  • Page 6
    ...we changed the future of design with the introduction of AutoCAD software. This represented a truly disruptive, and democratizing, technology. In stage two we made the move to 3D digital models and developed a portfolio of industry-specific products to address the needs of particular market segments...

  • Page 7
    ...the Board of Directors, I thank our customers, employees, channel partners, and investors for another successful year. Autodesk has come a long way in 25 years and we look forward to leading the design revolution for the next 25 years and beyond. Carl Bass Chief Executive Officer and President CEO...

  • Page 8
    ... Year Ended January 31, 2008 Fiscal Year Ended January 31, 2007 GAAP EPS ...SFAS 123R stock-based compensation expense ...Employee tax reimbursements related to stock option review ...Investment impairment ...Litigation accrual...Amortization of developed technology ...Amortization of customer...

  • Page 9
    ... to attend Autodesk's 2008 Annual Meeting of Stockholders to be held on Thursday, June 12, 2008 at 2:00 p.m., Pacific time, at our principal executive offices, 111 McInnis Parkway, San Rafael, California 94903. At the Annual Meeting, you will be asked to: 1. 2. 3. Elect 10 directors; Ratify the...

  • Page 10

  • Page 11
    NOTICE OF 2008 ANNUAL MEETING OF STOCKHOLDERS Time and Date Place Thursday, June 12, 2008 at 2:00 p.m., Pacific time. Autodesk's principal executive offices, located at: 111 McInnis Parkway, San Rafael, California 94903. (1) To elect 10 directors to serve for the ensuing year and until their ...

  • Page 12

  • Page 13
    ... Directors' Option Plan ...Federal Tax Aspects ...Participation in the Plan ...CORPORATE GOVERNANCE ...Corporate Governance Guidelines and Code of Business Conduct ...Stock Ownership Guidelines ...Independence of the Board of Directors ...Board Meetings and Board Committees ...Compensation Committee...

  • Page 14

  • Page 15
    ... delivery, please follow the instructions provided on your proxy card or voting instruction card. Q: Where is the Annual Meeting? A: The Annual Meeting will be held at Autodesk's principal executive offices, located at 111 McInnis Parkway, San Rafael, California 94903. The telephone number...

  • Page 16
    .... As of the Record Date, there were 223,433,440 shares of Common Stock outstanding and entitled to vote at the Annual Meeting. No shares of Autodesk's Preferred Stock were outstanding. Q: How many shares must be present or represented to conduct business at the Annual Meeting? A: The presence of the...

  • Page 17
    ..., signing, dating and returning the proxy card in the enclosed, postage pre-paid envelope, or by using the Internet voting site or the toll-free telephone number listed on the proxy card and Notice. Proxy cards submitted by mail must be received by the time of the meeting in order for your shares to...

  • Page 18
    ... record, you may change your vote by (1) filing with Autodesk's General Counsel, prior to your shares being voted at the Annual Meeting, a written notice of revocation or a duly executed proxy card, in either case dated later than the prior proxy card relating to the same shares, or (2) by attending...

  • Page 19
    ... a timely manner. In order to be included in the proxy statement for the 2009 annual meeting of stockholders, stockholder proposals must be received by Autodesk's General Counsel no later than December 29, 2008, and must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange...

  • Page 20
    ... A: Autodesk's principal executive offices are located at 111 McInnis Parkway, San Rafael, California 94903. Any written requests for additional information, additional copies of the proxy materials and 2008 Annual Report, notices of stockholder proposals, recommendations for candidates to the Board...

  • Page 21
    ...Intuit, Inc. Executive Vice President and General Manager, Sales and Marketing Group, and Chief Sales and Marketing Officer, Intel Corporation Independent Consultant Chairman of the Board, McAfee, Inc. Founder and Partner, Emerging Company Partners, LLC 1992 2006 1992 1993 1988 2000 2007 Elizabeth...

  • Page 22
    ... 2007. Previously, he was the Chief Technology Innovation Officer of Intuit, Inc. He was Vice President and Director of the Solutions and Services Research Center at HPLabs from 2000 to 2005. Sean M. Maloney has been Executive Vice President and General Manager, Sales and Marketing Group, and Chief...

  • Page 23
    ... Ms. Bartz and Mr. Bass to serve as members of the Company's Board of Directors for as long as such individuals are employed by the Company. See "Corporate Governance" and "Executive Compensation-Compensation of Directors" below for additional information regarding the Board of Directors. 9 Proxy...

  • Page 24
    ... registered public accountants can reasonably provide, including statutory audits and services rendered in connection with SEC filings. The fiscal year 2007 fees include approximately $1.4 million for audit services related to the Company's voluntary stock option review. The fiscal year 2008 fees...

  • Page 25
    ...serve as members of our Board of Directors. The Plan was amended and restated to: • • Increase the number of shares of Company common stock ("Shares") reserved for issuance thereunder by 600,000 Shares; Address certain potential tax consequences under Section 409A of the Internal Revenue Code of...

  • Page 26
    ... being elected or appointed to our Board of Directors for the first time, each non-employee director is currently granted an Option to purchase 50,000 shares of Common Stock (the "Initial Grant"). Each Initial Grant vests and becomes exercisable in three annual installments of 34 percent, 33 percent...

  • Page 27
    ... Option to purchase 20,000 shares of Common Stock on the date of each annual meeting of stockholders (the "Annual Grant"), provided that such director has served on the Board of Directors for at least six full months prior to that date and remains a member of the Board of Directors on that date...

  • Page 28
    ... cash dollar amount in the form of restricted stock, which shall vest on the date of the next annual meeting of stockholders, subject to continued service on the Company's Board of Directors. The number of Shares that may currently be issued as restricted stock under the Plan after its amendment in...

  • Page 29
    ... at the time the participant recognizes such income (for example, the exercise of a nonqualified stock option). Participation in the Plan Each new non-employee member of the Board of Directors receives an Initial Grant to purchase 50,000 shares of Common Stock on the date of the first meeting of the...

  • Page 30
    ... or Code of Ethics for Senior Executive and Financial Officers that are required to be disclosed by the rules of the SEC or The Nasdaq Stock Market. Stock Ownership Guidelines Our directors and officers are encouraged to be Autodesk stockholders through their participation in our stock option plans...

  • Page 31
    ... director under the listing standards of The Nasdaq Stock Market. The Compensation and Human Resources Committee reviews compensation and benefits for our executives and has authority to grant stock options to executive officers and non-executive employees under our stock plans. Because options...

  • Page 32
    The Compensation and Human Resources Committee held 10 meetings during fiscal 2008. The Compensation and Human Resources Committee has adopted a written charter approved by the Board of Directors, which is available on the Company's website at www.autodesk.com under "Investors-Corporate Governance."...

  • Page 33
    ...consider recommendations for candidates to the Board of Directors from stockholders. Stockholder recommendations for candidates to the Board of Directors must be directed in writing to Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903, Attention: General Counsel, and must include the...

  • Page 34
    ... the Company's 2007 Annual Meeting of Stockholders. Contacting the Board of Directors Communications from stockholders to the non-employee directors should be addressed to the Lead Director as follows: Autodesk Inc., c/o General Counsel, 111 McInnis Parkway, San Rafael, California 94903, Attention...

  • Page 35
    ...our executive officers for the achievement of strategic and financial corporate goals and individual performance that ultimately enhance stockholder value. This objective provides the guiding principles for compensation decisions made by the Compensation and Human Resources Committee of the Board of...

  • Page 36
    ... Officers. Certain executives such as our CEO, Senior Vice President of Human Resources, Vice President of Compensation and Benefits, and others from Autodesk's Human Resources, Finance, Legal, and Investor Relations organizations may assist and support the Compensation Committee. These employees...

  • Page 37
    ...group are listed below. These companies all have headquarters located in the San Francisco Bay Area with the exception of BMC Software, with headquarters in Houston, Texas. Adobe Systems BEA Systems BMC Software Cadence Design eBay Electronic Arts Elements of Executive Compensation Programs Autodesk...

  • Page 38
    ... components of our executive compensation programs. Actual base salaries for executive officers are set annually by the Compensation Committee, typically at the March meeting. Promotion or equity adjustments may be approved at other quarterly meetings. In March 2007, the Compensation Committee...

  • Page 39
    ... Salary) Carl Bass, Chief Executive Officer and President ...Carol Bartz, Executive Chairman ...Al Castino, Senior Vice President and Chief Financial Officer ...George M. Bado, Executive Vice President Worldwide Sales and Services ...Jan Becker, Senior Vice President Human Resources ...• Actual...

  • Page 40
    ... of Autodesk's fiscal year 2008 compensation program. This component is intended to direct executive attention to the importance of sustained, long-term revenue growth and profitability. In addition, stock options and other equity awards are required to compete effectively for talent in the software...

  • Page 41
    ...place on superior performance and achievement. Each of our Named Executive Officers has approximately one half of his or her annual cash compensation contingent on corporate, divisional and individual performance. For fiscal year 2008, the base pay and cash incentive components for our CEO were each...

  • Page 42
    Pay Mix - Annual Compensation Carl Bass, Chief Executive Officer and President Carol A. Bartz, Executive Chairman of the Board of Directors Alfred J. Castino, Senior Vice President and Chief Financial Officer George M. Bado, Executive Vice President, Worldwide Sales and Services Jan Becker, ...

  • Page 43
    ...grants to those executive officers subject to the stock ownership guidelines described below. Our 2006 and 2008 Employee Stock Plans limit the use of incentive stock options (ISOs) because of the heavier financial burden they place on the Company. However, because ISOs provide special tax advantages...

  • Page 44
    ... date of grant. These CEO Award grants were awarded to 300 employees below the vice president level by a special nomination process to recognize outstanding achievements. • • • Stock Ownership Guidelines for Executive Officers The Board of Directors believes that stock ownership by executive...

  • Page 45
    ... Internal Revenue Code, which allow certain payments under the plan to be deductible for federal income tax purposes. • • Post-Employment Obligations Employment Agreements Two of our Named Executive Officers have negotiated employment agreements with the Company: Carl Bass, our CEO, and Carol...

  • Page 46
    ... benefits simply for consummating a change in control of the Company. Compensation Committee Report The Compensation and Human Resources Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management...

  • Page 47
    ... to Consolidated Financial Statements in our fiscal year 2008 Annual Report on Form 10-K filed on March 28, 2008. These amounts do not correspond to the actual value that will be realized by the Named Executive Officers upon exercise or sale of such awards. Non-Equity Incentive Plan Compensation-Non...

  • Page 48
    ...(a) Carol A. Bartz, ...2008 Executive Chairman(a)(b) 2007 Alfred J. Castino, ...2008 Senior Vice President and Chief 2007 Financial Officer George M. Bado, ...2008 Executive Vice President, 2007 Worldwide Sales and Services(c) Jan Becker, ...2008 Senior Vice President, Human 2007 Resources 500...

  • Page 49
    ... compensation program. The following table presents information concerning grants of plan-based awards to each of the Named Executive Officers during the fiscal year ended January 31, 2008: All Other Option Awards: Number of Estimated Future Payouts Under Securities Exercise or Base Grant Date...

  • Page 50
    ... and re-priced option award. Outstanding Equity Awards at 2008 Fiscal Year End The following table presents information concerning unexercised options for each Named Executive Officer outstanding as of January 31, 2008. This table includes options granted under the 2006 Employee Stock Plan and the...

  • Page 51
    ... during the fiscal year ended January 31, 2008. Option Awards Number of Shares Acquired on Value Realized on Exercise (#) Exercise ($)(a) Name of Executive Officer (a) Reflects the difference between (i) the market price of Autodesk Common Stock at the time of exercise on the exercise date and (ii...

  • Page 52
    ... employment on account of good reason, as cause and good reason are defined in the Program, the executive officer will receive, upon execution of a release and one-year non competition agreement An amount equal to the executive officer's annual base compensation and average annual bonus, payable...

  • Page 53
    ... 12 months. In the event Ms. Bartz's employment is terminated by the Company without cause or if Ms. Bartz resigns for good reason, Ms. Bartz will receive (i) the continued health care coverage discussed above, and (ii) immediate vesting of all outstanding, unvested stock options. Upon a change of...

  • Page 54
    ...2008($) Compensation: Base Salary(1) ...$ - Executive Incentive Plan (EIP)(2) ...800,000 Stock Options(3) ...- Benefits and perquisites: Health Insurance(4) ...- Disability Income(5) ...- Accidental Death or Dismemberment(6) ...- Life Insurance(7) ...- Accrued Vacation Pay ...73,846 Total Executive...

  • Page 55
    ...31/2008($) 1/31/2008($) 1/31/2008($) 1/31/2008($) Disability on 1/31/2008($) Death on 1/31/2008($) Compensation: Base Salary(1) ...$ - Executive Incentive Plan(2) ...80,000 Sales commissions and bonus(8) ...155,279 Stock options(3) ...- Benefits and perquisites: Health Insurance(4) ...Disability...

  • Page 56
    ... in Control) column are the sum of the fiscal 2008 bonus already earned under the Executive Incentive Plan and a severance bonus equal to the average of the last three years' bonuses under the Autodesk Change in Control Program. (3) Stock Options: For Mr. Castino, Mr. Bado and Ms. Becker, amounts...

  • Page 57
    ... is a director on such date. If elected, cash compensation is accrued monthly and paid quarterly, in arrears. For fiscal 2008, all of the non-employee directors elected to receive 100 percent of their annual fees as restricted stock. Additionally, the Company's 2000 Directors' Option Plan provides...

  • Page 58
    ... of forfeitures related to service-based vesting conditions. The assumptions used in the valuation of these awards are set forth in Note 1, "Business and Summary of Significant Accounting Policies," in the Notes to Consolidated Financial Statements in our fiscal year 2008 Annual Report on Form 10...

  • Page 59
    ... and fair values of restricted stock awarded in fiscal 2008, as discussed above: Restricted Stock Grant Date Fair Value of Stock Awards ($) Options Grant Date Fair Value of Option Awards ($) Name Number of Shares (#) Grant Date Number of Shares (#) Exercise Price Per Share ($) J. Hallam Dawson...

  • Page 60
    ... shares, all of which have been previously granted. Executive officers and members of the Board of Directors were not eligible to participate in this plan. The Nonstatutory Stock Option Plan was intended to help the Company attract and retain outstanding individuals in order to promote the Company...

  • Page 61
    ... Stock. (1) Unless otherwise indicated in their respective footnote, the address for each listed person is c/o Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903. (2) The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Exchange...

  • Page 62
    ...,498 shares. The address of Wellington Management Company, LLP is 75 State Street, Boston, Massachusetts 02109. (6) As of December 31, 2007, the reporting date of ClearBridge Advisors LLC's most recent filing with the SEC pursuant to Section 13(g) of the Exchange Act filed on February 14, 2008, 11...

  • Page 63
    ... class of our equity securities ("10 percent Stockholders"), to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the SEC and The Nasdaq Stock Market. Such executive officers, directors and 10 percent Stockholders are also required by SEC rules to furnish us with...

  • Page 64
    ...systems of internal control and the audit process; and by monitoring the Company's compliance with applicable laws, regulations and policies. The Audit Committee reviewed and discussed the audited financial statements for fiscal year 2008 with management and Ernst & Young LLP, Autodesk's independent...

  • Page 65
    ... that your shares be represented at the Annual Meeting, regardless of the number of shares that you hold. Therefore, you are urged to execute and return the accompanying proxy in the enclosed envelope at your earliest convenience. THE BOARD OF DIRECTORS April 28, 2008 San Rafael, California 51...

  • Page 66
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  • Page 67
    ... bid, if no sales were reported), as quoted on such system or exchange (or, if more than one, on the exchange with the greatest volume of trading in the Company's Common Stock) on the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; (ii...

  • Page 68
    ... return to the Plan if the persons to whom they were originally issued receive the benefits of ownership of such Shares (other than voting), as such concept is interpreted from time to time by the Securities and Exchange Commission in the context of Rule 16b-3. Shares used to pay the exercise price...

  • Page 69
    ... of the Company's next Annual Meeting for a total vesting period of approximately one (1) year, provided that the Director continues to serve on the Board on such date. (v) In the event that any Option granted under the Plan would cause the number of Shares subject to outstanding Options plus the...

  • Page 70
    ... by services rendered by the Director (except as otherwise determined by the Board and set forth in the applicable Restricted Stock agreement); and (2) Subject to Sections 9(d) and 11(c), Restricted Stock shall vest on the date of the following year's Annual Meeting of Stockholders of the Company...

  • Page 71
    ... in effect for a term of ten (10) years unless sooner terminated under Section 12 of the Plan. 7. Option Exercise Price and Consideration. (a) Exercise Price. The per Share exercise price for Optioned Stock shall be 100% of the Fair Market Value per Share on the date of grant of the Option. (b) Form...

  • Page 72
    ...is prior to the date the stock certificate is issued, except as provided in Section 11 of the Plan. (c) Removal of Restrictions. Shares of Restricted Stock covered by each Restricted Stock Award made under the Plan shall be released from escrow as soon as practicable after the last day of the Period...

  • Page 73
    ..., Asset Sale or Change of Control. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Option and Restricted Stock Award, the number of Shares which have been authorized for issuance under the Plan but as...

  • Page 74
    ... the absence of such consent, such Options and Restricted Stock shall remain in full force and effect as if this Plan had not been amended or terminated. 13. Time of Granting Options or Restricted Stock Awards. The date of grant of an Option or Restricted Stock Award shall, for all purposes, be the...

  • Page 75
    ...Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 16. Agreements. Options and Restricted Stock Awards shall be evidenced by written agreements in such form as the Board...

  • Page 76
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  • Page 77
    ...94-2819853 (I.R.S. employer Identification No.) 111 McInnis Parkway, San Rafael, California (Address of principal executive offices) 94903 Registrant's telephone number, including area code: (415) 507-5000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of...

  • Page 78
    ...93 Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accounting Fees and Services...

  • Page 79
    ...third-party developers and users, which provides us with a broad reach into volume markets. Our reseller network is extensive and provides our customers with global resources for the purchase and support of our products as well as resources for effective and cost-efficient training services. We have...

  • Page 80
    ... executive office is located at 111 McInnis Parkway, San Rafael, California 94903 and the telephone number at that address is (415) 507-5000. Our internet address is www.autodesk.com. The information posted on our website is not incorporated into this Annual Report on Form 10-K. Our Annual Report...

  • Page 81
    ... most advanced technology for building information modeling ("BIM"), AutoCAD-based design and documentation productivity software, dynamic civil modeling and collaborative project management. BIM, a paradigm for building design, documentation and construction, enables users to exchange and analyze...

  • Page 82
    ...'s revenue. The Autodesk Inventor products deliver AutoCAD Mechanical software for 2D drawing and detailing, Inventor software, and data management software in one solution. Inventor software is a 3D mechanical design creation tool that provides users a 3D assembly-centric solid modeling system...

  • Page 83
    ... 3ds Max Autodesk 3ds Max software provides 3D modeling, animation and rendering solutions that enable game developers, design visualization professionals and visual effects artists to create realistic digital images, animations and complex scenes and to communicate abstract or complex mechanical...

  • Page 84
    ... 2008, 2007 and 2006, respectively. No other distributor or reseller accounted for 10% or more of our revenue. Our customer-related operations are divided into three geographic regions, the Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific, and are supported by global marketing and sales...

  • Page 85
    ... product training, sales training classes, the Internet and direct telephone support. We also provide online support directly to our customers through our Subscription Program. There are also a number of user group forums in which customers are able to share information. EDUCATIONAL PROGRAMS...

  • Page 86
    ...Subscription Program. To a lesser extent, deferred revenue consists of deferred license and other revenue derived from Autodesk Buzzsaw and Autodesk Constructware, consulting services and deferred license sales. Backlog also includes current software license product orders which have not yet shipped...

  • Page 87
    ...reasonable terms and conditions, to support continued development and sales of our products and services. Some of these licensing arrangements require or may require royalty payments and other licensing fees. The amount of these payments and fees may depend on various factors, 11 2008 Annual Report

  • Page 88
    ... Segment software products involves duplication of the software media and the printing of user manuals. The purchase of media and the transfer of the software programs onto media for distribution to customers are performed by us and by licensed subcontractors. Media for our products include...

  • Page 89
    ...impact on our business and are discussed in our Notes to Consolidated Financial Statements: Date of closing Company Details January 2008 Hanna Strategies Holdings, Inc. Hanna Strategies, a company that formerly performed ("Hanna Strategies") software development services for us, will be integrated...

  • Page 90
    ... Board Executive Vice President, Worldwide Sales and Services Senior Vice President, Human Resources and Corporate Real Estate Senior Vice President and Chief Financial Officer Senior Vice President of Autodesk AEC Senior Vice President, Worldwide Marketing Senior Vice President Strategic Planning...

  • Page 91
    ... the Media and Entertainment Division from October 2002 to March 2007. Prior to joining Autodesk, Mr. Petit was Vice President of Operations for Aptilon Health, an online interactive marketing company. There is no family relationship among any of our directors or executive officers. 15 2008 Annual...

  • Page 92
    ...-Autodesk's 3D model-based design products, (Revit products, Autodesk Inventor products, AutoCAD Civil 3D, and NavisWorks products). BIM (Building Information Modeling)-BIM describes a model-based technology linked with a database of project information, and is the process of generating and managing...

  • Page 93
    ... component of our growth strategy is to convert our customers of AutoCAD and AutoCAD LT to related vertical industry products and to our 3D model-based design products such as the Autodesk Inventor products, the Revit products, AutoCAD Civil 3D and NavisWorks products. Should sales of AutoCAD...

  • Page 94
    ... revenue from sales of licenses of AutoCAD software, including products based on AutoCAD that serve specific vertical markets, upgrades to those products and products that are interoperable with AutoCAD. As such, any factor adversely affecting sales of these products, including the product release...

  • Page 95
    ... the members of our distribution channel, or achieve anticipated levels of sell-through, our ability to generate net revenue will be adversely affected. We sell our software products both directly to customers and through a network of distributors and resellers. Our ability to effectively distribute...

  • Page 96
    ... effect on our business, financial condition, results of operations, cash flows and the trading price for our securities. Three lawsuits have been filed against us and our current officers and certain of our current and former directors and officers relating to our historical stock option practices...

  • Page 97
    ... of transactions completed before such changes are effective. In particular, for fiscal 2007, we adopted Statement of Financial Accounting Standards No. 123R ("SFAS 123R") which requires us to record stock-based compensation charges to earnings for employee stock option grants using a fair-value...

  • Page 98
    ...our programs to retire major products, unexpected outcomes of matters relating to litigation, failure to achieve continued cost reductions and productivity increases, unanticipated changes in tax rates and tax laws, distribution channel management, changes in sales compensation practices, the timing...

  • Page 99
    ...and our websites for our development, marketing, operational, support and sales activities. We are continually investing resources to update and improve these systems and environments in order to meet the growing requirements of our business and customers. For example, in November 2007, we converted...

  • Page 100
    ... United States and internationally through our foreign subsidiaries. Our executive offices and corporate headquarters are located in leased office space in San Rafael, California. Our San Rafael facilities consist of 366,000 square feet under leases that have expiration dates ranging from December...

  • Page 101
    ... lawsuits were filed against Autodesk and certain of the Company's current and former directors and officers relating to its historical stock option practices and related accounting. On November 20, 2006, the Company and certain of its current and former members of the Board were sued in United...

  • Page 102
    ...COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NASDAQ Global Select Market under the symbol ADSK. The following table lists the high and low sales prices for each quarter in the last two fiscal years. High Low Fiscal 2008 First...

  • Page 103
    ...by the Board of Directors in December 2007, which authorized the repurchase of an additional 20.0 million shares. These plans, announced in December 2004 and 2007, respectively, do not have fixed expiration dates. Company Stock Performance Comparison of Five Year Cumulative Total Stockholder Return...

  • Page 104
    ...are not included in this Form 10-K; the financial data for the year ended January 31, 2004 is derived from unaudited consolidated financial statements, which are not included in this Form 10-K. 2008 Fiscal year ended January 31, 2007 2006 2005 (In millions, except per share data) Unaudited 2004 For...

  • Page 105
    ... into volume markets. Our reseller network is extensive and provides our customers with global resources for the purchase and support of our products as well as resources for effective and cost efficient training services. We have a significant number of registered third-party developers, creating...

  • Page 106
    ... sales process than our traditional upgrade process and reduces volatility in our revenue. Moving customers to our Subscription Program ensures that we have more customers on current versions of our products, increases customer loyalty and increases the likelihood that they will migrate to our 3D...

  • Page 107
    ... license and other revenue in the current period. The remainder, which relates to incentives on our Subscription Program, reduces deferred revenue in the period the subscription transaction is billed, which results in a reduction to maintenance revenue over the maintenance contract period. Partner...

  • Page 108
    ... We currently have $149.4 million of net deferred tax assets, mostly arising from net operating losses including stock option deductions taken in fiscal years prior to fiscal 2007, tax credits, non-deductible accruals and timing differences for purchased technologies and capitalized software, offset...

  • Page 109
    ...adopted SFAS 123R using the modified prospective transition method, which requires the application of the accounting standard as of February 1, 2006, the first day of our fiscal year 2007. Our consolidated financial statements for fiscal 2008 and 2007 reflect our adoption of SFAS 123R. In accordance...

  • Page 110
    ...and an increase in maintenance revenue from our Subscription Program of 31%. Net revenue for our 2D products and 3D modelbased design products increased 13%, and 26%, respectively, during fiscal 2008, as compared to the prior fiscal year. A critical component of our growth strategy is to continue to...

  • Page 111
    ... Strategies. We completed fiscal 2008 with a higher deferred revenue balance and higher accounts receivable balance as compared to the previous fiscal year. Our deferred revenue balance at January 31, 2008 included $433.8 million of customer maintenance contracts related to our Subscription Program...

  • Page 112
    ... to Fiscal 2007 Net Revenue License and Other Revenue License and other revenue are comprised of two components: all forms of product license revenue and other revenue. Product license revenue includes revenue from the sale of new seats, revenue from the Autodesk Upgrade Program and revenue from the...

  • Page 113
    ... design products (Revit products, Autodesk Inventor products, AutoCAD Civil 3D, and NavisWorks software). The increase in new seat revenue was driven primarily by higher average sales prices per seat and volume growth in both our 2D design and 3D model-based design products. The positive effect of...

  • Page 114
    ...million, respectively, related to current software license product orders which have not yet shipped at the end of each respective fiscal year. Deferred revenue consists primarily of deferred maintenance revenue from our Subscription Program. To a lesser extent, deferred revenue consists of deferred...

  • Page 115
    ...Aggregate backlog at January 31, 2007 and January 31, 2006 was $395.8 million and $283.5 million, respectively, of which $17.0 million for both fiscal years related to current software license product orders which have not yet shipped at the end of each respective fiscal year. 39 2008 Annual Report

  • Page 116
    ...period of the prior fiscal year, increasing 11% in absolute dollars between the periods. Net revenue for our 3D model-based design products (Autodesk Inventor products, Revit products and AutoCAD Civil 3D) increased 41% during fiscal 2007 compared to fiscal 2006. Total sales of 3D model-based design...

  • Page 117
    ...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...

  • Page 118
    ... order processing, dealer and sales commissions and overhead charges. These expenses also include costs of programs aimed at increasing revenue, such as advertising, trade shows and expositions, and various sales and promotional programs designed for specific sales channels and end users. Marketing...

  • Page 119
    ... include salaries, benefits, and bonuses for our finance, human resources and legal personnel as well as professional fees for legal and accounting services, overhead costs, stock-based compensation expense under SFAS 123R for stock awards granted to general and administrative employees, litigation...

  • Page 120
    ...the timing of the derecognition of previously recognized tax benefits, and describes the methods for classifying and disclosing the liabilities within the financial statements for any unrecognized tax benefits. The provisions of FIN 48 were effective as of the beginning of our 2008 fiscal year, with...

  • Page 121
    ... the Notes to Consolidated Financial Statements. Liquidity and Capital Resources Our primary source of cash is from the sale of our products. Our primary use of cash is payment of our operating costs which consist primarily of employee-related expenses, such as compensation and benefits, as well as...

  • Page 122
    ... plans as of January 31, 2008. See Note 4, "Deferred Compensation," in the Notes to Consolidated Financial Statements for further discussion. Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we use foreign currency option contracts...

  • Page 123
    ... 31, 2008, we maintained two active stock option plans for the purpose of granting stock options to employees and non-employee members of Autodesk's Board of Directors ("Board"): the 2006 Employee Stock Plan ("2006 Plan"), which is available only to employees, and the 2000 Directors' Option Plan, as...

  • Page 124
    ... entitled "Executive Compensation," in our Proxy Statement for our fiscal year 2008 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission not later than 120 days after the fiscal year ended January 31, 2008. In addition to our stock option plans, our employees are...

  • Page 125
    ...our investment portfolio to manage interest rate risk. We place our investments in instruments that meet high credit quality standards, as specified in our investment policy guidelines, which limits the amount of credit exposure to any one issue, issuer or type of instrument. 49 2008 Annual Report

  • Page 126
    ... FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AUTODESK, INC. CONSOLIDATED STATEMENTS OF INCOME Fiscal year ended January 31, 2008 2007 2006 (in millions, except per share data) Net revenue: License and other ...Maintenance ...Total net revenue ...Costs and expenses: Cost of license and other revenue...

  • Page 127
    ...January 31, 2007 2008 (in millions) ASSETS Current assets: Cash and cash equivalents ...Marketable securities ...Accounts receivable, net ...Deferred income taxes ...Prepaid expenses and other current assets ...Total current assets ...Marketable securities ...Computer equipment, software, furniture...

  • Page 128
    AUTODESK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal year ended January 31, 2008 2007 2006 (in millions) Operating Activities Net income ...Adjustments to reconcile net income to net cash provided by operating activities: Charge for acquired in-process research and development ......

  • Page 129
    ...Repurchase and retirement of common shares ...Balances, January 31, 2006 ...Common shares issued under stock option and stock purchase plans ...Compensation expense related to stock options ...Reclassifications required by SFAS 123R ...Tax benefits from employee stock plans . . Comprehensive income...

  • Page 130
    ... customers progressive business solutions through powerful technology products and services. The Company helps customers in the architectural, engineering, construction, manufacturing, geospatial mapping and digital media markets. The Company's state of the art software products enable its customers...

  • Page 131
    ... 31, 2008 are classified as non-current marketable securities; for additional information see Note 12, "Financial Instruments." Autodesk determines the appropriate classification of its marketable securities at the time of purchase and re-evaluates such classification as of each balance sheet date...

  • Page 132
    ... in the Americas; Europe, Middle East and Africa; and Asia/Pacific regions. Autodesk performs ongoing evaluations of its customers' financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. In fiscal 2008, 2007 and 2006, total sales to...

  • Page 133
    ... the period of general market availability of the products are capitalized and generally amortized over a one year period, if material. Autodesk had no capitalized software development costs at January 31, 2008 and January 31, 2007. Purchased Technologies, Net Purchased technologies are amortized...

  • Page 134
    ..., 2007 and 2006. The changes in the carrying amount of goodwill during the years ended January 31, 2008 and 2007 are as follows: Design Solutions Media and Entertainment Total Balance as of January 31, 2006 ...Constructware acquisition ...Other acquisitions, purchase accounting adjustments, effect...

  • Page 135
    ... Year Ended January 31, 2008 Fiscal Year Ended January 31, 2007 Cost of license and other revenue ...Marketing and sales ...Research and development ...General and administrative ...Stock-based compensation expense related to employee options and employee stock purchases ...Tax benefit ...Stock...

  • Page 136
    ... of outstanding options. The Company estimates the expected term of share purchases under the ESP Plan based upon each future scheduled purchase date. Effective after the dividend on the Company's common stock for the fourth quarter of fiscal 2005, which was paid in April 2006, Autodesk discontinued...

  • Page 137
    ... number of versions being upgraded. An existing customer also has the option to upgrade to a discipline-specific or 3D product, which generally has a higher price, for a premium fee; this is referred to as a crossgrade. Autodesk's product license revenue from distributors and resellers is generally...

  • Page 138
    ... effect of stock options and the weighted average number of common shares outstanding. Autodesk has no potentially dilutive securities other than stock options. Recently Issued Accounting Standards In December 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial...

  • Page 139
    ...of options to non-employee members of Autodesk's Board of Directors. At January 31, 2008, 0.31 million shares were available for future issuance. The 2000 Plan will expire in March of 2010. Options granted under the above mentioned plans vest over periods ranging from one to four years and generally...

  • Page 140
    AUTODESK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) A summary of stock option activity for the fiscal year ended January 31, 2008 is as follows: Number of Shares (in thousands) Weighted average price per share Options outstanding at January 31, 2007 ...Granted ...Exercised ......

  • Page 141
    ...the Audit Committee of the Board of Directors was conducting a voluntary review of Autodesk's historical stock option granting practices and related accounting issues. Due to the this review, Autodesk was not current with its reporting obligations under the Securities Exchange Act of 1934 until June...

  • Page 142
    ... STATEMENTS-(Continued) Equity Compensation Plan Information The following table summarizes the number of outstanding options granted to employees and directors, as well as the number of securities remaining available for future issuance under these plans as of January 31, 2008 (number of securities...

  • Page 143
    ... ...- - (12.5) Non-deductible In-Process research and development charge ...- - 3.1 Other ...2.1 2.9 1.0 $113.8 $ 76.8 $ 58.1 67 2008 Annual Report Pursuant to footnote 82 of SFAS 123R, the Company did not record fiscal year 2008 and 2007 excess stock option tax benefits of $86.1 million and $42...

  • Page 144
    ... TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Significant components of Autodesk's deferred tax assets and liabilities are as follows: January 31, 2008 2007 Research and development credit carryforwards ...$ 83.2 $ 58.7 Tax loss carryforwards ...10.7 82.1 Foreign tax credit carryforwards ...44...

  • Page 145
    ... fiscal 2007, Autodesk recognized the following income tax benefits: • In December 2006, Congress passed the Tax Relief and Health Care Act of 2006 which resulted in the reinstatement of the Federal research and development credit to the beginning of Autodesk's fiscal 2007 year. Autodesk recorded...

  • Page 146
    ... addition, the company files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from fiscal year 2000 to 2008. Note 4. Deferred Compensation At January 31, 2008, Autodesk had marketable securities totaling $39.8 million, of which $26.7 million related to investments in...

  • Page 147
    ... 2006. This fee is reduced as time lapses during the five-year contract period. Autodesk has certain royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a dollar amount per unit shipped or a percentage of the underlying revenue...

  • Page 148
    ... lawsuits were filed against Autodesk and certain of the Company's current and former directors and officers relating to its historical stock option practices and related accounting: on November 20, 2006, the Company and certain of its current and former members of the Board were sued in United...

  • Page 149
    ... this program as of January 31, 2008. In fiscal 2008, 2007, and 2006, Autodesk repurchased its common stock through open market purchases. The number of shares acquired and the timing of the purchases are based on several factors, including general market conditions, the trading price of Autodesk...

  • Page 150
    ... net income per share amounts: Fiscal Year Ended January 31, 2008 2007 2006 Numerator: Numerator for basic and diluted net income per share-net income ...Denominator: Denominator for basic net income per share-weighted average shares ...Effect of dilutive common stock options ...Denominator for...

  • Page 151
    ..., editing, finishing and visual effects, compositing, media mastering and encoding technology. Both reportable segments distribute their respective products primarily through authorized resellers and distributors and, to a lesser extent, through direct sales to end-users. 75 2008 Annual Report

  • Page 152
    ... 1, "Business and Summary of Significant Accounting Policies." Information concerning the operations of Autodesk's reportable segments is as follows: Fiscal year ended January 31, 2008 2007 2006 Net revenue: Design Solutions ...$1,895.1 $1,594.6 $1,344.5 Media and Entertainment ...258.6 234.6 172...

  • Page 153
    ... FINANCIAL STATEMENTS-(Continued) Information regarding Autodesk's operations by geographic area is as follows: Fiscal year ended January 31, 2008 2007 2006 Net revenue: U.S...$ 682.0 $ 617.3 $ 528.6 Other Americas ...121.5 117.2 94.6 Total Americas ...Europe, Middle East and Africa ...Asia...

  • Page 154
    ...of less than three months. Autodesk does not enter into any foreign exchange derivative instruments for trading or speculative purposes. Autodesk's forward contracts, which are not designated as hedging instruments under Statement of Financial Accounting Standards No. 133, "Accounting for Derivative...

  • Page 155
    ...on the specific identification method. Proceeds from the sale and maturity of marketable securities were $799.1 million in fiscal 2008, $325.2 million in fiscal 2007 and $204.0 million in fiscal 2006. The following table shows the gross unrealized losses and fair value of Autodesk's investments with...

  • Page 156
    ... of Robobat technology will enable Autodesk to develop structural analysis and detailing solutions that leverage the information at the heart of building information modeling ("BIM") from design to fabrication. It also complements Autodesk's current structural engineering software offerings and...

  • Page 157
    ... of Autodesk's 3D model-based design software by coordinating design information from multiple sources. Management's preliminary allocation of the purchase price consideration, based on a valuation of the acquired assets and liabilities, is as follows: NavisWorks: Developed technologies (6 year...

  • Page 158
    ... 2006, Autodesk acquired Alias Systems Holdings, Inc., a privately held developer of 3D graphics technology for total cash consideration of $196.8 million. In addition, Autodesk also assumed all outstanding unvested options to purchase shares of Alias common stock, which converted into options...

  • Page 159
    ... FINANCIAL STATEMENTS-(Continued) Management's allocation of the purchase price, based on a valuation of acquired assets and liabilities, is as follows: Alias: Developed technologies (6 year useful life) ...$ 34.8 Customer relationships (7 year useful life) ...29.8 Trade name (6 year useful...

  • Page 160
    ... property and related tax effects. Fiscal Year Ended January 31, 2006 (unaudited) Total net revenues ...Net income ...Basic net income per share ...Diluted net income per share ...Other Acquisitions $1,632.2 329.4 1.44 1.33 In addition, during the year ended January 31, 2008, Autodesk completed...

  • Page 161
    ... Financial Statements. Note 14. Related Parties In April 2006, Autodesk acquired a 28% ownership in Hanna Strategies, a privately-held software development firm with operations in the U.S. and China, for cash consideration of $12.5 million. Autodesk also acquired an option to purchase the...

  • Page 162
    ... financial information for fiscal 2008 and 2007 is as follows: 2008 1st quarter 2nd quarter 3rd quarter 4th quarter Fiscal year Net revenue: License and other ...Maintenance ...Total net revenue ...Costs and expenses: Cost of license and other revenue ...Cost of maintenance revenue ...Marketing...

  • Page 163
    ... of a review by the Internal Revenue Service. Autodesk also recognized an income tax benefit of $5.6 million during the fourth quarter of fiscal 2007 from the reinstatement of the Federal research and development credit through the passage of the Tax Relief and Health Care Act of 2006 by Congress...

  • Page 164
    ...the information set forth therein. As discussed in Note 1, "Business and Summary of Significant Accounting Policies," and Note 3, "Income Taxes," in the Notes to the Consolidated Financial Statements, Autodesk, Inc. changed its method of accounting for stock-based compensation as of February 1, 2006...

  • Page 165
    ... audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained...

  • Page 166
    ... Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to Autodesk's management, including our Chief Executive Officer and our Chief Financial Officer...

  • Page 167
    ... Governance-Corporate Governance Guidelines and Code of Business Conduct" and "Corporate Governance- Board Meetings and Board Committees" in our Proxy Statement. Information regarding the Registrant's executive officers is set forth at the end of Item 1 of Part I of this Annual Report on Form 10...

  • Page 168
    ... statement schedule of Autodesk, Inc., for the fiscal years ended January 31, 2008, 2007 and 2006, is filed as part of this Report and should be read in conjunction with the Consolidated Financial Statements of Autodesk, Inc. Schedule II Valuation and Qualifying Accounts Schedules not listed...

  • Page 169
    ... 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. AUTODESK, INC. By: /s/ CARL BASS Carl Bass Chief Executive Officer and President Dated: March 28, 2008 93 2008 Annual Report

  • Page 170
    ... and Chief Financial Officer (Principal Financial Officer) Vice President and Chief Accounting Officer (Principal Accounting Officer) Executive Chairman of the Board /s/ ALFRED J. CASTINO Alfred J. Castino /s/ ANDREW D. MILLER Andrew D. Miller /s/ CAROL A. BARTZ Carol A. Bartz /s/ MARK...

  • Page 171
    Signature Title /s/ LARRY W. WANGBERG Larry W. Wangberg Director /s/ STEVEN M. WEST Steven M. West Director 95 2008 Annual Report

  • Page 172
    ...Stock Purchase Plan Forms of Agreement (incorporated by reference to Exhibit 10.2 filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 2005) Registrant's 2000 Directors' Option Plan (incorporated by reference to Exhibit 10.1 filed with the Registrant's Current...

  • Page 173
    ... Registrant's Current Report on Form 8-K filed on August 23, 2007) List of Subsidiaries Consent of Independent Registered Public Accounting Firm (Ernst & Young LLP) Power of Attorney (contained in the signature page to this Annual Report) Certification of Chief Executive Officer pursuant to Rule 13a...

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  • Page 175
    ... have each informed the Board of Directors that they will not seek re-election at the 2008 Annual Meeting of Stockholders Notice of Annual Meeting Autodesk, Inc. 111 McInnis Parkway, San Rafael, CA 94903, USA, June 12, 2008, 2:00 p.m. Pacific Time Investor Relations For more information, including...

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