Autodesk 2008 Annual Report Download - page 148

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Indemnifications
In the normal course of business, Autodesk provides indemnifications of varying scopes, including limited
product warranties and indemnification of customers against claims of intellectual property infringement made
by third parties arising from the use of its products or services. Autodesk accrues for known indemnification
issues if a loss is probable and can be reasonably estimated. Historically, costs related to these indemnifications
have not been significant, but because potential future costs are highly variable, Autodesk is unable to estimate
the maximum potential impact of these indemnifications on its future results of operations.
In connection with the purchase, sale or license of assets or businesses with third parties, Autodesk has
entered into or assumed customary indemnification agreements related to the assets or businesses purchased, sold
or licensed. Historically, costs related to these indemnifications have not been significant, but because potential
future costs are highly variable, Autodesk is unable to estimate the maximum potential impact of these
indemnifications on its future results of operations.
As permitted under Delaware law, Autodesk has agreements whereby it indemnifies its officers and
directors for certain events or occurrences while the officer or director is, or was, serving at Autodesk’s request
in such capacity. The maximum potential amount of future payments Autodesk could be required to make under
these indemnification agreements is unlimited; however, Autodesk has Directors’ and Officers’ Liability
insurance coverage that is intended to reduce its financial exposure and may enable Autodesk to recover a portion
of any future amounts paid. Autodesk believes the estimated fair value of these indemnification agreements in
excess of applicable insurance coverage is minimal.
Legal Proceedings
On August 26, 2005, Telstra Corporation Limited (“Telstra”) filed suit in the Federal Court of Australia,
Victoria District Registry against Autodesk Australia Pty Ltd. (“AAPL”) seeking partial indemnification for
claims filed against Telstra by SpatialInfo Pty Limited relating to Telstra’s use of certain software in the
management of its computer based cable plant records system. On December 12, 2005, SpatialInfo added AAPL
as a defendant to its lawsuit against Telstra. In February 2008, the parties agreed to settle all outstanding claims
and dismiss the action. The final resolution of the litigation did not have a material effect on Autodesk’s results
of operations, cash flows or financial position in a particular period.
During the fourth quarter of fiscal 2007, three stockholder derivative 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 States Federal District Court for the Northern District of California in
a stockholder derivative action, entitled “Giles v. Bartz, et al.,” Case No. C06-8175 (the “Giles Case”). On
December 29, 2006, the Company, certain of its current and former members of the Board, and certain current
and past executive officers were sued in United States Federal District Court for the Northern District of
California in a stockholder derivative action, entitled “Campion v. Sutton, et al.,” Case No. C06-07967. This
lawsuit was consolidated into the previously mentioned Giles case and later voluntarily dismissed by the plaintiff
on January 31, 2007. On January 9, 2007, the Company, certain of its current and former members of the Board,
and certain current and former executive officers were sued in the Superior Court for the State of California,
County of Marin in a stockholder derivative action, entitled “Koerner v. Bartz, et al.,” Case No. CV-070112 (the
“Koerner Case”). The plaintiff in the Giles Case filed an amended and restated complaint on December 3, 2007,
and the plaintiff in the Koerner Case filed an amended and restated complaint on December 7, 2007. These
actions are in the preliminary stages and Autodesk cannot determine the final financial impact of these matters
based on the facts known at this time. However, it is possible that an unfavorable resolution of the matters could
occur and materially affect its future results of operations, cash flows or financial position in a particular period.
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