Autodesk 2002 Annual Report Download - page 25

We plan to record restructuring costs of approximately $1.0 million during the first quarter of fiscal 2003
related to the consolidation of additional European offices. Also, we may need to record additional restructuring
charges in fiscal 2003 associated with previously abandoned offices. The reserves established during fiscal 2002
were in part based on subleasing assumptions. Should we be unable to sublease the office spaces as expected, we
will record additional expenses in the quarterly period when such determinations are made.
During fiscal 2001 we reversed $1.2 million of accruals, $1.0 million of which related to a restructuring
reserve established in fiscal 2000. The accruals were settled for less than originally estimated.
Restructuring and other charges in fiscal 2000 of $34.7 million consisted primarily of Discreet Logic Inc.
and VISION acquisition-related charges and a corporate restructuring that occurred in that year.
For additional information regarding the restructuring and other charges recorded over the past three fiscal
years, see Note 11, Restructuring and Other in the Notes to Consolidated Financial Statements.
Interest and Other Income. Interest and other income, which consists primarily of investment income and
gains and losses on foreign currency transactions, was $19.1 million in fiscal 2002, $21.0 million in fiscal 2001
and $23.2 million in fiscal 2000. Investment income fluctuates based on average cash and marketable securities
balances, average maturities and interest rates. The decrease in interest and other income between fiscal 2002,
2001 and 2000 was primarily due to a trend of declining interest rates on the investment of cash and marketable
securities balances.
Gain on disposal of affiliate. During the third quarter of fiscal 2002, we recognized a one-time non-cash
gain of $9.5 million related to the dissolution of RedSpark, a development stage company. Because we owned
greater than 50 percent of the voting stock, we had been consolidating RedSpark’s operating losses since
RedSpark was formed in April 2000. RedSpark’s expenses, which were primarily research and development
related, were included within the operating expense categories of our statement of income. The gain, which
resulted from the reversal of the minority interest liability balance, represents the reversal of cumulative losses
recognized in excess of the $3.2 million we originally invested.
Provision for income taxes. Absent the impact of the gain on disposal of affiliate, our effective income tax
rate was 30 percent in fiscal 2002 and 32 percent in both fiscal 2001 and 2000. There was no tax expense from
the one-time gain on disposal of affiliate since we had never recognized any tax benefits from our allocable share
of RedSpark’s accumulated losses. Consistent with previous years, the effective tax rate for fiscal 2002 is less
than the federal statutory rate of 35 percent due to the benefits associated with our foreign earnings which are
taxed at rates different from the federal statutory rate, research credits, and tax-exempt interest, partially offset by
non-deductible goodwill amortization. The fiscal 2002 tax rate was lower than the fiscal 2001 and 2000 tax rates
due to a relatively higher impact of these permanent items.
Our future effective tax rate may be impacted by the amount of benefits associated with our foreign
earnings, which are taxed at rates different from the federal statutory rate, research credits, and tax-exempt
interest. We believe that our fiscal 2003 effective tax rate will be less than 30 percent primarily due to the
adoption of new accounting rules that result in the discontinuation of goodwill amortization. See “Recently
Issued Accounting Standards” for further discussion.
At January 31, 2002, we had net deferred tax assets of $60.9 million. Realization of these assets is
dependent on our ability to generate approximately $150.0 million of future taxable income in appropriate tax
jurisdictions. We believe that sufficient income will be earned in the future to realize these assets.
Equity in net loss of affiliate. In August 2001, we acquired the remaining 60 percent interest in Buzzsaw
that we did not own. Consequently, from the date of the acquisition Buzzsaw’s on-going revenues and costs and
expenses have been included in each of the respective line items in our consolidated statements of income.
24