Autodesk 2003 Annual Report Download - page 19

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ITEM 2. PROPERTIES
Our executive offices and the principal offices for domestic marketing and sales and production are located
in leased office space in northern California. We also lease space in various locations throughout the U.S. for
local sales, development and technical support personnel. Our foreign subsidiaries lease office space for their
operations including local sales, product development and technical support personnel. During fiscal 2003 we
closed several domestic and international offices in an effort to reduce operating expense levels.
We believe that our existing facilities and offices are adequate to meet our requirements for the foreseeable
future.
ITEM 3. LEGAL PROCEEDINGS
On December 27, 2001, Spatial Corp. (“Spatial”) filed suit in Marin County Superior Court against
Autodesk and D-Cubed Ltd. (“D-Cubed”), seeking (1) a declaration that (a) Autodesk had breached the ten year
old development agreement between Spatial and Autodesk (“Development Agreement”) and (b) that Autodesk
and D-Cubed had misappropriated the trade secrets of Spatial (2) an injunction preventing Autodesk from
disclosing ACIS source code to D-Cubed and (3) an injunction preventing Autodesk from working with
individuals who had previously worked on ACIS source code for Spatial. ACIS is a geometric solid modeler
upon which Autodesk ShapeManager is derived. Autodesk ShapeManager is incorporated into a number of
Autodesk products, including Autodesk Inventor Series, AutoCAD based products and 3ds max.
After a hearing on January 23, 2002, the Superior Court denied Spatial’s motion for a preliminary
injunction, finding that Spatial had failed to establish that it was likely to prevail on the merits at trial. On August
1, 2002, Spatial amended its complaint to seek the following additional remedies: (1) a declaration regarding the
appropriate location of the ACIS source code and (2) termination of Development Agreement, including our right
to work with third party contractors on the ACIS source code and the perpetual right to incorporate and distribute
ACIS with our products. On October 16, 2002, Spatial dismissed all of its claims for misappropriation of trade
secrets against Autodesk and D-Cubed. On February 13, 2003, the Court granted D-Cubed Ltd.’s motion for
summary judgment and denied our motion for summary adjudication of issues. We filed a motion for
reconsideration of the court’s ruling to be argued in May 2003. The case is now scheduled for trial in June 2003.
We believe that Spatial’s claims are without merit, and we are contesting them vigorously. Although the
results of litigation are inherently uncertain, we believe that the ultimate resolution of this matter will not have
material effect on our consolidated statements of financial condition, results of operations or cash flows.
However, if Spatial were to prevail at trial on its request to terminate the perpetual license to ACIS, and we could
not obtain a license on acceptable terms or license or develop a substitute technology, our business and operating
results could be materially adversely affected. During the fourth quarter of fiscal 2003 we recorded a $2.5 million
reserve related to this matter.
On October 7, 2002, Digimation Inc. filed a demand for arbitration against Autodesk with the American
Arbitration Association alleging breach of contract and interference with prospective economic advantage and
business relations. The claims arise out of a November 1998 Preferred Publisher Agreement (the “PPA”) entered
into with our Discreet division and relate to the marketing, publishing, development and support of software
plug-ins for our 3ds max application. We have counter-claimed against Digimation for, among other things,
Digimation’s failure to perform under the PPA. We believe that the ultimate resolution of this matter will not
have a material effect on our consolidated statements of financial condition, results of operations or cash flows.
Generally, we are involved in various legal proceedings arising from the normal course of business
activities. In our opinion, resolution of these matters is not expected to have a material adverse impact on our
consolidated results of operations, cash flows or our financial position. However, depending on the amount and
timing, an unfavorable resolution of a matter could materially affect our future results of operations, cash flows
or financial position in a particular period.
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