Autodesk 2003 Annual Report Download - page 33

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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.
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
The following table sets forth the components of interest and other income, net (in thousands):
2003 2002 2001
Interest and investment income ........................................ $ 9,466 $14,144 $22,397
Gains (losses) on foreign currency transactions ............................ 1,727 (440) (628)
Minority interest in net loss of RedSpark ................................ — 2,657 1,112
Write-downs of investments in privately-held businesses .................... (3,436) (2,861) (2,553)
Realized gains (losses) on investments .................................. 2,069 2,775 (263)
Other............................................................. 3,678 2,783 983
$13,504 $19,058 $21,048
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 2003, 2002 and 2001 was primarily
due to a trend of declining interest rates on the investment of cash and marketable securities balances combined
with lower 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. 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 non-recurring tax benefit resulting from the Internal
Revenue Service (“IRS”) audit resolution for fiscal 1997-1999, our effective income tax rate was 27 percent in
fiscal 2003, 30 percent in fiscal 2002 (absent the impact of the gain on disposal of affiliate) and 32 percent in
fiscal 2001. The non-recurring net tax benefit of $3.8 million resulted from the resolution of our IRS audit for the
fiscal years ended 1997-1999 and the establishment of U.S. deferred income taxes on previously permanently
reinvested foreign earnings. The effective tax rate for fiscal 2003 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 additional taxes provided on prior year
foreign earnings. Additional taxes on prior year foreign earnings relate to a foreign tax audit and to intercompany
transfer pricing adjustments. The fiscal 2003 tax rate was lower than the fiscal 2002 and 2001 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 currently believe that our fiscal 2004 effective tax rate will be less than 27 percent primarily due to a
relatively higher impact of benefits associated with our foreign earnings which are taxed at rates different from
the federal statutory rate.
At January 31, 2003 we had net deferred tax assets of $27.2 million. Realization of these assets is dependent
on our ability to generate approximately $70.0 million of future taxable income in appropriate tax jurisdictions.
We believe that sufficient income will be earned in the future to realize these assets.
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