Autodesk 2003 Annual Report Download - page 59

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2024. The state tax loss carryforwards will expire beginning January 31, 2004 through January 31, 2014.
Autodesk has recorded a valuation allowance against some deferred tax assets including the tax benefit of certain
tax loss carryforwards of acquired companies due to the uncertainty of their realizability.
The Company has $5.9 million of cumulative federal research tax credit carryforwards and $1.4 million of
cumulative state research tax credit carryforwards, which may be available to reduce future income tax liabilities
in the U.S. and California. The federal credit carryforwards will expire beginning January 31, 2019 through
January 31, 2024. The state credit carryforwards may reduce future California income tax liabilities indefinitely.
The Company also has $6.7 million of cumulative foreign tax credit carryforwards, which may be available
to reduce future U.S. tax liabilities. The federal credits will expire beginning January 31, 2009.
As a result of certain employment actions and capital investments undertaken by Autodesk, income earned
in certain countries is subject to reduced tax rates and in some cases is wholly exempt from taxes for years
through fiscal 2009. The income tax benefits attributable to the tax status of these subsidiaries are estimated to be
$0.4 million ($0.00 per basic net income per share) in fiscal 2003, $4.4 million ($0.04 per basic net income per
share) in fiscal 2002 and $2.0 million ($0.02 per basic net income per share) in fiscal 2001.
In fiscal 2003, the Company resolved its Internal Revenue Service (“IRS”) audit for the fiscal years ended
1997-1999, and the statute of limitations lapsed with respect to these years in the fourth quarter of fiscal 2003.
The closure of these years resulted in a current income tax benefit of approximately $61.7 million which related
primarily to various international tax matters and research and development tax credits. Also in the fourth
quarter, the Company provided an additional $57.9 million in U.S. deferred income taxes on previously
permanently reinvested foreign earnings to reflect a potential repatriation of such foreign earnings to meet
expected U.S. cash needs, including the Company’s current stock repurchase program. The impact of these
events is a net income tax benefit of $3.8 million.
Note 5. Gain on Disposal of Affiliate
During October 2001, the shareholders of RedSpark, Inc. (“RedSpark”) approved a plan to dissolve the
company. Previously, Autodesk had maintained a majority interest in RedSpark’s voting stock since RedSpark
was formed in April 2000. Accordingly, Autodesk consolidated RedSpark’s financial position and results of
operations.
As a result of the plan to dissolve RedSpark, Autodesk recognized a one-time non-cash gain of $9.5 million
during the third quarter of fiscal 2002. This gain, which resulted from the reversal of the minority interest
liability balance, represents the reversal of cumulative losses recognized in excess of the amount that Autodesk
originally invested.
Note 6. Borrowing Arrangements
During fiscal 2003, Autodesk had a U.S. line of credit available that permitted unsecured short-term
borrowings of up to $75.0 million, which could be used from time to time for working capital or other business
needs. This credit facility expired in January 2003. There were no borrowings outstanding under this agreement
at the time it expired.
In February 2003, Autodesk entered into a U.S. line of credit agreement that permits short-term unsecured
borrowings of up to $40.0 million, which may be used from time to time for working capital or other business
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