Autodesk 2004 Annual Report Download - page 37

plan, resulting in an annual savings of $50.0 million to be reflected in each on-going cost and expense line
item in the consolidated statements of income. A portion of these annual savings will be reinvested in other
parts of the business resulting in the creation of new positions in these reinvested areas.
During fiscal 2004 Autodesk recognized net $3.2 million of restructuring and other charges resulting
solely from restructuring activities. The net charge of $3.2 million is comprised of $3.8 million related to the
fiscal 2004 restructuring plan, recorded during the fourth quarter of fiscal 2004, as well as $1.1 million related
to additional office closure costs under the fiscal 2002 restructuring plan. Since the office closures in fiscal
2002, there has been a significant downturn in the commercial real estate market, particularly in areas of the
United Kingdom where some of the offices are located. As such, Autodesk is unable to either buy-out the
remaining lease obligations at favorable amounts or sub-lease the space at amounts originally estimated
during fiscal 2002. These charges were offset by $1.7 million of credits resulting from restructuring accrual
reversals related to underlying liabilities originally established under the fiscal 2002 and fiscal 2003
restructuring plans. The underlying liabilities, primarily related to employee termination costs outside the
United States, were ultimately settled for less than originally estimated.
Of the $3.8 million related to the fiscal 2004 plan, $0.2 million related to office closure costs and
$3.6 million related to the termination of 71 employees in the United States and 15 employees outside the
United States. Office closure costs included losses on operating leases and the write-off of leasehold
improvements and equipment. Employee termination costs consisted of one-time termination benefits
including severance benefits, medical benefits and outplacement costs.
During fiscal 2003 Autodesk recognized $25.9 million of restructuring and other charges. Of the
$25.9 million, $10.7 million related to additional costs associated with the fiscal 2002 restructuring plan and
$18.3 million related to a fiscal 2003 restructuring plan, offset by a credit of $2.1 million recorded as a result
of accrual reversals and a credit of $1.0 million recorded related to the reversal of the remaining restructuring
charges related to our fiscal 2000 restructuring program. Of the $10.7 million, $1.2 million related to the
further consolidation of certain European offices and the remaining $9.5 million resulted from changes to
estimated accrued liabilities related to vacated facilities.
During the third quarter of fiscal 2003 the Board of Directors approved a restructuring plan that resulted
in the termination of 394 employees and the closure of several additional international and domestic offices.
As a result of this restructuring plan, we realized immediate pretax savings of $10.0 million per quarter and
increased cash flows of $10.0 per quarter in addition to the savings realized from the fiscal 2002 plan. Both
the pretax and cash flow savings were re-invested in other parts of the business. During the year ended
January 31, 2003, Autodesk recognized $18.3 million of expenses as part of this restructuring effort, of which
$16.5 million related to employee termination costs and $1.8 million related to office closures. Employee
termination costs consisted of wage continuation, advance notice pay, medical benefits and outplacement
costs for 184 employees in the United States and 210 employees outside the United States. Office closure
costs included losses on operating leases and the write-off of leasehold improvements and equipment.
During fiscal year 2003 we also reversed $2.1 million of accruals related to restructuring reserves established
in fiscal 2002. The facility-related accruals were settled for less than originally estimated.
During fiscal 2002 Autodesk recognized $33.6 million of restructuring and other charges. These charges
resulted from restructuring activities ($24.5 million), in-process research and development expenses related
to the acquisition of the software division of Media 100 ($3.2 million — see Note 10, “Business
Combinations”), the wind-down costs associated with the dissolution of RedSpark ($3.6 million — see Note
5, “Gain on Disposal of Affiliate”), and a goodwill write-off of $2.3 million. The write-off of goodwill primarily
related to an acquired Infrastructure Solutions Division business and resulted from a strategic decision to
abandon the underlying product line.
The restructuring costs, which were part of a formal exit plan approved by our Board of Directors during
the second quarter of fiscal 2002, were in connection with our effort to reduce operating expense levels.
During that same quarter, we reduced our revenue estimates for the remainder of fiscal 2002. As a result of
the restructuring, we realized immediate pretax savings of $6.0 million per quarter and increased cash flows
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