Autodesk 2004 Annual Report Download - page 61

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Note 2. Net Income Per Share
A reconciliation of the numerators and denominators used in the basic and diluted net income per
share amounts follows:
Year ended January 31,
2004 2003 2002
(In thousands)
Numerator:
Numerator for basic and diluted net income per
share — net income ............................ $120,316 $ 31,904 $ 90,313
Denominator:
Denominator for basic net income per share —
weighted average shares....................... 111,497 113,035 108,815
Effect of dilutive common stock options ......... 4,155 1,740 3,460
Denominator for diluted net income per share .... 115,652 114,775 112,275
The computation of diluted net income per share does not include 8.2 million options for fiscal 2004,
18.7 million options for fiscal 2003 and 8.0 million options for fiscal 2002. Such options were excluded
because the options had exercise prices greater than the average market prices of common stock during
the respective periods and therefore were not dilutive.
Note 3. Financial Instruments
Fair Values of Financial Instruments
Estimated fair values of financial instruments are based on quoted market prices. The carrying amounts
and fair value of Autodesk’s financial instruments are as follows:
January 31, 2004 January 31, 2003
Cost Fair value Cost Fair value
(In thousands)
Cash and cash equivalents .............. $282,249 $282,249 $186,377 $186,377
Marketable securities ................... 244,729 247,251 219,756 224,672
Forward foreign currency contracts .... 630 630 694 694
Foreign currency option contracts ..... 181 181 205 205
Autodesk uses derivative instruments to manage its earnings and cash flow exposures to fluctuations
in foreign currency exchange rates. Under its risk management strategy, Autodesk uses foreign currency
forward and option contracts to manage its exposures of underlying assets, liabilities and other obligations,
which exist as part of the ongoing business operations. These foreign currency instruments by policy have
maturities of less than three months and settle before the end of each quarterly period. Generally,
Autodesk’s practice is to hedge a majority of its short-term foreign exchange transaction exposures.
Contracts are primarily denominated in euros, Swiss francs, Canadian dollars, British pounds and Japanese
yen, and Autodesk does not enter into any foreign exchange derivative instruments for trading or
speculative purposes.
Forwards
Autodesk’s forward contracts, which are not designated as hedging instruments under Statement of
Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,”
(“SFAS 133”), have average maturities of 90 days or less. The forwards are used to reduce the exchange rate
risk associated primarily with receivables and payables. Forward contracts are marked-to-market at the end
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
51