Autodesk 2004 Annual Report Download - page 75

Note 11. Restructuring and Other
The following table sets forth the components of Restructuring and Other in the consolidated
statements of income for the fiscal years ended January 31, (in thousands):
2004 2003 2002
Restructuring and exit charges, net ................ $3,183 $25,887 $28,097
Acquired in-process research and development
charges ........................................... — — 3,180
Goodwill write-off ................................... — — 2,353
$3,183 $25,887 $33,630
During the fourth quarter of fiscal 2004 the Board of Directors approved a restructuring plan that
involves the elimination of between 550 and 650 positions and the closure of a number of offices worldwide.
This plan is designed to further reduce operating expense levels to enable us to achieve our targeted
operating margins as well as redirect resources to product development, sales development and other
critical areas. The restructuring charge under this plan is estimated to be up to $37.0 million incurred over
four quarters beginning the fourth quarter of fiscal 2004. Of the $37.0 million, $26.0 million is attributable to
one-time termination benefits and $11.0 million is attributable to office closure costs.
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, $1.1 million related to
additional office closure costs under the fiscal 2002 restructuring plan and reversals of the accrual for
changes in estimates of $1.7 million 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.
Since the office closures in fiscal 2002, there has been 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.
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. The
$25.9 million was comprised of $10.7 million related to additional costs associated with the fiscal 2002
restructuring plan and $18.3 million related to the fiscal 2003 restructuring plan, offset by a credit of
$2.1 million resulting from accrual reversals and a credit of $1.0 million related to the reversal of the
remaining restructuring charges related to the 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.
This plan was designed to help further reduce operating expense levels as well as redirect resources to
product development and other critical areas. 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
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
65