Autodesk 2005 Annual Report Download - page 47

potential future costs are highly variable, we are unable to estimate the maximum potential impact of these
guarantees on our future results of operations.
Off-Balance Sheet Arrangements
Other than operating leases, we do not engage in off-balance sheet financing arrangements or have any
variable-interest entities. As of January 31, 2005 we did not have any off-balance sheet arrangements as defined
in Item 303(a)(4)(ii) of SEC Regulation S-K.
Stock Compensation
Autodesk maintains two active stock option plans for the purpose of granting stock options to employees
and members of Autodesk’s Board of Directors: the 1996 Stock Plan (available only to employees) and the 2000
Directors’ Option Plan (available only to non-employee directors). Additionally, there are six expired or
terminated plans with options outstanding, including the Nonstatutory Stock Option Plan (available only to non-
executive employees and consultants) which was terminated by the Board of Directors in December 2004. In
March 2005, the Board of Directors approved a new stock plan, the 2006 Stock Plan, which effectively replaces
the 1996 Stock Plan on February 1, 2006, subject to approval by the stockholders of the Company.
In addition to its stock option plans, the Company’s employees are also eligible to participate in Autodesk’s
1998 Employee Qualified Stock Purchase Plan.
Our stock option program is broad-based and designed to promote long-term retention. Essentially all of
our employees participate. Approximately 84% of the options we granted during fiscal 2005 were awarded to
employees other than our CEO and the four other most highly compensated officers. Options granted under
our equity plans vest over periods ranging from one to five years and expire within ten years of the date of grant.
The exercise price of the stock options is equal to the closing price of our Common Stock on the Nasdaq National
Market on the grant date.
All stock option grants to executive officers are made by the Compensation and Human Resources
Committee of the Board of Directors. All members of the Compensation and Human Resources Committee are
independent directors, as defined by the listing standards of the Nasdaq National Market. See the “Report of
the Compensation and Human Resources Committee of the Board of Directors” in our most recently filed Proxy
Statement for further information concerning Autodesk’s policies and procedures regarding the use of stock
options. Grants to our non-employee directors are non-discretionary and are pre-determined by the terms of
the 2000 Directors’ Option Plan.
Risk Factors Which May Impact Future Operating Results
We operate in a rapidly changing environment that involves a number of risks, many of which are beyond
our control. The following discussion highlights some of these risks and the possible impact of these factors on
future results of operations. If any of the following risks actually occur, our business, financial condition or results
of operations may be adversely impacted, causing the trading price of our common stock to decline.
Because we derive a substantial portion of our net revenues from a limited number of products, if these products
are not successful, our net revenues will be adversely affected.
We derive a substantial portion of our net revenues from sales of AutoCAD software, including products
based on AutoCAD that serve specific vertical markets, upgrades to those products and products that are
interoperable with AutoCAD. As such, any factor adversely affecting sales of these products, including the
product release cycle, market acceptance, product performance and reliability, reputation, price competition,
economic and market conditions and the availability of third-party applications, would likely harm our
operating results.
In the Discreet Segment, our customers’ buying patterns are heavily influenced by advertising and
entertainment industry cycles, which have resulted in and could have a negative impact on our future operating
results. In addition, Discreet’s Advanced Systems products rely primarily onworkstations manufactured by Silicon
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