Autodesk 2005 Annual Report Download - page 66

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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,
2005 2004 2003
(In thousands)
Numerator:
Numerator for basic and diluted net income per
share — net income ............................ $221,508 $120,316 $ 31,904
Denominator:
Denominator for basic net income per share —
weighted average shares ....................... 227,036 222,993 226,070
Effect of dilutive common stock options .......... 19,941 8,311 3,480
Denominator for diluted net income per share ..... 246,977 231,304 229,550
The computation of diluted net income per share does not include 0.3 million options for fiscal 2005, 16.4
million options for fiscal 2004 and 37.4 million options for fiscal 2003. 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, 2005 January 31, 2004
Cost Fair value Cost Fair value
(In thousands)
Cash and cash equivalents ............... $517,654 $517,654 $282,249 $282,249
Marketable securities .................... 15,038 15,038 244,729 247,251
Foreign currency option contracts ....... 203 203 181 181
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. 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. 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 less than three months. 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 of each
reporting period, with gains and losses recognized as other income or expense to offset the gains or losses
resulting from the settlement of the underlying foreign currency denominated receivables and payables.
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
54