Autodesk 2006 Annual Report Download

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Table of contents

  • Page 1
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  • Page 2

  • Page 3
    ...I^Wh[^ebZ[hi Fiscal year 2006 was another outstanding year for Autodesk. Customers around the globe-from design professionals in the building, manufacturing and infrastructure industries to creative artists in media and entertainment-increasingly adopted Autodesk solutions to realize their ideas to...

  • Page 4
    .... leading developer of 3D graphics technology. With industry leading products and customers in the manufacturing, building, and media and entertainment markets, Alias provided a unique opportunity for Autodesk. Our consistently strong performance has enabled us to significantly increase our...

  • Page 5
    ...scal 2006, launching Autodesk Revit Structure which provides fully integrated physical and analytical 3D modeling for structural engineering, analysis, and documentation. Increasingly, customers are adopting these precise and ï¬,exible building information modeling solutions to save time and money...

  • Page 6
    ... suite of desktop design tools to provide our customers competitive advantage in an increasingly global marketplace. Our acquisition of Alias provides exciting new products-including Autodesk Maya, Autodesk Alias Studio and Autodesk Showcase-which further increase the breadth and depth of our...

  • Page 7
    ... worlds are limited only by their imagination. Our focus remains on supplying our customers with technologies that are more innovative and comprehensive than those of our competition. Our record performance in fiscal 2006 was driven by our employees, partners, customers, and investors. I would like...

  • Page 8

  • Page 9
    ...Chairman, Chief Executive Officer and President Proxy Materials You are cordially invited to attend Autodesk's 2006 Annual Meeting of Stockholders to be held on Thursday, June 8, 2006 at 2:00 p.m., Pacific time, at our principal executive offices, 111 McInnis Parkway, San Rafael, California 94903.

  • Page 10

  • Page 11
    NOTICE OF 2006 ANNUAL MEETING OF STOCKHOLDERS Time and Date Place Items of Business Thursday, June 8, 2006, at 2:00 p.m., Pacific time. Autodesk's principal executive offices, located at: 111 McInnis Parkway, San Rafael, California 94903. (1) To elect ten directors to serve for the ensuing year and ...

  • Page 12

  • Page 13
    ... Accounting Fees and Services ...Pre-Approval of Audit and Non-Audit Services ...Corporate Governance ...Corporate Governance Guidelines and Code of Business Conduct ...Stock Ownership Guidelines ...Independence of the Board of Directors ...Contacting the Board of Directors ...Attendance at Annual...

  • Page 14
    ... ...Summary Compensation Table ...Executive Incentive Plan ...Employment Agreements and Change in Control Arrangements ...Related Party Transactions ...Compensation Committee Interlocks and Insider Participation ...Employee and Director Stock Options ...Option Program Description ...Distribution and...

  • Page 15
    ... Pacific time, and at any adjournment or postponement thereof, for the purpose of considering and acting upon the matters set forth herein. The Annual Meeting will be held at Autodesk's principal executive offices, located at 111 McInnis Parkway, San Rafael, California 94903. The telephone number...

  • Page 16
    ... the Annual Meeting? A: If you are a stockholder of record, you may instruct the proxy holders how to vote your shares by completing, signing, dating and returning the proxy card in the enclosed, postage pre-paid envelope, or by using the Internet voting site or the toll-free telephone number listed...

  • Page 17
    ... subsequent proxy card should be hand delivered to Autodesk's General Counsel or should be sent so as to be delivered to Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903, Attention: General Counsel. 3 Proxy Materials A: The Board of Directors recommends that you vote your shares...

  • Page 18
    ... manner. In order to be included in the proxy statement for the 2007 annual meeting of stockholders, stockholder proposals must be received by Autodesk's General Counsel no later than December 29, 2006, and must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of...

  • Page 19
    ... above may be obtained by writing to the General Counsel of Autodesk. All notices of proposals by stockholders, whether or not included in Autodesk's proxy materials, should be sent to Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903, Attention: General Counsel. 5 Proxy Materials

  • Page 20
    ... Committee of the Board of Directors and all of whom are presently directors of Autodesk. All nominees were elected by the stockholders at last year's annual meeting with the exception of Carl Bass, who became a director in January 2006. Unless otherwise instructed, the proxy holders will vote...

  • Page 21
    ...and was a director of Serena Software, Inc. through February 2006. Michael J. Fister has served as the Chief Executive Officer and President of Cadence Design Systems, Inc. since May 2004. Previously, Mr. Fister served as Senior Vice President and General Manager of the Enterprise Platforms Group of...

  • Page 22
    ... discretionary employee stock programs. The Compensation and Human Resources Committee held 5 meetings during fiscal 2006. The Compensation and Human Resources Committee has adopted a written charter approved by the Board of Directors, which is available on the Company's website at www.autodesk.com...

  • Page 23
    ... or appointed to our Board of Directors, each non-employee director is granted an option to purchase 50,000 shares of our Common Stock, with subsequent annual option grants of 20,000 shares of our Common Stock. The exercise price of options granted under the 2000 Directors' Option Plan is equal to...

  • Page 24
    ... and management's report on internal control included in the Company's Annual Reports on Form 10-K and for the review of the financial statements included in the Company's Quarterly Reports on Form 10-Q, as well as services that generally only the Company's independent registered public accountants...

  • Page 25
    ... or Code of Ethics for Senior Executive and Financial Officers that are required to be disclosed by the rules of the SEC or The Nasdaq Stock Market. Stock Ownership Guidelines Directors and officers are encouraged to be Autodesk stockholders through their participation in our stock option plans. The...

  • Page 26
    Contacting the Board of Directors Communications from stockholders to the non-employee directors should be addressed to the Lead Director as follows: J. Hallam Dawson, Autodesk Inc., c/o General Counsel, 111 McInnis Parkway, San Rafael, California 94903. Attendance at Annual Stockholders Meetings by...

  • Page 27
    ... one percent (1%) of the outstanding Common Stock. Unless otherwise indicated in their respective footnote, the address for each listed person is c/o Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903. The number and percentage of shares beneficially owned is determined in accordance...

  • Page 28
    ... Japan Trust and Banking Company Limited and (v) 14,753 shares beneficially owned by Barclays Bank PLC. The address of Barclays Global Investors, NA is 45 Fremont Street, San Francisco, CA 94105. This information was obtained from a filing made with the SEC pursuant to Section 13(g) of the Exchange...

  • Page 29
    ... retired in March 2006. Executive Incentive Plan The Executive Incentive Plan sets forth the plan for payment of cash bonuses to those of our executive officers who are designated for participation. The Executive Incentive Plan is intended to increase stockholder value and the success of Autodesk...

  • Page 30
    ... an employee for all of fiscal year 2007 in order to be eligible for any bonus. Employment Agreements and Change In Control Arrangements Employment Agreement with Carol A. Bartz. In April 1992, Autodesk entered into an agreement with Carol A. Bartz that provides, among other things, for a severance...

  • Page 31
    ... Act, as well as guidelines adopted by our Board of Directors for individuals who elect to enter into 10b5-1 trading plans. Related Party Transactions During fiscal 2006, the law firm of Wilson Sonsini Goodrich & Rosati, Professional Corporation, acted as principal outside counsel to Autodesk. Mark...

  • Page 32
    ... standards of The Nasdaq Stock Market. See "Report of the Compensation and Human Resources Committee of the Board of Directors" 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...

  • Page 33
    ... our 2006 Employee Stock Option Plan, which became effective in March 2006. In-the-Money and Out-of-the-Money Option Information The following table compares the number of shares subject to option grants with exercise prices at or below the closing price of our Common Stock at January 31, 2006 ("in...

  • Page 34
    ... by merger or asset sale, unless the option is to be assumed by the acquiring entity. In addition, under the Change in Control Program, in the event that the Company terminates any of the Named Executive Officers within 12 months following a change in control, the shares subject to each option...

  • Page 35
    ... Stock Purchase Plan. This amount does not include 9.65 million securities available for future issuance under our 2006 Employee Stock Plan, which became effective in March 2006. (3) Amounts correspond to Autodesk's Nonstatutory Stock Option Plan, which was terminated by the Board of Directors...

  • Page 36
    ... the 2000 Directors' Option Plan is equal to the closing price of our Common Stock on The Nasdaq Stock Market on the grant date. The 2006 Employee Stock Plan was adopted by the stockholders in November 2005 and became effective in March 2006. Employees, including executive officers, are eligible...

  • Page 37
    ...) that Autodesk's audited financial statements be included in Autodesk's Annual Report on Form 10-K for the fiscal year ended January 31, 2006 for filing with the SEC. AUDIT COMMITTEE OF THE BOARD OF DIRECTORS Mary Alice Taylor, Chairman Steven L. Scheid Larry W. Wangberg 23 Proxy Materials

  • Page 38
    ... The Nasdaq Stock Market, the "non-employee director" requirements of Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934 and the "outside director" requirements of Section 162(m) of the Internal Revenue Code of 1986. The Compensation and Human Resources Committee consists...

  • Page 39
    ... independent third-party executive compensation surveys as well as analysis of proxy statements for comparablysized software companies to assess an appropriate level of pay for performance. The Compensation and Human Resources Committee believes that Autodesk's executive compensation program falls...

  • Page 40
    ... officers. We generally may deduct compensation with respect to any of these individuals only to the extent that during any fiscal year such compensation does not exceed $1.0 million or meets certain other conditions enabling it to be characterized as performance-based. Our 2006 Employee Stock Plan...

  • Page 41
    COMPANY STOCK PRICE PERFORMANCE The following graph shows a five-year comparison of cumulative total return (equal to dividends plus stock appreciation) for our Common Stock, the Standard & Poor's 500 Stock Index and the Dow Jones U.S. Software Index. Comparison of Five Year Cumulative Total ...

  • Page 42
    ... that your shares be represented at the Annual Meeting, regardless of the number of shares that you hold. Therefore, you are urged to execute and return the accompanying proxy in the enclosed envelope at your earliest convenience. THE BOARD OF DIRECTORS April 28, 2006 San Rafael, California 28

  • Page 43
    ...Committee will generally meet eight times each year coincident with the timing of Board of Directors meetings and prior to the release of the Company's quarterly and annual fiscal year earnings. Each meeting will include an executive session, which will allow the Audit Committee to maintain free and...

  • Page 44
    ...by employees regarding accounting and auditing matters. 15. Review compliance with Autodesk's Related Party and Non-routine Transactions Policy, including reviewing and approving in advance any proposed related party transactions. 16. Review the Company's plans and subsequent progress in addressing...

  • Page 45
    ... reassess this charter at least annually and submit it to the Board of Directors for approval. 18. Require an annual assessment of the performance of the Audit Committee. 19. Submit for inclusion in the Company's annual Proxy Statement the audit committee disclosures required by the SEC and NASDAQ...

  • Page 46

  • Page 47
    ... File Number: 0-14338 AUTODESK, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 94-2819853 (I.R.S. employer Identification No.) 94903 (Zip Code) (Address of principal executive offices) Registrant's telephone...

  • Page 48
    ... and Financial Statement Schedules ...84 87 Directors and Executive Officers of the Registrant ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions ...Principal Accounting Fees...

  • Page 49
    ...delivering strong products on an annual release cycle, expanding our desktop offerings, migrating our customers to more advanced technologies and expanding in emerging markets such as project lifecycle management, and emerging economies, such as China, India and Eastern Europe. We are organized into...

  • Page 50
    ...design related professionals use AutoCAD to create, manage and share critical design data. AutoCAD LT AutoCAD LT software is used for 2D drafting and detailing by design professionals in the architecture, construction, engineering, manufacturing and design industries who require full DWG file format...

  • Page 51
    ...: Autodesk Civil 3D Autodesk Civil 3D design and drafting software delivers dynamic, model-based design to the civil engineering industry. It enables customers to create designs, make extensive updates, and perform multiple "what-if" scenarios with speed and flexibility. 5 2006 Annual Report

  • Page 52
    ... from the Media and Entertainment Segment are described below: Autodesk 3ds Max and Autodesk Maya Autodesk 3ds Max software and Autodesk Maya software are comprehensive professional 3D modeling, animation and rendering applications providing advanced tools for character animation, feature film and...

  • Page 53
    ...as Media and Entertainment's 3ds Max and Autodesk Maya. Under the Autodesk Subscription Program, customers who own the most recent version of the underlying product participate in a simplified upgrade process, feature-enhancing extensions, downloadable e-Learning courses and optional on-line support...

  • Page 54
    ..., including some software development, localization, quality assurance and technical publications, are performed in Europe and Asia, including China, India, Singapore and the United Kingdom. We plan to increase our product development operations in the Asia/Pacific region over the next several years...

  • Page 55
    ...-specific software solutions. This approach enables customers and third parties to customize our products for a wide variety of highly specific uses. We offer several programs that provide marketing, sales, technical support and programming tools to developers who develop add-on applications for...

  • Page 56
    ...and share their designs. These products allow us to expand our customer base from the design and engineering departments to adjacent departments and into the supply chain. This expansion may ultimately put us in competition with Enterprise Resource Planning ("ERP") vendors such as Oracle Corporation...

  • Page 57
    ... of software we develop. All software is licensed to users and provided in object code pursuant to either shrink-wrap, embedded or on-line licenses, or signed license agreements. These agreements contain restrictions on duplication, disclosure and transfer. We believe that because of the limitations...

  • Page 58
    ...space market, which is intended to enable our customers to create, manage and share building data throughout the entire building cycle. The goodwill acquired was assigned to the Building Solutions Division of our Design Solutions Segment. The assets acquired from Engineering Intent provide sales and...

  • Page 59
    ... file such material with, or furnish it to, the SEC. The information posted on our Web site is not incorporated into this Annual Report on Form 10-K. 13 2006 Annual Report The assets acquired from MechSoft complement Autodesk's solutions with tools that enable users to embed engineering...

  • Page 60
    ... with AutoCAD. As such, any factor adversely affecting sales of these products, including the product release cycle, market acceptance, product competition, performance and reliability, reputation, price competition, economic and market conditions and the availability of third-party applications...

  • Page 61
    ...a loss of investor confidence in our financial reports and have an adverse effect on our stock price. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404"), we are required to furnish a report by our management on our internal control over financial reporting. The report contains...

  • Page 62
    ... marketing or other operating expenses, changes in product pricing or product mix, platform changes, delays in product releases, timing of product releases and retirements, failure to continue momentum of annual release cycles or to move a significant number of customers from prior product versions...

  • Page 63
    ...as changes in customer requirements and preferences, characterize the software industry. We are devoting significant resources to the development of technologies, like our lifecycle management initiatives, and service offerings to address demands in the marketplace for increased connectivity and use...

  • Page 64
    ... to provide development support to us in the future. In addition, use of development resources through consulting relationships, particularly in non-US jurisdictions with developing legal systems, may be adversely impacted by, and expose us to risks relating to, evolving employment, export and...

  • Page 65
    ..., if one or more of such resellers were unable to meet their obligations with respect to accounts payable to us, we could be forced to write-off such accounts and may be required to delay the recognition of revenues on future sales to these customers, which could have a material adverse effect...

  • Page 66
    ... claims filed against Telstra by SpatialInfo Pty Limited relating to Telstra's use of certain software in the management of its computer based cable plant records system. On December 12, 2005, SpatialInfo added AAPL as a defendant to its lawsuit against Telstra. Autodesk is currently investigating...

  • Page 67
    ... Board, Chief Executive Officer and President. Ms. Bartz is a director of Cisco Systems, Inc., Network Appliance, Inc. and BEA Systems, Inc. Prior 21 2006 Annual Report 1. Proposal to approve Autodesk's 2006 Employee Stock Plan and the reservation of 9.65 million shares of Autodesk's common stock...

  • Page 68
    ...to April 2002 (Innoveda, Inc. was acquired by Mentor Graphics Corporation in April 2002) and from March 2000 to June 2001 was Executive Vice President, Operations for Centric Software, Inc., a product lifecycle management solutions company. Jan Becker joined Autodesk in September 1992 and has served...

  • Page 69
    ... repurchase program is to help offset the dilution to net income per share caused by the issuance of stock under our employee stock plans as well as to more effectively utilize excess cash generated from our business. The number of shares acquired and the timing of the purchases are based on several...

  • Page 70
    ... purchased in open-market transactions under the stock purchase plan approved by the Board of Directors in December 2004. ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with our audited consolidated financial statements and related...

  • Page 71
    ... into volume markets. Our reseller network is extensive and provides our customers with global resources for the purchase and support of our products as well as resources for effective and cost efficient training services. We have a significant number of registered third-party developers, creating...

  • Page 72
    .... Our uses of cash include share repurchases to offset the dilutive impact of our employee stock plans as well as investments in acquisitions and investments in growth initiatives, such as our recent acquisition of Alias Systems Holdings, Inc. ("Alias") during the fourth quarter of fiscal 2006. See...

  • Page 73
    ...in the AutoCAD environment, Autodesk Civil 3D and Autodesk Land Desktop. We believe customers in the web mapping market are demanding more frequent software releases, faster support for new standards, faster access to new data sources, and lower cost of ownership for their web mapping solutions. For...

  • Page 74
    .... License and other revenues include revenues from the sale of new seats, upgrades, customer consulting and training. Upgrade revenues are generated under the Autodesk Upgrade Program. Our existing customers who are using a currently supported version of a product can upgrade to the latest release...

  • Page 75
    ... time, as the services are performed. Maintenance revenues consist primarily of revenues from our subscription program. Under this program, customers are eligible to receive unspecified upgrades when-and-if-available, downloadable training courses and optional on-line support. We recognize revenues...

  • Page 76
    ... to employees at exercise prices equal to the fair market value of Autodesk common stock on the date of grant. We disclose in Note 1, "Business and Summary of Significant Accounting Policies," in the Notes to Consolidated Financial Statements the expense consistent with the method of Statement of...

  • Page 77
    ... share-based payments to employees, including grants of employee stock options, using a fair-value based method and the recording of such expense in our consolidated statements of income. Autodesk is required to adopt SFAS 123R, and is adopting it, starting in the first quarter of fiscal 2007. The...

  • Page 78
    ... of the higher priced vertical and 3D products. Product sales volume has increased due to the strength of our current product releases, including AutoCAD 2006 and AutoCAD LT, Autodesk Inventor products, Autodesk Civil 3D, Autodesk Revit products and Autodesk Architectural Desktop. Product backlog is...

  • Page 79
    ...by volume growth in AutoCAD, AutoCAD LT, and most major products, and growing sales of our higher priced 3D products. Upgrade revenue increased in fiscal 2006, but at a lower rate than in fiscal 2005 as customers increasingly migrate to our subscription program and as we moved the retirement date of...

  • Page 80
    ...for the Media and Entertainment Segment ("M&E") during fiscal 2006 increased 8% as compared to fiscal 2005, primarily due to new seat and subscription revenues of our animation product 3ds Max as well as growth in the sales of our Linux-based Advanced Systems Products. These increases were partially...

  • Page 81
    ... result of our new product releases and the announced retirement of the AutoCAD 2000i-based product series for early calendar 2005. In addition, changes in foreign currencies had a positive impact on revenue. Revenue from the sales of our services, training and support are immaterial for all periods...

  • Page 82
    ... by the volume and mix of product sales, changing consulting and hosted service costs, software amortization costs, royalty rates for licensed technology embedded in our products and new customer support offerings. Marketing and Sales Increase compared to prior fiscal year Fiscal 2006 $ percent...

  • Page 83
    ...to a customer information and customer support software project, offset in part by restructuring-related cost savings. We expect to continue to invest in marketing and sales of our products to develop market opportunities, to promote our competitive position and to strengthen our channel support. In...

  • Page 84
    ... $7.8 million of higher bonus accruals and benefits based on financial performance, $2.4 million of stock compensation expense incurred in connection with the change in employment status of a senior executive officer, offset in part by a reduction in IT-related expenses and headcount reductions...

  • Page 85
    ... Legal proceeding settlement of $2.4 million was received during the second quarter of fiscal 2005 as part of a court settlement related to legal proceedings with Spatial Corp. During October 2003, Spatial was ordered to reimburse Autodesk for attorneys' fees and trial costs. 39 2006 Annual Report

  • Page 86
    ... which consist primarily of employee-related expenses, such as compensation and benefits, as well as general operating expenses for marketing, facilities and overhead costs. In addition to operating expenses, our primary uses of cash include funding our stock repurchase program and investing in our...

  • Page 87
    ...investing activities during fiscal 2006 was primarily due to $242.1 million used in business acquisitions (Alias, Compass, Colorfront, c-plan, Solid Dynamics, Engineering Intent and AST). In addition, we also utilized $271.3 million for purchases of availablefor-sale marketable securities during the...

  • Page 88
    ... development needs and are fulfilled by our vendors within short time horizons. We do not have significant agreements for the purchase of supplies, services or other goods specifying minimum quantities or set prices that exceed our expected requirements for three months. We also enter into contracts...

  • Page 89
    ...use of stock options, see (a) "Policies Related to our Equity Compensation Programs" in the Proxy Statement for our Special Meeting of Stockholders which was held on November 10, 2005, and (b) "Report of the Compensation and Human Resources Committee of the Board of Directors" in the Proxy Statement...

  • Page 90
    ... Financial Statements for further discussion. We do not use derivative financial instruments in our investment portfolio to manage interest rate risk. We place our investments in instruments that meet high credit quality standards, as specified in our investment policy guidelines, which limits...

  • Page 91
    ... net income per share ...Shares used in computing diluted net income per share ... $ $ 1.44 1.33 229.0 247.5 $ 0.98 $ 0.90 227.0 247.0 $ 0.54 $ 0.52 223.0 231.3 See accompanying Notes to Consolidated Financial Statements. 45 2006 Annual Report Net revenues: License and other ...Maintenance...

  • Page 92
    ...2006 January 31, 2005 ASSETS Current assets: Cash and cash equivalents ...Marketable securities ...Accounts receivable, net ...Inventories ...Deferred income taxes ...Prepaid expenses and other current assets ...Total current assets ...Computer equipment, software... Financial Statements. 46

  • Page 93
    ... expense ...Write-downs of cost-method investments ...Net loss on fixed asset disposals ...Tax benefits from employee stock plans ...Restructuring related charges, net ...Changes in operating assets and liabilities, net of business combinations: Accounts receivable ...Inventories ...Deferred income...

  • Page 94
    ... ...Common shares issued under stock option and stock purchase plans ...Compensation expense related to stock options . . Tax benefits from employee stock plans ...Comprehensive income: Net income ...Other comprehensive income, net of tax: Change in unrealized gains on available-for-sale securities...

  • Page 95
    ... services and wireless development platforms that empower millions of users. Autodesk software products are sold in over 160 countries, both directly to customers and through a network of resellers and distributors. Principles of Consolidation The accompanying consolidated financial statements...

  • Page 96
    ... from sales to a large number of direct customers, resellers and distributors in the Americas, Europe and the Asia/Pacific region. Autodesk performs ongoing evaluations of its customers' financial condition and limits the amount of credit extended when deemed necessary, but generally requires no...

  • Page 97
    ...Autodesk defines establishment of technological feasibility as the completion of a working model. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the products are capitalized, if material. Purchased...

  • Page 98
    .... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 1. Business and Summary of Significant Accounting Policies (Continued) Purchased technologies, capitalized software and the related accumulated amortization at January 31 were as follows: 2006 2005 Purchased technologies ...Capitalized...

  • Page 99
    ... Tax Assets Employee Stock Compensation Autodesk accounts for employee stock options using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), as permitted by Statement of Financial Accounting...

  • Page 100
    ... is one of several assumptions in the Black-Scholes model used by Autodesk to make an estimate of the fair value of options granted under the Company's stock plans and the rights to purchase shares under the employee stock purchase plan. Prior to the third quarter of fiscal 2006, Autodesk estimated...

  • Page 101
    ... the subscription contract periods. Customer consulting and training revenues are recognized as the services are performed. In arrangements that include multiple software products and/or services, the Company allocates the sales price among each of the deliverables using the residual method, under...

  • Page 102
    ... of all share-based payments to employees, including grants of employee stock options, using a fair-value based method and the recording of such expense in the Company's Consolidated Statements of Income. Autodesk is required to adopt SFAS 123R starting in the first quarter of fiscal 2007. The pro...

  • Page 103
    ... ...Foreign currency option contracts ...(1) $287.2 90.3(1) 0.2 $287.2 90.3(1) 0.2 $517.7 15.0 0.2 $517.7 15.0 0.2 Includes $8.1 million of marketable securities classified as a non-current asset and recorded in Other assets. Autodesk uses derivative instruments to manage its earnings and cash...

  • Page 104
    ... 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...

  • Page 105
    ...Note 4. Restricted Financial Instruments At January 31, 2006 Autodesk had marketable securities totaling $90.3 million, of which $22.4 million related to investments in debt and equity securities that are restricted and held in a rabbi trust under non-qualified deferred compensation plans. The value...

  • Page 106
    ...$(20.3) 16.9 0.8 (4.1) 11.5 (1.9) $ 2.9 The tax benefit recognized associated with dispositions from employee stock plans was $124.0 million in fiscal 2006, $116.9 million in fiscal 2005, and zero in fiscal 2004. Foreign pretax income was $276.2 million in fiscal 2006, $183.5 million in fiscal 2005...

  • Page 107
    ... tax assets are realizable based on the "more likely than not" standard required for recognition in accordance with Statement of Financial Accounting Standards No. 109. Accordingly, during fiscal 2005, the Company reduced the valuation allowance relating to tax benefits of stock option deductions...

  • Page 108
    ... limitations with respect to certain federal and foreign tax years, Autodesk recognized income tax benefits of approximately $10.0 million. In addition, during fiscal 2006, Autodesk recognized an income tax provision of $3.1 million relating to the non-deductible In-Process Research and Development...

  • Page 109
    ... at January 31, 2006. Note 7. Commitments and Contingencies Leases Autodesk leases office space and computer equipment under noncancelable operating lease agreements. The leases generally provide that Autodesk pay taxes, insurance and maintenance expenses related to the leased assets. Future minimum...

  • Page 110
    .... In connection with the purchase, sale or license transactions of assets or businesses with third parties, Autodesk has entered into or assumed customary indemnity agreements related to the assets or businesses purchased, sold or licensed. Historically, costs related to these indemnities or...

  • Page 111
    ... claims filed against Telstra by SpatialInfo Pty Limited relating to Telstra's use of certain software in the management of its computer based cable plant records system. On December 12, 2005, SpatialInfo added AAPL as a defendant to its lawsuit against Telstra. Autodesk is currently investigating...

  • Page 112
    ...the Board of Directors approved plans to repurchase up to 144.0 million shares of Autodesk common stock. Of these 144.0 million shares, 123.5 million shares were repurchased and retired as of January 31, 2006. The number of shares acquired and the timing of the purchases are based on several factors...

  • Page 113
    ... FINANCIAL STATEMENTS (Continued) Note 9. Employee and Director Benefit Plans (Continued) The 1996 Stock Plan (the "1996 Plan"), which was approved by stockholders, allowed for options to be granted to employees, including officers. This plan initially allowed for the number of shares available...

  • Page 114
    AUTODESK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 9. Employee and Director Benefit Plans (Continued) A summary of stock option activity is as follows: Weighted average price per share Number of shares (Shares in thousands) Options outstanding at January 31, 2003 ......

  • Page 115
    AUTODESK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 9. Employee and Director Benefit Plans (Continued) agreement. At January 31, 2006, a total of 14.2 million shares were available for future issuance. This amount will automatically be increased on the first trading day of ...

  • Page 116
    ...Segment. Management's preliminary allocation of the purchase price, whichwas based onvaluations of acquired assets and liabilities performed in-part by a third-party appraiser, is as follows: Developed technologies (6 year useful life) ...In-process research and development ...Customer relationships...

  • Page 117
    ... functions, features and technical performance requirements. The total IPR&D amount was recorded in research and development on the Consolidated Statement of Income. Customer relationships represent the underlying relationships and agreements with Alias's existing customers. Trade name represents...

  • Page 118
    ... Management solution offerings. This acquisition expands Autodesk's geospatial technology product portfolio and strengthens its market position throughout central Europe. Management's allocation of the purchase consideration, based on a valuation of the acquired assets and liabilities performed...

  • Page 119
    ... by one of Autodesk's largest resellers. Management's allocation of the purchase consideration, based on a valuation of acquired assets and liabilities performed in-part by a third-party appraiser, is as follows: Developed technology (3 year useful life) ...Customer relationships (7 year useful life...

  • Page 120
    ... FINANCIAL STATEMENTS (Continued) Note 10. Business Combinations (Continued) Management's allocation of the purchase consideration, which is based on valuations of acquired assets performed, in part, by a third party appraiser, is as follows (in thousands): Developed technologies (3 year useful...

  • Page 121
    ... following table sets forth the restructuring activities for the fiscal years ended January 31, 2006 and 2005. Balance at January 31, 2005 Charges Utilized (1) Balance at January 31, 2006 Additions Reversals Alias Restructuring Plan Lease termination and asset costs ...Employee termination costs...

  • Page 122
    ...the Media and Entertainment Segment. The Location Services Division, which is not included in either reportable segment, is reflected as Other. The Design Solutions Segment derives revenues from the sale of software products and services for professionals and consumers, who design, build, manage and...

  • Page 123
    ..., 2006 2005 2004 Net revenues: Platform Technology Division and Other ...Manufacturing Solutions Division ...Building Solutions Division ...Infrastructure Solutions Division ... $ 731.6 256.9 177.6 178.4 $1,344.5 $ 599.5 199.7 124.3 147.8 $1,071.3 $ 471.1 141.4 81.2 118.0 $ 811.7 77 2006 Annual...

  • Page 124
    ... investment eliminated upon consolidation. (3) During fiscal 2006, Autodesk Development B.V. (Netherlands) acquired a $358 million partial interest in Autodesk Asia Pte Ltd. which had previously been held by Autodesk, Inc. as a result of an internal reorganization. This investment is eliminated upon...

  • Page 125
    ... tables sets forth the Alias Restructuring Plan and the Fiscal 2004 Plan activities that relate to each reportable segment during fiscal years ended January 31, 2006 and 2005. Alias Restructuring Plan Design Solutions Segment Lease Termination Costs Employee Termination Costs Media and Entertainment...

  • Page 126
    ...to close in the first quarter of fiscal 2007, is intended to enable Autodesk to rapidly expand its Buzzsaw collaborative project management solution with Constructware's cost, bid and risk management capabilities. This acquisition will be integrated into the Platform Technology Division and Other of...

  • Page 127
    ...Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts...

  • Page 128
    ...on management's assessment and an opinion on the effectiveness of the company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan...

  • Page 129
    ... with generally accepted accounting principals. Our independent registered public accounting firm, Ernst & Young LLP, have issued an audit report on our assessment of our internal control over financial reporting, which is included herein. Our management, including our Chief Executive Officer and...

  • Page 130
    ... code of ethics that applies to our principal executive officer, principal financial officer and principal accounting officer required by this Item are incorporated by reference to the sections of the Proxy Statement entitled "Election of Directors," "Section 16(a) - Beneficial Ownership Reporting...

  • Page 131
    ... 31, 2006, 2005 and 2004, is filed as part of this Report and should be read in conjunction with the Consolidated Financial Statements of Autodesk, Inc. Schedule II Valuation and Qualifying Accounts Schedules not listed above have been omitted because they are not applicable or are not required or...

  • Page 132
    ITEM 15(A)(2) FINANCIAL STATEMENT SCHEDULE II AUTODESK, INC. VALUATION AND QUALIFYING ACCOUNTS (In millions) Additions Charged to Costs and Expenses or Revenues Description Balance at Beginning of Year Deductions Write-Offs Balance at End of Year Fiscal year ended January 31, 2006 Allowance for...

  • Page 133
    ...the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. AUTODESK, INC. By: /S/ CAROL A. BARTZ Carol A. Bartz Chairman of the Board Dated: March 30, 2006 POWER...

  • Page 134
    ... Employee Stock Plan (incorporated by reference to Exhibit 10.2 filed with the Registrant's Current Report on Form 8-K filed on November 15, 2005) Registrant's 2006 Employee Stock Plan Forms of Agreement Form of Indemnification Agreement executed by Autodesk and each of its officers and directors...

  • Page 135
    ... Securities Exchange Act of 1934 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Denotes a management contract or compensatory plan or arrangement. * 89 2006 Annual Report

  • Page 136
    ... following corporations, as of January 31, 2006, all of which are included in the Registrant's consolidated financial statements: Name Jurisdiction of Incorporation ADSK Canada Inc. Autodesk (Europe) S.A. Autodesk AB Autodesk S.A. Autodesk de Argentina S.A. Autodesk Asia Pte Ltd. Autodesk Australia...

  • Page 137
    ... Plan and Autodesk, Inc. 1998 Employee Qualified Stock Purchase Plan Form S-8 Form S-8 Form S-8 Form S-8 Form S-8 Form S-8 Form S-8 333-81207 333-92539 333-45928 333-67974 333-88682 333-106556 333-116203 of our reports dated March 27, 2006, with respect to the consolidated financial statements...

  • Page 138
    ... report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: March 30, 2006 /s/ CAROL A. BARTZ Carol A. Bartz Chairman, Chief Executive Officer...

  • Page 139
    ... 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All...

  • Page 140
    ... fairly presents in all material respects the financial condition and results of operations of Autodesk, Inc. March 30, 2006 /s/ CAROL A. BARTZ Carol A. Bartz Chairman, Chief Executive Officer and President Based on my knowledge, I, Alfred J. Castino, certify, pursuant to 18 U.S.C. Section 1350, as...

  • Page 141
    ...Senior Vice President, Human Resources and Corporate Real Estate Alfred J. Castino Senior Vice President and Chief Financial Officer Corporate Headquarters Worldwide Headquarters Autodesk, Inc. 111 McInnis Parkway San Rafael, CA 94903 USA Asia Pacific Headquarters Autodesk Asia PTE Ltd. 391B Orchard...

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    111 McInnis Pkwy San Rafael, California 94903