Autodesk 2006 Annual Report Download - page 108

Download and view the complete annual report

Please find page 108 of the 2006 Autodesk annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 144

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

will expire beginning January 31, 2008 through January 31, 2027. The state tax loss carryforwards will expire
beginning January 31, 2010 through January 31, 2017. Approximately $50.8 million of the federal tax loss
carryforwards and $21.5 million ofthe state tax loss carryforwards are expected to expire unused due to ownership
change limitations provided in the Internal Revenue Code and similar state tax provisions.
Autodesk has $32.6 million of cumulative federal research tax credit carryforwards and $21.1 million of
cumulative state research tax credit carryforwards, which may be available to reduce future income tax liabilities
in the U.S. and California. The federal credit carryforwards will expire beginning January 31, 2011 through
January 31, 2027. The state credit carryforwards may reduce future California income tax liabilities indefinitely.
Autodesk also has $30.2 million of cumulative foreign tax credit carryforwards, which may be available to
reduce future U.S. tax liabilities. The federal credit will expire beginning January 31, 2015 through January 31, 2017.
Utilization of net operating losses and tax credits may be subject to an annual limitation due to ownership
change limitations provided in the Internal Revenue Code and similar state provisions. This annual limitation
may result in the expiration of net operating losses and credits before utilization.
As a result of certain employment actions and capital investments undertaken by Autodesk, income earned
in certain countries is subject toreduced taxrates and in some cases is wholly exempt from taxes for years through
fiscal 2009. The income tax benefits attributable to the tax status of these subsidiaries are estimated to be
$26.0 million ($0.11 per basic net income per share) in fiscal 2006, $18.0 million ($0.08 per basic net income
per share) in fiscal 2005, and less than $0.1 million in fiscal 2004. The amounts for fiscal years 2006 and 2005
include consideration of incremental tax benefits received from the American Jobs Creation Act of 2004
(“DRD Legislation”).
During fiscal 2006, Autodesk repatriated approximately $512 million of foreign earnings under the DRD
Legislation, which resulted in the reclassification of $12.6 million of federal deferred taxes to current taxes payable
relating to the repatriation of prior year foreign earnings and the accrual of $11.6 million of current federal taxes
relating to the repatriation of current year foreign earnings.
During fiscal 2006, Autodesk recognized an income tax benefit of $12.5 million relating to the DRD
Legislation. Of this amount, $10.6 million related to foreign withholding taxes previously accrued, which were
no longer due as part of the repatriation of foreign earnings under the DRD Legislation, and $1.9 million related
to an Internal Revenue Service (“IRS”) technical correction of the DRD Legislation.
Also during fiscal 2006, as a result of the Company’s resolution and closure of its Franchise Tax Board (“FTB”)
audits for fiscal 2000 and 2001, aswell as the closure and lapse of the statute of limitations withrespect 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 acquired as part of the Alias acquisition (see Note 10,
“Business Combinations,” for further discussion).
During fiscal 2005, Autodeskrecognized an income tax benefit of $15.5 millionrelating to the DRD Legislation.
This DRD Legislation, which was signed into law during the third quarter of fiscal 2005 as part of the American
Jobs Creation Act of 2004, allowed for the repatriation of certain foreign dividends at a rate lower than the 35%
federal statutory rate. Because Autodesk believed that it would be able to repatriate foreign earnings under this
DRD Legislation, the deferred tax liability which was previously accrued on prior year foreign earnings was
reduced, which resulted in a $15.5 million income tax benefit. This income tax benefit related to the difference
between the taxes previously provided on the earnings of a foreign subsidiary at the federal statutory tax rate
and the lower rate afforded under the new DRD Legislation.
As a result of the Company’s resolution and closure of its IRS audit for fiscal 2001 as well as the closure
of certain state and foreign tax years, and the lapse of the statute of limitations with respect to certain federal,
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 5. Income Taxes (Continued)
62