Autodesk 2007 Annual Report Download

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Table of contents

  • Page 1

  • Page 2

  • Page 3
    ... execution has led Autodesk to another year of outstanding performance. In fiscal year 2007, we continued to deliver industry-leading design software solutions that enable customers to increase innovation, improve quality and boost productivity. Demand was strong across our business, as customers...

  • Page 4
    ... a voluntary review of our previous stock option granting practices and as a result did not file our quarterly and annual financial statements in a timely manner. As a result, we could not issue or repurchase shares for much of fiscal year 2007. We have concluded the stock option review and the...

  • Page 5
    ...2D mechanical design product, AutoCAD Mechanical, increased 23 percent over fiscal 2006. During 2007, revenues from our Autodesk Inventor family of products, Autodesk Inventor Series and Autodesk Inventor Professional, increased 15 percent. We added nearly 48,000 commercial seats of Inventor, making...

  • Page 6
    ... better information. Owners and operators are requiring sustainable "green" designs to lower the total cost of ownership. Once again, we expanded our building industry scope in fiscal year 2007 with the launch of Autodesk Revit Systems, which extends building information modeling to reach mechanical...

  • Page 7
    ...Autodesk animation solutions enable the creativity and productivity necessary for our customers to meet these needs, demand for our solutions continued its robust climb. Revenues from new commercial seats of Autodesk 3ds Max increased 18 percent over fiscal year 2006. And revenues from Autodesk Maya...

  • Page 8

  • Page 9
    ... time, at our principal executive offices, 111 McInnis Parkway, San Rafael, California 94903. At the Annual Meeting, you will be asked to: 1. Elect eight directors; and 2. Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending...

  • Page 10

  • Page 11
    ... Friday, July 6, 2007, at 10:00 a.m., Pacific time. Autodesk's principal executive offices, located at: 111 McInnis Parkway, San Rafael, California 94903. (2) To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending January 31...

  • Page 12

  • Page 13
    ... ...Contacting the Board of Directors ...Executive Compensation ...Compensation Discussion and Analysis ...Compensation Committee Report ...Fiscal 2007 Summary Compensation Table ...Grants of Plan-Based Awards Fiscal 2007 ...Outstanding Equity at Fiscal Year-End ...Option Exercises and Stock Vested...

  • Page 14

  • Page 15
    ...upon the matters set forth herein. Q: Where is the Annual Meeting? A: The Annual Meeting will be held at Autodesk's principal executive offices, located at 111 McInnis Parkway, San Rafael, California 94903. The telephone number at that location is (415) 507-5000. Stockholders are cordially invited...

  • Page 16
    ... 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 on the proxy card. Proxy cards submitted by mail must be received by the time of the meeting in order for...

  • Page 17
    ...LLP as the Company's independent registered public accounting firm for the fiscal year ending January 31, 2008. Q: If I sign a proxy, how will it be voted? A: All shares entitled to vote and represented by properly executed proxy cards received prior to the Annual Meeting, and not revoked, will be...

  • Page 18
    ... 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. Q: Who will bear the costs of soliciting votes for the Annual Meeting? A: Autodesk will...

  • Page 19
    ... a timely manner. In order to be included in the proxy statement for the 2008 annual meeting of stockholders, stockholder proposals must be received by Autodesk's General Counsel no later than February 13, 2008, and must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange...

  • Page 20
    ... A: Autodesk's principal executive offices are located at 111 McInnis Parkway, San Rafael, California 94903. Any written requests for additional information, additional copies of the proxy materials and 2007 Annual Report, notices of stockholder proposals, recommendations for candidates to the Board...

  • Page 21
    ... and investors along with focusing on activities designed to improve the business climate for Autodesk. From April 1992 to April 2006, Ms. Bartz served as Chairman of the Board, Chief Executive Officer and President. Ms. Bartz is also a director of Cisco Systems, Inc. and Network Appliance...

  • Page 22
    ... investment bank specializing in Latin America, since September 1986. Mr. Dawson is a director China Trust Bank (USA) 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...

  • Page 23
    ... 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 can reasonably provide, including statutory audits and services rendered in connection with SEC filings. The fiscal 2007...

  • Page 24
    ...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 Board of Directors...

  • Page 25
    ...standards of The Nasdaq Stock Market. The Compensation and Human Resources Committee reviews compensation and benefits for our executives and has authority to grant stock options to executive officers and non-executive employees under our stock plans. Because options are granted automatically to non...

  • Page 26
    ... recommendations for candidates to the Board of Directors must be directed in writing to Autodesk, Inc., c/o General Counsel, 111 McInnis Parkway, San Rafael, California 94903, and must include the candidate's name, home and business contact information, detailed biographical data and qualifications...

  • Page 27
    ...'s 2006 annual meeting of stockholders. 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. 13...

  • Page 28
    ... any proposed changes to the Board for approval. The Committee annually reviews and approves compensation for the CEO and the executive officers of the Company. This includes base salaries, incentive awards, stock option grants, employment agreements, severance arrangements, change in control...

  • Page 29
    ... and assistance from internal or external legal, accounting, or other advisers. The Company contracted with several compensation consulting firms during the 2007 fiscal year that provided education and information to the Committee: • Management used information from Aon's Radford Executive Survey...

  • Page 30
    ... of the peer group. Each executive officer's base salary is based on salary levels of comparable jobs in the peer group as well as experience, skills, and performance level. Adjustments to base salaries generally are approved annually at the March quarterly Committee meeting. Promotion or equity...

  • Page 31
    ... award, the Company's revenue and operating margin performance, and an assessment of the individual's performance during the year. Five employees were originally designated to participate for fiscal 2007, all of whom are Named Executive Officers. When Carol A. Bartz entered into a new employment...

  • Page 32
    ... ...Jan Becker ... Chief Executive Officer Chief Financial Officer EVP, Worldwide Sales SVP, Human Resources $ 700,000 $ 278,000 $ 60,000 $ 233,000 $1,000,000 $ 278,000 $ 60,000 $ 233,000 • Cash Incentive Compensation-Autodesk Incentive Plan (AIP) An executive not designated to participate in...

  • Page 33
    ... of his base salary as a participant in Autodesk's EIP. • Equity-Based Compensation Equity awards provide employees and executives the perspective of an owner with a stake in the success of Autodesk, thus increasing alignment with shareholder interests. Stock options are currently the equity-based...

  • Page 34
    ... guidelines and the individual's performance or particular requirements at the time of hire. • Voluntary Stock Option Review During fiscal 2007, the Audit Committee of Autodesk's Board of Directors conducted a voluntary review of Autodesk's historical stock option granting practices and related...

  • Page 35
    ... Market on the grant date. • Option Grant Vesting and Expiration All stock options granted in fiscal 2007 vest according to the nature of the grant and the level of the recipient: • Executive Officer and all other vice president grants (new hire, promotion, performance grants) have four-year...

  • Page 36
    ...Board Member ...CEO ...CFO ...Senior Vice President ... 5,000 shares 5 times base salary 2 times base salary 2 times base salary The stock ownership guidelines are applicable only to those executive officers who are also subject to Section 16 of the Securities Exchange Act of 1934. The guidelines...

  • Page 37
    ... Board, awarded Carl Bass options to purchase 750,000 shares of Autodesk common stock in light of his promotion to CEO. • Incentive Awards for Fiscal 2007 In March 2007, the Committee reviewed the Company's revenue and operating margin performance for fiscal 2007 and the EIP funding requirements...

  • Page 38
    ...base salary Stock Options ...• Continue to vest previously granted options • No longer receive grants customarily awarded to executive officers • After 1/31/2007 may be granted stock options or other equity grants at the discretion of the Board Employee Benefits ...• Eligible to participate...

  • Page 39
    Compensation Carol A. Bartz Form 8-K Filed 1/25/2007 (period 1/19/2007) Carl Bass Form 8-K Filed 12/20/2006 (period 12/14/2006) • Any additional benefits accorded by Change in Control program • Immediate vesting of unvested stock options that would have vested within 12 months of the ...

  • Page 40
    ... Board of Directors approved an amended Executive Change in Control Program, in an effort to ensure the continued service of Autodesk's key executives in the event of a future change in control of the company. Each of Autodesk's current Named Executive Officers, among other employees, participates...

  • Page 41
    ... the total compensation of Autodesk's Named Executive Officers for the fiscal year ended January 31, 2007. Based on the fair value of equity awards granted to Named Executive Officers in fiscal 2007 and the base salary of the Named Executive Officers, equity-based compensation accounted for 70...

  • Page 42
    ... by such Named Executive Officer. Grants of Plan-Based Awards in Fiscal 2007 The following table presents information concerning grants of plan-based awards to each of the Named Executive Officers during the fiscal year ended January 31, 2007. All Other Option Awards: Number of Securities Underlying...

  • Page 43
    (b) Reflects options granted under the 2006 Employee Stock Plan during fiscal 2007 that are not performance based. All options granted to Named Executive Officers vest over a four year period at a rate of 25% per year. See "Employment Agreements and Change of Control Arrangements" below for a ...

  • Page 44
    ...of stock awards for any of the Named Executive Officers during the fiscal year ended January 31, 2007. Option Awards Number of Shares Acquired on Value Realized on Exercise (#) Exercise ($)(a) Name of Executive Officer Carl Bass...Carol A. Bartz ...Alfred J. Castino ...George M. Bado ...Jan Becker...

  • Page 45
    ... and Executive Incentive Plan awards under this plan. The investment options available to participants in the Nonqualified Deferred Compensation plan during fiscal 2007 are shown below, as well as the annual rate of return for each investment option for the calendar year ended December 31, 2006, as...

  • Page 46
    ...cost of a primary physician under a concierge plan and a medical advocacy service to assist in processing claims. Such coverage will end upon Ms. Bartz's death or Ms. Bartz becoming eligible under another employer's health plan, provided that, if there has been no termination of coverage at the time...

  • Page 47
    ... thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the executives on their termination. The price per share of Autodesk's common stock is the closing price on the Nasdaq Global Select Market as of January 31, 2007 ($43.72). The actual amounts...

  • Page 48
    ...on 1/31/2007 ($) Executive Benefits and Payments Upon Separation Voluntary Termination on 1/31/2007 ($) For Cause Termination on 1/31/2007 ($) Disability on 1/31/2007 ($) Death on 1/31/2007 ($) Compensation: Base Salary (1) ...- Executive Incentive Plan (EIP) (2) ...1,000,000 Stock Options...

  • Page 49
    ...($) Executive Benefits and Payments Upon Separation Voluntary Termination on 1/31/2007 ($) For Cause Termination on 1/31/2007 ($) Disability on 1/31/2007 ($) Death on 1/31/2007 ($) Compensation: Base Salary (1) ...Executive Incentive Plan (2) ...Sales commissions and bonus (8) ...Stock Options...

  • Page 50
    ... Good Reason (Change in Control) column are the sum of the fiscal 2007 bonus already earned under the Executive Incentive Plan and a severance bonus equal to the average of the last three years' bonuses under the Autodesk Change in Control Program. (3) Stock Options: For Mr. Castino, Mr. Bado and Ms...

  • Page 51
    ... the lump-sum amount payable to beneficiaries by Autodesk's insurance provider in the event of each executive's death. (8) Sales Commissions and Bonus: Reflects amounts earned in the fourth quarter of fiscal 2007 by Mr. Bado that will be paid in the following fiscal year. 37 Proxy Materials

  • Page 52
    ... Financial Statements in in our fiscal year 2007 Annual Report on Form 10-K.. These amounts do not correspond to the actual value that will be recognized by the directors. (b) In fiscal 2007, our non-employee directors received the following grants of restricted stock: Grant Date Fair Value of Stock...

  • Page 53
    ... 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 54
    ... Stock Option Plan permitted the grant to eligible employees of options to purchase up to 16.9 million shares, all of which have been previously granted. Executive officers and members of the Board of Directors were not eligible to participate in this plan. The Nonstatutory Stock Option Plan...

  • Page 55
    ...' 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 to participate in...

  • Page 56
    ... 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 with Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership...

  • Page 57
    ... Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities ("10% Stockholders"), to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the SEC and The Nasdaq Stock Market. Such executive...

  • Page 58
    ... Committee reviewed and discussed the audited financial statements for fiscal year 2007 with management and Ernst & Young LLP, Autodesk's independent auditors. Management is responsible for the quarterly and annual financial statements and the reporting process, including the systems of internal...

  • Page 59
    ... 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 June 12, 2007 San Rafael, California 45...

  • Page 60

  • Page 61
    ...may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of June 4, 2007, registrant had outstanding approximately 231.2 million shares of common stock. 2007 Annual Report 111 McInnis Parkway, San Rafael, California

  • Page 62
    ...15. Exhibits and Financial Statement Schedules ...176 177 Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director...

  • Page 63
    ... years ended January 31, 2006 and 2005, and each of the quarters in fiscal 2006 as a result of a voluntary review of Autodesk's historical stock option granting practices and related accounting issues. This restatement is more fully described in "Restatement of Consolidated Financial Statements...

  • Page 64
    ... forma expense under Statement of Financial Accounting Standards No. 123 ("SFAS 123") in Part II, Item 8, Note 1, "Business and Summary of Significant Accounting Policies," in the Notes to Consolidated Financial Statements to include these adjustments for the years ended January 31, 2006 and January...

  • Page 65
    ... 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 who create...

  • Page 66
    ... game development, and design visualization. Corporate Information We were incorporated in California in April 1982 and were reincorporated in Delaware in May 1994. Our principal executive office is located at 111 McInnis Parkway, San Rafael, California 94903 and the telephone number at that address...

  • Page 67
    ... to process plant design and mapping. Architects, engineers, drafters and 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 who require full DWG file format...

  • Page 68
    ... Architectural Desktop software supports existing 2D design practices while enabling users to gradually introduce increasingly powerful industry-specific features to save time and improve coordination. It offers flexibility in implementation, the efficiency of real-world building objects and AutoCAD...

  • Page 69
    ...Autodesk 3ds Max software provides 3D modeling, animation and rendering solutions that enable game developers, design visualization professionals and visual effects artists to create realistic digital images and animations and to communicate abstract or complex mechanical, architectural, engineering...

  • Page 70
    ... is substantially less than the cost of purchasing a new seat and is available to subscription customers as well. Revenues from our upgrade and crossgrade programs are reported on our Consolidated Statements of Income in License and other. PRODUCT DEVELOPMENT AND INTRODUCTION We continue to...

  • Page 71
    ... 2,900 developers in the Autodesk Developer Network create interoperable products that further enhance the range of integrated solutions available to our customers. For fiscal 2007, approximately 85% of our revenues were derived from indirect channel sales through distributors and resellers and we...

  • Page 72
    ... site. There are also a number of user group forums in which customers are able to share information. EDUCATIONAL PROGRAMS We offer education programs and specially priced software purchasing options tailored for educational institutions, students, and faculty to train the next generation of users...

  • Page 73
    ... revenue from our Subscription Program. To a lesser extent, deferred revenue consists of deferred license and other revenue derived from Autodesk Buzzsaw services, consulting services and deferred license sales. Backlog also includes current software license product orders which have not yet shipped...

  • Page 74
    ... or those of another party have in the past and may in the future lead to, among other things, costly litigation or product shipment delays, which could harm our business. We retain ownership of software we develop. All software is licensed to users and provided in object code pursuant to either...

  • Page 75
    ...market, which enabled our customers to create, manage and share building data throughout the entire building life cycle. The goodwill acquired was assigned to the Building Solutions Division of our Design Solutions Segment. December 2005 Applied Spatial Technologies ("AST") 15 2007 Annual Report...

  • Page 76
    ... of mechanical assemblies without the expense of building physical prototypes, thereby reducing costs and time-to-market. The goodwill acquired was assigned to the Manufacturing Solutions Division of our Design Solutions Segment. The acquisition of c-plan expanded our geospatial technology product...

  • Page 77
    ... are currently being investigated by the SEC in connection with our historical stock option practices and related accounting. The period of time necessary to resolve the informal SEC investigation is uncertain, and this matter could require significant management and financial resources which could...

  • Page 78
    ... our business, financial condition, results of operations, cash flows and the trading price for our securities. At least three lawsuits have been filed against us and our current directors and officers and certain of our former directors and officers relating to our historical stock option practices...

  • Page 79
    ... our reporting of transactions completed before such changes are effective. In particular, for fiscal 2007, we adopted Statement of Financial Accounting Standards No. 123R ("SFAS 123R") which requires us to record stock-based compensation charges to earnings for employee stock option grants using...

  • Page 80
    ...of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports, which would likely have an adverse effect on our business and stock price. As a result of the voluntary review of Autodesk's historical stock option grant practices, our management...

  • Page 81
    ... the timing of the introduction of new products by us or our competitors, slowing of momentum in upgrade or maintenance revenue, the adoption of SFAS 123R, which required us to record compensation expense for shares issued under our stock plans beginning in the first quarter of fiscal 2007 with...

  • Page 82
    ... net revenues. Rapid technological changes, as well 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...

  • Page 83
    ... systems and our websites for our development, marketing, operational, support and sales activities. We are continually investing resources to update and improve these systems in order to meet the growing requirements of our business and customers. Unsuccessful implementation of hardware or software...

  • Page 84
    ... financial and business condition of our reseller network. Computer software dealers and distributors are typically not highly capitalized and have previously experienced difficulties during times of economic contraction and may do so in the future. While we have processes to ensure that we assess...

  • Page 85
    ... our periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of our 2007 fiscal year that remain unresolved. ITEM 2. PROPERTIES We lease 1,625,000 square feet of office space in 97 locations in the United States and internationally through our...

  • Page 86
    ... reserves during the second quarter of fiscal 2007. On August 26, 2005, Telstra Corporation Limited ("Telstra") filed suit in the Federal Court of Australia, Victoria District Registry against Autodesk Australia Pty Ltd. ("AAPL") seeking partial indemnification for claims filed against Telstra by...

  • Page 87
    ...were filed against us and our current directors and officers (as well as certain of our former directors and officers) relating to our historical stock option practices and related accounting. On November 20, 2006, Autodesk and current members of our Board were sued in United States Federal District...

  • Page 88
    ... President Executive Chairman of the Board Executive Vice President, Worldwide Sales and Services Senior Vice President, Human Resources and Corporate Real Estate Senior Vice President and Chief Financial Officer Senior Vice President of Autodesk AEC Senior Vice President, Worldwide Marketing Senior...

  • Page 89
    ... Vice President of Autodesk AEC (Architecture, Engineering and Construction) Solutions. From August 2001 to February 2004, Mr. Bhatt served as Vice President, Corporate Development and Strategic Planning. From March 2000 to July 2001, he served as Chief Financial Officer and senior vice president...

  • Page 90
    ... 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 factors, including the level of our cash balances, general business and market conditions...

  • Page 91
    ... on Form 10-K or Quarterly Reports on Form 10-Q for the periods affected by this restatement. The financial information that has been previously filed or otherwise reported for these periods is superseded by the information in this Annual Report on Form 10-K, and the financial statements and related...

  • Page 92
    Fiscal Year Ended January 31, 2006 As As Reported Adjustments Restated (In millions, except per share data) For the Fiscal Year Net revenues...Income from operations ...Net income ...At Year End Total assets ...Long-term liabilities...Stockholders' equity ...Common Stock Data Basic net income per ...

  • Page 93
    ...exchange rates on net revenues and expenses, costs and expenses, planned product retirement and annual release cycles, our expectations regarding product acceptance, the realization of deferred tax benefits, continuation of our share repurchase program, and short-term and long-term cash requirements...

  • Page 94
    ... Committee of the Board of Directors was conducting a voluntary review of Autodesk's historical stock option granting practices and related accounting issues. On February 27, 2007, Autodesk announced the key results of the voluntary review, which were set forth in the Form 8-K filed on that date...

  • Page 95
    ..., the right to grant options under our stock plans to all employees other than non-employee directors was delegated to the Compensation Committee of the Board of Directors or to the chief executive officer, or CEO, as a committee of one. Executive officer option grants were generally approved by the...

  • Page 96
    ..., her stock option grant. The essential terms of the option grant, the grant price, number of options and date of grant, were presented to the Board on April 27, 1992, and approved by the Compensation Committee on May 4, 1992. In connection with the grant to the then-incoming CEO, both parties were...

  • Page 97
    ... administrative error. Based on the voluntary review, management determined that the accounting for the related option grants must be revised and we recognized pre-tax stock-based compensation expense of $2.3 million from such grants using the intrinsic value method of accounting under APB 25. Board...

  • Page 98
    ... Financial Statements. We also restated the pro forma expense under SFAS 123 in Note 1 "Business and Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements of this Form 10-K to reflect the impact of these adjustments for the years ended January 31, 2006...

  • Page 99
    ... 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 100
    ... Alias, of $14.4 million in fiscal 2007 compared to $0.7 million in fiscal 2006, decreased our operating margin by 1%. Finally, costs incurred as a result of our stock option review, including a bonus payment to participants of our Employee Stock Purchase Plan ("ESPP"), reduced our operating margin...

  • Page 101
    ... software, and Autodesk Inventor in one solution, and Autodesk AutoCAD Mechanical, which offers 2D mechanical design and engineering tools that are compatible with all AutoCAD-based products. For the Building Solutions Division, our focus during fiscal 2007 was to enable our customers to create...

  • Page 102
    ...the timing of new product introductions and promotions, channel sell-in for applicable markets and other factors. Our product returns reserves were $18.2 million at January 31, 2007 and $14.2 million at January 31, 2006. Product returns as a percentage of applicable revenues were 3.9% in fiscal 2007...

  • Page 103
    ... in business conditions and our assumptions occur, we may be required to record impairment charges. Deferred Tax Assets. We currently have $137.9 million of net deferred tax assets, mostly arising from net operating losses, including stock option deductions taken in fiscal years prior to fiscal 2007...

  • Page 104
    ...APB 25. SFAS 123R requires the measurement 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 our Consolidated Statements of Income. In March 2005, the SEC issued Staff Accounting Bulletin No. 107...

  • Page 105
    ...restated the pro forma expense under SFAS 123 in Part II, Item 8, Note 1, "Business and Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements to include these adjustments for the years ended January 31, 2006 and January 31, 2005. 45 2007 Annual Report (2.8)

  • Page 106
    ...Restated Fiscal year ended January 31, 2005 As As Reported Adjustments Restated Net revenues: License and other ...Maintenance ...Total net revenues...Costs and expenses: Cost of license and other revenues . . Cost of maintenance revenues ...Marketing and sales...Research and development ...General...

  • Page 107
    ... revenue, stock-based compensation and related tax adjustments made to our previously reported consolidated balance sheet as of January 31, 2006 (in millions, except per share data): January 31, 2006 As Reported Adjustments As Restated ASSETS Current assets: Cash and cash equivalents ...Marketable...

  • Page 108
    ... in-process research and development...Depreciation and amortization ...Stock-based compensation expense . 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...

  • Page 109
    ... year ended January 31, 2005 As As Reported Adjustments Restated Sales and maturities of available-forsale marketable securities ...Business combinations, net of cash acquired...Capital and other expenditures ...Purchases of software technologies and capitalization of software development costs...

  • Page 110
    Recently Issued Accounting Standards In September 2006, the SEC staff released Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements" ("SAB 108") which provides interpretive guidance on how the ...

  • Page 111
    ...periods. We use foreign currency option collar contracts to reduce the current quarter exchange rate effect on the net revenue of certain anticipated transactions. 51 2007 Annual Report The primary goals for fiscal 2007 were to continue our delivery of market-leading products and solutions to our...

  • Page 112
    ...half of fiscal 2007. Our voluntary stock option review and our inability to meet our filing requirements with the SEC prohibited share repurchases during the second half of fiscal 2007. We increased our cash and marketable securities while continuing to invest in our business through the acquisition...

  • Page 113
    ...AutoCAD-based products and the success of our Subscription Program in fiscal 2006. Revenue from the sales of services, training and support are immaterial for all periods presented. We attempt to release new product versions on a regular basis and synchronize our major product 53 2007 Annual Report...

  • Page 114
    ... years related to current software license product orders which have not yet shipped at the end of each respective fiscal year. We rely significantly upon major distributors and resellers in both the U.S. and international regions, including Tech Data Corporation and their affiliates, who accounted...

  • Page 115
    ... to fiscal 2006, primarily from revenue increases in our Animation business line and from both our January 2006 acquisition of Alias and the introduction of new versions of 3ds Max and Maya products during the second quarter of fiscal 2007. Although net revenues from Advanced Systems sales did...

  • Page 116
    ... from upgrades increased in fiscal 2006, but at a lower rate than in fiscal 2005 as customers increasingly migrated to our Subscription Program and as we moved the retirement date of the AutoCAD 2002-based products to the first quarter of fiscal 2007. Revenue from the sales of our services, training...

  • Page 117
    ... Financial Statements of this Form 10-K. Cost of license and other revenues includes direct material and overhead charges, royalties, amortization of purchased technology, hosting costs, labor costs of fulfilling service contracts and order processing and, beginning at the start of fiscal 2007...

  • Page 118
    ...increased marketing and promotion costs related to product launches, trade shows, branding, and demand generation. Marketing and sales expense for fiscal 2007 also included $3.8 million in one-time ESPP bonus payments incurred in connection with our voluntary stock option review. Marketing and sales...

  • Page 119
    ... 16, "Related Parties," in Notes to Consolidated Financial Statements for further discussion of this investment. Research and development expenses for fiscal 2007 also included $3.5 million in one-time ESPP bonus payments incurred in connection with our voluntary stock option review. The increase in...

  • Page 120
    ..., professional fees for legal and accounting services, litigation costs, and overhead costs. General and administrative expense from the beginning of fiscal 2007 also includes stock-based compensation expense under SFAS 123R for stock awards granted to general and administrative employees...

  • Page 121
    ...closure costs originally established under the fiscal 2002 restructuring plan. Since the office closures in fiscal 2002, there has been a 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...

  • Page 122
    ... 2003, Spatial was ordered to reimburse Autodesk for attorneys' fees and trial costs. Provision for income taxes Autodesk accounts for income taxes and the related accounts under the liability method in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes...

  • Page 123
    ... per share data): 2007 1st quarter 2nd quarter 3rd quarter 4th quarter Fiscal year Net revenues: License and other ...Maintenance...Total net revenues ...Costs and expenses: Cost of license and other revenues...Cost of maintenance revenues...Marketing and sales ...Research and development...General...

  • Page 124
    ...As Restated As Reported 3rd quarter Adjustments (1) As Restated Net revenues: License and other ...Maintenance...Total net revenues ...Costs and expenses: Cost of license and other revenues...Cost of maintenance revenues...Marketing and sales ...Research and development...General and administrative...

  • Page 125
    ... balance sheets during the fiscal year ended January 31, 2006 (in millions): 4th quarter 3rd quarter As Restated As Reported Adjustments (1) As Restated As Reported Adjustments (1) ASSETS Current assets: Cash and cash equivalents ...Marketable securities...Accounts receivable, net ...Inventories...

  • Page 126
    ... 694.8 (3.3) (8.2) 32.0 715.3 $ 1,174.6 (1) See Note 2, "Restatement of Consolidated Financial Statements." The net of tax impact of the stock-based compensation adjustments in the first quarter of fiscal 2007 was insignificant. However, we restated our Consolidated Balance Sheet as of January 31...

  • Page 127
    ... and Capital Resources Our primary source of cash is from the sale of our products. Our primary use of cash is payment of our operating costs which consist primarily of employee-related expenses, such as compensation and benefits, as well as general operating expenses for marketing, facilities and...

  • Page 128
    ...(a)(4)(ii) of SEC Regulation S-K. Stock Compensation As of January 31, 2007, we maintained two active stock option plans for the purpose of granting stock options to employees and members of Autodesk's Board of Directors ("Board"): the 2006 Employee Stock Plan (available only to employees) and the...

  • Page 129
    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 2007 were awarded to employees other than our CEO, CFO and the three other most highly compensated officers for...

  • Page 130
    ...executive employees currently enrolled in the ESPP at that date. This bonus was designed to approximate the profits employee participants would have made on the scheduled September 30, 2006 exercise date, had the purchases been made and the shares been sold on the next trading day at close of market...

  • Page 131
    ...2007 Fiscal year ended January 31, 2006 2005 As Restated (1) As Restated (1) (in millions) Net revenues: License and other...Maintenance ...Total net revenues ...Costs and expenses: Cost of license and other revenues ...Cost of maintenance revenues ...Marketing and sales ...Research and development...

  • Page 132
    ... 31, 2007 January 31, 2006 As Restated (1) (In millions) 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...

  • Page 133
    ... in-process research and development ...Depreciation and amortization ...Stock-based compensation expense ...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...

  • Page 134
    AUTODESK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Fiscal year ended January 31, 2007 2006 As Restated (1) (In millions) 2005 As Restated (1) Supplemental cash flow information: Net cash paid during the period for income taxes ...Supplemental non-cash investing activity: Accounts ...

  • Page 135
    ...Repurchase and retirement of common shares ...Balances, January 31, 2006 ...Common shares issued under stock option and stock purchase plans ...Compensation expense related to stock options . . Reclassifications required by SFAS 123R ...Tax benefits from employee stock plans...Comprehensive income...

  • Page 136
    ... real world, increasing innovation and competitive advantage. 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 include the accounts...

  • Page 137
    ... loss associated with problem accounts. The product returns and other reserves are based on historical experience of actual product returns, estimated channel inventory levels, the timing of new product introductions, channel sell-in for applicable markets and other factors. 77 2007 Annual Report

  • Page 138
    ... number of resellers, distributors and direct customers in the Americas; Europe, Middle East and Africa; and Asia/Pacific regions. Autodesk performs ongoing evaluations of its customers' financial condition and limits the amount of credit extended when deemed necessary, but generally requires no...

  • Page 139
    ...as a component of cost of revenues, was $12.9 million in fiscal 2007, $8.2 million in fiscal 2006 and $15.7 million in fiscal 2005. 79 2007 Annual Report Costs incurred for computer software developed or obtained for internal use are capitalized for application development activities, if material...

  • Page 140
    ...As required under Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets," Autodesk no longer amortizes goodwill but instead tests it for impairment annually in the fourth quarter or more often if and when circumstances indicate potential impairment. When assessing...

  • Page 141
    ..., INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 1. Business and Summary of Significant Accounting Policies (Continued) The changes in the carrying amount of goodwill during the years ended January 31, 2007 and 2006 are as follows: Design Solutions Media and Entertainment Total...

  • Page 142
    ...replaced Statement of Financial Accounting Standards No. 123 ("SFAS 123") and superseded Accounting Principles Board Opinion No. 25 ("APB 25"). SFAS 123R requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair-value based method and...

  • Page 143
    ... employee stock purchases for fiscal 2007, which was recorded as follows: Cost of license and other revenues ...Marketing and sales ...Research and development ...General and administrative ...Stock-based compensation expense related to employee options and employee stock purchases ...Tax benefit...

  • Page 144
    ... 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 145
    ... Financial Statements. (2) Includes previously reported stock-based employee compensation cost, net of related tax effects, of $0.4 million and $3.1 million for the fiscal years ended January 31, 2006 and 2005, respectively. The weighted average estimated fair value of stock options granted...

  • Page 146
    ...and service. Revenues from upgrades are generated under the Autodesk Upgrade Program. Autodesk's existing customers who are using a currently supported version of a product can upgrade to the latest release of the product by paying a separate fee at the time of upgrade that is based on the number of...

  • Page 147
    ... revenues include revenues from consulting, training, Autodesk Developers Network and Advanced Systems customer support Customer consulting and training revenues are recognized over time, as the services are performed. Maintenance revenues consist of revenues from the Company's Subscription Program...

  • Page 148
    ...the Company's assessment, Autodesk recorded an increase to opening retained earnings during the first quarter of fiscal 2008 for tax benefits not previously recognized of approximately $26 million as a result of adopting FIN 48. In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain...

  • Page 149
    ...the fiscal years ended January 31, 2006 and January 31, 2005 and each of the quarters in fiscal 2006 as a result of a voluntary review of Autodesk's historical stock option granting practices and related accounting issues. Previously filed annual reports on Form 10-K and quarterly reports on Form 10...

  • Page 150
    ... of the voluntary stock option review, Autodesk also identified that it had incorrectly recorded certain credits to resellers. As a result, adjustments were made to increase net revenues and decrease deferred revenue by $14.0 million in fiscal 2006 and $5.1 million in fiscal 2005. These adjustments...

  • Page 151
    ..., the right to grant options under our stock plans to all employees other than non-employee directors was delegated to the Compensation Committee of the Board of Directors or to the chief executive officer, or CEO, as a committee of one. Executive officer option grants were generally approved by the...

  • Page 152
    ... For the 34 employees, it appears that these cases were most likely due to administrative error. Based on the voluntary review, management determined that the accounting for the related option grants must be revised and Autodesk has recognized pre-tax stock-based compensation expense of $2.3 million...

  • Page 153
    ... a reasonable period of time prior to final approval of the grant for accounting purposes. Based on the voluntary review, management determined that the measurement dates for the related option grants must be revised. Accordingly, Autodesk has recognized pre-tax stock-based compensation expense of...

  • Page 154
    ... which the terms of the award were likely communicated to the employee to the highest price in the grant window would cause the pre-tax compensation charges to increase by approximately $2.3 million. The Company's management believes that the approaches used for each of the categories were the most...

  • Page 155
    ... Financial Statements of this Form 10-K to reflect the impact of these adjustments for the years ended January 31, 2006 and 2005. As mentioned above, while performing the voluntary stock option review, Autodesk identified that it had incorrectly recorded certain credits to resellers. Certain credits...

  • Page 156
    ... FINANCIAL STATEMENTS (Continued) Note 2. Restatement of Consolidated Financial Statements (Continued) The adjustments to stock-based compensation, net of related tax effects, as originally reported for annual periods prior to fiscal 2007 are as follows (in millions): Fiscal Year Originally Reported...

  • Page 157
    ... Restated Fiscal year ended January 31, 2005 As Reported Adjustments As Restated Net revenues: License and other ...Maintenance ...Total net revenues ...Costs and expenses: Cost of license and other revenues ...Cost of maintenance revenues . Marketing and sales...Research and development ...General...

  • Page 158
    ... Financial Statements (Continued) January 31, 2006 As Reported ASSETS Adjustments As Restated Current assets: Cash and cash equivalents ...Marketable securities ...Accounts receivable, net ...Inventories...Deferred income taxes ...Prepaid expenses and other current assets ...Total current assets...

  • Page 159
    AUTODESK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2. Restatement of Consolidated Financial Statements (Continued) The Company also restated common stock, additional paid in capital, deferred compensation and retained earnings balances for all fiscal years prior to fiscal ...

  • Page 160
    ...-process research and development Depreciation and amortization Stock-based compensation expense 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...

  • Page 161
    ... Financial Statements. Note 3. Employee and Director Benefit Plans Stock Option Plans As of January 31, 2006, Autodesk maintained two active stock option plans for the purpose of granting stock options to employees and members of Autodesk's Board of Directors (the "Board"): the 2006 Employee Stock...

  • Page 162
    AUTODESK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 3. Employee and Director Benefit Plans (Continued) A summary of stock option activity is as follows: Number of Shares (in thousands) Weighted average price per share Options outstanding at January 31, 2006 ...Granted ......

  • Page 163
    ... Company issues shares on March 31 and September 30 of each fiscal year. The provisions of this plan expire during fiscal 2018. Due to the Company's voluntary stock option review during fiscal 2007, Autodesk was not current with its reporting obligations under the Securities and Exchange Act of 1934...

  • Page 164
    ... Stock Option Plan, which was terminated by the Board of Directors in December 2004. Pretax Savings Plan Autodesk has a 401(k) plan that covers nearly all U.S. employees. Eligible employees may contribute up to 50% of their pretax salary, subject to limitations mandated by the Internal Revenue...

  • Page 165
    ... with dispositions from employee stock plans was $124.6 million in fiscal 2006 and $112.5 million in fiscal 2005. Foreign pretax income was $354.1 million in fiscal 2007, $276.2 million in fiscal 2006 and $183.5 million in fiscal 2005. 105 2007 Annual Report Federal: Current ...Deferred ...State...

  • Page 166
    ... ...Research and development tax credit benefit...Extraterritorial income exclusion ...State income taxes, net of the Federal benefit ...Officer compensation in excess of $1.0 million ...Net income tax benefit from DRD Legislation on prior year foreign earnings...Non-deductible In-Process research...

  • Page 167
    ... Financial Statements. The valuation allowance increased by $5.2 million in fiscal 2007 and decreased by $0.2 million in fiscal 2006 and $21.4 million in fiscal 2005. During fiscal 2005, Autodesk re-assessed the realizability of certain deferred tax assets related to stock option deductions...

  • Page 168
    ...Tax Relief and Health Care Act of 2006 which resulted in the reinstatement of the Federal research and development credit to the beginning of Autodesk's fiscal 2007 year. Autodesk recorded an income tax benefit of $5.6 million from this Act during the fourth quarter of fiscal 2007. • Autodesk also...

  • Page 169
    ...respect to certain Federal, state, and foreign tax years, Autodesk recognized an income tax benefit of approximately $8.9 million during fiscal 2005. • Also during fiscal 2005, following certain business changes, Autodesk completed an internal reorganization of the ownership of Autodesk Canada. As...

  • Page 170
    ... FINANCIAL STATEMENTS (Continued) Note 5. Deferred Compensation At January 31, 2007, Autodesk had marketable securities totaling $112.0 million, of which $27.2 million related to investments in debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans...

  • Page 171
    ... years ended January 31, 2007 and 2006: Balance at January 31, 2006 Charges Utilized Balance at January 31, 2007 Additions Adjustments Alias Restructuring Plan Lease termination and asset costs ...Employee termination costs ...Fiscal 2004 Plan Lease termination costs ...Employee termination costs...

  • Page 172
    ..., marketing and software development services. Of the total purchase commitments, $28.8 million related to a termination fee for an outsource application hosting services agreement entered into during fiscal 2006. This fee is reduced as time lapses during the five-year contract period. Autodesk has...

  • Page 173
    ..., 113 2007 Annual Report In connection with the purchase, sale or license of assets or businesses with third parties, Autodesk has entered into or assumed customary indemnification agreements related to the assets or businesses purchased, sold or licensed. Historically, costs related to these...

  • Page 174
    ...frequency, especially in Latin America. On March 1, 2002, Consultores en Computación y Contabilidad, S.C., a Mexican hardware/software reseller and its principals (collectively, "CCC") filed a lawsuit in the Mexico Court in the First Civil Court of the Federal District, against, Autodesk, Adobe 114

  • Page 175
    ... were filed against Autodesk and the Company's current directors and officers (as well as certain of the Company's former directors and officers) relating to its historical stock option practices and related accounting. On November 20, 2006, the Company and its current members of the Board were...

  • Page 176
    ...its employee stock plans. The number of shares acquired and the timing of the purchases are based on several factors, including general market conditions and the trading price of Autodesk common stock. In fiscal 2007, 2006 and 2005, Autodesk repurchased its common stock through open market purchases...

  • Page 177
    ... computation of basic and diluted net income per share because they had exercise prices greater than the average market prices of common stock during the respective periods and therefore were not dilutive. See Note 2, "Restatement of Consolidated Financial Statements." 117 2007 Annual Report 3.4

  • Page 178
    ...Business Solutions Division. Total sales of AutoCAD and AutoCAD LT (2D design products) accounted for 40% of consolidated net revenues in fiscal 2007 and 43% of consolidated net revenues in both fiscal 2006 and 2005. Total sales of 3D model-based design products (Autodesk Inventor Family of Products...

  • Page 179
    ... from stock-based compensation recorded under SFAS 123 of $5.0 million and $10.3 million for fiscal years 2006 and 2005, respectively. Unallocated amounts in fiscal 2005 also include $26.7 million resulting from restructuring activity. 119 2007 Annual Report Net revenues: Design Solutions...Media...

  • Page 180
    ...199.7 124.3 147.8 $1,071.3 Information regarding Autodesk's operations by geographic area is as follows: Fiscal year ended January 31, 2007 2006 As Restated (1) 2005 As Restated (1) Net revenues: U.S...Other Americas ...Total Americas ...Europe, Middle East and Africa...Japan ...Other Asia/Pacific...

  • Page 181
    ... the Alias Restructuring Plan and the Fiscal 2004 Plan activities that relate to each reportable segment during fiscal years ended January 31, 2007, 2006 and 2005. Alias Restructuring Plan Design Solutions Segment Lease Termination and Asset Costs Employee Termination Costs Media and Entertainment...

  • Page 182
    ... based on quoted market prices. The carrying amounts and fair value of Autodesk's financial instruments are as follows: January 31, 2007 Cost Fair Value January 31, 2006 Cost Fair Value Cash and cash equivalents...Marketable securities ...Foreign currency option contracts... $665.9 112.0 0.1 $ 665...

  • Page 183
    ... identification method. Proceeds from the sale of marketable securities were $547.1 million in fiscal 2007, $204.0 million in fiscal 2006 and $301.6 million in fiscal 2005. Note 15. Business Combinations The following acquisitions were accounted for under Statement of Financial Accounting Standards...

  • Page 184
    ...'s cost, bid and risk management capabilities. Management's allocation of the purchase price, which was based on a valuation of acquired assets and liabilities performed in-part by a third-party appraiser, is as follows: Constructware: Developed technologies (6 year useful life)...Customer...

  • Page 185
    ... Statement of Financial Accounting Standards No. 141, "Business Combinations," Autodesk recorded an adjustment to reduce the carrying value of Alias' deferred revenue balance at the 125 2007 Annual Report Developed technologies (6 year useful life)...In-process research and development ...Customer...

  • Page 186
    ...$8.8 million. In addition, this plan also involves costs associated with exiting leased facilities and abandonment of certain assets of approximately $2.3 million. Autodesk completed the integration of Alias during the second quarter of fiscal 2007. Autodesk currently has not identified any material...

  • Page 187
    ... total purchase price consideration. Autodesk incorporates c-plan's family of geospatial applications and data management solutions into its Infrastructure Lifecycle Management solution offerings. This acquisition expands Autodesk's geospatial technology product portfolio and strengthens its market...

  • Page 188
    ... 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: Compass Systems GmbH ("Compass") Developed technology (3 year useful life) ...Customer...

  • Page 189
    ..., INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 16. Related Parties In April 2006, Autodesk acquired a 28% ownership in Hanna Strategies Holdings, Inc. ("Hanna Strategies"), a privately-held software development firm with operations in the U.S. and China, for cash consideration...

  • Page 190
    ... follows: 2007 1st quarter 2nd quarter 3rd quarter 4th quarter Fiscal year Net revenues: License and other ...Maintenance ...Total net revenues ...Costs and expenses: Cost of license and other revenues ...Cost of maintenance revenues ...Marketing and sales ...Research and development ...General and...

  • Page 191
    ... of a review by the Internal Revenue Service. Autodesk also recognized a nonrecurring income tax benefit of $5.6 million during the fourth quarter of fiscal 2007 from the reinstatement of the Federal research and development credit through the passage of the Tax Relief and Health Care Act of 2006 by...

  • Page 192
    ... Restated 3rd quarter As Reported Adjustments (1) As Restated Net revenues: License and other ...$ 336.5 Maintenance ...80.3 Total net revenues ...Costs and expenses: Cost of license and other revenues . Cost of maintenance revenues ...Marketing and sales ...Research and development ...General and...

  • Page 193
    ...Restated 1st quarter As Reported Adjustments (1) As Restated Net revenues: License and other ...Maintenance ...Total net revenues ...Costs and expenses: Cost of license and other revenues ...Cost of maintenance revenues . Marketing and sales...Research and development ...General and administrative...

  • Page 194
    .... Quarterly Financial Information (Unaudited) (Continued) The following table summarizes the impact of the restatement on each line item of the Company's interim condensed consolidated balance sheets during the fiscal year ended January 31, 2006 (in millions): 4th quarter ASSETS Current assets: Cash...

  • Page 195
    ... FINANCIAL STATEMENTS (Continued) Note 17. Quarterly Financial Information (Unaudited) (Continued) 2nd quarter As Reported ASSETS Adjustments (1) As Restated As Reported 1st quarter Adjustments (1) As Restated Current assets: Cash and cash equivalents ...Marketable securities ...Accounts...

  • Page 196
    ... the second or third quarter of fiscal 2008, is intended to increase the interoperability of Autodesk's 3D model-based and 2D design software by coordinating design information from multiple sources. This acquisition will be integrated into the Architecture, Engineering and Construction Segment. The...

  • Page 197
    ...'s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the...

  • Page 198
    ...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 199
    ... this Form 10-K, on August 17, 2006, Autodesk announced that the Audit Committee of the Board of Directors, with the assistance of independent outside legal counsel and forensic accounting experts, was conducting a voluntary review of Autodesk's historical stock option granting practices and related...

  • Page 200
    ... Exchange Commission rules and forms, and (ii) is accumulated and communicated to Autodesk's management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed...

  • Page 201
    ... and investors along with focusing on activities designed to improve the business climate for Autodesk. From April 1992 to April 2006, Ms. Bartz served as Chairman of the Board, Chief Executive Officer and President. Ms. Bartz is also a director of Cisco Systems, Inc. and Network Appliance...

  • Page 202
    ... investment bank specializing in Latin America, since September 1986. Mr. Dawson is a director China Trust Bank (USA) 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...

  • Page 203
    ... Code of Business Conduct 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. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and executive...

  • Page 204
    ...benefits or compensation arrangements. In addition, the Autodesk Board of Directors has delegated to the Committee exclusive authority to grant stock options to Autodesk's executive officers and other employees. Role of Executives in Compensation Decisions The Committee sets compensation for the CEO...

  • Page 205
    The Company contracted with several compensation consulting firms during the 2007 fiscal year that provided education and information to the Committee: • Management used information from Aon's Radford Executive Survey to provide benchmark data and overall practices reports to inform the Committee...

  • Page 206
    ... of the peer group. Each executive officer's base salary is based on salary levels of comparable jobs in the peer group as well as experience, skills, and performance level. Adjustments to base salaries generally are approved annually at the March quarterly Committee meeting. Promotion or equity...

  • Page 207
    ... is 143% of his target EIP award. Approved awards are listed below: Executive Title Target Award Approved Award Carl Bass ...Al Castino ...George Bado ...Jan Becker ... Chief Executive Officer Chief Financial Officer EVP, Worldwide Sales SVP, Human Resources $700,000 $ 278,000 $ 60,000 $ 233,000...

  • Page 208
    ...-Autodesk Incentive Plan (AIP) An executive not designated to participate in the company's EIP is eligible to participate in the Autodesk Incentive Plan (AIP), which is generally available to all non-sales employees. The AIP consists of an overall corporate plan and several individual group plans...

  • Page 209
    ... guidelines and the individual's performance or particular requirements at the time of hire. • Voluntary Stock Option Review During fiscal 2007, the Audit Committee of Autodesk's Board of Directors conducted a voluntary review of Autodesk's historical stock option granting practices and related...

  • Page 210
    ... chief executive officer and began approving all employee grants at its regularly scheduled quarterly meetings. The Committee approves stock option grants to newly hired executive officers at the quarterly meeting following the executive's hire date. It also approves promotion and performance grants...

  • Page 211
    ... the NASDAQ Global Select Market on the grant date. All stock options granted in fiscal 2007 vest according to the nature of the grant and the level of the recipient: • Executive Officer and all other vice president grants (new hire, promotion, performance grants) have four-year vesting, with one...

  • Page 212
    .../Board Member ...CEO ...CFO ...Senior Vice President ... 5,000 shares 5 times base salary 2 times base salary 2 times base salary The stock ownership guidelines are applicable only to those executive officers who are also subject to Section 16 of the Securities Exchange Act of 1934. The guidelines...

  • Page 213
    ... Board, awarded Carl Bass options to purchase 750,000 shares of Autodesk common stock in light of his promotion to CEO. • Incentive Awards for Fiscal 2007 In March 2007, the Committee reviewed the Company's revenue and operating margin performance for fiscal 2007 and the EIP funding requirements...

  • Page 214
    ...31/2007 may be granted stock options or other equity grants at the discretion of the Board • Continue to be eligible to receive grants customarily awarded to executive officers Employee Benefits ... • Eligible to participate in benefits normally provided to employees • Four weeks paid annual...

  • Page 215
    ...(or a comparable plan) • Immediate vesting of all unvested stock options • Any additional benefits accorded by Change in Control program • Lump sum payment of 100 percent of base salary and 100 percent of target annual incentive. • Immediate vesting of unvested stock options that would have...

  • Page 216
    ... Board of Directors approved an amended Executive Change in Control Program, in an effort to ensure the continued service of Autodesk's key executives in the event of a future change in control of the company. Each of Autodesk's current Named Executive Officers, among other employees, participates...

  • Page 217
    ... Fiscal Year Salary ($) (b) Total ($) Carol Bartz, Former Chief Executive Officer and President ...Alfred J. Castino, Senior Vice President and Chief Financial Officer...George M. Bado, Executive Vice President, Worldwide Sales and Services ...Jan Becker, Senior Vice President, Human Resources...

  • Page 218
    ... Plan-Based Awards in Fiscal 2007 The following table presents information concerning grants of plan-based awards to each of the Named Executive Officers during the fiscal year ended January 31, 2007. Estimated Future Payouts Under NonEquity Incentive Plan Awards (a) All Other Option Awards: Number...

  • Page 219
    ... to receive no Executive Incentive Plan award for fiscal 2007 and will not participate in the future. (b) Reflects options granted under the 2006 Employee Stock Plan during fiscal 2007 that are not performance based. All options granted to Named Executive Officers vest over a four year period at...

  • Page 220
    ... of stock awards for any of the Named Executive Officers during the fiscal year ended January 31, 2007. Option Awards Number of Shares Acquired on Value Realized on Exercise (#) Exercise ($)(a) Name of Executive Officer Carl Bass...Carol Bartz...Alfred J. Castino ...George M. Bado ...Jan Becker...

  • Page 221
    ... Fiscal Year End ($) Name Carl Bass...Carol Bartz...Alfred J. Castino ...George M. Bado ...Jan Becker ... - 2,224,335 - 207,026 206,333 - - - - - - 1,645,008 - 52,287 86,570 - 2,766,918 - - - - 10,342,881 - 665,185 1,268,485 Under Autodesk's Nonqualified Deferred Compensation Plan, certain...

  • Page 222
    ...competition agreement): • An amount equal to the executive officer's annual base compensation and average annual bonus, payable bimonthly over a 12 month period; • The acceleration of such executive officer's stock options with respect to the number of shares that would have vested within the 12...

  • Page 223
    ... in connection with a change of control, Mr. Bass will receive (i) continued payment of his then current base salary plus his target annual incentive compensation under the Executive Incentive Plan for the year in which the termination occurs, for 12 months, (ii) accelerated 163 2007 Annual Report

  • Page 224
    ... thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the executives on their termination. The price per share of Autodesk's common stock is the closing price on the NASDAQ Global Select Market as of January 31, 2007 ($43.72). The actual amounts...

  • Page 225
    ... Executive Benefits and Payments Upon Separation Voluntary Termination on 1/31/2007 ($) For Cause Termination on 1/31/2007 ($) Disability on 1/31/2007 ($) Death on 1/31/2007 ($) Compensation: Base Salary (1) ...- Executive Incentive Plan (EIP) (2) ...1,000,000 Stock Options (3) ...- Benefits...

  • Page 226
    ...($) Executive Benefits and Payments Upon Separation Voluntary Termination on 1/31/2007 ($) For Cause Termination on 1/31/2007 ($) Disability on 1/31/2007 ($) Death on 1/31/2007 ($) Compensation: Base Salary (1) ...Executive Incentive Plan (2) ...Sales commissions and bonus (8) ...Stock Options...

  • Page 227
    ... Good Reason (Change in Control) column are the sum of the fiscal 2007 bonus already earned under the Executive Incentive Plan and a severance bonus equal to the average of the last three years' bonuses under the Autodesk Change in Control Program. (3) Stock Options: For Mr. Castino, Mr. Bado and Ms...

  • Page 228
    ... amounts for awards granted in and prior to fiscal 2007. The assumptions used in the valuation of these awards are set forth in Note 1, "Business and Summary of Significant Accounting Policies," in the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. These amounts...

  • Page 229
    ... 89,964 89,964 89,964 (c) In fiscal 2007, each of our non-employee directors received the following options to purchase shares of our common stock: Grant Date Fair Value of Option Awards ($) Name Grant Date Number of Shares (#) Exercise Price Per Share ($) J. Hallam Dawson ...Mary Alice Taylor...

  • Page 230
    ... 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 231
    ... for each listed person is c/o Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903. (2) The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for...

  • Page 232
    ... Act on February 6, 2007. (5) The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202, which was obtained from a filing made with the SEC pursuant to Section 13(g) of the Exchange Act on February 13, 2007. (6) The address of TCW Asset Management Co. is 865...

  • Page 233
    ... Stock Option Plan permitted the grant to eligible employees of options to purchase up to 16.9 million shares, all of which have been previously granted. Executive officers and members of the Board of Directors were not eligible to participate in this plan. The Nonstatutory Stock Option Plan...

  • Page 234
    ...' 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 to participate in...

  • Page 235
    ... 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 can reasonably provide, including statutory audits and services rendered in connection with SEC filings. The fiscal 2007...

  • Page 236
    ...FINANCIAL STATEMENT SCHEDULE II Additions Charged to Costs and Expenses or Revenues Description Balance at Beginning of Year Deductions and Write-Offs Balance at End of Year Fiscal year ended January 31, 2007 Allowance for doubtful accounts ...Product returns reserves ...Restructuring ...Fiscal...

  • Page 237
    ... A. Bartz Carol A. Bartz /s/ Chief Executive Officer and June 4, 2007 President (Principal Executive Officer) Senior Vice President and Chief Financial Officer June 4, 2007 (Principal Financial Officer) Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer...

  • Page 238
    Signature Title Date /s/ Per-kristian Halvorsen Per-Kristian Halvorsen /s/ Steven L. Scheid Steven L. Scheid Director Director Director Director June 4, 2007 June 4, 2007 June 4, 2007 June 4, 2007 /s/ Mary Alice Taylor Mary Alice Taylor /s/ Larry W. Wangberg Larry W. Wangberg 178

  • Page 239
    ...'s Annual Report on Form 10-K for the fiscal year ended January 31, 2006) Text of amendment to certain stock option agreements (incorporated by reference to Exhibit 10.1 filed with the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2006) Executive Incentive Plan...

  • Page 240
    ...'s Current Report on Form 8-K filed on December 20, 2006) Office Lease between Registrant and the J.H.S. Trust for 111 McInnis Parkway, San Rafael, CA, as amended (incorporated by reference to Exhibit 10.1 filed with the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October...

  • Page 241
    ... the Standard & Poor's 500 Stock Index and the Dow Jones U.S. Software Index. Comparison of Five Year Cumulative Total Stockholder Return (1) $450 Autodesk, Inc. S&P 500 Dow Jones US Software $400 $350 $300 $250 $200 $150 $100 $50 $2002 2003 2004 2005 2006 2007 (1) Assumes $100 invested...

  • Page 242
    ... Independent Business Consultant Executive Officers Carl Bass Chief Executive Officer and President Carol A. Bartz Executive Chairman of the Board George M. Bado Executive Vice President, Worldwide Sales and Services Jan Becker Senior Vice President, Human Resources and Corporate Real Estate Alfred...

  • Page 243
    ... differ materially. Further information on potential factors that could affect actual results are included in the Form 10-K for the year ended January 31, 2007, a copy of which is enclosed herein. Autodesk does not assume any obligation to update the forward-looking statements provided to reflect...

  • Page 244
    111 McInnis Parkway San Rafael, California 94903