Autodesk 2007 Annual Report Download - page 167

107
2007 Annual Report
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4. Income Taxes (Continued)
Significant components of Autodesk’s deferred tax assets and liabilities are as follows:
January 31,
2007 2006
As Restated (1)
Tax loss carryforwards ..................................... $ 82.1 $139.5
Research and development credit carryforwards . . . . . . . . . . . . . 58.7 42.4
Foreign tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.6 30.2
Nonqualified stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.1 1.7
Accrued compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . 22.3 16.5
Other accruals not currently deductible for tax. . . . . . . . . . . . . . . 15.3 9.7
Fixed assets .............................................. 15.0 11.8
Capitalized research and development expenditures . . . . . . . . . . 7.7 11.2
Reserves for product returns and bad debts . . . . . . . . . . . . . . . . . . 6.1 5.4
Purchased technology and capitalized software . . . . . . . . . . . . . . — 9.5
Other .................................................... 0.8 4.8
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278.7 282.7
Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7.4) (2.2)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271.3 280.5
Purchased technology and capitalized software . . . . . . . . . . . . . . (15.9) —
Unremitted earnings of foreign subsidiaries . . . . . . . . . . . . . . . . . (117.5) (91.9)
Total deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (133.4) (91.9)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 137.9 $ 188.6
(1) See Note 2, “Restatement of Consolidated Financial Statements,” in Notes to Consolidated 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 that had not been previously recognized. As a result
of U.S. operating results, as well as U.S. jurisdictional forecasts of pretax operating results, Autodesk
believes these deferred tax assets are realizable based on the “more likely than not” standard required
for recognition in accordance with SFAS 109. Accordingly, during fiscal 2005, the Company reduced the
valuation allowance relating to tax benefits of stock option deductions by $18.7 million and credited
additional paid in capital by an equal and offsetting amount. As of January 31, 2005, Autodesk no longer
recorded a valuation allowance relating to tax benefits of stock option deductions.
No provision has been made for Federal income taxes on unremitted earnings of certain of Autodesk’s
foreign subsidiaries (cumulatively $319.4 million at January 31, 2007) because Autodesk plans to reinvest
such earnings for the foreseeable future. At January 31, 2007, the unrecognized deferred tax liability for
these earnings was approximately $102.3 million.
Realization of the Company’s net deferred tax assets of $137.9 million is dependent upon the Company
generating approximately $519 million of future taxable income in appropriate tax jurisdictions to obtain