Autodesk 2007 Annual Report Download - page 85

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2007 Annual Report
Product returns could exceed our estimates and harm our net revenues.
We permit our distributors and resellers to return 2% to 20% of prior quarter purchases and to return
a product when new product releases supersede older versions. Consistent with our experience in fiscal
2007, we anticipate that product returns will continue to be driven by product update cycles, new product
releases and software quality.
We establish reserves for stock balancing and product rotation. These reserves are based on historical
experience, estimated channel inventory levels and the timing of new product introductions and other
factors. While we maintain strict measures to monitor these reserves, actual product returns may exceed
our reserve estimates, and such differences could harm our business.
If we are not able to adequately protect our proprietary rights, our business could be harmed.
We rely on a combination of patents, copyright and trademark laws, trade secrets, confidentiality
procedures and contractual provisions to protect our proprietary rights. Despite such efforts to protect
our proprietary rights, unauthorized parties from time to time have copied aspects of our software
products or have obtained and used information that we regard as proprietary. Policing unauthorized use
of our software products is time-consuming and costly. While we have recovered some revenues resulting
from the unauthorized use of our software products, we are unable to measure the extent to which
piracy of our software products exists, and software piracy can be expected to be a persistent problem.
Furthermore, our means of protecting our proprietary rights may not be adequate, and our competitors
may independently develop similar technology.
ITEM 1B. UNRESOLVED STAFF COMMENTS
We have received no written comments regarding 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 foreign subsidiaries. Our executive offices and corporate headquarters are located in leased
office space in San Rafael, California. Our San Rafael facilities consist of 304,000 square feet under leases
that have expiration dates ranging from October 2007 to February 2012. We and our foreign subsidiaries
lease additional space in various locations throughout the world for local sales, product development and
technical support personnel.
All facilities are in good condition and are operating at capacities averaging 79% occupancy
worldwide. We believe that our existing facilities and offices are adequate to meet our requirements for
the foreseeable future. See Note 8, “Commitments and Contingencies,” in the Notes to the Consolidated
Financial Statements for more information about our lease commitments.
ITEM 3. LEGAL PROCEEDINGS
On December 27, 2001, Spatial Corp. (“Spatial”) filed suit in Marin County Superior Court against
Autodesk and one of our consultants, D-Cubed Ltd., seeking among other things, termination of a
development and license agreement between Spatial and Autodesk and an injunction preventing Autodesk
from working with contractors under the agreement. On October 2, 2003, a jury found that Autodesk did
not breach the agreement. As the prevailing party in the action, the court awarded Autodesk approximately
$2.4 million for reimbursement of attorneys’ fees and the costs of trial, which was paid during the second
quarter of fiscal 2005. Spatial filed a notice of appeal on December 2, 2003 appealing the decision of the
jury. Spatial claims that certain testimony of a witness should not have been considered by the jury and
as a result, Spatial asserts that it is entitled to a new trial. On March 23, 2006, the Court of Appeal denied