Autodesk 2007 Annual Report Download - page 94

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Restatement of Previously Issued Financial Results
Introduction
On August 17, 2006, Autodesk, Inc. (“Autodesk” or the “Company”) announced that the Audit
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.
The Audit Committee engaged independent outside legal counsel, Hogan & Hartson LLP, who,
with the assistance of forensic accounting experts, PricewaterhouseCoopers, reviewed the facts and
circumstances surrounding approximately 230 separate stock option grant approvals made between
January 1988 and August 2006, or the “relevant period.” During the course of the voluntary review, more
than 700,000 documents were reviewed and interviews with over 40 current and former employees,
directors and advisors were conducted. In February 2007, the Audit Committee completed its review and
presented its final report to Autodesk’s Board of Directors.
The following is a summary of the key findings of the Audit Committee:
• Throughout the relevant period, numerous administrative errors were made in the processing of
option grants resulting in options being accounted for incorrectly;
• Between July 2000 and February 2005, the Company made monthly broad-based employee grants
pursuant to authority delegated by the Board to the CEO, where the grant dates for most of these
broad based grants were selected by an administrative process to coincide with low trading prices
during the month of the applicable grant;
• During the calendar year 1992:
• a broad-based employee grant that included a grant to the Company’s then-CFO and then-
General Counsel were measured on an incorrect date; and
• the new hire grant to the then-incoming CEO was measured on an incorrect date;
• There was no evidence that any officer or director backdated any stock option granted to himself
or herself;
• Based on the evidence developed during the review, the Audit Committee concluded that it was
unlikely that those involved in the decisions and actions that resulted in measurement date errors
understood the accounting impact of their actions or that they intended to misstate our financial
statements; and
• There was no evidence of any measurement date error involving any stock option grant made to a
person serving as a director.
The Company had progressively, substantially and voluntarily improved its employee stock-based
compensation grant process prior to 2006, before the intense regulatory and media focus on stock
option grant practices began, and no Company employees or officers who may have made discretionary
determinations that resulted in measurement date errors in the past has any continuing role relating to
the distribution, administration or accounting for stock-based compensation.
As a result of the findings of the voluntary review, the Board of Directors has concluded, upon
the recommendation of management and the Audit Committee, that the consolidated balance sheets
as of January 31, 2002, 2003, 2004, 2005 and 2006, and the related consolidated statements of income,
stockholders’ equity, and cash flows for each of the fiscal years ended January 31, 2003, 2004, 2005
and 2006, should no longer be relied upon. As a result, we are restating our previously-issued financial
statements for fiscal years 2003 through 2006, inclusive, to correct errors related to accounting for total
stock-based compensation expense.