Autodesk 2008 Annual Report Download - page 109

We adopted SFAS 123R using the modified prospective transition method, which requires the application of
the accounting standard as of February 1, 2006, the first day of our fiscal year 2007. Our consolidated financial
statements for fiscal 2008 and 2007 reflect our adoption of SFAS 123R. In accordance with the modified
prospective transition method, our consolidated financial statements for prior periods have not been restated for,
and do not include the impact of, compensation expense calculated under SFAS 123R.
SFAS 123R requires companies to estimate the fair value of share-based payment awards on the date of
grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is
recognized as expense over the requisite service periods in our Consolidated Statements of Income. Prior to the
adoption of SFAS 123R, we accounted for stock-based awards to employees and directors using the intrinsic
value method in accordance with APB 25, as permitted by SFAS 123. Under the intrinsic value method,
compensation expense resulted primarily from stock option grants to non-executive employees at exercise prices
below fair market value on the option measurement date. The majority of these grants were made between
August 2000 and February 2005.
We use the Black-Scholes-Merton option-pricing model for determining the estimated fair value for
employee stock awards. This is the same option-pricing model used in prior years to calculate the pro forma
compensation expense under our SFAS 123 footnote disclosures. This model requires the input of assumptions,
including expected stock price volatility, expected life, expected dividend yield and risk-free interest rate of each
award. The parameters used in the model are reviewed on a quarterly basis and adjusted, as needed.
Compensation expense for employee stock awards is recognized on a straight-line basis over the vesting period
of the award. The adoption of SFAS 123R also requires certain changes to the accounting for income taxes, the
method used in determining diluted shares, the application of a pre-vesting forfeiture rate against both pre-and
post-adoption grants, as well as additional disclosure related to the cash flow effects resulting from share-based
compensation.
Legal Contingencies. As described in Part I, Item 3, “Legal Proceedings” and Part II, Item 8, Note 6,
“Commitments and Contingencies,” in the Notes to Consolidated Financial Statements, we are periodically
involved in various legal claims and proceedings. We routinely review the status of each significant matter and
assess our potential financial exposure. If the potential loss from any matter is considered probable and the
amount can be reasonably estimated, we record a liability for the estimated loss. Because of inherent
uncertainties related to these legal matters, we base our loss accruals on the best information available at the
time. As additional information becomes available, we reassess our potential liability and may revise our
estimates. Such revisions could have a material impact on future quarterly or annual results of operations.
Recently Issued Accounting Standards
In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standards No. 141 (revised 2007) “Business Combinations” (“SFAS 141R”). SFAS 141R establishes
principles and requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill
acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial
effects of the business combination. This statement will be effective for Autodesk’s fiscal year beginning
February 1, 2009. Autodesk is currently evaluating the impact that SFAS 141R will have on its consolidated
financial position, results of operations or cash flows.
In December 2007, the FASB also issued Statement of Financial Accounting Standards No. 160
“Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”).
SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling
interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments
when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and
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2008 Annua
l Report