Autodesk 2008 Annual Report Download - page 146

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
• Autodesk recognized an income tax benefit of $12.5 million relating to the DRD Legislation. Of this
amount, $10.6 million related to foreign withholding taxes previously accrued which were no longer
due as part of the repatriation of foreign earnings under the DRD Legislation, and $1.9 million related
to an Internal Revenue Service (“IRS”) technical correction of the DRD Legislation.
• As a result of the Company’s resolution and closure of its Franchise Tax Board (“FTB”) audits for
fiscal 2000 and 2001, as well as the closure and lapse of the statute of limitations with respect to certain
Federal and foreign tax years, Autodesk recognized income tax benefits of approximately
$10.0 million.
As of January 31, 2008, the Company had approximately $152.4 million of gross unrecognized tax benefits,
excluding interest, of which approximately $138.0 million represents the amount of unrecognized tax benefits
that would impact the effective tax rate, if recognized. The remaining $14.4 million relates to items that would
result in balance sheet reclassification only, with no impact to income tax expense. It is possible that the amount
of unrecognized tax benefits will change in the next twelve months; however an estimate of the range of the
possible change cannot be made at this time.
A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits is as follows:
Gross unrecognized tax benefits at February 1, 2007 ................................. $137.7
Increases for tax positions of prior years .......................................... 2.7
Increases for tax positions related to the current year ................................. 15.5
Decreases for settlements of tax matters ........................................... —
Decreases for lapse of statute of limitations ........................................ (3.5)
Gross unrecognized tax benefits at January 31, 2008 ................................. $152.4
It is the Company’s continuing practice to recognize interest and/or penalties related to income tax matters
in income tax expense. The Company had approximately $2.7 million, net of tax benefit, accrued for interest and
$0 accrued for penalties related to unrecognized tax benefits as of January 31, 2008.
Autodesk and its subsidiaries are subject to income tax in the United States as well as numerous state and
foreign jurisdictions. The Company’s U.S. and state income tax returns for fiscal year 2003 through fiscal year
2008 remain open to examination. In addition, the company files tax returns in multiple foreign taxing
jurisdictions with open tax years ranging from fiscal year 2000 to 2008.
Note 4. Deferred Compensation
At January 31, 2008, Autodesk had marketable securities totaling $39.8 million, of which $26.7 million
related to investments in debt and equity securities that are held in a rabbi trust under non-qualified deferred
compensation plans. The value of debt and equity securities held in the rabbi trust at January 31, 2007 was
$27.2 million. The total related deferred compensation liability was $26.7 million at January 31, 2008, of which
$18.2 million was classified as current and $8.5 million was classified as non-current liabilities. The total related
deferred compensation liability at January 31, 2007 was $27.2 million of which $12.5 million was classified as
current and $14.7 million was classified as non-current liabilities. The current and non-current portions of the
liability are recorded in the Consolidated Balance Sheets under “Accrued compensation” and “Other liabilities,”
respectively.
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