Autodesk 2010 Annual Report Download - page 128

jurisdictions to realize the net deferred tax assets. Our judgments regarding future profitability may change due to
future market conditions and other factors. Any change in future profitability may require material adjustments to
these net deferred tax assets, resulting in a reduction in net income in the period when such determination is
made.
Stock-Based Compensation. We measure stock-based compensation cost at the grant date fair value of the
award, and recognize expense on a straight-line basis over the requisite service period, which is generally the
vesting period. We estimate the fair value of stock-based payment awards using the Black-Scholes-Merton
option-pricing model. The determination of the fair value of a stock-based award on the date of grant using the
Black-Scholes-Merton option-pricing model is affected by our stock price on the date of grant as well as
assumptions regarding a number of complex and subjective variables. These variables include our expected stock
price volatility over the expected term of the award, actual and projected employee stock option exercise
behaviors, the risk-free interest rate for the expected term of the award and expected dividends. The variables
used in the model are reviewed on a quarterly basis and adjusted, as needed. The value of the portion of the
award that is ultimately expected to vest is recognized as expense in our Consolidated Statements of Operations.
Legal Contingencies. As described in Part I, Item 3, “Legal Proceedings” and Part II, Item 8, Note 8,
“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
See Part II, Item 8, Note 1, “Business and Summary of Significant Accounting Policies,” in the Notes to
Consolidated Financial Statements for a full description of recent accounting pronouncements, including the
expected dates of adoption and estimated effects on results of operations and financial condition, which is
incorporation herein by reference.
Overview of Fiscal 2010 Results of Operations
Fiscal Year
Ended
January 31, 2010
As a % of Net
Revenue
Fiscal Year
Ended
January 31, 2009
As a % of Net
Revenue
(in millions)
Net Revenue ...................... $1,713.7 100% $2,315.2 100%
Cost of revenue ................ 191.8 11% 219.1 9%
Gross Profit ....................... 1,521.9 89% 2,096.1 91%
Operating expenses ............. 1,456.3 85% 1,851.6 80%
Income from Operations ............. $ 65.6 4% $ 244.5 11%
Our results for fiscal 2010 continue to reflect the recent global economic downturn, which has impacted our
business on almost every front. While global macroeconomic indicators remain mixed, there were some slight
signs of stabilization during the second half of fiscal 2010. Job losses and the availability of credit in the major
industries we serve are important indicators for our business. There have been significant job losses around the
world over the past two years, and unemployment remains high in several important geographies, including the
U.S. Additionally, there are a number of mixed data points as to whether credit has become more readily
available, and how this continues to impact our customers and partners. Our level of confidence in fiscal 2011
revenue forecasts is limited, and consequently we are not able to provide full year fiscal 2011 revenue guidance.
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