Autodesk 2010 Annual Report Download - page 156

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred Tax Assets
Deferred tax assets arise primarily from tax credits, net operating losses, and timing differences for reserves,
accrued liabilities, stock options, purchased technologies and capitalized software, partially offset by the
establishment of U.S. deferred tax liabilities on unremitted earnings from certain foreign subsidiaries and a
valuation allowance against California and Canadian deferred tax assets. They are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to
reverse. Valuation allowances are established when necessary to reduce gross deferred tax assets to the amount
“more likely than not” expected to be realized.
Stock-based Compensation Expense
Subsequent to the issuance of its July 31, 2009 unaudited Condensed Consolidated Financial Statements,
Autodesk was notified by the Company’s third party software provider that it had made certain changes to how
its software program calculates stock-based compensation expense. Specifically, the prior version of this
software that the Company had been using calculated stock-based compensation expense by incorrectly applying
a weighted average forfeiture rate to the vested portion of stock option awards until the grant’s final vest date,
rather than calculating stock-based compensation expense based upon the actual vested portion of the grant date
fair value, resulting in an understatement of stock-based compensation expense in certain periods prior to the
grant’s final vest date. Consequently, the Company identified errors in the calculation of stock-based
compensation expense for fiscal years ended January 31, 2009, 2008 and 2007, for the three months ended
April 30, 2009, and for the three and six months ended July 31, 2009. The errors identified relate only to the
timing of stock-based compensation expense recognition.
Autodesk determined that the cumulative error from the understatement of stock-based compensation
expense related to the periods discussed above totaled $7.9 million, net of tax effects through July 31, 2009. The
impact of the errors on the fiscal years ended January 31, 2009, 2008 and 2007, is to decrease net income by $1.5
million, $3.5 million and $1.8 million, respectively. For the three months ended April 30, 2009, and three months
ended July 31, 2009, the impact of the errors was to increase net loss by $0.6 million and decrease net income by
$0.5 million, respectively.
Management has determined that the impact of this error is not material to the previously issued annual and
interim financial statements using the guidance of SEC Staff Accounting Bulletin (“SAB”) No. 99 (“SAB 99”)
and SAB No. 108. Accordingly, Autodesk’s Consolidated Statements of Financial Operations for the fiscal year
ended January 31, 2010 include the cumulative adjustment to increase stock-based compensation expense by
$6.8 million net of tax effects (or $0.03 per share) to correct these errors. Autodesk does not believe the
correction of these errors is material to the Consolidated Financial Statements for the fiscal year ending
January 31, 2010.
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