Autodesk 2010 Annual Report Download - page 174

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of January 31, 2010, Autodesk had $62.9 million of cumulative Federal research tax credit
carryforwards, $34.3 million of cumulative California state research tax credit carryforwards and $43.4 million
of cumulative Canadian Federal tax credit carryforwards, which may be available to reduce future income tax
liabilities in the respective jurisdictions. The Federal credit carryforwards will expire beginning fiscal 2012
through fiscal 2030, the state credit carryforwards may reduce future California income tax liabilities
indefinitely, and the Canadian tax credit carryforwards will expire beginning fiscal 2012 through fiscal 2030.
Autodesk also has $112.2 million of cumulative foreign tax credit carryforwards, which may be available to
reduce future U. S. tax liabilities. The foreign tax credit will expire beginning fiscal 2017 through fiscal 2020.
Utilization of net operating losses and tax credits may be subject to an annual limitation due to ownership
change limitations provided in the Internal Revenue Code and similar state provisions. This annual limitation
may result in the expiration of net operating losses and credits before utilization.
As a result of certain business and employment actions and capital investments undertaken by Autodesk,
income earned in certain countries is subject to reduced tax rates through fiscal 2019. The income tax benefits
attributable to the tax status of these business arrangements are estimated to be zero in fiscal 2010, $0.3 million
($0.001 basic net income per share) in fiscal 2009 and $9.0 million ($0.04 basic net income per share) in fiscal
2008. The income tax benefits were offset partially by accruals of U.S. income taxes on undistributed earnings,
among other factors.
During fiscal 2010, Autodesk recognized income tax expense of approximately $17.7 million primarily
related to a change in the expected future tax rates and the establishment of a valuation allowance against
California deferred taxes of $20.2 million partially offset by the closure of audits and other decreases in uncertain
tax positions with respect to fiscal 2003 of $2.5 million.
During fiscal 2009, Autodesk recognized income tax benefits of approximately $6.1 million primarily
related to closure of audits and other decreases in uncertain tax positions with respect to fiscal 2002 through
fiscal 2008.
During fiscal 2008, Autodesk recognized income tax benefits of approximately $3.0 million primarily
related to the lapse of foreign statute of limitations with respect to uncertain tax positions that relate to fiscal
2001.
As of January 31, 2010, the Company had $178.2 million of gross unrecognized tax benefits, of which
$165.2 million would impact the effective tax rate, if recognized. 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:
2010 2009 2008
Gross unrecognized tax benefits at the beginning of the fiscal year ............... $169.4 $152.4 $137.7
Increases for tax positions of prior years .................................... 3.1 1.2 2.7
Decreases for tax positions of prior years ................................... (1.9) (7.0) —
Increases for tax positions related to the current year .......................... 11.1 25.8 15.5
Decreases for lapse of statute of limitations ................................. (3.5) (3.0) (3.5)
Gross unrecognized tax benefits at the end of the fiscal year .................... $178.2 $169.4 $152.4
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