Autodesk 2011 Annual Report Download - page 132

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AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
cumulative error from the understatement of stock-based compensation expense related to the periods prior to
fiscal 2010 totaled $6.8 million, net of tax effects. Accordingly, additional expenses of $0.4 million for Cost of
license and other revenue, $4.4 million for Marketing and sales, $2.9 million for Research and development, $2.1
million for General and Administrative and $3.0 million for additional tax benefit are included in the stock-based
compensation expenses in the table above for the fiscal year ended January 31, 2010.
Autodesk uses the Black-Scholes-Merton option-pricing model to estimate the fair value of stock-based
awards based on the following assumptions:
Fiscal Year Ended
January 31, 2011
Fiscal Year Ended
January 31, 2010
Fiscal Year Ended
January 31, 2009
Stock Option
Plans ESP Plan
Stock Option
Plans ESP Plan
Stock Option
Plans ESP Plan
Range of expected
volatilities ............. 40-45% 33-47% 43-55% 43-73% 37-55% 36-41%
Range of expected lives
(in years) .............. 2.6-4.4 0.5-2.0 2.7-4.0 0.5-2.0 2.6-4.0 0.5-2.0
Expected dividends ........ 0% 0% 0% 0% 0% 0%
Range of risk-free interest
rates ................. 0.84 - 1.85% 0.20 - 1.05% 1.02 - 2.42% 0.20 - 0.98% 1.01 - 3.40% 1.29 - 1.85%
Expected forfeitures ....... 10.5 - 13.5% 10.5 - 13.5% 13.5% 13.5% 13.6% 13.6%
Autodesk estimates expected volatility for stock-based awards based on the average of the following two
measures. The first is a measure of historical volatility in the trading market for the Company’s common stock,
and the second is the implied volatility of traded forward call options to purchase shares of the Company’s
common stock.
Autodesk estimates the expected life of stock-based awards using both exercise behavior and post-vesting
termination behavior as well as consideration of outstanding options.
Autodesk did not pay cash dividends in fiscal 2011, 2010 or 2009 and does not anticipate paying any cash
dividends in the foreseeable future. Consequently, an expected dividend yield of zero is used in the Black-
Scholes-Merton option pricing model.
The risk-free interest rate used in the Black-Scholes-Merton option pricing model for stock-based awards is
the historical yield on U.S. Treasury securities with equivalent remaining lives.
Autodesk recognizes expense only for the stock-based awards that are ultimately expected to vest.
Therefore, Autodesk has developed an estimate of the number of awards expected to cancel prior to vesting
(“forfeiture rate”). The forfeiture rate is estimated based on historical pre-vest cancellation experience and is
applied to all stock-based awards. The Company estimates forfeitures at the time of grant and revises those
estimates in subsequent periods if actual forfeitures differ from those estimates.
Advertising Expenses
Advertising costs are expensed as incurred. Total advertising expenses incurred were $18.8 million in fiscal
2011, $18.4 million in fiscal 2010 and $16.4 million in fiscal 2009.
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