Autodesk 2016 Annual Report Download - page 132

2016 Form 10-K 60
Establishment of a valuation allowance on certain net deferred tax assets. This is a non-cash charge to record a valuation
allowance on certain deferred tax assets. As explained above, management finds it useful to exclude certain non-cash charges to
assess the appropriate level of various cash expenses to assist in budgeting, planning, and forecasting future periods.
Discrete tax items. We exclude the GAAP tax provision, including discrete items, from the non-GAAP measure of income,
and include a non-GAAP tax provision based upon the projected annual non-GAAP effective tax rate. Discrete tax items include
income tax expenses or benefits that do not relate to ordinary income from continuing operations in the current fiscal year, unusual
or infrequently occurring items, or the tax impact of certain stock-based compensation. Examples of discrete tax items include,
but are not limited to, certain changes in judgment and changes in estimates of tax matters related to prior fiscal years, certain
costs related to business combinations, certain changes in the realizability of deferred tax assets or changes in tax law. Management
believes this approach assists investors in understanding the tax provision and the effective tax rate related to ongoing operations.
We believe the exclusion of these discrete tax items provides investors with useful supplemental information about the Company's
operational performance.
Income tax effects on the difference between GAAP and non-GAAP costs and expenses. The income tax effects that are
excluded from the non-GAAP measures relate to the tax impact on the difference between GAAP and non-GAAP expenses,
primarily due to stock-based compensation, amortization of purchased intangibles and restructuring charges (benefits) for GAAP
and non-GAAP measures.
Liquidity and Capital Resources
Our primary source of cash is from the sale of licenses to our products. Our primary use of cash is payment of our
operating costs, which consist primarily of employee-related expenses, such as compensation and benefits, as well as general
operating expenses for marketing, facilities, and overhead costs. In addition to operating expenses, we also use cash to fund our
stock repurchase program and invest in our growth initiatives, which include acquisitions of products, technology, and
businesses. See further discussion of these items below.
At January 31, 2016, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $2.8
billion and net accounts receivable of $653.6 million. Net of long-term debt, we have cash, cash equivalents, and marketable
securities totaling $1.3 billion at January 31, 2016.
In June 2015, we issued $450.0 million aggregate principal amount of 3.125% senior notes due June 15, 2020 and $300.0
million aggregate principal amount of 4.375% senior notes due June 15, 2025. In December 2012, we issued $400.0 million
aggregate principal amount of 1.95% notes due December 15, 2017 and $350.0 million aggregate principal amount of 3.6%
notes due December 15, 2022 (all four series of notes collectively, the “Notes”). As of March 23, 2016, we have $1.5 billion
aggregate principal amount of Notes outstanding. In addition, we have a line of credit facility that permits unsecured short-term
borrowings of up to $400.0 million. As of March 23, 2016, we have no amounts outstanding under the credit facility. In May
2015, Autodesk amended and restated the credit agreement to extend the facility's maturity date from May 2018 to May 2020
and to amend the financial covenants. Borrowings under the credit facility and the net proceeds from the offering of the Notes
are available for general corporate purposes.
Our cash and cash equivalents are held by diversified financial institutions globally. Our primary commercial banking
relationship is with Citigroup and its global affiliates. In addition, Citibank N.A., an affiliate of Citigroup, is one of the lead
lenders and agent in the syndicate of our $400.0 million line of credit.
The increase in our cash, cash equivalents, and marketable securities to $2.8 billion at January 31, 2016 from $2.3 billion
at January 31, 2015 was primarily the result of the proceeds from the issuance of our June 2015 notes and the result of cash
generated from operations. These increases to cash, cash equivalents and marketable securities were partially offset by cash
used for repurchases of our common stock (net of stock issuance proceeds), acquisitions including business combinations and
technology purchases, capital expenditures, and other investing activities. The cash proceeds from issuance of common stock
vary based on our stock price, stock option exercise activity and the volume of employee purchases under the Employee Stock
Purchase Plan.
The primary source of net cash provided by operating activities of $414.0 million in fiscal 2016 was $578.9 million of
non-cash expenses, including our deferred tax asset valuation allowance, stock-based compensation expense, and depreciation,
amortization and accretion expense, offsetting our net loss of $330.5 million. In addition, net cash flow provided by changes in
operating assets and liabilities was $190.6 million. The primary working capital sources of cash was an increase in deferred
revenue for fiscal 2016 compared to fiscal 2015. Our days sales outstanding in trade receivables was 92 at January 31, 2016
2016 Annual Report