ADSK » Topics » Liquidity and Capital Resources

This excerpt taken from the ADSK 10-K filed Mar 19, 2010.

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 invest in our growth initiatives, which include acquisitions of products, technology and businesses and to fund our stock repurchase program. See further discussion of these items below.

At January 31, 2010, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $1,126.2 million and net accounts receivable of $277.4. In addition, we have a U.S. line of credit facility that permits unsecured short-term borrowings of up to $250.0 million and a China line of credit that permits unsecured short-term borrowings of up to $5.0 million. These line of credit agreements contain customary covenants that could restrict the imposition of liens on our assets, and restrict our ability to incur additional indebtedness or make dispositions of assets if we fail to maintain their financial covenants. These credit facilities are available for working capital and other business needs. At January 31, 2010, we had no borrowings outstanding on the U.S. or China line of credit. The U.S. facility expires in August 2012 and the China facility has no contractual expiration. As of March 19, 2010, no amounts were outstanding on the U.S. and China line of credit facilities.

Our cash and cash equivalents are held by diversified financial institutions globally. Our primary commercial banking relationship is with Citibank and its global affiliates (“Citibank”). In addition, Citicorp USA, Inc., an affiliate of Citibank, is the lead lender and agent in the syndicate of our $250.0 million U.S. line of credit.

The increase in our cash, cash equivalents and marketable securities from $988.7 million at January 31, 2009 to $1,126.2 million at January 31, 2010 is principally the result of cash generated from operations and the proceeds from the issuance of common stock. These increases to cash, cash equivalents and marketable securities were partially offset by cash used for repurchases of our common stock, repayment of our lines of credit, capital expenditures, the acquisition of PlanPlatform and equity investments. Cash generated from operations was negatively impacted by lower net revenue and the payment of restructuring charges.

At January 31, 2010, our short-term investment portfolio had an estimated fair value of $161.9 million and a cost basis of $169.1 million. The portfolio fair value consisted of $89.0 million invested in commercial paper and corporate securities, $26.3 million invested in mutual funds, $24.6 million invested in certificates of deposit and time deposits with remaining maturities at the date of purchase greater than 90 days and less than one year, $10.0 million invested in money market funds, $8.8 million invested in U.S. government agency securities and $3.2 million invested in municipal securities and other securities.

At January 31, 2010, we had an investment in The Reserve International Liquidity Fund (the “International Fund”), a market fund with an estimated fair value of $10.0 million. During the third quarter of fiscal 2009, the International Fund ceased redemptions after net asset values of the funds decreased below $1 per share. This occurred as a result of the International Fund revaluing its holdings of debt securities issued by Lehman Brothers, which filed for Chapter 11 bankruptcy on September 15, 2008, and the resulting unusually high redemption requests on the International Fund. Our investment in the International Fund is unrelated to the assets of our Deferred Compensation Plan.

 

46


Table of Contents

A third party court appointed supervisor is overseeing, but not managing, the accounting and payment administration of the non U.S.-based International Fund. Our investment in the International Fund is not currently liquid, and in the event we need to access these funds, we will not be able to do so. However, based on currently available information, we expect to recover substantially all of our current holdings, net of reserves, from the International Fund within the next 12 months. Accordingly, the investment in the International Fund is classified in current “Marketable Securities” in the Consolidated Balance Sheets.

In addition, At January 31, 2010, we owned two auction rate securities with an estimated fair value of $7.6 million. Our auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that were structured to reset at auction every 28 days. The securities, which met our investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007 and have earned a premium interest rate since that time. While we expect to recover substantially all of our current holdings, net of reserves, in the auction rate securities, we cannot predict when this will occur or the amount we will receive. Due to the lack of liquidity of these investments, they are included in non-current “Marketable securities” in the Consolidated Balance Sheets. See Note 2, “Financial Instruments and Hedging Activities,” in the Notes to Consolidated Financial Statements for further discussion of our financial instruments.

At January 31, 2010, $26.3 million of trading securities were invested in a defined set of mutual funds as directed by the participants in our Deferred Compensation Plan (see Note 6, “Deferred Compensation,” in the Notes to Consolidated Financial Statements for further discussion).

The primary source for net cash provided by operating activities of $246.8 million for fiscal 2010 was net income increased by the effect of non-cash expenses associated with depreciation and amortization, stock-based compensation, and impairment of goodwill. The primary working capital source of cash was a decrease in accounts receivable. The decrease in accounts receivable relates primarily to the increase in collections during the fourth quarter of fiscal 2010 as compared to the fourth quarter of fiscal 2009. Our days sales outstanding in trade receivables was 55 days at January 31, 2010. The primary working capital uses of cash were for payment of restructuring-related costs, the reduction of deferred revenue due to lower maintenance billings for fiscal 2010 compared to fiscal 2009 and reductions of accrued expenses primarily related to our fiscal 2010 employee bonus accrual and fourth quarter fiscal 2010 commissions. We expect net cash flows provided by operating activities to be higher in fiscal 2011 than in fiscal 2010 due to improved operating margins.

Long-term cash requirements for items other than normal operating expenses are anticipated for the following: stock repurchases; the acquisition of businesses, software products, or technologies complementary to our business; capital expenditures, including the purchase and implementation of internal-use software applications; and funding restructuring costs.

Our existing cash, cash equivalents and investment balances may decline in fiscal 2011 in the event of a further weakening of the economy or changes in our planned cash outlay. Cash from operations could also be affected by various risks and uncertainties, including, but not limited to the risks detailed in Part I, Item 1A titled “Risk Factors.” However, based on our current business plan and revenue prospects, we believe that our existing balances, our anticipated cash flows from operations and our available credit facility will be sufficient to meet our working capital and operating resource expenditure requirements for the next 12 months. Our existing U.S. credit facility is currently $250.0 million of which we have no amounts outstanding. This credit facility is available for working capital and other business needs.

Our revenue, earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our risk management strategy utilizes derivative instruments to hedge a majority of our foreign currency transaction exposures that exist as part of our ongoing business operations. As of January 31, 2010, we have open contracts to hedge expected cash flows for one to twelve months in the future. Contracts are primarily denominated in euros, Japanese yen, Swiss francs, British pounds and Canadian dollars. We do not enter into any

 

47


Table of Contents

derivative instruments for trading or speculative purposes. The notional amount of our option and forward contracts was $239.1 million and $276.7 million at January 31, 2010 and January 31, 2009, respectively.

This excerpt taken from the ADSK 10-Q filed Jun 3, 2009.

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 invest in our growth initiatives, which include acquisitions of products, technology and businesses and to fund our stock repurchase program. See further discussion of these items below.

At April 30, 2009, our principal sources of liquidity were cash, cash equivalents and short-term marketable securities totaling $958.9 million, net accounts receivable of $228.6 million and $2.1 million of outstanding draws on our lines of credit. We have a U.S. line of credit facility that permits unsecured short-term borrowings of up to $250.0 million and a China line of credit that permits unsecured short-term borrowings of up to $5.0 million. These line of credit agreements contain customary covenants that could restrict the imposition of liens on our assets, and restrict our ability to incur additional indebtedness or make dispositions of assets if we fail to maintain their financial covenants. These credit facilities are available for working capital and other business needs. At April 30, 2009, we had no borrowings outstanding on the U.S. line of credit. As of April 30, 2009, we had $2.1 million outstanding on the China line of credit. The U.S. facility expires in August 2012, and the China facility has no contractual expiration.

Our primary commercial banking relationship is with Citibank and its global affiliates (“Citibank”). Our cash and cash equivalents are held by diversified financial institutions globally. Citicorp USA, Inc., an affiliate of Citibank, is the lead lender and agent in the syndicate of our $250.0 million U.S. line of credit. Citibank, like many financial institutions, has obtained government assistance.

At April 30, 2009, our short-term investment portfolio consisted of term deposits, money market funds and mutual funds with an estimated fair value of $78.4 million, and a cost basis of $83.0 million. Of this amount, $22.8 million was invested in a defined set of mutual funds as directed by the participants in our Deferred

 

36


Table of Contents

Compensation Plan (see Note 8, “Deferred Compensation” in the Notes to Condensed Consolidated Financial Statements for further discussion), $3.7 million was invested in bank term deposits with original maturities greater than 90 days and less than one year, and $20.0 million was invested in U.S. Government Agencies. The remaining $31.9 million was invested in two money market funds: $30.9 million was invested in The Reserve International Liquidity Fund (the “International Fund”) and $1.0 million was invested in The Reserve Primary Fund (the “Primary Fund,” and together with the International Fund, the “Reserve Funds”). During the third quarter of fiscal 2009, the Reserve Funds ceased redemptions after net asset values of the funds decreased below $1 per share. This occurred as a result of the Reserve Funds revaluing their holdings of debt securities issued by Lehman Brothers, which filed for Chapter 11 bankruptcy on September 15, 2008, and the resulting unusually high redemption requests on the Reserve Funds. Our investments in the Reserve Funds are unrelated to the assets of our Deferred Compensation Plan.

The timing of future redemptions from the Reserve Funds are currently undetermined. The SEC is overseeing the administration, accounting and payout of the U.S.-based Primary Fund, and a third party court appointed supervisor is overseeing, but not managing, the accounting and payment administration of the non U.S.-based International Fund. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so. However, we believe that the distributions for the Reserve Funds will occur within the next 12 months. Accordingly, the Reserve Funds are classified in current “Marketable Securities” in the Condensed Consolidated Balance Sheets.

At April 30, 2009, we owned two auction rate securities with an estimated fair value of $7.6 million and a cost basis of $9.0 million. Our auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that were structured to reset at auction every 28 days. The securities, which met Autodesk’s investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007 and have earned a premium interest rate since that time. Due to the lack of liquidity of these investments, they are included in non-current “Marketable securities.” We will continue to evaluate our accounting for these investments on a quarterly basis. See Note 4, “Financial Instruments,” for further discussion of our financial instruments.

Net cash provided by operating activities of $27.2 million during the first quarter of fiscal 2010 was primarily comprised of net loss and the offsetting effect of non-cash expenses associated with depreciation and amortization, stock-based compensation, impairment of goodwill and deferred tax assets, and restructuring charges. The primary working capital source of cash was a decrease in accounts receivable. The decrease in accounts receivable relates primarily to seasonality in our maintenance contract renewals. A larger portion of our install base renews their maintenance contracts in the fourth quarter and this drives higher cash collections of accounts receivable in the first quarter. Our days sales outstanding in trade receivables was 49 days at April 30, 2009. The primary working capital uses of cash were for reductions of accrued expenses primarily related to our fiscal 2009 employee bonus accrual and fourth quarter fiscal 2009 commissions, payment of restructuring-related costs and the reduction of accrued Employee Stock Purchase Plan (“ESP Plan”) liability due to the half-yearly ESP Plan purchase at the end of March.

As of April 30, 2009, other than the draws and repayments on the lines of credit discussed above, there have been no material changes in our contractual obligations or commercial commitments compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2009. Long-term cash requirements for items other than normal operating expenses are anticipated for the following: the acquisition of businesses, software products, or technologies complementary to our business; capital expenditures, including the purchase and implementation of internal-use software applications; stock repurchases; and funding restructuring costs. In addition, $22.8 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans at April 30, 2009. See Note 8, “Deferred Compensation,” in the Notes to Condensed Consolidated Financial Statements for further discussion.

 

37


Table of Contents

Our existing cash, cash equivalents and investment balances may decline in fiscal 2010 in the event of a further weakening of the economy or changes in our planned cash outlay. Cash from operations could also be affected by various risks and uncertainties, including, but not limited to the risks detailed in Part II, Item 1A titled “Risk Factors”. However, based on our current business plan and revenue prospects, we believe that our existing balances, our anticipated cash flows from operations and our available credit facility will be sufficient to meet our working capital and operating resource expenditure requirements for the next twelve months. Our existing U.S. credit facility is currently $250.0 million of which we have no amounts outstanding. This credit facility is available for working capital and other business needs.

Our revenue, earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our risk management strategy utilizes foreign currency forward and option contracts to manage our foreign currency exposures that exist as part of our ongoing business operations. Prior to the third quarter of fiscal 2009, such contracts did not extend beyond the current quarter; however, beginning in the third quarter of fiscal 2009, we entered into longer-term hedging contracts. We have expanded our foreign currency cash flow hedge program beyond one quarter, and as of April 30, 2009, have open contracts to hedge expected cash flows for one to 12 months in the future in order to reduce foreign currency volatility. Contracts are primarily denominated in euros, Japanese yen, Swiss francs, British pounds and Canadian dollars. We do not enter into any foreign exchange derivative instruments for trading or speculative purposes. The notional amount of our option and forward contracts was $175.0 million and $276.7 million at April 30, 2009 and January 31, 2009, respectively.

At April 30, 2009, we had a short term marketable securities balance consisting of money market funds, mutual funds, U.S. Government Agencies, and bank deposits totaling $78.4 million. At January 31, 2009, we had a short term marketable securities balance consisting of money market funds, mutual funds, and bank deposits totaling $63.5 million. The mutual fund balances totaling $22.8 million at April 30, 2009 and $19.9 million at January 31, 2009 are held in a rabbi trust under deferred compensation arrangements. See Note 4, “Financial Instruments,” in the Notes to Condensed Consolidated Financial Statements for further discussion.

These excerpts taken from the ADSK 10-K filed Mar 20, 2009.

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 invest in our growth initiatives, which include acquisitions of products, technology and businesses and to fund our stock repurchase program. See further discussion of these items below.

At January 31, 2009, our principal sources of liquidity were cash, cash equivalents and short-term marketable securities totaling $981.1 million, net accounts receivable of $316.5 million and $52.1 million of outstanding under our lines of credit. We have a U.S. line of credit facility that permits unsecured short-term borrowings of up to $250.0 million and a China line of credit that permits unsecured short-term borrowings of up to $5.0 million. These line of credit agreements contain customary covenants that could restrict the imposition of liens on our assets, and restrict our ability to incur additional indebtedness or make dispositions of assets if we fail to maintain their financial covenants. The lines of credit are available for working capital or other business needs. We drew on the U.S. line of credit during fiscal 2009 due to temporary differences between cash needs and cash availability in the U.S. During fiscal 2009 we principally used the facility to fund the 8.0 million share stock repurchase and for the acquisition of Moldflow. At January 31, 2009, we had $50.0 million outstanding on the U.S. line of credit. At January 31, 2009, we had $2.1 million outstanding on the China line of credit. We drew on the China line of credit due to temporary differences between cash needs and cash availability in China. The U.S. facility expires in August 2012 and the current China facility draw matures in May 2009. The China facility is a short-term revolving facility which may be canceled or called at any time with 30 days’ written notice. As of March 18, 2009, the balances outstanding on the U.S. and China line of credit facilities were $10.0 million and $2.1 million, respectively.

Our primary commercial banking relationship is with Citibank and its global affiliates (“Citibank”). Our cash and cash equivalents are held by diversified financial institutions globally, and the portion of our cash and cash equivalents held by Citibank has been significantly reduced during the fourth quarter of fiscal 2009. Citicorp USA, Inc., an affiliate of Citibank, is the lead lender and agent in the syndicate of our $250.0 million U.S. line of credit. Recently, Citibank, like many financial institutions, has obtained government assistance.

At January 31, 2009, our short-term investment portfolio consisted of term deposits, money market funds and mutual funds with an estimated fair value of $63.5 million, and a cost basis of $68.0 million. Of this cost basis amount, $19.9 million was invested in a defined set of mutual funds as directed by the participants in our Deferred Compensation Plan (see Note 4, “Deferred Compensation” in the Notes to Consolidated Financial Statements for further discussion), and $10.3 million was invested in bank term deposits with original maturities greater than 90 days and less than one year. The remaining $37.8 million was invested in two money market funds: $35.1 million was invested in The Reserve International Liquidity Fund (the “International Fund”) and $2.7 million was invested in The Reserve Primary Fund (the “Primary Fund,” and together with the International Fund, the “Reserve Funds”). In mid-September, the Reserve Funds ceased redemptions after net asset values of the funds decreased below $1 per share. This occurred as a result of the Reserve Funds revaluing their holdings of debt securities issued by Lehman Brothers, which filed for Chapter 11 bankruptcy on September 15, 2008, and the resulting unusually high redemption requests on the Reserve Funds. Accordingly, we recorded $4.5 million other-than-temporary impairment impacting fiscal 2009. The impairment expense was recorded in “Interest and other income (expense), net” in the Consolidated Statements of Income.

The timing of redemptions from the Reserve Funds currently is undetermined. The SEC is overseeing the administration, accounting and payout of the U.S.-based Primary Fund, and a third party court appointed supervisor is overseeing, but not managing, the accounting and payment administration of the non U.S.-based International Fund. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so. However, it is our current belief that the distributions for the Reserve Funds will occur within the next 12 months. Accordingly, the Reserve Funds are classified in current “Marketable Securities” in the Consolidated Balance Sheets as of January 31, 2009. This re-designation is included in “Purchases of

 

45


Table of Contents

available-for-sale marketable securities” in the investing activities section of the Consolidated Statements of Cash Flows. In the third and fourth quarters of fiscal 2009, the Reserve Funds made a partial distribution under which we received $75.0 million, leaving an additional $37.8 million, on a cost basis, still outstanding.

At January 31, 2009, our investment portfolio included two auction rate securities with an estimated fair value of $7.6 million and a cost basis of $9.0 million. Our auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that were structured to reset at auction every 28 days. The securities, which met our investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007. In addition, these auction rate securities, which were previously AAA-rated, were downgraded during fiscal 2009. Under the contractual terms of these investments, because the auctions failed to settle, the interest rate on these investments reset by increasing to the Libor rate plus 200 basis points, which represents a premium interest rate on these investments. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so without a loss of principal unless a future auction is successful, or a secondary market is available. In fiscal 2009 we recorded an other-than-temporary impairment of $1.4 million related to these investments. The impairment expense was recorded in “Interest and other income (expense), net” in the Consolidated Statements of Income. Due to the lack of liquidity of these investments, they are included in “Marketable securities—non-current.” We will continue to evaluate our accounting for our investments on a quarterly basis. See Note 12, “Financial Instruments,” in Notes to Consolidated Financial Statements for further discussion of our financial instruments.

Net cash flows provided by operating activities of $593.9 million for fiscal 2009 was primarily comprised of net income and the net effect of non-cash expenses associated with the impairment of goodwill and intangibles, primarily related to our M&E segment, as well as restructuring charges. The primary working capital sources of cash were decreases in accounts receivable and increases in deferred revenue. The decrease in accounts receivable relates primarily to reduced billings at the end of fiscal 2009 due to a decline in revenue. Our days sales outstanding in trade receivables reflect the seasonality in maintenance billings, and was 59 days at January 31, 2009 and 2008. The primary working capital use of cash was decreased accrued expenses primarily due to lower accrued employee bonuses and commissions. We expect net cash flows provided by operating activities to be negative in the first quarter of fiscal 2010 as a result of lower revenue combined with cash expenditures in the quarter for payments of the annual employee incentive plan and payments related to our restructuring plan.

Other than the draws on the lines of credit discussed above, there have been no material changes in our contractual obligations or commercial commitments. Long-term cash requirements for items other than normal operating expenses are anticipated for the following: the acquisition of new businesses, software products, or technologies complementary to our business; capital expenditures, including the purchase and implementation of internal-use software applications; stock repurchases; and funding restructuring costs. In addition, $19.9 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans as of January 31, 2009. See Note 4, “Deferred Compensation,” in the Notes to Consolidated Financial Statements for further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we use foreign currency option contracts and forwards to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Prior to the quarter ended October 31, 2008, our foreign currency instruments, by practice, had maturities of less than three months and settled before the end of each quarterly period. During fiscal 2009, we entered into foreign currency instruments with maturities longer than three months that did not settle before the end of each quarterly period. We have expanded our hedge program beyond the current quarter to reduce foreign currency risk and volatility by entering into cash flow hedges for one to 12 months in the future with reduced protection for our longer term hedge instruments. The principal currencies hedged during fiscal 2009 were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign exchange exposures to review the overall effectiveness of our foreign currency hedge positions.

 

46


Table of Contents

Liquidity and Capital Resources

FACE="Times New Roman" SIZE="2">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 invest in our growth initiatives, which include acquisitions of products, technology and businesses
and to fund our stock repurchase program. See further discussion of these items below.

At January 31, 2009, our principal sources of
liquidity were cash, cash equivalents and short-term marketable securities totaling $981.1 million, net accounts receivable of $316.5 million and $52.1 million of outstanding under our lines of credit. We have a U.S. line of credit facility that
permits unsecured short-term borrowings of up to $250.0 million and a China line of credit that permits unsecured short-term borrowings of up to $5.0 million. These line of credit agreements contain customary covenants that could restrict the
imposition of liens on our assets, and restrict our ability to incur additional indebtedness or make dispositions of assets if we fail to maintain their financial covenants. The lines of credit are available for working capital or other business
needs. We drew on the U.S. line of credit during fiscal 2009 due to temporary differences between cash needs and cash availability in the U.S. During fiscal 2009 we principally used the facility to fund the 8.0 million share stock repurchase
and for the acquisition of Moldflow. At January 31, 2009, we had $50.0 million outstanding on the U.S. line of credit. At January 31, 2009, we had $2.1 million outstanding on the China line of credit. We drew on the China line of credit
due to temporary differences between cash needs and cash availability in China. The U.S. facility expires in August 2012 and the current China facility draw matures in May 2009. The China facility is a short-term revolving facility which may be
canceled or called at any time with 30 days’ written notice. As of March 18, 2009, the balances outstanding on the U.S. and China line of credit facilities were $10.0 million and $2.1 million, respectively.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Our primary commercial banking relationship is with Citibank and its global affiliates (“Citibank”). Our cash and cash equivalents are held by
diversified financial institutions globally, and the portion of our cash and cash equivalents held by Citibank has been significantly reduced during the fourth quarter of fiscal 2009. Citicorp USA, Inc., an affiliate of Citibank, is the lead lender
and agent in the syndicate of our $250.0 million U.S. line of credit. Recently, Citibank, like many financial institutions, has obtained government assistance.

FACE="Times New Roman" SIZE="2">At January 31, 2009, our short-term investment portfolio consisted of term deposits, money market funds and mutual funds with an estimated fair value of $63.5 million, and a cost basis of $68.0 million. Of this
cost basis amount, $19.9 million was invested in a defined set of mutual funds as directed by the participants in our Deferred Compensation Plan (see Note 4, “Deferred Compensation” in the Notes to Consolidated Financial Statements for
further discussion), and $10.3 million was invested in bank term deposits with original maturities greater than 90 days and less than one year. The remaining $37.8 million was invested in two money market funds: $35.1 million was invested in The
Reserve International Liquidity Fund (the “International Fund”) and $2.7 million was invested in The Reserve Primary Fund (the “Primary Fund,” and together with the International Fund, the “Reserve Funds”). In
mid-September, the Reserve Funds ceased redemptions after net asset values of the funds decreased below $1 per share. This occurred as a result of the Reserve Funds revaluing their holdings of debt securities issued by Lehman Brothers, which filed
for Chapter 11 bankruptcy on September 15, 2008, and the resulting unusually high redemption requests on the Reserve Funds. Accordingly, we recorded $4.5 million other-than-temporary impairment impacting fiscal 2009. The impairment expense was
recorded in “Interest and other income (expense), net” in the Consolidated Statements of Income.

The timing of redemptions from
the Reserve Funds currently is undetermined. The SEC is overseeing the administration, accounting and payout of the U.S.-based Primary Fund, and a third party court appointed supervisor is overseeing, but not managing, the accounting and payment
administration of the non U.S.-based International Fund. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so. However, it is our current belief that the distributions
for the Reserve Funds will occur within the next 12 months. Accordingly, the Reserve Funds are classified in current “Marketable Securities” in the Consolidated Balance Sheets as of January 31, 2009. This re-designation is included in
“Purchases of

 


45







Table of Contents



available-for-sale marketable securities” in the investing activities section of the Consolidated Statements of Cash Flows. In the third and fourth
quarters of fiscal 2009, the Reserve Funds made a partial distribution under which we received $75.0 million, leaving an additional $37.8 million, on a cost basis, still outstanding.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">At January 31, 2009, our investment portfolio included two auction rate securities with an estimated fair value of $7.6 million and a cost basis of
$9.0 million. Our auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that were structured to reset at auction every 28 days. The
securities, which met our investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007. In addition, these auction rate securities, which were previously AAA-rated, were downgraded during fiscal
2009. Under the contractual terms of these investments, because the auctions failed to settle, the interest rate on these investments reset by increasing to the Libor rate plus 200 basis points, which represents a premium interest rate on these
investments. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so without a loss of principal unless a future auction is successful, or a secondary market is
available. In fiscal 2009 we recorded an other-than-temporary impairment of $1.4 million related to these investments. The impairment expense was recorded in “Interest and other income (expense), net” in the Consolidated Statements of
Income. Due to the lack of liquidity of these investments, they are included in “Marketable securities—non-current.” We will continue to evaluate our accounting for our investments on a quarterly basis. See Note 12, “Financial
Instruments,” in Notes to Consolidated Financial Statements for further discussion of our financial instruments.

Net cash flows
provided by operating activities of $593.9 million for fiscal 2009 was primarily comprised of net income and the net effect of non-cash expenses associated with the impairment of goodwill and intangibles, primarily related to our M&E segment, as
well as restructuring charges. The primary working capital sources of cash were decreases in accounts receivable and increases in deferred revenue. The decrease in accounts receivable relates primarily to reduced billings at the end of fiscal 2009
due to a decline in revenue. Our days sales outstanding in trade receivables reflect the seasonality in maintenance billings, and was 59 days at January 31, 2009 and 2008. The primary working capital use of cash was decreased accrued expenses
primarily due to lower accrued employee bonuses and commissions. We expect net cash flows provided by operating activities to be negative in the first quarter of fiscal 2010 as a result of lower revenue combined with cash expenditures in the quarter
for payments of the annual employee incentive plan and payments related to our restructuring plan.

Other than the draws on the lines of
credit discussed above, there have been no material changes in our contractual obligations or commercial commitments. Long-term cash requirements for items other than normal operating expenses are anticipated for the following: the acquisition of
new businesses, software products, or technologies complementary to our business; capital expenditures, including the purchase and implementation of internal-use software applications; stock repurchases; and funding restructuring costs. In addition,
$19.9 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans as of January 31, 2009. See Note 4, “Deferred Compensation,” in the Notes to Consolidated Financial Statements for
further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we
use foreign currency option contracts and forwards to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Prior
to the quarter ended October 31, 2008, our foreign currency instruments, by practice, had maturities of less than three months and settled before the end of each quarterly period. During fiscal 2009, we entered into foreign currency instruments
with maturities longer than three months that did not settle before the end of each quarterly period. We have expanded our hedge program beyond the current quarter to reduce foreign currency risk and volatility by entering into cash flow hedges for
one to 12 months in the future with reduced protection for our longer term hedge instruments. The principal currencies hedged during fiscal 2009 were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign
exchange exposures to review the overall effectiveness of our foreign currency hedge positions.

 


46







Table of Contents


This excerpt taken from the ADSK 10-Q filed Dec 4, 2008.

Liquidity and Capital Resources

Our primary source of cash is from the sale of 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 invest in our growth initiatives, which include acquisitions of products, technology and businesses and to fund our stock repurchase program. See further discussion of these items below.

As a result of recent volatile conditions in global capital markets, including the bankruptcy filing of Lehman Brothers Holdings, Inc. (“Lehman Brothers”), general liquidity in short-term credit markets has been constrained despite several pro-active intervention measures undertaken by the U.S. government. At October 31, 2008, our principal sources of liquidity were cash, cash equivalents and short-term marketable securities totaling $933.2 million, net accounts receivable of $291.4 million and $3.9 million of outstanding draws on our lines of credit. We have a U.S. line of credit facility that permits unsecured short-term borrowings of up to $250.0 million and a China line of credit that permits unsecured short-term borrowings of up to $5.0 million. These line of credit agreements contain customary covenants that could restrict liens, certain types of additional debt and dispositions of assets if we fail to maintain their financial covenants. The lines of credit are available for working capital or other business needs. We drew on the U.S. line of credit during the nine months ended October 31, 2008 because of a temporary difference between cash needs and cash availability in the U.S. During the nine months ended October 31, 2008, we principally used the facility to fund the repurchase of 8.0 million shares of Autodesk common stock and for the acquisition of Moldflow. At October 31, 2008, we had no borrowings outstanding on the U.S. line of credit. We drew on the China line of credit during the nine months ended October 31, 2008 due to a temporary difference between cash needs and cash availability in China. As of October 31, 2008, we had $3.9 million outstanding on the China line of credit. The U.S. facility expires in August 2012 and the China facility expires in March 2009.

Our primary commercial banking relationship is with Citibank and its global affiliates (“Citibank”), and a significant portion of our cash and cash equivalents was held by Citibank at October 31, 2008. Citicorp USA, Inc., an affiliate of Citibank, is the lead lender and agent in the syndicate of our $250.0 million U.S. line of credit. Recently, Citibank, like many financial institutions, has obtained government assistance. Subsequent to the end of our quarter ended October 31, 2008, we diversified our cash concentration by transferring a portion of our cash balance to other global financial institutions.

 

37


Table of Contents

At October 31, 2008, our short-term investment portfolio consisted of term deposits, money market funds and mutual funds with an estimated fair value of $136.8 million, and a cost basis of $138.8 million. Of this amount, $22.8 million was invested in a defined set of mutual funds as directed by the participants in our Deferred Compensation Plan (see Note 8, “Deferred Compensation” in the Notes to Condensed Consolidated Financial Statements for further discussion), and $9.6 million was invested in bank term deposits with original maturities greater than 90 days and less than one year. The remaining $104.4 million was invested in two money market funds: $98.3 million was invested in The Reserve International Liquidity Fund (the “International Fund”) and $6.1 million was invested in The Reserve Primary Fund (the “Primary Fund,” and together with the International Fund, the “Reserve Funds”). In mid-September, the Reserve Funds ceased redemptions after net asset values of the funds decreased below $1 per share. This occurred as a result of the Reserve Funds revaluing their holdings of debt securities issued by Lehman Brothers, which filed for Chapter 11 bankruptcy on September 15, 2008, and the resulting unusually high redemption requests on the Reserve Funds. Accordingly, we recorded $2.0 million other-than-temporary impairment during the three months ended October 31, 2008. The impairment expense was recorded in “Interest and other income (expense), net” in the Condensed Consolidated Statements of Income.

The timing of redemptions from the Reserve Funds currently is undetermined. The SEC is overseeing the administration, accounting and payout of the U.S.-based Primary Fund, and a third party court appointed supervisor is overseeing, but not managing, the accounting and payment administration of the non U.S.-based International Fund. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so. However, we believe that the distributions for the Reserve Funds will occur within the next 12 months. Accordingly, the Reserve Funds are classified in current “Marketable Securities” in the Condensed Consolidated Balance Sheets as of October 31, 2008. This re-designation is included in “Purchases of available-for-sale marketable securities” in the investing activities section of the Condensed Consolidated Statements of Cash Flows. On November 21, 2008, the Primary Fund announced a distribution to be made on or about December 5, 2008. We estimate that our share of this distribution will be approximately $3.6 million.

At October 31, 2008, we owned two auction rate securities with an estimated fair value of $8.3 million and a cost basis of $9.0 million. Our auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that were structured to reset at auction every 28 days. The securities, which met Autodesk’s investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007. In addition, these auction rate securities, which were previously AAA-rated, were downgraded to AA- and A+ during the nine months ended October 31, 2008. Under the contractual terms of these investments, because the auctions have failed to settle, and due to the downgrade of the securities ratings, the interest rate on these investments earn interest at the Libor rate plus 200 basis points, which represents a premium interest rate on these investments. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so without a loss of principal unless a future auction on these investments is successful. Currently, we believe these investments are temporarily impaired; however, it is not clear when they will be settled. Based on our expected operating cash flows and our ability to access our cash, other short-term investments, and other sources of cash, we have the intention and ability to hold the securities until the value recovers or to maturity. Due to the lack of liquidity of these investments, they are included in non-current “Marketable securities.” We will continue to evaluate our accounting for these investments on a quarterly basis. See Note 4, “Financial Instruments,” for further discussion of our financial instruments.

Net cash provided by operating activities of $507.2 million for the nine months ended October 31, 2008 was primarily comprised of net income and the net effect of non-cash expenses. The primary working capital sources of cash were increases in net income, decreases in accounts receivable and increases in income taxes payable. The decrease in accounts receivable relates primarily to seasonality in our maintenance contract renewals. A larger portion of our install base renews their maintenance contracts in the fourth quarter rather than in the third quarter of our fiscal year. This drives higher maintenance billings and higher accounts receivable balances at the

 

38


Table of Contents

end of the fourth quarter of our fiscal year. Our days sales outstanding in trade receivables was 44 days at October 31, 2008. The increase in income taxes payable is primarily due to the higher income tax provision related to the increased pre-tax income for the nine months ended October 31, 2008. The primary working capital use of cash was for purchases of marketable securities and reductions of accrued expenses primarily related to our fiscal 2009 employee bonus accrual. Marketable securities increased due to the reclassification of cash equivalents to marketable securities from the Reserve Funds due to their illiquidity. Accrued expenses decreased primarily due to payments on the Employee Stock Purchase Plan and various tax payments.

As of October 31, 2008, other than the draws and repayments on the lines of credit discussed above, there have been no material changes in our contractual obligations or commercial commitments compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2008. Long-term cash requirements for items other than normal operating expenses are anticipated for the following: the acquisition of businesses, software products, or technologies complementary to our business; capital expenditures, including the purchase and implementation of internal-use software applications; and stock repurchases. In addition, $22.8 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans at October 31, 2008. See Note 8, “Deferred Compensation,” in the Notes to Condensed Consolidated Financial Statements for further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we use foreign currency option contracts to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. During the quarter ended October 31, 2008, we changed our practice regarding foreign currency instruments. Historically, we hedged only current quarter revenue and expenses, but during the quarter ended October 31, 2008, we began using foreign currency instruments to hedge future quarters’ revenue and expenses. Our foreign currency instruments, by practice, currently have maturities of less than three months and settle before the end of each quarterly period. The principal currencies hedged during the nine months ended October 31, 2008 were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign exchange exposures to ensure the overall effectiveness of our foreign currency hedge positions.

This excerpt taken from the ADSK 10-Q filed Sep 5, 2008.

Liquidity and Capital Resources

Our primary source of cash is from the sale of 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 invest in our growth initiatives, which include acquisitions of products, technology and businesses and to fund our stock repurchase program. See further discussion of these items below.

At July 31, 2008, our principal sources of liquidity were cash, cash equivalents and short-term marketable securities totaling $962.2 million, net accounts receivable of $325.2 million and $120.0 million of outstanding draws on our lines of credit. We have a U.S. line of credit facility that permits unsecured short-term borrowings of up to $250.0 million and a China line of credit that permits unsecured short-term borrowings of up to $5.0 million. These line of credit agreements contain customary covenants that could restrict liens, certain types of additional debt and dispositions of assets if we fail to maintain its financial covenants. The lines of credit are available for working capital or other business needs. We drew on the U.S line of credit line during the six months ended July 31, 2008 because of a temporary difference between cash needs and cash availability in the United States. During the six months ended July 31, 2008, we principally used the facility to fund the 8.0 million stock repurchase and for the acquisition of Moldflow. At July 31, 2008, we had $115.0 million outstanding on the U.S. line of credit. We drew on the China line of credit due to a temporary difference between cash needs and cash availability in China. As of July 31, 2008, we had $5.0 million outstanding on the China line of credit. The U.S facility expires in August 2012 and the China facility expires in March 2009. As of September 4, 2008, the balance on the U.S. line of credit was $20.0 million.

At July 31, 2008, our investment portfolio included two auction rate securities with an estimated fair value of $8.3 million and a cost basis of $9.0 million. Our auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that were structured to reset at auction every 28 days. The securities, which met Autodesk’s investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007. In addition, these auction rate securities, which were previously AAA-rated, were downgraded to AA- and A+ during the three months ended July 31, 2008. Under the contractual terms of these investments, because the auctions failed to settle, the interest rate on these investments earned interest at the Libor rate plus 125 basis points. During the three months ended July 31, 2008, in conjunction with the downgrade of the securities ratings, the interest rate on these investments reset by increasing to the Libor rate plus 200 basis points, which represents a premium interest rate on these investments. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so without a loss of principal unless a future auction on these investments is successful. Currently, we believe these investments are temporarily impaired, however it is not clear when they will be settled. Based on our expected operating cash flows and our ability to access our cash, other short-term

 

35


Table of Contents

investments, and other sources of cash, we have the intention and ability to hold the securities until the value recovers or to maturity. Due to the lack of liquidity of these investments, they are included in “Marketable securities-non-current.” We will continue to evaluate our accounting for these investments on a quarterly basis. See Note 4, “Financial Instruments,” for further discussion of our financial instruments.

Net cash provided by operating activities of $400.3 million for the six months ended July 31, 2008 was primarily comprised of net income and the net effect of non-cash expenses. The primary working capital sources of cash were increases in net income, decreases in accounts receivable, increases in deferred revenue and increases in income taxes payable. The decrease in accounts receivable relates primarily to seasonality in our maintenance contract renewals. A larger portion of our install base renews their maintenance contracts in the fourth quarter rather than in the second quarter of our fiscal year. This drives higher maintenance billings and higher accounts receivable balances at the end of the fourth quarter of our fiscal year. Growth in our installed base and strong maintenance renewals increased deferred revenue. Our days sales outstanding in trade receivables was 48 days at July 31, 2008. The increase in income taxes payable is primarily due to the higher income tax provision related to the increased pre-tax income for the six months ended July 31, 2008. The primary working capital use of cash was payments of accrued expenses. Accrued expenses decreased primarily due to payments for employee bonuses and commissions, partially offset by additional contributions to the employee stock purchase plan accrual.

As of July 31, 2008, other than the draws on the lines of credit discussed above, there have been no material changes in our contractual obligations or commercial commitments compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2008. Long-term cash requirements for items other than normal operating expenses are anticipated for the following: the acquisition of businesses, software products, or technologies complementary to our business; capital expenditures, including the purchase and implementation of internal-use software applications; and stock repurchases. In addition, $28.2 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans at July 31, 2008. See Note 8, “Deferred Compensation,” in the Notes to Condensed Consolidated Financial Statements for further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we use foreign currency option contracts to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Our foreign currency instruments, by practice, have maturities of less than three months and settle before the end of each quarterly period, but we intend to enter into longer term hedges in the future. The principal currencies hedged during the six months ended July 31, 2008 were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign exchange exposures to ensure the overall effectiveness of our foreign currency hedge positions.

This excerpt taken from the ADSK 10-Q filed Jun 2, 2008.

Liquidity and Capital Resources

Our primary source of cash is from the sale of 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 to invest in our growth initiatives, which include business acquisitions. See further discussion of these items below.

At April 30, 2008, our principal sources of liquidity were cash, cash equivalents and short-term marketable securities totaling $942.0 million and net accounts receivable of $333.5 million. In addition, we also have available a U.S. line of credit facility that permits unsecured short-term borrowings of up to $250.0 million, and is available for working capital or other business needs. The credit agreement contains customary covenants which could

 

30


Table of Contents

restrict liens, certain types of additional debt and dispositions of assets if Autodesk fails to maintain its financial covenants. This facility expires in August 2012 and there was $40.0 million outstanding at April 30, 2008. We drew on this line during the first quarter of fiscal 2009 because of a temporary difference between cash needs and cash availability in the United States; we principally used the facility to fund the 8.0 million share repurchase.

At April 30, 2008, our investment portfolio included two auction rate securities with an estimated fair value of $8.3 million ($9.0 million cost basis). Our auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that are reset at auction every 28 days. These AAA-rated auction rate securities, which met our investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007. The failed auctions resulted in the interest rate on these investments resetting at Libor plus 125 basis points, which represents a premium interest rate on these investments. At this time, these investments are not currently liquid, and in the event we need to access these funds, we will not be able to do so without a loss of principal unless a future auction on these investments is successful. Currently, we believe these investments are temporarily impaired, but it is not clear in what period of time they will be settled. Based on our ability to access our cash and other short-term investments, our expected operating cash flows and our other sources of cash, we have the intention and ability to hold the securities until the value recovers or to maturity. Due to the lack of liquidity of these investments, they are included in “Marketable securities-non-current.” We will continue to evaluate our accounting for these investments on a quarterly basis. See Note 16, “Financial Instruments,” for further discussion of our financial instruments.

Net cash flows provided by operating activities decreased $6.3 million to $185.3 million during the first quarter of fiscal 2009, as compared to the same period in the prior fiscal year. The decrease was primarily due to larger payments in the first quarter of fiscal 2009 for accrued fiscal 2008 bonuses and fourth quarter fiscal 2008 commissions, partially offset by increased collections of accounts receivable and higher net income.

As of April 30, 2008, other than the draw on the line of credit discussed above, there have been no material changes in our contractual obligations or commercial commitments compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2008. Long-term cash requirements for items other than normal operating expenses are anticipated for the following: stock repurchases; the acquisition of businesses, software products, or technologies complementary to our business; and capital expenditures, including the purchase and implementation of internal-use software applications. In the event that the proposed acquisition of Moldflow closes, we expect to obtain the necessary funds to pay the offer price from our existing cash balances and borrowings under our existing revolving credit facility. See Note 17, “Subsequent Events,” in the Notes to Condensed Consolidated Financial Statements for further discussion. In addition, $29.0 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans at April 30, 2008. See Note 6, “Deferred Compensation,” in the Notes to Condensed Consolidated Financial Statements for further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we use foreign currency option contracts to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Our foreign currency instruments, by policy, have maturities of less than three months and settle before the end of each quarterly period. The principal currencies hedged during the first quarter of fiscal 2009 were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign exchange exposures to ensure the overall effectiveness of our foreign currency hedge positions.

These excerpts taken from the ADSK 10-K filed Mar 28, 2008.

Liquidity and Capital Resources

Our primary source of cash is from the sale of 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 to invest in our growth initiatives, which include business acquisitions. See further discussion of these items below.

At January 31, 2008, our principal sources of liquidity were cash, cash equivalents and short-term marketable securities totaling $949.3 million and net accounts receivable of $386.5 million. In addition, we also have available a U.S. line of credit facility. This line of credit permits unsecured short-term borrowings of up to $250.0 million, and is available for working capital or other business needs. The credit agreement contains customary covenants which could restrict liens, certain types of additional debt and dispositions of assets if Autodesk fails to maintain its financial covenants. Autodesk pays a quarterly commitment fee, ranging between $62,500 and $156,250, to maintain this facility. This facility expires in August 2012 and there were no borrowings outstanding at January 31, 2008.

At January 31, 2008, our investment portfolio included auction rate securities with an estimated fair value of $8.4 million ($9.0 million cost basis). Autodesk’s auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that are reset at auction every 28 days. These AAA-rated auction rate securities, which met Autodesk’s investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007. The failed auctions resulted in the interest rate on these investments resetting at Libor plus 125 basis points, which represents a premium interest rate on these investments. At this time, these investments are not currently liquid, and in the event Autodesk needs to access these funds, the Company will not be able to do so without a loss of principal unless a future auction on these investments is successful. Autodesk has reduced the carrying value of these investments by $0.6 million through other comprehensive income or loss to reflect a temporary impairment on these securities. Currently, Autodesk believes these investments are temporarily impaired, but it is not clear in what period of time they will be settled. Based on our ability to access our cash and other short-term investments, our expected operating cash flows and our other sources of cash, the Company has the intention and ability to

 

45


Table of Contents

hold the securities until the value recovers or to maturity. Due to the lack of liquidity of these investments, they are included in “Marketable securities—non-current.” Autodesk will continue to evaluate its accounting for these investments on a quarterly basis. See Note 12, “Financial Instruments,” for further discussion of Autodesk’s financial instruments.

Net cash flows provided by operating activities increased $131.9 million to $708.5 million during fiscal 2008 as compared to the prior fiscal year. The increase was primarily due to an increase in net income of $66.5 million from fiscal 2007 to fiscal 2008 and improved working capital management. Net working capital changes were driven primarily by increases in accrued compensation and other accrued liabilities that increased cash flows from operations by $38.4 million and $26.9 million, respectively.

Long-term cash requirements for items other than normal operating expenses are anticipated for the following: development of new software products and incremental product offerings resulting from the enhancement of existing products; financing anticipated growth; the share repurchase program; the acquisition of businesses, software products, or technologies complementary to our business; and capital expenditures, including the purchase and implementation of internal-use software applications. In addition, $26.7 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans as of January 31, 2008. See Note 4, “Deferred Compensation,” in the Notes to Consolidated Financial Statements for further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we use foreign currency option contracts to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Our foreign currency instruments, by policy, have maturities of less than three months and settle before the end of each quarterly period. The principal currencies hedged during fiscal 2008 were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign exchange exposures to ensure the overall effectiveness of our foreign currency hedge positions.

Liquidity and Capital Resources

Our
primary source of cash is from the sale of 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 to invest in our growth initiatives, which include business acquisitions. See further discussion of these items
below.

At January 31, 2008, our principal sources of liquidity were cash, cash equivalents and short-term marketable securities
totaling $949.3 million and net accounts receivable of $386.5 million. In addition, we also have available a U.S. line of credit facility. This line of credit permits unsecured short-term borrowings of up to $250.0 million, and is available for
working capital or other business needs. The credit agreement contains customary covenants which could restrict liens, certain types of additional debt and dispositions of assets if Autodesk fails to maintain its financial covenants. Autodesk pays a
quarterly commitment fee, ranging between $62,500 and $156,250, to maintain this facility. This facility expires in August 2012 and there were no borrowings outstanding at January 31, 2008.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">At January 31, 2008, our investment portfolio included auction rate securities with an estimated fair value of $8.4 million ($9.0 million cost
basis). Autodesk’s auction rate securities are variable rate debt instruments that have underlying securities with contractual maturities greater than ten years and interest rates that are reset at auction every 28 days. These AAA-rated auction
rate securities, which met Autodesk’s investment guidelines at the time the investments were made, have failed to settle in auctions since August 2007. The failed auctions resulted in the interest rate on these investments resetting at Libor
plus 125 basis points, which represents a premium interest rate on these investments. At this time, these investments are not currently liquid, and in the event Autodesk needs to access these funds, the Company will not be able to do so without a
loss of principal unless a future auction on these investments is successful. Autodesk has reduced the carrying value of these investments by $0.6 million through other comprehensive income or loss to reflect a temporary impairment on these
securities. Currently, Autodesk believes these investments are temporarily impaired, but it is not clear in what period of time they will be settled. Based on our ability to access our cash and other short-term investments, our expected operating
cash flows and our other sources of cash, the Company has the intention and ability to

 


45







Table of Contents



hold the securities until the value recovers or to maturity. Due to the lack of liquidity of these investments, they are included in “Marketable
securities—non-current.” Autodesk will continue to evaluate its accounting for these investments on a quarterly basis. See Note 12, “Financial Instruments,” for further discussion of Autodesk’s financial instruments.

Net cash flows provided by operating activities increased $131.9 million to $708.5 million during fiscal 2008 as compared to the prior
fiscal year. The increase was primarily due to an increase in net income of $66.5 million from fiscal 2007 to fiscal 2008 and improved working capital management. Net working capital changes were driven primarily by increases in accrued compensation
and other accrued liabilities that increased cash flows from operations by $38.4 million and $26.9 million, respectively.

Long-term cash
requirements for items other than normal operating expenses are anticipated for the following: development of new software products and incremental product offerings resulting from the enhancement of existing products; financing anticipated growth;
the share repurchase program; the acquisition of businesses, software products, or technologies complementary to our business; and capital expenditures, including the purchase and implementation of internal-use software applications. In addition,
$26.7 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans as of January 31, 2008. See Note 4, “Deferred Compensation,” in the Notes to Consolidated Financial Statements for
further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we
use foreign currency option contracts to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Our foreign
currency instruments, by policy, have maturities of less than three months and settle before the end of each quarterly period. The principal currencies hedged during fiscal 2008 were the euro, British pound, Japanese yen, Swiss franc and Canadian
dollar. We monitor our foreign exchange exposures to ensure the overall effectiveness of our foreign currency hedge positions.

This excerpt taken from the ADSK 10-Q filed Dec 4, 2007.

Liquidity and Capital Resources

Our primary source of cash is from the sale of 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 to invest in our growth initiatives, which include business acquisitions. See further discussion of these items below.

At October 31, 2007, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $872.6 million and net accounts receivable of $299.2 million. In addition, we also have

 

35


Table of Contents

available a U.S. line of credit facility. This line of credit permits unsecured short-term borrowings of up to $250.0 million, and is available for working capital or other business needs. The credit agreement contains customary covenants which could restrict liens, certain types of additional debt and dispositions of assets if Autodesk fails to maintain its financial covenants. Autodesk pays a quarterly commitment fee, ranging between $62,500 and $156,250, to maintain this facility. This facility expires in August 2012 and there were no borrowings outstanding at October 31, 2007.

At October 31, 2007, we had $9.0 million of investments in auction rate securities included in “Marketable securities” which failed to settle at three monthly auctions during the third quarter of fiscal 2008, as well as once during November 2007. While we continue to earn interest on these investments at the maximum contractual rate, the investments are not liquid at par value. In the event we need to access these funds, we may have to sell these securities at an amount below par value. Based on our ability to access our cash, cash equivalents and other short-term investments, our expected operating cash flows and our other sources of cash, we do not anticipate having to sell these securities below par value in order to operate our business.

Net cash flows provided by operating activities increased $103.7 million during the first nine months of fiscal 2008, as compared to the same period in the prior fiscal year. The increase was primarily due to an increase in net income of $66.4 million during the first nine months of fiscal 2008 compared to the same period in the prior fiscal year and improved working capital management. Net working capital changes were driven primarily by increases in other accrued liabilities and accrued compensation that increased cash flows from operations by $20.1 million and $19.9 million, respectively.

As of October 31, 2007, there have been no material changes in our contractual obligations or commercial commitments compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2007. Long-term cash requirements for items other than normal operating expenses are anticipated for the following: development of new software products and incremental product offerings resulting from the enhancement of existing products; financing anticipated growth; the stock repurchase program; the acquisition of businesses, software products, or technologies complementary to our business; and capital expenditures, including the purchase and implementation of internal-use software applications. In addition, $31.6 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans at October 31, 2007. See Note 6, “Deferred Compensation,” in the Notes to Condensed Consolidated Financial Statements for further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we use foreign currency option contracts to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Our foreign currency instruments, by policy, have maturities of less than three months and settle before the end of each quarterly period. The principal currencies hedged during the three and nine months ended October 31, 2007 were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign exchange exposures to ensure the overall effectiveness of our foreign currency hedge positions.

This excerpt taken from the ADSK 10-Q filed Aug 31, 2007.

Liquidity and Capital Resources

Our primary source of cash is from the sale of 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 to invest in our growth initiatives, which include business acquisitions. See further discussion of these items below.

At July 31, 2007, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $826.9 million and net accounts receivable of $278.4 million. At July 31, 2007, we also had available a U.S. line of credit facility which was established during fiscal 2006. This line of credit, which permitted unsecured short-term borrowings of up to $100.0 million, was available for working capital or other business needs. The credit agreement contained customary covenants which could have restricted liens, certain types of additional debt and dispositions of assets if Autodesk failed to maintain its financial covenants. Because the Company was not current with its reporting obligations under the Securities and Exchange Act of 1934 until June of fiscal 2008, the Company was in violation of its financial reporting covenant. Autodesk received a waiver from the borrowing institution for the period during which it was not in compliance with the covenant. Autodesk paid a quarterly commitment fee, ranging between $25,000 and $62,500, to maintain this facility. There were no borrowings outstanding at July 31, 2007. We entered into an agreement in August 2007 to replace this line of credit with a new U.S. line of credit with permitted unsecured short-term borrowings up to $250.0 million. The new facility expires on August 17, 2012.

Net cash flows provided by operating activities increased $75.3 million during the first half of fiscal 2008, as compared to the same period in the prior fiscal year. The increase was primarily due to an increase in net income of $39.6 million during the first half of fiscal 2008 compared to the same period in the prior fiscal year and improved working capital management. Net working capital changes were driven primarily by improved management of accounts payable and accounts receivable that increased cash flows from operations by $25.4 million and $22.3 million, respectively.

As of July 31, 2007, there have been no material changes in our contractual obligations or commercial commitments compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2007. Long-term cash requirements for items other than normal operating expenses are anticipated for the following: development of new software products and incremental product offerings resulting from the enhancement of existing products; financing anticipated growth; the stock repurchase program; the acquisition of businesses, software products, or technologies complementary to our business; and capital expenditures, including the purchase and implementation of internal-use software applications. In addition, $29.3 million of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans at July 31, 2007. See Note 6, “Deferred Compensation,” in the Notes to Condensed Consolidated Financial Statements for further discussion.

Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations, we use foreign currency option contracts to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Our foreign currency instruments, by policy, have maturities of less than three months and settle before the end of each quarterly period. The principal currencies hedged during the three and

 

36


Table of Contents

six months ended July 31, 2007 were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign exchange exposures to ensure the overall effectiveness of our foreign currency hedge positions.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki