Autodesk Reports Second Quarter Fiscal 2010 Financial Results

Autodesk, Inc.
Consolidated Statements of Operations
(In millions, except per share data)

Three Months Ended Six Months Ended
July 31, July 31,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)
Net revenue:
License and other $231.0 $440.2 $474.6 $872.4

Maintenance 183.9 179.3 366.1 345.9
----- ----- ----- -----

Total net revenue 414.9 619.5 840.7 1,218.3
----- ----- ----- -------

Cost of license and other revenue 47.1 57.6 96.6 113.6

Cost of maintenance revenue 3.0 2.1 5.8 4.1
--- --- --- ---

Total cost of revenue 50.1 59.7 102.4 117.7

Gross profit 364.8 559.8 738.3 1,100.6

Operating Expenses:

Marketing and sales 176.4 230.2 360.3 455.7

Research and development 109.8 154.8 231.4 300.4

General and administrative 49.5 56.0 99.5 105.8

Impairment of goodwill - - 21.0 -

Restructuring charges 26.4 - 42.9 -
---- --- ---- ---

Total operating expenses 362.1 441.0 755.1 861.9
----- ----- ----- -----

Income (loss) from operations 2.7 118.8 (16.8) 238.7

Interest and other income, net 10.7 6.3 10.7 13.2
---- --- ---- ----

Income (loss) before income taxes 13.4 125.1 (6.1) 251.9

Provision for income taxes (2.9) (35.3) (15.6) (67.5)
---- ----- ----- -----

Net income (loss) $10.5 $89.8 $(21.7) $184.4
===== ===== ====== ======

Basic net income (loss) per share $0.05 $0.40 $(0.09) $0.82
===== ===== ====== =====

Diluted net income (loss) per share $0.05 $0.39 $(0.09) $0.80
===== ===== ====== =====

Shares used in computing basic
net income (loss) per share 228.9 224.2 228.0 225.2
===== ===== ===== =====

Shares used in computing diluted
net income (loss) per share 232.3 231.1 228.0 232.1
===== ===== ===== =====

Autodesk, Inc.
Condensed Consolidated Balance Sheets
(In millions)

July 31, January 31,
2009 2009
---- ----
(Unaudited)

ASSETS:

Current assets:
Cash and cash equivalents $668.5 $917.6
Marketable securities 267.9 63.5
Accounts receivable, net 223.9 316.5
Deferred income taxes 48.3 31.1
Prepaid expenses and other current assets 58.7 59.3
---- ----
Total current assets 1,267.3 1,388.0
------- -------

Marketable securities 92.3 7.6
Computer equipment, software, furniture and
leasehold improvements, net 118.3 120.6
Purchased technologies, net 96.7 113.3
Goodwill 525.5 542.5
Long term deferred income taxes, net 92.7 125.7
Other assets 118.3 123.0
----- -----
$2,311.1 $2,420.7
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:
Accounts payable $56.7 $62.4
Accrued compensation 88.4 124.3
Accrued income taxes 17.9 16.7
Deferred revenue 424.4 438.8
Borrowings under line of credit - 52.1
Other accrued liabilities 74.3 105.8
---- -----
Total current liabilities 661.7 800.1
----- -----

Deferred revenue 77.5 113.3
Long term income taxes payable 122.5 116.9
Long term deferred income taxes - 22.7
Other liabilities 64.3 57.0

Commitments and contingencies

Stockholders' equity:
Preferred stock- -
Common stock and additional paid-in capital 1,166.6 1,080.4
Accumulated other comprehensive loss (1.4) (11.2)
Retained earnings 219.9 241.5
----- -----
Total stockholders' equity 1,385.1 1,310.7
------- -------
$2,311.1 $2,420.7
======== ========

Autodesk, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
Six Months Ended
July 31,
--------
2009 2008
---- ----
(Unaudited)

Operating Activities
Net income (loss) $(21.7) $184.4
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 55.5 39.1
Stock-based compensation expense 44.4 48.4
Impairment of goodwill 21.0 -
Restructuring related charges, net 42.9 -
Gain on disposition of assets (2.3) -
Charge for acquired in-process research and
development - 16.8
Changes in operating assets and liabilities,
net of business combinations (65.3) 111.6
----- -----
Net cash provided by operating activities 74.5 400.3
---- -----

Investing Activities
Purchases of marketable securities (298.2) (5.6)
Sales of marketable securities 1.4 4.7
Maturities of marketable securities 14.3 -
Capital expenditures (24.3) (39.9)
Purchase of equity investment (10.0) -
Business combinations, net of cash acquired - (263.9)
--- ------
Net cash used in investing activities (316.8) (304.7)
------ ------

Financing activities
Draws on line of credit 2.2 690.0
Repayments of line of credit (54.3) (570.0)
Proceeds from issuance of common stock, net of
issuance costs 44.1 50.1
Repurchases of common stock - (256.6)
--- ------
Net cash used in financing activities (8.0) (86.5)
---- -----

Effect of exchange rate changes on cash and cash
equivalents 1.2 2.6
--- ---

Net increase (decrease) in cash and cash equivalents (249.1) 11.7
Cash and cash equivalents at beginning of fiscal year 917.6 917.9
----- -----
Cash and cash equivalents at end of period $668.5 $929.6
====== ======

Autodesk, Inc.
Reconciliation of GAAP financial measures to non-GAAP financial measures
(In millions, except per share data)

To supplement our consolidated financial statements presented on a GAAP
basis, Autodesk provides investors with certain non-GAAP measures
including non-GAAP net income, non-GAAP net income per share, non-GAAP
cost of license and other revenue, non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP income from operations, non-GAAP interest and
other income, net and non-GAAP provision for income taxes. These non-GAAP
financial measures are adjusted to exclude certain costs, expenses, gains
and losses, including stock-based compensation expense, amortization of
purchased intangibles, in-process research and development expenses,
restructuring charges, goodwill impairment, establishment of a valuation
allowance on certain deferred tax assets and related income tax expenses.
See our reconciliation of GAAP financial measures to non-GAAP financial
measures herein. We believe these exclusions are appropriate to enhance
an overall understanding of our past financial performance and also our
prospects for the future, as well as to facilitate comparisons with our
historical operating results. These adjustments to our GAAP results are
made with the intent of providing both management and investors a more
complete understanding of Autodesk's underlying operational results and
trends and our marketplace performance. For example, the non-GAAP
results are an indication of our baseline performance before gains,
losses or other charges that are considered by management to be outside
our core operating results. In addition, these non-GAAP financial
measures are among the primary indicators management uses as a basis for
our planning and forecasting of future periods.

There are limitations in using non-GAAP financial measures because the
non-GAAP financial measures are not prepared in accordance with generally
accepted accounting principles and may be different from non-GAAP
financial measures used by other companies. The non-GAAP financial
measures are limited in value because they exclude certain items that may
have a material impact upon our reported financial results. The
presentation of this additional information is not meant to be considered
in isolation or as a substitute for the directly comparable financial
measures prepared in accordance with generally accepted accounting
principles in the United States. Investors should review the
reconciliation of the non-GAAP financial measures to their most directly
comparable GAAP financial measures as provided in the tables accompanying
this press release.

The following table shows Autodesk's non-GAAP results reconciled to GAAP
results included in this release.

Three Months Ended Six Months Ended
July 31, July 31,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)

GAAP cost of license and other revenue $47.1 $57.6 $96.6 $113.6
SFAS 123R stock-based compensation
expense (0.7) (1.1) (1.3) (2.1)
Amortization of developed technology (8.3) (5.3) (16.6) (8.8)
---- ---- ----- ----
Non-GAAP cost of license and other
revenue $38.1 $51.2 $78.7 $102.7
===== ===== ===== ======

GAAP gross margin $364.8 $559.8 $738.3 $1,100.6
SFAS 123R stock-based compensation
expense 0.7 1.1 1.3 2.1
Amortization of developed technology 8.3 5.3 16.6 8.8
--- --- ---- ---
Non-GAAP gross margin $373.8 $566.2 $756.2 $1,111.5
====== ====== ====== ========

GAAP marketing and sales $176.4 $230.2 $360.3 $455.7
SFAS 123R stock-based compensation
expense (9.5) (10.0) (19.0) (20.5)
---- ----- ----- -----
Non-GAAP marketing and sales $166.9 $220.2 $341.3 $435.2
====== ====== ====== ======

GAAP research and development $109.8 $154.8 $231.4 $300.4
SFAS 123R stock-based compensation
expense (7.0) (7.7) (14.2) (16.1)
In-process research and development - (16.8) - (16.8)
--- ----- --- -----
Non-GAAP research and development $102.8 $130.3 $217.2 $267.5
====== ====== ====== ======

GAAP general and administrative $49.5 $56.0 $99.5 $105.8
SFAS 123R stock-based compensation
expense (4.0) (4.4) (9.9) (9.7)
Amortization of customer relationships
and trademarks (6.7) (6.4) (13.1) (9.3)
---- ---- ----- ----
Non-GAAP general and administrative $38.8 $45.2 $76.5 $86.8
===== ===== ===== =====

GAAP impairment of goodwill $- $- $21.0 $-
Impairment of goodwill - - (21.0) -
--- --- ----- ---
Non-GAAP impairment of goodwill $- $- $- $-
=== === === ===

GAAP restructuring charges $26.4 $- $42.9 $-
Restructuring charges (26.4) - (42.9) -
----- --- ----- ---
Non-GAAP restructuring charges $- $- $- $-
=== === === ===

GAAP operating expenses $362.1 $441.0 $755.1 $861.9
SFAS 123R stock-based compensation
expense (20.5) (22.1) (43.1) (46.3)
Amortization of customer relationships
and trademarks (6.7) (6.4) (13.1) (9.3)
In-process research and development - (16.8) - (16.8)
Impairment of goodwill - - (21.0) -
Restructuring charges (26.4) - (42.9) -
----- --- ----- ---
Non-GAAP operating expenses $308.5 $395.7 $635.0 $789.5
====== ====== ====== ======

GAAP income (loss) from operations $2.7 $118.8 $(16.8) $238.7
SFAS 123R stock-based compensation
expense 21.2 23.2 44.4 48.4
Amortization of developed technology 8.3 5.3 16.6 8.8
Amortization of customer relationships
and trademarks 6.7 6.4 13.1 9.3
In-process research and development - 16.8 - 16.8
Impairment of goodwill - - 21.0 -
Restructuring charges 26.4 - 42.9 -
---- --- ---- ---
Non-GAAP income from operations $65.3 $170.5 $121.2 $322.0
===== ====== ====== ======

GAAP provision for income taxes $(2.9) $(35.3) $(15.6) $(67.5)
Establishment of valuation allowance on
deferred tax assets - - 21.0 -
Income tax effect on difference between
GAAP and non-GAAP total costs and
expenses at a normalized rate (16.4) (11.2) (38.7) (20.3)
----- ----- ----- -----
Non-GAAP provision for income tax $(19.3) $(46.5) $(33.3) $(87.8)
====== ====== ====== ======

GAAP net income (loss) $10.5 $89.8 $(21.7) $184.4
SFAS 123R stock-based compensation
expense 21.2 23.2 44.4 48.4
Amortization of developed technology 8.3 5.3 16.6 8.8
Amortization of customer relationships
and trademarks 6.7 6.4 13.1 9.3
In-process research and development - 16.8 - 16.8
Impairment of goodwill - - 21.0 -
Restructuring charges 26.4 - 42.9 -
Establishment of valuation allowance on
deferred tax assets - - 21.0 -
Income tax effect on difference between
GAAP and non-GAAP total costs and
expenses at a normalized rate (16.4) (11.2) (38.7) (20.3)
----- ----- ----- -----
Non-GAAP net income $56.7 $130.3 $98.6 $247.4
===== ====== ===== ======

GAAP diluted net income (loss) per share $0.05 $0.39 $(0.09) $0.80
SFAS 123R stock-based compensation
expense 0.09 0.10 0.19 0.21
Amortization of developed technology 0.03 0.02 0.07 0.03
Amortization of customer relationships
and trademarks 0.03 0.03 0.06 0.04
In-process research and development - 0.07 - 0.07
Impairment of goodwill - - 0.09 -
Restructuring charges 0.11 - 0.18 -
Establishment of valuation allowance on
deferred tax assets - - 0.09 -
Income tax effect on difference between
GAAP and non-GAAP total costs and
expenses at a normalized rate (0.07) (0.05) (0.17) (0.09)
----- ----- ----- -----
Non-GAAP diluted net income per share $0.24 $0.56 $0.42 $1.06
===== ===== ===== =====

GAAP diluted shares used in per share
calculation 232.3 231.1 228.0 232.1
Impactof SFAS 123R on diluted shares 0.80.8 0.5 0.5
Shares included in non-GAAP net income
per share, but excluded from GAAP net
loss per share as they would have been
anti-dilutive - - 3.1 -
--- --- --- ---
Non-GAAP diluted shares used in per
share calculation 233.1 231.9 231.6 232.6
===== ===== ===== =====

Other Supplemental Financial Information (1)
QTR QTR QTR QTR YTD
Fiscal Year 2010 1 2 3 4 2010
Financial Statistics
($ in millions, except
per share data):
Total net revenue $426 $415 $841
License and other
revenue $244 $231 $475
Maintenance revenue $182 $184 $366

GAAP Gross Margin 88% 88% 88%
Non-GAAP Gross Margin (2)(3) 90% 90% 90%

GAAP Operating Expenses $393 $362 $755
GAAP Operating Margin -5% 1% -2%
GAAP Net Income (Loss) $(32) $10 $(22)
GAAP Diluted Net Income
(Loss) Per Share $(0.14) $0.05 $(0.09)

Non-GAAP Operating
Expenses (2)(4) $327 $308 $635
Non-GAAP Operating
Margin (2)(5) 13% 16% 14%
Non-GAAP Net Income (2)(6) $42 $57 $99
Non-GAAP Diluted Net
Income Per Share (2)(7) $0.18 $0.24 $0.42

Total Cash and Marketable
Securities $966 $1,029 $1,029
Days Sales Outstanding 49 49 49
Capital Expenditures $14 $11 $24
Cash from Operations $27 $47 $74
GAAP Depreciation and
Amortization $27 $28 $55

Deferred Maintenance
Revenue Balance $458 $453 $453

Revenue by Geography
(in millions):
Americas $163 $159 $323
Europe $167 $157 $324
Asia/Pacific $96 $99 $194

Revenue by Segment (in
millions):
Platform Solutions and
Emerging Business $156 $145 $301
Architecture, Engineering
and Construction $128 $125 $253
Manufacturing $94 $98 $192
Media and Entertainment $48 $47 $95
Other $- $- $-

Other Revenue Statistics:
% of Total Rev from
AutoCAD and AutoCAD LT 33% 32% 32%
% of Total Rev from 3D
design products 29% 30% 29%
% of Total Rev from
Emerging Economies 14% 15% 15%
Upgrade Revenue (in millions) $43 $26 $70

Favorable (Unfavorable)
Impact of U.S. Dollar
Translation Relative to
Foreign Currencies
Compared to Comparable
Prior Year Period
(in millions):
FX Impact on Total Net
Revenue $(31) $(24) $(55)
FX Impact on Total
Operating Expenses $22 $14 $35
FX Impact on Total Net
Income (Loss) $(9) $(10) $(20)

Gross Margin by Segment
(in millions):
Platform Solutions and
Emerging Business $146 $136 $282
Architecture, Engineering
and Construction $116 $113 $229
Manufacturing $86 $89 $175
Media and Entertainment $34 $36 $70
Unallocated amounts $(9) $(9) $(18)

Common Stock Statistics:
GAAP Shares Outstanding 228,219,000 229,666,000 229,666,000
GAAP Diluted Weighted
Average Shares
Outstanding 227,080,000 232,286,000 227,990,000
Shares Repurchased - - -

Maintenance Installed
Base* 1,719,000 2,299,000 2,299,000

*The second quarter of fiscal 2010 maintenance installed base includes a
one-time adjustment of 581,000 educational seats for users migrated to a
standard educational maintenance plan. These users were not previously
captured in our maintenance installed base.

(1) Totals may not agree with the sum of the components due to rounding.
(2) To supplement our consolidated financial statements presented on a
GAAP basis, Autodesk provides investors with certain non-GAAP measures
including non-GAAP net income, non-GAAP net income per share, non-GAAP
cost of license and other revenue, non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP income from operations, non-GAAP interest and
other income, net and non-GAAP provision for income taxes. These non-GAAP
financial measures are adjusted to exclude certain costs, expenses, gains
and losses, including stock-based compensation expense, amortization of
purchased intangibles, goodwill impairment, restructuring charges,
establishment of a valuation allowance on certain deferred tax assets and
related income tax expenses. See our reconciliation of GAAP financial
measures to non-GAAP financial measures herein. We believe these
exclusions are appropriate to enhance an overall understanding of our
past financial performance and also our prospects for the future, as well
as to facilitate comparisons with our historical operating results. These
adjustments to our GAAP results are made with the intent of providing both
management and investors a more complete understanding of Autodesk's
underlying operational results and trends and our marketplace performance.
For example, the non-GAAP results are an indication of our baseline
performance before gains, losses or other charges that are considered by
management to be outside our core operating results. In addition, these
non-GAAP financial measures are among the primary indicators management
uses as a basis for our planning and forecasting of future periods.

There are limitations in using non-GAAP financial measures because the
non-GAAP financial measures are not prepared in accordance with generally
accepted accounting principles and may be different from non-GAAP
financial measures used by other companies. The non-GAAP financial
measures are limited in value because they exclude certain items that may
have a material impact upon our reported financial results. The
presentation of this additional information is not meant to be considered
in isolation or as a substitute for the directly comparable financial
measures prepared in accordance with generally accepted accounting
principles in the United States. Investors should review the
reconciliation of the non-GAAP financial measures to their most directly
comparable GAAP financial measures as provided in the tables accompanying
this press release.

QTR QTR QTR QTR YTD
Fiscal Year 2010 1 2 3 4 2010

(3) GAAP Gross Margin 88% 88% 88%
Stock-based compensation
expense 0% 0% 0%
Amortization of developed
technology 2% 2% 2%
--- --- ---
Non-GAAP Gross Margin 90% 90% 90%

(4) GAAP Operating Expenses $393 $362 $755
Stock-based compensation
expense (22) (21) (43)
Amortization of customer
relationships and
trademarks (6) (7) (13)
Restructuring charges (17) (26) (43)
Impairment of goodwill (21) - (21)
--- --- ---
Non-GAAP Operating
Expenses $327 $308 $635

(5) GAAP Operating Margin -5% 1% -2%
Stock-based compensation
expense 5% 5% 5%
Amortization of developed
technology 2% 2% 2%
Amortization of customer
relationships and
trademarks 2% 2% 2%
Restructuring charges 4% 6% 5%
Impairment of goodwill 5% 0% 2%
--- --- ---
Non-GAAP Operating
Margin 13% 16% 14%

(6) GAAP Net Income (Loss) $(32) $10 $(22)
Stock-based compensation
expense 23 21 44
Amortization of developed
technology 8 8 16
Amortization of customer
relationships and
trademarks 6 7 13
Impairment of goodwill 21 - 21
Restructuring charges 17 26 43
Establishment of
valuation allowance on
deferred tax assets 21 - 21
Income tax effect on
difference between GAAP
and non-GAAP total costs
and expenses at a
normalized rate (22) (16) (38)
--- --- ---
Non-GAAP Net Income $42 $56 $98

(7) GAAP Diluted Net Income
(Loss) Per Share $(0.14) $0.05 $(0.09)
Stock-based compensation
expense 0.10 0.09 0.19
Amortization of developed
technology 0.04 0.03 0.07
Amortization of customer
relationships and
trademarks 0.03 0.03 0.06
Impairment of goodwill 0.09 - 0.09
Restructuring charges 0.07 0.11 0.18
Establishment of
valuation allowance on
deferred tax assets 0.09 - 0.09
Income tax effect on
difference between GAAP
and non-GAAP total costs
and expenses at a
normalized rate (0.10) (0.07) (0.17)
----- ----- -----
Non-GAAP Diluted Net
Income Per Share $0.18 $0.24 $0.42

Professional Land Surveyor Source

Autodesk

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Eric D. Colburn, PLS, "The Geo-Business Innovator", helps geo-professionals improve through innovative solutions, mastery of marketing and business growth strategies, and coaching/training. Eric is a successful, serial entrepreneur, podcaster, industry writer, product development consultant, and RI licensed professional land surveyor.

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