Autodesk Reports Strong Financial Results in First Quarter Fiscal 2011

Autodesk and AutoCAD are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. Academy Award is a registered trademark of the Academy of Motion Picture Arts and Sciences. All other brand names, product names, or trademarks belong to their respective holders. Autodesk reserves the right to alter product and service offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document. © 2010 Autodesk, Inc. All rights reserved.

Autodesk, Inc.
Consolidated Statements of Operations
(In millions, except per share data)
   
Three Months Ended
April 30,
2010 2009
(Unaudited)
Net revenue:
License and other $ 279.8 $ 243.6
 
Maintenance   194.8     182.2  
 
Total net revenue   474.6     425.8  
 
Cost of revenue:
Cost of license and other revenue 41.2 44.1
 
Cost of maintenance revenue   10.1     8.2  
 
Total cost of revenue 51.3 52.3
 
Gross profit 423.3 373.5
 

Operating expenses:

 
Marketing and sales 186.5 183.9
 
Research and development 127.2 121.5
 
General and administrative 51.7 50.0
 
Impairment of goodwill - 21.0
 
Restructuring charges   7.1     16.5  
 
Total operating expenses   372.5     392.9  
 
Income (loss) from operations 50.8 (19.4 )
 
Interest and other income (expense), net   (3.4 )   -  
 
Income (loss) before income taxes 47.4 (19.4 )
 
Provision for income taxes   (10.5 )   (12.7 )
 
Net income (loss) $ 36.9   $ (32.1 )
 
Basic net income (loss) per share $ 0.16   $ (0.14 )
 
Diluted net income (loss) per share $ 0.16   $ (0.14 )
 

Shares used in computing basic net income (loss) per share

  229.0     227.1  
 

Shares used in computing diluted net income (loss) per share

  234.6     227.1  
 
Autodesk, Inc.
Condensed Consolidated Balance Sheets
(In millions)
   
April 30,
2010
  January 31,
2010
(Unaudited)
 
ASSETS:
 
Current assets:
Cash and cash equivalents $ 938.1 $ 838.7
Marketable securities 121.7 161.9
Accounts receivable, net 218.1 277.4
Deferred income taxes 43.8 44.2
Prepaid expenses and other current assets   72.3       57.4  
Total current assets   1,394.0       1,379.6  
 
Marketable securities 179.5 125.6
Computer equipment, software, furniture and leasehold improvements, net 95.5 101.6
Purchased technologies, net 80.1 88.0
Goodwill 540.3 542.9
Long term deferred income taxes, net 112.4 101.9
Other assets   99.9       107.6  
$ 2,501.7     $ 2,447.2  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
 
Current liabilities:
Accounts payable $ 90.4 $ 67.8
Accrued compensation 78.4 115.6
Accrued income taxes 15.3 8.4
Deferred revenue 470.6 444.6
Other accrued liabilities   56.3       67.6  
Total current liabilities   711.0       704.0  
 
Deferred revenue 73.1 71.9
Long term income taxes payable 131.1 127.2
Other liabilities 72.4 70.6
 
Commitments and contingencies
 
Stockholders' equity:
Preferred stock - -
Common stock and additional paid-in capital 1,237.6 1,204.3
Accumulated other comprehensive income (loss) (1.1 ) (3.5 )
Retained earnings   277.6       272.7  
Total stockholders' equity   1,514.1       1,473.5  
$ 2,501.7     $ 2,447.2  
 
Autodesk, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
  Fiscal Quarter Ended
April 30,
2010   2009
(Unaudited)
 

Operating activities:

Net income (loss)

$ 36.9 $ (32.1 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 26.7 27.0
Stock-based compensation expense 24.3 23.0
Impairment of goodwill - 21.0
Restructuring charges, net 7.1 16.5
Gain on disposition of assets - 1.1

Changes in operating assets and liabilities, net of business combinations

  44.1     (29.3 )
Net cash provided by operating activities   139.1     27.2  
 

Investing activities:

Purchases of marketable securities (134.5 ) (26.6 )
Sales of marketable securities 29.7

1.4

Maturities of marketable securities 94.1

10.3

Capital expenditures (5.8 ) (13.6 )
Purchases of equity investments   -     (10.0 )
Net cash used in investing activities   (16.5 )   (38.5 )
 
Financing activities:

Proceeds from issuance of common stock, net of issuance costs

36.2

25.4

Repurchases of common stock

(58.8

)

-

Draws on line of credit - 2.2
Repayments of line of credit   -     (52.2 )
Net cash used in financing activities   (22.6 )   (24.6 )
 
Effect of exchange rate changes on cash and cash equivalents   (0.6 )   (1.2 )
 
Net increase (decrease) in cash and cash equivalents 99.4 (37.1 )
Cash and cash equivalents at beginning of fiscal year   838.7     917.6  
Cash and cash equivalents at end of period $ 938.1   $ 880.5  
 

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 profit, non-GAAP operating expenses, non-GAAP income from operations 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, 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
April 30,
2010   2009
(Unaudited)
 
GAAP cost of license and other revenue $ 41.2 $ 44.1
Stock-based compensation expense (0.8 ) (0.6 )
Amortization of developed technology   (7.7 )   (8.3 )
Non-GAAP cost of license and other revenue $ 32.7   $ 35.2  
 
GAAP gross profit $ 423.3 $ 373.5
Stock-based compensation expense 0.8 0.6

Amortization of developed technology

  7.7     8.3  
Non-GAAP gross profit $ 431.8   $ 382.4  
 
GAAP marketing and sales $ 186.5 $ 183.9
Stock-based compensation expense   (10.6 )   (9.5 )
Non-GAAP marketing and sales $ 175.9   $ 174.4  
 
GAAP research and development $ 127.2 $ 121.5
Stock-based compensation expense   (8.3 )   (7.0 )

Non-GAAP research and development

$ 118.9   $ 114.5  
 
GAAP general and administrative $ 51.7 $ 50.0
Stock-based compensation expense (4.6 ) (5.9 )

Amortization of customer relationships and trade names

  (6.2 )   (6.4 )
Non-GAAP general and administrative $ 40.9   $ 37.7  
 
GAAP impairment of goodwill $ - $ 21.0
Impairment of goodwill   -     (21.0 )
Non-GAAP impairment of goodwill $ -   $ -  
 
GAAP restructuring charges $ 7.1 $ 16.5
Restructuring charges   (7.1 )   (16.5 )
Non-GAAP restructuring charges $ -   $ -  
 
GAAP operating expenses $ 372.5 $ 392.9
Stock-based compensation expense (23.5 ) (22.4 )

Amortization of customer relationships and trade names

(6.2 ) (6.4 )
Impairment of goodwill - (21.0 )
Restructuring charges   (7.1 )   (16.5 )
Non-GAAP operating expenses $ 335.7   $ 326.6  
 
GAAP income (loss) from operations $ 50.8 $ (19.4 )
Stock-based compensation expense 24.3 23.0
Amortization of developed technology 7.7 8.3

Amortization of customer relationships and trade names

6.2 6.4
Impairment of goodwill - 21.0
Restructuring charges   7.1     16.5  
Non-GAAP income from operations $ 96.1   $ 55.8  
 
GAAP (provision) benefit for income taxes $ (10.5 ) $ (12.7 )

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

  (14.5 )   (22.2 )
Non-GAAP (provision) for income tax $ (25.0 ) $ (13.9 )
 
GAAP net income (loss) $ 36.9 $ (32.1 )
Stock-based compensation expense 24.3 23.0
Amortization of developed technology 7.7 8.3

Amortization of customer relationships and trade names

6.2 6.4
Impairment of goodwill - 21.0
Restructuring charges 7.1 16.5

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

  (14.5 )   (22.2 )
Non-GAAP net income $ 67.7   $ 41.9  
 
GAAP diluted net income (loss) per share $ 0.16 $ (0.14 )
Stock-based compensation expense 0.10 0.10
Amortization of developed technology 0.03 0.04

Amortization of customer relationships and trade names

0.03 0.03
Impairment of goodwill - 0.09
Restructuring charges 0.03 0.07

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

  (0.06 )   (0.10 )
Non-GAAP diluted net income per share $ 0.29   $ 0.18  
 

GAAP diluted shares used in per share calculation

234.6 227.1

Shares included in non-GAAP net income per share, but excluded from GAAP net loss per share as they would have been anti-dilutive

  -    

2.0

 

Non-GAAP diluted shares used in per share calculation

  234.6    

229.1

 

 

Other Supplemental Financial Information*
Fiscal Year 2011   QTR 1   QTR 2   QTR 3   QTR 4   YTD 2011
Financial Statistics ($ in millions, except per share data):
Total net revenue $ 475 $ 475
License and other revenue $ 280 $ 280
Maintenance revenue $ 195 $ 195
 
GAAP Gross Margin 89 % 89 %
Non-GAAP Gross Margin (1)(2) 91 % 91 %
 
GAAP Operating Expenses $ 373 $ 373
GAAP Operating Margin 11 % 11 %
GAAP Net Income $ 37 $ 37
GAAP Diluted Net Income Per Share $ 0.16 $ 0.16
 
Non-GAAP Operating Expenses (1)(3) $ 336 $ 336
Non-GAAP Operating Margin (1)(4) 20 % 20 %
Non-GAAP Net Income (1)(5) $ 68 $ 68
Non-GAAP Diluted Net Income Per Share (1)(6) $ 0.29 $ 0.29
 
Total Cash and Marketable Securities $ 1,239 $ 1,239
Days Sales Outstanding 42 42
Capital Expenditures $ 6 $ 6
Cash from Operations $ 139 $ 139
GAAP Depreciation and Amortization $ 27 $ 27
 
Deferred Maintenance Revenue Balance $ 492 $

492

 
Revenue by Geography (in millions):
Americas $

161

$

161

Europe, Middle East and Africa

$

199

$

199

Asia Pacific

$ 115 $ 115
 
Revenue by Segment (in millions):
Platform Solutions and Emerging Business $ 184 $ 184
Architecture, Engineering and Construction $ 137 $ 137
Manufacturing $ 108 $ 108
Media and Entertainment $ 46 $ 46
Other $ - $ -
 
Other Revenue Statistics:
% of Total Rev from AutoCAD and AutoCAD LT

36

%

36

%

% of Total Rev from Model-based Design products

29 % 29 %
% of Total Rev from Emerging Economies 14 % 14 %
Upgrade Revenue (in millions) $ 51 $ 51
 

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 $

21

$

21

FX Impact on Total Operating Expenses $ (11 ) $ (11 )
FX Impact on Operating Income $

10

$

10

 
Gross Margin by Segment (in millions):
Platform Solutions and Emerging Business $ 173 $ 173
Architecture, Engineering and Construction $ 123 $ 123
Manufacturing $ 100 $ 100
Media and Entertainment $ 36 $ 36
Unallocated amounts $ (9 ) $ (9 )
 
Common Stock Statistics:

Common Shares Outstanding

229,391,000 229,391,000

Fully Diluted Weighted Average Shares Outstanding

234,606,000 234,606,000
Shares Repurchased 2,003,000 2,003,000
 
Installed Base Statistics:
Maintenance Installed Base 2,383,000 2,383,000
 
* Totals may not agree with the sum of the components due to rounding.
 

** Includes favorable (unfavorable) revenue impact from our hedging program during the fiscal quarter.

 

(1) 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 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, restructuring charges, amortization of purchased intangibles 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 Autodesk's press release.

QTR 1

QTR 2

QTR 3

QTR 4

YTD 2011

(2) GAAP Gross Margin 89 % 89 %
Stock-based compensation expense 0 % 0 %
Amortization of developed technology   2 %                 2 %
Non-GAAP Gross Margin 91 % 91 %
 
(3) GAAP Operating Expenses $ 373 $ 373
Stock-based compensation expense (24 ) (24 )

Amortization of customer relationships and trade names

(6 ) (6 )
Restructuring charges   (7 )                 (7 )
Non-GAAP Operating Expenses $ 336 $ 336
 
(4) GAAP Operating Margin 11 % 11 %
Stock-based compensation expense 5 % 5 %
Amortization of developed technology 2 % 2 %

Amortization of customer relationships and trade names

1 % 1 %
Restructuring charges   1 %                 1 %
Non-GAAP Operating Margin 20 % 20 %
 
(5) GAAP Net Income $ 37 $ 37
Stock-based compensation expense 24 24
Amortization of developed technology 8 8

Amortization of customer relationships and trade names

6 6
Restructuring charges 7 7

Income tax effect on difference between GAAP and non-GAAP total costs and expenses at a normalized rate

  (14 )                 (14 )
Non-GAAP Net Income $ 68 $ 68
 
(6) GAAP Diluted Net Income Per Share $ 0.16 $ 0.16
Stock-based compensation expense 0.10 0.10
Amortization of developed technology 0.03 0.03

Amortization of customer relationships and trade names

0.03 0.03
Restructuring charges 0.03 0.03

Income tax effect on difference between GAAP and non-GAAP total costs and expenses at a normalized rate

  (0.06 )                 (0.06 )
Non-GAAP Diluted Net Income Per Share $ 0.29 $ 0.29

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