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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
____
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 31, 1999
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-14338
AUTODESK, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2819853
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
111 MCINNIS PARKWAY, SAN RAFAEL, CALIFORNIA 94903
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 507-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange
Title of each class on which registered
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None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting Common Stock held by non-affiliates
of the Registrant, based upon the closing sale price of the Common Stock on
April 22, 1999 as reported on the NASDAQ National Market, was approximately
$1,039,000,000. Shares of Common Stock held by each officer and director and
by each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive
determination for other purposes.
As of April 22, 1999, Registrant had outstanding 58,880,000 shares of Common
Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended January
31, 1999 are incorporated by reference in Parts II and IV. Portions of the
Proxy Statement for Registrant's 1999 Annual Meeting of Stockholders to be held
June 24, 1999 are incorporated by reference in Part III.
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PART I
FORWARD-LOOKING INFORMATION
The forward-looking statements included in this report, which reflect
management's best judgment based on factors currently known, involve risks and
uncertainties. Actual results could differ materially from those anticipated in
the forward-looking statements included herein as a result of a number of
factors, including but not limited to those discussed in Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
incorporated by reference to pages 2 through 21 of the Company's 1999 Annual
Report to Stockholders.
ITEM 1. BUSINESS
GENERAL
Autodesk, Inc. ("Autodesk" or the "Company") was incorporated in California
in 1982 and was reincorporated in Delaware in May 1994. The Company's two-
dimensional ("2D") and three-dimensional ("3D") products are used across
industries and in the home for architectural design, mechanical design, spatial
data management and mapping, animation, and visualization applications. The
Company's flagship product, AutoCAD(R), is one of the world's leading computer-
aided design ("CAD") tools, with an installed base of more than 2.1 million
units worldwide. The Company's software products are sold worldwide, primarily
through a network of dealers and distributors.
In February 1995, the Company realigned its internal marketing and
development organizations around key market groups that most closely match
Autodesk's customer base. During fiscal year 1998, the Company defined a new
market group, the Personal Solutions Group ("PSG"), whose products are targeted
to individual users as well as professionals. Each market group incorporates
product development, quality assurance, technical publications, and product
industry marketing. The Company has aligned its market groups into three
segments: the Design Solutions segment (which includes the AEC, MCAD, and GIS
market groups, as well as AutoCAD products), the Personal Solutions segment, and
the Kinetix segment. The Company's market groups are discussed below.
In March 1999, Autodesk acquired Discreet Logic Inc. ("Discreet"), in a
business combination accounted for as a pooling of interests. In the
acquisition, Autodesk acquired all of the voting stock of Discreet, issuing 0.33
shares of Autodesk common stock or 0.33 exchangeable shares for each outstanding
share of Discreet. The transaction resulted in the issuance of an aggregate of
approximately 10 million shares of Autodesk common stock and exchangeable
shares.
Architecture, Engineering, and Construction ("AEC") AEC software from the
Company and third party developers is used to automate every phase of a
building's life cycle-from conceptual design through construction, maintenance,
and renovation. The architecture, engineering, construction, facilities
management, process & power, and land management industries use AEC products.
During fiscal year 1998, the Company expanded its product offerings for the AEC
Market Group by acquiring Softdesk, Inc. in March 1997. Principal AEC products
include AutoCAD Architectural Desktop(TM), AutoCAD(R) Land Development Desktop,
and Autodesk(R) CAD Overlay(R).
Mechanical Computer-Aided Design ("MCAD") The Company's Mechanical CAD
Market Group is dedicated to providing mechanical engineers, designers, and
drafters with advanced, value-based software solutions that are designed to
solve their professional design challenges. Autodesk's premier MCAD product is
Mechanical Desktop(R). Following the acquisition of Genius CAD Software GmbH
("Genius") in May 1998, Autodesk also offers the Genius(TM) AutoCAD product.
Geographic Information Systems ("GIS") The Company's GIS Market Group
strategy is to provide a family of easy-to-use mapping and GIS technology to
help large and small businesses and governments manage their assets and
infrastructure. The GIS Market Group assists automated mapping/facilities
managers, as well as GIS and CAD users, to share mapping, GIS, and associated
information in an enterprise environment. The Company's current GIS products
include AutoCAD Map(R), Autodesk MapGuide(R), and Autodesk World(R).
Personal Solutions Group ("PSG") The PSG Market Group develops easy-to-use,
affordable tools for professionals, occasional users, or consumers who draft,
diagram, and draw, thus expanding the Company's traditional customer base of
architects and engineers. PSG products also enable non-CAD users to visually
communicate with CAD users. PSG products include AutoCAD LT(R), Actrix(TM)
Technical, and AutoSketch(R).
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Kinetix(R) The Kinetix division of Autodesk is devoted to bringing powerful
3D content-creation software to computer-industry professionals focused on two
markets: entertainment (film, broadcast video, and interactive games) and design
conceptualization and visualization. Kinetix provides two core platform products
- -3D Studio MAX(R) and 3D Studio VIZ(R), that specifically focus on these
markets.
As noted above, Autodesk acquired Discreet in the first quarter of fiscal
year 2000. Discreet develops, assembles, markets and supports nonlinear digital
systems and software for creating, editing, and compositing imagery and special
effects for film, video and HDTV. Discreet products include flame* and inferno*.
PRODUCTS
The Company's Design Solutions segment includes the following products:
AutoCAD
AutoCAD software is a general-purpose CAD tool used independently and in
conjunction with specific applications designed to work with AutoCAD in fields
ranging from architecture and mechanical design to plant design and mapping.
Professionals utilize AutoCAD for design, modeling, drafting, mapping,
rendering, and management tasks. AutoCAD runs on Microsoft Windows 95, Windows
98, and Windows NT for Intel.
AutoCAD(R) Release 14 was introduced in May 1997. Built for speed and
efficiency, AutoCAD Release 14 includes enhancements in areas that most
influence productivity, including: precision drawing tools such as AutoSnap(TM),
data-sharing features like raster image and reference file clipping,
photorealistic rendering, solid fills, and TrueType fonts.
AutoCAD software's open-system architecture allows users to adapt AutoCAD
to unique professional requirements with any of more than 5,000 independently
developed add-on applications. Many of these applications are based on
ObjectARX(TM) technology, a new generation of C++-based application programming
interfaces ("APIs"). ObjectARX-based applications utilize AutoCAD software's
object-oriented capabilities.
Sales of AutoCAD and AutoCAD upgrades accounted for approximately 62
percent, 70 percent, and 70 percent of Autodesk's revenues in fiscal years 1999,
1998, and 1997, respectively. On a stand-alone basis, AutoCAD and AutoCAD
upgrades were 51 percent, 65 percent, and 68 percent of consolidated revenues in
fiscal years 1999, 1998, and 1997, respectively. During fiscal year 1999,
approximately 263,000 new AutoCAD licenses were added worldwide, compared to
244,000 and 207,000 licenses added during fiscal years 1998 and 1997,
respectively.
AutoCAD(R) OEM
AutoCAD OEM ("Original Equipment Manufacturer") for Windows-based operating
systems is a selectively licensed CAD engine offering a complete application-
development environment for creating and delivering targeted or niche solutions
with scaled feature sets. It is for developers, system integrators, and
commercial software developers who require an embeddable CAD system which gives
them the ability to scale and control the application feature set. AutoCAD OEM
provides developers with a complete toolkit of AutoCAD features and APIs
including ObjectARX capabilities, a full suite of drawing and editing functions
as well as AutoLISP(R) and a LISP API. These capabilities enable development of
new products for new markets untapped by traditional CAD products and solutions.
Mechanical Desktop
Mechanical Desktop software is an integrated software application that
unites advanced 2D and 3D mechanical design capabilities for PCs. Mechanical
Desktop contains integrated modules for fully parametric feature-based solid
modeling, surface modeling, and assembly modeling; 2D design/drafting and bi-
directional associative drafting; as well as a built-in Autodesk(R) IGES
Translator, which enables users to accurately exchange IGES (Initial Graphics
Exchange Specification) data with other systems. Mechanical Desktop Release 3.0,
which was released in August 1998, includes numerous performance enhancements.
Individual Face Drafting, Parting Line Definition, Part Splitting, Face
Splitting, 3D Helical Sweep, 3D Lofting, Feature Suppression, Global Design
Variables, Sketch Editing, new Balloon, Bill of Material, and Part List
Functionality and Drafting Standards Support, are among the advanced features
included in the latest release of Mechanical Desktop software.
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Genius(TM) AutoCAD
For mechanical designers who work primarily in 2D with AutoCAD, Genius(TM)
14 is a complete 2D solution that offers all the power of standard part
libraries and automation tools that reduce design cycle and drawing production
time. The functionality included in Genius 14 includes: Drawing borders & Title
blocks, PowerEdit, PowerSnaps, PowerRecall, PowerDimension, In line create &
edit, Dim break with associativity, Detail views, Standard parts, Nuts & Bolts.
AutoCAD Map
AutoCAD Map software is the first AutoCAD-based automated-mapping product
for professional planners, utility managers, and technicians who need to create
and maintain their own maps and use their data for engineering-based analysis
and planning. Built with AutoCAD software, AutoCAD Map focuses on five key GIS
business-related functions: digital map creation, analysis, maintenance of up-
to-date maps, data exchange, and publishing. The API in AutoCAD Map enables
developers to build vertical applications for industries such as
telecommunications, utilities, oil and gas, state and local government, and
natural resource and environmental engineering. AutoCAD Map also contains
ObjectARX capabilities.
Autodesk MapGuide
Autodesk MapGuide is a Web-based GIS technology that is designed to allow
corporate customers and developers to use the Internet and business Intranets to
rapidly deploy decision support systems having a geographic component. Suited
for a wide range of users--from GIS professionals to the casual computer user
across a scale from the small to the very large enterprise--Autodesk MapGuide
software enables users to access and query digital maps over a network, and
permits users to display and analyze geographic data for applications such as
tracking customers, providing digital map-based information to dispersed staff,
allocating resources, and managing facilities infrastructure.
Autodesk World
Autodesk World allows for the integration and analysis of geographic-based
data within a Windows environment. It provides users with data capture, edit,
analysis, integration, and presentation functionality for spatially based
information, including raster, vector (both CAD and GIS) data, and attributes
associated with those data. Autodesk World features Object Linking and
Embedding ("OLE"), which allows users to link drawings to other Windows
applications such as Microsoft Word or Excel. Autodesk World's application
programming interfaces and integrated Visual Basic for Applications 5.0
scripting environment enable easy customization and application development.
AutoCAD Architectural Desktop
AutoCAD Architectural Desktop software offers a new level of architectural
design tools built on the speed and power of AutoCAD. Supporting the
architectural design process from conceptual design to design development,
through construction documentation, AutoCAD Architectural Desktop features
industry-specific 2D production drafting functionality as well as integrated and
accessible 3D design options. Users benefit from simplified mass modeling,
intelligent building components, style definitions, and layer management
according to industry standards. AutoCAD Architectural Desktop software's data
continuity throughout the entire design process enables efficiency and
productivity by eliminating the need to recreate design and drafting data.
AutoCAD Land Development Desktop
AutoCAD Land Development Desktop software is built on the power and speed
of AutoCAD / AutoCAD Map and is specifically designed for civil engineering,
surveying, and land planning professionals worldwide. This innovative software
contains specialized features such as COGO and Map Creation, Terrain Modeling,
Alignments, Parcels and Project Data Management. Users will benefit from an easy
to use interface and overall integration of the product. With project data
stored in a central location, AutoCAD Land Development Desktop provides an
interoperable solution to help the entire project team intelligently share large
amounts of drawing and project data in an efficient and accurate way.
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Autodesk CAD Overlay
Autodesk CAD Overlay software enables users to display, edit, and
manipulate raster images in color, grayscale, and binary formats inside AutoCAD
Release 14, AutoCAD Map, Mechanical Desktop, AutoCAD(R) Mechanical, AutoCAD Land
Development Desktop, or AutoCAD Architectural Desktop drawings. Autodesk CAD
Overlay software allows users to integrate scanned drawings with AutoCAD line
types and then plot hybrid raster/vector drawings. It enables users to treat
raster entities as if they were vector entities for quick, efficient
manipulation. CAD Overlay also allows users to manipulate, and edit, aerial
photos and satellite imagery, for analysis and presentation purposes inside
AutoCAD.
The Company's Personal Solutions segment includes the following products:
AutoCAD LT
AutoCAD LT 98 is a low-cost 2D CAD application intended for CAD managers,
designers, and engineers who need a powerful, stand-alone CAD tool, but who do
not require the advanced feature set in AutoCAD. AutoCAD LT 98 software
contains an extensive 2D drafting toolset as well as 3D lines and polylines with
quick shading and hidden-line removal. Other features include a Start-Up dialog
box and Drawing Set-Up wizards to help the user create or open a drawing
quickly; real-time pan and zoom; a Drag-and-Drop Content Explorer(TM) featuring
thousands of industry-standard symbols; and Integrated Internet Tools to open or
save drawings directly to the Internet. AutoCAD LT operates in the Windows
environment with pull-down menus, customizable toolbar, toolbox, menus, and
scripts, as well as dialog boxes and icons. It supports the Windows Clipboard,
as well as ActiveX Automation. AutoCAD LT 98 is fully compatible with Windows
98 and Windows NT 4.X and has built-in Microsoft Office 97 compatibility.
AutoSketch
AutoSketch Release 6 is an affordable, easy-to-use precision drawing tool
for technical professionals who occasionally create conceptual drawings and
sketches. AutoSketch Release 6 reduces the complexity of professional CAD by
providing "drawing guides" that help users get started quickly and easily on any
type of technical drawing. Incorporating a variety of new productivity and ease-
of-use features such as 3D Effects, an AutoArray tool, and Dynamic Pan & Zoom,
AutoSketch Release 6 is a powerful, yet affordable tool that fulfills the
precision drawing needs of a broad range of users.
Actrix
Actrix is a family of easy-to-use diagramming solutions that allows
customers to quickly create a range of dynamic drawings, including engineering
schematics, facilities plans, network diagrams, and process flow charts. Actrix
is also a modern development platform for creating custom corporate solutions
and third party applications. Actrix Technical, the first entry in the Actrix
product family, shipped in November 1998. Actrix Technical is ideal for
engineers, architects, facilities planners, network managers, and project
managers who need to create diagrams, schematics, and content-based layouts.
With its AutoCAD interoperability and user friendliness, Actrix Technical can be
used as an adjacent-seat diagramming solution for organizations and design teams
who use AutoCAD and specifically for non-CAD users. Actrix delivers next-
generation ActiveShapes(TM) objects whose built-in intelligence makes them
automatically snap, orient, and align with accuracy. Actrix is a Windows
application, and it supports file formats like DXF, TIFF, BMP, HTML, JPEG, and
DWF.
The principal product offerings from the Kinetix segment are discussed below:
3D Studio MAX
3D Studio MAX R2 software, which began shipping in the third quarter of
fiscal year 1998, is a 3D modeling and animation software package specifically
written to take advantage of advanced features offered by the Windows NT
operating system. With a real-time interface, multiple-processor support, and 3D
graphics acceleration capabilities, 3D Studio MAX delivers workstation-class
performance and functionality to PCs.
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The intuitive interface eliminates many of the commonly accepted boundaries
between modeling, rendering, and animation, and offers instant feedback; users
can see the results of their actions in real time, as they are applied. Shaded
views with real-time feedback allow users to visualize natural, real-world
environments in which they can directly manipulate objects, regardless of scene
complexity. Because 3D Studio MAX software maintains a data history of geometry
creation and modification, users can return to and change any step, at any time,
without having to redo prior work. 3D Studio MAX is also the only environment
that can run Character Studio(R), a powerful character-animation and skinning
plug-in software product offered by Autodesk.
3D Studio VIZ
3D Studio VIZ, introduced in May 1997, is a design tool that enables users
to express ideas on-screen, in full 3D. Architectural models, engineering
samples, and construction-site previews all become a quick reality with this
software tool. Real-world feedback can be incorporated into the design, and
users can explore more options with their customers more cost-effectively. 3D
Studio VIZ and AutoCAD files are easily exchanged and allow for the development
of advanced engineering or architectural visualizations. 3D Studio VIZ animates,
so clients can take a simulated walkthrough of a site, understand a structure,
or view a part as it will operate in the final assembly. The 3D Studio VIZ user
interface employs CAD-like creation tools including fillets, trims, and
chamfers.
The principal product offerings from Autodesk's new Discreet business unit are
discussed below:
flame*
flame* is an on-line, resolution-independent, non-linear, uncompressed
digital system. The system is used by creative professionals to create, edit and
composite special visual effects in an on-line, real-time environment. Easily
integrated into a suite environment and possessing the power and features
necessary to serve as the core of a fully digital suite, flame* is designed to
allow the operator to create desired effects with near instantaneous feedback. A
complete flame* system includes the flame* software, and SGI Octane workstation,
a stone* disk array and various I/O devices.
inferno*
inferno* is an on-line, non-linear, resolution-independent, uncompressed
digital system providing all the features of flame* with film tools, and
increased image resolution and color control for digital film work. The system
also features tools for grain management, wire and scratch removal and colour
calibration. A compete inferno* system includes the inferno* software, an SGI
Onyx2 workstation, a stone* disk array and various I/O devices.
PRODUCT DEVELOPMENT AND ENHANCEMENT
The software industry is characterized by rapid technological change in
computer hardware, operating systems, and software. To keep pace with this
change, Autodesk maintains an aggressive program of new product development.
Autodesk dedicates considerable resources to research and development to further
enhance its existing products and to create new products and technologies.
During fiscal years 1999, 1998, and 1997, Autodesk incurred $142.8 million,
$122.4 million, and $93.7 million, respectively, for software design,
development, product localization, and project-management activities (excluding
capitalized software development costs of $1.3 million and $2.2 million during
fiscal year 1999 and 1998, respectively; no software development costs were
capitalized during fiscal year 1997).
The majority of Autodesk's basic research and product development has been
performed in the United States, while translation and localization of foreign-
market versions, as well as some product development, are performed by
development teams or contractors in the local markets. Autodesk's product-
related functions in Europe, including software development, localization,
quality assurance, and technical publications, are centralized in Neuchatel,
Switzerland. Production in Europe is centralized in Ireland, and production in
Asia Pacific is centralized in Singapore.
Autodesk intends to continue recruiting and hiring experienced software
developers and to consider the licensing and acquisition of complementary
software technologies and businesses. In addition, Autodesk will continue to
actively collaborate with and support independent software developers who offer
products that enhance and complement AutoCAD software and other products offered
by Autodesk.
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The software industry is characterized by rapid technological change as
well as changes in customer requirements and preferences. The software products
offered by Autodesk are internally complex and despite extensive testing and
quality control, may contain errors or defects ("bugs"). Defects or errors may
occur in future releases of AutoCAD or other software products offered by
Autodesk. Such defects or errors could result in corrective releases to
Autodesk's software products, damage to Autodesk's reputation, loss of revenues,
an increase in product returns, or lack of market acceptance of its products,
any of which could have a material and adverse effect on Autodesk's business and
consolidated results of operations.
Autodesk believes that its future results will depend largely upon its
ability to offer products that compete favorably with respect to product
reliability, performance, ease of use, range of useful features, continuing
product enhancements, reputation, price and training. Delays or difficulties may
result in the delay or cancellation of planned development projects, and could
have a material and adverse effect on Autodesk's business and consolidated
results of operations. Further, increased competition in the market for design,
drafting, mapping, or multimedia software products could also have a negative
impact on Autodesk's business and consolidated results of operations. More
specifically, gross margins may be adversely affected if sales of low-end CAD
products and AutoCAD upgrades, which historically have had lower margins, grow
at a faster rate than Autodesk's higher-margin products.
The success of Autodesk's Discreet business unit will depend in part upon
Autodesk's ability to enhance Discreet's existing systems and software and to
develop and introduce new products and features which meet changing customer
requirements and emerging industry standards on a timely basis. In addition, in
connection with Discreet's recent acquisitions, Autodesk must fully integrate
the edit* (formerly D-Vision OnLine), effect* (formerly Flint and Illuminaire
Composition), paint* (formerly Illuminaire Paint), and light* (formerly
Lightscape) products into its product line and operations. Discreet from time to
time experienced delays in introducing new products and product enhancements and
the Discreet business unit post acquisition may experience difficulties that
could delay or prevent the successful development, introduction and marketing of
new products or product enhancements. In addition, such new products or product
enhancements may not meet the requirements of the marketplace and achieve market
acceptance. Any such failure could have a material adverse effect on Autodesk's
business and consolidated results of operations. From time to time the Discreet
business unit or others may announce products, features or technologies which
have the potential to shorten the life cycle of or replace its then existing
products. Such announcements could cause customers to defer the decision to buy
or determine not to buy its products or cause its distributors to seek to return
products to the Discreet business unit, any of which could have a material
adverse effect on Autodesk's business and consolidated results of operations. In
addition, product announcements by Silicon Graphics, Inc. ("SGI") and others in
the past have caused customers to defer their decision to buy or determine not
to buy Discreet's products. In addition, products or technologies developed by
others may render the Discreet business unit's products or technology
noncompetitive or obsolete.
Certain of Autodesk's historical product development activities have
been performed by independent firms and contractors, while other technologies
are licensed from third parties. Autodesk generally either owns or licenses the
software developed by third parties. Because talented development personnel are
in high demand, independent developers, including those who have developed
products for Autodesk in the past, may not be able to provide development
support to Autodesk in the future. Similarly, Autodesk may not be able to obtain
and renew existing license agreements on favorable terms, if at all, which could
have a material and adverse effect on Autodesk's business and consolidated
results of operations.
Autodesk's business strategy has historically depended in large part on its
relationships with third-party developers, who provide products that expand the
functionality of Autodesk's design software. Certain developers may elect to
support other products or otherwise experience disruption in product development
and delivery cycles. Such disruption in particular markets could negatively
impact these third-party developers and end users, which could have a material
adverse effect on Autodesk's business and consolidated results of operations.
Further, increased merger and acquisition activity currently experienced in the
technology industry could affect relationships with other third-party
developers, and thus adversely affect operating results.
Additionally, Autodesk's development efforts may not result in the timely
introduction of new products, and such new products may not be commercially
successful. Failure to successfully develop new products, delays in the
introduction of these new products, or lower-than-anticipated demand for these
products could have a material and adverse effect on the Company's business and
consolidated results of operations.
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MARKETING AND SALES
Autodesk's customer-related operations are divided into three geographic
regions: the Americas, Europe, and Asia Pacific. Autodesk's products are
marketed worldwide through a network of domestic and foreign offices. The
Company sells its software products primarily through distributors and resellers
(value-added resellers or "VARs") who distribute Autodesk's products to end
users in more than 150 countries. VARs, including both independent owners and
computer store franchisees, are supported by Autodesk and its subsidiaries
through technical training, periodic publications, and Autodesk's Home Page on
the Internet.
In addition, Autodesk works directly with dealer and distributor sales
organizations, computer manufacturers, other software developers, and
peripherals manufacturers through cooperative advertising, promotions, and
trade-show presentations. Autodesk also holds annual "Expos" throughout the
world. These dedicated trade shows, incorporated within major industry trade
shows, highlight Autodesk's products, as well as a number of third-party
products. Autodesk employs mass-marketing techniques such as direct mailings
and advertising in business and trade journals. Autodesk has a worldwide user
group organization dedicated to the exchange of information related to the use
of Autodesk's products.
Domestically, Autodesk distributes its products primarily through its
authorized dealer network. Other domestic sales are made principally to large
corporations, governmental agencies, educational institutions, and, for certain
low-end design products, to end users. The majority of all of Autodesk's
international sales are made to dealers and distributors, which are supported by
Autodesk's foreign subsidiaries and international sales organizations. Certain
international sales result from direct exports from the United States.
Fluctuations in foreign exchange rates, specifically the stronger value of the
dollar, relative to certain international currencies, negatively impacted
foreign revenues during fiscal year 1999. These foreign currency fluctuations,
as well as any slowdowns in any of Autodesk's geographical markets, including
the recent economic instability experienced in certain Asia Pacific countries,
could have a material adverse effect on Autodesk's business and future
consolidated results of operations.
Autodesk's ability to effectively distribute its products depends in part
upon the financial and business condition of its VAR network. Although Autodesk
has not currently experienced any material problems with its VAR network,
computer software dealers and distributors are typically not highly capitalized,
have tended to experience difficulties during times of economic contraction and
during periods of technology-market price pressure, and may do so in the future.
Computer 2000/Datech and Mensch und Maschine accounted for 11 percent ($84.2
million) and 11 percent ($81.2 million) of total consolidated revenues for
fiscal year 1999. Revenues from Computer 2000/Datech and Mensch und Maschine are
included in the Design Solutions segment. While no single customer accounted for
more than 10 percent of Autodesk's consolidated revenues in fiscal years 1998 or
1997, the loss of, or a significant reduction in, business with any one of
Autodesk's major international distributors or large U.S. resellers could have a
material adverse effect on Autodesk's business and consolidated results of
operations. Autodesk's largest international distributor is Computer 2000/Datech
AG in Germany. Autodesk's largest resellers in the United States are Avatech,
DLT Solutions, Inc. and Ingram Micro.
Autodesk intends to continue to make its products available in foreign
languages and expects that foreign sales will continue to contribute a
significant portion of its consolidated revenues. International revenues,
including exports from the United States, accounted for approximately 60
percent, 59 percent, and 67 percent of consolidated revenues in fiscal years
1999, 1998, and 1997, respectively.
CUSTOMER AND DEALER SUPPORT
During fiscal year 1998, Autodesk realigned its customer and dealer support
network around its market groups to better provide services related to specific
industry segments. Autodesk requires each authorized dealer and distributor to
provide a professional level of technical support to customers by employing
full-time, trained, technical-support personnel. Autodesk supports its dealers
and distributors through technical product training, sales training classes, and
direct telephone support. During fiscal year 1998, Autodesk began to offer more
end-user support in addition to services which had historically been offered
such as the online support available through the Autodesk Home Page on the
Internet. These new support services include the Web-Based Learning program, a
fee-based distance learning program that provides lessons and tutorials that
highlight critical components of its products, and various Learning Assistance
programs, which provide lessons related to design projects through an
interactive multimedia tool.
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Autodesk offers phone support through authorized Autodesk dealers under two
programs: the Autodesk Premier Support Program ("APSP") and the Autodesk Systems
Center Program ("ASCP"). Under the APSP, participating dealers act as dedicated
account managers to Autodesk customers that have technical questions related to
a specific vertical industry. The ASCP requires dealers to provide superior
industry-specific application training to end users of the Company's products.
In addition, Autodesk provides direct phone support to end users under the
Safety Net Program ("SNP"). Under the SNP, Autodesk support staff provide
technical support for customers with questions about AutoCAD and products
offered by Autodesk's market groups.
As of January 31, 1999, Autodesk had authorized more than 900 independent
Autodesk Training Centers (ATC(R)) throughout the world. These accredited
training centers offer in-depth education and training in computer-aided design
skills on AutoCAD and other Autodesk products, as well as on related,
independently developed software.
Customers have formed Autodesk user groups as forums for education and to
suggest product enhancements and development of new products. The Autodesk User
Group International (AUGI(R)), officially recognized by Autodesk, sponsors an
annual meeting held concurrently with the Autodesk University(R) user show;
publishes a quarterly newsletter; independently evaluates Autodesk products;
compiles user feature and functionality requirements; and offers telecourses
taught by its membership on CompuServe. In addition, there are local user
groups in Europe, Asia Pacific, and the Americas focused on expanding the use of
Autodesk products.
DEVELOPER PROGRAMS
One of Autodesk's key strategies is to maintain an open-architecture design
of its software products to facilitate third-party development of peripheral and
complementary products. This approach enables customers and third parties to
customize Autodesk's products for a wide variety of highly specific uses.
Autodesk offers several programs that provide marketing, sales, and technical
support and programming tools to Autodesk Registered Developers worldwide, who
develop commercially available add-on applications for Autodesk products.
Although Autodesk derives no direct revenue from these application developers,
Autodesk believes that the availability and use of their add-on products enhance
sales opportunities for Autodesk's core products.
Under the Autodesk Developer Channel, Autodesk offers three programs to
third-party developers that are interested in licensing Autodesk software and
technology. The Unique Application Reseller program ("UAR") allows software
developer partners the ability to sell and support Autodesk software when
bundled with specifically defined vertical applications. The OEM program
provides the technology for qualified developers to create and deliver suites of
scaleable products that focus on solving customer needs in specialized markets.
The Solution Integrator ("SI") allows solution provider partners the ability to
sell and support Autodesk software when bundled with specifically defined
vertical solutions.
To support the growth of third-party developers, whose applications extend
and enhance the functionality of Autodesk's products worldwide, Autodesk
established the Developer Network Program ("ADN"). The ADN is a business network
comprised of independent application developers and customers. This program
provides sales, marketing, technical, and product support to Autodesk Strategic
Developers.
BACKLOG
Autodesk typically ships products within one to two weeks after receipt of
an order, which is common in the computer software industry. Accordingly,
Autodesk does not maintain significant backlog, and backlog as of any particular
date gives no indication of actual sales for any succeeding period.
COMPETITION
The software industry has limited barriers to entry, and the availability
of desktop computers with continually expanding capabilities at progressively
lower prices contributes to the ease of market entry. Because of these and other
factors, competitive conditions in the industry are likely to intensify in the
future. Increased competition could result in price reductions, reduced revenues
and profit margins, and loss of market share, any of which could adversely
affect Autodesk's business, consolidated results of operations, and financial
condition. The design
9
software market in particular is characterized by vigorous competition in each
of the vertical markets in which Autodesk and its individual market groups
compete, both by entry of competitors with innovative technologies and by
consolidation of companies with complementary products and technologies.
The Architecture, Engineering, and Construction family of products competes
directly with software offered by companies such as Bentley Systems, Inc.
("Bentley"); Computervision Corporation (a subsidiary of Parametric Technology
Corporation) ("Computervision"); CADAM Systems Company, Inc.; Diehl Graphsoft,
Inc.; EaglePoint Software; International Microcomputer Software, Inc. ("IMSI");
Intergraph Corporation; Nemetschek Systems, Inc.; and Visio Corporation
("Visio"). Autodesk's MCAD products compete with products offered by Bentley;
Visionary Design Systems; Hewlett-Packard Corporation; Parametric Technology
Corporation; Structural Dynamics Research Corporation; Unigraphics;
Computervision; Dassault Systemes ("Dassault"); SolidWorks Corporation (a
subsidiary of Dassault); Baystate Technologies, Inc.; and think3. Autodesk's GIS
Market Group faces competition from Bentley; Intergraph Corporation; MapInfo
Corporation; Environmental Systems Research Institute ("ESRI"); and
Smallworldwide plc. Kinetix product offerings compete with products offered by
other multimedia companies such as Adobe Systems Inc.; Macromedia, Inc.; Silicon
Graphics, Inc.; and Avid Technology, Inc. The Personal Solutions Group family of
products competes with IMSI; The Learning Company; Visio; Micrografx Inc.; and
others. Certain of the competitors of Autodesk have greater financial,
technical, sales and marketing, and other resources than Autodesk.
The future financial performance of Autodesk's Discreet business unit will
depend in part on the successful development, introduction and customer
acceptance of existing and new or enhanced products. In addition, in order for
the unit to achieve sustained growth, the market for its systems and software
must continue to develop and Autodesk must expand this market to include
additional applications within the film and video industries and develop or
acquire new products for use in related markets. Autodesk may not be successful
in marketing its existing or new or enhanced products. In addition, as Autodesk
enters new markets, distribution channels, technical requirements and levels and
bases of competition may be different from those in Autodesk's current markets;
Autodesk may not be able to compete favorably.
Autodesk believes that the principal factors affecting competition in its
markets are product reliability, performance, ease of use, range of useful
features, continuing product enhancements, reputation, price, and training. In
addition, the availability of third-party application software is a competitive
factor within the CAD market. Autodesk believes that it competes favorably in
these areas and that its competitive position will depend, in part, upon its
continued ability to enhance existing products, and to develop and market new
products.
In April 1998, Autodesk received notice that the Federal Trade Commission
("FTC") has undertaken a nonpublic investigation to determine whether Autodesk
or others have engaged in or are engaging in unfair methods of competition. The
FTC has not made any claims or allegations regarding Autodesk's current business
practices or policies, nor have any charges been filed. Autodesk intends to
cooperate fully with the FTC in its inquiry. Autodesk does not believe that the
investigation will have a material impact on its business or results of
operations.
INTELLECTUAL PROPERTY AND LICENSES
Autodesk protects its intellectual property through copyright, trade
secret, patent, and trademark laws. For substantially all AutoCAD sales outside
of North America, Autodesk uses software protection locks to inhibit
unauthorized copying. Nonetheless, Autodesk's intellectual property rights may
not be successfully asserted in the future or may be invalidated, circumvented,
or challenged. In addition, the laws of certain foreign countries where
Autodesk's products are distributed do not protect Autodesk's intellectual
property rights to the same extent as U.S. laws. The inability of Autodesk to
protect its proprietary information could have a material adverse effect on
Autodesk's business and consolidated results of operations.
From time to time, Autodesk receives claims alleging infringement of a
third party's intellectual property rights, including patents. Any disputes
involving Autodesk's intellectual property rights or those of another party
could lead to costly litigation which could have a material adverse effect on
Autodesk's business and consolidated results of operations.
Autodesk retains ownership of software it develops. All software is
licensed to users and provided in object code pursuant to either shrink-wrap,
embedded or on-line licenses, or executed license agreements. These agreements
contain restrictions on duplication, disclosure, and transfer.
10
Autodesk believes that because of the limitations of laws protecting its
intellectual property and the rapid, ongoing technological changes in both the
computer hardware and software industries, it must rely principally upon
software engineering and marketing skills to maintain and enhance its
competitive market position.
Autodesk has an in-house antipiracy program focused on pursuing companies and
individuals who illegally duplicate, sell, or install Autodesk's software
products. Software piracy is in some cases a felony under U.S. federal law,
which allows copyright and patent holders to protect and enforce their rights as
owners of intellectual property. Additionally, Autodesk is a member and co-
founder of the Business Software Alliance ("BSA"), an organization comprised of
member software companies whose purpose is to advance favorable public policy
for the technology industry and promote the importance of honoring software
copyrights.
Until fiscal 1996, substantially all of Discreet's systems were sold without
written license agreements. Autodesk may be involved in litigation relating to
these sales, and the outcome of any such litigation may be more unfavorable to
Autodesk as a result of such omissions. The Discreet business unit uses both
software and hardware keys with respect to its systems and software but
otherwise does not copy-protect its systems and software. It may be possible for
unauthorized third parties to copy the Discreet business unit's products or to
reverse-engineer or obtain and use information that the Discreet business unit
regards as proprietary. Competitors may independently develop technologies that
are substantially equivalent or superior to the Discreet business unit's
technologies.
PRODUCTION AND SUPPLIERS
Production of Autodesk's software products involves duplication of the
software media and the printing of user manuals. The purchase of media and the
transfer of the software programs onto media for distribution to customers are
performed by Autodesk and by licensed subcontractors. Media for Autodesk's
products include CD-ROMs and disks which are available from multiple sources.
User manuals for Autodesk's products and packaging materials are produced to
Autodesk specifications by outside sources. Domestic production is performed in
leased facilities operated by Autodesk. Certain product assembly is also
performed by independent third-party contractors. International production is
performed by independent third-party contractors in Ireland and Singapore. To
date, Autodesk has not experienced any material difficulties or delays in the
production of its software and documentation.
Autodesk's Discreet business unit has historically relied on third-party
vendors to manufacture and supply all of the hardware components used in its
systems. Manufacturing at the Discreet unit consists of assembly (including disk
array assembly), testing, and value added systems integration.
The Discreet unit's flame*, effect*, inferno*, fire*, smoke* and frost*
software currently run on workstations manufactured by SGI. There are
significant risks associated with this reliance on SGI and the Discreet unit may
be impacted by the timing of the development and release of products by SGI, as
was the case during fiscal year 1996. In addition, there may be unforeseen
difficulties associated with adapting the Discreet unit's products to future SGI
products. Moreover, although Autodesk has no reason to believe that the Discreet
unit will be unable to obtain sufficient quantities of SGI workstations on a
timely basis, the Discreet unit may not continue to be able to procure such
workstations in sufficient quantities on a timely basis.
The Discreet unit is also dependent on SGI as the unit's sole source for video
I/O cards used in the unit's systems. The Discreet unit generally purchases sole
source or other components pursuant to purchase orders placed from time to time
in the ordinary course of business and has no written agreements or guaranteed
supply arrangements with its sole source suppliers.
EMPLOYEES
As of January 31, 1999, Autodesk had 2,712 full-time employees, of which 2,071
were based in the Americas, 439 in Europe, and 202 in Asia Pacific. The
continued growth and success of Autodesk depends significantly on the continued
service of highly skilled employees. Competition for these employees in today's
marketplace, especially in the technology industries, is intense. Autodesk's
ability to attract and retain employees is dependent on a number of factors,
including its continued ability to grant stock incentive awards. Autodesk may
not be successful in continuing to recruit new personnel and to retain existing
personnel. The loss of one or more key employees or Autodesk's inability to
maintain existing employees or recruit new employees could have a material
adverse impact
11
on Autodesk. In addition, Autodesk may experience increased compensation costs
to attract and retain skilled personnel.
ITEM 2. PROPERTIES
Autodesk's executive offices and those related to product development,
domestic marketing and sales, and production are located in leased office space
in northern California. The Company also leases office space in various
locations throughout the United States for local sales, development, and
technical support personnel. Autodesk's foreign subsidiaries lease office space
for their operations.
Autodesk believes that its existing facilities and offices are adequate to
meet its requirements for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
On August 28, 1998, a complaint was filed against Discreet and certain of its
directors in the Marin County, California, Superior Court relating to Autodesk's
acquisition of the Company. The complaint alleges that the defendants breached
their fiduciary duties to shareholders in connection with the acquisition. The
complaint seeks unspecified damages from the defendants. Autodesk believes the
claims asserted in the complaint are without merit and intends to vigorously
contest them.
12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 1999.
Executive Officers of the Registrant
- ------------------------------------
The following sets forth certain information regarding the executive officers of
the Company as of April 22, 1999:
NAME AGE POSITION
---- --- --------
Carol A. Bartz.............. 50 Chairman of the Board and Chief Executive Officer
Eric B. Herr................ 51 President and Chief Operating Officer
Joseph H. Astroth, Ph.D..... 43 Vice President, GIS Market Group
Carl Bass................... 41 Vice President, AECAD and Chief Technical Officer
Steve Cakebread............. 47 Vice President and Chief Financial Officer
Linda Clarke................ 43 Vice President, Corporate Marketing
Dominic J. Gallello......... 44 Vice President, Mechanical CAD Market Group
Stephen McMahon............. 57 Vice President, Human Resources and Facilities
Marcia K. Sterling.......... 55 Vice President, Business Development, General Counsel, and
Secretary
Godfrey R. Sullivan......... 45 Vice President, Personal Solutions Group
Michael E. Sutton........... 54 Vice President, Worldwide Field Organization
CAROL A. BARTZ joined the Company in April 1992 and has served as Chief
Executive Officer and Chairman of the Board since May 1992. Ms. Bartz served as
President from May 1992 through September 1996. Ms. Bartz is a director of
AirTouch Communications, Inc., Network Appliance, Inc., BEA Systems, Inc.,
Cadence Design Systems, Inc., and Cisco Systems, Inc.
ERIC B. HERR has been Autodesk's President and Chief Operating Officer since
September 1996, having also served as the Acting Vice President, AEC Market
Group, from September 1996 through March 1997. Mr. Herr served as the Chief
Financial Officer from the time he joined the Company in May 1992 until
September 1996. From December 1992 through January 1995, Mr. Herr served as Vice
President, Emerging Businesses. From January 1995 to May 1995, Mr. Herr served
as Vice President, Finance and Administration.
DR. JOSEPH H. ASTROTH has served as Vice President, GIS Market Group, since
joining the Company in January 1996. From September 1989 through December 1995,
Dr. Astroth held various positions with Graphic Data Systems Corporation
including Director, Environmental Market Group, from January 1993 to June 1994,
and Vice President of Product Management, Engineering, from June 1994 to
December 1995.
CARL BASS was named Vice President of Engineering in October 1997. He was
named Chief Technical Officer in December 1996. From November 1995 to December
1996, Mr. Bass served as a Senior Technical Fellow for the AutoCAD family of
products. Mr. Bass served as Chief Architect for AutoCAD from September 1993 to
October 1995. Before joining Autodesk, Mr. Bass was cofounder and Chief
Technical Officer of Ithaca Software from May 1986 to August 1993.
STEVE CAKEBREAD joined the Company in April 1997 as Vice President and Chief
Financial Officer. From April 1993 through March 1997 he served as Vice
President, Finance World Trade Corporation at Silicon Graphics. Mr. Cakebread
held various finance and general management positions at Hewlett-Packard from
January 1972 through March 1993.
LINDA CLARKE joined the Company in February 1999 as Vice President of
Corporate Marketing. From December 1996 through December 1998, she served as
Vice President of Global Marketing for Baan Company. From January 1990 through
December 1996, Ms. Clarke was the Vice President of Marketing, Application
Products Division of Adobe Systems.
DOMINIC J. GALLELLO has served as Vice President, MCAD Market Group since
January 1995. Mr. Gallello served as Vice President, Asia Pacific, from the
time he joined Autodesk in October 1992 until July 1996. From February 1995 to
August 1995, Mr. Gallello served as Acting Vice President, MCAD Market Group.
13
STEPHEN MCMAHON has served as Vice President, Human Resources, since joining
Autodesk in July 1992. From July 1987 to July 1992, Mr. McMahon served as Senior
Director, Human Resources, for Apple Computer, Inc.
MARCIA K. STERLING joined Autodesk in October 1995 as Vice President, Business
Development, General Counsel, and Secretary. From September 1982 to October
1995, she practiced corporate and securities law at Wilson Sonsini Goodrich &
Rosati, where she was a member.
GODFREY R. SULLIVAN was named Vice President, Personal Solutions Group, in
September 1997. Mr. Sullivan served as Vice President, the Americas, since
joining Autodesk in October 1992 and as Acting Vice President, AEC/FM Market
Group, from February 1995 to September 1995.
MICHAEL E. SUTTON was named Vice President, Worldwide Field Organization in
September 1998. From June 1993 through September 1998, Mr. Sutton served as Vice
President, Europe/Middle East/Africa.
There is no family relationship among any of the directors or executive
officers of Autodesk.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated by reference to the
Company's 1999 Annual Report to Stockholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference to page 1 of
the Company's 1999 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is incorporated by reference to pages 2
through 21 of the Company's 1999 Annual Report to Stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The information required by this Item is incorporated by reference to page 18 of
the Company's 1999 Annual Report to Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by reference to pages 22
through 42 of the Company's 1999 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
14
PART III
Certain information required by Part III is omitted from this Report in that the
Registrant will file a definitive proxy statement pursuant to Regulation 14A
(the "Proxy Statement") not later than 120 days after the end of the fiscal year
covered by this Report and certain information included therein is incorporated
herein by reference. Only those sections of the Proxy Statement that
specifically address the items set forth herein are incorporated by reference.
Such incorporation does not include the Compensation Committee Report or the
Performance Graph included in the Proxy Statement.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Company's directors required by this Item is
incorporated by reference to the Company's Proxy Statement.
The information concerning the Company's executive officers required by this
Item is incorporated by reference herein to the section of this Report in Part
I, Item 4, entitled "Executive Officers of the Registrant."
The information regarding compliance with Section 16 of the Securities and
Exchange Act of 1934 is to be set forth in the Proxy Statement and is hereby
incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Report:
1. Financial Statements: The following Consolidated Financial Statements of
--------------------
Autodesk, Inc., and Report of Ernst & Young LLP, Independent Auditors, are
incorporated by reference to pages 22 through 42 of the Registrant's 1999
Annual Report to Stockholders:
Consolidated Statement of Income-Fiscal Years Ended January 31, 1999, 1998,
and 1997
Consolidated Balance Sheet-January 31, 1999 and 1998
Consolidated Statement of Cash Flows-Fiscal Years Ended January 31, 1999,
1998, and 1997
Consolidated Statement of Stockholders' Equity-Three-Year Period Ended
January 31, 1999
Notes to Consolidated Financial Statements
15
Report of Ernst & Young LLP, Independent Auditors
2. Financial Statement Schedule: The following financial statement schedule of
----------------------------
Autodesk, Inc., for the fiscal years ended January 31, 1999, 1998, and 1997,
is filed as part of this Report and should be read in conjunction with the
Consolidated Financial Statements of Autodesk, Inc.
Schedule II Valuation and Qualifying Accounts..................... S-1
Schedules not listed above have been omitted because they are not applicable
or are not required or the information required to be set forth therein is
included in the Consolidated Financial Statements or Notes thereto.
3. Exhibits: The Exhibits listed on the accompanying Index to Exhibits
--------
immediately following the financial statement schedules are filed as part of,
or incorporated by reference into, this Report.
Exhibit
No. Description
-- -----------
2.1 (1) Second Amended and Restated Agreement and Plan of Acquisition and Amalgamation by and among Autodesk, Inc.,
Autodesk Development B.V., 9066-9771 Quebec Inc., Autodesk Canada Inc., 9066-9854 Quebec Inc. and Discreet
Logic Inc., dated as of November 18, 1998, as amended on December 18, 1998 and January 18, 1999
2.2 (1) Second Amended and Restated Amalgamation Agreement by and among Discreet Logic Inc., 9066-9854 Quebec Inc.
and Autodesk, Inc. dated as of January 18, 1999
2.3 (2) Agreement and Plan of Reorganization By and Among Autodesk, Inc., Autodesk Acquisition Corporation, and
Softdesk, Inc., dated December 10, 1996, as amended December 19, 1996
3.1 Certificate of Incorporation of Registrant
3.2 (3) Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock of
Autodesk, Inc.
3.3 Certificate of the Powers, Designations, Preferences and Rights of Series B Preferred Stock of Autodesk,
Inc.
3.4 (4) Bylaws of Registrant, as amended
4.1 (5) Preferred Shares Right Agreement dated December 14, 1995
4.2 (5) Amendment No. 1 to Preferred Shares Rights Agreement
9.1 Voting and Exchange Trust Agreement dated March 16, 1999 among Autodesk, Inc., Discreet Logic Inc., Autodesk
Development B.V., and Montreal Trust Company of Canada
10.1 (6)* Registrant's 1987 Stock Option Plan, as amended
10.2 (6)* Registrant's Employee Qualified Stock Purchase Plan and form of Subscription Agreement, as amended
10.3 (4)* Registrant's 1990 Directors' Option Plan, as amended
10.4 (4)* Registrant's 1996 Stock Plan, as amended
10.5 (7)* Form of Indemnification Agreement executed by the Company
and each of its officers and directors
10.6(8)* Agreement between Registrant and Carol A. Bartz dated
April 7, 1992
10.7(9)* Teleos Research 1996 Stock Plan
10.8(10)* Softdesk, Inc. 1992 Stock Option Plan
10.9(10)* Softdesk, Inc. 1993 Director Stock Option Plan
16
10.10(10)* Softdesk, Inc. 1993 Equity Incentive Plan
10.11(4)* Registrant's 1998 Employee Qualified Stock Purchase Plan
10.12 Support Agreement dated March 16, 1999 among Autodesk, Inc., Autodesk Development B.V. and Discreet Logic
Inc.
10.13(11)* Discreet Logic Inc. Amended and Restated 1994 Restricted Stock and Stock Option Plan
10.14(11)* Discreet Logic Inc. 1995 Employee Stock Purchase Plan
10.15(11)* Discreet Logic Inc. 1995 Non-Employee Director Stock Option Plan
10.16(11)* Discreet Logic Inc. 1997 Special Limited Non-Employee Director Stock Plan
13.1 Pages 1 through 42 of the Registrant's Annual Report to Stockholders for the year ended January 31, 1999 (to
be deemed filed only to the extent required by the instructions to exhibits for reports on Form 10-K)
21.1 List of Subsidiaries
23.1 Consent of Independent Auditors (included on page 20 of this Report)
24.1 Power of Attorney (included on page 19 of this Report)
27.1 Financial Data Schedule
(1) Incorporated by reference to the exhibit filed with the Registrant's Report on Form 8-K filed on March 16, 1999.
(2) Incorporated by reference to the exhibit filed with the Registration Statement on Form S-4 filed on March 3,
1997.
(3) Incorporated by reference to the exhibit filed with the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 31, 1997.
(4) Incorporated by reference to the exhibit filed with the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 31, 1998.
(5) Incorporated by reference to the Registrant's Report on Form 8-A filed on January 5, 1996, as amended on January
8, 1996 and January 15, 1998.
(6) Incorporated by reference to the exhibit filed with the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 31, 1996.
(7) Incorporated by reference to the exhibit filed with the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 31, 1995.
(8) Incorporated by reference to the exhibit filed with the Registrant's Report on Form 10-Q for the fiscal quarter
ended April 30, 1992.
(9) Incorporated by reference to the exhibit filed with the Registrant's Report on Form S-8 filed on July 23, 1996.
(10) Incorporated by reference to the exhibit filed with the Registrant's Report on Form S-8 filed on April 3, 1997.
(11) Incorporated by reference to the exhibits filed with the Registrant's Report on Form S-8 filed on March 18, 1999.
* Denotes a management contract or compensatory plan or arrangement.
17
(b) Reports on Form 8-K
-------------------
On November 19, 1998 the Company filed a report on Form 8-K describing the
Second Amended and Restated Agreement and Plan of Acquisition and
Amalgamation entered into among Autodesk, Inc., Autodesk Development B.V.,
9066-9771 Quebec Inc., Autodesk Canada Inc., 9066-9854 Quebec Inc., and
Discreet Logic Inc.
On January 20, 1999 the Company filed a report on Form 8-K describing the
Amendment No. 2 to the Second Amended and Restated Agreement and Plan of
Acquisition and Amalgamation entered into among Autodesk, Inc., Autodesk
Development B.V., 9066-9771 Quebec Inc., Autodesk Canada Inc., 9066-9854
Quebec Inc., and Discreet Logic Inc.
With the exception of the information incorporated by reference to the
Annual Report to Stockholders in Items 5, 6, 7, and 8 of Part II and Item
14 of Part IV of this Form 10-K, the Company's 1999 Annual Report to
Stockholders is not to be deemed filed as a part of this Report.
Autodesk, the Autodesk logo, AutoCAD, AutoCAD LT, AutoCAD Map, AutoSketch,
Kinetix, Mechanical Desktop, 3D Studio MAX, AutoLISP, Softdesk, Autodesk
University, CAD Overlay, Autodesk MapGuide, Autodesk World, 3D Studio VIZ,
AUGI, ATC, and Character Studio are registered trademarks, and ObjectARX,
AutoSnap, Actrix, Content Explorer, ActiveShapes, and AutoCAD Architectural
Desktop are trademarks of Autodesk, Inc. in the USA and/or other countries.
Genius is a trademark of Genius CAD Software GmbH and CoKG licensed to
Autodesk, Inc., for limited use in connection with specified products. All
other brand names, product names, or trademarks belong to their respective
holders.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AUTODESK, INC.
By: /s/ CAROL A. BARTZ
------------------------
Carol A. Bartz
Chairman of the Board
Dated: April 28, 1999
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Carol A. Bartz as his or her attorney-in-fact,
each with the power of substitution, for him or her in any and all capacities,
to sign any amendments to this Report on Form 10-K, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ----------------------------- ------------------------------------------ -------------------------------
/s/ CAROL A. BARTZ Chief Executive Officer and April 28, 1999
- -----------------------------
Carol A. Bartz Director (Principal Executive
Officer)
/s/ STEVE CAKEBREAD Vice President and Chief Financial Officer April 28, 1999
- -----------------------------
Steve Cakebread (Principal Financial Officer)
/s/ DAVID S. OPPENHEIMER Vice President, Finance April 28, 1999
- -----------------------------
David S. Oppenheimer (Principal Accounting Officer)
/s/ MARK A. BERTELSEN Director April 28, 1999
- -----------------------------
Mark A. Bertelsen
/s/ CRAWFORD W. BEVERIDGE Director April 28, 1999
- -----------------------------
Crawford W. Beveridge
/s/ J. HALLAM DAWSON Director April 28, 1999
- -----------------------------
J. Hallam Dawson
/s/ PAUL OTELLINI Director April 28, 1999
- -----------------------------
Paul Otellini
/s/ MORTON L. TOPFER Director April 28, 1999
- -----------------------------
Morton L. Topfer
/s/ MARY ALICE TAYLOR Director April 28, 1999
- -----------------------------
Mary Alice Taylor
19
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Autodesk, Inc. of our report dated February 22, 1999, except for Note 12 as
to which the date is March 16, 1999, included in the 1999 Annual Report to
Stockholders of Autodesk, Inc.
Our audits also included the financial statement schedule of Autodesk, Inc.
listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-15675, No. 33-22656, No. 33-39458, No. 33-41265, No. 33-51110,
No. 33-54683, No. 33-61015, No. 333-08693, No. 333-15037, No. 333-24469, and
No. 333-62655) pertaining to the 1987 Stock Option Plan, 1990 Directors'
Option Plan, 1996 Stock Plan, Employee Qualified Stock Purchase Plan and the
1998 Employee Qualified Stock Purchase Plan of Autodesk, Inc., the Teleos
Research 1996 Stock Plan and the Softdesk, Inc. 1992 Stock Option Plan,
Softdesk, Inc. 1993 Director Stock Option Plan and Softdesk, Inc. 1993 Equity
Incentive Plan of our report dated February 22, 1999, except for Note 12 as to
which the date is March 16, 1999, with respect to the consolidated financial
statements incorporated herein by reference, and our report included in the
preceding paragraph with respect to the financial statement schedule in this
Annual Report (Form 10-K) of Autodesk, Inc.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
San Jose, California
April 28, 1999
20
Schedule II
AUTODESK, INC.
VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at Charged to Balance
Beginning Costs and Deductions at End
Description of Year Expenses Write-Offs of Year
- ---------------------------------------- ----------- ----------- ----------- -----------
Fiscal year ended January 31, 1999
Allowance for doubtful accounts $ 7,136,000 $ 1,737,000 $ 2,068,000 $ 6,805,000
Allowance for stock balancing and
product rotation $20,219,000 $25,484,000 $30,926,000 $14,777,000
Fiscal year ended January 31, 1998
Allowance for doubtful accounts $ 6,635,000 $ 3,701,000 $ 3,200,000 $ 7,136,000
Allowance for stock balancing and
product rotation $17,175,000 $38,419,000 $35,375,000 $20,219,000
Fiscal year ended January 31, 1997
Allowance for doubtful accounts $ 6,731,000 $ 1,735,000 $ 1,831,000 $ 6,635,000
Allowance for stock balancing and
product rotation $14,607,000 $46,884,000 $44,316,000 $17,175,000
S-1