UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE PERIOD ENDED APRIL 30, 1995
OR
[_] 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)
TELEPHONE NUMBER (415) 507-5000
(Registrant's telephone number, including area code)
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
----- -----
As of June 7, 1995, there were 47,020,000 shares of the Registrant's
Common Stock outstanding.
AUTODESK, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
--------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Statement of Income
Three months ended April 30, 1995 and 1994...... 3
Condensed Consolidated Balance Sheet
April 30, 1995 and January 31, 1995............. 4
Condensed Consolidated Statement of Cash Flows
Three months ended April 30, 1995 and 1994...... 6
Notes to Condensed Consolidated Financial
Statements...................................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.... 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................ 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................. 10
SIGNATURES....................................... 11
2
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AUTODESK, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
(Unaudited)
Three months ended
April 30
-------------------
1995 1994
-------- --------
Revenues $141,777 $109,550
Direct commissions 3,119 2,972
-------- --------
Net revenues 138,658 106,578
Costs and expenses:
Cost of revenues 17,285 15,099
Marketing and sales 45,003 36,560
Research and development 19,166 15,583
General and administrative 18,796 14,996
-------- --------
100,250 82,238
-------- --------
Income from operations 38,408 24,340
Interest and other income, net 2,500 1,559
-------- --------
Income before income taxes 40,908 25,899
Provision for income taxes 14,931 9,453
-------- --------
Net income $ 25,977 $ 16,446
======== ========
Net income per share $ 0.51 $ 0.33
======== ========
Shares used in computing net
income per share 50,610 50,240
======== ========
See accompanying notes.
3
AUTODESK, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
(In thousands)
April 30, 1995 January 31, 1995
--------------- -----------------
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $167,504 $195,038
Marketable securities 52,398 45,316
Accounts receivable, net 95,579 86,340
Inventories 7,559 5,769
Deferred income taxes 28,052 29,915
Prepaid expenses and other current assets 11,224 10,707
-------- --------
Total current assets 362,316 373,085
-------- --------
Marketable securities 55,695 15,019
Computer equipment, furniture and leasehold improvements, at cost:
Computer equipment and furniture 98,947 91,557
Leasehold improvements 21,563 20,048
Less accumulated depreciation (70,181) (65,090)
-------- --------
Net computer equipment, furniture and leasehold improvements 50,329 46,515
Capitalized software 23,384 26,406
Other assets 20,978 21,051
-------- --------
$512,702 $482,076
======== ========
See accompanying notes.
4
AUTODESK, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands)
April 30, 1995 January 31, 1995
--------------- -----------------
(Unaudited) (Audited)
Current liabilities:
Accounts payable $ 19,567 $ 21,535
Accrued compensation 16,615 18,165
Accrued income taxes 40,796 53,202
Litigation accrual 26,260 25,800
Other accrued liabilities 45,200 36,288
-------- --------
Total current liabilities 148,438 154,990
-------- --------
Deferred income taxes 1,894 2,625
Other liabilities 1,124 977
Stockholders' equity:
Common stock 122,930 100,870
Retained earnings 217,448 215,064
Foreign currency translation adjustment 20,868 7,550
-------- --------
Total stockholders' equity 361,246 323,484
-------- --------
$512,702 $482,076
======== ========
See accompanying notes.
5
AUTODESK, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended
April 30,
--------------------
1995 1994
-------- --------
Operating activities
Net income $ 25,977 $ 16,446
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 6,656 5,673
Changes in operating assets and liabilities (16,966) (8,748)
-------- --------
Net cash provided by operating activities 15,667 13,371
-------- --------
Investing activities
Sales (purchases) of marketable securities, net (47,758) 24,121
Purchases of computer equipment, furniture and leasehold improvements (6,293) (3,186)
Other 12,531 2,150
-------- --------
Net cash provided (used) by investing activities (41,520) 23,085
-------- --------
Financing activities
Proceeds from issuance of common stock 22,590 21,024
Repurchase of common stock (21,415) (30,743)
Dividends paid (2,856) (2,856)
-------- --------
Net cash used in financing activities (1,681) (12,575)
-------- --------
Net increase (decrease) in cash and cash equivalents (27,534) 23,881
Cash and cash equivalents at beginning of quarter 195,038 85,604
-------- --------
Cash and cash equivalents at end of quarter $167,504 $109,485
======== ========
See accompanying notes.
6
AUTODESK, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements for the three month periods
ended April 30, 1995 and April 30, 1994 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim period. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with
management's discussion and analysis of financial condition and results of
operations, contained in the Company's Annual Report to Stockholders
incorporated by reference in the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1995. The results of operations for the three
months ended April 30, 1995 are not necessarily indicative of the results for
the entire fiscal year ending January 31, 1996.
2. On May 19, 1995, the Company declared a cash dividend of $0.06 per share
payable to stockholders of record on July 7, 1995. The dividend will be paid
on July 21, 1995.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues. Autodesk's first quarter worldwide net revenues increased 30
percent over first quarter net revenues in the prior fiscal year to $138.7
million resulting principally from new and upgrade sales of AutoCAD Release 12
and AutoCAD Release 13, which began shipping in the preceding quarter. Growth in
revenues was also attributable to increased sales of AutoCAD LT and from sales
of multimedia product offerings such as 3D Studio and Animator Studio, which
began shipping late in the quarter. First quarter net revenues in fiscal year
1996 increased by 50 percent, 38 percent and 14 percent in Asia/Pacific, Europe
and the Americas, respectively, when compared to the same period of fiscal year
1995. The weaker value of the dollar, relative to international currencies,
favorably affected first quarter revenues by approximately $6.8 million compared
to the first quarter of the prior fiscal year. Consolidated revenues derived
from AutoCAD and AutoCAD updates represented approximately 80 percent of
revenues in both the first quarter of fiscal year 1996 and the first quarter of
fiscal year 1995. International sales, including exports from the US, accounted
for approximately 66 percent of the Company's revenues in the first quarter of
fiscal year 1996 as compared to 63 percent for the first quarter of fiscal year
1995.
The Company currently intends to release a variety of new and upgraded products
during the balance of fiscal year 1996. Delays in the introduction of new or
enhanced products or failure to achieve significant customer acceptance for
these new products may have an adverse effect on the Company's revenues and
results of operation in future periods. There can be no assurance that the
Company will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of new products and product
enhancements or that its new products and product enhancements will adequately
meet the requirements of the marketplace and achieve market acceptance. In
addition, the Company's revenues in future periods could be affected by changes
in currency exchange rates or uncertainties in the global economic environment.
Cost of revenues. Cost of revenues as a percentage of net revenues decreased
in the first quarter of fiscal 1996 to 12 percent from 14 percent in the first
quarter of the prior fiscal year. The improved gross margin in the current
quarter resulted from on-going cost control measures in production, particularly
in the areas of media duplication, packaging, shipping and the delivery of
products on lower-cost compact disc media (CD-ROM). In the future, the Company
expects that cost of revenues as a percentage of net revenues may be impacted by
the mix of sales of new products, the geographic distribution of sales, sales of
AutoCAD updates, which have a lower gross margin than commercial versions of
AutoCAD, and the volume of software sold on CD-ROM media.
Marketing and sales. Marketing and sales expenses decreased from 34 percent of
net revenues in the first quarter of fiscal year 1995 to 32 percent in the first
quarter of fiscal year 1996. Actual spending increased 23 percent in order to
support worldwide marketing efforts of new and enhanced products, including
promotional activities related to AutoCAD Release 13, and product offerings from
the Company's multimedia market group. The Company expects to continue to
emphasize marketing and sales of its products to promote Autodesk's competitive
position.
8
Research and development. Research and development expenses as a percentage of
net revenues for the first quarter of fiscal year 1996 decreased to 14 percent
from 15 percent in the first quarter of the prior fiscal year. Actual research
and development spending increased by 23 percent in absolute dollars on a year
over year basis due to increased personnel costs to support the development of
new and enhanced products and expenses related to product localization. The
Company anticipates that research and development expenses will increase in
fiscal year 1996 over the prior fiscal year as a result of product offerings
scheduled for release during the year and from expenses associated with
localizing certain foreign-language versions of these products. Additionally,
the Company intends to continue recruiting and hiring experienced software
developers and to consider the acquisition of complementary software
technologies and businesses.
General and administrative. General and administrative expenses were 14 percent
of net revenues in the first quarter of both fiscal years 1996 and 1995.
Expenses increased 25 percent in absolute dollars over the same period in the
prior fiscal year resulting primarily from higher personnel costs and expenses
incurred to support the Company's increased operations and infrastructure.
Interest and other income. Interest and other income in the first quarter was
$2.5 million, including foreign currency gains of approximately $190,000,
compared to $1.6 million in the same quarter of the prior fiscal year, net of
foreign exchange losses of approximately $150,000. Interest income for the
quarter was $2.4 million, an increase of approximately $630,000 from the same
period in the prior fiscal year resulting from higher interest rates throughout
the world and from a greater average balance of cash, cash equivalents and
marketable securities.
Provision for income taxes. The Company's effective income tax rate was 36.5
percent in the first quarter of both fiscal year 1996 and 1995.
Quarterly results. The Company's consolidated results of operations to date have
not been materially affected by seasonal trends. However, the Company believes
that in the future its results may reflect quarterly fluctuations resulting from
factors such as order deferrals in anticipation of new product releases, delays
in the release of new products, a slower growth rate in the personal-computer
CAD and desktop multimedia software markets or adverse general economic and
industry conditions in any of the countries in which the Company does business.
In addition, with a significant portion of net revenues and net income
contributed by international operations, fluctuations of the US dollar against
foreign currencies and the seasonality of the European, Asia/Pacific and other
international markets could impact the Company's results of operations and
financial condition in a particular quarter. Rapid technological change and the
Company's ability to develop, manufacture and market products that successfully
adapt to that change may also have an impact on the results of operations.
Further, increased competition in the market for design automation and
multimedia software products could also negatively impact the Company's results
of operations.
Due to the factors noted above, the Company's future earnings and stock price
may be subject to significant volatility, particularly on a quarterly basis.
Any shortfall in revenues or earnings from levels expected by securities
analysts could have an immediate and significant adverse effect on the trading
price of the Company's common stock. The Company typically receives and
fulfills a majority of its orders within the quarter, with a substantial portion
occurring in the third month of the fiscal quarter. As a result, the Company
may not learn of revenue shortfalls until late in a fiscal quarter, which could
result in an even more immediate and adverse effect on the trading price of the
Company's common stock.
9
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and marketable securities, which consist primarily of
high-quality municipal bonds and tax-advantaged money market instruments,
totaled $275.6 million at April 30, 1995 compared to $255.4 million at January
31, 1995. The increase in cash, cash equivalents and marketable securities was
due primarily to cash generated from operations ($15.7 million) and cash
proceeds from the issuance of shares through the Company's stock option and
stock purchase programs ($22.6 million). This increase was partially offset by
cash used to purchase 532,500 shares of the Company's stock under an ongoing
systematic repurchase program ($21.4 million); to purchase computer equipment,
furniture and leasehold improvements ($6.3 million); and to pay dividends on the
Company's common stock ($2.9 million).
Longer term cash requirements, other than normal operating expenses, are
anticipated for development of new software products and enhancement of existing
products; financing anticipated growth; dividend payments; repurchases of the
Company's common stock; and the possible acquisition of software products or
technologies complementary to the Company's business. The Company believes that
its existing cash, cash equivalents, marketable securities, available line of
credit and anticipated cash generated from operations will be sufficient to
satisfy its currently anticipated cash requirements for fiscal year 1996.
The Company's principal commitments at April 30, 1995 consisted of obligations
under operating leases for facilities.
PART II. OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 of the Company's Annual Report to Stockholders on
Form 10-K for the fiscal year ended January 31, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended April 30, 1995.
10
SIGNATURES
Pursuant to the requirements 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.
DATED: June 9, 1995
AUTODESK, INC.
(Registrant)
/S/ Carol A. Bartz
------------------
Carol A. Bartz
President and Chief Executive Officer
/S/ Eric B. Herr
----------------
Eric B. Herr
Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
11
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
5
1,000
3-MOS
JAN-31-1996
APR-30-1995
167,504
52,398
101,994
6,415
7,559
362,316
120,510
70,181
512,702
148,438
0
122,930
0
0
238,316
512,702
141,777
141,777
17,285
82,965
0
585
460
40,908
14,931
25,977
0
0
0
25,977
0.51
0
