Autodesk Reports Second Quarter Results; 2004 Family Product Upgrade Momentum; Subscriptions Continue to Gain Traction
SAN RAFAEL, Calif., Aug 21, 2003 (BUSINESS WIRE) -- Autodesk, Inc. (Nasdaq:ADSK), the world's leading design software and digital content company, today announced that worldwide revenue for its fiscal second quarter ended July 31, 2003 totaled $212 million compared to $211 million reported in the first quarter of fiscal 2004.
Second quarter net income was $32.6 million or $0.29 per diluted share on a GAAP basis. During the quarter, the company recognized a one-time tax benefit of $19.7 million related to an industry wide issue regarding foreign sales corporations that was resolved favorably. Excluding the one-time benefit, net income was $12.9 million or $0.11 per diluted share. Net income in the first quarter of fiscal 2004 was $7.5 million or $0.07 per diluted share. Net income for the same quarter a year ago was $11.8 million or $0.10 per diluted share on a GAAP basis. Excluding one time items, for the same quarter a year ago net income was $14.5 million or $0.13 per diluted share.
A reconciliation of the above non-GAAP net income and EPS amounts to the corresponding GAAP net income and EPS amounts is provided at the end of this press release.
Autodesk's solid performance in the quarter was driven by strong upgrades to the AutoCAD(R) 2004 family of products and increasing adoption of the Autodesk Subscription Program. In addition, the company continued to deliver on its lifecycle management strategy with the launches of Autodesk Inventor(R) Professional and the Autodesk(R) Vault.
"We are pleased with the company's performance," said Carol Bartz, Autodesk chairman and CEO. "As we said last quarter, the AutoCAD 2004 family of products is the strongest in the company's history and our customers continue to affirm this. The strength of our offerings is demonstrated by increased upgrade revenues and subscriptions momentum during the quarter. As a result, the percentage of users who have upgraded has never been higher at this point in a cycle."
AutoCAD-based upgrade revenue increased substantially in the quarter to $29 million driving a 65 percent sequential increase in total Design Solutions Group (DSG) upgrade revenue. At the same time, the subscription program continues to appeal to customers as the best way to stay on the latest software release and budget more effectively. As a result, subscription revenue reached 15 percent of total DSG revenue in the quarter and deferred subscription revenue grew an additional $5 million to $65 million. These metrics show substantial progress toward Autodesk's goal of subscriptions reaching 25-30 percent of total DSG revenue.
To address customer needs for product lifecycle management capabilities, during the quarter Autodesk delivered two key milestones. Autodesk Inventor Professional includes additional functionality to provide customers the power to address multiple aspects of the industrial machine design process with a single, integrated software product. The Autodesk Vault is an engineering data management solution that enables fast, accurate sharing of design data across workgroups. Vault customers benefit from increased engineering productivity, increased design quality, and faster design cycles by improving visibility and management of critical design data throughout a product's lifecycle. The Vault is currently available to Autodesk Inventor Series subscription customers.
Autodesk finished the quarter with $412 million in cash and investments. This was after using $16 million to buy back one million shares of stock and $3 million to pay quarterly dividends.
"We are extremely confident in our business and our strategy," said Bartz. "We offer the best products in our history, our partnerships with our customers are strong and we continue to meet our business objectives. Autodesk is well positioned for the future."
Business Outlook
The following statements are forward looking statements, involving risks and uncertainties, and are based on current expectations. Factors that could cause net revenue to differ materially from our expectations include further weakening of the economies where we do business, lack of momentum in upgrade or subscription revenue, the failure of an anticipated post-SARS recovery to materialize in our Asia Pacific business, particularly in Greater China, and foreign currency fluctuations. Factors that could cause earnings and earnings per share to differ materially from our expectations include failure to achieve anticipated revenue levels, the inability to quickly adjust our cost structure to current revenue levels, interest rates, share count and unanticipated costs, such as litigation.
Q3 Fiscal 2004
Net revenues for the third quarter of fiscal 2004 are expected to be in the range of $216 million to $221 million. Earnings per diluted share for the third quarter of fiscal year 2004 are expected to be in the range of $0.13 to $0.16.
Full Year Fiscal 2004
Consistent with previous guidance, earnings per diluted share for fiscal year 2004 are expected to be in the range of $0.50 to $0.60. Net revenues for fiscal 2004 are expected to be in the range of $875 million to $885 million, within the previous guidance range.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties. In addition to the factors discussed above, factors that could cause actual results to differ materially include the following: general market and business conditions, failure to achieve anticipated levels of customer acceptance of key new applications, failure to achieve sufficient sell-through in our channels for new or existing products, pricing pressure, failure to achieve anticipated cost reductions, delays in the release of new products and services, failure to achieve continued success in technology advancements, changes in accounting rules, failure to successfully integrate new or acquired businesses, financial and business condition of our reseller and distribution channels, renegotiation or termination of royalty or intellectual property arrangements, and failure to grow lifecycle management or collaboration products.
Further information on potential factors that could affect the financial results of Autodesk are included in the company's report on Form 10-K, for the year ended January 31, 2003, and Form 10-Q for the quarter ended April 30, 2003, which are on file with the Securities and Exchange Commission.
Autodesk will host a conference call at 312-470-0197 (password: Autodesk) today and an audio webcast on the second quarter results beginning at 5:00 p.m. Eastern Time at www.Autodesk.com/investor. A replay of this webcast will be maintained on our website for at least twelve months.
About Autodesk
Autodesk is the world's leading design software and digital content company, offering customers progressive business solutions through powerful technology products and services. Autodesk helps customers in the building, manufacturing, infrastructure, digital media, and wireless data services fields increase the value of their digital design data and improve efficiencies across their entire project lifecycle management processes. For more information, contact any Authorized Autodesk Reseller, call Autodesk at 800-964-6432, or visit www.autodesk.com. Discreet(R) product information is available at 800-869-3504 or via the Web at www.discreet.com.
Autodesk, AutoCAD, Autodesk Inventor, Discreet and the Autodesk logo are registered trademarks, of Autodesk, Inc., in the United States and/or other countries. All other brand names, product names, or trademarks belong to their respective holders.
Autodesk, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended Six Months Ended
July 31, July 31,
------------------ ------------------
2003 2002 2003 2002
------------------ ------------------
(Unaudited) (Unaudited)
Net revenues $211,705 $211,401 $422,471 $440,728
------------------ ------------------
Costs and expenses:
Cost of revenues 34,896 34,210 71,847 74,902
Marketing and sales 83,604 81,782 169,142 169,118
Research and development 45,754 46,642 93,146 91,849
General and administrative 33,510 34,595 67,788 67,754
Amortization of purchased
intangibles - 44 - 247
Restructuring and other - 3,735 - 5,277
------------------ ------------------
197,764 201,008 401,923 409,147
------------------ ------------------
Income from operations 13,941 10,393 20,548 31,581
Interest and other income, net 3,070 5,716 6,342 8,694
------------------ ------------------
Income before income taxes 17,011 16,109 26,890 40,275
Income tax (provision) benefit 15,591 (4,349) 13,220 (10,874)
------------------ ------------------
Net income $32,602 $11,760 $40,110 $29,401
================== ==================
Basic net income per share $0.29 $0.10 $0.36 $0.26
================== ==================
Diluted net income per share $0.29 $0.10 $0.35 $0.25
================== ==================
Shares used in computing basic
net income per share 111,480 113,348 111,642 113,326
================== ==================
Shares used in computing diluted
net income per share 113,460 114,275 113,462 115,783
================== ==================
Autodesk, Inc.
Pro Forma Consolidated Statements of Income
(See pro forma adjustments listed in the tables below)
(In thousands, except per share data)
Three Months Ended Six Months Ended
July 31, July 31,
------------------ ------------------
2003 2002 2003 2002
------------------ ------------------
(Unaudited) (Unaudited)
Net revenues $211,705 $211,401 $422,471 $440,728
------------------ ------------------
Costs and expenses:
Cost of revenues 34,896 34,210 71,847 74,902
Marketing and sales 83,604 81,782 169,142 169,118
Research and development 45,754 46,642 93,146 91,849
General and administrative 33,510 34,595 67,788 67,754
------------------ ------------------
197,764 197,229 401,923 403,623
------------------ ------------------
Income from operations 13,941 14,172 20,548 37,105
Interest and other income, net 3,070 5,716 6,342 8,694
------------------ ------------------
Income before income taxes 17,011 19,888 26,890 45,799
Provision for income taxes (4,083) (5,370) (6,454) (12,366)
------------------ ------------------
Pro forma net income $12,928 $14,518 $20,436 $33,433
================== ==================
Basic pro forma net income per
share $0.12 $0.13 $0.18 $0.30
================== ==================
Diluted pro forma net income per
share $0.11 $0.13 $0.18 $0.29
================== ==================
Shares used in computing basic
pro forma net income per share 111,480 113,348 111,642 113,326
================== ==================
Shares used in computing diluted
pro forma net income per share 113,460 114,275 113,462 115,783
================== ==================
A reconciliation between operating expenses on a GAAP basis and
pro forma operating expenses is as follows:
GAAP operating expenses $197,764 $201,008 $401,923 $409,147
Amortization of purchased
intangibles - (44) - (247)
Restructuring and other - (3,735) - (5,277)
------------------ ------------------
Pro forma operating expenses $197,764 $197,229 $401,923 $403,623
================== ==================
A reconciliation between income from operations on a GAAP basis
and pro forma income from operations is as follows:
GAAP income from operations $13,941 $10,393 $20,548 $31,581
Amortization of purchased
intangibles - 44 - 247
Restructuring and other - 3,735 - 5,277
------------------ ------------------
Pro forma income from operations $13,941 $14,172 $20,548 $37,105
================== ==================
A reconciliation between provision for income taxes on a GAAP
basis and pro forma provision for income taxes is as follows:
GAAP benefit (provision) for
income taxes $15,591 $(4,349) $13,220 $(10,874)
Non-recurring tax benefit (19,674) - (19,674) -
Income tax effect of pro forma
adjustments - (1,021) - (1,492)
------------------ ------------------
Pro forma provision for income
taxes $(4,083) $(5,370) $(6,454)$(12,366)
================== ==================
A reconciliation between net income on a GAAP basis and pro
forma net income is as follows:
GAAP net income $32,602 $11,760 $40,110 $29,401
Amortization of purchased
intangibles - 44 - 247
Restructuring and other - 3,735 - 5,277
Non-recurring tax benefit (19,674) - (19,674) -
Income tax effect of pro forma
adjustments - (1,021) - (1,492)
------------------ ------------------
Pro forma net income $12,928 $14,518 $20,436 $33,433
================== ==================
To supplement our consolidated financial statements presented on a
GAAP basis, Autodesk uses pro forma measures of operating results, net
income and income per share, which are adjusted to exclude certain
costs, expenses, gains and losses we believe appropriate to enhance an
overall understanding of our past financial performance and also our
prospects for the future. 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 pro forma
results are an indication of our baseline performance before gains,
losses or other charges that are considered by management to be
outside of our core operating results. In addition, these adjusted pro
forma results are among the primary indicators management uses as a
basis for our planning and forecasting of future periods. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for net income or diluted
net income per share prepared in accordance with generally accepted
accounting principles in the United States.
Autodesk, Inc.
Consolidated Balance Sheets
(In thousands)
July 31, January 31,
2003 2003
----------- -----------
(Unaudited) (Audited)
ASSETS:
Current assets:
Cash and cash equivalents $219,424 $186,377
Marketable securities 42,930 60,643
Accounts receivable, net 138,018 132,803
Inventories 11,606 12,284
Deferred income taxes 28,345 28,923
Income taxes receivable 19,674 -
Prepaid expenses and other current assets 35,064 28,602
----------- -----------
Total current assets 495,061 449,632
----------- -----------
Marketable securities 149,572 164,029
Computer equipment, software, furniture and
leasehold improvements, at cost:
Computer equipment, software and furniture 216,535 210,900
Leasehold improvements 33,658 32,913
Less accumulated depreciation (177,198) (167,691)
----------- -----------
Net 72,995 76,122
Purchased technologies and capitalized
software, net 23,788 30,125
Goodwill, net 160,230 155,945
Deferred income taxes 6,810 -
Other assets 7,657 7,797
----------- -----------
$916,113 $883,650
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $47,238 $45,122
Accrued compensation 52,953 44,869
Accrued income taxes 58,202 39,802
Deferred revenues 104,378 93,241
Other accrued liabilities 69,582 86,994
----------- -----------
Total current liabilities 332,353 310,028
----------- -----------
Deferred income taxes, net - 1,678
Other liabilities 2,939 2,736
Stockholders' equity:
Preferred stock - -
Common stock and additional paid-in capital 463,148 479,874
Accumulated other comprehensive loss (10,194) (11,568)
Deferred compensation (880) (2,185)
Retained earnings 128,747 103,087
----------- -----------
Total stockholders' equity 580,821 569,208
----------- -----------
$916,113 $883,650
=========== ===========
Autodesk, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
July 31, July 31,
2003 2002
----------- -----------
(Unaudited) (Unaudited)
Operating Activities
Net income $40,110 $29,401
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 24,129 24,719
Write-downs of cost method investments 26 200
Tax benefits from employee stock plans - 8,154
Changes in operating assets and
liabilities (16,705) (25,260)
----------- -----------
Net cash provided by operating activities 47,560 37,214
----------- -----------
Investing Activities
Net sales or maturities of marketable
securities 30,839 85,512
Capital and other expenditures (13,865) (22,354)
Acquisitions, net of cash acquired (5,150) (133,531)
Other investing activities 1,448 (3,045)
----------- -----------
Net cash provided by (used in) investing
activities 13,272 (73,418)
----------- -----------
Financing activities
Repayment of notes payable and borrowings - (210)
Repurchase of common stock (45,671) (36,793)
Proceeds from issuance of common stock 21,478 59,714
Dividends paid (6,680) (6,806)
----------- -----------
Net cash (used in) provided by financing
activities (30,873) 15,905
----------- -----------
----------- -----------
Effect of exchange rate changes on cash and
cash equivalents 3,088 7,447
----------- -----------
Net decrease in cash and cash equivalents 33,047 (12,852)
Cash and cash equivalents at beginning of year 186,377 157,687
----------- -----------
Cash and cash equivalents at end of period $219,424 $144,835
=========== ===========
Supplemental cash flow information:
Net cash paid (received) during the period
for income taxes $(573) $20,125
=========== ===========
Fiscal Year 2004 Fact Sheet QTR QTR
QTR 1 QTR 2 3 4 YTD2004
------------ ------------ --- --- ------------
Financial Statistics (in
millions):
------------------------
Net Revenues $210.8 $211.7 $422.5
Gross Margin 82% 84% 83%
GAAP Operating Expenses $167.2 $162.9 $330.1
GAAP Operating Margin 3% 7% 5%
GAAP Net Income $7.5 $32.6 $40.1
GAAP Earnings Per Share
(diluted) $0.07 $0.29 $0.35
Pro Forma Operating
Expenses (1) $167.2 $162.9 $330.1
Pro Forma Operating
Margin (1) 3% 7% 5%
Pro Forma Net Income (1)
(2) $7.5 $12.9 $20.4
Pro Forma Earnings Per
Share (diluted) (1) (3) $0.07 $0.11 $0.18
Total Cash and
Marketable Securities $401.8 $411.9 $411.9
Days Sales Outstanding 58 59 59
Capital Expenditures $4.1 $9.8 $13.9
Cash from Operations $17.3 $30.3 $47.6
GAAP Depreciation and
Amortization $12.3 $11.8 $24.1
Revenue by Geography (in
millions):
------------------------
Americas $92.1 $84.8 $176.9
Europe $68.1 $79.1 $147.2
Asia/Pacific $50.6 $47.8 $98.4
Revenue by Division (in
millions):
------------------------
Design Solutions Group $172.6 $180.9 $353.5
Manufacturing
Solutions Division $30.1 $29.1 $59.2
Infrastructure
Solutions Division
(formerly GIS) $22.7 $25.5 $48.2
Building Solutions
Group $15.9 $16.3 $32.2
Platform Technology
Group & Other $103.9 $110.0 $213.9
Discreet $38.2 $30.8 $69.0
Operating Income (Loss)
by Segment
------------------------
Design Solutions $54.4 $61.3 $115.7
Discreet $0.7 $(1.6) $(0.9)
Unallocated amounts $(48.5) $(45.8) $(94.3)
AutoCAD Statistics:
------------------------
New Units of AutoCAD-
based Products 48,500 33,400 81,900
Upgrade Revenue of
AutoCAD-based Products $16.6 $29.1 $45.7
(in millions)
Installed Base 3,271,800 3,305,200 3,336,000
Headcount:
------------------------
Headcount 3,551 3,564 3,564
Common Stock Statistics:
------------------------
Stock Outstanding
(Pro Forma EPS
Calculation-diluted) 113,446,000 113,460,000 113,462,000
Stock Repurchased 2,001,000 1,000,100 3,001,100
(1) To supplement our consolidated financial statements presented on a
GAAP basis, Autodesk uses pro forma measures of operating results, net
income and income per share, which are adjusted to exclude certain
costs, expenses, gains and losses we believe appropriate to enhance an
overall understanding of our past financial performance and also our
prospects for the future. 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 pro forma
results are an indication of our baseline performance before gains,
losses or other charges that are considered by management to be
outside of our core operating results.
In addition, these adjusted pro forma results are among the primary
indicators management uses as a basis for our planning and forecasting
of future periods. The presentation of this additional information is
not meant to be considered in isolation or as a substitute for net
income or diluted net income per share prepared in accordance with
generally accepted accounting principles in the United States.
(2) GAAP Net Income $7.5 $32.6 $40.1
Non-recurring tax
benefit $- $(19.7) $(19.7)
------------ ------------ ------------
Pro Forma Net Income $7.5 $12.9 $20.4
(3) GAAP Earnings Per
Share (diluted) $0.07 $0.29 $0.35
Non-recurring tax
benefit $- $(0.18) $(0.17)
------------ ------------ ------------
Pro Forma Earnings
Per Share (diluted) $0.07 $0.11 $0.18
SOURCE: Autodesk, Inc.
Autodesk, Inc. Investors: Sue Pirri, 415-507-6467 sue.pirri@autodesk.com Marlene Peterson, 415-507-6732 marlene.peterson@autodesk.com Media: Shannon Hart, 415-507-6241 shannon.hart@autodesk.com Nicole Pack, 415-507-6282 nicole.pack@autodesk.com
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