Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AUTODESK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

Fiscal year ended January 31,
201620152014
Net revenue:
License and other$1,226.9$1,341.4$1,254.9
Subscription1,277.21,170.81,019.0
Total net revenue2,504.12,512.22,273.9
Cost of revenue:
Cost of license and other revenue214.6208.5178.7
Cost of subscription revenue156.1133.695.6
Total cost of revenue370.7342.1274.3
Gross profit2,133.42,170.11,999.6
Operating expenses:
Marketing and sales1,015.5998.0842.6
Research and development790.0725.2611.1
General and administrative293.4283.3211.8
Amortization of purchased intangibles33.239.836.5
Restructuring charges, net—3.112.8
Total operating expenses2,132.12,049.41,714.8
Income from operations1.3120.7284.8
Interest and other expense, net(21.6)(37.7)(4.9)
(Loss) income before income taxes(20.3)83.0279.9
Provision for income taxes(310.2)(1.2)(51.1)
Net (loss) income$(330.5)$81.8$228.8
Basic net (loss) income per share$(1.46)$0.36$1.02
Diluted net (loss) income per share$(1.46)$0.35$1.00
Weighted average shares used in computing basic net (loss) income per share226.0227.1224.0
Weighted average shares used in computing diluted net (loss) income per share226.0232.4229.6

See accompanying Notes to Consolidated Financial Statements.

2016 Form 10-K 65

AUTODESK, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In millions)

Fiscal year ended January 31,
201620152014
Net (loss) income$(330.5)$81.8$228.8
Other comprehensive (loss) income, net of reclassifications:
Net (loss) gain on derivative instruments (net of tax effect of $0.6, ($0.7), and $1.1)(27.1)39.30.7
Change in net unrealized loss on available-for-sale securities (net of tax effect of $0.0, ($0.2), and $0.3)(1.4)(0.2)(1.1)
Change in defined benefit pension items (net of tax effect of $0.9, $1.8, and $0.6)(4.6)(16.0)5.4
Net change in cumulative foreign currency translation (loss) gain (net of tax effect of $0.5, $4.9, and$2.1)(34.7)(75.8)0.1
Total other comprehensive (loss) income(67.8)(52.7)5.1
Total comprehensive (loss) income$(398.3)$29.1$233.9

See accompanying Notes to Consolidated Financial Statements.

2016 Form 10-K 66

AUTODESK, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

January 31, 2016January 31, 2015
ASSETS
Current assets:
Cash and cash equivalents$1,353.0$1,410.6
Marketable securities897.9615.8
Accounts receivable, net653.6458.9
Deferred income taxes, net—85.1
Prepaid expenses and other current assets88.6100.9
Total current assets2,993.12,671.3
Marketable securities532.3273.0
Computer equipment, software, furniture, and leasehold improvements, net169.3159.2
Developed technologies, net70.886.5
Goodwill1,535.01,456.2
Deferred income taxes, net9.2100.0
Other assets205.6163.5
Total assets$5,515.3$4,909.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$119.9$100.5
Accrued compensation243.3253.3
Accrued income taxes29.428.2
Deferred revenue1,068.9900.8
Other accrued liabilities129.5117.3
Total current liabilities1,591.01,400.1
Deferred revenue450.3256.3
Long term income taxes payable161.4158.8
Long term deferred income taxes67.7—
Long term notes payable, net1,487.7743.1
Other liabilities137.6132.2
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; shares authorized 2.0; none issued or outstanding at January 31, 2016 and 2015——
Common stock and additional paid-in capital, $0.01 par value; shares authorized 750.0; 224.4 outstanding at January 31, 2016 and 227.0 outstanding at January 31, 20151,821.51,773.1
Accumulated other comprehensive loss(121.1)(53.3)
Retained earnings(80.8)499.4
Total stockholders’ equity1,619.62,219.2
Total liabilities and stockholders' equity$5,515.3$4,909.7

See accompanying Notes to Consolidated Financial Statements.

2016 Form 10-K 67

AUTODESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Fiscal year ended January 31,
201620152014
Operating Activities
Net (loss) income$(330.5)$81.8$228.8
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization, and accretion145.8145.9128.9
Stock-based compensation expense197.2165.6132.2
Deferred income taxes235.9(18.8)(49.4)
Excess tax benefits from stock-based compensation—(0.5)(9.1)
Restructuring charges, net—3.112.8
Other operating activities(25.0)16.2(16.1)
Changes in operating assets and liabilities, net of business combinations:
Accounts receivable(195.5)(17.3)72.3
Prepaid expenses and other current assets(2.8)6.8(20.3)
Accounts payable and accrued liabilities24.9130.8(19.6)
Deferred revenue360.5245.266.0
Accrued income taxes3.5(50.7)37.0
Net cash provided by operating activities414.0708.1563.5
Investing Activities
Purchases of marketable securities(2,250.1)(1,355.1)(1,214.2)
Sales of marketable securities329.4190.0537.0
Maturities of marketable securities1,376.6969.0742.1
Acquisitions, net of cash acquired(148.5)(630.0)(176.1)
Capital expenditures(72.4)(75.5)(64.2)
Other investing activities(44.5)(4.0)(18.6)
Net cash used in investing activities(809.5)(905.6)(194.0)
Financing Activities
Proceeds from issuance of common stock110.8175.4312.8
Taxes paid related to net share settlement of equity awards(51.6)(40.0)(24.6)
Repurchase and retirement of common shares(458.0)(372.4)(423.8)
Proceeds from debt, net of discount748.3——
Excess tax benefits from stock-based compensation—0.59.1
Other financing activities(6.3)(3.4)—
Net cash provided by (used in) financing activities343.2(239.9)(126.5)
Effect of exchange rate changes on cash and cash equivalents(5.3)(5.0)(2.2)
Net (decrease) increase in cash and cash equivalents(57.6)(442.4)240.8
Cash and cash equivalents at beginning of fiscal year1,410.61,853.01,612.2
Cash and cash equivalents at end of fiscal year$1,353.0$1,410.6$1,853.0
Supplemental cash flow information:
Cash paid during the year for interest$34.7$20.4$20.5
Net cash paid during the year for income taxes$59.1$63.4$75.7

See accompanying Notes to Consolidated Financial Statements.

2016 Form 10-K 68

AUTODESK, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

Common stock and additional paid-in capitalAccumulated other comprehensive (loss) incomeRetained earningsTotal stockholders' equity
SharesAmount
Balances, January 31, 2013223.6$1,449.8$(5.7)$599.1$2,043.2
Common shares issued under stock plans13.6288.2——288.2
Stock-based compensation expense—132.2——132.2
Tax benefits from employee stock plans—(12.2)——(12.2)
Net income———228.8228.8
Other comprehensive income——5.15.1
Repurchase and retirement of common shares(10.5)(220.7)—(203.1)(423.8)
Balances, January 31, 2014226.71,637.3(0.6)624.82,261.5
Common shares issued under stock plans7.2135.4——135.4
Stock-based compensation expense—165.6——165.6
Net income———81.881.8
Other comprehensive (loss)——(52.7)—(52.7)
Repurchase and retirement of common shares(6.9)(165.2)—(207.2)(372.4)
Balances, January 31, 2015227.01,773.1(53.3)499.42,219.2
Common shares issued under stock plans5.959.2——59.2
Stock-based compensation expense—197.2——197.2
Tax benefits from employee stock plans—0.3——0.3
Net (loss) income———(330.5)(330.5)
Other comprehensive (loss)——(67.8)—(67.8)
Repurchase and retirement of common shares(8.5)(208.3)—(249.7)(458.0)
Balances, January 31, 2016224.4$1,821.5$(121.1)$(80.8)$1,619.6

See accompanying Notes to Consolidated Financial Statements.

2016 Form 10-K 69

AUTODESK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

January 31, 2016

(Tables in millions of dollars, except per share data, unless otherwise indicated)

  1. Business and Summary of Significant Accounting Policies

Business

Autodesk, Inc. (“Autodesk” or the “Company”) is a world leading design software and services company, offering customers productive business solutions through powerful technology products and services. The Company serves customers in the architecture, engineering, and construction; manufacturing; and digital media, consumer, and entertainment industries. The Company’s sophisticated software products enable its customers to experience their ideas before they are real by allowing them to imagine, design, and create their ideas and to visualize, simulate, and analyze real-world performance early in the design process by creating digital prototypes. These capabilities allow Autodesk’s customers to foster innovation, optimize and improve their designs, help save time and money, improve quality, and collaborate with others. Autodesk software products are sold globally, both directly to customers and through a network of resellers and distributors.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Autodesk and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Current Period Adjustments

Subsequent to furnishing preliminary financial statements on Form 8-K on February 25, 2016 for the three and twelve months ended January 31, 2016, Autodesk identified a $4.5 million tax adjustment associated with deemed foreign withholding taxes related to non-permanently reinvested earnings in foreign jurisdictions which have not yet repatriated resulting in changes to the Consolidated Financial Statements as reflected in this Annual Report on Form 10-K. This non-cash adjustment resulted in an increase to GAAP diluted loss per share from $(1.44) to $(1.46) for the full fiscal year.

Prior Period Adjustments

Autodesk previously established a valuation allowance against the Company’s deferred tax assets during the three months ended July 31, 2015. In the course of preparing the Condensed Consolidated Financial Statements for the three and nine months ended October 31, 2015, Autodesk determined that it had understated income tax expense by $33.1 million for the three and six months ended July 31, 2015, primarily related to an error in the establishment of the valuation allowance, which had been understated at July 31, 2015. Autodesk performed the analysis required by Staff Accounting Bulletin 99, Materiality, to evaluate the materiality of the error, quantitatively and qualitatively, and concluded it was not material to the Company’s Condensed Consolidated Financial Statements as of July 31, 2015 and for the three and six month periods ended July 31, 2015. However, in light of the significance of a correction of the error to the results for the three months ended October 31, 2015, Autodesk chose to correct the error by revising the previously reported results for the three and six months ended July 31, 2015, to include the additional $33.1 million of non-cash income tax expense associated with the establishment of the valuation allowance. See Note 16, "Selected Quarterly Financial Information (Unaudited)," in the Notes to the Condensed Consolidated Financial Statements for further discussion.

During the quarter ended April 30, 2015, Autodesk determined that it had not correctly accounted for certain liabilities primarily related to employee benefits and unclaimed property. As a result, we recorded $5.7 million of additional operating expenses related to prior periods. As these adjustments were related to the correction of errors, Autodesk performed the analysis required by Staff Accounting Bulletin 99, Materiality, and Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements. Based on this analysis, Autodesk concluded that the effect of the errors was not material to the financial position, results of operations or cash flows of any prior fiscal year from both a quantitative and qualitative perspective and is not material to the full fiscal year 2016.

2016 Form 10-K 70

Reclassifications

During the second quarter of fiscal 2015, Autodesk elected to present amortization of purchased customer relationships, trade names, patents, and user lists as a separate line item within operating expenses. As a result, amortization previously reflected in “General and Administrative” expense was reclassified to “Amortization of Purchased Intangibles" within Operating Expenses. These expenses have been reclassified in the Consolidated Statements of Operations for fiscal years 2015 and 2014 to conform to the current period presentation as follows:

Fiscal year ended January 31,
20152014
Reclassifications within operating expenses:
(Decrease) to general and administrative$(10.9)$(36.5)
Increase to amortization of purchased intangibles10.936.5

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in Autodesk’s consolidated financial statements and notes thereto. These estimates are based on information available as of the date of the consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions. Actual results may differ materially from these estimates.

Examples of significant estimates and assumptions made by management involve the determination of the fair value of acquired assets and liabilities, goodwill, financial instruments, long-lived assets and other intangible assets, the realizability of deferred tax assets, and the fair value of stock awards. The Company also makes assumptions, judgments, and estimates in determining the accruals for uncertain tax positions, variable compensation, partner incentive programs, product returns reserves, allowances for doubtful accounts, asset retirement obligations, and legal contingencies.

Foreign Currency Translation and Transactions

The assets and liabilities of Autodesk’s foreign subsidiaries are translated from their respective functional currencies into U.S. dollars at the rates in effect at the balance sheet date, and revenue and expense amounts are translated at exchange rates that approximate those rates in effect during the period in which the underlying transactions occur. Foreign currency translation adjustments are recorded as other comprehensive (loss) income.

Gains and losses realized from foreign currency transactions, those transactions denominated in currencies other than the foreign subsidiary’s functional currency, are included in interest and other income, net. Monetary assets and liabilities are remeasured using foreign currency exchange rates at the end of the period, and non-monetary assets are remeasured based on historical exchange rates.

Derivative Financial Instruments

Under its risk management strategy, Autodesk uses derivative instruments to manage its short-term exposures to fluctuations in foreign currency exchange rates which exist as part of ongoing business operations. Autodesk’s general practice is to hedge a majority of transaction exposures denominated in euros, Japanese yen, Swiss francs, British pounds, Canadian dollars, and Australian dollars. These instruments have maturities between one to 12 months in the future. Autodesk does not enter into any derivative instruments for trading or speculative purposes.

The bank counterparties in all contracts expose Autodesk to credit-related losses in the event of their nonperformance. However, to mitigate that risk, Autodesk only contracts with counterparties who meet the Company’s minimum requirements under its counterparty risk assessment process. Autodesk monitors ratings, credit spreads, and potential downgrades on at least a quarterly basis. Based on Autodesk’s on-going assessment of counterparty risk, the Company will adjust its exposure to various counterparties. Autodesk generally enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. However, Autodesk does not have any master netting arrangements in place with collateral features.

2016 Form 10-K 71

Autodesk accounts for its derivative instruments as either assets or liabilities on the balance sheet and carries them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. Derivatives that do not qualify for hedge accounting are adjusted to fair value through earnings. See Note 2, "Financial Instruments" for information regarding Autodesk's hedging activities.

Cash and Cash Equivalents

Autodesk considers all highly liquid investments with insignificant interest rate risk and remaining maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents are recorded at cost, which approximates fair value.

Marketable Securities

Marketable securities are stated at fair value. Marketable securities maturing within one year that are not restricted are classified as current assets.

Autodesk determines the appropriate classification of its marketable securities at the time of purchase and re-evaluates such classification as of each balance sheet date. Autodesk carries all “available-for-sale securities” at fair value, with unrealized gains and losses, net of tax, reported in stockholders’ equity until disposition or maturity. Autodesk carries all “trading securities” at fair value, with unrealized gains and losses, recorded in “Interest and other income, net” in the Company’s Consolidated Statements of Operations. The cost of securities sold is based on the specific-identification method.

All of Autodesk’s marketable securities are subject to a periodic impairment review. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Autodesk considers various factors in determining whether to recognize an impairment charge, including the length of time and extent to which the fair value has been less than Autodesk’s cost basis, the financial condition and near-term prospects of the investee, and Autodesk’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market value. For additional information, see “Concentration of Credit Risk” within this Note 1 and Note 2, “Financial Instruments.”

Accounts Receivable, Net

Accounts receivable, net, consisted of the following as of January 31:

20162015
Trade accounts receivable$700.1$495.4
Less: Allowance for doubtful accounts(7.6)(6.3)
Product returns reserve(1.6)(2.6)
Partner programs and other obligations(37.3)(27.6)
Accounts receivable, net$653.6$458.9

Allowances for uncollectible trade receivables are based upon historical loss patterns, the number of days that billings are past due, and an evaluation of the potential risk of loss associated with problem accounts.

The product returns reserves are based on historical experience of actual product returns, estimated channel inventory levels, the timing of new product introductions, channel sell-in for applicable markets, and other factors.

As part of the indirect channel model, Autodesk has a partner incentive program that uses quarterly attainment of monetary rewards to motivate distributors and resellers to achieve mutually agreed upon business goals in a specified time period. A portion of these incentives reduce license and other revenue in the current period. The remainder, which relates to incentives on our Subscription Program, is recorded as a reduction to deferred revenue in the period the subscription transaction is billed and subsequently recognized as a reduction to subscription revenue over the contract period. These incentive balances do not require significant assumptions or judgments. The reserves associated with the partner incentive program are treated on the balance sheet as either contra account receivable (when due to distributors and direct resellers) or accounts payable (when due to indirect resellers).

2016 Form 10-K 72

Concentration of Credit Risk

Autodesk places its cash, cash equivalents, and marketable securities in highly liquid instruments with, and in the custody of, diversified financial institutions globally with high credit ratings and limits the amounts invested with any one institution, type of security, and issuer.

Geographical concentrations of consolidated cash, cash equivalents, and marketable securities held by Autodesk as of January 31:

20162015
United States26%19%
Other Americas1%1%
Europe, Middle East, and Africa (“EMEA”)50%56%
Asia Pacific (“APAC”)23%24%

Autodesk’s primary commercial banking relationship is with Citigroup Inc. and its global affiliates. Citibank, N.A., an affiliate of Citigroup, is one of the lead lenders and an agent in the syndicate of Autodesk’s $400.0 million line of credit facility. It is Autodesk’s policy to limit the amounts invested with any one institution by type of security and issuer.

Autodesk’s accounts receivable are derived from sales to a large number of resellers, distributors, and direct customers in the Americas; EMEA; and APAC geographies. Autodesk performs ongoing evaluations of these partners' financial condition and limits the amount of credit extended when deemed necessary, but generally does not require collateral from such parties. Total sales to the Company's largest distributor Tech Data Corporation, and its global affiliates (“Tech Data”), accounted for 25%, 25%, and 24% of Autodesk's net revenue for fiscal years ended January 31, 2016, 2015, and 2014, respectively. The majority of the net revenue from sales to Tech Data relates to Autodesk's Platform Solutions and Emerging Business ("PSEB") segment and is for sales made outside of the United States. In addition, Tech Data accounted for 22% of trade accounts receivable at both January 31, 2016 and 2015, respectively.

Computer Equipment, Software, Furniture, and Leasehold Improvements, Net

Computer equipment, software, and furniture are depreciated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term. Depreciation expense was $60.6 million in fiscal 2016, $52.1 million in fiscal 2015, and $47.2 million in fiscal 2014.

Computer equipment, software, furniture, leasehold improvements and the related accumulated depreciation at January 31 were as follows:

20162015
Computer hardware, at cost$202.7$194.0
Computer software, at cost85.684.9
Leasehold improvements, land, and buildings, at cost202.9176.3
Furniture and equipment, at cost59.053.0
Computer software, hardware, leasehold improvements, furniture, and equipment, at cost550.2508.2
Less: Accumulated depreciation(380.9)(349.0)
Computer software, hardware, leasehold improvements, furniture, and equipment, net$169.3$159.2

Costs incurred for computer software developed or obtained for internal use are capitalized for application development activities, if material, and immediately expensed for preliminary project activities and post-implementation activities. These capitalized costs are amortized over the software’s expected useful life, which is generally three years.

2016 Form 10-K 73

Software Development Costs

Software development costs incurred prior to the establishment of technological feasibility are included in research and development expenses. Autodesk defines establishment of technological feasibility as the completion of a working model. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the products are capitalized and generally amortized over a three year period, if material. Autodesk had no material capitalized software development costs at January 31, 2016 and January 31, 2015.

Other Intangible Assets, Net

Other intangible assets include developed technologies, customer relationships, trade names, patents, user lists, and the related accumulated amortization. These assets are shown as “Developed technologies, net” and as part of “Other assets” in the Consolidated Balance Sheet. The majority of Autodesk’s other intangible assets are amortized to expense over the estimated economic life of the product, which ranges from one to ten years. Amortization expense for developed technologies, customer relationships, trade names, patents, and user lists was $82.6 million in fiscal 2016, $92.9 million in fiscal 2015 and $80.7 million in fiscal 2014.

Other intangible assets and related accumulated amortization at January 31 were as follows:

20162015
Developed technologies, at cost$571.4$538.4
Customer relationships, trade names, patents, and user lists, at cost (1)371.6348.9
Other intangible assets, at cost (2)943.0887.3
Less: Accumulated amortization(796.2)(715.4)
Other intangible assets, net$146.8$171.9
(1)Included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.
(2)Includes the effects of foreign currency translation.

The weighted average amortization period for developed technologies, customer relationships, and trade names during fiscal 2016 was 4.2 years. Expected future amortization expense for developed technologies, customer relationships, trade names, patents, and user lists for each of the fiscal years ended thereafter is as follows:

Fiscal Year ended January 31,
2017$63.1
201833.8
201924.6
202013.4
20217.4
Thereafter4.5
Total$146.8

Goodwill

Goodwill consists of the excess of the consideration transferred over the fair value of net assets acquired in business combinations. Autodesk assigns goodwill to the reporting unit associated with each business combination, and tests goodwill for impairment annually in its fourth fiscal quarter or more often if circumstances indicate a potential impairment. For purposes of the goodwill impairment test, a reporting unit is an operating segment or one level below.

Autodesk has the option to perform an assessment of qualitative factors of impairment (“optional assessment”) prior to necessitating a two-step quantitative impairment test. Should the optional assessment be utilized for any given fiscal year, qualitative factors to consider include cost factors; financial performance; legal, regulatory, contractual, political, business, or other factors; entity specific factors; industry and market considerations, macroeconomic conditions, and other relevant events and factors affecting the reporting unit. If, after assessing the totality of events or circumstances, it is more likely than not that

2016 Form 10-K 74

the fair value of the reporting unit is greater than its carrying value, then performing the two-step impairment test is unnecessary.

Therefore, the two-step quantitative impairment test is necessary when either Autodesk does not utilize the optional assessment or, as a result of the optional assessment, it is not more likely than not that the fair value of the reporting unit is greater than its carrying value. In performing the two-step impairment test, Autodesk uses discounted cash flow models which include assumptions regarding projected cash flows. Variances in these assumptions could have a significant impact on Autodesk's conclusion as to whether goodwill is impaired, or the amount of any impairment charge. Impairment charges, if any, result from instances where the fair values of net assets associated with goodwill are less than their carrying values. As changes in business conditions and assumptions occur, Autodesk may be required to record impairment charges. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. The value of Autodesk’s goodwill could also be impacted by future adverse changes such as: (i) declines in Autodesk’s actual financial results, (ii) a sustained decline in Autodesk’s market capitalization, (iii) significant slowdown in the worldwide economy or the industries Autodesk serves, or (iv) changes in Autodesk’s business strategy or internal financial forecast results.

For the annual impairment assessment in fiscal 2016, Autodesk utilized the optional assessment for the following reporting units: Platform Solutions and Emerging Business (“PSEB”), Manufacturing ("MFG"), Architecture, Engineering, and Construction ("AEC"), and Media and Entertainment (“M&E”). Based on a review of the qualitative factors described above, Autodesk determined that it was more likely than not that the fair value of each of the reporting units exceeded the carrying value. As a result, Autodesk concluded that performing the two-step impairment test was not necessary, and therefore the goodwill of the PSEB, MFG, AEC, and M&E reporting units were not impaired during the fiscal year ended January 31, 2016.

For the Delcam reporting unit, Autodesk deemed the two-step impairment test was necessary and used a discounted cash flow model which included assumptions regarding projected cash flows. Based on this testing, Autodesk estimated fair value was 16% in excess of the carrying value for the Delcam reporting unit and determined there was no impairment of goodwill during the year ended January 31, 2016. In addition, Autodesk did not recognize any goodwill impairment losses in fiscal 2015 or 2014.

Estimating the fair value of the reporting units requires the use of estimates and significant judgments regarding future cash flows that are based on a number of factors including actual operating results, forecasted billings, revenue, and spend targets, discount rate assumptions, and long-term growth rate assumptions. The estimates and judgments described above could adversely change in future periods and Autodesk cannot provide absolute assurance that all of the targets will be achieved, which could lead to future impairment charges.

The change in the carrying amount of goodwill during the fiscal year ended January 31, 2016 is as follows:

Platform Solutions and Emerging BusinessArchitecture, Engineering, and ConstructionManufacturingMedia and EntertainmentDelcam (1)Total
Balance as of January 31, 2015
Goodwill$327.5$427.0$422.7$245.2$183.0$1,605.4
Accumulated impairment losses———(149.2)—(149.2)
327.5427.0422.796.0183.01,456.2
netfabb GmbH32.8————32.8
Goodwill acquired from other acquisitions33.44.116.610.4—64.5
Effect of foreign currency translation, purchase accounting adjustments, and other(6.8)(3.9)(1.9)0.6(6.5)(18.5)
Balance as of January 31, 2016
Goodwill386.9427.2437.4256.2176.51,684.2
Accumulated impairment losses———(149.2)—(149.2)
$386.9$427.2$437.4$107.0$176.5$1,535.0
(1)Delcam is a separate reporting unit within the Manufacturing ("MFG") reporting segment.

2016 Form 10-K 75

The change in the carrying amount of goodwill during the fiscal year ended January 31, 2015 is as follows:

Platform Solutions and Emerging BusinessArchitecture, Engineering, and ConstructionManufacturingMedia and EntertainmentDelcam (1)Total
Balance as of January 31, 2014
Goodwill$142.3$415.2$411.6$190.0$—$1,159.1
Accumulated impairment losses———(149.2)—(149.2)
142.3415.2411.640.8—1,009.9
Delcam plc————196.1196.1
Within Technologies Limited80.6———80.6
Shotgun Software Inc.———43.243.2
Goodwill acquired from other acquisitions117.828.120.115.3181.3
Effect of foreign currency translation, purchase accounting adjustments, and other(13.2)(16.3)(9.0)(3.3)(13.1)(54.9)
Balance as of January 31, 2015
Goodwill327.5427.0422.7245.2183.01,605.4
Accumulated impairment losses———(149.2)—(149.2)
$327.5$427.0$422.7$96.0$183.0$1,456.2
(1)Delcam is a separate reporting unit within the Manufacturing ("MFG") reporting segment.

Purchase accounting adjustments reflect revisions made to the Company’s preliminary purchase price allocations during fiscal 2016 and 2015.

Impairment of Long-Lived Assets

At least annually or more frequently as circumstances dictate, Autodesk reviews its long-lived assets for impairment whenever impairment indicators exist. Autodesk continually monitors events and changes in circumstances that could indicate the carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur, Autodesk assesses recoverability of these assets. Recoverability is measured by comparison of the carrying amounts of the assets to the future undiscounted cash flows the assets are expected to generate. If the long-lived assets are considered to be impaired, the impairment to be recognized is equal to the amount by which the carrying value of the assets exceeds its fair market value. Autodesk did not recognize any material impairments of long-lived assets during the fiscal years ended January 31, 2016, 2015, and 2014, respectively.

In addition to the recoverability assessments, Autodesk routinely reviews the remaining estimated useful lives of its long-lived assets. Any reduction in the useful life assumption will result in increased depreciation and amortization expense in the quarter when such determinations are made, as well as in subsequent quarters.

Deferred Tax Assets

Deferred tax assets arise primarily from tax credits, net operating losses, and timing differences for reserves, accrued liabilities, stock options, deferred revenue, purchased technologies, and capitalized intangibles, partially offset by U.S. deferred tax liabilities on unremitted earnings from certain foreign subsidiaries, acquired intangibles, and valuation allowances against U.S. and foreign deferred tax assets. Autodesk performed a quarterly assessment of the recoverability of these net deferred tax assets and believe that we will generate sufficient future taxable income in appropriate tax jurisdictions to realize the net deferred tax assets. They are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce gross deferred tax assets to the amount that is "more likely than not" to be realized.

2016 Form 10-K 76

Revenue Recognition

Autodesk recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collection is probable.

For multiple element arrangements containing only software and software-related elements, Autodesk allocates the sales price among each of the deliverables using the residual method, under which revenue is allocated to undelivered elements based on their vendor-specific objective evidence (“VSOE”) of fair value. VSOE is the price charged when an element is sold separately or a price set by management with the relevant authority. If Autodesk does not have VSOE of an undelivered element, revenue recognition is deferred on the entire sales arrangement until all elements for which Autodesk does not have VSOE are delivered. If Autodesk does not have VSOE for undelivered maintenance or services, the revenue for the arrangement is recognized over the longest contractual service period in the arrangement. Revenue recognition for significant lines of business is discussed further below.

For multiple element arrangements involving non-software elements, including cloud subscription services, our revenue recognition policy is based upon the accounting guidance contained in ASC 605, Revenue Recognition. For these arrangements, Autodesk first allocates the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and the non-software elements. Autodesk then further allocates consideration within the software group to the respective elements within that group using the residual method as described above. Autodesk exercises judgment and uses estimates in connection with the determination of the amount of revenue to be recognized in each accounting period.

Autodesk allocates the total arrangement consideration among the various elements based on a selling price hierarchy. The selling price for a deliverable is based on its VSOE if available, third-party evidence ("TPE") if VSOE is not available, or the best estimated selling price ("BESP") if neither VSOE nor TPE is available. BESP represents the price at which Autodesk would transact for the deliverable if it were sold regularly on a standalone basis. To establish BESP for those elements for which neither VSOE nor TPE are available, Autodesk performs a quantitative analysis of pricing data points for historical standalone transactions involving such elements for a twelve-month period. As part of this analysis, Autodesk monitors and evaluates the BESP against actual pricing to ensure that it continues to represent a reasonable estimate of the standalone selling price, considering several other external and internal factors including, but not limited to, pricing and discounting practices, contractually stated prices, the geographies in which Autodesk offers products and services, and the type of customer (i.e. distributor, value-added reseller, and direct end user, among others). Autodesk analyzes BESP at least annually or on a more frequent basis if a significant change in our business necessitates a more timely analysis, or if significant selling price variances are experienced.

In situations when Autodesk has multiple contracts with a single counterparty, Autodesk uses the guidance in ASC 985-605 to evaluate both the form and the substance of the arrangements to determine if they should be combined and accounted for as one arrangement or as separate arrangements.

Autodesk’s assessment of likelihood of collection is also a critical element in determining the timing of revenue recognition. If collection is not probable, the revenue will be deferred until cash is received.

License and other revenue consists of two components: product license revenue and other revenue. Product license revenue includes software license revenue from the sale of perpetual licenses, term-based licenses from our desktop subscription and enterprise offerings, and product revenue for Creative Finishing. Other revenue includes revenue from consulting, training, Autodesk Developers Network and Creative Finishing customer support, and is recognized over time, as the services are performed.

Autodesk's Subscription revenue consists of two components: maintenance revenue for our software products and revenue for our cloud service offerings, including Autodesk 360. Autodesk's maintenance program provides our commercial and educational customers of perpetual products with a cost effective and predictable budgetary option to obtain the productivity benefits of our new releases and enhancements when and if released during the term of their contracts. Under Autodesk's maintenance program, customers are eligible to receive unspecified upgrades when and if available, downloadable training courses, and online support. Autodesk recognizes maintenance revenue ratably over the term of the maintenance agreement, which is generally between one and three years but can occasionally be as long as five years. Revenue for Autodesk's cloud service offerings is recognized ratably over the contract term commencing with the date Autodesk's service is made available to customers and all other revenue recognition criteria have been satisfied.

2016 Form 10-K 77

Taxes Collected from Customers

Autodesk nets taxes collected from customers against those remitted to government authorities in the consolidated financial statements. Accordingly, taxes collected from customers are not reported as revenue.

Shipping and Handling Costs

Shipping and handling costs are included in cost of revenue for all periods presented.

Stock-based Compensation Expense

The following table summarizes stock-based compensation expense for fiscal 2016, 2015, and 2014, respectively, as follows:

Fiscal Year Ended January 31,
201620152014
Cost of license and other revenue$6.1$4.6$3.8
Cost of subscription5.74.32.2
Marketing and sales85.272.458.6
Research and development70.456.043.7
General and administrative29.828.323.9
Stock-based compensation expense related to stock awards and ESP Plan purchases197.2165.6132.2
Tax benefit(1.6)(45.2)(36.4)
Stock-based compensation expense related to stock awards and ESP Plan purchases, net$195.6$120.4$95.8

Autodesk determines the grant-date fair value of its share-based payment awards using a Black-Scholes Merton ("BSM") option pricing model or the quoted stock price on the date of grant, unless the awards are subject to market conditions, in which case Autodesk uses a binomial-lattice model (e.g., Monte Carlo simulation model). The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. Autodesk uses the following assumptions to estimate the fair value of stock-based awards:

Fiscal Year EndedFiscal Year EndedFiscal Year Ended
January 31, 2016January 31, 2015January 31, 2014
Performance Stock UnitESP PlanPerformance Stock UnitESP PlanPerformance Stock UnitESP Plan
Range of expected volatilities27%28 -29%30%29 - 33%34%27 - 36%
Range of expected lives (in years)N/A0.5 - 2.0N/A0.5 - 2.0N/A0.5 - 2.0
Expected dividends—%—%—%—%—%—%
Range of risk-free interest rates0.2%0.1 - 0.7%0.1%0.0 - 0.6%0.1%0.1 - 0.4%

Autodesk estimates expected volatility for stock-based awards based on the average of the following two measures. The first is a measure of historical volatility in the trading market for the Company’s common stock, and the second is the implied volatility of traded forward call options to purchase shares of the Company’s common stock. The expected volatility for PSUs subject to market conditions includes the expected volatility of Autodesk's peer companies within the S&P Computer Software Select Index.

Autodesk estimates the expected life of stock-based awards using both exercise behavior and post-vesting termination behavior as well as consideration of outstanding options.

Autodesk did not pay cash dividends in fiscal 2016, 2015, or 2014 and does not anticipate paying any cash dividends in the foreseeable future. Consequently, an expected dividend yield of zero is used in the BSM option pricing model and the Monte Carlo simulation model.

The risk-free interest rate used in the BSM option pricing model and the Monte Carlo simulation model for stock-based awards is the historical yield on U.S. Treasury securities with equivalent remaining lives.

2016 Form 10-K 78

Autodesk recognizes expense only for the stock-based awards that are ultimately expected to vest. Therefore, Autodesk has developed an estimate of the number of awards expected to cancel prior to vesting (“forfeiture rate”). The forfeiture rate is estimated based on historical pre-vest cancellation experience and is applied to all stock-based awards. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates.

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses incurred were $29.8 million in fiscal 2016, $23.9 million in fiscal 2015, and $15.6 million in fiscal 2014.

Net (Loss) Income Per Share

Basic net (loss) income per share is computed based on the weighted average number of shares of common stock outstanding for the period, excluding stock options and restricted stock units. Diluted net (loss) income per share is computed based upon the weighted average shares of common shares outstanding for the period and potentially dilutive common shares, including the effect of stock options and restricted stock units under the treasury stock method.

Defined Benefit Pension Plans

The funded status of Autodesk's defined benefit pension plans is recognized in the Consolidated Balance Sheets. The funded status is measured as the difference between the fair value of plan assets and the projected benefit obligation for the fiscal years presented. The projected benefit obligation represents the actuarial present value of benefits expected to be paid upon retirement based on employee services already rendered and estimated future compensation levels. The fair value of plan assets represents the current market value of Autodesk's cumulative company and participant contributions made to the various plans in effect.

Net periodic benefit cost is recorded in the Consolidated Statements of Operations and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs, and gains or losses previously recognized as a component of other comprehensive income. Certain events, such as changes in the employee base, plan amendments, and changes in actuarial assumptions may result in a change in the defined benefit obligation and the corresponding change to other comprehensive income.

Gains and losses and prior service costs not recognized as a component of net periodic benefit cost in the Consolidated Statements of Operations as they arise are recognized as a component of other comprehensive (loss) income in the Consolidated Statements of Comprehensive (Loss) Income. Those gains and losses and prior service costs are subsequently amortized as a component of net periodic benefit cost over the average remaining service lives of the plan participants using a corridor approach to determine the portion of gain or loss subject to amortization.

The measurement of projected benefit obligations and net periodic benefit cost is based on estimates and assumptions that reflect the terms of the plans and use participant-specific information such as compensation, age and years of services, as well as certain assumptions, including estimates of discount rates, expected return of plan assets, rate of compensation increases, interest rates, and mortality rates.

Accounting Standards in Fiscal 2016

With the exception of those discussed below, there have been no recent changes in accounting pronouncements issued by the FASB or adopted by the Company during the fiscal year ended January 31, 2016, that are of significance, or potential significance, to the Company.

Accounting Standards Adopted

Effective in the fourth quarter of fiscal 2016, Autodesk elected to early adopt FASB's Accounting Standards Update No. 2015-17 ("ASU 2015-17") regarding ASC Topic 470 "Income Taxes: Balance Sheet Classification of Deferred Taxes." The amendments in ASU 2015-17 require deferred tax assets and liabilities, along with any related valuation allowances, to be classified as noncurrent on the consolidated balance sheet. The amendments for ASU-2015-17 were prospectively applied. Prior periods were not retrospectively adjusted and remain presented as current or non-current in accordance with the previous

2016 Form 10-K 79

accounting guidance. Adoption of ASU 2015-17 did not have a material impact on Autodesk's consolidated financial statements.

Effective in the third quarter of fiscal 2016, Autodesk elected to early adopt FABS's Accounting Standards Update No. 2015-16 ("ASU 2015-16") regarding ASC Topic 805 "Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments." The amendments in ASU 2015-16 eliminate the requirement to restate prior period financial statements for measurement period adjustments. The amendments also require that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The amendments for ASU-2015-16 were prospectively applied and did not have a material impact on Autodesk's consolidated financial statements.

Effective in the second quarter of fiscal 2016, Autodesk elected to early adopt FASB's Accounting Standards Update 2015-03 (“ASU 2015-03”) regarding Subtopic 835-30 “Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs.” The amendments in ASU 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The standard requires retrospective application and represents a change in accounting principle. The adoption of ASU 2015-03 resulted in a $4.1 million retrospective reduction of both our other assets and long term notes payable, net, as of January 31, 2015.

Recently Issued Accounting Standards

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 ("ASU 2016-02") regarding ASC Topic 842 "Leases." The amendments in this ASU require balance sheet recognition of lease assets and lease liabilities by lessees for leases classified as operating leases, with an optional policy election to not recognize lease assets and lease liabilities for leases with a term of 12 months or less. The amendments also require new disclosures, including qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. ASU 2016-02 will be effective for Autodesk’s fiscal year beginning February 1, 2019 unless Autodesk elects early adoption. The amendments require a modified retrospective approach with optional practical expedients. Autodesk is currently evaluating the accounting, transition, and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01 ("ASU 2016-01") regarding ASC Topic 825-10 "Financial Instruments - Overall." The amendments address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments, and require equity securities to be measured at fair value with changes in fair value recognized through net income. The amendments also simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment for impairment quarterly at each reporting period. The amendments in ASU 2016-01 are effective for annual and interim periods beginning after December 15, 2017. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with prospective adoption of the amendments related to equity securities without readily determinable fair values existing as of the date of adoption. Autodesk is currently evaluating the accounting, transition, and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

In May 2015, the FASB issued Accounting Standards Update No. 2015-07 ("ASU 2015-07") regarding ASC Topic 820 "Fair Value Measurement: Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)." The amendments in ASU 2015-07 remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also limit certain disclosures to investments for which the entity has elected to measure at fair value using the net asset value per share practical expedient. The amendments in ASU 2015-07 are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The amendments should be applied retrospectively by removing from the fair value hierarchy any investments for which fair value is measured using the net asset value per share practical expedient. Autodesk does not expect ASU 2015-07 to have a material impact on its consolidated financial statements.

In April 2015, the FASB issued Accounting Standards Update No. 2015-05 ("ASU 2015-05") regarding Subtopic 350-40, “Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” The amendments in this ASU provide guidance about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in ASU 2015-05 are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The amendments in

2016 Form 10-K 80

ASU 2015-05 may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. Autodesk does not expect ASU 2015-05 to have a material impact on its consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update 2014-09 ("ASU 2014-09") regarding ASC Topic 606 “Revenue from Contracts with Customers.” ASU 2014-09 provides principles for recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 to defer the effective date by one year with early adoption permitted as of the original effective date. ASU 2014-09 will be effective for Autodesk’s fiscal year beginning February 1, 2018 unless we elect the earlier date of February 1, 2017. In addition, the FASB issued ASU 2016-08 in March 2016, to help provide interpretive clarifications on the new guidance in ASC Topic 606. Autodesk is currently evaluating the accounting, transition, and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

2016 Form 10-K 81

  1. Financial Instruments

The following tables summarize the Company's financial instruments' amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category as of January 31, 2016 and 2015.

January 31, 2016
Amortized CostGross unrealized gainsGross unrealized lossesFair ValueLevel 1Level 2Level 3
Cash equivalents (1):
Agency bonds$8.5$—$—$8.5$8.5$—$—
Certificates of deposit267.6——267.6267.6——
Commercial paper106.6——106.6—106.6—
Custody cash deposit2.1——2.12.1——
Money market funds382.4——382.4—382.4—
Municipal bonds5.0——5.05.0——
U.S. treasury bills103.0——103.0103.0——
Marketable securities:
Short-term available for sale
Asset backed securities7.3——7.3—7.3—
Certificates of deposit190.3——190.3190.3——
Commercial paper141.1——141.1—141.1—
Corporate debt securities377.10.1(0.3)376.9376.9——
Municipal bonds9.7——9.79.7——
Sovereign debt20.1——20.1—20.1—
U.S. government agency bonds40.0—(0.1)39.939.9——
U.S. treasury bills74.6——74.674.6——
Short-term trading securities
Mutual funds38.80.4(1.2)38.038.0——
Long-term available for sale
Agency bonds56.80.1—56.956.9——
Asset backed securities36.50.1—36.6—36.6—
Corporate debt securities320.90.3(0.8)320.4320.4——
Municipal securities2.9——2.92.9——
Sovereign debt16.9——16.9—16.9—
U.S. government agency securities98.40.3(0.1)98.698.6——
Convertible debt securities (2)2.52.0(1.1)3.4——3.4
Derivative contracts (3)1.57.8(7.4)1.9—1.60.3
Total$2,310.6$11.1$(11.0)$2,310.7$1,594.4$712.6$3.7
(1)Included in “Cash and cash equivalents” in the accompanying Consolidated Balance Sheets.
(2)Considered "available for sale" and included in "Other assets" in the accompanying Consolidated Balance Sheets.
(3)Included in “Prepaid expenses and other current assets,” "Other assets," or “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.

2016 Form 10-K 82

January 31, 2015
Amortized CostGross unrealized gainsGross unrealized lossesFair ValueLevel 1Level 2Level 3
Cash equivalents (1):
Certificates of deposit$258.6$—$—$258.6$258.6$—$—
Commercial paper161.0——161.0—161.0—
Corporate bond11.5——11.511.5——
Custody cash deposit141.5——141.5141.5——
Money market funds127.3——127.3—127.3—
Marketable securities:
Short-term available for sale
Agency bonds37.9——37.937.9——
Certificates of deposit101.9——101.9101.9——
Commercial paper258.4——258.4—258.4—
Corporate debt securities148.00.1(0.1)148.0148.0——
Municipal bond29.20.1—29.329.3——
Short-term trading securities
Mutual funds36.93.4—40.340.3——
Long-term available for sale
Agency bond50.60.2—50.850.8——
Corporate debt securities199.40.6(0.2)199.8199.8——
Municipal securities13.30.1—13.413.4——
U.S. government agency securities8.90.1—9.09.0——
Convertible debt securities (2)4.72.5(2.1)5.1——5.1
Derivative contracts (3)3.519.5(7.0)16.0—15.10.9
Total$1,592.6$26.6$(9.4)$1,609.8$1,042.0$561.8$6.0
(1)Included in “Cash and cash equivalents” in the accompanying Consolidated Balance Sheets.
(2)Considered "available for sale" securities and included in "Other assets" in the accompanying Consolidated Balance Sheets.
(3)Included in “Prepaid expenses and other current assets,” "Other assets," or “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.

Autodesk classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable securities with remaining maturities of less than 12 months are classified as short-term and marketable securities with remaining maturities greater than 12 months are classified as long-term. Autodesk may sell certain of its marketable securities prior to their stated maturities for strategic purposes or in anticipation of credit deterioration.

Autodesk applies fair value accounting for certain financial assets and liabilities, which consist of cash equivalents, marketable securities, and other financial instruments, on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and (Level 3) unobservable inputs for which there is little or no market data, which require Autodesk to develop its own assumptions. When determining fair value, Autodesk uses observable market data and relies on unobservable inputs only when observable market data is not available. There have been no transfers between fair value measurement levels during the year ended January 31, 2016.

Autodesk's cash equivalents, marketable securities, and financial instruments are primarily classified within Level 1 or Level 2 of the fair value hierarchy. Autodesk values it's available for sale securities on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1) or inputs other than quoted prices that are observable either

2016 Form 10-K 83

directly or indirectly in determining fair value (Level 2). Autodesk's Level 2 securities are valued primarily using observable inputs other than quoted prices in active markets for identical assets and liabilities. Autodesk's Level 3 securities consist of investments held in auction rate securities, convertible debt securities, and derivative contracts which are valued using probability weighted discounted cash flow models and some of the inputs to the models are unobservable in the market.

A reconciliation of the change in Autodesk’s Level 3 items for the fiscal years ended January 31, 2016 and 2015 was as follows:

Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)
Derivative ContractsConvertible Debt SecuritiesTotal
Balances, January 31, 2014$9.1$20.2$29.3
Purchases0.10.60.7
Settlements(0.8)(3.0)(3.8)
Losses included in interest and other expense(7.5)(13.3)(20.8)
Gains included in OCI—0.60.6
Balances, January 31, 20150.95.16.0
Purchases4.36.210.5
Settlements(5.9)(8.3)(14.2)
Gains included in interest and other expense1.0—1.0
Gains included in OCI—0.40.4
Balances, January 31, 2016$0.3$3.4$3.7

The following table summarizes the estimated fair value of Autodesk's “available-for-sale securities” classified by the contractual maturity date of the security:

January 31, 2016
CostFair Value
Due in 1 year$849.2$849.0
Due in 1 year through 5 years542.5543.2
Due in 5 years through 10 years3.43.4
Total$1,395.1$1,395.6

As of January 31, 2016 and 2015, Autodesk did not have any material securities in a continuous unrealized loss position for greater than twelve months.

As of January 31, 2016 and 2015 Autodesk had $104.3 million and $52.6 million, respectively, in direct investments of privately held companies accounted for under the cost method. The increase from fiscal 2015 was primarily due to an approximately $27.4 million investment in FIT AG that was entered into simultaneously with the netfabb GmbH acquisition. Refer to Note 5. "Acquisitions" for further discussion regarding the acquisition and investment. The privately held investments are periodically assessed for other-than-temporary impairment. If Autodesk determines that an other-than-temporary impairment has occurred, Autodesk writes down the investment to its estimated fair value. Autodesk estimates fair value of its cost method investments considering available information such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance, and any other readily available market data.

During fiscal 2016, Autodesk recorded $0.2 million in other-than-temporary impairment on its privately held equity and debt investments. During fiscal 2015, Autodesk recorded $19.2 million other-than-temporary impairment on its privately held equity and debt investments. The impairment expense was recorded in “Interest and other expense, net” on the Company's Consolidated Statement of Operations.

2016 Form 10-K 84

The sales or settlement of “available-for-sale securities” in fiscal 2016, 2015, and 2014 resulted in a gain of $0.1 million, a gain of $0.7 million, and a loss of $0.2 million, respectively. The losses and gains were recorded in "Interest and other expense, net" on the Company's Consolidated Statement of Operations.

Proceeds from the sale and maturity of marketable securities for fiscal 2016 and fiscal 2015 were $1.7 billion and $1.2 billion, respectively.

Derivative Financial Instruments

Under its risk management strategy, Autodesk uses derivative instruments to manage its short-term exposures to fluctuations in foreign currency exchange rates that exist as part of ongoing business operations. Autodesk's general practice is to hedge a portion of transaction exposures denominated in euros, Japanese yen, Swiss francs, British pounds, Canadian dollars and Australian dollars. These instruments have maturities between one to twelve months in the future. Autodesk does not enter into derivative instrument transactions for trading or speculative purposes.

The bank counterparties to the derivative contracts potentially expose Autodesk to credit-related losses in the event of their nonperformance. However, to mitigate that risk, Autodesk only contracts with counterparties who meet the Company's minimum requirements under its counterparty risk assessment process. Autodesk monitors ratings, credit spreads, and potential downgrades on at least a quarterly basis. Based on Autodesk's on-going assessment of counterparty risk, the Company will adjust its exposure to various counterparties. Autodesk generally enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. However, Autodesk does not have any master netting arrangements in place with collateral features.

Foreign currency contracts designated as cash flow hedges

Autodesk uses foreign currency contracts to reduce the exchange rate impact on a portion of the net revenue or operating expense of certain anticipated transactions. These contracts are designated and documented as cash flow hedges. The effectiveness of the cash flow hedge contracts is assessed quarterly using regression analysis as well as other timing and probability criteria. To receive cash flow hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge and the hedges are expected to be highly effective in offsetting changes to future cash flows on hedged transactions. The gross gains and losses on these hedges are included in “Accumulated other comprehensive loss” and are reclassified into earnings at the time the forecasted revenue or expense is recognized. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, Autodesk reclassifies the gain or loss on the related cash flow hedge from “Accumulated other comprehensive loss” to “Interest and other expense, net” in the Company's Consolidated Financial Statements at that time.

The net notional amount of these contracts are presented net settled and were $142.4 million at January 31, 2016 and $336.6 million at January 31, 2015. Outstanding contracts are recognized as either assets or liabilities on the Consolidated Balance Sheet at fair value. The majority of the net gain of $15.7 million remaining in “Accumulated other comprehensive loss” as of January 31, 2016 is expected to be recognized into earnings within the next twelve months.

Derivatives not designated as hedging instruments

Autodesk uses foreign currency contracts which are not designated as hedging instruments to reduce the exchange rate risk associated primarily with foreign currency denominated receivables and payables. These forward contracts are marked-to-market at the end of each fiscal quarter with gains and losses recognized as “Interest and other expense, net.” These derivative instruments do not subject the Company to material balance sheet risk due to exchange rate movements because gains and losses on these derivative instruments are intended to offset the gains or losses resulting from the settlement of the underlying foreign currency denominated receivables and payables. The net notional amounts of these foreign currency contracts are presented net settled and were $231.6 million at January 31, 2016 and $44.6 million at January 31, 2015.

From time to time and consistent with its risk management policy, Autodesk also uses derivative instruments to hedge its economic exposure related to committed, in-process acquisitions priced in foreign currency. Such derivatives do not qualify for hedge accounting and are marked-to-market through earnings, with any gain or loss reflected immediately in “Interest and other expense, net,” in each period.

In addition to these foreign currency contracts, Autodesk holds derivative instruments issued by privately held companies, which are not designated as hedging instruments. These derivatives consist of certain conversion options on the convertible debt

2016 Form 10-K 85

securities held by Autodesk and an option to acquire a privately held company. These derivatives are recorded at fair value as of each balance sheet date and are recorded in “Other assets.” Changes in the fair values of these instruments are recognized in income as “Interest and other expense, net.”

Fair Value of Derivative Instruments:

The fair value of derivative instruments in Autodesk’s Consolidated Balance Sheets were as follows as of January 31, 2016 and January 31, 2015:

Balance Sheet LocationFair Value at
January 31, 2016January 31, 2015
Derivative Assets
Foreign currency contracts designated as cash flow hedgesPrepaid expenses and other current assets (1)$3.4$20.4
Derivatives not designated as hedging instrumentsPrepaid expenses and other current assets and Other assets4.90.9
Total derivative assets$8.3$21.3
Derivative Liabilities
Foreign currency contracts designated as cash flow hedgesOther accrued liabilities (2)$3.4$5.4
Derivatives not designated as hedging instrumentOther accrued liabilities3.0—
Total derivative liabilities$6.4$5.4
(1)Considering Autodesk's master netting arrangements, these contracts are presented net settled. The gross balance is $5.1 million and $23.8 million at January 31, 2016 and January 31, 2015, respectively.
(2)Considering Autodesk's master netting arrangements, these contracts are presented net settled. The gross balance is $5.1 million and $8.7 million at January 31, 2016 and January 31, 2015, respectively.

The effects of derivatives designated as hedging instruments on Autodesk’s Consolidated Statements of Operations were as follows for the fiscal years ended January 31, 2016, 2015, and 2014, respectively (amounts presented include any income tax effects):

Foreign Currency Contracts
Fiscal Year Ended January 31,
201620152014
Amount of gain recognized in accumulated other comprehensive income on derivatives (effective portion)$2.2$46.4$12.2
Amount and location of gain reclassified from accumulated other comprehensive income into income (effective portion)
Net revenue$39.8$10.5$13.1
Operating expenses(10.5)(3.5)(1.6)
Total$29.3$7.0$11.5
Amount and location of (loss) gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing)
Interest and other expense, net$(0.7)$0.9$(0.1)

2016 Form 10-K 86

The effects of derivatives not designated as hedging instruments on Autodesk’s Consolidated Statements of Operations were as follows for the fiscal years ended January 31, 2016, 2015, and 2014, respectively (amounts presented include any income tax effects):

Foreign Exchange Contracts
Fiscal Year Ended January 31,
201620152014
Amount and location of (loss) gain recognized in income on derivatives not designated as hedging instruments
Interest and other expense, net$(1.7)$(25.5)$12.8
  1. Employee and Director Stock Plans

Stock Plans

As of January 31, 2016, Autodesk maintained two active stock plans for the purpose of granting equity awards to employees and to non-employee members of Autodesk’s Board of Directors: the 2012 Employee Stock Plan (as amended, the “2012 Employee Plan”), which is available only to employees, and the Autodesk 2012 Outside Directors’ Stock Plan (“2012 Directors' Plan”), which is available only to non-employee directors. Additionally, there are two expired or terminated plans with options outstanding. The exercise price of all stock options granted under these plans was equal to the fair market value of the stock on the grant date.

The 2012 Employee Plan was approved by Autodesk's stockholders and became effective on January 6, 2012. On June 10, 2015, Autodesk's stockholders approved amendments to the 2012 Employee Plan, which increased the number of shares reserved for issuance under the plan by 12.5 million shares. The 2012 Employee Plan replaced the 2008 Employee Stock Plan, as amended ("2008 Plan"), and no further equity awards may be granted under the 2008 Plan. The 2012 Employee Plan reserves up to 45.1 million shares which includes 39.1 million shares reserved under the 2012 Employee Plan, as well as up to 6.0 million shares forfeited under certain prior employee stock plans during the life of the 2012 Employee Plan. The 2012 Employee Plan permits the grant of stock options, restricted stock units, and restricted stock awards. Each restricted stock unit or restricted stock award granted will be counted against the shares authorized for issuance under the 2012 Employee Plan as 1.79 shares. If a granted option, restricted stock unit, or restricted stock award expires or becomes unexercisable for any reason, the unpurchased or forfeited shares that were granted may be returned to the 2012 Employee Plan and may become available for future grant under the 2012 Employee Plan. As of January 31, 2016, 29.2 million shares subject to options or restricted stock awards have been granted under the 2012 Employee Plan. Options and restricted stock that were granted under the 2012 plan vest over periods ranging from immediately upon grant to over a three year period and options expire 10 years from the date of grant. The 2012 Employee Plan will expire on June 30, 2022. At January 31, 2016, 18.6 million shares were available for future issuance under the 2012 Employee Plan.

The 2012 Director's Plan was approved by Autodesk's stockholders and became effective on January 6, 2012. The 2012 Directors' Plan replaced the 2010 Outside Directors' Stock Plan, as amended ("2010 Plan"). The 2012 Directors' Plan permits the grant of stock options, restricted stock units, and restricted stock awards to non-employee members of Autodesk’s Board of Directors. Each restricted stock unit or restricted stock award granted will be counted against the shares authorized for issuance under the 2012 Directors' Plan as 2.11 shares. As of January 31, 2016, 0.7 million shares subject to restricted stock unit awards have been granted under the 2012 Directors' Plan. Restricted stock units that were granted under the 2012 Outside Directors' Plan vest over one to three years from the date of grant. On March 12, 2015, the Board reduced the number of shares reserved for issuance under the 2012 Directors' Plan by 0.9 million shares, so that 1.7 million shares are now reserved for issuance under the 2012 Directors' Plan. The 2012 Directors' Plan will expire on June 30, 2022. At January 31, 2016, 1.0 million shares were available for future issuance under the 2012 Director's Plan.

The following sections summarize activity under Autodesk’s stock plans.

2016 Form 10-K 87

Stock Options:

A summary of stock option activity for the fiscal year ended January 31, 2016 is as follows:

Number of SharesWeighted average exercise price per shareWeighted average remaining contractual termAggregate Intrinsic Value (2)
(in millions)(in years)(in millions)
Options outstanding at January 31, 20152.7$34.46
Granted (1)——
Exercised(1.1)30.88
Canceled/Forfeited——
Options vested, exercisable and outstanding at January 31, 20161.6$37.063.7$15.4
Options available for grant at January 31, 201619.6
(1)Autodesk did not grant stock options in the twelve months ended January 31, 2016.
(2)Represents the total pre-tax intrinsic value, based on Autodesk’s closing stock price of $46.82 per share as of January 31, 2016, which would have been received by the option holders had all option holders exercised their options as of that date.

As of January 31, 2016, compensation cost related to stock options has been fully recognized.

The following table summarizes information about the pre-tax intrinsic value of options exercised during the fiscal years ended January 31, 2016, 2015, and 2014:

Fiscal year ended January 31,
201620152014
Pre-tax intrinsic value of options exercised (1)$32.6$67.6$149.0

——————

(1)The intrinsic value of options exercised is calculated as the difference between the exercise price of the option and the market value of the stock on the date of exercise.

The following table summarizes information about options vested and exercisable, and outstanding at January 31, 2016:

Number of Shares (in millions)Weighted average exercise price per share
Range of per-share exercise prices:
$12.31 - $34.700.5$27.34
$36.06 - $41.620.640.62
$42.39 - $43.810.543.80
1.6$37.06

These options will expire if not exercised at specific dates ranging through September 2022.

2016 Form 10-K 88

Restricted Stock:

A summary of restricted stock unit activity for the fiscal year ended January 31, 2016 is as follows:

Unreleased Restricted Stock UnitsWeighted average grant date fair value
(in thousands)
Unvested restricted stock units at January 31, 20157,801.3$48.46
Granted4,035.152.53
Vested(3,657.5)45.61
Canceled/Forfeited(473.9)50.19
Performance Adjustment (1)34.654.92
Unvested restricted stock units at January 31, 20167,739.6$51.80
(1)Based on Autodesk's financial results for the performance period, the fiscal 2015, 2014 and 2013 performance stock units were earned at 113.8%, 65.8%, and 92.3% of the target award, respectively. The vesting of the 2013 performance stock units was subject to the holders satisfying the remaining service condition of the awards, which ended in March 2015.

For the restricted stock units granted during fiscal years ended January 31, 2016, 2015, and 2014, the weighted average grant date fair value was $52.53, $54.17, and $42.37, respectively. The fair value of the shares vested during fiscal years ended January 31, 2016, 2015, and 2014 was $193.3 million, $147.8 million, and $87.0 million, respectively.

During the fiscal year ended January 31, 2016, Autodesk granted 3.6 million restricted stock units. The restricted stock units vest over periods ranging from immediately upon grant to a pre-determined date that is typically within three years from the date of grant. Restricted stock units are not considered outstanding stock at the time of grant, as the holders of these units are not entitled to any of the rights of a stockholder, including voting rights. The fair value of the restricted stock units is expensed ratably over the vesting period. Autodesk recorded stock-based compensation expense related to restricted stock units of $146.4 million, $118.9 million, and $74.9 million during fiscal years ended January 31, 2016, 2015, and 2014, respectively. As of January 31, 2016, total compensation cost not yet recognized of $248.2 million related to non-vested awards, is expected to be recognized over a weighted average period of 1.8 years. At January 31, 2016, the number of restricted stock units granted but unvested was 6.9 million.

During the fiscal year ended January 31, 2016, Autodesk granted 0.4 million performance stock units ("PSUs") for which the ultimate number of shares earned is determined based on the achievement of performance criteria at the end of the stated performance period. The performance criteria are based upon billings and subscriptions goals adopted by the Compensation and Human Resource Committee (the “Annual Financial Results”), as well as total stockholder return compared against the S&P Computer Software Select Index (“Relative TSR”). Each PSU covers a three year period:

•Up to one third of the PSU may vest following year one depending upon the achievement of Annual Financial Results for year one as well as 1 year Relative TSR (covering year one).
•Up to one third of the PSU may vest following year two depending upon the achievement of Annual Financial Results for year two as well as 2 year Relative TSR (covering years one and two).
•Up to one third of the PSU may vest following year three depending upon the achievement of Annual Financial Results for year three as well as 3 year Relative TSR (covering years one, two, and three).

PSUs are not considered outstanding stock at the time of grant, as the holders of these units are not entitled to any of the rights of a stockholder, including voting rights. Autodesk has determined the grant-date fair value for these awards using a Monte Carlo simulation model since the awards are subject to a market condition. The fair value of the performance restricted stock units is expensed using the accelerated attribution method over the vesting period. Autodesk recorded stock-based compensation expense related to PSUs of $23.2 million, $17.5 million, and $8.7 million during fiscal years ended January 31, 2016, 2015, and 2014 respectively. As of January 31, 2016, total compensation cost not yet recognized of $3.6 million related to non-vested PSUs, is expected to be recognized over a weighted average period of 0.8 years. At January 31, 2016, the number of PSUs granted but unvested was 0.8 million.

2016 Form 10-K 89

1998 Employee Qualified Stock Purchase Plan (“ESP Plan”)

Under Autodesk’s ESP Plan, which was approved by stockholders in 1998, eligible employees may purchase shares of Autodesk’s common stock at their discretion using up to 15% of their eligible compensation subject to certain limitations, at not less than 85% of fair market value as defined in the ESP Plan. At January 31, 2016, a total of 43.3 million shares were available for future issuance. This amount automatically increases on the first trading day of each fiscal year by an amount equal to the lesser of 10.0 million shares or 2% of the total of (1) outstanding shares plus (2) any shares repurchased by Autodesk during the prior fiscal year. Under the ESP Plan, the Company issues shares on the first trading day following March 31 and September 30 of each fiscal year. The ESP Plan expires during fiscal 2018.

Autodesk issued 2.1 million shares under the ESP Plan at an average price of $36.29 per share in fiscal 2016, 2.1 million shares at an average price of $33.91 per share in fiscal 2015, and 2.9 million shares at an average price of $22.61 per share in fiscal 2014. The weighted average grant date fair value of awards granted under the ESP Plan during fiscal 2016, 2015, and 2014, calculated as of the award grant date using the BSM option pricing model, was $11.85, $15.14, and $11.80 per share, respectively. Autodesk recorded $27.1 million, $23.9 million, and $22.9 million of compensation expense associated with the ESP Plan in fiscal 2016, 2015, and 2014, respectively.

Equity Compensation Plan Information

The following table summarizes the number of outstanding options granted to employees and directors, as well as the number of securities remaining available for future issuance under these plans as of January 31, 2016:

(a)(b)(c)
Plan categoryNumber of securities to be issued upon exercise of outstanding optionsWeighted-average exercise price of outstanding optionsNumber of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (in millions)
Equity compensation plans approved by security holders9.3$37.0662.9(1)
Total9.3$37.0662.9
(1)Included in this amount are 43.3 million securities available for future issuance under Autodesk’s ESP Plan.
  1. Income Taxes

The provision for income taxes consists of the following:

Fiscal year ended January 31,
201620152014
Federal:
Current$(4.7)$(43.8)$29.1
Deferred220.9(11.9)(41.4)
State:
Current0.5(13.2)0.6
Deferred20.99.0—
Foreign:
Current68.469.563.9
Deferred4.2(8.4)(1.1)
$310.2$1.2$51.1

Pursuant to accounting standards related to stock-based compensation, the Company has unrecorded excess stock option tax benefits of $233.8 million as of January 31, 2016. These amounts will be credited to additional paid-in-capital when such amounts reduce cash taxes payable. Foreign pretax income was $218.2 million in fiscal 2016, $302.5 million in fiscal 2015, and $380.5 million in fiscal 2014.

2016 Form 10-K 90

The differences between the U.S. statutory rate and the aggregate income tax provision are as follows:

Fiscal year ended January 31,
201620152014
Income tax provision at U.S. Federal statutory rate$(7.1)$29.0$98.0
State income tax benefit, net of the U.S. Federal benefit(7.6)(4.0)(2.9)
Foreign income taxed at rates different from the U.S. statutory rate(29.4)(40.0)(57.1)
U.S. valuation allowance345.02.92.1
Tax effect of non-deductible stock-based compensation19.315.710.8
Research and development tax credit benefit(9.4)(7.2)(8.8)
Closure of income tax audits and changes in uncertain tax positions(4.7)(0.7)3.6
Tax effect of officer compensation in excess of $1.0 million1.42.43.0
Non-deductible expenses2.62.22.6
Other0.10.9(0.2)
$310.2$1.2$51.1

Autodesk's tax expense was increased by $345.0 million during fiscal 2016 for valuation allowances reducing the Company's U.S. federal and state deferred tax assets to the amount more likely than not to be realized. The effective tax rate impact includes valuation allowances against the deferred tax assets that existed at the beginning of fiscal 2016, and valuation allowances to offset tax attributes generated during fiscal 2016.

The Protecting Americans from Tax Hikes (PATH) Act of 2015 enacted on December 18, 2015 extended and made permanent the federal R&D tax credit. As a result, our income tax provision for Fiscal 2016 includes a tax benefit that reduced our effective annual tax rate. We recorded federal R&D tax benefits of $9.4 million, $7.2 million and $8.8 million during fiscal 2016, 2015, and 2014, respectively. As of January 31, 2016, the deferred tax asset balances for U.S federal and state R&D tax credits were offset by a valuation allowance.

Significant components of Autodesk’s deferred tax assets and liabilities are as follows:

January 31,
20162015
Stock-based compensation$37.5$39.9
Research and development tax credit carryforwards91.362.6
Foreign tax credit carryforwards51.1—
Accrued compensation and benefits41.543.6
Other accruals not currently deductible for tax23.618.4
Purchased technology and capitalized software64.353.9
Fixed assets18.616.2
Tax loss carryforwards17.616.0
Deferred Revenue56.748.0
Other13.97.4
Total deferred tax assets416.1306.0
Less: valuation allowance(398.0)(70.8)
Net deferred tax assets18.1235.2
Indefinite lived intangibles(54.1)(40.7)
Unremitted earnings of foreign subsidiaries(22.4)(9.4)
Total deferred tax liabilities(76.5)(50.1)
Net deferred tax assets$(58.4)$185.1

The valuation allowance increased by $327.2 million, $3.6 million, and $15.9 million in fiscal 2016, 2015, and 2014, respectively. The fiscal 2016, 2015, and 2014 changes in valuation allowance were primarily related to U.S. and Canadian

2016 Form 10-K 91

deferred taxes. Autodesk recorded a $230.8 million valuation allowance against the Company's U.S. federal and remaining state deferred tax assets recorded in the second quarter of fiscal 2016. Autodesk regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, Autodesk considers both positive and negative evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, Autodesk considered recent cumulative losses in the United States arising from the Company's business model transition as a significant piece of negative evidence and determined that it was not more likely than not that the federal and remaining state deferred tax assets would be realized. As Autodesk continually strives to optimize our overall business model, tax planning strategies may become feasible and prudent allowing us to realize many of the deferred tax assets which are offset by a valuation allowance; therefore, Autodesk will continue to evaluate the realizability of our net deferred tax assets each quarter, both in the US and in foreign jurisdictions, based on all available evidence, both positive and negative.

Autodesk provides U.S. income taxes on the earnings of foreign subsidiaries, except to the extent subsidiaries' earnings are considered permanently reinvested outside the U.S. As of January 31, 2016, the cumulative amount of earnings upon which U.S. income taxes have not been provided was $1,942.2 million. The unrecognized deferred tax liability for these earnings was approximately $544.3 million.

Realization of foreign non-current net deferred tax assets of $9.2 million is dependent upon the company's ability to generate future taxable income in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced and Autodesk then determines that it is not more likely than not to realize such deferred tax assets.

As of January 31, 2016, Autodesk had $222.7 million of cumulative federal tax loss carryforwards and $258.9 million of cumulative state tax loss carryforwards, which may be available to reduce future income tax liabilities in certain jurisdictions. These federal and state tax loss carryforwards will expire beginning fiscal 2019 through fiscal 2037 and fiscal 2019 through fiscal 2037, respectively. Autodesk also had $6.0 million of cumulative UK tax loss carryforwards, which may be available to reduce future income tax liabilities indefinitely. Autodesk had $6.8 million of cumulative federal and state capital loss carryforwards as of January 31, 2016 which are available to offset future capital gains through fiscal 2019.

As of January 31, 2016, Autodesk had $116.2 million of cumulative federal research tax credit carryforwards, $60.9 million of cumulative California state research tax credit carryforwards, and $50.4 million of cumulative Canadian federal tax credit carryforwards, which may be available to reduce future income tax liabilities in the respective jurisdictions. The federal tax credit carryforwards will expire beginning fiscal 2021 through fiscal 2037, the state credit carryforwards may reduce future California income tax liabilities indefinitely, and the Canadian tax credit carryforwards will expire beginning fiscal 2027 through fiscal 2037. Autodesk also has $185.4 million of cumulative foreign tax credit carryforwards, which may be available to reduce future U. S. tax liabilities. The foreign tax credit will expire beginning fiscal 2019 through fiscal 2027.

Utilization of net operating losses and tax credits may be subject to an annual limitation due to ownership change limitations provided in the Internal Revenue Code and similar state provisions. This annual limitation may result in the expiration of net operating losses and credits before utilization.

As a result of certain business and employment actions and capital investments undertaken by Autodesk, income earned in certain Europe and Asia Pacific countries is subject to reduced tax rates through fiscal 2016 and 2020, respectively with extensions available with incremental business and employment actions. We have no net income tax benefits attributable to the tax status of these business arrangements in fiscal 2016, compared to $1.2 million ($0.01 basic net income per share) in fiscal 2015, and $9.7 million ($0.04 basic net income per share) in fiscal 2014. The income tax benefits were offset by accruals of U.S. income taxes on undistributed earnings, among other factors.

As of January 31, 2016, the company had $254.3 million of gross unrecognized tax benefits, of which $236.8 million would impact the effective tax rate, if recognized. However, this rate impact would be offset to the extent that recognition of unrecognized tax benefits currently presented as a reduction of deferred tax assets would increase the valuation allowance.

It is possible that the amount of unrecognized tax benefits will change in the next twelve months; however an estimate of the range of the possible change cannot be made at this time.

2016 Form 10-K 92

A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits is as follows:

Fiscal Year Ended January 31,
201620152014
Gross unrecognized tax benefits at the beginning of the fiscal year$245.8$222.1$212.7
Increases for tax positions of prior years1.43.21.8
Decreases for tax positions of prior years(7.0)(2.5)(0.3)
Increases for tax positions related to the current year15.833.215.3
Decreases relating to settlements with taxing authorities(0.5)(5.4)(4.6)
Reductions as a result of lapse of the statute of limitations(1.2)(4.8)(2.8)
Gross unrecognized tax benefits at the end of the fiscal year$254.3$245.8$222.1

It is the company's continuing practice to recognize interest and/or penalties related to income tax matters in income tax expense. Autodesk had $3.3 million, $2.0 million, and $2.8 million, net of tax benefit, accrued for interest and penalties related to unrecognized tax benefits as of January 31, 2016, 2015, and 2014, respectively.

Autodesk and its subsidiaries are subject to income tax in the United States as well as numerous state and foreign jurisdictions. Autodesk's U.S. and state income tax returns for fiscal year 2003 through fiscal year 2016 remain open to examination. In addition, Autodesk files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from fiscal year 2004 to 2016.

  1. Acquisitions

During the fiscal years ended January 31, 2016 and January 31, 2015, Autodesk completed the business combinations and technology purchases described below. The results of operations for the following acquisitions are included in the accompanying Consolidated Statement of Operations since their respective acquisition dates. Pro forma results of operations have not been presented because the effects of the following acquisitions, individually and in the aggregate, were not material to Autodesk's Consolidated Financial Statements.

For acquisitions accounted for as business combinations, Autodesk recorded the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The fair values assigned to the identifiable intangible assets acquired were based on estimates and assumptions determined by management. Autodesk recorded the excess of consideration transferred over the aggregate fair values as goodwill.

Fiscal 2016 Acquisitions

On November 12, 2015, Autodesk closed a share purchase agreement with FIT AG (“FIT”) to acquire all of the outstanding shares of netfabb GmbH ("netfabb") for approximately $42.5 million cash consideration. Autodesk simultaneously entered into an investment agreement with FIT to invest approximately $27.4 million cash to acquire an equity interest in FIT. netfabb is a German-based provider of industrial grade additive manufacturing software solutions supporting most major 3D printers. FIT is a German-based provider of rapid prototyping and additive design and manufacturing services. The acquisition of netfabb is expected to provide Autodesk with software solutions that will reduce production costs and increase efficiency in 3D printing and additive manufacturing. netfabb will be integrated into Autodesk's PSEB segment. The amount of goodwill that is expected to be deductible for U.S. income tax purposes is $29.8 million.

During the fiscal year ended January 31, 2016, Autodesk also completed several other business combinations and technology acquisitions for total cash consideration of $106.8 million. These business combinations and technology acquisitions were not material individually or in aggregate to Autodesk's Consolidated Financial Statements.

2016 Form 10-K 93

The following table summarizes the fair value of the assets acquired and liabilities assumed by major class for each of the business combinations and technology acquisitions completed during the fiscal year ended January 31, 2016:

netfabbOther
Developed technologies$6.6$27.3
Customer relationships and other non-current intangible assets6.212.9
Trade name1.44.7
Goodwill32.864.5
Deferred Revenue (current and non-current)(1.0)(0.7)
Deferred tax liability(3.9)(2.4)
Net tangible assets (liabilities)0.40.5
$42.5$106.8

For netfabb and certain other business combinations, the allocation of purchase price consideration to certain assets and liabilities is not yet finalized. Autodesk's estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). For netfabb, the primary areas of the preliminary purchase price allocation that are not yet finalized are amounts for tax assets and liabilities, pending finalization of estimates and assumptions in respect of certain tax aspects of the transaction and residual goodwill, as well as pending finalization of the valuation of certain intangible assets accounted for as part of the business combination. For certain other business combinations, the primary areas of the preliminary purchase price allocation that are not yet finalized are amounts for tax assets and liabilities, pending finalization of estimates and assumptions in respect of certain tax aspects of the transaction and residual goodwill.

Fiscal 2015 Acquisitions

On June 27, 2014, Autodesk acquired Shotgun Software, Inc. (“Shotgun”) for total consideration of $54.5 million, of which $51.2 million was cash consideration. Prior to acquiring Shotgun, Autodesk had a convertible debt investment in the company with an acquisition-date fair value of $3.3 million using a market approach to value the investment. Shotgun was a privately-owned company that provided a cloud-based production management solution that enabled digital studios to track, schedule, review, and collaborate on projects and images. Shotgun has been integrated into, and the related goodwill was assigned to, Autodesk's M&E segment. Goodwill is not expected to be deductible for U.S. income tax purposes.

On May 29, 2014, Autodesk acquired all the outstanding shares of Within Technologies Limited ("Within Technologies”) for total cash consideration of $88.0 million. Autodesk used its non-U.S.-based cash for the transaction. Within Technologies is a United Kingdom based developer of design and simulation software for next generation manufacturing processes. The Within Technologies acquisition is expected to accelerate Autodesk’s development of tools and technologies for advanced manufacturing. Within Technologies has been integrated into Autodesk’s PSEB reportable segment. The amount of goodwill that is expected to be deductible for U.S. income tax purposes is $78.9 million.

On February 6, 2014, Autodesk acquired the entire issued and to be issued share capital of Delcam plc (“Delcam”), for $284.6 million. Delcam was previously listed as a public company (LON: DLC) and is a leading supplier of advanced CADCAM and industrial measurement solutions for the manufacturing industry. With this transaction Autodesk gains Delcam’s range of design, manufacturing, and inspection software that provide automated CADCAM solutions for a variety of industries, ranging from aerospace to toys and sports equipment. The transaction was structured as a cash offer for all the outstanding shares of Delcam, and Delcam has been integrated into Autodesk's MFG reportable segment. The amount of goodwill that is expected to be deductible for U.S. income tax purposes is $166.0 million.

During the fiscal year ended January 31, 2015, Autodesk also completed 21 other business combination and technology acquisitions for total cash consideration of approximately $234.5 million. These business combinations and technology acquisitions were not material individually or in aggregate to Autodesk's Consolidated Financial Statements.

2016 Form 10-K 94

The following table summarizes the fair value of the assets acquired and liabilities assumed by major class for each of the business combinations and technology acquisitions completed during the fiscal year ended January 31, 2015:

ShotgunWithinDelcamOther
Developed technologies$5.4$4.6$28.9$39.0
Customer relationships7.53.639.79.8
Trade name1.61.216.56.3
Goodwill43.280.6190.4180.6
Deferred Revenue(0.7)—(10.4)(0.4)
Deferred tax (liability) asset(2.6)(1.7)(13.2)(2.1)
Net tangible assets0.1(0.3)32.71.3
Total$54.5$88.0$284.6$234.5
  1. Deferred Compensation

At January 31, 2016, Autodesk had marketable securities totaling $1,430.2 million, of which $38.0 million related to investments in debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. The total related deferred compensation liability was $38.0 million at January 31, 2016, of which $1.9 million was classified as current and $36.1 million was classified as non-current liabilities. The total related deferred compensation liability at January 31, 2015 was $40.3 million, of which $5.3 million was classified as current and $35.0 million was classified as non-current liabilities. The securities are recorded in the Consolidated Balance Sheets under the current portion of "Marketable Securities". The current and non-current portions of the liability are recorded in the Consolidated Balance Sheets under “Accrued compensation” and “Other liabilities,” respectively.

  1. Borrowing Arrangements

In June 2015, Autodesk issued $450.0 million aggregate principal amount of 3.125% senior notes due June 15, 2020 and $300.0 million aggregate principal amount of 4.375% senior notes due June 15, 2025 (collectively, the “2015 Senior Notes”). Autodesk received net proceeds of $742.0 million from issuance of the 2015 Senior Notes, net of a discount of $1.7 million and issuance costs of $6.3 million. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2015 Senior Notes using the effective interest method. The proceeds of the 2015 Senior Notes are available for general corporate purposes. Autodesk may redeem the 2015 Senior Notes at any time, subject to a make whole premium. In addition, upon the occurrence of certain change of control triggering events, Autodesk may be required to repurchase the 2015 Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 2015 Senior Notes contain restrictive covenants that limit Autodesk's ability to create certain liens, to enter into certain sale and leaseback transactions and to consolidate or merge with, or convey, transfer or lease all or substantially all of its assets, subject to significant qualifications and exceptions. Based on quoted market prices, the fair value of the 2015 Senior Notes was approximately $756.9 million as of January 31, 2016.

In December 2012, Autodesk issued $400.0 million aggregate principal amount of 1.95% senior notes due December 15, 2017 and $350.0 million aggregate principal amount of 3.6% senior notes due December 15, 2022 (collectively, the "2012 Senior Notes"). Autodesk received net proceeds of $739.3 million from issuance of the 2012 Senior Notes, net of a discount of $4.5 million and issuance costs of $6.1 million. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2012 Senior Notes using the effective interest method. The proceeds of the 2012 Senior Notes are available for general corporate purposes. Autodesk may redeem the 2012 Senior Notes at any time, subject to a make whole premium. In addition, upon the occurrence of certain change of control triggering events, Autodesk may be required to repurchase the 2012 Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 2012 Senior Notes contain restrictive covenants that limit our ability to create certain liens, to enter into certain sale and leaseback transactions and to consolidate or merge with, or convey, transfer, or lease all or substantially all of our assets, subject to significant qualifications and exceptions. Based on quoted market prices, the fair value of the 2012 Senior Notes was approximately $738.0 million as of January 31, 2016.

Autodesk’s line of credit facility permits unsecured short-term borrowings of up to $400.0 million with an option to request an increase in the amount of the credit facility by up to an additional $100.0 million, and is available for working capital or other business needs. This credit agreement contains customary covenants that could restrict the imposition of liens on

2016 Form 10-K 95

Autodesk’s assets, and restrict the Company’s ability to incur additional indebtedness or make dispositions of assets if Autodesk fails to maintain the financial covenants. The financial covenants consist of a debt to capitalization ratio, and an interest coverage ratio. The line of credit is syndicated with various financial institutions, including Citibank, N.A., an affiliate of Citigroup, which is one of the lead lenders and an agent. In May 2015, Autodesk amended and restated the credit agreement to extend the facility's maturity date from May 2018 to May 2020 and to update the calculation for our financial covenants. As of January 31, 2016, we were in compliance with the credit facility’s covenants. At January 31, 2016 and January 31, 2015, Autodesk had no outstanding borrowings on this line of credit.

  1. Commitments and Contingencies

Lease commitments

Autodesk leases office space and computer equipment under non-cancellable operating lease agreements that expire at various dates through 2090. The leases generally provide that Autodesk pay taxes, insurance, and maintenance expenses related to the leased assets. Certain of these lease arrangements contain escalation clauses whereby monthly rent increases over time. At January 31, 2016, the aggregate future minimum lease payments required were as follows:

2017$61.0
201854.8
201943.1
202026.2
202118.0
Thereafter51.2
254.3
Less: Sublease income1.6
$252.7

Rent expense related to these operating leases recognized on a straight-line basis over the lease period, was as follows:

Fiscal Year Ended January 31,
201620152014
Rent expense$58.7$55.0$50.2

Purchase commitments

In the normal course of business, Autodesk enters into various purchase commitments for goods or services. Total non-cancellable purchase commitments as of January 31, 2016 were approximately $100.2 million for periods through fiscal 2020. These purchase commitments primarily result from contracts for the acquisition of IT infrastructure, marketing, and software development services.

Autodesk has certain royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a dollar amount per unit shipped or a percentage of the underlying revenue. Royalty expense, which was recorded under cost of license and other revenue and cost of subscription revenue on Autodesk’s Consolidated Statements of Operations, was $17.4 million in fiscal 2016, $17.9 million in fiscal 2015, and $18.0 million in fiscal 2014.

Guarantees and Indemnifications

In the normal course of business, Autodesk provides indemnifications of varying scopes, including limited product warranties and indemnification of customers against claims of intellectual property infringement made by third parties arising from the use of its products or services. Autodesk accrues for known indemnification issues if a loss is probable and can be reasonably estimated. Historically, costs related to these indemnifications have not been significant, and because potential future costs are highly variable, Autodesk is unable to estimate the maximum potential impact of these indemnifications on its future results of operations.

2016 Form 10-K 96

In connection with the purchase, sale, or license of assets or businesses with third parties, Autodesk has entered into or assumed customary indemnification agreements related to the assets or businesses purchased, sold or licensed. Historically, costs related to these indemnifications have not been significant, and because potential future costs are highly variable, Autodesk is unable to estimate the maximum potential impact of these indemnifications on its future results of operations.

As permitted under Delaware law, Autodesk has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at Autodesk’s request in such capacity. The maximum potential amount of future payments Autodesk could be required to make under these indemnification agreements is unlimited; however, Autodesk has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable Autodesk to recover a portion of any future amounts paid. Autodesk believes the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.

Legal Proceedings

Autodesk is involved in a variety of claims, suits, investigations, and proceedings in the normal course of business activities including claims of alleged infringement of intellectual property rights, commercial, employment, piracy prosecution, business practices, and other matters. In the Company's opinion, resolution of pending matters is not expected to have a material adverse impact on its consolidated results of operations, cash flows, or its financial position. Given the unpredictable nature of legal proceedings, there is a reasonable possibility that an unfavorable resolution of one or more such proceedings could in the future materially affect the Company's results of operations, cash flows, or financial position in a particular period, however, based on the information known by the Company as of the date of this filing and the rules and regulations applicable to the preparation of the Company's financial statements, any such amount is either immaterial or it is not possible to provide an estimated amount of any such potential loss.

  1. Stockholders' Equity

Preferred Stock

Under Autodesk’s Certificate of Incorporation, 2.0 million shares of preferred stock are authorized. At January 31, 2016, there were no preferred shares issued or outstanding. The Board of Directors has the authority to issue the preferred stock in one or more series and to fix rights, preferences, privileges, and restrictions, including dividends and the number of shares constituting any series or the designation of such series, without any further vote or action by the stockholders.

Common Stock Repurchase Programs

Autodesk has a stock repurchase program that is used to offset dilution from the issuance of stock under the Company’s employee stock plans and for such other purposes as may be in the interests of Autodesk and its stockholders, which has the effect of returning excess cash generated from the Company’s business to stockholders. Autodesk repurchased and retired 8.5 million shares in fiscal 2016 at an average repurchase price of $53.58 per share, 6.9 million shares in fiscal 2015 at an average repurchase price of $53.83 per share, and 10.5 million shares in fiscal 2014 at an average repurchase price of $40.43.

At January 31, 2016, 6.3 million shares remained available for repurchase under the repurchase program approved by the Board of Directors. The number of shares acquired and the timing of the purchases are based on several factors, including general market and economic conditions, the number of employee stock option exercises and restricted stock unit issuances, the trading price of Autodesk common stock, cash on hand and available in the United States, cash requirements for acquisitions, and Company defined trading windows.

2016 Form 10-K 97

  1. Interest and Other Expense, net

Interest and other expense, net, consists of the following:

Fiscal Year Ended January 31,
201620152014
Interest and investment expense, net$(33.9)$(13.2)$(9.8)
(Loss) gain on foreign currency—(3.9)4.0
Gain (loss) on strategic investments3.8(23.3)(1.8)
Other income8.52.72.7
Interest and other expense, net$(21.6)$(37.7)$(4.9)
  1. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of taxes, was comprised of the following:

Net Unrealized Gains (Losses) on Derivative InstrumentsNet Unrealized Gains (Losses) on Available for Sale SecuritiesDefined Benefit Pension ComponentsForeign Currency Translation AdjustmentsTotal
Balances, January 31, 2014$3.5$1.8$(7.7)$1.8$(0.6)
Other comprehensive income (loss) before reclassifications47.0(1.7)(18.3)(80.7)(53.7)
Pre-tax (gains) losses reclassified from accumulated other comprehensive income(7.0)1.70.5—(4.8)
Tax effects(0.7)(0.2)1.84.95.8
Net current period other comprehensive income (loss)39.3(0.2)(16.0)(75.8)(52.7)
Balances, January 31, 201542.81.6(23.7)(74.0)(53.3)
Other comprehensive income (loss) before reclassifications1.6(1.3)(6.8)(35.2)(41.7)
Pre-tax (gains) losses reclassified from accumulated other comprehensive income(29.3)(0.1)1.3—(28.1)
Tax effects0.6—0.90.52.0
Net current period other comprehensive loss(27.1)(1.4)(4.6)(34.7)(67.8)
Balances, January 31, 2016$15.7$0.2$(28.3)$(108.7)$(121.1)

Reclassifications related to gains and losses on available for sale securities are included in Interest and other expense, net. Refer to Note 2, "Financial Instruments" for the amount and location of reclassifications related to derivative instruments. Reclassifications of the defined benefit pension components are included in the computation of net periodic benefit cost. Refer to Note 14, "Retirement Benefit Plans".

2016 Form 10-K 98

  1. Net (Loss) Income Per Share

Basic net (loss) income per share is computed using the weighted average number of shares of common stock outstanding for the period, excluding stock options and restricted stock units. Diluted net (loss) income per share is based upon the weighted average number of shares of common stock outstanding for the period and potentially dilutive common shares, including the effect of stock options and restricted stock units under the treasury stock method. The following table sets forth the computation of the numerators and denominators used in the basic and diluted net (loss) income per share amounts:

Fiscal Year Ended January 31,
201620152014
Numerator:
Net (loss) income$(330.5)$81.8$228.8
Denominator:
Denominator for basic net (loss) income per share—weighted average shares226.0227.1224.0
Effect of dilutive securities (1)—5.35.6
Denominator for dilutive net (loss) income per share226.0232.4229.6
Basic net (loss) income per share$(1.46)$0.36$1.02
Diluted net (loss) income per share$(1.46)$0.35$1.00
(1)Dilutive securities of 4.7 million shares for the fiscal year ended January 31, 2016 have been excluded from the calculation of diluted net (loss) income per share as those shares would have been anti-dilutive due to the net loss incurred during this period.

The computation of diluted net (loss) income per share does not include shares that are anti-dilutive under the treasury stock method because their exercise prices are higher than the average market value of Autodesk’s stock during the fiscal year. For the fiscal years ended January 31, 2016, 2015, and 2014, 0.1 million, 0.1 million, and 5.4 million potentially anti-dilutive shares, respectively, were excluded from the computation of net (loss) income per share.

  1. Segments

Autodesk reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. Autodesk has four reportable segments: AEC, MFG, PSEB, and M&E. Autodesk has no material inter-segment revenue.

The AEC, MFG, and PSEB segments derive revenue from the sale of licenses for software products and services to customers who design, build, manage, or own building, manufacturing, and infrastructure projects. Autodesk's M&E segment derives revenue from the sale of products to creative professionals, post-production facilities, and broadcasters for a variety of applications, including feature films, television programs, commercials, music and corporate videos, interactive game production, web design, and interactive web streaming.

AEC software products help to improve the way building, civil infrastructure, process plant, and construction projects are designed, built, and managed. A broad portfolio of solutions enables greater efficiency, accuracy, and sustainability across the entire project lifecycle. Autodesk AEC solutions include advanced technology for BIM, AutoCAD-based design and documentation productivity software, sustainable design analysis applications, and collaborative project management solutions. BIM, an integrated process for building and infrastructure design, analysis, documentation, and construction, uses consistent, coordination information to improve communication and collaboration between the extended project team. AEC provides a comprehensive portfolio of BIM solutions that help customers deliver projects faster and more economically, while minimizing environmental impact. AEC’s revenue primarily includes revenue from the sales of Autodesk Building Design Suites, Autodesk Infrastructure Design Suites, AEC flexible enterprise offerings, AEC consulting services, and AutoCAD Civil 3D.

MFG provides the manufacturers in automotive and transportation, industrial machinery, consumer products and building products with comprehensive digital prototyping solutions that bring together design data from all phases of the product development process to develop a single digital model created in Autodesk Inventor software. Autodesk’s solutions for digital prototyping enable a broad group of manufacturers to realize benefits with minimal disruption to existing workflows. MFG’s revenue primarily includes revenue from the sales of licenses of Autodesk Product Design Suites, AutoCAD Mechanical, Delcam, and Autodesk Moldflow products.

2016 Form 10-K 99

PSEB includes Autodesk’s design product, AutoCAD. Autodesk’s AutoCAD product is a platform product that underpins the Company’s design product offerings for the industries it serves. For example, AEC and MFG offer tailored versions of AutoCAD software for the industries they serve. Autodesk’s AutoCAD product also provides a platform for Autodesk’s developer partners to build custom solutions for a range of diverse design-oriented markets. PSEB's revenue primarily includes revenue from sales of AutoCAD and AutoCAD LT, the AutoCAD Design Suite, and many other design products, including consumer design products, as well as from sales of licenses of other Autodesk's design products.

M&E consists of two product groups: Animation and Creative Finishing. Animation products, such as Autodesk Maya, Autodesk 3ds Max, and the Autodesk Entertainment Creation Suites, are sold as software only and provide tools for digital sculpting, modeling, animation, effects, rendering and compositing, for design visualization, visual effects, and games production. M&E products are also included in a number of PSEB, AEC, and MFG focused suites. Creative Finishing products, such as Autodesk Flame and Autodesk Lustre, provide editing, finishing, and visual effects design and color grading.

All of Autodesk’s reportable segments distribute their respective products primarily through authorized resellers and distributors and, to a lesser extent, through direct sales to end-users.

The accounting policies of the reportable segments are the same as those described in Note 1, “Business and Summary of Significant Accounting Policies.” Autodesk evaluates each segment’s performance on the basis of gross profit. Autodesk currently does not separately accumulate and report asset information by segment, except for goodwill, which is disclosed in Note 1, “Business and Summary of Significant Accounting Policies.”

Information concerning the operations of Autodesk’s reportable segments is as follows:

Fiscal year ended January 31,
201620152014
Net revenue:
Architecture, Engineering, and Construction$949.1$872.6$730.6
Manufacturing724.6675.6579.4
Platform Solutions and Emerging Business670.4796.7789.2
Media and Entertainment160.0167.3174.7
$2,504.1$2,512.2$2,273.9
Gross profit:
Architecture, Engineering, and Construction$857.0$785.8$663.8
Manufacturing638.1604.0531.5
Platform Solutions and Emerging Business572.0712.3716.8
Media and Entertainment127.1127.3137.8
Unallocated (1)(60.8)(59.3)(50.3)
$2,133.4$2,170.1$1,999.6
Depreciation, amortization and accretion:
Architecture, Engineering, and Construction$1.5$1.3$0.2
Manufacturing1.33.00.9
Platform Solutions and Emerging Business9.86.85.5
Media and Entertainment0.20.30.2
Unallocated133.0134.5122.1
$145.8$145.9$128.9
(1)Unallocated amounts primarily relate to corporate expenses and other costs and expenses that are managed outside the reportable segments, including stock-based compensation expense.

2016 Form 10-K 100

Information regarding Autodesk’s operations by geographic area is as follows:

Fiscal year ended January 31,
201620152014
Net revenue:
Americas
U.S.$803.9$736.4$672.3
Other Americas168.9161.6146.6
Total Americas972.8898.0818.9
Europe, Middle East, and Africa934.6980.0851.8
Asia Pacific
Japan219.7269.0274.5
Other Asia Pacific377.0365.2328.7
Total Asia Pacific596.7634.2603.2
Total net revenue$2,504.1$2,512.2$2,273.9

Information regarding Autodesk’s long-lived assets by geographic area is as follows:

January 31,
20162015
Long-lived assets (1):
Americas
U.S.$118.8$108.8
Other Americas3.23.1
Total Americas122.0111.9
Europe, Middle East, and Africa25.725.0
Asia Pacific21.622.3
Total long-lived assets$169.3$159.2
(1)Long-lived assets exclude deferred tax assets, marketable securities, goodwill, and other intangible assets.
  1. Retirement Benefit Plans

Pretax Savings Plan

Autodesk has a 401(k) plan that covers nearly all U.S. employees. Eligible employees may contribute up to 50% of their pretax salary, subject to limitations mandated by the Internal Revenue Service. Autodesk makes voluntary cash contributions and matches a portion of employee contributions in cash. Autodesk’s contributions were $17.3 million in fiscal 2016, $11.2 million in fiscal 2015, and $8.1 million in fiscal 2014. Autodesk does not allow participants to invest in Autodesk common stock through the 401(k) plan.

Defined Benefit Pension Plans

Autodesk maintains certain defined benefit pension plans to employees primarily located in countries outside of the U.S, particularly the United Kingdom, Switzerland, and Japan. The Company deposits funds for specific plans, consistent with the requirements of local law, with insurance companies, third-party trustees, or into government-managed accounts, and accrues for the unfunded portion of the obligation, where material. Depending on the design of the plan, local customs, and market circumstances, the liabilities of a plan may exceed qualified plan assets.

2016 Form 10-K 101

Benefit Obligation and Plan Assets

The changes in the projected benefit obligations and plan assets for the plans described above were as follows:

Fiscal year ended January 31,
20162015
Beginning projected benefit obligation$144.7$62.2
Service cost5.74.6
Interest cost3.33.9
Actuarial loss (gain)6.318.8
Benefits paid(6.5)(7.5)
Foreign currency exchange rate changes(10.1)(1.2)
Curtailments and settlements(2.2)(2.9)
Contributions by plan participants4.05.9
Business combinations—60.9
Ending projected benefit obligation$145.2$144.7
Beginning fair value of plan assets$104.2$40.7
Actual return on plan assets1.34.1
Contributions paid by employer4.54.9
Contributions paid by plan participants4.05.9
Benefit payments(6.5)(7.5)
Curtailments and settlements—(2.9)
Foreign currency exchange rate changes(6.1)(1.2)
Business combinations—60.2
Ending fair value of plan assets$101.4$104.2
Funded status$(43.8)$(40.5)

Amounts included within the business combinations line above represent plan assets and liabilities assumed under the acquisition of Delcam.

The amounts recognized on the consolidated balance sheets at the end of each period were as follows:

Fiscal Year Ended January 31,
20162015
Other long-term liabilities$43.8$40.5
Accumulated other comprehensive loss, before tax32.226.6
Net amount recognized$76.0$67.1

On a worldwide basis, our defined benefit pension plans were 70% funded as of January 31, 2016. Funded status is not indicative of our ability to pay ongoing pension benefits or of Autodesk's obligation to fund retirement accounts.

2016 Form 10-K 102

As of January 31, 2016, the aggregate accumulated benefit obligation was $127.1 million for the defined benefit pension plans compared to $124.3 million as of January 31, 2015. Included in the aggregate data in the following tables are the amounts applicable to our defined benefit pension plans, with accumulated benefit obligations in excess of plan assets, as well as plans with projected benefit obligations in excess of plan assets. Amounts related to such plans at the end of each period were as follows:

Fiscal Year Ended January 31,
20162015
Plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligations$127.1$124.0
Plan Assets101.4103.9
Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations$145.2$144.7
Plan Assets101.4104.2

Defined Benefit Pension Plan Assets

The investments of the plans are managed by insurance companies or third-party investment managers selected by Autodesk's Trustees, consistent with regulations or market practice of the country where the assets are invested. Investments managed by qualified insurance companies or third-party investment managers under standard contracts follow local regulations, and Autodesk is not actively involved in their investment strategies.

Defined benefit pension plan assets measured at fair value on a recurring basis consisted of the following investment categories at the end of each period as follows:

Fiscal Year Ended January 31,
20162015
Level 1Level 2Level 3TotalTotal
Investment fund$—$58.5$—$58.5$60.6
Insurance contracts—42.6—42.643.5
Total assets measured at fair value—101.1—101.1104.1
Cash0.3——0.30.1
Total pension plan assets at fair value$0.3$101.1$—$101.4$104.2

The assets held in the investment fund in the preceding table are invested in a diversified growth fund actively managed by Russell Investments in association with Aon Hewitt. The objective of the fund is to generate capital appreciation on a long-term basis through a diversified portfolio of investments. The fund aims to deliver equity-like returns in the medium to long term with around two-thirds the volatility of equity markets. The fair value of the assets held in the investment fund classified as Level 2 are either priced using quoted prices for identical assets in inactive markets or priced monthly at net asset value without restrictions on redemption.

The insurance contracts in the preceding table represent the immediate cash surrender value of assets managed by qualified insurance companies. Autodesk does not have control over the target allocation or visibility of the investment strategies of those investments. Insurance contracts and investments held by insurance companies made up 42% of total plan assets as of both January 31, 2016 and January 31, 2015.

2016 Form 10-K 103

Estimated Future Benefit Payments

Estimated benefit payments over the next 10 fiscal years are as follows:

Pension Benefits
2017$3.9
20183.9
20193.7
20203.5
20213.5
2022-202619.1

Funding Expectations

Our expected required funding for the plans during fiscal 2017 is approximately $4.3 million.

Net Periodic Benefit Cost

The components of net periodic pension cost for the defined benefit pension plans for fiscal 2016, 2015, and 2014 are as follows:

Fiscal Year Ended January 31,
201620152014
Service cost for benefits earned during the period$5.7$4.6$5.4
Interest cost on projected benefit obligation3.33.91.1
Expected return on plan assets(3.9)(4.6)(0.8)
Amortization of prior service credit(0.1)(0.1)(0.1)
Amortization of loss1.40.61.0
Net periodic benefit cost$6.4$4.4$6.6

Amounts Recorded in OCI

The components of other comprehensive income for the defined benefit pension plans before taxes for fiscal 2016, 2015, and 2014 are as follows:

Fiscal Year Ended January 31,
201620152014
Prior service credit for period$(2.2)$—$—
Net loss (gain) for period9.118.4(3.9)
Amortization of prior service credit0.10.10.1
Amortization of net loss(1.4)(0.6)(1.0)
Other comprehensive loss (income)$5.6$17.9$(4.8)

Amounts Recorded in AOCI

The amounts recorded in accumulated other comprehensive loss before taxes at the end of each period were as follows:

Fiscal Year Ended January 31,
20162015
Net prior service credit$(3.9)$(1.8)
Net actuarial loss36.128.4
Accumulated other comprehensive loss, before tax$32.2$26.6

2016 Form 10-K 104

The estimated amounts that will be amortized from AOCI into net periodic benefit cost over the next fiscal year for the qualified defined benefit pension plans are as follows:

Pension Benefits
Amortization of prior service credit$(0.1)
Amortization of the net loss1.5
Total amortization$1.4

Assumptions

Weighted average actuarial assumptions used to determine costs for the plans for each period were as follows:

Fiscal Year Ended January 31,
201620152014
Discount rate3.2%3.3%2.3%
Expected long-term rate of return on plan assets3.8%3.9%1.9%
Rate of compensation increase2.2%2.2%2.2%

The weighted-average expected long-term rate of return for the plan assets is 3.8%. The weighted-average expected long-term rate of return on plan assets is based on the interest rates guaranteed under the insurance contracts, and the expected rate of return appropriate for each category of assets weighted for the distribution within the diversified investment fund. The assumptions used for the plans are based upon customary rates and practices for the location of the plans. Factors such as asset class allocations, long-term rates of return (actual and expected), and results of periodic asset liability modeling studies are considered when constructing the long-term rate of return assumption for our defined benefit pension plans.

Weighted average actuarial assumptions used to determine benefit obligations for the plans at the end of each period were as follows:

Fiscal Year Ended January 31,
201620152014
Discount rate2.2%2.4%2.2%
Rate of compensation increase2.6%1.2%2.2%

In selecting the appropriate discount rate for the plans, the Company uses country-specific information, adjusted to reflect the duration of the particular plan. The discount rate was based on highly rated long-term bond indexes and yield curves that match the duration of the plan’s benefit obligations.

Defined Contribution Plans

Autodesk also provides defined contribution plans in certain foreign countries where required by statute. Autodesk’s funding policy for foreign defined contribution plans is consistent with the local requirements in each country. Autodesk’s contributions to these plans were $23.0 million in fiscal 2016, $23.5 million in fiscal 2015, and $22.3 million in fiscal 2014.

Other Plans

In addition, Autodesk offers a non-qualified deferred compensation plan to certain key employees whereby they may defer a portion (or all) of their annual compensation until retirement or a different date specified by the employee in accordance with terms of the plan. See Note 6, “Deferred Compensation,” for further discussion.

2016 Form 10-K 105

  1. Restructuring Reserves

During fiscal 2014, the Board of Directors of the Company approved a world-wide restructuring plan in order to re-balance staffing levels to better align them with the evolving needs of the business. The restructuring plan included a reduction of approximately 85 positions and the consolidation of four leased facilities, with a total cost of approximately $15.0 million ("Fiscal 2014 Plan"). By July 31, 2014, the personnel and facilities related actions included in this restructuring plan were substantially complete.

During fiscal 2013, the Board of Directors of the Company approved a world-wide restructuring plan in line with the Company's strategy, including its continuing shift to cloud and mobile computing ("Fiscal 2013 Plan"). The restructuring plan resulted in a reduction of approximately 500 positions and the consolidation of eight leased facilities, with an aggregate charge of $46.2 million to date. By January 31, 2015, the personnel and facilities related actions included in this restructuring plan were substantially complete.

The following table sets forth the restructuring activities for the fiscal years ended January 31, 2016 and 2015:

Balances, January 31, 2015AdditionsPaymentsAdjustments (1)Balances, January 31, 2016
Fiscal 2013 Plan
Lease termination and asset costs$0.2$—$(0.1)$—$0.1
Fiscal 2014 Plan
Lease termination and asset costs1.4—(0.4)0.21.2
Total$1.6$—$(0.5)$0.2$1.3
Current portion (2)$0.7$0.8
Non-current portion (2)0.90.5
Total$1.6$1.3
(1)Adjustments include the impact of foreign currency translation.
(2)The current and non-current portions of the reserve are recorded in the Consolidated Balance Sheets under “Other accrued liabilities” and “Other liabilities,” respectively.
Balances, January 31, 2014AdditionsPaymentsAdjustments (1)Balances, January 31, 2015
Fiscal 2013 Plan
Employee termination costs$0.1$—$—$(0.1)$—
Lease termination and asset costs0.20.3(0.3)—0.2
Fiscal 2014 Plan
Employee termination costs3.52.5(6.0)——
Lease termination and asset costs1.30.3(0.5)0.31.4
Total$5.1$3.1$(6.8)$0.2$1.6
Current portion (2)$4.0$0.7
Non-current portion (2)1.10.9
Total$5.1$1.6
(1)Adjustments include the impact of foreign currency translation.
(2)The current and non-current portions of the reserve are recorded in the Consolidated Balance Sheets under “Other accrued liabilities” and “Other liabilities,” respectively.

2016 Form 10-K 106

  1. Selected Quarterly Financial Information (Unaudited)

Summarized quarterly financial information for fiscal 2016 and 2015 is as follows:

20161st quarter2nd quarter (1)3rd quarter4th quarter (2)Fiscal year
Net revenue$646.5$609.5$599.8$648.3$2,504.1
Gross profit554.7516.5508.8553.42,133.4
Income (loss) from operations21.54.3(14.8)(9.7)1.3
Provision for income taxes(2.7)(269.5)(21.3)(16.7)(310.2)
Net income (loss)19.1(268.6)(43.8)(37.2)(330.5)
Basic net income (loss) per share$0.08$(1.18)$(0.19)$(0.17)$(1.46)
Diluted net income (loss) per share$0.08$(1.18)$(0.19)$(0.17)$(1.46)
Income (loss) from operations includes the following items:
Stock-based compensation expense$50.2$40.7$50.2$56.1$197.2
Amortization of acquisition related intangibles22.420.219.719.982.2
20151st quarter2nd quarter3rd quarter4th quarterFiscal year
Net revenue$592.5$637.1$618.0$664.6$2,512.2
Gross profit513.8549.2532.0575.12,170.1
Income from operations42.249.914.614.0120.7
Provision for income taxes(7.3)(11.6)(0.9)18.6(1.2)
Net income28.331.310.711.581.8
Basic net income per share$0.12$0.14$0.05$0.05$0.36
Diluted net income per share$0.12$0.13$0.05$0.05$0.35
Income from operations includes the following items:
Stock-based compensation expense$33.6$39.8$43.1$49.1$165.6
Amortization of acquisition related intangibles23.924.622.621.993.0
Restructuring charges, net2.30.8——3.1
(1)Certain second quarter fiscal 2016 balances have been revised to include the correction of an error identified in the third quarter of fiscal 2016, resulting in an additional $33.1 million of income tax expense from the previously reported results, primarily related to the establishment of a valuation allowance. See Note 1, "Business and Summary of Significant Accounting Policies" for further discussion.
(2)Subsequent to furnishing preliminary financial statements on Form 8-K on February 25, 2016 for the three and twelve months ended January 31, 2016, Autodesk identified a $4.5 million tax adjustment associated with deemed foreign withholding taxes related to non-permanently reinvested earnings in foreign jurisdictions which have not yet repatriated resulting in changes to the Consolidated Financial Statements as reflected in this Annual Report on Form 10-K. This non-cash adjustment resulted in an increase to GAAP diluted loss per share from $(0.15) to $(0.17) for the three months ended January 31, 2016.
  1. Subsequent Events (Unaudited)

Following a review of its business, on February 2, 2016, the Board of Directors of the Company approved a world-wide restructuring plan that includes a reduction in force that will result in the termination of approximately 10% of the Company’s workforce, or approximately 925 employees, and the consolidation of certain leased facilities. The Company is taking these actions to accelerate its move to the cloud and its transition to a subscription-based business model. The restructuring is expected to reduce expenses, streamline the organization, and reallocate resources to align more closely with the company’s needs going forward. Although the Company is reducing its overall staffing levels in the near term, the Company plans to invest in key development areas and strategic opportunities.

The Company expects to substantially complete the reduction in force and the facilities consolidation by the end of its fourth quarter of fiscal 2017 (ending January 31, 2017). The Company anticipates incurring pre-tax restructuring charges of $85

2016 Form 10-K 107

million to $95 million, substantially all of which would result in cash expenditures, $77 million to $85 million of which would be for one-time employee termination benefits, and $8 million to $10 million of which would be for facilities-related and other costs.

2016 Form 10-K 108

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Autodesk, Inc.

We have audited the accompanying consolidated balance sheets of Autodesk, Inc. as of January 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the three years in the period ended January 31, 2016. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Autodesk, Inc. at January 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended January 31, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Autodesk, Inc.’s internal control over financial reporting as of January 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 23, 2016 expressed an adverse opinion thereon.

/s/ ERNST & YOUNG LLP

San Francisco, California

March 23, 2016

2016 Form 10-K 109

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Autodesk, Inc.

We have audited Autodesk, Inc.’s internal control over financial reporting as of January 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Autodesk, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management concluded that a material weakness exists in its internal control over financial reporting related to its controls over the technical review of the reconciliation of the deferred tax accounts and the effective tax rate. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of Autodesk, Inc. as of January 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the three years in the period ended January 31, 2016. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal 2016 financial statements, and this report does not affect our report dated March 23, 2016, which expressed an unqualified opinion on those financial statements.

In our opinion, because of the effect of the material weakness described above on the achievement of the objectives of the control criteria, Autodesk, Inc. has not maintained effective internal control over financial reporting as of January 31, 2016, based on the COSO criteria.

/s/ ERNST & YOUNG LLP

San Francisco, California

March 23, 2016

2016 Form 10-K 110

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