Autodesk (ADSK) 10-K risk factor changes: FY2018 vs FY2017

[removed: Global] [added: *Global] economic and political conditions may further impact our [removed: business, financial results] [added: industries, business] and financial [removed: condition.][added: results.*]

If economic growth in countries where we do business [removed: slows, such as in Japan or in emerging economies,] [added: slows] or if such countries experience further economic recessions, customers may delay or reduce technology purchases.

[removed: ][added: ]

[removed: If] [added: *If] we fail to successfully manage our business model transition to cloud-based products and more flexible product licenses, our results of operations could be negatively [removed: impacted.][added: impacted.*]

To address the industry transition from personal computer to cloud, mobile, and social computing, we [removed: have] accelerated our move to the cloud and are offering more flexible product licenses.

During [removed: our] [added: the first three years of the] transition, revenue, billings, gross margin, operating margin, net income (loss), earnings (loss) per share, deferred revenue, and cash flow from operations [removed: will be] [added: have been] impacted as more revenue is recognized ratably rather than upfront and as new offerings bring a wider variety of price points.

[removed: Our] [added: *Our] strategy to develop and introduce new products and services exposes us to risks such as limited customer acceptance, costs related to product defects, and large expenditures, each of which may not result in additional net revenue or could result in decreased net [removed: revenue.][added: revenue.*]

[added: If we are not able to meet customer requirements, either with respect to our software or] hardware products or the manner in which we provide such products, or if we are not able to adapt our business model to meet our customers' requirements, our business, financial condition or results of operations may be adversely impacted.

At times, sales of licenses of our AutoCAD and AutoCAD LT or individual Autodesk flagship products have decreased without a corresponding increase in industry collections or cloud-based [removed: services revenue or without purchases of customer seats to our industry collections.]

Also, adoption of our cloud and mobile computing offerings and changes in the delivery of our software and services to our customers, such as [removed: desktop] [added: product] subscription [removed: (formerly referred to as rental)] offerings, will change the way in which we recognize revenue relating to our software and services, with a potential negative impact on our financial performance.

[removed: Revenue] [added: *Revenue] from our offerings may be difficult to predict during our business model [removed: transition.][added: transition.*]

This also has frozen the growth of our maintenance [removed: subscription] revenue because there will be no further opportunities to attach maintenance licensing.

[removed: We] [added: As a result, we] expect our maintenance [removed: subscription] revenue to decline over time, but it may decline more quickly than anticipated due to low maintenance renewals.

At the same time, our [removed: new model] subscription revenue may not grow as rapidly as anticipated.

Our [removed: new model] subscription pricing allows customers to use our offerings at a lower initial cost when compared to the sale of a perpetual license.

Although our [removed: new model] subscriptions are designed to increase the number of customers who purchase offerings and create a recurring revenue stream that is more predictable over time, it creates risks related to the timing of revenue recognition and expected reductions in cash flows in the near term.

[removed: We] [added: *We] may not be able to predict subscription renewal rates and their impact on our future revenue and operating [removed: results.][added: results.*]

[removed: We] [added: *We] are dependent on international revenue and operations, exposing us to significant regulatory, global economic, intellectual property, collections, currency exchange rate, taxation, political instability and other risks, which could adversely impact our financial [removed: results.][added: results.*]

International net revenue represented [removed: 63%] [added: 64%] and [removed: 68%] [added: 63%] of our net revenue in fiscal [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

| • | [removed: potential changes in tax laws, including possible] U.S. and foreign tax law changes [removed: that, if enacted, could significantly impact] [added: impacting] how multinational companies are taxed; |

[removed: Actions] [added: *Actions] that we are taking to restructure our business in alignment with our [removed: business model transition strategy may be costly and] [added: strategic priorities] may not be as effective as [removed: anticipated.][added: anticipated.*]

As a result of these actions, we [removed: have incurred and may] [added: will] incur additional costs in the short term that [added: will] have the effect of reducing our [added: GAAP] operating margins.

If we are unable to [removed: realize the expected outcomes from the] [added: successfully complete our] restructuring efforts, our business and operating results may be harmed.

[removed: Our] [added: *Our] software is highly complex and may contain undetected errors, defects or vulnerabilities, each of which could harm our business and financial [removed: performance.][added: performance.*]

[removed: Existing] [added: *Existing] and increased competition and rapidly evolving technological changes may reduce our revenue and [removed: profits.][added: profits.*]

[removed: This shift further lowers barriers] to entry and poses a disruptive challenge to established software companies.

[removed: We] [added: *We] are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash [removed: flows.][added: flows.*]

Because we conduct a substantial portion of our business outside the [removed: U.S. and we make certain business and resource decisions based on assumptions about foreign currency,] [added: U.S.,] we face exposure to adverse movements in foreign currency exchange rates.

[removed: A breach of security in our products, services or computer systems] [added: *Security incidents] may compromise the integrity of our [removed: products] or [added: our customers’ products,] services, [added: data or intellectual property,] harm our reputation, [added: damage our competitiveness,] create additional liability and adversely impact our financial [removed: results.][added: results.*]

The risk of a security [removed: breach or disruption,] [added: incident,] particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

These threats include but are not limited to identity theft, unauthorized access, DNS attacks, wireless network attacks, viruses and worms, advanced persistent threat (APT), application centric attacks, peer-to-peer attacks, phishing, [added: malicious file uploads,] backdoor trojans and distributed denial of service (DDoS) attacks.

Any of the foregoing could attack our [removed: products, services] [added: systems, products] or [removed: computer systems.][added: services.]

Despite [removed: significant] efforts to create security barriers to such programs, it is virtually impossible for us to entirely eliminate this risk.

The impact of [removed: cyber attacks] [added: security incidents] could disrupt the proper functioning of our [removed: software] [added: systems,] products or [removed: services,] [added: services;] cause errors in the output of our customers' [removed: work,] [added: work;] allow unauthorized access to sensitive, [added: data or intellectual property, including] proprietary or confidential information of ours or our [removed: customers, and] [added: customers; or] other destructive outcomes.

If any of the foregoing were to occur, our reputation may suffer, [added: our competitive position may be diminished,] customers may stop buying our products [removed: or] [added: and] services, we could face lawsuits and potential liability, and our financial performance could be negatively impacted.

[removed: Changes in laws or regulations related to the Internet, local data storage or related to] [added: *Increasing regulatory focus on] privacy [added: issues] and [removed: data security concerns] [added: expanding laws] may impact our business or expose us to increased [removed: liability.][added: liability.*]

[removed: In addition,] [added: GDPR, other] new laws and [removed: industry] self-regulatory codes [removed: have been enacted and more are being considered that] may affect our ability to reach current and prospective customers, to understand how our products and services are being used, to respond to customer requests allowed under the laws, and to implement our new business models effectively.

Governments, [added: the plaintiffs’ bar,] privacy advocates and [removed: class action attorneys are increasingly scrutinizing] [added: customers have increased their focus on] how companies collect, process, use, store, share [removed: or] [added: and] transmit personal data.

[removed: We] [added: *We] rely on [removed: third-parties to provide us with a number of operational services, including hosting and delivery and certain of our customer services and other operations and processing of data;] [added: third-party services;] any interruption or delay in service from these third [removed: parties, breaches of security or privacy] [added: parties] could expose us to liability, harm our [removed: reputation] [added: reputation, damage our competitiveness] and adversely impact our financial [removed: performance.][added: performance.*]

[removed: As we gather customer data and host certain customer data in third-party facilities, a] [added: Any third party] security [removed: breach] [added: incident] could compromise the integrity or availability or result in the theft of [removed: customer] data.

Our overall performance depends largely upon domestic and worldwide economic and political conditions.

The United States and other international economies have experienced cyclical downturns from time to time in which economic activity was impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, decreased government spending, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy.

These economic conditions can occur abruptly.

Our customers include government entities, including the U.S. federal government, and if spending cuts impede the ability of governments to purchase our products and services, our revenue could decline.

These trends have increased levels of political and economic unpredictability globally, and may increase the volatility of global financial markets; the impact of such developments on the global economy remains uncertain.

Political instability or adverse political developments in any of the countries in which we do business could harm our business, results of operations and financial condition.

A financial sector credit crisis could impair credit availability and the financial stability of our customers, including our distribution partners and channels.

A disruption in the financial markets may also have an effect on our derivative counter-parties and could also impair our banking partners, on which we rely for operating cash management.

Any of

*2018 Form 10-K 14*

these events could harm our business, results of operations and financial condition.

On June 15, 2017, we commenced a program to incentivize maintenance plan customers to move to subscription plan offerings.

Through this program we offer discounts to those maintenance plan customers that move to subscription plan offerings, while at the same time increasing maintenance plan pricing over time for customers that remain on maintenance.


*2018 Form 10-K 15*

services revenue or without purchases of customer seats to our industry collections.

On June 15, 2017, we commenced a program to incentivize maintenance plan customers to move to subscription plan offerings.

On June 15, 2017, we commenced a program to incentivize maintenance plan customers to move to subscription plan offerings.

During the fourth quarter of fiscal 2018, we commenced a world-wide restructuring plan to support the Company's strategic priorities of completing the subscription transition; digitizing the Company; and re-imagining manufacturing, construction, and production.

Through the restructuring, we seek to reduce our investment in areas not aligned with our strategic priorities, including in areas related to research and development and go-to-market activities.

At the same time, we plan to further invest in strategic priority areas related to as digital infrastructure, customer success, and construction.


*2018 Form 10-K 16*

We may encounter challenges in the execution of these efforts, and these challenges could impact our financial results.


*2018 Form 10-K 17*

*We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls*.

Our offerings are subject to U.S. export controls and economic sanctions laws and regulations that prohibit the shipment of certain products and services without the required export authorizations or export to locations, governments, and persons targeted by U.S. sanctions.

While we have processes in place to prevent our offerings from being exported in violation of these laws, including obtaining authorizations as appropriate and screening against U.S. Government and international lists of restricted and prohibited persons, we cannot guarantee that these processes will prevent all violations of export control and sanctions laws.

We also note that if our channel partners fail to obtain appropriate import, export or re-export licenses or permits, we may also be adversely affected, through reputational harm as well as other negative consequences including government investigations and penalties.

We presently incorporate export control and sanctions compliance requirements in our channel partner agreements.

Complying with export control and sanctions regulations for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities.

Violations of U.S. sanctions or export control laws can result in fines or penalties.

While we have extensive compliance procedures in place, licensing of our product offerings may have been made in potential violation of the export control and economic sanctions laws.

We filed a Voluntary Self Disclosure in December 2016 with the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) with respect to the sale of certain licenses in an aggregate amount of less than $700,000.

We are currently waiting for OFAC to complete its review of this matter.

We could be subject to monetary penalties or other sanctions by OFAC in connection with its review of this issue.

This shift further lowers barriers


*2018 Form 10-K 18*

As our business has expanded globally, we have increasingly become subject to risks arising from adverse changes in global economic and political conditions.

The past several years were characterized by mixed global economic conditions, volatile credit markets, volatile exchange rates, relatively high unemployment, increased government deficit spending and debt levels, uncertainty about certain governments' abilities to repay such debt or to address certain fiscal issues, and volatility in many financial instrument markets.

This could result in reductions in sales of our products and services, longer sales cycles and slower adoption of our technologies.

Over the past several years, many of our customers have experienced tighter credit, negative financial news and weaker financial performance of their businesses and have reduced their workforces, thereby reducing the number of licenses and the number of maintenance contracts they purchase from us.

Current debt balances of many countries without proportionate increases in revenues have caused many countries to reduce spending and in some cases have forced those countries to restructure their debt in an effort to avoid defaulting under those obligations.

This has not only impacted those countries but others that are holders of such debt and those assisting in such restructuring.

These actions may impact, and over the past several years have negatively impacted, our business, financial results and financial condition.

Moreover, our financial performance may be negatively impacted by:

| | |

| --- | --- |

| • | lack of credit available to, and the insolvency of, key channel partners, which may impair our distribution channels and cash flows; |

| • | counterparty failures negatively impacting our treasury functions, including timely access to our cash reserves and third-party fulfillment of hedging transactions; |

| • | counterparty failures negatively affecting our insured risks; |

| • | inability of banks to honor our existing line of credit, which could increase our borrowing expenses or eliminate our ability to obtain short-term financing; and |

| • | decreased borrowing and spending by our end users on small and large projects in the industries we serve, thereby reducing demand for our products. |

In addition, in June 2016, voters in the United Kingdom approved an advisory referendum to withdraw from the European Union (commonly referred to as “Brexit”).

The Brexit vote and the perceptions as to the impact of the withdrawal of the United Kingdom from the European Union may adversely affect business activity, political stability and economic conditions in the United Kingdom, the European Union and elsewhere.

2017 Form 10-K 14

It is uncertain at this time how the new U.S. President, Administration and Congress will affect our business, including potentially through increased import tariffs and other influences on U.S. trade relations with other countries, such as Mexico and China.

The imposition of tariffs or other trade barriers could increase our costs and reduce the competitiveness of our offerings in certain markets.

In addition, other countries may change their own policies on business and foreign investment in companies in their respective countries.

Uncertainty about current and future economic and political conditions on us, our customers and partners, makes it difficult for us to forecast operating results and to make decisions about future investments.

Further macro-economic degradation, a slower economic recovery in industries important to our business or adverse exchange rate movements, may adversely affect our business, financial results and financial condition.

We are also developing consumer products for digital art, personal design and creativity, and home design.

If we are not able to meet customer requirements, either with respect to our software or

2017 Form 10-K 15

Our entry into 3D printing presents many of the risks described above concerning developing and introducing new products as well as new risks for us.

The manufacturing and 3D printing markets are highly competitive and some of our competitors have experience and resources superior to ours.

We have limited experience designing, developing, and selling hardware products and no experience developing and selling printers.

The market for 3D printing is nascent and may not develop as rapidly as we expect.

Our sale of 3D printers could subject us to product and other liability that we do not currently face.

If any of these risks materialize, it could adversely affect our business and financial performance as well as our reputation and brand.

2017 Form 10-K 16

Further, a significant portion of our earnings from our international operations may not be freely transferable to the U.S. due to remittance restrictions, adverse tax consequences or other factors.

2017 Form 10-K 17

During the first quarter of fiscal 2017, we commenced a company-wide restructuring plan to accelerate the Company’s move to the cloud and its transition to a subscription-based business model.

Through the restructuring, we sought to reduce expenses, streamline the organization, and reallocate resources to align more closely with the Company’s needs going forward.

For example, the June 23, 2016 announcement of Brexit caused significant volatility in global stock markets and currency exchange rate

2017 Form 10-K 18

fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we conduct business.

[removed: The] [added: *The] discussion in our MD&A and elsewhere in this Form 10-K contains trend analyses and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Forward-looking statements are any statements that look to future events and consist of, among other things, our business strategies, [added: including those discussed in “Strategy” and “Overview of Fiscal 2018” below,] future [added: net revenue, operating expenses, recurring revenue, annualized recurring revenue, annualized revenue per subscription, other future] financial results [removed: (including by] [added: (by] product type and geography) and subscriptions, the effectiveness of our [added: restructuring efforts, the effectiveness of our] efforts to successfully manage transitions to new business models and markets, our expectations regarding the continued transition of our business model, [added: expectations for] our [added: maintenance plan and subscription plan subscriptions, our] ability to increase our subscription base, expected market trends, including the growth of cloud and mobile computing, the effect of unemployment, the availability of credit, our expectations for our restructuring, the effects of [removed: mixed] global economic conditions, the effects of revenue recognition, [added: the effects of recently issued accounting standards,] expected trends in certain financial metrics, including expenses, the impact of acquisitions and investment activities, expectations regarding our cash needs, the effects of fluctuations in exchange rates and our hedging activities on our financial results, our ability to successfully expand adoption of our products, our ability to gain market acceptance of new businesses and sales initiatives, [removed: and] the impact of economic volatility and geopolitical activities in certain countries, particularly emerging economy countries, the timing and amount of purchases under our [removed: newly announced] stock buy-back plan, and the effects of potential non-cash charges on our financial results and the resulting effect on our financial results.

As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of a number of factors, including those set forth [removed: above] [added: below] in [added: Part II,] Item 1A, “Risk Factors,” and in our other reports filed with the U.S. Securities and Exchange Commission.

We assume no obligation to update the forward-looking statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by [removed: law.][added: law.*]

[removed: Strategy][added: Strategy]

If [removed: you've] [added: you have] ever driven a high-performance car, admired a towering skyscraper, used a smartphone, or watched a great film, chances are [removed: you've] [added: you have] experienced what millions of Autodesk customers are doing with our software.

To address this [removed: transition] [added: transition,] we have accelerated our move to the cloud and mobile devices and are offering more flexible licensing.

Our product subscriptions [removed: presently] [added: currently] represent a hybrid of desktop software and [removed: cloud-based] [added: cloud] functionality, which provides a device-independent, collaborative design workflow for designers and their stakeholders.

Our [removed: cloud service] [added: SaaS] offerings, for example, BIM 360, Shotgun, [removed: Fusion 360,] [added: Fusion,] and AutoCAD 360 Pro, provide tools, including mobile and social capabilities, to [removed: help] streamline design, collaboration, [added: building] and [added: manufacturing and] data management processes.

Industry collections [removed: allow] [added: provide our customers with increased] access to a [removed: broad set] [added: broader selection] of [added: Autodesk] products and services that exceeds those previously available in suites - simplifying the customer ability to get access to a complete set of tools for their industry.

We now offer subscriptions for individual products and industry collections, cloud service offerings, and flexible enterprise business agreements [removed: ("new model subscription offerings").][added: (collectively referred to as "subscription plan").]

These [added: subscription plan] offerings are designed to give our customers more flexibility with how they use our products and service offerings and to attract a broader range of customers, such as project-based users and small businesses.

With the discontinuation of the sale of most perpetual licenses, we have [removed: accelerated our transition] [added: transitioned] away from selling a mix of perpetual licenses and term-based product subscriptions toward a single subscription model.

[removed: ][added: ]

During the [added: first three years of the] transition, revenue, margins, EPS, deferred revenue and cash flow from operations have been [removed: and will be] impacted as more revenue is recognized ratably rather than upfront and as [removed: new product] subscription [added: plan] offerings generally have a lower initial purchase price.

[removed: Annualized] [added: As we progress through the current stage of the business model transition, annualized] recurring revenue [removed: ("ARR") and] [added: ("ARR"),] growth of [added: billings, and total] subscriptions better reflect business [removed: momentum and provide additional transparency into the transition.][added: momentum.]

To further analyze progress, we disaggregate our growth [removed: in these metrics] between the original maintenance model [removed: ("maintenance")] [added: ("maintenance plan")] and the [removed: new model] subscription [removed: offerings.][added: plan model.]

Maintenance [added: plan] subscriptions peaked in the fourth quarter of our fiscal [removed: 2016,] [added: 2016 as we discontinued selling new maintenance plan subscriptions in fiscal 2017,] and we expect them to decline slowly over [removed: time.][added: time as maintenance plan customers continue to convert to our subscription plans.]

[removed: During the fiscal year ended January 31, 2017, 2016, and 2015, our] [added: Our] indirect [removed: channels, which] [added: channels] include value added resellers, direct market resellers, distributors, computer manufacturers, and other software [removed: developers, were responsible for 72%, 79%, and 83% of our overall revenue, respectively.][added: developers.]

[removed: During the same periods, our] [added: Our] direct [removed: channels, which] [added: channels] include [added: internal] sales resources dedicated to selling in our largest accounts, our highly specialized products, and business transacted through our online Autodesk branded [removed: store, were responsible for 28%, 21%, and 17% of our overall revenue, respectively.][added: store.]

We anticipate that our channel mix will continue to [removed: change, particularly] [added: change] as we scale our [removed: digitally transacted] online Autodesk branded store business and our largest accounts shift towards direct-only business models.

[removed: Importantly,] [added: However,] we expect our indirect channel will continue to transact and support the majority of our [added: customers and] revenue as we move beyond the business model transition.

[removed: We] [added: For example, we] have [removed: also created] [added: established] the Autodesk Forge program to support innovators that build solutions to facilitate the development of a single connected ecosystem for the future of how things are designed, made, and [removed: used.][added: used as well as support ideas that push the boundaries of 3D printing.]

In addition to the competitive advantages afforded by our technology, our large global network of distributors, resellers, third-party developers, customers, educational institutions, educators, and students is a key competitive [removed: advantage.][added: advantage which has been cultivated over an extensive period of time.]

We offer free educational [removed: subscriptions] [added: licenses] of Autodesk software worldwide to students, educators, and [added: accredited] educational institutions.

[removed: Through Autodesk Design Academy, we provide] secondary and postsecondary school markets hundreds of standards-aligned class projects to support design-based disciplines in Science, Technology, Engineering, Digital Arts, and Math (STEAM) while using Autodesk's professional-grade 3D design, engineering and entertainment software used in industry.

We also have made Autodesk Design Academy curricula available on iTunes [removed: U.][added: U and Udemy.]

Our intention is to make Autodesk software ubiquitous and the design [added: and making] software of choice for those poised to become the next generation of professional users.

[removed: Critical] [added: Critical] Accounting Policies and [removed: Estimates][added: Estimates]

[added: *Revenue Recognition.*] We recognize 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 elements arrangements involving non-software elements, including cloud subscription services, our revenue recognition policy is based upon the accounting guidance contained in Accounting Standards Codification ("ASC") 605, [removed: Revenue Recognition.][added: *Revenue Recognition*.]

[removed: To establish BESP for those elements for which] neither VSOE nor TPE are available, we perform a quantitative analysis of pricing data points for historical standalone transactions involving such elements for a twelve-month period.

[added: *Marketable Securities and Privately Held Company Investments.*] As described in Note 2, “Financial Instruments,” in the Notes to the Consolidated Financial Statements, our investments in marketable securities are measured at the end of each reporting period and reported at fair value.

In determining the fair value of our [removed: investments] [added: investments,] we are sometimes required to use various alternative valuation techniques.

[added: *Business Combinations.*] We allocate the fair value of the consideration transferred to the assets and liabilities acquired, as well as to in-process research and development based on their estimated fair values at the acquisition date.

[added: *Realizability of Long-Lived Assets.*] We assess the realizability of our long-lived assets and related intangible assets, other than goodwill, [removed: annually during the fourth fiscal quarter,] [added: quarterly,] or sooner should events or changes in circumstances indicate the carrying values of such assets may not be recoverable.

[added: *Income Taxes.*] We account for income taxes under the asset and liability approach.

We recognize the tax benefit for an uncertain tax position when it meets a more [removed: likely than not threshold.]

Considering this negative evidence and the absence of sufficient positive objective evidence that we would generate sufficient taxable income in the U.S. to realize the deferred tax assets, we determined that it was more likely than not [added: that the Company would not realize the U.S. federal and state deferred tax assets and recorded a full valuation allowance.]

[added: Considering this negative evidence and the absence of sufficient positive objective evidence] that [added: we would generate sufficient taxable income in] the [added: U.S. to realize the deferred tax assets, we determined that it was more likely than not that the] Company would not realize U.S. federal and state deferred tax assets and recorded a valuation allowance on our federal and state deferred tax assets.

*2018 Form 10-K 35*

On June 15, 2017, we commenced a program to incentivize maintenance plan customers to move to subscription plan offerings.

Through this program we offer discounts to those maintenance customers that move to a subscription plan, while at the same time increasing maintenance plan pricing over time for customers that remain on maintenance.

To provide more meaningful information as to the performance of different categories of product and services, we have changed our presentation of revenue and cost of revenue on our Condensed Consolidated Statements of Operations effective the first quarter of fiscal 2018.

See Note 1, "Business and Summary of Significant Accounting Policies," for additional information.

In order to support our strategic priorities of completing the subscription transition, digitizing the Company, and re-imagining manufacturing, construction, and production, we commenced a world-wide restructuring plan in the fourth quarter of fiscal 2018.

Through the restructuring, we seek to reduce our investments in areas not aligned with our strategic priorities, including in areas related to research and development and go-to-market activities.

At the same time, we plan to further invest in strategic priority areas related to digital infrastructure, customer success, and construction.

By re-balancing resources to better align with our strategic priorities, we are positioning ourselves to meet our long-term goals, while keeping non-GAAP spend flat in fiscal 2019.

We anticipate incurring pre-tax restructuring charges of $135 million to $149 million, substantially all of which would result in cash expenditures, $124 million to $137 million of which would be for one-time employee termination benefits, and $11 million to $12 million of which would be for facilities-related and other costs.

If we are unable to successfully complete our reorganizational efforts we may need to undertake additional restructuring efforts, and our business and operating results may be harmed.


*2018 Form 10-K 36*

The following chart shows our split between indirect and direct


We inspire and support beginners with Tinkercad, a simple online 3D design and 3D printing tool.

Through Autodesk Design Academy, we provide


*2018 Form 10-K 37*

To establish BESP for those elements for which


*2018 Form 10-K 38*


*2018 Form 10-K 39*


*2018 Form 10-K 40*

likely than not threshold.

We continue to have a full valuation allowance against our U.S. deferred tax assets in fiscal 2018.

*Legal Contingencies*.

We also recognize accelerated depreciation related to assets at the time we commit to a plan to abandon.


*2018 Form 10-K 41*

| • | Total ARR increased 25 percent as of January 31, 2018, as compared to the end of fiscal 2017. |

| • | Total subscriptions increased 20 percent to $3.72 million. |

| • | The base of both subscription plan ARR and subscriptions surpassed the base of maintenance plan ARR and subscriptions. |

| • | Total spend (cost of revenue + operating expenses) increased 1 percent. |

| • | Total deferred revenue (short term + long term deferred revenue) increased 9 percent. |

During the first three years of the transition, revenue, margins, EPS, deferred revenue and cash flow from operations were impacted as more revenue is recognized ratably rather than upfront and as product subscription plan offerings generally have a lower initial purchase price.

Our determination and presentation may differ from that of other companies.


As a result of this shift and various other factors described in Note 13, "Segments" in the Notes to our Consolidated Financial Statements, we have

2017 Form 10-K 36

reassessed the way we allocate resources and evaluate financial performance and now operate as a single operating segment.

As we progress through the business model transition, reported revenue is less relevant to measure the success of the business as perpetual license sales have been discontinued in favor of subscription offerings, which have considerably lower upfront prices.

For example, we have established the Autodesk Spark program to support ideas that push the boundaries of 3D printing and nurture the companies that will advance innovations within 3D printing hardware and software.

2017 Form 10-K 37

Revenue Recognition.

2017 Form 10-K 38

Marketable Securities and Privately Held Company Investments.

Business Combinations.

2017 Form 10-K 39

Realizability of Long-Lived Assets.

Income Taxes.

2017 Form 10-K 40

We continue to have a full valuation allowance against our U.S. deferred tax assets in fiscal 2017 and increased the amount of the valuation allowance to include deferred tax assets generated in fiscal 2017, including deferred tax assets that were established as a result of the adoption of ASU 2016-9 in the second quarter of fiscal 2017.

Legal Contingencies.

In February 2016, the Board of Directors approved a world-wide restructuring plan (“Fiscal 2017 Plan”) in order to re-balance staffing levels and reduce operating expenses to better align them with the evolving needs of the Company's business.

Ongoing termination benefits arrangements are recognized as a liability at estimated fair value when the amount of such benefits becomes estimable and payment is probable.

2017 Form 10-K 41

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| | | | $ | | | | % | | | | | | | | | | | | | |

During fiscal 2017, net revenue decreased 19%, as compared to the prior fiscal year, primarily due to a 40% decrease in license and other revenue resulting from the discontinuation of the sale of most individual perpetual products as of February 1, 2016, and of new perpetual licenses of suites effective August 1, 2016.

Income from operations decreased in fiscal 2017 due to a $473.1 million decrease in revenue (as discussed above) and a $56.6 million increase in our operating expenses as compared to fiscal 2016.

Our operating margin decreased to (25)% for fiscal 2017 from 0% for fiscal 2016.

The increase in operating expenses between fiscal 2017 and 2016 was driven by restructuring charges and other facility exit costs.

Further discussion regarding the cost of revenue and operating expense activities are discussed below under the heading “Results of Operations.”

2017 Form 10-K 42

Recurring revenue represents the revenue for the period from our maintenance plans and revenue from our new model subscription offerings, including portions of revenue allocated to license and other revenue for those offerings.

It excludes subscription revenue related to education offerings, consumer product offerings, select Creative Finishing product offerings, Autodesk Buzzsaw, Autodesk Constructware, and third party products.

| | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | $ | | | | % | | | | $ | | | | % | | | | | | | | | | | |

| Subscription revenue | $ | 1,290.0 | | | $ | 12.8 | | | 1 | % | | $ | 1,277.2 | | | $ | 106.4 | | | 9 | % | | $ | 1,170.8 | |

| Add: License and other revenue from new model subscription offerings (1) | 241.4 | | | | 140.3 | | | | 139 | % | | 101.1 | | | | 69.1 | | | | 216 | % | | 32.0 | | |

| Less: other adjustments (2) | (31.0 | | ) | | 0.2 | | | | (1 | )% | | (31.2 | | ) | | 16.2 | | | | (34 | )% | | (47.4 | | ) |

| Total recurring revenue (3) | $ | 1,500.4 | | | $ | 153.3 | | | 11 | % | | $ | 1,347.1 | | | $ | 191.7 | | | 17 | % | | $ | 1,155.4 | |

___________________

| (1) | Includes the portion of revenue for new model subscription offerings allocated to license & other revenue within our Condensed Consolidated Statements of Operations. |

| (2) | Other adjustments include subscription revenue related to select Creative Finishing product offerings, Autodesk Buzzsaw, Autodesk Constructware, education offerings, and third party products which are excluded from recurring revenue. |

[removed: Foreign] [added: Foreign] currency exchange [removed: risk][added: risk]

As of January 31, [removed: 2017] [added: 2018,] and [removed: 2016,] [added: 2017,] we had open cash flow and balance sheet hedge contracts with future settlements within one to twelve months.

We do not enter into [removed: any] foreign exchange derivative instruments for trading or speculative purposes.

The notional amount of our option and forward contracts was [removed: $640.0] [added: $949.5] million and [removed: $374.0] [added: $640.0] million at January 31, [removed: 2017] [added: 2018,] and [removed: 2016,] [added: 2017,] respectively.

A sensitivity analysis performed on our hedging portfolio as of January 31, [removed: 2017] [added: 2018,] indicated that a hypothetical 10% appreciation of the U.S. dollar from its value at January 31, [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] would increase the fair value of our foreign currency contracts by [removed: $60.9] [added: $57.9] million and [removed: $33.3] [added: $60.9] million, respectively.

A hypothetical 10% depreciation of the dollar from its value at January 31, [removed: 2017] [added: 2018,] and [removed: 2016] [added: 2017] would decrease the fair value of our foreign currency contracts by [removed: $32.5] [added: $83.2] million and [removed: $25.6] [added: $32.5] million, respectively.

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

Interest rate movements affect both the interest income we earn on our [removed: short term] [added: short-term] investments and the market value of certain longer term securities.

At January 31, [removed: 2017,] [added: 2018,] we had [removed: $1,898.9] [added: $1,078.6] million of cash equivalents and marketable securities, including [removed: $686.8] [added: $245.2] million classified as short-term marketable securities and [removed: $306.2] [added: $190.8] million classified as long-term marketable securities.

If interest rates were to move up by 50 or 100 basis points over a twelve month period, the market value change of our marketable securities would have an unrealized gain or loss of [removed: $2.9] [added: $1.4] million and [removed: $5.6] [added: $2.8] million, respectively.

[removed: Other] [added: Other] Market [removed: Risk][added: Risk]

[removed: ][added: ]

*2018 Form 10-K 61*

2017 Form 10-K 62

[removed: Note:] [added: Note:] A glossary of terms used in this Form 10-K appears at the end of this Item [removed: 1.][added: 1.]

[removed: GENERAL][added: GENERAL]

We serve customers in [removed: the] architecture, engineering and construction; product design and manufacturing; and digital media and entertainment industries.

[removed: Customers] [added: Our customers] are able to [removed: design and create better things] [added: design, fabricate, manufacture] and [removed: processes] [added: build anything] by visualizing, simulating and analyzing real-world performance early in the design process.

These capabilities allow our customers to foster innovation, optimize [removed: and improve] their designs, [added: streamline their manufacturing and construction processes,] save time and money, improve quality, communicate plans, and collaborate with others.

[removed: Segments][added: *Segments*]

[removed: Accordingly, our CODM now] [added: The Company's chief operating decision maker ("CODM")] allocates resources and assesses the operating performance of [removed: Autodesk] [added: the Company] as a whole.

[removed: ][added: ]

A summary of our revenue by geographic area and product family is found in Note 13, [removed: “Segments,”] [added: “Segment, Geographic and Product Family Information,”] in the Notes to our Consolidated Financial Statements.

[removed: Corporate Information][added: *Corporate Information*]

[removed: PRODUCTS][added: PRODUCTS]

Our architecture, engineering and construction products improve the way building, [removed: civil] infrastructure, [removed: process plant] and [removed: construction] [added: industrial] projects are designed, built, and [removed: used.][added: operated.]

Our product development and manufacturing software provides manufacturers in automotive, transportation, industrial machinery, consumer products and building [removed: products] [added: product industries] with comprehensive digital [removed: engineering solutions that bring together data from all phases of the product development] [added: design, engineering, manufacturing] and production [removed: life cycle, creating a single digital model.][added: solutions.]

| [removed: •] [added: *•*] | [removed: AutoCAD] [added: *AutoCAD*] |

[removed: AutoCAD software provides digital tools that can be] used independently and in conjunction with other specific applications in fields ranging from construction and civil engineering to manufacturing and plant design.

| [removed: •] [added: *•*] | [removed: AutoCAD LT] [added: *AutoCAD LT*] |

| [removed: •] [added: *•*] | [removed: Industry Collections] [added: *Industry Collections*] |

[removed: Launched in August 2016,] Autodesk's Industry [removed: Collections, our newest subscription offerings,] [added: Collections] provide our customers with increased access to a broader selection of Autodesk products, greater value, more flexibility, and a simpler way to subscribe and manage Autodesk subscriptions.

| [removed: •] [added: *•*] | [removed: 3ds Max] [added: *3ds Max*] |

| [removed: •] [added: *•*] | [removed: Maya] [added: *Maya*] |

| [removed: •] [added: *•*] | [removed: Revit] [added: *Revit*] |

[removed: Using the information-rich models created with Revit, architects, engineers,] and construction firms can collaborate to make better-informed decisions earlier in the design process to deliver projects with greater efficiency.

| [removed: •] [added: *•*] | [removed: Inventor] [added: *Inventor*] |

| [removed: •] [added: *•*] | [removed: AutoCAD] [added: *AutoCAD] Civil [removed: 3D] [added: 3D*] |

| [removed: •] [added: *•*] | [removed: CAM Solutions] [added: *CAM Solutions*] |

Our computer-aided manufacturing ("CAM") [removed: software, obtained via our Delcam acquisition,] [added: software] offers industry-leading solutions for Computer Numeric Control ("CNC") machining, inspection, and [removed: modelling] [added: modeling] for manufacturing.

| [removed: •] [added: *•*] | [removed: Fusion 360] [added: *Fusion 360*] |

| [removed: •] [added: *•*] | [removed: BIM 360] [added: *BIM 360*] |

BIM 360 construction management [added: cloud-based] software enables almost anytime, anywhere access to project data throughout the building construction lifecycle.

| [removed: •] [added: *•*] | [removed: Shotgun] [added: *Shotgun*] |

[removed: PRODUCT] [added: PRODUCT] DEVELOPMENT AND [removed: INTRODUCTION][added: INTRODUCTION]

In fiscal [removed: 2017,] [added: 2018,] we continued to successfully implement a strategic transition of our business model announced in fiscal 2014.

[removed: We now offer] [added: *Subscription Plans*—Comprises our] term-based product [removed: subscriptions for individual products and industry collections,] [added: subscriptions,] cloud service offerings, and [removed: flexible] enterprise business agreements [removed: ("new model subscription offerings").][added: (EBAs).]

[removed: These] [added: Subscription plan] offerings are designed to give our customers increased flexibility with how they use our products and service offerings and to attract a broader range of customers such as project-based users and small businesses.

Research and development expenditures were [removed: $766.1] [added: $755.5] million or [removed: 38%] [added: 37%] of fiscal [removed: 2017] [added: 2018] net revenue, [removed: $790.0] [added: $766.1] million or [removed: 32%] [added: 38%] of fiscal [removed: 2016] [added: 2017] net revenue and [removed: $725.2] [added: $790.0] million or [removed: 29%] [added: 32%] of fiscal [removed: 2015] [added: 2016] net revenue.

We believe that our ability to conduct research and development at various locations throughout the world allows us to optimize [added: product development, lower costs, and integrate local market knowledge into our development activities.]

[removed: MARKETING] [added: MARKETING] AND [removed: SALES][added: SALES]

To a lesser extent we also transact directly with our enterprise and named account customers and with customers through our [removed: digitally transacted] online Autodesk branded store.

We have a network of approximately [removed: 1,700] [added: 1,600] resellers and distributors worldwide.

For fiscal [removed: 2017,] [added: 2018,] approximately [removed: 72%] [added: 70%] of our revenue was derived from indirect channel sales through distributors and [removed: resellers, and we expect that the majority of our revenue will continue to be derived from indirect channel sales in the future.][added: resellers.]

As such, Autodesk has one segment manager (the CODM), and one operating segment.

These technologies bring together data from all phases of the product development and production life cycle, creating a digital pipeline that supports greater productivity and accuracy through process automation.

AutoCAD software provides digital tools that can be

*2018 Form 10-K 5*

Using the information-rich models created with Revit, architects, engineers,


*2018 Form 10-K 6*

Additionally, on June 15, 2017, we commenced a program to incentivize maintenance plan customers to move to subscription plan offerings.

Through this program we offer discounts to those maintenance plan customers that move to subscription plan offerings, while at the same time increasing maintenance plan pricing over time for customers that remain on maintenance plans.

Subscriptions represent a combined hybrid offering of desktop software and cloud functionality which provides a device-independent, collaborative design workflow for designers and their stakeholders.

For example, in fiscal 2018, we continued and expanded our investments in construction.

We continued to make investments in the traditional data creation tools to support the design and pre-construction phases, while expanding our investment in the areas of site execution with process and project management cloud-based tools.

Recognizing the value of data continuity across the construction lifecycle of design, building and operations, we made investments in the handover and operations phase of the project through our cloud-based tools.

To connect the phases of construction upstream with design, we invested in and announced our cloud-based project delivery platform that allows individuals, teams and projects to be connected across all phases in a common data platform.

We anticipate ongoing investments in construction that support pre-construction, site execution as well as the handover phase of the project and will continue to invest in connecting workflows and data across the ecosystem of the project.


*2018 Form 10-K 7*


*2018 Form 10-K 8*

Under our subscription plan, customers can use our software anytime, anywhere, and get access to the latest updates to previous versions through term-based product subscriptions, cloud service offerings, and enterprise business agreements.

We inspire and support beginners with Tinkercad, a simple online 3D design and 3D printing tool.


*2018 Form 10-K 9*


*2018 Form 10-K 10*

Our combined hybrid offerings include both desktop software and cloud functionality.


*2018 Form 10-K 11*

DEFERRED REVENUE AND UNBILLED DEFERRED REVENUE

Our deferred revenue balance at January 31, 2018 was $1,955.1 million and primarily relates to subscription and maintenance agreements invoiced for which the revenue has not yet been recognized but will be recognized as revenue ratably over the life of the contracts.

The term of our subscription contracts is typically between one and three years.

We define unbilled deferred revenue as contractually stated or committed orders under multi-year billing plans for subscription, services, license and maintenance for which the associated deferred revenue has not been recognized and the customer has not been invoiced.

Unbilled deferred revenue is not included on our Condensed Consolidated Balance Sheet until invoiced to the customer.

| | | | |

| --- | --- | --- | --- |

| | | | |

| | Fiscal Year Ended | | |

| *(in millions)* | January 31, 2018 | | |

| Deferred revenue | $ | 1,955.1 | |

| Unbilled deferred revenue (1) | 326.4 | | |

Prior to the third quarter of fiscal 2017, we had four operating segments: Architecture, Engineering, and Construction (“AEC”), Manufacturing (“MFG”), Platform Solutions and Emerging Business (“PSEB”), and Media and Entertainment (“M&E”).

As a result of our business model transition, there have been a number of changes in the business including the shift from selling perpetual licenses to subscription-based offerings and organizational changes in how the business is managed including a restructuring announced in the first quarter of fiscal 2017.

In the third quarter of fiscal 2017, these organizational changes resulted in a change in the internal reporting provided to our chief operating decision maker (“CODM”).

These internal reports are used by the CODM to assess the performance of the business on a consolidated basis.

As such, beginning in the third quarter of

2017 Form 10-K 4

fiscal 2017, we concluded that we had one segment manager (the CODM), one operating segment, and one reporting unit for goodwill impairment purposes.

To make way for industry collections, we ended the sale of the Design and Creation Suites on July 31, 2016, including Building Design Suites, Infrastructure Design Suites, and Product Design Suites.

2017 Form 10-K 5

2017 Form 10-K 6

The transition to a subscription model reflects the significant and growing interaction of our desktop software and our cloud services, working together to bring an integrated workflow to our customers.

For example, in fiscal 2017, we continued strategically investing in digital manufacturing by bringing together a number of products and technologies, focused on providing integrated solutions for additive, subtractive, hybrid manufacturing, robotics and simulation.

Digital manufacturing solutions provide our customers with the tools necessary to advance their manufacturing and production software, processes and systems in order to achieve efficiency and cost reduction improvements.

Digital manufacturing provides a unique opportunity for these customers to connect designing, making, and using.

We anticipate ongoing investments in digital manufacturing and other product groups to both serve existing customers and expand market opportunity.

The increase in research and development expenditures as a percentage of revenue compared to fiscal 2016 and 2015 was driven by the decrease in our total revenue as a result of our business model transition.

2017 Form 10-K 7

product development, lower costs, and integrate local market knowledge into our development activities.

We intend to continue to make our products available in foreign languages.

We also offer subscriptions which provide our customers with flexible term-based licenses of our software and services.

2017 Form 10-K 8

2017 Form 10-K 9

Ultimately, our co-CEOs, have the highest level of direct responsibility for addressing our climate-change related risks and opportunities.

Autodesk has established an Environmental Core Team which reports indirectly to our co-CEOs.

In fiscal 2017, we added emissions from our supply chain to our measurement boundary.

The industry is presently undergoing a

2017 Form 10-K 10

2017 Form 10-K 11

| June 2014 | | Shotgun Software Inc. ("Shotgun") | | The acquisition of Shotgun provided a cloud-based production management solution that enabled digital studios to track, schedule, review, and collaborate on projects and images. |

| May 2014 | | Within Technologies Limited ("Within”) | | The acquisition of Within accelerated Autodesk’s development of tools and technologies for advanced manufacturing, including 3D printing. |

| February 2014 | | Delcam plc (“Delcam”) | | The acquisition of Delcam provided Autodesk a range of design, manufacturing and inspection software that enabled automated CADCAM solutions for a variety of industries, ranging from aerospace to toys and sports equipment. |

BACKLOG

Backlog is defined as current software license product orders which have not yet shipped.

As a result of the business model transition, there was no backlog at January 31, 2017 compared to $31.4 million at January 31, 2016, and we do not expect material backlog in future periods.

2017 Form 10-K 12

License and Other Revenue—License and other revenue consists of two components: (1) all forms of product license revenue and (2) other revenue.

New Model Subscription Offerings (New Model)—Comprises our term-based product subscriptions (formerly titled Desktop subscription), cloud service offerings, and flexible enterprise business agreements.

Suites—Autodesk suites are a combination of products that target a specific user objective (product design, building design, etc.) and support a set of workflows for that objective.

Our primary suites include: Autodesk Building Design Suite, Autodesk Entertainment Creation Suite, Autodesk Factory Design Suite, Autodesk Infrastructure Design Suite, Autodesk Plant Design Suite, and Autodesk Product Design Suite.

Autodesk discontinued selling new perpetual licenses of suites while introducing industry collections effective August 1, 2016.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

| x | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the fiscal year [removed: ended January] [added: ended January] 31, [removed: 2017][added: 2018]

| ¨ | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from [removed: to][added: to]

[removed: Commission] [added: Commission] File Number: [removed: 0-14338][added: 0-14338]

[removed: AUTODESK, INC.][added: AUTODESK INC.]

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

| [removed: Delaware] [added: Delaware] | | [removed: 94-2819853] [added: 94-2819853] |

| [removed: (State] [added: (State] or other [removed: jurisdiction of] [added: jurisdiction of] incorporation or [removed: organization)] [added: organization)] | | [removed: (I.R.S. employer Identification No.)] [added: (I.R.S. employer Identification No.)] |

| [removed: 111] [added: 111] McInnis [removed: Parkway, San] [added: Parkway, San] Rafael, [removed: California] [added: California] | | [removed: 94903] [added: 94903] |

| [removed: (Address] [added: (Address] of principal executive [removed: offices)] [added: offices)] | | [removed: (Zip Code)] [added: (Zip Code)] |

[removed: Registrant’s] [added: Registrant’s] telephone number, including area code: (415) [removed: 507-5000][added: 507-5000]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | | [removed: Name] [added: Name] of each [removed: exchange on] [added: exchange on] which [removed: registered] [added: registered] |

| [removed: Common] [added: Common] Stock, $0.01 Par [removed: Value] [added: Value] | | [removed: The] [added: The] NASDAQ Stock Market [removed: LLC (NASDAQ] [added: LLC (NASDAQ] Global Select [removed: Market)] [added: Market)] |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [added: x]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting company” [added: and “emerging growth company”] in Rule 12b-2 of the Exchange Act.

| Large accelerated filer x | | Accelerated filer o | | Non-accelerated filer o | | Smaller reporting company o | [added: | Emerging growth company o |]

As of July 31, [removed: 2016,] [added: 2017,] the last business day of the registrant’s most recently completed second fiscal quarter, there were approximately [removed: 208.4] [added: 218.5] million shares of the registrant’s common stock outstanding that were held by non-affiliates, and the aggregate market value of such shares held by non-affiliates of the registrant (based on the closing sale price of such shares on the NASDAQ Global Select Market on July 31, [removed: 2016)] [added: 2017)] was approximately [removed: $12.4] [added: $24.2] billion.

As of March [removed: 10, 2017,] [added: 12, 2018,] the registrant had outstanding [removed: 220,849,268] [added: 218,327,862] shares of common stock.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

The Proxy Statement will be filed within 120 days of the registrant’s fiscal year ended January 31, [removed: 2017.][added: 2018.]

[removed: ][added: ]

[removed: \[THIS] [added: \[THIS] PAGE INTENTIONALLY LEFT [removed: BLANK\]][added: BLANK\]]

[removed: AUTODESK,] [added: AUTODESK,] INC. FORM [removed: 10-K][added: 10-K]

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| | | [removed: Page] [added: Page] |

[removed: | [PART I](#s9748BEBF85A3A55CDF3E5EF800949A01) | | |][added: PART I]

| Item 1. | [removed: [Business](#s562B148FD02D25D54CD65EF7E98BDD3C)] [added: [Business](#s725A84F1AEBE5835874D3157BE405D58)] | [removed: [4](#s562B148FD02D25D54CD65EF7E98BDD3C)] [added: [5](#s725A84F1AEBE5835874D3157BE405D58)] |

| Item 1A. | [Risk [removed: Factors](#s87EDC24CBB3F63FDD2565EF800F1D4C5)] [added: Factors](#s64E91BB8DEFE50A5B6C818A6DB824B11)] | [removed: [14](#s87EDC24CBB3F63FDD2565EF800F1D4C5)] [added: [14](#s64E91BB8DEFE50A5B6C818A6DB824B11)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s60ED5D190A8438CA46665EF801107882)] [added: Comments](#s2BA153F924BD51E0B6DB1AF812B39EDE)] | [removed: [31](#s60ED5D190A8438CA46665EF801107882)] [added: [30](#s2BA153F924BD51E0B6DB1AF812B39EDE)] |

| Item 2. | [removed: [Properties](#s24030A59CF804DAD93275EF801306F22)] [added: [Properties](#s48FD45BFA4A452448482EA1A3B3B020F)] | [removed: [31](#s24030A59CF804DAD93275EF801306F22)] [added: [30](#s48FD45BFA4A452448482EA1A3B3B020F)] |

| Item 3. | [Legal [removed: Proceedings](#s17074E872634C9E318685EF8014F38FA)] [added: Proceedings](#s3BBD8147673C51649F57D89CF1812CC7)] | [removed: [31](#s17074E872634C9E318685EF8014F38FA)] [added: [30](#s3BBD8147673C51649F57D89CF1812CC7)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s65E2C48880F2E37DC7285EF8018D23A1)] [added: Disclosures](#s8AF3859E75A652A88D72DE2B3BD7855B)] | [removed: [31](#s65E2C48880F2E37DC7285EF8018D23A1)] [added: [30](#s8AF3859E75A652A88D72DE2B3BD7855B)] |

_____________________________________________________________

or

_____________________________________________________________

_____________________________________________________________

_____________________________________________________________

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

*2018 Form 10-K 1*


*2018 Form 10-K 2*

| [PART II](#s51E9D19A97C258C8BC4C55053FB77EE9) | | |

| [PART IV](#sF383373CF22B50E78507CF59FC0F2D7B) | | |

| | [Signatures](#s9716C2561F74560D8E30D7BBDFCDAFE7) | [111](#s9716C2561F74560D8E30D7BBDFCDAFE7) |


*2018 Form 10-K 3*


*2018 Form 10-K 4*

10-K 1 adsk-0131201710xk.htm 10-K

_____________________________________________________________

or

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

2017 Form 10-K 1

2017 Form 10-K 2

| [PART II](#s007F6D0460AFE6B3507E5EF801AC3742) | | |

| [PART IV](#sE4A67C3136957E30C21D5EF80E889A83) | | |

| | [Signatures](#sEEA6C4424C31410EFF8E5EF80F15AEC9) | [112](#sEEA6C4424C31410EFF8E5EF80F15AEC9) |

2017 Form 10-K 3

We lease [removed: 1,978,960] [added: 2,128,261] square feet of office space in [removed: 133] [added: 124] locations in the United States and internationally through our foreign subsidiaries.

Our executive offices [added: are located in leased office space in San Francisco, California,] and [added: our] corporate headquarters are located in leased office space in San Rafael, California.

Our San Rafael facilities consist of [removed: 220,000] [added: approximately 189,000] square feet under leases that have expiration dates ranging from [removed: December 2017] [added: February 2018] to December 2019.

Our facilities are operating at capacities averaging [removed: 82%] [added: 80%] occupancy worldwide as of January 31, [removed: 2017.][added: 2018.]

Our San Francisco facilities consist of approximately 264,000 square feet under leases that have expiration dates ranging from December 2018 to December 2023.

In addition, we own 101,225 square feet of office space in four locations internationally through our foreign subsidiaries.

[removed: ][added: ]

[removed: PART II][added: PART II]

*2018 Form 10-K 30*

2017 Form 10-K 31

| | [removed: High] [added: High] | | | | [removed: Low] [added: Low] | | |

[removed: Dividends][added: Dividends]

We did not declare any cash or stock dividends in either fiscal [removed: 2017] [added: 2018] or fiscal [removed: 2016.][added: 2017.]

[removed: Stockholders][added: Stockholders]

As of January 31, [removed: 2017,] [added: 2018,] the number of common stockholders of record was [removed: 430.][added: 388.]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

As of January 31, [removed: 2017, 3.4] [added: 2018, 10.4] million shares have been repurchased under this plan.

During the three and twelve months ended January 31, [removed: 2017,] [added: 2018,] we repurchased [removed: 2.9] [added: 2.5] million and [removed: 9.7] [added: 6.9] million shares, respectively, of our common stock under the [removed: existing and prior] Board of Director authorized share repurchase [removed: programs.][added: program.]

At January 31, [removed: 2017, 26.6] [added: 2018, 19.6] million shares remained available for repurchase under the repurchase program approved by the Board of Directors.

See Note 9, “Stockholders' [removed: Equity,”] [added: (Deficit) Equity (Deficit),”] in the Notes to Consolidated Financial Statements for further discussion.

[removed: ][added: ]

The following table provides information about the repurchase of common stock in open-market transactions during the quarter ended January 31, [removed: 2017:][added: 2018:]

| [removed: (Shares] [added: *(Shares] in [removed: millions)] [added: millions)*] | [removed: Total] [added: Total] Number of Shares [removed: Purchased] [added: Purchased] | | | [removed: Average] [added: Average] Price Paid per [removed: Share] [added: Share] | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs(1)] [added: Programs(1)] | | | [removed: Maximum] [added: Maximum] Number of Shares that May Yet Be Purchased Under the Plans or [removed: Programs(2)] [added: Programs(2)] | |

[removed: Sales] [added: Sales] of Unregistered [removed: Securities][added: Securities]

There were no sales of unregistered securities during the three months ended January 31, [removed: 2017.][added: 2018.]

[removed: Company] [added: Company] Stock [removed: Performance][added: Performance]

[removed: Comparison] [added: Comparison] of Five Year Cumulative Total Stockholder Return [removed: (1)][added: (1)]

[removed: ][added: ]

| (1) | Assumes $100 invested on January 31, [removed: 2012,] [added: 2013,] in Autodesk’s stock, the Standard & Poor’s 500 Stock Index, and the Dow Jones U.S. Software Index, with reinvestment of all dividends. Total stockholder returns for prior periods are not an indication of future investment returns. |

| Fiscal 2018 | | | | | | | |

| First Quarter | $ | 90.94 | | | $ | 80.04 | |

| Second Quarter | 115.25 | | | | 91.17 | | |

| Third Quarter | 125.01 | | | | 104.77 | | |

| Fourth Quarter | 131.10 | | | | 103.19 | | |

*2018 Form 10-K 31*

| November 1- November 30 | 0.4 | | | $ | 109.18 | | | 0.4 | | | 21.7 | |

| December 1 - December 31 | 2.0 | | | 107.35 | | | | 2.0 | | | 19.7 | |

| January 1 - January 31 | 0.1 | | | 113.26 | | | | 0.1 | | | 19.6 | |

| Total | 2.5 | | | $ | 107.86 | | | 2.5 | | | | |

*2018 Form 10-K 32*



*2018 Form 10-K 33*

| Fiscal 2016 | | | | | | | |

| First Quarter | $ | 65.00 | | | $ | 53.02 | |

| Second Quarter | 59.42 | | | | 49.50 | | |

| Third Quarter | 55.82 | | | | 42.06 | | |

| Fourth Quarter | 65.78 | | | | 45.04 | | |

2017 Form 10-K 32

| November 1- November 30 | 1.2 | | | $ | 73.51 | | | 1.2 | | | 28.3 | |

| December 1 - December 31 | 0.9 | | | 75.47 | | | | 0.9 | | | 27.4 | |

| January 1 - January 31 | 0.8 | | | 80.01 | | | | 0.8 | | | 26.6 | |

| Total | 2.9 | | | $ | 75.98 | | | 2.9 | | | | |

2017 Form 10-K 33

2017 Form 10-K 34

The financial data for the fiscal years ended January 31, [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] are derived from, and are qualified by reference to, the audited consolidated financial statements that are included in this Form 10-K.

The Consolidated Statements of Operations and the Consolidated Statements of Cash Flows data for the year ended January 31, [removed: 2015] [added: 2016] are derived from, and are qualified by reference to, the audited consolidated financial statements that are included in this Form 10-K.

The Consolidated Balance Sheet data for the fiscal year ended January 31, [removed: 2015] [added: 2016] and the remaining financial data for the fiscal years ended January 31, [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] are derived from audited, consolidated financial statements which are not included in this Form 10-K.

| | [removed: Fiscal year ended] [added: Fiscal Year Ended] January [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| | [removed: (In] [added: (In] millions, except per share [removed: data)] [added: data)] | | | | | | | | | | | | | | | | | | |

| Net revenue | $ | [removed: 2,031.0] [added: 2,056.6] | | | $ | [removed: 2,504.1] [added: 2,031.0] | | | $ | [removed: 2,512.2] [added: 2,504.1] | | | $ | [removed: 2,273.9] [added: 2,512.2] | | | $ | [removed: 2,312.2] [added: 2,273.9] | |

| (Loss) income from operations | [removed: (499.6] [added: (509.1] | | ) | | [removed: 1.3] [added: (499.6] | | [added: )] | | [removed: 120.7] [added: 1.3] | | | | [removed: 284.8] [added: 120.7] | | | | [removed: 305.9] [added: 284.8] | | |

| Net (loss) income | [removed: (582.1] [added: (566.9] | | ) | | [removed: (330.5] [added: (582.1] | | ) | | [removed: 81.8] [added: (330.5] | | [added: )] | | [removed: 228.8] [added: 81.8] | | | | [removed: 247.4] [added: 228.8] | | |

| Cash flow from operations [removed: (1)] | [removed: 169.7] [added: 0.9] | | | | [removed: 414.0] [added: 169.7] | | | | [removed: 708.6] [added: 414.0] | | | | [removed: 572.6] [added: 708.6] | | | | [removed: 572.0] [added: 572.6] | | |

| Basic net (loss) income per share | $ | [removed: (2.61] [added: (2.58] | ) | | $ | [removed: (1.46] [added: (2.61] | ) | | $ | [removed: 0.36] [added: (1.46] | [added: )] | | $ | [removed: 1.02] [added: 0.36] | | | $ | [removed: 1.09] [added: 1.02] | |

| Diluted net (loss) income per share | [removed: (2.61] [added: (2.58] | | ) | | [removed: (1.46] [added: (2.61] | | ) | | [removed: 0.35] [added: (1.46] | | [added: )] | | [removed: 1.00] [added: 0.35] | | | | [removed: 1.07] [added: 1.00] | | |

| Total assets | $ | [removed: 4,798.1] [added: 4,113.6] | | | $ | [removed: 5,515.3] [added: 4,798.1] | | | $ | [removed: 4,909.7] [added: 5,515.3] | | | $ | [removed: 4,589.9] [added: 4,909.7] | | | $ | [removed: 4,302.4] [added: 4,589.9] | |

| Long-term liabilities | [removed: 1,879.1] [added: 2,246.4] | | | | [removed: 2,304.7] [added: 1,879.1] | | | | [removed: 1,294.5] [added: 2,304.7] | | | | [removed: 1,262.0] [added: 1,290.4] | | | | [removed: 1,221.5] [added: 1,256.9] | | |

| Stockholders’ [added: (deficit)] equity | [removed: 733.6] [added: (256.0] | | [added: )] | | [removed: 1,619.6] [added: 733.6] | | | | [removed: 2,219.2] [added: 1,619.6] | | | | [removed: 2,261.5] [added: 2,219.2] | | | | [removed: 2,043.2] [added: 2,261.5] | | |

[removed: ][added: ]

*2018 Form 10-K 34*

_______________

| | |

| --- | --- |

| (1) | During the three months ended July 31, 2016, the Company early adopted Accounting Standards Update No. 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)” (“ASU 2016-09”), which addresses among other items, updates to the presentation and treatment of excess tax benefits related to stock based compensation. The Company has adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact for the fiscal years ended January 31, 2015, 2014, and 2013 to net cash provided by operating activities and net cash used in financing activities was $0.5 million, $9.1 million, and $12.9 million, respectively. There was no impact to the fiscal year ended January 31, 2016. |

2017 Form 10-K 35

[removed: AUTODESK, INC.][added: AUTODESK, INC.]

[removed: CONSOLIDATED] [added: CONSOLIDATED] STATEMENTS OF [removed: OPERATIONS][added: OPERATIONS]

| | [removed: Fiscal] [added: Fiscal] year ended January [removed: 31,] [added: 31,] | | | | | | | | | | |

| [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | |

| License and other | 741.0 | | | | [added: (256.2 | | ) | | 484.8 | | | |] 1,226.9 | | | | [removed: 1,341.4] [added: (103.4] | | [added: )] | [added: | 1,123.5 | | |]

| Total net revenue | [removed: 2,031.0] [added: 2,056.6] | | | | [removed: 2,504.1] [added: 2,031.0] | | | | [removed: 2,512.2] [added: 2,504.1] | | |

| Cost of license and other revenue | [removed: 190.6] [added: 72.6] | | | | [removed: 214.6] [added: 110.2] | | | | [removed: 208.5] [added: 159.4] | | |

| Total cost of revenue | [removed: 341.9] [added: 303.4] | | | | [removed: 370.7] [added: 341.9] | | | | [removed: 342.1] [added: 370.7] | | |

| Gross profit | [removed: 1,689.1] [added: 1,753.2] | | | | [removed: 2,133.4] [added: 1,689.1] | | | | [removed: 2,170.1] [added: 2,133.4] | | |

| Marketing and sales | [removed: 1,022.5] [added: 1,087.3] | | | | [removed: 1,015.5] [added: 1,022.5] | | | | [removed: 998.0] [added: 1,015.5] | | |

| Research and development | [removed: 766.1] [added: 755.5] | | | | [removed: 790.0] [added: 766.1] | | | | [removed: 725.2] [added: 790.0] | | |

| General and administrative | [removed: 287.8] [added: 305.2] | | | | [removed: 293.4] [added: 287.8] | | | | [removed: 283.3] [added: 293.4] | | |

| Amortization of purchased intangibles | [removed: 31.8] [added: 20.2] | | | | [removed: 33.2] [added: 31.8] | | | | [removed: 39.8] [added: 33.2] | | |

| Restructuring charges and other facility exit costs, net | [removed: 80.5] [added: 94.1] | | | | [removed: —] [added: 80.5] | | | | [removed: 3.1] [added: —] | | |

| Total operating expenses | [removed: 2,188.7] [added: 2,262.3] | | | | [removed: 2,132.1] [added: 2,188.7] | | | | [removed: 2,049.4] [added: 2,132.1] | | |

| (Loss) income from operations | [removed: (499.6] [added: (509.1] | | ) | | [removed: 1.3] [added: (499.6] | | [added: )] | | [removed: 120.7] [added: 1.3] | | |

| Interest and other expense, net | [removed: (24.2] [added: (48.2] | | ) | | [removed: (21.6] [added: (24.2] | | ) | | [removed: (37.7] [added: (21.6] | | ) |

| [removed: (Loss) income] [added: Loss] before income taxes | [removed: (523.8] [added: (557.3] | | ) | | [removed: (20.3] [added: (523.8] | | ) | | [removed: 83.0] [added: (20.3] | | [added: )] |

| Provision for income taxes | [removed: (58.3] [added: (9.6] | | ) | | [removed: (310.2] [added: (58.3] | | ) | | [removed: (1.2] [added: (310.2] | | ) |

| Net [removed: (loss) income] [added: loss] | $ | [removed: (582.1] [added: (566.9] | ) | | $ | [removed: (330.5] [added: (582.1] | ) | | $ | [removed: 81.8] [added: (330.5] | [added: )] |

| Basic net [removed: (loss) income] [added: loss] per share | $ | [removed: (2.61] [added: (2.58] | ) | | $ | [removed: (1.46] [added: (2.61] | ) | | $ | [removed: 0.36] [added: (1.46] | [added: )] |

| Diluted net [removed: (loss) income] [added: loss] per share | $ | [removed: (2.61] [added: (2.58] | ) | | $ | [removed: (1.46] [added: (2.61] | ) | | $ | [removed: 0.35] [added: (1.46] | [added: )] |

| Weighted average shares used in computing basic net [removed: (loss) income] [added: loss] per share | [removed: 222.7] [added: 219.5] | | | | [removed: 226.0] [added: 222.7] | | | | [removed: 227.1] [added: 226.0] | | |

| Weighted average shares used in computing diluted net [removed: (loss) income] [added: loss] per share | [removed: 222.7] [added: 219.5] | | | | [removed: 226.0] [added: 222.7] | | | | [removed: 232.4] [added: 226.0] | | |

[removed: ][added: ]

[removed: CONSOLIDATED] [added: CONSOLIDATED] STATEMENTS OF COMPREHENSIVE [removed: (LOSS) INCOME][added: LOSS]

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Net [removed: (loss) gain] [added: loss] on derivative instruments (net of tax effect of [added: $3.2,] ($1.1), [removed: $0.6,] and [removed: ($0.7))] [added: $0.6)] | [removed: (1.1] [added: (31.2] | | ) | | [removed: (27.1] [added: (1.1] | | ) | | [removed: 39.3] [added: (27.1] | | [added: )] |

| Change in net unrealized [removed: gain] (loss) [added: gain] on available-for-sale securities (net of tax effect of [added: $0.1,] ($0.5), [removed: $0.0,] and [removed: ($0.2))] [added: $0.0)] | [removed: 1.3] [added: (0.2] | | [added: )] | | [removed: (1.4] [added: 1.3] | | [removed: )] | | [removed: (0.2] [added: (1.4] | | ) |

| Change in defined benefit pension items (net of tax effect of [added: ($0.7),] ($0.9), [removed: $0.9,] and [removed: $1.8)] [added: $0.9)] | [removed: (5.5] [added: 4.5] | | [removed: )] | | [removed: (4.6] [added: (5.5] | | ) | | [removed: (16.0] [added: (4.6] | | ) |

| Net change in cumulative foreign currency translation [removed: loss] [added: gain (loss)] (net of tax effect of [added: ($4.8),] $0.2, [removed: $0.5,] and [removed: $4.9)] [added: $0.5)] | [removed: (52.1] [added: 81.6] | | [removed: )] | | [removed: (34.7] [added: (52.1] | | ) | | [removed: (75.8] [added: (34.7] | | ) |

| Total other comprehensive [removed: loss] [added: income (loss)] | [removed: (57.4] [added: 54.7] | | [removed: )] | | [removed: (67.8] [added: (57.4] | | ) | | [removed: (52.7] [added: (67.8] | | ) |

| Total comprehensive [removed: (loss) income] [added: loss] | $ | [removed: (639.5] [added: (512.2] | ) | | $ | [removed: (398.3] [added: (639.5] | ) | | $ | [removed: 29.1] [added: (398.3] | [added: )] |

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

| | [removed: January] [added: | January] 31, [removed: 2017] [added: 2018] | | | | [removed: January] [added: January] 31, [removed: 2016] [added: 2017] | | | [added: | January 31, 2016 | | |]

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| Cash and cash equivalents | $ | [removed: 1,213.1] [added: 1,078.0] | | | $ | [removed: 1,353.0] [added: 1,213.1] | |

| Marketable securities | [removed: 686.8] [added: 245.2] | | | | [removed: 897.9] [added: 686.8] | | |

| Accounts receivable, net | [removed: 452.3] [added: 438.2] | | | | [removed: 653.6] [added: 452.3] | | |

| Prepaid expenses and other current assets | [removed: 108.4] [added: 116.5] | | | | [removed: 88.6] [added: 108.4] | | |

| Maintenance | $ | 989.6 | | | $ | 1,103.1 | | | $ | 1,152.5 | |

| Subscription | 894.3 | | | | 443.1 | | | | 228.1 | | |

| Total maintenance and subscription revenue | 1,883.9 | | | | 1,546.2 | | | | 1,380.6 | | |

| License and other | 172.7 | | | | 484.8 | | | | 1,123.5 | | |

| Cost of maintenance and subscription revenue | 214.4 | | | | 191.7 | | | | 162.3 | | |

| Amortization of developed technology | 16.4 | | | | 40.0 | | | | 49.0 | | |

*2018 Form 10-K 62*

AUTODESK, INC.

| Net loss | $ | (566.9 | ) | | $ | (582.1 | ) | | $ | (330.5 | ) |


*2018 Form 10-K 63*

AUTODESK, INC.


*2018 Form 10-K 64*

AUTODESK, INC.

| Net loss | $ | (566.9 | ) | | $ | (582.1 | ) | | $ | (330.5 | ) |

| Repayments of debt | (400.0 | | ) | | — | | | | — | | |


*2018 Form 10-K 65*

AUTODESK, INC.

| Net loss | — | | | — | | | | — | | | | (566.9 | | ) | | (566.9 | | ) |

| Other comprehensive income | — | | | — | | | | 54.7 | | | | — | | | | 54.7 | | |

| Balances, January 31, 2018 | 218.3 | | | $ | 1,952.7 | | | $ | (123.8 | ) | | $ | (2,084.9 | ) | | $ | (256.0 | ) |


*2018 Form 10-K 66*

AUTODESK, INC.

*Change in Presentation*

During the first quarter of fiscal 2018, the Company changed its historical presentation of its revenue and cost of revenue categories.

Previously, the Company presented revenue and cost of revenue on two lines: subscription, and license and other.

Included within subscription was maintenance revenue for all of the Company's software products and revenue for the Company's cloud service offerings.

License and other revenue included product license revenue, standalone consulting services, and other immaterial items.

Also, included within license and other revenue was an allocation of the estimated value of the software license from the Company's term-based product subscriptions and enterprise offerings, which contain a software license, maintenance and cloud services.

For these arrangements, as there is no vendor-specific-objective evidence ("VSOE") for the related maintenance, the arrangement consideration was allocated between the license and maintenance deliverables based on best estimated selling prices in our consolidated statements of operations.

The Company performed the allocation because it provided a meaningful presentation to investors based on the Company's then current product mix.

As part of the Company's technological and business model transition, the Company discontinued the sale of most of its perpetual licenses, transitioning away from selling a mix of perpetual licenses and term-based product subscriptions to a single subscription model involving a combined hybrid offering of desktop software and cloud functionality, which provides a device-independent, collaborative design workflow for designers and their stakeholders.

Fiscal 2018 marks the first full year in the Company's history that it sold substantially all term-based product subscriptions.

To better reflect this shift in its business, the Company adopted a revised presentation in the first quarter of fiscal 2018, including the separation of subscription revenue and maintenance revenue on distinct line items on the Company's consolidated statement of operations.

Subscription revenue now consists of our term-based product subscriptions, cloud service offerings, and flexible enterprise business arrangements.

Note that with the change in presentation of revenue in the Company’s consolidated statement of operations in fiscal 2018, term-based product subscriptions and flexible enterprise business arrangements are classified and presented in a single line item.

Maintenance revenue is presented as a separate line item in the new presentation and consists of revenue from the Company's existing maintenance plan agreements and related renewals.

| Subscription | $ | 1,290.0 | | | $ | 1,277.2 | | | $ | 1,170.8 | |

| Cost of subscription revenue | 151.3 | | | | 156.1 | | | | 133.6 | | |

2017 Form 10-K 63

2017 Form 10-K 64

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

2017 Form 10-K 65

——————

| | |

| --- | --- |

| (1) | During the three months ended July 31, 2016, the Company early adopted Accounting Standards Update No. 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)” (“ASU 2016-09”), which addresses among other items, updates to the presentation and treatment of excess tax benefits related to stock based compensation. The Company has adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact for the fiscal year ended January 31, 2015 to net cash provided by operating activities and net cash used in financing activities was $0.5 million. There was no impact to the fiscal year ended January 31, 2016. |

2017 Form 10-K 66

2017 Form 10-K 67

| Balances, January 31, 2014 | 226.7 | | | $ | 1,637.3 | | | $ | (0.6 | ) | | $ | 624.8 | | | $ | 2,261.5 | |

| Net income | — | | | — | | | | — | | | | 81.8 | | | | 81.8 | | |

2017 Form 10-K 68

1.

Segments

Through the second quarter of fiscal 2017, Autodesk had four operating and reportable segments: Architecture, Engineering, and Construction (“AEC”), Manufacturing (“MFG”), Platform Solutions and Emerging Business (“PSEB”), and Media and Entertainment (“M&E”).

During the third quarter of fiscal 2017, as a result of changes in our organizational structure from the business model transition and various other factors described further in Note 13, "Segments," management determined the Company operates as a single operating segment and single reporting unit.

However, the Company will continue to provide disaggregation of revenue by product family and geographical information within Note 13, "Segments."

Monetary assets and liabilities are

2017 Form 10-K 69

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.

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.

2017 Form 10-K 70

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.

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

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| United States | 9 | % | | 26 | % |

2017 Form 10-K 71

2017 Form 10-K 72

| 2018 | $ | 37.2 | |

| 2019 | 28.9 | | |

| 2020 | 16.7 | | |

[removed: Evaluation] [added: Evaluation] of Disclosure Controls and [removed: Procedures][added: Procedures]

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in our Exchange Act reports is (i) recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission, and (ii) accumulated and communicated to Autodesk management, including our [removed: Co-Chief] [added: Chief] Executive [removed: Officers] [added: Officer] and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We conducted an evaluation, under the supervision and with the participation of our [removed: Co-Chief] [added: Chief] Executive [removed: Officers] [added: Officer] and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.

Based upon this evaluation, our [removed: Co-Chief] [added: Chief] Executive [removed: Officers] [added: Officer] and Chief Financial Officer have concluded that our disclosure controls and procedures [removed: were not] [added: are] effective as of January 31, [removed: 2017 for reasons described below.][added: 2018.]

[removed: Management’s] [added: Management’s] Report on Internal Control over Financial [removed: Reporting][added: Reporting]

Our management assessed the effectiveness of our internal control over financial reporting as of January 31, [removed: 2017.][added: 2018.]

Our management, including our [removed: Co-Chief] [added: Chief] Executive [removed: Officers] [added: Officer] and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all errors and all fraud.

Our management has concluded that, as of January 31, [removed: 2017,] [added: 2018,] our internal control over financial reporting [removed: was not] [added: is] effective 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 [removed: principles due to the material weakness discussed in further detail below.][added: principles.]

[removed: Changes] [added: Changes] in Internal Control Over Financial [removed: Reporting][added: Reporting]

[removed: Other than with respect to the remediation efforts described above, there] [added: There] were no changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the [removed: quarter] [added: three months] ended January 31, [removed: 2017] [added: 2018,] that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

We have performed additional analyses and other procedures to enable management to conclude that, notwithstanding the existence of the material weakness described above, the consolidated financial statements included in this Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Additionally, corrective actions continue to address the internal control material weakness as described below under the section "Remediation Efforts with Respect to Material Weakness".

In connection with the preparation of our Consolidated Financial Statements for the fiscal year ended January 31, 2017, our management concluded that it has a material weakness in our internal control over financial reporting related to the operating effectiveness of our controls over the calculation of income tax expense.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Remediation Efforts with Respect to Material Weakness

Management first identified a material weakness in internal control over financial reporting in connection with the preparation of our Condensed Consolidated financial statements for the fiscal quarter ended October 31, 2015.

Since that time, management’s remediation activities have included the following:


2017 Form 10-K 106

| | |

| --- | --- |

| • | enhanced our technical accounting review for complex income tax considerations; |

| • | enhanced the design of our income tax controls to include specific activities to ensure proper classification of deferred taxes and calculation of income tax expense; |

| • | supplemented our accounting and tax professionals with the engagement of an internationally recognized accounting firm to assist us in the technical review regarding the application of tax rules around deferred tax assets and liabilities; and |

| • | reorganized the structure of our tax function to enhance the level of documentation, technical oversight, and review. |

Management has enhanced its controls to include refinements and improvements to controls over the accounting for income taxes.

While significant progress has been made as of January 31, 2017, management does not believe these controls are operating effectively.

As a result, management does not believe that the material weakness has been remediated and will continue to enhance its controls over the accounting for income tax expense.

[removed: ][added: ]

[removed: PART III][added: PART III]

*2018 Form 10-K 106*

2017 Form 10-K 107

[removed: EXECUTIVE] [added: EXECUTIVE] OFFICERS OF THE [removed: REGISTRANT][added: REGISTRANT]

The following sets forth certain information as of March [removed: 21, 2017] [added: 22, 2018,] regarding our executive officers.

| [removed: Name] [added: Name] | [removed: Age] [added: Age] | | [removed: Position] [added: Position] |

| Andrew Anagnost | [removed: 52] [added: 53] | | [removed: Co-CEO,] [added: President and] Chief [removed: Marketing] [added: Executive] Officer [removed: and SVP, BSM] |

| R. Scott Herren | [removed: 55] [added: 56] | | SVP and Chief Financial Officer |

| Steve M. Blum | [removed: 52] [added: 53] | | SVP, Worldwide [removed: Sales and Services] [added: Field Operations] |

| Pascal W. Di Fronzo | [removed: 52] [added: 53] | | SVP, Corporate Affairs, Chief Legal Officer & Secretary |

[removed: Andrew Anagnost] [added: Andrew Anagnost] joined Autodesk in September 1997 and has served as [removed: our co-CEO since February 2017] [added: President] and [removed: as our Senior Vice President, Industry Strategy & Marketing] [added: Chief Executive Officer] since [removed: March 2012.][added: June 2017.]

From December 2009 to March 2012, Dr. Anagnost was Vice President, Product Suites and Web [removed: Services.][added: Services of the Company.]

Prior to this position, Dr. Anagnost served as Vice President of CAD/CAE products for the manufacturing division [added: of the Company] from March 2007 to December 2009.

Previously, Dr. Anagnost held other senior management positions at [removed: Autodesk.][added: the Company.]

Prior to joining [removed: Autodesk,] [added: the Company,] Dr. Anagnost held various engineering, sales, marketing and product management positions at Lockheed Aeronautical Systems Company and EXA Corporation.

Scott [removed: Herren] [added: Herren] joined Autodesk in November 2014 and serves as Senior Vice President and Chief Financial Officer.

[removed: ][added: ]