Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AUTODESK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)



	Fiscal year ended January 31,
2019				2018				2017
Net revenue:
Subscription	$	1,802.3			$	894.3			$	443.1
Maintenance	635.1				989.6				1,103.1
Total subscription and maintenance revenue	2,437.4				1,883.9				1,546.2
Other (1)	132.4				172.7				484.8
Total net revenue	2,569.8				2,056.6				2,031.0
Cost of revenue:
Cost of subscription and maintenance revenue	216.0				214.4				191.7
Cost of other revenue (2)	54.4				72.6				110.2
Amortization of developed technology	15.5				16.4				40.0
Total cost of revenue	285.9				303.4				341.9
Gross profit	2,283.9				1,753.2				1,689.1
Operating expenses:
Marketing and sales	1,183.9				1,087.3				1,022.5
Research and development	725.0				755.5				766.1
General and administrative	340.1				305.2				287.8
Amortization of purchased intangibles	18.0				20.2				31.8
Restructuring and other exit costs, net	41.9				94.1				80.5
Total operating expenses	2,308.9				2,262.3				2,188.7
Loss from operations	(25.0		)		(509.1		)		(499.6		)
Interest and other expense, net	(17.7		)		(48.2		)		(24.2		)
Loss before income taxes	(42.7		)		(557.3		)		(523.8		)
Provision for income taxes	(38.1		)		(9.6		)		(58.3		)
Net loss	$	(80.8	)		$	(566.9	)		$	(582.1	)
Basic net loss per share	$	(0.37	)		$	(2.58	)		$	(2.61	)
Diluted net loss per share	$	(0.37	)		$	(2.58	)		$	(2.61	)
Weighted average shares used in computing basic net loss per share	218.9				219.5				222.7
Weighted average shares used in computing diluted net loss per share	218.9				219.5				222.7


(1)	Previously labeled as "License and other" in prior periods.


(2)	Previously labeled as "Cost of license and other revenue" in prior periods.

See accompanying Notes to Consolidated Financial Statements.

2019 Form 10-K 61

AUTODESK, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In millions)



	Fiscal year ended January 31,
	2019			2018			2017
Net loss	$	(80.8	)	$	(566.9	)	$	(582.1	)
Other comprehensive (loss) income, net of reclassifications:
Net gain (loss) on derivative instruments (net of tax effect of ($1.1), $3.2, and ($1.1))	31.6			(31.2		)	(1.1		)
Change in net unrealized gain (loss) on available-for-sale securities (net of tax effect of $0.0, $0.1, and ($0.5))	2.0			(0.2		)	1.3
Change in defined benefit pension items (net of tax effect of ($2.0), ($0.7), and ($0.9))	13.0			4.5			(5.5		)
Net change in cumulative foreign currency translation (loss) gain (net of tax effect of $0.5, ($4.8), and $0.2))	(57.8		)	81.6			(52.1		)
Total other comprehensive (loss) income	(11.2		)	54.7			(57.4		)
Total comprehensive loss	$	(92.0	)	$	(512.2	)	$	(639.5	)

See accompanying Notes to Consolidated Financial Statements.

2019 Form 10-K 62

AUTODESK, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)



	January 31, 2019			January 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	886.0		$	1,078.0
Marketable securities	67.6			245.2
Accounts receivable, net	474.3			438.2
Prepaid expenses and other current assets	192.1			116.5
Total current assets	1,620.0			1,877.9
Marketable securities	—			190.8
Computer equipment, software, furniture, and leasehold improvements, net	149.7			145.0
Developed technologies, net	105.6			27.1
Goodwill	2,450.8			1,620.2
Deferred income taxes, net	65.3			81.7
Other assets	337.8			170.9
Total assets	$	4,729.2		$	4,113.6
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	101.6		$	94.7
Accrued compensation	280.8			250.9
Accrued income taxes	13.2			28.0
Deferred revenue	1,763.3			1,551.6
Other accrued liabilities	142.3			198.0
Total current liabilities	2,301.2			2,123.2
Long-term deferred revenue	328.1			403.5
Long-term income taxes payable	21.5			41.6
Long-term deferred income taxes	79.8			66.6
Long-term notes payable, net	2,087.7			1,586.0
Long-term other liabilities	121.8			148.7
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.01 par value; shares authorized 2.0; none issued or outstanding at January 31, 2019 and 2018	—			—
Common stock and additional paid-in capital, $0.01 par value; shares authorized 750.0; 219.4 outstanding at January 31, 2019 and 218.3 outstanding at January 31, 2018	2,071.5			1,952.7
Accumulated other comprehensive loss	(135.0		)	(123.8		)
Accumulated deficit	(2,147.4		)	(2,084.9		)
Total stockholders’ deficit	(210.9		)	(256.0		)
Total liabilities and stockholders' deficit	$	4,729.2		$	4,113.6

See accompanying Notes to Consolidated Financial Statements.

2019 Form 10-K 63

AUTODESK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)



	Fiscal year ended January 31,
	2019			2018			2017
Operating activities
Net loss	$	(80.8	)	$	(566.9	)	$	(582.1	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization, and accretion	95.2			108.4			139.2
Stock-based compensation expense	249.5			261.4			221.8
Deferred income taxes	(6.8		)	(39.1		)	(38.8		)
Restructuring and other exit costs, net	31.7			94.1			80.5
Other operating activities	2.2			7.3			(7.7		)
Changes in operating assets and liabilities, net of business combinations:
Accounts receivable	(25.4		)	13.3			201.5
Prepaid expenses and other current assets	7.5			(9.9		)	(13.5		)
Accounts payable and accrued liabilities	(58.5		)	(13.9		)	2.7
Deferred revenue	197.0			168.3			267.0
Accrued income taxes	(34.5		)	(22.1		)	(100.9		)
Net cash provided by operating activities	377.1			0.9			169.7
Investing activities
Purchases of marketable securities	(138.2		)	(514.0		)	(1,867.9		)
Sales of marketable securities	319.6			489.0			1,257.7
Maturities of marketable securities	211.4			594.3			1,057.2
Acquisitions, net of cash acquired	(1,040.2		)	—			(85.2		)
Capital expenditures	(67.0		)	(50.7		)	(76.0		)
Other investing activities	4.0			(12.2		)	(13.8		)
Net cash (used in) provided by investing activities	(710.4		)	506.4			272.0
Financing activities
Proceeds from issuance of common stock	90.9			94.4			119.6
Taxes paid related to net share settlement of equity awards	(143.4		)	(143.1		)	(76.2		)
Repurchase and retirement of common shares	(293.5		)	(699.0		)	(621.7		)
Proceeds from debt, net of discount	500.0			496.9			—
Repayments of debt	—			(400.0		)	—
Other financing activities	(2.1		)	(5.8		)	—
Net cash provided by (used in) financing activities	151.9			(656.6		)	(578.3		)
Effect of exchange rate changes on cash and cash equivalents	(10.6		)	14.2			(3.3		)
Net decrease in cash and cash equivalents	(192.0		)	(135.1		)	(139.9		)
Cash and cash equivalents at beginning of fiscal year	1,078.0			1,213.1			1,353.0
Cash and cash equivalents at end of fiscal year	$	886.0		$	1,078.0		$	1,213.1
Supplemental cash flow information:
Cash paid during the year for interest	$	59.0		$	54.6		$	47.6
Cash paid for income taxes, net of tax refunds	$	78.0		$	84.5		$	77.7
Non-cash investing and financing activities:
Fair value of equity awards assumed (See Note 6)	$	10.3		$	—		$	—
Fair value of common stock issued as consideration for business combination (See Note 6)	$	44.8		$	—		$	—

See accompanying Notes to Consolidated Financial Statements.

2019 Form 10-K 64

AUTODESK, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(In millions)



	Common stock and additional paid-in capital						Accumulated other comprehensive loss			Accumulated deficit			Total stockholders' (deficit) equity
Shares			Amount
Balances, January 31, 2016	224.4			$	1,821.5		$	(121.1	)	$	(80.8	)	$	1,619.6
Common shares issued under stock plans	5.6			43.4			—			—			43.4
Stock-based compensation expense	—			221.8			—			—			221.8
Tax benefits from employee stock plans	—			6.9			—			113.0			119.9
Net loss	—			—			—			(582.1		)	(582.1		)
Other comprehensive loss	—			—			(57.4		)	—			(57.4		)
Repurchase and retirement of common shares	(9.7	)		(217.3		)	—			(414.3		)	(631.6		)
Balances, January 31, 2017	220.3			1,876.3			(178.5		)	(964.2		)	733.6
Common shares issued under stock plans	4.9			(48.7		)	—			—			(48.7		)
Stock-based compensation expense	—			261.4			—			—			261.4
Net loss	—			—			—			(566.9		)	(566.9		)
Other comprehensive income	—			—			54.7			—			54.7
Repurchase and retirement of common shares	(6.9	)		(136.3		)	—			(553.8		)	(690.1		)
Balances, January 31, 2018	218.3			1,952.7			(123.8		)	(2,084.9		)	(256.0		)
Common shares issued under stock plans	3.0			(52.5		)	—			—			(52.5		)
Stock-based compensation expense	—			249.5			—			—			249.5
Pre-combination expense related to equity awards assumed	—			10.3			—			—			10.3
Cumulative effect of accounting changes	—			—			—			177.5			177.5
Net loss	—			—			—			(80.8		)	(80.8		)
Other comprehensive loss	—			—			(11.2		)	—			(11.2		)
Shares issued as consideration for business combination	0.3			44.8			—			—			44.8
Repurchase and retirement of common shares	(2.2	)		(133.3		)	—			(159.2		)	(292.5		)
Balances, January 31, 2019	219.4			$	2,071.5		$	(135.0	)	$	(2,147.4	)	$	(210.9	)

See accompanying Notes to Consolidated Financial Statements.

2019 Form 10-K 65

AUTODESK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

January 31, 2019

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

1**.** Business and Summary of Significant Accounting Policies

Business

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

Principles of Consolidation

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

Use of Estimates

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

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

Foreign Currency Translation and Transactions

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

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

Derivative Financial Instruments

Autodesk accounts for its derivative instruments as either assets or liabilities on the balance sheet and carries them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. Derivatives that do not qualify for hedge accounting are adjusted to fair value through earnings. See Note 3, "Financial Instruments" for information regarding Autodesk's hedging activities.

2019 Form 10-K 66

Cash and Cash Equivalents

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

Marketable Securities and Privately Held Company Investments

Marketable securities are stated at fair value. Marketable securities maturing within one year that are not restricted are classified as current assets. Substantially all marketable debt and equity investments held by Autodesk are classified as current based on the nature of the investments and their availability for use in current operations.

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

Privately held debt and equity securities (Level 3) are valued using significant unobservable inputs or data in an inactive market and the valuation requires the Company's judgment due to the absence of market prices and inherent lack of liquidity. These assumptions are inherently subjective and involve significant management judgment. Whenever possible, we use observable market data and rely on unobservable inputs only when observable market data is not available, when determining fair value.

The carrying value is not adjusted for the Company's privately held equity securities if there are no observable price changes in a same or similar security from the same issuer or if there are no identified events or changes in circumstances that may indicate impairment, as discussed below. In determining the estimated fair value of its strategic investments in privately held companies, the Company utilizes the most recent data available to the Company. In addition, the determination of whether an orderly transaction is for a same or similar investment requires significant management judgment including: the rights and obligations of the investments, the extent to which those differences would affect the fair values of those investments, and the impact of any differences based on the stage of operational development of the investee.

All of Autodesk’s marketable securities and privately held company investments are subject to a periodic impairment review. For any marketable debt securities, declines in fair value judged to be other-than-temporary on securities available for sale are included as a reduction to investment income. To determine whether a decline in value is other-than-temporary, the Company evaluates, among other factors: the duration and extent to which the fair value has been less than the carrying value and its intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. For the purposes of computing realized and unrealized gains and losses, the cost of securities sold is based on the specific-identification method. Interest on securities classified as available for sale is also included as a component of investment income.

For Autodesk's quarterly impairment assessment of privately held debt and equity securities strategic investment portfolio, the analysis encompasses an assessment of the severity and duration of the impairment and qualitative and quantitative analysis of other key factors including: the investee’s financial metrics, the investee’s products and technologies meeting or exceeding predefined milestones, market acceptance of the product or technology, other competitive products or technology in the market, general market conditions, management and governance structure of the investee, the investee’s liquidity, debt ratios and the rate at which the investee is using its cash. If the investment is considered to be impaired, the Company will record the investment at fair value by recognizing an impairment through the consolidated statement of operations and establishing a new carrying value for the investment.

For additional information, see “Concentration of Credit Risk” within this Note 1 and Note 3, “Financial Instruments.”

2019 Form 10-K 67

Accounts Receivable, Net

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



	2019			2018
Trade accounts receivable	$	526.6		$	469.2
Less: Allowance for doubtful accounts	(2.2		)	(2.3		)
Product returns reserve	(0.3		)	(0.2		)
Partner programs and other obligations	(49.8		)	(28.5		)
Accounts receivable, net (1)	$	474.3		$	438.2


(1)	Autodesk adopted ASU No. 2014-09, “Revenue from Contracts with Customers" regarding Accounting Standards Codification (ASC Topic 606) during the first quarter of fiscal 2019. As such, current year balances are shown under ASC Topic 606 and prior year balances are shown under ASC Topic 605. See Note 1, "Business and Summary of Significant Accounting Policies-Accounting Standards Adopted", of our consolidated financial statements for additional information.

(1)

Autodesk adopted ASU No. 2014-09, “Revenue from Contracts with Customers" regarding Accounting Standards Codification (ASC Topic 606) during the first quarter of fiscal 2019. As such, current year balances are shown under ASC Topic 606 and prior year balances are shown under ASC Topic 605. See Note 1, "Business and Summary of Significant Accounting Policies-Accounting Standards Adopted", of our consolidated financial statements for additional information.

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

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

Concentration of Credit Risk

Autodesk places its cash, cash equivalents, and marketable securities in highly liquid instruments with, and in the custody of, multiple diversified financial institutions globally with high credit ratings and limits the amounts invested with any one institution, type of security, and issuer. Autodesk’s primary commercial banking relationship is with Citigroup Inc. and its global affiliates. Citibank, N.A., an affiliate of Citigroup, is one of the lead lenders and an agent in the syndicate of Autodesk’s $650.0 million line of credit facility.

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

Autodesk’s accounts receivable are derived from sales to a large number of resellers, distributors, and direct customers in the Americas, EMEA, and APAC geographies. Autodesk performs ongoing evaluations of these partners' and customers' financial condition and limits the amount of credit extended when deemed necessary, but generally does not require collateral from such parties. Total sales to the Company's largest distributor Tech Data Corporation, and its global affiliates (“Tech Data”), accounted for 35%, 31%, and 30% of Autodesk's net revenue for fiscal years ended January 31, 2019, 2018, and 2017, respectively. The majority of the net revenue from sales to Tech Data is for sales made outside of the United States. In addition, Tech Data accounted for 29% and 31% of trade accounts receivable as of January 31, 2019, and 2018, respectively. No other customer accounted for more than 10% of Autodesk's total net revenue or trade accounts receivable for each of the respective periods.

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

Computer equipment, software, and furniture are depreciated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the

2019 Form 10-K 68

shorter of their estimated useful lives or the lease term. Depreciation expense was $59.2 million in fiscal 2019, $67.6 million in fiscal 2018, and $73.1 million in fiscal 2017.

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



	2019			2018
Computer hardware, at cost	$	190.2		$	217.1
Computer software, at cost	66.7			72.6
Leasehold improvements, land and buildings, at cost	247.8			228.9
Furniture and equipment, at cost	67.2			63.4
Computer software, hardware, leasehold improvements, furniture, and equipment, at cost	571.9			582.0
Less: Accumulated depreciation	(422.2		)	(437.0		)
Computer software, hardware, leasehold improvements, furniture, and equipment, net	$	149.7		$	145.0

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

Software Development Costs

Software development costs incurred prior to the establishment of technological feasibility are included in research and development expenses. Autodesk defines establishment of technological feasibility as the completion of a working model. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the products are capitalized and generally amortized over a three-year period, if material. Autodesk had no material capitalized software development costs at January 31, 2019, and January 31, 2018.

Other Intangible Assets, Net

Other intangible assets include developed technologies, customer relationships, trade names, patents, user lists and the related accumulated amortization. These assets are shown as “Developed technologies, net” and as part of “Other assets” in the Consolidated Balance Sheet. The majority of Autodesk’s other intangible assets are amortized to expense over the estimated economic life of the product, which ranges from two to ten years. Amortization expense for developed technologies, customer relationships, trade names, patents, and user lists was $33.5 million in fiscal 2019, $36.6 million in fiscal 2018 and $72.2 million in fiscal 2017.

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



	2019			2018
Developed technologies, at cost	$	670.2		$	578.5
Customer relationships, trade names, patents, and user lists, at cost (1)	533.1			372.5
Other intangible assets, at cost (2)	1,203.3			951.0
Less: accumulated amortization	(922.5		)	(895.8		)
Other intangible assets, net	$	280.8		$	55.2


(1)	Included in “Other assets” in the accompanying Consolidated Balance Sheets.


(2)	Includes the effects of foreign currency translation.

2019 Form 10-K 69

The weighted average amortization period for developed technologies, customer relationships, trade names, patents, and user lists during fiscal 2019 was 5.4 years. Excluding in-process research and development, expected future amortization expense for developed technologies, customer relationships, trade names, patents, and user lists for each of the fiscal years ended thereafter is as follows:



	Fiscal Year ended January 31,
2020	$	73.6
2021	64.8
2022	49.1
2023	37.6
Thereafter	19.2
Total	$	244.3

Goodwill

Goodwill consists of the excess of the consideration transferred over the fair value of net assets acquired in business combinations. Autodesk tests goodwill for impairment annually in its fourth fiscal quarter or more often if circumstances indicate a potential impairment may exist, or if events have affected the composition of reporting units.

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

The quantitative impairment test is necessary when either Autodesk does not use the optional assessment or, as a result of the optional assessment, it is not more likely than not that the fair value of the reporting unit is greater than its carrying value. In situations in which an entity's reporting unit is publicly traded, the fair value of the Company may be approximated by its market capitalization, in performing the quantitative impairment test.

Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced to fair value through an impairment charge recorded in the Company's statements of operations. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. The value of Autodesk’s goodwill could also be impacted by future adverse changes such as: (i) declines in Autodesk’s actual financial results, (ii) a sustained decline in Autodesk’s market capitalization, (iii) a significant slowdown in the worldwide economy or the industries Autodesk serves, or (iv) changes in Autodesk’s business strategy.

For the annual impairment test, Autodesk's market capitalization was substantially in excess of the carrying value of the Company as of January 31, 2019. Accordingly, Autodesk has determined there was no goodwill impairment during the fiscal year ended January 31, 2019. In addition, Autodesk did not recognize any goodwill impairment losses in fiscal 2018 or 2017.

2019 Form 10-K 70

The following table summarizes the changes in the carrying amount of goodwill during the fiscal years ended January 31, 2019 and 2018:



	January 31, 2019			January 31, 2018
Goodwill, beginning of the year	$	1,769.4		$	1,710.3
Less: accumulated impairment losses, beginning of the year	(149.2		)	(149.2		)
Additions arising from acquisitions during the year	866.9			—
Effect of foreign currency translation, measurement period adjustments, and other (1)	(36.3		)	59.1
Goodwill, end of the year	$	2,450.8		$	1,620.2


(1)	Purchase accounting adjustments reflect revisions made to the Company’s preliminary determination of estimated fair value of assets and liabilities assumed during fiscal 2019 and 2018.

Impairment of Long-Lived Assets

At least annually or more frequently as circumstances dictate, Autodesk reviews its long-lived assets for impairment whenever impairment indicators exist. Autodesk continually monitors events and changes in circumstances that could indicate the carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur, Autodesk assesses recoverability of these assets. Recoverability is measured by comparison of the carrying amounts of the assets to the future undiscounted cash flow the assets are expected to generate. If the long-lived assets are considered to be impaired, the impairment to be recognized is equal to the amount by which the carrying value of the assets exceeds its fair market value. Autodesk did not recognize any material impairments of long-lived assets during the fiscal years ended January 31, 2019, 2018, and 2017, respectively.

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

Deferred Tax Assets

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

Stock-based Compensation Expense

The following table summarizes stock-based compensation expense for fiscal 2019, 2018, and 2017, respectively, as follows:



	Fiscal Year Ended January 31,
	2019			2018			2017
Cost of subscription and maintenance revenue	$	13.2		$	11.9		$	8.6
Cost of other revenue	4.3			4.0			5.5
Marketing and sales	109.4			107.3			94.1
Research and development	82.6			82.9			81.3
General and administrative	40.0			55.3			32.3
Stock-based compensation expense related to stock awards and Employee Qualified Stock Purchase Plan ("ESPP") purchases	249.5			261.4			221.8
Tax benefit	(2.6		)	(2.6		)	(2.6		)
Stock-based compensation expense related to stock awards and ESPP purchases, net	$	246.9		$	258.8		$	219.2

2019 Form 10-K 71

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



	Fiscal Year Ended			Fiscal Year Ended		Fiscal Year Ended
	January 31, 2019			January 31, 2018		January 31, 2017
	Stock Option Plans	Performance Stock Unit	ESPP	Performance Stock Unit	ESPP	Performance Stock Unit	ESPP
Range of expected volatilities	37 - 42%	36%	33 - 38%	32%	31 - 34%	38 - 39%	30 - 40%
Range of expected lives (in years)	0.5 - 3.8	N/A	0.5 - 2.0	N/A	0.5 - 2.0	N/A	0.5 - 2.0
Expected dividends	—%	—%	—%	—%	—%	—%	—%
Range of risk-free interest rates	2.3 - 2.7%	2.0%	1.9 - 2.8%	1.0 - 1.2%	0.9 - 1.4%	0.6 - 0.7%	0.5 - 0.9%

Autodesk estimates expected volatility for stock-based awards based on the average of the following two measures: (1) a measure of historical volatility in the trading market for the Company’s common stock, and (2) the implied volatility of traded forward call options to purchase shares of the Company’s common stock. The expected volatility for performance stock units subject to market conditions includes the expected volatility of Autodesk's peer companies within the S&P Computer Software Select Index or S&P North American Technology Software Index with a market capitalization over $2.00 billion, depending on the award type.

Autodesk estimates the expected life of stock-based awards using both exercise behavior and post-vesting termination behavior as well as consideration of outstanding options. The range of expected lives of ESPP awards are based upon the four, six-month exercise periods within a 24-month offering period.

Autodesk did not pay cash dividends in fiscal 2019, 2018, or 2017 and does not anticipate paying any cash dividends in the foreseeable future. Consequently, an expected dividend yield of zero is used in the BSM option pricing model and the Monte Carlo simulation model.

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

Autodesk recognizes expense only for the stock-based awards that ultimately vest. Autodesk accounts for forfeitures of stock-based awards as those forfeitures occur.

Advertising Expenses

Advertising costs are expensed as incurred. Total advertising expenses incurred were $37.5 million in fiscal 2019, $31.1 million in fiscal 2018, and $33.6 million in fiscal 2017.

Net Loss Per Share

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

Defined Benefit Pension Plans

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

2019 Form 10-K 72

assets represents the current market value of Autodesk's cumulative company and participant contributions made to the various plans in effect.

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

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

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

Accounting Standards in Fiscal 2019

With the exception of those discussed below, there have been no recent changes in accounting pronouncements issued by FASB or adopted by the Company during the fiscal year ended January 31, 2019, that are applicable to the Company.

Accounting Standards Adopted

Effective in the third quarter of fiscal 2019, Autodesk early adopted ASU No. 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract." The ASU allows implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement. The ASU also requires amortization expense be recognized in the same line item as the related fees associated with the arrangement and related capitalized implementation costs be presented in the same line as the prepayment for the hosting fee. Changes to Autodesk's disclosures appear in this filing. The new guidance was applied prospectively to eligible costs as of August 1, 2018, and did not have a material impact on our Consolidated Financial Statements.

In August 2018, as part of FASB’s Disclosure Framework project, FASB issued ASU No. 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans," and ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement." FASB issued these ASUs to help improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by GAAP that is most important to users of each entity’s financial statements. Effective in the third quarter of fiscal 2019, Autodesk early adopted ASU No. 2018-14 and ASU No. 2018-13. Most changes required retrospective application with a few exceptions in ASU No. 2018-13 that allowed for prospective adoption.

Effective in the first quarter of fiscal 2019, Autodesk adopted FASB Accounting Standards Update ("ASU") No. 2017-05, "Other Income– Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets." The ASU, among other things, clarifies the scope of the derecognition of nonfinancial assets, provides the definition of in-substance financial assets, and impacts the accounting for partial sales of nonfinancial assets by requiring full gain recognition upon the sale. The new guidance was adopted prospectively as there was no impact on the Company's prior periods consolidated statements of financial position and results of operations which would be reflected in either the full or modified retrospective transition approach. The future effect of the adoption will depend upon the nature of the Company's future dispositions, if any.

Effective in the first quarter of fiscal 2019, Autodesk adopted FASB ASU No. 2017-01, "Business Combinations: Clarifying the Definition of a Business" which provides a more robust framework to use in determining when a set of assets and activities is considered a business. The new guidance was applied on a prospective basis and the adoption did not have any impact on Autodesk's consolidated financial statements. Any future effect of the adoption will depend upon the nature of the Company's future acquisitions, if any.

2019 Form 10-K 73

Effective in the first quarter of fiscal 2019, Autodesk adopted FASB ASU No. 2016-16, “Income Taxes: Intra-Entity Transfers of Assets Other than Inventory” which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The new guidance was applied on a modified retrospective basis with a cumulative increase of $1.9 million to the opening balance of "Accumulated deficit" at February 1, 2018. The ASU did not have any other material impacts on Autodesk's Consolidated Financial Statements.

Effective in the first quarter of fiscal 2019, Autodesk adopted FASB ASU No. 2016-01 regarding Accounting Standards Codification ("ASC") Topic 825-10, "Financial Instruments - Overall." The amendments address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments, and require equity securities to be measured at fair value, unless the measurement alternative method has been elected for equity investments without readily determinable fair values ("non-marketable equity securities"), with changes in fair value recognized through net income. The amendments also simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment for impairment quarterly at each reporting period. Under the measurement alternative method, the non-marketable equity securities will be measured at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, which will be recorded within the Consolidated Statement of Operations. The determination of whether a transaction is for a similar investment will require significant management judgment including consideration of the rights and obligations between the investments and the extent to which those differences would affect the fair values of those investments with additional consideration for the stage of development of the investee company.

Autodesk prospectively adopted the amendments related to non-marketable equity securities existing as of the date of adoption. The new standard may add volatility to the Company's statements of operations in future periods, due to changes in market prices of the Company's investments in publicly held equity investments and the valuation and timing of observable price changes and impairments of its investments in non-marketable securities. See Note 3, "Financial Instruments" for more information.

Revenue from contracts with customers

Effective in the first quarter of fiscal 2019, Autodesk adopted ASU No. 2014-09, “Revenue from Contracts with Customers" regarding Accounting Standards Codification (ASC Topic 606)” and the subsequent and related ASU No. 2015-14, ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12, and ASU No. 2016-20.

Under ASC Topic 606, the Company has concluded that the desktop software and related substantial cloud functionality that are included in the majority of its product subscription offerings and enterprise arrangements are not distinct in the context of the contract as they are considered highly interrelated and represent a single combined performance obligation that should be recognized over time. Therefore, the adoption of ASC Topic 606 has not resulted in a material change in the timing and amount of the recognition of revenue for the majority of the Company's product subscription offerings and enterprise arrangements.

One impact of the new standard relates to product subscriptions that do not incorporate substantial cloud functionality. A limited number of Autodesk's product subscriptions do not incorporate substantial cloud functionality, and therefore are not considered highly interrelated. Under ASU No. 2014-09, these limited number of product subscriptions are recognized as separate and distinct license and service performance obligations. Under ASU No. 2009-13, "Revenue Recognition" regarding Accounting Standards Codification (ASC Topic 605), licenses sold with undelivered elements without vendor-specific objective evidence ("VSOE") are recognized ratably over the term of the undelivered elements. Under ASC Topic 606, Autodesk is no longer required to establish VSOE to recognize software license revenue separately from the other elements and recognizes software licenses once the customer obtains control of the license, which is generally upon delivery of the license. Therefore, revenue allocated to the licenses in these offerings under ASC Topic 606 is recognized at a point in time instead of over the contract term.

Autodesk adopted ASC Topic 606 using the modified retrospective method, with a cumulative decrease of $89.0 million to the opening balance of "Accumulated deficit" at February 1, 2018. Autodesk applied the standard only to contracts that are not completed as of the date of initial application. The comparative information has not been adjusted and continues to be reported under ASC Topic 605. The details of the quantitative impact of the adoption on the fiscal year ended January 31, 2019, are shown below. See the Note 2, "Revenue Recognition" for more details.

2019 Form 10-K 74

Costs to acquire a contract from a customer

With the adoption of ASC Topic 606, Autodesk also adopted ASC Topic 340-40, "Other Assets and Deferred Costs—Contracts with Customers." Prior to the adoption of ASC Topic 340-40, Autodesk previously recognized compensation paid to sales employees and certain resellers related to obtaining customer contracts in marketing and sales expense in the Consolidated Statements of Operations when incurred. Under ASC Topic 340-40, Autodesk capitalizes this sales compensation as contract costs when they are incremental, directly incurred to obtain a contract with a customer and expected to be recoverable. The contract costs are amortized based on the transfer of goods or services to which the contract costs relate.

Under the modified retrospective method, Autodesk booked a cumulative decrease of $90.4 million to the opening balance of "Accumulated deficit" at February 1, 2018. The comparative information has not been adjusted and continues to be reported as incurred. The details of the quantitative impact of the adoption on the fiscal year ended January 31, 2019, are shown below. See Note 7, "Deferred Compensation" for disclosures under the new standard.

Quantitative effect of ASC Topics 606 and 340-40 adoption

Under the modified retrospective adoption, Autodesk calculated the impact of the adoption during fiscal 2019, as the first year of adoption. The following table shows select line items that were materially impacted by the adoption of ASC Topics 606 and 340-40 on Autodesk’s Consolidated Statements of Operations for the fiscal year ended January 31, 2019:



	For the Fiscal Year ended January 31, 2019
	As reported			Impact from the adoption of ASC 606 and 340-40			As adjusted
Net revenue (1)
Subscription	$	1,802.3		$	(16.6	)	$	1,785.7
Maintenance	635.1			5.7			640.8
Other	132.4			(11.3		)	121.1
Cost of revenue (1)
Cost of subscription and maintenance revenue	216.0			(0.1		)	215.9
Cost of other revenue	54.4			1.1			55.5
Operating expenses (1):
Marketing and sales	1,183.9			(17.9		)	1,166.0
Provision for income taxes	(38.1		)	(4.8		)	(42.9		)
Net loss (2)	$	(80.8	)	$	(10.1	)	$	(90.9	)
Basic net loss per share	$	(0.37	)	$	(0.05	)	$	(0.42	)
Diluted net loss per share	$	(0.37	)	$	(0.05	)	$	(0.42	)


(1)	While not shown here, gross margin, loss from operations, and loss before income taxes have consequently been affected as a result of the net effect of the adjustments noted above.


(2)	The impact on the Consolidated Statements of Comprehensive Loss is limited to the net effects of the impacts noted above on the Consolidated Statements of Operations, specifically on the line item "Net loss."

2019 Form 10-K 75

The following table shows select line items that were materially impacted by the adoption of ASC Topics 606 and 340-40 on Autodesk’s Consolidated Balance Sheet as of January 31, 2019:



	As reported			Impact from the adoption of ASC 606 and 340-40			As adjusted
ASSETS
Current assets:
Accounts receivable, net	$	474.3		$	73.4		$	547.7
Prepaid expenses and other current assets (1)	192.1			(79.4		)	112.7
Deferred income taxes, net	65.3			7.0			72.3
Other assets (1)	337.8			(17.9		)	319.9
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Deferred revenue	1,763.3			140.6			1,903.9
Other accrued liabilities	142.3			1.7			144.0
Long-term deferred revenue	328.1			37.2			365.3
Long-term income taxes payable	21.5			(0.2		)	21.3
Long-term deferred income taxes	79.8			(6.7		)	73.1
Stockholders’ deficit:
Accumulated deficit (2)	$	(2,147.4	)	$	(189.5	)	$	(2,336.9	)


(1)	Short term and long term "contract assets" under ASC Topic 606 are included within "Prepaid expenses and other current assets" and "Other assets", respectively, on the Consolidated Balance Sheet.


(2)	Included in the "Accumulated deficit" adjustment is $179.4 million for the cumulative effect adjustment of adopting ASC Topic 606 and 340-40 on the opening balance as of February 1, 2018.

Adoption of the standard had no impact to net cash provided by or (used in) operating, financing, or investing activities on the Company’s Consolidated Statements of Cash Flows.

Recently Issued Accounting Standards But Not Yet Adopted

In February 2018, FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” The amendment allows entities to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The amendment only impacts the income tax effect of the passage of the Tax Cuts and Jobs Act but does not affect the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations. The amendment is effective for Autodesk's fiscal year beginning February 1, 2019. Autodesk currently expects the impact to stockholders' deficit and other comprehensive loss to be approximately $1.3M.

In August 2017, FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The amendment helps simplify certain aspects of hedge accounting and results in a more accurate portrayal of the economics of an entity’s risk management activities in its financial statements. For cash flow and net investment hedges as of the adoption date, the guidance requires a modified retrospective approach. The amended presentation and disclosure guidance is required only prospectively. Autodesk will adopt the amendment for the fiscal year beginning February 1, 2019, the required adoption date. The transition impact, if any, is expected to be immaterial and no substantive changes are expected to Autodesk’s current processes, accounting, or disclosures for cash flow hedges.

In June 2016, FASB issued ASU No. 2016-13 regarding ASC Topic 326, "Financial Instruments - Credit Losses," which modifies the measurement of expected credit losses of certain financial instruments. Autodesk plans to adopt ASU No. 2016-13 as of the effective date which represents Autodesk’s fiscal year beginning February 1, 2020. Autodesk does not believe the ASU will have a material impact on its consolidated financial statements.

In February 2016, FASB issued ASU No. 2016-02, Leases (ASC Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about

2019 Form 10-K 76

leasing transactions. The new standard requires entities to reflect the net present value of all future fixed lease payments for both operating and finance leases. It also requires entities to disclose fixed and variable lease payments separately and by lease type (operating vs. finance leases). In addition, FASB issued ASU No. 2018-10 and 2018-11 in July 2018 and ASU No. 2018-20 in December 2018 to help provide interpretive clarifications on various issues raised by stakeholders. ASU No. 2018-10 clarifies ambiguous or potentially conflicting guidance in ASU No. 2016-02 but is not expected to have a material impact on Autodesk. ASU No. 2018-11 provides an additional transition option to apply ASU No. 2016-02 upon adoption of the new standard. ASU No. 2018-20 allows lessors, as an accounting policy election, to treat sales taxes and other similar taxes as lessee costs only. ASU No. 2018-20 also requires lessors to exclude certain lessor costs paid by lessees directly to third parties from its variable payments, and therefore revenue, and requires lessors to allocate other variable payments to be allocated between lease and nonlease components.

Autodesk will adopt ASU No. 2016-02 as of February 1, 2019 using the modified retrospective method permitted under ASC No. 2018-11 for all existing leases. Under ASU No. 2016-02, Autodesk is required to recognize an asset and offsetting liability upon adoption. The asset and liability are measured by taking the present value of all future fixed lease payments, discounted using the Company’s incremental borrowing rate. Autodesk has elected to opt for the practical expedients to not reassess whether any existing contracts are leases or contain a lease, not reassess the lease classification of existing leases, not reassess initial direct costs for existing leases, and to combine lease and non-lease components for new leases post adoption.

In preparation for adoption of the standard, Autodesk is implementing key systems, processes and internal controls to enable the preparation of financial information. ASC No. 2016-02 will have a material impact on the Company’s consolidated balance sheet because of the capitalization of future fixed lease payments. ASU No. 2016-02 is not expected to have a material impact to the Company’s consolidated statement of operations or net cash provided by operating activities.

2**.** Revenue Recognition

Revenue Recognition

Autodesk’s revenue is divided into three categories: subscription revenue, maintenance revenue, and other revenue. Revenue is recognized when control for these offerings is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for products and services.

Our contracts with customers may include promises to transfer multiple products and services to a customer. Determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation may require significant judgment. Judgment is required to determine the level of integration and interdependency between individual components of software and cloud functionality. This determination influences whether the software is considered distinct and accounted for separately as a license performance obligation, or not distinct and accounted for together with the cloud functionality as a single subscription performance obligation recognized over time.

For product subscriptions and enterprise business agreement ("EBA") subscriptions in which the desktop software and related cloud functionality are highly interrelated, the combined performance obligation is recognized ratably over the contract term as the obligation is delivered. For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer. For standalone maintenance subscriptions, cloud subscriptions, and technical support services, the performance obligation is satisfied ratably over the contract term as those services are delivered. For consulting services, the performance obligation is satisfied over a period of time as those services are delivered.

When an arrangement includes multiple performance obligations which are concurrently delivered and have the same pattern of transfer to the customer (the services transfer to the customer over the contract period), we account for those performance obligations as a single performance obligation.

For contracts with more than one performance obligation, the transaction price is allocated among the performance obligations in an amount that depicts the relative standalone selling price ("SSP") of each obligation. Judgment is required to determine the SSP for each distinct performance obligation. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount that should be allocated based on the relative SSP of the various products and services.

2019 Form 10-K 77

In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that includes market conditions and other observable inputs. We typically have more than one SSP for individual products and services due to the stratification of those products and services by customer and circumstance. In these instances, we use relevant information such as the sales channel and geographic region to determine the SSP.

Our indirect channel model includes both a two-tiered distribution structure, where Autodesk sells to distributors that subsequently sell to resellers, and a one-tiered structure where Autodesk sells directly to resellers. For these arrangements, transfer of control begins at the time access to our subscriptions is made available electronically to our customer, provided all other criteria for revenue recognition are met. Judgment is required to determine whether our distributors and resellers have the ability to honor their commitment to pay, regardless of whether they collect payment from their customers. If we were to change this assessment, it could cause a material increase or decrease in the amount of revenue that we report in a particular period.

As part of the indirect channel model, we have a partner incentive program that uses quarterly attainment of monetary rewards to motivate distributors and resellers to achieve mutually agreed upon business goals in a specified time period. Incentives related to our subscription program are recorded as a reduction to deferred revenue in the period the subscription transaction is billed, and are subsequently recognized as a reduction to subscription revenue over the contract period. A small portion of partner incentives reduce other revenue in the current period. These incentive balances do not require significant assumptions or judgments. Depending on how the payments are made, the reserves associated with the partner incentive program are recorded on the balance sheet as either contra accounts receivable or accounts payable.

Revenue Disaggregation

Autodesk recognizes revenue from the sale of (1) product subscriptions, cloud service offerings, and flexible enterprise business agreements ("EBAs"), (2) renewal fees for existing maintenance plan agreements that were initially purchased with a perpetual software license, and (3) consulting, training and other goods and services. The three categories are presented as line items on Autodesk's Consolidated Statements of Operations.

2019 Form 10-K 78

Information regarding the components of Autodesk's net revenue from contracts with customers by geographic location, product family, and sales channel is as follows:



	Fiscal Year ended January 31,
	2019		2018		2017
Net revenue by product family (1):
Architecture, Engineering and Construction	$	1,021.6	$	787.5	$	810.4
Manufacturing	616.2		528.8		575.2
AutoCAD and AutoCAD LT	731.8		561.4		472.7
Media and Entertainment	182		152.1		138.8
Other	18.2		26.8		33.9
Total net revenue	$	2,569.8	$	2,056.6	$	2,031.0

Net revenue by geographic area:
Americas
U.S.	$	874.6	$	740.4	$	742.1
Other Americas	175.3		130.7		129.8
Total Americas	1,049.9		871.1		871.9
Europe, Middle East and Africa	1,034.3		815.4		800.4
Asia Pacific	485.6		370.1		358.7
Total net revenue	$	2,569.8	$	2,056.6	$	2,031.0

Net revenue by sales channel:
Indirect	$	1,830.8	$	1,443.8	$	1,468.9
Direct	739.0		612.8		562.1
Total net revenue	$	2,569.8	$	2,056.6	$	2,031.0


(1)	Due to changes in the go-to-market offerings of our AutoCAD product subscription, prior period balances have been adjusted to conform to current period presentation.

Payments for product subscriptions, industry collections, cloud subscriptions, and maintenance subscriptions are typically due up front with payment terms of 30 to 45 days. Payments on EBAs are typically due in annual installments over the contract term, with payment terms of 30 to 60 days. Autodesk does not have any material variable consideration, such as obligations for returns, refunds, or warranties or amounts payable to customers for which significant estimation or judgment is required as of the reporting date.

As of January 31, 2019, Autodesk had total billed and unbilled deferred revenue of $2.7 billion, which represents the total contract price allocated to undelivered performance obligations, which are generally recognized over the next three years. We expect to recognize $1.9 billion or 72% of this revenue during the next 12 months. We expect to recognize the remaining $0.8 billion or 28% of this revenue thereafter.

We expect that the amount of billed and unbilled deferred revenue will change from quarter to quarter for several reasons, including the specific timing, duration and size of customer subscription and support agreements, varying billing cycles of such agreements, the specific timing of customer renewals, and foreign currency fluctuations.

Contract Balances

We receive payments from customers based on a billing schedule as established in our contracts. Contract assets relate to performance completed in advance of scheduled billings. Contract assets were not material as of January 31, 2019. Deferred revenue relates to payments received in advance of performance under the contract. The primary changes in our contract assets and deferred revenues are due to our performance under the contracts and billings.

2019 Form 10-K 79

Revenue recognized during the fiscal year ended January 31, 2019, that was included in the deferred revenue balances at January 31, 2018, was $1.5 billion. The satisfaction of performance obligations typically lags behind payments received under revenue contracts from customers, which may lead to an increase in our deferred revenue balance over time.

3**.** Financial Instruments

The following tables summarize the Company's financial instruments' amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category as of January 31, 2019 and 2018.



			January 31, 2019
			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value			Level 1		Level 2			Level 3
Cash equivalents (1):
	Certificates of deposit		$	1.0	$	—	$	—		$	1.0		$	—	$	1.0		$	—
	Commercial paper		87.9		—		—			87.9			—		87.9			—
	Corporate debt securities		5.0		—		—			5.0			—		5.0			—
	Custody cash deposit		0.8		—		—			0.8			0.8		—			—
	Money market funds		281.4		—		—			281.4			281.4		—			—
Marketable securities:
	Short-term available-for-sale
		Other (2)	6.2		1.1		—			7.3			2.7		4.6			—
	Short-term trading securities
		Mutual funds	56.6		3.7		—			60.3			60.3		—			—
Convertible debt securities (3)			4.6		1.9		(2.1		)	4.4			—		—			4.4
Derivative contract assets (4)			1.7		8.6		(1.8		)	8.5			—		7.7			0.8
Derivative contract liabilities (5)			—		—		(7.4		)	(7.4		)	—		(7.4		)	—
		Total	$	445.2	$	15.3	$	(11.3	)	$	449.2		$	345.2	$	98.8		$	5.2


(1)	Included in “Cash and cash equivalents” in the accompanying Consolidated Balance Sheets.


(2)	Consists of corporate bonds, commercial paper, and common stock.


(3)	Considered “available for sale” and included in “Other assets” in the accompanying Consolidated Balance Sheets.


(4)	Included in “Prepaid expenses and other current assets,” “Other assets,” or “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.


(5)	Included in “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.

2019 Form 10-K 80



			January 31, 2018
			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value			Level 1		Level 2			Level 3
Cash equivalents (1):
	Agency bonds		$	5.0	$	—	$	—		$	5.0		$	5.0	$	—		$	—
	Certificates of deposit		17.4		—		—			17.4			17.4		—			—
	Commercial paper		324.2		—		—			324.2			—		324.2			—
	Corporate debt securities		5.0		—		—			5.0			5.0		—			—
	Custody cash deposit		5.2		—		—			5.2			5.2		—			—
	Money market funds		278.8		—		—			278.8			—		278.8			—
	Municipal bonds		5.0		—		—			5.0			5.0		—			—
	Sovereign debt		2.0		—		—			2.0			—		2.0			—
	U.S. government securities		—		—		—			—			—		—			—
Marketable securities:
	Short-term available-for-sale
		Agency bonds	—		—		—			—			—		—			—
		Asset backed securities	13.1		—		—			13.1			—		13.1			—
		Certificates of deposit	—		—		—			—			—		—			—
		Commercial paper	27.5		—		—			27.5			—		27.5			—
		Corporate debt securities	99.4		—		(0.1		)	99.3			99.3		—			—
		Municipal bonds	—		—		—			—			—		—			—
		Sovereign debt	9.2		—		—			9.2			7.7		1.5			—
		U.S. government securities	37.1		—		—			37.1			37.1		—			—
	Short-term trading securities
		Mutual funds	50.1		8.9		—			59.0			59.0		—			—
	Long-term available-for-sale
		Agency bonds	13.7		—		(0.1		)	13.6			13.6		—			—
		Asset backed securities	36.8		—		(0.2		)	36.6			—		36.6			—
		Corporate debt securities	100.2		0.1		(0.4		)	99.9			99.9		—			—
		Municipal bonds	12.7		—		(0.1		)	12.6			12.6		—			—
		Sovereign debt	2.8		—		—			2.8			—		2.8			—
		U.S. government securities	25.5		—		(0.2		)	25.3			25.3		—			—
Convertible debt securities (2)			7.5		0.5		(0.2		)	7.8			—		—			7.8
Derivative contract assets (3)			2.0		7.5		(1.3		)	8.2			—		7.2			1.0
Derivative contract liabilities (4)			—		—		(26.6		)	(26.6		)	—		(26.6		)	—
		Total	$	1,080.2	$	17.0	$	(29.2	)	$	1,068.0		$	392.1	$	667.1		$	8.8


(1)	Included in “Cash and cash equivalents” in the accompanying Consolidated Balance Sheets.


(2)	Considered "available for sale" securities and included in "Other assets" in the accompanying Consolidated Balance Sheets.


(3)	Included in “Prepaid expenses and other current assets,” "Other assets," or “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.


(4)	Included in “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.

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

2019 Form 10-K 81

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

Autodesk's cash equivalents, marketable securities, and financial instruments are primarily classified within Level 1 or Level 2 of the fair value hierarchy. Autodesk values its securities on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1) or inputs other than quoted prices that are observable either directly or indirectly in determining fair value (Level 2). Autodesk's Level 2 securities are valued primarily using observable inputs other than quoted prices in active markets for identical assets and liabilities. Autodesk's Level 3 securities consist of investments held in convertible debt securities, and derivative contracts.

A reconciliation of the change in Autodesk’s Level 3 items for the fiscal year ended January 31, 2019 was as follows:



	Fair Value Measurements Using Significant Unobservable Inputs
	(Level 3)
		Derivative Contracts			Convertible Debt Securities			Total
Balances, January 31, 2018		$	1.0		$	7.8		$	8.8
Settlements		—			(3.5		)	(3.5		)
(Losses) Gains included in earnings (1)		(0.2		)	0.5			0.3
Losses included in OCI		—			(0.4		)	(0.4		)
Balances, January 31, 2019		$	0.8		$	4.4		$	5.2


(1)	Included in “Interest and other expense, net” in the accompanying Consolidated Statements of Operations.

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



	January 31, 2019
	Cost		Fair Value
Due within 1 year	$	10.8	$	11.7
Total	$	10.8	$	11.7

As of January 31, 2019 and 2018, Autodesk had no securities, individually and in the aggregate, in a continuous unrealized loss position for greater than twelve months.

The sales or redemptions of “available-for-sale securities” in fiscal 2019 and 2018 resulted in a loss of $1.3 million and $0.3 million, respectively, and a gain of $1.5 million in 2017. The loss and gains were recorded in "Interest and other expense, net" on the Company's Consolidated Statements of Operations.

Proceeds from the sale and maturity of marketable securities for fiscal 2019 and fiscal 2018 were $531.0 million and $1.08 billion, respectively.

2019 Form 10-K 82

Non-marketable equity securities

As of January 31, 2019 and 2018, Autodesk had $111.6 million and $112.3 million, respectively, in direct investments in privately held companies. These non-marketable equity securities investments do not have readily determined fair value and with the adoption of ASU No. 2016-01 during the first quarter of fiscal 2019, Autodesk elected to use the measurement alternative to account for the adjustment of these investments in a given quarter. See "Note 1, "Business and Summary of Significant Accounting Policies" for more details of the adoption.

Under the measurement alternative method, these investments are measured at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer in the current period. To determine if a transaction is for a similar investment, Autodesk considers the rights and obligations between the investments and the extent to which those differences would affect the fair values of those investments with additional consideration for the stage of development of the investee company. The fair value would then be adjusted positively or negatively based on available information such as pricing in recent rounds of financing. During the fiscal year ended January 31, 2019, Autodesk recorded $6.2 million as a positive adjustment on certain of its privately held investments, reflected as a gain in "Interest and other income (expense), net" on the Company's Consolidated Statement of Operations.

Non-marketable equity securities investments are periodically assessed for impairment based on available information such as current cash positions, earnings and cash flow positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. Autodesk does not intend to sell these investments and it is not more likely than not that Autodesk will be required to sell the investment before recovery of the cost basis. If Autodesk determines that an impairment has occurred, Autodesk writes down the investment to its fair value. During fiscal 2019, fiscal 2018 and fiscal 2017, Autodesk recorded $4.8 million, $15.5 million and $1.3 million, respectively, in impairments on its privately held investments, reflected as a loss in "Interest and other expense, net" on the Company's Consolidated Statements of Operations. Autodesk does not consider the remaining investments to be impaired at January 31, 2019.

Derivative Financial Instruments

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

Foreign currency contracts designated as cash flow hedges

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

The notional amounts of these contracts are presented net settled and were $803.5 million at January 31, 2019, and $619.9 million at January 31, 2018. Outstanding contracts are recognized as either assets or liabilities on the balance sheet at

2019 Form 10-K 83

fair value. The majority of the net gain of $15.0 million remaining in “Accumulated other comprehensive loss” as of January 31, 2019, is expected to be recognized into earnings within the next twelve months.

Derivatives not designated as hedging instruments

Autodesk uses foreign currency contracts that are not designated as hedging instruments to reduce the exchange rate risk associated primarily with foreign currency denominated receivables, payables, and cash. These forward contracts are marked-to-market at the end of each month with gains and losses recognized as “Interest and other expense, net.” These derivative instruments do not subject the Company to material balance sheet risk due to exchange rate movements because gains and losses on these derivative instruments are intended to offset the gains or losses resulting from the revaluation and settlement of the underlying foreign currency denominated receivables, payables, and cash. The notional amounts of these foreign currency contracts are presented net settled and were $579.8 million at January 31, 2019, and $329.6 million at January 31, 2018.

In addition to these foreign currency contracts, Autodesk holds derivative instruments issued by privately held companies, which are not designated as hedging instruments. These derivatives consist of certain conversion options on the convertible debt securities held by Autodesk and an option to acquire a privately held company. These derivatives are recorded at fair value as of each balance sheet date and are recorded in “Other assets.” Changes in the fair values of these instruments are recognized in “Interest and other expense, net.”

Fair Value of Derivative Instruments:

The fair value of derivative instruments in Autodesk’s Consolidated Balance Sheets were as follows as of January 31, 2019, and January 31, 2018:



	Balance Sheet Location	Fair Value at
	January 31, 2019			January 31, 2018
Derivative Assets
Foreign currency contracts designated as cash flow hedges	Prepaid expenses and other current assets	$	4.3		$	6.2
Derivatives not designated as hedging instruments	Prepaid expenses and other current assets and Other assets	4.2			2.0
Total derivative assets		$	8.5		$	8.2
Derivative Liabilities
Foreign currency contracts designated as cash flow hedges	Other accrued liabilities	$	3.3		$	18.7
Derivatives not designated as hedging instruments	Other accrued liabilities	4.1			7.9
Total derivative liabilities		$	7.4		$	26.6

2019 Form 10-K 84

The effects of derivatives designated as hedging instruments on Autodesk’s Consolidated Statements of Operations were as follows for the fiscal years ended January 31, 2019, 2018, and 2017, respectively (amounts presented include any income tax effects):



	Foreign Currency Contracts
	Fiscal Year Ended January 31,
	2019			2018			2017
Amount of gain (loss) recognized in accumulated other comprehensive loss on derivatives (effective portion)	$	19.6		$	(21.3	)	$	6.3
Amount and location of (loss) gain reclassified from accumulated other comprehensive loss into (loss) income (effective portion)
Net revenue	$	(8.5	)	$	8.0		$	9.2
Operating expenses	(3.6		)	1.9			(1.8		)
Total	$	(12.1	)	$	9.9		$	7.4
Amount and location of gain (loss) recognized in income (loss) on derivatives (ineffective portion and amount excluded from effectiveness testing)
Interest and other expense, net	$	0.2		$	(0.2	)	$	(0.3	)

The effects of derivatives not designated as hedging instruments on Autodesk’s Consolidated Statements of Operations were as follows for the fiscal years ended January 31, 2019, 2018, and 2017, respectively (amounts presented include any income tax effects):



	Fiscal Year Ended January 31,
	2019		2018			2017
Amount and location of loss recognized in loss (income) on derivatives
Interest and other expense, net	$	6.6	$	(19.1	)	$	(11.1	)

4**.** Employee and Director Stock Plans

Stock Plans

As of January 31, 2019, Autodesk maintained four active stock plans for the purpose of granting equity awards to employees and to non-employee members of Autodesk’s Board of Directors: the 2012 Employee Stock Plan (as amended, the “2012 Employee Plan”), which is available only to employees, the Autodesk 2012 Outside Directors’ Stock Plan (“2012 Directors' Plan”), which is available only to non-employee directors, the PlanGrid 2012 Equity Incentive Plan ("PlanGrid 2012 Plan"), which is available to employees who held outstanding unvested options and restricted stock units that were assumed as part of our acquisition of PlanGrid, Inc. and the BuildingConnected, Inc. 2013 Stock Plan ("BuildingConnected 2013 Plan"), which is available to employees who held outstanding unvested options that were assumed as part of our acquisition of BuildingConnected, Inc. Additionally, there is one terminated plan with options outstanding.

The 2012 Employee Plan was approved by Autodesk's stockholders and became effective on January 6, 2012. Since the 2012 Stock Plan was adopted by stockholders in January 2012, Autodesk has received stockholder approval to increase the number of shares subject to the plan by 36.1 million shares. The 2012 Employee Plan replaced the 2008 Employee Stock Plan, as amended ("2008 Plan"), and no further equity awards may be granted under the 2008 Plan. The 2012 Employee Plan reserves up to 57.3 million shares which includes 51.3 million shares reserved under the 2012 Employee Plan, as well as up to 6.0 million shares forfeited under certain prior employee stock plans during the life of the 2012 Employee Plan. The 2012 Employee Plan permits the grant of stock options, restricted stock units, and restricted stock awards. Each restricted stock unit or restricted stock award granted will be counted against the shares authorized for issuance under the 2012 Employee Plan as 1.79 shares. If a granted option, restricted stock unit, or restricted stock award expires or becomes unexercisable for any reason, the unpurchased or forfeited shares that were granted may be returned to the 2012 Employee Plan and may become available for future grant under the 2012 Employee Plan. As of January 31, 2019, 45.0 million shares subject to options or restricted stock awards have been granted under the 2012 Employee Plan. Options and restricted stock that were granted under the 2012 Employee Plan vest over periods ranging from immediately upon grant to over a three year period and options expire 10 years from the date of grant. The 2012 Employee Plan will expire on June 30, 2022. At January 31, 2019, 18.6 million shares were available for future issuance under the 2012 Employee Plan.

2019 Form 10-K 85

The 2012 Directors' Plan was approved by Autodesk's stockholders and became effective on January 6, 2012. The 2012 Directors' Plan replaced the 2010 Outside Directors' Stock Plan, as amended ("2010 Plan"). The 2012 Directors' Plan permits the grant of stock options, restricted stock units, and restricted stock awards to non-employee members of Autodesk’s Board of Directors. Each restricted stock unit or restricted stock award granted will be counted against the shares authorized for issuance under the 2012 Directors' Plan as 2.11 shares. As of January 31, 2019, 0.9 million shares subject to restricted stock unit awards have been granted under the 2012 Directors' Plan. Restricted stock units that were granted under the 2012 Outside Directors' Plan vest over one to three years from the date of grant. On March 12, 2015, the Board reduced the number of shares reserved for issuance under the 2012 Directors' Plan by 0.9 million shares, so that 1.7 million shares are now reserved for issuance under the 2012 Directors' Plan. The 2012 Directors' Plan will expire on June 30, 2022. At January 31, 2019, 0.8 million shares were available for future issuance under the 2012 Director's Plan.

Pursuant to the PlanGrid acquisition on December 19, 2018, the Company assumed the unvested options and restricted stock units under the PlanGrid 2012 Plan. No further equity awards will be granted under the PlanGrid 2012 Plan. As of January 31, 2019, 0.6 million shares subject to options remain outstanding under the PlanGrid 2012 Plan. Options that were granted under the PlanGrid 2012 Plan vest over a four year period and expire 10 years from the date of grant. The PlanGrid 2012 Plan will expire on June 18, 2022.

Pursuant to the BuildingConnected acquisition on January 23, 2019, the Company assumed the unvested options under the BuildingConnected 2013 Plan. No further equity awards will be granted under the BuildingConnected 2013 Plan. As of January 31, 2019, 0.1 million shares subject to options remain outstanding under the BuildingConnected 2013 Plan. Options that were granted under the BuildingConnected 2013 Plan vest over a four year period and expire 10 years from the date of grant. The BuildingConnected 2013 Plan will expire on May 6, 2023.

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

Stock Options:

A summary of stock option activity for the fiscal year ended January 31, 2019 is as follows:



	Number of Shares (in millions)		Weighted average exercise price per share		Weighted average remaining contractual term (in years)	Aggregate Intrinsic Value (1) (in millions)
Options outstanding at January 31, 2018	0.2		$	40.49
Assumed from acquisitions	0.7		20.82
Granted	—		—
Exercised	(0.1	)	37.64
Canceled/Forfeited	—		—
Options vested, exercisable and outstanding at January 31, 2019	0.8		$	23.95	7.7	$	100.7
Options vested and exercisable at January 31, 2019	0.2		$	37.10	2.6	$	17.2
Options vested and exercisable as of January 31, 2019 and expected to vest thereafter	0.8		$	23.95	7.7	$	100.7
Shares available for grant at January 31, 2019	19.4


(1)	Represents the total pre-tax intrinsic value, based on Autodesk’s closing stock price of $147.20 per share as of January 31, 2019.

As of January 31, 2019, compensation cost of $66.5 million related to non-vested stock options is expected to be recognized over a weighted average period of 2.8 years.

2019 Form 10-K 86

The following table summarizes information about the pre-tax intrinsic value of options exercised and the weighted average grant date fair value per share of options granted during the fiscal years ended January 31, 2019, 2018, and 2017:



	Fiscal year ended January 31,
	2019		2018		2017
Pre-tax intrinsic value of options exercised (1)	$	9.7	$	22.8	$	32.0
Weighted average grant date fair value per share of stock options assumed from acquisition	$	110.40	$	—	$	—

——————


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

The following table summarizes information about options vested and exercisable, and outstanding at January 31, 2019:



	Options Vested and Exercisable						Options Outstanding
	Number of Shares (in thousands)	Weighted average contractual life (in years)	Weighted average exercise price per share		Aggregate intrinsic value (in millions)		Number of Shares (in thousands)	Weighted average contractual life (in years)	Weighted average exercise price per share		Aggregate intrinsic value (in millions)
Range of per-share exercise prices:
$2.90 - $16.12	2.6		$	9.51			122.7		$	14.62
$19.32 - $20.65	5.4		20.03				85.7		20.19
$21.13 - $21.13	2.8		21.13				292.9		21.13
$21.32 - $21.32	11.7		21.32				85.1		21.32
$22.17 - $31.88	8.5		25.58				105.3		27.50
$32.58 - $33.92	4.0		33.82				4.0		33.82
$36.06 - $36.06	2.5		36.06				2.5		36.06
$36.44 - $36.44	5.2		36.44				5.2		36.44
$38.55 - $38.55	1.4		38.55				1.4		38.55
$41.62 - $41.62	112.3		41.62				112.3		41.62
	156.4	2.6	$	37.10	$	17.2	817.1	7.7	$	23.95	$	100.7

These options will expire if not exercised at specific dates ranging through October 2028.

Restricted Stock Units:

A summary of restricted stock activity for the fiscal year ended January 31, 2019 is as follows:



	Unreleased Restricted Stock Units (in thousands)		Weighted average grant date fair value per share
Unvested restricted stock at January 31, 2018	5,670.7		$	82.94
Granted	2,250.7		144.37
Vested	(2,982.0	)	76.30
Canceled/Forfeited	(681.9	)	94.70
Performance Adjustment (1)	29.9		101.74
Unvested restricted stock at January 31, 2019	4,287.4		$	120.07


(1)	Based on Autodesk's financial results and relative total stockholder return for the fiscal 2018 performance period. The performance stock units were attained at rates ranging from 90.0% to 117.6% of the target award.

For the restricted stock granted during fiscal years ended January 31, 2019, 2018, and 2017, the weighted average grant date fair values were $144.37, $106.55, and $65.95, respectively. The fair values of the shares vested during fiscal years ended January 31, 2019, 2018, and 2017 were $425.4 million, $399.7 million, and $232.2 million, respectively.

2019 Form 10-K 87

During the fiscal year ended January 31, 2019, Autodesk granted 2.1 million restricted stock units. Restricted stock units vest over periods ranging from immediately upon grant to a pre-determined date that is typically within three years from the date of grant. Restricted stock units are not considered outstanding stock at the time of grant, as the holders of these units are not entitled to any of the rights of a stockholder, including voting rights. The fair value of the restricted stock units is expensed ratably over the vesting period. Autodesk recorded stock-based compensation expense related to restricted stock units of $189.3 million, $202.1 million, and $173.0 million during fiscal years ended January 31, 2019, 2018, and 2017, respectively. As of January 31, 2019, total compensation cost not yet recognized of $364.5 million related to non-vested awards is expected to be recognized over a weighted average period of 1.76 years. At January 31, 2019, the number of restricted stock units granted but unvested was 3.9 million.

During the fiscal year ended January 31, 2019, Autodesk granted 0.2 million performance stock units for which the ultimate number of shares earned is determined based on the achievement of performance criteria at the end of the stated service and performance period. The performance criteria for the performance stock units are based on Annualized Recurring Revenue ("ARR") and free cash flow per share goals adopted by the Compensation and Human Resources Committee, as well as total stockholder return compared against companies in the S&P Computer Software Select Index or the S&P North American Technology Software Index ("Relative TSR"). These performance stock units vest over a three-year period and have the following vesting schedule:


•	Up to one third of the performance stock units may vest following year one, depending upon the achievement of the performance criteria for fiscal 2019 as well as 1-year Relative TSR (covering year one).


•	Up to one third of the performance stock units may vest following year two, depending upon the achievement of the performance criteria for year two as well as 2-year Relative TSR (covering years one and two).


•	Up to one third of the performance stock units may vest following year three, depending upon the achievement of the performance criteria for year three as well as 3-year Relative TSR (covering years one, two and three).

Performance stock units are not considered outstanding stock at the time of grant, as the holders of these units are not entitled to any of the rights of a stockholder, including voting rights. Autodesk has determined the grant-date fair value for these awards using the stock price on the date of grant or if the awards are subject to a market condition, a Monte Carlo simulation model. The fair value of the performance stock units is expensed using the accelerated attribution over the vesting period. Autodesk recorded stock-based compensation expense related to performance stock units of $28.6 million, $33.7 million, and $22.9 million during fiscal years ended January 31, 2019, 2018, and 2017 respectively. As of January 31, 2019, total compensation cost not yet recognized of $5.6 million related to unvested performance stock units, is expected to be recognized over a weighted average period of 0.81 years. At January 31, 2019, the number of performance stock units granted but unvested was 0.4 million.

1998 Employee Qualified Stock Purchase Plan (“ESPP”)

Under Autodesk’s ESPP, which was approved by stockholders in 1998, eligible employees may purchase shares of Autodesk’s common stock at their discretion using up to 15% of their eligible compensation, subject to certain limitations, at 85% of the lower of Autodesk's closing price (fair market value) on the offering date or the exercise date. The offering period for ESPP awards consists of four, six-month exercise periods within a 24-month offering period.

At January 31, 2019, a total of 8.1 million shares were available for future issuance. Under the ESPP, the Company issues shares on the first trading day following March 31 and September 30 of each fiscal year. The ESPP does not have an expiration date.

A summary of the ESPP activity for the fiscal years ended January 31, 2019, 2018 and 2017 is as follows:



	Fiscal year ended January 31,
	2019		2018		2017
Issued shares	1.0		2.0		2.3
Average price of issued shares	$	90.25	$	39.03	$	36.99
Weighted average grant date fair value of awards granted under the ESPP	$	42.75	$	32.41	$	19.20

2019 Form 10-K 88

Autodesk recorded $27.2 million, $25.7 million, and $25.9 million of compensation expense associated with the ESPP in fiscal 2019, 2018, and 2017, respectively.

Equity Compensation Plan Information

The following table summarizes the number of outstanding options and awards granted to employees and directors, as well as the number of securities remaining available for future issuance under these plans as of January 31, 2019:



	(a)	(b)		(c)
Plan category	Number of securities to be issued upon exercise or vesting of outstanding options and awards (in millions)	Weighted-average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (in millions)
Equity compensation plans approved by security holders	5.1	$	23.95	27.6	(1)
Total	5.1	$	23.95	27.6


(1)	Included in this amount are 8.1 million securities available for future issuance under Autodesk’s ESPP.

5**.** Income Taxes

The provision for income taxes consists of the following:



	Fiscal year ended January 31,
2019				2018				2017
Federal:
Current	$	(13.3	)		$	(0.8	)		$	1.6
Deferred	(6.7		)		(19.3		)		8.4
State:
Current	(1.8		)		(0.3		)		(1.9		)
Deferred	0.1				2.2				1.3
Foreign:
Current	65.3				50.9				93.9
Deferred	(5.5		)		(23.1		)		(45.0		)
	$	38.1			$	9.6			$	58.3

Foreign pretax (loss) income was $181.4 million in fiscal 2019, $(76.2) million in fiscal 2018, and $(27.6) million in fiscal 2017.

2019 Form 10-K 89

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



	Fiscal year ended January 31,
2019				2018				2017
Income tax provision (benefit) at U.S. Federal statutory rate	$	(9.0	)		$	(188.4	)		$	(177.0	)
State income tax benefit, net of the U.S. Federal benefit	(11.4		)		(21.9		)		(17.3		)
Foreign income taxed at rates different from the U.S. statutory rate	117.8				(53.3		)		22.3
U.S. valuation allowance	18.8				(82.5		)		233.0
Transition tax	(16.0		)		408.4				—
Increase in attributes due to ASU 2016-9 adoption	—				—				(119.4		)
Change in valuation allowance from ASU 2016-9 adoption	—				—				119.4
Tax effect of non-deductible stock-based compensation	7.6				20.7				18.8
Stock compensation windfall / shortfall	(39.4		)		(67.7		)		(23.0		)
Research and development tax credit benefit	(23.5		)		(11.3		)		(10.3		)
Closure of income tax audits and changes in uncertain tax positions	(12.7		)		1.2				8.2
Tax effect of officer compensation in excess of $1.0 million	5.0				2.2				2.2
Non-deductible expenses	1.5				2.1				2.0
Other	(0.6		)		0.1				(0.6		)
	$	38.1			$	9.6			$	58.3

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



	January 31,
2019				2018
Stock-based compensation	$	25.9			$	26.7
Research and development tax credit carryforwards	238.7				170.3
Foreign tax credit carryforwards	198.6				162.2
Accrued compensation and benefits	6.5				25.9
Other accruals not currently deductible for tax	19.0				22.9
Purchased technology and capitalized software	32.6				43.4
Fixed assets	15.0				16.5
Tax loss carryforwards	237.2				85.7
Deferred revenue	49.0				120.3
Other	28.4				32.4
Total deferred tax assets	850.9				706.3
Less: valuation allowance	(797.8		)		(634.2		)
Net deferred tax assets	53.1				72.1
Indefinite lived intangibles	(67.6		)		(57.0		)
Total deferred tax liabilities	(67.6		)		(57.0		)
Net deferred tax assets (liabilities)	$	(14.5	)		$	15.1

Autodesk’s tax expense is primarily driven by tax expense in foreign locations, withholding taxes on payments made to the U.S. from foreign sources, and tax amortization on indefinite-lived intangibles offset by a tax benefit resulting from release of uncertain tax positions upon finalization of IRS examination and release of valuation allowance from acquired deferred tax liabilities.

Autodesk regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, Autodesk considers both positive and negative evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, Autodesk considered cumulative losses arising from the Company's business model transition as a significant piece of negative evidence. Consequently, Autodesk determined

2019 Form 10-K 90

that a valuation allowance was required on the accumulated U.S., Canada and Singapore tax attributes. In the current year, the U.S. created incremental deferred tax assets, primarily operating losses, foreign tax and R&D credits, Singapore generated operating losses and Canada generated R&D credits. These U.S. and Singapore deferred tax attributes have been offset by a full valuation allowance. The valuation allowance increased by $163.6 million in fiscal 2019 primarily due to the generation of deferred tax attributes. The valuation allowance decreased by $113.8 million, and increased $352.4 million in fiscal 2018, and 2017, respectively, primarily related to U.S. Tax Act reduction in rate in fiscal 2018 and U.S. and Canadian deferred tax attributes generated in fiscal 2017. As Autodesk continually strives to optimize the overall business model, tax planning strategies may become feasible and prudent allowing the Company to realize many of the deferred tax assets that are offset by a valuation allowance; therefore, Autodesk will continue to evaluate the ability to utilize the net deferred tax assets each quarter, both in the U.S. and in foreign jurisdictions, based on all available evidence, both positive and negative.

The Tax Act was signed into law on December 22, 2017 and provided broad and significant changes to the U.S. corporate income tax regime. In light of our fiscal year-end, the Tax Act reduced the statutory federal corporate rate from 35% to 33.81% for fiscal 2018 and to 21% for fiscal 2019 and forward. The Tax Act also, among many other provisions, imposed a one-time mandatory tax on accumulated earnings of foreign subsidiaries (commonly referred to as the "transition tax"), subjected the deemed intangible income of our foreign subsidiaries to current U.S. taxation (commonly referred to as "GILTI"), provided for a full dividends received deduction upon repatriation of untaxed earnings of our foreign subsidiaries, imposed a minimum taxation (without most tax credits) on modified taxable income, which is generally taxable income without deductions for payments to related foreign companies (commonly referred to as “BEAT”), modified the accelerated depreciation deduction rules, and made updates to the deductibility of certain expenses. We have completed our determination of the accounting implications of the Tax Act on our tax accruals.

We recorded a tax benefit of the Tax Act in our financial statements as of January 31, 2018 of approximately $32.3 million mainly driven by the corporate rate remeasurement of the indefinite-lived intangible deferred tax liability.

As of January 31, 2018, we estimated taxable income associated with offshore earnings of $831.5 million, and as of January 31, 2019, we adjusted the taxable income to $819.6 million to reflect the impact of Treasury Regulations issued in the fourth quarter of fiscal 2019. Transition tax related to adjustments in the offshore earnings resulted in no impact to the effective tax rate as it is primarily offset by net operating losses that are subject to a full valuation allowance. As a result of the transition tax, we recorded a deferred tax asset of approximately $45.1 million for foreign tax credits, which are also subject to a full valuation allowance.

We are subject to GILTI in fiscal 2019, primarily offset by current year operating losses, resulting in no impact to the effective tax rate.

We anticipate that the U.S. Department of Treasury and other standard-setting bodies will continue to interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered. As future guidance is issued, we may make adjustments to amounts that we have previously recorded that may materially impact our financial statements in the period in which the adjustments are made.

Realization of foreign non-current net deferred tax assets of $54.3 million is dependent upon the Company's ability to generate future taxable income in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced and Autodesk then determines that it is not more likely than not to realize such deferred tax assets.

As of January 31, 2019, Autodesk had $531.4 million of cumulative federal tax loss carryforwards and $1,465.7 million of cumulative state tax loss carryforwards, which may be available to reduce future income tax liabilities in federal and state jurisdictions. In addition to U.S. federal and state tax loss carryforwards, Ireland, Netherlands, and Singapore jurisdictions incurred federal tax losses totaling $521.8 million, which may be available to reduce future income tax liabilities indefinitely. As discussed above, with the exception of our Irish losses, of $238.8 million, these cumulative assets have full valuation allowance against them on our balance sheet as the Company has determined it is more likely than not that these losses will not be utilized. The pre-fiscal 2019 federal tax loss carryforward will expire beginning fiscal 2021 through fiscal 2038. Federal losses generated in fiscal 2019 do not have an expiration pursuant to the Tax Act and are carried forward indefinitely. The state tax loss carryforward will expire beginning fiscal 2020 through fiscal 2040.

As of January 31, 2019, Autodesk had $164.9 million of cumulative federal research tax credit carryforwards, $68.8 million of cumulative California state research tax credit carryforwards, and $59.0 million of cumulative Canadian federal tax

2019 Form 10-K 91

credit carryforwards, which may be available to reduce future income tax liabilities in the respective jurisdictions. The federal tax credit carryforwards will expire beginning fiscal 2021 through fiscal 2040, the state credit carryforwards may reduce future California income tax liabilities indefinitely, and the Canadian tax credit carryforwards will expire beginning fiscal 2027 through fiscal 2040. Autodesk also has $242.4 million of cumulative foreign tax credit carryforwards, which may be available to reduce future U. S. tax liabilities. The foreign tax credit will expire beginning fiscal 2020 through fiscal 2030. As discussed above, these cumulative assets have full valuation allowance against them on our balance sheet as the Company has determined it is more likely than not that these losses will not be utilized.

Utilization of net operating losses and tax credits may be subject to an annual limitation due to ownership change limitations provided in the Internal Revenue Code and similar state provisions. This annual limitation may result in the expiration of net operating losses and credits before utilization. No ownership change has occurred through the balance sheet date that would limit a material amount of U.S. federal and state tax attributes.

As of January 31, 2019, the Company had $209.0 million of gross unrecognized tax benefits, of which $190.6 million would reduce our valuation allowance, if recognized. The remaining $18.4 million would impact the effective tax rate.

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

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



	Fiscal Year Ended January 31,
	2019			2018			2017
Gross unrecognized tax benefits at the beginning of the fiscal year	$	337.6		$	261.4		$	254.3
Increases for tax positions of prior years	7.9			22.8			11.9
Decreases for tax positions of prior years	(146.3		)	(22.5		)	(4.1		)
Increases for tax positions related to the current year	10.3			78.4			11.1
Decreases relating to settlements with taxing authorities	—			(0.8		)	(10.8		)
Reductions as a result of lapse of the statute of limitations	(0.5		)	(1.7		)	(1.0		)
Gross unrecognized tax benefits at the end of the fiscal year	$	209.0		$	337.6		$	261.4

It is the Company's continuing practice to recognize interest and/or penalties related to income tax matters in income tax expense. Autodesk had $3.1 million, $2.8 million, and $2.5 million, net of tax benefit, accrued for interest and penalties related to unrecognized tax benefits as of January 31, 2019, 2018, and 2017, respectively. There was $0.3 million, $0.3 million, and $1.5 million of net expense for interest and penalties related to tax matters recorded through the consolidated statements of operations for the years ended January 31, 2019, 2018, and 2017, respectively.

Autodesk's U.S. and state income tax returns for fiscal year 2003 through fiscal year 2019 remain open to examination due to either net operating loss or credit carryforward. The Internal Revenue Service has examined the Company's U.S. consolidated federal income tax returns for fiscal years 2014 and 2015. This audit was finalized on January 31, 2019 and impacts from the finalization of the audit were recorded in the January 31, 2019 financial statements. While it is possible that the Company's tax positions may be challenged, the Company believes its positions are consistent with the tax law, and the balance sheet reflects appropriate liabilities for uncertain federal tax positions for the years being examined.

Autodesk files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from fiscal year 2005 to 2019.

As a result of certain business and employment actions and capital investments undertaken by Autodesk, income earned in certain Europe and Asia Pacific countries is subject to reduced tax rates through fiscal 2019. In fiscal 2019, the Company incurred $11.4 million net benefit ($0.05 basic net income per share) from the tax status of these business arrangements, compared to zero benefit in fiscal 2018, and $27.1 million ($0.12 basic net income per share) in fiscal 2017.

2019 Form 10-K 92

6**.** Acquisitions

During the fiscal years ended January 31, 2019, and January 31, 2018, Autodesk completed the business combinations described below. The results of operations for the following acquisitions are included in the accompanying Consolidated Statements of Operations since their respective acquisition dates. Pro forma results of operations have been presented for acquisitions that were material to Autodesk's Consolidated Financial Statements. The adoption of ASU No. 2017-01 in the first quarter of fiscal 2019 did not impact the accounting for these acquisitions.

Fiscal 2019 Acquisitions

BuildingConnected, Inc.

On January 23, 2019, Autodesk acquired BuildingConnected, Inc. ("BuildingConnected"). BuildingConnected is a leading provider of construction bid-management software and this acquisition is expected to enable Autodesk to offer a more comprehensive construction workflow.

The acquisition-date fair value of the consideration transferred totaled $253.2 million, which consisted of $248.1 million of cash, and $5.1 million attributable to the fair value of equity awards related to pre-combination services. Under the terms of the merger agreement, Autodesk was obligated to replace BuilidingConnected's unvested options with 116,279 Autodesk options.

PlanGrid, Inc.

On December 19, 2018, Autodesk acquired PlanGrid, Inc. ("PlanGrid"). PlanGrid is a leading provider of construction productivity software and this acquisition is expected to enable Autodesk to offer a more comprehensive, cloud-based construction platform.

The acquisition-date fair value of the consideration transferred totaled $777.6 million, which consisted of $772.4 million of cash and $5.2 million attributed to the fair value of assumed PlanGrid equity awards for pre-combination services. Under the terms of the merger agreement, Autodesk was obligated to replace PlanGrid's unvested options and restricted stock awards with 602,051 Autodesk options and 41,069 Autodesk RSUs. Autodesk entered in to a term loan agreement in the aggregate principal amount of $500.0 million to fund a portion of the purchase. See Note 8, "Borrowing Arrangements" for more information.

Assemble Systems, Inc.

On July 3, 2018, Autodesk acquired Assemble Systems, Inc. ("Assemble Systems"). Assemble Systems is a provider of software solutions that enable construction professionals to influence, query and connect BIM data to key workflows across bid management, estimating, scheduling, site management and finance. Over time, Assemble Systems' software solution will be integrated with Autodesk's BIM 360 project management platform.

The acquisition-date fair value of the consideration transferred totaled $93.6 million, which consisted of $38.2 million of cash, $44.8 million of Autodesk common stock (340,769 shares) and ascribed a value of $10.6 million to Autodesk's existing equity interest in Assemble Systems.

Prior to the acquisition date, Autodesk accounted for its approximate 14% equity interest in Assemble Systems as a cost-method investment. The acquisition-date fair value of Autodesk's existing equity interest was $10.6 million and is included in the measurement of the consideration transferred. Autodesk recognized a gain of $4.6 million as a result of remeasuring its prior equity interest in Assemble Systems held before the business combination using a control premium to calculate a discount for lack of control. The gain is included in “Interest and other expense, net” in the Consolidated Statements of Operations.

Preliminary Purchase Price Allocation

For the Assemble Systems, PlanGrid, and BuildingConnected acquisitions that were accounted for as business combinations, Autodesk recorded the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The fair values assigned to the identifiable intangible assets acquired were based on estimates and assumptions determined by management. Autodesk recorded the excess of consideration transferred over the aggregate fair values as goodwill. The goodwill recorded is primarily attributable to synergies expected to arise after the acquisition. There is no amount of goodwill that is deductible for U.S. income tax purposes.

2019 Form 10-K 93

The following table summarizes the fair value of the assets acquired and liabilities assumed by major class for the business combinations that were completed during the fiscal year ended January 31, 2019:



	Assemble Systems (1)			PlanGrid			BuildingConnected			Total
Developed technologies	$	4.4		$	78.0		$	12.5		$	94.9
Customer relationships and other non-current intangible assets	12.0			98.0			26.9			136.9
Trade name	2.8			20.0			6.8			29.6
Goodwill	72.0			588.7			206.3			867.0
Deferred revenue (current and non-current)	(1.7		)	(25.5		)	(2.8		)	(30.0		)
Net tangible assets	4.1			18.4			3.5			26.0
Total	$	93.6		$	777.6		$	253.2		$	1,124.4


(1)	During Q4 of fiscal 2019, Autodesk recorded a measurement period adjustment related to the valuation of the deferred tax liability associated with the Assemble Systems acquisition. This adjustment increased goodwill and reduced net tangible assets by $0.1 million.

For the three business combinations in fiscal 2019, the determination of estimated fair values of certain assets and liabilities is derived from estimated fair value assessments and assumptions by Autodesk. For PlanGrid and BuildingConnected, Autodesk's estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). For the three business combinations in fiscal 2019, the tax impact of the acquisition is also subject to change within the measurement period. Different estimates and assumptions could result in different valuations assigned to the individual assets acquired and liabilities assumed, and the resulting amount of goodwill.

Unaudited Pro Forma Results of Acquirees

Autodesk has included the financial results of each of the acquirees in the consolidated financial statements from the respective dates of acquisition; the revenues and the results of each of the acquirees, except for PlanGrid, have not been material both individually or in the aggregate to Autodesk's fiscal 2019 and 2018 results.

The following unaudited pro forma financial information summarizes the combined results of operations for Autodesk and PlanGrid, as though the companies were combined as of the beginning of Autodesk's fiscal year 2018. The unaudited pro forma financial information was as follows (in millions):



	Fiscal Year ended January 31,
	2019			2018
Total revenues	$	2,632.6		$	2,099.2
Pretax loss	(157.5		)	(724.9		)
Net loss	(200.1		)	(734.5		)

The pro forma financial information for all periods presented includes the business combination accounting effects from the acquisition of PlanGrid including amortization expense from acquired intangible assets, compensation expense, and the interest expense and debt issuance costs related to the term loan agreement. The historical financial information has been adjusted to give effect to pro forma events that are directly attributable to the business combinations and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the Company’s fiscal 2018.

The pro forma financial information for fiscal 2019 and 2018 combines the historical results of the Company, the adjusted historical results of PlanGrid for fiscal 2019 and 2018 considering the date the Company acquired PlanGrid and the effects of the pro forma adjustments described above.

2019 Form 10-K 94

Fiscal 2018 Acquisitions

During the fiscal year ended January 31, 2018, Autodesk did not complete any business combinations or technology acquisitions.

7**.** Deferred Compensation

At January 31, 2019, Autodesk had marketable securities totaling $67.6 million, of which $60.3 million related to investments in debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. Of the $60.3 million related to the deferred compensation liability at January 31, 2019, $5.0 million was classified as current and $55.3 million was classified as non-current liabilities. Of the $59.0 million related to the deferred compensation liability at January 31, 2018, $3.4 million was classified as current and $55.6 million was classified as non-current liabilities. The securities are recorded in the Consolidated Balance Sheets under the current portion of "Marketable securities." The current and non-current portions of the liability are recorded in the Consolidated Balance Sheets under “Accrued compensation” and “Long-Term Other liabilities,” respectively.

Costs to obtain a contract with a customer

Sales commissions earned by our internal sales personnel and our reseller partners are considered incremental and recoverable costs of obtaining a contract with a customer. The commission costs are capitalized and included in "Prepaid expenses and other current assets" and "Other assets" on our Consolidated Balance Sheets. The deferred costs are then amortized over the period of benefit. Autodesk determined that sales commissions earned by internal sales personnel that are related to contract renewals are commensurate with sales commissions earned on the initial contracts, and we determined the period of benefit to be the term of the respective customer contract. Commissions paid to our reseller partners that are related to contract renewals are not commensurate with commissions earned on the initial contract, and we determined the estimated period of benefit by taking into consideration customer retention data, customer contracts, our technology and other factors. Deferred costs are periodically reviewed for impairment. Amortization expense is included in sales and marketing expenses in the Consolidated Statements of Operations.

The ending balance of assets recognized from costs to obtain a contract with a customer was $93.0 million as of January 31, 2019. Amortization expense related to assets recognized from costs to obtain a contract with a customer was $108.8 million during the fiscal year ended January 31, 2019. Autodesk did not recognize any contract cost impairment losses during the fiscal year ended January 31, 2019.

8**.** Borrowing Arrangements

On December 17, 2018, Autodesk entered into a credit agreement by and among Autodesk, the lenders from time to time party therto and Citibank, N.A., as agent, which provides for an unsecured revolving loan facility in the aggregate principal amount of $650.0 million with an option, subject to customary conditions, to request an increase in the amount of the credit facility by up to an additional $350.0 million, and is available for working capital or other business needs. The credit agreement replaced and terminated Autodesk’s prior $400.0 million revolving credit facility. The credit agreement contains customary covenants that could, among other things, restrict the imposition of liens on Autodesk's assets, and restrict Autodesk's ability to incur additional indebtedness or make dispositions of assets if Autodesk fails to maintain compliance with the financial covenants. The credit agreement financial covenants consist of (1) a minimum interest coverage ratio of 2.50:1.0 starting with the fiscal quarter ending January 31, 2019 and increasing to 3.00:1.0 starting with the fiscal quarter ending April 30, 2019, and (2) a maximum leverage ratio of 3.50:1.0 starting with the fiscal quarter ending July 31, 2019 and dropping to 3.00:1.0 in the fiscal quarter ending January 31, 2020. At January 31, 2019, Autodesk was in compliance with the credit agreement covenants. Revolving loans under the credit agreement bear interest, at Autodesk's option, at either (i) a floating rate per annum equal to the base rate plus a margin of between 0.000% and 0.500%, depending on Autodesk’s Public Debt Rating (as defined in the credit agreement) or (ii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market, plus a margin of between 0.900% and 1.500%, depending on Autodesk’s Public Debt Rating. The maturity date on the credit agreement is December 2023. At January 31, 2019, Autodesk had no outstanding borrowings under the credit agreement.

On December 17, 2018, Autodesk also entered into a term loan agreement by and among Autodesk, the lenders from time to time party thereto and Citibank, N.A., as agent, which provides for a delayed draw term loan facility in the aggregate principal amount of $500.0 million and was borrowed in full to consummate the PlanGrid acquisition in Note 6**, "Acquisitions."** The term loan bears interest, at Autodesk's option, at either (i) a floating rate per annum equal to the base rate plus a margin between 0.000% and 0.625%, depending on Autodesk's Public Debt Rating or (ii) a per annum rate equal to the

2019 Form 10-K 95

rate at which dollar deposits are offered in the London interbank market, plus a margin of between 0.875% and 1.625%, depending on Autodesk's Public Debt Rating. Based on Autodesk's current credit ratings the term loan bears interest at a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market, plus a margin of 1.125% per annum. Interest under the term loan was 3.628% at January 31, 2019. The term loan agreement contains customary covenants that could, among other things, restrict the imposition of liens on Autodesk's assets, and restrict Autodesk’s ability to incur additional indebtedness or make dispositions of assets if Autodesk fails to maintain the financial covenants. The term loan agreement has the same financial covenants as those included in the credit agreement governing its revolving loan facility described above. The term loan will mature on December 2020 and will not be subject to amortization prior to the maturity date.

In June 2017, Autodesk issued $500.0 million aggregate principal amount of 3.5% notes due June 15, 2027 (collectively, the “2017 Notes”). Net of a discount of $3.1 million and issuance costs of $4.9 million, Autodesk received net proceeds of $492.0 million from issuance of the 2017 Notes. Both the discount and issuance costs are being amortized to interest expense over the term of the 2017 Notes using the effective interest method. The proceeds of the 2017 Notes have been used for the repayment of $400.0 million of debt originally due December 15, 2017 and the remainder is available for general corporate purposes. Autodesk may redeem the 2017 Notes at any time, subject to a make whole premium. In addition, upon the occurrence of certain change of control triggering events, Autodesk may be required to repurchase the 2017 Notes at a price equal to 101.0% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 2017 Notes contain restrictive covenants that limit Autodesk's ability to create certain liens, to enter into certain sale and leaseback transactions and to consolidate or merge with, or convey, transfer or lease all or substantially all of its assets, subject to important qualifications and exceptions. Based on quoted market prices, the fair value of the 2017 Notes was approximately $474.3 million as of January 31, 2019.

In June 2015, Autodesk issued $450.0 million aggregate principal amount of 3.125% senior notes due June 15, 2020 and $300.0 million aggregate principal amount of 4.375% senior notes due June 15, 2025 (collectively, the “2015 Notes”). Net of a discount of $1.7 million and issuance costs of $6.3 million, Autodesk received net proceeds of $742.0 million from issuance of the 2015 Senior Notes. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2015 Notes using the effective interest method. The proceeds of the 2015 Notes are available for general corporate purposes. Autodesk may redeem the 2015 Notes at any time, subject to a make whole premium. In addition, upon the occurrence of certain change of control triggering events, Autodesk may be required to repurchase the 2015 Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 2015 Notes contain restrictive covenants that limit Autodesk's ability to create certain liens, to enter into certain sale and leaseback transactions and to consolidate or merge with, or convey, transfer or lease all or substantially all of its assets, subject to significant qualifications and exceptions. Based on quoted market prices, the fair value of the 2015 Notes was approximately $754.2 million as of January 31, 2019.

In December 2012, Autodesk issued $400.0 million aggregate principal amount of 1.95% senior notes due December 15, 2017 ("$400.0 million 2012 Notes") and $350.0 million aggregate principal amount of 3.6% senior notes due December 15, 2022 ("$350.0 million 2012 Notes" and collectively with the $400.0 million 2012 Notes, the "2012 Notes"). Autodesk received net proceeds of $739.3 million from issuance of the 2012 Notes, net of a discount of $4.5 million and issuance costs of $6.1 million. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2012 Notes using the effective interest method. The proceeds of the 2012 Notes are available for general corporate purposes. On July 27, 2017, Autodesk redeemed in full the $400.0 million 2012 Notes. The redemption was completed pursuant to the optional redemption provisions of the first supplemental indenture dated December 13, 2012. To redeem the notes, Autodesk used the proceeds of the 2017 Notes to pay a redemption price of approximately $400.9 million, plus accrued and unpaid interest. Total cash repayment was $401.8 million. Autodesk did not incur any additional early termination penalties in connection with such redemption. Based on the quoted market price, the fair value of the $350.0 million 2012 Notes was approximately $349.6 million as of January 31, 2019.

2019 Form 10-K 96

9**.** Commitments and Contingencies

Lease commitments

Autodesk leases office space and computer equipment under non-cancellable operating lease agreements that expire at various dates through 2090. The leases generally provide that Autodesk pay taxes, insurance, and maintenance expenses related to the leased assets. Certain of these lease arrangements contain escalation clauses whereby monthly rent increases over time.

At January 31, 2019, the aggregate future minimum lease payments required were as follows:




2020	$	76.2
2021	61.7
2022	53.6
2023	50.7
2024	41.4
Thereafter	127.0
	410.6
Less: Sublease income	0.8
	$	409.8

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



	Fiscal Year Ended January 31,
	2019		2018		2017
Rent expense	$	60.7	$	55.9	$	65.3

Purchase commitments

In the normal course of business, Autodesk enters into various purchase commitments for goods or services. Total non-cancellable purchase commitments as of January 31, 2019, were approximately $82.7 million for periods through fiscal 2028. These purchase commitments primarily result from contracts entered into for the acquisition of IT infrastructure, marketing, and software development services, as well as commitments related to our investment agreements with limited liability partnership funds.

Autodesk has certain royalty commitments associated with the sale and licensing of certain products. Royalty expense is generally based on a dollar amount per unit sold or a percentage of the underlying revenue. Royalty expense, which was recorded under cost of maintenance and subscription revenue and cost of license and other revenue on Autodesk’s Consolidated Statements of Operations, was $6.4 million in fiscal 2019, $15.3 million in fiscal 2018, and $16.2 million in fiscal 2017.

Guarantees and Indemnifications

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

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

2019 Form 10-K 97

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

Legal Proceedings

Autodesk is involved in a variety of claims, suits, inquiries, investigations, and proceedings in the normal course of business including claims of alleged infringement of intellectual property rights, commercial, employment, tax, piracy prosecution, business practices, and other matters. Autodesk routinely reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any matter is considered probable and the amount can be reasonably estimated, Autodesk records a liability for the estimated loss. Because of inherent uncertainties related to these legal matters, Autodesk bases its loss accruals on the best information available at the time. As additional information becomes available, Autodesk reassesses its potential liability and may revise its estimates. In the Company's opinion, resolution of pending matters is not expected to have a material adverse impact on its consolidated results of operations, cash flows, or its financial position. Given the unpredictable nature of legal proceedings, there is a reasonable possibility that an unfavorable resolution of one or more such proceedings could in the future materially affect the Company's results of operations, cash flows, or financial position in a particular period, however, based on the information known by the Company as of the date of this filing and the rules and regulations applicable to the preparation of the Company's financial statements, any such amount is either immaterial or it is not possible to provide an estimated amount of any such potential loss.

10**.** Stockholders' (Deficit) Equity

Preferred Stock

Under Autodesk’s Certificate of Incorporation, 2.0 million shares of preferred stock are authorized. At January 31, 2019, there were no preferred shares issued or outstanding. The Board of Directors has the authority to issue the preferred stock in one or more series and to fix rights, preferences, privileges, and restrictions, including dividends and the number of shares constituting any series or the designation of such series, without any further vote or action by the stockholders.

Common Stock Repurchase Program

Autodesk has a stock repurchase program that is used to offset dilution from the issuance of stock under the Company’s employee stock plans and for such other purposes as may be in the interests of Autodesk and its stockholders, which has the effect of returning excess cash generated from the Company’s business to stockholders. Autodesk repurchased and retired approximately 2.2 million shares in fiscal 2019 at an average repurchase price of $130.15 per share, 6.9 million shares in fiscal 2018 at an average repurchase price of $100.45 per share, and 9.7 million shares in fiscal 2017 at an average repurchase price of $64.73.

At January 31, 2019, 17.4 million shares remained available for repurchase under the repurchase program approved by the Board of Directors. The share repurchase program does not have an expiration date and the pace and timing of repurchases will depend on factors such as cash generation from operations, available surplus, the volume of employee stock plan activity, cash requirements for acquisitions, economic and market conditions, stock price and legal and regulatory requirements.

2019 Form 10-K 98

11**.** Interest and Other Expense, net

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



	Fiscal Year Ended January 31,
	2019			2018			2017
Interest and investment expense, net	$	(52.1	)	$	(34.5	)	$	(29.7	)
Gain (loss) on foreign currency	5.1			(3.3		)	(3.3		)
Gain (loss) on strategic investments	12.5			(16.4		)	0.3
Other income	16.8			6.0			8.5
Interest and other expense, net	$	(17.7	)	$	(48.2	)	$	(24.2	)

12**.** Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of taxes, consisted of the following:



	Net Unrealized Gains (Losses) on Derivative Instruments			Net Unrealized Gains (Losses) on Available for Sale Securities			Defined Benefit Pension Components			Foreign Currency Translation Adjustments			Total
Balances, January 31, 2017	$	14.6		$	1.5		$	(33.8	)	$	(160.8	)	$	(178.5	)
Other comprehensive (loss) income before reclassifications	(24.5		)	(0.6		)	4.3			86.3			65.5
Pre-tax losses (gains) reclassified from accumulated other comprehensive income	(9.9		)	0.3			0.9			0.1			(8.6		)
Tax effects	3.2			0.1			(0.7		)	(4.8		)	(2.2		)
Net current period other comprehensive (loss) income	(31.2		)	(0.2		)	4.5			81.6			54.7
Balances, January 31, 2018	(16.6		)	1.3			(29.3		)	(79.2		)	(123.8		)
Other comprehensive income (loss) before reclassifications	20.6			0.7			14.7			(58.3		)	(22.3		)
Pre-tax gains reclassified from accumulated other comprehensive income	12.1			1.3			0.3			—			13.7
Tax effects	(1.1		)	—			(2.0		)	0.5			(2.6		)
Net current period other comprehensive income (loss)	31.6			2.0			13.0			(57.8		)	(11.2		)
Balances, January 31, 2019	$	15.0		$	3.3		$	(16.3	)	$	(137.0	)	$	(135.0	)

Reclassifications related to gains and losses on available-for-sale debt securities are included in "Interest and other expense, net". Refer to Note 3, "Financial Instruments" for the amount and location of reclassifications related to derivative instruments. Reclassifications of the defined benefit pension components of net periodic benefit cost are included in "Interest and other expense, net". Refer to Note 15, "Retirement Benefit Plans."

2019 Form 10-K 99

13**.** Net Loss Per Share

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



	Fiscal Year Ended January 31,
	2019			2018			2017
Numerator:
Net loss	$	(80.8	)	$	(566.9	)	$	(582.1	)
Denominator:
Denominator for basic net loss per share—weighted average shares	218.9			219.5			222.7
Effect of dilutive securities (1)	—			—			—
Denominator for dilutive net loss per share	218.9			219.5			222.7
Basic net loss per share	$	(0.37	)	$	(2.58	)	$	(2.61	)
Diluted net loss per share	$	(0.37	)	$	(2.58	)	$	(2.61	)


(1)	The effect of dilutive securities of 3.1 million, 4.5 million, and 4.6 million shares for the fiscal years ended January 31, 2019, 2018, and 2017, respectively, have been excluded from the calculation of diluted net loss per share as those shares would have been anti-dilutive due to the net loss incurred during those fiscal years.

The computation of diluted net loss per share does not include shares that are anti-dilutive under the treasury stock method because their exercise prices are higher than the average market value of Autodesk’s stock during the fiscal year. The effect of 0.5 million, 0.5 million, and 0.1 million potentially anti-dilutive shares were excluded from the computation of net loss per share for the fiscal years ended January 31, 2019, 2018, and 2017, respectively.

14**. Segments**

Autodesk reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions, allocating resources and assessing performance as the source of the Company’s reportable segments. The Company's chief operating decision maker ("CODM") allocates resources and assesses the operating performance of the Company as a whole. As such, Autodesk has one segment manager (the CODM), and one operating segment.

15**.** Retirement Benefit Plans

Pretax Savings Plan

Autodesk has a 401(k) plan that covers nearly all U.S. employees. Eligible employees may contribute up to 75% of their pretax salary, subject to limitations mandated by the Internal Revenue Service. Autodesk makes voluntary cash contributions and matches a portion of employee contributions in cash. Autodesk’s contributions were $17.1 million in fiscal 2019, $17.3 million in fiscal 2018, and $16.4 million in fiscal 2017. Autodesk does not allow participants to invest in Autodesk common stock through the 401(k) plan.

Defined Benefit Pension Plans

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

2019 Form 10-K 100

Benefit Obligation and Plan Assets

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



	Fiscal year ended January 31,
	2019			2018
Beginning projected benefit obligation	$	158.1		$	146.4
Service cost	4.1			5.2
Interest cost	2.3			2.7
Actuarial (gain) loss	(4.3		)	(2.8		)
Benefits paid	(2.6		)	(3.3		)
Foreign currency exchange rate changes	(10.0		)	13.9
Curtailments and settlements	(61.0		)	(8.2		)
Contributions by plan participants	5.0			4.0
Plan amendment	—			0.2
Ending projected benefit obligation	$	91.6		$	158.1

Beginning fair value of plan assets	$	121.1		$	107.4
Actual return on plan assets	1.4			3.8
Contributions paid by employer	5.9			6.5
Contributions paid by plan participants	5.0			4.0
Benefit payments	(2.6		)	(3.3		)
Curtailments and settlements	(42.3		)	(8.0		)
Foreign currency exchange rate changes	(7.7		)	10.7
Ending fair value of plan assets	$	80.8		$	121.1
Funded status	$	(10.8	)	$	(37.0	)

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



	Fiscal Year Ended January 31,
	2019		2018
Other long-term liabilities	$	10.8	$	37.0
Accumulated other comprehensive loss, before tax	16.3		31.7
Net amount recognized	$	27.1	$	68.7

On a worldwide basis, the Company's defined benefit pension plans were 88% funded as of January 31, 2019.

As of January 31, 2019, the aggregate accumulated benefit obligation was $85.1 million for the defined benefit pension plans compared to $139.5 million as of January 31, 2018. Included in the aggregate data in the following tables are the amounts applicable to the Company's defined benefit pension plans, with accumulated benefit obligations in excess of plan assets, as well as plans with projected benefit obligations in excess of plan assets. Amounts related to such plans at the end of each period were as follows:



	Fiscal Year Ended January 31,
	2019		2018
Plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligations	$	75.6	$	130.7
Plan assets	70.0		112.1
Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations	$	91.6	$	158.1
Plan assets	80.8		121.1

2019 Form 10-K 101

Defined Benefit Pension Plan Assets

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

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



	Fiscal Year Ended January 31,
	2019								2018
	Level 1		Level 2		Level 3		Total		Total
Insurance contracts	$	—	$	28.0	$	—	$	28.0	$	53.0
Other investments	—		14.5		—		14.5		17.0
Total assets measured at fair value	$	—	$	42.5	$	—	42.5		70.0
Cash							4.3		0.2
Investment Fund valued using net asset value							34.0		50.9
Total pension plan assets at fair value							$	80.8	$	121.1

The insurance contracts in the preceding table represent the immediate cash surrender value of assets managed by qualified insurance companies. Autodesk does not have control over the target allocation or visibility of the investment strategies of those investments. Insurance contracts and investments held by insurance companies made up 35% and 44% of total plan assets as of January 31, 2019 and January 31, 2018, respectively.

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

Estimated Future Benefit Payments

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



	Pension Benefits
2020	$	2.4
2021	2.3
2022	2.3
2023	2.3
2024	2.3
2025-2029	13.9
Total	$	25.5

Funding Expectations

Our expected required funding for the plans during fiscal 2020 is approximately $4.6 million.

2019 Form 10-K 102

Net Periodic Benefit Cost

The components of net periodic pension cost for the defined benefit pension plans for fiscal 2019, 2018, and 2017 are as follows:



	Fiscal Year Ended January 31,
	2019			2018			2017
Service cost for benefits earned during the period	$	4.1		$	5.2		$	5.6
Interest cost on projected benefit obligation (1)	2.3			2.7			3.0
Expected return on plan assets (1)	(3.2		)	(3.9		)	(4.2		)
Amortization of prior service credit (1)	(0.2		)	(0.3		)	(0.3		)
Amortization of loss (1)	0.5			1.2			1.5
Settlement loss (1)	4.3			1.9			1.2
Curtailment gain (1)	(10.9		)	(0.1		)	—
Net periodic (benefit) cost	$	(3.1	)	$	6.7		$	6.8


(1)	Included in Interest and other expense, net in Autodesk's fiscal 2019 Consolidated Statements of Operations as a result of the adoption of ASU No. 2017-07 in the first quarter of fiscal 2019.

Amounts Recorded in OCI

The components of other comprehensive income (loss) for the defined benefit pension plans before taxes for fiscal 2019, 2018, and 2017 are as follows:



	Fiscal Year Ended January 31,
	2019			2018			2017
Prior service credit for period	$	(0.1	)	$	0.2		$	—
Net (gain) loss for period	(2.4		)	(2.5		)	7.2
Effect of settlement	(4.3		)	(1.9		)	(1.2		)
Effect of curtailment	(7.9		)	(0.2		)	—
Amortization of prior service credit	0.2			0.3			0.3
Amortization of net loss	(0.5		)	(1.2		)	(1.5		)
Other comprehensive (income) loss	$	(15.0	)	$	(5.3	)	$	4.8

Amounts Recorded in Accumulated Other Comprehensive Loss

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



	Fiscal Year Ended January 31,
	2019			2018
Net prior service credit	$	(1.4	)	$	(3.1	)
Net actuarial loss	17.7			34.8
Accumulated other comprehensive loss, before tax	$	16.3		$	31.7

Assumptions

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



	Fiscal Year Ended January 31,
	2019		2018		2017
Discount rate	2.5	%	2.4	%	3.2	%
Expected long-term rate of return on plan assets	3.3	%	3.3	%	4.3	%
Rate of compensation increase	2.3	%	2.3	%	2.2	%

The weighted-average expected long-term rate of return for the plan assets is 3.3%. The weighted-average expected long-term rate of return on plan assets is based on the interest rates guaranteed under the insurance contracts, and the expected rate of

2019 Form 10-K 103

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

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



	Fiscal Year Ended January 31,
	2019		2018		2017
Discount rate	2.0	%	1.8	%	1.7	%
Rate of compensation increase	2.7	%	2.6	%	2.6	%

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

Defined Contribution Plans

Autodesk also provides defined contribution plans in certain foreign countries where required by statute. Autodesk’s funding policy for foreign defined contribution plans is consistent with the local requirements in each country. Autodesk’s contributions to these plans were $29.6 million in fiscal 2019, $27.2 million in fiscal 2018, and $26.6 million in fiscal 2017.

Cash Balance Plans

Autodesk provides a cash balance plan that insures the risks of disability, death, and longevity, in which the vested pension capital is reinvested and provides a 100% capital and interest guarantee. The weighted-average guaranteed interest crediting rate for cash balance plans was 1.0%, 1.0%, and 1.3% for mandatory retirement savings and 0.3%, 0.3%, and 0.8% for supplementary retirement savings for fiscal 2019, 2018, and 2017, respectively.

Other Plans

In addition, Autodesk offers a non-qualified deferred compensation plan to certain key employees whereby they may defer a portion (or all) of their annual compensation until retirement or a different date specified by the employee in accordance with terms of the plan. See Note 7, “Deferred Compensation,” for further discussion.

16**.** Restructuring and other exit costs, net

During the fourth quarter of fiscal year 2018, the Board of Directors approved a world-wide restructuring plan (“Fiscal 2018 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, Autodesk seeks to reduce its investments in areas not aligned with its strategic priorities, including in areas related to research and development and go-to-market activities. At the same time, Autodesk plans to further invest in strategic priority areas related to digital infrastructure, customer success, and construction. By re-balancing resources to better align with the Company’s strategic priorities, Autodesk is positioning itself to meet its long-term goals. This world-wide restructuring plan included a reduction in force of approximately 11% of the Company’s workforce, or 1,027 employees, and the consolidation of certain leased facilities. By January 31, 2019, the personnel and facilities related actions included in this restructuring plan were substantially complete.

During Fiscal 2019, restructuring charges under the Fiscal 2018 Plan included $39.2 million in employee termination benefits and $3.2 million in lease termination and other exit costs.

2019 Form 10-K 104

The following tables set forth the restructuring charges and other facility exit costs, net during the fiscal years ended January 31, 2019 and 2018:



	Balances, January 31, 2018		Additions		Payments			Adjustments (1)			Balances, January 31, 2019
Fiscal 2018 Plan
Employee terminations costs	$	53.0	$	39.2	$	(89.7	)	$	(0.5	)	$	2.0
Facility terminations and other exit costs	2.5		3.2		(5.7		)	0.1			0.1
Total	$	55.5	$	42.4	$	(95.4	)	$	(0.4	)	$	2.1
Current portion (2)	$	55.5									$	2.1
Total	$	55.5									$	2.1


(1)	Adjustments primarily relate to the impact of foreign exchange rate changes, settlement of lease contracts, and certain write offs related to fixed assets.


(2)	The current portions of the reserve are recorded in the Consolidated Balance Sheets under “Other accrued liabilities.” There was no non-current portion as of January 31, 2019.



	Balances, January 31, 2017		Additions		Payments			Adjustments (1)			Balances, January 31, 2018
Fiscal 2018 Plan
Employee terminations costs	$	—	$	87.3	$	(35.1	)	$	0.8		$	53.0
Facility terminations and other exit costs	—		6.3		(1.3		)	(2.5		)	2.5
Fiscal 2017 Plan
Employee termination costs	1.1		0.1		(1.5		)	0.3			—
Facility terminations and other exit costs	1.9		0.1		(1.5		)	(0.3		)	0.2
Other facility termination costs
Facility termination costs	4.5		0.3		(3.0		)	(0.3		)	1.5
Total	$	7.5	$	94.1	$	(42.4	)	$	(2.0	)	$	57.2
Current portion (2)	$	5.9									$	57.2
Non-current portion (2)	1.6										—
Total	$	7.5									$	57.2


(1)	Adjustments primarily relate to the accelerated depreciation of fixed assets and the impact of foreign exchange rate changes.


(2)	The current and non-current portions of the reserve are recorded in the Consolidated Balance Sheets under “Other accrued liabilities” and “Other liabilities,” respectively.

2019 Form 10-K 105

17**.** Selected Quarterly Financial Information (Unaudited)

Summarized quarterly financial information for fiscal year 2019 and 2018 is as follows:



2019	1st quarter			2nd quarter			3rd quarter			4th quarter			Fiscal year
Net revenue (1)	$	559.9		$	611.7		$	660.9		$	737.3		$	2,569.8
Gross profit (1)	493.1			541.9			588.6			660.3			2,283.9
(Loss) Income from operations (1)	(55.3		)	(24.7		)	14.7			40.3			(25.0		)
Provision for income taxes	(18.6		)	(16.0		)	(35.2		)	31.7			(38.1		)
Net (loss) income (1)	(82.4		)	(39.4		)	(23.7		)	64.7			(80.8		)
Basic net (loss) income per share (1) (2)	$	(0.38	)	$	(0.18	)	$	(0.11	)	$	0.30		$	(0.37	)
Diluted net (loss) income per share (1) (2)	$	(0.38	)	$	(0.18	)	$	(0.11	)	$	0.29		$	(0.37	)
(Loss) Income from operations includes the following items:
Stock-based compensation expense	$	54.4		$	56.9		$	64.2		$	74.0		$	249.5
Amortization of acquisition related intangibles	7.4			7.2			7.8			11.1			33.5
CEO transition costs	—			(0.1		)	—			—			(0.1		)
Acquisition related costs	—			2.5			1.8			11.9			16.2
Restructuring and other exit costs, net	$	22.5		$	13.8		$	3.7		$	1.9		$	41.9

2018	1st quarter			2nd quarter			3rd quarter			4th quarter			Fiscal year
Net revenue	$	485.7		$	501.8		$	515.3		$	553.8		$	2,056.6
Gross profit	407.5			427.2			437.8			480.7			1,753.2
Loss from operations	(119.6		)	(107.6		)	(100.0		)	(181.9		)	(509.1		)
(Provision) Benefit for income taxes	(8.2		)	(17.6		)	(8.6		)	24.8			(9.6		)
Net loss	(129.6		)	(144.0		)	(119.8		)	(173.5		)	(566.9		)
Basic net loss per share (2)	$	(0.59	)	$	(0.66	)	$	(0.55	)	$	(0.79	)	$	(2.58	)
Diluted net loss per share (2)	$	(0.59	)	$	(0.66	)	$	(0.55	)	$	(0.79	)	$	(2.58	)
Loss from operations includes the following items:
Stock-based compensation expense	$	59.0		$	58.8		$	65.1		$	62.1		$	245.0
Amortization of acquisition related intangibles	10.4			8.9			8.7			8.6			36.6
CEO transition costs	11.0			10.6			—			(0.2		)	21.4
Restructuring and other exit costs, net	$	(0.3	)	$	0.5		$	—		$	93.9		$	94.1


(1)	Reflects the impact of the adoption of new accounting standards in fiscal year 2019 related to revenue recognition. See Note 1, "Business and Summary of Significant Accounting Policies, Accounting Standards Adopted", of our consolidated financial statements for additional information.


(2)	Net (loss) income per share were computed independently for each of the periods presented; therefore the sum of the net (loss) income per share amount for the quarters may not equal the total for the fiscal year.

18**.** Subsequent Events

In February 2019 and March 2019, Autodesk repaid $75.0 million and $50.0 million, respectively for a total payment of $125.0 million on the $500.0 million Term Loan Agreement entered into in December 2018 in connection with the consummation of the PlanGrid acquisition described in Note 6, "Acquisitions." See Note 8,"Borrowing Arrangements" for more details on the Term Loan Agreement. Autodesk did not incur any early termination penalties in connection with such repayment.

2019 Form 10-K 106

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Autodesk, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Autodesk, Inc. (the Company) as of January 31, 2019, and 2018, the related consolidated statements of operations, comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the three years in the period ended January 31, 2019, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2019, and 2018, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 25, 2019 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for recognizing revenue from contracts with customers and recognizing costs related to obtaining a customer contract in the year ended January 31, 2019 due to the adoption of ASU No. 2014‑09, Revenue from Contracts with Customers.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ ERNST & YOUNG LLP

We have served as the Company's auditor since 1983.

San Francisco, California

March 25, 2019

2019 Form 10-K 107

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Autodesk, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Autodesk, Inc.’s internal control over financial reporting as of January 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Autodesk, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated balance sheets of the Company as of January 31, 2019, and 2018, the related consolidated statements of operations, comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the three years in the period ended January 31, 2019, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) and our report dated March 25, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

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

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

/s/ ERNST & YOUNG LLP

San Francisco, California

March 25, 2019

2019 Form 10-K 108

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