10-QPeriod: Q3 FY2002

Autodesk, Inc. Quarterly Report for Q3 Ended Oct 31, 2001

Filed November 30, 2001For Securities:ADSK

Summary

Autodesk, Inc.'s third-quarter fiscal year 2002 report (ending October 31, 2001) shows a slight year-over-year decline in net revenues to $216.4 million from $229.2 million, primarily due to weakness in the Discreet Segment and unfavorable foreign currency exchange rates. Despite the revenue dip, net income saw an increase to $21.5 million from $18.5 million, largely driven by a significant non-cash gain of $9.5 million from the dissolution of an affiliate, RedSpark, and effective cost management. Key operational highlights include continued investment in the Design Solutions Segment, which remained stable, while the Discreet Segment experienced a notable decline. The company made strategic acquisitions, notably the software division of Media 100, to bolster its streaming media capabilities. Autodesk also continued its share repurchase program, returning capital to shareholders. While facing economic headwinds and competitive pressures, the company expressed confidence in its liquidity and ability to meet future cash requirements.

Key Highlights

  • 1Net revenues for the third quarter decreased by 9% to $216.4 million, impacted by a 27% decline in the Discreet Segment and a strong US dollar.
  • 2Net income increased by 16% to $21.5 million ($0.38 per diluted share) due to a $9.5 million non-cash gain from the dissolution of affiliate RedSpark and cost control measures.
  • 3The Design Solutions Segment revenues remained stable year-over-year, indicating resilience in its core business, while AutoCAD sales contributed 29% of total revenue.
  • 4Autodesk completed the acquisition of the software division of Media 100 for $16 million, enhancing its streaming media technology.
  • 5The company continued its share repurchase program, buying back 2.4 million shares for $87.3 million in the first nine months of fiscal 2002.
  • 6Nonrecurring charges amounted to $17.1 million for the nine months, primarily related to restructuring, the Media 100 acquisition, and RedSpark dissolution.
  • 7Liquidity remains strong with $427.6 million in cash and marketable securities, and the company believes it has sufficient resources to meet its obligations.

Frequently Asked Questions

The increase in net income was significantly boosted by a one-time, non-cash gain of $9.5 million recognized from the dissolution of RedSpark, an affiliate. Additionally, effective cost management across various expense categories contributed to improved profitability on a lower revenue base.

The acquisition of the remaining stake in Buzzsaw.com was completed in August 2001 and its results are included in the consolidated statements from that date. The acquisition of the Media 100 software division occurred in October 2001 for $16 million, adding streaming media technology and contributing $3.2 million in acquisition-related nonrecurring charges during the quarter.

Autodesk acknowledges current economic slowdowns and competitive pressures, which make future revenue difficult to predict. While the Design Solutions Segment remains stable, the Discreet Segment is experiencing a decline. The company expects continued investment in marketing and sales and anticipates that unfavorable exchange rates could negatively impact future international revenues. Management believes its existing cash, marketable securities, and credit lines are sufficient for future cash requirements.

Significant nonrecurring charges totaling $17.1 million for the nine months ended October 31, 2001, included $10.3 million for restructuring and reorganization activities (like office closures and employee terminations), $3.2 million for the Media 100 acquisition, and $3.6 million for the wind-down of RedSpark. These charges negatively impacted reported net income for the period.