CIMdata PLM Industry Summary Online Archive
18 November 2004
Financial News
Autodesk Third Quarter Revenues Increase 28 Percent; GAAP EPS Increases 200 Percent
Autodesk Inc. announced financial results for its third fiscal quarter ended October 31, 2004. For the third quarter, Autodesk reported net revenues of $300 million, a 28 percent increase over $234 million reported in the third quarter of the prior year.
The company separately announced that it has declared a 2-for-1 stock split on its common stock.
Third quarter net income increased 228 percent over the prior year to $74 million on a GAAP basis. GAAP EPS was $0.60 per diluted share, or $0.30 per diluted share after the effect of the 2-for-1 stock split. GAAP basis net income includes tax benefits of $29 million. GAAP net income also includes a $3 million pre-tax restructuring charge. Excluding these items, pro-forma third quarter net income was $48 million. Pro-forma EPS was $0.38 per diluted share, or $0.19 per diluted share on a split adjusted basis. GAAP basis net income in the third quarter of the prior year was $23 million. GAAP EPS in the third quarter of the prior year was $0.20 per diluted share, or $0.10 on a post-split basis. There were no pro-forma adjustments in the prior year.
The tax benefit totaling $29 million is comprised of several items. During the quarter the company recognized a tax benefit of $9 million from successful resolution of tax audits of previous years. The company also recognized $20 million in tax benefits primarily as a result of the new Dividends Received Deduction provided in the American Jobs Creation Act, which was signed into law on October 22, 2004. Under this legislation, the company is allowed to bring up to $500 million of foreign-earned cash into the United States by January 31, 2006, at a more favorable tax rate. This will allow the company to more effectively manage its cash and invest in the business. As a result of this legislation, the company now estimates its effective tax rate for fiscal 2005 and 2006 to be 20 percent, down from 24 percent. This reduction in estimated rate for the first half of fiscal 2005 resulted in a $4 million tax benefit. The remaining $16 million is related to the reduction in the estimated tax liability for previous fiscal years.
"Autodesk had another outstanding quarter," said Carol Bartz, Autodesk chairman and CEO. "Our customers are interested in quick implementation, ease of use and a fast return on investment, and our products meet those needs. Our results demonstrate that our products are strong and our strategies are working."
Autodesk's performance was driven by strong revenues from new seats, increasing penetration of its 3D products, continued success with the subscription program, and continued commitment to improved productivity and efficiency.
New seat revenue increased 36 percent over the prior year. Customers continue to respond enthusiastically to the ease of use and quick ROI of the AutoCAD 2005 family of products. Revenue from new commercial seats of AutoCAD increased 35 percent over the prior year.
During the quarter, Autodesk 3D products continued to gain traction in the market. In October, the company launched Autodesk® Civil 3DT 2005, the only civil engineering software available today that creates intelligent relationships between objects, so design changes are dynamically updated. Aggregate revenue from Autodesk Inventor® Series, Autodesk Inventor® Professional, Autodesk® Revit®, Autodesk® AutoCAD® Revit Series, Autodesk® Architectural Desktop, Autodesk Map® 3D and Autodesk Civil 3D increased 50 percent over the prior year. Customer adoption of Inventor, the world's best selling 3D mechanical design software, reached record levels.
Subscription revenues, called maintenance on the financial statements, increased 55 percent over the third quarter of the prior year, as customers continue to recognize the value of the subscription program and the quick return on investment of Autodesk products.
Autodesk continued to demonstrate progress in improving its productivity and profitability. Operating margins increased 6 percentage points over the prior year to 18 percent on a GAAP basis. Pro-forma operating margins, which exclude the $3 million restructuring charge, increased 7 percentage points to 19 percent in the quarter. These results demonstrate the company's commitment to improving productivity and efficiency.
"I am extremely pleased with our results this quarter," said Bartz. "Our product positioning has never been better. Our focus on productivity has enabled us to increase our investment in growth initiatives while improving our profitability. We expect to maintain this momentum next year."
In connection with the company's two-for-one stock split, stockholders as of the close of business on December 6, 2004, will be issued one additional share for each share of common stock held on the record date, with a payment date of December 20, 2004. The stock split will increase the number of shares outstanding from approximately 114 million shares to approximately 228 million shares.
In addition, the company announced that it will discontinue its $0.03 per share quarterly dividend. Dividend payments will cease after the March 2005 payment.
Business Outlook
The following statements are forward looking statements which are based on current expectations and which involve risks and uncertainties some of which are set forth below.
Fourth Quarter Fiscal 2005
Net revenues for the fourth quarter of fiscal 2005 are expected to be in the range of $335 million to $345 million. GAAP basis earnings per diluted share are expected to be in the range of $0.50 to $0.55, or $0.25 to $0.28 after the effect of the 2-for-1 stock split. Pro-forma earnings per diluted share are expected to be in the range of $0.52 to $0.57, or $0.26 to $0.29, on a post-split basis.
Full Year Fiscal 2005
For fiscal year 2005, net revenues are expected to be in the range of $1.213 billion to $1.223 billion. GAAP basis earnings per diluted share are expected to be in the range of $1.76 to $1.82, or $0.88 to $0.91 on a post-split basis. Pro-forma earnings per diluted share are expected to be in the range of $1.67 to $1.73, or $0.84 to $0.87 on a post-split basis.
First Quarter Fiscal 2006
Net revenues for the first quarter of fiscal 2006 are expected to be in the range of $320 million to $330 million. GAAP basis earnings per diluted share are expected to be in the range of $0.47 to $0.52, or $0.24 to $0.26 on a post-split basis.
Full Year Fiscal 2006
For fiscal year 2006, net revenues are expected to be in the range of $1.33 billion to $1.38 billion. GAAP basis earnings per diluted share are expected to be in the range of $2.00 to $2.15, or $1.00 to $1.08 on a post-split basis. Guidance for fiscal year 2006 excludes the impact of expected required stock option expensing.
All fiscal 2005 and fiscal 2006 EPS guidance ranges are based on the new 20 percent estimated effective tax rate. The company believes its effective tax rate will revert back to the historical effective tax rate of approximately 24 percent in fiscal year 2007.
Further information on potential factors that could affect the financial results of Autodesk are included in the company's report on Form 10-K for the year ended January 31, 2004, and Form 10-Q for the quarter ended July 31, 2004, which are on file with the Securities and Exchange Commission.
Autodesk will host its third quarter earnings announcement today at 5:00 p.m. Eastern Time. The live announcement may be accessed at 800-798-2864 (passcode: 54386757). An audio webcast will also be available beginning at 5:00 p.m. Eastern Time at http://www.autodesk.com/investor . A replay of this webcast will be maintained on our website for at least twelve months.
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