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Business and Summary of Significant Accounting Policies | 12 Months Ended
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Jan. 31, 2015
Accounting Policies [Abstract] |
Business and Summary Of Significant Accounting Policies | Business and Summary of Significant Accounting Policies Business Autodesk, Inc. (“Autodesk” or the “Company”) is a world leading design software and services company, offering customers productive business solutions through powerful technology products and services. The Company serves customers in the architecture, engineering, and construction; manufacturing; and digital media, consumer, and entertainment industries. The Company’s sophisticated software products enable its customers to experience their ideas before they are real by allowing them to imagine, design, and create their ideas and to visualize, simulate, and analyze real-world performance early in the design process by creating digital prototypes. These capabilities allow Autodesk’s customers to foster innovation, optimize and improve their designs, help save time and money, improve quality, and collaborate with others. Autodesk software products are sold globally, both directly to customers and through a network of resellers and distributors. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Autodesk and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Reclassifications During the first quarter of fiscal 2014, Autodesk combined maintenance revenue and cloud services offering-related revenue into one category named “Subscription.” As a result, revenue and cost of revenue related to cloud service offerings previously reflected in “License and other revenue” and “Cost of license and other revenue” were reclassified to “Subscription revenue” and “Cost of subscription revenue.” These revenues and expenses have been reclassified in the Consolidated Statements of Operations for fiscal year 2013 to conform to the current period presentation as follows:
|  | Fiscal year ended January 31,
|  | 2013
Reclassifications within revenue: |  |
Decrease to License and other revenue |  | $ | (26.5 | )
Increase to Subscription revenue |  | 26.5 |
Reclassifications within cost of revenue: |  |
Decrease to Cost of license and other revenue |  | $ | (32.1 | )
Increase to Cost of subscription revenue |  | 32.1 |
During the second quarter of fiscal 2015, Autodesk elected to present amortization of purchased customer relationships, trade names, patents, and user lists as a separate line item within operating expenses. As a result, amortization previously reflected in “General and Administrative” expense was reclassified to “Amortization of Purchased Intangibles" within Operating Expenses. These expenses have been reclassified in the Consolidated Statements of Operations for fiscal years 2014 and 2013 to conform to the current period presentation as follows:
| Fiscal year ended January 31,
| 2014 |  | 2013
Reclassifications within operating expenses: |  |  |
(Decrease) to general and administrative | $ | (36.5 | ) |  | $ | (42.1 | )
Increase to amortization of purchased intangibles | 36.5 |  |  | 42.1 |
Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in Autodesk’s consolidated financial statements and notes thereto. These estimates are based on information available as of the date of the consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions. Actual results may differ materially from these estimates. Examples of significant estimates and assumptions made by management involve the determination of the fair value of acquired assets and liabilities, goodwill, financial instruments, long-lived assets and other intangible assets, the realizability of deferred tax assets, and the fair value of stock awards. The Company also makes assumptions, judgments, and estimates in determining the accruals for uncertain tax positions, variable compensation, partner incentive programs, product returns reserves, allowances for doubtful accounts, asset retirement obligations, and legal contingencies. Foreign Currency Translation and Transactions The assets and liabilities of Autodesk’s foreign subsidiaries are translated from their respective functional currencies into U.S. dollars at the rates in effect at the balance sheet date, and revenue and expense amounts are translated at exchange rates that approximate those rates in effect during the period in which the underlying transactions occur. Foreign currency translation adjustments are recorded as other comprehensive income (loss). Gains and losses realized from foreign currency transactions, those transactions denominated in currencies other than the foreign subsidiary’s functional currency, are included in interest and other income, net. Monetary assets and liabilities are remeasured using foreign currency exchange rates at the end of the period, and non-monetary assets are remeasured based on historical exchange rates. Derivative Financial Instruments Under its risk management strategy, Autodesk uses derivative instruments to manage its short-term exposures to fluctuations in foreign currency exchange rates which exist as part of ongoing business operations. Autodesk’s general practice is to hedge a majority of transaction exposures denominated in euros, Japanese yen, Swiss francs, British pounds, Canadian dollars, and Australian dollars. These instruments have maturities between one to 12 months in the future. Autodesk does not enter into any derivative instruments for trading or speculative purposes. The bank counterparties in all contracts expose Autodesk to credit-related losses in the event of their nonperformance. However, to mitigate that risk, Autodesk only contracts with counterparties who meet the Company’s minimum requirements under its counterparty risk assessment process. Autodesk monitors ratings, credit spreads, and potential downgrades on at least a quarterly basis. Based on Autodesk’s on-going assessment of counterparty risk, the Company will adjust its exposure to various counterparties. Autodesk generally enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. However, Autodesk does not have any master netting arrangements in place with collateral features. Autodesk accounts for its derivative instruments as either assets or liabilities on the balance sheet and carries them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. Derivatives that do not qualify for hedge accounting are adjusted to fair value through earnings. See Note 2, "Financial Instruments" for information regarding Autodesk's hedging activities. Cash and Cash Equivalents Autodesk considers all highly liquid investments with insignificant interest rate risk and remaining maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents are recorded at cost, which approximates fair value. Marketable Securities Marketable securities are stated at fair value. Marketable securities maturing within one year that are not restricted are classified as current assets. Autodesk determines the appropriate classification of its marketable securities at the time of purchase and re-evaluates such classification as of each balance sheet date. Autodesk carries all “available-for-sale securities” at fair value, with unrealized gains and losses, net of tax, reported in stockholders’ equity until disposition or maturity. Autodesk carries all “trading securities” at fair value, with unrealized gains and losses, recorded in “Interest and other income, net” in the Company’s Consolidated Statements of Operations. All of Autodesk’s marketable securities are subject to a periodic impairment review. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Autodesk considers various factors in determining whether to recognize an impairment charge, including the length of time and extent to which the fair value has been less than Autodesk’s cost basis, the financial condition and near-term prospects of the investee, and Autodesk’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market value. Autodesk did not record any other-than temporary impairment charges during fiscal years ended January 31, 2015, 2014, and 2013. For additional information, see “Concentration of Credit Risk” within this Note 1 and Note 2, “Financial Instruments.” Accounts Receivable, Net Accounts receivable, net, consisted of the following as of January 31:
| 2015 |  | 2014
Trade accounts receivable | $ | 495.4 |  |  | $ | 464.6 |
Less: Allowance for doubtful accounts | (6.3 | ) |  | (4.9 | )
Product returns reserve | (2.6 | ) |  | (4.0 | )
Partner programs and other obligations | (27.6 | ) |  | (32.0 | )
Accounts receivable, net | $ | 458.9 |  |  | $ | 423.7 |
Allowances for uncollectible trade receivables are based upon historical loss patterns, the number of days that billings are past due, and an evaluation of the potential risk of loss associated with problem accounts. The product returns reserves are based on historical experience of actual product returns, estimated channel inventory levels, the timing of new product introductions, channel sell-in for applicable markets, and other factors. As part of the indirect channel model, Autodesk has a partner incentive program that uses quarterly attainment of monetary rewards to motivate distributors and resellers to achieve mutually agreed upon business goals in a specified time period. A portion of these incentives reduce license and other revenue in the current period. The remainder, which relates to incentives on our Subscription Program, is recorded as a reduction to deferred revenue in the period the maintenance transaction is billed and subsequently recognized as a reduction to maintenance revenue over the contract period. These incentive balances do not require significant assumptions or judgments. The reserves associated with the partner incentive program are treated on the consolidated balance sheet as either contra account receivable (when due to distributors and direct resellers) or accounts payable (when due to indirect resellers). Concentration of Credit Risk Autodesk places its cash, cash equivalents, and marketable securities in highly liquid instruments with, and in the custody of, diversified financial institutions globally with high credit ratings and limits the amounts invested with any one institution, type of security, and issuer. Geographical concentrations of consolidated cash, cash equivalents, and marketable securities held by Autodesk as of January 31:
| 2015 |  | 2014
United States | 19 | % |  | 25 | %
Other Americas | 1 | % |  | 1 | %
Europe, Middle East, and Africa (“EMEA”) | 56 | % |  | 57 | %
Asia Pacific (“APAC”) | 24 | % |  | 17 | %
Autodesk’s primary commercial banking relationship is with Citigroup Inc. and its global affiliates. Citibank, N.A., an affiliate of Citigroup, is one of the lead lenders and an agent in the syndicate of Autodesk’s $400.0 million line of credit facility. It is Autodesk’s policy to limit the amounts invested with any one institution by type of security and issuer. Autodesk’s accounts receivable are derived from sales to a large number of resellers, distributors, and direct customers in the Americas; EMEA; and APAC geographies. Autodesk performs ongoing evaluations of these partners' financial condition and limits the amount of credit extended when deemed necessary, but generally does not require collateral from such parties. Total sales to the Company's largest distributor Tech Data Corporation, and its global affiliates (“Tech Data”), accounted for 25%, 24%, and 23% of Autodesk's net revenue for fiscal years ended January 31, 2015, 2014, and 2013, respectively. The majority of the net revenue from sales to Tech Data relates to Autodesk's Platform Solutions and Emerging Business ("PSEB") segment and is for sales made outside of the United States. In addition, Tech Data accounted for 22% and 24% of trade accounts receivable at January 31, 2015 and 2014, respectively. Computer Equipment, Software, Furniture, and Leasehold Improvements, Net Computer equipment, software, and furniture are depreciated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term. Depreciation expense was $52.1 million in fiscal 2015, $47.2 million in fiscal 2014, and $45.6 million in fiscal 2013. Computer equipment, software, furniture, leasehold improvements and the related accumulated depreciation at January 31 were as follows:
| 2015 |  | 2014
Computer hardware, at cost | $ | 194.0 |  |  | $ | 163.0 |
Computer software, at cost | 84.9 |  |  | 80.9 |
Leasehold improvements, land, and buildings, at cost | 176.3 |  |  | 163.7 |
Furniture and equipment, at cost | 53.0 |  |  | 51.7 |
Computer software, hardware, leasehold improvements, furniture, and equipment, at cost | 508.2 |  |  | 459.3 |
Less: Accumulated depreciation | (349.0 | ) |  | (329.0 | )
Computer software, hardware, leasehold improvements, furniture, and equipment, net | $ | 159.2 |  |  | $ | 130.3 |
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. During fiscal 2015, Autodesk wrote-off $25.8 million of fully depreciated assets. 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, 2015 and January 31, 2014. Other Intangible Assets, Net Other intangible assets include developed technologies, customer relationships, trade names, patents, user lists, and the related accumulated amortization. These assets are shown as “Developed technologies, net” and as part of “Other assets” in the Consolidated Balance Sheet. The majority of Autodesk’s other intangible assets are amortized to expense over the estimated economic life of the product, which ranges from one to ten years. Amortization expense for developed technologies, customer relationships, trade names, patents, and user lists was $92.9 million in fiscal 2015, $80.7 million in fiscal 2014 and $82.0 million in fiscal 2013. Other intangible assets and related accumulated amortization at January 31 were as follows:
| 2015 |  | 2014
Developed technologies, at cost | $ | 538.4 |  |  | $ | 462.4 |
Customer relationships, trade names, patents, and user lists, at cost (1) | 348.9 |  |  | 268.1 |
| 887.3 |  |  | 730.5 |
Less: Accumulated amortization | (715.4 | ) |  | (626.2 | )
Other intangible assets, net | $ | 171.9 |  |  | $ | 104.3 |
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(1) | Included as a net balance in “Other assets” in the Consolidated Balance Sheet. Customer relationships and trade names include the effects of foreign currency translation.
The weighted average amortization period for developed technologies, customer relationships, and trade names during fiscal 2015 was 4.2 years. Expected future amortization expense for developed technologies, customer relationships, trade names, patents, and user lists for each of the fiscal years ended thereafter is as follows:
| Fiscal Year ended January 31,
2016 | $ | 73.2 |
2017 | 49.7 |
2018 | 24.0 |
2019 | 15.5 |
2020 | 5.3 |
Thereafter | 4.2 |
Total | $ | 171.9 |
Goodwill Goodwill consists of the excess of the consideration transferred over the fair value of net assets acquired in business combinations. Autodesk assigns goodwill to the reporting unit associated with each business combination, and tests goodwill for impairment annually in its fourth fiscal quarter or more often if circumstances indicate a potential impairment. For purposes of the goodwill impairment test, a reporting unit is an operating segment or one level below. Autodesk has the option to perform an assessment of qualitative factors of impairment (“optional assessment”) prior to necessitating a two-step quantitative impairment test. Should the optional assessment be utilized for any given fiscal year, qualitative factors to consider include cost factors; financial performance; legal, regulatory, contractual, political, business, or other factors; entity specific factors; industry and market considerations, macroeconomic conditions, and other relevant events and factors affecting the reporting unit. If, after assessing the totality of events or circumstances, it is more likely than not that the fair value of the reporting unit is greater than its carrying value, then performing the two-step impairment test is unnecessary. Therefore, the two-step quantitative impairment test is necessary when either Autodesk does not utilize the optional assessment or, as a result of the optional assessment, it is not more likely than not that the fair value of the reporting unit is greater than its carrying value. In performing the two-step impairment test, Autodesk uses discounted cash flow models which include assumptions regarding projected cash flows. Variances in these assumptions could have a significant impact on Autodesk's conclusion as to whether goodwill is impaired, or the amount of any impairment charge. Impairment charges, if any, result from instances where the fair values of net assets associated with goodwill are less than their carrying values. As changes in business conditions and assumptions occur, Autodesk may be required to record impairment charges. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. The value of Autodesk’s goodwill could also be impacted by future adverse changes such as: (i) declines in Autodesk’s actual financial results, (ii) a sustained decline in Autodesk’s market capitalization, (iii) significant slowdown in the worldwide economy or the industries Autodesk serves, or (iv) changes in Autodesk’s business strategy or internal financial forecast results. For the fiscal 2015 annual goodwill impairment testing, Autodesk had five reporting units: PSEB, Manufacturing ("MFG"), Architecture, Engineering, and Construction ("AEC"), Media and Entertainment ("M&E"), and Delcam. For the annual impairment assessment in fiscal 2015, Autodesk utilized the optional assessment for Delcam. Based on a review of the qualitative factors described above, we determined that for our Delcam reporting unit, it was more likely than not that the fair value of the reporting unit exceeded the carrying value. As a result, we concluded that performing the two-step impairment test was not necessary for Delcam. For each of the remaining four reporting units, Autodesk did not utilize the optional assessment but rather performed the quantitative two-step impairment test. In performing the quantitative two-step test, Autodesk used a discounted cash flow model which included assumptions regarding projected cash flows. Based on this testing, Autodesk determined that the fair value was substantially in excess of the carrying value for each of the four reporting units and therefore the goodwill of each reporting unit was not impaired during the fiscal year ended January 31, 2015. In addition, Autodesk did not recognize any goodwill impairment losses in fiscal 2014 or 2013. The change in the carrying amount of goodwill during the fiscal year ended January 31, 2015 is as follows:
| Platform Solutions and Emerging Business |  | Architecture, Engineering, and Construction |  | Manufacturing |  | Media and Entertainment |  | Delcam |  | Total
Balance as of January 31, 2014 |  |  |  |  |  |  |  |  |  |  |
Goodwill | $ | 142.3 |  |  | $ | 415.2 |  |  | $ | 411.6 |  |  | $ | 190.0 |  |  | $ | — |  |  | $ | 1,159.1 |
Accumulated impairment losses | — |  |  | — |  |  | — |  |  | (149.2 | ) |  | — |  |  | (149.2 | )
| 142.3 |  |  | 415.2 |  |  | 411.6 |  |  | 40.8 |  |  | — |  |  | 1,009.9 |
Delcam plc | — |  |  | — |  |  | — |  |  | — |  |  | 196.1 |  |  | 196.1 |
Within Technologies Limited | 80.6 |  |  | — |  |  | — |  |  | — |  |  |  |  |  | 80.6 |
Shotgun Software Inc. | — |  |  | — |  |  | — |  |  | 43.2 |  |  |  |  |  | 43.2 |
Goodwill acquired from other acquisitions | 117.8 |  |  | 28.1 |  |  | 20.1 |  |  | 15.3 |  |  |  |  |  | 181.3 |
Effect of foreign currency translation, purchase accounting adjustments, and other | (13.2 | ) |  | (16.3 | ) |  | (9.0 | ) |  | (3.3 | ) |  | (13.1 | ) |  | (54.9 | )
Balance as of January 31, 2015 |  |  |  |  |  |  |  |  |  |  |
Goodwill | 327.5 |  |  | 427.0 |  |  | 422.7 |  |  | 245.2 |  |  | 183.0 |  |  | 1,605.4 |
Accumulated impairment losses | — |  |  | — |  |  | — |  |  | (149.2 | ) |  | — |  |  | (149.2 | )
| $ | 327.5 |  |  | $ | 427.0 |  |  | $ | 422.7 |  |  | $ | 96.0 |  |  | $ | 183.0 |  |  | $ | 1,456.2 |
The change in the carrying amount of goodwill during the fiscal year ended January 31, 2014 is as follows:
| Platform Solutions and Emerging Business |  | Architecture, Engineering, and Construction |  | Manufacturing |  | Media and Entertainment |  | Total
Balance as of January 31, 2013 |  |  |  |  |  |  |  |  |
Goodwill | $ | 129.5 |  |  | $ | 310.3 |  |  | $ | 389.9 |  |  | $ | 191.0 |  |  | $ | 1,020.7 |
Accumulated impairment losses | — |  |  | — |  |  | — |  |  | (149.2 | ) |  | (149.2 | )
| 129.5 |  |  | 310.3 |  |  | 389.9 |  |  | 41.8 |  |  | 871.5 |
Graitec SA | — |  |  | 73.4 |  |  | — |  |  | — |  |  | 73.4 |
Goodwill acquired from other acquisitions | 12.8 |  |  | 32.0 |  |  | 22.2 |  |  | — |  |  | 67.0 |
Effect of foreign currency translation, purchase accounting adjustments, and other | — |  |  | (0.5 | ) |  | (0.5 | ) |  | (1.0 | ) |  | (2.0 | )
Balance as of January 31, 2014 |  |  |  |  |  |  |  |  |
Goodwill | 142.3 |  |  | 415.2 |  |  | 411.6 |  |  | 190.0 |  |  | 1,159.1 |
Accumulated impairment losses | — |  |  | — |  |  | — |  |  | (149.2 | ) |  | (149.2 | )
| $ | 142.3 |  |  | $ | 415.2 |  |  | $ | 411.6 |  |  | $ | 40.8 |  |  | $ | 1,009.9 |
Purchase accounting adjustments reflect revisions made to the Company’s preliminary purchase price allocations during fiscal 2015 and 2014. Impairment of Long-Lived Assets At least annually or more frequently as circumstances dictate, Autodesk reviews its long-lived assets for impairment whenever impairment indicators exist. Autodesk continually monitors events and changes in circumstances that could indicate the carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur, Autodesk assesses recoverability of these assets. Recoverability is measured by comparison of the carrying amounts of the assets to the future undiscounted cash flows the assets are expected to generate. If the long-lived assets are considered to be impaired, the impairment to be recognized is equal to the amount by which the carrying value of the assets exceeds its fair market value. Autodesk did not recognize any impairment of long-lived assets during the fiscal years ended January 31, 2015, 2014, and 2013, 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 the establishment of U.S. deferred tax liabilities on unremitted earnings from certain foreign subsidiaries, and valuation allowances against U.S. and foreign deferred tax assets. We perform a quarterly assessment of the recoverability of these net deferred tax assets and believe that we will generate sufficient future taxable income in appropriate tax jurisdictions to realize the net deferred tax assets. They are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce gross deferred tax assets to the amount “more likely than not” expected to be realized. Revenue Recognition Autodesk recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collection is probable. For multiple element arrangements containing only software and software-related elements, Autodesk allocates the sales price among each of the deliverables using the residual method, under which revenue is allocated to undelivered elements based on their vendor-specific objective evidence (“VSOE”) of fair value. VSOE is the price charged when an element is sold separately or a price set by management with the relevant authority. If Autodesk does not have VSOE of an undelivered element, revenue recognition is deferred on the entire sales arrangement until all elements for which Autodesk does not have VSOE are delivered. If Autodesk does not have VSOE for undelivered maintenance or services, the revenue for the arrangement is recognized over the longest contractual service period in the arrangement. Revenue recognition for significant lines of business is discussed further below. For multiple element arrangements involving non-software elements, including cloud subscription services, our revenue recognition policy is based upon the accounting guidance contained in ASC 605, Revenue Recognition. For these arrangements, Autodesk first allocates the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and the non-software elements. Autodesk then further allocates consideration within the software group to the respective elements within that group using the residual method as described above. Autodesk exercises judgment and uses estimates in connection with the determination of the amount of revenue to be recognized in each accounting period. Autodesk allocates the total arrangement consideration among the various elements based on a selling price hierarchy. The selling price for a deliverable is based on its VSOE if available, third-party evidence ("TPE") if VSOE is not available, or the best estimated selling price ("BESP") if neither VSOE nor TPE is available. BESP represents the price at which Autodesk would transact for the deliverable if it were sold regularly on a standalone basis. To establish BESP for those elements for which neither VSOE nor TPE are available, Autodesk performs a quantitative analysis of pricing data points for historical standalone transactions involving such elements for a twelve-month period. As part of this analysis, Autodesk monitors and evaluates the BESP against actual pricing to ensure that it continues to represent a reasonable estimate of the standalone selling price, considering several other external and internal factors including, but not limited to, pricing and discounting practices, contractually stated prices, the geographies in which Autodesk offers products and services, and the type of customer (i.e. distributor, value-added reseller, and direct end user, among others). Autodesk analyzes BESP at least annually or on a more frequent basis if a significant change in our business necessitates a more timely analysis, or if significant selling price variances are experienced. Autodesk’s assessment of likelihood of collection is also a critical element in determining the timing of revenue recognition. If collection is not probable, the revenue will be deferred until the earlier of when collection is deemed probable or cash is received. License and other revenue are comprised of two components: (1) all forms of product license revenue and (2) other revenue. (1) All Forms of Product License Revenue Product license revenue includes: software license revenue from the sale of new seat licenses and upgrades and product revenue for Creative Finishing. (2) Other Revenue Other revenue includes revenue from consulting, training, Autodesk Developers Network, and Creative Finishing customer support, and is recognized over time, as the services are performed. Autodesk's Subscription revenue consists of two components: maintenance revenue for our software products and revenue for our cloud service offerings, including Autodesk 360. Autodesk's maintenance program provides our commercial and educational customers of perpetual products with a cost effective and predictable budgetary option to obtain the productivity benefits of our new releases and enhancements when and if released during the term of their contracts. Under Autodesk's maintenance program, customers are eligible to receive unspecified upgrades when and if available, downloadable training courses, and online support. Autodesk recognizes maintenance revenue ratably over the term of the maintenance agreement, which is generally between one and three years but can occasionally be as long as five years. Revenue for Autodesk's cloud service offerings is recognized ratably over the contract term commencing with the date Autodesk's service is made available to customers and all other revenue recognition criteria have been satisfied. Taxes Collected from Customers Autodesk nets taxes collected from customers against those remitted to government authorities in the consolidated financial statements. Accordingly, taxes collected from customers are not reported as revenue. Shipping and Handling Costs Shipping and handling costs are included in cost of revenue for all periods presented. Stock-based Compensation Expense The following table summarizes stock-based compensation expense for fiscal 2015, 2014, and 2013, respectively, as follows:
| Fiscal Year Ended January 31,
| 2015 |  | 2014 |  | 2013
Cost of license and other revenue | $ | 4.6 |  |  | $ | 3.8 |  |  | $ | 3.7 |
Cost of subscription | 4.3 |  |  | 2.2 |  |  | 1.5 |
Marketing and sales | 72.4 |  |  | 58.6 |  |  | 64.3 |
Research and development | 56.0 |  |  | 43.7 |  |  | 61.8 |
General and administrative | 28.3 |  |  | 23.9 |  |  | 25.0 |
Stock-based compensation expense related to stock awards and ESP Plan purchases | 165.6 |  |  | 132.2 |  |  | 156.3 |
Tax benefit | (45.2 | ) |  | (36.4 | ) |  | (35.5 | )
Stock-based compensation expense related to stock awards and ESP Plan purchases, net | $ | 120.4 |  |  | $ | 95.8 |  |  | $ | 120.8 |
Autodesk determines the grant-date fair value of its share-based payment awards using a Black-Scholes Merton Option ("BSM") 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, 2015 |  | January 31, 2014 |  | January 31, 2013
|  | Performance Stock Unit (1) |  | ESP Plan |  | Performance Stock Unit (1) |  | ESP Plan |  | Stock Option (2) |  | ESP Plan
Range of expected volatilities |  | 30% |  | 29 - 33% |  | 34% |  | 27 - 36% |  | 41 - 45% |  | 41 - 44%
Range of expected lives (in years) |  | N/A |  | 0.5 - 2.0 |  | N/A |  | 0.5 - 2.0 |  | 3.6 - 4.6 |  | 0.5 - 2.0
Expected dividends |  | —% |  | —% |  | —% |  | —% |  | —% |  | —%
Range of risk-free interest rates |  | 0.1% |  | 0.0 - 0.6% |  | 0.1% |  | 0.1 - 0.4% |  | 0.5 - 0.8% |  | 0.1 - 0.3%
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(1) | Autodesk did not grant PSUs in fiscal 2013 that were subject to market conditions.
(2) | Autodesk did not grant stock options in fiscal 2015 or 2014.
Autodesk estimates expected volatility for stock-based awards based on the average of the following two measures. The first is a measure of historical volatility in the trading market for the Company’s common stock, and the second is the implied volatility of traded forward call options to purchase shares of the Company’s common stock. The expected volatility for PSUs subject to market conditions includes the expected volatility of Autodesk's peer companies within the S&P Computer Software Select Index. Autodesk estimates the expected life of stock-based awards using both exercise behavior and post-vesting termination behavior as well as consideration of outstanding options. Autodesk did not pay cash dividends in fiscal 2015, 2014, or 2013 and does not anticipate paying any cash dividends in the foreseeable future. Consequently, an expected dividend yield of zero is used in the Black-Scholes-Merton 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 are ultimately expected to vest. Therefore, Autodesk has developed an estimate of the number of awards expected to cancel prior to vesting (“forfeiture rate”). The forfeiture rate is estimated based on historical pre-vest cancellation experience and is applied to all stock-based awards. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. Advertising Expenses Advertising costs are expensed as incurred. Total advertising expenses incurred were $23.9 million in fiscal 2015, $15.6 million in fiscal 2014, and $15.6 million in fiscal 2013. Net Income Per Share Basic net income per share is computed based on the weighted average number of shares of common stock outstanding for the period, excluding stock options and restricted stock units. Diluted net income per share is computed based upon the weighted average shares of common shares outstanding for the period and potentially dilutive common shares, including the effect of stock options and restricted stock units under the treasury stock method. Defined Benefit Pension Plans The funded status of Autodesk's defined benefit pension plans is recognized in the Consolidated Balance Sheets. The funded status is measured as the difference between the fair value of plan assets and the projected benefit obligation for the fiscal years presented. The projected benefit obligation represents the actuarial present value of benefits expected to be paid upon retirement based on employee services already rendered and estimated future compensation levels. The fair value of plan assets represents the current market value of Autodesk's cumulative company and participant contributions made to the various plans in effect. Net periodic benefit cost is recorded in the Consolidated Statements of Operations and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs, and gains or losses previously recognized as a component of other comprehensive income. Certain events, such as changes in the employee base, plan amendments, and changes in actuarial assumptions may result in a change in the defined benefit obligation and the corresponding change to other comprehensive income. Gains and losses and prior service costs not recognized as a component of net periodic benefit cost in the Consolidated Statements of Operations as they arise are recognized as a component of other comprehensive income in the Consolidated Statements of Comprehensive Income. Those gains and losses and prior service costs are subsequently amortized as a component of net periodic benefit cost over the average remaining service lives of the plan participants using a corridor approach to determine the portion of gain or loss subject to amortization. The measurement of projected benefit obligations and net periodic benefit cost is based on estimates and assumptions that reflect the terms of the plans and use participant-specific information such as compensation, age and years of services, as well as certain assumptions, including estimates of discount rates, expected return of plan assets, rate of compensation increases, interest rates, and mortality rates. Accounting Standards in Fiscal 2015 With the exception of those discussed below, there have been no recent changes in accounting pronouncements issued by the FASB or adopted by the Company during the fiscal year ended January 31, 2015, that are of significance, or potential significance, to the Company. Accounting Standards Adopted Effective February 1, 2014, Autodesk prospectively adopted FASB's Accounting Standards Update (“ASU”) 2013-11 regarding ASC Topic 740 “Income Tax.” This ASU clarifies the guidance on the presentation of an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the consolidated financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The adoption of this ASU resulted in an $81.9 M reduction of both our long term taxes payable and long-term deferred tax assets as of January 31, 2015. Recently Issued Accounting Standards On May 28, 2014, the FASB issued ASU 2014-09 regarding ASC Topic 606 “Revenue from Contracts with Customers.” This ASU provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU will be effective for Autodesk’s fiscal year beginning February 1, 2017. Early adoption is not permitted. Autodesk is currently evaluating the accounting, transition, and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

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- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6927468&loc=d3e6003-108592 + Details
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