Autodesk 2001 Annual Report Download - page 36

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Autodesk, Inc. FY 01
Autodesk, Inc.
Notes to Consolidated Financial
Statements
January 31, 2001
Note 1. Autodesk and Summary of
Significant Accounting Policies
About Autodesk
Autodesk, Inc. (”Autodesk”) is one of the world’s leading
design software and digital content companies for archi-
tectural design and land devel o pm e nt, m an u -
facturing, utilities, telecommunications, and media
and entertainment. Founded in April 1982, Autodesk pro-
vides design software, Internet portal services,
wireless development platforms and point-of-
location applications.
Principles of Consolidation
The accompanying consolidated financial statements
include the accounts of Autodesk and its wholly and
majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated. The
equity method of accounting is used for investments in
companies in which Autodesk has significant influence,
which is generally represented by stock ownership of at
least 20 percent but not more than 50 percent.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires man-
agement to make estimates and assumptions that affect
the amounts reported in Autodesk’s consolidated financial
statements and notes thereto. Actual results could differ
materially from those estimates.
Foreign Currency Translation
The assets and liabilities of foreign subsidiaries are trans-
lated 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
weighted average rates during the period. Foreign cur-
rency translation adjustments are recorded as other
comprehensive income.
Gains and losses realized from foreign currency transac-
tions, those transactions denominated in currencies other
than the subsidiary’s functional currency, are included in
interest and other income.
Forward Foreign Exchange Contracts
(”Forwards”) and Option Contracts (”Options”)
Autodesk hedges a portion of its exposure in certain
receivables and payables as well as certain anticipated
cash flows denominated in foreign currencies using for-
wards and options in European and Asian currencies.
Gains and losses associated with exchange rate fluctua-
tions on forwards and options are recorded in interest and
other income and offset corresponding gains and losses
on the assets, liabilities, and anticipated cash flows being
hedged.The costs of forwards are amortized on a straight-
line basis over the life of the contract as interest and other
income, while option premiums are expensed entirely on
the date of purchase because of the short-term life of the
options.
Cash and Cash Equivalents
Autodesk considers all highly liquid investments with
insignificant interest rate risk and original maturities of
three months or less to be cash equivalents. Cash equiva-
lents 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 reevalu-
ates such classification as of each balance sheet date.
Autodesk has classified all of its marketable securities as
available-for-sale and carries such securities at fair value,
with unrealized gains and losses, net of tax, reported in
stockholders’ equity until disposition.
Concentration of Credit Risk
Autodesk places its cash,cash equivalents and marketable
securities with and in the custody of financial institutions
with high credit standing and, by policy, limits the
amounts invested with any one institution, type of security
and issuer.
Autodesk’s accounts receivable are derived from sales to a
large number of direct customers, resellers and distribu-
tors in the Americas, Europe and the Asia Pacific region.
Autodesk performs ongoing evaluations of its customers’
financial condition and limits the amount of credit extended
when deemed necessary, but generally requires no collat-
eral.No single customer accounted for more than 10 percent
of consolidated net revenues in fiscal 2001, 2000 or 1999.
Inventories
Inventories, consisting principally of diskettes, compact
discs (CDs), user manuals and hardware purchased for
resale are stated at the lower of cost (determined on the
first-in, first-out method) or market.