Autodesk 2002 Annual Report Download - page 20

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussion in “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” contains trend analyses and other forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
consist of, among other things, statements regarding net revenues, revenue mix, level of product returns, gross
margins, costs and expenses and restructuring activity, as well as statements involving trend analyses and
statements including such words as “we believe” and similar expressions. These forward-looking statements are
subject to business and economic risks. As such, our actual results could differ materially from those set forth in
the forward-looking statements as a result of the factors set forth elsewhere herein, including “Risk Factors
Which May Impact Future Operating Results.”
Recent Acquisitions
In August 2001, we acquired the remaining outstanding stock of Buzzsaw.com, Inc. (“Buzzsaw”) that we
did not own. Additionally, in October 2001, Autodesk acquired the software division of Media 100, Inc. (“Media
100”). The acquisition of Buzzsaw is part of Autodesk’s strategy to extend its business to complementary new
markets and the acquisition of Media 100 provides Autodesk with streaming media technology for, among other
things, the immediate playback of content over the Internet. Both acquisitions were accounted for as purchases.
Accordingly, Autodesk’s fiscal 2002 consolidated results include Buzzsaw’s and Media 100’s results of
operations from the respective dates of the acquisitions.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amount of assets, liabilities, net revenues, costs and expenses and related
disclosures. We regularly evaluate our estimates and assumptions. Actual results may differ from these estimates
under different assumptions or conditions.
We believe that of our significant accounting policies, which are described in Note 1 to the consolidated
financial statements, the following policies involve a higher degree of judgment and complexity.
Revenue Recognition. Our accounting policies and practices are in compliance with Statement of
Position 97-2, “Software Revenue Recognition,” as amended, and Staff Accounting Bulletin No. 101, “Revenue
Recognition in Financial Statements.”
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, the price is fixed or determinable, and collectibility is probable.
Based on whether the sale is product or service related, we recognize revenue as follows. Product sales are
recognized at the time of shipment. Subscription, customer support and hosted service revenues are recognized
ratably over the contract periods. Customer consulting and training revenues are recognized as the services are
performed.
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