Autodesk 2002 Annual Report Download - page 39

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2002
Note 1. Autodesk and Summary of Significant Accounting Policies
About Autodesk
Founded in 1982, Autodesk, Inc. (“Autodesk”) is a leading design software and digital media company.
Autodesk serves a diverse portfolio of markets, including building design, geographic information systems,
manufacturing, digital media and wireless data services.
In August 2001, Autodesk acquired the remaining outstanding stock of Buzzsaw.com, Inc. (“Buzzsaw”).
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.
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. As of
January 31, 2002, Autodesk no longer had any investments accounted for under the equity method of accounting.
For additional information regarding investments accounted for under the equity method, see Note 10, Business
Combinations.
Use of Estimates
The preparation of financial statements in conformity with 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. On a regular basis, management evaluates these estimates and
assumptions. Actual results may differ materially from these estimates.
Significant estimates and assumptions made by management involve the establishment of provisions for bad
debts, product returns and excess and obsolete inventory reserves, the determination of the fair value of stock
awards to employees for purposes of the pro forma disclosures in Note 9, Stock Compensation and Employee
Benefit Plans, realizability of deferred tax assets and long-lived assets, and the adequacy of office closure related
restructuring accruals.
Foreign Currency Translation
The assets and liabilities of 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
weighted average rates during the period. Foreign currency translation adjustments are recorded as other
comprehensive income.
Gains and losses realized from foreign currency transactions, those transactions denominated in currencies
other than the subsidiary’s functional currency, are included in interest and other income. These amounts have
been immaterial.
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