Autodesk 2002 Annual Report Download - page 42

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Web Site Development Costs
During the third quarter of fiscal 2001, Autodesk adopted the provisions of the Emerging Issues Task Force
(“EITF”) consensus No. 00-2, “Accounting for Web Site Development Costs.” This consensus provides guidance
on what types of costs associated with Web site development should be capitalized or expensed. Autodesk
capitalized Web site development costs totaling $0.6 million in fiscal 2002 and $1.7 million in fiscal 2001. Such
capitalized amounts are being amortized over a two-year period.
Deferred Tax Assets
Deferred tax assets arise primarily from net operating losses, reserves and timing differences for purchased
technologies and capitalized software. They are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are recorded. Valuation allowances are established
when necessary to reduce the deferred tax assets to the amount expected to be realized.
Investments in Privately-held Businesses
Autodesk has several minority investments in privately-held technology companies, many of which are in
the development stage. As of January 31, 2002, the carrying value of these investments totaled $4.1 million.
These investments are accounted for using the cost method of accounting because Autodesk’s ownership interest
in the investees is less than 20 percent and Autodesk does not have the ability to exercise significant influence on
the investees. The value of these investments is included in other assets in the accompanying consolidated
balance sheets. Autodesk monitors these investments for impairment and makes appropriate reductions in
carrying values when declines in their fair value are determined to be other-than-temporary.
Employee Stock Compensation
As permitted by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based
Compensation” (“SFAS 123”), Autodesk measures compensation expense for its stock-based employee
compensation plans using the intrinsic method prescribed by Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees” (“APB 25”). In accordance with SFAS 123, Autodesk has provided
in Note 9 the pro forma disclosures of the effect on net income and earnings per share if SFAS 123 had been
applied in measuring compensation expense for all periods presented.
In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44, “Accounting for
Certain Transactions Involving Stock Compensation, an Interpretation of APB 25” (“FIN 44”). The application
of FIN 44 did not have a material impact on Autodesk’s financial statements.
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 collectibility is probable. Autodesk’s revenue
recognition policies are in compliance with the provisions of the American Institute of Certified Public
Accountants’ Statement of Position 97-2, “Software Revenue Recognition” (“SOP 97-2”), as amended, and Staff
Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements.”
Autodesk recognizes revenue as follows. Product sales, which include software licenses and the related
hardware and peripherals, are recognized at the time of shipment. In addition to product sales, Autodesk
recognizes subscription and hosted service revenues ratably over the contract periods. Customer consulting and
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