Autodesk 2003 Annual Report Download - page 47

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AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2003
Note 1. Business and Summary of Significant Accounting Policies
Business
Autodesk, Inc. (“Autodesk” or “the Company”) is one of the world’s leading design software and digital
content companies for customers involved in building design, civil engineering, manufacturing, utilities,
telecommunications and media and entertainment. Autodesk provides a broad range of integrated and
interoperable design software, Internet services, wireless development platforms and point-of-location
applications that empower more than five million users. Autodesk software products are sold in over 160
countries, 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 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. During the
fiscal year ended January 31, 2003, 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, the determination of the fair value of stock awards to employees for purposes of the pro
forma disclosures in Note 1, Employee Stock Compensation, and Note 9, Stock Compensation and Employee
Benefit Plans, realizability of deferred tax assets and long-lived assets, goodwill valuation, legal settlement
reserves 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, as described in
Note 12, Interest and Other Income.
Forward Foreign Exchange Contracts (“Forwards”) and Option Contracts (“Options”)
Autodesk hedges a portion of its European, Asian and Canadian exposures in certain receivables and
payables as well as certain anticipated cash flows denominated in foreign currencies using forwards and options.
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