Autodesk 2003 Annual Report Download - page 49

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AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Autodesk’s accounts receivable are derived from sales to a large number of direct customers, resellers and
distributors 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 collateral. No single customer accounted for more than 10 percent of consolidated net revenues in
fiscal 2003, 2002 or 2001.
Allowances for uncollectible trade receivables are based upon historical loss patterns, the number of days
that billings are past due and an evaluation of the potential risk of loss associated with specific problem accounts.
Inventories
Inventories consisted of the following as of January 31:
2003 2002
(in thousands)
Raw materials and finished goods ............................... $ 9,851 $14,511
Demonstration inventory, net .................................. 2,433 3,488
$12,284 $17,999
Inventories are stated at the lower of standard cost (determined on the first-in, first-out method) or market.
Appropriate consideration is given to excess and obsolete inventory levels in evaluating lower of cost or market.
Computer Equipment, Software, Furniture and Leasehold Improvements
Computer equipment, software and furniture are depreciated using the straight-line method over the
estimated useful lives of the assets, which range from two to five years. Leasehold improvements are amortized
on a straight-line basis over the shorter of the estimated useful life or the lease term. Depreciation expense was
$31.6 million in fiscal 2003, $26.3 million in fiscal 2002 and $26.2 million in fiscal 2001.
Costs incurred for computer software developed or obtained for internal use are capitalized for application
development activities and immediately expensed for preliminary project activities and post-implementation
activities.
Purchased Technologies and Capitalized Software
Costs incurred in the initial design phase of software development are expensed as incurred. Once the point
of technological feasibility is reached, production costs (programming and testing) are capitalized. Certain
acquired software-technology rights are also capitalized. Capitalized software costs are amortized ratably, as
revenues are recognized, but not less than on a straight-line basis over 18-month to seven-year periods.
Amortization expense, which is included as a component of cost of revenues, was $16.9 million in fiscal 2003,
$15.7 million in fiscal 2002 and $16.1 million in fiscal 2001. The actual lives of Autodesk’s purchased
technologies or capitalized software may be less than management’s initial estimates.
Purchased technologies and capitalized software and the related accumulated amortization at January 31
were as follows:
2003 2002
(In thousands)
Purchased technologies .................................... $133,029 $ 108,949
Capitalized software ...................................... 18,444 14,844
151,473 123,793
Less: Accumulated amortization ............................ (121,348) (104,457)
Purchased technologies and capitalized software, net ............ $ 30,125 $ 19,336
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