Autodesk 2004 Annual Report Download - page 53

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, offering customers progressive business solutions through powerful technology
products and services. The Company helps customers in the building, manufacturing, infrastructure, digital
media, and wireless data services fields increase the value of their digital design data and improve
efficiencies across their entire project lifecycle management processes. Autodesk provides a broad range
of integrated and interoperable design software, Internet services, wireless development platforms and
point-of-location applications that empower millions of 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% but not more than
50%. During the fiscal years ended January 31, 2004 and 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 in fiscal year 2002, 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 and employee termination 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 are immaterial.
Forward Foreign Exchange Contracts (“Forwards”) and Option Contracts (“Options”)
Autodesk hedges a portion of its European, Asian and Canadian currency exposures in certain
receivables and payables as well as certain anticipated cash flows denominated in foreign currencies using
forwards and options. These foreign currency instruments by policy have maturities of less than three
months and settle before the end of each quarterly period.
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2004
43