Autodesk 2005 Annual Report Download - page 60

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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. Tech Data Corporation, including their affiliates, accounted for 15% and 13% of gross
accounts receivable at January 31, 2005 and 2004, respectively.
Inventories
Inventories consisted of the following as of January 31:
2005 2004
(In thousands)
Raw materials and finished goods ................................ $8,256 $13,875
Demonstration inventory, net .................................... 4,289 3,490
$12,545 $17,365
Inventories are stated at the lower of standard cost (determined on the first-in, first-out method) or market.
Autodesk evaluates quantities on hand and estimated excess and obsolete inventory levels in determining 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
$36.2 million in fiscal 2005, $34.3 million in fiscal 2004 and $31.6 million in fiscal 2003.
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 the development ofsoftware to be sold or licensed 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 using the ratio of current gross revenues for a product to the total of current and anticipated future
gross revenues for that product, but not less than on a straight-line basis over the estimated economic life of
the product, which range from 12 months to seven years. Amortization expense, which is included as a component
of cost of revenues, was $15.7 million in fiscal 2005, $15.5 million in fiscal 2004 and $16.9 million in fiscal 2003.
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 1. Business and Summary of Significant Accounting Policies (Continued)
48