Autodesk 2006 Annual Report Download - page 71

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
We beginManagement’s Discussion and Analysis of FinancialCondition and Results ofOperations (“MD&A”)
with our overall strategy and the individual strategies for our major business units that reflect the goals of our
business and the direction in which our business and products are moving. This is followed by a discussion of
the Critical Accounting Policies that we believe are important to understanding the assumptions and judgments
incorporated in our reported financial results. In the next section, we discuss our Results of Operations for fiscal
2006 compared to fiscal 2005 and for fiscal 2005 compared to fiscal 2004, beginning with an Overview. We then
provide an analysis of changes in our balance sheet and cash flows, and discuss our financial commitments in
the sections entitled “Liquidity and Capital Resources,” “Contractual Obligations” and “Off-Balance Sheet
Arrangements.”
The MD&A should be read in conjunction with the other sections of this Annual Report on Form 10-K,
including Item 1: “Business,” Item 1A: “Risk Factors,” Item 6: “Selected Financial Data,” and Item 8: “Financial
Statements and Supplementary Data.”
The discussion in our MD&A contains trend analyses and other forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements consist of, among other things, statements regarding the financial impact of the Alias acquisition, the
expected impact on Autodesk’s consolidated income and net income per share of the adoption of SFAS 123R in the first
quarter of fiscal 2007, anticipated future operating margins, net revenues, product backlog, upgrade and maintenance
revenues, the effect of fluctuations in exchange rates on net revenues and expenses, costs and expenses, including cost
of revenues and operating expenses, future income, planned product retirement and annual release cycles, expectations
regarding product acceptance, continuation of our share repurchase program, and short-term and long-term cash
requirements, as well as statements involving trend analyses and statements including such words as “we believe” and
“plan” and similar expressions. These forward-looking statements are subject to business and economic risks. As such,
our actual results could differ materially from those set forth inthe forward-looking statements as a result of the factors
set forth above in Item 1A, “Risk Factors,” and in our other reports filed with the Securities and Exchange Commission.
STRATEGY
Our goal is to be the world’s leading design software and services company for the building, manufacturing,
infrastructure, media and entertainment, and wireless location based services industries. Our focus is to help
customers create, manage and share their data and digital assets more effectively and improve efficiencies across
the entire lifecycle management process.
We believe that our ability to make technology available to mainstream markets is one of our competitive
advantages. By innovating in existing technology categories, we bring powerful design products to volume
markets. Our architecture allows for extensibility and integration. Our products are designed to be easy to
learn and use, and to provide customers low cost of deployment, low total cost of ownership and a rapid return
on investment.
We have created a large global community of resellers, third-party developers and customers, which provides
us with a broad reach into volume markets. Our reseller network is extensive and provides our customers with
global resources for the purchase and support of our products as well as resources for effective and cost efficient
training services. We have a significant number of registered third-party developers, creating products that run
on top of our products, further extending our reach into volume markets. Our installed base of millions of
users has made Autodesk’s products a worldwide design software standard. Users trained on Autodesk products
are broadly available both from universities and the existing work force, reducing the cost of training for
our customers.
Our growth strategy derives from these core strengths. We continue to increase the business value of our
desktop design tools for our customers in a number of ways. We improve the performance and functionality of
existing products with each new release, and we have increased the frequency of most of our releases. Beyond
our horizontal design products, we develop products addressing specific vertical market needs. In addition, we
2006 Annual Report
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