Autodesk 2012 Annual Report Download - page 119

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AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2012
(Tables in millions of dollars, except per share data, unless otherwise indicated)
1. Business and Summary of Significant Accounting Policies
Business
Autodesk, Inc. (“Autodesk” or the “Company”) is a world leading design software and services company, offering
customers productive business solutions through powerful technology products and services. The Company serves customers in
the architecture, engineering and construction; manufacturing; and digital media and entertainment industries. The Company’s
sophisticated software products enable its customers to experience their ideas before they are real by allowing them to imagine,
design, and create their ideas and to visualize, simulate and analyze real-world performance early in the design process by
creating digital prototypes. These capabilities allow Autodesk’s customers to optimize and improve their designs, help save
time and money, improve quality and foster innovation. Autodesk software products are sold globally, 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-owned and
majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
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. These estimates are based on information available as of the date of the consolidated financial statements. On a regular
basis, management evaluates these estimates and assumptions. Actual results may differ materially from these estimates.
Examples of significant estimates and assumptions made by management involve the determination of the fair value of
goodwill, financial instruments, long-lived assets and other intangible assets, the realizability of deferred tax assets and the fair
value of stock awards (see “Stock-Based Compensation Expense” within this Note 1 and Note 3 “Employee and Director Stock
Plans,” for further discussion). The Company also make assumptions, judgments and estimates in determining the accruals for
uncertain tax positions, variable compensation, partner incentive programs, product returns reserves, allowances for doubtful
accounts, asset retirement obligations and legal contingencies.
Foreign Currency Translation
The assets and liabilities of Autodesk’s 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 (loss).
Gains and losses realized from foreign currency transactions, those transactions denominated in currencies other than the
foreign subsidiary’s functional currency, are included in interest and other income, net.
Derivative Financial Instruments
Under its risk management strategy, Autodesk uses derivative instruments to manage its short-term exposures to
fluctuations in foreign currency exchange rates which exist as part of ongoing business operations. Autodesk’s general practice
is to hedge a majority of transaction exposures denominated in euros, Japanese yen, Swiss francs, British pounds, Canadian
dollars, and Australian dollars. These instruments have maturities between one to 12 months in the future. Autodesk does not
enter into any derivative instruments for trading or speculative purposes.
The bank counterparties in all contracts expose Autodesk to credit-related losses in the event of their nonperformance.
However, to mitigate that risk, Autodesk only contracts with counterparties who meet the Company’s minimum requirements
under its counterparty risk assessment process. Autodesk monitors ratings, credit spreads and potential downgrades on at least a
quarterly basis. Based on Autodesk’s on-going assessment of counterparty risk, the Company will adjust its exposure to various
counterparties. Autodesk generally enters into master netting arrangements, which reduce credit risk by permitting net
settlement of transactions with the same counterparty. However, Autodesk does not have any master netting arrangements in
place with collateral features.
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2012 Annual Report