Autodesk 2008 Annual Report Download - page 120

Interest and Other Income, Net
The following table sets forth the components of interest and other income, net:
Fiscal Year Ended
January 31,
2008 2007 2006
(in millions)
Interest and investment income, net ........................................... $33.4 $18.6 $13.2
Loss on cost method investment ............................................. (5.0) — —
Investment impairment ..................................................... (4.0) — —
Loss from unconsolidated subsidiary .......................................... (3.4) (4.3) —
Recovery of funds from an acquisition escrow account ........................... — 2.2 —
Gain (loss) on foreign currency transactions .................................... 0.1 (0.3) (0.7)
Other income ............................................................ 3.3 0.6 0.7
$24.4 $16.8 $13.2
Investment income fluctuates based on average cash and marketable securities balances, average maturities
and interest rates. The increase in interest and investment income, net, during fiscal 2008, as compared to fiscal
2007, reflects proportionately higher cash balances and interest rate yields during the fiscal 2008. The increase in
interest and investment income, net, during fiscal 2007 as compared to fiscal 2006 reflects proportionately higher
interest rate yields during 2007 when compared with 2006. The increase in interest and investment income, net,
for fiscal 2008 was partially offset by a loss on a cost method investment and an impairment of our 28% equity
investment in Hanna Strategies.
Our 28% ownership interest in Hanna Strategies, accounted for under Accounting Principles Board Opinion
No. 18, “The Equity Method of Accounting for Investments in Common Stock,” and FASB Interpretation
No. 35, “Criteria for Applying the Equity Method of Accounting for Investments in Common Stock,” resulted in
a loss from unconsolidated subsidiary representing our 28% ownership interest in Hanna Strategies’ results of
operations through January 2, 2008, when we acquired the remaining 72%.
In addition, during fiscal 2007 we also received $2.2 million recovery of funds from an escrow account
established for a prior acquisition.
Provision for income taxes
Autodesk accounts for income taxes and the related accounts under the liability method in accordance with
Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). Deferred tax
liabilities and assets are determined based on the difference between the financial statement and tax bases of assets
and liabilities, using enacted rates expected to be in effect during the year in which the basis differences reverse.
On February 1, 2007 we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109,” (“FIN 48”) which clarifies the accounting for uncertainty
in tax positions. Under FIN 48, companies are required to recognize the benefit from a tax position only if it is
“more likely than not” that the tax position would be sustained upon audit based solely on the technical merits of
the tax position. FIN 48 clarified how a company would measure the income tax benefits from the tax positions
that are recognized, provides guidance as to the timing of the derecognition of previously recognized tax benefits,
and describes the methods for classifying and disclosing the liabilities within the financial statements for any
unrecognized tax benefits. The provisions of FIN 48 were effective as of the beginning of our 2008 fiscal year,
with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained
earnings. Based on our assessment, we recorded an increase to opening retained earnings during the first quarter
of fiscal 2008 for tax benefits not previously recognized of $26.4 million as a result of adopting FIN 48.
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