Autodesk 2008 Annual Report Download - page 154

Download and view the complete annual report

Please find page 154 of the 2008 Autodesk annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 176

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Forwards and Options
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 use forward and option contracts to hedge a majority of transaction exposures
denominated in euros, Swiss francs, Canadian dollars, British pounds and Japanese yen. These foreign currency
instruments have maturities of less than three months. Autodesk does not enter into any foreign exchange
derivative instruments for trading or speculative purposes.
Autodesk’s forward contracts, which are not designated as hedging instruments under Statement of
Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,”
(“SFAS 133”), are used to reduce the exchange rate risk associated primarily with receivables and payables.
Forward contracts are marked-to-market at the end of each reporting period, with gains and losses recognized as
other income or expense to offset the gains or losses resulting from the settlement of the underlying foreign
currency denominated receivables and payables. The notional amounts of foreign currency contracts were $66.9
million at January 31, 2008 and $65.5 million at January 31, 2007. While the contract or notional amount is often
used to express the volume of foreign exchange contracts, the amounts potentially subject to credit risk are
generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed
the obligations of Autodesk to the counterparties.
In addition to the forward contracts, Autodesk utilizes foreign currency option collar contracts to reduce the
exchange rate impact on a portion of the net revenue of certain anticipated transactions. These option contracts
are designated and documented as cash flow hedges and qualify for hedge accounting treatment under SFAS 133.
For cash flow hedges, derivative gains and losses included in comprehensive income are reclassified into
earnings at the time the forecasted revenue is recognized or the option expires. The cost of these foreign currency
option collars is recorded as other current assets and other accrued liabilities on the Company’s Consolidated
Balance Sheets. The notional amounts of foreign currency option contracts were $131.8 million at January 31,
2008 and $97.3 million at January 31, 2007, and the critical terms were generally the same as those of the
underlying exposure. Gains, if any, from the effective portion of the option contracts, as determinable under
SFAS 133, are recognized as net revenue, while the ineffective portion of the option contract is recorded in
interest and other income, net. There were $0.2 million net settlement gains recorded as net revenue during fiscal
2008 and fiscal 2007, respectively. Amounts associated with the cost of the options, which were recorded in
interest and other income, net, totaled $0.7 million during fiscal 2008 and $0.6 million during fiscal 2007.
78