Autodesk 2003 Annual Report Download - page 42

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Interest rate sensitivity
We had an investment portfolio of fixed income securities, including those classified as security deposits, of
$224.7 million at January 31, 2003. These securities are subject to interest rate fluctuations and will decrease in
market value if interest rates increase.
A sensitivity analysis was performed on our investment portfolio as of January 31, 2003. This sensitivity
analysis is based on a modeling technique that measures the hypothetical market value changes that would result
from a parallel shift in the yield curve of plus 50, plus 100 or plus 150 basis points occurring in either six months
or 12 months. For the 6-month time horizon the market value changes for a 50, 100, or 150 basis point increase
were reductions of $1.7 million, $3.3 million and $4.9 million, respectively. For the 12-month time horizon the
market value changes for a 50, 100 or 150 basis point increase were reductions of $1.4 million, $2.8 million and
$4.1 million, respectively.
We do not use derivative financial instruments in our investment portfolio to manage interest rate risk. We
place our investments in instruments that meet high credit quality standards, as specified in our investment policy
guidelines, which limits the amount of credit exposure to any one issue, issuer or type of instrument.
Investments in privately-held businesses
We have an investment portfolio with a remaining net book value of approximately $0.6 million as of
January 31, 2003 that includes minority equity investments in several privately-held technology companies,
many of which are in the development stage. We account for these minority equity investments using the cost
method of accounting because our ownership interests are less than 20 percent and we do not have the ability to
exert significant influence on the investees.
These investments are inherently risky because the markets for the technologies or products the portfolio
companies have under development are typically in the early stages and may never develop into commercially
viable products. We assess the value of these investments on a regular basis and when we identify other than
temporary declines in the values of these investments, we write down the carrying values to their fair values.
Write downs totaled $3.4 million in fiscal 2003, $2.9 million in fiscal 2002 and $2.6 million in fiscal 2001. Due
to the inherently risky nature of these investments, we may incur additional losses in the future up to the
remaining carrying value of $0.6 million recorded in our consolidated balance sheet at January 31, 2003.
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