Autodesk 2004 Annual Report Download - page 62

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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 $26.0 million at January 31, 2004 and
$32.0 million at January 31, 2003. 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.
Options
In addition to the forward contracts, Autodesk utilizes foreign currency option collar contracts to
reduce the exchange rate impact on the net revenue of certain anticipated transactions. These option
contracts, which are designated and documented as cash flow hedges and qualify for hedge accounting
treatment under SFAS 133, have maturities of less than three months and settle before the end of each fiscal
quarter. 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 notional amounts of foreign currency option contracts were $42.0 million at January 31, 2004 and
$36.2 million at January 31, 2003 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 revenues, while the ineffective portion of the option contract is recorded in interest
and other income, net. During fiscal 2004 and 2003, there were no net settlement gains recorded as net
revenues. Amounts associated with the cost of the options totaling $0.8 million during fiscal 2004 and
$0.8 million during fiscal 2003 were recorded in interest and other income, net.
Marketable Securities
Marketable securities include the following available-for-sale securities at January 31, 2004 and 2003:
January 31, 2004
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Estimated
fair value
(In thousands)
Short-term:
Municipal Bonds ................ $ 69,894 $ 132 $— $ 70,026
Mutual Funds ................... 11,249 — — 11,249
81,143 132 — 81,275
Long-term:
Municipal Bonds ................ 163,586 2,390 — 165,976
$244,729 $2,522 $— $247,251
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 3. Financial Instruments (Continued)
52