Autodesk 2009 Annual Report Download - page 109

Marketable Securities. At January 31, 2009 we had $71.1 million of short- and long-term marketable
securities. We review our investments in marketable securities quarterly for indicators of other-than-temporary
impairment. This determination requires significant judgment. In making this determination, we employ a
systematic methodology that considers available quantitative and qualitative evidence. If the cost of an investment
exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which
the fair value is less than cost, and our intent and ability to hold the investment. We also consider specific adverse
conditions related to the financial health of, and business outlook for, the sponsor, including industry and sector
performance, operational and financing cash flow factors, and rating agency actions. Once a decline in fair value is
determined to be other-than-temporary, an impairment charge is recorded to our Consolidated Statements of
Income. This impairment results in a new cost basis in the investment recorded in our Consolidated Balance Sheets.
If market, industry, and/or sponsor conditions deteriorate, we may incur future impairments.
Determining the fair value of marketable securities that are not actively traded requires significant
judgment. We recorded a $4.5 million impairment charge during fiscal 2009. This impairment related to
investments in two money market funds: The Reserve International Liquidity Fund (the “International Fund”)
and The Reserve Primary Fund (the “Primary Fund,” and together with the International Fund, the “Reserve
Funds”). We believe this impairment charge is other-than-temporary; therefore, we recorded the amount as an
expense under “Interest and other income (expense), net” in our Consolidated Statements of Income. The
impairment occurred as a result of the Reserve Funds revaluing their holdings of debt securities issued by
Lehman Brothers, which filed for Chapter 11 bankruptcy on September 15, 2008, and the resulting unusually
high redemption requests on the Reserve Funds. Certain past and future distributions from the Reserve Funds are
currently under dispute by fund investors and the actual amount of the loss on these investments is uncertain at
this time. The cost basis of our investment in the Reserve Funds immediately prior to September 15, 2008 was
$112.8 million; we received $75.0 million in distributions from the Reserve Funds during the third and fourth
quarters of fiscal 2009. As of January 31, 2009, the cost basis of amounts still invested in the Reserve Funds by
us and awaiting distribution was approximately $37.8 million. We believe we will receive substantially all of our
remaining investment balance within the next twelve months; therefore, these assets are classified as current in
our Consolidated Balance Sheet.
In addition, at January 31, 2009, we had auction rate securities with an estimated fair value of $7.6 million
($9.0 million cost basis) included in non-current “Marketable securities” due to their lack of liquidity. We
determined that these securities are other-than-temporarily impaired, and we recorded a $1.4 million impairment
charge in the fourth quarter of fiscal 2009. See further discussion of these Reserve Fund and auction rate
securities in Liquidity and Capital Resources section below.
Goodwill. We test goodwill for impairment annually in the fourth quarter or sooner should events or
changes in circumstances indicate potential impairment. When assessing goodwill for impairment, we use
discounted cash flow models which include assumptions regarding projected cash flows. Variances in these
assumptions could have a significant impact on our conclusion as to whether goodwill is impaired, or the amount
of any impairment charge. Impairment charges, if any, result from instances where the fair values of net assets
associated with goodwill are less than their carrying values. As changes in business conditions and our
assumptions occur, we may be required to record impairment charges.
We recorded an impairment charge of approximately $128.2 million affecting the fourth quarter of fiscal
2009 representing the entire goodwill balance associated with our Media and Entertainment (“M&E”) segment as
of October 31, 2008. During the fourth quarter, revenue and cash flow projections for all segments were
substantially impacted by the sharp downturn in the global economy and in our business. The M&E segment was
the only segment which had a current fair value of its future discounted cash flows that fell below the carrying
value of its assets. Should our revenue and cash flow projections decline significantly in the future, additional
impairment charges may be recorded on goodwill. See further discussion of this impairment charge in Note 1,
“Business and Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial
Statements.
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