Autodesk 2009 Annual Report Download - page 124

available-for-sale marketable securities” in the investing activities section of the Consolidated Statements of Cash
Flows. In the third and fourth quarters of fiscal 2009, the Reserve Funds made a partial distribution under which we
received $75.0 million, leaving an additional $37.8 million, on a cost basis, still outstanding.
At January 31, 2009, our investment portfolio included two auction rate securities with an estimated fair
value of $7.6 million and a cost basis of $9.0 million. Our auction rate securities are variable rate debt
instruments that have underlying securities with contractual maturities greater than ten years and interest rates
that were structured to reset at auction every 28 days. The securities, which met our investment guidelines at the
time the investments were made, have failed to settle in auctions since August 2007. In addition, these auction
rate securities, which were previously AAA-rated, were downgraded during fiscal 2009. Under the contractual
terms of these investments, because the auctions failed to settle, the interest rate on these investments reset by
increasing to the Libor rate plus 200 basis points, which represents a premium interest rate on these investments.
At this time, these investments are not currently liquid, and in the event we need to access these funds, we will
not be able to do so without a loss of principal unless a future auction is successful, or a secondary market is
available. In fiscal 2009 we recorded an other-than-temporary impairment of $1.4 million related to these
investments. The impairment expense was recorded in “Interest and other income (expense), net” in the
Consolidated Statements of Income. Due to the lack of liquidity of these investments, they are included in
“Marketable securities—non-current.” We will continue to evaluate our accounting for our investments on a
quarterly basis. See Note 12, “Financial Instruments,” in Notes to Consolidated Financial Statements for further
discussion of our financial instruments.
Net cash flows provided by operating activities of $593.9 million for fiscal 2009 was primarily comprised of
net income and the net effect of non-cash expenses associated with the impairment of goodwill and intangibles,
primarily related to our M&E segment, as well as restructuring charges. The primary working capital sources of
cash were decreases in accounts receivable and increases in deferred revenue. The decrease in accounts receivable
relates primarily to reduced billings at the end of fiscal 2009 due to a decline in revenue. Our days sales outstanding
in trade receivables reflect the seasonality in maintenance billings, and was 59 days at January 31, 2009 and 2008.
The primary working capital use of cash was decreased accrued expenses primarily due to lower accrued employee
bonuses and commissions. We expect net cash flows provided by operating activities to be negative in the first
quarter of fiscal 2010 as a result of lower revenue combined with cash expenditures in the quarter for payments of
the annual employee incentive plan and payments related to our restructuring plan.
Other than the draws on the lines of credit discussed above, there have been no material changes in our
contractual obligations or commercial commitments. Long-term cash requirements for items other than normal
operating expenses are anticipated for the following: the acquisition of new businesses, software products, or
technologies complementary to our business; capital expenditures, including the purchase and implementation of
internal-use software applications; stock repurchases; and funding restructuring costs. In addition, $19.9 million
of our marketable securities are held in a rabbi trust under non-qualified deferred compensation plans as of
January 31, 2009. See Note 4, “Deferred Compensation,” in the Notes to Consolidated Financial Statements for
further discussion.
Our international operations are subject to currency fluctuations. To minimize the effect of these fluctuations,
we use foreign currency option contracts and forwards to hedge our exposure on anticipated transactions and
forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables
denominated in foreign currencies. Prior to the quarter ended October 31, 2008, our foreign currency instruments,
by practice, had maturities of less than three months and settled before the end of each quarterly period. During
fiscal 2009, we entered into foreign currency instruments with maturities longer than three months that did not
settle before the end of each quarterly period. We have expanded our hedge program beyond the current quarter to
reduce foreign currency risk and volatility by entering into cash flow hedges for one to 12 months in the future
with reduced protection for our longer term hedge instruments. The principal currencies hedged during fiscal 2009
were the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. We monitor our foreign exchange
exposures to review the overall effectiveness of our foreign currency hedge positions.
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