Autodesk 2010 Annual Report Download - page 143

other goods specifying minimum quantities or set prices that exceed our expected requirements for three months.
In addition, we have certain software royalty commitments associated with the shipment and licensing of certain
products. Royalty expense is generally based on the number of units shipped or a percentage of the underlying
revenue. Royalty expense, included in cost of license and other revenue, was $16.5 million in fiscal 2010, $17.1
million in fiscal 2009 and $14.9 million in fiscal 2008.
The expected timing of payment of the obligations discussed above is estimated based on current
information. Timing of payments and actual amounts paid may be different depending on the time of receipt of
goods or services or changes to agreed-upon amounts for some obligations.
We provide indemnifications of varying scopes and certain guarantees, including limited product warranties.
Historically, costs related to these warranties and indemnifications have not been significant, but because
potential future costs are highly variable, we are unable to estimate the maximum potential impact of these
guarantees on our future results of operations.
Issuer Purchases of Equity Securities
Our Board of Directors approved a stock repurchase program authorizing the cumulative repurchase of up to
164.0 million shares. The purpose of the stock repurchase program is to help offset the dilution to net income per
share caused by the issuance of stock under our employee stock plans and has the effect of returning excess cash
generated from our business to stockholders. The number of shares acquired and the timing of the purchases are
based on several factors, including general market conditions, the volume of employee stock option exercises, the
trading price of our common stock, cash on hand and available in the U.S., and company defined trading
windows. There were 1.0 million repurchases of our common stock during the three months ended January 31,
2010; during the year ended January 31, 2010 we repurchased 2.7 million shares of our common stock. At
January 31, 2010, 13.5 million shares remained available for repurchase under the existing repurchase
authorization. This program does not have a fixed expiration date. See Note 9, “Stockholder’ Equity,” in the
Notes to Consolidated Financial Statements for further discussion.
Off-Balance Sheet Arrangements
Other than operating leases, we do not engage in off-balance sheet financing arrangements or have any
variable-interest entities. As of January 31, 2010 we did not have any off-balance sheet arrangements as defined
in Item 303(a)(4)(ii) of SEC Regulation S-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign currency exchange risk
Our revenue, earnings and cash flows are subject to fluctuations due to changes in foreign currency
exchange rates. Our risk management strategy utilizes foreign currency contracts to manage our foreign currency
exposures that exist as part of our ongoing business operations. As of January 31, 2010 and 2009, we had open
contracts to hedge expected cash flows for one to 12 months in the future in order to reduce our exposure to
foreign currency volatility. Contracts were primarily denominated in euros, Japanese yen, Swiss francs, British
pounds and Canadian dollars. We do not enter into any foreign exchange derivative instruments for trading or
speculative purposes. The notional amount of our option and forward contracts was $239.1 million and $276.7
million at January 31, 2010 and 2009, respectively.
We utilize foreign currency contracts to reduce the exchange rate impact on the net revenue and operating
expenses of certain anticipated transactions. A sensitivity analysis performed on our hedging portfolio as of
January 31, 2010 indicated that a hypothetical 10% appreciation of the U.S. dollar from its value at January 31,
2010 would increase the fair value of our contracts by $24.2 million. A hypothetical 10% depreciation of the
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