Autodesk 2010 Annual Report Download - page 164

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At January 31, 2010, Autodesk’s short-term investment portfolio included $26.3 million of trading securities
invested in a defined set of mutual funds as directed by the participants in the Company’s Deferred
Compensation Plan. At January 1, 2010, these securities had unrealized losses of $3.1 million and a cost basis of
$29.4 million, (see Note 6, “Deferred Compensation”).
The following table summarizes the estimated fair value of our available-for-sale marketable securities,
classified by the contractual maturity date of the security:
January 31, 2010
Cost Fair Value
Due in 1 year ............................................... $135.4 $135.6
Due in 1 year through 5 years .................................. 116.8 118.0
Due in 5 years through 10 years ................................ — —
Due after 10 years ........................................... 7.6 7.6
Total ...................................................... $259.8 $261.2
As of January 31, 2010 and 2009, Autodesk did not have any securities in a continuous unrealized loss
position.
Derivative Financial Instruments
Under its risk management strategy, Autodesk uses derivative instruments to manage its short-term
exposures to fluctuations in foreign currency exchange rates which exist as part of ongoing business operations.
Autodesk’s general practice is to hedge a majority of transaction exposures denominated in euros, Japanese yen,
Swiss francs, British pounds and Canadian dollars. These instruments have maturities between one to 12 months
in the future. Autodesk does not enter into any derivative instruments for trading or speculative purposes.
Cash Flow Hedges
Autodesk utilizes foreign currency contracts to reduce the exchange rate impact on a portion of the net
revenue or operating expense of certain anticipated transactions. These contracts, which are designated and
documented as cash flow hedges, qualify for hedge accounting treatment. The effectiveness of the cash flow
hedge contracts is assessed quarterly using regression analysis as well as other timing and probability criteria. To
receive special hedge accounting treatment, all hedging relationships are formally documented at the inception of
the hedge and the hedges are expected to be highly effective in offsetting changes to future cash flows on hedged
transactions. The gross gains and losses on these hedges are included in “Accumulated other comprehensive
income/(loss)” and are reclassified into earnings at the time the forecasted revenue or expense is recognized. In
the event the underlying forecasted transaction does not occur, or it becomes probably that it will not occur,
Autodesk reclassifies the gain or loss on the related cash flow hedge from “Accumulated other comprehensive
income/(loss)” to “Interest and other income, net” in the Company’s Consolidated Financial Statements at that
time.
The notional amount of these contracts was $239.1 million at January 31, 2010 and $276.7 million at
January 31, 2009. Outstanding contracts are recognized as either assets or liabilities on the balance sheet at fair
value. The entire net gain of $2.3 million remaining in Accumulated Other Comprehensive Income (Loss) as of
January 31, 2010 is expected to be recognized into earnings within the next 12 months.
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