Autodesk 2011 Annual Report Download - page 118

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, 2011 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, cash flows, receivables and payables are subject to fluctuations due to changes in
foreign currency exchange rates. Our risk management strategy utilizes foreign currency contracts to manage our
exposure to foreign currency volatility that exists as part of our ongoing business operations. We utilize cash
flow hedge contracts to reduce the exchange rate impact on a portion of the net revenue or operating expense of
certain anticipated transactions. In addition, we use balance sheet hedge contracts to reduce the exchange rate
risk associated primarily with foreign currency denominated receivables and payables. As of January 31, 2011
and 2010, we had open cash flow and balance sheet hedge contracts with future settlements within one to twelve
months. 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 $401.6 million and $258.7 million at
January 31, 2011 and 2010, 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, 2011 indicated that a hypothetical 10% appreciation of the U.S. dollar from its value at January 31,
2011 and 2010 would increase the fair value of our foreign currency contracts by $31.6 million and $24.2
million, respectively. A hypothetical 10% depreciation of the dollar from its value at January 31, 2011 and 2010
would decrease the fair value of our foreign currency contracts by $26.6 million and $13.1 million, respectively.
Interest Rate Risk
Interest rate movements affect both the interest income we earn on our short term investments and, to a lesser
extent, the market value of certain longer term securities. At January 31, 2011, we had $1,466.9 million of cash
equivalents and marketable securities. With an average cash equivalent investment balance for the quarter of
approximately $810.0 million, if interest rates were to increase (decrease) by 10%, this would result in a $0.2
million increase (decrease) in annual interest income. Further, at January 31, 2011, we had approximately $285.0
million invested in a longer term portfolio (with remaining maturities that may be less than one year) which, with
50 and 100 basis point moves, would result in market value changes (gains or losses) of $0.9 million and $1.8
million respectively, over a twelve month period. At January 31, 2010, we had $910.0 million of cash equivalents
and marketable securities. With an average investment balance for the quarter of approximately $742.8 million, if
interest rates were to increase (decrease) by 10%, this would result in a $0.1 million increase (decrease) in annual
interest income. Further, at January 31, 2010, we had approximately $125.6 million invested in a longer term
portfolio which, with 50 and 100 basis point moves, would result in market value changes (gains or losses) of
$0.2 million over both six and 12 month periods. We do not use derivative financial instruments in our
investment portfolio to manage interest rate risk.
52