Autodesk 2013 Annual Report Download - page 141

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use quoted prices in active markets for identical assets (Level 1) or inputs other than quoted prices that are observable either
directly or indirectly in determining fair value (Level 2). Autodesk's Level 2 securities are valued primarily using observable
inputs other than quoted prices in active markets for identical assets and liabilities. Autodesk's Level 3 securities consist of
investments held in auction rate securities, convertible debt securities and derivative contracts which are valued using
probability weighted discounted cash flow models and some of the inputs to the models are unobservable in the market.
A reconciliation of the change in Autodesk’s Level 3 items for the fiscal years ended January 31, 2013 and 2012 was as
follows:
Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
Derivative
Contracts
Convertible
Debt
Securities
Taxable
Auction-Rate
Securities Total
Balance at January 31, 2011 $ — $ — $ 4.2 $ 4.2
Purchases 6.2 18.3 — 24.5
Balance at January 31, 2012 6.2 18.3 4.2 28.7
Purchases 2.0 7.0 — 9.0
Settlements (1.3) (7.2) — (8.5)
Total realized/unrealized gains (losses) 3.8 (0.6) — 3.2
Balance at January 31, 2013 $ 10.7 $ 17.5 $ 4.2 $ 32.4
The following table summarizes the estimated fair value of Autodesk's “available-for-sale securities” classified by the
contractual maturity date of the security:
January 31, 2013
Cost Fair Value
Due in 1 year $ 306.7 $ 306.8
Due in 1 year through 5 years 423.2 424.4
Due in 5 years through 10 years — —
Due after 10 years 4.2 4.2
Total $ 734.1 $ 735.4
As of January 31, 2013 and 2012, Autodesk did not have any securities in a continuous unrealized loss position for greater
than twelve months.
Autodesk also has direct investments in privately held companies accounted for under the cost method, which are
periodically assessed for other-than-temporary impairment. If Autodesk determines that an other-than-temporary impairment
has occurred, Autodesk writes down the investment to its fair value. Autodesk estimates fair value of its cost method
investments considering available information such as pricing in recent rounds of financing, current cash positions, earnings
and cash flow forecasts, recent operational performance and any other readily available market data. During fiscal 2013,
Autodesk recorded a $10.5 million other-than-temporary impairment on its privately held equity investments. The impairment
expense was recorded in “Interest and other income, net” on the Company's Consolidated Statement of Income.
The sales or redemptions of “available-for-sale securities” in fiscal 2013 and fiscal 2011 resulted in gains of $5.0 million
and $1.7 million, respectively. The sales or redemptions of “available-for-sale securities” in fiscal 2012 resulted in no gains or
losses. The cost of securities sold is based on the specific identification method.
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 portion of transaction exposures denominated in euros, Japanese yen, Swiss francs, British pounds, Canadian
69
2013 Annual Report