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Financial Instruments | 9 Months Ended
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Oct. 31, 2014
Financial Instruments [Abstract] |
Financial Instruments | Financial Instruments The following tables summarize the Company's financial instruments' amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category as of October 31, 2014 and January 31, 2014:
|  |  | October 31, 2014
|  |  | Amortized Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Cash equivalents (1): |  |  |  |  |  |  |  |  |  |  |  |  |
| Certificates of deposit and time deposits | $ | 328.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 328.1 |  |  | $ | 165.1 |  |  | $ | 163.0 |  |  | $ | — |
| Agency discount note | 57.3 |  |  | — |  |  | — |  |  | 57.3 |  |  | 57.3 |  |  | — |  |  | — |
| Commercial paper and corporate bonds | 216.8 |  |  | — |  |  | — |  |  | 216.8 |  |  | 16.3 |  |  | 200.5 |  |  | — |
| Money market funds | 65.3 |  |  | — |  |  | — |  |  | 65.3 |  |  | — |  |  | 65.3 |  |  | — |
| Other (2) | 7.0 |  |  | — |  |  | — |  |  | 7.0 |  |  | 2.0 |  |  | 5.0 |  |  | — |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |  |
| Short-term available for sale |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Commercial paper and certificates of deposit | 242.5 |  |  | — |  |  | — |  |  | 242.5 |  |  | 6.2 |  |  | 236.3 |  |  | — |
|  | Time deposits | 132.3 |  |  | — |  |  | — |  |  | 132.3 |  |  | — |  |  | 132.3 |  |  | — |
|  | Corporate debt securities | 99.6 |  |  | — |  |  | — |  |  | 99.6 |  |  | 99.6 |  |  | — |  |  | — |
|  | Municipal securities | 22.3 |  |  | 0.1 |  |  | — |  |  | 22.4 |  |  | 22.4 |  |  | — |  |  | — |
|  | Treasury bill | 6.0 |  |  | — |  |  | — |  |  | 6.0 |  |  | 6.0 |  |  | — |  |  | — |
|  | Other (3) | 9.5 |  |  | — |  |  | — |  |  | 9.5 |  |  | 9.5 |  |  | — |  |  | — |
| Short-term trading securities |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Mutual funds | 38.7 |  |  | 5.4 |  |  | — |  |  | 44.1 |  |  | 44.1 |  |  | — |  |  | — |
| Long-term available for sale |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Corporate debt securities | 186.4 |  |  | 0.4 |  |  | (0.2 | ) |  | 186.6 |  |  | 186.6 |  |  | — |  |  | — |
|  | Agency bond | 40.7 |  |  | 0.1 |  |  | — |  |  | 40.8 |  |  | 40.8 |  |  | — |  |  | — |
|  | U.S. government agency securities | 10.0 |  |  | — |  |  | — |  |  | 10.0 |  |  | 10.0 |  |  | — |  |  | — |
|  | Municipal securities | 18.0 |  |  | 0.1 |  |  | — |  |  | 18.1 |  |  | 18.1 |  |  | — |  |  | — |
Convertible debt securities (4) | 16.5 |  |  | 4.8 |  |  | (8.1 | ) |  | 13.2 |  |  | — |  |  | — |  |  | 13.2 |
Derivative contracts (5) | 6.2 |  |  | 21.4 |  |  | (7.2 | ) |  | 20.4 |  |  | — |  |  | 16.7 |  |  | 3.7 |
|  | Total | $ | 1,503.2 |  |  | $ | 32.3 |  |  | $ | (15.5 | ) |  | $ | 1,520.0 |  |  | $ | 684.0 |  |  | $ | 819.1 |  |  | $ | 16.9 |
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(1) | Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets.
(2) | Consists of international government bonds and municipal securities.
(3) | Consists of U.S. government agency securities, agency discount notes, and other short-term securities.
(4) | Considered “available for sale” and included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.
(5) | Included in “Prepaid expenses and other current assets,” “Other assets,” or “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets.
|  |  | January 31, 2014
|  |  | Amortized Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Cash equivalents (1): |  |  |  |  |  |  |  |  |  |  |  |  |
| Certificates of deposit and time deposits | $ | 280.7 |  |  | $ | — |  |  | $ | — |  |  | $ | 280.7 |  |  | $ | 30.4 |  |  | $ | 250.3 |  |  | $ | — |
| Commercial paper | 280.5 |  |  | — |  |  | — |  |  | 280.5 |  |  | — |  |  | 280.5 |  |  | — |
| Municipal securities | 2.0 |  |  | — |  |  | — |  |  | 2.0 |  |  | 2.0 |  |  | — |  |  | — |
| Money market funds | 262.8 |  |  | — |  |  | — |  |  | 262.8 |  |  | — |  |  | 262.8 |  |  | — |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |  |
| Short-term available for sale |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Commercial paper and corporate debt securities | 261.0 |  |  | — |  |  | — |  |  | 261.0 |  |  | 95.4 |  |  | 165.6 |  |  | — |
|  | Time deposits | 37.1 |  |  | — |  |  | — |  |  | 37.1 |  |  | — |  |  | 37.1 |  |  | — |
|  | Agency bond | 42.7 |  |  | — |  |  | — |  |  | 42.7 |  |  | 42.7 |  |  | — |  |  | — |
|  | U.S. government agency securities | 11.3 |  |  | — |  |  | — |  |  | 11.3 |  |  | 11.3 |  |  | — |  |  | — |
|  | Municipal securities | 11.7 |  |  | — |  |  | — |  |  | 11.7 |  |  | 11.7 |  |  | — |  |  | — |
|  | Other (2) | 11.4 |  |  | — |  |  | — |  |  | 11.4 |  |  | 11.4 |  |  | — |  |  | — |
| Short-term trading securities |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Mutual funds | 35.6 |  |  | 3.3 |  |  | — |  |  | 38.9 |  |  | 38.9 |  |  | — |  |  | — |
| Long-term available for sale |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Corporate debt securities | 179.7 |  |  | 0.7 |  |  | (0.1 | ) |  | 180.3 |  |  | 180.3 |  |  | — |  |  | — |
|  | Agency bond | 43.3 |  |  | 0.1 |  |  | — |  |  | 43.4 |  |  | 43.4 |  |  | — |  |  | — |
|  | U.S. government agency securities | 9.8 |  |  | — |  |  | — |  |  | 9.8 |  |  | 9.8 |  |  | — |  |  | — |
|  | Municipal securities | 43.5 |  |  | 0.3 |  |  | — |  |  | 43.8 |  |  | 43.8 |  |  | — |  |  | — |
Convertible debt securities (3) | 21.4 |  |  | 3.2 |  |  | (4.4 | ) |  | 20.2 |  |  | — |  |  | — |  |  | 20.2 |
Derivative contracts (4) | 10.8 |  |  | 14.8 |  |  | (6.0 | ) |  | 19.6 |  |  | — |  |  | 10.5 |  |  | 9.1 |
|  | Total | $ | 1,545.3 |  |  | $ | 22.4 |  |  | $ | (10.5 | ) |  | $ | 1,557.2 |  |  | $ | 521.1 |  |  | $ | 1,006.8 |  |  | $ | 29.3 |
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(1) | Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets.
(2) | Consists of agency discount notes, U.S. treasury bills, and other short-term securities.
(3) | Considered “available for sale” and included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.
(4) | Included in “Prepaid expenses and other current assets,” “Other assets,” or “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets.
Autodesk classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable securities with remaining maturities of less than 12 months are classified as short-term and marketable securities with remaining maturities greater than 12 months are classified as long-term. Autodesk may sell certain of its marketable securities prior to their stated maturities for strategic purposes or in anticipation of credit deterioration. Autodesk applies fair value accounting for certain financial assets and liabilities, which consist of cash equivalents, marketable securities and other financial instruments, on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and (Level 3) unobservable inputs for which there is little or no market data, which require Autodesk to develop its own assumptions. When determining fair value, Autodesk uses observable market data and relies on unobservable inputs only when observable market data is not available. There have been no transfers between fair value measurement levels during the three and nine months ended October 31, 2014. Autodesk's cash equivalents, marketable securities and financial instruments are primarily classified within Level 1 or Level 2 of the fair value hierarchy. Autodesk values its available for sale securities on pricing from pricing vendors, who may 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 convertible debt securities and derivative contracts which are valued using probability weighted discounted cash flow models as 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 nine months ended October 31, 2014 was as follows:
| Fair Value Measurements Using Significant Unobservable Inputs
| (Level 3)
|  | Derivative Contracts |  | Convertible Debt Securities |  | Total
Balance at January 31, 2014 |  | $ | 9.1 |  |  | $ | 20.2 |  |  | $ | 29.3 |
Purchases |  | 0.1 |  |  | 0.4 |  |  | 0.5 |
Settlements |  | (1.1 | ) |  | (3.3 | ) |  | (4.4 | )
Net realized (losses) |  | (3.0 | ) |  | (2.2 | ) |  | (5.2 | )
Net unrealized (losses) |  | (1.4 | ) |  | (1.9 | ) |  | (3.3 | )
Balance at October 31, 2014 |  | $ | 3.7 |  |  | $ | 13.2 |  |  | $ | 16.9 |
The following table summarizes the estimated fair value of Autodesk's “available-for-sale securities” classified by the contractual maturity date of the security:
| October 31, 2014
| Cost |  | Fair Value
Due within 1 year | $ | 512.2 |  |  | $ | 512.3 |
Due in 1 year through 5 years | 271.6 |  |  | 268.7 |
Total | $ | 783.8 |  |  | $ | 781.0 |
As of October 31, 2014 and January 31, 2014, 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 the nine months ended October 31, 2014, Autodesk recorded $3.4 million in other-than-temporary impairments on its privately held equity investments. During the nine months ended October 31, 2013, Autodesk recorded no other-than-temporary impairments on its privately held equity investments. The sales or redemptions of “available-for-sale securities” during the nine months ended October 31, 2014 and 2013 resulted in a gain of $0.7 million and a loss of $0.2 million, respectively. Gains and losses resulting from the sale or redemption of "available-for-sale securities" are recorded in “Interest and other (expense) income, net” on the Company's Condensed Consolidated Statement of Operations. Proceeds from the sale and maturity of marketable securities for the nine months ended October 31, 2014 and 2013 were $783.9 million and $725.0 million, respectively. 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 dollars and Australian dollars. These instruments have maturities between one to twelve months in the future. Autodesk does not enter into derivative instrument transactions for trading or speculative purposes. The bank counterparties to the derivative contracts potentially expose Autodesk to credit-related losses in the event of their nonperformance. However, to mitigate that risk, Autodesk only contracts with counterparties who meet the Company's minimum requirements under its counterparty risk assessment process. Autodesk monitors ratings, credit spreads and potential downgrades on at least a quarterly basis. Based on Autodesk's on-going assessment of counterparty risk, the Company will adjust its exposure to various counterparties. Autodesk generally enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. However, Autodesk does not have any master netting arrangements in place with collateral features. Foreign currency contracts designated as cash flow hedges Autodesk uses 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 are designated and documented as cash flow hedges. The effectiveness of the cash flow hedge contracts is assessed quarterly using regression analysis as well as other timing and probability criteria. To receive cash flow 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 (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 probable that it will not occur, Autodesk reclassifies the gain or loss on the related cash flow hedge from “Accumulated other comprehensive (loss)” to “Interest and other (expense) income, net” in the Company's Condensed Consolidated Financial Statements at that time. The net notional amounts of these contracts are presented net settled and were $401.0 million at October 31, 2014 and $351.7 million at January 31, 2014. Outstanding contracts are recognized as either assets or liabilities on the balance sheet at fair value. The majority of the net gain of $23.1 million remaining in “Accumulated other comprehensive (loss)” as of October 31, 2014 is expected to be recognized into earnings within the next twelve months. Derivatives not designated as hedging instruments Autodesk uses foreign currency contracts which are not designated as hedging instruments to reduce the exchange rate risk associated primarily with foreign currency denominated receivables and payables. These forward contracts are marked-to-market at the end of each fiscal quarter with gains and losses recognized as “Interest and other (expense) income, net.” These derivative instruments do not subject the Company to material balance sheet risk due to exchange rate movements because gains and losses on these derivative instruments are intended to offset the gains or losses resulting from the settlement of the underlying foreign currency denominated receivables and payables. The net notional amounts of these foreign currency contracts are presented net settled and were $24.5 million at October 31, 2014 and $205.5 million at January 31, 2014. From time to time and consistent with its risk management practices, Autodesk also uses derivative instruments to hedge its economic exposure related to committed, in-process acquisitions priced in foreign currency. Such derivatives do not qualify for hedge accounting and are marked-to-market through earnings, with any gain or loss reflected immediately in “Interest and other (expense) income, net,” in each period. In addition to these foreign currency contracts, Autodesk holds derivative instruments issued by privately held companies, which are not designated as hedging instruments. These derivatives consist of certain conversion options on the convertible debt securities held by Autodesk and an option to acquire a privately held company. These derivatives are recorded at fair value as of each balance sheet date and are recorded in “Other assets.” Changes in the fair values of these instruments are recognized in income as “Interest and other (expense) income, net.” Fair Value of Derivative Instruments The fair values of derivative instruments in Autodesk’s Condensed Consolidated Balance Sheets were as follows as of October 31, 2014 and January 31, 2014:
| Balance Sheet Location |  | Fair Value at
| October 31, 2014 |  | January 31, 2014
Derivative Assets |  |  |  |  |
Foreign currency contracts designated as cash flow hedges | Prepaid expenses and other current assets (1) |  | $ | 19.7 |  |  | $ | 4.4 |
Derivatives not designated as hedging instruments | Prepaid expenses and other current assets and Other assets |  | 3.7 |  |  | 16.9 |
Total derivative assets |  |  | $ | 23.4 |  |  | $ | 21.3 |
Derivative Liabilities |  |  |  |  |
Foreign currency contracts designated as cash flow hedges | Other accrued liabilities (2) |  | $ | 3.0 |  |  | $ | 1.7 |
Total derivative liabilities |  |  | $ | 3.0 |  |  | $ | 1.7 |
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(1) | Considering Autodesk's master netting arrangements, these contracts are presented net settled. The gross balance is $20.3 million and $5.9 million at October 31, 2014 and January 31, 2014, respectively.
(2) | Considering Autodesk's master netting arrangements, these contracts are presented net settled. The gross balance is $3.6 million and $3.2 million at October 31, 2014 and January 31, 2014, respectively.
The effects of derivatives designated as hedging instruments on Autodesk’s Condensed Consolidated Statements of Operations were as follows for the three and nine months ended October 31, 2014 and 2013, respectively (amounts presented include any income tax effects):
| Foreign Currency Contracts
| Three Months Ended October 31, |  | Nine Months Ended October 31,
| 2014 |  | 2013 |  | 2014 |  | 2013
Amount o f gain (loss) rec ognized in accumulated other comprehensive income on derivatives (effective portion) | $ | 22.3 |  |  | $ | (4.6 | ) |  | $ | 22.5 |  |  | $ | 8.0 |
Amount and location of gain (loss) reclassified from accumulated other comprehensive income into income (effective portion) |  |  |  |  |  |  |
Net revenue | $ | 2.1 |  |  | $ | 2.3 |  |  | $ | 4.6 |  |  | $ | 11.0 |
Operating expenses | (0.8 | ) |  | (0.3 | ) |  | (1.7 | ) |  | (1.3 | )
Total | $ | 1.3 |  |  | $ | 2.0 |  |  | $ | 2.9 |  |  | $ | 9.7 |
Amount and location of gain (loss) recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing) |  |  |  |  |  |  |
Interest and other (expense) income, net | $ | 0.1 |  |  | $ | (0.1 | ) |  | $ | 0.3 |  |  | $ | (0.1 | )
The effects of derivatives not designated as hedging instruments on Autodesk’s Condensed Consolidated Statements of Operations were as follows for the three and nine months ended October 31, 2014 and 2013, respectively (amounts presented include any income tax effects):
| Three Months Ended October 31, |  | Nine Months Ended October 31,
| 2014 |  | 2013 |  | 2014 |  | 2013
Amount and location of (loss) gain recognized in income on derivatives |  |  |  |  |  |  |
Interest and other (expense) income, net | $ | (4.5 | ) |  | $ | 2.9 |  |  | $ | (14.8 | ) |  | $ | 4.9 |

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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