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Financial Instruments | 9 Months Ended
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Oct. 31, 2021
Investments, All Other Investments [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, 2021, and January 31, 2021:
|  |  | October 31, 2021
|  |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Cash equivalents (1): |  |  |  |  |  |  |  |  |  |  |  |  |
| Money market funds | $ | 1,016.8 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,016.8 |  |  | $ | 1,016.8 |  |  | $ | — |  |  | $ | — |
| U.S. government securities | 20.0 |  |  | — |  |  | — |  |  | 20.0 |  |  | — |  |  | 20.0 |  |  | — |
| Commercial paper | 18.2 |  |  | — |  |  | — |  |  | 18.2 |  |  | — |  |  | 18.2 |  |  | — |
| Municipal bonds | 5.0 |  | — |  |  | — |  |  | 5.0 |  |  | — |  |  | 5.0 |  |  | — |
| Other (2) | 3.0 |  |  | — |  |  | — |  |  | 3.0 |  |  | 1.9 |  |  | 1.1 |  |  | — |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |  |
| Short-term |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Commercial paper | 28.0 |  |  | — |  |  | — |  |  | 28.0 |  |  | — |  |  | 28.0 |  |  | — |
|  | Corporate debt securities | 8.8 |  |  | — |  |  | — |  |  | 8.8 |  |  | — |  |  | 8.8 |  |  | — |
|  | Common stock | — |  |  | 6.4 |  |  | — |  |  | 6.4 |  |  | 6.4 |  |  | — |  |  | — |
| Long-term |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Corporate debt securities | 19.7 |  |  | — |  |  | — |  |  | 19.7 |  |  | — |  |  | 19.7 |  |  | — |
Mutual funds (3) (4) | 71.7 |  |  | 24.6 |  |  | — |  |  | 96.3 |  |  | 96.3 |  |  | — |  |  | — |
Strategic investments derivative assets (4) | 0.1 |  |  | 0.4 |  |  | (0.3) |  |  | 0.2 |  |  | — |  |  | — |  |  | 0.2 |
Derivative contract assets (4) | 0.6 |  |  | 26.2 |  |  | (0.1) |  |  | 26.7 |  |  | — |  |  | 26.7 |  |  | — |
Derivative contract liabilities (5) | — |  |  | — |  |  | (7.8) |  |  | (7.8) |  |  | — |  |  | (7.8) |  |  | — |
|  | Total | $ | 1,191.9 |  |  | $ | 57.6 |  |  | $ | (8.2) |  |  | $ | 1,241.3 |  |  | $ | 1,121.4 |  |  | $ | 119.7 |  |  | $ | 0.2 |
____________________ (1)Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets. These investments are classified as debt securities. (2)Consists of custody cash deposits, corporate debt securities, and certificates of deposit. (3)See Note 12, “Deferred Compensation” for more information. (4)Included in “Prepaid expenses and other current assets” or “Long-term other assets” in the accompanying Condensed Consolidated Balance Sheets. (5)Included in “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets.
|  |  | January 31, 2021
|  |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Cash equivalents (1): |  |  |  |  |  |  |  |  |  |  |  |  |
| Commercial paper | $ | 36.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 36.0 |  |  | $ | — |  |  | $ | 36.0 |  |  | $ | — |
| Money market funds | 686.9 |  |  | — |  |  | — |  |  | 686.9 |  |  | 686.9 |  |  | — |  |  | — |
| Other (2) | 4.4 |  |  | — |  |  | — |  |  | 4.4 |  |  | 4.0 |  |  | 0.4 |  |  | — |
Marketable securities: |  |  |  |  |  |  |  |  |  |  |  |  |
| Short-term |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Other (3) | 4.0 |  |  | — |  |  | — |  |  | 4.0 |  |  | — |  |  | 4.0 |  |  | — |
Mutual funds (4) (5) | 64.5 |  |  | 16.5 |  |  | — |  |  | 81.0 |  |  | 81.0 |  |  | — |  |  | — |
Strategic investments derivative asset (5) | 0.1 |  |  | 0.4 |  |  | (0.3) |  |  | 0.2 |  |  | — |  |  | — |  |  | 0.2 |
Derivative contract assets (5) | 0.4 |  |  | 9.8 |  |  | (0.4) |  |  | 9.8 |  |  | — |  |  | 9.8 |  |  | — |
Derivative contract liabilities (6) | — |  |  | — |  |  | (17.5) |  |  | (17.5) |  |  | — |  |  | (17.5) |  |  | — |
|  | Total | $ | 796.3 |  |  | $ | 26.7 |  |  | $ | (18.2) |  |  | $ | 804.8 |  |  | $ | 771.9 |  |  | $ | 32.7 |  |  | $ | 0.2 |
____________________ (1)Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets. These investments are classified as debt securities. (2)Consists of custody cash deposits and certificates of deposit. (3)Consists of commercial paper and municipal bonds. (4)See Note 12, “Deferred Compensation” for more information. (5)Included in “Prepaid expenses and other current assets,” or “Long-term other assets,” in the accompanying Condensed Consolidated Balance Sheets. (6)Included in “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets. The following table summarizes the fair values of investments classified as marketable debt securities by contractual maturity date as of October 31, 2021:
| Fair Value
Due within 1 year | $ | 36.8 |
Due in 1 year through 5 years | 19.7
Total | $ | 56.5 |
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. As of both October 31, 2021, and January 31, 2021, Autodesk had no material unrealized losses, individually and in the aggregate, for marketable debt securities that are in a continuous unrealized loss position for greater than 12 months. Total unrealized gains for securities with net gains in accumulated other comprehensive income were not material for the nine months ended October 31, 2021. Autodesk monitors all marketable debt securities for potential credit losses by reviewing indicators such as, but not limited to, current credit rating, change in credit rating, credit outlook, and default risk. There were no allowances for credit losses as of both October 31, 2021, and January 31, 2021. There were no write offs of accrued interest receivables for the nine months ended October 31, 2021 and 2020. There was no realized gain or loss for the sales or redemptions of marketable debt securities during both the nine months ended October 31, 2021 and 2020. Realized gains and losses from the sales or redemptions of marketable debt securities are recorded in “Interest and other expense, net” on the Company's Condensed Consolidated Statements of Operations. Proceeds from the sale and maturity of marketable debt securities for the three and nine months ended October 31, 2021, were none and $4.0 million, respectively. Proceeds from the sale and maturity of marketable debt securities for the three and nine months ended October 31, 2020, were $6.0 million and $17.0 million, respectively. Strategic investment equity securities As of October 31, 2021, and January 31, 2021, Autodesk had $139.8 million and $134.1 million, respectively, in direct investments in privately held companies. These strategic investment equity securities do not have readily determined fair values, and Autodesk uses the measurement alternative to account for the adjustment to these investments in a given quarter. If Autodesk determines that an impairment has occurred, Autodesk writes down the investment to its fair value. Adjustments to the carrying value of our strategic investment equity securities with no readily determined fair values measured using the measurement alternative were as follows:
| Nine Months Ended October 31, |  | Cumulative Amount as of |  |
| 2021 |  | 2020 |  | October 31, 2021 |  |  |  |
Upward adjustments (1) | $ | 7.2 |  |  | $ | 3.0 |  |  | $ | 23.2 |  |  |  |  |
Negative adjustments, including impairments (1) | (10.5) |  |  | (36.2) |  |  | (71.1) |  |  |  |  |
Net adjustments | $ | (3.3) |  |  | $ | (33.2) |  |  | $ | (47.9) |  |  |  |  |
____________________ (1)Included in “Interest and other expense, net” on the Company's Condensed Consolidated Statements of Operations. During the three and nine months ended October 31, 2021, Autodesk recognized gains of none and $8.1 million on the disposition of strategic investment equity securities, respectively. There were no gains or losses recognized on the disposition of strategic investment equity securities for both the three and nine months ended October 31, 2020. 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 currency collars and forward contracts are designated and documented as cash flow hedges. The notional amounts of these contracts are presented net settled and were $941.3 million at October 31, 2021, and $1.14 billion at January 31, 2021. Outstanding contracts are recognized as either assets or liabilities on the Company's Condensed Consolidated Balance Sheet at fair value. The majority of the net gain of $14.2 million remaining in “Accumulated other comprehensive loss” as of October 31, 2021, is expected to be recognized into earnings within the next 24 months. The location and amount of gain or loss recognized in income on cash flow hedges together with the total amount of income or expense presented in the Company's Condensed Consolidated Statements of Operations where the effects of the hedge are recorded were as follows for the three and nine months ended October 31, 2021 and 2020:
|  | Three Months Ended October 31, 2021
|  | Net revenue |  | Cost of revenue |  | Operating expenses
|  | Subscription revenue |  | Maintenance revenue |  | Cost of subscription and maintenance revenue |  | Marketing and sales |  | Research and development |  | General and administrative
Total amounts of income and expense line items presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded |  | $ | 1,070.7 |  | $ | 17.6 |  | $ | 74.8 |  | $ | 419.4 |  | $ | 282.1 |  | $ | 112.8
(Loss) on cash flow hedging relationships in Subtopic ASC 815-20 |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  |  |  |  |  |  |  |  |  |
Amount of (loss) reclassified from accumulated other comprehensive income into income |  | $ | (3.0) |  | $ | — |  | $ | (0.3) |  | $ | (1.0) |  | $ | (0.3) |  | $ | (0.5)
|  | Nine Months Ended October 31, 2021
|  | Net revenue |  | Cost of revenue |  | Operating expenses
|  | Subscription revenue |  | Maintenance Revenue |  | Cost of subscription and maintenance revenue |  | Marketing and sales |  | Research and development |  | General and administrative
Total amounts of income and expense line items presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded |  | $ | 3,034.9 |  | $ | 53.6 |  | $ | 219.3 |  | $ | 1,195.3 |  | $ | 824.5 |  | $ | 344.1
(Loss) on cash flow hedging relationships in Subtopic ASC 815-20 |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  |  |  |  |  |  |  |  |  |
Amount of (loss) reclassified from accumulated other comprehensive income into income |  | $ | (12.4) |  | $ | (1.2) |  | $ | — |  | $ | (0.4) |  | $ | (0.5) |  | $ | (0.1)
|  | Three Months Ended October 31, 2020
|  | Net Revenue |  | Cost of revenue |  | Operating expenses
|  | Subscription Revenue |  | Maintenance Revenue |  | Cost of subscription and maintenance revenue |  | Marketing and sales |  | Research and development |  | General and administrative
Total amounts of income and expense line items presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded |  | $ | 884.4 |  | $ | 39.8 |  | $ | 60.7 |  | $ | 359.3 |  | $ | 233.0 |  | $ | 98.8
Gain (loss) on cash flow hedging relationships in Subtopic ASC 815-20 |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) reclassified from accumulated other comprehensive income into income |  | $ | (0.3) |  | $ | 0.1 |  | $ | 0.4 |  | $ | 1.6 |  | $ | 0.3 |  | $ | 0.7
|  | Nine Months Ended October 31, 2020
|  | Net revenue |  | Cost of revenue |  | Operating expenses
|  | Subscription revenue |  | Maintenance Revenue |  | Cost of subscription and maintenance revenue |  | Marketing and sales |  | Research and development |  | General and administrative
Total amounts of income and expense line items presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded |  | $ | 2,528.6 |  | $ | 153.1 |  | $ | 176.6 |  | $ | 1,051.5 |  | $ | 682.9 |  | $ | 296.8
Gain (loss) on cash flow hedging relationships in Subtopic ASC 815-20 |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) reclassified from accumulated other comprehensive income into income |  | $ | 3.4 |  | $ | 0.7 |  | $ | 0.1 |  | $ | 0.3 |  | $ | 0.2 |  | $ | 0.1
Interest rate locks designated as cash flow hedges During the fiscal quarter ended October 31, 2021, Autodesk entered into interest rate lock arrangements to mitigate the risk of changes in interest rates prior to completion of a debt offering. The interest rate locks hedged the cash flow risk for each of the interest payments on the planned fixed-rate debt issue. The interest rate lock hedges were terminated in October 2021 in connection with the debt offering completed in that month. See Note 14, “Borrowing Arrangements,” for further discussion. The aggregate fair value of the terminated interest rate lock hedges, net of tax, in the amount of $4.0 million have been classified as an increase to accumulated other comprehensive income and will be amortized as a reduction to interest expense over the term of the related debt issuance. The Company had cash inflows of $4.0 million in the fiscal quarter ended October 31, 2021, associated with the termination of the interest rate lock arrangements, included in “Other financing activities” in our Condensed Consolidated Statement of Cash Flows. Derivatives not designated as hedging instruments Autodesk uses foreign currency contracts that are not designated as hedging instruments to reduce the exchange rate risk associated primarily with foreign currency denominated receivables, payables, and cash. The notional amounts of these foreign currency contracts are presented net settled and were $71.2 million at October 31, 2021, and $434.5 million at January 31, 2021. 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, 2021, and January 31, 2021:
| Balance Sheet Location |  | Fair Value at
| October 31, 2021 |  | January 31, 2021
Derivative Assets |  |  |  |  |
Foreign currency contracts designated as cash flow hedges | Prepaid expenses and other current assets |  | $ | 18.2 |  |  | $ | 4.7 |
Derivatives not designated as hedging instruments | Prepaid expenses and other current assets and long-term other assets |  | 8.7 |  |  | 5.3 |
Total derivative assets |  |  | $ | 26.9 |  |  | $ | 10.0 |
Derivative Liabilities |  |  |  |  |
Foreign currency contracts designated as cash flow hedges | Other accrued liabilities |  | $ | 5.9 |  |  | $ | 16.5 |
Derivatives not designated as hedging instruments | Other accrued liabilities |  | 1.9 |  |  | 1.0 |
Total derivative liabilities |  |  | $ | 7.8 |  |  | $ | 17.5 |
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, 2021 and 2020 (amounts presented include any income tax effects):
| Three Months Ended October 31, |  | Nine Months Ended October 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Amount of gain (loss) recognized in accumulated other comprehensive income on derivatives (effective portion) | $ | 14.7 |  |  | $ | 6.7 |  |  | $ | 24.6 |  |  | $ | (6.8) |
Amount and location of (loss) gain reclassified from accumulated other comprehensive loss into income (effective portion) |  |  |  |  |  |  |
Net revenue | $ | (3.0) |  |  | $ | (0.2) |  |  | $ | (13.6) |  |  | $ | 4.1 |
Cost of revenue | (0.3) |  |  | 0.4 |  |  | — |  |  | 0.1 |
Operating expenses | (1.8) |  |  | 2.6 |  |  | (1.0) |  |  | 0.6 |
Total | $ | (5.1) |  |  | $ | 2.8 |  |  | $ | (14.6) |  |  | $ | 4.8 |
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, 2021 and 2020 (amounts presented include any income tax effects):
| Three Months Ended October 31, |  | Nine Months Ended October 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Amount and location of (loss) gain recognized on derivatives in net income |  |  |  |  |  |  |
Interest and other expense, net | $ | 5.9 |  |  | $ | (0.8) |  |  | $ | 11.1 |  |  | $ | (6.2) |

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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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