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Financial Instruments
 12 Months Ended
Jan. 31, 2019
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 January 31, 2019 and 2018.
 
 
 
January 31, 2019
 
 
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Cash equivalents (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Certificates of deposit
$
1.0

 
$
—

 
$
—

 
$
1.0

 
$
—

 
$
1.0

 
$
—

 
Commercial paper
87.9

 
—

 
—

 
87.9

 
—

 
87.9

 
—

 
Corporate debt securities
5.0

 
—

 
—

 
5.0

 
—

 
5.0

 
—

 
Custody cash deposit
0.8

 
—

 
—

 
0.8

 
0.8

 
—

 
—

 
Money market funds
281.4

 
—

 
—

 
281.4

 
281.4

 
—

 
—

Marketable securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other (2)
6.2

 
1.1

 
—

 
7.3

 
2.7

 
4.6

 
—

 
Short-term trading securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
56.6

 
3.7

 
—

 
60.3

 
60.3

 
—

 
—

Convertible debt securities (3)
4.6

 
1.9

 
(2.1
)
 
4.4

 
—

 
—

 
4.4

Derivative contract assets (4)
1.7

 
8.6

 
(1.8
)
 
8.5

 
—

 
7.7

 
0.8

Derivative contract liabilities (5)
—

 
—

 
(7.4
)
 
(7.4
)
 
—

 
(7.4
)
 
—

 
 
Total
$
445.2

 
$
15.3

 
$
(11.3
)
 
$
449.2

 
$
345.2

 
$
98.8

 
$
5.2

____________________ 
(1)
Included in “Cash and cash equivalents” in the accompanying Consolidated Balance Sheets.
(2)
Consists of corporate bonds, commercial paper, and common stock.
(3)
Considered “available for sale” and included in “Other assets” in the accompanying Consolidated Balance Sheets.
(4)
Included in “Prepaid expenses and other current assets,” “Other assets,” or “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.
(5)
Included in “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.
 
 
 
 
January 31, 2018
 
 
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Cash equivalents (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency bonds
$
5.0

 
$
—

 
$
—

 
$
5.0

 
$
5.0

 
$
—

 
$
—

 
Certificates of deposit
17.4

 
—

 
—

 
17.4

 
17.4

 
—

 
—

 
Commercial paper
324.2

 
—

 
—

 
324.2

 
—

 
324.2

 
—

 
Corporate debt securities
5.0

 
—

 
—

 
5.0

 
5.0

 
—

 
—

 
Custody cash deposit
5.2

 
—

 
—

 
5.2

 
5.2

 
—

 
—

 
Money market funds
278.8

 
—

 
—

 
278.8

 
—

 
278.8

 
—

 
Municipal bonds
5.0

 
—

 
—

 
5.0

 
5.0

 
—

 
—

 
Sovereign debt
2.0

 
—

 
—

 
2.0

 
—

 
2.0

 
—

 
U.S. government securities
—

 
—

 
—

 
—

 
—

 
—

 
—

Marketable securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency bonds
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
Asset backed securities
13.1

 
—

 
—

 
13.1

 
—

 
13.1

 
—

 
 
Certificates of deposit
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
Commercial paper
27.5

 
—

 
—

 
27.5

 
—

 
27.5

 
—

 
 
Corporate debt securities
99.4

 
—

 
(0.1
)
 
99.3

 
99.3

 
—

 
—

 
 
Municipal bonds
—

 
—

 
—

 
—

 
—

 
—

 
—

 
 
Sovereign debt
9.2

 
—

 
—

 
9.2

 
7.7

 
1.5

 
—

 
 
U.S. government securities
37.1

 
—

 
—

 
37.1

 
37.1

 
—

 
—

 
Short-term trading securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
50.1

 
8.9

 
—

 
59.0

 
59.0

 
—

 
—

 
Long-term available-for-sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency bonds
13.7

 
—

 
(0.1
)
 
13.6

 
13.6

 
—

 
—

 
 
Asset backed securities
36.8

 
—

 
(0.2
)
 
36.6

 
—

 
36.6

 
—

 
 
Corporate debt securities
100.2

 
0.1

 
(0.4
)
 
99.9

 
99.9

 
—

 
—

 
 
Municipal bonds
12.7

 
—

 
(0.1
)
 
12.6

 
12.6

 
—

 
—

 
 
Sovereign debt
2.8

 
—

 
—

 
2.8

 
—

 
2.8

 
—

 
 
U.S. government securities
25.5

 
—

 
(0.2
)
 
25.3

 
25.3

 
—

 
—

Convertible debt securities (2)
7.5

 
0.5

 
(0.2
)
 
7.8

 
—

 
—

 
7.8

Derivative contract assets (3)
2.0

 
7.5

 
(1.3
)
 
8.2

 
—

 
7.2

 
1.0

Derivative contract liabilities (4)
—

 
—

 
(26.6
)
 
(26.6
)
 
—

 
(26.6
)
 
—

 
 
Total
$
1,080.2

 
$
17.0

 
$
(29.2
)
 
$
1,068.0

 
$
392.1

 
$
667.1

 
$
8.8

____________________ 
(1)
Included in “Cash and cash equivalents” in the accompanying Consolidated Balance Sheets.
(2)
Considered "available for sale" securities and included in "Other assets" in the accompanying Consolidated Balance Sheets.
(3)
Included in “Prepaid expenses and other current assets,” "Other assets," or “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.
(4)
Included in “Other accrued liabilities” in the accompanying Consolidated Balance Sheets.

Autodesk classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Generally 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. Autodesk reviews for any potential changes on a quarterly basis, in conjunction with our fiscal quarter-end close.

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 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.

A reconciliation of the change in Autodesk’s Level 3 items for the fiscal year ended January 31, 2019 was as follows:
 
Fair Value Measurements Using
Significant Unobservable Inputs
 
(Level 3)
 
 
Derivative Contracts
 
Convertible Debt Securities
 
Total
Balances, January 31, 2018
 
$
1.0

 
$
7.8

 
$
8.8

Settlements
 
—

 
(3.5
)
 
(3.5
)
(Losses) Gains included in earnings (1)
 
(0.2
)
 
0.5

 
0.3

Losses included in OCI
 
—

 
(0.4
)
 
(0.4
)
Balances, January 31, 2019
 
$
0.8

 
$
4.4

 
$
5.2


____________________ 
(1)
Included in “Interest and other expense, net” in the accompanying Consolidated Statements of Operations.

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, 2019
 
Cost
 
Fair Value
Due within 1 year
$
10.8

 
$
11.7

Total
$
10.8

 
$
11.7



As of January 31, 2019 and 2018, Autodesk had no securities, individually and in the aggregate, in a continuous unrealized loss position for greater than twelve months.

The sales or redemptions of “available-for-sale securities” in fiscal 2019 and 2018 resulted in a loss of $1.3 million and $0.3 million, respectively, and a gain of $1.5 million in 2017. The loss and gains were recorded in "Interest and other expense, net" on the Company's Consolidated Statements of Operations.

Proceeds from the sale and maturity of marketable securities for fiscal 2019 and fiscal 2018 were $531.0 million and $1.08 billion, respectively.

Non-marketable equity securities
    
As of January 31, 2019 and 2018, Autodesk had $111.6 million and $112.3 million, respectively, in direct investments in privately held companies. These non-marketable equity securities investments do not have readily determined fair value and with the adoption of ASU No. 2016-01 during the first quarter of fiscal 2019, Autodesk elected to use the measurement alternative to account for the adjustment of these investments in a given quarter. See "Note 1, "Business and Summary of Significant Accounting Policies" for more details of the adoption.

Under the measurement alternative method, these investments are measured at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer in the current period. To determine if a transaction is for a similar investment, Autodesk considers the rights and obligations between the investments and the extent to which those differences would affect the fair values of those investments with additional consideration for the stage of development of the investee company. The fair value would then be adjusted positively or negatively based on available information such as pricing in recent rounds of financing. During the fiscal year ended January 31, 2019, Autodesk recorded $6.2 million as a positive adjustment on certain of its privately held investments, reflected as a gain in "Interest and other income (expense), net" on the Company's Consolidated Statement of Operations.

Non-marketable equity securities investments are periodically assessed for impairment based on available information such as current cash positions, earnings and cash flow positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. Autodesk does not intend to sell these investments and it is not more likely than not that Autodesk will be required to sell the investment before recovery of the cost basis. If Autodesk determines that an impairment has occurred, Autodesk writes down the investment to its fair value. During fiscal 2019, fiscal 2018 and fiscal 2017, Autodesk recorded $4.8 million, $15.5 million and $1.3 million, respectively, in impairments on its privately held investments, reflected as a loss in "Interest and other expense, net" on the Company's Consolidated Statements of Operations. Autodesk does not consider the remaining investments to be impaired at January 31, 2019.

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, Australian dollars, Singapore dollars, Swiss francs Swedish krona, and Czech krona. These instruments have maturities between one and 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 counterparty risk on at least a quarterly basis and will adjust its exposure to various counterparties as necessary. 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, net” in the Company's Consolidated Financial Statements at that time.

The notional amounts of these contracts are presented net settled and were $803.5 million at January 31, 2019, and $619.9 million at January 31, 2018. Outstanding contracts are recognized as either assets or liabilities on the balance sheet at
fair value. The majority of the net gain of $15.0 million remaining in “Accumulated other comprehensive loss” as of January 31, 2019, is expected to be recognized into earnings within the next twelve months.

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. These forward contracts are marked-to-market at the end of each month with gains and losses recognized as “Interest and other expense, 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 revaluation and settlement of the underlying foreign currency denominated receivables, payables, and cash. The notional amounts of these foreign currency contracts are presented net settled and were $579.8 million at January 31, 2019, and $329.6 million at January 31, 2018.

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 “Interest and other expense, net.”

Fair Value of Derivative Instruments:

The fair value of derivative instruments in Autodesk’s Consolidated Balance Sheets were as follows as of January 31, 2019, and January 31, 2018:
 
Balance Sheet Location
 
Fair Value at
 
January 31, 2019
 
January 31, 2018
Derivative Assets
 
 
 
 
 
Foreign currency contracts designated as cash flow hedges
Prepaid expenses and other current assets
 
$
4.3

 
$
6.2

Derivatives not designated as hedging instruments
Prepaid expenses and other current assets and Other assets
 
4.2

 
2.0

Total derivative assets
 
 
$
8.5

 
$
8.2

Derivative Liabilities
 
 
 
 
 
Foreign currency contracts designated as cash flow hedges
Other accrued liabilities
 
$
3.3

 
$
18.7

Derivatives not designated as hedging instruments
Other accrued liabilities
 
4.1

 
7.9

Total derivative liabilities
 
 
$
7.4

 
$
26.6



The effects of derivatives designated as hedging instruments on Autodesk’s Consolidated Statements of Operations were as follows for the fiscal years ended January 31, 2019, 2018, and 2017, respectively (amounts presented include any income tax effects):
 
Foreign Currency Contracts
 
Fiscal Year Ended January 31,
 
2019
 
2018
 
2017
Amount of gain (loss) recognized in accumulated other comprehensive loss on derivatives (effective portion)
$
19.6

 
$
(21.3
)
 
$
6.3

Amount and location of (loss) gain reclassified from accumulated other comprehensive loss into (loss) income (effective portion)
 
 
 
 
 
Net revenue
$
(8.5
)
 
$
8.0

 
$
9.2

Operating expenses
(3.6
)
 
1.9

 
(1.8
)
Total
$
(12.1
)
 
$
9.9

 
$
7.4

Amount and location of gain (loss) recognized in income (loss) on derivatives (ineffective portion and amount excluded from effectiveness testing)
 
 
 
 
 
Interest and other expense, net
$
0.2

 
$
(0.2
)
 
$
(0.3
)

The effects of derivatives not designated as hedging instruments on Autodesk’s Consolidated Statements of Operations were as follows for the fiscal years ended January 31, 2019, 2018, and 2017, respectively (amounts presented include any income tax effects):
 
Fiscal Year Ended January 31,
 
2019
 
2018
 
2017
Amount and location of loss recognized in loss (income) on derivatives
 
 
 
 
 
Interest and other expense, net
$
6.6

 
$
(19.1
)
 
$
(11.1
)