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Financial Instruments

9 Months Ended

Oct. 31, 2020

Investments, All Other Investments [Abstract]

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, 2020, and January 31, 2020:


			October 31, 2020
		(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Level 1		Level 2		Level 3
Cash equivalents (1):


	Commercial paper		$	34.0	$	—	$	—	$	34.0	$	—	$	34.0	$	—


	Money market funds		817.8		—		—		817.8		817.8		—		—
	Other (2)		6.5		—		—		6.5		4.0		2.5		—


Marketable securities:
	Short-term available for sale








		Other (3)	4.0		—		—		4.0		—		4.0		—
	Short-term trading securities
		Mutual funds (4)	64.1		10.8		(0.4)		74.5		74.5		—		—








Strategic investments derivative assets (5)			1.8		1.5		(0.2)		3.1		—		—		3.1
Derivative contract assets (5)			0.4		6.4		(0.3)		6.5		—		6.5		—
Derivative contract liabilities (6)			—		—		(13.7)		(13.7)		—		(13.7)		—
		Total	$	928.6	$	18.7	$	(14.6)	$	932.7	$	896.3	$	33.3	$	3.1

____________________

(1)Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets. These investments are classified as debt securities with stated contractual maturities due within one year.

(2)Consists of custody cash deposits, municipal bonds, 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.


			January 31, 2020
		(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Level 1		Level 2		Level 3
Cash equivalents (1):
	Agency bonds		$	6.0	$	—	$	—	$	6.0	$	—	$	6.0	$	—

	Commercial paper		36.8		—		—		36.8		—		36.8		—


	Money market funds		1,135.5		—		—		1,135.5		1,135.5		—		—


	Other (2)		2.3		—		—		2.3		1.3		1.0		—
Marketable securities:






	Short-term trading securities
		Mutual funds (3)	59.9		9.2		(0.1)		69.0		69.0		—		—







Strategic investments derivative asset (4)			0.1		0.5		—		0.6		—		—		0.6
Derivative contract assets (4)			1.0		9.2		(1.3)		8.9		—		8.9		—
Derivative contract liabilities (5)			—		—		(4.7)		(4.7)		—		(4.7)		—
		Total	$	1,241.6	$	18.9	$	(6.1)	$	1,254.4	$	1,205.8	$	48.0	$	0.6

____________________

(2)Consists of custody cash deposits 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.

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, 2020, and January 31, 2020, 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, 2020.

Autodesk monitors all marketable debt securities for potential credit losses by reviewing indicators such as current credit rating, change in credit rating, credit outlook, and default risk. There were no allowances for credit losses for the nine months ended October 31, 2020. There were no write offs of accrued interest receivables for the nine months ended October 31, 2020.

There was no realized gain or loss for the sales or redemptions of debt securities during the nine months ended October 31, 2020 and 2019. Gains and losses resulting from the sale or redemption of debt securities are recorded in “Interest and other expense, net” on the Company's Condensed Consolidated Statements of Operations.

There was $6.0 million and $17.0 million in proceeds from the sale and maturity of marketable debt securities for the three and nine months ended October 31, 2020, respectively. Autodesk did not have any proceeds from the sale and maturity of marketable securities for the three months ended October 31, 2019. Proceeds from the sale and maturity of marketable debt securities for the nine months ended October 31, 2019 was $27.4 million.

As of October 31, 2020, Autodesk had non-marketable debt securities in privately held companies that had a fair value of $5.7 million. The amortized cost of these securities was $5.3 million and is classified as level 3 in the fair value hierarchy. There were no allowances for credit losses for the nine months ended October 31, 2020.

Strategic investment equity securities

As of October 31, 2020, and January 31, 2020, Autodesk had $134.8 million and $122.5 million in direct investments in privately held companies, respectively. 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
(in millions)	2020		2019		October 31, 2020
Upward adjustments (1)	$	3.0	$	2.5	$	12.4
Negative adjustments, including impairments (1)	(36.2)		(4.3)		(45.2)
Net adjustments	$	(33.2)	$	(1.8)	$	(32.8)

____________________

(1)Included in "Interest and other expense, net" on the Company's Condensed Consolidated Statements of Operations.

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 $1.36 billion at October 31, 2020, and $981.3 million at January 31, 2020. 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 loss of $3.2 million remaining in “Accumulated other comprehensive loss” as of October 31, 2020, 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, 2020 and 2019:


	Three Months Ended October 31, 2020
	Net revenue				Cost of revenue		Operating expenses
(in millions)	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 on cash flow hedging relationships in Subtopic ASC 815-20
Foreign exchange contracts
Amount of (loss) gain 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 on cash flow hedging relationships in Subtopic ASC 815-20
Foreign exchange contracts
Amount of gain reclassified from accumulated other comprehensive income into income	$	3.4	$	0.7	$	0.1	$	0.3	$	0.2	$	0.1


	Three Months Ended October 31, 2019
	Net Revenue				Cost of revenue		Operating expenses
(in millions)	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	$	715.0	$	91.2	$	54.2	$	330.7	$	213.0	$	99.1

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	$	3.3	$	1.6	$	(0.4)	$	(1.0)	$	(0.1)	$	(0.5)

	Nine Months Ended October 31, 2019
	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	$	1,974.5	$	306.7	$	166.9	$	960.8	$	634.0	$	299.6

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	$	8.7	$	4.7	$	(0.7)	$	(3.4)	$	(0.6)	$	(1.7)

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 $199.8 million at October 31, 2020, and $736.2 million at January 31, 2020.

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, 2020, and January 31, 2020:


	Balance Sheet Location	Fair Value at
(in millions)		October 31, 2020		January 31, 2020
Derivative Assets
Foreign currency contracts designated as cash flow hedges	Prepaid expenses and other current assets	$	5.7	$	1.0
Derivatives not designated as hedging instruments	Prepaid expenses and other current assets and long-term other assets	3.9		8.4
Total derivative assets		$	9.6	$	9.4
Derivative Liabilities
Foreign currency contracts designated as cash flow hedges	Other accrued liabilities	$	11.8	$	2.8
Derivatives not designated as hedging instruments	Other accrued liabilities	1.9		1.9
Total derivative liabilities		$	13.7	$	4.7

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, 2020 and 2019 (amounts presented include any income tax effects):


	Foreign Currency Contracts
	Three Months Ended October 31,				Nine Months Ended October 31,
(in millions)	2020		2019		2020		2019
Amount of gain (loss) recognized in accumulated other comprehensive loss on derivatives (effective portion)	$	6.7	$	(0.4)	$	(6.8)	$	2.7
Amount and location of gain (loss) reclassified from accumulated other comprehensive loss into income (effective portion)
Net revenue	$	(0.2)	$	4.9	$	4.1	$	13.4
Cost of revenue	0.4		(0.4)		0.1		(0.7)
Operating expenses	2.6		(1.6)		0.6		(5.7)
Total	$	2.8	$	2.9	$	4.8	$	7.0

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, 2020 and 2019 (amounts presented include any income tax effects):


	Three Months Ended October 31,				Nine Months Ended October 31,
(in millions)	2020		2019		2020		2019
Amount and location of (loss) gain recognized on derivatives in net income
Interest and other expense, net	$	(0.8)	$	1.5	$	(6.2)	$	3.2