Autodesk 2000 Annual Report Download - page 45

44 FY 00 Autodesk, Inc.
Genius CAD Software GmbH (“Genius”)
On May 4, 1998, Autodesk entered into an agreement
with Genius, a German limited liability company, to
purchase various mechanical CAD software applica-
tions and technologies. Autodesk accounted for this
acquisition under the purchase method of accounting.
Of the total purchase price of $68.9 million,which was
paid in cash, $13.1 million was allocated to IPR&D and
was expensed since the technology had not reached
technological feasibility and had no alternative future
use; $12.7 million was allocated to an intangible asset,
purchased technology; and $41.6 million was allo-
cated to goodwill.
The value assigned to the IPR&D ($13.1 million) was
determined by identifying research projects in areas
for which technological feasibility had not been
achieved. The calculations of value were adjusted to
reflect the value creation efforts of Genius prior to the
close of the acquisition. The value was determined
by estimating the costs remaining to develop the
purchased in-process technology into commercially
viable products, estimating the resulting net cash
flows from such projects, and discounting the net
cash flows back to their present value. The discount
rate included a factor that took into account the
uncertainty surrounding the successful development
of the purchased in-process technology projects.
The value assigned to purchased technology ($12.7 mil-
lion) was determined based on the expected future
cash flows of the existing developed technologies,
discounted for the characteristics and applications of
the product, the size of existing markets, growth rates
of existing and future markets, as well as an evalua-
tion of past and anticipated product-life cycles.
Softdesk,Inc.(“Softdesk”)
On March 31, 1997, Autodesk exchanged 2.9 million
shares of its common stock for all of the outstanding
stock of Softdesk, a supplier of AutoCAD-based appli-
cations software for the architecture, engineering and
construction market. Based on the value of Autodesk
stock and options exchanged, the transaction, includ-
ing transactions costs, was valued at approximately
$94.1 million.
Of the $94.1 million purchase price, $19.2 million was
allocated to IPR&D and expensed in fiscal 1998 since
the technology had not yet reached technological fea-
sibility and had no alternative future use; $9.2 million
was allocated to an intangible asset, purchased tech-
nologies;$6.7 million was allocated to other intangible
assets; and $48.0 million was allocated to goodwill.
The value assigned to IPR&D ($19.2 million) was deter-
mined by identifying research projects in areas for
which technological feasibility had not been achieved.
The value was determined by estimating the costs to
develop the purchased in-process technology into
commercially viable products, estimating the result-
ing net cash flows from such projects,and discounting
the net cash flows back to their present value.The dis-
count rate included a factor that took into account the
uncertainty surrounding the successful development
of the purchased in-process technology projects.
The value assigned to purchased technology ($9.2 mil-
lion) was determined by taking the expected future
cash flows of the existing developed technologies,
and then discounting them for the specific character-
istics and applications of the product, the size of exist-
ing markets, growth rates of existing and future
markets, as well as an evaluation of past and antici-
pated product-life cycles.
3D/Eye
In fiscal 1998, Autodesk also acquired certain assets
and licensed technology from 3D/Eye for $5.8 million.
Of the total cost, $3.0 million represented the value
of IPR&D that had not yet reached technological fea-
sibility and had no alternative future use.This amount
was expensed.
Denim Software L.L.C.(“Denim”)
On June 12,1997, Discreet acquired substantially all of
the assets and assumed certain liabilities of Denim
pursuant to the terms of an asset purchase agreement.
The purchased assets consisted primarily of Denim
software products, including ILLUMINAIRE Paint,
ILLUMINAIRE Composition and ILLUMINAIRE Studio
and related know-how and goodwill. The aggregate
purchase price of $12.2 million consisted primarily of
a cash payment of $9.1 million and the assumption
of $2.2 million of liabilities.
Of the $12.2 million purchase price, $2.2 million was
allocated to IPR&D and was expensed in fiscal 1998
since the technology had not yet reached technolog-
ical feasibility and had no alternative use; $1.5 million
was allocated to an intangible asset, purchased tech-
nology; and $7.9 million was allocated to goodwill.