Autodesk 2002 Annual Report Download - page 26

We recognized equity in net losses of $1.2 million in fiscal 2002 and $16.3 million in fiscal 2001,
representing our proportionate share of Buzzsaw’s losses during those periods. In April 2000, we invested $17.5
million in Buzzsaw and maintained a 40 percent interest. Loss recognition was suspended during the first quarter
of 2002, after we fully expensed all previous investments in Buzzsaw.
Business Combinations
Buzzsaw
In August 2001, we acquired the remaining outstanding stock of Buzzsaw that we did not own for $15.0
million in cash plus the assumption of $13.3 million of liabilities. Prior to the acquisition, we held a 40 percent
interest in Buzzsaw, a privately held company that provides leading online collaboration applications to improve
efficiencies and reduce costs for the building industry.
We accounted for this acquisition under Statement of Financial Accounting Standards No. 141, “Business
Combinations” (“SFAS 141”). The purchase consideration was allocated principally to a deferred tax asset in
recognition of a significant amount of Buzzsaw net operating loss and credit carryforwards that we expect to
utilize to reduce our future tax obligations.
Software Division of Media 100, Inc. (“Media 100”)
In October 2001, we acquired the software division of Media 100 for $16.0 million in cash. We accounted
for this acquisition under the provisions of SFAS 141. Of the total purchase price, we allocated $3.2 million to
in-process research and development (“IPR&D”); $7.4 million to developed technology; $0.6 million to brand
names that have an estimated useful life of 5 years; and $4.3 million to goodwill. The IPR&D was expensed
immediately since the technology had not yet reached technological feasibility and no alternative future uses
could be identified.
As of the acquisition date, the IPR&D substantially consisted of the Hitman product, an enterprise encoding
system that automates the encoding process and allows for the encoding of multiple jobs at the same time. The
Hitman product was 75 percent complete at the time, with $0.4 million of estimated remaining costs to reach
technological feasibility. We recently released this product with actual costs to complete that approximated the
initial $0.4 million estimate.
In valuing the developed and in-process technologies, we used a discounted cash flow analysis based on
projected net revenues, cost of revenues, operating expenses and income taxes resulting from such technologies
over a 6-year period. The projected financial results, which were discounted using a 40 percent rate for the
developed technology and a 50 percent rate for the IPR&D, were based on expectations of Media 100 on a stand-
alone basis.
The revenue projections for developed technologies, which considered the release dates of new products,
assumed a gradual decline. We based the revenue projections for the IPR&D on expected trends in technology
and the timing of new product introductions.
VISION* Solutions (“VISION”)
On April 22, 1999, we acquired VISION, a vendor of enterprise automated mapping/facilities management/
geographic information systems (AM/FM/GIS) solutions. Of the $26.0 million purchase price, which was paid in
cash, $3.3 million represented the value of IPR&D that had not yet reached technological feasibility and had no
alternative future use, and as such, was expensed during fiscal 2000. Of the remaining purchase price, $17.6
million was allocated to goodwill and $2.1 million was allocated to other identified intangibles.
As of the acquisition date, the IPR&D consisted of the development of two products, VISION 5.3, which
was 60 percent complete at the time, and VISION Electric 2.3, which was 39 percent complete. Both projects,
which were originally expected to be completed in late fiscal 2000, were released two years ago. The projects
were completed at an amount approximately equal to the original estimate of $1.4 million.
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