Autodesk 2002 Annual Report Download - page 27

In valuing the developed and in-process technologies at the acquisition date, 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 4-year period. The projected financial results, which were discounted using a 20 percent
rate for the developed technology and a 25 percent rate for the in-process technology, were based on expectations
for VISION on a stand-alone basis and excluded any synergistic benefits that we expected to achieve after the
acquisition.
The revenue projections for the 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 our new product introductions.
Although actual financial results to date have been lower than originally forecasted, Autodesk has
successfully integrated the VISION technology with GIS applications and products that were released in fiscal
2002. These GIS applications and products generate sufficient cash flows to realize the remaining value of
goodwill and identifiable intangible assets.
Discreet Logic Inc. (“Discreet”)
In March 1999, we acquired Discreet in a business combination accounted for as a pooling of interests. The
transaction resulted in the issuance of an aggregate of approximately 20.0 million shares of Autodesk common
stock in exchange for Discreet’s outstanding common stock. Accordingly, all prior period consolidated financial
statements were restated to include the combined results of operations of Discreet as though it had always been a
part of Autodesk.
Prior to the acquisition, Discreet’s fiscal year ended on June 30. In conforming Discreet’s fiscal year end to
ours, we recorded a $5.0 million adjustment to retained earnings during fiscal 2000.
Recent Events
Revit Technology Corporation (“Revit”)
In April 2002, we acquired Revit for $133.0 million in cash. The acquisition will be accounted for as a
purchase under SFAS 141. The addition of Revit complements our existing family of building industry
applications with a parametric building modeler for customers to design, coordinate and integrate information
about the entire building.
Recently Issued Accounting Standards
During July 2001, the Financial Accounting Standards Board issued SFAS 141. This Statement requires all
business combinations to be accounted for using the purchase method of accounting and redefines goodwill and
other intangibles that should be recognized separate from goodwill. SFAS 141 was effective for all business
combinations initiated after June 30, 2001. Both the acquisitions of Buzzsaw and Media 100 were accounted for
under SFAS 141.
During July 2001, the Financial Accounting Standards Board also issued Statement of Financial Accounting
Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). This Statement requires, among other
things, that goodwill not be amortized, but be tested for impairment at least annually. Application of SFAS 142 is
required immediately for business combinations completed after June 30, 2001; however, for transactions
completed prior to this date, we plan to adopt the provisions of SFAS 142 on February 1, 2002. We recently
completed an assessment of the annual goodwill impairment test pursuant to SFAS 142 and believe that none of
the goodwill balances as of January 31, 2002 are impaired.
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