Autodesk 2003 Annual Report Download - page 32

but rather tests it for impairment annually in the fourth quarter. There was no impairment of goodwill during the
year ended January 31, 2003. Goodwill amortization expense was $19.9 million in fiscal 2002 and $24.3 million
in fiscal 2001.
Restructuring and Other Charges
Fiscal 2003
Increase (decrease)
compared to prior
fiscal year
Fiscal 2002
Increase (decrease)
compared to prior
fiscal year
Fiscal 2001$percent $percent
(in millions)
Restructuring and other .............. $25.9 $(7.7) (23%) $33.6 $34.8 2900% $(1.2)
During fiscal 2003 Autodesk recognized $25.9 million of restructuring and other charges resulting solely
from restructuring activities. Of the $25.9 million, $10.7 million related to additional costs associated with the
fiscal 2002 restructuring plan and $18.2 million related to a new fiscal 2003 restructuring plan partially offset by
a credit of $3.0 million resulting from accrual reversals. Of the $10.7 million related to the fiscal 2002 plan, $1.2
million related to the further consolidation of certain European offices and the remaining $9.5 million resulted
from increases to estimated accrued liabilities related to vacated facilities. Since these offices were closed in
fiscal 2002, there has been a significant downturn in the real estate market, particularly in Northern California
where some of the offices are located. As such, we were unable to either buyout the remaining lease obligations
at favorable amounts or sub-lease the space at amounts originally estimated during fiscal 2002.
During the third quarter of fiscal 2003 the Board of Directors approved a new restructuring plan that
resulted in the termination of 394 employees and the closure of several additional international and domestic
offices. As a result of the restructuring plan approved in the third quarter of 2003, we expect to realize immediate
pretax savings of $10.0 million per quarter and increased cash flows of $10.0 million per quarter. These savings
are expected to last for the next several quarters and the pretax savings will be reflected in each on-going cost
and expense line item in the consolidated statements of income. Both the pretax and cash flow savings are being
used to fund the new business opportunities previously described. During the year ended January 31, 2003, we
recognized $18.2 million of expenses as part of this restructuring effort, of which $16.5 million related to
employee termination costs and $1.7 million related to office closures. Employee termination costs consisted of
wage continuation, advance notice pay, medical benefits, and outplacement costs for 184 employees in the U.S.
and 210 employees outside the U.S. Office closure costs included losses on operating leases and the write-off of
leasehold improvements and equipment. During fiscal year 2003 we also reversed $2.0 million and $1.0 million
of facility related accruals related to restructuring reserves established in fiscal 2002 and fiscal 2000,
respectively. The facility-related accruals were settled for less than originally estimated.
During fiscal 2002 we recognized $33.6 million of restructuring and other charges. These charges resulted
from restructuring activities ($24.5 million), in-process research and development expenses related to the
acquisition of Media 100 ($3.2 million), the wind-down costs associated with the dissolution of RedSpark, a
development stage company ($3.6 million), and a goodwill write-off of $2.3 million. The write-off of goodwill
primarily related to an acquired Infrastructure Solutions Division business and resulted from a strategic decision
to abandon the underlying product line.
The restructuring costs, which were part of a formal exit plan approved by our Board of Directors during the
second quarter of fiscal 2002, were in connection with our effort to reduce operating expense levels. During that
same quarter, we reduced our revenue estimates for the remainder of fiscal 2002. As a result of the restructuring
we realized immediate pretax savings of $6.0 million per quarter and increased cash flows of $4.0 million per
quarter in addition to the savings expected to be realized from the 2003 restructuring plan. These savings are
expected to last for the next several quarters and the pretax savings have been reflected in each on-going cost and
expense line item in the consolidated statements of income. Both the pretax and cash flow savings were
re-invested in other parts of the business.
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