Autodesk 2006 Annual Report Download - page 117

In-process research and development (“IPR&D”) represents incomplete Alias research and development
projects that had not reached technological feasibility and had no alternative future use as of the acquisition
date. Technological feasibility is established when an enterprise has completed all planning, designing, coding,
and testing activities that are necessary to establish that a product can be produced to meet its design
specifications including functions, features and technical performance requirements. The total IPR&D amount
was recorded in research and development on the Consolidated Statement of Income.
Customer relationships represent the underlying relationships and agreements with Alias’s existing
customers. Trade name represents the estimated fair value of the Alias trade name and trademarks. The
$123.0 million of goodwill, which is not deductible for tax purposes, was assigned to the Media and Entertainment
Segment ($73.5 million) and to the Manufacturing Solutions Division of the Design Solutions Segment
($49.5 million). The goodwill represents the premium paid for Alias’ established products.
The deferred revenue amount of $5.1 million represents the estimated fair value of the support obligations
assumed from Alias in connection with this acquisition. As a result of the fair value determination in accordance
with Statement of Financial Accounting Standards No. 141, “Business Combinations,” Autodesk recorded an
adjustment to reduce the carrying value of Alias’ deferred revenue balance at the acquisition date by $12.0 million
to $5.1 million. Autodesk estimates that the support obligations assumed from Alias will be fulfilled by the middle
of fiscal 2008.
Autodesk management approved a restructuring plan directly resulting from the Alias acquisition and
involving the elimination of employee positions, facilities and fixed assets of Alias (“Alias Restructuring Plan”).
The total restructuring reserve established for this plan was reflected as an allocation item in the total purchase
price consideration of the Alias acquisition. The Alias Restructuring Plan was established in accordance with
EITF 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” Total estimated cost of
the Alias Restructuring Plan is $11.1 million. This plan involves termination of approximately 130 positions
worldwide at an estimated cost for severance and outplacement of approximately $8.8 million. In addition, this
plan also involves costs associated with exiting leased facilities and abandonment of certain assets of
approximately $2.3 million. Substantially all of the actions required of the Alias Restructuring Plan are expected
to be completed by the fourth quarter of fiscal 2007.
Autodesk currently has not identified any material pre-acquisition contingencies where a liability is probable
and the amount of the liability can be reasonably estimated. If information becomes available prior to the end
of the purchase price allocation period, which would indicate that it is probable that such events had occurred
and the amounts can be reasonably estimated, such items would be included in the purchase price allocation.
Furthermore, the purchase price allocation is also dependent upon the final determination of costs under the
Alias Restructuring Plan.
The following unaudited pro forma financial information summarized the combined results of operations
of Autodesk and Alias, on a pro forma basis, as though the companies had been combined as of the beginning
of each of the periods presented. The pro forma financial information is presented for informational purposes
only and is not indicative of the results of operations that would have been achieved if the acquisition had taken
place at the beginning of each of the periods presented. The unaudited pro forma financial information in fiscal
2006 combines the historical financial results of Autodesk for the year ended January 31, 2006 and the historical
financial results of Alias for the period from February 1, 2005 to January 9, 2006. Autodesk’s Consolidated
Statements of Income for fiscal year 2006 include Alias’ financial results for the period from the acquisition date,
January 10, 2006, through January 31, 2006. The unaudited pro forma financial information in fiscal 2005 combines
the historical financial results for Autodesk, with the historical financial results of Alias for the twelve months
ended January 31, 2005. The pro forma financial information presented includes the business combination
accounting effects of amortization charges from acquired intangible assets, stock-based compensation charges
2006 Annual Report
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 10. Business Combinations (Continued)
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