Autodesk 2007 Annual Report Download - page 185

125
2007 Annual Report
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15. Business Combinations (Continued)
The fair value of these stock options of $8.1 million increased the total purchase price consideration. The
intrinsic value of these options, which relates to future services, was $8.2 million and was recorded as
deferred compensation within stockholders’ equity.
Autodesk incurred approximately $1.8 million in costs directly related to the consummation of this
transaction. These costs were reflected in the total purchase price consideration.
The acquisition was integrated into the Manufacturing Solutions Divisions of the Design Solutions
Segment and into the Media and Entertainment Segment.
Management’s allocation of the purchase price, which was based on valuations of acquired assets
and liabilities performed in-part by a third-party appraiser, is as follows:
Alias:
Developed technologies (6 year useful life). . . . . . . . . . . . . . . . . . . . . . $ 34.8
In-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9
Customer relationships (7 year useful life). . . . . . . . . . . . . . . . . . . . . . . 29.8
Trade name (6 year useful life) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
Goodwill..................................................... 132.5
Deferred revenue............................................. (5.1)
Net tangible assets ........................................... (0.1)
Restructuring reserve ......................................... (9.4)
$198.5
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 during fiscal 2006 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 $132.5 million of goodwill, the majority of which is not deductible for tax purposes, was assigned to
the Media and Entertainment Segment ($79.5 million) and to the Manufacturing Solutions Division of
the Design Solutions Segment ($53.0 million). During the second quarter of fiscal year 2007, Autodesk
recorded an increase to goodwill of $11.5 million primarily related to an increase in deferred tax liabilities
for book/tax intangible asset basis differences. As a result of this adjustment, the goodwill balance related
to the Alias acquisition is $132.5 million. During the third quarter of fiscal 2007, Autodesk recorded a
reduction to goodwill of $1.7 million because actual costs incurred under the Alias Restructuring Plan was
less than what the Company originally estimated at the time the acquisition was recorded. 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