Autodesk 2007 Annual Report Download - page 188

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AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15. Business Combinations (Continued)
Management’s allocation of the purchase consideration, which is based on valuations of acquired
assets performed by a third-party appraiser, is as follows:
Colorfront Ltd. (“Colorfront”)
Developed technology (4 year useful life) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.1
In-process research and development ................................................ 1.2
Customer relationships (3.5 year useful life) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2
Goodwill........................................................................... 9.4
Net tangible assets ................................................................. 0.1
$14.0
The value assigned to IPR&D, which was expensed during fiscal 2006, was determined by identifying
projects in areas where technological feasibility had not been achieved and alternative future uses did not
exist.
The goodwill balance of $9.4 million, which is deductible for tax purposes, was assigned to the
Media and Entertainment Segment. This acquired asset relates to the premium paid for Colorfront’s
color correction technology, which provides Autodesk with further long-term growth opportunities in the
digital film industry.
Compass Systems GmbH (“Compass”)
In March 2005, Autodesk acquired certain assets of Compass Systems GmbH, the European-based
developer of the Compass family of data management solutions, for cash consideration of $16.5 million.
The acquisition expands Autodesk’s data management solution for small and medium manufacturers.
Immediately prior to the acquisition, Compass was owned 50.1% by one of Autodesk’s largest resellers.
Management’s allocation of the purchase consideration, based on a valuation of acquired assets and
liabilities performed in-part by a third-party appraiser, is as follows:
Compass Systems GmbH (“Compass”)
Developed technology (3 year useful life) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.7
Customer relationships (7 year useful life). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
Backlog............................................................................ 0.2
Goodwill........................................................................... 5.8
Net tangible assets ................................................................. 0.3
$16.5
The goodwill balance of $5.8 million was assigned to the Manufacturing Solutions Division of
Autodesk’s Design Solutions Segment and is deductible for tax purposes. This asset is attributed to the
premium paid for Compass’ electronic and product data management along with their channel expertise
which provided an opportunity for Autodesk to enhance its growth in these markets.