Autodesk 2010 Annual Report Download - page 154
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AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
conclusion as to whether goodwill is impaired, or the amount of any impairment charge. Impairment charges, if
any, result from instances where the fair values of net assets associated with goodwill are less than their carrying
values. The process of evaluating the potential impairment of goodwill is subjective and requires significant
judgment at many points during the analysis. The value of Autodesk’s goodwill could also be impacted by future
adverse changes such as: (i) declines in Autodesk’s actual operating results, (ii) a sustained decline in Autodesk’s
market capitalization, (iii) further significant slowdown in the worldwide economy or the industries Autodesk
serves, or (iv) changes in Autodesk’s business strategy or internal operating results forecasts.
During the first quarter of fiscal 2010, Autodesk recorded an impairment charge of $21.0 million,
representing the entire goodwill balance of the Media and Entertainment (“M&E”) segment as of April 30, 2009.
This goodwill balance related to our M&E segment’s fourth quarter fiscal 2009 acquisition of substantially all of
the assets of Softimage. In May 2009, the Company concluded that an impairment of goodwill had occurred as of
April 30, 2009, due to revisions to the Company’s revenue and cash flow projections prepared in the second half
of the first quarter of fiscal 2010 in response to the significant and sustained revenue declines it was experiencing
in all segments and geographies in the first quarter of fiscal 2010. The revenue and cash flow projections were
substantially impacted for all segments; our M&E segment was the only segment that had a current fair value of
its future discounted cash flows that fell below the carrying value of its net assets.
During the fiscal year ended January 31, 2009, the carrying value of the M&E segment goodwill was
deemed to exceed the allocated fair value and Autodesk recorded a $128.2 million goodwill impairment charge.
Should our revenue and cash flow projections decline significantly in the future, additional impairment charges
may be recorded to goodwill.
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