Autodesk 2011 Annual Report Download - page 128

AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
research and development assets reached the stage of fully developed technology and began being amortized
to expense. In-process research and development is an indefinite lived asset that is held and tested at least
annually for impairment until such time that it becomes fully developed technology. Once completed, the
technology is amortized to expense over an applicable useful life. Prior to February 1, 2009, Autodesk
expensed in-process research and development to research and development expense in the period it was
acquired.
(2) Customer relationships and trade names are included in “Other assets” in the Consolidated Balance Sheet.
The weighted average amortization period for purchased technologies, customer relationships and trade
names during fiscal 2011 was 3.2 years. Expected future amortization expense for purchased technologies,
customer relationships and trade names for each of the fiscal years ended thereafter is as follows:
Year ending
January 31,
2012 .................................................................... $ 50.7
2013 .................................................................... 37.0
2014 .................................................................... 20.3
2015 .................................................................... 8.5
2016 .................................................................... 2.2
Thereafter ................................................................ 0.1
Total .................................................................... $118.8
Goodwill
Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations.
Autodesk assigns goodwill to the reportable segment associated with each business combination, and tests
goodwill for impairment annually in its fourth fiscal quarter or more often if circumstances indicate a potential
impairment. When assessing goodwill for impairment, Autodesk uses discounted cash flow models that include
assumptions regarding reportable segments’ projected cash flows (“Income Approach”) and corroborates it with
the estimated consideration that the Company would receive if there were to be a sale of the reporting segment
(“Market Approach”). Variances in these assumptions could have a significant impact on Autodesk’s 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 financial results, (ii) a sustained decline in Autodesk’s market
capitalization, (iii) significant slowdown in the worldwide economy or the industries Autodesk serves, or
(iv) changes in Autodesk’s business strategy or internal financial results forecasts. There was no impairment of
goodwill during the year ended January 31, 2011. A hypothetical 10% decrease in the fair value of Autodesk’s
Platform Solutions and Emerging Business; Manufacturing; Architecture, Engineering and Construction; or
Media and Entertainment reporting units would not have an impact on the carrying value, nor result in an
impairment, of goodwill shown on Autodesk’s balance sheet as of January 31, 2011 for the respective reporting
units.
During the fiscal year ended 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. During the
fiscal year ended January 31, 2009, the carrying value of M&E 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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