Autodesk 2013 Annual Report Download - page 133

In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU")
2011-08 regarding Accounting Standards Codification (“ASC”) Topic 350 “Intangibles – Goodwill and Other. Autodesk
adopted the provisions of ASU 2011-08 for its annual goodwill impairment test performed in the fourth quarter of fiscal 2013.
This update gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying amount before performing the two-step goodwill impairment test
mandated prior to the update. Companies are not required to perform the qualitative assessment and may instead proceed
directly to the first step of the two-part test.
In performing the qualitative assessments, Autodesk must consider events and circumstances, including but not limited to,
macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in
management or key personnel, changes in strategy, changes in customers, changes in the composition or carrying amount of a
reporting unit's net assets and changes in the price of Autodesk's common stock. If, after assessing the totality of events or
circumstances, it is determine that it is more likely than not that the fair value of a reporting unit is greater than its carrying
amount, then the two-step goodwill impairment test is not performed.
If the two-step impairment test is necessary, Autodesk uses discounted cash flow models which include assumptions
regarding projected cash flows. 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.
For the fiscal 2013 annual goodwill impairment testing, Autodesk had four reporting units: PSEB, Manufacturing
("MFG"), Architecture, Engineering and Construction ("AEC") and Media and Entertainment ("M&E"). Autodesk assessed
qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely
than not that the fair value of Autodesk's PSEB, MFG, and AEC reporting units was less than the reporting units' carrying
amount. Autodesk determined, after assessing the totality of the events and circumstances described above, that it was more
likely than not that the fair value of each of the PSEB, MFG, and AEC reporting units was greater than the carrying amount for
such reporting unit. Accordingly, there was no indication of impairment and the two-step goodwill impairment test was not
performed for these reporting units.
For the M&E reporting unit, Autodesk deemed the two-step impairment test was necessary and used a discounted cash
flow model which included assumptions regarding projected cash flows. Based on this testing, Autodesk determined that there
was no impairment of goodwill for the M&E reporting unit during the year ended January 31, 2013. In addition, Autodesk did
not recognize any goodwill impairment losses in fiscal 2012 or 2011.
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2013 Annual Report