Autodesk Reports Record Revenues

(1) To supplement Autodesk's consolidated financial statements presented on a GAAP basis, we provide investors with certain non-GAAP measures, including non-GAAP total costs and expenses (such as non-GAAP cost of license and other revenues and total cost of revenues, non-GAAP sales and marketing expense, non-GAAP research and development expense, and non-GAAP general and administrative expense), non-GAAP income from operations, non-GAAP provision for income taxes, non-GAAP net income and non-GAAP diluted net income per share.

        For our internal budgeting and resource allocation process, Autodesk's
        management uses non-GAAP financial information that does not include:
        (a) the stock-based compensation impact of SFAS 123R, (b) certain
        large and non-recurring litigation expenses, (c) amortization of
        purchased intangibles and purchases of incomplete technology that
        result in an inprocess research and development expense, and (d) the
        net tax impact of the repatriation of certain foreign earnings.
        Autodesk's management uses these non-GAAP financial measures in making
        operating decisions because we believe the understanding of how we
        should invest in research and development and fund measures provide
        meaningful supplemental infrastructure and go-to-market strategies. In
        addition, these non-GAAP financial information regarding Autodesk's
        operational performance and gives us a better measures facilitate
        management's internal comparisons to our historical operating results
        and comparisons to competitors' operating results.

As described above, Autodesk excludes the following items from one or more of its non-GAAP measures:

    A. Stock compensation impact of SFAS 123R. These expenses consist of
       expenses for employee stock options and employee stock purchases under
       SFAS 123(R). Autodesk excludes stock-based compensation expenses from
       our non-GAAP measures primarily because they are non-cash expenses and
       management finds it useful to exclude certain non-cash charges to
       assess the appropriate level of various operating expenses to assist in
       budgeting, planning and forecasting future periods. Further, as
       Autodesk applies SFAS 123R, we believe that it is useful to investors
       to understand the impact of the application of SFAS 123R to our results
       of operations.

    B. Certain litigation expenses. These expenses relate to the Company's
       accrual of $16.8 million related to the $18 million jury award in the
       z4 Technologies matter, where in the quarter ended April 30, 2006,
       Autodesk determined that (1) it is probable that a liability has been
       incurred and (2) the amount of loss could be reasonably estimated.
       Autodesk excludes this from its non-GAAP measures because it does not
       consider it to be reflective of ongoing operating results in the
       current period.

    C. Amortization of purchased intangibles and in-process research and
       development expenses. Autodesk incurs amortization of
       acquisition-related purchased intangible assets and charges related to
       in-process research and development, primarily in connection with its
       acquisition of certain businesses, such as Alias in January 2006. The
       amortization of purchased intangibles from a business combination is
       generally a non-cash expense and management finds it useful to exclude
       certain non-cash charges to assess the appropriate level of various
       operating expenses to assist in budgeting, planning and forecasting
       future periods.

    D. Tax impact of the repatriation of certain foreign earnings. In fiscal
       2006 and 2005, Autodesk repatriated foreign earnings under the American
       Jobs Creation Act of 2004. Future repatriations are not expected to
       reoccur. Autodesk excludes this item because the repatriation
       transaction is not reflective of ongoing operating results and has no
       direct correlation to the operation of Autodesk's business.

Autodesk believes that where the adjustments used in calculating non-GAAP net income and non-GAAP net income per share are based on specific, identified amounts that impact different line items in the Condensed Consolidated Statements of Income (including cost of license and other revenues and total cost of revenues, gross margin, operating expenses, including sales and marketing, research and development, and general and administrative expenses, income from operations, provision for income taxes, net income, and diluted net income per share) that it is useful to investors to understand how these specific line items in the Condensed Consolidated Statements of Income are affected by these adjustments for the following reasons:

    1. Cost of license and other revenues, total cost of revenues, and gross
       margin. Excluding stock-based compensation expense related to employee
       stock options and employee stock purchases from cost of license
       revenues and gross margin calculations assists investors in evaluating
       period-over-period changes without giving effect to these charges which
       are non-cash in nature. Excluding the impact from the amortization of
       purchased intangibles assists investors in evaluating period-over-
       period changes without giving effect to these charges which are a
       function of prior period acquisition transactions rather than the
       underlying operating activities of the period presented.

    2. Operating expenses (including sales and marketing, research and
       development, and general and administrative expenses). Excluding
       stock-based compensation expense related to employee stock options and
       employee stock purchases assists investors in evaluating period-over-
       period changes in each line item of operating expenses without giving
       effect to these charges which are non-cash in nature. Excluding the
       impact of (a) the amortization of purchased intangibles and inprocess
       research and development expenses and (b) certain litigation expenses
       assists investors in evaluating period-over-period changes to the
       affected line items in the Condensed Consolidated Statement of Income
       without giving effect to these charges which are a function of
       acquisition transactions or large and infrequent litigation costs
       rather than the underlying operating activities of the period presented

    3. Income from operations. Excluding stock-based compensation expense
       related to employee stock options and employee stock purchases from the
       calculation of income from operations assists investors in evaluating
       period-over-period changes without giving effect to these charges which
       are non-cash in nature. Excluding the impact from (a) the amortization
       of purchased intangibles and in-process research and development
       expenses and (b) certain litigation expenses assists investors in
       evaluating period-over-period changes without giving effect to these
       charges which are a function of acquisition transactions or large and
       infrequent litigation costs rather than the underlying operating
       activities of the period presented.

    4. Provision for income taxes. Excluding the  income  tax  effect  of  the
              non-GAAP  pre-tax  adjustments  from  the  provision  for  income  taxes
              assists  investors  in  understanding  the  tax  provision  associated  with
              those  adjustments  and  the  effective  tax  rate  of  Autodesk  related  to  its
              ongoing  operations  in  the  period  presented.  Excluding  the  net  tax
              impact  of  the  repatriation  of  foreign  earnings  assists  investors  in
              comparing  periods  in  which  repatriation  does  not  occur  and  in
              understanding  the  effective  tax  rate  of  Autodesk  related  to  its  ongoing
              operations  in  the  period  presented.

        5.  Net  Income,  Net  of  Tax  Effect  of  Non-GAAP  Adjustments.  Excluding
              stock-based  compensation  expense  related  to  employee  stock  options  and
              employee  stock  purchases  from  the  calculation  of  net  income  assists
              investors  in  evaluating  period-over-period  changes  without  giving
              effect  to  these  charges  which  are  non-cash  in  nature.    Excluding
              stock-based  compensation  expense  related  to  employee  stock  options  and
              employee  stock  purchases  from  the  calculation  of  net  income  assists
              investors  in  evaluating  period-over-period  changes  without  giving
              effect  to  these  charges  which  are  non-cash  in  nature.    Excluding  the
              impact  from  (a)  the  amortization  of  purchased  intangibles  and
              in-process  research  and  development  expenses  and  (b)  certain
              litigation  expenses  assists  investors  in  evaluating  period-over-period
              changes  without  giving  effect  to  these  charges  which  are  a  function  of
              acquisition  transactions  or  large  and  infrequent  litigation  costs
              rather  than  the  underlying  operating  activities  of  the  period
              presented.    Excluding  the  income  tax  effect  of  the  non-GAAP  pre-tax
              adjustments  from  the  provision  for  income  taxes  assists  investors  in
              understanding  the  tax  provision  associated  with  those  adjustments  and
              the  effective  tax  rate  of  Autodesk  related  to  its  ongoing  operations  in
              the  period  presented.  Excluding  the  net  tax  impact  of  the  repatriation
              of  foreign  earnings  assists  investors  in  comparing  periods  in  which
              repatriation  does  not  occur  and  in  understanding  the  effective  tax  rate
              of  Autodesk  related  to  its  ongoing  operations  in  the  period  presented.
 


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