Autodesk Posts Sequential Revenue, Profitability and Cash Flow

Autodesk Posts Sequential Revenue, Profitability and Cash Flow Growth

Autodesk and AutoCAD are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. Academy Award is a registered trademark of the Academy of Motion Picture Arts and Sciences. All other brand names, product names, or trademarks belong to their respective holders. Autodesk reserves the right to alter product and service offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document. © 2010 Autodesk, Inc. All rights reserved.

Autodesk, Inc.
Consolidated Statements of Operations
(In millions, except per share data)

	Three Months Ended						Fiscal Year Ended
	January 31,						January 31,
		2010			2009			2010			2009
	(Unaudited)						(Unaudited)
Net revenue:
License and other	$	270.0		$	310.0		$	980.7		$	1,603.4

Maintenance		186.1			179.8			733.0			711.8

Total net revenue		456.1			489.8			1,713.7			2,315.2

Cost of revenue:
Cost of license and other revenue		41.3			46.0			179.9			210.2

Cost of maintenance revenue		3.1			2.5			11.9			8.9

Total cost of revenue		44.4			48.5			191.8			219.1

Gross profit		411.7			441.3			1,521.9			2,096.1

Operating Expenses:

Marketing and sales		191.3			218.0			731.9			900.7

Research and development		116.8			138.7			457.5			576.1

General and administrative		47.1			49.3			197.7			205.7

Impairment of goodwill and intangibles		-			128.9			21.0			128.9

Restructuring charges		0.4			40.2			48.2			40.2

Total operating expenses		355.6			575.1			1,456.3			1,851.6

Income (loss) from operations		56.1			(133.8	)		65.6			244.5

Interest and other income (expense), net		2.6			(1.8	)		19.1			8.0

Income (loss) before income taxes		58.7			(135.6	)		84.7			252.5

(Provision) benefit for income taxes		(8.6	)		30.3			(26.7	)		(68.9	)

Net income (loss)	$	50.1		$	(105.3	)	$	58.0		$	183.6

Basic net income (loss) per share	$	0.22		$	(0.47	)	$	0.25		$	0.81

Diluted net income (loss) per share	$	0.21		$	(0.47	)	$	0.25		$	0.80

Shares used in computing basic
net income (loss) per share		229.0			226.3			228.7			225.5

Shares used in computing diluted
net income (loss) per share		233.2			226.3			232.1			230.1

Autodesk, Inc.
Condensed Consolidated Balance Sheets
(In millions)

		January 31,			January 31,
			2010			2009
		(Unaudited)

ASSETS:

Current assets:
	Cash and cash equivalents	$	838.7		$	917.6
	Marketable securities		161.9			63.5
	Accounts receivable, net		277.4			316.5
	Deferred income taxes		44.2			31.1
	Prepaid expenses and other current assets		57.4			59.3
Total current assets			1,379.6			1,388.0

Marketable securities			125.6			7.6
Computer equipment, software, furniture and leasehold improvements, net			101.6			120.6
Purchased technologies, net			88.0			113.3
Goodwill			542.9			542.5
Long term deferred income taxes, net			101.9			125.7
Other assets			107.6			123.0
		$	2,447.2		$	2,420.7


LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:
	Accounts payable	$	67.8		$	62.4
	Accrued compensation		115.6			124.3
	Accrued income taxes		8.4			16.7
	Deferred revenue		444.6			438.8
	Borrowings under line of credit		-			52.1
	Other accrued liabilities		67.6			105.8
Total current liabilities			704.0			800.1

Deferred revenue			71.9			113.3
Long term income taxes payable			127.2			116.9
Long term deferred income taxes			-			22.7
Other liabilities			70.6			57.0

Commitments and contingencies

Stockholders' equity:
	Preferred stock		-			-
	Common stock and additional paid-in capital		1,204.3			1,080.4
	Accumulated other comprehensive income (loss)		(3.5	)		(11.2	)
	Retained earnings		272.7			241.5
Total stockholders' equity			1,473.5			1,310.7
		$	2,447.2		$	2,420.7

Autodesk, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
	Fiscal Year Ended
	January 31,
		2010			2009
	(Unaudited)

Operating Activities
Net income	$	58.0		$	183.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		111.5			91.8
Stock-based compensation expense		93.6			89.5
Impairment of goodwill and intangibles		21.0			128.9
Restructuring charges, net		48.2			38.9
Gain on disposition of assets		(2.3	)		-
Charge for acquired in-process research and development		-			26.9
Changes in operating assets and liabilities, net of business combinations		(83.2	)		34.3
Net cash provided by operating activities		246.8			593.9

Investing Activities:
Purchases of marketable securities		(568.9	)		(118.6	)
Sales of marketable securities		26.4			75.0
Maturities of marketable securities		328.7			8.4
Capital expenditures		(39.0	)		(78.4	)
Purchases of equity investments		(11.4	)		-
Business combinations, net of cash acquired		(18.8	)		(364.5	)
Net cash used in investing activities		(283.0	)		(478.1	)

Financing activities:
Draws on line of credit		2.2			912.4
Repayments of line of credit		(54.3	)		(860.3	)
Proceeds from issuance of common stock, net of issuance costs		70.0			90.1
Repurchases of common stock		(63.2	)		(256.6	)
Net cash used in financing activities		(45.3	)		(114.4	)

Effect of exchange rate changes on cash and cash equivalents		2.6			(1.7	)

Net decrease in cash and cash equivalents		(78.9	)		(0.3	)
Cash and cash equivalents at beginning of fiscal year		917.6			917.9
Cash and cash equivalents at end of period	$	838.7		$	917.6

Autodesk, Inc.
Reconciliation of GAAP financial measures to non-GAAP financial measures
(In millions, except per share data)

To supplement our consolidated financial statements presented on a GAAP basis, Autodesk provides investors with certain non-GAAP measures including non-GAAP net income, non-GAAP net income per share, non-GAAP cost of license and other revenue, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP interest and other income, net, non-GAAP provision for income taxes and non-GAAP total spend savings. These non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses, including stock-based compensation expense, amortization of purchased intangibles, in-process research and development expenses, restructuring charges, goodwill and intangibles impairment, establishment of a valuation allowance on certain deferred tax assets and related income tax expenses. See our reconciliation of GAAP financial measures to non-GAAP financial measures herein. We believe these exclusions are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future, as well as to facilitate comparisons with our historical operating results. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of Autodesk's underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our core operating results. In addition, these non-GAAP financial measures are among the primary indicators management uses as a basis for our planning and forecasting of future periods.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with generally accepted accounting principles in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

The following table shows Autodesk's non-GAAP results reconciled to GAAP results included in this release.

	Three Months Ended						Fiscal Year Ended
	January 31,						January 31,
		2010			2009			2010			2009
	(Unaudited)						(Unaudited)

GAAP cost of license and other revenue	$	41.3		$	46.0		$	179.9		$	210.2
Stock-based compensation expense		(0.7	)		(0.5	)		(3.1	)		(3.6	)
Amortization of developed technology		(7.6	)		(7.9	)		(32.9	)		(23.2	)
Non-GAAP cost of license and other revenue	$	33.0		$	37.6		$	143.9		$	183.4

GAAP gross profit	$	411.7		$	441.3		$	1,521.9		$	2,096.1
Stock-based compensation expense		0.7			0.5			3.1			3.6
Amortization of developed technology		7.6			7.9			32.9			23.2
Non-GAAP gross profit	$	420.0		$	449.7		$	1,557.9		$	2,122.9

GAAP marketing and sales	$	191.3		$	218.0		$	731.9		$	900.7
Stock-based compensation expense		(8.6	)		(8.6	)		(41.1	)		(39.2	)
Non-GAAP marketing and sales	$	182.7		$	209.4		$	690.8		$	861.5

GAAP research and development	$	116.8		$	138.7		$	457.5		$	576.1
Stock-based compensation expense		(6.3	)		(6.0	)		(30.0	)		(29.3	)
In-process research and development		-			(8.9	)		-			(26.9	)
Non-GAAP research and development	$	110.5		$	123.8		$	427.5		$	519.9

GAAP general and administrative	$	47.1		$	49.3		$	197.7		$	205.7
Stock-based compensation expense		(3.3	)		(3.6	)		(19.4	)		(17.5	)
Amortization of customer relationships and trademarks		(6.0	)		(6.9	)		(25.5	)		(23.4	)
Non-GAAP general and administrative	$	37.8		$	38.8		$	152.8		$	164.8

GAAP impairment of goodwill and intangibles	$	-		$	128.9		$	21.0		$	128.9
Impairment of goodwill and intangibles		-			(128.9	)		(21.0	)		(128.9	)
Non-GAAP impairment of goodwill and intangibles	$	-		$	-		$	-		$	-

GAAP restructuring charges	$	0.4		$	40.2		$	48.2		$	40.2
Restructuring charges		(0.4	)		(40.2	)		(48.2	)		(40.2	)
Non-GAAP restructuring charges	$	-		$	-		$	-		$	-

GAAP operating expenses	$	355.6		$	575.1		$	1,456.3		$	1,851.6
Stock-based compensation expense		(18.2	)		(18.2	)		(90.5	)		(86.0	)
Amortization of customer relationships and trademarks		(6.0	)		(6.9	)		(25.5	)		(23.4	)
In-process research and development		-			(8.9	)		-			(26.9	)
Impairment of goodwill and intangibles		-			(128.9	)		(21.0	)		(128.9	)
Restructuring charges		(0.4	)		(40.2	)		(48.2	)		(40.2	)
Non-GAAP operating expenses	$	331.0		$	372.0		$	1,271.1		$	1,546.2

GAAP income (loss) from operations	$	56.1		$	(133.8	)	$	65.6		$	244.5
Stock-based compensation expense		18.9			18.7			93.6			89.6
Amortization of developed technology		7.6			7.9			32.9			23.2
Amortization of customer relationships and trademarks		6.0			6.9			25.5			23.4
In-process research and development		-			8.9			-			26.9
Impairment of goodwill and intangibles		-			128.9			21.0			128.9
Restructuring charges		0.4			40.2			48.2			40.2
Non-GAAP income from operations	$	89.0		$	77.7		$	286.8		$	576.7

GAAP (provision) benefit for income taxes	$	(8.6	)	$	30.3		$	(26.7	)	$	(68.9	)
Establishment of valuation allowance on deferred tax assets		-			-			21.0			-
Income tax effect on difference between GAAP and non-GAAP
total costs and expenses at a normalized rate		(13.1	)		(35.9	)		(68.5	)		(68.0	)
Non-GAAP (provision) for income tax	$	(21.7	)	$	(5.6	)	$	(74.2	)	$	(136.9	)

GAAP net income (loss)	$	50.1		$	(105.3	)	$	58.0		$	183.6
Stock-based compensation expense		18.9			18.7			93.6			89.6
Amortization of developed technology		7.6			7.9			32.9			23.2
Amortization of customer relationships and trademarks		6.0			6.9			25.5			23.4
In-process research and development		-			8.9			-			26.9
Impairment of goodwill and intangibles		-			128.9			21.0			128.9
Restructuring charges		0.4			40.2			48.2			40.2
Establishment of valuation allowance on deferred tax assets		-			-			21.0			-
Income tax effect on difference between GAAP and non-GAAP
total costs and expenses at a normalized rate		(13.1	)		(35.9	)		(68.5	)		(68.0	)
Non-GAAP net income	$	69.9		$	70.3		$	231.7		$	447.8

GAAP diluted net income (loss) per share	$	0.21		$	(0.47	)	$	0.25		$	0.80
Stock-based compensation expense		0.08			0.08			0.40			0.39
Amortization of developed technology		0.03			0.04			0.14			0.10
Amortization of customer relationships and trademarks		0.03			0.03			0.11			0.10
In-process research and development		-			0.04			-			0.12
Impairment of goodwill and intangibles		-			0.56			0.09			0.56
Restructuring charges		-			0.18			0.21			0.18
Establishment of valuation allowance on deferred tax assets		-			-			0.09			-
Income tax effect on difference between GAAP and non-GAAP
total costs and expenses at a normalized rate		(0.05	)		(0.15	)		(0.30	)		(0.30	)
Non-GAAP diluted net income per share	$	0.30		$	0.31		$	0.99		$	1.95

GAAP diluted shares used in per share calculation		233.2			226.3			232.1			230.1
Impact of stock-based compensation on diluted shares		0.7			(0.2	)		0.9			(0.4	)
Shares included in non-GAAP net income per share, but excluded
from GAAP net loss per share as they would have been anti-dilutive		-			3.0			-			-
Non-GAAP diluted shares used in per share calculation		233.9			229.1			233.0			229.7

GAAP total spend savings ⁺							$	423
Stock-based compensation expense								3
Amortization of developed technology								10
Amortization of customer relationships and trademarks								3
In-process research and development								(27	)
Impairment of goodwill and intangibles								(108	)
Restructuring charges								8
Non-GAAP total spend savings ⁺							$	312

⁺ FY 2010 operating expenses and cost of revenue, less FY 2009 operating expenses and cost of revenue

Autodesk, Inc.

Other Supplemental Financial Information*
Fiscal Year 2010		QTR 1			QTR 2			QTR 3			QTR 4			YTD 2010
Financial Statistics ($ in millions, except per share data):
Total net revenue		$	426		$	415		$	417		$	456		$	1,714
	License and other revenue	$	244		$	231		$	236		$	270		$	981
	Maintenance revenue	$	182		$	184		$	181		$	186		$	733

GAAP Gross Margin			88	%		88	%		89	%		90	%		89	%
Non-GAAP Gross Margin (1)(2)			90	%		90	%		92	%		92	%		91	%

GAAP Operating Expenses		$	393		$	362		$	346		$	356		$	1,456
GAAP Operating Margin			-5	%		1	%		6	%		12	%		4	%
GAAP Net Income (Loss)		$	(32	)	$	10		$	30		$	50		$	58
GAAP Diluted Net Income (Loss) Per Share		$	(0.14	)	$	0.05		$	0.13		$	0.21		$	0.25

Non-GAAP Operating Expenses (1)(3)		$	327		$	308		$	305		$	331		$	1,271
Non-GAAP Operating Margin (1)(4)			13	%		16	%		18	%		20	%		17	%
Non-GAAP Net Income (1)(5)		$	42		$	57		$	63		$	70		$	232
Non-GAAP Diluted Net Income Per Share (1)(6)		$	0.18		$	0.24		$	0.27		$	0.30		$	0.99

Total Cash and Marketable Securities		$	966		$	1,029		$	1,054		$	1,126		$	1,126
Days Sales Outstanding			49			49			47			55			55
Capital Expenditures		$	14		$	11		$	6		$	9		$	39
Cash from Operations		$	27		$	47		$	47		$	126		$	247
GAAP Depreciation and Amortization		$	27		$	28		$	29		$	27		$	111

Deferred Maintenance Revenue Balance		$	469		$	444		$	420		$	464		$	464

Revenue by Geography (in millions):
Americas		$	163		$	159		$	164		$	168		$	655
Europe		$	167		$	157		$	159		$	188		$	671
Asia/Pacific		$	96		$	99		$	94		$	100		$	388

Revenue by Segment (in millions):***
Platform Solutions and Emerging Business		$	156		$	150		$	154		$	165		$	624
Architecture, Engineering and Construction		$	128		$	123		$	125		$	137		$	514
Manufacturing		$	94		$	95		$	90		$	108		$	387
Media and Entertainment		$	48		$	47		$	48		$	46		$	189
Other		$	-		$	-		$	-		$	-		$	-

Other Revenue Statistics:
% of Total Rev from AutoCAD and AutoCAD LT***			33	%		31	%		32	%		31	%		32	%
% of Total Rev from 3D design products			29	%		29	%		29	%		29	%		29	%
% of Total Rev from Emerging Economies			14	%		15	%		15	%		16	%		15	%
Upgrade Revenue (in millions)		$	43		$	26		$	26		$	37		$	133

Favorable (Unfavorable) Impact of U.S. Dollar
Translation Relative to Foreign
Currencies Compared to Comparable Prior Year Period (in millions):
FX Impact on Total Net Revenue		$	(31	)	$	(24	)	$	(4	)	$	22		$	(36	)
FX Impact on Total Operating Expenses		$	22		$	14		$	2		$	(10	)	$	28
FX Impact on Total Net Income (Loss)		$	(9	)	$	(10	)	$	(2	)	$	12		$	(8	)

Gross Margin by Segment (in millions):***
Platform Solutions and Emerging Business		$	146		$	140		$	147		$	157		$	590
Architecture, Engineering and Construction		$	116		$	110		$	113		$	125		$	465
Manufacturing		$	86		$	88		$	84		$	101		$	359
Media and Entertainment		$	34		$	36		$	38		$	37		$	144
Unallocated amounts		$	(9	)	$	(9	)	$	(10	)	$	(8	)	$	(36	)

Common Stock Statistics:
GAAP Shares Outstanding			228,219,000			229,666,000			229,665,000			228,881,000			228,881,000
GAAP Fully Diluted Weighted Average Shares Outstanding			227,080,000			232,286,000			232,947,000			233,324,000			232,314,000
Shares Repurchased			-			-			1,673,000			1,002,000			2,675,000

Installed Base Statistics:
Maintenance Installed Base **			1,719,000			2,299,000			2,236,000			2,250,000			2,250,000

*	Totals may not agree with the sum of the components due to rounding.
**	The second quarter of fiscal 2010 maintenance installed base includes a one-time adjustment of 581,000 educational seats for users migrated to a standard educational maintenance plan. These users were not previously captured in our maintenance installed base.
***	In the third quarter of fiscal 2010, Autodesk changed its methodology for allocating certain revenue transactions, including gains and losses from foreign currency. The second quarter of fiscal 2010 amounts have been reclassified to conform to the current presentation. The change in methodology did not have a material effect on any other period.

(1)	To supplement our consolidated financial statements presented on a GAAP basis, Autodesk provides investors with certain non-GAAP measures including non-GAAP net income, non-GAAP net income per share, non-GAAP cost of license and other revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP interest and other income, net and non-GAAP provision for income taxes. These non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses, including stock-based compensation expense, restructuring charges, amortization of purchased intangibles, goodwill impairment, establishment of a valuation allowance on certain deferred tax assets and related income tax expenses. See our reconciliation of GAAP financial measures to non-GAAP financial measures herein. We believe these exclusions are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future, as well as to facilitate comparisons with our historical operating results. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of Autodesk's underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our core operating results. In addition, these non-GAAP financial measures are among the primary indicators management uses as a basis for our planning and forecasting of future periods.

	There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with generally accepted accounting principles in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying Autodesk's press release.

Fiscal Year 2010		QTR 1			QTR 2			QTR 3			QTR 4			YTD 2010

(2)	GAAP Gross Margin		88	%		88	%		89	%		90	%		89	%
	Stock-based compensation expense		0	%		0	%		0	%		0	%		0	%
	Amortization of developed technology		2	%		2	%		3	%		2	%		2	%
	Non-GAAP Gross Margin		90	%		90	%		92	%		92	%		91	%

(3)	GAAP Operating Expenses	$	393		$	362		$	346		$	356		$	1,457
	Stock-based compensation expense		(22	)		(21	)		(30	)		(19	)		(91	)
	Amortization of customer relationships and trademarks		(6	)		(7	)		(6	)		(6	)		(26	)
	Restructuring charges		(17	)		(26	)		(5	)		-			(48	)
	Impairment of goodwill		(21	)		-			-			-			(21	)
	Non-GAAP Operating Expenses	$	327		$	308		$	305		$	331		$	1,271

(4)	GAAP Operating Margin		-5	%		1	%		6	%		12	%		4	%
	Stock-based compensation expense		5	%		5	%		7	%		4	%		5	%
	Amortization of developed technology		2	%		2	%		2	%		2	%		2	%
	Amortization of customer relationships and trademarks		2	%		2	%		2	%		2	%		2	%
	Restructuring charges		4	%		6	%		1	%		0	%		3	%
	Impairment of goodwill		5	%		0	%		0	%		0	%		1	%
	Non-GAAP Operating Margin		13	%		16	%		18	%		20	%		17	%

(5)	GAAP Net Income (Loss)	$	(32	)	$	10		$	30		$	50		$	58
	Stock-based compensation expense		23			21			30			19			93
	Amortization of developed technology		8			8			9			8			33
	Amortization of customer relationships and trademarks		6			7			6			6			26
	Establishment of valuation allowance on deferred tax assets		21			-			-			-			21
	Impairment of goodwill		21			-			-			-			21
	Restructuring charges		17			26			5			-			48
	Income tax effect on difference between GAAP and non-GAAP
	total costs and expenses at a normalized rate		(22	)		(16	)		(17	)		(13	)		(68	)
	Non-GAAP Net Income	$	42		$	56		$	63		$	70		$	232

(6)	GAAP Diluted Net Income (Loss) Per Share	$	(0.14	)	$	0.05		$	0.13		$	0.21		$	0.25
	Stock-based compensation expense		0.10			0.09			0.13			0.08			0.40
	Amortization of developed technology		0.04			0.03			0.04			0.03			0.14
	Amortization of customer relationships and trademarks		0.03			0.03			0.02			0.03			0.11
	Establishment of valuation allowance on deferred tax assets		0.09			-			-			-			0.09
	Impairment of goodwill		0.09			-			-			-			0.09
	Restructuring charges		0.07			0.11			0.02			-			0.21
	Income tax effect on difference between GAAP and non-GAAP
	total costs and expenses at a normalized rate		(0.10	)		(0.07	)		(0.07	)		(0.05	)		(0.30	)
	Non-GAAP Diluted Net Income Per Share	$	0.18		$	0.24		$	0.27		$	0.30		$	0.99

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