Quarterly Report for the period ended October 31, 2005

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

As of November 30, 2005, there were approximately 230.8 million shares of the Registrant’s Common Stock outstanding.

The accompanying unaudited condensed consolidated financial statements of Autodesk, Inc. (“Autodesk” or the “Company”) as of October 31, 2005 and for the three and nine months ended October 31, 2005 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information along with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles (“GAAP”) for annual financial statements. In the opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the financial position and operating results for the interim periods presented have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates are based on information available as of the date of the unaudited condensed consolidated financial statements. Actual results could differ from those estimates. In addition, the results of operations for the three and nine months ended October 31, 2005 are not necessarily indicative of the results for the entire fiscal year ending January 31, 2006 or for any other period. These unaudited condensed financial statements should be read in conjunction with the consolidated financial statements and related notes, together with management’s discussion and analysis of financial position and results of operations contained in Autodesk’s fiscal 2005 Annual Report on Form 10-K.

Autodesk reclassified its January 31, 2005 Condensed Consolidated Balance Sheet, conforming it to current year presentation, to properly reflect the long-term portions of certain foreign pension liabilities and restructuring reserves from current liabilities to other liabilities.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 – revised 2004, “Share-Based Payment” (“SFAS 123R”) which replaces Statement of Financial Accounting Standards No. 123 (“SFAS 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair-value based method and the recording of such expense in the Company’s consolidated statements of income. Autodesk is required to adopt SFAS 123R starting in the first quarter of fiscal 2007. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. See Note 4, “Employee Stock Compensation,” for the pro forma net income and net income per share amounts for the three and nine months ended October 31, 2005 and 2004, as if the Company had used a fair-value based method similar to the methods required under SFAS 123R to measure compensation expense for employee stock awards. Autodesk believes the adoption of SFAS 123R will result in amounts that are similar to the current pro forma disclosures under SFAS 123 and that the adoption of SFAS 123R will have a material adverse effect on Autodesk’s consolidated statements of income and net income per share. This estimated impact is contingent upon many factors including, but not limited to, the Company’s market value of its common stock on the date future options are granted.

During the three and nine months ended October 31, 2005, sales to a single distributor represented 11% of Autodesk’s total net revenues in each period. During fiscal 2005, sales to this same distributor represented 11% of Autodesk’s total net revenues for the three months ended October 31, 2004 and 12% for the nine months ended October 31, 2004. In addition, gross accounts receivable due from this distributor represented 14% and 16% at October 31, 2005 and January 31, 2005, respectively.

Autodesk accounts for employee stock options using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), as permitted by SFAS 123. As such, no compensation expense is recognized in Autodesk’s Condensed Consolidated Statements of Income, other than for stock awards that have exercise prices less than the fair market value of Autodesk’s common stock at the date of grant.

The following table illustrates the effect on net income and net income per share if Autodesk had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation. For purposes of computing pro forma net income, the estimated fair value of options is amortized to expense on a straight-line basis over the options’ vesting period. Autodesk utilizes the Black-Scholes option pricing model to compute pro forma net income.

During the third quarter of fiscal 2006, Autodesk revised its approach to estimating expected volatility on its stock awards granted during the quarter. Expected volatility is one of several assumptions in the Black-Scholes-Merton model used by Autodesk to make an estimate of the fair value of options granted under the Company’s stock plans and the rights to purchase shares under the employee stock purchase plan. Prior to the third quarter of fiscal 2006, Autodesk estimated expected volatility solely based on historical stock volatility. Under its current method of estimating expected volatility, Autodesk has considered both the historical volatility in the trading market for its common stock as well as the implied volatility of tradable forward call options to purchase shares of its common stock. The Company believes this approach results in a better estimate of expected volatility.

During the fourth quarter of fiscal 2005, Autodesk modified its approach and updated certain assumptions with respect to determining the estimated fair value of shares granted under the employee qualified stock purchase plan to account for modifications to employee withholdings and the two-year offering period of the plan. The pro forma charges for the three and nine months ended October 31, 2004 have been revised and reflect a decrease of less than $0.1 million and an increase of $0.6 million, respectively, from amounts previously reported for those periods.

During the three months ended October 31, 2005, Autodesk recognized a one-time income tax benefit of $17.6 million. Of this amount, $10.6 million relates to foreign withholding taxes previously accrued which are no longer due, as part of the repatriation of foreign earnings under the American Jobs Creation Act of 2004 (“DRD Legislation”). The remaining $7.0 million related to the lapse of the statute of limitations with respect to certain federal and foreign tax years. During the three months ended July 31, 2005, the Company recognized a one-time income tax benefit of $1.9 million related to an IRS technical correction of the DRD Legislation. During the first quarter of fiscal 2006, Autodesk recognized a one-time income tax benefit of $1.2 million as a result of the resolution and closure of the Company’s Franchise Tax Board audit for fiscal 2000 as well as the closure and lapse of the statute of limitations with respect to certain foreign tax years. Absent the impact of these tax benefits, Autodesk’s effective income tax rate was 20% in the three and nine months ended October 31, 2005. The effective tax rate for fiscal 2006 is less than the federal statutory rate of 35% due to the extraterritorial income exclusion (“ETI exclusion”), deduction for Domestic Production Activities, research credits, tax benefits from low taxed foreign earnings and the DRD Legislation.

During the three and nine months ended October 31, 2004, Autodesk recognized one-time income tax benefits of $15.5 million related to the DRD legislation and $8.9 million related to income tax audit closures in the third quarter of fiscal 2005. Absent the impact of these tax benefits, Autodesk’s effective income tax rate was 20% in the three and nine months ended October 31, 2004. In addition, during the third quarter of fiscal 2005, Autodesk reduced its projected tax rate from 24% to 20% as a result of the new DRD legislation along with the belief that current year foreign earnings of certain subsidiaries will be taxed at a rate lower than previously projected. As a result, Autodesk recorded a cumulative catch-up adjustment of $4.3 million to its tax provision in the third quarter of fiscal 2005 to account for the reduction of its effective tax rate. The effective tax rate for fiscal 2005 is less than the federal statutory rate of 35% due to the ETI exclusion, research credits, tax-exempt interest, tax benefits from low taxed foreign earnings and the DRD legislation.

At October 31, 2005, Autodesk had net deferred tax assets of $210.3 million. Realization of these assets is dependent on its ability to generate approximately $610 million of future taxable income in appropriate tax jurisdictions. The Company believes that sufficient income will be earned in the future to realize these assets.

At October 31, 2005, Autodesk had marketable securities totaling $157.1 million, of which $21.5 million related to investments in debt and equity securities that are restricted and held in a rabbi trust under non-qualified deferred compensation plans. The value of restricted assets held in the rabbi trust at January 31, 2005 amounted to $14.3 million. Of the total related deferred compensation liability of $21.5 million at October 31, 2005, $14.8 million was classified as current and $6.7 million was classified as non-current liabilities. The related deferred compensation liability at January 31, 2005 of $14.3 million was classified as current liability. The current and non-current portions of the liability are recorded in the Condensed Consolidated Balance Sheet under “Accrued compensation” and “Other liabilities”, respectively.

Inventories are stated at the lower of standard cost (determined on the first-in, first-out method) or market. Autodesk evaluates quantities on hand and estimates excess and obsolete inventory levels in determining the lower of standard cost or market.

Computer equipment, software, furniture and leasehold improvements and the related accumulated depreciation were as follows:

Purchased technologies, capitalized software and the related accumulated amortization were as follows:

Expected future amortization expense for purchased technologies and capitalized software for the remainder of fiscal 2006 and for each of the fiscal years thereafter is as follows:

The changes in the carrying amount of goodwill during the nine months ended October 31, 2005 are as follows:

During the first nine months of fiscal 2006, Autodesk’s goodwill balance increased primarily due to the acquisitions of c-plan AG, Colorfront Ltd. and Compass Systems GmbH. See Note 18, “Business Combinations,” for a description of these acquisitions.

During the fourth quarter of fiscal 2004, the Board of Directors approved a restructuring plan that resulted in the elimination of 402 positions and the closure of a number of offices worldwide with a total cost of $27.5 million (“Fiscal 2004 Plan”). This plan was designed to improve efficiencies across the organization, reduce operating expense levels to help achieve the Company’s targeted operating margins and redirect resources to product development, sales development and other critical areas. Of the $27.5 million, $23.4 million was attributable to one-time termination benefits including severance benefits, medical benefits and outplacement costs. In addition, approximately $4.0 million of the restructuring charges was attributable to lease termination costs, which include losses on operating leases as well as the impairment of related leasehold improvements and equipment. The actions approved under the Fiscal 2004 Plan were completed during the fourth quarter of fiscal 2005. Autodesk estimates that the remaining outstanding liabilities for employee termination costs will be fully paid or substantially settled by the end of fiscal 2006. The remaining outstanding lease termination costs relate to operating lease agreements expiring between the fourth quarter of fiscal 2006 and the fourth quarter of fiscal 2012.

During the second quarter of fiscal 2002, the Board of Directors approved a formal restructuring plan that included employee terminations and the closure of certain facilities worldwide (“Fiscal 2002 Plan”). This plan was designed to reduce the Company’s overall operating expense levels. The actions approved under the Fiscal 2002 Plan were completed during the first half of fiscal 2003. The remaining outstanding liabilities relate to on-going lease termination costs for outstanding operating lease agreements expiring between the fourth quarter of fiscal 2006 and the fourth quarter of fiscal 2015.

The following table sets forth the restructuring activities during the nine months ended October 31, 2005.

An analysis of the Fiscal 2004 Plan by reportable segment is included in Note 16, “Segments.”

In the normal course of business, Autodesk provides indemnifications of varying scopes, including limited product warranties and indemnification of customers against claims of intellectual property infringement made

by third parties arising from the use of its products or services. Autodesk accrues for known warranty and indemnification issues if a loss is probable and can be reasonably estimated. Historically, costs related to these warranties and indemnifications have not been significant, but because potential future costs are highly variable, Autodesk is unable to estimate the maximum potential impact of these indemnities or guarantees on its future results of operations.

In connection with the purchase, sale or license transactions of assets or businesses with third parties, Autodesk has entered into or assumed customary indemnity agreements related to the assets or businesses purchased, sold or licensed. Historically, costs related to these indemnities or guarantees have not been significant, but because potential future costs are highly variable, Autodesk is unable to estimate the maximum potential impact of these indemnities or guarantees on its future results of operations.

As permitted under Delaware law, Autodesk has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at Autodesk’s request in such capacity. The maximum potential amount of future payments Autodesk could be required to make under these indemnification agreements is unlimited; however, Autodesk has Directors’ and Officers’ Liability insurance coverage that is intended to reduce its financial exposure and may enable Autodesk to recover a portion of any future amounts paid. Autodesk believes the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.

The following is a summary of material pending matters for which there were material developments for the three month period ended October 31, 2005. For a summary of other material current or pending legal proceedings, please refer to Autodesk’s fiscal 2005 Form 10-K and Autodesk’s quarterly report on Form 10-Q dated July 31, 2005 on file with the SEC.

On August 26, 2005, Telstra Corporation Limited (“Telstra”) filed suit in the Federal Court of Australia, Victoria District Registry against Autodesk Australia Pty Ltd. (“AAPL”) seeking partial indemnification for claims filed against Telstra by SpatialInfo Pty Limited relating to Telstra’s use of certain software in the management of its computer based cable plant records system. At a hearing on October 26, 2005, SpatialInfo received permission from the court to add AAPL as a defendant to its lawsuit against Telstra. Autodesk is currently investigating the allegations and intends to vigorously defend the case. Autodesk cannot determine the expected impact, if any, on its financial position, results of operation or cash flows at this time.

In connection with the Company’s anti-piracy program, designed to enforce copyright protection of its software and conducted both internally and through the Business Software Alliance (“BSA”), from time to time it undertakes litigation against alleged copyright infringers or provide information to criminal justice authorities to conduct actions against alleged copyright infringers. Such lawsuits have lead to counter claims alleging improper use of litigation or violation of other local law and have recently increased in frequency, especially in Latin America. On March 1, 2002, Consultores en Computación y Contabilidad, S.C., a Mexican hardware/software reseller and its principals (collectively, “CCC”) filed a lawsuit in the Mexico Court in the First Civil Court of the Federal District, against, Autodesk, Adobe Systems, Microsoft and Symantec (all members of the BSA and collectively the “Defendants”). CCC had been the target of a criminal anti-piracy enforcement action carried out by the Mexican police authorities on August 11, 1998 on the basis of a complaint filed by the Defendants in 1997 based on evidence provided to the Defendants that CCC had engaged in software piracy of the Defendants’ products. CCC alleged in the lawsuit that it had suffered $100 million in damages to its reputation as a result of the enforcement action, known as “moral damages.” CCC did not claim economic damages. On November 11, 2002, the trial court judge ruled in favor of the Defendants, holding that no moral damage occurred, since CCC was unable to prove the illegal nature of the Defendants’ actions. After subsequent appeals, all of which were won by the Defendants, a court of appeals held that the Defendants were liable to CCC for “moral” damages, and the court remanded the case to the First Civil Court for a determination of the amount. On September 9, 2005,

CCC filed a damages claim with the First Civil Court, increasing its claim to an amount that has been estimated up to $1.2 billion. Autodesk believes the damages claim has meritorious defenses and is vigorously defending against it. The timing of any final resolution is unknown. Autodesk cannot determine the expected impact, if any, on its financial position, results of operation or cash flows at this time.

In addition, Autodesk is involved in legal proceedings from time to time arising from the normal course of business activities including claims of alleged infringement of intellectual property rights, commercial, employment, piracy prosecution and other matters. In the Company’s opinion, resolution of pending matters is not expected to have a material adverse impact on its consolidated results of operations, cash flows or its financial position. However, it is possible that an unfavorable resolution of one or more such proceedings could in the future materially affect the Company’s future results of operations, cash flows or financial position in a particular period.

During the nine months ended October 31, 2005, Autodesk repurchased and retired 9.2 million shares of its common stock at an average repurchase price of $36.82 per share. As a result, common stock and additional paid-in capital and retained earnings were reduced for the nine months ended October 31, 2005 by $103.6 million and $236.1 million, respectively.

The changes in the components of other comprehensive income, net of taxes, were as follows:

The following table sets forth the computation of the numerators and denominators used in the basic and diluted net income per share amounts:

For both the three months ended October 31, 2005 and 2004, options to purchase 0.1 million weighted average shares were excluded from the computation of diluted net income per share. For the nine months ended October 31, 2005 and 2004, options to purchase 0.1 million weighted average shares and 0.4 million weighted average shares, respectively, were excluded from the computation of diluted net income per share. These options were excluded in the computation of basic and diluted net income per share because they had exercise prices greater than the average market prices of common stock during the respective periods and therefore were not dilutive.

Autodesk’s operating results are aggregated into two reportable segments: the Design Solutions Segment and the Media and Entertainment Segment. The Location Services Division, which is not included in either reportable segment, is reflected as Other.

The Design Solutions Segment derives revenues from the sale of design software products and services for professionals or consumers who design, build, manage and own building projects or manufactured goods and from the sale of mapping and geographic information systems technology to public and private users. The Design Solutions Segment consists primarily of the following business divisions: Manufacturing Solutions Division, Business Solutions Division, Infrastructure Solutions Division and the Platform Technology Division and Other, which includes Autodesk Collaboration Services. Total sales of AutoCAD and AutoCAD LT (2D design products) accounted for 43% and 41% of consolidated net revenues during the three months ended October 31, 2005 and 2004, respectively. These products accounted for 44% of consolidated net revenues during both the nine months ended October 31, 2005 and 2004. Total sales of 3D design products (Autodesk Inventor products, Autodesk Revit Building products and Autodesk Civil 3D) accounted for 19% and 15% of consolidated net revenues during the three months ended October 31, 2005 and 2004, respectively. These products accounted for 18% and 14% of consolidated net revenues during the nine months ended October 31, 2005 and 2004, respectively.

The Media and Entertainment Segment derives revenues from the sale of its products to creative professionals for a variety of applications, including feature films, television programs, commercials, music and corporate videos, game production, web design and interactive web streaming.

Both reportable segments distribute their respective products primarily through authorized dealers and distributors, and, to a lesser extent, through direct sales to end-users.

Autodesk evaluates each segment’s performance on the basis of income from operations before income taxes. Autodesk currently does not separately accumulate and report asset information by segment, except for goodwill, which is disclosed in Note 10, “Goodwill.” Information concerning the operations of Autodesk’s reportable segments is as follows:

Net revenues attributable to the major divisions within the Design Solutions Segment are as follows:

The following table sets forth the Fiscal 2004 Plan activities that relate to each reportable segment during the nine months ended October 31, 2005.

Since the inception of the Fiscal 2004 Plan, the Design Solutions Segment and the Media and Entertainment Segment recorded restructuring charges totaling $11.5 million and $7.0 million, respectively.

Autodesk uses derivative instruments to manage its earnings and cash flow exposures due to fluctuations in foreign currency exchange rates. Under its risk management strategy, Autodesk uses foreign currency forward and option contracts to manage its exposures of underlying assets, liabilities and other obligations, which exist as part of the ongoing business operations. These foreign currency instruments have maturities of less than three months. Autodesk’s general practice is to hedge a majority of its short-term foreign exchange transaction exposures. Contracts are primarily denominated in euros, Swiss francs, Canadian dollars, British pounds and Japanese yen. Autodesk does not enter into any foreign exchange derivative instruments for trading or speculative purposes.

Autodesk’s forward contracts, which are not designated as hedging instruments under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), have average maturities of less than three months. The forward contracts are used to reduce the exchange rate risk associated primarily with receivables and payables. Forward contracts are marked-to-market at the end of each reporting period, with gains and losses recognized as other income or expense to offset the gains or losses resulting from the settlement of the underlying foreign currency denominated receivables and payables.

The notional amounts of foreign currency forward contracts were $24.1 million at October 31, 2005 and $36.2 million at January 31, 2005. While the contract or notional amount is often used to express the volume of foreign exchange contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of Autodesk to the counterparties.

In addition to the forward contracts, Autodesk utilizes foreign currency option collar contracts to reduce the exchange rate impact on the net revenue of certain anticipated transactions. These option contracts, which are designated and documented as cash flow hedges and qualify for hedge accounting treatment under SFAS 133, have maturities of less than three months. For cash flow hedges, derivative gains and losses included in comprehensive income are reclassified into earnings at the time the forecasted revenue is recognized or the option expires. The cost of these foreign currency option collars are recorded as other current assets and other accrued liabilities on the Company’s condensed consolidated balance sheets.

The notional amounts of foreign currency option contracts were $78.1 million at October 31, 2005 and $52.4 million at January 31, 2005, and the critical terms were generally the same as those of the underlying exposure. Gains, if any, from the effective portion of the option contracts, as determinable under SFAS 133, are recognized as net revenues, while the ineffective portion of the option contract is recorded in interest and other income, net. There were no net settlement gains or losses recorded as net revenues during the three months ended October 31, 2005 and $1.7 million in net settlement gains during the nine months ended October 31, 2005. There were no settlement gains or losses during the three months ended October 31, 2004. Net settlement gains recorded as net revenues were $0.2 million during the nine months ended October 31, 2004. Amounts associated with the cost of the options, which were recorded in interest and other income, net, totaled $0.2 million during both the three months ended October 31, 2005 and October 31, 2004. Cost of the options during both of the nine months ended October 31, 2005 and October 31, 2004 totaled $0.6 million.

The following acquisitions were accounted for under Statement of Financial Accounting Standards No. 141, “Business Combinations.” Accordingly, the results of operations for each business acquired are included in the accompanying condensed consolidated statements of income since their acquisition dates, and the related assets and liabilities were recorded based upon their relative fair values at their respective acquisition dates. Pro forma results of operations have not been presented because the effects of the acquisitions were not significant to Autodesk.

On June 17, 2005, Autodesk acquired c-plan, a privately-held Swiss company, for $24.1 million. Of this amount, $2.2 million is payable over two years and is contingent on the continued employment of key employees. This amount will be recorded as compensation expense in future periods as it is incurred. Autodesk intends to incorporate c-plan’s family of geospatial applications and data management solutions into its Infrastructure Lifecycle Management solution offerings.

Management’s preliminary allocation of the purchase consideration, based on a valuation of the acquired assets and liabilities performed in part by a third-party appraiser, is as follows:

The goodwill balance of $7.0 million was assigned to the Infrastructure Solutions Division of Autodesk’s Design Solutions Segment and is not deductible for tax purposes. This asset is attributed to the premium paid for the established data management products.

The deferred revenue balance of $0.3 million reflects the estimated fair value of the support obligation assumed from c-plan in connection with the acquisition. The Company estimates that the support obligation assumed from c-plan will be fulfilled by the end of fiscal 2006.

On June 15, 2005, Autodesk acquired certain assets of Colorfront Ltd., a developer of color correction technology for film studios and digital film laboratories, for $15.2 million. Of this amount, $0.7 million is

payable over the next year and is contingent upon the continued employment of a key employee. This amount will be allocated to future compensation expense in the period in which it is incurred. In addition, $0.5 million was recorded as royalty expense during the quarter related to the settlement of a pre-existing royalty agreement with Colorfront.

This acquisition is intended to provide Autodesk with comprehensive new expertise in film laboratory processes, digital post-production, color science, image processing and hardware platform optimization.

Management’s allocation of the purchase consideration, which is based on valuations of acquired assets performed by a third-party appraiser, is as follows:

The value assigned to IPR&D, which was expensed during the current quarter, was determined by identifying projects in areas where technological feasibility had not been achieved and alternative future uses did not exist.

The goodwill balance of $9.4 million, which is deductible for tax purposes, was assigned to the Media and Entertainment Segment. This acquired asset relates to the premium paid for Colorfront’s color correction technology, which provides Autodesk with further long-term growth opportunities in the digital film industry.

On March 31, 2005, Autodesk acquired certain assets of Compass Systems GmbH (“Compass”), the European-based developer of the Compass family of data management solutions, for $16.5 million. The acquisition is intended to allow Autodesk to more quickly expand its data management solution and deliver on its plans to provide a comprehensive data management solution for small- and medium-size manufacturers. Immediately prior to the acquisition, Compass was owned 50.1% by one of Autodesk’s largest resellers.

Management’s allocation of the purchase consideration, based on a valuation of acquired assets and liabilities performed in-part by a third-party appraiser, is as follows:

The goodwill balance of $5.8 million was assigned to the Manufacturing Solutions Division of Autodesk’s Design Solutions Segment and is deductible for tax purposes. This asset is attributed to the premium paid for the electronic data management and product data management channel expertise which provides an opportunity for Autodesk to enhance its growth in these markets.

During October 2005, Autodesk entered into a definitive agreement to acquire Alias Systems Holdings, Inc. (“Alias”), a privately held developer of 3D graphics technology, for approximately $182 million in cash, subject to an adjustment based on the net working capital of Alias at the time of closing. This acquisition is currently expected to close either late in the fourth quarter of fiscal 2006 or early in the first quarter of fiscal 2007, subject to certain regulatory review and approval and completion of customary closing conditions. Autodesk expects this acquisition to grow its expertise and offerings for the consumer products and automotive design markets as well as for the media and entertainment market.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion in our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains trend analyses and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements consist of, among other things, statements regarding the expected timing of consummation, and financial impact, of the Alias acquisition, the expected impact on Autodesk’s consolidated income and net income per share of the adoption of SFAS 123R in the first quarter of fiscal 2007, anticipated future operating margins, net revenues, product backlog, upgrade and maintenance revenues, costs and expenses, including cost of revenues and operating expenses, allowance for bad debts, future income, level of product returns, planned annual release cycles, continuation of our share repurchase program, and short-term and long-term cash requirements, as well as statements involving trend analyses and statements including such words as “we believe” and “plan” and similar expressions. These forward-looking statements are subject to business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of the factors set forth below, in “Risk Factors Which May Impact Future Operating Results” and in our other reports filed with the Securities and Exchange Commission (“SEC”).

Our goal is to be the world’s leading design software and services company for the building, manufacturing, infrastructure, media and entertainment, and wireless location based services fields. Our focus is to help customers create, manage and share their data and digital assets more effectively and improve efficiencies across the entire lifecycle management process.

We believe that our ability to make technology available to mainstream markets is one of our competitive advantages. By innovating in existing technology categories, we bring powerful design products to volume markets. Our architecture allows for extensibility and integration. Our products are designed to be easy to learn and use, and to provide customers low cost of deployment, low total cost of ownership and a rapid return on investment.

We have created a large global community of resellers, third-party developers and customers, which provides us with a broad reach into volume markets. Our reseller network is extensive, which provides our customers with global resources for the purchase and support of our products as well as resources for effective and cost efficient training services. We have a significant number of registered third-party developers, creating products that run on top of our products, further extending our reach into volume markets. Our installed base of millions of users has made Autodesk products a worldwide design software standard. Users trained on Autodesk products are broadly available both from universities and the existing work force, reducing the cost of training for our customers.

Our growth strategy derives from these core strengths. We continue to increase the business value of our desktop design tools for our customers in a number of ways. We improve the performance and functionality of existing products with each new release, and we have increased the frequency of our releases. Beyond our horizontal design products, we develop products addressing specific vertical market needs. In addition, we believe that migration from our 2D products to our higher priced 3D products presents a significant growth opportunity. While the rate of migration to 3D varies from industry to industry, adoption of 3D design software should increase the productivity of our customers and result in richer design data. However, this migration also poses various risks to us. In particular, if we do not successfully convert our 2D customer base to our 3D products as expected, and sales of our 2D products decrease without a corresponding increase in customer seats of our 3D products, we would not realize the growth we expect and our business would be adversely affected.

Longer term, once the mainstream market has migrated to 3D design, we believe the richer design data created by our 3D products requires better tools for design information management, also known as lifecycle management. We believe that for each author of design information, there are multiple users of that information

downstream. As a result, we are developing and introducing products that will allow downstream users, both within and external to our customer enterprises, to manage and share their designs. Our large installed base provides a unique opportunity to sell additional products to design and engineering departments and to expand our customer base from these design and engineering departments to adjacent departments and into the supply chain.

Expanding our geographic coverage is a key element of our growth strategy. We believe that rapidly growing economies, including those of China, India and Eastern Europe, present significant growth opportunities for the Company. In support of our growth efforts in China, we opened our China Application Development Center (the “Center”) during fiscal 2004. With a level of understanding of local markets that could not be obtained from remote operations, the Center develops both products for the worldwide market as well as products to specifically address the Chinese market. In addition, we believe that our products will have a competitive advantage as a result of being engineered locally. We believe our ability to conduct research and development at various locations throughout the world allows us to optimize product development and lower costs. However, international development, whether conducted by us or independent developers on our behalf, involves significant costs and challenges, including whether we can adequately protect our intellectual property and derive significant revenue in areas, such as China, where software piracy is a substantial problem.

Another significant part of our growth strategy is to improve upon our installed base business model. A key element of this strategy is our ability to release major products on an annual basis. Strong annual release cycles have a number of benefits. In particular, they permit us to deliver key performance and functionality improvements to customers on a regular and timely basis. Annual releases also drive annual product retirement programs, thereby reducing the volatility of revenues we have experienced in the past, as both the release of the new version and retirement of the oldest supported version are currently planned to happen on an annual basis. We plan to manage the timing of annual product retirements to synchronize more closely with annual product releases. Volatility may also be reduced through the Autodesk Subscription Program as revenue is recognized ratably over the subscription contract period. Over time, we expect adoption of our subscription program to, by design, reduce the number of customers migrating to newer releases through upgrades or retirements.

We are continually focused on improving productivity and efficiency in all areas of the Company. Doing so will allow us to increase our investment in growth initiatives and improve our profitability. During fiscal 2004, we conducted a rigorous study of our cost structure. Through the services of a major consulting firm, we benchmarked Autodesk metrics against averages of other companies including other leading software companies. As a result of the study, we undertook a restructuring plan that concluded at the end of fiscal 2005, began implementing certain productivity and efficiency initiatives throughout the Company and committed to continuous improvements in our productivity. Over the last fiscal year, our operating margin increased from 18% for the third quarter of fiscal 2005 to 25% for the third quarter of fiscal 2006, while at the same time we continued to invest in growth initiatives. Over the longer term, we intend to continue to balance investments in revenue growth opportunities with our goal of increasing our operating margins.

We generate significant cash flows. Our uses of cash include share repurchases to offset the dilutive impact of our employee stock plans, as well as investments in acquisitions and investments in growth initiatives. We evaluate merger and acquisition and divestiture opportunities to the extent they support our strategy. Our typical acquisitions are intended to provide adjacency to our current products and services, specific technology or expertise and rapid product integration. Additionally, we continue to invest in growth initiatives including product development and sales, market and channel development.

expected to close late in the fourth quarter of fiscal 2006 or early in the first quarter of fiscal 2007, subject to certain regulatory review and approval and completion of customary closing conditions. The discussions in this Quarterly Report on Form 10-Q relates to Autodesk as a standalone entity and do not reflect the impact of this acquisition.

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, net revenues, costs and expenses and related disclosures. We regularly re-evaluate our estimates and assumptions. Actual results may differ from these estimates under different assumptions or conditions.

We believe that of our significant accounting policies, the following policies involve a higher degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

Revenue Recognition. Our accounting policies and practices are in compliance with Statement of Position 97-2, “Software Revenue Recognition,” as amended, and SEC Staff Accounting Bulletin No. 104, “Revenue Recognition.”

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collection is probable. However, determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue we report.

For multiple element arrangements that include software products, we allocate the sales price among each of the deliverables using the residual method, under which revenue is allocated to undelivered elements based on their vendor-specific objective evidence (“VSOE”) of fair value. VSOE is the price charged when that element is sold separately or the price as set by management with the relevant authority. If we do not have VSOE of the undelivered element, we defer revenue recognition on the entire sales arrangement until all elements are delivered. We are required to exercise judgment in determining whether VSOE exists for each undelivered element based on whether our pricing for these elements is sufficiently consistent.

Our assessment of likelihood of collection is also a critical element in determining the timing of revenue recognition.

Our product sales to distributors and resellers are generally recognized at the time title to our product passes to the distributor or reseller, provided all other criteria for revenue recognition are met. This policy is predicated on our ability to estimate sales returns. We are also required to evaluate whether our distributors and resellers have the ability to honor their commitment to make fixed or determinable payments, regardless of whether they collect cash from their customers. If we were to change any of these assumptions or judgments, it could cause a material increase or decrease in the amount of revenue that we report in a particular period.

In addition to product sales, Autodesk recognizes maintenance revenues from our subscription program ratably over the subscription periods. Customer consulting and training revenues are recognized as the services are performed.

Allowance for Doubtful Accounts. We maintain allowances for bad debts for estimated losses resulting from the inability of our customers to make required payments. Our allowance for doubtful accounts was $7.3 million at October 31, 2005 and $7.2 million at January 31, 2005.

Estimated allowances for doubtful accounts are determined based upon historical loss patterns and an evaluation of the potential risk of loss associated with specific problem accounts. The use of different estimates or assumptions could produce different allowance balances. While we believe our existing allowance for doubtful accounts is adequate and appropriate, additional reserves may be required should the financial condition of our customers deteriorate or as unusual circumstances arise.

Product Returns Reserves. With the exception of contracts with certain distributors, our sales contracts do not contain specific product-return privileges. However, we permit our distributors and resellers to return product in certain instances, generally when new product releases supercede older versions. Our product returns reserves were $12.1 million at October 31, 2005 and $15.3 million at January 31, 2005. Product returns as a percentage of applicable revenues were 3.9% and 3.6% for the three months ended October 31, 2005 and 2004, respectively, and 4.2% and 4.6% for the nine months ended October 31, 2005 and 2004, respectively.

The product returns reserve is based on historical experience of actual product returns, estimated channel inventory levels, the timing of new product introductions, channel sell-in for applicable markets and other factors. During the three months ended October 31, 2005 and October 31, 2004, we recorded additions to our product returns reserve of $6.7 million and $5.3 million, respectively, which reduced our revenue. During the nine months ended October 31, 2005 and October 31, 2004, we recorded additions to our product returns reserve of $31.7 million and $25.8 million, respectively, which reduced our revenue.

While we believe our accounting practice for establishing and monitoring product returns reserves is adequate and appropriate, any adverse activity or unusual circumstances could result in an increase in reserve levels in the period in which such determinations are made.

Realizability of Long-Lived Assets. We assess the realizability of our long-lived assets and related intangible assets, other than goodwill, annually during the fourth fiscal quarter, or sooner should events or changes in circumstances indicate the carrying values of such assets may not be recoverable. We consider the following factors important in determining when to perform an impairment review: significant under-performance of a business or product line relative to budget; shifts in business strategies which affect the continued uses of the assets; significant negative industry or economic trends; and the results of past impairment reviews.

In assessing the recoverability of these long-lived assets, we first determine their fair values, which are based on assumptions regarding the estimated future cash flows that could reasonably be generated by these assets. When assessing long-lived assets, we use undiscounted cash flow models which include assumptions regarding projected cash flows. Variances in these assumptions could have a significant impact on our conclusion as to whether an asset is impaired or the amount of the impairment charge. Impairment charges, if any, result in situations where the fair values of these assets are less than their carrying values.

In addition to our recoverability assessments, we routinely review the remaining estimated useful lives of our long-lived assets. Any reduction in the useful life assumption will result in increased depreciation and amortization expense in the quarter when such determinations are made, as well as in subsequent quarters.

We will continue to evaluate the values of our long-lived assets in accordance with applicable accounting rules. As changes in business conditions and our assumptions occur, we may be required to record impairment charges.

Goodwill. As required under Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” we no longer amortize goodwill, but test goodwill for impairment annually in the fourth quarter or sooner should events or changes in circumstances indicate potential impairment. As changes in business conditions and our assumptions occur, we may be required to record impairment charges.

Deferred Tax Assets. We currently have $210.3 million of net deferred tax assets, mostly arising from net operating losses, including stock option deductions, as well as tax credits, reserves and timing differences for

purchased technologies and capitalized software offset by the establishment of U.S. deferred tax liabilities on unremitted earnings from certain foreign subsidiaries. We perform a quarterly assessment of the recoverability of these net deferred tax assets, which is principally dependent upon our achievement of projected future taxable income of approximately $610 million in specific geographies. Our judgments regarding future profitability may change due to future market conditions and other factors. These changes, if any, may require possible material adjustments to these net deferred tax assets, resulting in a reduction in net income in the period when such determinations are made.

Autodesk is a U.S. based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. The Company’s effective tax rate is based on expected geographic income, statutory rates and enacted tax rules, including transfer pricing. Significant judgment is required in determining the Company’s effective tax rate and in evaluating its tax positions on a worldwide basis. The Company believes its tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which it conducts its business. It is possible that these positions may be challenged which may have a significant impact on the Company’s effective tax rate.

Restructuring Expenses. During the fourth quarter of fiscal 2004, the Board of Directors approved a restructuring plan that resulted in the elimination of employee positions and the closure of a number of offices worldwide (“Fiscal 2004 Plan”). This plan was designed to improve efficiencies across the organization, reduce operating expense levels to help achieve our targeted operating margins and redirect resources to product development, sales development and other critical areas. The actions approved under this plan were completed by the end of fiscal 2005.

Office closure costs consisted primarily of facility lease termination costs that were based upon projected rental payments through the remaining terms of the underlying operating leases, offset by projected sublease income. The projected sublease income amounts were calculated by using information provided by third-party real estate brokers as well as management judgments and were based on assumptions for each of the real estate markets where the leased facilities were located. If real estate markets worsen and we are not able to sublease the properties as expected, we will record additional expenses in the period when such rental payments are made. This situation occurred during each of fiscal 2005, 2004 and 2003; we therefore recorded additional charges as a result of the inability to sublease abandoned facilities. If the real estate markets subsequently improve, and we are able to sublease the properties earlier or at more favorable rates than projected, we will reverse a portion of the underlying restructuring accruals, which will result in increased net income in the period when such sublease becomes effective.

Stock Option Accounting. We do not record compensation expense when stock option grants are awarded to employees at exercise prices equal to the fair market value of Autodesk common stock on the date of grant. We disclose in Note 4, “Employee Stock Compensation,” in the Notes to Condensed Consolidated Financial Statements the expense consistent with the method of Statement of Financial Accounting Standards No. 123, “Accounting for Stock Issued to Employees” (“SFAS 123”). The alternative fair value accounting provided for under SFAS 123 requires use of option valuation models which require the input of highly subjective assumptions, including the expected life of the option and expected future volatility. Changes in the subjective input assumptions can materially affect the fair value estimate. Had we recorded compensation expense from stock option grants, our net income would have been substantially less. We will adopt Statement of Financial Accounting Standards No. 123 – revised 2004, “Share-Based Payment” (“SFAS 123R”), which replaces SFAS 123 and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) in the first quarter of fiscal 2007. Autodesk believes the adoption of SFAS 123R will result in amounts that are similar to the current pro forma disclosures under SFAS 123 and that the adoption of SFAS 123R will have a material adverse effect on Autodesk’s consolidated statements of income and net income per share. The estimated impact is contingent upon many factors including, but not limited to, the market value of Autodesk’s common stock on the date future options are granted.

Legal Contingencies. As described in Part II, Item 1, “Legal Proceedings” and Note 12, “Commitments and Contingencies”, in the Notes to Condensed Consolidated Financial Statements, we are periodically involved in various legal claims and proceedings. We routinely review the status of each significant matter and assess our potential financial exposure. If the potential loss from any matter is considered probable and the amount can be reasonably estimated, we record a liability for the estimated loss. Because of inherent uncertainties related to these legal matters, we base our loss accruals on the best information available at the time. As additional information becomes available, we reassess our potential liability and may revise our estimates. Such revisions could have a material impact on future quarterly or annual results of operations.

Our higher net revenues for the three months ended October 31, 2005 compared to the same period in the prior fiscal year were primarily due to strong new seat, subscription and upgrade revenues. Compared to the three months ended October 31, 2004, new seat revenues increased 22%, while subscription and upgrade revenues increased by 62% and 11%, respectively. Revenue growth was driven by volume growth in most major products as well as growing sales of the higher priced vertical and 3D products. Product sales volume has increased due to the strength of our current product releases, including AutoCAD 2006, Autodesk Inventor products, Autodesk Civil 3D, Autodesk Architectural Desktop and Autodesk Revit products.

Our net revenues were higher for the nine months ended October 31, 2005 compared to the same period in the prior fiscal year primarily due to strong new seat, subscription and upgrade revenues, coupled with the positive effects of changes in foreign currencies, principally driven by the strength of the euro. Compared to the nine months ended October 31, 2004, new seat revenues increased 23%, subscription revenues increased 58% and upgrade revenues increased 17%. Again, revenue growth was driven by volume growth in most major products as well as growing sales of the higher priced vertical and 3D products.

Product backlog is comprised of deferred revenue and current software license product orders which have not yet shipped. The category of current software license product orders which we have not yet shipped consists of orders from customers with approved credit status for currently available license software products and may include orders with current ship dates and orders with ship dates beyond the current fiscal period. Aggregate backlog at October 31, 2005 was approximately $264 million. Of this amount, approximately $21 million related

to current software license product orders which had not yet shipped at the end of the current fiscal quarter. The value of software license product orders that had not yet shipped was approximately $26 million at July 31, 2005, $27 million at April 30, 2005, $32 million at January 31, 2005 and $16 million at October 31, 2004.

We generate a significant amount of our revenue in the United States, Japan, Germany, United Kingdom, Italy, China, France, Korea, Australia and Canada. The growing strength of the U.S. dollar, relative to foreign currencies, did not have a significant impact on operating results during the three months ended October 31, 2005 compared to the same period in the prior fiscal year. However, the weaker value of the U.S. dollar, relative to foreign currencies, had a positive impact of $7 million on operating results for the nine months ended October 31, 2005 as compared to the comparable prior year period. Had exchange rates for the nine months ended October 31, 2004 remained in effect during the nine months ended October 31, 2005, translated international revenue billed in local currencies would have been $12 million lower and operating expenses would have been $5 million lower. Changes in the value of the U.S. dollar may have a significant effect on net revenues and operating expenses in future periods. To reduce this effect for the current quarter, we utilize foreign currency option collar contracts to reduce the current quarter exchange rate impact on the net revenue of certain anticipated transactions.

Our operating expenses increased in absolute dollars during the three and nine months ended October 31, 2005 as compared to the same periods in the prior fiscal year, excluding the effect of restructuring charges during the prior fiscal year, but declined as a percentage of revenue. The increase was due primarily to higher marketing costs associated with trade shows, product launches and branding campaigns, higher salary expense due to higher headcount and annual salary increases as well as higher professional fees related to third-party development activities. Our operating margins are very sensitive to changes in revenues, given the relatively fixed nature of most of our operating expenses, which consist primarily of employee-related expenditures, facilities costs and depreciation and amortization expense. During the remainder of fiscal 2006, we expect operating expenses, excluding restructuring, to increase compared to the same period in the prior fiscal year, as we balance investment in our growth opportunities with our focus on increasing profitability.

Throughout the nine months ended October 31, 2005, we maintained a strong balance sheet, generating $301.2 million of cash from our operating activities as compared to $229.4 million during the same period in the prior fiscal year. We finished the third quarter of fiscal 2006 with $547.9 million in cash, cash equivalents and marketable securities, a higher deferred revenue balance, a higher accounts receivable balance, and a lower days sales outstanding position as compared to the same period in the prior fiscal year. Seventy-six percent, or $185.0 million, of the deferred revenue balance at October 31, 2005 consisted of customer subscription contracts which will be recognized as maintenance revenue ratably over the life of the contracts, which is predominantly one year.

The increase in net revenues for both the three and nine month periods ended October 31, 2005 was due primarily to strong new seat, subscription and upgrade revenues, along with a favorable product mix shift towards higher priced vertical and 3D products.

Increases in license and other revenues during both the three and nine month periods ended October 31, 2005, as compared to the equivalent prior year periods, were primarily due to increased new seat revenues from most major products as well as increased upgrade revenues. New seat and upgrade revenue increases were driven by volume growth in most major products, growing sales of our higher priced vertical and 3D products, and promotions tied to the anticipated retirement of our AutoCAD 2002-based product series in the first quarter of fiscal 2007. At October 31, 2005, the remaining installed base of the AutoCAD 2002-based products was significantly larger than the installed base of the AutoCAD 2000i-based products at that equivalent time last year. We expect continued growth in new seat and upgrade revenues for the fourth quarter of fiscal 2006. However, as

a result of our decision earlier this year to synchronize our major product retirements and new release launches to occur in the first quarter of each fiscal year, we expect some upgrade revenue related to the retirement of our AutoCAD 2002-based products may move into the first quarter of fiscal 2007, as certain customers delay upgrading to the most current version. We anticipate that AutoCAD 2004-based products will be retired in the first quarter of fiscal 2008. The installed base of AutoCAD 2004-based products is smaller than the installed base of AutoCAD 2002-based products. As a result, in future years, we expect subscription revenue to exceed upgrade revenue, and we expect upgrade revenue to decline.

Revenue from the sales of our services, training and support are immaterial for all periods presented.

Maintenance revenues consist of revenues derived from our subscription program. As a percentage of total net revenues, maintenance revenues were 20% and 15% for the third quarter of fiscal 2006 and fiscal 2005, and 18% and 14% for the first nine months of fiscal 2006 and fiscal 2005. Our subscription program, available to most customers worldwide, continues to attract new and renewal customers by providing them with a cost effective and predictable budgetary option to obtain the productivity benefits of our newest releases and planned annual product release cycle and enhancements. We expect maintenance revenues to continue to increase both in absolute dollars and as a percentage of total net revenues.

Net revenues in the Americas increased during both the three and nine months ended October 31, 2005 from the same period of the prior fiscal year largely due to strong subscription and new seat revenues, offset in part by slightly lower upgrade revenues for the nine month period ended October 31, 2005.

Net revenues in the Europe, Middle East and Africa (“EMEA”) region increased during both the three and nine month periods ended October 31, 2005, as compared to the same periods of the prior fiscal year, primarily due to strong subscription, new seat and upgrade revenues.

Net revenues in Asia/Pacific increased in the third quarter of fiscal 2006 from the same period of the prior fiscal year due primarily to strong new seat revenues and subscription revenues. Asia/Pacific net revenues during the first nine months of fiscal 2006 increased from the same period in the prior fiscal year primarily due to strong new seat revenues, as well as subscription and upgrade revenues.

The increase in the Design Solutions Segment net revenues during the third quarter of fiscal 2006, as compared to the third quarter of fiscal 2005, was primarily due to strong new seat, subscription and upgrade revenues. Maintenance revenue from our subscription program accounted for 21% of Design Solutions Segment revenue for the third quarter of fiscal 2006 and 17% of Design Solutions Segment revenues for the third quarter of fiscal 2005. The increase in the Design Solutions Segment net revenues during the first nine months of fiscal 2006, as compared to the comparable prior year period, was primarily due to strong new seat, subscription and upgrade revenues. Although we have been placing increased focus on vertically-oriented and 3D product lines, sales of AutoCAD, AutoCAD upgrades and AutoCAD LT continue to comprise a significant portion of our net revenues. Such sales, which are reflected in the net revenues for the Platform Technology Division and Other, accounted for 43% of our consolidated net revenues during the three month periods ended October 31, 2005 and 41% during the three months ended October 31, 2004, growing 31% in absolute dollars between the periods. Sales of AutoCAD, AutoCAD upgrades and AutoCAD LT accounted for 44% of our consolidated net revenues during the nine months ended October 31, 2005 and October 31, 2004, and grew 27% in absolute dollars between the periods. Net revenues for our 3D products (Autodesk Inventor products, Autodesk Revit Building products and Autodesk Civil 3D) increased 59% during the three months ended October 31, 2005 and 64% during the nine months ended October 31, 2005, as compared to the same periods in the prior fiscal year. Total sales of 3D design products accounted for 19% and 15% of consolidated net revenues during the three months ended October 31, 2005 and 2004, respectively. These products accounted for 18% and 14% of consolidated net revenues during the nine months ended October 31, 2005 and 2004, respectively. A critical component of our growth strategy is to convert our 2D customer base, including customers of AutoCAD and related vertical industry products, to our higher priced 3D products. However, should sales of 2D products decrease without a corresponding increase in sales of 3D products, our results of operations will be adversely affected.

Net revenues for the Media and Entertainment Segment (“M&E”) for the three months ended October 31, 2005 were comparable to the same period in the prior fiscal year. While Advanced Systems sales increased in EMEA and Asia/Pacific and sales of our animation products increased worldwide, Advanced Systems sales in the United States declined in the current quarter, as compared to the same period in the prior fiscal year, due to forced attrition in our sales force. During the nine months ended October 31, 2005, overall M&E net revenues grew 10% as compared to the same period in the prior fiscal year, primarily due to growth in new seat and subscription revenues of our 3ds max product as well as growth in the sales of our Linux-based advanced systems products (flint and smoke), offset in part by the current quarter decline in advanced systems sales in the United States.

International sales accounted for 64% of our net revenues in the third quarter of fiscal 2006 as compared to 61% in the same period of the prior fiscal year. International sales during the first nine months of fiscal 2006 accounted for 67% of our net revenues, as compared to 64% in the same period of the prior fiscal year. We believe that international sales will continue to comprise a significant portion of net revenues. Economic weakness in any of the countries that contribute a significant portion of our net revenues would have a material adverse effect on our business. In addition, although the effect of changes in foreign currencies during the current quarter did not significantly impact revenue in the current quarter as compared to the same quarter in the prior fiscal year, during the nine months ended October 31, 2005, translated international revenues would have been $12 million lower had exchange rates for the nine months ended October 31, 2004 remained in effect. Recent strengthening of the United States dollar, if it were to continue, could significantly impact our future financial results for a given period.

Cost of license and other revenues includes direct material and overhead charges, royalties, amortization of purchased technology and capitalized software, hosting costs and the labor costs of fulfilling service contracts. Direct material and overhead charges include the cost of hardware sold (primarily workstations manufactured by SGI and IBM for the Media and Entertainment Segment), costs associated with transferring our software to electronic media, printing of user manuals and packaging materials and shipping and handling costs.

Cost of license and other revenues increased during the three and nine months ended October 31, 2005, in comparison to the same periods in the prior fiscal year, due primarily to increased volume and changes in product mix and higher royalty expenses for licensed technology embedded in our products.

Cost of maintenance revenues includes direct costs of our subscription program, amortization of capitalized software and overhead charges. Cost of maintenance revenues decreased during both the three and nine months ended October 31, 2005, as compared to the same periods in the prior fiscal year, due primarily to the cessation of amortization for an information technology system supporting our subscription program. The amortization reduction was partially offset by incremental direct program costs incurred as part of the growth of the subscription program.

Overall cost of revenues continues to decline as a percentage of net revenues due to the amount of fixed costs that are not necessarily impacted by the growth in our sales volumes; however, despite this trend, we expect cost of revenues as a percentage of net revenues to increase in future periods as a result of recording stock-based compensation expense beginning in fiscal 2007, as required by SFAS 123R. Absent stock-based compensation expense, we expect cost of revenues as a percentage of net revenues to decline. Cost of revenues, at least over the near term, are affected by the volume and mix of product sales, changing consulting and hosted service costs, software amortization costs, royalty rates for licensed technology embedded in our products and new customer support offerings.

Marketing and sales expenses include salaries, dealer and sales commissions, bonus, travel and facility costs for our marketing, sales, order processing, dealer training and support personnel and overhead charges. These expenses also include costs of programs aimed at increasing revenues, such as advertising, trade shows and expositions, and various sales and promotional programs designed for specific sales channels and end users.

The increase of marketing and sales expenses during the third quarter of fiscal 2006 compared to the same period in the prior year was due primarily to $10.8 million of increased marketing and promotion costs related to product launches, trade shows and branding, approximately $8.0 million of higher employee-related costs as well as costs related to a customer information and customer support software project. Marketing and sales expenses increased during the first nine months of fiscal 2006 compared to the same period in the prior fiscal year due primarily to $42.1 million of increased marketing and promotion costs related to product launches, trade shows and branding, $16.9 million of higher employee-related costs as well as costs related to a customer information and customer support software project.

We expect to continue to invest in marketing and sales of our products to develop market opportunities, to promote our competitive position and to strengthen our channel support. In addition, as a result of recording stock-based compensation expense beginning in fiscal 2007, as required by SFAS 123R, we expect marketing and sales expenses to increase both in absolute dollars and as a percentage of net revenues.

Research and development expenses consist primarily of salaries, benefits, and bonuses for software engineers, contract development fees, purchased in-process technology, depreciation of computer equipment used in software development and overhead charges.

The increase in research and development expenses during the third quarter of fiscal 2006 compared to the same period in the prior year was due primarily to efforts to invest additional resources for a number of products. Employee-related costs increased approximately $5.6 million and professional fees increased approximately $3.4 million in the third quarter of fiscal 2006 as compared to the same period in the prior fiscal year. During the current quarter, we purchased $6.0 million of in-process technology from a single independent software developer for use in our Design Solutions Segment. The in-process technology is intended for future releases of various products that have not yet reached technological feasibility and have no alternative future use.

Research and development expenses during the first nine months of fiscal 2006 compared to the same period in the prior year increased primarily due to efforts to invest additional resources in certain research and development related growth initiatives. Employee-related costs increased approximately $12.2 million and professional fees increased approximately $15.0 million in the first nine months of fiscal 2006 as compared to the same period in the prior fiscal year. During the nine months ended October 31, 2005, we purchased $18.6 million of in-process technology for our Design Solutions Segment from one independent software developer and recognized $1.2 million of in-process research and development costs in connection with our acquisition of Colorfront Ltd.

We expect that research and development spending will continue to increase in absolute dollars in future periods as we continue to invest in product development and continue to acquire new technology. In addition, we expect that research and development spending will increase as a percentage of net revenues in the future as a result of recording stock-based compensation expense beginning in fiscal 2007, as required by SFAS 123R.

General and administrative expenses include our finance, human resources, legal costs and overhead charges.

General and administrative expenses remained relatively flat as a percentage of revenues for both the three and nine months ended October 31, 2005, as compared to the same periods in the prior year, but increased in absolute dollars primarily as a result of higher employee-related and information technology project costs.

Absent the impact of recording stock-based compensation expense beginning in fiscal 2007, as required by SFAS 123R, we expect that general and administrative expenses will modestly decline as a percentage of net revenues in the future yet increase in absolute dollars due to salary increases and continued information technology projects. With the adoption of SFAS 123R and the recording of stock-based compensation expense in fiscal 2007, we expect that general and administrative expenses will increase in absolute dollars and as a percentage of net revenues.

There were no restructuring charges during the three and nine months ended October 31, 2005.

During the fourth quarter of fiscal 2004, the Board of Directors approved a restructuring plan involving the elimination of employee positions and the closure of a number of offices worldwide having a total cost of $27.5 million (“Fiscal 2004 Plan”). This plan was designed to improve efficiencies across the organization, reduce operating expense levels to help achieve our targeted operating margins and redirect resources to product development, sales development and other critical areas. The actions approved under the Fiscal 2004 Plan were completed during the fourth quarter of fiscal 2005. As a result of this plan, we expected to realize pretax savings of approximately $9.3 million per quarter, resulting in an annual savings of approximately $37.0 million to be reflected across each on-going cost and expense line item in the Condensed Consolidated Statements of Income. However, these savings are being used to fund various growth initiatives in line with our corporate strategy, while containing cost increases across each expense category described above.

During the three months ended October 31, 2004, we recorded gross restructuring charges of $2.9 million, of which approximately $2.4 million related to headcount reductions and $0.5 million related to the closure of facilities. During the nine months ended October 31, 2004, we recorded gross restructuring charges of $14.9 million under the Fiscal 2004 Plan. Approximately $11.5 million of this amount related to headcount reductions and approximately $3.5 million related to facility closures. Partially offsetting this charge was a reversal of $0.1 million related to a change in estimates underlying office closure costs originally established under the fiscal 2002 restructuring plan. The underlying liabilities were ultimately settled for less than originally estimated.

For additional information regarding restructuring reserves, see Note 11, “Restructuring Reserves” and Note 16, “Segments,” in the Notes to Condensed Consolidated Financial Statements.

The following table sets forth the components of interest and other income, net:

The investment income portion of the “Interest and investment income, net,” line item fluctuates based on average cash and marketable securities balances, average maturities and interest rates.

Interest and investment income during the nine months ended October 31, 2004 included $5.1 million of net interest income offset by an accrual of $2.8 million of foreign-based stamp taxes. We determined that certain

money market fund investments were subject to Swiss Transfer Stamp Taxes from August 2000 through the third quarter of fiscal 2005. The impact of this adjustment was not material to previously reported periods.

Other income included $2.4 million recognized during the second quarter of fiscal 2005 resulting from a court settlement related to legal proceedings with Spatial Corp.

During the three months ended October 31, 2005, we recognized a one-time income tax benefit of $17.6 million. Of this amount, $10.6 million relates to foreign withholding taxes previously accrued which are no longer due, as part of the repatriation of foreign earnings under the American Jobs Creation Act of 2004 (“DRD Legislation”). The remaining $7.0 million related to the lapse of the statute of limitations with respect to certain federal and foreign tax years. During the three months ended July 31, 2005, we recognized a one-time income tax benefit of $1.9 million related to an IRS technical correction of the DRD Legislation. During the first quarter of fiscal 2006, we recognized a one-time income tax benefit of $1.2 million as a result of the resolution and closure of our Franchise Tax Board audit for fiscal 2000 as well as the closure and lapse of the statute of limitations with respect to certain foreign tax years. Absent the impact of these tax benefits, our effective income tax rate was 20% in the three and nine months ended October 31, 2005. The effective tax rate for fiscal 2006 is less than the federal statutory rate of 35% due to the extraterritorial income exclusion (“ETI exclusion”), deduction for Domestic Production Activities, research credits, tax benefits from low taxed foreign earnings and the DRD Legislation.

During the three and nine months ended October 31, 2004, we recognized one-time income tax benefits of $15.5 million related to the DRD legislation and $8.9 million related to income tax audit closures in the third quarter of fiscal 2005. Absent the impact of these tax benefits, our effective income tax rate was 20% in the three and nine months ended October 31, 2004. In addition, during the third quarter of fiscal 2005, we reduced our projected tax rate from 24% to 20% as a result of the new DRD legislation along with the belief that current year foreign earnings of certain subsidiaries will be taxed at a rate lower than previously projected. As a result, we recorded a cumulative catch-up adjustment of $4.3 million to our tax provision in the third quarter of fiscal 2005 to account for the reduction of our effective tax rate. The effective tax rate for fiscal 2005 is less than the federal statutory rate of 35% due to the ETI exclusion, research credits, tax-exempt interest, tax benefits from low taxed foreign earnings and the DRD legislation.

Our future effective tax rate may be materially affected by the amount of benefits associated with our foreign earnings, which are taxed at rates different from the federal statutory rate, ETI exclusion, deduction for Domestic Production Activities, research credits, tax-exempt interest, DRD Legislation election and changes in the tax law. In addition, our adoption of SFAS 123R in the first quarter of fiscal 2007 may also affect our future effective tax rate.

At October 31, 2005, we had net deferred tax assets of $210.3 million. Realization of these assets is dependent on our ability to generate approximately $610 million of future taxable income in appropriate tax jurisdictions. We believe that sufficient income will be earned in the future to realize these assets.

We acquire new technology or supplement our existing technology by purchasing businesses focused in specific markets or industries. During the nine months ended October 31, 2005, we acquired the following businesses:

See Note 18, “Business Combinations,” in the Notes to the Condensed Consolidated Financial Statements for additional information on certain of these acquired businesses.

Our primary source of cash is receipts from revenue. The primary uses of cash are employee-related expenses (compensation and related benefits), general operating expenses (marketing, facilities and overhead) and cost of revenues. In addition, we receive cash proceeds from the exercise of employee stock options and the purchase of employee stock purchase plan shares and use cash to repurchase outstanding Autodesk shares under our share repurchase program.

At October 31, 2005, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $547.9 million and net accounts receivable of $201.8 million. During the first nine months of fiscal 2006, we generated $301.2 million of cash from operating activities compared to $229.4 million generated during the same period in fiscal 2005. This increase was primarily driven by higher operating earnings, higher accounts payable and deferred revenue balances, partially offset by higher working capital uses of cash related to larger bonus and other incentive compensation amounts paid during the first quarter of fiscal 2006.

During the nine months ended October 31, 2005, we used $209.9 million in net cash for investing activities compared to $62.7 million generated during the same period of fiscal 2005. The increase in cash used in investing activities during the current fiscal period was primarily due to $142.0 million in net purchases of available-for-sale marketable securities with funds repatriated from Europe and Asia to the United States under the DRD Legislation. During the nine months ended October 31, 2005, we repatriated approximately $400 million to the United States under the DRD Legislation. We also used $52.7 million used in business acquisitions (Compass, Colorfront, c-plan, Solid Dynamics and Engineering Intent). During the same period in fiscal 2005, we generated $105.2 million in net proceeds from the maturity and sale of available-for-sale marketable securities, a portion of which were liquidated to fund the repurchase of our common stock.

We used $216.0 million in net cash for financing activities during the nine months ended October 31, 2005, compared to $198.8 million during the same period last year. The major financing uses of cash in both periods were for the repurchase of our common stock and payment of dividends. We repurchased 9.2 million shares of our common stock for $339.7 million during the first nine months of fiscal 2006 and repurchased 21.7 million shares of our common stock for $400.1 million during the same period of fiscal 2005. As of October 31, 2005, 23.0 million shares remained available for repurchase under our stock repurchase program. We currently expect to continue making repurchases under this program. Our dividend payments declined to $3.4 million during the nine months ended October 31, 2005 as compared to $10.1 million during the same period in fiscal 2005. This decline was due to the discontinuance of the payment of cash dividends after the fourth quarter of fiscal 2005. The dividend payment made during the first nine months of fiscal 2006 related to the dividend declaration made during the fourth quarter of fiscal 2005. These financing uses of cash were partially offset by proceeds received from the issuance of common stock under our stock option and stock purchase plans, which amounted to $127.1 million during the nine months of fiscal 2006 and $211.5 million during the same period last year.

Long-term cash requirements, other than normal operating expenses, are anticipated for the development of new software products and incremental product offerings resulting from the enhancement of existing products; financing anticipated growth; the share repurchase program; the acquisition of businesses, software products, or technologies complementary to our business; and capital expenditures, including the purchase and implementation of internal-use software applications.

As noted above, during the nine months ended October 31, 2005, we repatriated approximately $400 million of foreign earnings held by financial institutions outside of the United States under the DRD Legislation. As a result, 62% of our consolidated cash, cash equivalents and marketable securities are held with financial institutions in the United States, as compared to 10% at January 31, 2005. We intend to repatriate up to a total of $500 million of accumulated foreign earnings under the DRD Legislation during fiscal 2006 to the United States where we can more effectively manage our cash and invest in our business. For further discussion of the DRD Legislation, see “Results of Operations—Provision for Income Taxes” above. In addition, $21.5 million of our marketable securities at October 31, 2005 is reserved for deferred compensation.

Our international operations are subject to currency fluctuations. To minimize the impact of these fluctuations, we use foreign currency option contracts to hedge our exposure on anticipated transactions and forward contracts to hedge our exposure on firm commitments, primarily certain receivables and payables denominated in foreign currencies. Our foreign currency instruments, by policy, have maturities of less than three months and settle before the end of each quarterly period. The principal currencies hedged during the nine months ended October 31, 2005 were the euro, Swiss franc, Canadian dollar, British pound and Japanese yen. We

monitor our foreign exchange exposures to ensure the overall effectiveness of our foreign currency hedge positions.

The purpose of Autodesk’s stock repurchase program is to help offset the dilution to net income per share caused by the issuance of stock under our employee stock plans as well as to more effectively utilize excess cash generated from our business. The number of shares acquired and the timing of the purchases are based on several factors, including the level of our cash balances, general business and market conditions, and other investment opportunities. At October 31, 2005, 23.0 million shares remained available for repurchase under the existing repurchase authorization.

The following table provides information about the repurchase of our common stock during the three months ended October 31, 2005:

Other than operating leases, we do not engage in off-balance sheet financing arrangements or have any variable-interest entities. As of October 31, 2005, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

We maintain two active stock option plans for the purpose of granting stock options to employees and members of Autodesk’s Board of Directors: the 1996 Stock Plan (available only to employees) and the 2000 Directors’ Option Plan (available only to non-employee directors). Additionally, there are five expired or terminated plans with options outstanding, including the Nonstatutory Stock Option Plan (available only to non-executive employees and consultants) which was terminated by the Board of Directors in December 2004. The 1996 Plan expires in March 2006. On November 10, 2005, the Company’s stockholders approved a new stock plan, the 2006 Employee Stock Plan, as well as amendments to the 2000 Directors’ Option Plan (See Item 5, “Other Information,” for voting results of these proposals).

In addition to stock option plans, our employees are also eligible to participate in Autodesk’s 1998 Employee Qualified Stock Purchase Plan.

Our stock option program is broad-based and designed to promote long-term retention. Essentially all of our employees participate. Approximately 84% of the options we granted during the nine months ended October 31,

2005 were awarded to employees other than our CEO and the four other most highly compensated officers for fiscal 2005, which we refer to as our Named Executive Officers. Options granted under our equity plans during fiscal 2006 vest over periods ranging from one to four years and expire within six to ten years of the date of grant. Options granted prior to fiscal 2006 expire within ten years of the date of grant. The exercise price of the stock options is equal to the closing price of our Common Stock on the Nasdaq National Market on the grant date.

All stock option grants to executive officers are made by the Compensation and Human Resources Committee of the Board of Directors. All members of the Compensation and Human Resources Committee are independent directors, as defined by the listing standards of the Nasdaq National Market. See the “Report of the Compensation and Human Resources Committee of the Board of Directors” in the Proxy Statement for our 2005 Annual Meeting of Stockholders for further information concerning Autodesk’s policies and procedures regarding the use of stock options. Grants to our non-employee directors are non-discretionary and are pre-determined by the terms of the 2000 Directors’ Option Plan.

The following table provides information about the distribution and dilutive effect of our stock options for the named periods:

We expect to grant options totaling not more than 2.5% of our outstanding shares during fiscal 2006.

The following table compares the number of shares subject to option grants with exercise prices at or below the closing price of our Common Stock at October 31, 2005 (“in-the-money”) with the number of shares subject to option grants with exercise prices greater than the closing price of our Common Stock at the same date (“out-of-the-money”). The closing price of our Common Stock on October 31, 2005 was $45.12 per share.

There were no options granted to the Named Executive Officers during the three months ended October 31, 2005.

The following table summarizes the number of outstanding options granted to employees and directors, as well as the number of securities remaining available for future issuance, under these plans at October 31, 2005 (number of securities in thousands):

Descriptions of each of our compensation plans may be found in the Proxy Statement for our 2005 Annual Meeting of Stockholders.

We operate in a rapidly changing environment that involves a number of risks, many of which are beyond our control. The following discussion highlights some of these risks and the possible impact of these factors on future results of operations. If any of the following risks actually occur, our business, financial condition or results of operations may be adversely impacted, causing the trading price of our common stock to decline.

Because we derive a substantial portion of our net revenues from a limited number of products, if these products are not successful, our net revenues will be adversely affected.

We derive a substantial portion of our net revenues from sales of AutoCAD software, including products based on AutoCAD that serve specific vertical markets, upgrades to those products and products that are interoperable with AutoCAD. As such, any factor adversely affecting sales of these products, including the product release cycle, market acceptance, product performance and reliability, reputation, price competition, economic and market conditions and the availability of third-party applications, would likely harm our operating results.

In the Media and Entertainment Segment, our customers’ buying patterns are heavily influenced by advertising and entertainment industry cycles, which have resulted in and could have a negative impact on our future operating results. In addition, a significant percentage of the Media and Entertainment Segment’s Advanced Systems products rely primarily on workstations manufactured by Silicon Graphics, Inc. (“SGI”). On September 15, 2005, SGI received an opinion from their auditors that the financial condition of SGI raised substantial doubt about its ability to continue as a going concern. Although we have reduced our dependence on SGI workstations for the Advanced Systems products and will continue to do so in the future, the near term failure of SGI to deliver products or product upgrades in a timely manner would likely result in an adverse effect upon our financial results for a given period.

Our operating results fluctuate within each quarter and from quarter to quarter making our future revenues and operating results difficult to predict.

Our quarterly operating results have fluctuated in the past and are likely to do so in the future. These fluctuations could cause our stock price to change significantly or experience declines. Some of the factors that could cause our operating results to fluctuate include the timing of the introduction of new products by us or our competitors, slowing of momentum in upgrade or maintenance revenue, the adoption of the new accounting pronouncement, SFAS 123R, that will require us to record compensation expense for shares issued under our stock plans beginning in the first quarter of fiscal 2007 with a material impact on our results of operations, failure to achieve anticipated levels of customer acceptance of key new applications, unexpected costs or changes in marketing or other operating expenses, changes in product pricing or product mix, platform changes, delays in product releases, timing of product retirements, failure to continue momentum of annual release cycles or to move a significant number of customers from prior product versions in connection with our retirement programs, failure to convert our 2D customer base to 3D products, distribution channel management, changes in sales compensation practices, the timing of large systems sales, failure to effectively implement our copyright legalization programs, especially in developing countries, failure to successfully ingrate Alias after closing, and general economic or political conditions, particularly in countries where we derive a significant portion of our net revenues.

We have also experienced fluctuations in operating results in interim periods in certain geographic regions due to seasonality or regional economic conditions. In particular, our operating results in Europe during the third quarter are usually affected by a slow summer period, and the Asia/Pacific operations typically experience seasonal slowing in the third and fourth quarters.

Our operating expenses are based in part on our expectations for future revenues and are relatively fixed in the short term. Accordingly, any revenue shortfall below expectations could have an immediate and significant

adverse effect on our profitability. Failure to continue to increase operating margins through rigorous cost controls would negatively affect future profitability. Further, gross margins may be adversely affected if our sales of AutoCAD LT, upgrades and advanced systems products, which historically have had lower margins, grow at a faster rate than sales of our higher-margin products.

Changes in existing financial accounting standards or practices or taxation rules or practices may adversely affect our results of operations.

Changes in existing accounting or taxation rules or practices, new accounting pronouncements or taxation rules, or varying interpretations of current accounting pronouncements or taxation practice could have a significant adverse effect on our results of operations or the manner in which we conduct our business. Further, such changes could potentially affect our reporting of transactions completed before such changes are effective. In particular, the FASB issued SFAS 123R which will require us to record stock-based compensation charges to earnings for employee stock option grants commencing in the first quarter of fiscal 2007, using a fair-value-based method for determining such charges. We believe that the adoption of SFAS 123R will materially adversely impact our earnings and may impact the manner in which we conduct our business.

While we believe we currently have adequate internal control over financial reporting, we are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), we are required to furnish a report by our management on our internal control over financial reporting. The report contains, among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. Such report must also contain a statement that our auditors have issued an attestation report on management’s assessment of such internal controls.

While we have determined in our Management Report on Internal Control over Financial Reporting included in the Annual Report on Form 10-K for the fiscal year ended January 31, 2005, that our internal control over financial reporting was effective as of January 31, 2005, we must continue to monitor and assess our internal control over financial reporting. If our management identifies one or more material weaknesses in our internal control over financial reporting and such weakness remains uncorrected at fiscal year end, we will be unable to assert such internal control is effective at fiscal year end. If we are unable to assert that our internal control over financial reporting is effective at fiscal year end (or if our auditors are unable to attest that our management’s report is fairly stated or they are unable to express an opinion on the effectiveness of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports, which would likely have an adverse effect on our business and stock price.

Our business could suffer as a result of risks associated with strategic acquisitions and investments like the acquisition of Alias.

We periodically acquire or invest in businesses, software products and technologies that are complementary to our business through strategic alliances, equity investments and the like. For example, during the third quarter of fiscal 2006, we announced the signing of an agreement to acquire Alias Systems, Inc. The risks associated with such acquisitions include, among others, the difficulty of assimilating the operations and personnel of the companies, the failure to realize anticipated revenue and cost projections, the requirement to test and assimilate the internal control processes of the acquired business in accordance with the requirements of Section 404, and the diversion of management’s time and attention. In addition, such investments and acquisitions, may involve significant transaction-related costs. We may not be successful in overcoming such risks, and such investments

and acquisitions may negatively impact our business. In addition, such investments and acquisitions have in the past and may in the future contribute to potential fluctuations in quarterly results of operations. The fluctuations could arise from transaction-related costs and charges associated with eliminating redundant expenses or write-offs of impaired assets recorded in connection with acquisitions. These costs or charges, including those relating to the Alias acquisition, could negatively impact results of operations for a given period or cause quarter to quarter variability in our operating results.

The software industry has limited barriers to entry, and the availability of desktop computers with continually expanding performance at progressively lower prices contributes to the ease of market entry. The markets in which we compete are characterized by vigorous competition, both by entry of competitors with innovative technologies and by consolidation of companies with complementary products and technologies. In addition, some of our competitors have greater financial, technical, sales and marketing and other resources. Furthermore, a reduction in the number and availability of compatible third-party applications may adversely affect the sale of our products. Because of these and other factors, competitive conditions in the industry are likely to intensify in the future. Increased competition could result in continued price reductions, reduced net revenues and profit margins and loss of market share, any of which would likely harm our business.

We believe that our future results depend largely upon our ability to offer products that compete favorably with respect to reliability, performance, ease of use, range of useful features, continuing product enhancements, reputation and price.

Net revenues or earnings shortfalls or the volatility of the market generally may cause the market price of our stock to decline.

The market price for our common stock has experienced significant fluctuations and may continue to fluctuate significantly. The market price for our common stock may be affected by a number of factors, including the following: net revenues or earnings shortfalls, unexpected deviations in results of key performance metrics, and changes in estimates or recommendations by securities analysts; the announcement of new products or product enhancements by us or our competitors; quarterly variations in our or our competitors’ results of operations; developments in our industry; one-time events such as acquisitions, divestitures and litigation; and general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.

In addition, stock prices for many companies in the technology sector have experienced wide fluctuations that have often been unrelated to the operating performance of such companies. Historically, after periods of volatility in the market price of a company’s securities, a company becomes more susceptible to securities class action litigation. This type of litigation is often expensive and diverts management’s attention and resources.

Our efforts to develop and introduce new products and service offerings expose us to risks such as limited customer acceptance, costs related to product defects and large expenditures that may not result in additional net revenues.

Rapid technological change, as well as changes in customer requirements and preferences, characterize the software industry. We are devoting significant resources to the development of technologies, like our lifecycle management initiatives, and service offerings to address demands in the marketplace for increased connectivity and use of digital data created by computer-aided design software. As a result, we are transitioning to new business models, requiring a considerable investment of technical and financial resources. Such investments may not result in sufficient revenue generation to justify their costs, or competitors may introduce new products and services that achieve acceptance among our current customers, adversely affecting our competitive position. In particular, a critical component of our growth strategy is to convert our 2D customer base, including customers

of AutoCAD, AutoCAD LT, and related vertical industry products, to our 3D products such as Autodesk Inventor Series or Autodesk Revit. Should sales of AutoCAD, AutoCAD upgrades and AutoCAD LT products decrease without a corresponding conversion of customer seats to 3D products, our results of operations will be adversely affected.

Product development may also be outsourced to third-parties or developed externally and transferred to the Company through business or technology acquisitions. Such externally developed technologies have certain additional risks, including potential difficulties with effective integration into existing products, adequate transfer of technology know-how and ownership and protection of transferred intellectual property.

Additionally, the software products we offer are complex, and despite extensive testing and quality control, may contain errors or defects. These defects or errors could result in the need for corrective releases to our software products, damage to our reputation, loss of revenues, an increase in product returns or lack of market acceptance of our products, any of which would likely harm our business.

We rely on third party technologies and if we are unable to use or integrate these technologies, our product and service development may be delayed.

We rely on certain software that we license from third parties, including software that is integrated with internally developed software and used in our products to perform key functions. These third-party software licenses may not continue to be available on commercially reasonable terms, and the software may not be appropriately supported, maintained or enhanced by the licensors. The loss of licenses to, or inability to support, maintain and enhance any such software could result in increased costs, or in delays or reductions in product shipments until equivalent software could be developed, identified, licensed and integrated, which would likely harm our business.

In addition, for certain of our products and services, we rely on third party hardware and services, like the workstations supplied by SGI. Financial difficulties, product line changes, or even failure of these third parties, like SGI, may impact our ability to deliver such products and services and, as a result, may adversely impact our business.

Disruptions with licensing relationships and third party developers could adversely impact our business.

We license certain key technologies from third parties. Licenses may be restricted in the term or the use of such technology in ways that negatively affect our business. Similarly, we may not be able to obtain or renew license agreements for key technology on favorable terms, if at all, and any failure to do so could harm our business.

Our business strategy has historically depended in part on our relationships with third-party developers, who provide products that expand the functionality of our design software. Some developers may elect to support other products or may experience disruption in product development and delivery cycles or financial pressure during periods of economic downturn. In particular markets, this disruption would likely negatively impact these third-party developers and end users, which could harm our business.

As a result of our strategy of partnering with other companies for product development our product delivery schedules could be adversely affected if we experience difficulties with our product development partners.

We partner with certain independent firms and contractors to perform some of our product development activities. We believe our partnering strategy allows us to, among other things, achieve efficiencies in developing new products and maintaining and enhancing existing product offerings.

Accordingly, our partnering strategy creates a dependency on such independent developers. Independent developers, including those who currently develop products for us in the United States and throughout the world,

may not be able or willing to provide development support to us in the future. In addition, use of development resources through consulting relationships, particularly in non-US jurisdictions with developing legal systems, may be adversely impacted by, and expose us to risks relating to, evolving employment, export and intellectual property laws. These risks could, among other things, expose our intellectual property to misappropriation and result in disruptions to product delivery schedules.

Our international operations expose us to significant regulatory, intellectual property, collections, exchange fluctuations, taxation and other risks, which could adversely impact our future net revenues and increase our net expenses.

We anticipate that international operations will continue to account for a significant portion of our consolidated net revenues and will provide significant support to our overall development efforts. Risks inherent in our international operations include the following: unexpected changes in regulatory practices and tariffs, difficulties in staffing and managing foreign sales and development operations, longer collection cycles for accounts receivable, potential changes in tax laws, tax arrangements with foreign governments and laws regarding the management of data, greater difficulty in protecting intellectual property, possible future limitations upon foreign owned business, and the impact of fluctuating exchange rates between the U.S. dollar and foreign currencies in markets where we do business.

Our international results will also continue to be impacted by economic and political conditions in foreign markets generally or in specific large foreign markets. These factors may adversely impact our future international operations and consequently our business as a whole.

Our risk management strategy uses derivative financial instruments in the form of foreign currency forward and option contracts, for the purpose of hedging foreign currency market exposures, during each quarter, which exist as a part of our ongoing business operations. These instruments provide us some protection against currency exposures for only the current quarter. Significant fluctuations in exchange rates between the U.S. dollar and foreign currency markets may adversely impact our future net revenues.

General economic conditions may affect our net revenues and harm our business.

As our business has grown, we have become increasingly subject to the risks arising from adverse changes in domestic and global economic and political conditions. If economic growth in the United States and other countries’ economies is slowed, many customers may delay or reduce technology purchases. This could result in reductions in sales of our products, longer sales cycles, slower adoption of new technologies and increased price competition. In addition, weakness in the end-user market could negatively affect the cash flow of our distributors and resellers who could, in turn, delay paying their obligations to us, which would increase our credit risk exposure. Any of these events would likely harm our business, results of operations and financial condition.

If we do not maintain our relationships with the members of our distribution channel, or achieve anticipated levels of sell-through, our ability to generate net revenues will be adversely affected.

We sell our software products both directly to customers and through a network of distributors and resellers. Our ability to effectively distribute our products depends in part upon the financial and business condition of our reseller network. Computer software dealers and distributors are typically not highly capitalized and have previously experienced difficulties during times of economic contraction and may do so in the future. While we have processes to ensure that we assess the creditworthiness of dealers and distributors prior to our sales to them, if their financial condition were to deteriorate, they might not be able to make repeat purchases. We rely significantly upon major distributors and resellers in both the U.S. and international regions, including one such distributor who accounted for 11% of consolidated net revenues for the three and nine months ended October 31, 2005. Sales to this same distributor accounted for 11% of consolidated net revenues for the three months ended October 31, 2004 and 12% of consolidated net revenues for the nine months ended October 31, 2004. The loss of

or a significant reduction in business with those distributors or resellers or the failure to achieve anticipated levels of sell-through with any one of our major international distributors or large resellers could harm our business. In particular, if one or more of such resellers should be unable to meet their obligations with respect to accounts payable to us, we could be forced to write off such accounts, which could have a material adverse effect on our results of operations in a given period.

With the exception of contracts with some distributors, our sales contracts do not contain specific product-return privileges. However, we permit our distributors and resellers to return products in certain instances. For example, we generally allow our distributors and resellers to return older versions of products which have been superceded by new product releases. We anticipate that product returns will continue to be affected by product update cycles, new product releases and software quality.

We establish reserves for stock balancing and product rotation. These reserves are based on historical experience, estimated channel inventory levels and the timing of new product introductions and other factors. While we maintain strict measures to monitor these reserves, actual product returns may exceed our reserve estimates, and such differences could harm our business.

If we are not able to adequately protect our proprietary rights, our business could be harmed.

We rely on a combination of patents, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary rights. Despite such efforts to protect our proprietary rights, unauthorized parties from time to time have copied aspects of our software products or have obtained and used information that we regard as proprietary. Policing unauthorized use of our software products is time-consuming and costly. While we have recovered some revenues resulting from the unauthorized use of our software products, we are unable to measure the extent to which piracy of our software products exists, and software piracy can be expected to be a persistent problem. Furthermore, our means of protecting our proprietary rights may not be adequate, and our competitors may independently develop similar technology.

We may face intellectual property infringement claims that could be costly to defend and result in our loss of significant rights.

As more and more software patents are granted worldwide, as the number of products and competitors in our industry segments grows and as the functionality of products in different industry segments overlap, we expect that software product developers will be increasingly subject to infringement claims. Infringement or misappropriation claims may be asserted against us, and any such assertions could harm our business. Additionally, certain patent holders have become more aggressive in threatening litigation in attempts to obtain fees for licensing the right to use patents. Any such claims or threats, whether with or without merit, could be time-consuming to defend, result in costly litigation and diversion of resources, or could cause product shipment delays or require us to enter into royalty or licensing agreements. In addition, such royalty or license agreements, if required, may not be available on acceptable terms, if at all, which would likely harm our business.

We have no material changes to the disclosure on this matter made in Item 7A of our report on Form 10-K for the fiscal year ended January 31, 2005.

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to Autodesk’s management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components of our internal control over financial reporting. Management’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance because a control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met.

There were no changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the quarter ended October 31, 2005 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Information with respect to this Item may be found in Note 12 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q, which information is incorporated into this Item by reference.

There were no sales of unregistered securities during the nine months ended October 31, 2005.

The information concerning issuer purchases of equity securities required by this Item is incorporated by reference herein to the section of this Report entitled “Issuer Purchases of Equity Securities” in Part I, Item 2 above.

At our Special Meeting of Stockholders held on November 10, 2005, the following proposals were approved by the stockholders.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AUTODESK, INC.

(Registrant)

/S/ ANDREW D. MILLER

Andrew D. Miller

Vice President, Chief Accounting Officer and

Corporate Controller

(Principal Accounting Officer and Duly Authorized Officer)


		Page No.
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Consolidated Statements of Income Three and nine months ended October 31, 2005 and 2004		3

Condensed Consolidated Balance Sheets October 31, 2005 and January 31, 2005		4

Condensed Consolidated Statements of Cash Flows Nine months ended October 31, 2005 and 2004		5

Notes to Condensed Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3. Quantitative and Qualitative Disclosures About Market Risk		44

Item 4. Controls and Procedures		44

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		45

Item 3. Defaults Upon Senior Securities		45

Item 4. Submission of Matters to a Vote of Securities Holders		45

Item 5. Other Information		45

Item 6. Exhibits		46

Signatures		47


	Three Months Ended October 31,					Nine Months Ended October 31,
	2005			2004		2005			2004
Net revenues:
License and other	$	304,402		$	254,450	$	910,145		$	753,404
Maintenance		73,860			45,708		196,220			124,208

Total net revenues		378,262			300,158		1,106,365			877,612

Costs and expenses:
Cost of license and other revenues		40,762			39,184		119,302			112,885
Cost of maintenance revenues		1,636			4,210		11,075			12,597
Marketing and sales		136,349			113,205		397,765			327,497
Research and development		74,034			59,942		212,881			176,165
General and administrative		32,444			26,837		92,789			76,856
Restructuring		—			2,922		—			14,889

Total costs and expenses		285,225			246,300		833,812			720,889

Income from operations		93,037			53,858		272,553			156,723
Interest and other income, net		3,167			2,801		9,011			7,396

Income before income taxes		96,204			56,659		281,564			164,119
Income tax (provision) benefit		(1,667	)		17,411		(35,651	)		(8,379	)

Net income	$	94,537		$	74,070	$	245,913		$	155,740

Basic net income per share	$	0.41		$	0.33	$	1.08		$	0.69

Diluted net income per share	$	0.38		$	0.30	$	0.99		$	0.63

Shares used in computing basic net income per share		229,577			227,823		228,687			227,344

Shares used in computing diluted net income per share		249,462			248,045		247,979			245,492


	October 31, 2005			January 31, 2005
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	390,878		$	517,654
Marketable securities		157,062			15,038
Accounts receivable, net		201,769			196,827
Inventories		15,112			12,545
Deferred income taxes		68,896			14,250
Prepaid expenses and other current assets		26,069			25,483

Total current assets		859,786			781,797

Computer equipment, software, furniture and leasehold improvements, net		60,132			69,566
Purchased technologies and capitalized software, net		16,253			9,319
Goodwill		194,680			166,628
Deferred income taxes, net		141,425			105,061
Other assets		18,353			9,833

	$	1,290,629		$	1,142,204

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	62,483		$	46,234
Accrued compensation		101,980			140,622
Accrued income taxes		40,257			41,549
Deferred revenues		210,684			178,701
Other accrued liabilities		48,019			61,234

Total current liabilities		463,423			468,340

Deferred revenues		32,440			15,528
Other liabilities		17,665			10,258

Commitments and contingencies
Stockholders’ equity:
Preferred stock		—			—
Common stock and additional paid-in capital		752,748			625,225
Accumulated other comprehensive loss		(7,661	)		(2,843	)
Deferred compensation		(307	)		(269	)
Retained earnings		32,321			25,965

Total stockholders’ equity		777,101			648,078

	$	1,290,629		$	1,142,204


	Nine Months Ended October 31,
	2005			2004
Operating Activities
Net income	$	245,913		$	155,740
Adjustments to reconcile net income to net cash provided by operating activities:
Charges for acquired in-process research & development		1,200			—
Depreciation and amortization		33,812			38,581
Stock compensation expense		392			2,915
Net loss on fixed asset disposals		52			321
Tax benefits from employee stock plans		103,545			91,414
Restructuring related charges, net		—			4,773
Changes in operating assets and liabilities		(83,748	)		(64,318	)

Net cash provided by operating activities		301,166			229,426

Investing Activities
Net (purchases) sales and maturities of available-for-sale marketable securities		(142,010	)		105,238
Capital and other expenditures		(15,318	)		(29,291	)
Business combinations, net of cash acquired		(52,677	)		(11,750	)
Other investing activities		79			(1,487	)

Net cash (used in) provided by investing activities		(209,926	)		62,710

Financing Activities
Proceeds from issuance of common stock, net of issuance costs		127,110			211,456
Repurchases of common stock		(339,714	)		(400,066	)
Dividends paid		(3,406	)		(10,146	)

Net cash used in financing activities		(216,010	)		(198,756	)

Effect of exchange rate changes on cash and cash equivalents		(2,006	)		1,519

Net increase (decrease) in cash and cash equivalents		(126,776	)		94,899
Cash and cash equivalents at beginning of year		517,654			282,249

Cash and cash equivalents at end of period	$	390,878		$	377,148

Supplemental cash flow information:
Net cash paid during the period for income taxes	$	23,522		$	12,123

Supplemental non-cash investing activity:
Accounts receivable and other receivable reductions as partial consideration in business combinations	$	2,371		$	—


	Three Months Ended October 31,						Nine Months Ended October 31,
	2005			2004			2005			2004
Net income – as reported	$	94,537		$	74,070		$	245,913		$	155,740
Add: Stock-based employee compensation cost, net of related tax effects, included in the determination of net income as reported		106			2,026			314			2,312
Deduct: Total stock-based employee compensation cost determined under the fair-value based method for all awards, net of related tax effects		(16,450	)		(16,559	)		(53,856	)		(42,806	)

Pro forma net income	$	78,193		$	59,537		$	192,371		$	115,246

Net income per share:
Basic – as reported	$	0.41		$	0.33		$	1.08		$	0.69

Basic – pro forma	$	0.34		$	0.26		$	0.84		$	0.51

Diluted – as reported	$	0.38		$	0.30		$	0.99		$	0.63

Diluted – pro forma	$	0.32		$	0.24		$	0.78		$	0.48


	October 31, 2005		January 31, 2005
Raw materials and finished goods, net	$	12,667	$	8,256
Demonstration inventory, net		2,445		4,289

	$	15,112	$	12,545


	October 31, 2005			January 31, 2005
Computer equipment, software and furniture	$	203,103		$	191,656
Leasehold improvements		33,360			32,586
Less: Accumulated depreciation and amortization		(176,331	)		(154,676	)

	$	60,132		$	69,566


	October 31, 2005			January 31, 2005
Purchased technologies	$	149,908		$	137,108
Capitalized software		21,780			21,780

		171,688			158,888
Less: Accumulated amortization		(155,435	)		(149,569	)

Purchased technologies and capitalized software, net	$	16,253		$	9,319


Period ending January 31,
2006 – remaining three months	$	1,453
2007		5,526
2008		4,456
2009		2,936
2010		1,382
2011		500

Total	$	16,253


	Design Solutions		Media and Entertainment		Total
Balance as of January 31, 2005	$	159,063	$	7,565	$	166,628
Additions arising from acquisitions		18,672		9,380		28,052

Balance as of October 31, 2005	$	177,735	$	16,945	$	194,680


	Balance at January 31, 2005		Additions		Charges Utilized		Reversals		Balance at October 31, 2005
Fiscal 2004 Plan
Lease termination costs	$	2,020	$	—	$	1,081	$	—	$	939
Employee termination costs		4,311		—		4,002		—		309

Fiscal 2002 Plan
Lease termination costs		6,740		—		1,849		—		4,891

Total	$	13,071	$	—	$	6,932	$	—	$	6,139

Current portion ⁽¹⁾	$	7,466							$	2,160
Non-current portion ⁽¹⁾		5,605								3,979

Total	$	13,071							$	6,139


	Design Solutions Segment						Media and Entertainment Segment						Unallocated Amounts
	Office Closure Costs			Employee Termination Costs			Office Closure Costs			Employee Termination Costs			Office Closure Costs			Employee Termination Costs			Total
Balance at January 31, 2005	$	942		$	1,497		$	803		$	534		$	275		$	2,280		$	6,331
Additions		—			—			—			—			—			—			—
Charges utilized		(753	)		(1,281	)		(245	)		(534	)		(83	)		(2,187	)		(5,083	)

Balance at October 31, 2005	$	189		$	216		$	558		$	—		$	192		$	93		$	1,248


Net tangible assets	$	8,255
Developed technology (5 year useful life)		4,200
Customer relationships (6 year useful life)		2,600
Trade name (2 year useful life)		160
Goodwill		6,995
Deferred revenue		(315	)

	$	21,895


Developed technology (4 year useful life)	$	3,100
In-process research and development (“IPR&D”)		1,200
Customer relationships (3.5 year useful life)		220
Goodwill		9,380
Net tangible assets		100

	$	14,000


Developed technology (3 year useful life)	$	3,700
Customer relationships (7 year useful life)		6,550
Backlog		170
Goodwill		5,765
Net tangible assets		357

	$	16,542


	Three Months Ended October 31, 2005		As a % of Net Revenues		Three Months Ended October 31, 2004		As a % of Net Revenues
	(in millions)
Net Revenues	$	378.3	100	%	$	300.2	100	%
Cost of revenues		42.4	11	%		43.4	14	%
Operating expenses excluding restructuring		242.9	64	%		200.0	67	%
Restructuring		—	—			2.9	1	%

Income from Operations	$	93.0	25	%	$	53.9	18	%


	Nine Months Ended October 31, 2005		As a % of Net Revenues		Nine Months Ended October 31, 2004		As a % of Net Revenues
	(in millions)
Net Revenues	$	1,106.4	100	%	$	877.6	100	%
Cost of revenues		130.4	12	%		125.5	14	%
Operating expenses excluding restructuring		703.4	63	%		580.5	66	%
Restructuring		—	—			14.9	2	%

Income from Operations	$	272.6	25	%	$	156.7	18	%


	Three Months Ended October 31, 2005		Increase compared to prior year period				Three Months Ended October 31, 2004		Nine Months Ended October 31, 2005		Increase compared to prior year period				Nine Months Ended October 31, 2004
	Three Months Ended October 31, 2005		$		%		Three Months Ended October 31, 2004		Nine Months Ended October 31, 2005		$		%		Nine Months Ended October 31, 2004
	(in millions)
Net revenues:
License and other	$	304.4	$	49.9	20	%	$	254.5	$	910.2	$	156.8	21	%	$	753.4
Maintenance		73.9		28.2	62	%		45.7		196.2		72.0	58	%		124.2

	$	378.3	$	78.1	26	%	$	300.2	$	1,106.4	$	228.8	26	%	$	877.6

Net revenues by geographic area:
Americas	$	160.3	$	23.3	17	%	$	137.0	$	432.1	$	58.5	16	%	$	373.6
Europe, Middle East and Africa		133.4		37.6	39	%		95.8		408.1		104.6	34	%		303.5
Asia Pacific		84.6		17.2	26	%		67.4		266.2		65.7	33	%		200.5

	$	378.3	$	78.1	26	%	$	300.2	$	1,106.4	$	228.8	26	%	$	877.6

Net revenues by operating segment:
Design Solutions	$	333.8	$	77.4	30	%	$	256.4	$	972.8	$	213.8	28	%	$	759.0
Media and Entertainment		42.9		-0.2	0	%		43.1		129.2		11.8	10	%		117.4
Other		1.6		0.9	129	%		0.7		4.4		3.2	267	%		1.2

	$	378.3	$	78.1	26	%	$	300.2	$	1,106.4	$	228.8	26	%	$	877.6

Net design solutions revenues:
Platform Technology Division and other	$	181.3	$	40.2	28	%	$	141.1	$	539.2	$	109.6	26	%	$	429.6
Manufacturing Solutions Division		63.3		12.9	26	%		50.4		182.5		42.9	31	%		139.6
Building Solutions Division		45.1		16.0	55	%		29.1		125.3		40.3	47	%		85.0
Infrastructure Solutions Division		44.1		8.3	23	%		35.8		125.8		21.0	20	%		104.8

	$	333.8	$	77.4	30	%	$	256.4	$	972.8	$	213.8	28	%	$	759.0


	Three Months Ended October 31, 2005			Increase compared to prior year period					Three Months Ended October 31, 2004			Nine Months Ended October 31, 2005			Increase compared to prior year period					Nine Months Ended October 31, 2004
	Three Months Ended October 31, 2005			$			%		Three Months Ended October 31, 2004			Nine Months Ended October 31, 2005			$			%		Nine Months Ended October 31, 2004
	(in millions)
Cost of revenues:
License and other	$	40.8		$	1.6		4	%	$	39.2		$	119.3		$	6.4		6	%	$	112.9
Maintenance		1.6			(2.6	)	-62	%		4.2			11.1			(1.5	)	-12	%		12.6

	$	42.4		$	(1.0	)	-2	%	$	43.4		$	130.4		$	4.9		4	%	$	125.5

As a percentage of net revenues		11	%							14	%		12	%							14	%


	Three Months Ended October 31, 2005			Increase compared to prior year period				Three Months Ended October 31, 2004			Nine Months Ended October 31, 2005			Increase compared to prior year period				Nine Months Ended October 31, 2004
	Three Months Ended October 31, 2005			$		%		Three Months Ended October 31, 2004			Nine Months Ended October 31, 2005			$		%		Nine Months Ended October 31, 2004
	(in millions)
Marketing and sales	$	136.3		$	23.1	20	%	$	113.2		$	397.8		$	70.3	21	%	$	327.5
As a percentage of net revenues		36	%						38	%		36	%						37	%


	Three Months Ended October 31, 2005			Increase compared to prior year period				Three Months Ended October 31, 2004			Nine Months Ended October 31, 2005			Increase compared to prior year period				Nine Months Ended October 31, 2004
	Three Months Ended October 31, 2005			$		%		Three Months Ended October 31, 2004			Nine Months Ended October 31, 2005			$		%		Nine Months Ended October 31, 2004
	(in millions)
General and administrative	$	32.4		$	5.6	21	%	$	26.8		$	92.8		$	15.9	21	%	$	76.9
As a percentage of net revenues		9	%						9	%		8	%						9	%


Date	Company	Details

October 2005	Engineering Intent Corporation (“Engineering Intent”)	The assets acquired from Engineering Intent provided sales and engineering automation technology designed to help customers ‘engineer-to-order’ during their sales cycle, thereby reducing costs and allowing for efficient development of customized solutions. The assets acquired were assigned to the Manufacturing Solutions Division of our Design Solutions Segment.

August 2005	Solid Dynamics, SA (“Solid Dynamics”)	The acquisition of Solid Dynamics provided kinematics and dynamics physics technology which designers use to simulate the motion of mechanical assemblies without the expense of building physical prototypes, thereby reducing costs and time-to-market. The assets acquired were assigned to the Manufacturing Solutions Division of our Design Solutions Segment.

June 2005	c-plan AG (“c-plan”)	The acquisition of c-plan expands our geospatial technology product portfolio and strengthens our market position throughout central Europe. The assets acquired were assigned to the Infrastructure Solutions Division of our Design Solutions Segment.

June 2005	Colorfront Ltd. (“Colorfront”)	The assets acquired from Colofront are intended to provide us with comprehensive new expertise in film laboratory processes, digital post-production, color science, image processing and hardware platform organization. The assets acquired were assigned to the Media and Entertainment Segment.

March 2005	Compass Systems GmbH (“Compass”)	The assets acquired from Compass allow us to more quickly expand our data management solution and deliver on our plans to provide a comprehensive data management solution for small and medium-size manufacturers. The assets acquired were assigned to the Manufacturing Solutions Division of our Design Solutions Segment.


(Shares in thousands)	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
August 1-August 31	381		$	41.23	381		25,803
September 1-September 30	2,843			42.92	2,843		22,960
October 1-October 31	—			—	—		—

Total	3,224	⁽¹⁾	$	42.71	3,224	⁽¹⁾	22,960	⁽²⁾


	Nine months ended October 31, 2005		Fiscal year ended January 31,
	Nine months ended October 31, 2005		2005		2004
Net grants during the period as % of outstanding shares	2.1	%	3.9	%	3.1	%
Grants to Named Executive Officers during the period as % of total options granted	16.4	% ⁽¹⁾	15.9	%	11.7	%
Grants to Named Executive Officers during the period as % of outstanding shares	0.4	%	0.8	%	0.7	%
Cumulative options held by Named Executive Officers as % of total options outstanding	24.0	%	25.2	%	20.9	%


			Options Outstanding
(Shares in thousands)	Shares Available for Options		Number of Shares		Weighted Average Price Per Share
Options outstanding at January 31, 2004	19,894		52,936		$	8.40
Granted	(11,550	)	11,550			17.52
Exercised	—		(25,445	)		8.46
Canceled	2,607		(2,635	)		9.46
Additional shares reserved	8,455		—			—
Reduction to shares available for future issuance approved by the Board of Directors in March 2005	(10,000	)	—			—

Options outstanding at January 31, 2005	9,406		36,406			11.17
Granted	(6,229	)	6,229			31.18
Exercised	—		(9,940	)		9.42
Canceled	1,149		(1,320	)		15.52

Options outstanding at October 31, 2005	4,326		31,375		$	15.50


	Exercisable			Unexercisable			Total
(Shares in thousands)	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
In-the-Money	12,871	$	9.58	18,504	$	19.63	31,375	$	15.50
Out-of-the-Money	—		—	—		—	—		—

Total Options Outstanding	12,871	$	9.58	18,504	$	19.63	31,375	$	15.50


	(a)	(b)		(c)
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders ⁽¹⁾	27,411	$	16.36	18,478	⁽²⁾
Equity compensation plans not approved by security holders ⁽³⁾	3,964		9.61	—

Total	31,375	$	15.50	18,478


	Affirmative Votes	Negative Votes	Votes Withheld	Broker Non-Votes
1. Proposal to approve Autodesk’s 2006 Employee Stock Plan and the reservation of 9.65 million shares of Autodesk’s common stock for issuance thereunder.	142,438,789	33,580,192	1,294,605	—

2. Proposal to approve amendments to Autodesk’ 2000 Directors’ Plan, including the reservation of an additional 750,000 shares of Autodesk ‘s common stock for issuance thereunder.	136,938,829	39,069,517	1,305,240	—


Exhibit 2.1		Agreement and Plan of Merger dated October 4, 2005 by and among Autodesk, Inc., Maytag Acquisition Corporation, Alias Systems Holdings Inc., Accel-KKR Company, LLC and Ontario Teachers’ Pension Plan Board.

Exhibit 10.1		Autodesk Inc. 1996 Stock Plan, as amended and restated

Exhibit 10.2		Autodesk, Inc. 2000 Directors’ Option Plan, as amended and restated (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 15, 2005)

Exhibit 10.3		Autodesk, Inc. 2006 Employee Stock Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on November 15, 2005)

Exhibit 31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

Exhibit 31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

Exhibit 32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002