Income Taxes

3 Months Ended

Apr. 30, 2011

Income Taxes

7. Income Taxes

Autodesk’s effective tax rate was 18% and 22% during the three months ended April 30, 2011 and 2010, respectively. Autodesk’s effective tax rate decreased 4 percentage points during the three months ended April 30, 2011 as compared to the same period in the prior fiscal year primarily due to a decrease in non-deductible stock-based compensation expense and an increase in tax benefits in fiscal 2012 from foreign earnings taxed at lower rates compared to fiscal 2011. Excluding the impact of discrete tax benefits of $4.1 million associated with stock based compensation, the effective tax rate for the three months ended April 30, 2011 was 23% and was lower than the Federal statutory tax rate of 35% primarily due to foreign income taxed at lower rates and U.S. research and development credits partially offset by the impact of non-deductible stock-based compensation expense.

As of April 30, 2011, the Company had $192.0 million of gross unrecognized tax benefits, excluding interest, of which approximately $178.6 million represents the amount of unrecognized tax benefits that would impact the effective tax rate, if recognized. It is possible that the amount of unrecognized tax benefits will change in the next twelve months; however, an estimate of the range of the possible change cannot be made at this time.

At April 30, 2011, Autodesk had net deferred tax assets of $141.8 million. The Company believes that it will generate sufficient future taxable income in appropriate tax jurisdictions to realize these assets.