Income Taxes

6 Months Ended

Jul. 31, 2011

Income Taxes

7. Income Taxes

Autodesk’s effective tax rate was 24% and 21% during the three and six months ended July 31, 2011, respectively, compared to 25% and 24% during the three and six months ended July 31, 2010, respectively. Autodesk’s effective tax rate decreased during the three months ended July 31, 2011 as compared to the same period in the prior fiscal year primarily due to an increase in tax benefits in fiscal 2012 from foreign earnings taxed at lower rates and a decrease in non-deductible stock-based compensation expense. Excluding the impact of discrete tax items primarily associated with stock-based compensation of $0.9 million expense and $3.7 million benefit in the three and six months ended July 31, 2011 respectively, the effective tax rate for the three and six months ended July 31, 2011 was 23% and was lower than the Federal statutory tax rate of 35%, primarily due to foreign income taxed at lower rates and research and development credits partially offset by the impact of non-deductible stock-based compensation expense.

As of July 31, 2011, the Company had $195.3 million of gross unrecognized tax benefits, excluding interest, of which approximately $181.8 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 July 31, 2011, Autodesk had net deferred tax assets of $154.1 million. The Company believes that it will generate sufficient future taxable income in appropriate tax jurisdictions to realize these assets.