Autodesk Reports Second Quarter Fiscal 2010 Financial Results

(C) 2009 Autodesk, Inc. All rights reserved.

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

                                      Three Months Ended  Six Months Ended
                                             July 31,         July 31,
                                             --------         --------
                                           2009    2008    2009     2008
                                           ----    ----    ----     ----
                                            (Unaudited)     (Unaudited)
    Net revenue:
       License and other                  $231.0  $440.2  $474.6   $872.4

       Maintenance                         183.9   179.3   366.1    345.9
                                           -----   -----   -----    -----

          Total net revenue                414.9   619.5   840.7  1,218.3
                                           -----   -----   -----  -------

    Cost of license and other revenue       47.1    57.6    96.6    113.6

    Cost of maintenance revenue              3.0     2.1     5.8      4.1
                                             ---     ---     ---      ---

       Total cost of revenue                50.1    59.7   102.4    117.7

       Gross profit                        364.8   559.8   738.3  1,100.6

    Operating Expenses:

       Marketing and sales                 176.4   230.2   360.3    455.7

       Research and development            109.8   154.8   231.4    300.4

       General and administrative           49.5    56.0    99.5    105.8

       Impairment of goodwill                  -       -    21.0        -

       Restructuring charges                26.4       -    42.9        -
                                            ----     ---    ----      ---

          Total operating expenses         362.1   441.0   755.1    861.9
                                           -----   -----   -----    -----

    Income (loss) from operations            2.7   118.8   (16.8)   238.7

    Interest and other income, net          10.7     6.3    10.7     13.2
                                            ----     ---    ----     ----

    Income (loss) before income taxes       13.4   125.1    (6.1)   251.9

    Provision for income taxes              (2.9)  (35.3)  (15.6)   (67.5)
                                            ----   -----   -----    -----

    Net income (loss)                      $10.5   $89.8  $(21.7)  $184.4
                                           =====   =====  ======   ======

    Basic net income (loss) per share      $0.05   $0.40  $(0.09)   $0.82
                                           =====    =====    ======        =====

        Diluted  net  income  (loss)  per  share        $0.05      $0.39    $(0.09)      $0.80
                                                                                      =====      =====    ======        =====

        Shares  used  in  computing  basic
          net  income  (loss)  per  share                      228.9      224.2      228.0        225.2
                                                                                      =====      =====      =====        =====

        Shares  used  in  computing  diluted
          net  income  (loss)  per  share                      232.3      231.1      228.0        232.1
                                                                                      =====      =====      =====        =====



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

                                                                                                              July  31,      January  31,
                                                                                                                  2009                  2009
                                                                                                                  ----                  ----
                                                                                                        (Unaudited)

        ASSETS:

        Current  assets:
            Cash  and  cash  equivalents                                                  $668.5              $917.6
            Marketable  securities                                                            267.9                  63.5
            Accounts  receivable,  net                                                      223.9                316.5
            Deferred  income  taxes                                                              48.3                  31.1
            Prepaid  expenses  and  other  current  assets                      58.7                  59.3
                                                                                                                    ----                  ----
        Total  current  assets                                                              1,267.3            1,388.0
                                                                                                              -------            -------

        Marketable  securities                                                                  92.3                    7.6
        Computer  equipment,  software,  furniture  and
          leasehold  improvements,  net                                                  118.3                120.6
        Purchased  technologies,  net                                                      96.7                113.3
        Goodwill                                                                                          525.5                542.5
        Long  term  deferred  income  taxes,  net                                    92.7                125.7
        Other  assets                                                                                  118.3                123.0
                                                                                                                  -----                -----
                                                                                                            $2,311.1          $2,420.7
                                                                                                            ========          ========


        LIABILITIES  AND  STOCKHOLDERS'  EQUITY:

        Current  liabilities:
            Accounts  payable                                                                      $56.7                $62.4
            Accrued  compensation                                                                88.4                124.3
            Accrued  income  taxes                                                                17.9                  16.7
            Deferred  revenue                                                                      424.4                438.8
            Borrowings  under  line  of  credit                                                -                  52.1
            Other  accrued  liabilities                                                      74.3                105.8
                                                                                                                    ----                -----
        Total  current  liabilities                                                        661.7                800.1
                                                                                                                  -----                -----

        Deferred  revenue                                                                            77.5                113.3
        Long  term  income  taxes  payable                                              122.5                116.9
        Long  term  deferred  income  taxes                                                    -                  22.7
        Other  liabilities                                                                          64.3                  57.0

        Commitments  and  contingencies

        Stockholders'  equity:
            Preferred  stock                                                                                -                        -
            Common  stock  and  additional  paid-in  capital            1,166.6            1,080.4
            Accumulated  other  comprehensive  loss                                (1.4)              (11.2)
            Retained  earnings                                                                    219.9                241.5
                                                                                                                  -----                -----
        Total  stockholders'  equity                                                  1,385.1            1,310.7
                                                                                                              -------            -------
                                                                                                            $2,311.1          $2,420.7
                                                                                                            ========          ========



        Autodesk,  Inc.
        Condensed  Consolidated  Statements  of  Cash  Flows
        (In  millions)
                                                                                                                          Six  Months  Ended
                                                                                                                                  July  31,
                                                                                                                                  --------
                                                                                                                              2009        2008
                                                                                                                              ----        ----
                                                                                                                                (Unaudited)

        Operating  Activities
            Net  income  (loss)                                                                              $(21.7)  $184.4
            Adjustments  to  reconcile  net  income  (loss)  to  net
              cash  provided  by  operating  activities:
                      Depreciation  and  amortization                                                55.5        39.1
                      Stock-based  compensation  expense                                          44.4        48.4
                      Impairment  of  goodwill                                                              21.0              -
                      Restructuring  related  charges,  net                                      42.9              -
                      Gain  on  disposition  of  assets                                                (2.3)            -
                      Charge  for  acquired  in-process  research  and
                        development                                                                                        -        16.8
                      Changes  in  operating  assets  and  liabilities,
                        net  of  business  combinations                                              (65.3)    111.6
                                                                                                                              -----      -----
        Net  cash  provided  by  operating  activities                                      74.5      400.3
                                                                                                                                ----      -----

        Investing  Activities
            Purchases  of  marketable  securities                                            (298.2)      (5.6)
            Sales  of  marketable  securities                                                          1.4          4.7
            Maturities  of  marketable  securities                                              14.3              -
            Capital  expenditures                                                                          (24.3)    (39.9)
            Purchase  of  equity  investment                                                        (10.0)            -
            Business  combinations,  net  of  cash  acquired                                    -    (263.9)
                                                                                                                                  ---    ------
        Net  cash  used  in  investing  activities                                          (316.8)  (304.7)
                                                                                                                            ------    ------

        Financing  activities
            Draws  on  line  of  credit                                                                        2.2      690.0
            Repayments  of  line  of  credit                                                          (54.3)  (570.0)
            Proceeds  from  issuance  of  common  stock,  net  of
              issuance  costs                                                                                      44.1        50.1
            Repurchases  of  common  stock                                                                    -    (256.6)
                                                                                                                                  ---    ------
        Net  cash  used  in  financing  activities                                              (8.0)    (86.5)
                                                                                                                                ----      -----

        Effect  of  exchange  rate  changes  on  cash  and  cash
          equivalents                                                                                                  1.2          2.6
                                                                                                                                  ---          ---

        Net  increase  (decrease)  in  cash  and  cash  equivalents            (249.1)      11.7
        Cash  and  cash  equivalents  at  beginning  of  fiscal  year            917.6      917.9
                                                                                                                              -----      -----
        Cash  and  cash  equivalents  at  end  of  period                                $668.5    $929.6
                                                                                                                            ======    ======



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

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

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

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

                                                                                    Three  Months  Ended    Six  Months  Ended
                                                                                                  July  31,                  July  31,
                                                                                                  --------                  --------
                                                                                              2009        2008        2009            2008
                                                                                              ----        ----        ----            ----
                                                                                                (Unaudited)            (Unaudited)

        GAAP  cost  of  license  and  other  revenue        $47.1      $57.6      $96.6        $113.6
        SFAS  123R  stock-based  compensation
          expense                                                                      (0.7)      (1.1)      (1.3)          (2.1)
        Amortization  of  developed  technology              (8.3)      (5.3)    (16.6)          (8.8)
                                                                                              ----        ----      -----            ----
        Non-GAAP  cost  of  license  and  other
          revenue                                                                    $38.1      $51.2      $78.7        $102.7
                                                                                            =====      =====      =====        ======

        GAAP  gross  margin                                                $364.8    $559.8    $738.3    $1,100.6
        SFAS  123R  stock-based  compensation
          expense                                                                        0.7          1.1          1.3              2.1
        Amortization  of  developed  technology                8.3          5.3        16.6              8.8
                                                                                                ---          ---        ----              ---
        Non-GAAP  gross  margin                                        $373.8    $566.2    $756.2    $1,111.5
                                                                                          ======    ======    ======    ========

        GAAP  marketing  and  sales                                  $176.4    $230.2    $360.3        $455.7
        SFAS  123R  stock-based  compensation
          expense                                                                      (9.5)    (10.0)    (19.0)        (20.5)
                                                                                              ----      -----      -----          -----
        Non-GAAP  marketing  and  sales                          $166.9    $220.2    $341.3        $435.2
                                                                                          ======    ======    ======        ======

        GAAP  research  and  development                        $109.8    $154.8    $231.4        $300.4
        SFAS  123R  stock-based  compensation
          expense                                                                      (7.0)      (7.7)    (14.2)        (16.1)
        In-process  research  and  development                      -      (16.8)            -          (16.8)
                                                                                                ---      -----          ---          -----
        Non-GAAP  research  and  development                $102.8    $130.3    $217.2        $267.5
                                                                                          ======    ======    ======        ======

        GAAP  general  and  administrative                      $49.5      $56.0      $99.5        $105.8
        SFAS  123R  stock-based  compensation
          expense                                                                      (4.0)      (4.4)      (9.9)          (9.7)
        Amortization  of  customer  relationships
          and  trademarks                                                        (6.7)      (6.4)    (13.1)          (9.3)
                                                                                              ----        ----      -----            ----
        Non-GAAP  general  and  administrative              $38.8      $45.2      $76.5          $86.8
                                                                                            =====      =====      =====          =====

        GAAP  impairment  of  goodwill                                    $-            $-      $21.0                $-
        Impairment  of  goodwill                                                -              -      (21.0)                -
                                                                                                ---          ---      -----              ---
        Non-GAAP  impairment  of  goodwill                            $-            $-            $-                $-
                                                                                                ===          ===          ===              ===

        GAAP  restructuring  charges                                $26.4            $-      $42.9                $-
        Restructuring  charges                                          (26.4)            -      (42.9)                -
                                                                                            -----          ---      -----              ---
        Non-GAAP  restructuring  charges                              $-            $-            $-                $-
                                                                                                ===          ===          ===              ===

        GAAP  operating  expenses                                    $362.1    $441.0    $755.1        $861.9
        SFAS  123R  stock-based  compensation
          expense                                                                    (20.5)    (22.1)    (43.1)        (46.3)
        Amortization  of  customer  relationships
          and  trademarks                                                        (6.7)      (6.4)    (13.1)          (9.3)
        In-process  research  and  development                      -      (16.8)            -          (16.8)
        Impairment  of  goodwill                                                -              -      (21.0)                -
        Restructuring  charges                                          (26.4)            -      (42.9)                -
                                                                                            -----          ---      -----              ---
        Non-GAAP  operating  expenses                            $308.5    $395.7    $635.0        $789.5
                                                                                          ======    ======    ======        ======

        GAAP  income  (loss)  from  operations                  $2.7    $118.8    $(16.8)      $238.7
        SFAS  123R  stock-based  compensation
          expense                                                                      21.2        23.2        44.4            48.4
        Amortization  of  developed  technology                8.3          5.3        16.6              8.8
        Amortization  of  customer  relationships
          and  trademarks                                                          6.7          6.4        13.1              9.3
        In-process  research  and  development                      -        16.8              -            16.8
        Impairment  of  goodwill                                                -              -        21.0                  -
        Restructuring  charges                                            26.4              -        42.9                  -
                                                                                              ----          ---        ----              ---
        Non-GAAP  income  from  operations                      $65.3    $170.5    $121.2        $322.0
                                                                                            =====    ======    ======        ======

        GAAP  provision  for  income  taxes                      $(2.9)  $(35.3)  $(15.6)      $(67.5)
        Establishment  of  valuation  allowance  on
          deferred  tax  assets                                                    -              -        21.0                  -
        Income  tax  effect  on  difference  between
          GAAP  and  non-GAAP  total  costs  and
          expenses  at  a  normalized  rate                        (16.4)    (11.2)    (38.7)        (20.3)
                                                                                            -----      -----      -----          -----
        Non-GAAP  provision  for  income  tax                $(19.3)  $(46.5)  $(33.3)      $(87.8)
                                                                                          ======    ======    ======        ======

        GAAP  net  income  (loss)                                        $10.5      $89.8    $(21.7)      $184.4
        SFAS  123R  stock-based  compensation
          expense                                                                      21.2        23.2        44.4            48.4
        Amortization  of  developed  technology                8.3          5.3        16.6              8.8
        Amortization  of  customer  relationships
          and  trademarks                                                          6.7          6.4        13.1              9.3
        In-process  research  and  development                      -        16.8              -            16.8
        Impairment  of  goodwill                                                -              -        21.0                  -
        Restructuring  charges                                            26.4              -        42.9                  -
        Establishment  of  valuation  allowance  on
          deferred  tax  assets                                                    -              -        21.0                  -
        Income  tax  effect  on  difference  between
          GAAP  and  non-GAAP  total  costs  and
          expenses  at  a  normalized  rate                        (16.4)    (11.2)    (38.7)        (20.3)
                                                                                            -----      -----      -----          -----
        Non-GAAP  net  income                                              $56.7    $130.3      $98.6        $247.4
                                                                                            =====    ======      =====        ======

        GAAP  diluted  net  income  (loss)  per  share    $0.05      $0.39    $(0.09)        $0.80
        SFAS  123R  stock-based  compensation
          expense                                                                      0.09        0.10        0.19            0.21
        Amortization  of  developed  technology              0.03        0.02        0.07            0.03
        Amortization  of  customer  relationships
          and  trademarks                                                        0.03        0.03        0.06            0.04
        In-process  research  and  development                      -        0.07              -            0.07
        Impairment  of  goodwill                                                -              -        0.09                  -
        Restructuring  charges                                            0.11              -        0.18                  -
        Establishment  of  valuation  allowance  on
          deferred  tax  assets                                                    -              -        0.09                  -
        Income  tax  effect  on  difference  between
          GAAP  and  non-GAAP  total  costs  and
          expenses  at  a  normalized  rate                        (0.07)    (0.05)    (0.17)        (0.09)
                                                                                            -----      -----      -----          -----
        Non-GAAP  diluted  net  income  per  share          $0.24      $0.56      $0.42          $1.06
                                                                                            =====      =====      =====          =====

        GAAP  diluted  shares  used  in  per  share
          calculation                                                            232.3      231.1      228.0          232.1
        Impact  of  SFAS  123R  on  diluted  shares              0.8          0.8          0.5              0.5
        Shares  included  in  non-GAAP  net  income
          per  share,  but  excluded  from  GAAP  net
          loss  per  share  as  they  would  have  been
          anti-dilutive                                                                -              -          3.1                  -
                                                                                                ---          ---          ---              ---
        Non-GAAP  diluted  shares  used  in  per
          share  calculation                                                233.1      231.9      231.6          232.6
                                                                                            =====      =====      =====          =====



                                      Other  Supplemental  Financial  Information  (1)
                                                                            QTR                    QTR          QTR        QTR        YTD
        Fiscal  Year  2010                                      1                        2              3            4          2010
        Financial  Statistics
          ($  in  millions,  except
          per  share  data):
        Total  net  revenue                                $426                  $415                                      $841
                  License  and  other
                    revenue                                        $244                  $231                                      $475
                  Maintenance  revenue                  $182                  $184                                      $366

        GAAP  Gross  Margin                                    88%                    88%                                        88%
        Non-GAAP  Gross  Margin  (2)(3)              90%                    90%                                        90%

        GAAP  Operating  Expenses                    $393                  $362                                      $755
        GAAP  Operating  Margin                            -5%                      1%                                        -2%
        GAAP  Net  Income  (Loss)                      $(32)                  $10                                      $(22)
        GAAP  Diluted  Net  Income
          (Loss)  Per  Share                            $(0.14)              $0.05                                  $(0.09)

        Non-GAAP  Operating
          Expenses    (2)(4)                                $327                  $308                                      $635
        Non-GAAP  Operating
          Margin    (2)(5)                                        13%                    16%                                        14%
        Non-GAAP  Net  Income  (2)(6)                $42                    $57                                        $99
        Non-GAAP  Diluted  Net
          Income  Per  Share    (2)(7)              $0.18                $0.24                                    $0.42

        Total  Cash  and  Marketable
          Securities                                            $966              $1,029                                  $1,029
        Days  Sales  Outstanding                          49                      49                                          49
        Capital  Expenditures                            $14                    $11                                        $24
        Cash  from  Operations                            $27                    $47                                        $74
        GAAP  Depreciation  and
          Amortization                                          $27                    $28                                        $55

        Deferred  Maintenance
          Revenue  Balance                                  $458                  $453                                      $453

        Revenue  by  Geography
          (in  millions):
        Americas                                                  $163                  $159                                      $323
        Europe                                                      $167                  $157                                      $324
        Asia/Pacific                                            $96                    $99                                      $194

        Revenue  by  Segment  (in
          millions):
        Platform  Solutions  and
          Emerging  Business                              $156                  $145                                      $301
        Architecture,  Engineering
          and  Construction                                $128                  $125                                      $253
        Manufacturing                                          $94                    $98                                      $192
        Media  and  Entertainment                      $48                    $47                                        $95
        Other                                                            $-                      $-                                          $-

        Other  Revenue  Statistics:
        %  of  Total  Rev  from
          AutoCAD  and  AutoCAD  LT                        33%                    32%                                        32%
        %  of  Total  Rev  from  3D
          design  products                                      29%                    30%                                        29%
        %  of  Total  Rev  from
          Emerging  Economies                              14%                    15%                                        15%
        Upgrade  Revenue  (in  millions)          $43                    $26                                        $70

        Favorable  (Unfavorable)
          Impact  of  U.S.  Dollar
          Translation  Relative  to
          Foreign  Currencies
          Compared  to  Comparable
          Prior  Year  Period
          (in  millions):
        FX  Impact  on  Total  Net
          Revenue                                                  $(31)                $(24)                                    $(55)
        FX  Impact  on  Total
          Operating  Expenses                              $22                    $14                                        $35
        FX  Impact  on  Total  Net
          Income  (Loss)                                        $(9)                $(10)                                    $(20)

        Gross  Margin  by  Segment
          (in  millions):
        Platform  Solutions  and
          Emerging  Business                              $146                  $136                                      $282
        Architecture,  Engineering
          and  Construction                                $116                  $113                                      $229
        Manufacturing                                          $86                    $89                                      $175
        Media  and  Entertainment                      $34                    $36                                        $70
        Unallocated  amounts                              $(9)                  $(9)                                    $(18)

        Common  Stock  Statistics:
        GAAP  Shares  Outstanding      228,219,000    229,666,000                        229,666,000
        GAAP  Diluted  Weighted
          Average  Shares
          Outstanding                            227,080,000    232,286,000                        227,990,000
        Shares  Repurchased                                    -                        -                                            -

        Maintenance  Installed
          Base*                                            1,719,000        2,299,000                            2,299,000

        *The  second  quarter  of  fiscal  2010  maintenance  installed  base  includes  a
        one-time  adjustment  of  581,000  educational  seats  for  users  migrated  to  a
        standard  educational  maintenance  plan.    These  users  were  not  previously
        captured  in  our  maintenance  installed  base.


        (1)  Totals  may  not  agree  with  the  sum  of  the  components  due  to  rounding.
        (2)  To  supplement  our  consolidated  financial  statements  presented  on  a
        GAAP  basis,  Autodesk  provides  investors  with  certain  non-GAAP  measures
        including  non-GAAP  net  income,  non-GAAP  net  income  per  share,  non-GAAP
        cost  of  license  and  other  revenue,  non-GAAP  gross  margin,  non-GAAP
        operating  expenses,  non-GAAP  income  from  operations,  non-GAAP  interest  and
        other  income,  net  and  non-GAAP  provision  for  income  taxes.    These  non-GAAP
        financial  measures  are  adjusted  to  exclude  certain  costs,  expenses,  gains
        and  losses,  including  stock-based  compensation  expense,  amortization  of
        purchased  intangibles,  goodwill  impairment,  restructuring  charges,
        establishment  of  a  valuation  allowance  on  certain  deferred  tax  assets  and
        related  income  tax  expenses.    See  our  reconciliation  of  GAAP  financial
        measures  to  non-GAAP  financial  measures  herein.    We  believe  these
        exclusions  are  appropriate  to  enhance  an  overall  understanding  of  our
        past  financial  performance  and  also  our  prospects  for  the  future,  as  well
        as  to  facilitate  comparisons  with  our  historical  operating  results.    These
        adjustments  to  our  GAAP  results  are  made  with  the  intent  of  providing  both
        management  and  investors  a  more  complete  understanding  of  Autodesk's
        underlying  operational  results  and  trends  and  our  marketplace  performance.
        For  example,  the  non-GAAP  results  are  an  indication  of  our  baseline
        performance  before  gains,  losses  or  other  charges  that  are  considered  by
        management  to  be  outside  our  core  operating  results.    In  addition,  these
        non-GAAP  financial  measures  are  among  the  primary  indicators  management
        uses  as  a  basis  for  our  planning  and  forecasting  of  future  periods.

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

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

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

        (4)  GAAP  Operating  Expenses            $393                  $362                                      $755
                  Stock-based  compensation
                    expense                                          (22)                  (21)                                      (43)
                  Amortization  of  customer
                    relationships  and
                    trademarks                                      (6)                    (7)                                      (13)
                  Restructuring  charges                (17)                  (26)                                      (43)
                  Impairment  of  goodwill              (21)                      -                                        (21)
                                                                            ---                    ---                                        ---
                  Non-GAAP  Operating
                    Expenses                                      $327                  $308                                      $635

        (5)  GAAP  Operating  Margin                    -5%                      1%                                        -2%
                  Stock-based  compensation
                    expense                                              5%                      5%                                          5%
                  Amortization  of  developed
                    technology                                        2%                      2%                                          2%
                  Amortization  of  customer
                    relationships  and
                    trademarks                                        2%                      2%                                          2%
                  Restructuring  charges                    4%                      6%                                          5%
                  Impairment  of  goodwill                  5%                      0%                                          2%
                                                                            ---                    ---                                        ---
                  Non-GAAP  Operating
                    Margin                                              13%                    16%                                        14%

        (6)  GAAP  Net  Income  (Loss)              $(32)                  $10                                      $(22)
                  Stock-based  compensation
                    expense                                            23                      21                                          44
                  Amortization  of  developed
                    technology                                        8                        8                                          16
                  Amortization  of  customer
                    relationships  and
                    trademarks                                        6                        7                                          13
                  Impairment  of  goodwill                21                        -                                          21
                  Restructuring  charges                  17                      26                                          43
                  Establishment  of
                    valuation  allowance  on
                    deferred  tax  assets                    21                        -                                          21
                  Income  tax  effect  on
                    difference  between  GAAP
                    and  non-GAAP  total  costs
                    and  expenses  at  a
                    normalized  rate                          (22)                  (16)                                      (38)
                                                                            ---                    ---                                        ---
                  Non-GAAP  Net  Income                    $42                    $56                                        $98

        (7)  GAAP  Diluted  Net  Income
          (Loss)  Per  Share                            $(0.14)              $0.05                                  $(0.09)
                  Stock-based  compensation
                    expense                                        0.10                  0.09                                      0.19
                  Amortization  of  developed
                    technology                                  0.04                  0.03                                      0.07
                  Amortization  of  customer
                    relationships  and
                    trademarks                                  0.03                  0.03                                      0.06
                  Impairment  of  goodwill            0.09                        -                                      0.09
                  Restructuring  charges              0.07                  0.11                                      0.18
                  Establishment  of
                    valuation  allowance  on
                    deferred  tax  assets                0.09                        -                                      0.09
                  Income  tax  effect  on
                    difference  between  GAAP
                    and  non-GAAP  total  costs
                    and  expenses  at  a
                    normalized  rate                      (0.10)              (0.07)                                  (0.17)
                                                                        -----                -----                                    -----
                  Non-GAAP  Diluted  Net
                    Income  Per  Share                    $0.18                $0.24                                    $0.42
 





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