Autodesk 2012 Annual Report Download - page 84

of licenses that we sell. Any reduction in the number of licenses that we sell, even if our customers' attach rates do not change,
will have a negative impact on our future maintenance revenue. This in turn would impact our business and harm our financial
results.
We recognize maintenance revenue ratably over the term of the maintenance contracts, which is predominantly one year,
but may also range up to five years. Decreases in net maintenance billings will negatively impact future maintenance revenue,
however future maintenance revenue will also be impacted by other factors such as the amount, timing and mix of contract
terms of future billings.
We are dependent on international revenue and operations, exposing us to significant regulatory, global economic, intellectual
property, collections, currency exchange rate, taxation, political instability and other risks, which could adversely impact our
financial results.
We are dependent on our international operations for a significant portion of our revenue. Our international revenue,
including that from emerging economies, is subject to general economic and political conditions in foreign markets, including
conditions in foreign markets resulting from economic and political conditions in the U.S. Our revenue is also impacted by the
relative geographical and country mix of our revenue over time. These factors have recently adversely impacted and may in the
future adversely impact our international revenue, and consequently our business as a whole. Further, our dependency on
international revenue makes us much more exposed to global economic and political trends, which can negatively impact our
financial results, even if our results in the U.S. are strong for a particular period.
We anticipate that our international operations will continue to account for a significant portion of our net revenue, and,
as we expand our international development, sales and marketing expertise, will provide significant support to our overall
efforts in countries outside of the U.S. Risks inherent in our international operations include fluctuating currency exchange
rates, including risks related to any hedging activities we undertake, unexpected changes in regulatory requirements and
practices, delays resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas and other trade
barriers and restrictions, transportation delays, operating in locations with a higher incidence of corruption and fraudulent
business practices, particularly in emerging economies, increasing enforcement by the U.S. under the Foreign Corrupt Practices
Act, adoption of stricter anti-corruption laws in certain countries, including the United Kingdom, difficulties in staffing and
managing foreign sales and development operations, longer collection cycles for accounts receivable, potential changes in tax
laws, including possible U.S. tax law changes that, if enacted, could significantly impact how U.S. multinational companies are
taxed on foreign subsidiary earnings, tax arrangements with foreign governments, including our ability to meet and review the
terms of those tax arrangements, and laws regarding the management of and access to data and public networks, possible future
limitations upon foreign owned businesses, increased financial accounting and reporting burdens and complexities, inadequate
local infrastructure, greater difficulty in protecting intellectual property, and other factors beyond our control, including popular
uprisings, terrorism, war, natural disasters and diseases.
Some of our business partners also have international operations and are subject to the risks described above. Even if we
are able to successfully manage the risks of international operations, our business may be adversely affected if our business
partners are not able to successfully manage these risks.
Our business could suffer as a result of risks, costs and charges associated with strategic acquisitions and investments.
We regularly acquire or invest in businesses, software products and technologies that are complementary to our business
through acquisitions, strategic alliances or equity or debt investments. The risks associated with such acquisitions include,
among others, the difficulty of assimilating products, operations and personnel, inheriting liabilities such as intellectual
property infringement claims, 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 of the
Sarbanes-Oxley Act of 2002 and the diversion of management's time and attention. Our recent increase in the number of
acquisitions further exacerbates these risks.
In addition, such acquisitions and investments involve other risks such as:
• the inability to retain customers, vendors, distributors, business partners, and other entities associated with the acquired
business;
• the potential impact on relationships with existing customers, vendors, distributors as business partners as a result of
acquiring another business;
• the potential that due diligence of the acquired business or product does not identify significant problems;
• the potential any one or multiple of the investments become impaired in a given reporting period;
• the potential for incompatible business cultures; and
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• significant transaction or integration-related costs.
We may not be successful in overcoming such risks, and such acquisitions and investments may negatively impact our
business. In addition, such acquisitions and investments have in the past and may in the future contribute to potential
fluctuations in our quarterly financial results These 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 and
investments. These costs or charges could negatively impact our financial results for a given period, cause quarter to quarter
variability in our financial results or negatively impact our financial results for several future periods.
The current global economic uncertainty may lead to a reduction of our revenue levels and force us to take actions to
reduce our cost structure to more closely align our costs with our reduced revenue levels. Over the past several years we have
on several occasions taken such actions. In taking any future restructuring actions, we may incur, and over the past several
years have incurred, additional costs that negatively impact our operating margins. If we do not achieve the proper balance of
these cost reduction initiatives, we may eliminate critical elements of our operations, the loss of which could negatively impact
our ability to benefit from eventual economic growth.
In addition, such global economic uncertainty and resulting impact on our business may cause us to take, and over the
past several years we have taken, actions to stimulate demand for our products through a number of programs. Although we
attempt to balance the cost of these programs against the longer term benefits, it is possible that we will make such investments
without corresponding increases in demand for our products and our revenue. This would further reduce our operating margins
and have a negative impact on our financial results.
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 other factors
described in this Part I, Item 1A and the following:
• changes in estimates of future results or recommendations by securities analysts;
• the announcement of new products or product enhancements by us or our competitors;
• shortfalls in our expected financial results, including net revenue, earnings or key performance metrics;
• quarterly variations in our or our competitors' results of operations;
• unusual events such as significant acquisitions, divestitures, regulatory actions and litigation;
• changes in laws, rules or regulations applicable to our business;
• general socio-economic, political or market conditions; and
• other factors, including factors unrelated to our operating performance, such as instability affecting the economy or the
operating performance of our competitors.
Significant changes in the price of our common stock could expose us to additional costly and time-consuming litigation.
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.
Rapid technological changes, as well as changes in customer requirements and preferences, characterize the software
industry. We devote significant resources to the development of new technologies, such as our design and entertainment
products and our digital prototyping and collaboration products. In addition, we frequently introduce new business models or
methods that require a considerable investment of technical and financial resources such as an increase in our portfolio of, and
focus on, suites. We are making such investments through further development and enhancement of our existing products, as
well as through acquisitions of new product lines. 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.