Autodesk 2014 Annual Report Download - page 98

2013 Annual Report
2014 Form 10-K 24
We may face intellectual property infringement claims that could be costly to defend and result in the loss of significant rights.
As more software patents are granted worldwide, the number of products and competitors in our industry segments grows
and the functionality of products in different industry segments overlaps, we expect that software product developers will be
increasingly subject to infringement claims. Infringement or misappropriation claims have in the past been, and may in the
future be, asserted against us, and any such assertions could harm our business. Additionally, certain patent holders without
products have become more aggressive in threatening and pursuing litigation in attempts to obtain fees for licensing the right to
use patents. Any such claims or threats, whether with or without merit, have been and could in the future be time-consuming to
defend, result in costly litigation and diversion of resources, 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.
Our investment portfolio is composed of a variety of investment vehicles in a number of countries that are subject to interest
rate trends, market volatility and other economic factors. If general economic conditions decline, this could cause the credit
ratings of our investments to deteriorate, illiquidity in the financial marketplace, and we may experience a decline in interest
income, and an inability to sell our investments, leading to impairment in the value of our investments.
It is our policy to invest our cash, cash equivalents and marketable securities in highly liquid instruments with, and in the
custody of, financial institutions with high credit ratings and to limit the amounts invested with any one institution, type of
security and issuer. However, we are subject to general economic conditions, interest rate trends and volatility in the financial
marketplace that can affect the income that we receive from our investments, the net realizable value of our investments
(including our cash, cash equivalents and marketable securities) and our ability to sell them. In the U.S., for example, the yields
on our portfolio securities are very low due to general economic conditions. Any one of these factors could reduce our
investment income, or result in material charges, which in turn could impact our overall net income and earnings per share.
From time to time we make direct investments in privately held companies. The privately held companies in which we
invest are considered inherently risky. The technologies and products these companies have under development are typically in
the early stages and may never materialize, which could result in a loss of all or a substantial part of our initial investment in
these companies. The evaluation of privately held companies is based on information that we request from these companies,
which is not subject to the same disclosure regulations as U.S. publicly traded companies, and as such, the basis for these
evaluations is subject to the timing and accuracy of the data received from these companies.
If we were to experience a loss on any of our investments that loss may cause us to record an other-than-temporary
impairment charge. The effect of this charge could impact our overall net income and earnings per share. In any of these
scenarios, our liquidity may be negatively impacted, which in turn may prohibit us from making investments in our business,
taking advantage of opportunities and potentially meeting our financial obligations as they come due.
We are subject to legal proceedings and regulatory inquiries, and we may be named in additional legal proceedings or become
involved in regulatory inquiries in the future, all of which are costly, distracting to our core business and could result in an
unfavorable outcome, or a material adverse effect on our business, financial condition, results of operations, cash flows or the
trading price for our securities.
We are involved in legal proceedings and receive inquiries from regulatory agencies. As the global economy has changed
and our business has evolved, we have seen an increase in litigation activity and regulatory inquiries. Like many other high
technology companies, the number and frequency of inquiries from U.S. and foreign regulatory agencies we have received
regarding our business and our business practices, and the business practices of others in our industry, have increased in recent
years. In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, we
could be exposed to costly and time consuming legal proceedings that could result in any number of outcomes. Although
outcomes of such actions vary, any claims or regulatory actions initiated by or against us, whether successful or not, could
result in expensive costs of defense, costly damage awards, injunctive relief, increased costs of business, fines or orders to
change certain business practices, significant dedication of management time, diversion of significant operational resources, or
otherwise harm our business. In any of these cases, our financial results could be negatively impacted.
Although 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.