Computer Associates 2006 Annual Report Download - page 43

can be no assurances that such restrictions or other restrictions will not have a material adverse effect on our
business, financial condition, operating results and cash flow.
The markets for some or all of our key product areas may not grow.
Our products are aligned by software business unit. Our business units consist of Enterprise Systems Management,
Security Management, Storage Management, Business Service Optimization and the CA Products Group — which
encompass solutions from a number of CA brands that fall outside of our core areas of systems and security
management. Some or all of these areas may not grow, may decline in growth, or customers may decline or forgo
use of products in some or all of these product areas. This is particularly true in newly emerging areas. A decline in
sales in these product areas could result in decreased demand for our products and services, which would adversely
impact our business, financial condition, operating results and cash flow.
Third parties could claim that our products infringe their intellectual property rights which could result in
significant litigation expense or settlement with unfavorable terms that could adversely affect our business,
financial condition, operating results and cash flow.
From time to time we receive notices from third parties claiming infringement of various forms of their intellectual
property. Investigation of these claims, whether with or without merit, can be expensive and could affect
development, marketing or shipment of our products. As the number of software patents issued increases, it is
likely that additional claims, with or without merit, will be asserted. Defending against such claims is time-
consuming and could result in significant litigation expense or settlement with unfavorable terms that could
adversely affect our business, financial condition, operating results and cash flow.
Fluctuations in foreign currencies could result in translation losses.
Most of the revenue and expenses of our foreign subsidiaries are denominated in local currencies. Given the
relatively long sales cycle that is typical for many of our products, foreign currency fluctuations could result in
substantial changes due to the foreign currency impact upon translation of these transactions into U.S. dollars.
Additionally, fluctuations of the exchange rates of foreign currencies against the U.S. dollar can affect our revenue
within those markets, all of which may adversely impact our business, financial condition, operating results and
cash flow.
Our stock price is subject to significant fluctuations.
Our stock price is subject to significant fluctuations in response to variations in quarterly operating results, the gain
or loss of significant license agreements, changes in earnings estimates by analysts, announcements related to
accounting issues, announcements of technological innovations or new products by us or our competitors, changes
in domestic and international economic and business conditions, general conditions in the software and computer
industries and other events or factors. In addition, the stock market in general has experienced extreme price and
volume fluctuations that have affected the market price of many companies in industries that are similar or related to
those in which we operate and that have been unrelated to the operating performance of these companies. These
market fluctuations have in the past adversely affected and may continue to adversely affect the market price of our
common stock, which in turn could affect the value of our stock-based compensation and our ability to retain and
attract key employees.
Any failure by us to execute our restructuring plan successfully could result in total costs and expenses that
are greater than expected.
In July 2005, we announced a restructuring plan to increase efficiency and productivity and to more closely align
our investments with strategic growth opportunities. The plan includes a workforce reduction of approximately five
percent or 800 positions worldwide as well as facility and procurement rationalization. We may have further
workforce reductions or restructuring actions in the future. Risks associated with these actions and other workforce
management issues include delays in implementation of anticipated workforce reductions, changes in restructuring
plans that increase or decrease the number of employees affected, decreases in employee morale and the failure to
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