Autodesk 2000 Annual Report Download - page 28

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Autodesk, Inc. FY 00
Intellectual Property
Autodesk relies on a combination of patents, copy-
right and trademark laws,trade secrets,confidentiality
procedures and contractual provisions to protect its
proprietary rights. Despite such efforts to protect its
proprietary rights, unauthorized parties from time to
time have copied aspects of Autodesk’s software prod-
ucts or have obtained and used information that
Autodesk regards as proprietary. Policing unautho-
rized use of Autodesk’s software products is time-
consuming and costly. While Autodesk has received
some revenues resulting from the unauthorized use of
its software products, it is unable to measure the
extent to which piracy of its software products exists,
and software piracy can be expected to be a persistent
problem. Autodesk’s means of protecting its propri-
etary rights may not be adequate, and its competitors
may independently develop similar technology.
Autodesk expects that software product developers
will be increasingly subject to infringement claims
as the number of products and competitors in its
industry segments grows and as the functionality of
products in different industry segments overlaps.
Infringement or invalidity claims (or claims for indem-
nification resulting from infringement claims) may be
asserted against Autodesk, and any such assertions
could harm its business.Any such claims,whether with
or without merit, could be time-consuming, result
in costly litigation and diversion of resources, cause
product shipment delays,or require Autodesk 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 Autodesk’s business.
Autodesk also relies on certain software that it licenses
from third parties,including software that is integrated
with internally developed software and used in its
products to perform key functions. These third-party
software licenses may not continue to be available on
commercially reasonable terms, and the software
may not be appropriately supported, maintained or
enhanced by the licensors. The loss of licenses to,
or inability to support,maintain and enhance any such
software could result in increased costs, or in delays
or reductions in product shipments until equivalent
software could be developed, identified, licensed and
integrated, which could harm Autodesk’s business.
Attraction and Retention of Employees
Autodesk’s continued growth and success depends
significantly on the continued service of highly skilled
employees. Competition for these employees in
today’s marketplace, especially in the technology
industries, is intense. Autodesk’s ability to attract and
retain employees is dependent on a number of factors
including its continued ability to grant stock incentive
awards.The growth of well-financed Internet start-up
companies, particularly in the San Francisco Bay Area,
may negatively impact Autodesk’s ability to recruit
new personnel or retain existing personnel.The loss of
key employees or inability to recruit new employees
would negatively impact Autodesk’s business.In addi-
tion, Autodesk may experience increased compensa-
tion costs to attract and retain skilled personnel.
Impact of Year 2000
Prior to January 1,2000,Autodesk completed its reme-
diation and testing of systems for Year 2000 readiness.
As a result of those planning and implementation
efforts, Autodesk experienced no significant disrup-
tions in mission critical information technology or
other systems and believes those systems successfully
responded to the Year 2000 date change. Autodesk
expensed $1.3 million during fiscal 2000 in connection
with remediating its systems.
Single European Currency
Autodesk is in the process of addressing the issues
raised by the introduction of the Single European
Currency (“Euro”) as of January 1, 1999 and during the
transition period ending January 1, 2002. Autodesk
will continue to modify the internal systems that will
be affected by this conversion during fiscal 2001,
and does not expect the costs of further system mod-
ifications to be material. Autodesk may not be able to
complete such modifications to comply with Euro
requirements, which could harm Autodesk’s business.
Autodesk is currently evaluating the impact of the
introduction of the Euro on its foreign exchange activ-
ities, functional currency designations, and pricing
strategies in the new economic environment. In addi-
tion Autodesk faces risks to the extent that banks and
vendors upon whom Autodesk relies and their suppli-
ers are unable to make appropriate modifications to
support Autodesk’s operations with respect to Euro
transactions. While Autodesk may continue to evalu-
ate the impact of the Euro, management does not
believe its introduction will harm Autodesk’s business.
Risks Associated with Acquisitions and Investments
Autodesk periodically acquires or invests in busi-
nesses, software products and technologies that are
complementary to Autodesk’s business through
strategic alliances, debt and equity investments, and
the like.The risks associated with such acquisitions or
investments include, among others, the difficulty of
assimilating the operations and personnel of the