Autodesk 2002 Annual Report Download - page 31

aided design software. As a result, we are transitioning to new business models, requiring a considerable
investment of technical and financial resources. Such investments may not result in sufficient revenue generation
to justify their costs, or competitors may introduce new products and services that will achieve acceptance among
our current customers, adversely affecting our competitive position.
Disruptions with third party developer and licensing relationships could adversely impact our business.
Independent firms and contractors perform some of our product development activities, while other
technologies are licensed from third parties. We generally either own or license the software developed by third
parties. Because talented development personnel are in high demand, independent developers, including those
who currently develop products for us, may not be able to provide development support to us in the future.
Similarly, we may not be able to obtain and renew license agreements on favorable terms, if at all, and any
failure to do so could harm our business.
Our business strategy has historically depended in part on our relationships with third-party developers, who
provide products that expand the functionality of our design software. Some developers may elect to support
other products or may experience disruption in product development and delivery cycles. In particular markets,
this disruption could negatively impact these third-party developers and end users, which could harm our
business.
Our international operations expose us to significant regulatory, intellectual property, collections, exchange
fluctuations and other risks, which could adversely impact our future net revenues.
We anticipate that international operations will continue to account for a significant portion of our
consolidated net revenues. Risks inherent in our international operations include the following: unexpected
changes in regulatory practices and tariffs, difficulties in staffing and managing foreign operations, longer
collection cycles for accounts receivable, potential changes in tax laws and laws regarding the management of
data, greater difficulty in protecting intellectual property and the impact of fluctuating exchange rates between
the U.S. dollar and foreign currencies in markets where we do business.
Our international results may also be impacted by general economic and political conditions in these foreign
markets or in specific large foreign markets. These and other factors may adversely impact our future
international operations and consequently our business as a whole.
Our risk management strategy uses derivative financial instruments in the form of foreign currency option
contracts and forward contracts for the purpose of hedging foreign currency market exposures, which exist as a
part of our ongoing business operations.
If we do not maintain our relationship with the members of our distribution channel, our ability to generate net
revenues will be adversely affected.
We sell our software products primarily to distributors and resellers. Our ability to effectively distribute our
products depends in part upon the financial and business condition of our reseller network. Computer software
dealers and distributors are typically not highly capitalized and have previously experienced difficulties during
times of economic contraction and may do so in the future. In addition, the changing distribution models
resulting from the Internet, from increased focus on direct sales to major accounts or from two-tiered distribution
may impact our reseller network in the future. While no single customer accounted for more than 10 percent of
our consolidated net revenues in fiscal 2002, 2001 or 2000, the loss of or a significant reduction in business with
any one of our major international distributors or large U.S. resellers could harm our business.
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