Autodesk 2006 Annual Report Download - page 57

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sometimes lead to costly litigation and counterclaims. Our inability to protect our proprietary information could
harm our business.
From time to time, we receive claims alleging infringement of a third party’s intellectual property rights,
including patents. Disputes involving our intellectual property rights or those of another party have in the past
and may in the future lead to, among other things, costly litigation or product shipment delays, which could harm
our business.
We retain ownership of software we develop. All software is licensed to users and provided in object code
pursuant to either shrink-wrap, embedded or on-line licenses, or signed license agreements. These agreements
contain restrictions on duplication, disclosure and transfer.
We believe that because of the limitations of lawsprotecting our intellectual property and the rapid, ongoing
technological changes in both the computer hardware and software industries, we must rely principally upon
software engineering and marketing skills to maintain and enhance our competitive market position.
While we have recovered some revenues resulting from the unauthorized use of our software products, we
are unable to measure the full extent to which piracy of our software products exists. We believe, however, that
software piracy is and can be expected to be a persistent problem.
PRODUCTION AND SUPPLIERS
Production of our Design Solutions Segment and certain Media and Entertainment Segment software
products involves duplication of the software media and the printing of user manuals. The purchase of media
and the transfer of the software programs onto media for distribution to customers are performed by us and
by licensed subcontractors. Media for our products include CD-ROMs which are available from multiple sources.
User manuals for our products and packaging materials are produced to our specifications by outside sources.
Production is generally performed in leased facilities operated by us. Some product assembly is also performed
by independent third-party contractors. To date, we have not experienced any material difficulties or delays in
the production of our software and documentation.
In addition, the Media and Entertainment Segment has historically relied on third-party vendors for the
supply of hardware components used in its systems. Many of Media and Entertainment’s software products
currently run on workstations manufactured by Silicon Graphics, Inc. (“SGI”). There are significant risks associated
with this reliance on SGI, including SGI’s current financial instability and its plans for future product development,
which could include curtailing development of next generation workstations targeted at our markets. SGI has
recently announced its intentions to cease development of new products for the media and entertainment
industry. We now offer a complete range of Media and Entertainment Segment products for use on standard,
open, PC-based Linux platforms to mitigate these risks. Our customers may now choose to adopt our products
using these alternative platforms, or may delay purchases while evaluating the new platforms. See Item 1A, “Risk
Factors,” for further discussion of this risk.
EMPLOYEES
As of January 31, 2006, we employed 4,813 people, including 517 resulting from our acquisition of Alias. None
of our employees in the United States are represented by a labor union; however, in certain foreign countries,
our employees are represented by work councils. We have never experienced any work stoppages and believe
our employee relations are good. Reliance upon employees in other countries entails various risks that possible
further government instability or regulation unfavorable to foreign-owned businesses could negatively impact
our business in the future.
Competition in recruiting personnel in the software industry, especially highly skilled engineers, is intense.
We believe our continued growth and future success is highly dependent on our continued ability to attract,
retain and motivate highly skilled employees.
2006 Annual Report
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