Autodesk 2006 Annual Report Download - page 61

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the U.S. dollar and foreign currencies. These 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 forward
and option contracts, for the purpose of hedging foreign currency market exposures, during each quarter, which
exist as a part of our ongoing business operations. These instruments provide us some protection against
currency exposures for only the current quarter. Significant fluctuations in exchange rates between the U.S. dollar
and foreign currency markets may adversely impact our future net revenues.
While 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.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), we are required to furnish a
report by our management on our internal control over financial reporting. The report contains, among other
matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of our
fiscal year, including a statement as to whether or not our internal control over financial reporting is effective.
This assessment must include disclosure of any material weaknesses in our internal control over financial
reporting identified by management. Such report must also contain a statement that our independent registered
public accounting firm has issued an attestation report on management’s assessment of such internal controls.
While we have determined in our Management Report on Internal Control over Financial Reporting included
in this Annual Report on Form 10-K that our internal control over financial reporting was effective as of January 31,
2006, we must continue to monitor and assess our internal control over financial reporting. If our management
identifies one or more material weaknesses in our internal control over financial reporting and such weakness
remains uncorrected at fiscal year end, we will be unable to assert such internal control is effective at fiscal year
end. If we are unable to assert that our internal control over financial reporting is effective at fiscal year end
(or if our independent registered public accounting firm is unable to attest that our management’s report is fairly
stated or they are unable to express an opinion on the effectiveness of our internal controls), we could lose
investor confidence in the accuracy and completeness of our financial reports, whichwould likely have an adverse
effect on our business and stock price.
Our business could suffer as a result of risks associated with strategic acquisitions and investments such as the
acquisition of Alias.
We periodically acquire or invest in businesses, software products and technologies that are complementary
to our business through strategic alliances, equity investments or acquisitions. For example, during the fourth
quarter of fiscal 2006, we completed the acquisition of Alias Systems Holdings, Inc. The risks associated with
such acquisitions include, among others, the difficulty of assimilating the products, operations and personnel
of the companies, the failure to realize anticipated revenue and cost projections, the requirement to test and
assimilate the internal control processes of the acquired business in accordance with the requirements of Section
404, and the diversion of management’s time and attention. In addition, such investments and acquisitions, may
involve significant transaction or integration-related costs. We may not be successful in overcoming such risks,
and such investments and acquisitions may negatively impact our business. In addition, such investments and
acquisitions have in the past and may in the future contribute to potential fluctuations in quarterly results of
operations. The fluctuations could arise from transaction-related costs and charges associated with eliminating
redundant expenses or write-offs of impaired assets recorded in connection with acquisitions. These costs or
charges, including those relating to the Alias acquisition, could negatively impact results of operations for a given
period or cause quarter to quarter variability in our operating results.
2006 Annual Report
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