Autodesk 2007 Annual Report Download - page 79

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2007 Annual Report
Changes in existing financial accounting standards or practices, or taxation rules or practices may adversely
affect our results of operations.
Changes in existing accounting or taxation rules or practices, new accounting pronouncements or
taxation rules, or varying interpretations of current accounting pronouncements or taxation practice
could have a significant adverse effect on our results of operations or the manner in which we conduct our
business. Further, such changes could potentially affect our reporting of transactions completed before
such changes are effective. In particular, for fiscal 2007, we adopted Statement of Financial Accounting
Standards No. 123R (“SFAS 123R”) which requires us to record stock-based compensation charges to
earnings for employee stock option grants using a fair-value-based method for determining such charges.
We believe that the adoption of SFAS 123R will continue to materially adversely impact our earnings and
may impact the manner in which we conduct our business.
Our international operations expose us to significant regulatory, intellectual property, collections, exchange
fluctuations, taxation and other risks, which could adversely impact our future net revenues and increase our
net expenses.
We anticipate that international operations will continue to account for a significant portion of our
net revenues and will provide significant support to our overall development efforts. Risks inherent in
our international operations include the following: the impact of fluctuating exchange rates between the
U.S. dollar and foreign currencies in markets where we do business, unexpected changes in regulatory
practices and tariffs, difficulties in staffing and managing foreign sales and development operations,
longer collection cycles for accounts receivable, potential changes in tax laws, tax arrangements with
foreign governments and laws regarding the management of data, possible future limitations upon foreign
owned businesses, and greater difficulty in protecting intellectual property.
Our international results will also continue to be impacted by economic and political conditions in
foreign markets generally and in specific large foreign markets, especially by changes in foreign exchange
rates between 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. The 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.