Autodesk 2010 Annual Report Download - page 108

ITEM 1A. RISK FACTORS
We operate in a rapidly changing environment that involves significant risks, a number of which are beyond
our control. In addition to the other information contained in this Form 10-K, the following discussion highlights
some of these risks and the possible impact of these factors on our business, financial condition and future results
of operations. If any of the following risks actually occur, our business, financial condition or results of
operations may be adversely impacted, causing the trading price of our common stock to decline. In addition,
these risks and uncertainties may impact the “forward-looking” statements described elsewhere in this
Form 10-K and in the documents incorporated herein by reference. They could affect our actual results of
operations, causing them to differ materially from those expressed in “forward-looking” statements.
If global economic conditions do not improve or further deteriorate, our financial results may be further
harmed.
As our business has expanded globally, we have increasingly become subject to risks arising from adverse
changes in domestic and global economic and political conditions. Global economic conditions have deteriorated
over the past several quarters and it is not yet clear whether a sustainable recovery is currently taking place. This
has led to our customers deferring, reducing or cancelling purchases in response to tighter credit, negative
financial news and weaker financial performance of their businesses. Over the past several quarters, many of our
customers have reduced their work forces, thereby reducing the number of licenses and the number of
maintenance contracts they purchase from us. These factors have negatively impacted our business and our
financial results.
These actions have negatively impacted and may continue to negatively impact our business, financial results
and financial condition. In addition, the negative effect these factors have had on our cash flows has caused us to
restructure our business and in turn incur restructuring charges as well as take impairment charges on some of our
long-term assets, and may cause us to take additional restructuring actions and charges in the future.
If global economic conditions further deteriorate, or our customers continue to struggle under these
pressures, our customers may further delay, reduce or cancel their technology purchases. This could result in
further reductions in sales of our products, longer sales cycles, slower adoption of new technologies and
increased price competition. If global economic conditions do not improve, or our customers’ businesses do not
improve, our customers may further delay, reduce or cancel their technology purchases. This could result in
stagnation of our sales and our revenue.
In addition, continued weakness in the end-user market could further negatively affect the cash flow of our
distributors and resellers who could, in turn, delay paying their obligations to us. This would in turn increase our
credit risk exposure and cause delays in our recognition of revenue on future sales to these customers.
A significant portion of our revenue is generated through maintenance revenue; decreases in maintenance
attach or renewal rates, or a decrease in the number of new licenses we sell negatively impacts our future
revenue and operating results.
Our maintenance customers have no obligation to attach maintenance to their initial license or renew their
maintenance contract after the expiration of their initial maintenance period, which is typically one year. Our
customers’ attach and renewal rates may decline or fluctuate as a result of a number of factors. If our customers
do not attach maintenance to their initial license or renew their maintenance contract for our products, our
maintenance revenue will decline, and our business will suffer. In addition, a portion of the growth of our
maintenance revenue has typically been associated with growth of the number of licenses that we sell. Any
reduction in the number of licenses that we sell, even if our customers’ attach rates do not change, will have a
negative impact on our future maintenance revenue. This in turn would impact our business and harm our
financial results. Over the past several quarters, we have experienced a reduction in the number of licenses and
maintenance contracts sold as a result of increased unemployment. This in turn, has negatively impacted our
business and our financial results.
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