Autodesk 2010 Annual Report Download - page 115

In preparing our financial statements we make certain assumptions, judgments and estimates that affect
amounts reported in our consolidated financial statements, which, if not accurate, may significantly impact
our financial results.
We make assumptions, judgments and estimates for a number of items, including the fair value of goodwill,
financial instruments, long-lived assets and other intangible assets, the realizability of deferred tax assets and the
fair value of stock awards. We also make assumptions, judgments and estimates in determining the accruals for
employee related liabilities including commissions, bonuses, and sabbaticals; and in determining the accruals for
uncertain tax positions, partner incentive programs, product returns reserves, allowances for doubtful accounts,
asset retirement obligations and legal contingencies. These assumptions, judgments and estimates are drawn from
historical experience and various other factors that we believe are reasonable under the circumstances as of the
date of the consolidated financial statements. Actual results could differ materially from our estimates, and such
differences could significantly impact our financial results.
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. For example, in
October 2009, the Financial Accounting Standards Board, (“FASB”), issued two new pieces of authoritative
guidance on revenue recognition, changing previous guidance in this technical accounting area. These changes will
be effective for us February 1, 2011. We are currently assessing the impact that the adoption of these new
accounting pronouncements will have on our consolidated financial position, results of operations and cash flows.
In addition, the FASB is currently working on a joint project with the International Accounting Standards
Board regarding revenue recognition. The objective of this project is to clarify the principles for recognizing
revenue and create a joint revenue recognition standard for Generally Accepted Accounting Principles in the U.S.
(“GAAP”) and International Financial Reporting Standards. Although a proposed standard has not yet been
issued, it is expected that any proposed standard would result in changes to the way we recognize and report
revenue under GAAP. We are currently unable to estimate the impact that these changes will have on our
consolidated financial position, results of operations and cash flows.
Furthermore, during the first quarter of fiscal 2010, the State of California enacted legislation significantly
altering California tax law. As a result of the newly enacted legislation, we expect that in fiscal years 2012 and
beyond our income subject to tax in California will be less than under prior tax law and accordingly our deferred
tax assets are less likely to be realized.
We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results
and cash flows.
Because we conduct a substantial portion of our business outside the U.S. and we make certain business and
resource decisions based on assumptions about foreign currency, we face exposure to adverse movements in foreign
currency exchange rates. These exposures may change over time as business practices evolve and economic
conditions change, and they could have a material adverse impact on our financial results and cash flows.
We use derivative instruments to manage a portion of our earnings exposure and cash flow exposure to
fluctuations in foreign currency exchange rates. As part of our risk management strategy, we use foreign
currency forward and option contracts to manage a portion of our exposures of underlying assets, liabilities and
other obligations, which exist as part of our ongoing business operations. These foreign currency instruments
have maturities that extend for one to 12 months in the future, and provide us with some protection against
currency exposures. Our attempts to hedge against these risks may not be successful, resulting in an adverse
impact on our financial results.
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