Autodesk 2010 Annual Report Download - page 117

Further, given the rapid speed of changing customer expectations and advancement of technology inherent
in the software industry, as well as the extensive and complex efforts required to create useful and widely
accepted products, our executive management team must act quickly, continuously and with vision. Although we
have articulated a strategy that we believe will fulfill these challenges, if we fail to execute properly on that
strategy, adapt that strategy as market conditions evolve, fail to internalize and execute on that strategy, we may
fail to meet our customers’ expectations, fail to compete with our competitors’ products and technology and lose
the confidence of our channel partners and employees. This in turn could adversely affect our business and
financial performance.
Our business could suffer as a result of risks, costs and charges associated with strategic acquisitions and
investments.
We regularly acquire or invest in businesses, software products and technologies that are complementary to
our business through acquisitions, strategic alliances or equity investments. The risks associated with such
acquisitions include, among others, the difficulty of assimilating products, operations and personnel, 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 of the Sarbanes-Oxley Act
of 2002, and the diversion of management’s time and attention.
In addition, such acquisitions and investments may involve significant transaction or integration-related
costs. We may not be successful in overcoming such risks, and such acquisitions and investments may negatively
impact our business. In addition, such acquisitions and investments have in the past and may in the future
contribute to potential fluctuations in our quarterly results of operations. These 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 and investments. For example, during our first quarter of fiscal
2010, we recorded an impairment charge of $21.0 million related to goodwill associated with an acquisition in
our M&E segment. In addition, we recorded an impairment charge of $128.9 million during our fourth quarter of
fiscal 2009, also primarily related to goodwill associated with acquisitions in our M&E segment. We also may
need to make further investments to support these acquired companies and may have difficulty identifying and
acquiring appropriate resources. These costs or charges could negatively impact our results of operations for a
given period, cause quarter to quarter variability in our operating results or negatively impact our operating
results for several future periods.
Our business could be adversely affected if we are unable to attract and retain key personnel.
Our success depends largely on our ability to attract and retain highly skilled technical, professional,
managerial, sales and marketing personnel. Historically, competition for these key personnel has been intense.
The loss of services of any of our key personnel, the inability to retain and attract qualified personnel in the
future, or delays in hiring required personnel, particularly engineering and sales personnel, could make it difficult
to meet key objectives, such as timely and effective product introductions and financial goals.
Our operating results could be negatively impacted if our tax positions are successfully challenged by tax
authorities.
We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Our
effective tax rate is based on our expected geographic mix of earnings, statutory rates, intercompany transfer
pricing, and enacted tax rules. Significant judgment is required in determining our effective tax rate and in
evaluating our tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer
pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. It is
possible that these positions may be challenged by jurisdictional tax authorities and may have a significant
impact on our effective tax rate.
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