Autodesk 2012 Annual Report Download - page 87

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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 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 1 to 12 months in the future, and provide us with
some protection against currency exposures. However, our attempts to hedge against these risks may not be successful,
resulting in an adverse impact on our financial results.
The fluctuations of currencies in which we conduct business can both increase and decrease our overall revenue and
expenses for any given fiscal period. Although our foreign currency cash flow hedge program extends beyond the current
quarter in order to reduce our exposure to foreign currency volatility, we do not attempt to completely mitigate this risk, and in
any case, will incur transaction fees in adopting such hedging programs. Such volatility, even when it increases our revenues or
decreases our expenses, impacts our ability to accurately predict our future results and earnings.
We may face intellectual property infringement claims that could be costly to defend and result in our loss of significant rights.
As more software patents are granted worldwide, the number of products and competitors in our industry segments grow
and the functionality of products in different industry segments overlap, we expect that software product developers will be
increasingly subject to infringement claims. Infringement or misappropriation claims have in the past been, and may in the
future be, asserted against us, and any such assertions could harm our business. Additionally, certain patent holders without
products have become more aggressive in threatening and pursuing litigation in attempts to obtain fees for licensing the right to
use patents. Any such claims or threats, whether with or without merit, have been and could in the future be time-consuming to
defend, result in costly litigation and diversion of resources, cause product shipment delays or require us to enter into royalty or
licensing agreements. In addition, such royalty or license agreements, if required, may not be available on acceptable terms, if
at all, which would likely harm our business.
Our investment portfolio is composed of a variety of investment vehicles in a number of countries that are subject to interest
rate trends, market volatility and other economic factors. If general economic conditions further cause interest rates to decline,
credit ratings of our investments to deteriorate, or illiquidity in the financial marketplace, we may continue to experience a
decline in interest income, an inability to sell our investments, or impairment in the value of our investments.
It is our policy to invest our cash, cash equivalents and marketable securities in highly liquid instruments with, and in the
custody of, financial institutions with high credit ratings and to limit the amounts invested with any one institution, type of
security and issuer. However, we are subject to general economic conditions, interest rate trends and volatility in the financial
marketplace that can affect the income that we receive from our investments, the net realizable value of our investments
(including our cash, cash equivalents and marketable securities) and our ability to sell them. In the U.S., for example, the yields
on our portfolio securities are very low due to general economic conditions. Any one of these factors could reduce our interest
income, or result in material charges, which in turn could impact our overall net income and earnings per share.
If we were to experience a loss on any of our investments that loss may cause us to record an other-than-temporary
impairment charge. The effect of this charge could impact our overall net income and earnings per share. In any of these
scenarios, our liquidity may be negatively impacted, which in turn may prohibit us from making investments in our business,
taking advantage of opportunities and potentially meeting our financial obligations as they come due.
We are subject to legal proceedings and regulatory inquiries, and we may be named in additional legal proceedings or become
involved in regulatory inquiries in the future, all of which are costly, distracting to our core business and could result in an
unfavorable outcome, or a material adverse effect on our business, financial condition, results of operations, cash flows or the
trading price for our securities.
We are involved in legal proceedings and receive inquiries from regulatory agencies. As the global economy has changed
and our business has evolved, we have seen an increase in litigation activity and regulatory inquiries. Like many other high
technology companies, the number and frequency of inquiries from U.S. and foreign regulatory agencies we have received
regarding our business and our business practices, and the business practices of others in our industry, have increased in recent
years. In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, we
could be exposed to costly and time consuming legal proceedings that could result in any number of outcomes. While outcomes
of such actions vary, any claims or regulatory actions initiated by or against us, whether successful or not, could result in
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2012 Annual Report