Computer Associates 2005 Annual Report Download - page 72

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Table of Contents
Our operating results and revenue are subject to fluctuations caused by many economic factors associated with our industry and the
markets for our products which, in turn, may individually and collectively affect our revenue, profitability and cash flow in adverse and
unpredictable ways.
Quarterly and annual results of operations are affected by a number of factors, associated with our industry and the markets for our
products, including those listed below, which in turn could adversely affect our revenue, profitability, and cash flow in the future.
• Timing and impact of threat outbreaks (e.g. worms and viruses);
• The rate of adoption of new product technologies and releases of new operating systems;
• Demand for products and services;
• Length of sales cycle;
• Customer implementation of our products;
• Magnitude of price and product and/or services competition;
• Introduction of new hardware;
• General economic conditions in countries in which customers do a substantial amount of business;
• Customer budgets for hardware, software and services;
• Ability to develop and introduce new or enhanced versions of our products;
• Changes in foreign currency exchange rates;
• Ability to control costs;
• The size of licensing transactions;
• Reorganizations of the sales and technical services forces;
• The results of litigation, including the government and internal investigations;
• Ability to retain and attract qualified personnel; and
• Reaction of customers to our Business Model.
Any of the foregoing factors, among others, may cause our operating expenses to be disproportionately high, or cause our revenue and
operating results to fluctuate. As a consequence, our business, financial condition, operating results, and cash flow could be adversely
affected.
Because we have significant international operations that are affected by economic and market conditions as well as intracompany
decisions and capabilities, our sales and revenue may be affected in unpredictable ways.
International revenue has historically represented a significant percentage of our total worldwide revenue. Continued success in selling
our products outside the United States will depend on a variety of market and business factors, including:
• Reorganizations of the sales and technical services forces;
• Fluctuations in foreign exchange currency rates;
• Staffing key managerial positions;
• The ability to successfully localize software products for a significant number of international markets;
• General economic conditions in foreign countries;
• Political stability;
• Trade restrictions such as tariffs, duties, or other controls affecting foreign operations; and
Any of the foregoing factors, among others, could adversely affect our business, financial condition, operating results, and cash flow.
We have entered into a Deferred Prosecution Agreement (DPA) with the U.S. Attorney’s Office for the Eastern District of New York
(USAO) and a Final Consent Judgment with the SEC and if we violate either agreement we may be subject to, among other things,
criminal prosecution or civil penalties which could adversely affect our credit ratings, stock price, ability to attract or retain employees
and, therefore, our sales, revenue and client base.
Our agreements with the USAO and the SEC resolve their investigations into certain of our past accounting practices, including our
revenue recognition policies and procedures, and obstruction of their investigations provided we comply with certain continuing