Computer Associates 2007 Annual Report Download - page 33

additional claims, with or without merit, will be asserted. Defending against such claims is time-consuming and could result in
significant litigation expense or settlement with unfavorable terms that could adversely affect our business, financial
condition, operating results and cash flow.
Fluctuations in foreign currencies could result in translation losses.
Most of the revenue and expenses of our foreign subsidiaries are denominated in local currencies. Given the relatively long
sales cycle that is typical for many of our products, foreign currency fluctuations could result in substantial changes due to the
foreign currency impact upon translation of these transactions into U.S. dollars. Additionally, fluctuations of the exchange
rates of foreign currencies against the U.S. dollar can affect our results from operations within those markets, all of which may
adversely impact our business, financial condition, operating results and cash flow.
Our stock price is subject to significant fluctuations.
Our stock price is subject to significant fluctuations in response to variations in quarterly operating results, the gain or loss of
significant license agreements, changes in earnings or cash flow estimates by analysts, changes in our forward-looking
guidance, announcements related to accounting issues, announcements of technological innovations or new products by us
or our competitors, changes in domestic and international economic and business conditions, general conditions in the
software and computer industries and other events or factors. In addition, the stock market in general has experienced
extreme price and volume fluctuations that have affected the market price of many companies in industries that are similar or
related to those in which we operate and that have been unrelated to the operating performance of these companies. These
market fluctuations have in the past adversely affected and may continue to adversely affect the market price of our common
stock, which in turn could affect the value of our stock-based compensation and our ability to retain and attract key
employees.
Any failure by us to execute our restructuring plan successfully could result in total costs and expenses that are greater
than expected.
We have announced restructuring plans, which include workforce reductions as well as global facility consolidations and other
cost reduction initiatives. We may have further workforce reductions or restructuring actions in the future. Risks associated
with these actions and other workforce management issues include delays in implementation of anticipated workforce
reductions, changes in restructuring plans that increase or decrease the number of employees affected, decreases in employee
morale and the failure to meet operational targets due to the loss of employees, any of which may impair our ability to achieve
anticipated cost reductions or may otherwise harm our business.
We have outsourced various functions to third parties and these arrangements may not be successful thereby resulting
in increased costs or may negatively impact service levels.
We have outsourced various functions to third parties and may outsource additional functions to third-party providers in the
future. We rely on those third parties to provide services on a timely and effective basis. Although we closely monitor the
performance of these third parties and maintain back-up plans in case third parties are unable to perform as agreed, we do not
ultimately control the performance of our outsourcing partners. The failure of third-party outsourcing partners to perform as
expected or as required by contract could result in significant disruptions and costs to our operations.
Potential tax liabilities may adversely affect our results.
We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgment is required
in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions
and calculations where the ultimate tax determination is uncertain. We are regularly under audit by tax authorities. Although
we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially
different than that which is reflected in historical income tax provisions and accruals. Should additional taxes be assessed as a
result of an audit or litigation, a material effect on our income tax provision and net income in the period or periods in which
that determination is made could result.
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