Computer Associates 2008 Annual Report Download - page 27

be no assurances that such restrictions or other restrictions will not have a material adverse effect on our business,
financial condition, operating results and cash flow.
Third parties could claim that our products infringe their intellectual property rights or that we owe royalty payments,
which could result in significant litigation expense or settlement with unfavorable terms, which could materially
adversely affect our business, financial condition, operating results and cash flow.
From time to time third parties may claim that our products infringe various forms of their intellectual property or that
we owe royalty payments to them. Investigation of these claims, whether with or without merit, can be expensive and
could affect development, marketing or shipment of our products. As the number of software patents issued increases, it
is likely that 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, which could materially 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 and that a substantial portion of our revenue is generated
outside of the U.S., foreign currency fluctuations could result in substantial changes due to the foreign currency impact
upon translation of these transactions into U.S. dollars.
In the normal course of business, we employ various strategies to manage these risks, including the use of derivative
instruments. To the extent that these strategies do not manage all of the risks inherent in our foreign exchange
exposures or that these strategies may cause our earnings and expenses to fluctuate more than they would have had
these strategies not been employed, fluctuations of the exchange rates of foreign currencies against the U.S. dollar could
materially adversely affect 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 reaction to variations in quarterly operating and financial results,
the gain or loss of significant license agreements, changes in our public forecasts of operating and financial results,
changes in investment analysts’ estimates of our operating and financial results, 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 from
time to time in the past adversely affected and may continue to adversely affect the market price of our common stock,
which in turn could adversely affect the value of our stock-based compensation and our ability to retain and attract key
employees, which could materially adversely affect our business, financial condition, operating results and cash flow.
Any failure by us to execute our restructuring plans and related sales model changes successfully could result in total
costs that are greater than expected or revenues that are less than anticipated.
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, which could
materially adversely affect our financial condition, operating results and cash flow.
During fiscal 2008, our restructuring efforts in Asia focused on shifting our sales model in certain smaller countries from
a direct sales force model to an indirect, partner-led model. We may implement this strategy in other regions in the
future. Risks associated with this business model shift include the potential inability of our partners to sell our products
effectively and to provide adequate implementation services and product support. A greater reliance on partners will
also subject us to further third party risks associated with business practices in those regions.
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