Citrix 2005 Annual Report Download - page 27

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Page฀25
December฀31,฀2004,฀which฀is฀reflected฀as฀cost฀of฀service฀revenues฀rather฀than฀sales,฀marketing฀and฀support฀expenses.฀In฀2006,฀
we฀ currently฀ expect฀ sales,฀ marketing฀ and฀ support฀ expenses฀ to฀ increase฀ moderately฀ due฀ to฀ the฀ full฀ year฀ impact฀ of฀ our฀ 2005฀
Acquisitions,฀increased฀compensation฀costs฀as฀we฀continue฀to฀make฀investments฀in฀our฀business฀and฀hire฀personnel,฀as฀well฀as,฀
additional฀compensation฀costs฀related฀to฀the฀adoption฀of฀SFAS฀No.฀123R.
Sales,฀marketing฀and฀support฀expenses฀increased฀approximately฀$84.8฀million฀during฀2004฀as฀compared฀to฀2003,฀primarily฀due฀to฀
the฀hiring฀of฀additional฀sales฀personnel฀and฀related฀personnel฀costs฀and฀increases฀in฀commissions฀and฀other฀variable฀compensation฀
costs฀due฀to฀the฀achievement฀of฀targeted฀sales฀goals฀and฀an฀increase฀in฀staffing฀and฀associated฀personnel฀costs฀related฀to฀the฀
Expertcity฀acquisition.฀In฀addition,฀there฀was฀an฀increase฀in฀marketing฀program฀costs฀resulting฀from฀our฀worldwide฀brand฀awareness฀
and฀advertising฀campaign฀and฀from฀the฀marketing฀of฀services฀related฀to฀our฀Online฀Services฀division,฀which฀were฀introduced฀in฀the฀
first฀quarter฀of฀2004.฀These฀increases฀were฀partially฀offset฀by฀an฀increase฀in฀the฀allocation฀of฀certain฀revenue฀generating฀services฀
expenses฀from฀operating฀expense฀to฀cost฀of฀services฀revenues.
General฀and฀Administrative฀Expenses
Year฀Ended฀December฀31, 2005฀฀
Compared฀to
2004฀
Compared฀to
(In฀thousands) 2005 2004 2003 2004 2003
General฀and฀administrative $฀125,538 $฀106,516 $฀85,672 $฀19,022 $฀20,844
General฀and฀administrative฀expenses฀consisted฀primarily฀of฀personnel-related฀costs฀and฀expenses฀related฀to฀outside฀consultants฀
assisting฀ with฀ regulatory฀ compliance฀ and฀ information฀ systems,฀ as฀ well฀ as,฀ auditing฀ and฀ legal฀ fees.฀ General฀ and฀ administrative฀
expenses฀increased฀approximately฀$19.0฀million฀for฀the฀year฀ended฀December฀31,฀2005฀compared฀to฀the฀year฀ended฀December฀31,฀
2004,฀primarily฀due฀to฀an฀increase฀in฀headcount,฀associated฀salaries฀and฀employee฀related฀expenses,฀an฀increase฀in฀staffing฀and฀
employee฀related฀expenses฀due฀to฀the฀2005฀Acquisitions฀and,฀to฀a฀lesser฀extent฀the฀full฀year฀impact฀of฀our฀2004฀Acquisitions.฀We฀
currently฀expect฀general฀and฀administrative฀expenses฀to฀increase฀in฀2006฀primarily฀due฀to฀the฀full฀year฀impact฀of฀our฀2005฀Acquisitions฀
and฀due฀to฀additional฀compensation฀costs฀related฀to฀the฀adoption฀of฀SFAS฀No.฀123R.
General฀and฀administrative฀expenses฀increased฀approximately฀$20.8฀million฀during฀2004฀as฀compared฀to฀2003฀primarily฀due฀to฀฀
an฀increase฀in฀external฀consulting฀and฀services฀associated฀with฀regulatory฀compliance฀requirements฀and฀information฀systems,฀an฀
increase฀in฀headcount฀and฀related฀personnel฀costs฀as฀well฀as฀an฀increase฀in฀staffing฀and฀associated฀personnel฀costs฀related฀to฀the฀
Expertcity฀acquisition.
Amortization฀of฀Other฀Intangible฀Assets
Year฀Ended฀December฀31, 2005฀฀
Compared฀to
2004฀
Compared฀to
(In฀thousands) 2005 2004 2003 2004 2003
Amortization฀of฀other฀intangible฀assets $฀ 11,622 $฀6,204 $฀300 ฀ $฀ 5,418 ฀ $฀ ฀฀5,904
Amortization฀ of฀ other฀ intangible฀ assets฀ increased฀ approximately฀ $5.4฀million฀ in฀ 2005฀ as฀ compared฀ to฀2004฀ primarily฀ due฀ to฀ an฀
increase฀in฀amortization฀expense฀related฀to฀certain฀acquired฀finite-lived฀intangible฀assets.฀As฀of฀December฀31,฀2005,฀we฀had฀unamortized฀
other฀ identified฀intangible฀assets฀ with฀ estimable฀useful฀ lives฀in฀ the฀net฀ amount฀of฀$55.6฀million.฀Amortization฀ of฀ other฀intangible฀
assets฀increased฀approximately฀$5.9฀million฀in฀2004฀as฀compared฀to฀2003฀primarily฀due฀to฀an฀increase฀in฀amortization฀expense฀
related฀to฀intangible฀assets฀acquired฀in฀the฀Expertcity฀acquisition.฀We฀currently฀ expect฀amortization฀ expense฀to฀increase฀during฀
2006฀as฀a฀result฀of฀our฀acquisitions.฀For฀more฀information฀regarding฀our฀acquisitions฀see,฀“Management’s฀Discussion฀and฀Analysis฀
of฀Financial฀Condition฀and฀Results฀of฀Operations—Acquisitions”฀and฀Note฀3฀to฀our฀consolidated฀financial฀statements.
In-Process฀Research฀and฀Development
Year฀Ended฀December฀31, 2005฀฀
Compared฀to
2004฀
Compared฀to
(In฀thousands) 2005 2004 2003 2004 2003
In-process฀research฀and฀development $฀ 7,000 $฀19,100 $฀— $(12,100) $฀19,100
In฀2005,฀$7.0฀million฀of฀the฀purchase฀price฀paid฀for฀our฀2005฀Acquisitions฀was฀allocated฀to฀IPR&D,฀and฀in฀2004,฀$19.1฀million฀of฀the฀
purchase฀price฀paid฀for฀our฀2004฀Acquisitions฀was฀allocated฀to฀IPR&D.฀The฀amounts฀allocated฀to฀IPR&D฀in฀our฀acquisitions฀had฀not฀
yet฀reached฀technological฀feasibility,฀had฀no฀alternative฀future฀use฀and฀were฀written-off฀at฀the฀date฀of฀the฀acquisitions฀in฀accordance฀