Citrix 2005 Annual Report Download - page 34

In฀January฀2003,฀the฀FASB฀issued฀FASB฀Interpretation,฀or฀FIN,฀No.฀46,฀Consolidation฀of฀Variable฀Interest฀Entities,฀which฀addresses฀
the฀consolidation฀of฀variable฀interest฀entities฀in฀which฀an฀enterprise฀absorbs฀a฀majority฀of฀the฀entity’s฀expected฀losses,฀receives฀a฀
majority฀of฀the฀entity’s฀expected฀residual฀returns,฀or฀both,฀as฀a฀result฀of฀ownership,฀contractual฀or฀other฀financial฀interests฀in฀the฀
entity.฀In฀December฀2003,฀the฀FASB฀issued฀FIN฀No.฀46฀(revised),฀which฀replaced฀FIN฀No.฀46.฀FIN฀No.฀46฀(revised)฀was฀effective฀
immediately฀ for฀ certain฀ disclosure฀ requirements฀ and฀ variable฀ interest฀ entities฀ referred฀ to฀ as฀ special-purpose฀ entities฀ for฀ periods฀
ending฀after฀December฀15,฀2003฀and฀for฀other฀types฀of฀entities฀for฀financial฀statements฀for฀periods฀ending฀after฀March฀15,฀2004.฀
We฀determined฀ that฀ we฀are฀ not฀ required฀ to฀consolidate฀ the฀lessor,฀the฀ leased฀ facility฀ or฀ the฀ related฀debt฀associated฀ with฀ our฀
synthetic฀ lease฀ in฀ accordance฀ with฀ FIN฀ No.฀ 46฀ (revised).฀ Accordingly,฀ there฀ was฀ no฀ impact฀ on฀ our฀ financial฀ position,฀ results฀ of฀
operations฀or฀cash฀flows฀from฀adoption.฀However,฀if฀the฀lessor฀were฀to฀change฀its฀ownership฀of฀the฀property฀or฀significantly฀change฀
its฀ownership฀of฀other฀properties฀that฀it฀currently฀holds,฀we฀could฀be฀required฀to฀consolidate฀the฀entity,฀the฀leased฀facility฀and฀the฀
debt฀in฀a฀future฀period.
Commitments
Capital฀expenditures฀were฀$26.4฀million฀during฀2005,฀$24.4฀million฀during฀2004฀and฀$11.1฀million฀during฀2003.฀During฀2005,฀capital฀
expenditures฀were฀primarily฀related฀to฀computer฀equipment฀purchases฀associated฀with฀our฀research฀and฀development฀activities,฀
software฀purchases฀related฀to฀improving฀our฀internal฀infrastructure฀and฀leasehold฀improvements.฀Over฀the฀next฀12฀months,฀we฀currently฀
expect฀capital฀expenditures฀to฀increase฀due฀to฀the฀planned฀implementation฀of฀certain฀systems฀to฀streamline฀business฀operations฀
and฀enhance฀management฀reporting฀capabilities.
During฀2002฀and฀2001,฀we฀took฀actions฀to฀consolidate฀certain฀of฀our฀offices,฀including฀the฀exit฀of฀certain฀leased฀office฀space฀and฀
the฀abandonment฀of฀certain฀leasehold฀improvements.฀Lease฀obligations฀related฀to฀these฀existing฀operating฀leases฀continue฀to฀2025฀
with฀a฀total฀remaining฀obligation฀at฀December฀31,฀2005฀of฀approximately฀$18.9฀million,฀of฀which฀$1.8฀million฀was฀accrued฀for฀as฀of฀
December฀31,฀2005,฀and฀is฀reflected฀in฀accrued฀expenses฀and฀other฀liabilities฀in฀our฀consolidated฀financial฀statements.฀In฀calculating฀
this฀accrual,฀we฀made฀estimates,฀based฀on฀market฀information,฀including฀the฀estimated฀vacancy฀periods฀and฀sublease฀rates฀and฀
opportunities.฀We฀periodically฀re-evaluate฀our฀estimates;฀and฀if฀actual฀circumstances฀prove฀to฀be฀materially฀worse฀than฀management฀
has฀estimated,฀the฀total฀charges฀for฀these฀vacant฀facilities฀could฀be฀significantly฀higher.
Historically,฀significant฀portions฀of฀our฀cash฀inflows฀were฀generated฀by฀our฀operations.฀We฀currently฀expect฀this฀trend฀to฀continue฀
throughout฀2006.฀We฀believe฀that฀our฀existing฀cash฀and฀investments฀together฀with฀cash฀flows฀expected฀from฀operations฀will฀
be฀sufficient฀to฀meet฀expected฀operating฀and฀capital฀expenditure฀requirements฀for฀the฀next฀12฀months.฀We฀continue฀to฀search฀for฀suitable฀
acquisition฀candidates฀and฀could฀acquire฀or฀make฀investments฀in฀companies฀we฀believe฀are฀related฀to฀our฀strategic฀objectives.฀We฀
could฀from฀time฀to฀time฀seek฀to฀raise฀additional฀funds฀through฀the฀issuance฀of฀debt฀or฀equity฀securities฀for฀larger฀acquisitions.
Citrix฀Systems,฀Inc.
Management’s฀Discussion฀and฀Analysis฀of฀Financial฀Condition฀and฀Results฀of฀Operations฀
(Continued)
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