Citrix 2009 Annual Report Download - page 116

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CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended
December 31, 2009 and 2008 is as follows (in thousands):
Balance at January 1, 2008 ............................................................ $ 27,283
Additions based on tax positions related to the current year .............................. 2,069
Additions for tax positions of prior years ............................................ 826
Reductions related to the expiration of statutes of limitations ............................. (1,849)
Settlements .................................................................... —
Balance at December 31, 2008 ......................................................... 28,329
Additions based on tax positions related to the current year .............................. 4,156
Additions for tax positions of prior years ............................................ 14,731
Reductions related to the expiration of statutes of limitations ............................. (994)
Settlements .................................................................... —
Balance at December 31, 2009 ......................................................... $ 46,222
The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.
At December 31, 2009, there was $0.8 million related to tax positions for which the ultimate deductibility is
highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of
deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period
would not affect the annual effective tax rate but would accelerate the payment or receipt of cash to an earlier
period.
The Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax
expense. During the year ended December 31, 2009, the Company recognized $0.1 million of expense related to
interest and penalties. The Company has approximately $0.3 million for the payment of interest and penalties
accrued at December 31, 2009.
12. SEGMENT INFORMATION AND SIGNIFICANT CUSTOMERS
The Company operates in a single industry segment consisting of the design, development marketing, sales
and support of access virtualization, networking and software-as-a-service solutions. The Company’s revenues
are derived from sales of its Desktop Solutions and Datacenter and Cloud Solutions and related technical services
in the Americas, EMEA and Asia-Pacific regions and from its online services sold by its Online Services
division. These three geographic regions and the Online Services division constitute the Company’s four
reportable segments. In 2010, the Company will realign the way it evaluates its performance and, as a result, it
will change its segment reporting to be consistent with the way it will be internally managing the business.
The Company does not engage in intercompany revenue transfers between segments. The Company’s chief
operating decision maker (“CODM”) evaluates the Company’s performance based primarily on profitability in
the geographic locations in which the Company operates and separately evaluates the performance of its Online
Services division. Segment profit for each segment includes certain sales, marketing, general and administrative
expenses directly attributable to the segment, including research and development costs in the Online Services
division and excludes certain expenses that are managed outside the reportable segments. Costs excluded from
segment profit primarily consist of certain research and development costs associated with the Company’s
Desktop Solutions and Datacenter and Cloud Solutions, restructuring charges, stock-based compensation costs,
amortization of product related technology, amortization of other intangible assets, interest, corporate expenses
and income taxes, as well as charges for in-process research and development. Corporate expenses are comprised
F-36