Citrix 2009 Annual Report Download - page 32

• difficulties in protecting intellectual property;
• burdens of complying with a wide variety of foreign laws; and
• as we generate cash flow in non-U.S. jurisdictions, if required, we may experience difficulty
transferring such funds to the U.S. in a tax efficient manner.
Our results of operations are also subject to fluctuations in foreign currency exchange rates. In order to
minimize the impact on our operating results, we generally initiate our hedging of currency exchange risks one
year in advance of anticipated foreign currency expenses. When the dollar is weak, foreign currency denominated
expenses will be higher, and these higher expenses will be partially offset by the gains realized from our hedging
contracts. If the dollar is strong, foreign currency denominated expenses will be lower. These lower expenses will
in turn be partially offset by the losses incurred from our hedging contracts. There is a risk that there will be
fluctuations in foreign currency exchange rates beyond the one year timeframe for which we hedge our risk. Due
to the generally weaker dollar in 2009 when compared to 2008, our operating expenses were higher when
converted to U.S. dollars, but these higher expenses were partially offset by gains in our hedging programs.
Our success depends, in part, on our ability to anticipate and address these risks. We cannot guarantee that
these or other factors will not adversely affect our business or operating results.
Unanticipated changes in our tax rates or our exposure to additional income tax liabilities could affect our
operating results and financial condition.
Our future effective tax rates could be favorably or unfavorably affected by unanticipated changes in the
valuation of our deferred tax assets and liabilities, the geographic mix of our revenue, or by changes in tax laws
or their interpretation. Significant judgment is required in determining our worldwide provision for income taxes.
In addition, we are subject to the continuous examination of our income tax returns by tax authorities, including a
current examination by the Internal Revenue Service, or IRS, for our income tax returns for 2004 and 2008. We
regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy
of our provision for income taxes. There can be no assurance, however, that the outcomes from these continuous
examinations will not have an adverse effect on our operating results and financial condition. Additionally, due
to the evolving nature of tax rules combined with the large number of jurisdictions in which we operate, it is
possible that our estimates of our tax liability and the realizability of our deferred tax assets could change in the
future, which may result in additional tax liabilities and adversely affect our results of operations, financial
condition and cash flows.
We have credit exposure to our hedging counterparties.
In order to minimize volatility in earnings associated with fluctuations in the value of foreign currency
relative to the U.S. dollar, we use financial instruments to hedge our exposure to foreign currencies as we deem
appropriate for a portion of our expenses which are denominated in the local currency of our foreign subsidiaries.
As a result of entering into these contracts with counterparties who are unrelated to us, the risk of a counterparty
default exists in fulfilling the hedge contract. Should there be a counterparty default, we could be unable to
recover anticipated net gains from the transactions.
Our proprietary rights could offer only limited protection. Our products, including products obtained through
acquisitions, could infringe third-party intellectual property rights, which could result in material costs.
Our efforts to protect our proprietary rights may not be successful. We rely primarily on a combination of
copyright, trademark, patent and trade secret laws, confidentiality procedures and contractual provisions to
protect our proprietary rights. The loss of any material trade secret, trademark, trade name, patent or copyright
could have a material adverse effect on our business. Despite our precautions, it could be possible for
unauthorized third parties to copy or reverse engineer certain portions of our products or to otherwise obtain and
use our proprietary information. If we cannot protect our proprietary technology against unauthorized copying or
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