Citrix 2009 Annual Report Download - page 35

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If we lose or are unable to maintain any of these third-party licenses or are required to modify software
obtained under third-party licenses, it could delay the release of our products. Any delays could have a material
adverse effect on our business, results of operations and financial condition.
Our success depends on our ability to attract and retain and further penetrate large enterprise customers.
We must retain and continue to expand our ability to reach and penetrate large enterprise customers by
adding effective VADs and expanding our consulting services. Our inability to attract and retain large enterprise
customers could have a material adverse effect on our business, results of operations and financial condition.
Large enterprise customers usually request special pricing and purchase of multiple years of subscription and
maintenance up-front and generally have longer sales cycles, which could negatively impact our revenues. By
allowing these customers to purchase multiple years of subscription or maintenance up-front and by granting
special pricing, such as bundled pricing or discounts, to these large customers, we may have to defer recognition
of some or all of the revenue from such sales. This deferral could reduce our revenues and operating profits for a
given reporting period. Additionally, as we attempt to attract and penetrate large enterprise customers, we may
need to increase corporate branding and marketing activities, which could increase our operating expenses. These
efforts may not proportionally increase our operating revenues and could reduce our profits.
Issues arising during the upgrade of our enterprise resource planning system could affect our operating
results and ability to manage our business effectively.
We are in the process of upgrading our SAP enterprise resource planning, or ERP, computer system to
enhance operating efficiencies and provide more effective management of our business operations. The upgrade
could cause substantial business interruption that could adversely impact our operating results. We are investing
significant financial and personnel resources into this project. However, there is no assurance that the design will
meet our current and future business needs or that it will operate as designed. We are heavily dependent on such
computer systems, and any significant failure or delay in the system upgrade, if encountered, would cause a
substantial interruption to our business and additional expense which could result in an adverse impact on our
operating results, cash flows and financial condition.
We rely on indirect distribution channels and major distributors that we do not control.
We rely significantly on independent distributors and resellers to market and distribute our products and
appliances. For instance, one distributor, Ingram Micro, accounted for 14% of our net revenues in 2009. Our
distributor arrangements with Ingram Micro consist of several non-exclusive, independently negotiated
agreements with our subsidiaries, each of which cover different countries or regions. Moreover, no reseller
accounted for over 10% of our total net revenues in 2009. We do not control our distributors and resellers.
Additionally, our distributors and resellers are not obligated to buy our products and could also represent other
lines of products. We maintain and periodically revise our sales incentive programs for our independent
distributors and resellers, and such program revisions may adversely impact our results of operations. Some of
our distributors and resellers maintain inventories of our packaged products for resale to smaller end-users. If
distributors and resellers reduce their inventory of our packaged products, our business could be adversely
affected. Further, we could maintain individually significant accounts receivable balances with certain
distributors. The financial condition of our distributors could deteriorate and distributors could significantly delay
or default on their payment obligations. Any significant delays, defaults or terminations could have a material
adverse effect on our business, results of operations and financial condition.
For certain of our products we rely on third-party suppliers and contract manufacturers, making us
vulnerable to supply problems and price fluctuations.
We rely on a number of third-party suppliers, who provide hardware or hardware components for our
products, and contract manufacturers. For example, the production, final test, warehousing and shipping for our
Desktop Solutions and Datacenter and Cloud Solutions, including our NetScaler products, Access Gateway
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