Citrix 2009 Annual Report Download - page 45

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2008 Acquisition
In October 2008, we acquired all of the issued and outstanding securities of Vapps, Inc., or Vapps, a
privately held Delaware corporation headquartered in Hoboken, New Jersey. Vapps offers high quality audio
conferencing solutions to small and medium sized businesses and enterprise and service provider markets that
complement our online services products. The total consideration for this transaction was approximately $27.8
million in cash, including $1.0 million in transaction costs. In addition, if certain financial and operational
milestones are achieved by the Vapps business, contingent consideration of up to approximately $3.2 million
may be earned. The sources of funds for this transaction consisted of available cash and investments. In addition,
we assumed approximately 0.1 million unvested stock options upon the closing of the transaction. In connection
with the Vapps Acquisition, we allocated $19.9 million to goodwill, $8.2 million to product related technologies
and $2.6 million to other intangible assets. The goodwill related to the Vapps acquisition was allocated to our
Online Services segment and is not deductible for tax purposes.
Revenues from Vapps are included in our Online Services revenue. The Vapps results of operations have
been included in our consolidated results of operations beginning after the date of its acquisition and are not
significant in relation to our consolidated financial statements.
2007 Acquisitions
During 2007, we acquired all of the issued and outstanding capital stock of two privately held companies,
Ardence Delaware Inc., a leading provider of solutions that allow information technology administrators to set up
and configure PCs, servers, and Web servers in real time from a centrally managed source, and XenSource, Inc.,
a privately held leader in enterprise-grade virtual infrastructure solutions, collectively the 2007 Acquisitions. The
2007 Acquisitions positioned us in adjacent server and desktop virtualization markets that will allow us to
continue to extend our leadership in the broader application delivery infrastructure market. The total
consideration for the 2007 Acquisitions was approximately $379.4 million, comprised of approximately
7.1 million shares of our common stock valued at $232.3 million, $142.8 million in cash and approximately $4.3
million in direct transaction costs. In addition, in connection with the 2007 Acquisitions, we issued
approximately 1.3 million unvested shares of our common stock, 0.1 million non-vested stock units and assumed
approximately 3.4 million stock options each of which will be exercisable for the right to receive one share of our
common stock upon vesting. Revenues from the products acquired in the 2007 Acquisitions are primarily
included in our Product License revenue. The 2007 Acquisitions’ results of operations have been included in our
consolidated results of operations beginning after the date of each of the acquisitions. The source of funds for the
cash consideration paid in these transactions consisted of available cash and investments. In connection with the
2007 Acquisitions, we allocated $246.2 million to goodwill, $112.3 million to product related intangible assets
and $56.3 million to other intangible assets.
In-process Research and Development for Acquisitions
The fair values used in determining the purchase price allocation for certain intangible assets for our
acquisitions were based on estimated discounted future cash flows, royalty rates and historical data, among other
information. Purchased in-process research and development, or IPR&D, of $1.1 million and $9.8 million was
expensed immediately upon the closing of the acquisition of Vapps and 2007 Acquisitions, respectively, because it
pertained to technology that was not currently technologically feasible, meaning it had not reached the working
model stage, did not contain all of the major functions planned for the product, was not ready for initial customer
testing and had no alternative future use. The fair value assigned to IPR&D was determined using the income
approach, which includes estimating the revenue and expenses associated with a project’s sales cycle and by
estimating the amount of after-tax cash flows attributable to the projects. The future cash flows were discounted to
present value utilizing an appropriate risk-adjusted rate of return, which ranged from 20%–36%. The rate of return
determination included a factor that takes into account the uncertainty surrounding the successful development of
the IPR&D.
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