Citrix 2009 Annual Report Download - page 50

carrying value. If these products are not ultimately accepted by our customers and distributors, and there is no
alternative future use for the technology, we could determine that some or all of their remaining $144.3 million
carrying value is impaired. In the event of impairment, we would record an impairment charge to earnings that
could have a material adverse effect on our results of operations.
Goodwill
At December 31, 2009, we had $899.8 million in goodwill related to our acquisitions. The goodwill
recorded in relation to these acquisitions is not deductible for tax purposes. We operate in a single industry
segment consisting of the design, development and marketing of technology solutions that deliver applications
on-demand. Our revenues are derived from sales of our Desktop Solutions and related technical services in the
Americas, EMEA, and Asia-Pacific regions and from online services sold by our Online Services division. These
three geographic regions and the Online Services division constitute our reportable segments. See Note 12 to our
consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31,
2009 for additional information regarding our reportable segments. We evaluate goodwill among these segments,
which represent our reporting units.
We account for goodwill in accordance with FASB’s authoritative guidance which requires that goodwill
and certain intangible assets are not amortized, but are subject to an annual impairment test. There was no
impairment of goodwill as a result of the annual impairment tests completed during the fourth quarters of 2009
and 2008. Historically, we completed the annual goodwill impairment test as of December 31 of each fiscal year.
During fiscal 2009, we changed the annual impairment test date from December 31 to October 1. This change
was made to allow for more time and better support in the completion of the assessment prior to the filing of our
Annual Report on Form 10-K as a large accelerated filer. In addition, the earlier date would allow us the
additional time necessary to complete any Step 2 impairment analysis should one be required in the future prior
to the filing of our Annual Report on Form 10-K. We believe the resulting change in accounting principle related
to changing the annual impairment testing date will not delay, accelerate, or avoid an impairment charge. We
have determined that this change in accounting principle is preferable under the circumstances. A letter of
preferability from our independent registered public accounting firm regarding this change in accounting
principle is included as an exhibit to this Annual Report on Form 10-K for the year ended December 31, 2009.
Excluding goodwill, we have no intangible assets deemed to have indefinite lives.
Income Taxes
We are required to estimate our income taxes in each of the jurisdictions in which we operate as part of the
process of preparing our consolidated financial statements. At December 31, 2009, we had approximately $92.5
million in deferred tax assets. The authoritative guidance requires a valuation allowance to reduce the deferred
tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. We review deferred tax assets periodically for recoverability and
make estimates and judgments regarding the expected geographic sources of taxable income and gains from
investments, as well as tax planning strategies in assessing the need for a valuation allowance. At December 31,
2009, we determined that a $8.7 million valuation allowance relating to deferred tax assets for net operating
losses from acquired companies and unrealized losses from temporary impairments on available-for-sale
investments was necessary. If the estimates and assumptions used in our determination change in the future, we
could be required to revise our estimates of the valuation allowances against our deferred tax assets and adjust
our provisions for additional income taxes.
In the ordinary course of global business, there are transactions for which the ultimate tax outcome is
uncertain, thus judgment is required in determining the worldwide provision for income taxes. We provide for
income taxes on transactions based on our estimate of the probable liability. We adjust our provision as
appropriate for changes that impact our underlying judgments. Changes that impact provision estimates include
such items as jurisdictional interpretations on tax filing positions based on the results of tax audits and general
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