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CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
anti-dilutive effect for the respective periods in which they were outstanding. The reconciliation of the numerator
and denominator of the earnings per share calculation is presented in Note 15.
3. ACQUISITIONS
2008 Acquisition
In October 2008, the Company acquired all of the issued and outstanding securities of Vapps, Inc.
(“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 the Company’s 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, the Company assumed approximately 0.1 million unvested stock options upon the
closing of the transaction. Revenues from Vapps are included in the Company’s Online Services revenue. In
connection with the Vapps Acquisition, the Company 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 the Company’s Online Services segment and is not deductible for tax purposes.
2007 Acquisitions
During 2007, the Company 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 (the “2007
Acquisitions”). The total consideration for the 2007 Acquisitions was approximately $379.4 million, comprised
of approximately 7.1 million shares of the Company’s 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, the Company issued approximately 1.3 million unvested shares of its common stock and
0.1 million non-vested stock units and assumed approximately 3.4 million stock options each of which became
exercisable for the right to receive one share of the Company’s common stock upon vesting. Revenues from the
products acquired in the 2007 Acquisitions are primarily included in the Company’s Product License revenue.
The 2007 Acquisitions’ results of operations have been included in the Company’s consolidated results of
operations beginning after the date of the respective 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,
the Company 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
The fair values used in determining the purchase price allocation for certain intangible assets for the
Company’s acquisitions were based on estimated discounted future cash flows, royalty rates and historical data,
among other information. Purchased in-process research and development (“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
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