Citrix 2012 Annual Report Download - page 27

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of those assets, or if financial analysts or investors believe we may need to take such action in the future, our stock price and
operating results could be materially and adversely affected.
Furthermore, impairment testing requires significant judgment, including the identification of reporting units based on
our internal reporting structure that reflects the way we manage our business and operations and to which our goodwill and
intangible assets would be assigned. In 2011, we early adopted authoritative guidance, which provides entities with an option to
perform a qualitative assessment to determine whether further quantitative impairment testing for goodwill is necessary where
we estimate future revenue, consider market factors and estimate our future cash flows. Significant judgments are required to
estimate the fair value of our goodwill and intangible assets, including estimating future cash flows, determining appropriate
discount rates, estimating the applicable tax rates, foreign exchange rates and interest rates, projecting the future industry trends
and market conditions, and making other assumptions. Although we believe the assumptions, judgments and estimates we have
made have been reasonable and appropriate, different assumptions, judgments and estimates, particularly when implementing
new assessment methodology such as we did in 2011, could materially affect our results of operations. Changes in these
estimates and assumptions, including changes in our reporting structure, could materially affect our determinations of fair
value.
Our inability to maintain or develop our strategic and technology relationships could adversely affect our business.
Our business depends on strategic and technology relationships. We cannot assure you that those relationships will
continue in the future. We rely on strategic or technology relationships with companies such as Microsoft, Intel, Cisco, Dell,
Hewlett-Packard Company and others. We depend on the entities with which we have strategic or technology relationships to
successfully test our products, to incorporate our technology into their products and to market and sell those products. We
cannot assure you that we will be able to maintain our current strategic and technology relationships or to develop additional
strategic and technology relationships. In addition, one of our strategic partners may decide to team with another company or
develop its own integrated solution that could compete with our products. If the companies with which we have strategic or
technology relationships are unable to incorporate our technology into their products or to market or sell those products, our
business, results of operations and financial condition could be materially adversely affected.
RISKS RELATED TO INTELLECTUAL PROPERTY AND BRAND RECOGNITION
Our efforts to protect our intellectual property may not be successful, which could materially and adversely affect our
business.
We rely primarily on a combination of copyright, trademark, patent and trade secret laws, confidentiality procedures and
contractual provisions to protect our source code and other intellectual property. The loss of any material trade secret,
trademark, tradename, 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, disclose or reverse engineer certain portions of our products or to
otherwise obtain and use our proprietary source code, in which case we could potentially lose future trade secret protection for
that source code. If we cannot protect our proprietary source code against unauthorized copying, disclosure or use,
unauthorized third parties could develop products similar to or better than ours.
Any patents owned by us could be invalidated, circumvented or challenged. Any of our pending or future patent
applications, whether or not being currently challenged, may not be issued with the scope of protection we seek, if at all; and if
issued, may not provide any meaningful protection or competitive advantage.
In addition, our ability to protect our proprietary rights could be affected by differences in international law and the
enforceability of licenses. The laws of some foreign countries do not protect our intellectual property to the same extent as do
the laws of the United States and Canada. For example, we derive a significant portion of our sales from licensing our products
under “click-to-accept” license agreements that are not signed by licensees and electronic enterprise customer licensing
arrangements that are delivered electronically, all of which could be unenforceable under the laws of many foreign jurisdictions
in which we license our products.
Our products and services, including products obtained through acquisitions, could infringe third-party intellectual
property rights, which could result in material litigation costs.
We are increasingly subject to patent infringement claims and may in the future be subject to claims alleging the
unauthorized use of a third-party's code in our products. This may occur for a variety of reasons, including:
• the expansion of our product lines, such as our Mobile and Desktop and Networking and Cloud products, and
related technical services and expansion of our Online Services division's Collaboration and Data products,
through product development and acquisitions;
• an increase in patent infringement litigation commenced by non-practicing entities;