Citrix 2013 Annual Report Download - page 26

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currencies to which we have the greatest exposure. When the dollar is weak, foreign currency denominated expenses will be
higher, and these higher expenses will be partially offset by the gains realized from our hedging contracts. If the dollar is
strong, foreign currency denominated expenses will be lower. These lower expenses will in turn be partially offset by the losses
incurred from our hedging contracts. There is a risk that there will be fluctuations in foreign currency exchange rates beyond
the one year timeframe for which we hedge our risk and there is no guarantee that we will accurately forecast the expenses we
are hedging. Changes in the value of foreign currencies relative to the value of the U.S. dollar could adversely affect future
revenue and operating results. In addition, as a result of entering into these contracts with counterparties who are unrelated to
us, the risk of a counterparty default exists in fulfilling the hedge contract. Should there be a counterparty default, we could be
unable to recover anticipated net gains from the transactions.
If we fail to effectively manage our growth, our future operating results could be adversely affected.
Historically, the scope of our operations, the number of our employees and the geographic area of our operations and our
revenue have grown rapidly. In addition, we have acquired both domestic and international companies. This growth and the
assimilation of acquired operations and their employees could continue to place a significant strain on our managerial,
operational and financial resources as our future acquisition activities accelerate our business expansion. We need to continue
to implement and improve additional management and financial systems and controls. We may not be able to manage the
current scope of our operations or future growth effectively and still exploit market opportunities for our products and services
in a timely and cost-effective way and we may not meet our scalability expectations. Our future operating results could be
adversely affected if we are unable to manage our expanding product lines, our marketing and sales organizations and our client
support organization to the extent required for any increase in installations of our products.
If operating margins and gross margins decline, our future operating results could be adversely affected.
Our operating margins in our new initiatives may be lower than those we have achieved in our more mature products and
services markets, and our new initiatives may not generate sufficient revenue to recoup our investments in them. We may
experience a decline in gross margin as the mix of our revenue may include more products with a hardware component and
increased sales of our services, both of which have a higher cost than our software products. If we are not able to recoup our
investment by normalizing our margins or reducing our costs through integration of new initiatives it could adversely affect our
business, results of operations and financial condition.
If we do not generate sufficient cash flow from operations in the future, we may not be able to fund our product
development efforts and acquisitions or fulfill our future obligations.
Our ability to generate sufficient cash flow from operations to fund our operations and product development efforts,
including the payment of cash consideration in acquisitions and the payment of our other obligations, depends on a range of
economic, competitive and business factors, many of which are outside of our control. We cannot assure you that our business
will generate sufficient cash flow from operations, or that we will be able to liquidate our investments, repatriate cash and
investments held in our overseas subsidiaries, sell assets or raise equity or debt financings when needed or desirable. An
inability to fund our operations or fulfill outstanding obligations could have a material adverse effect on our business, financial
condition and results of operations. For further information, please refer to “Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources.”
RISKS RELATED TO ACQUISITIONS AND STRATEGIC RELATIONSHIPS
Acquisitions present many risks, and we may not realize the financial and strategic goals we anticipate at the time of an
acquisition.
Our growth is dependent upon market growth, our ability to enhance existing products and services, and our ability to
introduce new products and services on a timely basis. In recent years, we have addressed and intend to continue to address the
need to develop new products and services and enhance existing products and services through acquisitions of other companies,
product lines and/or technologies. However, acquisitions, including those of high-technology companies, are inherently risky.
We cannot provide any assurance that any of our acquisitions or future acquisitions will be successful in helping us reach our
financial and strategic goals. The risks we commonly encounter in undertaking, managing and integrating acquisitions are:
• an uncertain revenue and earnings stream from the acquired company, which could dilute our earnings;
• difficulties and delays integrating the personnel, operations, technologies, products and systems of the acquired
companies;
• undetected errors or unauthorized use of a third-party's code in products of the acquired companies;