Citrix 2014 Annual Report Download - page 28

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applicable regulations, or the need to implement costly or time-consuming protocols to comply with applicable regulations
(including regulations related to conflict minerals), equipment malfunction, natural disasters and environmental factors, any of
which could delay or impede their ability to meet our demand.
We are exposed to fluctuations in foreign currency exchange rates, which could adversely affect our future operating
results.
Our results of operations are subject to fluctuations in exchange rates, which could adversely affect our future revenue
and overall operating results. In order to minimize volatility in earnings associated with fluctuations in the value of foreign
currency relative to the U.S. dollar, we use financial instruments to hedge our exposure to foreign currencies as we deem
appropriate for a portion of our expenses, which are denominated in the local currency of our foreign subsidiaries. We generally
initiate our hedging of currency exchange risks one year in advance of anticipated foreign currency expenses for those
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 and if our new initiatives do not generate strong margins, our future operating
results could be adversely affected.
Historically, we have experienced continued growth in the scope of our operations, the number of our employees and our
geographic footprint. In addition to internal business initiatives, 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.
Further, 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 necessary funds through 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.”