Citrix 2014 Annual Report Download - page 29

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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;
• our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition
or integration activities;
• challenges with implementing adequate and appropriate controls, procedures and policies in the acquired business;
• difficulties managing or integrating an acquired company’s technologies or lines of business;
• potential difficulties in completing projects associated with purchased in-process research and development;
• entry into markets in which we have no or limited direct prior experience and where competitors have stronger
market positions and which are highly competitive;
• the potential loss of key employees of the acquired company;
• potential difficulties integrating the acquired products and services into our sales channel;
• assuming pre-existing contractual relationships of an acquired company that we would not have otherwise entered
into, the termination or modification of which may be costly or disruptive to our business;
• being subject to unfavorable revenue recognition or other accounting treatment as a result of an acquired
company’s practices; and
• intellectual property claims or disputes.
Our failure to manage growth effectively and successfully integrate acquired companies due to these or other factors
could have a material adverse effect on our business, results of operations and financial condition. Further, our 2015 operating
plan assumes a significant level of financial performance from our acquisitions that were completed during 2013 and 2014 and
if these acquired companies or technologies do not perform as we expect, our operating results could be materially and
adversely affected.
In addition, we may not have the opportunity to make suitable acquisitions on favorable terms in the future, which could
negatively impact the growth of our business. We expect that other companies in our industry will compete with us to acquire
compatible businesses. This competition could increase prices for businesses and technologies that we would likely pursue, and
our competitors may have greater resources than we do to complete these acquisitions.
If we determine that any of our goodwill or intangible assets, including technology purchased in acquisitions, are impaired,
we would be required to take a charge to earnings, which could have a material adverse effect on our results of operations.
We have a significant amount of goodwill and other intangible assets, such as product related intangible assets, from our
acquisitions. We do not amortize goodwill and intangible assets that are deemed to have indefinite lives. However, we do
amortize certain product related technologies, trademarks, patents and other intangibles and we periodically evaluate them for
impairment. We review goodwill for impairment annually, or sooner if events or changes in circumstances indicate that the
carrying amount could exceed fair value, at the reporting unit level, which for us also represents our operating segments.
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, 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. In addition, due to uncertain market conditions and
potential changes in our strategy and product portfolio, it is possible that the forecasts we use to support our goodwill and other
intangible assets could change in the future, which could result in non-cash charges that would adversely affect our results of
operations and financial condition. For example, in 2014, we made changes to our business strategy and product portfolio that