Citrix 2014 Annual Report Download - page 42

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expensed $0.1 million during the year ended December 31, 2014, and are included in General and administrative expense in the
accompanying consolidated statements of income.
2015 Acquisition
Subsequent Event
On January 8, 2015, we acquired all of the issued and outstanding securities of Sanbolic, Inc., or Sanbolic. Sanbolic is an
innovator and leader in workload-oriented storage virtualization technologies. The Sanbolic technology, combined with
XenDesktop, XenApp, and XenMobile products will enable us to develop a range of differentiated solutions that will reduce
the complexity of Microsoft Windows application delivery and desktop virtualization deployments. Sanbolic will become part
of our Enterprise and Service Provider division. The total preliminary consideration for this transaction was approximately
$89.4 million, net of $0.2 million cash acquired, and was paid in cash. Transaction costs associated with the acquisition are
currently estimated at $0.4 million, of which we expensed $0.2 million during the year ended December 31, 2014, and are
included in General and administrative expense in the accompanying consolidated statements of income. In addition, in
connection with the acquisition, we assumed non-vested stock units which were converted into the right to receive, in the
aggregate, up to 37,057 shares of our common stock, for which the vesting period began on the closing of the transaction.
Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The
preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent liabilities. We base these estimates on our historical
experience and on various other assumptions that we believe to be reasonable under the circumstances, and these estimates
form the basis for our judgments concerning the carrying values of assets and liabilities that are not readily apparent from other
sources. We periodically evaluate these estimates and judgments based on available information and experience. Actual results
could differ from our estimates under different assumptions and conditions. If actual results significantly differ from our
estimates, our financial condition and results of operations could be materially impacted.
We believe that the accounting policies described below are critical to understanding our business, results of operations
and financial condition because they involve more significant judgments and estimates used in the preparation of our
consolidated financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made
based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that
could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially
impact our consolidated financial statements. We have discussed the development, selection and application of our critical
accounting policies with the Audit Committee of our Board of Directors and our independent auditors, and our Audit
Committee has reviewed our disclosure relating to our critical accounting policies and estimates in this “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.”
Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended
December 31, 2014 describes the significant accounting policies and methods used in the preparation of our Consolidated
Financial Statements.
Revenue Recognition
We recognize revenue when it is earned and when all of the following criteria are met: persuasive evidence of the
arrangement exists; delivery has occurred or the service has been provided and we have no remaining obligations; the fee is
fixed or determinable; and collectability is probable. We define these four criteria as follows:
• Persuasive evidence of the arrangement exists. Evidence of an arrangement generally consists of a purchase order
issued pursuant to the terms and conditions of a distributor, reseller or end user agreement. For SaaS, we generally
require the customer or the reseller to electronically accept the terms of an online services agreement or execute a
contract.
• Delivery has occurred and we have no remaining obligations. We consider delivery of licenses under electronic
licensing agreements to have occurred when the related products are shipped and the end-user has been electronically
provided the software activation keys that allow the end-user to take immediate possession of the product. For
hardware appliance sales, our standard delivery method is free-on-board shipping point. Consequently, we consider
delivery of appliances to have occurred when the products are shipped pursuant to an agreement and purchase order.
For SaaS, delivery occurs upon providing the users with their login id and password. For product training and
consulting services, we fulfill our obligation when the services are performed. For license updates and maintenance,