Citrix 2000 Annual Report Download - page 22

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20
The actual and estimated costs to complete and completion dates of the
in−process and core technology acquired for each acquisition are as follows:
APM VDONET VIEWSOFT
−−−−−−−−−− −−−−−−−−−− −−−−−−−−−−
(IN THOUSANDS)
Date Acquired.................................. June 1998 July 1998 July 1999
Cost Incurred to Date.......................... $4,275 $4,230 $4,370
Estimated Cost to Complete..................... −− −− 4,988
−−−−−−−−−− −−−−−−−−−− −−−−−−−−−−
Total Estimated Project Cost................... $4,275 $4,230 $9,358
========== ========== ==========
Estimated Cost to Complete at Date of
Valuation.................................... $4,000 $ 200 $ 660
========== ========== ==========
Estimated Completion Date at Date of
Valuation.................................... First Second Fourth
Quarter of Quarter of Quarter of
1999 1999 1999
Estimated Completion Date...................... N/A N/A Third
Quarter of
2001
The estimated completion date of the ViewSoft project has been delayed from
the originally anticipated completion date due to increases in project scope, a
longer testing period and transition of the development team. The Company is
currently unable to determine the impact of such delays on its business, future
results of operations and financial condition. There can be no assurance that
the Company will not incur additional charges in subsequent periods to reflect
costs associated with completing this project or that the Company will be
successful in its efforts to integrate and further develop this technology.
Write−Down of Technology. The Company periodically reviews its goodwill
and other intangible assets to determine if any impairment exists. In June 1998,
the Company completed its acquisition of APM Ltd. The acquired core technology
consisted primarily of a Java software product that would operate in a MetaFrame
server environment. At the time of acquisition, it was anticipated that there
was a growing need and momentum in the market to develop and run Java client
applications. Since the acquisition, the market has not developed as
anticipated. In the second quarter of 2000, management changed the Java
application server to a Java Performance Pack product, which adds performance
enhancements and management tools to other Citrix products. By the fourth
quarter of 2000, the Company had developed a Java Performance Pack and was
assessing the market demand for this technology. As of December 31, 2000, the
Company did not believe that there were sufficient projected cash flows to
support the net book value of the core technology associated with the APM
acquisition. In addition, the Company determined that there was no alternative
future use for the acquired technology. As a result, the Company recorded a
write−down of $7.3 million, representing the net book value of the APM core
technology as of December 31, 2000.
In July 1998, the Company completed its acquisition of VDOnet Corporation
Ltd. The acquired core technology consisted primarily of the ICA Video Services
project which allowed video applications and applications containing videos to
be viewed on an ICA client. Subsequent development efforts resulted in the
VideoFrame 1.0 product, which was shipped in the third quarter of 1999, but has
resulted in few sales to end users. Since the acquisition, the Company has
explored alternative uses for the acquired technology. By the third quarter of
2000, the Company was exploring uses related primarily to delivering video
applications in a server−based computing environment and video streaming with
ICA devices. In the fourth quarter of 2000, the Company reviewed potential
modifications to its cash flow projections based on alternative uses for the
technology. As a result of its evaluation, the Company did not believe that
there were sufficient projected cash flows to support the carrying value of the
core technology. As a result, the Company recorded a write−down of $1.8 million,
representing the net book value of the VDOnet core technology as of December 31,
2000.
Interest and Other Income. The increase in interest and other income in
2000 was primarily due to the full year effect of interest earned on the
invested net proceeds from the issuance of the zero coupon convertible
subordinated debentures (the "Debentures") in March 1999 and interest earned
from the increase in cash from operations. In addition, other income increased
as the Company changed the composition of its
20