Citrix 2000 Annual Report Download - page 29

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Role of Mergers and Acquisitions
Acquisitions involve numerous risks, including the following:
− difficulties in integration of the operations, technologies, and products
of the acquired companies;
− the risk of diverting management's attention from normal daily operations
of the business;
− potential difficulties in completing projects associated with purchased
in−process research and development;
− risks of entering markets in which the Company has no or limited direct
prior experience and where competitors in such markets have stronger
market positions;
− the potential loss of key employees of the acquired company; and
− an uncertain sales and earnings stream from the acquired entity, which
may result in unexpected dilution to the Company's earnings.
Mergers and acquisitions of high−technology companies are inherently risky,
and no assurance can be given that the Company's previous or future acquisitions
will be successful and will not have a material adverse affect on the Company's
business, operating results or financial condition. The Company must also focus
on its ability to manage and integrate any such acquisition. Failure to manage
growth effectively and successfully integrate acquired companies could adversely
affect the Company's business and operating results.
Revenue Recognition Process
The Company continually re−evaluates its programs, including specific
license terms and conditions, to market its current and future products and
services. The Company may implement new programs, including offering specified
and unspecified enhancements to its current and future product lines. The
Company may recognize revenues associated with such enhancements after the
initial shipment or licensing of the software product or over the product's life
cycle. The Company has implemented a new licensing model associated with the
release of a new product in 2001. The Company may implement a different
licensing model, in certain circumstances, which would result in the recognition
of licensing fees over a longer period, which may result in decreasing revenue.
The timing of the implementation of such programs, the timing of the release of
such enhancements and other factors will impact the timing of the Company's
recognition of revenues and related expenses associated with its products,
related enhancements and services. As a result of these factors, the Company
currently cannot quantify the impact of the re−evaluation of its programs on its
business, results of operations and financial condition.
Product Returns and Price Reductions
The Company provides certain of its distributors with product return rights
for stock balancing or limited product evaluation. The Company also provides
certain of its distributors with price protection rights. To cover these product
returns and price protections, the Company has established reserves based on its
evaluation of historical trends and current circumstances. These reserves may
not be sufficient to cover product returns and price protections in the future,
in which case the Company's operating results may be adversely affected.
International Operations
The Company's continued growth and profitability will require further
expansion of its international operations. To successfully expand international
sales, the Company must establish additional foreign operations, hire additional
personnel and recruit additional international resellers. Such international
operations are subject to certain risks, such as:
− difficulties in staffing and managing foreign operations;
− dependence on independent distributors and resellers;
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