Citrix 2006 Annual Report Download - page 43

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
Citrix Systems, Inc.  Annual Report
In 2006, $1.0 million of the purchase price paid for our
2006 Acquisitions was allocated to IPR&D, in 2005, $7.0
million of the purchase price paid for our 2005 Acquisitions
was allocated to IPR&D, and in 2004, $19.1 million of
the purchase price paid for our 2004 Acquisitions was
allocated to IPR&D. The amounts allocated to IPR&D
in our acquisitions had not yet reached technological
feasibility, had no alternative future use and were written-
off at the date of the acquisitions in accordance with FASB
Interpretation No. 4, Applicability of FASB Statement No. 2
to Business Combinations Accounted for by the Purchase
Method . For more information regarding the acquisitions,
see “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Overview” and
Note 4 to our consolidated financial statements.
Our efforts with respect to the acquired technologies
currently consist of design and development that may
be required to support the release of the technologies
into updated versions of existing service offerings and
potentially new product and service offerings related to
our NetScaler, Access Gateway and our Online Services
products. We currently expect that we will successfully
develop new products or services utilizing the acquired
in-process technology, but there can be no assurance that
commercial viability of future product or service offerings
will be achieved. Furthermore, future developments in the
software industry, changes in technology, changes in other
products and offerings or other developments may cause
us to alter or abandon product plans. Failure to complete
the development of projects in their entirety, or in a timely
manner, could have a material adverse impact on our
financial condition and results of operations.
The fair value assigned to IPR&D was based on valuations
prepared using methodologies and valuation techniques
consistent with those used by independent appraisers. All
fair values were determined using the income approach,
which includes estimating the revenue and expenses
associated with a project’s sales cycle and by estimating
the amount of after-tax cash flows attributable to the
projects. The future cash flows were discounted to present
value utilizing an appropriate risk-adjusted rate of return,
which ranged from 17% to 25%. The rate of return included
a factor that takes into account the uncertainty surrounding
the successful development of the IPR&D.
Interest Income
Year Ended December31, 2006
Compared to
2005
2005
Compared to
2004(In thousands) 2006 2005 2004
Interest Income $ 41,210 $ 23,614 $ 14,274 $ 17,596 $ 9,340
Interest income increased during 2006 as compared
to 2005 due to higher interest rates earned on overall
higher average cash, cash equivalent and investment
balances that resulted primarily from increased proceeds
received from employee stock-based compensation
plans, a decrease in cash spent for acquisitions and
an increase in cash from operations, partially offset by
increased spending on stock repurchases, an increase
in net payments made on our debt and an increase in
capital expenditures. Interest income increased during
2005 as compared to 2004 due to higher interest rates
earned on overall higher average cash, cash equivalent and
investment balances that resulted primarily from cash from
operations, increased proceeds received from employee
stock-based compensation plans, partially offset by
increased spending on stock repurchases and acquisitions.
For more information see “Management’s Discussion and
Analysis of Financial Condition and Results of Operations
— Overview” and “— Liquidity and Capital Resources” and
Note 4 to our consolidated financial statements included
elsewhere in this Annual Report.