Citrix 2006 Annual Report Download - page 78

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Property and Equipment
Property and equipment is stated at cost. Depreciation
is computed using the straight-line method over the
estimated useful lives of the assets, which is generally three
years for computer equipment, software, office equipment
and furniture, the lesser of the lease term or five years for
leasehold improvements, which is the estimated useful
life, seven years for the Company’s enterprise resource
planning system and 40 years for buildings. Depreciation
expense was $27.4 million, $22.0 million and $21.2 million
for 2006, 2005 and 2004, respectively.
During 2006 and 2005, the Company retired $3.3 million
and $8.0 million, respectively, in property and equipment
that were no longer in use. At the time of retirement, the
remaining net book value of these assets was immaterial
and no asset retirement obligations were associated
with them.
Property and equipment consist of the following:
December 31,
(In thousands) 2006 2005
Buildings $ 17,781 $ 17,781
Computer equipment 86,001 66,594
Software 68,185 53,479
Equipment and furniture 21,453 19,401
Leasehold improvements 46,532 39,075
Land 9,062 9,062
249,014 205,392
Less accumulated depreciation
and amortization (156,434) (131,665)
$ 92,580 $ 73,727
Long-Lived Assets
The Company reviews for impairment of long-lived assets
and certain identifiable intangible assets to be held and
used whenever events or changes in circumstances
indicate that the carrying amount of such assets may
not be fully recoverable. Determination of recoverability
is based on an estimate of undiscounted future cash
flows resulting from the use of the asset and its eventual
disposition. Measurement of an impairment loss is based
on the fair value of the asset compared to its carrying value.
Long-lived assets and certain identifiable intangible assets
to be disposed of are reported at the lower of carrying
amount or fair value less costs to sell. During 2006, 2005
and 2004, the Company did not recognize any impairment
charges associated with its long-lived or intangible assets.
Goodwill
The Company accounts for goodwill in accordance with
SFAS No. 142, Goodwill and Other Intangible Assets.
SFAS No. 142, requires that goodwill and certain intangible
assets are not amortized, but are subject to an annual
impairment test. At December 31, 2006 and 2005,
the Company had $631.7 million and $592.0 million of
goodwill, respectively. There was no impairment of goodwill
as a result of the annual impairment tests completed
during the fourth quarters of 2006 and 2005. Excluding
goodwill, the Company has no intangible assets deemed
to have indefinite lives. Substantially all of the Company’s
goodwill at December 31, 2006 and December 31, 2005
was associated with the Americas and Online Services
reportable segments. See Note 4 for acquisitions and Note
13 for segment information.
Intangible Assets
The Company has intangible assets with finite lives that
are recorded at cost, less accumulated amortization.
Amortization is computed over the estimated useful lives
of the respective assets, generally three to seven years,
except for patents, which are amortized over the lesser of
their remaining life or ten years. In accordance with SFAS
No. 86, Accounting for the Costs of Computer Software
to be Sold, Leased or Otherwise Marketed, the Company
records acquired core and product technology at net
realizable value and reviews this technology for impairment
on a periodic basis by comparing the estimated net
realizable value to the unamortized cost of the technology.
There has been no impairment of these assets for any of
the periods presented.