Citrix 2007 Annual Report Download - page 26

We recorded approximately $490.7 million of goodwill and intangible assets in connection with our 2006
Acquisitions and our 2007 Acquisitions. If the actual revenues and operating profit attributable to acquired
intangible assets are less than the projections we used to initially value these intangible assets when we acquired
them, then these intangible assets may be deemed to be impaired. If we determine that any of the goodwill or
other intangible assets associated with our recent acquisitions are impaired, then we would be required to reduce
the value of those assets or to write them off completely by taking a related charge to earnings. If we are required
to write down or write off all or a portion of those assets, or if financial analysts or investors believe we may
need to take such action in the future, our stock price and operating results could be materially adversely
affected.
At December 31, 2007, we had $276.3 million, net, of unamortized identified intangibles, which include
core and product technology we purchased in acquisitions or under third party licenses. These intangibles are
primarily associated with our Application Networking products and Server Virtualization products. However, our
channel distributors and entities with which we have technology relationships, customers or prospective
customers may not purchase or widely accept our new products. If we fail to complete the development of our
anticipated future product and service offerings, including product offerings acquired through our acquisitions, if
we fail to complete them in a timely manner, or if we are unsuccessful in selling any new lines of products,
appliances and services, we could determine that the value of the purchased technology is impaired in whole or in
part and take a charge to earnings. We could also incur additional charges in later periods to reflect costs
associated with completing those projects that could not be completed in a timely manner. An impairment charge
could have a material adverse effect on our results of operations. If the actual revenues and operating profit
attributable to acquired product and core technologies are less than the projections we used to initially value
product and core technologies when we acquired it, such intangible assets may be deemed to be impaired. If we
determine that any of our intangible assets are impaired, we would be required to take a related charge to
earnings that could have a material adverse effect on our results of operations.
Our business could be adversely affected if we are unable to expand and diversify our distribution channels.
We currently intend to continue to expand our distribution channels by leveraging our relationships with
independent hardware and software vendors and system integrators to encourage them to recommend or
distribute our products. In addition, an integral part of our strategy is to diversify our base of channel
relationships by adding and training more channel members with abilities to reach larger enterprise customers
and to sell our newer products. This strategy will require additional resources, as we will need to expand our
internal sales and service coverage of these customers. If we fail in these efforts and cannot expand, train or
diversify our distribution channels, our business could be adversely affected. In addition to this diversification of
our base, we will need to maintain a healthy mix of channel members who cater to smaller customers. We may
need to add and remove distribution members to maintain customer satisfaction and a steady adoption rate of our
products, which could increase our operating expenses. Through our Citrix Partner Network, Citrix Authorized
Learning Centers and other programs, we are currently investing, and intend to continue to invest, significant
resources to develop these channels, which could reduce our profits.
We could change our licensing programs or subscription renewal programs, which could negatively impact
the timing of our recognition of revenue.
We continually re-evaluate our licensing programs and subscription renewal programs, including specific
license models, delivery methods, and terms and conditions, to market our current and future products and
services. We could implement new licensing programs and subscription renewal programs, including offering
specified and unspecified enhancements to our current and future product and service lines. Such changes could
result in recognizing revenues over the contract term as opposed to upon the initial shipment or licensing of our
software product. We could implement different licensing models in certain circumstances, for which we would
recognize licensing fees over a longer period. Changes to our licensing programs and subscription renewal
programs, including the timing of the release of enhancements, upgrades, and maintenance releases, the term of
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