Citrix 2007 Annual Report Download - page 27

the contract, discounts and other factors, could impact the timing of the recognition of revenue for our products,
related enhancements and services and could adversely affect our operating results and financial condition.
Sales of our Subscription Advantage product constitute substantially all of our License Updates revenue and a
large portion of our deferred revenue.
We anticipate that sales of our Subscription Advantage product will continue to constitute a substantial
portion of our License Updates revenue. Our ability to continue to generate both recognized and deferred revenue
from our Subscription Advantage product will depend on our customers continuing to perceive value in
automatic delivery of our software upgrades and enhancements. A decrease in demand for our Subscription
Advantage product could occur as a result of a decrease in demand for our Application Virtualization,
Application Networking, Server Virtualization and Application Performance Monitoring products. If our
customers do not continue to purchase our Subscription Advantage product, our License Updates revenue and
deferred revenue would decrease significantly and our results of operations and financial condition would be
adversely affected.
As our international sales and operations grow, we could become increasingly subject to additional risks that
could harm our business.
We conduct significant sales and customer support, development and engineering operations in countries
outside of the United States. During the year ended December 31, 2007, we derived approximately 44.5% of our
revenues from sales other than the United States. Our continued growth and profitability could require us to
further expand our international operations. To successfully expand international sales, we must establish
additional foreign operations, hire additional personnel and recruit additional international resellers. Our
international operations are subject to a variety of risks, which could cause fluctuations in the results of our
international operations. These risks include:
• compliance with foreign regulatory and market requirements;
• variability of foreign economic, political and labor conditions;
• changing restrictions imposed by regulatory requirements, tariffs or other trade barriers or by United
States export laws;
• longer accounts receivable payment cycles;
• potentially adverse tax consequences;
• difficulties in protecting intellectual property;
• burdens of complying with a wide variety of foreign laws; and
• as we generate cash flow in non-U.S. jurisdictions, if required, we may experience difficulty
transferring such funds to the U.S. in a tax efficient manner.
Our results of operations are also subject to fluctuations in foreign currency exchange rates. In order to
minimize the impact on our operating results, we generally initiate our hedging of currency exchange risks one
year in advance of anticipated foreign currency expenses. When the dollar is weak, foreign currency denominated
expenses will be higher, and these higher expenses will be partially offset by the gains realized from our hedging
contracts. If the dollar is strong, foreign currency denominated expenses will be lower. These lower expenses will
in turn be partially offset by the losses incurred from our hedging contracts. There is a risk that there will be
fluctuations in foreign currency exchange rates beyond the one year timeframe for which we hedge our risk. Due
to the generally weaker dollar in 2007, our operating expenses benefited from gains produced by our hedging
programs as compared to 2006.
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