Citrix 2007 Annual Report Download - page 31

• our suppliers manufacture products for a range of customers, and fluctuations in demand for the
products these suppliers manufacture for others may affect their ability to deliver components and
products to us in a timely manner; and
• our suppliers may encounter financial hardships unrelated to our demand for components, which could
inhibit their ability to fulfill our orders and meet our requirements.
There may be delay associated with establishing additional or replacement suppliers, particularly for
components that are available only from sole or limited sources. Any interruption or delay in the supply of
products or components, or our inability to obtain products or components from alternate sources at acceptable
prices in a timely manner, could impair our ability to meet the demand of our customers and adversely affect our
business, financial condition or results of operations.
Our products could contain errors that could delay the release of new products and may not be detected until
after our products are shipped.
Despite significant testing by us and by current and potential customers, our products, especially new
products or releases or acquired products, could contain errors. In some cases, these errors may not be discovered
until after commercial shipments have been made. Errors in our products could delay the development or release
of new products and could adversely affect market acceptance of our products. Additionally, our products depend
on third party products, which could contain defects and could reduce the performance of our products or render
them useless. Because our products are often used in mission-critical applications, errors in our products or the
products of third parties upon which our products rely could give rise to warranty or other claims by our
customers.
Our synthetic lease is an off-balance sheet arrangement that could negatively affect our financial condition
and results.
In April 2002, we entered into a seven-year synthetic lease with a lessor for our headquarters office
buildings in Fort Lauderdale, Florida. The synthetic lease qualifies for operating lease accounting treatment
under SFAS No. 13, Accounting for Leases, so we do not include the property or the associated lease debt on our
condensed consolidated balance sheets. However, if the lessor were to change its ownership of our property or
significantly change its ownership of other properties that it currently holds, under FIN No. 46, Consolidation of
Variable Interest Entities (revised) we could be required to consolidate the entity, the leased facility and the
associated debt at that time.
If we elect not to purchase the property at the end of the lease term, we have guaranteed a minimum residual
value of approximately $51.9 million to the lessor. Therefore, if the fair value of the property declines below
$51.9 million, our residual value guarantee would require us to pay the difference to the lessor, which could have
a material adverse effect on our results of operations and financial condition.
We have entered into a credit facility agreement that restrict our ability to conduct our business and failure to
comply with such agreements may have an adverse effect on our business, liquidity and financial position.
We, along with our subsidiary, Citrix Systems International GmbH, maintain a credit facility agreement that
contains financial covenants tied to a maximum consolidated leverage ratio and minimum interest coverage,
among other things. The credit facility agreement also contains affirmative and negative covenants, including
limitations related to our ability to incur future indebtedness, contingent obligations or liens, conduct certain
mergers or acquisitions, make certain investments and loans, alter our capital structure, sell stock or assets and
pay dividends. If we fail to comply with these covenants or any other provision of the credit facility agreement,
we may be in default under the credit facility agreement, and we cannot assure you that we will be able to obtain
the necessary waivers or amendments of such default. Upon an event of default under our credit facility
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