Citrix 2007 Annual Report Download - page 33

including some minor damage to our corporate headquarters facility. In addition, even in the absence of direct
damage to our operations, large disasters, terrorist attacks or other casualty events could have a significant impact
on our partners’ and customers’ businesses, which in turn could result in a negative impact on our results of
operations. Extensive or multiple disruptions in our operations, or our partners’ or customers’ businesses, due to
natural disasters or other unanticipated catastrophes could have a material adverse effect on our results of
operations.
If we do not generate sufficient cash flow from operations in the future, we may not be able to fund our
product development and acquisitions and fulfill our future obligations.
Our ability to generate sufficient cash flow from operations to fund our operations and product
development, including the payment of cash consideration in acquisitions and the payment of our other
obligations, depends on a range of economic, competitive and business factors, many of which are outside our
control. We cannot assure you that our business will generate sufficient cash flow from operations, or that we
will be able to liquidate our investments, repatriate cash and investments held in our overseas subsidiaries, sell
assets or raise equity or debt financings when needed or desirable. An inability to fund our operations or fulfill
outstanding obligations could have a material adverse effect on our business, financial condition and results of
operations. For further information, please refer to “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital Resources.”
Matters relating to or arising out of our historical stock option granting practices, including regulatory
inquiries or proceedings, litigation matters and potential additional cash and non-cash charges, could have a
material adverse effect on us.
As described in the Explanatory Note to our Annual Report on Form 10-K for the year ended December 31,
2006, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in
Note 2 to our consolidated financial statements included therein, in the fourth quarter of 2006, the Audit
Committee of our Board of Directors commenced a voluntary independent investigation of certain of our stock
option granting practices and the related accounting during the period from January 1996 through December
2006. This investigation was conducted by the Audit Committee with the assistance of independent outside legal
counsel and outside forensic accounting consultants. In addition to those grants evaluated as part of the Audit
Committee’s investigation, we also evaluated all grants (consisting of two employee new hire grants) in
December 1995, which was the month the Company completed its initial public offering, and all grants to
non-employee directors. The Audit Committee completed its investigation in the second quarter of 2007. Based
on the facts obtained in connection with the Audit Committee’s investigation and management’s supplemental
review, we concluded that stock options granted during the period from December 1995 to March 2005, were
accounted for using incorrect measurement dates, which required a restatement of our previously filed financial
statements.
We incurred significant expenses related to legal, accounting, tax and other professional services in
connection with the investigation of our historical stock option granting practices and the related restatements,
and may incur significant expenses in the future with respect to such matters, including as a result of litigation
matters or additional cash and non-cash charges. For example, as described in Part I, Item 3 “Legal Proceedings,”
purported stockholder derivative actions have been filed relating to certain of our historical stock option grants.
Even if resolved favorably, these matters may be time-consuming, expensive and disruptive to normal business
operations, and the impact and outcomes of current or future litigation matters are difficult to predict and could
have a material adverse effect on our business, results of operations and financial condition.
Additionally, as described in the Explanatory Note to our Annual Report on Form 10-K for the year ended
December 31, 2006, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
in Part II Item 7 and in Note 2 to our consolidated financial statements included in our Annual Report on Form
10-K for the year ended December 31, 2006 in Part IV Item 15, after the Audit Committee completed its
27