Citrix 2007 Annual Report Download - page 34

investigation of our historical stock option granting practices and our review of the accounting treatment for our
historical stock option grants, we recorded additional stock-based compensation expenses and related tax effects
with regard to certain past stock option grants, and we restated previously issued financial statements included in
our Annual Report on Form 10-K for the year ended December 31, 2006. Although we believe we made
appropriate judgments in determining the financial and tax impacts of our historical stock option granting
practices and have consulted with the Office of the Chief Accountant of the SEC on certain interpretive matters,
we cannot provide assurance that regulatory authorities, including the Internal Revenue Service, or IRS, will
agree with the manner in which we have accounted for and reported, or not reported, the financial and tax
impacts. Specifically, in light of the significant judgment used in establishing revised measurement dates,
alternate approaches to those used by us could have resulted in different compensation expense charges than
those reported in our Annual Report on Form 10-K for the year ended December 31, 2006 and those differences
could be considered material. We considered various alternative approaches and believe that the approaches used
by us were appropriate under the circumstances. For a complete discussion of the judgments underlying the
revised measurement dates, see “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2006. If
regulatory authorities disagree with our financial or tax adjustments and such disagreements result in material
changes to our historical financial statements, we may be required to further restate our prior financial
statements, amend prior filings with the SEC or take other action that is not currently contemplated. In addition,
other adjustments for non-operating cash charges may be required in connection with the resolution of stock
option related matters arising under any litigation commenced against us.
If stock balancing returns or price adjustments exceed our reserves, our operating results could be adversely
affected.
We provide most of our distributors with stock balancing return rights, which generally permit our
distributors to return products to us by the forty-fifth day of a fiscal quarter, subject to ordering an equal dollar
amount of our products prior to the last day of the same fiscal quarter. We also provide price protection rights to
most of our distributors. Price protection rights require that we grant retroactive price adjustments for inventories
of our products held by distributors if we lower our prices for those products within a specified time period. To
cover our exposure to these product returns and price adjustments, we establish reserves based on our evaluation
of historical product trends and current marketing plans. However, we cannot assure you that our reserves will be
sufficient to cover our future product returns and price adjustments. If we inadequately forecast reserves, our
operating results could be adversely affected.
Our stock price could be volatile, and you could lose the value of your investment.
Our stock price has been volatile and has fluctuated significantly in the past. The trading price of our stock
is likely to continue to be volatile and subject to fluctuations in the future. Your investment in our stock could
lose some or all of its value. Some of the factors that could significantly affect the market price of our stock
include:
• actual or anticipated variations in operating and financial results;
• analyst reports or recommendations;
• changes in interest rates; and
• other events or factors, many of which are beyond our control.
The stock market in general, The NASDAQ Global Select Market (formerly, the Nasdaq National Market),
and the market for software companies and technology companies in particular, have experienced extreme price
and volume fluctuations. These broad market and industry factors could materially and adversely affect the
market price of our stock, regardless of our actual operating performance.
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