Citrix 2007 Annual Report Download - page 42

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
We design, develop and market technology solutions that allow applications to be delivered, supported and
shared on-demand with high performance, enhanced security and improved total cost of ownership, or TCO. We
market and license our products through multiple channels such as value-added resellers, channel distributors,
system integrators, independent software vendors, our Websites and original equipment manufacturers.
2007 Acquisitions
Ardence Delaware Inc.
On January 5, 2007, we acquired all of the issued and outstanding capital stock of Ardence Delaware Inc. or
the Ardence Acquisition, a leading provider of solutions that allow information technology administrators to set
up and configure PCs, servers, and Web servers in real time from a centrally managed source. The Ardence
Acquisition strengthens our application delivery capabilities with more robust streaming and provisioning
technologies and increased security and reliability. The total consideration for the Ardence Acquisition was $51.7
million comprised of cash paid of $50.3 million and acquisition related costs of approximately $1.4 million. As
part of the Ardence Acquisition, we assumed approximately 0.1 million non-vested stock-based awards and
approximately 0.1 million stock option upon the closing of the transaction. The sources of funds for
consideration paid in the transaction consisted of available cash and investments.
Xensource, Inc.
On October 19, 2007, we completed our acquisition of all of the issued and outstanding capital stock of
XenSource, Inc., or the XenSource Acquisition, a privately held leader in enterprise-grade virtual infrastructure
solutions. The acquisition positions us in adjacent server and desktop virtualization markets that will allow us to
extend our leadership in the broader Application Delivery Infrastructure market by adding key enabling
technologies that make the end-to-end computing environment more flexible, dynamic and responsive to
business change. The total consideration for the XenSource Acquisition was approximately $328.5 million,
comprised of approximately 7.1 million shares of our common stock valued at $232.3 million, $92.5 million in
cash and approximately $3.7 million in direct transaction costs. In addition, in connection with the XenSource
Acquisition we issued approximately 1.3 million unvested shares of our common stock and assumed
approximately 3.3 million stock options each of which will be exercisable for the right to receive one share of our
common stock upon vesting. The sources of funds for cash consideration paid in the transaction consisted of
available cash and investments.
The Sevin Rosen funds, a venture capital firm, was a stockholder in XenSource. Stephen Dow, a member of
our Board of Directors, is a general partner of the Sevin Rosen funds and did not directly hold any interest in
XenSource. Although the Sevin Rosen funds were represented on the Board of Directors of XenSource, Mr. Dow
was not a director of XenSource. Our acquisition of XenSource, provided a return to all the partners of the Sevin
Rosen funds, including Mr. Dow. Subject to certain assumptions, we estimate that the allocation to Mr. Dow
through the general partner entities of the Sevin Rosen funds related to the acquisition of XenSource will be
approximately $1.9 million, if and when the Sevin Rosen funds distribute such allocations to its general partner
entities. Mr. Dow has been on our Board of Directors since 1989 and currently owns 278,564 shares of our
common stock. Mr. Dow did not attend the meeting at which our Board approved the transaction and recused
himself from the vote to approve the transaction. Consistent with our policies and the charter of the Nominating
and Corporate Governance Committee of our Board of Directors, the acquisition of XenSource was reviewed and
approved by the Nominating and Corporate Governance Committee. There were no material relationships among
us and XenSource or any of their respective affiliates or any of the parties to the agreement to acquire XenSource
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