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 Citrix Reports Fourth Quarter and Fiscal Year Financial Results
   Wednesday, January 28, 2015 4:05:36 PM ET

--Deferred revenue of $1.56 billion, up 10 percent year-over-year, and 11 percent sequentially

Citrix Systems, Inc. (CTXS ) today reported financial results for the fourth quarter and fiscal year ending December 31, 2014, and announced a restructuring program to drive strategic focus and operational efficiency.

Financial Results

For the fourth quarter of fiscal year 2014, Citrix achieved revenue of $851 million, compared to $802 million in the fourth quarter of fiscal year 2013, representing 6 percent revenue growth. For fiscal year 2014, Citrix reported annual revenue of $3.14 billion, compared to $2.92 billion for fiscal year 2013, an 8 percent increase.

GAAP Results

Net income for the fourth quarter of fiscal year 2014 was $95 million, or $0.58 per diluted share, compared to $139 million, or $0.74 per diluted share, for the fourth quarter of fiscal year 2013. GAAP results for the fourth quarter of fiscal year 2014 include impairment charges of $30 million related to certain intangible assets, which are included in amortization of product related and other intangible assets, as well as a restructuring charge of $3 million for severance costs related to a restructuring program implemented in the first quarter of 2014. Net income for the fourth quarter of fiscal year 2014 also includes net tax benefits of $12 million, or $0.08 per diluted share, primarily related to the extension of the 2014 federal research and development tax credit.

Annual net income for fiscal year 2014 was $252 million, or $1.47 per diluted share, compared to $340 million, or $1.80 per diluted share for fiscal year 2013. GAAP results for fiscal year 2014 include impairment charges of $60 million related to certain intangible assets, which are included in amortization of product related and other intangible assets, a charge of $21 million related to a previously disclosed patent lawsuit, as well as a restructuring charge of $20 million for severance costs related to a restructuring program implemented in the first quarter of 2014. In addition, GAAP net income for fiscal year 2014 includes net tax benefits of $21 million, or $0.12 per diluted share, primarily related to the closing of audits with the IRS for certain tax years and the extension of the 2014 federal research and development tax credit.

Non-GAAP Results

Non-GAAP net income for the fourth quarter of fiscal year 2014 was $180 million, or $1.10 per diluted share, compared to $195 million, or $1.04 per diluted share for the fourth quarter of fiscal year 2013. Non-GAAP net income for the fourth quarter of fiscal year 2014 includes net tax benefits of $12 million, or $0.08 per diluted share. Non-GAAP net income for the fourth quarter of fiscal year 2014 and 2013 exclude the effects of amortization of acquired intangible assets and stock-based compensation expense and the tax effects related to these items. Non-GAAP net income for the fourth quarter of fiscal year 2014 also excludes charges related to amortization of debt discount and the restructuring program implemented in the first quarter of fiscal year 2014 and the tax effects related to these items.

Annual non-GAAP net income for fiscal year 2014 was $565 million, or $3.30 per diluted share, compared to $568 million, or $3.02 per diluted share for fiscal year 2013. Non-GAAP net income for fiscal year 2014 includes net tax benefits of $21 million, or $0.12 per diluted share. Non-GAAP net income for fiscal year 2014 and 2013 excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses and the tax effects related to these items. Non-GAAP net income for fiscal year 2014 also excludes charges related to amortization of debt discount, a previously disclosed patent lawsuit and the restructuring program implemented in the first quarter of fiscal year 2014 and the tax effects related to these items.

2015 Restructuring Program

Citrix also announced the implementation of a restructuring program designed to increase strategic focus and operational efficiency. The restructuring will affect approximately 700 full-time and 200 contractor positions, and is expected to result in annualized pre-tax savings in the range of approximately $90 million to $100 million. Citrix expects to incur pre-tax charges in the range of approximately $40 million to $45 million related to employee severance arrangements and $9 million to $10 million related to the consolidation of leased facilities during fiscal year 2015.

"We hear every day from customers about the dual pressures they face - to deliver business results, while creating an engaging work-life experience for their people," said Mark Templeton, president and CEO, Citrix. "Our focus on enabling a software-defined workplace is putting Citrix in front of this strategic challenge through the unique integration of our delivery networking solutions, workspace services and mobility apps. I’m proud of our 2014 performance, but we’re not satisfied. We are looking ahead to 2015 with a focus on innovation that delivers a better experience, more flexibility and greater security to our customers, and a more focused organizational footprint that enables profitable growth."

Q4 Financial Summary

In reviewing the results for the fourth quarter of fiscal year 2014 compared to the fourth quarter of fiscal year 2013:

-- Product and license revenue decreased 1 percent;

-- Software as a service revenue increased 10 percent;

-- Revenue from license updates and maintenance increased 9 percent;

-- Professional services revenue, which is comprised of consulting, product training and certification, increased 15 percent;

-- Net revenue increased in the EMEA region by 7 percent, increased in the Pacific region by 5 percent, and increased in the Americas region by 4 percent;

-- Deferred revenue totaled $1.56 billion as of December 31, 2014, compared to $1.41 billion as of December 31, 2013, an increase of 10 percent; and

-- Cash flow from operations was $190 million for the fourth quarter of fiscal year 2014, compared with $230 million for the fourth quarter of fiscal year 2013.

During the fourth quarter of fiscal year 2014:

-- GAAP gross margin was 80 percent. Non-GAAP gross margin was 85 percent, excluding the effects of amortization of acquired product related intangible assets and stock-based compensation expense;

-- GAAP operating margin was 14 percent. Non-GAAP operating margin was 26 percent, excluding the effects of amortization of acquired intangible assets, stock-based compensation expense, and costs associated with the 2014 restructuring program; and

-- The company received 3.3 million shares, of which 2.6 million related to the company’s accelerated share repurchase agreement and 0.7 million shares from repurchases at an average price of $65.26.

Annual Financial Summary

In reviewing the results for fiscal year 2014 compared to fiscal year 2013:

-- Product and license revenue increased 1 percent;

-- Software as a service revenue increased 12 percent;

-- Revenue from license updates and maintenance increased 9 percent;

-- Professional services revenue, which is comprised of consulting, product training and certification, increased 26 percent;

-- Net revenue increased in the EMEA region by 9 percent, increased in the Pacific region by 6 percent and increased in the Americas region by 5 percent; and

-- Cash flow from operations was $846 million for fiscal year 2014 compared with $928 million for fiscal year 2013.

During the year ending December 31, 2014:

-- GAAP gross margin was 80 percent. Non-GAAP gross margin was 85 percent, excluding the effects of amortization of acquired product related intangible assets and stock-based compensation expense;

-- GAAP operating margin was 10 percent. Non-GAAP operating margin was 22 percent, excluding the effects of amortization of acquired intangible assets, stock-based compensation expense, the charge related to a previously disclosed patent lawsuit, and costs associated with the 2014 restructuring program; and

-- The company received 26.1 million shares, of which 21.8 million related to the company’s accelerated share repurchase agreement and 4.3 million shares from repurchases at an average price of $64.00.

Financial Outlook for Fiscal Year 2015

Citrix management expects to achieve the following results for the fiscal year ending December 31, 2015:

-- Net revenue is targeted to be in the range of $3.29 billion to $3.33 billion.

-- Today’s announcement regarding the restructuring of the company’s global workforce is expected to result in annualized pre-tax savings in the range of approximately $90 million to $100 million. Citrix expects to incur pre-tax charges in the range of approximately $40 million to $45 million related to employee severance arrangements and approximately $9 million to $10 million related to the consolidation of leased facilities during fiscal year 2015.

-- GAAP diluted earnings per share is targeted to be in the range of $2.10 to $2.15. Non-GAAP diluted earnings per share is targeted to be in the range of $3.60 to $3.65, excluding $1.00 related to the effects of stock-based compensation expenses, $0.61 related to the effects of amortization of acquired intangible assets, $0.33 related to restructuring charges, $0.19 related to the effects of amortization of debt discount and $(0.58) to $(0.68) for the tax effects related to these items.

-- GAAP tax rate is targeted to be in the range of 17 percent to 18 percent. Non-GAAP tax rate, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, amortization of debt discount and restructuring charges, is targeted to be in the range of 22 percent to 23 percent.

Financial Outlook for First Quarter 2015

Citrix management expects to achieve the following results for the first quarter of fiscal year 2015 ending March 31, 2015:

-- Net revenue is targeted to be in the range of $780 million to $790 million.

-- In the first quarter of fiscal year 2015, Citrix expects to incur a pre-tax charge in the range of approximately $30 million to $35 million related to employee severance arrangements and approximately $3 million to $5 million related to the consolidation of leased facilities in connection with the 2015 restructuring program.

-- GAAP diluted earnings per share is targeted to be in the range of $0.20 to $0.22. Non-GAAP diluted earnings per share is targeted to be in the range of $0.70 to $0.72, excluding $0.26 related to the effects of stock-based compensation expenses, $0.16 related to the effects of amortization of acquired intangible assets, $0.22 related to restructuring charges, $0.05 related to the effects of amortization of debt discount and $(0.17) to $(0.21) for the tax effects related to these items.

-- GAAP tax rate is targeted to be in the range of 17 percent to 18 percent. Non-GAAP tax rate, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, amortization of debt discount and restructuring charges, is targeted to be in the range of 22 percent to 23 percent.

The above statements are based on current targets. These statements are forward-looking, and actual results may differ materially.

Conference Call Information

Citrix will host a conference call today at 4:45 p.m. ET to discuss its financial results, quarterly highlights and business outlook. The call will include a slide presentation, and participants are encouraged to listen to and view the presentation via webcast at http://www.citrix.com/investors .

The conference call may also be accessed by dialing: (888) 799-0519 or (706) 634-0155, using passcode: CITRIX. A replay of the webcast can be viewed for approximately 30 days on the Investor Relations section of the Citrix corporate website at http://www.citrix.com/investors .

About Citrix

Citrix (CTXS ) is leading the transition to software-defining the workplace, uniting virtualization, mobility management, networking and SaaS solutions to enable new ways for businesses and people to work better. Citrix solutions power business mobility through secure, mobile workspaces that provide people with instant access to apps, desktops, data and communications on any device, over any network and cloud. With annual revenue in 2014 of $3.14 billion, Citrix solutions are in use at more than 330,000 organizations and by over 100 million users globally. Learn more at www.citrix.com.

For Citrix Investors

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Investors are cautioned that statements in this press release, which are not strictly historical statements, including, without limitation, statements by Citrix’s chief executive officer, statements concerning our restructuring program and expected cost savings, statements contained in the Financial Outlook for Fiscal Year 2015 and First Quarter 2015 sections and under the Non-GAAP Financial Measures Reconciliation section, and statements regarding management’s plans, objectives and strategies, constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements, including, without limitation, the impact of the global economy and uncertainty in the IT spending environment; the success and growth of the company’s product lines, including competition, demand and pricing dynamics and other transitions in the markets for Citrix’s virtualization products and collaboration services; the company’s ability to develop and commercialize new products and services, including its enterprise mobility products, while growing its established virtualization, networking and collaboration products and services; disruptions due to its restructuring program, changes and transitions in key personnel and succession risks; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix’s products and services; changes in our revenue mix towards products and services with lower gross margins; seasonal fluctuations in the company’s business; failure to execute Citrix’s sales and marketing plans; failure to successfully partner with key distributors, resellers, system integrators, service providers and strategic partners and the company’s reliance on and the success of those partners for the marketing and distribution of the company’s products; the company’s ability to maintain and expand its business in small sized and large enterprise accounts; the size, timing and recognition of revenue from significant orders; the success of investments in its product groups, foreign operations and vertical and geographic markets; the ability of Citrix to make suitable acquisitions on favorable terms in the future; risks associated with Citrix’s acquisitions, including failure to further develop and successfully market the technology and products of acquired companies, failure to achieve or maintain anticipated revenues and operating performance contributions from acquisitions, which could dilute earnings, the retention of key employees from acquired companies, difficulties and delays integrating personnel, operations, technologies and products, disruption to our ongoing business and diversion of management’s attention from our ongoing business; the recruitment and retention of qualified employees; risks in effectively controlling operating expenses, including failure to achieve anticipated cost savings from the restructuring program and other cost reduction initiatives; ability to effectively manage our capital structure and the impact of related changes on our operating results and financial condition; the effect of new accounting pronouncements on revenue and expense recognition; the risks associated with securing data and maintaining security of our networks and customer data stored by our services; failure to comply with federal, state and international regulations; litigation and disputes, including challenges to our intellectual property rights or allegations of infringement of the intellectual property rights of others; the inability to further innovate our technology or enter into new businesses due to the intellectual property rights of others; changes in the company’s pricing and licensing models, promotional programs and product mix, all of which may impact Citrix’s revenue recognition; charges in the event of a write-off or impairment of acquired assets, underperforming businesses, investments or licenses; international market readiness, execution and other risks associated with the markets for Citrix’s products and services; unanticipated changes in tax rates, non-renewal of tax credits or exposure to additional tax liabilities; risks of political and social turmoil; and other risks detailed in the company’s filings with the Securities and Exchange Commission. Citrix assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

Citrix(R) is a trademarks or registered trademarks of Citrix Systems, Inc. and/or one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owners.

                                                                                                                                               
                                                                                                                           CITRIX SYSTEMS, INC.
                                                                                                                Condensed Consolidated Statements of Income
                                                                                                             (In thousands, except per share data - unaudited)
                                                                                                                                                                                       
                                                                                                               Three Months Ended                                                                                          Year Ended
                                                                                                                  December 31,                                                                                            December 31,
                                                                                             2014                            2013                            2014                              2013
                                                                                -------------------------------------------------- -------------------------------------------------- --------------------------------------------------- --------------------------------
Revenues:                                                                                                                                                                                          
     Product and licenses                                                       $267,367                                           $269,889                                            $899,736                                             $891,630
     Software as a service                                                       168,398                                            153,269                                             651,562                                              582,872
     License updates and maintenance                                             366,952                                            337,036                                           1,416,017                                            1,305,053
     Professional services                                                        48,766       42,226       175,541        138,879  
                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
            Total net revenues                                                   851,483                                            802,420                                           3,142,856                                            2,918,434
                                                                                                                                                                                                                                           
Cost of net revenues:
     Cost of product and licenses revenues                                        35,966                                             30,467                                             124,110                                              114,932
     Cost of services and maintenance revenues                                    94,920                                             81,749                                             349,683                                              289,990
     Amortization of product related intangible assets                            43,766       24,492       146,426         97,873  
                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
             Total cost of net revenues                                          174,652                                            136,708                                             620,219                                              502,795
Gross margin                                                                     676,831                                            665,712                                           2,522,637                                            2,415,639
                                                                                                                                                                                                                                           
Operating expenses:
     Research and development                                                    141,947                                            126,498                                             553,817                                              516,338
     Sales, marketing and services                                               323,978                                            301,486                                           1,280,265                                            1,216,680
     General and administrative                                                   77,316                                             66,528                                             319,922                                              260,236
     Amortization of other intangible assets                                      13,043                                             10,346                                              45,898                                               41,668
     Restructuring                                                                 3,139            -        20,424              -  
                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
            Total operating expenses                                             559,423      504,858     2,220,326      2,034,922  
                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                                                           
Income from operations                                                           117,408                                            160,854                                             302,311                                              380,717
                                                                                                                                                                                                                                           
Interest income                                                                    2,716                                              2,132                                               9,421                                                8,194
Interest expense                                                                  10,731                                                 26                                              28,332                                                  128
Other expense, net                                                                (1,692 )                          (942 )                         (7,694 )                            (893 )
                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
Income before income taxes                                                       107,701                                            162,018                                             275,706                                              387,890
                                                                                                                                                                                                                                           
Income tax expense                                                                12,473       23,374        23,983         48,367  
                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
Net income                                                                       $95,228     $138,644      $251,723       $339,523  
                                                                                ======== ==================== ==================== ======== ==================== ==================== ========= ==================== ==================== ========== ====================
                                                                                                                                                                                                                                           
Earnings per common share - diluted                                   $0.58        $0.74         $1.47          $1.80  
                                                                                ======== ==================== ==================== ======== ==================== ==================== ========= ==================== ==================== ========== ====================
Weighted average shares outstanding - diluted                       163,215      186,500       171,300        188,245  
                                                                                ======== ==================== ==================== ======== ==================== ==================== ========= ==================== ==================== ========== ====================
                                                                                                                                                                                                                                                      
                                                                                                              
                                                                                CITRIX SYSTEMS, INC.
                                                                        Condensed Consolidated Balance Sheets
                                                                             (In thousands - unaudited)
                                                                                                                                                      
                                                                                           December 31, 2014                 December 31, 2013
                                                                                                ------------------------------  -------------------- ------------------------------
ASSETS:
Cash and cash equivalents                                                                         $260,149                                             $280,740
Short-term investments                                                                             529,260                                              453,976
Accounts receivable, net                                                                           674,401                                              654,821
Inventories, net                                                                                    12,617                                               14,107
Prepaid expenses and other current assets                                                          166,005                                              110,981
Current portion of deferred tax assets, net                                                         45,892         48,470  
                                                                                                ---------- -------------------- -------------------- ---------- --------------------
     Total current assets                                                                        1,688,324                                            1,563,095
                                                                                                                                                      
Long-term investments                                                                            1,073,110                                              855,700
Property and equipment, net                                                                        367,779                                              338,996
Goodwill                                                                                         1,796,851                                            1,768,949
Other intangible assets, net                                                                       390,717                                              509,595
Long-term portion of deferred tax assets, net                                                      128,198                                              115,418
Other assets                                                                                        67,028         60,496  
                                                                                                ---------- -------------------- -------------------- ---------- --------------------
     Total assets                                                                               $5,512,007     $5,212,249  
                                                                                                ========== ==================== ==================== ========== ====================
                                                                                                                                                      
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Accounts payable                                                                                    79,884                                               78,452
Accrued expenses and other current liabilities                                                     298,079                                              257,606
Income taxes payable                                                                                12,053                                               29,322
Current portion of deferred revenues                                                             1,200,093      1,098,681  
                                                                                                ---------- -------------------- -------------------- ---------- --------------------
     Total current liabilities                                                                   1,590,109                                            1,464,061
                                                                                                                                                      
Long-term portion of deferred revenues                                                             357,771                                              313,059
Convertible notes                                                                                1,292,953                                                    -
Other liabilities                                                                                   97,529                                              115,322
                                                                                                                                                      
Stockholders’ equity:
Common stock                                                                                           295                                                  291
Additional paid-in capital                                                                       4,292,706                                            3,974,297
Retained earnings                                                                                3,155,264                                            2,903,541
Accumulated other comprehensive (loss) income                                                      (36,790 )                                              4,951
Less - common stock in treasury, at cost                                           (5,237,830 )                      (3,563,273 )
                                                                                                ---------- -------------------- -------------------- ---------- --------------------
   Total stockholders’ equity                                         2,173,645      3,319,807  
                                                                                                ---------- -------------------- -------------------- ---------- --------------------
     Total liabilities and stockholders’ equity                      $5,512,007     $5,212,249  
                                                                                                ========== ==================== ==================== ========== ====================
                                                                                                                                                                 
                                                                                                       
                                                                             CITRIX SYSTEMS, INC.
                                                                Condensed Consolidated Statement of Cash Flows
                                                                    (In thousands - unaudited)
                                                                                                                                               
                                                                                                Three Months Ended                                       Year Ended
                                                                                                 December 31, 2014                                    December 31, 2014
                                                                                          -----------------------------                       ------------------------------
OPERATING ACTIVITIES
Net Income                                                                                  $95,228                                             $251,723
Adjustments to reconcile net income to net cash provided by
operating activities:
   Amortization and depreciation                                                             93,454                                              330,270
   Amortization of debt discount and transaction costs                                        8,789                                               23,293
   Stock-based compensation expense                                                          40,847                                              169,287
   Provision for accounts receivable allowances                                               3,220                                                7,910
   Deferred income tax benefit                                                              (11,868 )                                            (36,982 )
Other non-cash items                                                                          2,875                             3,610  
                                                                                          --------- --------------------                      ---------- --------------------
               Total adjustments to reconcile net income to net cash                        137,317                                              497,388
                    provided by operating activities
Changes in operating assets and liabilities, net of the effects of
acquisitions:
        Accounts receivable                                                                (213,504 )                                            (30,962 )
        Inventory                                                                             3,175                                               (1,167 )
        Prepaid expenses and other current assets                                            (2,370 )                                             (8,133 )
        Other assets                                                                           (153 )                                              1,498
        Deferred revenues                                                                   154,306                                              146,123
        Accounts payable                                                                     (7,486 )                                                 40
        Income taxes, net                                                                     8,061 )                                            (79,119 )
        Accrued expenses                                                                      8,349                                               62,195
        Other liabilities                                                                     7,508                             6,395  
                                                                                          --------- --------------------                      ---------- --------------------
Total changes in operating assets and liabilities, net of the                               (42,114 )                                             96,870  
effects of acquisitions
                                                                                          --------- --------------------                      ---------- --------------------
Net cash provided by operating activities                                                   190,431                                              845,981
INVESTING ACTIVITIES
Purchases of available-for-sale investments, net                                            (23,896 )                                           (289,730 )
Purchases of property and equipment                                                         (49,975 )                                           (165,417 )
Cash paid for acquisitions, net of cash acquired                                            (57,717 )                                           (101,059 )
Proceeds related to cost method investments                                                     142                                                4,049
Purchases of cost method investments                                                           (801 )                                             (3,624 )
Cash paid for licensing and core technology                                                    (964 )                                            (13,676 )
                                                                                          --------- --------------------                      ---------- --------------------
Net cash used in investing activities                                                      (133,211 )                                           (569,457 )
FINANCING ACTIVITIES
Proceeds from issuance of common stock under stock-based                                      7,944                                               46,618
compensation plans
Proceeds from issuance of convertible notes, net of debt issuance                                 -                                            1,415,717
costs
Purchase of convertible note hedges                                                               -                                             (184,288 )
Proceeds from issuance of warrants                                                                -                                              101,775
Repayment of acquired debt                                                                     (300 )                                             (4,066 )
Excess tax benefit from stock-based compensation                                              1,010                                                6,132
Stock repurchases, net                                                                      (39,899 )                                         (1,640,885 )
Cash paid for tax withholding on vested stock awards                                         (5,894 )                                            (33,671 )
                                                                                          --------- --------------------                      ---------- --------------------
Net cash used in financing activities                                                       (37,139 )                                           (292,668 )
                                                                                          --------- --------------------                      ---------- --------------------
                                                                                                                                               
Effect of exchange rate changes on cash and cash equivalents                                 (2,719 )                                             (4,447 )
                                                                                          --------- --------------------                      ---------- --------------------
Change in cash and cash equivalents                                                          17,362                           (20,591 )
                                                                                          --------- --------------------                      ---------- --------------------
Cash and cash equivalents at beginning of period                                            242,787                           280,740  
                                                                                          --------- --------------------                      ---------- --------------------
Cash and cash equivalents at end of period                                                 $260,149                          $260,149  
                                                                                          ========= ====================                      ========== ====================
                                                                                                                                               

Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures

(Unaudited)

Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of each non-GAAP financial measure used in this earnings release and related conference call, slide presentation or webcast to the most directly comparable GAAP financial measure. These measures differ from GAAP in that they exclude amortization primarily related to acquired intangible assets and debt discount, stock-based compensation expenses, charges associated with the Company’s restructuring program, significant litigation charges and the related tax effect of those items. The Company’s basis for these adjustments is described below.

Management uses these non-GAAP measures for internal reporting and forecasting purposes, when publicly providing its business outlook, to evaluate the Company’s performance and to evaluate and compensate the Company’s executives. The Company has provided these non-GAAP financial measures in addition to GAAP financial results because it believes that these non-GAAP financial measures provide useful information to certain investors and financial analysts for comparison across accounting periods not influenced by certain non-cash items that are not used by management when evaluating the Company’s historical and prospective financial performance. In addition, the Company has historically provided this or similar information and understands that some investors and financial analysts find this information helpful in analyzing the Company’s operating margins, operating expenses and net income and comparing the Company’s financial performance to that of its peer companies and competitors.

Management typically excludes the amounts described above when evaluating the Company’s operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the Company’s operating performance due to the following factors:

-- The Company does not acquire businesses on a predictable cycle. The Company, therefore, believes that the presentation of non-GAAP measures that adjust for the impact of amortization and certain stock-based compensation expenses and the related tax effects that are primarily related to acquisitions, provide investors and financial analysts with a consistent basis for comparison across accounting periods and, therefore, are useful to investors and financial analysts in helping them to better understand the Company’s operating results and underlying operational trends.

-- Amortization costs and the related tax effects are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.

-- Although stock-based compensation is an important aspect of the compensation of the Company’s employees and executives, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years after the grant of the stock-based instrument, and generally cannot be changed or influenced by management after the grant.

-- Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be accounted for as separate liability (debt) and equity (conversion option) components in a manner that reflects the issuer’s non-convertible debt borrowing rate. The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management’s assessment of the company’s operating performance because management believes that the exclusion of these charges will better help investors and financial analysts understand the Company’s operating results and underlying operational trends.

-- The charges incurred in conjunction with the Company’s restructuring program, which relate to reductions in headcount and the consolidation of leased facilities, are not anticipated to be ongoing costs; and, thus, are outside of the normal operations of the Company’s business. The Company, therefore, believes that the exclusion of these charges will better help investors and financial analysts understand the Company’s operating results and underlying operational trends as compared to prior periods.

-- Charges or benefits related to significant litigation are not anticipated to be ongoing costs; and, thus, are outside of the normal operations of the Company’s business. These charges or benefits are recorded in the period when it is probable a liability had been incurred and the amount of loss can be reasonably estimated even though the subject matter of the underlying dispute may relate to multiple or different periods. As such, the Company believes that these expenses do not accurately reflect the underlying performance of continuing operations for the period in which they are incurred.

These non-GAAP financial measures are not prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and may differ from the non-GAAP information used by other companies. There are significant limitations associated with the use of non-GAAP financial measures. The additional non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP (such as net income and earnings per share) and should not be considered measures of the Company’s liquidity. Furthermore, the Company in the future may exclude amortization related to newly acquired intangible assets and debt discount, additional charges related to its restructuring program, significant litigation charges and the related tax effects from financial measures that it releases, and the Company expects to continue to incur stock-based compensation expenses.

                                                             
                                           CITRIX SYSTEMS, INC.
                                            
                                Non-GAAP Financial Measures Reconciliation
                                            
                    (In thousands, except per share, gross margin and operating margin
                                             data - unaudited)
                                                                                    
The following tables show the non-GAAP financial measures used in
this press release reconciled to the most directly comparable GAAP
financial measures.
                                                                                    
                                                                                     Three Months Ended
                                                                                      December 31, 2014
                                                                                   ----------------------
GAAP gross margin                                                                           79.5%
     Add: stock-based compensation                                                           0.1
     Add: amortization of product related intangible assets                                  5.1
                                                                                   ----------------------
Non-GAAP gross margin                                                                       84.7%
                                                                                   ======================
                                                                                    
                                                             
                                                             Three Months Ended
                                                              December 31, 2014
                                                            --------------------
GAAP operating margin                                               13.8%
     Add: stock-based compensation                                   4.8
     Add: amortization of product related intangible assets          5.1
     Add: amortization of other intangible assets                    1.5
     Add: restructuring charges                                      0.4
                                                            --------------------
Non-GAAP operating margin                                           25.6%
                                                            ====================
                                                             
                                                             
                                                                                                           Three Months Ended December 31,
                                                                                              2014                             2013
                                                                                 -------------------------------------------------- --------------------------------
GAAP net income                                                                   $95,228                          $138,644
     Add: stock-based compensation                                                 40,847                                               46,635
     Add: amortization of product related intangible assets                        43,766                                               24,492
     Add: amortization of other intangible assets                                  13,043                                               10,346
     Add: amortization of debt discount                                             7,861                                                    -
     Add: restructuring charges                                                     3,139                                                    -
     Less: tax effects related to above items                                     (24,026 )                         (25,422 )
                                                                                 -------- -------------------- -------------------- ---------- --------------------
Non-GAAP net income                                                              $179,858       $194,695  
                                                                                 ======== ==================== ==================== ========== ====================
                                                                                                                                     
                                                             
                                                                                                        Three Months Ended December 31,
                                                                                             2014                          2013
                                                                                 ------------------------------------------------ ----------------------------
GAAP earnings per share - diluted                                    $0.58                         $0.74
     Add: stock-based compensation                                                 0.25                                             0.25
     Add: amortization of product related intangible assets                        0.27                                             0.13
     Add: amortization of other intangible assets                                  0.08                                             0.06
     Add: amortization of debt discount                                            0.05                                                -
     Add: restructuring charges                                                    0.02                                                -
     Less: tax effects related to above items                                     (0.15 )                       (0.14 )
                                                                                 ------ -------------------- -------------------- ------ --------------------
Non-GAAP earnings per share - diluted                                $1.10      $1.04  
                                                                                 ====== ==================== ==================== ====== ====================
                                                                                                                                          
                                                             
                                         CITRIX SYSTEMS, INC.
                                                                                  
                                                                                  Twelve Months Ended
                                                                                   December 31, 2014
                                                                                 --------------------
GAAP gross margin                                                                        80.2%
     Add: stock-based compensation                                                        0.1
     Add: amortization of product related intangible assets                               4.7
                                                                                 --------------------
Non-GAAP gross margin                                                                    85.0%
                                                                                 ====================
                                                                                  
                                                                   
                                                                                        Twelve Months Ended
                                                                                         December 31, 2014
                                                                                       --------------------
GAAP operating margin                                                                          9.6%
     Add: stock-based compensation                                                              5.4
     Add: amortization of product related intangible assets                                     4.7
     Add: amortization of other intangible assets                                               1.5
     Add: restructuring charges                                                                 0.6
     Add: charge related to a previously disclosed patent lawsuit                               0.6
                                                                                       --------------------
Non-GAAP operating margin                                                                      22.4%
                                                                                       ====================
                                                                                        
                                                                   
                                                                                                                Twelve Months Ended December 31,
                                                                                                    2014                             2013
                                                                                       -------------------------------------------------- --------------------------------
GAAP net income                                                                        $251,723                          $339,523
     Add: stock-based compensation                                                      169,287                                              183,941
     Add: amortization of product related intangible assets                             146,426                                               97,873
     Add: amortization of other intangible assets                                        45,898                                               41,668
     Add: amortization of debt discount                                                  20,832                                                    -
     Add: restructuring charges                                                          20,424                                                    -
     Add: charge related to a previously disclosed patent lawsuit                        20,727                                                    -
     Less: tax effects related to above items                                          (110,000 )                         (95,009 )
                                                                                       -------- -------------------- -------------------- ---------- --------------------
Non-GAAP net income                                                                    $565,317       $567,996  
                                                                                       ======== ==================== ==================== ========== ====================
                                                                                                                                           
                                                                   Twelve Months Ended December 31,
                                                                              2014             2013
                                                                  ---------------- ----------------
GAAP earnings per share - diluted                               $1.47            $1.80
     Add: stock-based compensation                                            0.99             0.98
     Add: amortization of product related intangible assets                   0.85             0.52
     Add: amortization of other intangible assets                             0.27             0.22
     Add: amortization of debt discount                                       0.12                -
     Add: restructuring charges                                               0.12                -
     Add: charge related to a previously disclosed patent lawsuit             0.12                -
     Less: tax effects related to above items                               (0.64)           (0.50)
                                                                  ---------------- ----------------
Non-GAAP earnings per share - diluted                           $3.30            $3.02
                                                                  ================ ================
                                                                                                    
                                                                       Forward Looking Guidance
                                                                                                                                            
                                                                        For the Three Months Ended                       For the Twelve Months Ended
                                                                                                    March 31,                                      December 31,
                                                                                                      2015                          2015
                                                                                           -------------------------- -------------------- ---------------------------
GAAP earnings per share - diluted                                                   $0.20 to $0.22                                   $2.10 to $2.15
     Add: adjustments to exclude the effects of amortization of                                       0.16                                             0.61
     intangible assets
     Add: adjustments to exclude the effects of expenses related to                                   0.26                                             1.00
     stock-based compensation
     Add: adjustments to exclude the effects of amortization of debt                                  0.05                                             0.19
     discount
     Add: adjustments to exclude the effects of restructuring charges                                 0.22                                             0.33
     Less: tax effects related to above items                                                   (0.17) to (0.21)              (0.58) to (0.68)
                                                                                           -------------------------- -------------------- ---------------------------
Non-GAAP earnings per share - diluted                                               $0.70 to $0.72                $3.60 to $3.65
                                                                                           ========================== ==================== ===========================
                                                                                                                                            
                                                                                                      
                                                                                             For the Three Months Ended                       For the Twelve Months Ended
                                                                                                      March 31,                                      December 31,
                                                                                                        2015                          2015
                                                                                             -------------------------- -------------------- ---------------------------
GAAP tax rate                                                                                       17.0% - 18.0%                                    17.0% - 18.0%
     Add: tax effects of stock-based compensation, amortization of                                       5.0                           5.0
     intangible assets, amortization of debt discount and restructuring
     charges
                                                                                             -------------------------- -------------------- ---------------------------
Non-GAAP tax rate                                                                                   22.0% - 23.0%                 22.0% - 23.0%
                                                                                             ========================== ==================== ===========================
                                                                                                                                              

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150128006276r1&sid=cmtx6&distro=nx&lang=en

SOURCE: Citrix Systems, Inc.

Citrix Systems, Inc. 
Media inquiries: 
Julie Geer, 408-790-8543 
julie.geer@citrix.com 
or 
Investor inquiries: 
Eduardo Fleites, 954-229-5758 
eduardo.fleites@citrix.com


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