Citrix 2005 Annual Report Download - page 30

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Page฀28
cash฀of฀$42.9฀million฀related฀to฀$174.4฀million฀of฀cash฀paid฀under฀our฀stock฀repurchase฀programs฀partially฀offset฀by฀$101.6฀million฀
in฀proceeds฀received฀from฀employee฀stock฀compensation฀plans฀and฀$29.9฀million฀in฀net฀proceeds฀from฀our฀Credit฀Facility฀and฀Term฀
Loan,฀net฀of฀financing฀fees.
During฀2004,฀we฀generated฀positive฀operating฀cash฀flows฀of฀$265.3฀million.฀These฀cash฀flows฀related฀primarily฀to฀net฀income฀of฀
$131.5฀million,฀adjusted฀for,฀among฀other฀things,฀tax฀ benefits฀from฀the฀ exercise฀of฀non-statutory฀stock฀options฀ and฀disqualifying฀
dispositions฀of฀incentive฀stock฀options฀of฀$20.9฀million,฀non-cash฀charges,฀including฀depreciation฀and฀amortization฀of฀$33.6฀million,฀
the฀ write-off฀ of฀ in-process฀ research฀ and฀ development฀ associated฀ with฀ our฀ 2004฀ Acquisitions฀ of฀ $19.1฀ million,฀ the฀ write-off฀ of฀
deferred฀debt฀issuance฀costs฀on฀our฀convertible฀subordinated฀debentures฀of฀$7.2฀million,฀provision฀for฀product฀returns฀of฀$6.7฀million,฀
the฀accretion฀of฀original฀issue฀discount฀and฀amortization฀of฀financing฀costs฀of฀$4.3฀million฀and฀an฀aggregate฀increase฀in฀cash฀flow฀
from฀our฀operating฀assets฀and฀liabilities฀of฀$42.5฀million.฀Our฀investing฀activities฀provided฀$39.3฀million฀of฀cash฀consisting฀primarily฀
of฀ the฀ net฀ proceeds,฀ after฀ reinvestment,฀ from฀ sales฀ and฀ maturities฀ of฀ our฀ available-for-sale฀ and฀ held-to-maturity฀ investments฀ of฀
$221.3฀million฀partially฀offset฀by฀cash฀paid฀for฀the฀2004฀Acquisitions,฀net฀of฀cash฀acquired,฀of฀$140.8฀million,฀the฀expenditure฀
of฀ $24.4฀million฀for฀the฀purchase฀of฀property฀and฀equipment฀and฀cash฀paid฀for฀ licensing฀agreements฀and฀core฀ technology฀of฀
$16.8฀million.฀Our฀financing฀activities฀used฀cash฀of฀$414.1฀million฀related฀to฀$355.7฀million฀of฀cash฀paid฀for฀the฀redemption฀of฀our฀
convertible฀subordinated฀ debentures฀and฀ $121.9฀million฀of฀ cash฀paid฀ under฀our฀ stock฀ repurchase฀ programs฀partially฀ offset฀ by฀
$63.5฀million฀in฀proceeds฀received฀from฀employee฀stock฀compensation฀plans.
Cash฀and฀Investments
Year฀Ended฀December฀31, 2005฀฀
Compared฀to
(In฀thousands) 2005 2004 2004
Cash฀and฀investments $฀554,221 $฀417,115 $฀137,106
As฀ of฀ December฀ 31,฀2005,฀we฀ had฀$554.2฀million฀ in฀cash฀and฀investments฀compared฀to฀$417.1฀million฀ at฀ December฀31,฀ 2004.฀
Additionally,฀at฀December฀31,฀ 2005,฀we฀had฀$63.7฀million฀of฀restricted฀cash฀equivalents฀and฀investments,฀see฀ “Restricted฀ Cash฀
Equivalents฀and฀Investments”฀below.฀The฀$137.1฀million฀increase฀in฀cash฀and฀investments฀as฀compared฀to฀December฀31,฀2004,฀is฀
primarily฀due฀to฀the฀ release฀of฀restricted฀cash฀as฀collateral฀due฀to฀the฀termination฀of฀our฀credit฀default฀contracts,฀an฀increase฀in฀
proceeds฀received฀from฀exercises฀of฀instruments฀under฀our฀employee฀stock-based฀compensation฀plans฀and฀net฀proceeds฀received฀
from฀ our฀ Term฀ Loan฀ of฀ $29.9฀million฀partially฀ offset฀ by฀an฀ increase฀ in฀cash฀ paid฀ under฀ our฀stock฀ repurchase฀ programs฀ and฀ an฀
increase฀ in฀ cash฀ spent฀ for฀ our฀ 2005฀ Acquisitions.฀ In฀ addition,฀ in฀ 2004,฀ we฀ redeemed฀ our฀ convertible฀ subordinated฀ debentures฀
which฀reduced฀our฀average฀cash฀balances฀held฀in฀2004.฀We฀generally฀invest฀our฀cash฀and฀cash฀equivalents฀in฀investment฀grade,฀
highly฀liquid฀securities฀to฀allow฀for฀flexibility฀in฀the฀event฀of฀immediate฀cash฀needs.฀Our฀short฀and฀long-term฀investments฀primarily฀
consist฀ of฀ interest-bearing฀ securities.฀ See฀ “Management’s฀ Discussion฀ and฀ Analysis฀ of฀ Financial฀ Condition฀ and฀ Results฀ of฀
Operations—Liquidity฀ and฀ Capital฀ Resources—Convertible฀ Subordinated฀ Debentures”฀ and฀ Notes฀ 3฀ and฀ 8฀ to฀ our฀ consolidated฀
financial฀statements฀for฀further฀information.
Restricted฀Cash฀Equivalents฀and฀Investments
Year฀Ended฀December฀31, 2005฀฀
Compared฀to
(In฀thousands) 2005 2004 2004
Restricted฀cash฀equivalents฀and฀investments $฀ 63,728 $฀149,051 $฀(85,323)
As฀ of฀ December฀ 31,฀ 2005,฀ we฀ had฀ $63.7฀ million฀ in฀ restricted฀ cash฀ equivalents฀ and฀ investments฀ compared฀ to฀ $149.1฀ million฀ at฀
December฀31,฀2004.฀The฀decrease฀in฀restricted฀cash฀and฀investments฀is฀primarily฀due฀to฀the฀termination฀of฀our฀credit฀default฀
contracts฀and฀the฀release฀of฀the฀previously฀restricted฀collateral฀related฀to฀those฀contracts.฀As฀of฀December฀31,฀2005,฀restricted฀cash฀
equivalents฀and฀investments฀are฀primarily฀comprised฀of฀approximately฀$62.8฀million฀in฀investment฀securities฀and฀cash฀equivalents฀
pledged฀as฀collateral฀for฀specified฀obligations฀under฀our฀synthetic฀lease฀arrangement.฀As฀of฀December฀31,฀2004฀restricted฀cash฀
was฀primarily฀comprised฀of฀approximately฀$86.3฀million฀in฀investment฀securities฀that฀were฀pledged฀as฀collateral฀for฀certain฀of฀our฀
credit฀default฀contracts฀and฀interest฀rate฀swap฀agreements฀and฀amounts฀related฀to฀our฀synthetic฀lease฀of฀approximately฀$62.8฀million.฀
We฀maintain฀the฀ability฀to฀manage฀the฀composition฀of฀the฀restricted฀cash฀equivalents฀and฀investments฀within฀certain฀limits฀and฀to฀
withdraw฀and฀use฀excess฀investment฀earnings฀from฀the฀pledged฀collateral฀for฀operating฀purposes.฀For฀further฀information฀regarding฀
our฀synthetic฀lease,฀credit฀default฀contracts฀and฀interest฀rate฀swaps,฀see฀Notes฀10฀and฀13฀to฀our฀consolidated฀financial฀statements.
Citrix฀Systems,฀Inc.
Management’s฀Discussion฀and฀Analysis฀of฀Financial฀Condition฀and฀Results฀of฀Operations฀
(Continued)