Citrix 2009 Annual Report Download - page 44

technology, talent and/or companies, and through a commitment to delivering high-quality products and services
to customers and partners. We expect to continue to make strategic investments in research and development of
existing and new products, and we will invest in research and development of advanced technologies for future
application. We believe that delivering innovative and high-value solutions through our Desktop Solutions and
Datacenter and Cloud Solutions is the key to meeting customer and partner needs and achieving our future
growth.
From an operations standpoint, in order to operate more efficiently and to drive long-term changes in our
cost model, on January 28, 2009, we announced the implementation of a strategic restructuring program, or the
Strategic Restructuring Program. The Strategic Restructuring Program included reducing our headcount by
approximately 450 full-time positions. In 2009, we incurred a pre-tax charge of $26.5 million related to
employee severance and related costs and non-cancelable lease costs related to the consolidation of certain of our
facilities. In addition to the Strategic Restructuring Program, we took steps in 2009 to reduce operating costs that
included reprioritizing internal projects, reducing contract workers and limiting travel spending.
Summary of Results
For the year ended December 31, 2009 compared to the year ended December 31, 2008, we delivered the
following financial performance:
• Product License revenue decreased 13.1% to $539.0 million;
• License Updates revenue increased 8.2% to $605.0 million;
• Online Services revenue increased 18.5% to $308.2 million;
• Technical Services revenue increased 12.7% to $162.0 million;
• Operating income increased 5.1% to $178.7 million; and
• Diluted earnings per share increased 8.1% to $1.03.
The decrease in our Product License revenue was primarily driven by decreased sales of our application
virtualization products, mainly in our EMEA segment. As expected, we saw many customers delay or reduce
planned IT projects in response to macro economic conditions. However, we are seeing signs of potential
improvement, including improving dynamics in certain markets and a high level of interest in desktop
virtualization. We currently expect our Product License revenue to increase when comparing the first quarter of
2010 to the first quarter of 2009. The increase in License Updates revenue was driven by renewals of our
Subscription Advantage product over a larger subscriber base. Our Online Services revenue increased due to
increased sales of our web collaboration services. We currently expect that total revenue will increase when
comparing the first quarter of 2010 to the first quarter of 2009, as well as when comparing the 2010 fiscal year to
the 2009 fiscal year. The increase in operating income is primarily due to a reduction in compensation and
employee related costs of $21.6 million primarily due to the Strategic Restructuring Program, net of costs related
to the Strategic Restructuring Program. Also contributing to the increase in operating income is an increase in
gross margin of $18.6 million primarily due to an increase in total revenues due to factors discussed above.
In addition, the recent crisis in the credit markets caused some of our investments to experience declines in
fair value, which resulted in impairment charges and unrealized losses in our investment portfolio. We do not
currently anticipate that the lack of liquidity caused by holding these investments will have a material adverse
effect on our operating cashflows or financial position. We continue to monitor our overall investment portfolio
and if the credit ratings of the issuers of our investments deteriorate or if the issuers experience financial
difficulty, including bankruptcy, we may be required to make additional adjustments to the carrying value of the
securities in our investment portfolio and recognize additional impairment charges for declines in fair value
which are determined to be other-than-temporary. See “– Liquidity and Capital Resources” below.
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