Citrix 2009 Annual Report Download - page 61

We establish tax reserves when, despite our belief that our tax return positions are fully supportable, certain
of these positions may be challenged. While it is often difficult to predict whether we will prevail, we believe
that our tax reserves reflect the probable outcome of known contingencies. As such, included in our effective tax
rate for the year ended December 31, 2009 is an additional tax reserve of approximately $18.9 million related to
uncertainties arising from current and prior tax years partially offset by a reduction of approximately $1.0 million
in tax reserves related to the expiration of a statute of limitations for the 2005 tax year.
In 2009, our effective tax rate decreased to approximately (8.6%) from 16.6% when comparing the three
months ended December 31, 2009 to the three months ended December 31, 2008 primarily due to a benefit from
tax credits recognized in the fourth quarter of 2009. When comparing the twelve months ended December 31,
2009 to the twelve months ended December 31, 2008, our effective tax rate decreased to 1.5% from 9.5%
primarily due to the tax credits recognized in the fourth quarter of 2009.
We are subject to the continuous examination of our income tax returns by tax authorities. We regularly
assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our
provision for income taxes. There can be no assurance, however, that the outcomes from these continuous
examinations will not have an adverse effect on our effective tax rate.
Liquidity and Capital Resources
During 2009, we generated positive operating cash flows of $484.0 million. These cash flows related
primarily to net income of $191.0 million, adjusted for, among other things, non-cash charges including
depreciation and amortization of $138.6 million, stock-based compensation expense of $111.4 million and a
goodwill adjustment of $5.4 million. Also contributing to these cash inflows is an aggregate increase in cash flow
from our operating assets and liabilities of $87.6 million, net of the effects of acquisitions. These operating cash
inflows are partially offset by $50.8 million related to a deferred income tax benefit, the tax effect of stock-based
compensation of $7.9 million and the excess benefit from the exercise of stock options of $5.2 million. Our
investing activities used $502.9 million of cash consisting primarily of cash paid for net purchases of investments
of $412.7 million. Also contributing to these cash outflows is the purchase of property and equipment of
$76.2 million. Our financing activities used cash of $45.5 million, primarily from expenditures on our stock
repurchase program of $214.9 million partially offset by proceeds received from the issuance of common stock
under our employee stock-based compensation plans of $166.0 million.
During 2008, we generated positive operating cash flows of $462.1 million. These cash flows related
primarily to net income of $178.3 million, adjusted for, among other things, non-cash charges including stock-
based compensation expense of $124.6 million and depreciation and amortization of $123.7 million. Also
contributing to these cash inflows is an aggregate increase in cash flow from our operating assets and liabilities
of $43.4 million, net of the effects of acquisitions. These operating cash inflows are partially offset by a
$6.4 million benefit related to an adjustment of payroll taxes and $6.8 million related to a deferred income tax
benefit. Our investing activities used $158.6 million of cash consisting primarily of the expenditure of
$181.0 million for the purchase of property and equipment, including the purchase of our headquarters building
and $68.4 million in cash paid for licensing agreements and acquisitions. These investing cash outflows are
partially offset by the net sales and maturities of our available-for-sale investments of $90.9 million. Our
financing activities used cash of $206.9 million, primarily related to $256.5 million paid for stock repurchases.
This cash outflow was partially offset by $44.4 million in proceeds received from employee stock compensation
plans and $5.6 million related to excess tax benefits from the exercise of stock-based awards.
Historically, significant portions of our cash inflows were generated by our operations. We currently expect
this trend to continue throughout 2010. We believe that our existing cash and investments together with cash flows
expected from operations will be sufficient to meet expected operating and capital expenditure requirements for the
next 12 months. We continue to search for suitable acquisition candidates and could acquire or make investments in
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