Citrix 2012 Annual Report Download - page 114

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Annual Report 2012 Citrix Systems, Inc.
Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of each non-GAAP financial
measure used in this 2012 Annual Report to the most directly comparable GAAP financial measure. These measures
differ from GAAP in that they exclude amortization primarily related to acquired intangible assets, stock-based
compensation expenses 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.
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
primarily related to newly acquired intangible assets, and the related tax effects from financial measures that it releases,
and the Company expects to continue to incur stock-based compensation expenses.