Citrix 2014 Annual Report Download - page 39

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
We are 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 or cloud.
We market and license our products directly to customers, over the Web, and through systems integrators, or SIs, in
addition to indirectly through value-added resellers, or VARs, value-added distributors, or VADs, original equipment
manufacturers, or OEMs and service providers.
We are a Delaware corporation founded on April 17, 1989.
Executive Summary
We have positioned, scaled and transformed through significant growth phases - from remote access, to web app delivery,
to virtualization, to mobile workspaces - and, now, we are focused on enabling a software-defined workplace where people can
securely and effortlessly collaborate across any device over any network and cloud, resulting in increased business productivity
for our customers. Our technologies mobilize desktops, apps, data, and people to help our customers drive value. We continue
driving innovation in the datacenter with our unique technologies across both physical and software defined networking
platforms while powering some of the world’s largest clouds and giving enterprises the capabilities to combine best-in-class
application networking services on a single, consolidated footprint.
In 2014, we continued to see an uneven spending environment in markets around the world and encountered hesitancy on
the part of customers in initiating large capital projects. In addition, we introduced new product offerings within our Desktop
and Application Virtualization business. These offerings are focused on simplifying the installation and management process
while delivering new capabilities to enhance the user experience for audio, video and graphics. Although we expect a multi-
year product cycle from these offerings, we have experienced longer than normal customer evaluations of these solutions,
causing longer than anticipated sales-cycles. In the Delivery Networking business, investments that we have been making in
increasing go-to-market coverage has led to growth in our Netscaler products, which partially offsets the results in our Desktop
and Application Virtualization business which have been impacted by increased competition and alternative products on new
platforms. In the second half of 2014, we outlined our vision for the software-defined workplace recognizing that our
customers are looking for a better way to mobilize their businesses while creating a more secure, flexible and easy-to-use
infrastructure.
In 2015, we will be investing in areas that will power long-term growth; mobility, cloud services and networking. We will
continue to refine our delivery of the software-defined workspace solution that will deliver the quick, tangible return on
investment, or ROI for our customers.
We believe that continued economic uncertainty and the transition of computing and legacy platforms to mobile, cloud,
SaaS and social solutions may adversely affect sales of our products and services and may result in longer sales cycles, slower
adoption of technologies and increased price competition.
In January 2015, we announced the implementation of a restructuring program designed to increase strategic focus and
operational efficiency, the 2015 Restructuring Program. The restructuring will affect approximately 700 full-time and 200
contractor positions. It is anticipated that the aggregate total pre-tax restructuring charges will be in the range of $49.0 million
to $55.0 million. Included in these pre-tax charges are approximately $40.0 million to $45.0 million related to employee
severance arrangements and approximately $9.0 million to $10.0 million related to the consolidation of leased facilities during
fiscal year 2015. The majority of the activities related to the 2015 Restructuring Program are anticipated to be completed by the
end of 2015.
In April 2014, we completed a private placement of $1.25 billion principal amount of 0.500% Convertible Senior Notes
due 2019, or the Convertible Notes. In May 2014, we issued an additional $187.5 million principal amount of Convertible
Notes pursuant to the full exercise of the over-allotment option granted to the initial purchasers in the offering, or the Over-
Allotment Option. The net proceeds from this offering were approximately $1.42 billion (including the proceeds from the Over-
Allotment Option), after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us.
In addition, in April 2014, in connection with the $1.5 billion increase in repurchase authority granted to us under our ongoing
stock repurchase program, we used approximately $101.0 million to purchase 1.7 million shares of our common stock from
certain purchasers of the Convertible Notes in privately negotiated transactions concurrently with the closing of the Convertible
Notes offering, and an additional $1.4 billion to purchase additional shares of our common stock through our ASR Agreement
with Citibank. Under the ASR Agreement, we paid approximately $1.4 billion to Citibank upon consummation of the ASR and