Citrix 2000 Annual Report Download - page 23

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investment portfolio in the fourth quarter of 2000 from tax−exempt and taxable
to predominantly taxable securities. The increase in interest and other income
in 1999 was primarily due to interest earned on the invested net proceeds from
the issuance of Debentures in March 1999. The Company may acquire or make
investments in companies it believes are related to its strategic objectives.
Such investments will reduce the Company's cash and/or investment balances and
therefore may reduce interest income.
Interest Expense. The increases in interest expense in 2000 and 1999 were
primarily due to interest related to the Debentures issued in March 1999.
Income Taxes. In July 1999, the Company changed its organizational
structure whereby it moved certain operational and administrative processes to
overseas subsidiaries. The restructuring resulted in foreign earnings being
taxed at lower foreign tax rates. In 2000, the Company determined that foreign
earnings will be permanently reinvested overseas in order to fund the Company's
growth in overseas markets. As a result of these organizational changes, the
Company's effective tax rate amounted to 30% in 2000, as compared to 36% in 1999
and 1998.
LIQUIDITY AND CAPITAL RESOURCES
During 2000, the Company generated positive operating cash flows of $243.2
million related primarily to net income of $94.5 million, adjusted for non−cash
items including tax benefits from the exercise of non−statutory stock options
and disqualifying dispositions of incentive stock options of $63.9 million,
depreciation and amortization expenses of $50.2 million, and provisions for
product returns and inventory obsolescence of $34.8 million primarily due to
stock rotations and the overall increase in the Company's revenues. These cash
inflows were partially offset by an aggregate decrease in cash flow from
operating assets and liabilities of $26.6 million. Cash used in investing
activities of $1.8 million for 2000 related primarily to the expenditure of
$43.5 million for the purchase of computer equipment, leasehold improvements and
office equipment to support the Company's growth and expansion, and net cash
paid for acquisitions, primarily the Innovex Group, of $30.1 million, partially
offset by cash inflows from the net sale of investments totaling $73.2 million.
Cash used in financing activities of $82.6 million related primarily to the
expenditure of $157.9 million for stock repurchase programs, partially offset by
$70.5 million from the issuance of common stock under the Company's stock option
and employee stock purchase plans and $4.9 million generated from premiums
charged in the sale of put warrants.
During 1999, cash provided by operating activities of $184.0 million
related primarily to net income of $116.9 million, adjusted for non−cash items
including tax benefits from the exercise of non−statutory stock options and
disqualifying dispositions of incentive stock options of $50.8 million,
depreciation and amortization expenses of $27.6 million and an increase in
accounts payable and other accrued expenses of $25.1 million due to increased
marketing expenses, accrued taxes and royalty fees and provisions for product
returns of $20.9 million primarily due to stock rotation caused by the release
of MetaFrame 1.8 and the overall increase in the Company's revenues. These cash
inflows were partially offset by increases in accounts receivable of $44.0
million due primarily to higher revenue levels and an increase of prepaid
expenses of $32.8 million due primarily to a receivable from estimated tax
payments in excess of the tax liability. Cash used in investing activities of
$457.5 million for 1999 related primarily to the net purchases of investments of
$396.2 million, the net cash paid for the acquisition of ViewSoft of $32.7
million and the expenditure of $26.3 million for the purchase of leasehold
improvements and equipment to support the Company's growth and expansion into
new facilities. Cash provided by financing activities of $362.1 million related
primarily to the net proceeds from the issuance of convertible subordinated
debentures and $70.4 million from the issuance of common stock under the
Company's stock option and employee stock purchase plans.
At December 31, 2000, the Company had $849.2 million in cash and
investments, including $375.0 million in cash and cash equivalents, and $427.3
million of working capital. The Company's cash and cash equivalents are invested
in investment grade, highly liquid securities to minimize interest rate risk and
allow for flexibility in the event of immediate cash needs.
In December 2000, the Company, through a wholly−owned subsidiary, entered
into a forward bond purchase agreement ("Bond Purchase Agreement") with an
investment advisor. Pursuant to the Bond
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