Citrix 2006 Annual Report Download

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“Over the next decade, delivering applications to
people—wherever they work and play—will become a
defining issue for IT. Why? Because applications
are the language of business. Winners will be fl uent with
application delivery.
Others will lag behind, struggling with the
pace of change in an increasingly dynamic world.”
– Mark Templeton, President and CEO, Citrix Systems
2006 Annual Report

Table of contents

  • Page 1
    ... a defining issue for IT. Why? Because applications are the language of business. Winners will be ï¬,uent with application delivery. Others will lag behind, struggling with the pace of change in an increasingly dynamic world." - Mark Templeton, President and CEO, Citrix Systems 2006 Annual Report

  • Page 2
    ... of license revenues Cost of services revenues Amortization of product related intangible assets Total cost of revenues Gross margin Operating expenses: Research and development Sales, marketing and support General and administrative Amortization of other intangible assets In-process research and...

  • Page 3
    ...competencies in strategic planning, product innovation, acquisition integration and business scalability. We've made great progress on each of these dimensions. I'm proud to report 2006 revenue of $1.134 billion. Credit goes to the Citrix employees, business partners and families who are responsible...

  • Page 4
    ...break the rigid connections between where people work and where applications are best managed. In my 12 years with Citrix, I have not seen a time when our vision, technology and products are better aligned with customer needs, making us more market-relevant and strategic. All signs indicate that our...

  • Page 5
    ...moved us quickly to the forefront of solutions for branch office workers and Web-based applications. Our Application Sharing products leverage the explosive use of the Internet, driving the growth of our Online Division's "software-as-a-service" business. Citrix Systems, Inc. 2006 Annual Report 3

  • Page 6
    ...Presentation Server I Desktop Server I EdgeSight Application Networking NetScaler I Access Gateway I WANScaler Online Services GoToMyPC I GoToAssist I GoToMeeting I GoToWebinar Citrix offers products in three high-growth markets for Application Delivery Infrastructure. Application Virtualization...

  • Page 7
    ...over 75% of Internet users pass through a Citrix NetScaler system every day. Our Access Gateway product line secures the point of access to applications of any type-Web or Windows. In just two years, Access Gateway has rapidly grown to an industry-leading position in SSL VPN market share. The recent...

  • Page 8
    ... computing in classrooms, labs and the front office. Small businesses with our online application-sharing products can leverage the Internet to reach customers across global markets. Our online assistance products allow technology companies to provide top-notch customer support over the Web and our...

  • Page 9
    ...the top five. Our plan is simple-to provide IT with the power of a secure, end-to-end infrastructure for delivering applications, information and content-anywhere. As applications evolve, as user needs Mark Templeton President and Chief Executive Officer Citrix Systems, Inc. 2006 Annual Report 7

  • Page 10
    ..., product demand and pipeline, Subscription Advantage, Presentation Server, NetScaler, Access Suite and Access Gateway, historical stock option granting practices, cash and non-cash charges, contingent liabilities under Internal Revenue Code Section 409A, product and price competition, Citrix Online...

  • Page 11
    ...Statements Quarterly Financial Information (Unaudited) Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Corporate Information and Stockholder Information 50 53 54 55 56 57 58 60 62 104 116 IBC Citrix Systems, Inc. 2006 Annual Report 

  • Page 12
    ... except per share data) 2006 2005(a) (Restated) 2004(a) (Restated) 2003 (Restated) 2002 (Restated) Consolidated Statements of Income Data (a) : $ 1,134,319 Net revenues 98,698 Cost of revenues(b) Gross margin Operating expenses: Research and development Sales, marketing and support General and...

  • Page 13
    ... repurchases made under our stock repurchase program and shares issued in connection with our acquisitions. See Notes 4 and 8 to our consolidated financial statements included in this Annual Report. The following adjusts our consolidated income statements for the years ended December 31, 2005, 2004...

  • Page 14
    ... per share data) 2002 (As reported) (Adjustments) (As restated) (As reported) (Adjustments) (As restated) Consolidated Statements of Income Data: Net revenues Cost of revenues(a) Gross margin Operating expenses: Research and development Sales, marketing and support General and administrative...

  • Page 15
    ...deferred revenues Long-term debt Other liabilities Commitments and contingencies Stockholders' equity Preferred stock at $.01 par value: 5,000 shares authorized Common stock at $0.001 par value 1,000,000 shares authorized Additional paid-in capital Deferred compensation Retained earnings Accumulated...

  • Page 16
    ... long-term Other liabilities Commitments and contingencies Put warrants Common stock subject to repurchase Stockholders' equity Preferred stock at $.01 par value: 5,000 shares authorized Common stock at $0.001 par value 1,000,000 shares authorized Additional paid-in capital Deferred compensation...

  • Page 17
    ... consolidated financial statements included elsewhere in this Annual Report. The impact under Accounting Principles Board, or APB, No. 25, Accounting for Stock Issued to Employees, of recognizing additional stock-based compensation expense and related tax effects as a result of our historical stock...

  • Page 18
    ... indicated that the consent forms were available for signature at that time. We generally used the in-person board meeting dates when determining revised measurement dates, because members of management responsible for approval and processing of these grants believed or acted as if approval was...

  • Page 19
    ...date. We also made grants to the employees of companies we acquired in connection with acquisitions. Grants made in conjunction with acquisitions were typically authorized at the time of the Board's approval of the acquisition. The exercise price of such grants was typically set at the closing stock...

  • Page 20
    ... granted options; • electronic mail messages and other electronic files retrieved from our computer system and in back up media; • documentation prepared in connection with our annual performance reviews of employees as part of the process of determining the allocation of stock option grants...

  • Page 21
    ...,667 generally used the date of the first in-person Board of Directors meeting after the evidence suggested that the amount and terms of the grant were final as the revised measurement date for financial accounting purposes. Where evidence existed of advance approval by the Compensation Committee...

  • Page 22
    ...date for financial accounting purposes. We recorded approximately $32,000 in pre-tax stock-based compensation expense related to these grants. The last grant for which we revised the measurement date was March 1, 2005. Board Grants. From 1996 through 2006, we made 48 grants to non-employee directors...

  • Page 23
    ...impact on revenue or cash and investments as a result of this additional stock compensation expense and the adjustments related to our historical stock option granting practices. As a result of the review, we determined that we failed to properly withhold employment (the employee and our portions of...

  • Page 24
    ... changes $ 3,142 Other tax charges (2,127) Income tax impact on other tax charges 727 Income tax adjustments related to IRC Section 162(m) (288) Income tax impact related to stock option compensation expense date changes (862) Total income tax adjustments Total charge to net income $ (423) 592 22

  • Page 25
    ...of stock-based compensation expense were affected by the high level of volatility in our stock price and the date ranges used in our sensitivity analysis, generally the time period between the original grant dates of certain stock options and the revised Citrix Systems, Inc. 2006 Annual Report 23

  • Page 26
    Management's Discussion and Analysis of Financial Condition and Results of Operations measurement dates. For example, in 1999 (the year in our restatement period with the largest sensitivity range based on option grant date), our stock price closed at a low of $14.65 per share and a high of $77.50 ...

  • Page 27
    ... and license our products through multiple channels such as value-added resellers, channel distributors, system integrators, independent software vendors, our Websites and original equipment manufacturers. 2006 Acquisitions During 2006, we acquired all of the issued and outstanding capital stock of...

  • Page 28
    ... 2006 Acquisitions are comprised of core technologies, customer relationships, trade name and covenants not to compete. The valuation of the acquired technologies was based on the estimated discounted future cash flows associated with the acquired companies' existing products. The value of customer...

  • Page 29
    ... for Acquisitions The fair values used in determining the purchase price allocation for certain intangible assets for our acquisitions were based on estimated discounted future cash flows, royalty rates and historical data, among other information. Purchased in-process research and development, or...

  • Page 30
    ... Board of Directors, the acquisition of XenSource was reviewed and approved by the Nominating and Corporate Governance Committee. There are no material relationships among us and XenSource or any of their respective affiliates or any of the parties to the agreement to acquire XenSource and related...

  • Page 31
    ... the VSOE of fair value for each element, considering the price charged for each product or applicable renewal rates for license updates. In the normal course of business, we do not permit product returns, but we do provide most of our distributors with stock balancing and price protection rights...

  • Page 32
    ... not recognize compensation cost related to stock options granted to our employees and non-employee directors that had an exercise price equal to or above the market value of the underlying common stock on the date of grant in our consolidated statement of income prior to January 1, 2006. We elected...

  • Page 33
    ...'s voluntary, independent review of our historical stock option granting practices and the related accounting see Note 2 to our consolidated financial statements included elsewhere in this Annual Report. Core and Product Technology Assets We review acquired core and product technology assets for...

  • Page 34
    ... and marketing of technology solutions that deliver applications on-demand. Our revenues are derived from sales of our Application Delivery Infrastructure products and related technical services in the Americas, Europe, the Middle East and Africa, or EMEA, and Asia-Pacific regions and from online...

  • Page 35
    ... design, development and marketing of technology solutions that deliver applications on-demand with high performance, enhanced security and improved TCO. We market and license our products through multiple channels such as value added resellers, channel distributors, system integrators, independent...

  • Page 36
    ...of product license revenues Cost of services revenues Amortization of product related intangible assets Total cost of revenues Gross margin Operating expenses: Research and development Sales, marketing and support General and administrative Amortization of other intangible assets In-process research...

  • Page 37
    ... as a percent of our total Product License revenue due to expected increases in sales of our Application Networking products, EdgeSight products and our newly acquired Ardence products. License Updates consist of fees related to our Subscription Advantage program that are recognized ratably over the...

  • Page 38
    ...lesser extent, increased sales of our Application Virtualization products. License Updates revenue increased during 2006 when compared to 2005 primarily due to a larger base of subscribers and increasing renewals related to our Subscription Advantage program. Online Services revenue increased during...

  • Page 39
    ... during 2006 as compared to 2005 primarily due to amortization of product related intangible assets acquired in acquisitions. For more information regarding our acquisitions, see "Management's Discussion and Analysis of Financial Condition and Results Citrix Systems, Inc. 2006 Annual Report 37

  • Page 40
    ... hiring of personnel. For more information regarding our acquisitions see, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" and Notes 4 and 18 to our consolidated financial statements included elsewhere in this Annual Report. Research and development...

  • Page 41
    ... advertising, trade shows, public relations and other market development programs. Sales, marketing and support expenses increased during 2006 compared to 2005 primarily due to an increase in headcount and the associated increase in salaries, commissions and other variable compensation and employee...

  • Page 42
    ... in this Annual Report on Form 10-K for the year ended December 31, 2006. General and administrative expenses increased for the year ended December 31, 2005 compared to the year ended December 31, 2004, primarily due to an increase in headcount, associated salaries and employee related expenses, an...

  • Page 43
    ... acquisitions. For more information see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" and "- Liquidity and Capital Resources" and Note 4 to our consolidated financial statements included elsewhere in this Annual Report. Citrix Systems, Inc. 2006...

  • Page 44
    ... see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" and Note 9 to our consolidated financial statements included elsewhere in this Annual Report. Year Ended December 31, (In thousands) 2006 $ - 2005 $ - 2004 $ 7,219 2006...

  • Page 45
    ... these cash inflows is an aggregate increase in cash flow from our operating assets and liabilities of $24.6 million, net of the effects of acquisitions. Our investing activities used $437.3 million of cash consisting primarily of the net purchases after Citrix Systems, Inc. 2006 Annual Report 43

  • Page 46
    ...million related to $174.4 million of cash paid under our stock repurchase programs partially offset by $101.6 million in proceeds received from employee stock compensation plans and $29.9 million in net proceeds from our Credit Facility and Term Loan, net of financing fees. Historically, significant...

  • Page 47
    ... 2006 Acquisitions partially offset by $1.7 million of uncollectible accounts written off, net of recoveries. From time to time, we could maintain individually significant accounts receivable balances from our distributors or customers, which are comprised of large business enterprises, governments...

  • Page 48
    ... was available to repurchase shares of our common stock pursuant to the stock repurchase program. All shares repurchased are recorded as treasury stock. We are authorized to make open market purchases of our common stock using general corporate funds. Additionally, during 2006 and 2005, we entered...

  • Page 49
    ... represent non-cancelable commitments to purchase inventory ordered before year-end. (2) Total contractual obligations do not include agreements where our commitment is variable in nature or where cancellations without payment provisions exist. Citrix Systems, Inc. 2006 Annual Report 47

  • Page 50
    Management's Discussion and Analysis of Financial Condition and Results of Operations As of December 31, 2006, we did not have any individually material capital lease obligations, purchase obligations, or other material long-term commitments reflected on our consolidated balance sheets. Off-Balance...

  • Page 51
    ... the related statutes. We expect to incur approximately $0.9 million, net of income tax, in additional charges to correct future adverse tax consequences under IRC Section 409A related to future employee option exercises of incorrectly priced stock options. Citrix Systems, Inc. 2006 Annual Report...

  • Page 52
    .... The securities classified as available-for-sale are subject to interest rate risk. The modeling technique used measures the change in fair values arising from an immediate hypothetical shift in market interest rates and assumes that ending fair values include principal plus accrued interest and...

  • Page 53
    ... $61.0 million related to office space utilized for our corporate headquarters in Fort Lauderdale, Florida. Payments under this synthetic lease are indexed to a variable interest rate (LIBOR plus a margin). Based upon our interest rate exposure under this synthetic lease at December 31, 2006, a 100...

  • Page 54
    ...our Chief Financial Officer to grant stock options to our non-executive employees, subject to certain parameters; and • • Prior to our January 2006 adoption of SFAS No. 123R and its related interpretations, we reviewed our stock option granting practices and revised policies and procedures to...

  • Page 55
    ... and priced according to a predetermined, fixed schedule each year; Revisions and clarifications of the parameters of the Compensation Committee's delegation of authority to our Chief Executive Officer and Chief Financial Officer to make equity awards; • Citrix Systems, Inc. 2006 Annual Report...

  • Page 56
    ... sheets of Citrix Systems, Inc. as of December 31, 2006 and 2005, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2006 of Citrix Systems, Inc. and our report dated September...

  • Page 57
    ... Citrix Systems, Inc. as of December 31, 2006 and 2005, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company...

  • Page 58
    ...$.001 par value: 1,000,000 shares authorized; 238,156 and 226,573 shares issued at 2006 and 2005, respectively Additional paid-in capital Deferred compensation Retained earnings Accumulated other comprehensive income (loss) Less-common stock in treasury, at cost (59,465 and 49,965 shares in 2006 and...

  • Page 59
    ... Cost of product license revenues Cost of services revenues Amortization of product related intangibles Total cost of revenues Gross margin Operating expenses: Research and development Sales, marketing and support General and administrative Amortization of other intangible assets In-process research...

  • Page 60
    ... issued under employee stock purchase plan Common stock issued for acquisitions Tax benefit from employer stock plans Stock-based compensation expense Repurchase of common stock Cash paid in advance for share repurchase contracts Unrealized loss on forward contracts and interest rate swaps, net of...

  • Page 61
    ...Loss) $ 7,810 - 7,810 164) (156) - 7,489 11,485) - (467) - (4,463 8,406 237 - $ 4,180 Common Stock to Treasury Deferred Compensation $ - (13,647) (13,647) - - - - 6,451 - - - - - (7,196) - - - - (14,220 21,417 21,417 Shares... 237 182,997 $ 191,640 Citrix Systems, Inc. 2006 Annual Report 5

  • Page 62
    ... costs In-process research and development Provision for doubtful accounts Provision for product returns Provision for inventory reserves Deferred income tax benefit Tax effect of stock-based compensation Excess tax benefit from exercise of stock options Other non-cash items Total adjustments...

  • Page 63
    ...cash equivalents at end of year Supplemental Cash Flow Information (In thousands) Non-cash investing activity-Increase (decrease) in restricted cash equivalents and investments Non-cash financing activity-Fair value of stock issued in connection with acquisitions Cash paid for income taxes Cash paid...

  • Page 64
    ...Company designs, develops and markets technology solutions that allow applications to be delivered, supported and shared on-demand, securely and at a relatively low total cost of ownership. The Company markets and licenses its products through multiple channels such as value-added resellers, channel...

  • Page 65
    ... indicated that the consent forms were available for signature at that time. The Company generally used the in-person board meeting dates when determining revised measurement dates, because members of management responsible for approval and processing of these grants believed or acted as if approval...

  • Page 66
    ... some cases the Annual grants in conjunction with the Company's annual merit review process, which generally occurred a few months following the Company's fiscal year end (referred to as annual grants). • Non-annual grants to newly hired and promoted employees and from time to time to officers...

  • Page 67
    ... Directors and Compensation Committee meetings and related presentations; • unanimous written consents signed by the Compensation Committee members, and evidence relating to the date such consents were created and circulated for signature and/or signed; Citrix Systems, Inc. 2006 Annual Report...

  • Page 68
    ...obtained during interviews conducted by the Audit Committee's outside counsel of numerous individuals, including current and former officers, directors, employees and outside professionals; and • electronic mail messages and other electronic files retrieved from the Company's computer system and...

  • Page 69
    ... conclusively was obtained, the Company generally used the date of the first in-person Board of Directors meeting after the evidence suggested that the amount and terms of the grant were final as determined by management as the revised measurement date for financial accounting purposes. However, if...

  • Page 70
    ... $32,000 in pre-tax stock-based compensation expense related to these grants. The last grant for which the Company revised the measurement date was March 1, 2005. Board Grants. From 1996 through 2006, the Company made 48 grants to non-employee directors on 21 grant dates for a total of 3.1 million...

  • Page 71
    ... expense, if any, for each of the years ended December 31, 1996 through December 31, 2004 was not material. The total pre-tax stock-based compensation expense for the period from January 1, 1996 through December 31, 2005 was approximately $170.0 million. Citrix Systems, Inc. 2006 Annual Report 6

  • Page 72
    ...no impact on previously reported diluted net income per share for the years ended December 31, 2005 and 2004. Tax Related Issues Because virtually all holders of stock options granted by the Company were not involved in or aware of the incorrect pricing of certain options, the Company has taken and...

  • Page 73
    ... result of the review, the Company also determined that it failed to properly withhold employment (the employee and Company portions of FICA and supplemental federal withholding) taxes associated with certain stock option exercises. The Company recorded such amounts in the consolidated statements of...

  • Page 74
    ... stock-based compensation and related tax adjustments made to the Company's previously reported consolidated balance sheet as of December 31, 2005 (in thousands, except per share amounts): As Reported ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net...

  • Page 75
    ... Cost of product license revenues Cost of services revenues Amortization of product related intangibles Total cost of revenues Gross margin Operating expenses: Research and development Sales, marketing and support General and administrative Amortization of other intangible assets In-process research...

  • Page 76
    ... debt issuance costs In-process research and development 7,000 146 Provision for doubtful accounts Provision for product returns 5,954 383 Provision for inventory reserves Deferred income tax benefit (14,348) 38,336 Tax effect of stock-based compensation (325) Other non-cash items Total adjustments...

  • Page 77
    ... value-added resellers, distributors and end customers. Collateral is not required. Product returns are provided for in the consolidated financial statements and have historically been within management's expectations. The Company also maintains allowances for doubtful accounts for estimated losses...

  • Page 78
    ...to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. During 2006, 2005 and 2004, the Company did not recognize any impairment charges associated with its long-lived or intangible assets. Goodwill The Company accounts for goodwill in accordance with SFAS No...

  • Page 79
    ... certain acquired intangible assets to goodwill to adjust the purchase price allocation resulting from a 2001 acquisition. The adjustment resulted in a $4.4 million reduction of amortization expense, net of related tax effect of $2.8 million in 2004. Citrix Systems, Inc. 2006 Annual Report 77

  • Page 80
    ... an executed product license agreement from the end-user. For technical support, product training and consulting services, the Company requires a purchase order and an executed agreement. For online services, the Company requires the customer or the reseller to electronically accept the terms of an...

  • Page 81
    ...cooperative advertising agreements and provisions for stock balancing return rights. License Updates consist of fees related to the Subscription Advantage program that are recognized ratably over the term of the contract, which is typically 12-24 months. Subscription Advantage is a renewable program...

  • Page 82
    ... software code in its products or in the development of future products in exchange for the payment of fixed fees or amounts based upon the sales of the related product. The licensing agreements generally have terms ranging from one to five years, and generally include renewal options. However...

  • Page 83
    ... doubtful accounts receivable, provision for estimated returns for stock balancing and price protection rights, as well as other sales allowances, the assumptions used in the valuation of stock-based awards, the valuation of the Company's goodwill, net realizable value of core and product technology...

  • Page 84
    ...4. Acquisitions 2006 Acquisitions During 2006, the Company acquired all of the issued and outstanding capital stock of two privately held companies, Reflectent Software, Inc., a provider of solutions to monitor the real-time performance of clientserver, Web and desktop applications from an end-user...

  • Page 85
    ... Company received an immaterial number of shares related to non-tendering payees of the 2005 Acquisitions. The 2005 Acquisitions further extend the Company's Application Delivery Infrastructure, which are designed to offer comprehensive solutions across all Citrix Systems, Inc. 2006 Annual Report...

  • Page 86
    ... Acquisitions The fair values used in determining the purchase price allocation for certain intangible assets for the Company's acquisitions were based on estimated discounted future cash flows, royalty rates and historical data, among other information. Purchased in-process research and development...

  • Page 87
    ...outstanding capital stock of Ardence Delaware, Inc. ("Ardence"), a leading provider of solutions that allow information technology administrators to set up and configure PCs, servers, and Web servers in real time from a centrally managed source. This acquisition strengthens the Company's application...

  • Page 88
    ...in losses to the Company. The Company separately accounts for changes in the fair value of the investments and as of December 31, 2006 and 2005 there was no material change in fair value. 2005 $ 74,097 385,873 38,333 18,317 2,976 20,211 Cash and cash equivalents: Money market funds Commercial paper...

  • Page 89
    ... Employee Stock Purchase Plan (the "2005 ESPP"). Upon certain of the Company's acquisitions, it assumed several plans from the acquired companies. The Company's Board of Directors has provided that no new awards will be granted under the Company's acquired Citrix Systems, Inc. 2006 Annual Report...

  • Page 90
    ... in 2005. The 2005 ESPP replaced the Company's 1995 ESPP under which no more shares may be granted. Under the 2005 ESPP, all full-time and certain part-time employees of the Company are eligible to receive options to purchase common stock of the Company twice per year at the end of a six month...

  • Page 91
    ... risk free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues with remaining term equivalent to the Company's expected term. The expected term for the 1995 ESPP is the six month Payment Period. The weighted average fair value of the shares purchased under...

  • Page 92
    ... of services revenues Research and development Sales, marketing and support General and administrative Total $ 2006 2,100 18,209 24,095 17,192 implied volatility is more representative of future stock price trends than historical volatility. The approximate risk free interest rate was based on the...

  • Page 93
    ... issued pursuant to the non-vested stock units will not exceed 280,000 shares. The Company's policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule 85,179 25,940 (63,195) (8,000) 39,924 WeightedAverage Fair Value at Grant Date $ 26.52 35.00...

  • Page 94
    ... ESPP options. The expected term for the 2005 ESPP options is the six month Payment Period. The weighted average fair value of the shares purchased under the 2005 ESPP during 2006 was $26.30. Benefit Plan The Company maintains a 401(k) benefit plan (the "Plan") allowing eligible U.S.-based employees...

  • Page 95
    ...independent review of historical stock option granting practices and related accounting see "Management's Discussion and Analysis of Financial Condition and Results of Operations" elsewhere in this Annual Report. Preferred Stock The Company is authorized to issue 5,000,000 shares of preferred stock...

  • Page 96
    ... Term Loan approximated fair value due to its market rate of interest. The aggregate fair value of the Company's available-forsale investments was $440.1 million and $76.9 million at December 31, 2006 and 2005, respectively. 11. Commitments and Contingencies Leases The Company leases certain office...

  • Page 97
    ... pursuant to the lease are recorded as operating expenses in the Company's consolidated statements of income. The Company entered into the synthetic lease in order to lease its headquarters properties under more favorable terms than under its previous Citrix Systems, Inc. 2006 Annual Report 5

  • Page 98
    ... case for alleged infringement of U.S. patents by Citrix Online Division's GoToMyPC service. The complaints name Citrix Systems, Inc. and Citrix Online LLC, a wholly-owned subsidiary of Citrix Systems, Inc., as defendants and seek unspecified damages and other relief. In response, the Company filed...

  • Page 99
    ...party. The Company has not made payments pursuant to these provisions. The Company has not identified any losses that are probable under these provisions and, accordingly, the Company has not recorded a liability related to these indemnification provisions. Citrix Systems, Inc. 2006 Annual Report 7

  • Page 100
    ... tax credit carryovers. During the years ended December 31, 2006, 2005, and 2004, the Company recognized tax benefits related to the exercise of employee stock options in the amount of $40.6 million, $35.0 million, and $16.5 million, respectively. These benefits were recorded to additional paid-in...

  • Page 101
    ... to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its reserves reflect the probable outcome of known tax contingencies. As such, included in the Company's effective tax rate for 2006 is Citrix Systems, Inc. 2006 Annual Report 

  • Page 102
    ..., development and marketing of technology solutions that allow applications to be delivered, supported and shared on-demand. The Company's revenues are derived from sales of its Application Delivery Infrastructure products and related technical services in the Americas, EMEA and Asia-Pacific regions...

  • Page 103
    ... Company's Application Virtualization products, Application Networking products and other products and Online services revenues for the Citrix Online Division's products, for the years ended: December 31, (In thousands) 2006 2005 (Restated) Identifiable assets: Americas EMEA Asia-Pacific Online...

  • Page 104
    ... of future cash flows caused by changes in currency exchange rates, the Company has established a program that uses foreign exchange forward contracts to hedge its exposure to these potential changes. The terms of these instruments, and the hedged transactions to which they relate, generally do not...

  • Page 105
    ... uncorrected errors on the balance sheet are presumed to be reversed into the statement of operations in the current period even though some or all of the uncorrected difference may relate to periods prior to the latest statement of operations presented and, Citrix Systems, Inc. 2006 Annual Report...

  • Page 106
    ... year of adoption (e.g. January 1, 2006 for the Company). The adoption of SAB No. 108 did not have a material effect on the Company's consolidated financial position, results of operations or cash flows. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and...

  • Page 107
    ...updates Online services Technical services Total net revenues Cost of revenues: Cost of product license revenues Cost of services revenues Amortization of product related intangibles Total cost of revenues Gross margin Operating expenses: Research and development Sales, marketing and support General...

  • Page 108
    ...updates Online services Technical services Total net revenues Cost of revenues: Cost of product license revenues Cost of services revenues Amortization of product related intangibles Total cost of revenues Gross margin Operating expenses: Research and development Sales, marketing and support General...

  • Page 109
    ... Cost of product license revenues Cost of services revenues Amortization of product related intangibles Total cost of revenues Gross margin Operating expenses: Research and development Sales, marketing and support General and administrative Amortization of other intangible assets In-process research...

  • Page 110
    ... Cost of product license revenues Cost of services revenues Amortization of product related intangibles Total cost of revenues Gross margin Operating expenses: Research and development Sales, marketing and support General and administrative Amortization of other intangible assets In-process research...

  • Page 111
    March 31, 2006 As Reported ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories, net Prepaid expenses and other current assets Current portion of deferred tax assets, net Total current assets Restricted cash equivalents and investments Long-...

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    ... June 30, 2006 As Reported ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories, net Prepaid expenses and other current assets Current portion of deferred tax assets, net Total current assets Restricted cash equivalents and investments Long...

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    September 30, 2006 As Reported ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories, net Prepaid expenses and other current assets Current portion of deferred tax assets, net Total current assets Restricted cash equivalents and investments ...

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    ... liabilities Long-term portion of deferred revenues Other liabilities Commitments and contingencies Stockholders' equity: Preferred stock at $.01 par value: 5,000 shares authorized Common stock at $.001 par value: 1,000,000 shares authorized Additional paid-in capital Deferred compensation Retained...

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    ...contingencies Stockholders' equity: Preferred stock at $.01 par value: 5,000 shares authorized Common stock at $.001 par value: 1,000,000 shares authorized Additional paid-in capital Deferred compensation Retained earnings Accumulated other comprehensive loss Less - common stock in treasury, at cost...

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    ... revenues Long-term debt Other liabilities Commitments and contingencies Stockholders' equity: Preferred stock at $.01 par value: 5,000 shares authorized Common stock at $.001 par value: 1,000,000 shares authorized Additional paid-in capital Deferred compensation Retained earnings Accumulated...

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    ... and June 30, 2007, the Company received notice from the Nasdaq Listing and Hearing Review Council Compliance Department that the Company had demonstrated compliance with all the of the Nasdaq Marketplace Rules and that the delisting process was closed. Citrix Systems, Inc. 2006 Annual Report 115

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    ... ended December 31, 2006 for repurchases of our common stock. For more information see Note 8 to our consolidated financial statements included elsewhere in this Annual Report. (2) These amounts represent the cumulative average of the price paid per share for shares acquired in open market purchases...

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    ....22 113.12 Peer Group consists of those companies with an SIC code of 7372. COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN $150 $100 $50 $0 Dec01 Dec02 Dec03 Dec04 Dec05 Dec06 CITRIX SYSTEMS INC S&P 500 INDEX NASDAQ U.S. INDEX PEER GROUP Citrix Systems, Inc. 2006 Annual Report 117

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    ...200 channel and alliance partners in more than 100 countries. Annual revenue in 2006 was $1.1 billion. Learn more at www.citrix.com. Corporate Headquarters Ft. Lauderdale, FL, USA EMEA Headquarters Schaffhausen, Switzerland India Development Center Bangalore, India Online Division Headquarters Santa...

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    Citrix Systems, Inc. 851 West Cypress Creek Road Fort Lauderdale, FL 33309 USA www.citrix.com