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Better ways for people, IT and business to work.
Annual Report 2010

Table of contents

  • Page 1
    Annual Report 2010 Better ways for people, IT and business to work.

  • Page 2
    ... Total cost of revenues Gross margin Operating expenses Research and development Sales, marketing and services General and administrative Amortization of other intangible assets Restructuring In-process research and development Total operating expenses Income from operations Other income, net Income...

  • Page 3
    ... center of computing-and cloud services are at their fingertips. This is precisely the kind of world we planned for. Citrix virtual computing products and services help over a hundred million people work and play from anywhere-gracefully adapting to the pace of change. This is our worthy, long-term...

  • Page 4
    ... and time zones. As one of the world's top software-as-a-service, or SaaS, providers, we are leveraging the reach of our "GoTo" brand, its scalable SaaS platform, and our unique go-to-market know-how. Our idea is to offer easy-to-use, economical-to-consume virtual meeting and support products...

  • Page 5
    ...It works with virtually any device because of Citrix Receiver-our universal client for PCs, Macs, thin clients, smartphones and tablets. With a simple click or touch, people get a high fidelity user experience provided by Citrix HDX technologies-even over wireless connections. At the same time, our...

  • Page 6
    ... making it easy to connect existing datacenters into ANY external cloud service, regardless of the hypervisor, network or app platform on either side. A core technology for this is the open source Xen engine which is already the de facto platform of cloud computing. In fact, it powers well over two...

  • Page 7
    ... leaders. Citrix is not hunkering down to ride out "the storm." We're leading customers with the ideas, products and services they need to embrace the new ways people, IT and businesses want to work. We're enabling faster Windows 7 migrations, lowering desktop refresh costs, broadening adoption...

  • Page 8
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 9
    ...Lauderdale, Florida 33309 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (954) 267-3000 Securities registered pursuant to Section 12(b) of the Act: Common Stock, $.001 Par Value The NASDAQ Stock Market LLC (Title of each class) (Name...

  • Page 10
    ...Item 14 Part IV: Item 15 Exhibits, Financial Statement Schedules ...Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions and...

  • Page 11
    ... ITEM 1. BUSINESS General Citrix Systems, Inc. is a Delaware corporation founded on April 17, 1989. We design, develop and market technology solutions that enable IT services to be securely delivered on demand-independent of location, device or network. Our customers achieve lower IT operating costs...

  • Page 12
    ... GoToMyPC remote access service, to network engineers who purchase our NetScaler web application devices, or the IT professional who licenses our XenDesktop infrastructure products. This section provides an overview of our major product and services offerings. Desktop Solutions Our Desktop Solutions...

  • Page 13
    ... payment processing, real-time reporting and management, online course catalog, automated reminder and follow-up emails, content library to organize and store reusable content, materials, tests, polls, toll-free audio and VoIP options. . The service offers flat-fee pricing for unlimited training...

  • Page 14
    ... needs of professionals and small offices, supports up to 50 PCs, rolls out secure, remote access for multiple users in minutes, and features an administration website in which managers can add, suspend and delete users and run usage reports. GoToMyPC® Corporate is built for businesses that require...

  • Page 15
    ... application delivery to other remote users including those in smaller branch offices, home offices and business travelers, while users in larger branch offices are supported with Citrix Repeater appliances. • Virtual Infrastructure Products Citrix XenServer and Citrix Essentials offer powerful...

  • Page 16
    ... services are specifically designed to address the variety of challenges facing access infrastructure environments. We offer several support-level options, global coverage and personalized relationship management. Post-sale technical support is offered through Citrix-operated support centers located...

  • Page 17
    Phone-, iPhone- and Android-based devices such as PCs, laptops, tablets, thin clients, netbooks and smartphones. ICA allows applications and desktops to run on a central server enabling centralized management of applications, desktops, end-users, servers, licenses and other system components for ...

  • Page 18
    ... provided us access to source code for versions of Microsoft Windows Server. These agreements are not required for our software development processes on Windows Server and do not provide for payments to or from Microsoft. The agreements are designed to allow Citrix to provide technical support for...

  • Page 19
    ... software updates, technical support and online services. Perpetual licenses allow our customers to use the version of software initially purchased into perpetuity, while term-based licenses are limited to a specified period of time. Software update subscriptions give customers the right to upgrade...

  • Page 20
    ... and the Online Services division constitute our two reportable segments. See Note 12 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2010. Operations For our application networking products, including NetScaler, Access Gateway and...

  • Page 21
    ...all purchasing, inventory, scheduling, order processing and accounting functions related to our operations. For our software products, production, warehousing and shipping are performed by our independent contractor HP, Ireland. Master software CD-ROMs, development of user manuals, packaging designs...

  • Page 22
    ... View product. We believe XenDesktop gives Citrix a competitive advantage by providing customers multiple ways to manage desktops within one, integrated desktop virtualization system. Online Services Our SaaS products for web collaboration, remote support and remote access continue to maintain solid...

  • Page 23
    ...®, GoView®, GoToLabs™, GoToManage®, HiDef Conferencing®, HiDef Corporate®, ICA®, nCore™, NetScaler®, Simplicity is Power™, Support Smarter®, VPX™, Xen®, XenApp®, XenCenter®, XenClient™, XenDesktop® , XenEnterprise®, XenMotion® XenServer®, Xen Source® and Xen Summit®. While...

  • Page 24
    ...services, including our Desktop Solutions, Online Services and Datacenter and Cloud Solutions, market positioning, Citrix Ready, FlexCast, our Partner Network, Product Licenses, License Updates, Technical Services, financial information and results of operations for future periods, product and price...

  • Page 25
    ... XenDesktop, XenApp, and other future product offerings and upgrades, could be affected by Microsoft's licensing and pricing scheme for client devices, servers and applications. Further, the announcement of the release, and the actual release, of new Windows-based server operating systems or...

  • Page 26
    ... have long-term employment agreements with any of our key personnel. Any officer or employee can terminate his or her relationship with us at any time. The effective management of our growth, if any, could depend upon our ability to retain our highlyskilled managerial, technical, sales and services...

  • Page 27
    ... Server Operating Systems. Declines and variability in demand for our Desktop Solutions could occur as a result of new competitive product releases and updates to existing products; termination of our product offerings and enhancements; potential market saturation; technological change; general...

  • Page 28
    ... releases of our current products and services, those delays or shortfalls could have a material adverse effect on our business, results of operations and financial condition. We believe that we could incur additional development costs, acquisition costs and royalties as we develop, buy or license...

  • Page 29
    ... years we have grown our force of sales professionals that work closely with partners to sell to primary information technology, or IT, buyers strategic IT executives, desktop operations managers, IT infrastructure managers, network architects and server operations managers, to address the multiple...

  • Page 30
    ... the current expectations of our management. Operations and costs incurred and potential liabilities assumed in connection with our acquisition of Netviewer also could have an adverse effect on our business, financial condition and operating results. If these risks materialize, our stock price could...

  • Page 31
    ...in non-cash charges that would adversely affect our results of operations and financial condition. Furthermore, impairment testing requires significant judgment, including the identification of reporting units based on our internal reporting structure that reflects the way we manage our business and...

  • Page 32
    ... recognize licensing fees over a longer period, including offering additional products in a software-as-a-service model. Changes to our licensing programs and subscription renewal programs, including the timing of the release of enhancements, upgrades, maintenance releases, the term of the contract...

  • Page 33
    ... of operations and financial condition would be adversely affected. As our international sales and operations grow, we could become increasingly subject to additional risks that could harm our business. We conduct significant sales and customer support, development and engineering operations in...

  • Page 34
    ...security of computing devices and networks is a critical issue for us and our customers. We devote significant resources to address security vulnerabilities in our products and services through engineering more secure products and services, enhancing security and reliability features in our products...

  • Page 35
    ... applicable licenses for open source software that we use such that we have not triggered any of these conditions, there is little or no legal precedent governing the interpretation of many of the terms of these types of licenses. As a result, the potential impact of these terms on our business...

  • Page 36
    ...XenServer products or meet customer requirements for innovation, quality and price of these Xen products. We rely to a significant degree on an informal community of independent open source software programmers to develop and enhance the Xen hypervisor. A relatively small group of software engineers...

  • Page 37
    ... have a material adverse effect on our business, results of operations and financial condition. Large enterprise customers usually request special pricing and purchase of multiple years of subscription and maintenance up-front and generally have longer sales cycles, which could negatively impact our...

  • Page 38
    ... or components from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and adversely affect our business, financial condition or results of operations. Our products could contain errors that could delay the release of new products...

  • Page 39
    ... exchange over the Web could result in a decline in the use of the Web and the viability of Web-based services, which would significantly adversely affect our financial condition and the operating results for our Online Services division. Regulation of audio services may adversely affect our Online...

  • Page 40
    ... adverse effect on our business, liquidity and financial position. We, along with our subsidiary, Citrix Systems International GmbH, maintain a credit facility agreement that contains financial covenants tied to a maximum consolidated leverage ratio and minimum interest coverage, among other things...

  • Page 41
    ... been the highest in the fourth quarter of our fiscal year due to corporate calendar year-end spending trends. In addition, our European operations generally provide lower revenues in the summer months because of the generally reduced level of economic activity in Europe during the summer. This...

  • Page 42
    ...In addition our Enterprise division owns land and buildings in Fort Lauderdale, Florida with approximately 281,189 square feet of office space used for our corporate headquarter and 42,000 square feet of office space in EMEA. We believe that our existing facilities are adequate for our current needs...

  • Page 43
    ... use in our business, for investment in acquisitions and to repurchase shares of our common stock. We have not paid any cash dividends on our capital stock in the last two years and do not currently anticipate paying any cash dividends on our capital stock in the foreseeable future. Issuer Purchases...

  • Page 44
    ... level of shares issued under our stock-based compensation programs, stock repurchases made under our stock repurchase program and shares issued in connection with our acquisitions. See Notes 3, 7 and 8 to our consolidated financial statements included in this Annual Report on Form 10-K for the year...

  • Page 45
    ...improving application performance and thereby reducing the amount of processing power involved, and allowing easy reconfiguration of servers for multiple purposes. Our Online Services division is focused on developing and marketing Web-based access, support and collaboration services. These services...

  • Page 46
    .... We also plan to increase sales, consulting and technical services capacity and headcount to drive larger strategic customer engagements and more focus on SI partnerships as well as investing in new channel programs that allow our partners to upgrade their capabilities in desktop virtualization...

  • Page 47
    ... due to increased sales and renewals of our Subscription Advantage product of $102.0 million and increased sales of our support services of $50.3 million. Our business is subject to seasonal fluctuations. Historically, our net revenues have fluctuated quarterly and have generally been the highest...

  • Page 48
    ...2010 and are included in general and administrative expense in the accompanying consolidated statements of income for the year ended December 31, 2010. In-process Research and Development for Acquisitions The fair values used in determining the purchase price allocation for certain intangible assets...

  • Page 49
    ... receive customer payments. We license most of our software products bundled with a one year contract for license updates that provide the end-user with enhancements and unspecified upgrades to the licensed product on a when and if available basis. Customers may also elect to purchase subscriptions...

  • Page 50
    ... authoritative guidance, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service or performance period, which is the vesting period. We currently use the Black-Scholes option pricing model to determine...

  • Page 51
    ... affect our operating income, net income and earnings per share. This may result in a lack of consistency in future periods and materially affect the fair value estimate of stock-based payments. It may also result in a lack of comparability with other companies that use different models, methods and...

  • Page 52
    ... technical services and from sales of our Online Services division's web collaboration, remote access and support services. The Enterprise division and the Online Services division constitute our two reportable segments. See Note 12 to our consolidated financial statements included in this Annual...

  • Page 53
    ...of the annual impairment tests completed during the fourth quarters of 2010 and 2009. Excluding goodwill, we have no intangible assets deemed to have indefinite lives. Income Taxes We are required to estimate our income taxes in each of the jurisdictions in which we operate as part of the process of...

  • Page 54
    ...cost of net revenues ...Gross margin ...Operating expenses: Research and development ...Sales, marketing and services ...General and administrative ...Amortization of other intangible assets ...Restructuring ...In-process research and development ...Total operating expenses ...Income from operations...

  • Page 55
    ... annual renewable program that provides subscribers with automatic delivery of unspecified software upgrades, enhancements and maintenance releases when and if they become available during the term of the subscription. Technical Services revenues are comprised of fees from technical support services...

  • Page 56
    ...in this Annual Report on Form 10-K for the year ended December 31, 2010. Segment Revenues During the first quarter of 2010, we changed how we measure profitability internally, develop our annual plan and allocate our resources from a geography-based approach (which included the Americas; Europe, the...

  • Page 57
    ...of our Desktop Solutions consulting and educational services, primarily related to lower XenApp revenue. We currently anticipate cost of services revenues will increase when comparing the first quarter of 2011 to the first quarter of 2010 consistent with the increase in Online Services and Technical...

  • Page 58
    ... research and development, sales, marketing and services and general and administrative expenses. These savings were partially offset by strategic investments in the business during 2009. For more information regarding the 2009 Strategic Restructuring Program, see the Executive Summary above. In...

  • Page 59
    ... resulting from the implementation of the 2009 Strategic Restructuring Program. For more information see, "-Overview" included in this Annual Report on Form 10-K for the year ended December 31, 2010. General and Administrative Expenses 2010 Year Ended December 31, Compared to 2010 2009 2008 2009...

  • Page 60
    .... The restructuring program was substantially completed by the end of 2009. For more information see, "-Overview" and Note 13 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2010. Interest Income 2010 Year Ended December 31...

  • Page 61
    ... and Capital Resources" and Note 4 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2010. Income Taxes We and certain of our subsidiaries are subject to federal income taxes in the U.S. as well as income taxes of multiple state and...

  • Page 62
    ... million in cash paid for licensing agreements, acquisitions and other assets. Our financing activities used cash of $26.3 million, primarily from expenditures on our stock repurchase program of $433.7 million partially offset by proceeds received from the issuance of common stock under our employee...

  • Page 63
    ... in the event of immediate cash needs. Our short-term and long-term investments primarily consist of interest-bearing securities. See "-Liquidity and Capital Resources" and Note 4 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31...

  • Page 64
    .... We currently hold one available-for-sale investment for which quoted prices are not readily available, our $50.0 million face value investment issued by AIG Matched Funding Corporation, or the AIG Capped Floater. In order to measure the AIG Capped Floater at fair value we used a discounted...

  • Page 65
    ...or EBITDA. In addition, we are required to pay an annual facility fee ranging from 0.08% to 0.20% based on the aggregate amount available under the Credit Facility, as amended, and the level of our total debt and adjusted EBITDA. During the year ended December 31, 2010, no borrowings were made under...

  • Page 66
    ...using general corporate funds in order to lower the average cost to acquire shares. These programs include terms that require us to make up-front payments to the counterparty financial institution and result in the receipt of stock during or at the end of the agreement or the receipt of either stock...

  • Page 67
    ... represent non-cancelable commitments to purchase inventory ordered before year-end of approximately $9.7 million and a contingent obligation to purchase inventory, which is based on amount of usage, of approximately $8.4 million. Total contractual obligations do not include agreements where...

  • Page 68
    ... in Notes 2 and 14 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2010. Exposure to Exchange Rates A substantial majority of our overseas expense and capital purchasing activities are transacted in local currencies, including...

  • Page 69
    ... not have any current impact on our results of operations as we had no amounts outstanding under the Amended Credit Facility as of December 31, 2010. ITEM 8. FINANCIAL STATEMENTS AND SCHEDULES Our consolidated financial statements and related financial statement schedule, together with the report of...

  • Page 70
    ... and communicated to our management, including our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting During the quarter ended...

  • Page 71
    ... income, equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2010 of Citrix Systems, Inc. and our report dated February 24, 2011 expressed an unqualified opinion thereon. /s/ Ernst & Young, LLP Certified Public Accountants Boca Raton, Florida...

  • Page 72
    ... officers, directors and certain other persons to enter into trading plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. We have been advised that Gary Morin, a member of our board of directors and Brett Caine, our Senior Vice President, Online Services Division...

  • Page 73
    ...with the Securities and Exchange Commission not later than 120 days after the close of the Company's fiscal year ended December 31, 2010. ITEM 11. EXECUTIVE COMPENSATION The information required under this item is incorporated herein by reference to the Company's definitive proxy statement pursuant...

  • Page 74
    ... Stock Unit Agreement under the Citrix Systems, Inc. 2005 Equity Incentive Plan Form of Executive Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2005 Equity Incentive Plan (Time Based Vesting) Form of Restricted Stock Unit Agreement for Non-Employee Directors under the Citrix Systems...

  • Page 75
    ...other financial institutions Term Loan Agreement dated as of August 9, 2005 by and among Citrix Systems, Inc., Citrix Systems International GMBH, JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc. and certain other financial institutions NetScaler, Inc. 1997 Stock Plan (17) Type # 3 License Form...

  • Page 76
    ... Act of 2002 XBRL (eXtensible Business Reporting Language). The following materials from Citrix Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated...

  • Page 77
    ..., IL 60604 and 3 World Financial Center, Suite 400, New York, NY 10281-1022. (c) Financial Statement Schedule. The Company hereby files as part of this Annual Report on Form 10-K for the year ended December 31, 2010 the consolidated financial statement schedule listed in Item 15(a)(2) above, which...

  • Page 78
    ... duly authorized, in Fort Lauderdale, Florida on the 24th day of February, 2011. CITRIX SYSTEMS, INC By: /s/ MARK B. TEMPLETON Mark B. Templeton President and Chief Executive Officer POWER OF ATTORNEY AND SIGNATURES We, the undersigned officers and directors of Citrix Systems, Inc., hereby...

  • Page 79
    ...and Financial Statement Schedule The following consolidated financial statements of Citrix Systems, Inc. are included in Item 8: Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets-December 31, 2010 and 2009 ...Consolidated Statements of Income-Years ended December...

  • Page 80
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 81
    ... and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2010. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our...

  • Page 82
    ... current liabilities ...1,020,012 834,364 Long-term portion of deferred revenues ...114,638 63,336 Other liabilities ...8,362 4,940 Commitments and contingencies Equity: Citrix Systems, Inc. stockholders' equity Preferred stock at $.01 par value: 5,000 shares authorized, none issued and outstanding...

  • Page 83
    ...cost of net revenues ...Gross margin ...Operating expenses: Research and development ...Sales, marketing and services ...General and administrative ...Amortization of other intangible assets ...Restructuring ...In-process research and development ...Total operating expenses ...Income from operations...

  • Page 84
    CITRIX SYSTEMS, INC. CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (In thousands) Common Stock Shares Amount Additional Paid In Capital Balance at December 31, 2007 ...252,201 Shares issued under stock-based compensation plans ...3,132 Stock-based compensation expense ...- Common stock...

  • Page 85
    Retained Earnings Accumulated Other Comprehensive Income (Loss) Common Stock in Treasury Shares Amount Non-Controlling Interest Total Equity Total Comprehensive Income $1,208,791 178,276 $5,751 - - - - - (8,416) (13,187) - (64,841) $(1,414,479 10,858) (344,314 $1,838,325 44,372 122,...

  • Page 86
    ... investments ...Cash paid for acquisitions, net of cash acquired ...Cash paid for licensing agreements and product related intangible assets ...Net cash used in investing activities ...Financing activities Proceeds from issuance of common stock under stock-based compensation plans ...Excess tax...

  • Page 87
    ...Citrix Systems, Inc. is a Delaware corporation founded on April 17, 1989. The Company designs, develops and markets technology solutions that enable IT services to be securely delivered on demand-independent of location, device or network. The Company's customers may achieve lower IT operating costs...

  • Page 88
    ..., which is generally three years for computer equipment, software, office equipment and furniture, the lesser of the lease term or five years for leasehold improvements, which is the estimated useful life, seven years for the Company's enterprise resource planning system and 40 years for buildings...

  • Page 89
    ... it determined that it had incorrectly recorded acquisition-related payments to certain employees in connection with the October 2007 acquisition of XenSource, Inc. as purchase consideration and goodwill when it should have been recorded as compensation expense. Accordingly, the Company recorded...

  • Page 90
    ..., trade names and covenants not to compete and is reported as an operating expense in the accompanying consolidated statements of income. Estimated future annual amortization expense is as follows (in thousands): Year ending December 31, 2011 ...2012 ...2013 ...2014 ...2015 ...Software Development...

  • Page 91
    ... by channel distributors or OEMs or directly to the end-user by the Company via packaged product or download from the Company's website. The Company licenses most of its software products bundled with a one year contract for its Subscription Advantage program. Customers may also elect to purchase...

  • Page 92
    ... for returns. License Update revenues consist of fees related to the Subscription Advantage program that are recognized ratably over the term of the contract, which is typically 12 to 24 months. Subscription Advantage is a renewable program that provides subscribers with immediate access to software...

  • Page 93
    ... right to use certain 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...

  • Page 94
    ... may exist with any single financial institution at a time. Pension Liability The Company provides retirement benefits to certain employees who are not U.S. based. Generally, benefits under these programs are based on an employee's length of service and level of compensation. The majority of these...

  • Page 95
    ... made by management include the provision for doubtful accounts receivable, the provision to reduce obsolete or excess inventory to market, the provision for estimated returns, as well as sales allowances, the assumptions used in the valuation of stock-based awards, the assumptions used in the...

  • Page 96
    ... 2008 Acquisition In October 2008, the Company acquired all of the issued and outstanding securities of Vapps, Inc. ("Vapps"), a privately held corporation headquartered in Hoboken, New Jersey. Vapps offers high quality audio conferencing solutions to small and medium sized businesses and enterprise...

  • Page 97
    ... in general and administrative expense in the accompanying consolidated statements of income for the year ended December 31, 2010. In-process Research and Development The fair values used in determining the purchase price allocation for certain intangible assets for the Company's acquisitions were...

  • Page 98
    CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. INVESTMENTS Available-for-sale Investments Investments in available-for-sale securities at fair value were as follows for the years ended December 31, (in thousands): 2010 Gross Gross Unrealized Unrealized Gains Losses 2009 Gross ...

  • Page 99
    ... which were triple-A rated, whose underlying assets were generally student loans that were substantially backed by the federal government under the Federal Family Education Loan Program through investment accounts managed by UBS Financial Services, Inc. ("UBS"). The market for municipal auction rate...

  • Page 100
    ... in available-for-sale securities at fair value based on quoted prices in active markets for identical securities. As quoted prices in active markets were not available for the AIG Capped Floater, in order to measure it at fair value, the Company used a discounted cash flow model. The Company then...

  • Page 101
    ... Non-Employee Director Stock Option Plan and Third Amended and Restated 1995 Employee Stock Purchase Plan. Awards previously granted under these plans and still outstanding typically expire ten years from the date of grant and will continue to be subject to all the terms and conditions of such plans...

  • Page 102
    CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Under the 2005 ESPP, all full-time and certain part-time employees of the Company are eligible to purchase common stock of the Company twice per year at the end of a six-month payment period (a "Payment Period"). During each Payment ...

  • Page 103
    CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock Options As part of the Company's 2010 acquisitions, the Company assumed 54,967 options to purchase shares of its common stock, all of which upon assumption were reset to have a five year life and vest over two to three years from ...

  • Page 104
    CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The assumptions used to value option grants are as follows: 2010 Stock options granted during 2009 2008 Expected volatility factor ...Approximate risk free interest rate ...Expected term (in years) ...Expected dividend yield ...Non-...

  • Page 105
    ... senior level executives restricted stock unit awards that vest based on market and service conditions as part of a long-term incentive plan. The number of restricted stock units underlying each award is determined at the end of a three-year performance period ending December 31, 2011. In order to...

  • Page 106
    ... using general corporate funds in order to lower the average cost to acquire shares. These programs include terms that require the Company to make up-front payments to the counterparty financial institution and result in the receipt of stock during or at the end of the term of the agreement...

  • Page 107
    ...outstanding under its structured stock repurchase programs and during the year it did not make any up-front payments to financial institutions related to structured stock repurchase agreements. During the year ended December 31, 2008, the Company took delivery of 4,406,757 shares at an average price...

  • Page 108
    ... million, respectively. Lease commitments under non-cancelable operating leases with initial or remaining terms in excess of one year and sublease income associated with non-cancelable subleases, are as follows: Operating Leases Sublease Income (In thousands) Years ending December 31, 2011 ...2012...

  • Page 109
    ... and estimates its non-cancelable obligations under these agreements for the fiscal year ended December 31, 2011 to be approximately $9.7 million. The Company also has contingent obligations to purchase inventory for the fiscal year ended December 31, 2011, which are based on amount of usage, of...

  • Page 110
    CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The components of the provision for income taxes are as follows: 2010 2009 (In thousands) 2008 Current: Federal ...Foreign ...State ...Total current...Tax credits ...Net operating losses ...Other ...Stock option compensation ...Valuation...

  • Page 111
    ... follows: Year Ended December 31, 2010 2009 2008 Federal statutory taxes ...35.0% 35.0% 35.0% State income taxes, net of federal tax benefit ...3.3 3.6 4.3 Foreign operations ...(16.8) (24.1) (30.1) Permanent differences ...1.1 2.8 (0.2) Tax credits ...(10.4) (23.9) (5.3) Stock option compensation...

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    ... from its Enterprise division products and Online Services division services. Segment profit for each segment includes certain research and development, sales, marketing, general and administrative expenses directly attributable to the segment as well as other corporate costs allocated to...

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    ... ...Segment profit (loss): Enterprise division ...Online Services division ...Unallocated expenses (1): Amortization of intangibles ...Restructuring ...In-process research and development ...Net interest and other income ...Stock-based compensation ...Consolidated income before income taxes...

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    ... primarily comprised of sales from the Company's application networking products which include NetScaler, Access Gateway and Branch Repeater and the Company's virtual infrastructure products which include XenServer and Essentials for Hyper-V and related maintenance. Technical services revenues are...

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    ...outstanding restructuring liability primarily relates to non-cancelable lease costs related to the consolidation of excess facilities that the Company expects to pay over the lives of the related obligations through fiscal 2012. The activity in the Company's restructuring accruals for the year ended...

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    ...protect against fluctuations in operating expenses and the volatility 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...

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    ... forward contracts ... $1,743 $7,295 Operating expenses $(1,573) $(152) There was no material ineffectiveness in the Company's foreign currency hedging program in the periods presented. For the Year ended December 31, (In thousands) Location of Loss Amount of Loss Recognized in Income Recognized...

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    ..., INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15. NET INCOME PER SHARE ATTRIBUTABLE TO CITRIX SYSTEMS, INC. STOCKHOLDERS The following table sets forth the computation of basic and diluted net income per share attributable to Citrix Systems, Inc. stockholders: Year Ended December 31, 2010 2009...

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    ... 1.05 Net income per share attributable to Citrix Systems, Inc. stockholders-diluted ...0.04 0.23 0.29 0.47 1.03 The sum of the quarterly earnings per share amounts do not add to the annual earnings per share amount due to the weighting of common and common equivalent shares outstanding during each...

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    CITRIX SYSTEMS, INC. SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS Charged Charged Balance Beginning to Costs and to Other at End of Period Expenses Accounts Deductions of Period (In thousands) 2010 Deducted from asset accounts: Allowance for doubtful accounts ...$ 3,219 Allowance for returns ...1,...

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    ... Term Loan Agreement dated as of August 9, 2005 by and among Citrix Systems, Inc., Citrix Systems International GMBH, JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc. and certain other financial institutions NetScaler, Inc. 1997 Stock Plan 10.14†10.15*†10.16 (17) Type # 3 License...

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    ... of Restricted Stock Unit Agreement Amendment No. 1 to Credit Agreement, dated as of September 19, 2008, among Citrix Systems, Inc., Citrix International GmbH, JPMorgan Chase Bank, N.A., JP Morgan Securities, Inc. and certain other financial institutions Form of Long Term Incentive Agreement Form of...

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    ... by reference herein to Exhibit 10.1 to the Company's Current Report on Form 8-K dated as of September 27, 2006. (17) Incorporated by reference herein to Exhibit 10.31 to the Company's Annual Report on Form 10-K for the year ended December 31, 2006. (18) Incorporated by reference herein to...

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    ... end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual...

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    ... end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual...

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    ...the Annual Report of Citrix Systems, Inc. (the "Company") on Form 10-K for the period ending December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Mark B. Templeton, Chief Executive Officer of the Company, and David J. Henshall, Chief Financial...

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    ... program that the company implemented in January 2009. The following table shows the non-GAAP financial measures used in this Annual Report reconciled to the most directly comparable GAAP financial measures. Twelve Months Ended December 31, 2010 2009 GAAP earnings per share - diluted Add: stock...

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    ... 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...

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    ..., employees, suppliers, contract manufacturers, product price and inventory, government regulation (including the FCC), seasonal factors, natural disasters, stock based compensation, licensing and subscription renewal programs, computer system enhancements, international operations and expansion...

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    ...Stockholders (Includes reinvestment of dividends) Annual Return Percentage Years Ended Company Name/Index Citrix Systems, Inc. S&P 500 Index Nasdaq... with a SIC Code of 7372. $250 $200 $150 $100 $50 $0 2005 2006 2007 2008 2009 2010 Citrix Systems, Inc. S&P 500 Index Nasdaq Index Peer ...

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    ... www.citrix.com. Corporate Headquarters Ft. Lauderdale, FL, USA India Development Center Bangalore, India Latin America Headquarters Coral Gables, FL, USA Silicon Valley Headquarters Santa Clara, CA, USA Online Division Headquarters Santa Barbara, CA, USA UK Development Center Chalfont, United...

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