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| CTXS > SEC Filings for CTXS > Form 10-K on 21-Feb-2013 | All Recent SEC Filings |
21-Feb-2013
Annual Report
In January 2013, we completed our acquisition of Zenprise, a privately held
leading innovator in MDM. We are currently working to integrate the Zenprise
products for MDM with our Citrix CloudGateway product for managing mobile apps
and data to offer our enterprise IT customers comprehensive products that make
it easier to manage and secure devices, apps and data, while allowing users to
embrace mobile workstyles and access enterprise apps from virtually any device.
We believe our Mobility products will offer a comprehensive approach that can
transform organizations into mobile enterprises with the security and control IT
requires, the ease of use and flexibility users desire, and the productivity
business demands.
Our Cloud Networking products power mobile workstyles while altering the
traditional economics of the datacenter by providing greater levels of
flexibility of computing resources, especially with respect to servers,
improving application performance and thereby reducing the amount of processing
power involved, and allowing easy reconfiguration of servers by permitting
storage and network infrastructure to be added-in virtually rather than
physically. Our Cloud Networking products are also enhancing our differentiation
and driving customer interest around desktop virtualization as enterprises are
finding good leverage in deploying these technologies together.
In July 2012, we acquired Bytemobile, Inc., or Bytemobile, a privately held
leading provider of data and video optimization solutions for mobile network
operators. The Bytemobile acquisition has given us a strategic foothold in the
core infrastructure of certain mobile operators which are experiencing rapid
growth in network traffic, driven by the combination of new consumer devices,
rich multimedia content, and high speed 3G, 4G and LTE networks. Our Bytemobile
Smart Capacity products combined with our Citrix NetScaler line of Cloud
Networking products enhance our broader strategy of powering mobile workstyles
and cloud services and allow us to offer mobile operators combined solutions
that deliver a high quality user experience to mobile subscribers.
Our Cloud Platform products allow our customers to build scalable and reliable
private and public cloud computing environments where customers can quickly and
easily build cloud services within their existing infrastructure and provision
hosted applications, desktops, services and infrastructure as a service, or
IaaS, from the cloud.
Online Services division
Our Online Services division is focused on developing and marketing
Collaboration and Data products. These products are primarily marketed via the
web to large enterprises, medium and small businesses, prosumers and
individuals. Our Online Services division's Collaboration products offer secure
and cost-effective solutions that allow users to host and actively participate
in online meetings, webinars and training sessions remotely and reduce costs
associated with business travel. In addition, we offer products that offer users
a secure, simple and cost efficient way to access their desktops remotely and
support over the Internet on-demand. In the second quarter of 2012, we acquired
Podio ApS, or Podio, a privately held provider of a cloud-based collaborative
work platform. Podio became part of our Online Services division and is a
natural extension of our collaboration business, providing today's mobile
workforce an easy, secure and social way to come together and work as teams.
Our Data Sharing product, ShareFile, makes it easy for businesses of all sizes
to securely store, sync and share business documents and files, both inside and
outside the company. ShareFile's centralized cloud storage capability also
allows users to share files across multiple devices and access them from any
location.
Reclassifications
During the first quarter of 2012, we performed a review of the presentation of
certain of our revenue categories and adopted a revised presentation, which we
believe is more comparable to those presented by other companies in our industry
and better reflects our evolving product and service offerings. As a result,
technical support, hardware maintenance and software updates revenues, which
were previously presented in Technical services and License updates are
classified together as License updates and maintenance. A corresponding change
was made to rename Cost of services revenues to Cost of services and maintenance
revenues; however, there was no change in classification. Product training and
certification and consulting services, which were previously presented in
Technical services, are classified together as Professional services. Product
licenses has been renamed to Product and licenses to more appropriately describe
its composition of both software and hardware, however, there was no change in
classification. The composition and classification of Software as a service
remained unchanged. This change in presentation will not affect our total net
revenues, total cost of net revenues or gross margin.
Additionally, during the first quarter of 2012, we revised our methodology for
allocating certain IT support costs to more closely align these costs to the
employees directly utilizing the related assets and services and to reflect how
management assesses the cost of headcount. As a result, certain IT support costs
have been reclassified from General and administrative expenses to Cost of
services and maintenance revenues, Research and development expenses and Sales,
marketing and services expenses based on the headcount in each of these
functional areas. This change in presentation will not affect our income from
operations or cash flows.
Conforming changes have been made for all prior periods presented. See Note 2 to
our consolidated financial statements for more information regarding the
reclassifications described above.
Summary of Results
For the year ended December 31, 2012 compared to the year ended December 31,
2011, we delivered the following financial performance:
• Product and license revenue increased 11.6% to $830.6 million;
• Software as a Service revenue increased 18.9% to $511.3 million;
• License updates and maintenance revenue increased 19.7% to $1,125.1 million;
• Professional services revenue increased 30.1% to $119.1 million;
• Operating income decreased 6.3% to $390.8 million; and
• Diluted earnings per share decreased 0.3% to $1.86.
The increase in our Product and licenses revenue was primarily driven by sales
of our Networking and Cloud products, led by NetScaler and increased sales of
our Mobile and Desktop products, led by XenDesktop. We currently target our
Product and licenses revenue to increase when comparing the first quarter of
2013 to the first quarter of 2012. Our Software as a service revenue increased
due to increased sales of our Collaboration products, led by GoToMeeting and our
Data Sharing product, ShareFile. The increase in License updates and maintenance
revenue was primarily due to an increase in renewals and sales of our
Subscription Advantage product and an increase in maintenance revenues,
primarily driven by increased sales of our Networking and Cloud products, led by
NetScaler. Professional services revenue increased primarily due to increases in
consulting revenues related to increased implementation sales of our Enterprise
division's products. We currently target that total revenue to increase when
comparing the first quarter of 2013 to the first quarter of 2012. In addition,
when comparing the 2013 fiscal year to the 2012 fiscal year we target total
revenue to increase. The decrease in Operating income and diluted net income per
share when comparing 2012 to 2011 was primarily due to an increase in
stock-based compensation costs primarily related to our retention-focused annual
stock grant to key employees and our recent acquisitions and an increase in
amortization of intangible assets primarily related to our recent acquisitions.
Also contributing to the decrease is an increase in Cost of net revenues due to
increases in sales of products with a hardware component and increased sales of
our services, both of which have a higher cost than our software products.
2012 Acquisitions
Podio
In April 2012, we acquired all of the issued and outstanding securities of
Podio, a privately-held provider of a cloud-based collaborative work platform.
Podio became part of our Online Services division and expands our offerings of
integrated cloud-based support for team-based collaboration. The total
consideration for this transaction was approximately $43.6 million, net of $1.7
million of cash acquired, and was paid in cash. Transaction costs associated
with the acquisition were approximately $0.5 million, all of which we expensed
during the year ended December 31, 2012 and are included in General and
administrative expense in our accompanying consolidated statements of income in
this Annual Report on Form 10-K for the year ended December 31, 2012. In
addition, in connection with the acquisition, we assumed non-vested stock units
which were converted into the right to receive up to 127,668 shares of our
common stock, for which the vesting period reset fully upon the closing of the
transaction.
Bytemobile
In July 2012, we acquired all of the issued and outstanding securities of
Bytemobile, a privately-held provider of data and video optimization solutions
for mobile network operators. Bytemobile became part of our Enterprise division
and extends our industry reach into the mobile and cloud markets. The total
consideration for this transaction was approximately $399.5 million, net of $5.6
million of cash acquired, and was paid in cash. Transaction costs associated
with the acquisition were approximately $2.1 million, all of which we expensed
during the year ended December 31, 2012 and are included in General and
administrative expense in the accompanying consolidated statements of income in
this Annual Report on Form 10-K for the year ended December 31, 2012.
2012 Other Acquisitions
During the first quarter of 2012, we acquired all of the issued and outstanding
securities of a privately-held company for total cash consideration of
approximately $24.6 million, net of $0.6 million of cash acquired. This business
became part of our Enterprise division. Transaction costs associated with the
acquisition were approximately $0.5 million, of which we expensed $0.4 million
and $0.1 million during the years ended December 31, 2012 and 2011,
respectively, and are included in General and administrative expense in the
accompanying consolidated statements of income in this Annual Report on Form
10-K for
the year ended December 31, 2012. In addition, in connection with this
acquisition, we assumed non-vested stock units which were converted into the
right to receive up to 13,481 shares of our common stock and assumed certain
stock options which are exercisable for 12,017 shares of our common stock, for
which the vesting period reset fully upon the closing of the transaction.
During the second quarter of 2012, we acquired all of the issued and outstanding
securities of two privately-held companies for a total cash consideration of
approximately $15.4 million, net of $0.2 million of cash acquired. The
businesses became part of our Enterprise division. Transaction costs associated
with the acquisitions were approximately $0.4 million, all of which we expensed
during the year ended December 31, 2012 and are included in General and
administrative expense in the accompanying consolidated statements of income in
this Annual Report on Form 10-K for the year ended December 31, 2012. In
addition, in connection with the acquisitions, we assumed non-vested stock units
which were converted into the right to receive, in the aggregate, up to 66,459
shares of our common stock, for which the vesting period reset fully upon the
closing of each respective transaction.
During the third quarter of 2012, we acquired all of the issued and outstanding
securities of two privately-held companies for a total cash consideration of
approximately $5.3 million. One of the businesses became part of our Enterprise
division and the other became part of our Online Services division. Transaction
costs associated with the acquisitions were approximately $0.2 million, all of
which we expensed during the year ended December 31, 2012 and are included in
General and administrative expense in the accompanying consolidated statements
of income in this Annual Report on Form 10-K for the year ended December 31,
2012. In addition, in connection with the acquisitions, we assumed non-vested
stock units which were converted into the right to receive, in the aggregate, up
to 13,487 shares of our common stock, for which the vesting period reset fully
upon the closing of each respective transaction.
We have included the effects of all of the companies acquired in 2012 in our
results of operations prospectively from the date of each acquisition.
2011 Acquisitions
Netviewer AG
In February 2011, we acquired all of the issued and outstanding securities of
Netviewer AG, or Netviewer, a privately held European SaaS vendor in
collaboration and IT services. Netviewer became part of our Online Services
division and the acquisition enables the extension of our Online Services
business in Europe. The total consideration for this transaction was
approximately $107.5 million, net of $6.3 million of cash acquired, and was paid
in cash. Transaction costs associated with the acquisition were approximately
$3.1 million, of which we expensed $1.1 million and $2.0 million during the
years ended December 31, 2011 and 2010, respectively, and are included in
General and administrative expense in the accompanying consolidated statements
of income in this Annual Report on Form 10-K for the year ended December 31,
2012. In addition, in connection with the acquisition, we assumed non-vested
stock units, which were converted into the right to receive up to 99,100 shares
of our common stock, for which the vesting period reset fully upon the closing
of the transaction.
Cloud.com
In July 2011, we acquired all of the issued and outstanding securities of
Cloud.com Inc., or Cloud.com, a privately-held provider of software
infrastructure platforms for cloud providers. Cloud.com became part of our
Enterprise division and the acquisition further establishes us as a leader in
infrastructure for the growing cloud provider market. The total consideration
for this transaction was approximately $158.8 million, net of $5.6 million of
cash acquired, and was paid in cash. Transaction costs associated with the
acquisition were approximately $2.9 million, all of which we expensed during the
year ended December 31, 2011, and are included in General and administrative
expense in the accompanying consolidated statements of income in this Annual
Report on Form 10-K for the year ended December 31, 2012. In addition, in
connection with the acquisition we assumed non-vested stock units, which were
converted into the right to receive up to 288,742 shares of our common stock and
certain stock options which are exercisable for 183,780 shares of our common
stock, for which the vesting period reset fully upon the closing of the
transaction.
RingCube
In August 2011, we acquired all of the issued and outstanding securities of
RingCube Technologies, Inc., or RingCube, a privately-held company that
specializes in user personalization technology for virtual desktops. RingCube
became part of our Enterprise division and the acquisition further solidifies
our position in desktop virtualization. The total consideration for this
transaction was approximately $32.2 million, net of $0.5 million of cash
acquired, and was paid in cash. Transaction costs associated with the
acquisition were approximately $0.6 million, all of which we expensed during the
year ended December 31, 2011, and are included in General and administrative
expense in the accompanying consolidated statements of income in this Annual
Report on Form 10-K for the year ended December 31, 2012. In addition, in
connection with the RingCube acquisition, we assumed non-vested stock units
which were converted into the right to receive up to 58,439 shares of our common
stock, for which the vesting period reset fully upon the closing of the
transaction.
ShareFile
In October 2011, we acquired all of the issued and outstanding securities of
Novell Labs, Inc. d/b/a ShareFile, or ShareFile, a privately-held provider of
secure data sharing and collaboration solutions. ShareFile initially became part
of our Enterprise division and in the first quarter of 2012 it was transferred
to our Online Services division. The total consideration for this transaction
was approximately $54.0 million, net of $1.7 million of cash acquired, and was
paid in cash. Transaction costs associated with the acquisition were
approximately $0.7 million, all of which we expensed during the year ended
December 31, 2011 and are included in General and administrative expense in our
consolidated statements of income included in this Annual Report on Form 10-K
for the year ended December 31, 2012. In addition, in connection with the
acquisition we assumed non-vested stock units, which were converted into the
right to receive up to 180,697 shares of our common stock and assumed certain
stock options which are exercisable for 390,775 shares of our common stock, for
which the vesting period reset fully upon the closing of the transaction.
App-DNA
In November 2011, we acquired all of the issued and outstanding securities of
App-DNA, a privately-held company that specializes in application migration and
management. App-DNA became part of our Enterprise division. The total
consideration for this transaction was approximately $90.8 million, net of $3.2
million of cash acquired, and was paid in cash. Transaction costs associated
with the acquisition were approximately $1.3 million, all of which we expensed
during the year ended December 31, 2011, and are included in General and
administrative expense in our consolidated statements of income included in this
Annual Report on Form 10-K for the year ended December 31, 2012. In addition, in
connection with the acquisition we assumed non-vested stock units, which were
converted into the right to receive up to 114,487 shares of our common stock,
for which the vesting period reset fully upon the closing of the transaction.
2011 Other Acquisition
During the first quarter of 2011, we acquired certain assets of a wholly-owned
subsidiary of a privately-held company for total cash consideration of
approximately $10.5 million. We accounted for this acquisition as a business
combination in accordance with the authoritative guidance and it became part of
our Enterprise division, thereby expanding our solutions portfolio for service
providers and developing unique integrations with our application delivery
solutions.
We have included the effects of all of the companies acquired in 2011 in our
results of operations prospectively from the date of each acquisition.
Purchase of Non-Controlling Interest
Kaviza Inc.
In May 2011, we acquired all of the non-controlling interest of Kaviza Inc., or
Kaviza, a provider of virtual desktop infrastructure solutions, for $17.2
million. As a result of this transaction, we have obtained a 100% interest in
this subsidiary. In accordance with the authoritative guidance, the excess of
the proceeds paid over the carrying amount of the non-controlling interest of
Kaviza has been reflected as a reduction of additional paid-in capital. In
addition, in connection with the purchase of the non-controlling interest of
Kaviza, we assumed non-vested stock units which were converted into the right to
receive up to 88,687 shares of our common stock and assumed certain stock
options which are exercisable for 33,301 shares of our common stock, with
existing vesting schedules.
Subsequent Events
On January 2, 2013, we acquired all of the issued and outstanding securities of
Zenprise, Inc., or Zenprise, a privately-held leader in mobile device
management. We will integrate the Zenprise products for mobile device
management, with our Citrix CloudGateway™ products for managing mobile apps and
data. The total preliminary consideration for this transaction was approximately
$324.2 million, net of $2.9 million of cash acquired, and was paid in cash.
Transaction costs associated with the acquisition are currently estimated at
$0.7 million, of which we expensed approximately $0.5 million during the year
ended December 31, 2012 and are included in General and administrative expense
in our consolidated statements of income included in this Annual Report on Form
10-K for the year ended December 31, 2012. In addition, in connection with the
acquisition, we assumed certain stock options which are exercisable for 285,817
shares of our common stock, for which the vesting period reset fully upon the
closing of the transaction.
Critical Accounting Policies and Estimates Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. We base these estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, and these estimates form the basis for our judgments concerning the carrying values of assets and liabilities that are not readily apparent from other sources. We periodically evaluate these estimates and judgments based on available information and experience. Actual results could differ from our estimates under different assumptions and conditions. If actual results significantly differ from our estimates, our financial condition and results of operations could be materially impacted. We believe that the accounting policies described below are critical to understanding our business, results of operations and financial condition because they involve more significant judgments and estimates used in the preparation of our consolidated financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. We have discussed the development, selection and application of our critical accounting policies with the Audit Committee of our Board of Directors and our independent auditors, and our Audit Committee has reviewed our disclosure relating to our critical accounting policies and estimates in this "Management's Discussion and Analysis of Financial Condition and Results of Operations." . . .
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