UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

July 24, 2015

 

 

CITRIX SYSTEMS, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   0-27084   75-2275152

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

851 West Cypress Creek Road

Fort Lauderdale, Florida

  33309
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (954) 267-3000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01. Entry into a Material Definitive Agreement.

On July 28, 2015, Citrix Systems, Inc. (“Citrix”) entered into a letter agreement (the “Cooperation Agreement”) with Elliott Associates, L.P., Elliott International, L.P. and Elliott International Capital Advisors Inc. (collectively, “Elliott”), which have combined economic exposure and voting power over approximately 7.5% of the outstanding shares of Citrix’s common stock. Under the Cooperation Agreement, Citrix agreed to appoint Jesse Cohn, Senior Portfolio Manager of Elliott Management Corp., to Citrix’s Board of Directors (the “Board”), with a term expiring at the 2016 annual meeting of Citrix stockholders (the “2016 Annual Meeting”). The Board effected such appointment on July 28, 2015 and, in connection therewith, Asiff S. Hirji concurrently retired from the Board.

Under the Cooperation Agreement, Citrix and Elliott also agreed to work to promptly identify a mutually agreed-upon candidate who is independent of both Citrix and Elliott to be appointed as a director of Citrix, with a term also expiring at the 2016 Annual Meeting (the “Additional Independent Director”). Upon the appointment of the Additional Independent Director to the Board, an incumbent director mutually agreed upon by Citrix and Elliott will concurrently retire from the Board.

Citrix has also agreed to nominate Mr. Cohn and the Additional Independent Director for election as directors of Citrix at the 2016 Annual Meeting. Under the Cooperation Agreement, Elliott agreed to vote, or cause to be voted, all shares of Citrix’s common stock owned by Elliott or its controlled or controlling affiliates in favor of the directors nominated by the Board at the 2016 Annual Meeting, and at any subsequent annual meeting of Citrix stockholders at which Mr. Cohn has been nominated by the Board for re-election as a director.

The Board also agreed to form two new ad hoc committees: (1) an Operations Committee, which will conduct a comprehensive review of Citrix’s operations including its operating margins, profitability and capital structure, and (2) a Search Committee, which will conduct a search for a new Chief Executive Officer as successor to Mark B. Templeton (the “CEO Successor”), who has informed the Board of his intention to retire as discussed below in Item 5.02. Both of these new committees will be chaired by Robert M. Calderoni, a current Board member and newly appointed Executive Chairman. The other members of the Operations Committee are Robert D. Daleo and Mr. Cohn. The other members of the Search Committee are Godfrey R. Sullivan and Mr. Cohn. Under the Cooperation Agreement, Citrix has agreed that the Additional Independent Director will be appointed to both the Operations Committee and the Search Committee when he or she joins the Board.

Under the Cooperation Agreement, Elliott has agreed to certain standstill restrictions until the first anniversary of the date of the Cooperation Agreement, provided that if Mr. Cohn remains a director on such date, the standstill restrictions will continue until the earlier of the date that the Board fails to re-nominate Mr. Cohn as a director for election at an annual meeting of the Citrix stockholders or the date that Mr. Cohn resigns as a director. These standstill restrictions include not (i) engaging in any solicitation of proxies or consents with respect to the election or removal of directors; (ii) forming or joining a “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”)) with respect to the common stock and other voting securities of Citrix; (iii) beneficially owning more than 9.9% of the voting power of, or economic exposure to, the common stock of Citrix; (iv) making or participating in any tender offer, merger, business combination, recapitalization, restructuring, liquidation, dissolution or extraordinary transaction involving Citrix (an “Extraordinary Transaction”); (v) seeking, alone or in concert with others, representation on the Board or the removal of any member of the Board, except as provided in the Cooperation Agreement; or (vi) making any stockholder proposal. The standstill restrictions terminate automatically upon certain events, including (a) the announcement by Citrix of a definitive agreement with respect to an Extraordinary Transaction that would result in the acquisition by any person or group of more than 50% of the common stock of Citrix, or (b) the commencement of any tender or exchange offer that, if consummated, would constitute an Extraordinary Transaction that would result in the acquisition by any person or group of more than 50% of the common stock of Citrix, where Citrix files a Schedule 14D-9 (or any amendment thereto) that does not recommend that Citrix’s stockholders reject such tender or exchange offer.

The foregoing description of the terms and conditions of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation Agreement, a copy of which is attached to this Current Report as Exhibit 10.1 and incorporated herein by reference. A press release, dated July 28, 2015, announcing entry into the Cooperation Agreement is attached as Exhibit 99.1 to this Current Report and is incorporated into this Item 1.01 by reference.


Item 2.02. Results of Operations and Financial Condition.

The information under this Item 2.02, including Exhibit 99.2 to this Current Report, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

On July 28, 2015, Citrix issued a press release regarding its financial results for the quarter ended June 30, 2015. A copy of the press release is furnished as Exhibit 99.2 to this Current Report and is incorporated into this Item 2.02 by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

In addition to the appointments (including committee appointments) and retirements described in Item 1.01 above (which disclosure is incorporated into this Item 5.02 by reference), on July 24, 2015, Mr. Templeton notified Citrix that he plans to retire upon the identification and appointment of the CEO Successor. Mr. Templeton will continue to serve in his current capacities during the search for the CEO Successor.

Also on July 24, 2015, Mr. Calderoni was appointed Executive Chairman of the Board, effective immediately, and current Chairman, Thomas F. Bogan, was appointed to the role of Lead Independent Director. Biographical information for Mr. Calderoni and the other officers and directors of Citrix can be found in the proxy statement for its 2015 annual meeting of stockholders, filed with the U.S. Securities and Exchange Commission on April 17, 2015 (the “2015 Proxy Statement”).

As a result of his appointment to the Board, Mr. Cohn will be entitled to the non-employee director compensation described under the heading Director Compensation beginning on page 22 of the 2015 Proxy Statement. Citrix intends to enter into an indemnification agreement with Mr. Cohn in substantially the same form entered into with the other members of the Board.

A press release, dated July 28, 2015, announcing Mr. Templeton’s intention to retire is attached as Exhibit 99.3 to this Current Report and is incorporated into this Item 5.02 by reference.

 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
No.

  

Description

10.1    Cooperation Agreement, by and among Citrix Systems, Inc., Elliott Associates, L.P., Elliott International, L.P. and Elliott International Capital Advisors Inc., dated July 28, 2015.
99.1    Press release dated July 28, 2015 of Citrix Systems, Inc., announcing entry into the Cooperation Agreement.
99.2*    Press release dated July 28, 2015 of Citrix Systems, Inc., announcing 2015 second quarter earnings.
99.3    Press release dated July 28, 2015 of Citrix Systems, Inc., announcing CEO succession plan.

 

* Furnished herewith.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    CITRIX SYSTEMS, INC.
Date: July 28, 2015     By:  

/s/ David J. Henshall

    Name:   David J. Henshall
    Title:   Executive Vice President, Chief Operating Officer and Chief Financial Officer


Exhibit Index

 

Exhibit
No.

  

Description

10.1    Cooperation Agreement, by and among Citrix Systems, Inc., Elliott Associates, L.P., Elliott International, L.P. and Elliott International Capital Advisors Inc., dated July 28, 2015.
99.1    Press release dated July 28, 2015 of Citrix Systems, Inc., announcing entry into the Cooperation Agreement.
99.2*    Press release dated July 28, 2015 of Citrix Systems, Inc., announcing 2015 second quarter earnings.
99.3    Press release dated July 28, 2015 of Citrix Systems, Inc., announcing CEO succession plan.

 

* Furnished herewith.


Exhibit 10.1

Citrix Systems, Inc.

851 West Cypress Creek Road

Fort Lauderdale, FL 33309

July 28, 2015

Elliott Associates, L.P.

Elliott International, L.P.

Elliott International Capital Advisors Inc.

40 West 57th Street

New York, NY 10019

Gentlemen:

This letter (this “Agreement”) constitutes the agreement between Citrix Systems, Inc., a Delaware corporation (the “Company”), Elliott Associates, L.P., a Delaware limited partnership (“Elliott Associates”), Elliott International, L.P., a Cayman Islands limited partnership (“Elliott International”), and Elliott International Capital Advisors Inc., a Delaware corporation (together with Elliott Associates and Elliott International, the “Investors”), with respect to the matters set forth below. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in paragraph 12 below.

1. Effective as of the date hereof, (a) Asiff S. Hirji shall resign from the Board of Directors of the Company (the “Board”), and (b) the Board shall take such actions as are necessary to appoint Jesse Cohn as a new member of the Board to fill the vacancy so created (the “Investor Designee”). The Nominating and Corporate Governance Committee of the Board, together with the Investors, will conduct a search process to promptly identify an additional director mutually agreeable to the Company and the Investors (the “New Independent Director” and together with the Investor Designee, the “New Directors”) to join the Board, and promptly following identification of such New Independent Director and completion of the Company’s review process, (i) one (1) additional director mutually agreeable to the Company and the Investors shall resign from the Board, and (ii) the Board shall take such actions as are necessary to appoint the New Independent Director to fill the vacancy so created. The New Independent Director shall qualify as Independent and satisfy the Board membership criteria set forth in the Company’s Corporate Governance Guidelines. Notwithstanding anything to the contrary contained in this Agreement, if (i) the Investors’ and their controlling or controlled Affiliates’ aggregate beneficial ownership decreases to less than 3.0% of the Company’s outstanding common stock as a result of dispositions by the Investors and (ii) the Investor Designee has joined the Board, then the Board may in its sole discretion request that the Investor Designee resign from the Board and any committees thereof, in which case the Investor Designee shall promptly deliver his written resignation to the Board (which shall provide for his immediate resignation) and the obligations of each of the parties hereunder shall terminate.


2. The Company shall include the New Directors on its slate for election as directors of the Company at its 2016 Annual Meeting of Stockholders (the “2016 Annual Meeting”). If the New Independent Director resigns, refuses, or is unable to serve as a director at any time prior to the first anniversary of the date of this Agreement, the Company and the Investors shall mutually agree on a replacement who is Independent and satisfies the Board membership criteria set forth in the Company’s Corporate Governance Guidelines. Such replacement for the New Independent Director shall be appointed to the Board to serve the unexpired term of the departed New Independent Director, and shall be considered a New Director for all purposes of this Agreement. If the Investor Designee is unable to serve or fulfill his duties as a director because of his death or disability prior to the first anniversary of the date of this Agreement, the Investors shall select a replacement who is reasonably acceptable to the Company. Such replacement for the Investor Designee shall be appointed to the Board to serve the unexpired term of the departed Investor Designee, and shall be considered the Investor Designee and a New Director for all purposes of this Agreement. Any other vacancies on the Board or any committee thereof created prior to the Expiration Date shall be filled by the Board upon the recommendation of the Nominating and Corporate Governance Committee. The size of the Board shall not exceed ten (10) directors prior to the first anniversary of the date of this Agreement, except with the prior written consent of the Investors.

3. As a condition to a New Director’s appointment to the Board and any subsequent nomination for election as a director at the Company’s Annual Meeting of Stockholders, the New Director will provide any information the Company reasonably requires, including information required to be disclosed in a proxy statement or other filing under applicable law, stock exchange rules or listing standards, information in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal obligations, and will consent to appropriate background checks, to the extent, in each case, consistent with the information and background checks required by the Company in accordance with past practice with respect to other members of the Board. If, following the completion of the Company’s initial background review process, the Board learns that the Investor Designee has committed, been indicted or charged with, or made a plea of nolo contendre to a felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, then the Board may request that the Investor Designee submit his resignation and, in such case, the Investors will cause the Investor Designee to resign from the Board and may select a replacement designee reasonably acceptable to the Board.

4. In connection with the 2016 Annual Meeting (and any adjournments or postponements thereof), the Company will recommend that the Company’s stockholders vote in favor of the election of each of the Company’s nominees (including the New Directors), solicit proxies for each of the Company’s nominees, and cause all Company common stock represented by proxies granted to it (or any of its officers, directors or representatives) to be voted in favor of each of the Company’s nominees. In connection with the 2016 Annual Meeting (and any adjournments or postponements thereof), so long as both New Directors have been nominated by the Board for re-election as a director, and at each subsequent Annual Meeting of Stockholders of the Company (and any adjournments or postponements thereof) at which the Investor Designee has been nominated by the Board for re-election as a director, the Investors will cause to be present for quorum purposes and vote or cause to be voted all Company common stock beneficially owned by them or their controlling or controlled Affiliates and which they or such

 

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controlling or controlled Affiliates are entitled to vote on the record date for the 2016 Annual Meeting or such subsequent Annual Meeting of Stockholders in favor of (A) the election of directors nominated by the Board and (B) otherwise in accordance with the Board’s recommendation on any non-Extraordinary Transaction related proposals.

5. The parties hereto acknowledge that each of the New Directors, upon election to the Board, will serve as a member of the Board and will be governed by the same protections and obligations regarding confidentiality, conflicts of interest, related party transactions, fiduciary duties, codes of conduct, trading and disclosure policies, director resignation policy, and other governance guidelines and policies of the Company (including, but not limited to, the policies with respect to management being responsible for managing communications with external constituencies) as other directors (collectively, “Company Policies”), and shall be required to preserve the confidentiality of Company business and information, including discussions or matters considered in meetings of the Board or Board committees, and shall have the same rights and benefits, including with respect to insurance, indemnification, compensation and fees, as are applicable to all independent directors of the Company. The Company represents and warrants that: (i) all Company Policies currently in effect are publicly available on the Company’s website or described in its proxy statement filed with the Securities and Exchange Commission (the “SEC”) on April 17, 2015 or have otherwise been provided to the Investors, and such Company Policies will not be amended prior to the appointment of the Investor Designee and (ii) during the Restricted Period, any changes to the Company Policies, or new Company Policies, will be adopted in good faith and not for the purpose of undermining or conflicting with the arrangements contemplated hereby.

6. The Company will take all action necessary to form a committee of the Board as promptly as practicable after the date hereof to conduct a full operating review of the business (the “Operations Committee”). The Operations Committee will evaluate, among other things, the Company’s operating margins, profitability and capital structure with a mandate to recommend a plan to improve margins, profitability and capital structure (the “Operating Review”). The Operations Committee will be empowered to hire advisors to assist in its Operating Review. The Operations Committee shall be comprised of four (4) members, consisting of Robert M. Calderoni, Robert D. Daleo, and the New Directors. The Chairman of the Operations Committee shall be Mr. Calderoni.

7. The Company will take all action necessary to form a committee of the Board as promptly as practicable after the date hereof to conduct the search for a new Chief Executive Officer (the “Search Committee”). The Search Committee will be empowered to identify, review and recommend a new Chief Executive Officer to the Board. The Search Committee shall be comprised of four (4) members, consisting of Robert M. Calderoni, Godfrey R. Sullivan, and the New Directors. The Chairman of the Search Committee shall be Mr. Calderoni.

8. Promptly, and in any event within one business day, following the execution and delivery of this Agreement, the Company shall substantially concurrently issue three press releases in the forms attached as Exhibit A (the “Company Press Releases”) and no party shall make any statement inconsistent with the Company Press Releases in connection with the announcement of this Agreement. None of the Investors or their Affiliates shall issue a press release in connection with this Agreement or the actions contemplated hereby. Additionally,

 

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promptly following the execution and delivery of this Agreement, the Company will file a Current Report on Form 8-K, which will report the entry into this Agreement. The Investors shall promptly, but in no case prior to the date of the filing or other public release by the Company of the Company Press Releases, prepare and file an amendment to the Schedule 13D with respect to the Company originally filed by the Investors with the SEC on June 11, 2015 (the “Schedule 13D”) reporting the entry into this Agreement and amending applicable items to conform to its obligations hereunder. The amendment and the Form 8-K shall each be consistent with the Company Press Releases and the terms of this Agreement, and shall be in form and substance reasonably acceptable to the Company and the Investors.

9. From the date of this Agreement until the Expiration Date or until such earlier time as the restrictions in this paragraph 9 terminate as provided herein (such period, the “Restricted Period”), the Investors will not, and will cause their respective Affiliates and their respective principals, directors, general partners, officers, employees, and agents and representatives acting on their behalf (collectively, the “Restricted Persons”) not to, directly or indirectly, absent prior express written invitation or authorization by the Board:

(a) engage in any “solicitation” (as such term is used in the proxy rules of the SEC) of proxies or consents with respect to the election or removal of directors or any other matter or proposal or become a “participant” (as such term is used in the proxy rules of the SEC) in any such solicitation of proxies or consents;

(b) knowingly encourage or advise any other Person or knowingly assist any Person in so encouraging or advising any Person with respect to the giving or withholding of any proxy, consent or other authority to vote or in conducting any type of referendum (other than such encouragement or advice that is consistent with Company management’s recommendation in connection with such matter);

(c) form, join or act in concert with any “group” as defined pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to any Voting Securities, other than solely with other Affiliates of the Investors with respect to Voting Securities now or hereafter owned by them;

(d) acquire, or offer, seek or agree to acquire, by purchase or otherwise, or direct any third party in the acquisition of, any Voting Securities or assets of the Company, or rights or options to acquire any Voting Securities or assets of the Company, or engage in any swap or hedging transactions or other derivative agreements of any nature with respect to Voting Securities, in each case if such acquisition or transaction would result in the Investors having beneficial ownership (voting power or economic exposure) of more than 9.9% of the Company’s outstanding common stock;

(e) sell, offer or agree to sell, all or substantially all, directly or indirectly, through swap or hedging transactions or otherwise, voting rights decoupled from the underlying common stock of the Company held by the Investors to any Third Party;

(f) make or in any way participate, directly or indirectly, in any tender offer, exchange offer, merger, consolidation, acquisition, business combination, recapitalization,

 

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restructuring, liquidation, dissolution or extraordinary transaction involving the Company or any of its subsidiaries or its or their securities or assets (each, an “Extraordinary Transaction”) (it being understood that the foregoing shall not restrict the Investors from tendering shares, receiving payment for shares or otherwise participating in any such transaction on the same basis as other stockholders of the Company, or from participating in any such transaction that has been approved by the Board); or make, directly or indirectly, any proposal, either alone or in concert with others, to the Company or the Board that would reasonably be expected to require a public announcement regarding any of the types of matters set forth above in this paragraph;

(g) enter into a voting trust, arrangement or agreement or subject any Voting Securities to any voting trust, arrangement or agreement, in each case other than solely with other Affiliates of the Investors, with respect to Voting Securities now or hereafter owned by them and other than granting proxies in solicitations approved by the Board;

(h) (i) seek, alone or in concert with others, election or appointment to, or representation on, the Board or nominate or propose the nomination of, or recommend the nomination of, any candidate to the Board, except as set forth herein, (ii) seek, alone or in concert with others, the removal of any member of the Board or (iii) conduct a referendum of stockholders;

(i) make or be the proponent of any stockholder proposal (pursuant to Rule 14a-8 under the Exchange Act or otherwise);

(j) make any request for stock list materials or other books and records of the Company under Section 220 of the Delaware General Corporation Law or other statutory or regulatory provisions providing for shareholder access to books and records;

(k) except as set forth herein, make any public proposal with respect to (i) any change in the number or term of directors or the filling of any vacancies on the Board, (ii) any material change in the capitalization or dividend policy of the Company, (iii) any other material change in the Company’s management, business or corporate structure, (iv) any waiver, amendment or modification to the Company’s Certificate of Incorporation or Bylaws, or other actions which may impede the acquisition of control of the Company by any person, (v) causing a class of securities of the Company to be delisted from, or to cease to be authorized to be quoted on, any securities exchange or (vi) causing a class of equity securities of the Company to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act;

(l) institute, solicit, assist or join any litigation, arbitration or other proceeding against or involving the Company or any of its current or former directors or officers (including derivative actions) in order to effect or take any of the actions expressly prohibited by this paragraph 9; provided, however, that for the avoidance of doubt the foregoing shall not prevent any Restricted Person from (A) bringing litigation to enforce the provisions of this Agreement, (B) making counterclaims with respect to any proceeding initiated by, or on behalf of, the Company against a Restricted Person, (C) bringing bona fide commercial disputes that do not relate to the subject matter of this Agreement or the topics covered in the correspondence between the Company and the Restricted Persons prior to the date hereof, or (D) exercising

 

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statutory appraisal rights; provided, further, that the foregoing shall also not prevent the Restricted Persons from responding to or complying with a validly issued legal process;

(m) enter into any negotiations, agreements or understandings with any Third Party to take any action that the Investors are prohibited from taking pursuant to this paragraph 9; or

(n) make any request or submit any proposal to amend or waive the terms of this Agreement, in each case which would reasonably be expected to result in a public announcement of such request or proposal;

provided, that the restrictions in this paragraph 9 shall terminate automatically upon the earliest of (i) as a non-exclusive remedy for any such breach, upon five (5) business days’ prior written notice by the Investors following a material breach of this Agreement by the Company (including, without limitation, a failure to appoint the New Directors and otherwise constitute the Board in accordance with paragraph 1, a failure to appoint the New Directors to the applicable committees of the Board in accordance with paragraphs 6 and 7, or a failure to issue the Company Press Releases in accordance with paragraph 8) if such breach has not been cured within such notice period, provided that the Investors are not in material breach of this Agreement at the time such notice is given, (ii) the announcement by the Company of a definitive agreement with respect to any Extraordinary Transaction that would result in the acquisition by any person or group of more than 50% of the Voting Securities, (iii) the commencement of any tender or exchange offer (by a person other than the Investors or their Affiliates) which, if consummated, would constitute an Extraordinary Transaction that would result in the acquisition by any person or group of more than 50% of the Voting Securities, where the Company files a Schedule 14D-9 (or any amendment thereto), other than a “stop, look and listen” communication by the Company pursuant to Rule 14d-9(f) promulgated under the Exchange Act, that does not recommend that the Company’s stockholders reject such tender or exchange offer, (iv) such time as the Company issues a preliminary proxy statement, definitive proxy statement or other proxy materials in connection with the 2016 Annual Meeting that are inconsistent with the terms of this Agreement or (v) the adoption by the Board of any amendment to the Certificate of Incorporation or Bylaws of the Company that would reasonably be expected to substantially impair the ability of a stockholder to submit nominations for election to the Board or stockholder proposals in connection with any future Company Annual Meeting of Stockholders. Notwithstanding anything to the contrary in this Agreement, nothing in this paragraph 9 shall prohibit or restrict the Investor Designee from exercising his rights and fiduciary duties as a director of the Company or restrict his discussions solely among other members of the Board and/or management, advisors, representatives or agents of the Company.

10. During the Restricted Period, the Company, the Investors and the Investor Designee shall each refrain from making, and shall cause their respective Affiliates and its and their respective principals, directors, members, general partners, officers and employees not to make or cause to be made any statement or announcement including in any document or report filed with or furnished to the SEC or through the press, media, analysts or other persons, that constitutes an ad hominem attack on, or otherwise disparages, defames, slanders, impugns or is reasonably likely to damage the reputation of, (a) in the case of statements or announcements by any of the Investors: the Company or any of its Affiliates, subsidiaries or advisors, or any of its

 

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or their respective current or former officers, directors or employees (including, without limitation, any statements or announcements regarding the Company’s strategy, operations, performance, products or services), and (b) in the case of statements or announcements by the Company: the Investors and the Investors’ advisors, their respective employees or any person who has served as an employee of the Investors and the Investors’ advisors. The foregoing shall not restrict the ability of any person to comply with any subpoena or other legal process or respond to a request for information from any governmental authority with jurisdiction over the party from whom information is sought.

11. The Company hereby agrees that the Investor Designee may provide confidential information of the Company to the Investors and their Affiliates subject to, and solely in accordance with the terms of, a confidentiality agreement in the form attached hereto as Exhibit B (which the Investors agree to execute and deliver to the Company simultaneously with the Investors’ execution and delivery of this Agreement). The Investors and the Investor Designee hereby acknowledge that they and their Affiliates are aware that United States securities laws may restrict any person who has material, non-public information about a company from purchasing or selling any securities of such company while in possession of such information. Accordingly, the Investors shall, and shall cause their Affiliates to, purchase and sell securities of the Company only in compliance with the Company’s insider trading policy, a copy of which has been provided to the Investors.

12. As used in this Agreement, the term (a) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act and shall include Persons who become Affiliates of any Person subsequent to the date of this Agreement; (b) “beneficially own”, “beneficially owned” and “beneficial ownership” shall have the meaning set forth in Rules 13d-3 and 13d-5(b)(l) promulgated under the Exchange Act and shall include any other economic exposure to Company common stock, including through any swap or other derivative transaction, that gives a Person the economic equivalent of ownership of Company common stock, including, without limitation, the notional number of shares subject to derivative agreements in the form of cash-settled swaps; (c) “business day” shall mean any day other than a Saturday, Sunday or a day on which the Federal Reserve Bank of New York is closed; (d) “Expiration Date” means the first anniversary of the date of this Agreement; provided that, if the Investor Designee remains a director of the Company as of such anniversary date, then the Expiration Date shall be automatically extended until the earlier of (i) the date that the Board fails to re-nominate the Investor Designee as a director of the Company in connection with an Annual Meeting of Stockholders or (ii) the date that the Investor Designee resigns as a director of the Company (for the avoidance of doubt, it is understood and agreed that the Board shall have no obligation to re-nominate the Investor Designee as a director of the Company following the 2016 Annual Meeting); (e) “Independent” means that a Person (x) (i) shall not be an employee, director, general partner, manager or other agent of an Investor or of any Affiliate of an Investor, (ii) shall not be a limited partner, member or other investor in any Investor or any Affiliate of an Investor and (iii) shall not have, and shall not have had, any agreement, arrangement or understanding, written or oral, with any Investor or any Affiliate of an Investor regarding such Person’s service on the Board, and (y) shall be an independent director of the Company under the Company’s independence guidelines, applicable law and the rules and regulations of the SEC and Nasdaq Stock Market; (f) “Person” shall be interpreted broadly to include, among others, any individual, general or limited partnership, corporation, limited

 

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liability or unlimited liability company, joint venture, estate, trust, group, association or other entity of any kind or structure; (g) “Third Party” means any Person that is not a party to this Agreement or an Affiliate thereof, a member of the Board, a director or officer of the Company, or legal counsel to any party to this Agreement; and (h) “Voting Securities” shall mean the shares of common stock of the Company and any other securities of the Company entitled to vote in the election of directors, or securities convertible into, or exercisable or exchangeable for, such shares or other securities, whether or not subject to the passage of time or other contingencies.

13. Each of the Investors, severally and not jointly, represents and warrants that (a) this Agreement has been duly authorized, executed and delivered by it and is a valid and binding obligation of such Investor, enforceable against it in accordance with its terms; (b) neither it nor any of its Affiliates has or will during the Restricted Period have, any agreement, arrangement or understanding, written or oral, with the New Independent Director or other member of the Board (other than the Investor Designee) pursuant to which such individual has been or will be compensated for his or her service as a director on, or nominee for election to, the Board; and (c) as of the date of this Agreement, (i) the Investors, together with all of their respective Affiliates, collectively beneficially own, an aggregate of 11,989,100 shares of Voting Securities and (ii) except as previously disclosed in writing to the Company prior to the execution of this Agreement, none of the Investors nor any of their respective Affiliates, is a party to any swap or hedging transactions or other derivative agreements of any nature with respect to the Voting Securities.

14. The Company represents and warrants that (a) this Agreement has been duly authorized, executed and delivered by it and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms; (b) does not require the approval of the stockholders of the Company; and (c) does not and will not violate any law, any order of any court or other agency of government, the Company’s Certificate of Incorporation or Bylaws, each as amended from time to time, or any provision of any agreement or other instrument to which the Company or any of its properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such agreement or other instrument, or result in the creation or imposition of, or give rise to, any material lien, charge, restriction, claim, encumbrance or adverse penalty of any nature whatsoever pursuant to any such indenture, agreement or other instrument.

15. The Company and each of the Investors each acknowledge and agree that money damages would not be a sufficient remedy for any breach (or threatened breach) of this Agreement by it and that, in the event of any breach or threatened breach hereof, (a) the non-breaching party will be entitled to seek injunctive and other equitable relief, without proof of actual damages; (b) the breaching party will not plead in defense thereto that there would be an adequate remedy at law; and (c) the breaching party agrees to waive any applicable right or requirement that a bond be posted by the non-breaching party. Such remedies will not be the exclusive remedies for a breach of this Agreement, but will be in addition to all other remedies available at law or in equity.

16. This Agreement (including its exhibits) constitutes the only agreement between the Investors and the Company with respect to the subject matter hereof and supersedes all prior

 

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agreements, understandings, negotiations and discussions, whether oral or written. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No party may assign or otherwise transfer either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party. Any purported transfer requiring consent without such consent shall be void. No amendment, modification, supplement or waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party affected thereby, and then only in the specific instance and for the specific purpose stated therein. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

17. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the purposes of such invalid or unenforceable provision.

18. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. Each of the Investors and the Company (a) irrevocably and unconditionally consents to the personal jurisdiction and venue of the federal or state courts located in Wilmington, Delaware; (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; (c) agrees that it shall not bring any action relating to this Agreement or otherwise in any court other than such courts; and (d) waives any claim of improper venue or any claim that those courts are an inconvenient forum. The parties agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in paragraph 20 or in such other manner as may be permitted by applicable law, shall be valid and sufficient service thereof. Each of the parties, after consulting or having had the opportunity to consult with counsel, knowingly, voluntarily and intentionally waives any right that such party may have to a trial by jury in any litigation based upon or arising out of this Agreement or any related instrument or agreement, or any of the transactions contemplated thereby, or any course of conduct, dealing, statements (whether oral or written), or actions of any of them. No party shall seek to consolidate, by counterclaim or otherwise, any action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived.

19. This Agreement is solely for the benefit of the parties and is not enforceable by any other Person.

20. All notices, consents, requests, instructions, approvals and other communications provided for herein, and all legal process in regard hereto, will be in writing and will be deemed validly given, made or served when delivered in person, by electronic mail, by overnight courier

 

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or two business days after being sent by registered or certified mail (postage prepaid, return receipt requested) as follows:

If to the Company to:

Citrix Systems, Inc.

851 West Cypress Creek Road

Fort Lauderdale, FL 33309

Attn: Antonio G. Gomes

email: tony.gomes@citrix.com

with a copy (which shall not constitute notice) to:

Goodwin Procter LLP

53 State Street

Boston, MA 02109-2802

Attn:    Stuart M. Cable
   Lisa R. Haddad
Email:    scable@goodwinprocter.com
   lhaddad@goodwinprocter.com

If to the Investors:

Elliott Associates, L.P.

Elliott International, L.P.

Elliott International Capital Advisors Inc.

40 West 57th Street

New York, NY 10019

Attn:    Jesse Cohn
email:    jcohn@elliottmgmt.com

with a copy (which shall not constitute notice) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019

Attn:    Robert B. Schumer
   Steven J. Williams
email:    rschumer@paulweiss.com
   swilliams@paulweiss.com

At any time, any party may, by notice given in accordance with this paragraph to the other party, provide updated information for notices hereunder.

21. All attorneys’ fees, costs and expenses incurred in connection with this Agreement and all matters related hereto will be paid by the party incurring such fees, costs or expenses.

 

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22. Each of the parties acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed this Agreement with the advice of such counsel. Each party and its counsel cooperated and participated in the drafting and preparation of this Agreement, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties, and any controversy over interpretations of this Agreement shall be decided without regard to events of drafting or preparation.

23. This Agreement may be executed by the parties in separate counterparts (including by fax, jpeg, .gif, .bmp and .pdf), each of which when so executed shall be an original, but all such counterparts shall together constitute one and the same instrument.

[Signature page follows]

 

-11-


If the terms of this Agreement are in accordance with your understanding, please sign below, whereupon this Agreement shall constitute a binding agreement among us.

 

Very truly yours,
CITRIX SYSTEMS, INC.
By:  

/s/ Antonio G. Gomes

Name:   Antonio G. Gomes
Title:   Senior Vice President, General Counsel

 

Accepted and agreed to as of the date first written above:
ELLIOTT ASSOCIATES, L.P.
By:   Elliott Capital Advisors, L.P.,
  its General Partner
By:   Braxton Associates, Inc.,
  its General Partner
By:  

/s/ Elliot Greenberg

  Name:   Elliot Greenberg
  Title:   Vice President
ELLIOTT INTERNATIONAL, L.P.
By:   Elliott International Capital Advisors Inc.,
  as Attorney-in-Fact
By:  

/s/ Elliot Greenberg

  Name:   Elliot Greenberg
  Title:   Vice President
ELLIOTT INTERNATIONAL CAPITAL ADVISORS INC.
By:  

/s/ Elliot Greenberg

  Name:   Elliot Greenberg
  Title:   Vice President

[Signature Page to Letter Agreement]


Exhibit A

Company Press Releases

 

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Exhibit B

Confidentiality Agreement

 

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PERSONAL AND CONFIDENTIAL

July 28, 2015

Elliott Asssociates, L.P.

Elliott International, L.P.

Elliott International Capital Advisors Inc.

40 West 57th Street

New York, NY 10019

Ladies and Gentlemen:

This letter agreement shall become effective upon the appointment of the Investor Designee to the Board of Directors (the “Board”) of Citrix Systems, Inc. (the “Company”) pursuant to the other letter agreement, dated as of the date hereof, between the Company and you (the “Cooperation Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Cooperation Agreement. Subject to the terms of, and in accordance with, this letter agreement, you and, subject to the restrictions in paragraph 1, your Representatives and Affiliates, may receive certain information about the Company and its subsidiaries, divisions and Affiliates from the Investor Designee that is confidential and proprietary and the disclosure of which could harm the Company and its subsidiaries. You understand and agree that disclosure of any such information by the Investor Designee shall be subject in all cases to his fiduciary duties to the Company and its stockholders and the Company Policies. Without limiting the generality of the foregoing, it is understood and agreed that the Investor Designee shall not disclose to you or your Representatives or Affiliates (i) any information regarding the deliberations of the Board or its committees as a whole or of individual members of the Board or its committees or members of the Company’s management (which the parties agree shall not include factual information regarding the Company and its subsidiaries, divisions and Affiliates), (ii) any confidential or proprietary information of any third party in the possession of the Company and its subsidiaries that either (x) is identified as such to the Investor Designee by or on behalf of the Company or (y) as to which it is reasonably apparent that the Company or any of its subsidiaries is obligated by a contractual, legal or fiduciary obligation prohibiting disclosure, (iii) any legal advice provided by external or internal counsel to the Company or any of its subsidiaries in connection with a pending or threatened claim, action or proceeding, or (iv) any other information that may constitute waiver of the Company’s or any of its subsidiaries’ attorney-client privilege or attorney work-product privilege (both with respect to internal or external legal counsel) that is identified as such to the Investor Designee by or on behalf of the Company.

As a condition of your being furnished such information, you agree to treat any information, whether written or oral, concerning the Company or any of its subsidiaries, divisions or Affiliates


that is furnished to you by or on behalf of the Investor Designee (herein collectively referred to as the “Confidential Information”) in accordance with the provisions of this letter agreement and to take or abstain from taking certain other actions herein set forth. The term “Confidential Information” includes, without limitation, all notes, analyses, data or other documents furnished to you or your Affiliates or Representatives or prepared by you or your Affiliates or Representatives to the extent such materials reflect or are based upon, in whole or in part, the Confidential Information. The term “Confidential Information” does not include information that (a) is or becomes available to you or the Investor Designee on a nonconfidential basis from a source other than the Company or its Affiliates or representatives; provided that such source is not known by you or the Investor Designee to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation to, the Company that prohibits such disclosure, (b) is or becomes generally available to the public other than as a result of a disclosure by you or your Representatives or Affiliates in violation of this letter agreement, or (c) has been or is independently developed by you or your Representatives or Affiliates without the use of the Confidential Information or in violation of the terms of this letter agreement. For purposes of this letter agreement, the term “Representatives” shall include your and your Affiliates’ directors, officers, employees and attorneys.

 

  1. You hereby agree that the Confidential Information will be kept confidential and used solely for the purpose of monitoring and evaluating your investment in the Company; provided, however, that the Confidential Information may be disclosed (i) to your Affiliates and any of your Representatives who need to know such information for the sole purpose of advising you on your investment in the Company, (ii) in accordance with paragraph 3 of this letter agreement, or (iii) as the Company may otherwise consent in writing. All such Affiliates and Representatives shall (A) be informed by you of the confidential nature of the Confidential Information, (B) agree to keep the Confidential Information strictly confidential, and (C) be advised of the terms of this letter agreement. You agree to be responsible for any breaches of any of the provisions of this letter agreement by any of your Affiliates or Representatives as if they were party hereto (it being understood that such responsibility shall be in addition to and not by way of limitation of any right or remedy the Company may have against your Affiliates and Representatives with respect to such breach).

 

  2. You hereby acknowledge that you, your Affiliates and your Representatives are aware that the Confidential Information may contain material, non-public information about the Company, and that the U.S. securities laws restrict any person who has material, non-public information about a company from purchasing or selling any securities of such company while in possession of such information, and further acknowledge your obligations and those of your Affiliates and Representatives under Section 11 of the Cooperation Agreement.

 

  3.

Notwithstanding anything to the contrary provided in this letter agreement, in the event you or any of your Affiliates or Representatives receive a request or are required by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process or pursuant to a formal request from a regulatory examiner (any such requested or required disclosure, an “External Demand”) or otherwise pursuant to applicable law, regulation or the rules of any national securities exchange (as determined

 

2


  based on advice of outside legal counsel) to disclose all or any part of the Confidential Information, agree to, to the extent permitted by applicable law, (a) promptly notify the Company of the existence, terms and circumstances surrounding such External Demand or other requirement, (b) consult with the Company on the advisability of taking legally available steps to resist or narrow such request or disclosure, and (c) in the case of any External Demand, assist the Company, at the Company’s request and expense, in seeking a protective order or other appropriate remedy to the extent available under the circumstances. In the event that such protective order or other remedy is not obtained or not available or that the Company waives compliance with the provisions hereof, (i) you or your Affiliates or Representatives, as the case may be, may disclose only that portion of the Confidential Information which you or your Affiliates or Representatives are advised by counsel is legally required to be disclosed and to the extent you or your Affiliates or Representatives are advised by counsel is legally required, and, in the case of any External Demand, you or your Affiliates or Representatives shall, at the Company’s request and expense, exercise reasonable efforts to obtain assurance that confidential treatment will be accorded such Confidential Information, and (ii) you or your Affiliates or Representatives shall not be liable for such disclosure, unless such disclosure was caused by or resulted from a previous disclosure by you or your Affiliates or Representatives in violation of this letter agreement. Notwithstanding the foregoing, except in the case of an External Demand, you and your Affiliates and Representatives may disclose Confidential Information pursuant to this paragraph 3 if but only if such disclosure requirement does not arise from a breach of paragraph 9 of the Cooperation Agreement. For the avoidance of doubt, it is understood and agreed that there shall be no “applicable law”, “regulation” or “rule” requiring you or your Affiliates or Representatives to disclose any Confidential Information solely by virtue of the fact that, absent such disclosure, you or your Affiliates or Representatives would be prohibited from purchasing, selling or engaging in derivative or other voluntary transactions with respect to the securities of the Company or you or your Affiliates or Representatives would be unable to file any proxy materials in compliance with Section 14(a) of the Exchange Act or the rules promulgated thereunder.

 

  4. Upon the Company’s demand, you shall either promptly (at your option) (a) destroy the Confidential Information and any copies thereof, or (b) return to the Company all Confidential Information and any copies thereof, and, in either case, confirm in writing to the Company that all such material has been destroyed or returned, as applicable, in compliance with this letter agreement, provided that (i) you and your Affiliates and Representatives shall be permitted to retain Confidential Information to the extent necessary to comply with applicable law or such person’s document retention policies designed to ensure compliance with applicable law and (ii) the foregoing shall not require the deletion of Confidential Information from computer archives maintained in the ordinary course (provided that you and your Affiliates and Representatives shall continue to be bound by the obligations of confidentiality hereunder with respect to such Confidential Information for such period of time as you and such Affiliates or Representatives retain such Confidential Information).

 

  5.

You acknowledge and agree that money damages would not be a sufficient remedy for any breach (or threatened breach) of this letter agreement by you or your Affiliates or

 

3


  Representatives and that the Company shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach (or threatened breach), without proof of damages, and each party further agrees to waive, and use its reasonable best efforts to cause its Affiliates to waive any requirement for the securing or posting of any bond in connection with any such remedy. Such remedies shall not be the exclusive remedies for a breach of this letter agreement, but will be in addition to all other remedies available at law or in equity.

 

  6. You agree that (a) none of the Company or their respective Affiliates or representatives shall have any liability to you or any of your Affiliates or Representatives resulting from the selection, use or content of the Confidential Information by you or your Affiliates or Representatives and (b) none of the Company or their respective Affiliates or representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any Confidential Information. This letter agreement shall not create any obligation on the part of the Company or any of its subsidiaries, Affiliates or representatives to provide you or your Affiliates or Representatives with any Confidential Information, nor shall it entitle you or your Affiliates or Representatives (other than the Investor Designee in his capacity as a director of the Company) to participate in any Board or committee meetings. All Confidential Information shall remain the property of the Company and its subsidiaries. Neither you nor any of your Affiliates or Representatives shall by virtue of any disclosure of and/or your or their use of any Confidential Information acquire any rights with respect thereto, all of which rights shall remain exclusively with the Company and its subsidiaries.

 

  7. No failure or delay by any party or any of its representatives in exercising any right, power or privilege under this letter agreement shall operate as a waiver thereof, and no modification hereof shall be effective, unless in writing and signed by the parties.

 

  8. The illegality, invalidity or unenforceability of any provision hereof under the laws of any jurisdiction shall not affect its legality, validity or enforceability under the laws of any other jurisdiction, nor the legality, validity or enforceability of any other provision.

 

  9. This letter agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware. The parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the Chancery Courts in the State of Delaware and the United States District Court for the District of the State of Delaware for any action, suit or proceeding arising out of or relating to this letter agreement, and agree not to commence any action, suit or proceeding related thereto except in such courts.

 

  10. This letter agreement and the Cooperation Agreement (including the exhibits thereto) contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersedes all prior or contemporaneous agreements or understandings, whether written or oral. This letter agreement may be amended only by an agreement in writing executed by the parties hereto.

 

  11.

This letter agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute the same agreement. One or more counterparts of this letter agreement may be delivered by telecopier or pdf electronic

 

4


  transmission, with the intention that they shall have the same effect as an original counterpart hereof.

 

  12. Except as otherwise set forth herein, this letter agreement shall terminate three (3) years from the date on which the Investor Designee ceases to be a director of the Company; provided that you and your Affiliates shall maintain in accordance with the confidentiality obligations set forth herein any Confidential Information constituting trade secrets for such longer time as such information constitutes a trade secret of the Company or any of its subsidiaries under applicable law; and provided further that any liability for breach of this letter agreement prior to such termination shall survive such termination.

[Remainder of the page intentionally left blank]

 

5


Very truly yours,
CITRIX SYSTEMS, INC.
By:  

 

Name:  
Title:  
Confirmed and Agreed to:
ELLIOTT ASSOCIATES, L.P.

By: Elliott Capital Advisors, L.P.,

its General Partner

By: Braxton Associates, Inc.,

its General Partner

By:  

 

Name:  
Title:  
ELLIOTT INTERNATIONAL, L.P.

By: Elliott International Capital Advisors Inc.,

as Attorney-in-Fact

By:  

 

Name:  
Title:  
ELLIOTT INTERNATIONAL CAPITAL ADVISORS INC.
By:  

 

Name:  
Title:  

 

6



Exhibit 99.1

FOR IMMEDIATE RELEASE

Citrix Announces Cooperation Agreement With Elliott Management

Santa Clara, Calif. – July 28, 2015 – Citrix Systems, Inc. (NASDAQ: CTXS) today announced that it has entered into a cooperation agreement with Elliott Management Corporation (“Elliott”), an investment firm whose affiliated funds own approximately 7.5 percent of the company’s common stock.

As part of the agreement, Elliott’s Jesse Cohn has been appointed to the Citrix board of directors to replace Asiff Hirji who has decided to step down from the company’s board, effective immediately. In addition, as part of its continuing board evolution process, the company will commence a search for an additional independent board member, mutually agreeable to Citrix and Elliott, who will replace a current board member when appointed. In addition, Elliott and certain of its affiliates have agreed to customary standstill, voting and other provisions for a period of at least a year.

In a separate press release issued today, Citrix announced that its board of directors has formed an operations committee, which will work closely with the company’s management team on a comprehensive operational review focusing on improving Citrix’s margins, profitability and capital structure. The operations committee will be comprised of four directors, including Jesse Cohn and the mutually-agreed-upon new independent director. The operations committee will be led by current Citrix director Robert Calderoni, who will also assume the role of executive chairman of the Citrix board. Thomas Bogan, Citrix’s current chairman, will assume the role of lead independent director of the Citrix board.

“We believe the addition of new and fresh perspectives to our board will ensure Citrix continues to lead in application networking and virtualization markets,” said Thomas Bogan, lead independent director for Citrix. “On behalf of the board, I want to thank Asiff Hirji for his distinguished service to Citrix, guiding and advising the company through many years of growth.”

“We appreciate Citrix’s constructive approach and are pleased to have worked collaboratively with the board and management team to reach this cooperation agreement,” said Jesse Cohn, senior portfolio manager at Elliott Management. “We first invested in Citrix because we saw a substantial value creation opportunity for the company and its shareholders. We are confident that the initiatives announced today and the addition of new directors to the company’s board will allow Citrix to build upon its position as an innovative industry leader, and to drive significant shareholder value. We look forward to remaining a shareholder and working closely with the company towards our mutual goal of positioning Citrix for success and value creation.”


The full cooperation agreement between Citrix and Elliott will be filed on a Form 8-K with the Securities and Exchange Commission.

Qatalyst Partners and Goldman, Sachs & Co. are serving as financial advisors to Citrix and Goodwin Procter LLP is serving as legal counsel.

About Jesse Cohn

Jesse Cohn is a senior portfolio manager and head of US Equity Activism at Elliott Management Corporation, a $27 billion investment firm. Cohn joined Elliott in 2004 and manages both public and private investments for the firm. He currently sits on the Boards of Directors of MSC Software, BMC Software (observer), E2Open, Mitchell International (observer) and Ark Continuity. Cohn is also a frequent speaker on activism and governance-related topics and is a member of the Advisory Board at the Harvard Law School Program on Corporate Governance. Prior to working at Elliott, Cohn was an analyst in the mergers and acquisitions group of Morgan Stanley. He earned his Bachelor of Science in Economics from the University of Pennsylvania’s Wharton School of Business, from which he graduated summa cum laude.

About Robert M. Calderoni

Robert M. “Bob” Calderoni has served as a director on the Citrix Board of Directors since June 2014. He is also a member of the board of directors of Juniper Networks and KLA Tencor. Mr. Calderoni previously served as Chairman and Chief Executive officer of Ariba, Inc., from 2001 until it was sold to SAP in October 2012. Following the acquisition, Mr. Calderoni remained CEO of Ariba and was also appointed a member of the global managing board at SAP AG between 2012 and 2014. Prior to his role as CEO of Ariba, Mr. Calderoni served as the company’s Chief Financial Officer from January 2001 to October 2001. Prior to joining Ariba in January 2001, Mr. Calderoni served as CFO at Avery Dennison Corporation, Senior Vice President of Finance at Apple, and Vice President of Finance at IBM. Mr. Calderoni received a Bachelor of Science Degree in Accounting and Finance from Fordham University.

About Thomas F. Bogan

Tom Bogan has served as a director of Citrix since January 2003 and as Chairman of the Board of Directors since May 2005. Since January 2015, Mr. Bogan has served as Chief Executive Officer of Adaptive Insights, a provider of cloud-based performance management solutions. He previously served as a member of the Board of Directors of each of PTC, a publicly-traded company that develops, markets and supports product development software solutions, and Rally Software Development Corp., a publicly traded provider of cloud-based solutions for managing Agile Software Development, until its acquisition by CA Technologies in July 2015. He is currently a member of the Board of Directors at Apptio and Acquia, leading SaaS software companies. Mr. Bogan was a Partner at Greylock Partners, a venture capital firm from 2004 until 2009. From 1997 to 2003, Mr. Bogan served in a variety of positions with Rational Software Corporation, a software company acquired by IBM Corporation in 2003, including President and Chief Operating Officer from 2000 to 2003 and Senior Vice President and Chief Operating Officer from 1999 to 2000. Mr. Bogan graduated from Stonehill College with a B.S.B.A. Degree in Accounting.


About Citrix

Citrix (NASDAQ:CTXS) is leading the transition to software-defining the workplace, uniting virtualization, mobility management, networking and SaaS solutions to enable new ways for businesses and people to work better. Citrix solutions power business mobility through secure, mobile workspaces that provide people with instant access to apps, desktops, data and communications on any device, over any network and cloud. With annual revenue in 2014 of $3.14 billion, Citrix solutions are in use at more than 400,000 organizations and by over 100 million users globally. Learn more at www.citrix.com.

For Citrix Investors

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Those statements involve a number of factors that could cause actual results to differ materially, including risks associated with the impact of the global economy and uncertainty in the IT spending environment, revenue growth and recognition of revenue, products and services, their development and distribution, product demand and pipeline, economic and competitive factors, the Company’s key strategic relationships, as well as other risks detailed in the Company’s filings with the Securities and Exchange Commission. Citrix assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

# # #

Citrix® is a trademarks or registered trademarks of Citrix Systems, Inc. and/or one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owners.

For media inquiries, contact:

Eric Armstrong

Citrix Systems, Inc.

(954) 267-2977

eric.armstrong@citrix.com

Joele Frank, Wilkinson Brimmer Katcher

Joele Frank

(212) 355-4449

Eric Brielmann or Jed Repko

(415) 869-3950


For investor inquiries, contact:

Eduardo Fleites

Citrix Systems, Inc.

(954) 229-5758

eduardo.fleites@citrix.com



Exhibit 99.2

FOR IMMEDIATE RELEASE

For media inquiries, contact:

Eric Armstrong, Citrix Systems, Inc.

(954) 267-2977 or eric.armstrong@citrix.com

For investor inquiries, contact:

Eduardo Fleites, Citrix Systems, Inc.

(954) 229-5758 or eduardo.fleites@citrix.com

Citrix Reports Second Quarter Financial Results

Second quarter GAAP operating margin of 15 percent; non-GAAP operating margin of 25 percent

Second quarter GAAP diluted EPS of $0.64; non-GAAP diluted EPS of $1.00

Forms Operations Committee to Support Operational Review

Commences Exploration of Strategic Alternatives for GoTo Family of Products

SANTA CLARA, Calif. — July 28, 2015 — Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the second quarter of fiscal year 2015 ending June 30, 2015, as well as key operational initiatives.

Financial Results

For the second quarter of fiscal year 2015, Citrix achieved revenue of $797 million, compared to $782 million in the second quarter of fiscal year 2014, representing 2 percent revenue growth.

GAAP Results

Net income for the second quarter of fiscal year 2015 was $103 million, or $0.64 per diluted share, compared to $53 million, or $0.31 per diluted share, for the second quarter of fiscal year 2014. GAAP net income includes net tax benefits of approximately $21 million, or $0.13 per diluted share, for the second quarter of fiscal year 2015 and approximately $9 million, or $0.05 per diluted share, for the second quarter of fiscal year 2014 primarily related to the closing of audits with the IRS for certain tax years. In addition, GAAP results for the second quarter of fiscal year 2015 include restructuring charges of $15 million for severance and facility closing costs related to the 2015 restructuring program. The second quarter of fiscal year 2014 GAAP results included impairment charges of approximately $30 million related to certain intangible assets, which are included in amortization of product related intangible assets, and restructuring charges of approximately $5 million for severance costs related to the 2014 restructuring program.

Non-GAAP Results

Non-GAAP net income for the second quarter of fiscal year 2015 was $163 million, or $1.00 per diluted share, compared to $142 million, or $0.83 per diluted share for the second quarter of fiscal year 2014. Non-GAAP net income includes net tax benefits of approximately $21 million, or $0.13 per diluted share, for the second quarter of fiscal year 2015 and approximately $9 million, or $0.05 per diluted share, for the second quarter of fiscal year 2014 primarily related to the closing of audits with the IRS for certain tax years. Non-GAAP net income per diluted share excludes the effects of amortization of acquired intangible assets,


stock-based compensation expenses, charges related to amortization of debt discount, charges related to restructuring programs, and the tax effects related to these items.

“We are starting to see the benefits of the restructuring actions we took at the start of 2015 in terms of margin expansion,” said Mark Templeton, president and chief executive officer for Citrix. “Through the additional actions we are announcing today, we’re taking steps to ensure that we are focusing all of our energy on our core secure app delivery offerings and setting the company up for even better execution, greater efficiency and profitable growth.”

Forms Operations Committee to Support Operational Review

Citrix also today announced that its board of directors has formed an Operations Committee. The committee will be led by current board member Robert Calderoni, who will work closely with Mr. Templeton and the company’s management team in a comprehensive review of its operations and capital structure, building upon the company’s previously announced initiatives to drive operating margin expansion through simplification, efficiency and portfolio refinements. Citrix intends to announce the committee’s findings once its initial review has been completed and will provide updates thereafter.

As part of this initiative, Mr. Calderoni has been appointed executive chairman of the board, effective immediately, and Thomas Bogan will assume the role of lead independent director.

Commences Exploration of Strategic Alternatives for GoTo Family of Products

In addition, Citrix, with the assistance of its independent advisors, has initiated a review of strategic alternatives for the company’s GoTo family of products. The strategic alternatives review for this business could result in, among other things, a possible sale or spin-off transaction.

Qatalyst Partners and Goldman, Sachs & Co. are serving as financial advisors to Citrix and Goodwin Procter LLP is serving as legal counsel.

The company also announced that earlier this year it engaged a financial advisor to provide strategic advice related to a potential sale of its ByteMobile business. Citrix is currently in active discussions with third parties regarding a potential sale.

Q2 Financial Summary

In reviewing the results for the second quarter of fiscal year 2015 compared to the second quarter of fiscal year 2014:

 

    Product and license revenue decreased 12 percent;

 

    Software as a service revenue increased 11 percent;

 

    Revenue from license updates and maintenance increased 9 percent;

 

    Professional services revenue, which is comprised of consulting, product training and certification, decreased 12 percent;

 

    Net revenue increased in the Americas region by 1 percent, remained consistent in the EMEA region and decreased in the Pacific region by 8 percent;

 

    Deferred revenue totaled $1.5 billion as of June 30, 2015, compared to $1.4 billion as of June 30, 2014, an increase of 8 percent;


    GAAP operating margin increased from 7 percent to 15 percent; Non-GAAP operating margin increased from 22 percent to 25 percent; and,

 

    Cash flow from operations was $201 million for the second quarter of fiscal year 2015, compared with $204 million for the second quarter of fiscal year 2014.

During the second quarter of fiscal year 2015:

 

    GAAP gross margin was 83 percent, and non-GAAP gross margin was 86 percent, which excludes the effects of amortization of acquired product related intangible assets and stock-based compensation expense;

 

    GAAP operating margin was 15 percent, and non-GAAP operating margin was 25 percent, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expense, and costs associated with the restructuring programs.

 

    The company repurchased 0.7 million shares at an average price of $66.33.

Financial Outlook for Third Quarter 2015

Citrix management expects to achieve the following results for the third quarter of fiscal year 2015 ending September 30, 2015:

 

    Net revenue is targeted to be in the range of $780 million to $790 million.

 

    GAAP diluted earnings per share is targeted to be in the range of $0.46 to $0.49. Non-GAAP diluted earnings per share is targeted to be in the range of $0.83 to $0.85, which excludes $0.23 related to the effects of stock-based compensation expenses, $0.20 related to the effects of amortization of acquired intangible assets, $0.02 related to restructuring charges, $0.05 related to the effects of amortization of debt discount and $(0.11) to $(0.16) for the tax effects related to these items.

Financial Outlook for Fiscal Year 2015

Citrix management expects to achieve the following results for the fiscal year ending December 31, 2015:

 

    Net revenue is targeted to be in the range of $3.22 billion to $3.25 billion.

 

    GAAP diluted earnings per share is targeted to be in the range of $2.11 to $2.20. Non-GAAP diluted earnings per share is targeted to be in the range of $3.65 to $3.75, which excludes $0.87 related to the effects of stock-based compensation expenses, $0.74 related to the effects of amortization of acquired intangible assets, $0.33 related to restructuring charges, $0.20 related to the effects of amortization of debt discount, $(0.01) related to a benefit from a previously disclosed patent lawsuit and $(0.49) to $(0.68) for the tax effects related to these items.

The above statements are based on current targets. These statements are forward-looking, and actual results may differ materially.

Conference Call Information

Citrix will host a conference call today at 4:45 p.m. ET to discuss its financial results, quarterly highlights, business outlook and other items announced today. The call will include a slide presentation, and


participants are encouraged to listen to and view the presentation via webcast at http://www.citrix.com/investors.

The conference call may also be accessed by dialing: (888) 799-0519 or (706) 634-0155, using passcode: CITRIX. A replay of the webcast can be viewed for approximately 30 days on the Investor Relations section of the Citrix corporate website at http://www.citrix.com/investors.

About Citrix

Citrix (NASDAQ:CTXS) is leading the transition to software-defining the workplace, uniting virtualization, mobility management, networking and SaaS solutions to enable new ways for businesses and people to work better. Citrix solutions power business mobility through secure, mobile workspaces that provide people with instant access to apps, desktops, data and communications on any device, over any network and cloud. With annual revenue in 2014 of $3.14 billion, Citrix solutions are in use at more than 400,000 organizations and by over 100 million users globally. Learn more at www.citrix.com.

For Citrix Investors

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Investors are cautioned that statements in this press release, which are not strictly historical statements, including, without limitation, statements by Citrix’s president and chief executive officer, statements contained in the Financial Outlook for Fiscal Year 2015 and Third Quarter 2015 sections and under the Non-GAAP Financial Measures Reconciliation section, statements related to Citrix’s exploration of strategic alternatives regarding the GoTo family of products, statements related to Citrix’s potential sale of its ByteMobile business, statements concerning the formation of an Operations Committee of the Board of Directors of Citrix and its review of operations and capital structure, and statements regarding management’s plans, objectives and strategies, constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements, including, without limitation, the impact of the global economy, foreign exchange rate volatility and uncertainty in the IT spending environment; the success and growth of the company’s product lines, including competition, demand and pricing dynamics and other transitions in the markets for Citrix’s virtualization products and collaboration services; the company’s ability to develop and commercialize new products and services, including its enterprise mobility products, while growing its established virtualization, networking and collaboration products and services; the uncertainty as to which strategic alternatives may be available with respect to the GoTo family of products, whether any transaction will be commenced or completed, and the timing and value of any such transaction; the uncertainty as to a potential sale of the ByteMobile business, whether such sale will be completed, and the timing and value of any such sale transaction; disruptions to execution due to Citrix’s restructuring programs and operational review, review of strategic alternatives with respect to the GoTo family of products, potential sale of the ByteMobile business and changes and transitions in key personnel and succession risk; risks associated with the on-going CEO succession process; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix’s products and services; changes in our revenue mix towards products and services with lower gross margins; seasonal fluctuations in the company’s business; failure to execute Citrix’s sales and


marketing plans; failure to successfully partner with key distributors, resellers, system integrators, service providers and strategic partners and the company’s reliance on and the success of those partners for the marketing and distribution of the company’s products; the company’s ability to maintain and expand its business in small sized and large enterprise accounts; the size, timing and recognition of revenue from significant orders; the success of investments in its product groups, foreign operations and vertical and geographic markets; the ability of Citrix to make suitable acquisitions on favorable terms in the future; risks associated with Citrix’s acquisitions, including failure to further develop and successfully market the technology and products of acquired companies, failure to achieve or maintain anticipated revenues and operating performance contributions from acquisitions, which could dilute earnings, the retention of key employees from acquired companies, difficulties and delays integrating personnel, operations, technologies and products, disruption to our ongoing business and diversion of management’s attention from our ongoing business; the recruitment and retention of qualified employees; risks in effectively controlling operating expenses, including failure to achieve anticipated cost savings from the restructuring programs, the planned review by the Operations Committee of the Board of Directors and other cost reduction initiatives; ability to effectively manage our capital structure and the impact of related changes on our operating results and financial condition; risks and costs associated with engaging with activist stockholders; the effect of new accounting pronouncements on revenue and expense recognition; the risks associated with securing data and maintaining security of our networks and customer data stored by our services; failure to comply with federal, state and international regulations; litigation and disputes, including challenges to our intellectual property rights or allegations of infringement of the intellectual property rights of others; the inability to further innovate our technology or enter into new businesses due to the intellectual property rights of others; changes in the company’s pricing and licensing models, promotional programs and product mix, all of which may impact Citrix’s revenue recognition; charges in the event of a write-off or impairment of acquired assets, underperforming businesses, investments or licenses; international market readiness, execution and other risks associated with the markets for Citrix’s products and services; unanticipated changes in tax rates, non-renewal of tax credits or exposure to additional tax liabilities; risks of political and social turmoil; and other risks detailed in the company’s filings with the Securities and Exchange Commission. Citrix assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

# # #

Citrix® is a trademarks or registered trademarks of Citrix Systems, Inc. and/or one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owners.


CITRIX SYSTEMS, INC.

Condensed Consolidated Statements of Income

(In thousands, except per share data - unaudited)

 

    

Three Months Ended

June 30,

   

Six Months Ended

June 30,

 
     2015     2014     2015     2014  

Revenues:

      

Product and licenses

   $ 204,974      $ 231,792      $ 388,255      $ 439,216   

Software as a service

     177,584        160,779        346,948        317,911   

License updates and maintenance

     377,161        347,041        748,458        690,799   

Professional services

     37,040        41,948        73,900        84,453   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenues

     796,759        781,560        1,557,561        1,532,379   

Cost of net revenues:

      

Cost of product and licenses revenues

     24,290        32,762        48,974        64,099   

Cost of services and maintenance revenues

     89,733        88,099        178,923        166,782   

Amortization of product related intangible assets

     18,728        54,395        37,460        78,701   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of net revenues

     132,751        175,256        265,357        309,582   

Gross margin

     664,008        606,304        1,292,204        1,222,797   

Operating expenses:

      

Research and development

     140,203        140,375        284,844        273,993   

Sales, marketing and services

     296,258        321,539        602,663        638,035   

General and administrative

     79,872        75,015        161,898        147,403   

Amortization of other intangible assets

     10,992        10,445        20,433        22,899   

Restructuring

     14,534        4,511        48,485        14,161   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     541,859        551,885        1,118,323        1,096,491   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     122,149        54,419        173,881        126,306   

Interest income

     2,841        2,141        5,675        4,294   

Interest expense

     11,001        6,984        22,121        7,050   

Other (expense) income, net

     (3,262     1,452        (11,111     (3,767
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     110,727        51,028        146,324        119,783   

Income tax expense (benefit)

     7,452        (1,996     14,162        10,820   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 103,275      $ 53,024      $ 132,162      $ 108,963   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share – diluted

   $ 0.64      $ 0.31      $ 0.82      $ 0.61   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding – diluted

     162,027        170,891        161,674        178,246   
  

 

 

   

 

 

   

 

 

   

 

 

 


CITRIX SYSTEMS, INC.

Condensed Consolidated Balance Sheets

(In thousands - unaudited)

 

     June 30, 2015     December 31, 2014  

ASSETS:

    

Cash and cash equivalents

   $ 362,313      $ 260,149   

Short-term investments

     510,178        529,260   

Accounts receivable, net

     500,976        674,401   

Inventories, net

     12,708        12,617   

Prepaid expenses and other current assets

     154,990        166,005   

Current portion of deferred tax assets, net

     48,118        45,892   
  

 

 

   

 

 

 

Total current assets

     1,589,283        1,688,324   

Long-term investments

     972,909        1,073,110   

Property and equipment, net

     370,767        367,779   

Goodwill

     1,958,022        1,796,851   

Other intangible assets, net

     460,538        390,717   

Long-term portion of deferred tax assets, net

     80,336        128,198   

Other assets

     70,120        67,028   
  

 

 

   

 

 

 

Total assets

   $ 5,501,975      $ 5,512,007   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

    

Accounts payable

     81,966        79,884   

Accrued expenses and other current liabilities

     262,504        298,079   

Income taxes payable

     3,716        12,053   

Current portion of deferred revenues

     1,176,132        1,290,093   
  

 

 

   

 

 

 

Total current liabilities

     1,524,318        1,590,109   

Long-term portion of deferred revenues

     363,412        357,771   

Convertible notes

     1,308,852        1,292,953   

Other liabilities

     80,558        97,529   

Stockholders’ equity:

    

Common stock

     297        295   

Additional paid-in capital

     4,404,630        4,292,706   

Retained earnings

     3,287,426        3,155,264   

Accumulated other comprehensive loss

     (29,236     (36,790

Less – common stock in treasury, at cost

     (5,438,282     (5,237,830
  

 

 

   

 

 

 

Total stockholders’ equity

     2,224,835        2,173,645   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 5,501,975      $ 5,512,007   
  

 

 

   

 

 

 


CITRIX SYSTEMS, INC.

Condensed Consolidated Statement of Cash Flows

(In thousands – unaudited)

 

     Six Months Ended
June 30, 2015
 

OPERATING ACTIVITIES

  

Net Income

   $ 132,162   

Adjustments to reconcile net income to net cash provided by operating activities:

  

Depreciation, amortization and other

     150,960   

Stock-based compensation expense

     65,003   

Excess tax benefit from stock-based compensation

     (1,924

Deferred income tax benefit

     (5,554

Other non-cash items

     8,335   

Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies liabilities demo

     9,318   
  

 

 

 

Total adjustments to reconcile net income to net cash provided by operating activities

     226,138   

Changes in operating assets and liabilities, net of the effects of acquisitions:

  

Accounts receivable

     168,851   

Inventories

     (771

Prepaid expenses and other current assets

     (3,381

Other assets

     (6,023

Deferred revenues

     (18,319

Accounts payable

     38   

Income taxes, net

     8,380   

Accrued expenses and other current liabilities

     (20,082

Other liabilities

     6,025   
  

 

 

 

Total changes in operating assets and liabilities, net of the effects of acquisitions

     134,718   
  

 

 

 

Net cash provided by operating activities

     493,018   

INVESTING ACTIVITIES

  

Proceeds from available-for-sale investments, net

     119,402   

Purchases of property and equipment

     (80,005

Cash paid for acquisitions, net of cash acquired

     (251,184

Purchases of cost method investments

     (1,058

Cash paid for licensing and core technology

     (9,334
  

 

 

 

Net cash used in investing activities

     (222,179

FINANCING ACTIVITIES

  

Proceeds from issuance of common stock under stock-based compensation plans

     43,419   

Proceeds from revolving credit facility

     95,000   

Repayment of revolving credit facility

     (95,000

Repayment of acquired debt

     (7,569

Excess tax benefit from stock-based compensation

     1,924   

Stock repurchases, net

     (172,132

Cash paid for tax withholding on vested stock awards

     (28,321
  

 

 

 

Net cash used in financing activities

     (162,679
  

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (5,996
  

 

 

 

Change in cash and cash equivalents

     102,164   
  

 

 

 

Cash and cash equivalents at beginning of period

     260,149   
  

 

 

 

Cash and cash equivalents at end of period

   $ 362,313   
  

 

 

 


Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures

(Unaudited)

Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. These measures differ from GAAP in that they exclude amortization primarily related to acquired intangible assets and debt discount, stock-based compensation expenses, charges associated with the Company’s restructuring programs, significant litigation charges or benefits and the related tax effect of those items. The Company’s basis for 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 non-GAAP financial measures in addition to GAAP financial results because it believes that these non-GAAP financial measures provide useful information to certain investors and financial analysts for comparison across accounting periods not influenced by certain non-cash items that are not used by management when evaluating the Company’s historical and prospective financial performance. In addition, the Company has historically provided this or similar information and understands that some investors and financial analysts find this information helpful in analyzing the Company’s operating margins, operating expenses and net income and comparing the Company’s financial performance to that of its peer companies and competitors.

Management typically excludes the amounts described above when evaluating the Company’s operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the Company’s operating performance due to the following factors:

 

    The Company does not acquire businesses on a predictable cycle. The Company, therefore, believes that the presentation of non-GAAP measures that adjust for the impact of amortization and certain stock-based compensation expenses and the related tax effects that are primarily related to acquisitions, provide investors and financial analysts with a consistent basis for comparison across accounting periods and, therefore, are useful to investors and financial analysts in helping them to better understand the Company’s operating results and underlying operational trends.

 

    Amortization costs and the related tax effects are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.

 

    Although stock-based compensation is an important aspect of the compensation of the Company’s employees and executives, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years after the grant of the stock-based instrument, and generally cannot be changed or influenced by management after the grant.

 

    Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be accounted for as separate liability (debt) and equity (conversion option) components in a manner that reflects the issuer’s non-convertible debt borrowing rate. The difference between the imputed interest expense and the coupon interest expense, net of the interest amount capitalized, is excluded from management’s assessment of the company’s operating performance because management believes that the exclusion of these charges will better help investors and financial analysts understand the Company’s operating results and underlying operational trends.

 

    The charges incurred in conjunction with the Company’s restructuring programs, which relate to reductions in headcount and the consolidation of leased facilities, are not anticipated to be ongoing costs; and, thus, are outside of the normal operations of the Company’s business. The Company, therefore, believes that the exclusion of these charges will better help investors and financial analysts understand the Company’s operating results and underlying operational trends as compared to prior periods.

 

    Charges or benefits related to significant litigation are not anticipated to be ongoing costs; and, thus, are outside of the normal operations of the Company’s business. These charges or benefits are recorded in the period when it is probable a liability had been incurred and the amount of loss can be reasonably estimated even though the subject matter of the underlying dispute may relate to multiple or different periods. As such, the Company believes that these expenses do not accurately reflect the underlying performance of continuing operations for the period in which they are incurred.

These non-GAAP financial measures are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and may differ from the non-GAAP information used by other companies. There are significant limitations associated with the use of non-GAAP financial measures. The additional non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP (such as net income and earnings per share) and should not be considered measures of the Company’s liquidity. Furthermore, the Company in the future may exclude amortization primarily related to newly acquired intangible assets


and debt discount, additional charges related to its restructuring programs, significant litigation charges or benefits and the related tax effects from financial measures that it releases, and the Company expects to continue to incur stock-based compensation expenses.

CITRIX SYSTEMS, INC.

Non-GAAP Financial Measures Reconciliation

(In thousands, except per share, gross margin and operating margin data - unaudited)

The following tables show the non-GAAP financial measures used in this press release reconciled to the most directly comparable GAAP financial measures.

 

     Three Months
Ended
June 30, 2015
 

GAAP gross margin

     83.3

Add: stock-based compensation

     0.1   

Add: amortization of product related intangible assets

     2.4   
  

 

 

 

Non-GAAP gross margin

     85.8
  

 

 

 

 

     Three Months
Ended
June 30, 2015
    Three Months
Ended
June 30, 2014
 

GAAP operating margin

     15.3     7.0

Add: stock-based compensation

     3.9        5.8   

Add: amortization of product related intangible assets

     2.4        6.9   

Add: amortization of other intangible assets

     1.4        1.3   

Add: restructuring charges

     1.8        0.6   
  

 

 

   

 

 

 

Non-GAAP operating margin

     24.8     21.6
  

 

 

   

 

 

 

 

    

Three Months Ended

June 30,

 
     2015      2014  

GAAP net income

   $ 103,275       $ 53,024   

Add: stock-based compensation

     30,792         45,289   

Add: amortization of product related intangible assets

     18,728         54,395   

Add: amortization of other intangible assets

     10,992         10,445   

Add: amortization of debt discount

     7,980         5,169   

Add: restructuring charges

     14,534         4,511   

Less: tax effects related to above items

     (23,568      (30,901
  

 

 

    

 

 

 

Non-GAAP net income

   $ 162,733       $ 141,932   
  

 

 

    

 

 

 

 

    

Three Months Ended

June 30,

 
     2015      2014  

GAAP earnings per share – diluted

   $ 0.64       $ 0.31   

Add: stock-based compensation

     0.19         0.26   

Add: amortization of product related intangible assets

     0.11         0.32   

Add: amortization of other intangible assets

     0.07         0.06   

Add: amortization of debt discount

     0.05         0.03   

Add: restructuring charges

     0.09         0.03   

Less: tax effects related to above items

     (0.15      (0.18
  

 

 

    

 

 

 

Non-GAAP earnings per share – diluted

   $ 1.00       $ 0.83   
  

 

 

    

 

 

 


Forward Looking Guidance

 

     For the Three
Months Ended

September 30,
2015
   For the Twelve
Months Ended

December 31,
2015

GAAP earnings per share – diluted

   $0.46 to $0.49    $2.11 to $2.20

Add: adjustments to exclude the effects of amortization of intangible assets

   0.20    0.74

Add: adjustments to exclude the effects of expenses related to stock-based compensation

   0.23    0.87

Add: adjustments to exclude the effects of amortization of debt discount

   0.05    0.20

Add: adjustments to exclude the effects of restructuring charges

   0.02    0.33

Less: previously disclosed patent lawsuit benefit

   —      (0.01)

Less: tax effects related to above items

   (0.11) to (0.16)    (0.49) to (0.68)
  

 

  

 

Non-GAAP earnings per share – diluted

   $0.83 to $0.85    $3.65 to $3.75
  

 

  

 



Exhibit 99.3

FOR IMMEDIATE RELEASE

Citrix Announces CEO Succession Plan

Mark B. Templeton to retire as president and CEO

Board of directors initiates search to identify successor

SANTA CLARA, Calif. – July 28, 2015 – Citrix Systems, Inc. (NASDAQ: CTXS) today announced that the company’s president and chief executive officer, Mark Templeton, has informed the board of directors of his plans to retire. Mr. Templeton will continue to serve as president and CEO and a director of the company until such time as a successor has been appointed.

The Citrix Board has initiated a CEO search process and has retained Heidrick & Struggles, a leading executive search firm, to assist with the process of identifying and evaluating candidates.

“I will continue to focus on leading Citrix and driving value-creating change until we are ready to make a smooth transition,” said Mr. Templeton. “I have total confidence that the board will identify a great candidate to serve Citrix into the future.”

“Mark Templeton is a software industry giant. Under his 20 years of leadership, Citrix has transformed to a $3b global technology leader,” said Thomas Bogan, lead independent director for Citrix. “We look forward to continuing to work with Mark to drive the strategy we have laid out for the future, while we work to identify his best possible successor.”

About Mark B. Templeton

Mark Templeton has served as President of Citrix since 1998 and Chief Executive Officer since 2001. He joined Citrix in 1995 as Vice President of Marketing, prior to the company’s initial public offering. Under his leadership, Citrix has been transformed from one product, one customer segment and one go-to-market path, to a global powerhouse with annual revenues of $3.14 billion and 100 million users worldwide. Since 2008, Mr. Templeton has served on the Board of Directors of Equifax, a global information solutions provider. Mr. Templeton holds a Bachelor’s degree in product design from North Carolina State University and an MBA from The University of Virginia’s Darden School.

About Citrix

Citrix (NASDAQ:CTXS) is leading the transition to software-defining the workplace, uniting virtualization, mobility management, networking and SaaS solutions to enable new ways for


businesses and people to work better. Citrix solutions power business mobility through secure, mobile workspaces that provide people with instant access to apps, desktops, data and communications on any device, over any network and cloud. With annual revenue in 2014 of $3.14 billion, Citrix solutions are in use at more than 400,000 organizations and by over 100 million users globally. Learn more at www.citrix.com.

For Citrix Investors

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Those statements involve a number of factors that could cause actual results to differ materially, including risks associated with the impact of the global economy and uncertainty in the IT spending environment, revenue growth and recognition of revenue, products and services, their development and distribution, product demand and pipeline, economic and competitive factors, the Company’s key strategic relationships, as well as other risks detailed in the Company’s filings with the Securities and Exchange Commission. Citrix assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

# # #

Citrix® is a trademarks or registered trademarks of Citrix Systems, Inc. and/or one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owners.

For media inquiries, contact:

Eric Armstrong

Citrix Systems, Inc.

(954) 267-2977

eric.armstrong@citrix.com

Joele Frank, Wilkinson Brimmer Katcher

Joele Frank

(212) 355-4449

Eric Brielmann or Jed Repko

(415) 869-3950

For investor inquiries, contact:


Eduardo Fleites

Citrix Systems, Inc.

(954) 229-5758

eduardo.fleites@citrix.com

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