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Citrix Reports Third Quarter Financial Results

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 and related conference call, slide presentation or webcast to the most directly comparable GAAP financial measure. These measures differ from GAAP in that they exclude amortization primarily related to acquired intangible assets, stock-based compensation expenses 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.

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 , additional charges related to its restructuring program 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 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 September 30,
2012
GAAP operating margin 12.9 %
Add: stock-based compensation 6.2 %
Add: amortization of product related intangible assets 3.6 %
Add: amortization of other intangible assets 1.5 %
Non-GAAP operating margin 24.2 %

 
Three Months Ended September 30,
2012   2011
GAAP net income $ 78,245   $ 92,176
Add: stock-based compensation 40,103 24,954
Add: amortization product related intangible assets 22,930 14,679
Add: amortization of other intangible assets 9,838 4,430
Less: tax effects related to above items   (22,934 )     (15,665 )
Non-GAAP net income $ 128,182     $ 120,574  
 

 

Three Months Ended September 30,
2012   2011
GAAP earnings per share – diluted $ 0.41 $ 0.49
Add: stock-based compensation 0.21 0.13
Add: amortization of product related intangible assets 0.12 0.08
Add: amortization of other intangible assets 0.05 0.02
Less: tax effects related to above items   (0.11 )     (0.08 )
Non-GAAP earnings per share – diluted $ 0.68     $ 0.64  
 

   

CITRIX SYSTEMS, INC.

Forward Looking Guidance
 
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2012 2012
GAAP earnings per share - diluted $0.55 to $0.57 $1.81 to $1.83
Add: adjustments to exclude the effects of amortization of intangible assets

0.17

0.61
Add: adjustments to exclude the effects of expenses related to stock-based compensation
 
0.22 0.79
Less: tax effects related to above items (0.09) to (0.13) (0.39) to (0.43)
Non-GAAP earnings per share - diluted $0.83 to $0.85 $2.80 to $2.82
 

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