July 17, 2002 - Citrix Systems, Inc. (Nasdaq: CTXS), a global leader in virtual workplace software and services, today reported results for the second quarter ended 30 June 2002.
FINANCIAL RESULTS
Net revenues for the three months ended 30 June 2002 were $117.5 million, down 20% from $147.3 million in the comparable period of the prior year. Net income was $10.8 million for the second quarter of 2002, or $0.06 per share, as compared to $22.9 million, or $0.12 per share, in the comparable period of the prior year. Net income, adjusted to exclude the effects of write-offs for in-process research and development and amortisation of intangible assets primarily relating to business combinations, was $13.5 million for the second quarter, or $0.07 per share, as compared to $36.3 million, or $0.19 per share, in the comparable period of the prior year.
“While our second quarter results reflect the overall weakness of IT spending, they obscure the general trend of our end-user customer demand,” said Mark B. Templeton, president and chief executive officer for Citrix. “Overall end-user customer demand was essentially flat for the second quarter compared to the first. We experienced solid growth in electronic license sales, but it was offset by a decrease in packaged-product sales. That decrease in packaged-product caused our distribution partners to lower their inventories, impacting our revenue.
“In the third quarter, we plan to take action to reduce expenses, mainly through a 10% reduction in our worldwide workforce.
“On the revenue side, we expect further electronic licensing growth from our enterprise relationship manager programme and solid subscription renewals from our newly-formed customer care initiative. Additionally, we are seeing more segmentation of our customers in terms of size and how they buy. As a result, we are working on several initiatives to evolve our licensing programs and partner selling incentives to respond to these changes.”
Templeton added, “There were many highlights in the quarter including good signs of customer acceptance for NFuse Elite in North America and Europe, the launch of MetaFrame XP Feature Release 2, and the signing of a new agreement with Microsoft.” (Please see separate release issued Wednesday morning17, July 2002 titled Citrix Announces First North American and European NFuse® Elite Customers.)
“In the second quarter, we repurchased a significant amount of our Company’s stock, and to the extent that the price remains attractive, plan to continue repurchase activities in the third quarter,” he said.
“Finally, our strong balance sheet and cash flow from operations positions us well for the future. We firmly believe tomorrow’s winners are being built today, and we are absolutely committed to doing what we need to do for our long-term success.”
FINANCIAL HIGHLIGHTS
· Electronic licensing this quarter amounted to approximately 45% of product
sales, compared to 27% in the same period last year. Packaged product accounted for approximately 55% of product sales, compared to 73% in the same period last year.
· Deferred revenue related to products and services grew by $8 million
during the quarter; primarily due to increased Subscription Advantage renewals; total deferred revenue as of June 30, 2002 was approximately $88 million.
· Operating margin was 11% for the quarter, excluding the effect of
amortisation of intangible assets primarily related to business combinations.
· Cash flow from operations was approximately $32.9 million for the quarter.
· The Company did not incur taxes during the second quarter based on the
revised annual effective tax rate for fiscal year 2002 of approximately 15%.
· Cash and investments totalled $719.3 million at the end of the quarter, up
approximately $18 million.
· As part of the Company’s stock repurchase program, the Company repurchased
approximately 3.8 million shares of its common stock during the quarter.
MAJOR CUSTOMER ACTIVITY AND NEW PRODUCT INTRODUCTION
Citrix entered into customer agreements across a broad range of industry segments as a testament to the value provided to its diverse customer base. Significant customer deals during the quarter include New York City HRA, Petrobas, Sasol and SK Telecom.
Further, NFuse Elite, the industry’s first full-featured access portal server launched on June 3, 2002, has been purchased by companies such as Air Liquide, Alstom, Crompton Corporation, The Echo Design Group, Mid America Health and others. (Please see separate release issued Wednesday morning,17 July 2002, titled Citrix Announces First North American and European NFuse Elite Customers.) NFuse Elite is the industry’s first simple, powerful access portal, giving users secure, point-and-click access to their own personalised set of applications and content – while administrators get the ease and convenience of centralised portal management. With simple, wizard-driven installation and pre-configured roles, themes and templates, NFuse Elite delivers on the promise of an “out-of-the box” access portal.
BUSINESS OUTLOOK
Although the Company believes that continuing uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters, Citrix management offers the following guidance for the quarter ending 30 September 2002:
· Revenue is expected to be in the range of $110 million to $115 million.
· Ongoing adjusted operating expenses are expected to be down about 5%
sequentially, excluding the effect of amortisation of intangible assets and charges associated with reduction in workforce.
· Adjusted earnings per share is expected to be in the range of $.06 to
$.09, excluding the effect of amortisation of intangible assets and charges associated with reduction in workforce.
The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of amortisation of expenses and other exclusions.
CONFERENCE CALL INFORMATION
Citrix will host a conference call today at 4:45 p.m. EDT to discuss its financial results, quarterly highlights, and business outlook. The call will include a slide presentation and participants are encouraged to listen to and view the presentation via Web cast at http://www.citrix.com/investors. Dialling +1 888 799-0519 or +1 706 634-0155 may also access the audio portion of the conference call. In addition, a replay of the conference call will be available through 24 July 2002, by dialling +1 706 645-9291 or +1 800 642-1687 (pass code required: 4891155). A replay of the Web cast can be viewed at http://www.citrix.com/investors. About Citrix Citrix Systems, Inc. is a global leader in virtual workplace software and services that provide access to applications, information, processes and people on any device, over any network, anywhere, anytime. Citrix makes today’s digital office completely virtual - instead of having to go to your office, the office follows you. Working with the world’s top industry, integration and consulting partners, Citrix delivers enterprise-ready solutions to business challenges including application deployment, remote office connectivity, workforce mobility and business continuity. More than 120,000 companies worldwide use CitrixÒ Solutions for the Virtual Workplace to give users more mobility, give IT organisations more flexibility and reduce the cost of computing.
Citrix offers two families of products that enable virtual access to
information: Application Server software, including MetaFrame XP™, MetaFrameÒ for WindowsÒ and MetaFrame for UNIXÒ; and Access Portal software, including NFuse Elite, NFuse Classic and Enterprise Services for NFuse. The Company markets its products through a well-established indirect channel comprising more than 7,000 resellers, integrators and consultants. Citrix is traded on the Nasdaq Stock MarketSM under the symbol CTXS, and is part of the Standard and Poor’s 500 Index. Citrix is headquartered in Fort Lauderdale, Florida. For more information, please visit the Citrix Web site at http://www.citrix.com.
For Citrix Investors
This release contains forward-looking statements which are made pursuant to the safe harbour provisions 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, the statements by the chief executive officer, the statements contained in Business Outlook concerning management’s forecast of revenue, operating expenses and earnings per share, and statements regarding NFuse Elite, product marketing, outlook for the Company’s products and product mix, reductions in operating expenses and workforce, the Company’s balance sheet, stock repurchases, licensing programs, and management’s assessment of market factors, and strategic plans, 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 success of the Company’s MetaFrame and NFuse product line; the Company’s product concentration and its ability to develop and commercialise new products and services; the Company’s success in expanding into new geographic and vertical markets; the Company’s ability to expand its core business in large enterprise accounts; the size, timing and recognition of revenue from significant orders and other revenue recognition changes; the Company’s significant reliance on independent distributors and resellers for the marketing and distribution of its products; increased competition, including potential competition from Microsoft and other companies; the results of the Company’s new licensing programs; changes in the Company’s pricing policies or those of its competitors, including Microsoft; the costs and risks of developing, acquiring, or integrating new technologies or enhancements to existing products; the risks associated with third party licensing arrangements; the Company’s reliance upon its strategic relationships with Microsoft and other strategic partners; management of growth and higher operating expenses; the possibility of undetected software errors; dependence on proprietary technology; charges in the event of the impairment of assets; the maintenance of the Company’s growth rate; as well as risks of downturns in economic conditions generally, and in the software industry specifically, 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.
-ends-
Citrix®, MetaFrame®, MetaFrame XP™ and NFuse® are registered trademarks or trademarks of Citrix Systems, Inc. in the U.S. and other countries. Microsoft® and Windows® are registered trademarks of Microsoft Corporation. UNIX® is a registered trademark of The Open Group in the US and other
countries. All other trademarks and registered trademarks are property of
their respective owners.
For further information on Citrix Systems, contact:
AxiCom Benelux
Nienke Schipper Tel: +31 (0) 70 312 0384
Fax: +31 (0) 70 312 0381
Email: nienke.schipper@axicom.com
Gabrielle Seacy, Citrix Systems Tel: +31 (0) 347 324 800
Mob: +31 (0) 6 290 16 154
Fax: +31 (0)347 324 864
Email: gabrielle.seacy@eu.citrix.com
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,
2002 2001 2002 2001
Revenues $113,246 $137,334 $245,684 $260,273
Other revenues 4,210 9,940 14,082 19,813
Total net revenues 117,456 147,274 259,766 280,086
Cost of revenues 4,758 7,223 9,510 14,534
Gross margin 112,698 140,051 250,256 265,552
Operating expenses:
Research and development 17,059 18,150 35,908 34,324
Sales, marketing and support 61,413 56,840 122,611 106,251
General and administrative 21,339 19,061 44,577 37,076
Amortisation of intangible assets 2,611 12,228 5,942 18,533
In-process research and development - 2,580 - 2,580
Total operating expenses 102,422 108,859 209,038 198,764
Income from operations 10,276 31,192 41,218 66,788
Other income, net 573 3,735 3,415 8,327
Income before income taxes 10,849 34,927 44,633 75,115
Income taxes - 12,033 7,095 23,286
Net income $10,849 $22,894 $37,538 $51,829
Earnings per common share – diluted $0.06 $0.12 $0.20 $0.27
Weighted average shares outstanding – diluted 181,262 194,001 184,352
194,794
Adjusted net income $13,460 $36,306 $42,781 $70,246
Adjusted net income per share – diluted $0.07 $0.19 $0.23 $0.36
Note: The above presentation of adjusted net income and adjusted net income per share have been adjusted to exclude the effects of:
1) The write-off of acquired in-process research and development of $2,580
for the three and six months ended June 30, 2001.
2) Amortisation of intangible assets acquired from purchase business
combinations and licenses of $2,611 and $12,228 for the three months ended June 30, 2002 and 2001, respectively, and $5,942 and $18,533 for the six months ended June 30, 2002 and 2001, respectively. These intangible assets primarily include goodwill, acquired workforce and core technology.
3)
Condensed Consolidated Balance Sheets
(In thousands - unaudited)
June 30, 2002 December 31, 2001
ASSETS:
Cash and short-term investments $197,840 $216,771
Accounts receivable, net 69,665 65,032
Other current assets 89,937 64,252
Total current assets 357,442 346,055
Long-term investments 521,499 529,894
Property and equipment, net 85,267 90,110
Goodwill and other intangible assets, net 183,416 188,977
Other long-term assets 53,845 53,194
Total assets $1,201,469 $1,208,230
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Accounts payable and accrued expenses $94,122 $111,928
Current portion of deferred revenue 81,026 80,573
Total current liabilities 175,148 192,501
Convertible subordinated debentures 350,027 346,214
Long-term portion of deferred revenue 6,738 5,631
Put warrants - 16,554
Stockholders’ equity 669,556 647,330
Total liabilities and stockholders’ equity $1,201,469 $1,208,230