Citrix reports Q4, fiscal year earnings

Citrix Systems, Inc, the global leader in access infrastructure solutions, today reported results for the fourth quarter and fiscal year ended 31 December 2003.

Revenues for the three months ended 31 December 2003 were $157.7 million compared to $148.8 million in the same period of the prior year, a 6% increase. Net income was $36.3 million for the fourth quarter of 2003, or $0.21 per share on a GAAP basis, compared to $39.6 million, or $0.23 per share on a GAAP basis, in the comparable period of the prior year.

Net income, adjusted to exclude the effect of amortisation of intangible assets primarily related to business combinations, was $38.1 million for the fourth quarter of 2003, or $0.22 per share, compared to $40.6 million, or $0.23 per share, in the comparable period of the prior year.

Annual revenues for 2003 were $588.6 million, compared to $527.4 million in the previous year, a 12% increase. Annual net income for 2003 was $126.9 million, or $0.74 per share on a GAAP basis, compared to net income for 2002 of $93.9 million, or $0.52 per share on a GAAP basis. Annual net income, adjusted to exclude the effect of amortisation of intangible assets primarily related to business combinations, was $134.2 million, or $0.78 per share for 2003, compared to $100.8 million, or $0.56 per share for 2002.

"It was a solid quarter to end a very strong year," said Mark Templeton, president and chief executive officer for Citrix.

"In 2003 we saw tremendous growth in larger purchases, in our Subscription Advantage programme, and in deferred revenue as our customers made larger and longer-term commitments to Citrix. In addition, we executed well, improving our year-end operating margin by 6.5 percentage points to 26.2%.

"And we`ve kicked off 2004 aggressively," Templeton said. "Last week we held our first annual Global Summit Week, where we trained more than 2 000 members of our channel community and our worldwide sales force. They learned about new products and programmes that will help them offer more value to customers as trusted advisors, recommending complete access solutions.

"Enthusiasm within Citrix and our partner ecosystem is at an all-time high. It`s well-founded. We have the right products, the right partners, and the right programmes working synergistically to achieve our growth and operating goals.

"We`ll continue to invest in expanding our product portfolio, to grow in emerging countries, and to scale the organisation - both people and infrastructure -- so that we can execute on our strategy of making Citrix synonymous with access."

* Total revenues for the fourth quarter grew 6% over the comparable period last year; annual revenues grew 12%.

* Deferred revenue grew by $20.5 million, approximately 14%, during the quarter to a total of $165.1 million. Annually, deferred revenue grew by 59%.

* Operating margin was 26.8% for the quarter; adjusted operating margin for the quarter was 28.6%, excluding the effect of amortisation of intangible assets primarily related to business combinations. Operating margin for 2003 was 26.2%, up from 19.7% in 2002.

* Cash flow from operations was approximately $69 million for the quarter.

* Cash and investments totalled approximately $898.3 million at the end of the quarter.

* During the quarter, the company repurchased about 0.7 million shares at an average net price per share of $23.24. For the year, Citrix repurchased 8.9 million shares at an average price of $15.86.

Citrix closed several large deals during the quarter, including British Airport Authority, Blue Cross Blue Shield of South Carolina and DaimlerChrysler.

Citrix signed a deal with the British Airport Authority (BAA), which owns and operates seven airports including the world`s busiest international airport, London Heathrow, and has management contracts or stakes in numerous other major transportation hubs around the globe. Serving more than 200 million passengers worldwide, BAA has implemented 10 000 licences of the Citrix MetaFrame Access Suite to provide secure access to more than 500 applications from the organisation`s numerous airports, retail locations and the runways themselves, enabling the company to focus on its customers` needs and safety.

Founded in 1946 and with more than 12 000 employees, Blue Cross Blue Shield (BCBS) of South Carolina provides nearly one million South Carolinians with health insurance. With Citrix access infrastructure, BCBS of South Carolina delivers industry-specific insurance applications instantly and reliably to more than 16 000 users at offices throughout South Carolina, Virginia, Florida and Texas. As a result, BCBS of South Carolina can easily transition employees currently working in headquarter facilities to work from home. In addition, Citrix MetaFrame Presentation Server will also enable the company to quickly integrate newly acquired business units into its corporate IT environment.

DaimlerChrysler, one of the world`s leading automotive companies, sells passenger cars and commercial vehicles under brands including Mercedes-Benz, Chrysler, Jeep and Dodge. To improve application deployment, DaimlerChrysler ordered nearly 3 000 licences of Citrix MetaFrame Presentation Server and has already nearly 7 000 additional seats. With Citrix access infrastructure, DaimlerChrysler benefits from secure, easy and instant access to Microsoft Office, Lotus Notes and numerous proprietary applications.

During the fourth quarter, Citrix strengthened relationships with key partners including Microsoft, IBM, SAP, HP and PeopleSoft.

* Microsoft named Citrix its first "Global Independent Software Vendor Partner of the Year". The honour was given to Citrix for delivering the best customer solutions as a Microsoft Global Gold Certified Partner for Software Products. Also in October, Citrix announced its support of the Microsoft Office System, which includes all Microsoft Office branded programs, servers, services and solutions. The two companies have been working together for well over a decade in support of joint customers` business objectives.

* Citrix signed a systems integration agreement with IBM, which allows IBM to offer the Citrix MetaFrame Access Suite of products to IBM eServer xSeries customers. In addition, the two companies announced that their decade-long strategic relationship would now include the release of a new portlet that provides integration with IBM WebSphere Portal, giving joint customers secure, easy and instant access to information resources managed by Citrix MetaFrame Presentation Server through their WebSphere Portal.

* Citrix and SAP announced expanded development work encompassing the seamless integration of Citrix MetaFrame Presentation Server and SAP Enterprise Portal, a technology solution of the SAP NetWeaver Technology Suite.

* Citrix announced in October its support for HP`s Adaptive Enterprise strategy with HP OpenView certification and a new probe tool for optimising system performance. Citrix also joined the HP OpenView Solution Alliance Programme at the enhanced Solution Partner level.

* Citrix announced an expanded integration agreement with PeopleSoft. Citrix said it would make available a template "pagelet" that will make it easier for PeopleSoft Enterprise Portal customers to deploy non-PeopleSoft applications to the portal using the Web interface feature of Citrix MetaFrame Presentation Server.

Citrix management offers the following guidance for the quarter ending 31 March 2004:

* Revenue is expected to be in the range of $146 million to $156 million for the quarter ending 31 March 2004.

* GAAP earnings per share is expected to be in the range of $0.15 to $0.18 for the quarter ending 31 March 2004.

* Adjusted earnings per share, which excludes the amortisation of intangible assets primarily related to business combinations, is expected to be in the range of $0.16 to $0.19 for the quarter ending 31 March 2004.

The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements also do not include the effects of either the closing of the acquisition of Expertcity, Inc, or the tender or redemption of the company`s convertible debentures if either should occur in the quarter ending 31 March 2004. For a discussion of these effects, please see "Definitive Agreement to Acquire Expertcity" and "Convertible Debentures" below.

In December, Citrix announced that it signed a definitive agreement to acquire Santa Barbara, California-based Expertcity, Inc, the market leader in Web-based desktop access as well as a leader in Web-based training and customer assistance products. The transaction is valued at approximately $225 million in cash and stock, and is expected to close during the first quarter of 2004 or early in the second quarter of 2004. A $12 million earnout will be paid to all Expertcity stockholders if certain financial targets are achieved in 2004. The transaction is expected to be $0.03 to $0.04 dilutive to Citrix`s earnings per share in the first half of fiscal year 2004, as adjusted to exclude the effect of amortisation and an expense charge for the value of Expertcity`s in-process research and development (which will result in an additional $0.05-$0.10 dilution to Citrix`s earnings per share on a GAAP basis), and neutral to adjusted earnings in the second half of 2004. The impact of the acquisition is not included in the forward-looking statements included in "Business Outlook" above.

The acquisition expands Citrix`s portfolio of access products to include Expertcity`s popular GoToMyPC software service for secure, browser-based access to desktop PCs from anywhere over the Web. The acquisition also will add Expertcity`s market-leading GoToAssist service, which provides online help-desk and call centre assistance, as well as training and customer collaboration over the Web.

In March 1999, Citrix sold $850 million principal amount at maturity of the company`s zero coupon convertible subordinated debentures due in March 2019. Citrix can redeem the debentures on or after 22 March 2004, and the holders of the debentures can require the company to repurchase the debentures on fixed dates and at set redemption prices (equal to the issue price plus accrued original issue discount) beginning on 22 March 2004. If either of these two events were to occur, the company expects to incur a non-cash charge to earnings in the amount of approximately $7 million to account for unamortised debt issuance costs. The effect of this potential charge is not included in the forward-looking statements included in "business outlook" above.

Citrix will host a conference call today at 4.45pm ET 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 Webcast at http://www.citrix.com/investors.

The conference call may also be accessed by dialling: (888) 799 0519 or (706) 634 0155, using passcode: CITRIX. A replay of the Webcast can be viewed by visiting the Investor Relations section of the Citrix corporate Web site at http://www.citrix.com/investors through 4 February 2004. In addition, an audio replay of the conference call will be available through 28 January 2004 by dialling (800) 642 1687 or (706) 645 9291 (passcode required: 4809749).