CITRIX SYSTEMS INC - FORM 8-K - EX-99.1 - February 6, 2017

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Exhibit 99.1

Unaudited Pro Forma Financial Statements

On January 31, 2017, Citrix completed the spin-off and merger of its GoTo family of service offerings (“GoTo Business”) with LogMeIn, Inc. (Nasdaq: LOGM).

The unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2016 and for the fiscal years ended December 31, 2015, 2014 and 2013 assume that the separation of the GoTo Business occurred on January 1, 2013, the first day of fiscal year 2013. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 assumes that the separation occurred on that date.

The unaudited pro forma condensed consolidated financial statements are presented based on currently available information and are intended for informational purposes only. These unaudited pro forma condensed consolidated financial statements are not necessarily indicative of what Citrix’s results of operations or financial condition would have been had the separation been completed on the dates assumed. In addition, they are not necessarily indicative of Citrix’s future results of operations or financial condition. Beginning in the first quarter of fiscal year 2017, the historical financial results of the GoTo Business for periods prior to the separation will be reflected in Citrix’s financial statements as discontinued operations.

The historical condensed consolidated or consolidated financial statements of Citrix have been adjusted in the accompanying unaudited pro forma condensed consolidated financial statements to give pro forma effect to events that are (1) directly attributable to the separation, (2) factually supportable and (3) with respect to the unaudited pro forma condensed consolidated statements of income, expected to have a continuing impact on the combined results. The pro forma adjustments included in the accompanying unaudited pro forma condensed consolidated financial statements are based on currently available data and assumptions that Citrix believes are reasonable. However, the unaudited pro forma condensed consolidated statements of income do not include any expected cost savings or restructuring actions that may be achievable or that may occur subsequent to the separation or the impact of any non-recurring activity and one-time transaction-related costs.

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with (i) the accompanying notes to the unaudited pro forma condensed consolidated financial statements, (ii) the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Citrix’s Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC on February 18, 2016, and (iii) the unaudited condensed consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” included in Citrix’s Form 10-Q for the three and nine months ended September 30, 2016 filed with the SEC on November 4, 2016.

CITRIX SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2016

 

     Historical     GoTo
Business
Separation (a)		      Pro Forma
Adjustments		     Note     Pro Forma
Citrix		  
     (In thousands, except per share information)  

Revenues:

            

Product and licenses

    $ 628,002      $ 421       $ —          $ 627,581   

Software as a service

      606,544        507,992         —            98,552   

License updates and maintenance

      1,178,053        —           —            1,178,053   

Professional services

      97,310        —           —            97,310   
  

 

 

    

 

 

     

 

 

      

 

 

  

Total net revenues

      2,509,909        508,413         —            2,001,496   
  

 

 

    

 

 

     

 

 

      

 

 

  

Cost of net revenues:

            

Cost of product and license revenues

      93,077        —           —            93,077   

Cost of services and maintenance revenues

      281,440        112,566         —            168,874   

Amortization of product related intangible assets

      45,744        3,650         —            42,094   

Impairment of product related intangible assets

      1,128        —           —            1,128   
  

 

 

    

 

 

     

 

 

      

 

 

  

Total cost of net revenues

      421,389        116,216         —            305,173   
  

 

 

    

 

 

     

 

 

      

 

 

  

Gross margin

      2,088,520        392,197         —            1,696,323   
  

 

 

    

 

 

     

 

 

      

 

 

  

Operating expenses:

            

Research and development

      375,607        70,984         —            304,623   

Sales, marketing and services

      883,045        158,702         —            724,343   

General and administrative

      281,601        46,571         —            235,030   

Amortization of other intangible assets

      22,067        10,618         —            11,449   

Restructuring

      62,142        830         —            61,312   

Separation

      46,190        10,060         36,130        (b )      —     
  

 

 

    

 

 

     

 

 

      

 

 

  

Total operating expenses

      1,670,652        297,765         36,130          1,336,757   
  

 

 

    

 

 

     

 

 

      

 

 

  

Income from operations

      417,868        94,432         (36,130 )        359,566   

Interest income

      12,108        —           —            12,108   

Interest expense

      33,605        —           —            33,605   

Other expense, net

      (781 )      —           —            (781 ) 
  

 

 

    

 

 

     

 

 

      

 

 

  

Income before income taxes

      395,590        94,432         (36,130 )        337,288   

Income tax expense (benefit)

      59,328        27,521         (13,910 )      (c )      45,717   
  

 

 

    

 

 

     

 

 

      

 

 

  

Net income

    $ 336,262      $ 66,911       $ (22,220 )      $ 291,571   
  

 

 

    

 

 

     

 

 

      

 

 

  

Earnings per share:

            

Basic

    $ 2.17             $ 1.88   
  

 

 

           

 

 

  

Diluted

    $ 2.15             $ 1.86   
  

 

 

           

 

 

  

Weighted average shares outstanding:

            

Basic

      154,847               154,847   
  

 

 

           

 

 

  

Diluted

      156,697               156,697   
  

 

 

           

 

 

  

See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.

CITRIX SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 2015

 

     Historical     GoTo
Business
Separation (a)		      Pro Forma
Adjustments		     Note     Pro Forma
Citrix		  
     (In thousands, except per share information)  

Revenues:

            

Product and licenses

    $ 875,807      $ 1,999       $ —          $ 873,808   

Software as a service

      731,292        627,441         —            103,851   

License updates and maintenance

      1,521,007        —           —            1,521,007   

Professional services

      147,488        —           —            147,488   
  

 

 

    

 

 

     

 

 

      

 

 

  

Total net revenues

      3,275,594        629,440         —            2,646,154   
  

 

 

    

 

 

     

 

 

      

 

 

  

Cost of net revenues:

            

Cost of product and license revenues

      118,265        —           —            118,265   

Cost of services and maintenance revenues

      364,916        136,413         —            228,503   

Amortization and impairment of product related intangible assets

      131,183        3,911         —            127,272   
  

 

 

    

 

 

     

 

 

      

 

 

  

Total cost of net revenues

      614,364        140,324         —            474,040   
  

 

 

    

 

 

     

 

 

      

 

 

  

Gross margin

      2,661,230        489,116         —            2,172,114   
  

 

 

    

 

 

     

 

 

      

 

 

  

Operating expenses:

            

Research and development

      563,975        83,018         —            480,957   

Sales, marketing and services

      1,195,362        189,560         —            1,005,802   

General and administrative

      342,665        53,044         3,376        (b )      286,245   

Amortization and impairment of other intangible assets

      108,732        11,254         —            97,478   

Restructuring

      100,411        1,750         —            98,661   
  

 

 

    

 

 

     

 

 

      

 

 

  

Total operating expenses

      2,311,145        338,626         3,376          1,969,143   
  

 

 

    

 

 

     

 

 

      

 

 

  

Income from operations

      350,085        150,490         (3,376 )        202,971   

Interest income

      11,675        —           —            11,675   

Interest expense

      44,153        —           —            44,153   

Other expense, net

      (5,730 )      —           —            (5,730 ) 
  

 

 

    

 

 

     

 

 

      

 

 

  

Income before income taxes

      311,877        150,490         (3,376 )        164,763   

Income tax (benefit) expense

      (7,484 )      44,032         (1,300 )      (c )      (50,216 ) 
  

 

 

    

 

 

     

 

 

      

 

 

  

Net income

    $ 319,361      $ 106,458       $ (2,076 )      $ 214,979   
  

 

 

    

 

 

     

 

 

      

 

 

  

Earnings per share:

            

Basic

    $ 2.01             $ 1.35   
  

 

 

           

 

 

  

Diluted

    $ 1.99             $ 1.34   
  

 

 

           

 

 

  

Weighted average shares outstanding:

            

Basic

      158,874               158,874   
  

 

 

           

 

 

  

Diluted

      160,362               160,362   
  

 

 

           

 

 

  

See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.

CITRIX SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 2014

 

     Historical     GoTo Business
Separation (a)		      Pro Forma
Citrix		  
     (In thousands, except per share information)  

Revenues:

        

Product and licenses

    $ 899,736      $ 3,725       $ 896,011   

Software as a service

      651,562        576,067         75,495   

License updates and maintenance

      1,416,017        —           1,416,017   

Professional services

      175,541        —           175,541   
  

 

 

    

 

 

     

 

 

  

Total net revenues

      3,142,856        579,792         2,563,064   
  

 

 

    

 

 

     

 

 

  

Cost of net revenues:

        

Cost of product and license revenues

      124,110        —           124,110   

Cost of services and maintenance revenues

      349,683        122,312         227,371   

Amortization and impairment of product related intangible assets

      146,426        4,201         142,225   
  

 

 

    

 

 

     

 

 

  

Total cost of net revenues

      620,219        126,513         493,706   
  

 

 

    

 

 

     

 

 

  

Gross margin

      2,522,637        453,279         2,069,358   
  

 

 

    

 

 

     

 

 

  

Operating expenses:

        

Research and development

      553,817        66,898         486,919   

Sales, marketing and services

      1,280,265        205,307         1,074,958   

General and administrative

      319,922        43,357         276,565   

Amortization and impairment of other intangible assets

      45,898        3,994         41,904   

Restructuring

      20,424        6,332         14,092   
  

 

 

    

 

 

     

 

 

  

Total operating expenses

      2,220,326        325,888         1,894,438   
  

 

 

    

 

 

     

 

 

  

Income from operations

      302,311        127,391         174,920   

Interest income

      9,421        —           9,421   

Interest expense

      28,332        —           28,332   

Other expense, net

      (7,694 )      —           (7,694 ) 
  

 

 

    

 

 

     

 

 

  

Income before income taxes

      275,706        127,391         148,315   

Income tax expense (benefit)

      23,983        42,887         (18,904 ) 
  

 

 

    

 

 

     

 

 

  

Net income

    $ 251,723      $ 84,504       $ 167,219   
  

 

 

    

 

 

     

 

 

  

Earnings per share:

        

Basic

    $ 1.48         $ 0.98   
  

 

 

       

 

 

  

Diluted

    $ 1.47         $ 0.98   
  

 

 

       

 

 

  

Weighted average shares outstanding:

        

Basic

      169,879           169,879   
  

 

 

       

 

 

  

Diluted

      171,270           171,270   
  

 

 

       

 

 

  

See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.

CITRIX SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 2013

 

     Historical     GoTo Business
Separation (a)		      Pro Forma
Citrix		  
     (In thousands, except per share information)  

Revenues:

        

Product and licenses

    $ 891,630      $ 4,954       $ 886,676   

Software as a service

      582,872        535,537         47,335   

License updates and maintenance

      1,305,053        —           1,305,053   

Professional services

      138,879        —           138,879   
  

 

 

    

 

 

     

 

 

  

Total net revenues

      2,918,434        540,491         2,377,943   
  

 

 

    

 

 

     

 

 

  

Cost of net revenues:

        

Cost of product and license revenues

      114,932        —           114,932   

Cost of services and maintenance revenues

      289,990        105,742         184,248   

Amortization and impairment of product related intangible assets

      97,873        4,323         93,550   
  

 

 

    

 

 

     

 

 

  

Total cost of net revenues

      502,795        110,065         392,730   
  

 

 

    

 

 

     

 

 

  

Gross margin

      2,415,639        430,426         1,985,213   
  

 

 

    

 

 

     

 

 

  

Operating expenses:

        

Research and development

      516,338        61,349         454,989   

Sales, marketing and services

      1,216,680        216,215         1,000,465   

General and administrative

      260,236        37,098         223,138   

Amortization and impairment of other intangible assets

      41,668        4,040         37,628   
  

 

 

    

 

 

     

 

 

  

Total operating expenses

      2,034,922        318,702         1,716,220   
  

 

 

    

 

 

     

 

 

  

Income from operations

      380,717        111,724         268,993   

Interest income

      8,194        —           8,194   

Interest expense

      128        —           128   

Other expense, net

      (893 )      —           (893 ) 
  

 

 

    

 

 

     

 

 

  

Income before income taxes

      387,890        111,724         276,166   

Income tax expense

      48,367        38,312         10,055   
  

 

 

    

 

 

     

 

 

  

Net income

    $ 339,523      $ 73,412       $ 266,111   
  

 

 

    

 

 

     

 

 

  

Earnings per share:

        

Basic

    $ 1.82         $ 1.43   
  

 

 

       

 

 

  

Diluted

    $ 1.80         $ 1.41   
  

 

 

       

 

 

  

Weighted average shares outstanding:

        

Basic

      186,672           186,672   
  

 

 

       

 

 

  

Diluted

      188,245           188,245   
  

 

 

       

 

 

  

See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.

CITRIX SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2016

 

     Historical     GoTo
Business
Separation (a)		      Pro Forma
Adjustments		      Note      Pro Forma
Citrix		  
     (In thousands, except per share amounts)  
Assets              

Current assets:

              

Cash and cash equivalents

    $ 1,308,683      $ 79,021       $ 54,855         (d)       $ 1,284,517   

Short-term investments, available-for-sale

      354,328        150         —              354,178   

Accounts receivable, net of allowances of $5,561 at September 30, 2016

      475,085        43,592         —              431,493   

Inventories, net

      14,809        —           —              14,809   

Prepaid expenses and other current assets

      119,482        13,004         —              106,478   
  

 

 

    

 

 

     

 

 

        

 

 

  

Total current assets

      2,272,387        135,767         54,855            2,191,475   

Long-term investments, available-for-sale

      789,038        —           —              789,038   

Property and equipment, net

      352,521        84,791         —              267,730   

Goodwill

      1,965,024        380,917         —              1,584,107   

Other intangible assets, net

      247,392        58,999         —              188,393   

Deferred tax assets, net

      231,681        6,372         —              225,309   

Other assets

      64,460        4,243         —              60,217   
  

 

 

    

 

 

     

 

 

        

 

 

  

Total assets

    $ 5,922,503      $ 671,089       $ 54,855          $ 5,306,269   
  

 

 

    

 

 

     

 

 

        

 

 

  
Liabilities, Temporary Equity and Stockholders’ Equity              

Current liabilities:

              

Accounts payable

    $ 85,655      $ 16,943       $ —            $ 68,712   

Accrued expenses and other current liabilities

      279,947        36,377         15,851         (e)         259,421   

Income taxes payable

      51,341        310         —              51,031   

Current portion of deferred revenues

      1,194,101        116,167         —              1,077,934   

Convertible notes, short-term

      1,338,782        —           —              1,338,782   
  

 

 

    

 

 

     

 

 

        

 

 

  

Total current liabilities

      2,949,826        169,797         15,851            2,795,880   

Long-term portion of deferred revenues

      418,169        5,199         —              412,970   

Other liabilities

      114,931        4,065         —              110,866   

Temporary equity from Convertible notes

      87,841        —           —              87,841   

Stockholders’ equity:

              

Preferred stock at $.01 par value: 5,000 shares authorized, none issued and outstanding

      —          —           —              —     

Common stock at $.001 par value: 1,000,000 shares authorized; 302,107 shares issued and outstanding at September 30, 2016

      302        —           —              302   

Additional paid-in capital

      4,687,343        —           —              4,687,343   

Retained earnings

      3,810,887        492,028         39,004         (d)(e)         3,357,863   

Accumulated other comprehensive loss

      (22,835 )      —           —              (22,835 ) 
  

 

 

    

 

 

     

 

 

        

 

 

  
     8,475,697        492,028         39,004            8,022,673   

Less - common stock in treasury, at cost (146,420 shares at September 30, 2016)

      (6,123,961 )      —           —              (6,123,961 ) 
  

 

 

    

 

 

     

 

 

        

 

 

  

Total stockholders’ equity

      2,351,736        492,028         39,004            1,898,712   
  

 

 

    

 

 

     

 

 

        

 

 

  

Total liabilities, temporary equity and stockholders’ equity

    $ 5,922,503      $ 671,089       $ 54,855          $ 5,306,269   
  

 

 

    

 

 

     

 

 

        

 

 

  

See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements

The unaudited pro forma condensed consolidated financial statements give effect to the separation of the GoTo Business to be accounted for as a discontinued operation. The unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2016 and for the fiscal years ended December 31, 2015, 2014 and 2013 are presented as if the transaction occurred as of January 1, 2013. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 is presented as if the separation occurred on that date.

 

  (a) The GoTo Business Separation column in the unaudited pro forma condensed consolidated financial statements represents the historical financial results of the GoTo Business accounted for as a discontinued operation.

 

  (b) Reflects the removal of all non-recurring separation costs which are included in Citrix’s historical results of operations for the nine months ended September 30, 2016 and the fiscal year ended December 31, 2015. These costs relate primarily to third-party advisory and consulting services, retention payments to certain employees, incremental stock-based compensation and other costs directly related to the separation.

 

  (c) Represents the tax impact of pro forma adjustments at the applicable statutory income tax rates.

 

  (d) Represents the effect of the Final Net Adjustment (as defined in the Merger Agreement) and to reflect the cash and cash equivalents that will remain with Citrix. Pursuant to the Merger Agreement, as of the closing, GetGo retains cash and cash equivalents equal to approximately $25.0 million, subject to certain adjustments.

 

  (e) Represents the effect of the Employee Matters Agreement dated as of January 31, 2017, by and among Citrix, LogMeIn and GetGo, providing that certain employment-related liabilities are to be retained by Citrix.

CITRIX SYSTEMS INC Reports