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Citrix Updates On Operations Review; Shares Business Model For Fiscal Years 2016 And 2017

The following excerpt is from the company's SEC filing.

Increasing focus on core enterprise strategy of secure and reliable app and data delivery

Providing FY’16 GAAP diluted EPS outlook of $2.64 - $2.82; non-GAAP diluted EPS outlook of $4.40 - $4.50

Targeting 17 percent GAAP operating margin for 2016; at least 28 percent non-GAAP operating margin for 2016; targeting at least 30 percent non-GAAP operating margin for 2017

Announces plans to spin off GoTo businesses into separate company

SANTA CLARA, Calif.--(BUSINESS WIRE)--November 17, 2015--Citrix Systems, Inc. (NASDAQ:CTXS) today announced the initial results of its operations review. The decisions made will allow the company to significantly increase focus on its core enterprise strategy of secure and reliable delivery of applications and data, and consequently build a more efficient, scalable and profitable company. Immediate actions include rationalizing the company’s current product portfolio, realigning and optimizing operations and resources, and a restructuring of its labor force.

Key conclusions and initial plans from the company’s operational review include, but are not limited to:

A determination that a spinoff of the GoTo family of products into a separate public company is in the best interest of all stakeholders, allowing both companies to enhance its strategic focus and respective competitive positions, while permitting Citrix to improve operational efficiency. Please see news release here for additional detail.

Plans to increase emphasis and resources to core enterprise products for secure and reliable application and data delivery, including XenApp, XenDesktop, XenMobile, ShareFile and NetScaler. To achieve this focus, the company will end investment in certain other products and programs, in some cases moving technologies into strategic products, in other cases providing an orderly end-of-life to non-core products. The evaluation of all products, technologies, offerings and programs is ongoing, and will focus on enterprise readiness, ability to drive customer value, and growth and profitability prospects.

A realignment of resources that is expected to eliminate about 1,000 full-time and contract roles, excluding the effect of spinning off the GoTo business. The restructuring will focus on simplification of the company’s enterprise go-to-market motion and roles while improving coverage, reflect changes in the company’s product focus, and balance resources with demand across the company’s marketing, general and administration areas. The majority of these actions will take place in November 2015 and in January 2016.

As a result of these actions, Citrix said it expects to achieve approximately $200 million in annualized pre-tax cost savings, with approximately 75% of those cost savings anticipated to be realized in fiscal year 2016. Citrix currently expects to incur pre-tax charges in the range of approximately $65 million to $85 million related to employee severance arrangements during the fourth quarter of fiscal year 2015 and during fiscal year 2016.

“We are simplifying our business in all areas – product, marketing, sales, operations and development,” said Bob Calderoni, interim CEO and president, and executive chairman. “Focusing on our core strengths and simplifying how we work with customers and partners will help us improve execution, drive higher profit and begin investing for growth in areas in which we provide the greatest customer value.”

Financial Outlook

As a result of these initiatives, for the fiscal year ending December 31, 2016, Citrix management expects to achieve:

Net revenue growth of one to two percent;

GAAP operating margin of 17 percent, and non-GAAP operating margin of at least 28 percent, excluding 6 percent related to the effects of stock-based compensation expenses, 3 percent related to the effects of amortization of acquired intangible assets, and 2 percent related to restructuring charges; and,

GAAP diluted earnings per share in the range of $2.64 to $2.82, and non-GAAP diluted earnings per share in the range of $4.40 to $4.50, excluding $1.16 related to the effects of stock-based compensation expenses, $0.70 related to the effects of amortization of acquired intangible assets, $0.53 related to restructuring charges, $0.21 related to the effects of amortization of debt discount, and $(0.74) to $(1.02) for the tax effects related to these items.

For the fiscal year ending December 31, 2017, Citrix management expects to achieve revenue growth of four to five percent and is targeting non-GAAP operating margin of at least 30 percent.

The above statements are based on current targets, are consolidated and do not account for the spinoff of the GoTo businesses. These statements are forward-looking, and actual results may differ materially.

Conference Call

Citrix will host a conference call today at 4:45 p.m. E.T. to review the results of its operational and strategic review, including the spinoff of the GoTo family. The call will include a slide presentation and participants are encouraged to 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 by visiting the Investor Relations section of the Citrix corporate website at

for approximately 30 days.

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...


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