FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--October 22, 2008--Citrix Systems, Inc. (NASDAQ:CTXS), the global leader in application delivery infrastructure, today reported financial results for the third quarter of fiscal 2008 ended September 30, 2008.

In the third quarter of fiscal 2008, Citrix achieved revenue of $399 million, compared to $350 million in the third quarter of fiscal 2007, representing 14 percent revenue growth.

Net income for the third quarter of fiscal 2008 was $49 million, or $0.26 per diluted share, compared to $61 million, or $0.33 per diluted share for the third quarter of 2007.

Non-GAAP net income, in the third quarter of 2008 increased to $80 million, or $0.43 per diluted share, compared to $77 million, or $0.41 per diluted share, in the comparable period last year. Non-GAAP net income excludes the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expenses and the tax effects related to those items.

“I’m pleased with our third quarter results,” said Mark Templeton, president and chief executive officer for Citrix. “In the quarter, we took decisive actions to hold operating expenses flat, introduce new cost efficiency programs, and direct our customer conversations toward the tangible cost savings we provide. These factors helped us deliver double digit revenue growth in a tough macro-economic environment.”

In reviewing the third quarter results of 2008, compared to the third quarter of 2007:

Citrix management offers the following guidance for the fourth fiscal quarter 2008 ending December 31, 2008:

The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Citrix management offers the following guidance for the fiscal year ending December 31, 2008:

The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Citrix will host a conference call today at 4:45 p.m. 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 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 Web site at http://www.citrix.com/investors for approximately 30 days. In addition, an audio replay of the conference call will be available for approximately 15 days by dialing (800) 642-1687 or (706) 645-9291 (passcode required: 68087057).

Citrix Systems, Inc. (NASDAQ:CTXS) is the global leader and the most trusted name in Application Delivery Infrastructure. More than 215,000 organizations worldwide rely on Citrix to deliver any application to users anywhere with the best performance, highest security and lowest cost. Citrix customers include 100 percent of the Fortune 100 companies and 99 percent of the Fortune Global 500, as well as hundreds of thousands of small businesses and prosumers. Citrix has approximately 8,000 partners in more than 100 countries. Annual revenue in 2007 was $1.4 billion.

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and 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, statements by management, the statements contained in the Financial Outlook for Fourth Fiscal Quarter 2008, the Financial Outlook for Fiscal Year 2008, and under the Non-GAAP Financial Measures Reconciliation and statements regarding management’s plans, objectives and strategies, 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 uncertainty in the IT spending environment and the risk of a further downturn in economic conditions generally; the success and growth of the company’s product lines, including risks associated with successfully introducing new products into Citrix’s distribution channels; the company’s product concentration and its ability to develop and commercialize new products and services while maintaining growth in its core products; failure to execute Citrix’s sales and marketing plans; failure to successfully partner with key distributors, resellers, OEM’s and strategic partners and the company’s reliance on and the success of those partners for the marketing and distribution of the company’s products; the company’s ability to maintain and expand its business in small sized and large enterprise accounts; the size, timing and recognition of revenue from significant orders; the success of investments in its product groups, foreign operations and vertical and geographic markets; Citrix’s and Microsoft’s ability to develop and market application delivery and virtualization products; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix’s products; failure to further develop and successfully market the technology and products of acquired companies, including the possible failure to achieve or maintain anticipated revenues and profits from acquisitions; the management of anticipated future growth and the recruitment and retention of qualified employees, including those of acquired companies, and any disruptions due to changes in key personnel; risks in effectively controlling operating expenses; impairment of the value of the company’s investments; the effect of new accounting pronouncements on revenue and expense recognition; litigation; changes in the company’s pricing policies or those of its competitors; charges in the event of the impairment of assets acquired through business combinations and licenses; competition and other risks associated with the markets for our Web-based access, collaboration and customer assistance services and for our Web application delivery appliances; risks of political and social turmoil; 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.

In our earnings release, conference call, slide presentation or webcast, we may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release after the condensed consolidated financial statement and can be found on the Investor Relations page of the Citrix corporate Web site at http://www.citrix.com/investors.

Citrix®, GoToMeeting®, GoToWebinar®, Citrix Cloud Center™, XenApp™, XenServer™ and GoToAssist Express™ are trademarks of Citrix Systems, Inc. and/or one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owners.

CITRIX SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data - unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
		2008	2007		2008		2007
Revenues:
Product licenses	$	157,537	$	140,460	$	457,955	$	399,114
License updates		141,251		124,035		412,464		355,006
Online services		64,949		55,744		190,621		154,765
Technical services		35,156		29,692		106,617		83,498

Total net revenues		398,893		349,931		1,167,657		992,383

Cost of revenues:
Cost of license revenues		10,555		12,427		34,477		30,568
Cost of services revenues		19,785		16,710		58,582		46,963
Amortization of product related intangible assets		11,948		6,869		35,517		19,753

Total cost of net revenues		42,288		36,006		128,576		97,284

Gross margin		356,605		313,925		1,039,081		895,099

Operating expenses:
Research and development		72,500		49,332		217,995		143,643
Sales, marketing and services		169,072		146,031		504,761		417,056
General and administrative		61,866		54,638		192,570		168,513
Amortization of other intangibles		5,468		3,940		16,875		11,738
In-process research and development		—		—		—		1,200

Total operating expenses		308,906		253,941		932,201		742,150

Income from operations		47,699		59,984		106,880		152,949
Other income, net		3,181		13,461		17,974		37,307

Income before income taxes		50,880		73,445		124,854		190,256
Income taxes		1,731		12,750		6,678		38,538

Net income	$	49,149	$	60,695	$	118,176	$	151,718

Earnings per share:
Earnings per common share – diluted	$	0.26	$	0.33	$	0.63	$	0.82

Weighted average shares outstanding – diluted		185,666		186,747		187,886		185,522

CITRIX SYSTEMS, INC. Condensed Consolidated Balance Sheets (In thousands - unaudited)

	September 30, 2008		December 31, 2007
Assets:
Cash and cash equivalents	$	218,078	$	223,749
Restricted cash equivalents and investments		62,830		—
Short-term investments		242,986		356,085
Accounts receivable, net		220,772		225,861
Other current assets, net		148,409		128,650
Total current assets		893,075		934,345

Restricted cash equivalents and investments		917		63,735
Long-term investments		305,467		218,676
Property and equipment, net		176,475		134,907
Goodwill and other intangible assets, net		1,155,628		1,164,831
Other long-term assets, net		31,343		18,199
	$	2,562,905	$	2,534,693
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	246,347	$	246,969
Current portion of deferred revenues		441,569		407,305
Total current liabilities		687,916		654,274
Long-term portion of deferred revenues		39,591		35,381
Other liabilities		911		6,713

Stockholders’ equity		1,834,487		1,838,325
Total liabilities and stockholders’ equity	$	2,562,905	$	2,534,693

CITRIX SYSTEMS, INC. Condensed Consolidated Statement of Cash Flows (In thousands - unaudited)

	Nine Months Ended September 30, 2008
OPERATING ACTIVITIES
Net Income	$	118,176
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		89,946
Stock-based compensation expense		90,910
Provision for accounts receivable allowances		3,291
Other non-cash items		4,629
Total adjustments to reconcile net income to net cash provided by operating activities		188,776
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable		3,394
Prepaid expenses and other current assets		(21,920	)
Other assets		678
Deferred tax assets, net		(12,718	)
Accounts payable and accrued expenses		(13,832	)
Deferred revenues		38,474
Other liabilities		(5,031	)
Total changes in operating assets and liabilities, net of the effects of acquisitions		(10,955	)
Net cash provided by operating activities		295,997

INVESTING ACTIVITIES
Purchases of available-for-sale investments, net of proceeds		(2,473	)
Purchases of property and equipment		(87,559	)
Other investing activities		(34,107	)
Net cash used in investing activities		(124,139	)

FINANCING ACTIVITIES
Proceeds from issuance of common stock		37,452
Excess tax benefit from exercise of stock options		5,379
Structured stock repurchases, net		(225,095	)
Payments on debt		(407	)
Net cash used in financing activities		(182,671	)
Effect of exchange rate changes on cash and cash equivalents		5,142
Change in cash and cash equivalents		(5,671	)
Cash and cash equivalents at beginning of period		223,749
Cash and cash equivalents at end of period	$	218,078

Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures

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 business combinations, 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 gross margins, operating expenses and net income and comparing the company’s financial performance to that of its peer companies and competitors.

Management excludes the expenses 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 business combinations, 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 and in-process research and development primarily related to new business combinations 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, 2008
GAAP operating margin	12.0%
Add: stock-based compensation	7.5%
Add: amortization of product related intangibles assets	3.0%
Add: amortization of other intangible assets	1.3%
Non-GAAP operating margin	23.8%

	Three Months Ended September 30,
	2008	2007
GAAP net income	$49,149	$60,695
Add: stock-based compensation	29,922	14,908
Add: amortization of product related intangibles assets	11,948	6,869
Add: amortization of other intangible assets	5,468	3,940
Less: tax effects related to above items	(16,901)	(8,975)
Non-GAAP net income	$79,586	$77,437

GAAP earnings per share – diluted	$0.26	$0.33
Add: stock-based compensation	0.16	0.08
Add: amortization of product related intangibles assets	0.06	0.03
Add: amortization of other intangible assets	0.03	0.02
Less: tax effects related to above items	(0.08)	(0.05)
Non-GAAP earnings per share – diluted	$0.43	$0.41

Forward Looking Guidance

	For the Three Months Ending December 31, 2008	For the Twelve Months Ending December 31, 2008
GAAP earnings per share – diluted	$0.29 to $0.32	$0.91 to $0.94
Add: Adjustments to exclude the effects of amortization of intangible assets	0.09	0.37
Add: Adjustments to exclude the effects of expenses related to stock -based compensation	0.18 to 0.19	0.67 to 0.68
Less: Differential between the GAAP and non-GAAP tax rates related to above items	(0.13) to (0.09)	(0.37) to (0.33)
Non-GAAP earnings per share – diluted	$0.46 to $0.48	$1.61 to $1.63

CONTACT:
Citrix Systems, Inc.
Media inquiries:
Eric Armstrong, 954-267-2977
eric.armstrong@citrix.com
or
Eric Jones, A&R Edelman, 212-819-4862
eric.jones@ar-edelman.com
Investor inquiries:
Eduardo Fleites, 954-229-5758
eduardo.fleites@citrix.com