Form 10-Q |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 75-2275152 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
851 West Cypress Creek Road Fort Lauderdale, Florida | 33309 | |
(Address of principal executive offices) | (Zip Code) |
x Large accelerated filer | o Accelerated filer | |
o Non-accelerated filer | o Smaller reporting company |
Page Number | ||
PART I: | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II: | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 5. | ||
Item 6. | ||
March 31, 2014 | December 31, 2013 | ||||||
(Unaudited) | (Derived from audited financial statements) | ||||||
(In thousands, except par value) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 298,519 | $ | 280,740 | |||
Short-term investments, available-for-sale | 530,758 | 453,976 | |||||
Accounts receivable, net of allowances of $4,960 and $5,354 at March 31, 2014 and December 31, 2013, respectively | 510,862 | 654,821 | |||||
Inventories, net | 12,537 | 14,107 | |||||
Prepaid expenses and other current assets | 138,389 | 110,981 | |||||
Current portion of deferred tax assets, net | 47,836 | 48,470 | |||||
Total current assets | 1,538,901 | 1,563,095 | |||||
Long-term investments, available-for-sale | 998,831 | 855,700 | |||||
Property and equipment, net | 336,740 | 338,996 | |||||
Goodwill | 1,783,090 | 1,768,949 | |||||
Other intangible assets, net | 487,771 | 509,595 | |||||
Long-term portion of deferred tax assets, net | 70,779 | 115,418 | |||||
Other assets | 53,361 | 60,496 | |||||
$ | 5,269,473 | $ | 5,212,249 | ||||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 76,661 | $ | 78,452 | |||
Accrued expenses and other current liabilities | 271,840 | 257,606 | |||||
Income taxes payable | 8,458 | 29,322 | |||||
Current portion of deferred revenues | 1,092,577 | 1,098,681 | |||||
Total current liabilities | 1,449,536 | 1,464,061 | |||||
Long-term portion of deferred revenues | 318,226 | 313,059 | |||||
Other liabilities | 87,694 | 115,322 | |||||
Commitments and contingencies | |||||||
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; 292,798 and 291,078 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 293 | 291 | |||||
Additional paid-in capital | 4,034,515 | 3,974,297 | |||||
Retained earnings | 2,959,480 | 2,903,541 | |||||
Accumulated other comprehensive income | 4,250 | 4,951 | |||||
6,998,538 | 6,883,080 | ||||||
Less - common stock in treasury, at cost (108,158 and 107,789 shares at March 31, 2014 and December 31, 2013, respectively) | (3,584,521 | ) | (3,563,273 | ) | |||
Total stockholders' equity | 3,414,017 | 3,319,807 | |||||
$ | 5,269,473 | $ | 5,212,249 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
(In thousands, except per share information) | |||||||
Revenues: | |||||||
Product and licenses | $ | 207,424 | $ | 193,083 | |||
Software as a service | 157,132 | 137,566 | |||||
License updates and maintenance | 343,758 | 315,738 | |||||
Professional services | 42,505 | 26,512 | |||||
Total net revenues | 750,819 | 672,899 | |||||
Cost of net revenues: | |||||||
Cost of product and license revenues | 31,337 | 25,794 | |||||
Cost of services and maintenance revenues | 78,683 | 64,411 | |||||
Amortization of product related intangible assets | 24,306 | 24,709 | |||||
Total cost of net revenues | 134,326 | 114,914 | |||||
Gross margin | 616,493 | 557,985 | |||||
Operating expenses: | |||||||
Research and development | 133,618 | 130,492 | |||||
Sales, marketing and services | 316,496 | 297,682 | |||||
General and administrative | 72,388 | 62,785 | |||||
Amortization of other intangible assets | 12,454 | 10,418 | |||||
Restructuring | 9,650 | — | |||||
Total operating expenses | 544,606 | 501,377 | |||||
Income from operations | 71,887 | 56,608 | |||||
Interest income | 2,153 | 1,962 | |||||
Other expense, net | (5,285 | ) | (766 | ) | |||
Income before income taxes | 68,755 | 57,804 | |||||
Income tax expense (benefit) | 12,816 | (1,884 | ) | ||||
Net income | $ | 55,939 | $ | 59,688 | |||
Earnings per share: | |||||||
Basic | $ | 0.30 | $ | 0.32 | |||
Diluted | $ | 0.30 | $ | 0.32 | |||
Weighted average shares outstanding: | |||||||
Basic | 183,997 | 186,658 | |||||
Diluted | 185,681 | 189,011 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
(In thousands) | |||||||
Net income | $ | 55,939 | $ | 59,688 | |||
Other comprehensive loss: | |||||||
Change in foreign currency translation adjustment | (721 | ) | (6,813 | ) | |||
Available for sale securities: | |||||||
Change in net unrealized gains | 160 | (378 | ) | ||||
Less: reclassification adjustment for net gains included in net income | (163 | ) | (85 | ) | |||
Net change (net of tax effect) | (3 | ) | (463 | ) | |||
Loss on pension liability | — | (334 | ) | ||||
Cash flow hedges: | |||||||
Change in unrealized gains | 1,320 | (3,449 | ) | ||||
Less: reclassification adjustment for net (gains) losses included in net income | (1,297 | ) | 524 | ||||
Net change (net of tax effect) | 23 | (2,925 | ) | ||||
Other comprehensive loss | (701 | ) | (10,535 | ) | |||
Comprehensive income | $ | 55,238 | $ | 49,153 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
(In thousands) | |||||||
Operating Activities | |||||||
Net income | $ | 55,939 | $ | 59,688 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Amortization of intangible assets | 36,760 | 35,127 | |||||
Depreciation and amortization of property and equipment | 33,271 | 29,409 | |||||
Stock-based compensation expense | 40,701 | 43,556 | |||||
Loss (gain) on investments | 5,133 | (85 | ) | ||||
Provision for doubtful accounts | 610 | 407 | |||||
Provision for product returns | 584 | 1,619 | |||||
Provision for inventory reserves | 453 | 331 | |||||
Tax effect of stock-based compensation | (3,967 | ) | 14,846 | ||||
Excess tax benefit from stock-based compensation | (2,332 | ) | (9,476 | ) | |||
Deferred income tax benefit | (2,474 | ) | (18,189 | ) | |||
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies | (850 | ) | (909 | ) | |||
Other non-cash items | 39 | 175 | |||||
Total adjustments to reconcile net income to net cash provided by operating activities | 107,928 | 96,811 | |||||
Changes in operating assets and liabilities, net of the effects of acquisitions: | |||||||
Accounts receivable | 142,974 | 183,892 | |||||
Inventories | 1,117 | (1,140 | ) | ||||
Prepaid expenses and other current assets | (28,276 | ) | (35,158 | ) | |||
Other assets | 2,101 | 811 | |||||
Income taxes, net | (3,707 | ) | (32,536 | ) | |||
Accounts payable | (1,312 | ) | (11,312 | ) | |||
Accrued expenses and other current liabilities | 10,598 | (21,338 | ) | ||||
Deferred revenues | (938 | ) | 21,448 | ||||
Other liabilities | 1,452 | 5,632 | |||||
Total changes in operating assets and liabilities, net of the effects of acquisitions | 124,009 | 110,299 | |||||
Net cash provided by operating activities | 287,876 | 266,798 | |||||
Investing Activities | |||||||
Purchases of available-for-sale investments | (607,892 | ) | (636,792 | ) | |||
Proceeds from sales of available-for-sale investments | 266,421 | 231,782 | |||||
Proceeds from maturities of available-for-sale investments | 121,757 | 131,101 | |||||
Purchases of property and equipment | (30,469 | ) | (28,297 | ) | |||
Proceeds from the sales of cost method investments | 803 | — | |||||
Purchases of cost method investments | (766 | ) | (1,102 | ) | |||
Cash paid for acquisitions, net of cash acquired | (24,154 | ) | (324,049 | ) | |||
Cash paid for licensing agreements and product related intangible assets | (711 | ) | (2,236 | ) | |||
Net cash used in investing activities | (275,011 | ) | (629,593 | ) | |||
Financing Activities | |||||||
Proceeds from issuance of common stock under stock-based compensation plans | 7,958 | 25,251 | |||||
Repayment of acquired debt | (3,766 | ) | — | ||||
Excess tax benefit from stock-based compensation | 2,332 | 9,476 | |||||
Stock repurchases, net | — | (61,364 | ) | ||||
Cash paid for tax withholding on vested stock awards | (2,316 | ) | (2,254 | ) | |||
Net cash provided by (used in) financing activities | 4,208 | (28,891 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 706 | (458 | ) | ||||
Change in cash and cash equivalents | 17,779 | (392,144 | ) | ||||
Cash and cash equivalents at beginning of period | 280,740 | 643,609 | |||||
Cash and cash equivalents at end of period | $ | 298,519 | $ | 251,465 |
Three Months Ended | |||||||
March 31, | |||||||
2014 | 2013 | ||||||
Numerator: | |||||||
Net income | $ | 55,939 | $ | 59,688 | |||
Denominator: | |||||||
Denominator for basic earnings per share - weighted-average shares outstanding | 183,997 | 186,658 | |||||
Effect of dilutive employee stock awards | 1,684 | 2,353 | |||||
Denominator for diluted earnings per share - weighted-average shares outstanding | 185,681 | 189,011 | |||||
Basic earnings per share | $ | 0.30 | $ | 0.32 | |||
Diluted earnings per share | $ | 0.30 | $ | 0.32 | |||
Anti-dilutive weighted-average shares | 4,564 | 3,928 |
March 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||||
Description of the Securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||
Agency securities | $ | 637,562 | $ | 1,228 | $ | (456 | ) | $ | 638,334 | $ | 453,922 | $ | 1,177 | $ | (349 | ) | $ | 454,750 | |||||||||||||
Corporate securities | 700,953 | 1,121 | (248 | ) | 701,826 | 643,360 | 947 | (216 | ) | 644,091 | |||||||||||||||||||||
Municipal securities | 57,022 | 108 | (8 | ) | 57,122 | 53,698 | 81 | (23 | ) | 53,756 | |||||||||||||||||||||
Government securities | 132,251 | 90 | (34 | ) | 132,307 | 156,930 | 196 | (47 | ) | 157,079 | |||||||||||||||||||||
Total | $ | 1,527,788 | $ | 2,547 | $ | (746 | ) | $ | 1,529,589 | $ | 1,307,910 | $ | 2,401 | $ | (635 | ) | $ | 1,309,676 |
• | Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities; |
• | Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
• | Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
As of March 31, 2014 | Quoted Prices In Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
(in thousands) | |||||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents: | |||||||||||||||
Cash | $ | 290,579 | $ | 290,579 | $ | — | $ | — | |||||||
Money market funds | 5,942 | 5,942 | — | — | |||||||||||
Corporate securities | 1,998 | — | 1,998 | — | |||||||||||
Available-for-sale securities: | |||||||||||||||
Agency securities | 638,334 | — | 638,334 | — | |||||||||||
Corporate securities | 701,826 | — | 691,435 | 10,391 | |||||||||||
Municipal securities | 57,122 | — | 57,122 | — | |||||||||||
Government securities | 132,307 | — | 132,307 | — | |||||||||||
Prepaid expenses and other current assets: | |||||||||||||||
Foreign currency derivatives | 4,155 | — | 4,155 | — | |||||||||||
Total assets | $ | 1,832,263 | $ | 296,521 | $ | 1,525,351 | $ | 10,391 | |||||||
Accrued expenses and other current liabilities: | |||||||||||||||
Foreign currency derivatives | 1,582 | — | 1,582 | — | |||||||||||
Total liabilities | $ | 1,582 | $ | — | $ | 1,582 | $ | — |
As of December 31, 2013 | Quoted Prices In Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
(in thousands) | |||||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents: | |||||||||||||||
Cash | $ | 227,528 | $ | 227,528 | $ | — | $ | — | |||||||
Money market funds | 52,823 | 52,823 | — | — | |||||||||||
Corporate securities | 389 | — | 389 | — | |||||||||||
Available-for-sale securities: | |||||||||||||||
Agency securities | 454,750 | — | 454,750 | — | |||||||||||
Corporate securities | 644,091 | — | 633,801 | 10,291 | |||||||||||
Municipal securities | 53,756 | — | 53,756 | — | |||||||||||
Government securities | 157,079 | — | 157,079 | — | |||||||||||
Prepaid expenses and other current assets: | |||||||||||||||
Foreign currency derivatives | 4,952 | — | 4,952 | — | |||||||||||
Total assets | $ | 1,595,368 | $ | 280,351 | $ | 1,304,727 | $ | 10,291 | |||||||
Accrued expenses and other current liabilities: | |||||||||||||||
Foreign currency derivatives | 1,743 | — | 1,743 | — | |||||||||||
Total liabilities | $ | 1,743 | $ | — | $ | 1,743 | $ | — |
Corporate Securities | |||
(in thousands) | |||
Balance at December 31, 2013 | $ | 10,291 | |
Purchases of Level 3 securities | 100 | ||
Balance at March 31, 2014 | $ | 10,391 |
Three Months Ended | Three Months Ended | ||||||
Income Statement Classifications | March 31, 2014 | March 31, 2013 | |||||
Cost of services and maintenance revenues | $ | 477 | $ | 634 | |||
Research and development | 12,780 | 15,653 | |||||
Sales, marketing and services | 16,016 | 15,174 | |||||
General and administrative | 11,428 | 12,095 | |||||
Total | $ | 40,701 | $ | 43,556 |
Three Months Ended | |||
March 31, 2013 | |||
Expected volatility factor | 0.39 | ||
Approximate risk free interest rate | 0.44 | % | |
Expected term (in years) | 3.35 | ||
Expected dividend yield | 0 | % |
March 2014 Grant | March 2013 Grant | |||
Expected volatility factor | 0.19 - 0.38 | 0.16 - 0.42 | ||
Risk free interest rate | 0.81 | % | 0.33 | % |
Expected dividend yield | 0 | % | 0 | % |
Balance at January 1, 2014 | Additions | Other | Balance at March 31, 2014 | ||||||||||||||
Enterprise and Service Provider | $ | 1,402,156 | $ | 14,569 | $ | — | $ | 1,416,725 | |||||||||
SaaS | 366,793 | — | (428 | ) | (2) | 366,365 | |||||||||||
Consolidated | $ | 1,768,949 | $ | 14,569 | (1) | $ | (428 | ) | $ | 1,783,090 |
(1) | Amount relates to Framehawk acquisition. See Note 4 for more information regarding the Company’s acquisitions. |
(2) | Amount primarily relates to foreign currency translation. |
March 31, 2014 | December 31, 2013 | ||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||
Product related intangible assets | $ | 691,504 | $ | 450,283 | $ | 677,509 | $ | 428,418 | |||||||
Other | 479,391 | 232,841 | 482,918 | 222,414 | |||||||||||
Total | $ | 1,170,895 | $ | 683,124 | $ | 1,160,427 | $ | 650,832 |
Year ending December 31, | |||
2014 | $ | 136,636 | |
2015 | 112,197 | ||
2016 | 90,056 | ||
2017 | 63,128 | ||
2018 | 49,675 |
Three Months Ended | |||||||
March 31, | |||||||
2014 | 2013 | ||||||
Net revenues: | |||||||
Enterprise and Service Provider division | $ | 593,687 | $ | 535,333 | |||
SaaS division | 157,132 | 137,566 | |||||
Consolidated | $ | 750,819 | $ | 672,899 | |||
Segment profit: | |||||||
Enterprise and Service Provider division | $ | 126,576 | $ | 113,256 | |||
SaaS division | 32,422 | 22,035 | |||||
Unallocated expenses (1): | |||||||
Amortization of intangible assets | (36,760 | ) | (35,127 | ) | |||
Restructuring | (9,650 | ) | — | ||||
Net interest and other expense | (3,132 | ) | 1,196 | ||||
Stock-based compensation | (40,701 | ) | (43,556 | ) | |||
Consolidated income before income taxes | $ | 68,755 | $ | 57,804 |
(1) | Represents expenses presented to management on a consolidated basis only and not allocated to the operating segments. |
Three Months Ended | |||||||
March 31, | |||||||
2014 | 2013 | ||||||
Net revenues: | |||||||
Enterprise and Service Provider division | |||||||
Mobile and Desktop revenues(1) | $ | 381,361 | $ | 357,990 | |||
Networking and Cloud revenues(2) | 166,545 | 147,493 | |||||
Professional services(3) | 42,505 | 26,512 | |||||
Other | 3,276 | 3,338 | |||||
Total Enterprise and Service Provider division revenues | 593,687 | 535,333 | |||||
SaaS division revenues | 157,132 | 137,566 | |||||
Total net revenues | $ | 750,819 | $ | 672,899 |
(1) | Mobile and Desktop revenues are primarily comprised of sales from the Company’s desktop and application virtualization products, XenDesktop and XenApp, and the Company's Mobility products, which include XenMobile and related license updates and maintenance and support. |
(2) | Networking and Cloud revenues are primarily comprised of sales from the Company’s cloud networking products, which include NetScaler, CloudBridge and Bytemobile Smart Capacity, and the Company’s cloud platform products which include XenServer, CloudPlatform and CloudPortal and related license updates and maintenance and support. |
(3) | Professional services revenues are primarily comprised of revenues from consulting services and product training and certification services. |
Three Months Ended | |||||||
March 31, | |||||||
2014 | 2013 | ||||||
Net revenues: | |||||||
Enterprise and Service Provider division | |||||||
Americas | $ | 323,393 | $ | 296,434 | |||
EMEA | 200,628 | 174,402 | |||||
Asia-Pacific | 69,666 | 64,497 | |||||
Total Enterprise and Service Provider division revenues | 593,687 | 535,333 | |||||
SaaS division | |||||||
Americas | 130,672 | 116,230 | |||||
EMEA | 21,180 | 16,743 | |||||
Asia-Pacific | 5,280 | 4,593 | |||||
Total SaaS division revenues | 157,132 | 137,566 | |||||
Total net revenues | $ | 750,819 | $ | 672,899 |
Asset Derivatives | Liability Derivatives | ||||||||||||||
(In thousands) | |||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2014 | December 31, 2013 | ||||||||||||
Derivatives Designated as Hedging Instruments | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | $3,720 | Prepaid expenses and other current assets | $4,559 | Accrued expenses and other current liabilities | $742 | Accrued expenses and other current liabilities | $1,578 | |||||||
Asset Derivatives | Liability Derivatives | ||||||||||||||
(In thousands) | |||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2014 | December 31, 2013 | ||||||||||||
Derivatives Not Designated as Hedging Instruments | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | $435 | Prepaid expenses and other current assets | $393 | Accrued expenses and other current liabilities | $840 | Accrued expenses and other current liabilities | $165 |
For the Three Months Ended March 31, | |||||||||||||||||
(In thousands) | |||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Amount of Gain/(Loss) Recognized in Other Comprehensive Loss (Effective Portion) | Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion) | Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income (Effective Portion) | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Foreign currency forward contracts | $ | 23 | $ | (2,925 | ) | Operating expenses | $ | 1,297 | $ | (524 | ) |
For the Three Months Ended March 31, | |||||||||
(In thousands) | |||||||||
Derivatives Not Designated as Hedging Instruments | Location of Loss Recognized in Income on Derivative | Amount of Loss Recognized in Income on Derivative | |||||||
2014 | 2013 | ||||||||
Foreign currency forward contracts | Other expense, net | $ | (985 | ) | $ | (456 | ) |
Foreign Currency | Currency Denomination |
Australian Dollar | AUD 7,034 |
Pounds Sterling | GBP 30,495 |
Canadian Dollar | CAD 7,002 |
Chinese Yuan Renminbi | CNY 84,500 |
Danish Krone | DKK 8,000 |
Euro | EUR 20,329 |
Hong Kong Dollar | HKD 52,378 |
Indian Rupee | INR 718,968 |
Japanese Yen | JPY 120,535 |
New Zealand Dollar | NZD 35 |
Singapore Dollar | SGD 10,700 |
Swiss Franc | CHF 25,250 |
Foreign currency | Unrealized gain on available-for-sale securities | Unrealized gain on derivative instruments | Other comprehensive loss on pension liability | Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Balance at December 31, 2013 | $ | 5,458 | $ | 1,238 | $ | 2,852 | $ | (4,597 | ) | $ | 4,951 | ||||||||
Other comprehensive income before reclassifications | (721 | ) | 160 | 1,320 | — | 759 | |||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | (163 | ) | (1,297 | ) | — | (1,460 | ) | |||||||||||
Net current period other comprehensive loss | (721 | ) | (3 | ) | 23 | — | (701 | ) | |||||||||||
Balance at March 31, 2014 | $ | 4,737 | $ | 1,235 | $ | 2,875 | $ | (4,597 | ) | $ | 4,250 |
For the Three Months Ended March 31, 2014 | ||||||
(In thousands) | ||||||
Details about accumulated other comprehensive income components | Amount reclassified from accumulated other comprehensive income, net of tax | Affected line item in the Condensed Consolidated Statements of Income | ||||
Unrealized net gains on available-for-sale securities | $ | 163 | Other expense, net | |||
Unrealized net gains on cash flow hedges | 1,297 | Operating expenses * | ||||
$ | 1,460 |
Three Months Ended | |||
March 31, | |||
2014 | |||
Enterprise and Service Provider division | $ | 5,880 | |
SaaS division | 3,770 | ||
Total restructuring charges | $ | 9,650 |
Total | |||
Balance at January 1, 2014 | $ | — | |
Employee severance and related costs | 9,650 | ||
Payments | (2,068 | ) | |
Balance at March 31, 2014 | $ | 7,582 |
Total | |||
Enterprise and Service Provider division | $ | 3,830 | |
SaaS division | 3,752 | ||
Total restructuring charges | $ | 7,582 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Product and licenses revenue increased 7.4% to $207.4 million; |
• | Software as a service revenue increased 14.2% to $157.1 million; |
• | License updates and maintenance revenue increased 8.9% to $343.8 million; |
• | Professional services revenue increased 60.3% to $42.5 million; |
• | Gross margin as a percentage of revenue decreased 0.8% to 82.1%; |
• | Operating income increased 27.0% to $71.9 million; and |
• | Diluted net income per share decreased 4.6% to $0.30. |
Three Months Ended | Three Months Ended | ||||||||
March 31, | March 31, 2014 | ||||||||
2014 | 2013 | vs. March 31, 2013 | |||||||
Revenues: | |||||||||
Product and licenses | $ | 207,424 | $ | 193,083 | 7.4 | % | |||
Software as a service | 157,132 | 137,566 | 14.2 | ||||||
License updates and maintenance | 343,758 | 315,738 | 8.9 | ||||||
Professional services | 42,505 | 26,512 | 60.3 | ||||||
Total net revenues | 750,819 | 672,899 | 11.6 | ||||||
Cost of net revenues: | |||||||||
Cost of product and license revenues | 31,337 | 25,794 | 21.5 | ||||||
Cost of services and maintenance revenues | 78,683 | 64,411 | 22.2 | ||||||
Amortization of product related intangible assets | 24,306 | 24,709 | (1.6 | ) | |||||
Total cost of net revenues | 134,326 | 114,914 | 16.9 | ||||||
Gross margin | 616,493 | 557,985 | 10.5 | ||||||
Operating expenses: | |||||||||
Research and development | 133,618 | 130,492 | 2.4 | ||||||
Sales, marketing and services | 316,496 | 297,682 | 6.3 | ||||||
General and administrative | 72,388 | 62,785 | 15.3 | ||||||
Amortization of other intangible assets | 12,454 | 10,418 | 19.5 | ||||||
Restructuring | 9,650 | — | * | ||||||
Total operating expenses | 544,606 | 501,377 | 8.6 | ||||||
Income from operations | 71,887 | 56,608 | 27.0 | ||||||
Interest income | 2,153 | 1,962 | 9.7 | ||||||
Other expense, net | (5,285 | ) | (766 | ) | * | ||||
Income before income taxes | 68,755 | 57,804 | 18.9 | ||||||
Income tax expense (benefit) | 12,816 | (1,884 | ) | * | |||||
Net income | $ | 55,939 | $ | 59,688 | (6.3 | ) |
* | not meaningful |
• | Mobile and Desktop is primarily comprised of our desktop and application virtualization products, which include XenDesktop and XenApp and our mobility products which include XenMobile products; and |
• | Networking and Cloud is primarily comprised of our cloud networking products, which include NetScaler, Cloud Bridge and ByteMobile Smart Capacity, and our cloud platform products, which include XenServer, CloudPlatform and CloudPortal. |
• | Our Subscription Advantage program, an annual renewable program that provides subscribers with automatic delivery of unspecified software upgrades, enhancements and maintenance releases when and if they become available during the term of the subscription, for which fees are recognized ratably over the term of the contract, which is typically 12 to 24 months; and |
• | Our maintenance fees, which include technical support and hardware and software maintenance, and which are recognized ratably over the contract term. |
• | Fees from consulting services related to implementation of our products, which are recognized as the services are provided; and |
• | Fees from product training and certification, which are recognized as the services are provided. |
• | Communications Cloud products, which primarily include GoToMeeting, GoToWebinar and GoToTraining; |
• | Documents Cloud products, which primarily include ShareFile; |
• | Remote Access product, GoToMyPC; and |
• | Remote IT Support products, which primarily include GoToAssist. |
Three Months Ended | Three Months Ended | |||||||||||
March 31, | March 31, 2014 | |||||||||||
2014 | 2013 | vs. March 31, 2013 | ||||||||||
(In thousands) | ||||||||||||
Product and licenses | $ | 207,424 | $ | 193,083 | $ | 14,341 | ||||||
Software as a service | 157,132 | 137,566 | 19,566 | |||||||||
License updates and maintenance | 343,758 | 315,738 | 28,020 | |||||||||
Professional services | 42,505 | 26,512 | 15,993 | |||||||||
Total net revenues | $ | 750,819 | $ | 672,899 | $ | 77,920 |
Increase for the | |||||||||||
Three Months Ended | Three Months Ended | ||||||||||
March 31, | March 31, 2014 | ||||||||||
2014 | 2013 | vs. March 31, 2013 | |||||||||
Enterprise and Service Provider | $ | 593,687 | $ | 535,333 | 10.9 | % | |||||
SaaS | 157,132 | 137,566 | 14.2 | % | |||||||
Net revenues | $ | 750,819 | $ | 672,899 | 11.6 | % |
Three Months Ended | Three Months Ended | |||||||||||
March 31, | March 31, 2014 | |||||||||||
2014 | 2013 | vs. March 31, 2013 | ||||||||||
(In thousands) | ||||||||||||
Cost of product and license revenues | $ | 31,337 | $ | 25,794 | $ | 5,543 | ||||||
Cost of services and maintenance revenues | 78,683 | 64,411 | 14,272 | |||||||||
Amortization of product related intangible assets | 24,306 | 24,709 | (403 | ) | ||||||||
Total cost of net revenues | $ | 134,326 | $ | 114,914 | $ | 19,412 |
Three Months Ended | Three Months Ended | |||||||||||
March 31, | March 31, 2014 | |||||||||||
2014 | 2013 | vs. March 31, 2013 | ||||||||||
(In thousands) | ||||||||||||
Research and development | $ | 133,618 | $ | 130,492 | $ | 3,126 |
Three Months Ended | Three Months Ended | |||||||||||
March 31, | March 31, 2014 | |||||||||||
2014 | 2013 | vs. March 31, 2013 | ||||||||||
(In thousands) | ||||||||||||
Sales, marketing and services | $ | 316,496 | $ | 297,682 | $ | 18,814 |
Three Months Ended | Three Months Ended | |||||||||
March 31, | March 31, 2014 | |||||||||
2014 | 2013 | vs. March 31, 2013 | ||||||||
(In thousands) | ||||||||||
General and administrative | $ | 72,388 | $ | 62,785 | $ | 9,603 |
Three Months Ended | Three Months Ended | |||||||||
March 31, | March 31, 2014 | |||||||||
2014 | 2013 | vs. March 31, 2013 | ||||||||
(In thousands) | ||||||||||
Restructuring | $ | 9,650 | $ | — | $ | 9,650 |
Three Months Ended | Three Months Ended | ||||||||||||
March 31, | March 31, 2014 | ||||||||||||
2014 | 2013 | vs. March 31, 2013 | |||||||||||
(In thousands) | |||||||||||||
Other expense, net | $ | (5,285 | ) | $ | (766 | ) | $ | (4,519 | ) |
March 31, 2014 | December 31, 2013 | 2014 Compared to 2013 | |||||||||
(In thousands) | |||||||||||
Cash, cash equivalents and investments | $ | 1,828,108 | $ | 1,590,416 | $ | 237,692 |
• | Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities; |
• | Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
• | Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
Corporate Securities | |||
(in thousands) | |||
Balance at December 31, 2013 | $ | 10,291 | |
Purchases of Level 3 securities | 100 | ||
Balance at March 31, 2014 | $ | 10,391 |
March 31, 2014 | December 31, 2013 | 2014 Compared to 2013 | |||||||||
(In thousands) | |||||||||||
Accounts receivable | $ | 515,822 | $ | 660,175 | $ | (144,353 | ) | ||||
Allowance for returns | (1,282 | ) | (2,062 | ) | 780 | ||||||
Allowance for doubtful accounts | (3,678 | ) | (3,292 | ) | (386 | ) | |||||
Accounts receivable, net | $ | 510,862 | $ | 654,821 | $ | (143,959 | ) |
Payments due by period | ||||||||||||||||||||
Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | ||||||||||||||||
Operating lease obligations | $ | 420,462 | $ | 55,312 | $ | 93,038 | $ | 101,845 | $ | 170,267 | ||||||||||
Convertible senior notes(1) | — | — | — | — | ||||||||||||||||
Purchase obligations(2) | 37,875 | 37,875 | — | — | — | |||||||||||||||
Total contractual obligations(3) | $ | 458,337 | $ | 93,187 | $ | 93,038 | $ | 101,845 | $ | 170,267 |
(1) | During the second quarter of 2014, we completed a private placement of $1.44 billion principal amount of 0.500% Convertible Senior Notes due 2019, which are not included in the table above. See Note 16 to our condensed consolidated financial statements for detailed information on the Convertible Notes offering and the transactions related thereto. |
(2) | Purchase obligations represent non-cancelable commitments to purchase inventory ordered before March 31, 2014 of approximately $19.7 million and a contingent obligation to purchase inventory, which is based on amount of usage, of approximately $18.1 million. |
(3) | Total contractual obligations do not include agreements where our commitment is variable in nature or where cancellations without payment provisions exist and excludes $68.6 million of liabilities related to uncertain tax positions recorded in accordance with authoritative guidance, because we could not make reasonably reliable estimates of the period or amount of cash settlement with the respective taxing authorities. See Note 12 to our condensed consolidated financial statements. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
• | make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation; |
• | limit our ability to borrow additional amounts to fund acquisitions, for working capital and for other general corporate purposes. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Total Number of Shares (or Units) Purchased (1) | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased under the Plans or Programs (in thousands) (2) | ||||||||||
January 1, 2014 through January 31, 2014 | 12,407 | $ | 61.46 | — | $ | 429,284 | |||||||
February 1, 2014 through February 28, 2014 | 26,264 | 58.63 | — | 429,284 | |||||||||
March 1, 2014 through March 31, 2014 | 329,639 | 57.47 | — | 429,284 | |||||||||
Total | 368,310 | — | $ | 429,284 |
(1) | Represents shares acquired in open market purchases and 368,310 shares withheld from stock units that vested in the first quarter of 2014 to satisfy minimum tax withholding obligations that arose on the vesting of stock units. We had no repurchases of our common stock during the quarter ended March 31, 2014. For more information see Note 13 to our condensed consolidated financial statements. |
(2) | Shares withheld from stock units that vested to satisfy minimum tax withholding obligations that arose on the vesting of stock units do not deplete the dollar amount available for purchases under the repurchase program. |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
(a) | List of exhibits |
Exhibit No. | Description | |
10.1 | Form of Call Option Transaction Confirmation between Citrix Systems, Inc. and each of JPMorgan Chase Bank, National Association, London Branch; Goldman, Sachs & Co.; Bank of America, N.A.; and Royal Bank of Canada | |
10.2 | Form of Warrant Confirmation between Citrix Systems, Inc. and each of JPMorgan Chase Bank, National Association, London Branch; Goldman, Sachs & Co.; Bank of America, N.A.; and Royal Bank of Canada | |
31.1 | Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer | |
31.2 | Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer | |
32.1† | Section 1350 Certification of Principal Executive Officer and Principal Financial Officer | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
† | Furnished herewith. |
CITRIX SYSTEMS, INC. | ||
By: | /s/ DAVID J. HENSHALL | |
David J. Henshall | ||
Executive Vice President, Chief Operating Officer and Chief Financial Officer | ||
(Authorized Officer and Principal Financial Officer) |
Exhibit No. | Description | |
10.1 | Form of Call Option Transaction Confirmation between Citrix Systems, Inc. and each of JPMorgan Chase Bank, National Association, London Branch; Goldman, Sachs & Co.; Bank of America, N.A.; and Royal Bank of Canada | |
10.2 | Form of Warrant Confirmation between Citrix Systems, Inc. and each of JPMorgan Chase Bank, National Association, London Branch; Goldman, Sachs & Co.; Bank of America, N.A.; and Royal Bank of Canada | |
31.1 | Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer | |
31.2 | Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer | |
32.1† | Section 1350 Certification of Principal Executive Officer and Principal Financial Officer | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
† | Furnished herewith. |
To: | Citrix Systems, Inc. 851 West Cypress Creek Road Fort Lauderdale, Florida 33309 | May , 2014 | |
Attention: | Chief Financial Officer | ||
Telephone No.: | [ ] | ||
Facsimile No.: | [ ] |
General Terms. | |
Trade Date: | May [ ], 2014 |
Effective Date: | The third Exchange Business Day immediately prior to the Premium Payment Date |
Option Style: | “Modified American”, as described under “Procedures for Exercise” below |
Option Type: | Call |
Buyer: | Counterparty |
Seller: | Dealer |
Shares: | The common stock of Counterparty, par value USD 0.001 per share (Exchange symbol “CTXS”). |
Number of Options: | 187,500. For the avoidance of doubt, the Number of Options shall be reduced by any Options exercised by Counterparty. In no event will the Number of Options be less than zero. |
Applicable Percentage: | [ ]% |
Option Entitlement: | A number equal to the product of the Applicable Percentage and 11.1111. |
Strike Price: | USD 90.0001 |
Premium: | USD [ ] |
Premium Payment Date: | May [ ], 2014 |
Exchange: | The NASDAQ Global Select Market |
Related Exchange(s): | All Exchanges |
Excluded Provisions: | Section 14.03 and Section 14.04(g) of the Indenture. |
Procedures for Exercise. | |
Conversion Date: | With respect to any conversion of a Convertible Note, the date on which the Holder (as such term is defined in the Indenture) of such Convertible Note satisfies all of the requirements for conversion thereof as set forth in Section 14.02(b) of the Indenture; provided that if Counterparty has not delivered to Dealer a related Notice of Exercise, then in no event shall a Conversion Date be deemed to occur hereunder (and no Option shall be exercised or deemed to be exercised hereunder) with respect to any surrender of a Convertible Note for conversion in respect |
of which Counterparty has elected to designate (and such designation is accepted) a financial institution for exchange in lieu of conversion of such Convertible Note pursuant to Section 14.13 of the Indenture. | |
Free Convertibility Date: | October 15, 2018 |
Expiration Time: | The Valuation Time |
Expiration Date: | April 15, 2019, subject to earlier exercise. |
Multiple Exercise: | Applicable, as described under “Automatic Exercise” below. |
Automatic Exercise: | Notwithstanding Section 3.4 of the Equity Definitions, and subject to Section 9(h)(ii), on each Conversion Date in respect of which a Notice of Conversion that is effective as to Counterparty has been delivered by the relevant converting Holder, a number of Options equal to (i) the number of Convertible Notes in denominations of USD 1,000 as to which such Conversion Date has occurred minus (ii) the number of Options that are or are deemed to be automatically exercised on such Conversion Date under the Base Call Option Transaction Confirmation letter agreement dated April 24, 2014 between Dealer and Counterparty (the “Base Call Option Confirmation”), shall be deemed to be automatically exercised; provided that such Options shall be exercised or deemed exercised only if Counterparty has provided a Notice of Exercise to Dealer in accordance with “Notice of Exercise” below. |
Notwithstanding the foregoing, in no event shall the number of Options that are exercised or deemed exercised hereunder exceed the Number of Options. | |
Notice of Exercise: | Notwithstanding anything to the contrary in the Equity Definitions or under “Automatic Exercise” above, in order to exercise any Options, Counterparty must notify Dealer in writing before 5:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding the scheduled first day of the Settlement Averaging Period for the Options being exercised of (i) the number of such Options, (ii) the scheduled first day of the Settlement Averaging Period and the scheduled Settlement Date, (iii) the Relevant Settlement Method for such Options, and (iv) if the Relevant Settlement Method is Combination Settlement, the percentage of the consideration due upon conversion per Convertible Note in excess of the principal amount thereof that Counterparty has elected to pay to Holders (as such term is defined in the Indenture) in cash (the “Specified Cash Percentage”); provided that in respect of any Options relating to Convertible Notes with a Conversion Date occurring on or after the Free Convertibility Date, (A) such notice may be given on or prior to the second Scheduled Valid Day immediately preceding the Expiration Date and need only specify the information required in clause (i) above, and (B) if the Relevant Settlement Method for such Options is (x) Cash Settlement or (y) Combination Settlement, Dealer shall have received a separate notice (the “Notice of Final Settlement Method”) in respect of all such Convertible |
Notes before 5:00 p.m. (New York City time) on the Free Convertibility Date specifying the information required in clause (iii) and, if applicable, clause (iv) above. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Notes. | |
Valuation Time: | At the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its reasonable discretion. |
Market Disruption Event: | Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following: |
“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the primary United States national or regional securities exchange or market on which the Shares are listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m. (New York City time) on any Scheduled Valid Day for the Shares for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Shares or in any options contracts or futures contracts relating to the Shares.” | |
Settlement Terms. | |
Settlement Method: | For any Option, Net Share Settlement; provided that if the Relevant Settlement Method set forth below for such Option is not Net Share Settlement, then the Settlement Method for such Option shall be such Relevant Settlement Method, but only if Counterparty shall have notified Dealer of the Relevant Settlement Method in the Notice of Exercise or Notice of Final Settlement Method, as applicable, for such Option. |
Relevant Settlement Method: | In respect of any Option: |
(i) if Counterparty has not elected to settle all or any portion of its conversion obligations in respect of the related Convertible Note in excess of its principal amount in cash either by specifying a Specified Cash Percentage of 0% or not timely specifying a Specified Cash Percentage, in each case, pursuant to Section 14.02(a)(i) of the Indenture, then the Relevant Settlement Method for such Option shall be Net Share Settlement; | |
(ii) if Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note in excess of its principal amount in a combination of cash | |
and Shares by specifying a Specified Cash Percentage less than 100% but greater than 0% pursuant to Section 14.02(a)(i) of the Indenture, then the Relevant Settlement Method for such Option shall be Combination Settlement; and | |
(iii) if Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note in excess of its principal amount entirely in cash by specifying a Specified Cash Percentage of 100% pursuant to Section 14.02(a)(i) of the Indenture (such settlement method, “Settlement in Cash”), then the Relevant Settlement Method for such Option shall be Cash Settlement. | |
Net Share Settlement: | If Net Share Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on the relevant Settlement Date for each such Option, a number of Shares (the “Net Share Settlement Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for each such Option, of (i) (a) the Daily Option Value for such Valid Day, divided by (b) the Relevant Price on such Valid Day, divided by (ii) the number of Valid Days in the Settlement Averaging Period; provided that in no event shall the Net Share Settlement Amount for any Option exceed a number of Shares equal to the Applicable Limit for such Option divided by the Applicable Limit Price on the Settlement Date for such Option. |
Dealer will pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Net Share Settlement Share Amount valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period. | |
Combination Settlement: | If Combination Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will pay or deliver, as the case may be, to Counterparty, on the relevant Settlement Date for each such Option: |
(i)cash (the “Combination Settlement Cash Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of (A) an amount (the “Daily Combination Settlement Cash Amount”) equal to the product of (1) the Specified Cash Percentage and (2) the Daily Option Value, divided by (B) the number of Valid Days in the Settlement Averaging Period; provided that if the calculation in clause (A) above results in zero or a negative number for any Valid Day, the Daily Combination Settlement Cash Amount for such Valid Day shall be deemed to be zero; and | |
(ii)Shares (the “Combination Settlement Share Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for such |
Option, of a number of Shares for such Valid Day (the “Daily Combination Settlement Share Amount”) equal to (A) (1) the Daily Option Value on such Valid Day minus the Daily Combination Settlement Cash Amount for such Valid Day, divided by (2) the Relevant Price on such Valid Day, divided by (B) the number of Valid Days in the Settlement Averaging Period; provided that if the calculation in sub-clause (A)(1) above results in zero or a negative number for any Valid Day, the Daily Combination Settlement Share Amount for such Valid Day shall be deemed to be zero; | |
provided that in no event shall the sum of (x) the Combination Settlement Cash Amount for any Option and (y) the Combination Settlement Share Amount for such Option multiplied by the Applicable Limit Price on the Settlement Date for such Option, exceed the Applicable Limit for such Option. | |
Dealer will pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Combination Settlement Share Amount valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period. | |
Cash Settlement: | If Cash Settlement is applicable to any Option exercised or deemed exercised hereunder, in lieu of Section 8.1 of the Equity Definitions, Dealer will pay to Counterparty, on the relevant Settlement Date for each such Option, an amount of cash (the “Cash Settlement Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of (i) the Daily Option Value for such Valid Day, divided by (ii) the number of Valid Days in the Settlement Averaging Period. |
Daily Option Value: | For any Valid Day, an amount equal to (i) the Option Entitlement on such Valid Day, multiplied by (ii) the Relevant Price on such Valid Day less the Strike Price on such Valid Day; provided that if the calculation contained in clause (ii) above results in a negative number, the Daily Option Value for such Valid Day shall be deemed to be zero. In no event will the Daily Option Value be less than zero. |
Applicable Limit: | For any Option, an amount of cash equal to the Applicable Percentage multiplied by the excess of (i) the aggregate of (A) the amount of cash, if any, paid to the Holder of the related Convertible Note upon conversion of such Convertible Note as determined with reference to Section 14.02(a) of the Indenture and (B) the number of Shares, if any, delivered to the Holder of the related Convertible Note upon conversion of such Convertible Note as determined with reference to Section 14.02(a) of the Indenture multiplied by the Applicable Limit Price on the Settlement Date for such Option, over (ii) USD 1,000. |
Applicable Limit Price: | On any day, the opening price as displayed under the heading “Op” on Bloomberg page CTXS <equity> (or any successor thereto). |
Valid Day: | A day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other United States national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a United States national or regional securities exchange, on the principal other market on which the Shares are then listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Valid Day” means a Business Day. |
Scheduled Valid Day: | A day that is scheduled to be a Valid Day on the principal United States national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Scheduled Valid Day” means a Business Day. |
Business Day: | Any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed. |
Relevant Price: | On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page CTXS <equity> AQR (or its equivalent successor if such page is not available) in respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time of the Exchange on such Valid Day (or if such volume-weighted average price is unavailable at such time, the market value of one Share on such Valid Day, as determined by the Calculation Agent using, if practicable, a volume-weighted average method). The Relevant Price will be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours. |
Settlement Averaging Period: | For any Option and regardless of the Settlement Method applicable to such Option: |
(i)if the related Conversion Date occurs prior to the Free Convertibility Date, the 45 consecutive Valid Days commencing on, and including, the second Valid Day following such Conversion Date; or | |
(ii)if the related Conversion Date occurs on or following the Free Convertibility Date, the 45 consecutive Valid Days commencing on, and including, the 47th Scheduled Valid Day immediately prior to the Expiration Date. |
Settlement Date: | For any Option, the third Business Day immediately following the final Valid Day of the Settlement Averaging Period for such Option. |
Settlement Currency: | USD |
Other Applicable Provisions: | The provisions of Sections 9.1(c), 9.8, 9.9 and 9.11 of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Settled”. “Share Settled” in relation to any Option means that Net Share Settlement or Combination Settlement is applicable to that Option. |
Representation and Agreement: | Notwithstanding anything to the contrary in the Equity Definitions (including, but not limited to, Section 9.11 thereof), the parties acknowledge that (i) any Shares delivered to Counterparty shall be, upon delivery, subject to restrictions and limitations arising from Counterparty’s status as issuer of the Shares under applicable securities laws, (ii) Dealer may deliver any Shares required to be delivered hereunder in certificated form in lieu of delivery through the Clearance System and (iii) any Shares delivered to Counterparty may be “restricted securities” (as defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”)). |
3.Additional Terms applicable to the Transaction. | |
Adjustments applicable to the Transaction: | |
Potential Adjustment Events: | Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event” means an occurrence of any event or condition, as set forth in any Dilution Adjustment Provision, that would result in an adjustment under the Indenture to the “Conversion Rate” or the composition of a “unit of Reference Property” or to any “Last Reported Sale Price”, “Daily VWAP,” “Daily Conversion Value” or “Daily Settlement Amount” (each as defined in the Indenture). For the avoidance of doubt, Dealer shall not have any delivery or payment obligation hereunder, and no adjustment shall be made to the terms of the Transaction, on account of (x) any distribution of cash, property or securities by Counterparty to holders of the Convertible Notes (upon conversion or otherwise) or (y) any other transaction in which holders of the Convertible Notes are entitled to participate, in each case, in lieu of an adjustment under the Indenture of the type referred to in the immediately preceding sentence (including, without limitation, pursuant to the fourth sentence of the first paragraph of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture). |
Method of Adjustment: | Calculation Agent Adjustment, which means that, notwithstanding Section 11.2(c) of the Equity Definitions, upon any Potential Adjustment Event, the Calculation Agent shall make an adjustment corresponding to the |
adjustment determined pursuant to the Indenture to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction. | |
Notwithstanding the foregoing and “Consequences of Merger Events / Tender Offers” below, if the Calculation Agent in good faith determines that any adjustment determined pursuant to the terms and provisions of the Indenture that is the basis of any calculation herein and that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 of the Indenture, Section 14.07(a) of the Indenture or any supplemental indenture entered into thereunder or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets) is materially incorrect, then in each such case, the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction in a commercially reasonable manner. | |
Dilution Adjustment Provisions: | Sections 14.04(a), (b), (c), (d) and (e) and Section 14.05 of the Indenture. |
Extraordinary Events applicable to the Transaction: | |
Merger Events: | Applicable; provided that notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Share Exchange Event” in Section 14.07(a) of the Indenture. |
Tender Offers: | Applicable; provided that notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in Section 14.04(e) of the Indenture. |
Consequences of Merger Events / | |
Tender Offers: | Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall make an adjustment corresponding to the adjustment determined pursuant to Section 14.07(a) or Section 14.04(e), as the case may be, of the Indenture to any one or more of the nature of the Shares (in the case of a Merger Event), Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction, subject to the second paragraph under “Method of Adjustment”; provided, however, that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to any Excluded Provision; provided further that if, with respect to a Merger Event or a Tender Offer, (i) the consideration for the Shares |
includes (or, at the option of a holder of Shares, may include) shares of an entity or person that is not a corporation or is not organized under the laws of the United States, any State thereof or the District of Columbia or (ii) the Counterparty to the Transaction following such Merger Event or Tender Offer, will not be a corporation or will not be the Issuer following such Merger Event or Tender Offer, then Cancellation and Payment (Calculation Agent Determination) may apply at Dealer’s sole election. | |
Nationalization, Insolvency or Delisting: | Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors), such exchange or quotation system shall thereafter be deemed to be the Exchange. |
Additional Disruption Events: | |
Change in Law: | Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the word “Shares” with the phrase “Hedge Positions” in clause (X) thereof and (ii) inserting the parenthetical “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” at the end of clause (A) thereof. |
Failure to Deliver: | Applicable |
Hedging Disruption: | Applicable; provided that: |
(i)Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section: | |
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and | |
(ii)Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line |
thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”. | |
Hedging Party: | For all applicable Additional Disruption Events, Dealer. |
Determining Party: | For all applicable Extraordinary Events, Dealer. |
Non-Reliance: | Applicable. |
Agreements and Acknowledgments | |
Regarding Hedging Activities: | Applicable |
Additional Acknowledgments: | Applicable |
4.Calculation Agent. | Dealer; provided that, following the occurrence and during the continuation of an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to which Dealer is the Defaulting Party, Counterparty shall have the right to select a leading dealer in the market for U.S. corporate equity derivatives reasonably acceptable to Dealer to replace Dealer as Calculation Agent, and the parties shall work in good faith to execute any appropriate documentation required by such replacement Calculation Agent. |
(a) | Account for payments to Counterparty: |
Bank: | Wells Fargo Bank, NA | |
ABA#: | [ ] | |
Acct No.: | [ ] | |
Beneficiary: | Citrix Systems, Inc. |
(b) | Account for payments to Dealer: |
Bank: | [ ] | |
ABA#: | [ ] | |
Acct No.: | [ ] | |
Beneficiary: | [ ] | |
Ref: | [ ] |
6. | Offices. |
(a) | The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch Party. |
(b) | The Office of Dealer for the Transaction is: [ ] |
7. | Notices. |
(a) | Address for notices or communications to Counterparty: |
Citrix Systems, Inc. | ||
851 West Cypress Creek Road | ||
Fort Lauderdale, Florida 33309 | ||
Attention: | Chief Financial Officer | |
Telephone No.: | [ ] | |
Facsimile No.: | [ ] | |
With a copy to: | ||
Citrix Systems, Inc. | ||
851 West Cypress Creek Road | ||
Fort Lauderdale, Florida 33309 | ||
Attention: | General Counsel | |
Telephone No.: | [ ] | |
Facsimile No.: | [ ] | |
With a copy to: | ||
Sidley Austin LLP | ||
One South Dearborn | ||
Chicago, IL 60603 | ||
Attention: | John R. Box | |
Telephone No.: | (312) 853-7000 | |
Facsimile No.: | (312) 853-7036 |
8. | Representations and Warranties of Counterparty. |
(a) | Counterparty has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Counterparty’s part; and this Confirmation has been duly and validly executed and delivered by Counterparty and constitutes its valid and binding obligation, enforceable against Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto. |
(b) | Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument. |
(c) | No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Counterparty of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act or state securities laws. |
(d) | Counterparty is not and, after consummation of the transactions contemplated hereby, will not be required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended. |
(e) | Counterparty is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C) of the Commodity Exchange Act). |
(f) | Each of it and its affiliates is not, on the date hereof, in possession of any material non-public information with respect to Counterparty or the Shares. |
(g) | No state or local (including any non-U.S. jurisdiction’s) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares. |
(h) | Counterparty (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least $50 million. |
(i) | [Counterparty has received, read and understands the OTC Options Risk Disclosure Statement and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”.] |
9. | Other Provisions. |
(a) | Opinions. Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a) through (c) of this Confirmation. Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement. |
(b) | Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than 158.6 million (in the case of the first such notice) or (ii) thereafter more than 19.6 million less than the number of Shares included in the immediately preceding Repurchase Notice. Counterparty agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the fees and |
(c) | Regulation M. Counterparty is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of any securities of Counterparty, other than a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. Counterparty shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution. |
(d) | No Manipulation. Counterparty is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act. |
(e) | Transfer or Assignment. |
(i) | Counterparty shall have the right to transfer or assign its rights and obligations hereunder with respect to all, but not less than all, of the Options hereunder (such Options, the “Transfer Options”); provided that such transfer or assignment shall be subject to reasonable conditions that Dealer may impose, including but not limited, to the following conditions: |
(A) | With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification obligations pursuant to Section 9(b) or any obligations under Section 9(m) or 9(r) of this Confirmation; |
(B) | Any Transfer Options shall only be transferred or assigned to a third party that is a United States person (as defined in the Internal Revenue Code of 1986, as amended); |
(C) | Such transfer or assignment shall be effected on terms, including any reasonable undertakings by such third party (including, but not limited to, an undertaking with respect to compliance with applicable securities laws in a manner that, in the reasonable judgment of Dealer, will not expose Dealer to material risks under applicable securities laws) and execution of any documentation and delivery of legal opinions with respect to securities laws and other matters by such third party and Counterparty, as are requested and reasonably satisfactory to Dealer; |
(D) | Dealer will not, as a result of such transfer and assignment, be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Dealer would have been required to pay to Counterparty in the absence of such transfer and assignment; |
(E) | An Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer and assignment; |
(F) | Without limiting the generality of clause (B), Counterparty shall cause the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that results described in clauses (D) and (E) will not occur upon or after such transfer and assignment; and |
(G) | Counterparty shall be responsible for all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such transfer or assignment. |
(ii) | Dealer may not transfer any of its rights or obligations under the Transaction without the prior written consent of Counterparty, except that Dealer may, without Counterparty’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any affiliate of Dealer (1) that has a rating for its long term, unsecured and unsubordinated indebtedness that is equal to or better than Dealer’s credit rating at the time of such transfer or assignment, or (2) whose obligations hereunder will be guaranteed, pursuant to the terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer or Dealer’s ultimate parent. If at any time at which (A) the Section 16 Percentage exceeds 9.0%, (B) the Option Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Options to a third-party financial institution that is a recognized dealer in the market for U.S. corporate equity derivatives reasonably acceptable to Counterparty on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(k) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this sentence as if Counterparty was not the Affected Party). The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and each person subject to aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or indirectly beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the denominator of which is the number of Shares outstanding. The “Option Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, and (B) the denominator of which is the number of Shares outstanding. The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion. The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding. |
(iii) | Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance. |
(f) | Staggered Settlement. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s commercially reasonable hedging activities hereunder, Dealer reasonably determines that it would not be practicable or advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on any Settlement Date for the Transaction, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) as follows: |
(i) | in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (the first of which will be such Nominal Settlement Date and the last of which will be no later than the twentieth |
(ii) | the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date; and |
(iii) | if the Net Share Settlement terms or the Combination Settlement terms set forth above were to apply on the Nominal Settlement Date, then the Net Share Settlement terms or the Combination Settlement terms, as the case may be, will apply on each Staggered Settlement Date, except that the Shares otherwise deliverable on such Nominal Settlement Date will be allocated among such Staggered Settlement Dates as specified by Dealer in the notice referred to in clause (i) above. |
(g) | [Role of Agent. [Insert appropriate agency language, if applicable].][Reserved.][Conduct Rules. Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.] |
(h) | Additional Termination Events. |
(i) | Notwithstanding anything to the contrary in this Confirmation if an event of default with respect to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture that results in acceleration of Counterparty’s payment obligation under the Convertible Notes pursuant to the terms of the Indenture, then such event of default shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement. |
(ii) | Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty, within the applicable time period set forth under “Notice of Exercise” above, of any Notice of Exercise in respect of Options that relate to Convertible Notes as to which additional Shares would be added to the Conversion Rate pursuant to Section 14.03 of the Indenture in connection with a “Make-Whole Fundamental Change” (as defined in the Indenture) shall constitute an Additional Termination Event as provided in this Section 9(h)(ii). Upon receipt of any such Notice of Exercise, Dealer shall designate an Exchange Business Day following such Additional Termination Event (which Exchange Business Day shall in no event be earlier than the related settlement date for such Convertible Notes) as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “Make-Whole Conversion Options”) equal to the lesser of (A) the number of such Options specified in such Notice of Exercise minus the number of “Make-Whole Conversion Options” (as defined in the Base Call Option Confirmation), if any, that relate to such Convertible Notes and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Make-Whole Conversion Options. Any payment hereunder with respect to such termination shall be equal to the lesser of: (A) the product of (x) the Applicable Percentage and (y) the excess of (I) (1) the number of Make-Whole Conversion Options, multiplied by (2) the Conversion Rate (after taking into account any applicable adjustments to the Conversion Rate pursuant to Section 14.03 of the Indenture), multiplied by (3) the Stock Price (as defined in the Indenture) of the related Make-Whole Fundamental Change (as defined in the Indenture) over (II) the aggregate principal amount of such Convertible Notes, as determined by the Calculation Agent in a commercially reasonable manner; and (B) an amount calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Make-Whole Conversion Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the Option Entitlement that result from corresponding adjustments to the Conversion Rate pursuant to Section 14.03 of the Indenture). |
(i) | Amendments to Equity Definitions. |
(i) | Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) the occurrence of any |
(ii) | Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice to Counterparty” in the first sentence of such section. |
(j) | Setoff. Each party waives any and all rights it may have to setoff, whether arising under any agreement, applicable law or otherwise. |
(k) | Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to holders of Shares consists solely of cash, (ii) a Merger Event or Tender Offer that is within Counterparty’s control, or (iii) an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the type described in Section 5(b) of the Agreement, in each case that resulted from an event or events outside Counterparty’s control), and if Dealer would owe any amount to Counterparty pursuant to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”), then Dealer shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Counterparty gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Counterparty remakes the representation set forth in Section 8(f) as of the date of such election and (c) Dealer agrees, in its sole discretion, to such election, in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply. |
Share Termination Alternative: | If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable (the “Share Termination Payment Date”), in satisfaction of such Payment Obligation in the manner reasonably requested by Counterparty free of payment. |
Share Termination Delivery Property: | A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price. |
Share Termination Unit Price: | The value to Dealer of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation. For the avoidance of doubt, the parties agree that in determining the Share Termination Delivery Unit Price the Calculation Agent may consider the purchase price paid in connection with the purchase of Share Termination Delivery Property to the extent doing so results in a commercially reasonable Share Termination Unit Price. |
Share Termination Delivery Unit: | One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “Exchange Property”), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent. |
Failure to Deliver: | Applicable |
Other applicable provisions: | If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption “Representation and Agreement” in Section 2 will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction. |
(m) | Registration. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, the Shares (“Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election, either (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act and enter into an agreement, in form and substance satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered secondary offering of similar size; provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this paragraph shall apply at the election of Counterparty, (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of similar size, in form and substance commercially reasonably satisfactory to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its commercially reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement), or (iii) purchase the Hedge Shares from Dealer at the Relevant Price on such Exchange Business Days, and in the amounts, requested by Dealer. |
(n) | Tax Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation |
(o) | Right to Extend. Dealer may postpone or add, in whole or in part, any Valid Day or Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the Options hereunder, if Dealer reasonably determines, based on the advice of counsel in the case of the immediately following clause (ii), that such action is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions (but only in the case of a material decrease in liquidity relative to Dealer’s expectations as of the Trade Date) or (ii) to enable Dealer to effect transactions in Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (so long as such policies and procedures would generally be applicable to counterparties similar to Counterparty and transactions similar to the Transaction); provided that no such Valid Day or other date of valuation, payment or delivery may be postponed or extended more than 60 Valid Days after the final day in the original Settlement Averaging Period or original other date of valuation, payment or delivery, as the case may be. |
(p) | Status of Claims in Bankruptcy. Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Counterparty with respect to the Transaction that are senior to the claims of common stockholders of Counterparty in any United States bankruptcy proceedings of Counterparty; provided that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction. |
(q) | Securities Contract; Swap Agreement. The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code. |
(r) | Notice of Certain Other Events. Counterparty covenants and agrees that: |
(i) | promptly following the public announcement of the results of any election by the holders of Shares with respect to the consideration due upon consummation of any Merger Event, Counterparty shall give Dealer written notice of (x) the weighted average of the types and amounts of consideration that holders of Shares have elected to receive upon consummation of such Merger Event or (y) if no holders of Shares affirmatively make such election, the types and amounts of consideration actually received by holders of Shares (the date of such notification, the “Consideration Notification Date”); provided that in no event shall the Consideration Notification Date be later than the date on which such Merger Event is consummated; and |
(ii) | promptly following any adjustment to the Convertible Notes in connection with any Potential Adjustment Event, Merger Event or Tender Offer, Counterparty shall give Dealer written notice of the details of such adjustment. |
(s) | Wall Street Transparency and Accountability Act. In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, an Excess Ownership Position, or Illegality (as defined in the Agreement)). |
(t) | Agreements and Acknowledgements Regarding Hedging. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the |
(u) | Early Unwind. In the event the sale of the “Option Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers for any reason, or Counterparty fails to deliver to Dealer opinions of counsel as required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date, the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Each of Dealer and Counterparty represents and acknowledges to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged. |
(v) | Payment by Counterparty. In the event that, following payment of the Premium, (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Counterparty owes to Dealer an amount calculated under Section 6(e) of the Agreement, or (ii) Counterparty owes to Dealer, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero. |
(w) | Tax Documentation. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete or incorrect. Additionally, Counterparty shall, promptly upon request by Dealer, provide such other tax forms and documents reasonably requested by Dealer. |
(x) | Determinations; Adjustments. All calculations, adjustments and determinations made by Dealer hereunder, whether as Calculation Agent, as Determining Party or following the occurrence of an Early Termination Date, shall be made in good faith and in a commercially reasonable manner. Following any determination, adjustment or calculation by Dealer hereunder (including, without limitation, in its capacity as Calculation Agent), Dealer shall deliver to Counterparty, within five Exchange Business Days after a written request by Counterparty, a report in a commonly used file format for the storage and manipulation of financial data (including the methodology, interest rates, quotations and market data (including volatility) but without disclosing any proprietary or confidential models or other proprietary or confidential information) displaying in reasonable detail the basis for such determination, adjustment or calculation, as the case may be. For the avoidance of doubt, whenever the Calculation Agent or Determining Party (as the case may be) is called upon to make an adjustment pursuant to the terms of this Confirmation or the Equity Definitions to take into account the effect of an event, the Calculation Agent or Determining Party (as the case may be) shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position. |
Very truly yours, | ||
[Dealer] | ||
By: | ||
Authorized Signatory | ||
Name: | ||
Citrix Systems, Inc. | |
By: | |
Authorized Signatory | |
Name: |
Name of Counterparty | Date of Agreement | Section 2 General Terms - Applicable Percentage | Section 2 General Terms - Premium (USD) |
JPMorgan Chase Bank, National Association, London Branch | May 1, 2014 | 35% | 8,413,125 |
Goldman, Sachs & Co. | May 1, 2014 | 25% | 6,009,375 |
Bank of America, N.A. | May 1, 2014 | 20% | 4,807,500 |
Royal Bank of Canada | May 1, 2014 | 20% | 4,807,500 |
To: | Citrix Systems, Inc. 851 West Cypress Creek Road Fort Lauderdale, Florida 33309 | May , 2014 | |
Attention: | Chief Financial Officer | ||
Telephone No.: | [ ] | ||
Facsimile No.: | [ ] |
General Terms. | |
Trade Date: | May [ ], 2014 |
Effective Date: | The third Exchange Business Day immediately prior to the Premium Payment Date |
Warrants: | Equity call warrants, each giving the holder the right to purchase a number of Shares equal to the Warrant Entitlement at a price per Share equal to the Strike Price, subject to the terms set forth under the caption “Settlement Terms” below. For the purposes of the Equity Definitions, each reference to a Warrant herein shall be deemed to be a reference to a Call Option. |
Warrant Style: | European |
Seller: | Company |
Buyer: | Dealer |
Shares: | The common stock of Company, par value USD 0.001 per share (Exchange symbol “CTXS”). |
Number of Warrants: | [ ]1. For the avoidance of doubt, the Number of Warrants shall be reduced by any Warrants exercised or deemed exercised hereunder. In no event will the Number of Warrants be less than zero. |
Warrant Entitlement: | One Share per Warrant |
Strike Price: | USD 120.0000. |
Notwithstanding anything to the contrary in the Agreement, this Confirmation or the Equity Definitions, in no event shall the Strike Price be subject to adjustment to the extent that, after giving effect to such adjustment, the Strike Price would be less than USD 59.24, except for any adjustment pursuant to the terms of this Confirmation and the Equity Definitions in connection with stock splits or similar changes to Company’s capitalization. | |
Premium: | USD [ ] |
Premium Payment Date: | May [ ], 2014 |
Exchange: | The NASDAQ Global Select Market |
Related Exchange(s): | All Exchanges |
Procedures for Exercise. | |
Expiration Time: | The Valuation Time |
Expiration Dates: | Each Scheduled Trading Day during the period from, and including, the First Expiration Date to, but excluding, the 90th Scheduled Trading Day following the First Expiration Date shall be an “Expiration Date” for a number of Warrants equal to the Daily Number of Warrants on such date; provided that, notwithstanding anything to the contrary in the Equity Definitions, if any such date is a Disrupted Day, the Calculation Agent shall make adjustments, if applicable, to the Daily Number of Warrants or shall reduce such Daily Number of Warrants to zero for which such day shall be an Expiration Date and shall designate a Scheduled Trading Day or a number of Scheduled Trading Days as the Expiration Date(s) for the remaining Daily Number of Warrants or a portion thereof for the originally scheduled Expiration Date; and provided further that if such Expiration Date has not occurred pursuant to this clause as of the eighth Scheduled Trading Day following the last scheduled |
1 | This is equal to (i) the number of additional Convertible Notes, multiplied by (ii) the initial Conversion Rate, multiplied by (iii) the applicable percentage for Dealer. |
Expiration Date under the Transaction, the Calculation Agent shall have the right to declare such Scheduled Trading Day to be the final Expiration Date and the Calculation Agent shall determine its good faith estimate of the fair market value for the Shares as of the Valuation Time on that eighth Scheduled Trading Day or on any subsequent Scheduled Trading Day, as the Calculation Agent shall determine using commercially reasonable means. | |
First Expiration Date: | July 15, 2019 (or if such day is not a Scheduled Trading Day, the next following Scheduled Trading Day), subject to Market Disruption Event below. |
Daily Number of Warrants: | For any Expiration Date, the Number of Warrants that have not expired or been exercised as of such day, divided by the remaining number of Expiration Dates (including such day), rounded down to the nearest whole number, subject to adjustment pursuant to the provisos to “Expiration Dates”. |
Automatic Exercise: | Applicable; and means that for each Expiration Date, a number of Warrants equal to the Daily Number of Warrants for such Expiration Date will be deemed to be automatically exercised at the Expiration Time on such Expiration Date. |
Market Disruption Event: | Section 6.3(a) of the Equity Definitions is hereby amended by replacing clause (ii) in its entirety with “(ii) an Exchange Disruption, or” and inserting immediately following clause (iii) the phrase “; in each case that the Calculation Agent determines is material.” |
Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the words “Scheduled Closing Time” in the fourth line thereof. | |
Valuation Terms. | |
Valuation Time: | Scheduled Closing Time; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its reasonable discretion. |
Valuation Date: | Each Exercise Date. |
Settlement Terms. | |
Settlement Method Election: | Applicable; provided that (i) references to “Physical Settlement” in Section 7.1 of the Equity Definitions shall be replaced by references to “Net Share Settlement”; (ii) Company may elect Cash Settlement only if Company represents and warrants to Dealer in writing on the date of such election that (A) Company is not in possession of any material non-public information regarding Company or the Shares, (B) Company is electing Cash Settlement in good faith and not as part of a plan or scheme to evade |
compliance with the federal securities laws, and (C) the assets of Company at their fair valuation exceed the liabilities of Company (including contingent liabilities), the capital of Company is adequate to conduct the business of Company, and Company has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature; and (iii) the same election of settlement method shall apply to all Expiration Dates hereunder. | |
Electing Party: | Company |
Settlement Method Election Date: | The third Scheduled Trading Day immediately preceding the First Expiration Date. |
Default Settlement Method: | Net Share Settlement |
Net Share Settlement: | If Net Share Settlement is applicable, then on the relevant Settlement Date, Company shall deliver to Dealer a number of Shares equal to the Share Delivery Quantity for such Settlement Date to the account specified herein free of payment through the Clearance System, and Dealer shall be treated as the holder of record of such Shares at the time of delivery of such Shares or, if earlier, at 5:00 p.m. (New York City time) on such Settlement Date, and Company shall pay to Dealer cash in lieu of any fractional Share based on the Settlement Price on the relevant Valuation Date. |
Share Delivery Quantity: | For any Settlement Date, a number of Shares, as calculated by the Calculation Agent, equal to the Net Share Settlement Amount for such Settlement Date divided by the Settlement Price on the Valuation Date for such Settlement Date. |
Net Share Settlement Amount: | For any Settlement Date, an amount equal to the product of (i) the number of Warrants exercised or deemed exercised on the relevant Exercise Date, (ii) the Strike Price Differential for the relevant Valuation Date and (iii) the Warrant Entitlement. |
Cash Settlement: | If Cash Settlement is applicable, on the relevant Settlement Date, Company shall pay to Dealer an amount of cash in USD equal to the Net Share Settlement Amount for such Settlement Date. |
Settlement Price: | For any Valuation Date, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page CTXS <equity> AQR (or any successor thereto) in respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time on such Valuation Date (or if such volume-weighted average price is unavailable, the market value of one Share on such Valuation Date, as determined by the Calculation Agent). Notwithstanding the foregoing, if (i) any Expiration Date is a Disrupted Day and (ii) the |
Calculation Agent determines that such Expiration Date shall be an Expiration Date for fewer than the Daily Number of Warrants, as described above, then the Settlement Price for the relevant Valuation Date shall be the volume-weighted average price per Share on such Valuation Date on the Exchange, as determined by the Calculation Agent based on such sources as it deems appropriate using a volume-weighted methodology, for the portion of such Valuation Date for which the Calculation Agent determines there is no Market Disruption Event. | |
Settlement Dates: | As determined pursuant to Section 9.4 of the Equity Definitions, subject to Section 9(k)(i) hereof; provided that Section 9.4 of the Equity Definitions is hereby amended by (i) inserting the words “or cash” immediately following the word “Shares” in the first line thereof and (ii) inserting the words “for the Shares” immediately following the words “Settlement Cycle” in the second line thereof. |
Other Applicable Provisions: | If Net Share Settlement is applicable, the provisions of Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Net Share Settled.” “Net Share Settled” in relation to any Warrant means that Net Share Settlement is applicable to that Warrant. |
Representation and Agreement: | Notwithstanding Section 9.11 of the Equity Definitions, the parties acknowledge that any Shares delivered to Dealer may be, upon delivery, subject to restrictions and limitations arising from Company’s status as issuer of the Shares under applicable securities laws. |
3.Additional Terms applicable to the Transaction. | |
Adjustments applicable to the Transaction: | |
Method of Adjustment: | Calculation Agent Adjustment; provided that the parties hereto agree that neither open market Share repurchases at prevailing market prices nor Share repurchases in privately negotiated transactions entered into pursuant to that certain Master Confirmation relating to Uncollared Accelerated Share Repurchases, dated as of April 25, 2014, between Company and Citibank, N.A., and the first Supplemental Confirmation related thereto shall be considered Potential Adjustment Events. For the avoidance of doubt, in making any adjustments under the Equity Definitions, the Calculation Agent may make adjustments, if any, to any one or more of the Strike Price, the Number of Warrants, the Daily Number of Warrants and the Warrant Entitlement to account for the economic effect of the event on the Transaction, with such adjustments made by reference to the effect of such event assuming that the Dealer maintains a commercially reasonable hedge position. Notwithstanding the |
foregoing, any cash dividends or distributions on the Shares, whether or not extraordinary, shall be governed by Section 9(f) of this Confirmation in lieu of Article 10 or Section 11.2(c) of the Equity Definitions. | |
Extraordinary Events applicable to the Transaction: | |
New Shares: | Section 12.1(i) of the Equity Definitions is hereby amended (a) by deleting the text in clause (i) thereof in its entirety (including the word “and” following clause (i)) and replacing it with the phrase “publicly quoted, traded or listed (or whose related depositary receipts are publicly quoted, traded or listed) on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors)” and (b) by inserting immediately prior to the period the phrase “and (iii) of an entity or person that is a corporation organized under the laws of the United States, any State thereof or the District of Columbia that also becomes Company under the Transaction following such Merger Event or Tender Offer”. |
Consequence of Merger Events: | |
Merger Event: | Applicable; provided that if an event occurs that constitutes both a Merger Event under Section 12.1(b) of the Equity Definitions and an Additional Termination Event under Section 9(h)(ii)(B) of this Confirmation, the provisions of Section 9(h)(ii)(B) will apply. |
Share-for-Share: | Modified Calculation Agent Adjustment |
Share-for-Other: | Cancellation and Payment (Calculation Agent Determination) |
Share-for-Combined: | Cancellation and Payment (Calculation Agent Determination); provided that Dealer may elect, in its commercially reasonable judgment, Component Adjustment (Calculation Agent Determination) for all or any portion of the Transaction. |
Consequence of Tender Offers: | |
Tender Offer: | Applicable; provided that if an event occurs that constitutes both a Tender Offer under Section 12.1(d) of the Equity Definitions and Additional Termination Event under Section 9(h)(ii)(A) of this Confirmation, the provisions of Section 9(h)(ii)(A) will apply. |
Share-for-Share: | Modified Calculation Agent Adjustment |
Share-for-Other: | Modified Calculation Agent Adjustment |
Share-for-Combined: | Modified Calculation Agent Adjustment |
Announcement Event: | If an Announcement Date occurs in respect of a Merger Event (for the avoidance of doubt, determined without regard to the language in the definition of “Merger Event” |
following the definition of “Reverse Merger” therein) or Tender Offer (such occurrence, an “Announcement Event”), then on the earliest of the Expiration Date, Early Termination Date or other date of cancellation (the “Announcement Event Adjustment Date”) in respect of each Warrant, the Calculation Agent will determine the economic effect on such Warrant of the relevant event (regardless of whether the Announcement Event actually results in a Merger Event or Tender Offer, and taking into account such factors as the Calculation Agent may determine, including, without limitation, changes in volatility, expected dividends, stock loan rate or liquidity relevant to the Shares or the Transaction whether prior to or after the Announcement Event or for any period of time, including, without limitation, the period from the Announcement Event to the relevant Announcement Event Adjustment Date). If the Calculation Agent determines that such economic effect on any Warrant is material, then on the Announcement Event Adjustment Date for such Warrant, the Calculation Agent may make such adjustment to the exercise, settlement, payment or any other terms of such Warrant as the Calculation Agent determines appropriate to account for such economic effect, which adjustment shall be effective immediately prior to the exercise, termination or cancellation of such Warrant, as the case may be. | |
Announcement Date: | The definition of “Announcement Date” in Section 12.1 of the Equity Definitions is hereby amended by (i) replacing the words “a firm” with the word “any” in the second and fourth lines thereof, (ii) replacing the word “leads to the” with the words “, if completed, would lead to a” in the third and the fifth lines thereof, (iii) replacing the words “voting shares” with the word “Shares” in the fifth line thereof, and (iv) inserting the words “by any entity” after the word “announcement” in the second and the fourth lines thereof. |
Nationalization, Insolvency or Delisting: | Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors), such exchange or quotation system shall thereafter be deemed to be the Exchange. |
Additional Disruption Events: | |
Change in Law: | Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the word |
“Shares” with the phrase “Hedge Positions” in clause (X) thereof and (ii) inserting the parenthetical “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” at the end of clause (A) thereof. | |
Failure to Deliver: | Not Applicable |
Insolvency Filing: | Applicable |
Hedging Disruption: | Applicable; provided that: |
(i)Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section: | |
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and | |
(ii)Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”. | |
Loss of Stock Borrow: | Applicable, it being understood that the rate to borrow Shares shall be determined by reference to the terms of a commercially reasonable share borrowing arrangement and without regard to the Hedging Party’s cost of funding in connection with such borrowings. |
Maximum Stock Loan Rate: | 100 basis points |
Increased Cost of Stock Borrow: | Applicable, it being understood that the rate to borrow Shares shall be determined by reference to the terms of a commercially reasonable share borrowing arrangement and without regard to the Hedging Party’s cost of funding in connection with such borrowings. |
Initial Stock Loan Rate: | 0 basis points until April 15, 2018 and 25 basis points thereafter. |
Hedging Party: | For all applicable Additional Disruption Events, Dealer. |
Determining Party: | For all applicable Extraordinary Events, Dealer. |
Non-Reliance: | Applicable |
Agreements and Acknowledgments Regarding Hedging Activities: | Applicable |
Additional Acknowledgments: | Applicable |
4.Calculation Agent. | Dealer; provided that, following the occurrence and during the continuation of an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to which Dealer is the Defaulting Party, Company shall have the right to select a leading dealer in the market for U.S. corporate equity derivatives reasonably acceptable to Dealer to replace Dealer as Calculation Agent, and the parties shall work in good faith to execute any appropriate documentation required by such replacement Calculation Agent. |
(a) | Account for payments to Company: |
Bank: | Wells Fargo Bank, NA | |
ABA#: | [ ] | |
Acct No.: | [ ] | |
Beneficiary: | Citrix Systems, Inc. |
(b) | Account for payments to Dealer: |
Bank: | [ ] | |
ABA#: | [ ] | |
Acct No.: | [ ] | |
Beneficiary: | [ ] | |
Ref: | [ ] |
6. | Offices. |
(a) | The Office of Company for the Transaction is: Inapplicable, Company is not a Multibranch Party. |
(b) | The Office of Dealer for the Transaction is: [ ] |
7. | Notices. |
(a) | Address for notices or communications to Company: |
Citrix Systems, Inc. | ||
851 West Cypress Creek Road | ||
Fort Lauderdale, Florida 33309 | ||
Attention: | Chief Financial Officer | |
Telephone No.: | [ ] | |
Facsimile No.: | [ ] | |
With a copy to: | ||
Citrix Systems, Inc. | ||
851 West Cypress Creek Road | ||
Fort Lauderdale, Florida 33309 | ||
Attention: | General Counsel | |
Telephone No.: | [ ] | |
Facsimile No.: | [ ] | |
With a copy to: | ||
Sidley Austin LLP | ||
One South Dearborn | ||
Chicago, IL 60603 | ||
Attention: | John R. Box | |
Telephone No.: | (312) 853-7000 | |
Facsimile No.: | (312) 853-7036 |
8. | Representations and Warranties of Company. |
(a) | Company has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Company’s part; and this Confirmation has been duly and validly executed and delivered by Company and constitutes its valid and binding obligation, enforceable against Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto. |
(b) | Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Company hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Company, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Company or any of its subsidiaries is a party or by which Company or any of its subsidiaries is bound or to which Company or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument. |
(c) | No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Company of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act of 1933, as amended (the “Securities Act”) or state securities laws. |
(d) | A number of Shares equal to the Maximum Number of Shares (as defined below) (the “Warrant Shares”) have been reserved for issuance by all required corporate action of Company. The Warrant Shares have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrants following the exercise of the Warrants in accordance with the terms and conditions of the Warrants, will be validly issued, fully-paid and non-assessable, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights. |
(e) | Company is not and, after consummation of the transactions contemplated hereby, will not be required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended. |
(f) | Company is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C) of the Commodity Exchange Act). |
(g) | Company and each of its affiliates is not, on the date hereof, in possession of any material non-public information with respect to Company or the Shares. |
(h) | No state or local (including any non-U.S. jurisdiction’s) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares. |
(i) | Company (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least $50 million. |
(j) | [Counterparty has received, read and understands the OTC Options Risk Disclosure Statement and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”.] |
9. | Other Provisions. |
(a) | Opinions. Company shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a) through (d) of this Confirmation. Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement. |
(b) | Repurchase Notices. Company shall, on any day on which Company effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, |
(c) | Regulation M. Company is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of any securities of Company, other than a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. Company shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution. |
(d) | No Manipulation. Company is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act. |
(e) | Transfer or Assignment. Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer. Dealer may transfer or assign all or any part of its rights or obligations under the Transaction (x) without Company’s consent, to any affiliate of Dealer or to any to any third-party financial institution that is a recognized dealer in the market for U.S. corporate equity derivatives or (y) solely for the purpose of avoiding an Excess Ownership Position, with Company’s consent (such consent not to be unreasonably withheld or delayed), to any financial institution. If at any time at which (A) the Section 16 Percentage exceeds 9.0%, (B) the Warrant Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Warrants to a financial institution reasonably acceptable to Company on pricing terms reasonably acceptable to Dealer such that no Excess Ownership Position exists, with such consent of Company being granted and such transfer or assignment occurring, in each case, within a time period reasonably acceptable to Dealer, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists. In the event that Dealer so designates an Early Termination Date with respect to a Terminated Portion, a payment shall be |
(f) | Dividends. If at any time during the period from and including the Effective Date, to and including the last Expiration Date, an ex-dividend date for a cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), then the Calculation Agent will adjust any of the Strike Price, Number of Warrants, Daily Number of Warrants and/or any other variable relevant to the exercise, settlement or payment of the Transaction to preserve the fair value of the Warrants after taking into account such dividend. |
(g) | [Role of Agent. [Insert appropriate agency language, if applicable].][Reserved.][Conduct Rules. Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.] |
(h) | Additional Provisions. |
(i) | Amendments to the Equity Definitions: |
(A) | Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “an”; and adding the phrase “or Warrants” at the end of the sentence. |
(B) | Section 11.2(c) of the Equity Definitions is hereby amended by (w) replacing the words “a diluting or concentrative” with “an” in the fifth line thereof, (x) adding the phrase “or Warrants” after the words “the relevant Shares” in the same sentence, (y) deleting the words “diluting or concentrative” in the sixth to last line thereof and (z) deleting the phrase “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing it with the phrase “(and, for the avoidance of doubt, adjustments may be made to account for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).” |
(C) | Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “a material”; and adding the phrase “or Warrants” at the end of the sentence. |
(D) | Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.” |
(E) | Section 12.9(b)(iv) of the Equity Definitions is hereby amended by: |
(x) | deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and |
(y) | replacing the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such Lending Party does not lend Shares” in the penultimate sentence. |
(F) | Section 12.9(b)(v) of the Equity Definitions is hereby amended by: |
(x) | adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and |
(y) | (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other.” and (4) deleting clause (X) in the final sentence. |
(ii) | Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the Transaction, or, at the election of Dealer in its sole discretion, any portion of the Transaction, shall be deemed the sole Affected Transaction; provided that if Dealer so designates an Early Termination Date with respect to a portion of the Transaction, (a) a payment shall be made pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants included in the terminated portion of the Transaction, and (b) for the avoidance of doubt, the Transaction shall remain in full force and effect except that the Number of Warrants shall be reduced by the number of Warrants included in such terminated portion: |
(A) | A “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than Company, its wholly-owned subsidiaries and its and their employee benefit plans, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the common equity of Company representing more than 50% of the voting power of such common equity. Notwithstanding the foregoing, any transaction or transactions set forth in this clause (A) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares and cash payments made pursuant to dissenters’ appraisal rights, in connection with such transaction or transactions consists of shares of common stock, American depositary receipts, ordinary shares or other common equity interests, in each case, that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions (such securities, “Publicly Traded Securities”), and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made pursuant to dissenters’ appraisal rights. |
(B) | Consummation of (I) any recapitalization, reclassification or change of the Shares (other than changes resulting from a subdivision, combination or changes solely in par value) as a result of which the Shares would be converted into, or exchanged for, stock, other securities, other property or assets or (II) any share exchange, consolidation or merger of Company pursuant to which the Shares will be converted into cash, securities or other property or (III) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Company and its subsidiaries, taken as a whole, to any person other than one of Company’s wholly-owned subsidiaries. Notwithstanding the foregoing, any transaction or transactions set forth in this clause (B) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares |
(C) | Default by Company or any of its Significant Subsidiaries with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $75,000,000 (or its foreign currency equivalent) in the aggregate of Company and/or of any such Significant Subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable (after the expiration of all applicable grace periods) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, and such acceleration shall not have been rescinded or annulled or such failure to pay shall not have been cured, as the case may be, within 30 days after notice to Company by Dealer has been received. |
(D) | A final judgment for the payment of $75,000,000 (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) rendered against Company or any of its Significant Subsidiaries, which judgment is not discharged or stayed within 60 days after (I) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (II) the date on which all rights to appeal have been extinguished. |
(E) | Dealer, despite using commercially reasonable efforts, is unable or reasonably determines that it is impractical or illegal, to hedge its exposure with respect to the Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer). |
(i) | No Collateral or Setoff. Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not secured by any collateral. Obligations under the Transaction shall not be set off by Company against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise. Any provision in the Agreement with respect to the satisfaction of Company’s payment obligations to the extent of Dealer’s payment obligations to Company in the same currency and in the same Transaction (including, without limitation Section 2(c) thereof) shall not apply to Company and, for the avoidance of doubt, Company shall fully satisfy such payment obligations notwithstanding any payment obligation to Company by Dealer in the same currency and in the same Transaction. In calculating any amounts under Section 6(e) of the Agreement, notwithstanding anything to the contrary in the Agreement, (1) separate amounts shall be calculated as set forth in such Section 6(e) with respect to (a) the Transaction and (b) all other Transactions, and (2) such separate amounts shall be payable pursuant to Section 6(d)(ii) of the Agreement. For the avoidance of doubt and notwithstanding anything to the contrary provided in this Section 9(i), in the event of bankruptcy or liquidation of either Company or Dealer, neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise. |
(j) | Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. |
(i) | If (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to holders of Shares consists solely of cash, (ii) a Merger Event or Tender Offer that is within Company’s control, or (iii) an Event of Default in which Company is the Defaulting Party or a Termination Event in which Company is the Affected Party other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination |
Share Termination Alternative: | If applicable, Company shall deliver to Dealer the Share Termination Delivery Property on the date (the “Share Termination Payment Date”) on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, subject to Section 9(k)(i) below, in satisfaction, subject to Section 9(k)(ii) below, of the relevant Payment Obligation, in the manner reasonably requested by Dealer free of payment. |
Share Termination Delivery Property: | A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the relevant Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the amount of Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price (without giving effect to any discount pursuant to Section 9(k)(i)). |
Share Termination Unit Price: | The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its good faith discretion by commercially reasonable means. In the case of a Private Placement of Share Termination Delivery Units that are Restricted Shares (as defined below), as set forth in Section 9(k)(i) below, the Share Termination Unit Price shall be determined by the discounted price applicable to such Share Termination Delivery Units. In the case of a Registration Settlement of Share Termination Delivery Units that are Restricted Shares (as defined below) as set forth in Section 9(k)(ii) below, notwithstanding the foregoing, the Share Termination Unit Price shall be the Settlement Price on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of |
cancellation, as applicable. The Calculation Agent shall notify Company of the Share Termination Unit Price at the time of notification of such Payment Obligation to Company or, if applicable, at the time the discounted price applicable to the relevant Share Termination Units is determined pursuant to Section 9(k)(i). | |
Share Termination Delivery Unit: | One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “Exchange Property”), a unit consisting of the type and amount of Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event. If such Nationalization, Insolvency or Merger Event involves a choice of Exchange Property to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash. |
Failure to Deliver: | Inapplicable |
Other applicable provisions: | If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11 and 9.12 (as modified above) of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction. |
(k) | Registration/Private Placement Procedures. If, immediately prior to any delivery of Shares or Share Termination Delivery Property to Dealer hereunder, Dealer is not an Affiliate of Company and has not been an Affiliate of Company in the three months immediately preceding such delivery date, and if, in the reasonable opinion of Dealer, such Shares or Share Termination Delivery Property would be in the hands of Dealer subject to any applicable restrictions with respect to any registration or qualification requirement or prospectus delivery requirement for such Shares or Share Termination Delivery Property pursuant to any applicable federal or state securities law (including, without limitation, any such requirement arising under Section 5 of the Securities Act as a result of such Shares or Share Termination Delivery Property being “restricted securities”, as such term is defined in Rule 144 under the Securities Act, or as a result of the sale of such Shares or Share Termination Delivery Property being subject to paragraph (c) of Rule 145 under the Securities Act) (such Shares or Share Termination Delivery Property, “Restricted Shares”), then delivery of such Restricted Shares shall be effected pursuant to either clause (i) or (ii) below at the election of Company, unless Dealer waives the need for registration/private placement procedures set forth in (i) and (ii) below. Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants exercised or deemed exercised on any Expiration Date, Company shall elect, prior to the first Settlement Date for the first applicable Expiration Date, a Private Placement Settlement or Registration Settlement for all deliveries of Restricted Shares for all such Expiration Dates which election shall be applicable to all remaining Settlement Dates for such Warrants and the procedures in clause (i) or clause (ii) below shall apply for all such delivered Restricted Shares on an aggregate basis commencing after the final Settlement Date for such Warrants. The Calculation Agent shall make commercially reasonable adjustments to settlement terms and provisions under this Confirmation to reflect a single Private Placement or Registration Settlement for such aggregate Restricted Shares delivered hereunder. |
(i) | If Company elects to settle the Transaction pursuant to this clause (i) (a “Private Placement Settlement”), then delivery of Restricted Shares by Company shall be effected in customary private placement procedures with respect to such Restricted Shares reasonably acceptable to Dealer; provided that Company may not elect a Private Placement Settlement if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(a)(2) of the Securities Act |
(ii) | If Company elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Company shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, commercially reasonable underwriting discounts (if applicable), commissions (if applicable), indemnities due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements of similar size, all reasonably acceptable to Dealer. If Dealer, in its sole reasonable discretion, is not satisfied with such procedures and documentation Private Placement Settlement shall apply. If Dealer is satisfied with such procedures and documentation, it shall sell the Restricted Shares pursuant to such registration statement during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Restricted Shares (which, for the avoidance of doubt, shall be (x) the Share Termination Payment Date in case of settlement in Share Termination Delivery Units pursuant to Section 9(j) above or (y) the Settlement Date in respect of the final Expiration Date for all Daily Number of Warrants) and ending on the Exchange Business Day on which Dealer completes the sale of all Restricted Shares in a commercially reasonable manner or, in the case of settlement of Share Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales equals or exceeds the Payment Obligation (as defined above). If the Payment Obligation exceeds the realized net proceeds from such resale, Company shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Trading Day immediately following such resale the amount of such excess (the “Additional Amount”) in cash or in a number of Shares (“Make-whole Shares”) in an amount that, based on the Settlement Price on such day (as if such day was the “Valuation Date” for purposes of computing such Settlement Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares. If Company elects to pay the Additional Amount in Shares, the requirements and provisions for Registration Settlement shall apply. This provision shall be applied successively until the Additional Amount is equal to zero. In no event shall Company deliver a number of Restricted Shares greater than the Maximum Number of Shares. |
(iii) | Without limiting the generality of the foregoing, Company agrees that (A) any Restricted Shares delivered to Dealer may be transferred by and among Dealer and its affiliates and Company shall effect such transfer without any further action by Dealer and (B) after the period of 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) under the Securities Act are not satisfied with respect to Company) has elapsed in respect of any Restricted Shares delivered to Dealer, Company shall promptly remove, or cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Company or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of |
(iv) | If the Private Placement Settlement or the Registration Settlement shall not be effected as set forth in clauses (i) or (ii), as applicable, then failure to effect such Private Placement Settlement or such Registration Settlement shall constitute an Event of Default with respect to which Company shall be the Defaulting Party. |
(l) | Limit on Beneficial Ownership. Notwithstanding any other provisions hereof, Dealer may not exercise any Warrant hereunder or be entitled to take delivery of any Shares deliverable hereunder, and Automatic Exercise shall not apply with respect to any Warrant hereunder, to the extent (but only to the extent) that, after such receipt of any Shares upon the exercise of such Warrant or otherwise hereunder and after taking into account any Shares deliverable to Dealer under the letter agreement dated April 24, 2014 between Dealer and Company regarding Base Warrants (the “Base Warrant Confirmation”), (i) the Section 16 Percentage would exceed [7.5][9.25]%, or (ii) the Share Amount would exceed the Applicable Share Limit. Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery and after taking into account any Shares deliverable to Dealer under the Base Warrant Confirmation, (i) the Section 16 Percentage would exceed [7.5][9.25]%, or (ii) the Share Amount would exceed the Applicable Share Limit. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Company’s obligation to make such delivery shall not be extinguished and Company shall make such delivery as promptly as practicable after, but in no event later than one Business Day after, Dealer gives notice to Company that, after such delivery, (i) the Section 16 Percentage would not exceed [7.5][9.25]%, and (ii) the Share Amount would not exceed the Applicable Share Limit. |
(m) | Share Deliveries. Notwithstanding anything to the contrary herein, Company agrees that any delivery of Shares or Share Termination Delivery Property shall be effected by book-entry transfer through the facilities of DTC, or any successor depositary, if at the time of delivery, such class of Shares or class of Share Termination Delivery Property is in book-entry form at DTC or such successor depositary. |
(n) | Waiver of Jury Trial. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction. Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein. |
(o) | Tax Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Company and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Company relating to such tax treatment and tax structure. |
(p) | Maximum Share Delivery. |
(i) | Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to deliver a number of Shares greater than three times the Number of Shares (the “Maximum Number of Shares”) to Dealer in connection with the Transaction. |
(ii) | In the event Company shall not have delivered to Dealer the full number of Shares or Restricted Shares otherwise deliverable by Company to Dealer pursuant to the terms of the Transaction because Company has insufficient authorized but unissued Shares that are not reserved for other transactions (such deficit, the “Deficit Shares”), Company shall be continually obligated to deliver, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been delivered pursuant to this Section 9(p)(ii), when, and to the extent that, (A) Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), (B) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (C) Company additionally authorizes any unissued Shares that are not reserved for other transactions; provided that in no event shall Company deliver any Shares or Restricted Shares to Dealer pursuant to this Section 9(p)(ii) to the extent that such delivery would cause the aggregate number of Shares and Restricted Shares delivered to Dealer to |
(iii) | If, in connection with any adjustment to the Maximum Number of Shares as a result of an event that is not within Company’s control, the Maximum Number of Shares (as adjusted) would exceed the number of authorized but unissued Shares of Company that are not reserved for future issuance pursuant to transactions other than the Transaction (determined as of the date of such adjustment or proposed adjustment), Company shall have no obligation to deliver Shares in respect of the Transaction in excess of the number of authorized but unissued Shares of Company that are not reserved for future issuance pursuant to transactions other than the Transaction (determined as of the date of such adjustment or proposed adjustment), except as set forth in Section 9(p)(ii) above. |
(q) | Right to Extend. Dealer may postpone or add, in whole or in part, any Expiration Date or any other date of valuation, payment or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer determines, based on the advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions (but only in the case of a material decrease in liquidity relative to Dealer’s expectations as of the Trade Date) or (ii) to enable Dealer to effect transactions in Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (so long as such policies and procedures would generally be applicable to counterparties similar to Company and transactions similar to the Transaction); provided that no such Expiration Date or other date of valuation, payment or delivery may be postponed or extended more than 90 Trading Days after the final scheduled Expiration Date or original other date of valuation, payment or delivery, as the case may be. “Trading Day” means a Scheduled Trading Day that is not a Disrupted Day. |
(r) | Status of Claims in Bankruptcy. Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Company with respect to the Transaction that are senior to the claims of common stockholders of Company in any United States bankruptcy proceedings of Company; provided that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Company of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction. |
(s) | Securities Contract; Swap Agreement. The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code. |
(t) | Wall Street Transparency and Accountability Act. In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, an Excess Ownership Position, or Illegality (as defined in the Agreement)). |
(u) | Agreements and Acknowledgements Regarding Hedging. Company understands, acknowledges and agrees that: (A) at any time on and prior to the last Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk |
(v) | Early Unwind. In the event the sale of the “Option Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers for any reason, or Company fails to deliver to Dealer opinions of counsel as required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Company under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Each of Dealer and Company represents and acknowledges to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged. |
(w) | Payment by Dealer. In the event that (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Dealer owes to Company an amount calculated under Section 6(e) of the Agreement, or (ii) Dealer owes to Company, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero. |
(x) | Listing of Warrant Shares. Company shall have submitted an application for the listing of the Warrant Shares on the Exchange, and such application and listing shall have been approved by the Exchange, subject only to official notice of issuance, in each case, on or prior to the Premium Payment Date. Company agrees and acknowledges that such submission and approval shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement. |
(y) | Delivery or Receipt of Cash. For the avoidance of doubt, other than receipt of the Premium by Company, nothing in this Confirmation shall be interpreted as requiring Company to cash settle the Transaction, except in circumstances where cash settlement is within Company’s control (including, without limitation, where Company elects to deliver or receive cash, or where Company has made Private Placement Settlement unavailable due to the occurrence of events within its control) or in those circumstances in which holders of Shares would also receive cash. |
(z) | Determinations; Adjustments. All calculations, adjustments and determinations made by Dealer hereunder, whether as Calculation Agent, as Determining Party or following the occurrence of an Early Termination Date, shall be made in good faith and in a commercially reasonable manner. Following any determination, adjustment or calculation by Dealer hereunder (including, without limitation, in its capacity as Calculation Agent), Dealer shall deliver to Company, within five Exchange Business Days after a written request by Company, a report in a commonly used file format for the storage and manipulation of financial data (including the methodology, interest rates, quotations and market data (including volatility) but without disclosing any proprietary or confidential models or other proprietary or confidential information) displaying in reasonable detail the basis for such determination, adjustment or calculation, as the case may be. For the avoidance of doubt, whenever the Calculation Agent or Determining Party is called upon to make an adjustment pursuant to the terms of this Confirmation or the Equity Definitions to take into account the effect of an event, the Calculation Agent or Determining Party (as the case may be) shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position. |
Very truly yours, | ||
[Dealer] | ||
By: | ||
Authorized Signatory | ||
Name: |
Accepted and confirmed as of the Trade Date: | |
Citrix Systems, Inc. | |
By: | |
Authorized Signatory | |
Name: |
Name of Counterparty | Date of Agreement | Section 2 General Terms - Number of Warrants | Section 2 General Terms - Premium (USD) |
JPMorgan Chase Bank, National Association, London Branch | May 1, 2014 | 729,166 | 4,646,250 |
Goldman, Sachs & Co. | May 1, 2014 | 520,833 | 3,318,750 |
Bank of America, N.A. | May 1, 2014 | 416,666 | 2,655,000 |
Royal Bank of Canada | May 1, 2014 | 416,666 | 2,655,000 |
1. | I have reviewed this quarterly report on Form 10-Q of Citrix Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
By: | /s/ MARK B. TEMPLETON | |
Mark B. Templeton | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Citrix Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
By: | /s/ DAVID J. HENSHALL | |
David J. Henshall | ||
Executive Vice President, Chief Operating | ||
Officer and Chief Financial Officer | ||
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ MARK B. TEMPLETON | |
Mark B. Templeton | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
By: | /s/ DAVID J. HENSHALL | |
David J. Henshall | ||
Executive Vice President, Chief Operating Officer and Chief Financial Officer | ||
(Principal Financial Officer) | ||
Fair Value Measurements (Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) (Fair Value, Measurements, Recurring [Member], USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2014
|
Dec. 31, 2013
|
---|---|---|
Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Total assets | $ 1,832,263 | $ 1,595,368 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Total liabilities | 1,582 | 1,743 |
Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Total assets | 296,521 | 280,351 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Total liabilities | 0 | 0 |
Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Total assets | 1,525,351 | 1,304,727 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Total liabilities | 1,582 | 1,743 |
Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Total assets | 10,391 | 10,291 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Total liabilities | 0 | 0 |
Cash and Cash Equivalents [Member] | Cash [Member] | Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 290,579 | 227,528 |
Cash and Cash Equivalents [Member] | Cash [Member] | Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 290,579 | 227,528 |
Cash and Cash Equivalents [Member] | Cash [Member] | Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Cash and Cash Equivalents [Member] | Cash [Member] | Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Cash and Cash Equivalents [Member] | Money Market Funds [Member] | Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 5,942 | 52,823 |
Cash and Cash Equivalents [Member] | Money Market Funds [Member] | Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 5,942 | 52,823 |
Cash and Cash Equivalents [Member] | Money Market Funds [Member] | Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Cash and Cash Equivalents [Member] | Money Market Funds [Member] | Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Cash and Cash Equivalents [Member] | Corporate Securities [Member] | Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 1,998 | 389 |
Cash and Cash Equivalents [Member] | Corporate Securities [Member] | Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Cash and Cash Equivalents [Member] | Corporate Securities [Member] | Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 1,998 | 389 |
Cash and Cash Equivalents [Member] | Corporate Securities [Member] | Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Available-for-sale Securities [Member] | Corporate Securities [Member] | Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 701,826 | 644,091 |
Available-for-sale Securities [Member] | Corporate Securities [Member] | Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Available-for-sale Securities [Member] | Corporate Securities [Member] | Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 691,435 | 633,801 |
Available-for-sale Securities [Member] | Corporate Securities [Member] | Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 10,391 | 10,291 |
Available-for-sale Securities [Member] | Agency Securities [Member] | Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 638,334 | 454,750 |
Available-for-sale Securities [Member] | Agency Securities [Member] | Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Available-for-sale Securities [Member] | Agency Securities [Member] | Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 638,334 | 454,750 |
Available-for-sale Securities [Member] | Agency Securities [Member] | Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Available-for-sale Securities [Member] | Municipal Securities [Member] | Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 57,122 | 53,756 |
Available-for-sale Securities [Member] | Municipal Securities [Member] | Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Available-for-sale Securities [Member] | Municipal Securities [Member] | Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 57,122 | 53,756 |
Available-for-sale Securities [Member] | Municipal Securities [Member] | Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Available-for-sale Securities [Member] | Government Securities [Member] | Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 132,307 | 157,079 |
Available-for-sale Securities [Member] | Government Securities [Member] | Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Available-for-sale Securities [Member] | Government Securities [Member] | Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 132,307 | 157,079 |
Available-for-sale Securities [Member] | Government Securities [Member] | Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Prepaid Expenses and Other Current Assets [Member] | Estimate of Fair Value Measurement [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Foreign currency derivatives | 4,155 | 4,952 |
Prepaid Expenses and Other Current Assets [Member] | Level 1 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Foreign currency derivatives | 0 | 0 |
Prepaid Expenses and Other Current Assets [Member] | Level 2 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Foreign currency derivatives | 4,155 | 4,952 |
Prepaid Expenses and Other Current Assets [Member] | Level 3 [Member]
|
||
Assets, Fair Value Disclosure [Abstract] | ||
Foreign currency derivatives | 0 | 0 |
Accrued Expenses and Other Current Liabilities [Member] | Estimate of Fair Value Measurement [Member]
|
||
Liabilities, Fair Value Disclosure [Abstract] | ||
Foreign currency derivatives | 1,582 | 1,743 |
Accrued Expenses and Other Current Liabilities [Member] | Level 1 [Member]
|
||
Liabilities, Fair Value Disclosure [Abstract] | ||
Foreign currency derivatives | 0 | 0 |
Accrued Expenses and Other Current Liabilities [Member] | Level 2 [Member]
|
||
Liabilities, Fair Value Disclosure [Abstract] | ||
Foreign currency derivatives | 1,582 | 1,743 |
Accrued Expenses and Other Current Liabilities [Member] | Level 3 [Member]
|
||
Liabilities, Fair Value Disclosure [Abstract] | ||
Foreign currency derivatives | $ 0 | $ 0 |
Segment Information (Revenues By Product Grouping) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2014
|
Mar. 31, 2013
|
|||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net revenues | $ 750,819 | $ 672,899 | ||||||||
Enterprise and Service Provider Division [Member]
|
||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net revenues | 593,687 | 535,333 | ||||||||
Enterprise and Service Provider Division [Member] | Mobile and Desktop Revenues [Member]
|
||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net revenues | 381,361 | [1] | 357,990 | [1] | ||||||
Enterprise and Service Provider Division [Member] | Networking and Cloud Revenues [Member]
|
||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net revenues | 166,545 | [2] | 147,493 | [2] | ||||||
Enterprise and Service Provider Division [Member] | Professional Services [Member]
|
||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net revenues | 42,505 | [3] | 26,512 | [3] | ||||||
Enterprise and Service Provider Division [Member] | Other [Member]
|
||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net revenues | 3,276 | 3,338 | ||||||||
SaaS Division [Member]
|
||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net revenues | $ 157,132 | $ 137,566 | ||||||||
|
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