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Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CITRIX SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 75-2275152
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
6400 NW 6th Way
Fort Lauderdale, Florida 33309
(954) 267-3000
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Mark B. Templeton
President and Chief Executive Officer
CITRIX SYSTEMS, INC.
6400 NW 6th Way
Fort Lauderdale, Florida 33309
(954) 267-3000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copy to:
JONATHAN M. MOULTON, ESQ.
TESTA, HURWITZ & THIBEAULT, LLP
125 High Street
Boston, Massachusetts 02110
(617) 248-7000
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Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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Title of Shares Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Shares Aggregate Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Zero Coupon Convertible
Subordinated Debentures due $301,503,500 100% $301,503,500 $83,818
March 22, 2019 (1) (2)
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Common Stock, par value $.001
per share (3) (3) (3) (4)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
(2) This fee is calculated on the basis of the offering price of the
debentures.
(3) Includes 5,976,010 shares of common stock issuable upon conversion of the
debentures at the rate of 7.0306 shares of common stock for each $1,000
principal amount at maturity of the debentures. Pursuant to Rule 416 under the
Securities Act, such number of shares of common stock registered hereby shall
include an indeterminate number of shares of common stock that may be issued in
connection with a stock split, stock dividend, recapitalization or similar
event.
(4) Pursuant to Rule 457(i), there is no additional filing fee with respect to
the shares of common stock issuable upon conversion of the debentures because no
additional consideration will be received in connection with the exercise of the
conversion privilege.
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The Registrant hereby undertakes to amend this registration statement on
such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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SUBJECT TO COMPLETION, DATED MAY 20, 1999
PROSPECTUS
$850,000,000
[CITRIX LOGO APPEARS HERE]
Zero Coupon Convertible Subordinated Debentures Due March 22, 2019
The Debentures
. Aggregate principal amount at maturity: $850,000,000.
. Common stock into which the debentures are convertible: initially 5,976,010
shares, subject to conversion rate adjustments.
. Issue price: $354.71 on March 22, 1999.
. Yield to maturity: 5.25% per year.
. Conversion rate: 7.0306 shares of our common stock per $1,000 principal
amount at maturity of debentures.
. Date of maturity: March 22, 2019.
Conversion
. Holders can convert the debentures into our common stock at any time prior to
maturity.
Redemption
. We have the option to redeem the debentures after March 22, 2004.
Repurchase
. Holders have the option on March 22, 2004, March 22, 2009, or March 22, 2014,
or when there is a change in control of Citrix, to require us to repurchase
their debentures.
The debentures and common stock offered in this prospectus involve a high degree
of risk. Consider carefully the risk factors beginning on page 6.
Our common stock is traded on The Nasdaq National Market under the symbol
"CTXS".
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy of this prospectus. Any contrary representation is a criminal offense.
PROSPECTUS DATED , 1999.
The information in this prospectus is not complete and may be changed.
The selling securityholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer of sale is not
permitted.
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TABLE OF CONTENTS
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<S> <C>
FORWARD LOOKING INFORMATION.............................................. 1
WHERE YOU CAN FIND MORE INFORMATION...................................... 2
SUMMARY.................................................................. 3
RISK FACTORS............................................................. 6
RATIO OF EARNINGS TO FIXED CHARGES....................................... 14
USE OF PROCEEDS.......................................................... 15
DESCRIPTION OF DEBENTURES................................................ 15
DESCRIPTION OF CAPITAL STOCK............................................. 32
SELLING SECURITYHOLDERS.................................................. 34
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.................. 36
PLAN OF DISTRIBUTION..................................................... 40
LEGAL MATTERS............................................................ 41
EXPERTS.................................................................. 41
</TABLE>
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FORWARD LOOKING INFORMATION
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933. This section provides a "safe harbor"
for forward-looking statements to encourage companies to provide prospective
information about themselves so long as they identify these statement as
forward-looking and provide meaningful cautionary statements identifying
important factors that could cause actual results to differ from the projected
results. All statements other than statements of historical fact we make in this
prospectus or in any document incorporated by reference are forward-looking
statements. In particular, the statements regarding industry prospects and our
future results of operations or financial position are forward-looking
statements. Forward-looking statements reflect our current expectations and are
inherently uncertain. Our actual results may differ significantly from our
expectations. The section entitled "Risk Factors" describes some, but not all,
of the factors that could cause these differences.
Citrix(R), WinFrame(R) and ICA(R) are registered trademarks of Citrix.
MetaFrameTM and MultiWinTM are trademarks of Citrix for which there are pending
applications for registration in the U.S. Patent and Trademark Office. This
prospectus also includes trademarks of companies other than Citrix Systems, Inc.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You can inspect and
copy the registration statement on Form S-3 of which this prospectus is a part,
as well as reports, proxy statements and other information filed by us, at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You can obtain copies of such material from the Public Reference Room of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You
can call the SEC at 1-800-SEC-0330 for information regarding the operation of
its Public Reference Room. The SEC also maintains an Internet site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding registrants, like us, that file electronically.
This prospectus provides you with a general description of the debentures
and common stock being registered. This prospectus is part of a registration
statement that we have filed with the SEC. To see more detail, you should read
the exhibits and schedules filed with, or incorporated by reference into, our
registration statement.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information we
incorporate by reference is considered a part of this prospectus, and later
information we file with the SEC will automatically update and supersede this
information. We incorporate by reference our documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934 until this offering is completed:
. Annual Report on Form 10-K for the year ended December 31, 1998 and
related exhibits;
. Current Reports on Form 8-K filed on March 24, 1999, March 26, 1999
and April 23, 1999;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 and
related exhibits;
. The description of our capital stock contained in the Registration
Statement on Form 8-A which was filed with the SEC on October 24, 1995;
. Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1998
filed on March 10, 1999;
. Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1998
filed on March 10, 1999; and
. Quarterly Report on Form 10-Q/A for the quarter ended September 30, 1998
filed on March 10, 1999.
You may request these documents in writing or by telephone. We will
provide to you, at no cost, a copy of any or all information incorporated by
reference in the registration statement, of which this prospectus is a part.
Requests should be directed to our Investor Relations Department at our
principal offices which are located at 6400 NW 6th Way, Fort Lauderdale, Florida
33309. You may contact our investor relations department by calling us at (954)
267-3000.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. The selling
securityholders are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of the document.
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SUMMARY
All selling securityholders must deliver a prospectus to purchasers at or
prior to the time of any sale of the debentures or common stock issuable upon
conversion of the debentures. We have adjusted all the information in this
prospectus to reflect a two-for-one split of the common stock effective March
25, 1999.
Citrix Systems, Inc.
We are a leading supplier of server-based computing products and
technologies that enable the effective and efficient enterprise-wide deployment
and management of applications designed for Microsoft Windows(R) operating
systems. Our MetaFrameTM and WinFrame(R) product lines, developed under license
and strategic alliance agreements with Microsoft, permit organizations to deploy
Windows applications without regard to location, network connection or type of
client hardware platform. These product lines utilize our proprietary
Independent Computing Architecture (ICA(R)) communications protocol. Our ICA
technology allows an application to be displayed on a client while the program
is executed on a server, thereby providing a bandwidth-efficient solution.
With Microsoft's introduction of its 32-bit operating systems, such as
Windows 98 and Windows NT, Windows has quickly become one of the most widely
used operating platforms. Organizations seeking to deliver Windows applications
throughout local and remote computer networks often seek to provide access to
users across a variety of computer software applications, hardware devices and
networks. These organizations require a reliable, scalable and secure platform
for delivery and management of such applications.
Our server-based computing product lines provide such a platform and
include the following:
. MetaFrame. Our MetaFrame product line provides additional server and
client functionality to Microsoft's multi-user NT 4.0 operating system,
Windows NT Server, Terminal Server Edition ("NT Terminal Server"). NT
Terminal Server includes certain multi-user extensions we developed and
licensed to Microsoft in May 1997 for inclusion in NT Terminal Server
and Windows NT 5.x. The added functionality provided by MetaFrame allows
organizations to better deploy and manage applications across local and
remote computer networks to both Windows and non-Windows software
environments and a variety of client devices, network connections and
architectures. MetaFrame first shipped in June 1998 and constituted 46%
of our revenues in the first quarter of 1999 and 21% of our revenues in
1998.
. WinFrame. Our WinFrame application server software incorporates
Windows NT 3.51 and is sold pursuant to a distribution license from
Microsoft. WinFrame provides customers functionality similar to
MetaFrame and NT Terminal Server based on the prior version of
Windows NT, Windows NT 3.51. WinFrame first shipped in August 1995 and
constituted 8% of our revenues in the first quarter of 1999, 28% of our
revenues in 1998, 49% of our revenues in 1997 and 63% of our revenues in
1996.
. System Options Products. We also market a number of enhancements to
MetaFrame and WinFrame server software, including Load Balancing, which
provides scalability, and Secure ICA, which provides 128-bit encryption.
In addition, we offer additional user license packs to increase the
number of users who can access WinFrame and MetaFrame server software.
Collectively, these products accounted for 30% of our revenues in the
first quarter of 1999, 24% of our revenues in 1998 and 19% of our
revenues in 1997.
We market our products through multiple indirect channels worldwide,
including distributors, value added resellers, systems integrators and OEM
licensees.
We were incorporated in April 1989, and shipped our initial products in
1991. Our corporate headquarters are located at 6400 NW 6th Way, Fort
Lauderdale, Florida 33309. Our telephone number is (954) 267-3000.
Information contained in our Web site is not part of this prospectus.
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The Offering
Securities Offered $850,000,000 principal amount at maturity of Zero
Coupon Convertible Subordinated Debentures Due
March 22, 2019.
We will not pay interest on the debentures prior to
maturity. Each debenture was issued at a price of
$354.71 per debenture. The principal amount at
maturity is $1,000 for each debenture.
Maturity Date March 22, 2019.
Yield to Maturity 5.25% per year calculated from March 22, 1999.
of Debentures
Conversion Rights You have the option to convert the debentures into our
common stock at any time prior to maturity, unless the
debentures have been previously redeemed or purchased.
You can convert the debentures into common stock at a
conversion rate of 7.0306 shares for each $1,000
principal amount at maturity. The conversion rate will
be subject to adjustment if certain events occur. Upon
conversion, you will receive only common stock. You
will not receive any cash payment for the accrued
original issue discount to the conversion date. See
"Description of Debentures--You have the right to
convert the debentures to common stock."
The debentures are initially convertible into 5,976,010
shares of our common stock.
Optional Redemption On or after March 22, 2004, we can redeem all
by Citrix or part of the debentures for cash at any time at the
redemption prices listed in this prospectus. See
"Description of Debentures--We have the option to
redeem the debentures."
Original Issue Discount The securityholders will offer and sell the
debentures at a discount from their value at maturity.
We initially issued the debentures at a price of
$354.71 per debenture. Over time, the debentures will
increase in value until they reach their maturity value
of $1,000 on March 22, 2019. Original issue discount
is the difference between the initial sale price and
the value of the debenture at maturity.
We will not pay interest on the debentures. However,
you should be aware that accrued original issue
discount must be included periodically in your gross
income for federal income tax purposes. See "Certain
United States Federal Income Tax Considerations."
Sinking Fund None.
Repurchase of We will purchase the debentures at your option at a
Debentures at the price of $459.63, on March 22, 2009 at a price of
Option of the Holder $595.58, and on March 22, 2014 at a price of $771.74
per $1,000 principal amount at maturity. We may elect
to pay the repurchase price in cash, common stock or a
combination of cash and common stock. See "Description
of Debentures--You have the option to require us to
repurchase the debentures."
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Change in Control You may redeem the debentures if we experience a change
in control.
The change in control redemption price is equal to the
issue price plus
accrued original issue discount to the date of
redemption. See "Description of Debentures--You have
the option to require us to repurchase the debentures
upon a change in control."
Optional Conversion If certain changes are made to the federal tax laws, we
by Citrix upon a tax have the option to begin paying interest on the
event debentures instead of accruing original issue discount.
We would pay 5.25% per year in interest on the
principal amount that had accrued on the debentures up
until the date we exercised this option. If this
occurs, we would adjust your redemption price,
repurchase price and purchase price upon a change in
control. However, we would not adjust your conversion
rights. See "Description of Debentures--We have the
option to convert the debentures to semiannual coupon
debentures on a tax event."
Subordination The debentures are general unsecured obligations of
Citrix. The debentures are subordinated in right of
payment to all of our existing and future senior
indebtedness. As of March 31, 1999, we had no material
senior indebtedness. We are not restricted under the
indenture from incurring debt. See "Risk Factors--The
Debentures are subordinated and there are no financial
covenants" and "Description of Debentures--The
debentures are subordinated."
Use of Proceeds We will not receive any of the proceeds from the sale
of the debentures or the underlying common stock by any
selling securityholders.
Trading The common stock is traded on The Nasdaq National
Market under the symbol "CTXS."
5
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RISK FACTORS
Except for the historical information in this prospectus, the matters
contained in this prospectus include forward-looking statements that involve
risks and uncertainties. The following factors, among others, could cause
actual results to differ materially from those contained in forward-looking
statements made in this prospectus. Such factors, among others, may have a
material adverse effect upon our business, results of operations and financial
condition.
Our success is substantially dependent upon our strategic relationship with
Microsoft
Microsoft is the leading provider of desktop operating systems. We depend
upon the license of key technology from Microsoft, including certain source and
object code licenses, and technical support. We also depend upon our strategic
alliance agreement with Microsoft pursuant to which Citrix and Microsoft have
agreed to cooperate to develop advanced operating systems and promote Windows
application program interfaces. Our relationship with Microsoft is subject to
the following risks and uncertainties:
. Competition with Microsoft. NT Terminal Server is, and future product
offerings by Microsoft may be, competitive with our current WinFrame and
MetaFrame products, and any future product offerings by Citrix.
. Termination of Microsoft's Endorsement of the ICA Protocol. Microsoft
has agreed to endorse only our ICA protocol as the preferred method to
provide multi-user Windows access for devices other than Windows clients
until at least November 1999. Subsequent to November 1999, or before
November 1999 if certain events occur as provided in our development
agreement with Microsoft, it is possible that Microsoft will market or
endorse other methods to provide non-Windows client devices multi-user
Windows access.
. Dependence on Microsoft for Commercialization. Our ability to
successfully commercialize our MetaFrame product depends on Microsoft's
ability to market NT Terminal Server products. We do not have control
over Microsoft's distributors and resellers and, to our knowledge,
Microsoft's distributors and resellers are not obligated to purchase
products from Microsoft.
. Product Release Delays. There may be delays in the release and shipment
of future versions of NT Terminal Server.
If our relationship with Microsoft were terminated or adversely affected
for any reason, our business, operating results and financial condition would be
materially adversely affected.
Our continued growth depends upon broad-based acceptance of our ICA protocol
We believe that our success in the markets in which we compete will depend
upon our ability to make the ICA protocol a widely accepted standard for
supporting Windows applications. Microsoft includes as a component of NT
Terminal Server its Remote Desktop Protocol which has certain of the
capabilities of our ICA protocol, and may offer customers a competitive
solution. We believe that our success is dependent on our ability to enhance
and differentiate our ICA protocol, and foster broad acceptance of the ICA
protocol based on its performance, scalability, reliability and enhanced
features. In addition, our ability to win broad market acceptance of our ICA
protocol will depend upon the degree of success achieved by our strategic
partners in marketing their respective product offerings, product pricing and
customers' assessment of our technical, managerial, service and support
expertise. If another standard emerges or if we otherwise fail to achieve wide
acceptance of the ICA protocol as a standard for supporting Windows
applications, our business, operating results and financial condition could be
materially adversely affected.
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The success of our business also depends upon our strategic relationships with
parties other than Microsoft
In addition to our relationship with Microsoft, we have strategic
relationships with IBM, Compaq, Wyse and others. We depend upon our strategic
partners to successfully market and promote the use of our products and
incorporate our technology into their products and to market and sell such
products. If we are unable to maintain our current strategic relationships or
develop additional strategic relationships, or if any of our key strategic
partners are unsuccessful in incorporating our technology into their products or
marketing or selling such products, our business, operating results and
financial condition could be materially adversely affected.
We face significant competition from other technology companies
The markets in which we compete are intensely competitive. Most of our
competitors and potential competitors, including Microsoft, have significantly
greater financial, technical, sales, marketing and other resources. The
announcement of the release and the actual release of products competitive with
our existing and future product lines, such as NT Terminal Server and related
enhancements by Microsoft or third parties, could cause our existing and
potential customers to postpone or cancel plans to license our product lines.
This would adversely impact our business, operating results and financial
condition. Further, our ability to market MetaFrame and other future product
offerings may be affected by Microsoft's licensing and pricing scheme for client
devices implementing our product offerings which attach to NT Terminal Server.
In addition, alternative products exist for Internet commerce that directly
or indirectly compete with our products. Existing or new products that extend
website software to provide database access or interactive computing could
materially impact our ability to sell our products in this market. As markets
for our products continue to develop, additional companies, including companies
with significant market presence in the computer hardware, software and
networking industries, may enter the markets in which we compete and further
intensify competition. Finally, although we believe that price has historically
been a less significant competitive factor than product performance, reliability
and functionality, we believe that price competition may become more significant
in the future. We may not be able to maintain our historic prices, and any
inability to do so could adversely affect our business, results of operations
and financial condition.
As a result of these and other factors, we may not be able to compete
effectively with current or future competitors, which would have a material
adverse effect on our business, operating results and financial condition.
Our reliance on a few products for a majority of our revenue could adversely
affect our business
We anticipate that our MetaFrame and WinFrame product lines and related
enhancements will constitute the majority of our revenue for the foreseeable
future. The MetaFrame product, when combined with NT Terminal Server, provides
capabilities similar to those offered in the WinFrame technology line.
Therefore, our ability to generate revenue from our MetaFrame product will
depend upon market acceptance of NT Terminal Server products. We expect that
revenue from MetaFrame-based products will constitute an increasing percentage
of total revenue in the near future and that revenue from WinFrame-based
products will decrease over time as a percentage of total revenue. We may
experience declines in demand for our products as a result of new competitive
product releases, price competition, lack of success of our strategic partners,
technological change or other factors. In addition, the introduction of
products based on MetaFrame technology may create competition with our WinFrame
product line and may delay or replace orders of either product line. If we are
unable to successfully sell our MetaFrame and WinFrame product lines and related
enhancements, our business, operating results and financial condition would be
materially adversely affected.
Failure to properly manage our growth could adversely affect our business
We have recently experienced rapid growth in the scope of our operations,
the number of our employees and the geographic area of our operations. In
addition, we have completed certain international acquisitions since October
1997. Such growth and assimilation of operations and personnel of such acquired
companies has placed and may continue to place a significant strain on our
managerial, operational and financial resources. To manage
7
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our growth effectively, we must continue to implement and improve additional
management and financial systems and controls. Our systems, procedures or
controls may not be adequate to support our current or future operations. In
addition, we may not be able to effectively manage this expansion and still
achieve the rapid execution necessary to fully exploit the market opportunity
for our products and services in a timely and cost-effective manner. Our future
operating results will also depend on our ability to manage our expanding
product line, expand our sales and marketing organizations and expand our
support organization commensurate with the increasing base of our installed
product. Our failure to properly manage our growth could adversely affect our
business, operating results and financial condition.
In addition, we plan to increase our professional staff during 1999 as we
implement sales, marketing and support and product developments efforts, as well
as associated administrative systems, to support planned growth. As a result of
this planned growth in the size of our staff, we believe that we will require
additional facilities during 1999. Although we believe that the cost of such
additional facilities will not significantly impact our financial position or
results of operations, we anticipate that operating expenses will increase
during 1999 as a result of our planned growth in staff. Such an increase in
operating expenses may reduce our income from operations and cash flows from
operating activities in 1999.
Loss of key personnel could materially affect our business
Our future success depends, in large part, upon the services of a number of
key employees. Any officer or employee can terminate his relationship at any
time. The effective management of our anticipated growth will depend, in large
part, upon our ability to retain our highly skilled technical, managerial and
marketing personnel, and attract and maintain replacements for and additions to
such personnel in the future. Competition for such personnel is intense and may
affect our ability to successfully attract, assimilate or retain sufficiently
qualified personnel. The loss of one or more of our key personnel could have a
material adverse affect on our business, operating results and financial
condition.
Our success depends upon our ability to protect our proprietary technology
We rely primarily on a combination of copyright, trademark and trade secret
laws, as well as confidentiality procedures and contractual provisions, to
protect our proprietary rights. Our efforts to protect our proprietary
technology rights may not be successful. The loss of any material trade secret,
trademark, trade name or copyright could have a material adverse effect on us.
Despite our precautions, it may be possible for unauthorized third parties to
copy certain portions of our products or to obtain and use information regarded
as proprietary. Substantially all of our sales are derived from the licensing
of our products under "shrink wrap" license agreements that are not signed by
licensees and, therefore, may be unenforceable under the laws of certain
jurisdictions. In addition, our ability to protect our proprietary rights may
be affected by the following:
. Differences in International Law. The laws of some foreign countries do
not protect our intellectual property to the same extent as do the laws
of the United States and Canada.
. Third Party Infringement Claims. Third parties may assert infringement
claims against us in the future. This may result in costly litigation or
require us to obtain a license to intellectual property rights of such
third parties. Such licenses may not be available on reasonable terms or
at all.
As a result of these and other factors, we may not be able to compete
effectively with current or future competitors, which would have a material
adverse effect on our business, operating results and financial condition.
If we fail to introduce new products and enhance our existing products to keep
up with rapid technological change, demand for our products may decline
The markets for our products are relatively new and are characterized by:
. rapid technological change;
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. evolving industry standards;
. changes in customer requirements; and
. frequent new product introductions and enhancements, including
enhancements to certain key technology licensed from Microsoft.
These market characteristics will require us to continuously enhance our current
products and develop and introduce new products to keep pace with technological
developments and respond to evolving customer requirements. Additionally, we
and others may announce new products, new product enhancements or technologies
that could replace or shorten the life cycle of our existing product offerings.
We believe we will incur additional costs and royalties associated with the
development, licensing or acquisition of new technologies or enhancements to
existing products. This will increase our cost of revenues and operating
expenses. We cannot currently quantify the increase with respect to
transactions that have not occurred. We may use a substantial portion of our
cash and investments to fund these additional costs, resulting in a decrease in
interest income, unless such decrease is offset by cash flows from future
operations.
We may need to hire additional personnel to develop new products, product
enhancements and technologies. If we are unable to add staff and resources,
future enhancement and additional features to our existing or future products
may be delayed, which may have a material adverse effect on our business,
results of operations and financial condition.
If our products contain errors, they may be costly to correct, revenue may be
delayed, we could get sued and our reputation could be harmed
Despite significant testing by us and by current and potential customers,
our products may contain errors after commencement of commercial shipments. If
errors are discovered, we may not be able to successfully correct them in a
timely manner or at all. In addition, we may need to make significant
expenditures of capital resources in order to eliminate errors and failures.
Errors and failures in our products could result in loss of or delay in market
acceptance of our products and could damage our reputation. If one or more of
our products fails, a customer may assert warranty and other claims for
substantial damages against us. The occurrence or discovery of these types of
errors or failures could have a material adverse effect on our business,
operating results and financial condition.
Our success depends on our ability to expand and manage distribution channels
and major distributors
To increase our sales, we must further expand and manage our indirect
distribution channels, including OEMs, distributors, resellers, system
integrators and service providers. We rely significantly on independent
distributors and resellers for the marketing and distribution of our products.
We do not control our distributors and resellers. Additionally, our
distributors and resellers as well as our other indirect distribution channels
are not obligated to purchase products from us and may also represent other
lines of products. Our inability to expand and manage our relationship with our
partners, the inability or unwillingness of our partners to effectively market
and sell our products or the loss of existing partnerships could have a material
adverse effect on our business, operating results and financial condition. We
intend to leverage our relationships with hardware and software vendors and
systems integrators to encourage them to recommend or distribute our products.
In addition, an integral part of our strategy is to expand our direct sales
force and add third-party distributors both domestically and internationally.
We are currently investing, and intend to continue to invest, significant
resources to develop these channels, which could reduce our profits.
Our business may be affected by unexpected year 2000 problems
Until recently, many computer programs were written using two digits rather
than four digits to define the applicable year in the twentieth century. Such
software may recognize a date using "00" as the year 1900 rather than the year
2000. The consequences of this issue may include systems failures and business
process interruption to the extent companies fail to upgrade, replace or
otherwise address year 2000 problems. The year 2000 problem may also result in
additional business and competitive differentiation. Aside from the well-known
calculation
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<PAGE>
problems with the use of 2-digit date formats as the year changes from 1999 to
2000, the year 2000 is a special case leap year and in many organizations using
older technology, dates were used for special programmatic functions. As a
result, significant uncertainty exists in the software industry concerning the
potential impact of the year 2000 problem. We believe we have four general areas
of potential exposure with respect to the year 2000 problem:
. our own software products;
. our internal information systems;
. our computer hardware and other equipment related systems; and
. the effects of compliance efforts by third parties, including our
partners, suppliers and vendors.
While we believe that the current versions of our WinFrame and MetaFrame
products are capable of storing four-digit year data allowing applications to
differentiate between dates from the 1900s and the year 2000 and beyond, the
potential incompatibility with two-digit application programs may limit our
sales of product in those situations. There can be no assurance that our
products will not be integrated by us or our customers with, or otherwise
interact with, non-year 2000 compliant software or other products which may
malfunction and expose us to warranty and other claims from our customers or
other third parties.
We have not yet completed our assessment of year 2000 compliance issues
with respect to all of these areas. Since the year 2000 complications are not
fully known, potential year 2000 problems, including changing purchasing
patterns of customers impacted by year 2000 issues, could materially adversely
affect our business, results of operations and financial condition.
If our growth rate does not continue our financial condition could be affected
Our revenue growth rate in 1999 may not approach the levels attained in
1998, 1997 and 1996. Our growth during those three years was largely
attributable to the introduction of MetaFrame in mid-1998 and WinFrame in late
1995. To the extent our revenue growth continues, we believe that our cost of
revenues and certain operating expenses will also increase. A significant
portion of our expenses, such as employee compensation and rent, are relatively
fixed in the short term. Moreover, our expense levels are based, in part, on our
expectations regarding future revenue levels. Our income from operations and
cash flows from operating and investing activities may decrease as a percentage
of revenues in 1999. If we are unable to continue to manage our growth
efficiently, our business, financial condition and results of operations could
be materially adversely affected.
Our quarterly operating results may fluctuate
Our quarterly operating results have in the past varied and may in the
future vary significantly depending on a number of factors, including:
. the success of our MetaFrame products which in turn depends upon the
commercialization of Microsoft's NT Terminal Server;
. the effects of acquisitions or licenses of additional technology;
. the size, timing and recognition of revenue from significant orders;
. increased competition;
. changes in our pricing policies or those of our competitors, including
Microsoft;
. new product introductions or enhancements by competitors;
. delays in the introduction of products or product enhancements by us or
our competitors;
. customer order deferrals in anticipation of upgrades and new products;
. market acceptance of new products and technologies offered by us;
. changes in operating expenses, including for the addition of personnel;
. foreign currency exchange rates; and
. general economic conditions.
We continually re-evaluate our programs, including specific license terms
and conditions, to market our current and future products and services. We may
implement new programs, including offering specified and
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<PAGE>
unspecified enhancements to our current and future product lines. We may
recognize revenues associated with such enhancements after the initial shipment
or licensing of the software product or over the product's life cycle. The
timing of the implementation of such programs, the timing of the release of such
enhancements and other factors will impact the timing of our recognition of
revenues and related expenses associated with our products, related enhancements
and services. As a result of these factors, we currently cannot quantify the
impact of the re-evaluation of our programs on our business, results of
operations and financial condition.
We operate with little order backlog because our software products
typically are shipped shortly after orders are received. In addition, like many
systems level software companies, we recognize a substantial portion of our
revenues in the last month of a quarter with these revenues frequently
concentrated in the last weeks or days of the quarter. As a result, product
revenues in any quarter are substantially dependent on orders booked and shipped
in that quarter, and revenues for any future quarter are not predictable with
any degree of certainty. We may also choose to reduce prices or increase
spending in response to competition or to pursue new market opportunities. New
competitors, technological advances or other factors could result in lower
revenues and may require us to incur additional expenses, which, in turn, would
materially adversely affect our operating margins in the future.
Insufficient reserves for product returns and price reductions could adversely
affect us
We provide certain of our distributors with product return rights for stock
balancing and price protection rights. We also provide certain distributors and
resellers with limited product evaluation. We also provide certain of our
distributors with price protection rights. To cover these product returns and
price protection rights, we have established reserves based on our evaluation of
historical trends and current circumstances. These reserves may not prove to be
sufficient in the future, in which case our business, operating results and
financial condition could be adversely affected.
Our success depends on our ability to expand and manage our international
operations
Our continued growth and profitability will require further expansion of
our international operations. To successfully expand international sales, we
must establish additional foreign operations, hire additional personnel and
recruit additional international resellers. Such international operations are
subject to certain risks, such as:
. difficulties in staffing and managing foreign operations;
. fluctuations in foreign currency exchange rates;
. compliance with foreign regulatory and market requirements;
. variability of foreign economic and political conditions;
. changing restrictions imposed by regulatory requirements, tariffs or
other trade barriers or by United States export laws;
. costs of localizing products and marketing such products in foreign
countries;
. longer accounts receivable payment cycles;
. potentially adverse tax consequences, including restrictions on
repatriation of earnings;
. difficulties in protecting intellectual property; and
. burdens of complying with a wide variety of foreign laws.
Economic and market conditions may affect demand for our products
The demand for our products depends in part upon the general demand for
computer hardware and software, which fluctuates based on numerous factors,
including capital spending levels and general economic conditions. If capital
spending levels or general economic conditions are affected, our business,
financial condition and results of operations could be materially adversely
affected.
The debentures are subordinated and there are no financial covenants
The debentures are unsecured and subordinated in right of payment to any
senior indebtedness. As a result of this subordination, in the event of our
bankruptcy, liquidation or reorganization or certain other events, our assets
11
<PAGE>
will be available to pay obligations on the debentures only after all senior
indebtedness has been paid in full. After repaying any senior indebtedness, we
may not have enough assets to repay the debentures. The debentures will be
effectively subordinated to all our subsidiaries' indebtedness and other
liabilities, including trade payables. We are not prohibited from incurring
debt under the indenture. We may incur additional debt.
The indenture does not contain any financial covenants or restrictions on
the payment of dividends. The indenture does not restrict the issuance or
repurchase of securities by us or our subsidiaries. The indenture contains no
covenants or other provisions to afford you protection in the event of a highly
leveraged transaction or a change in control except as described under
"Description of Debentures--You have the option to require us to repurchase the
debentures upon a change in control." The term "change in control" is limited to
certain specified transactions. It may not include other events that might
adversely affect our financial condition. In addition, the change in control
provision will not necessarily afford you protection in the event of a highly
leveraged transaction, reorganization, merger or similar transaction involving
us.
We may not have the ability to raise the funds necessary to finance the
repurchase of the debentures
On the March 22, 2004, March 22, 2009 and March 22, 2014 repurchase dates,
holders may require us to purchase their debentures. In addition, upon a change
in control holders may require us to purchase their debentures. We cannot
guarantee that we will have the funds to pay the purchase price in cash on a
repurchase date or in the event of a change in control. We do not currently
have a credit agreement or other debt that prohibits us from purchasing the
debentures on a repurchase date or in the event of a change in control.
However, we may in the future enter into credit agreements or incur other debt
that contain restrictions and prohibitions. These future credit agreements or
other debt may provide that a change in control would be an event of default.
Future credit agreements may also prohibit us from paying the purchase price in
cash on a repurchase date or in the event of a change in control. This would
result in an event of default under the indenture. This may also result in an
event of default under our other indebtedness. In these circumstances, the
subordination provisions of the indenture would likely prohibit us from paying
you.
Possible volatility of debentures and common stock price
Our common stock price has been volatile and has fluctuated significantly.
The trading price of our common stock and our debentures is likely to continue
to be highly volatile and is subject to wide fluctuations as a result of:
. actual or anticipated variations in operating and financial results;
. anticipated revenue or earnings growth; and
. analyst reports or recommendations.
In addition, the stock market has experienced extreme price and volume
fluctuations. These broad market and industry factors may materially and
adversely affect the market price of the common stock, regardless of our actual
operating performance. Companies with volatile stock prices often face
securities class-action litigation. Securities class action litigation, if
instituted, could result in substantial costs and a diversion of management's
attention and resources, which would have a material adverse effect on our
business, financial condition and results of operations.
A public market for the debentures may not develop
Prior to the offering, there has been no trading market for the debentures.
There can be no guarantee that any market for the debentures will develop or be
maintained. If an active market for the debentures fails to develop or be
sustained, the trading price of such debentures could be materially adversely
affected.
We have anti-takeover provisions
Provisions of our Amended and Restated Certificate of Incorporation and By-
laws, as amended, as well as Delaware law could discourage a proxy contest or
make more difficult the acquisition of a substantial block of our
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<PAGE>
common stock. In addition, we are subject to the provisions of Section 203 of
the Delaware General Corporation Law which restricts certain business
combinations with interested stockholders. Our agreements with Microsoft contain
prohibitions on assignment which could have the effect of deterring an
acquisition by a third party, or limiting the price that investors might be
willing to pay in the future for shares of our common stock. In addition, our
Board of Directors is authorized to issue, without stockholder approval, up to
5,000,000 shares of preferred stock with voting, conversion and other rights and
preferences that may be superior to the common stock and that could adversely
affect the voting power or other rights of the holders of common stock. The
issuance of preferred stock or of rights to purchase preferred stock could be
used to discourage an unsolicited acquisition proposal.
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<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth, for the periods shown, the ratio of
earnings to fixed charges for us and our consolidated subsidiaries.
Fixed charges consist of:
. interest expensed and capitalized;
. amortized premiums, original issue discount and capitalized expenses
related to indebtedness;
. an estimate of the interest within rental expense; and
. preference security dividend requirements of consolidated subsidiaries.
Earnings consist of:
. the sum of the following items:
- pre-tax income from continuing operations before adjustment for
minority interests in consolidated subsidiaries or income or loss
from equity investees;
- fixed charges;
- amortization of capitalized interest;
- distributed income of equity investees; and
- our share of pre-tax losses of equity investees for which charges
arising from guarantees are included in fixed charges;
. less the sum of the following items:
- interest capitalized;
- preference security dividend requirements of consolidated
subsidiaries; and
- the minority interest in pre-tax income of subsidiaries that have
not incurred fixed charges.
The 1994 earnings amount includes accretion related to redeemable convertible
preferred securities outstanding during that year. In October 1995 the
preferred stockholders amended the terms of the preferred securities such that
the redemption price was equal to the original purchase price of the securities.
As a result, all previously accreted amounts were restored to equity in 1995.
Accordingly, no accretion amounts have been reflected in the 1995 earnings to
fixed charges ratio.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED THREE MONTHS ENDED
DECEMBER 31 MARCH 31, 1999
----------------------------------------------------------- ----------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges ..................... 1.3x 14.7x 99.7x 260.2x 90.9x 51.7x
</TABLE>
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<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling
securityholders of the debentures or the conversion shares.
DESCRIPTION OF DEBENTURES
We issued zero coupon convertible subordinated debentures due March 22,
2019 under an indenture dated as of March 22, 1999 between Citrix and State
Street Bank and Trust Company, as trustee. The following are summaries of
material portions of the debentures, the indenture and the registration rights
agreement. For more detailed information, you are directed to the form of
indenture and debenture and the registration rights agreement which have been
filed as exhibits to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999. The summaries are qualified by reference to the provisions of
the debentures, the indenture and the registration rights agreement, including
the definitions of certain terms that are not defined in this prospectus.
Wherever particular provisions or defined terms of the indenture, the debenture
or the registration rights agreement are referred to, such provisions or defined
terms are incorporated herein by reference. References in this section to
Citrix are solely to Citrix Systems, Inc. and not to its subsidiaries, unless
expressly stated to the contrary.
General
The debentures are general unsecured obligations of Citrix. The debentures
are limited to an aggregate principal amount at maturity of $850,000,000.
The debentures were initially issued in a private placement at an original issue
price of $354.71 for each $1,000 principal amount at maturity. This represented
an original issue discount of 64.53% from the principal amount payable at
maturity. The debentures will mature on March 22, 2019. The debentures will be
subordinate to all of our existing and future senior indebtedness. Neither us
nor our subsidiaries are restricted under the indenture from incurring any
indebtedness.
Except if we exercise our option to pay interest upon a change in the tax
laws, the debentures will accrue original issue discount for federal income tax
purposes. We will not make periodic payments of interest. Original issue
discount will begin accruing from the issue date of the debentures. Original
issue discount is the difference between the issue price and the principal
amount at maturity of a debenture. Should the debentures mature, be converted,
be repurchased by us or be redeemed, original issue discount and interest, if
any, will cease to accrue.
We will maintain an office where holders may surrender debentures for payment
registration, transfer or exchange in the Borough of Manhattan, The City of New
York, which shall initially be an office or agency of the trustee. We have
agreed to maintain a paying agent, conversion agent and registrar for the
debentures in the Borough of Manhattan, The City of New York. The trustee will
initially act as paying agent, conversion agent and registrar.
Form, denomination and registration of the debentures
Except in certain circumstances, the debentures are issuable only in fully-
registered, book-entry form in denominations of $1,000 principal amount at
maturity and in $1,000 multiples. The debentures are represented by one or more
permanent global debentures without coupons deposited with a custodian in the
name of a nominee of a depository, which shall initially be the Depository Trust
Company, or DTC. DTC and its direct and indirect participants maintain records
of beneficial interests in any global debenture. You may only effect transfers
through these records. Except as described below, you may not exchange your
beneficial interests in a global debenture for definitive debentures.
The record ownership in a global debenture, in whole or in part, may be
transferred only to DTC, another nominee of DTC or to a successor of DTC or its
nominee.
Except as described below, you will not be entitled to have debentures
registered in your name, will not receive or be entitled to receive physical
delivery of debentures in certificated form and will not be considered the
registered owner or holder under the indenture for any purpose.
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<PAGE>
You will not be charged a service fee for any registration if you transfer
or exchange the debentures. However, we may require you to pay to cover any tax
or other related governmental charge.
If a debenture becomes mutilated, defaced, destroyed, lost or stolen, we
will execute and the trustee will authenticate and deliver a new debenture in
the same form and same principal amount as the original debenture. Depending
upon the circumstances, we may require a security, indemnity, evidence of
destruction or loss, or payment to cover related fees and expenses.
DTC will credit on its internal systems the participant's accounts with the
appropriate principal amounts to reflect your beneficial interest in the global
debentures. Only those persons who have accounts with DTC, who hold interests
through participants or certain other entities, or maintain a custodial
relationship with a participant and have indirect access to the DTC system will
be permitted to own beneficial interests in a global debenture. DTC will
maintain records of the participants and your respective beneficial interests
and effect transfers through the maintenance of these records.
So long as DTC or its nominee is the registered owner or holder of a global
debenture, it is considered the sole owner or holder of the debentures for all
purposes under the indenture and the debentures. Except as described below, you
will not be entitled to have certificates registered in your name, will not
receive or be entitled to receive physical delivery of certificates in
definitive form and will not be considered the owner or holder of the debentures
represented by such global debentures. You may only transfer that interest in
accordance with DTC's procedures and those procedures described under the
indenture.
DTC may discontinue its services as securities depository with respect to
the debentures at any time. If DTC or any successor is unwilling or unable at
any time to continue as depository, or if it is so required and ceases to be a
"clearing agency" registered under the Securities Exchange Act, and if a
successor depository is not appointed by us within 90 days, we will cause the
debentures to be issued and delivered in definitive registered form in exchange
for the global debenture. Similarly, if an event of default has occurred and is
continuing, we will cause the debentures to be issued and delivered in
definitive registered form in exchange for the global debenture. In either
circumstance, the certificates will be registered in the name of those persons
as directed by DTC. DTC will base its instructions upon directions received
from its participants.
Payments on global debentures are made to DTC or its nominee. Neither we,
the trustee nor any paying agent have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global debentures, nor are we responsible or liable
for maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
When DTC or its nominee receives a payment in respect of a global
debenture, we expect that it will credit participants' accounts with payments in
amounts proportionate to your beneficial interest as shown on DTC's or its
nominee's records. We also expect that payments by participants to indirect
participants and by participants and indirect participants to you are governed
by standing instructions and customary practices. However, participants and
indirect participants are responsible for these payments.
If you desire to convert your interest into common stock or to cause us to
repurchase your interest under certain circumstances, you should contact your
broker, participant or indirect participant through whom you hold the beneficial
interests and obtain information on procedures, proper forms and cut-off times
for submitting requests.
Transfers between participants in DTC will be effected in accordance with
DTC rules and will be settled in clearing house funds. The laws of some states
may require that certain persons take physical delivery of securities in
definitive form. Consequently, the ability to transfer beneficial interests
into the global debenture to certain persons may be limited.
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<PAGE>
DTC will take any action permitted to be taken by a holder of debentures,
including the presentation of debentures for exchange as described below, only
at the direction of one or more participants to whose account with DTC interests
in the global debenture are credited. In addition, DTC will only take action in
respect of the principal amount of the debentures represented by the global
debenture as to which a participant has given the direction.
DTC has advised us that DTC is a limited purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve System,
a clearing corporation within the meaning of the Uniform Commercial Code and a
clearing agency registered pursuant to the provisions of Section 17A of the
Securities Exchange Act. DTC was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants. This practice eliminates the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies and clearing corporations and may include certain other
organizations. Certain participants, or their representatives, together with
other entities, own DTC. Indirect access to the DTC system is available to
banks, brokers, dealers, trust companies and others that clear through, or
maintain a direct or indirect custodial relationship with a participant.
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants and by indirect participants to you will
be governed by arrangements among the parties, subject to any statutory or
regulatory requirements that may be in effect from time to time. Redemption
notices should be sent to DTC or its nominee. If less than all of the
debentures are being redeemed, DTC will reduce the amount of interest of each
participant in such debentures in accordance with its procedures.
Although voting with respect to the debentures is limited, in certain cases
you may be required to vote on certain issues. DTC and its nominee will not
consent or vote with respect to the global debenture. Instead, under its usual
procedures, DTC will mail an omnibus proxy to us as soon as possible after the
record date. The omnibus proxy assigns the consenting or voting rights of DTC
or its trustee to those participants whose accounts the debentures are credited
on the record date. We believe that these arrangements allow you to exercise
rights equivalent in substance to the rights that can be directly exercised by a
holder of debentures.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy of the sources.
You have the right to convert the debentures into common stock
You may convert a debenture into shares of common stock at any time until
the close of business on the last business day prior to March 22, 2019.
However, if a debenture has been called for redemption, you will be entitled to
convert the debenture until the close of business on the business day
immediately preceding the date of redemption. If you had previously delivered a
notice exercising an option to require us to purchase the debenture, the
debenture may be converted only if the notice is withdrawn in accordance with
the indenture. You may convert debentures in part so long as the part is an
integral multiple of $1,000 principal amount at maturity.
The initial conversion rate of the debentures is 7.0306 shares of common
stock for each $1,000 principal amount at maturity of debentures. You will not
receive any cash payment representing accrued original issue discount upon
conversion of a debenture. Instead, upon conversion we will deliver to you a
fixed number of shares of common stock and any cash payment to account for
fractional shares. The cash payment for fractional shares will be based on the
closing price of the common stock on the trading day immediately prior to the
conversion date. Delivery of Common Stock will be deemed to satisfy our
obligation to pay the principal amount of the debenture and accrued original
issue discount. Accrued original issue discount will be deemed paid in full
rather than canceled, extinguished or forfeited. We will not adjust the
conversion rate to account for the accrued original issue discount.
The conversion rate will be subject to adjustment upon the following
events:
. issuance of shares of common stock as a dividend or distribution on the
common stock;
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<PAGE>
. subdivision or combination of the outstanding common stock;
. issuance to all common stock holders of rights or warrants that allow
the holders to purchase common stock at less than the current market
price for a 60-day period;
. distribution to all common stock holders of:
- capital stock other than our common stock;
- debt; or
- other assets but excluding all cash distributions and rights and
warrants described above;
. our paying an all-cash distribution to all holders of common stock or
the repurchase by us or our subsidiaries of our common stock in a tender
offer if, when aggregated with all other all-cash distributions or
repurchases during the prior 12 calendar months for which no adjustment
to the conversion rate has been made, the distribution or repurchase
exceeds 10% of our market capitalization.
We may increase the conversion rate as permitted by law for at least 20
days, so long as the increase is irrevocable during the period. We are not
required to adjust the conversion rate until adjustments greater than 1% have
occurred.
If we implement a stockholders' rights plan, it must provide that upon
conversion of the debentures the holders will receive:
. the common stock issuable upon conversion; and
. the rights granted under the plan, whether or not the rights have
separated from the common stock at the time of conversion.
Subject to the right of the holders of the debentures upon a change in
control of Citrix, we or a successor corporation will execute a supplemental
indenture if any of the following occur:
. any reclassification or change of shares of common stock issuable upon
conversion of the debentures, other than a change in par value or as a
result of a subdivision or combination;
. any consolidation or merger other than a merger in which we are the
continuing corporation and which does not result in any reclassification
or change in our common stock; or
. any sale or conveyance of all or substantially all of our property and
assets to any person.
The supplemental indenture will provide that the debenture holder has the right
to convert the debenture into the kind and amount of shares of stock and other
securities and property, including cash, that a holder of common stock
deliverable upon conversion of the debenture immediately prior to the
transaction would have received, and in the supplemental indenture will provide
for conversion rate adjustments in the supplemental indenture as close as
possible to the adjustments of the conversion rate provided by the indenture.
The term "all or substantially all" as used in the immediately preceding
paragraph will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. There may be a degree of
uncertainty in interpreting the phrase. As a result, if holders were to assert
that a conversion rate adjustment or the conversion privilege or the execution
of a supplemental indenture was required under the indenture and we were to
contest this assertion, we could not guarantee how a court would interpret this
phrase. This may prevent the trustee or the holders from successfully asserting
that the conversion rate or the conversion privilege is subject to adjustment or
that the debentures are convertible into other shares of stock and other
securities and property.
If we adjust the conversion rate as a result of our issuance of rights,
warrants, evidences of indebtedness, securities, cash or other property, holders
may be deemed to have received constructive distributions taxable as dividends.
See "Certain United States Federal Income Tax Considerations."
If we exercise our option to have interest instead of original issue
discount accrue following a tax event, you will still receive the same number of
shares of common stock. If you surrender a debenture for conversion from the
close of business on a regular record date to the opening of business of the
next interest payment date, you must
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<PAGE>
pay us the interest payment that we will be required to pay to record holder.
Except as described above, we will not pay interest on converted debentures on
any interest payment date after the conversion date. See "--We have the option
to convert the debentures to semiannual coupon debentures on a tax event."
We have the option to redeem the debentures
No sinking fund is provided for the debentures. On or after March 22,
2004, we may redeem the debentures for cash, in whole or in part, by giving
between 20 and 60 days' notice to holders.
The table below shows redemption prices of debentures per $1,000 principal
amount at maturity at March 22, 2004, at each following March 22 prior to
maturity and at maturity on March 22, 2019. The prices reflect the accrued
original issue discount calculated through each date. The redemption price of a
debenture redeemed between these dates would include an additional amount
reflecting the additional original issue discount accrued since the next
preceding date in the table to the actual redemption date.
<TABLE>
<CAPTION>
(1) (2) (3)
--- --- ---
Debenture Accrued Original Redemption
--------- ---------------- ----------
Issue Price Issue Discount Price
----------- -------------- -----
Redemption Date at 5.25% (1) + (2)
--------------- -------- --------
<S> <C> <C> <C>
March 22, 2004 .......... $354.71 $104.92 $ 459.63
March 22, 2005 .......... 354.71 129.36 484.07
March 22, 2006 .......... 354.71 155.11 509.82
March 22, 2007 .......... 354.71 182.23 536.94
March 22, 2008 .......... 354.71 210.79 565.50
March 22, 2009 .......... 354.71 240.87 595.58
March 22, 2010 .......... 354.71 272.54 627.25
March 22, 2011 .......... 354.71 305.91 660.62
March 22, 2012 .......... 354.71 341.04 695.75
March 22, 2013 .......... 354.71 378.05 732.76
March 22, 2014 .......... 354.71 417.03 771.74
March 22, 2015 .......... 354.71 458.07 812.78
March 22, 2016 .......... 354.71 501.30 856.01
March 22, 2017 .......... 354.71 546.84 901.55
March 22, 2018 .......... 354.71 594.79 949.50
At stated maturity ...... 354.71 645.29 1,000.00
</TABLE>
If we exercise our option to have interest instead of original issue discount
accrue on the debentures following a tax event, the debentures will be
redeemable at the restated principal amount plus the unpaid interest
19
<PAGE>
which accrued from the date we exercise our option. However, in no event may the
debentures be redeemed prior to March 22, 2004. See "--We have the option to
convert the debentures to semiannual coupon debentures on a tax event."
If we decide to redeem less than all of the outstanding debentures, the
trustee will select the debentures to be redeemed in principal amounts of $1,000
at maturity by the following methods:
. by lot;
. pro rata; or
. by another method the trustee considers fair and appropriate.
If the trustee selects a portion of your debentures for partial redemption and
you convert a portion of the same debentures, the converted portion will be
deemed to be of the portion selected for redemption.
All debentures which we or our subsidiaries redeem or acquire prior to
maturity will be immediately canceled. The debentures may not be held, reissued
or resold.
You have the option to require us to repurchase the debentures
On March 22, 2004, March 22, 2009 and March 22, 2014, we will be required
to repurchase, at your option, any outstanding debenture for which you deliver a
written repurchase notice to the paying agent. This notice must be delivered
during the period beginning at any time from the opening of business on the date
that is 20 business days prior to the repurchase date until the close of
business on the repurchase date. If the repurchase notice is given and
withdrawn during the period, we will not be obligated to repurchase the related
debentures. Our repurchase obligation will be subject to certain additional
conditions.
Your repurchase notice must state:
(1) the debenture certificate numbers;
(2) the portion of the principal amount at maturity of debentures to be
purchased, in multiples of $1,000;
(3) that the debentures are to be purchased by us pursuant to the
debentures; and
(4) if we elect to pay the repurchase price in common stock but fail to
satisfy the payment conditions and ultimately have to pay you in cash,
whether you would choose:
. to withdraw your repurchase notice as to some or all of the
debentures to which it relates; or
. to receive cash for the repurchase price for the debentures
subject to the repurchase notice.
If you fail to indicate your choice in clause (4) above, you will receive
cash for the entire repurchase price for all debentures subject to the
repurchase notice.
You may withdraw any repurchase notice by a written notice of withdrawal
delivered to the paying agent prior to the close of business on the repurchase
date. The notice of withdrawal must state:
. the principal amount at maturity;
. the certificate numbers of the withdrawn debentures; and
. the principal amount at maturity, if any, which remains subject to the
repurchase notice.
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<PAGE>
The repurchase price payable will be equal to the issue price plus accrued
original issue discount through the repurchase date. The table below shows the
repurchase prices of a debenture as of each of the repurchase dates.
<TABLE>
<CAPTION>
Repurchase Date Repurchase Price
--------------- ----------------
<S> <C>
March 22, 2004......................... $459.63
March 22, 2009......................... $595.58
March 22, 2014......................... $771.74
</TABLE>
If we have previously exercised our option to have interest instead of
original issue discount accrue on the debentures following a tax event, the
repurchase price will be equal to the restated principal amount plus the accrued
and unpaid interest that accrued from the date we exercised our option. See
"--We have the option to convert the debentures to semiannual coupon debentures
on a tax event."
We may, at our option, elect to pay the repurchase price in cash or shares
of common stock, or any combination of cash and common stock. If we elect to pay
any part or all of the repurchase price in shares of common stock, we will
deliver the number of shares of common stock equal to the portion of the
repurchase price divided by the market price of a share of common stock. No
fractional shares of common stock will be delivered. Instead, we will pay cash
based on the market price for all fractional shares of common stock. The market
price for our common stock will be determined based on the closing price per
share for the five trading day period ending on the third business day prior to
the applicable repurchase date. Because the market price of the common stock is
determined prior to the applicable repurchase date, holders of debentures bear
market risk from the date the market price is determined to the repurchase date.
We will be required to give notice at least 20 business days prior to each
repurchase date to you at your address shown in the register of the registrar
and to beneficial owners as required by law. The notice will state:
. whether we will pay the repurchase price of debentures in cash or common
stock or any combination of cash and common stock, specifying the
percentages of each;
. if we elect to pay any portion in common stock, the method of
calculating the market price of the common stock; and
. the procedures that you must follow to require us to repurchase
debentures from you.
We will publish the actual number of shares of common stock we will use as
payment in accordance with the above provisions in a daily newspaper of national
circulation.
Our right to repurchase debentures with common stock is subject to us
satisfying various conditions, including:
. the registration of the common stock with the SEC, if required; and
. any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.
We will comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
tender offer rules under the Securities Exchange Act which may be applicable at
the time. We will file Schedule 13E-4 or any other schedule required in
connection with any offer by us to repurchase debentures at your option.
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<PAGE>
Our ability to repurchase debentures with cash may be limited by the terms
of our then existing borrowing agreements. We may not repurchase debentures for
cash at the option of holders exercising their right of repurchase if an event
of default has occurred and is continuing, except a default in the payment of
the repurchase price with respect to the debentures. See "--Circumstances when
we are in default" for a description of the applicable events of default.
A holder must either effect book-entry transfer or deliver the debenture,
together with necessary endorsements, to the office of the paying agent after
delivery of the repurchase notice to receive payment of the repurchase price.
You will receive payment of the repurchase price following the later of the
repurchase date or the time of book-entry transfer or the delivery of the
debenture. If the paying agent holds money or securities sufficient to pay the
repurchase price of the debenture on the business day following the repurchase
date, then:
. the debenture will cease to be outstanding;
. original issue discount on will cease to accrue; and
. all other rights of the holder will terminate.
This will be the case whether or not book-entry transfer of the debenture
is made or whether the debenture is delivered to the paying agent.
You have the option to require us to repurchase the debentures upon a change in
control
If we undergo a change in control, you will have the option, subject to the
terms and conditions of the indenture, to require us to purchase your debentures
30 business days after the change in control. We will pay a purchase price
equal to the issue price plus accrued original issue discount through the
purchase date. You may require us to purchase all or any part of the debentures
so long as the principal amount at maturity of the debentures being purchased is
an integral multiple of $1,000.
A change in control occurs in the following situations:
. any person or group becomes the beneficial owner of our shares of voting
stock representing 50% or more of the total voting power of all
outstanding classes of our voting stock or has the power, directly or
indirectly, to elect a majority of the members of our board of
directors;
. If:
- we consolidate or merge with another person;
- we sell, assign, convey, transfer, lease or otherwise dispose of
all or substantially all of our assets; or
- any person consolidates with or merges with us.
However, these conditions will not be a change in control if the
persons that beneficially own shares of our voting stock immediately
prior to a transaction beneficially own shares with a majority of the
total voting power of all outstanding classes of voting stock of the
surviving or transferee person; or
. we liquidate or dissolve our business.
A holder must deliver written notice to a paying agent prior to the close
of business on the business day prior to the date on which the debentures are to
be purchased to exercise the repurchase right upon a change in control. This
notice must specify the debentures submitted for repurchase. You may withdraw
the notice by delivering a written notice of withdrawal to the paying agent
before the same date.
Within ten business days after a change in control, we will publish and
mail to the trustee and to each holder of the debentures a written notice of the
change in control which specifies the terms and conditions and the procedures
required for exercise of a holder's right to require us to purchase your
debentures.
22
<PAGE>
If we had previously exercised our option to have interest instead of
original issue discount accrue on the debentures following a tax event, we will
purchase the debentures at a cash price equal to the restated principal amount
plus accrued and unpaid interest which had accrued from the date we exercised
our option. See "--We have the option to convert the debentures to semiannual
coupon debentures on a tax event."
For purposes of defining a change of control:
. the term person and the term group have the meanings given by Sections
13(d) and 14(d) of the Securities Exchange Act or any successor
provisions;
. the term group includes any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-
5(b)(1) under the Securities Exchange Act or any successor provision;
. the term beneficial owner is determined in accordance with Rule 13d-3
under the Securities Exchange Act, as in effect on March 22, 1999,
except that the number of shares of our voting stock will include all
unissued shares deemed to be held by all other persons;
. the term beneficially owned means that which is owned by a beneficial
owner; and
. the term unissued shares means shares of voting stock not outstanding
that are subject to options, warrants, rights to purchase or conversion
privileges exercisable within 60 days of the date of a change in
control.
The term all or substantially all as used in the definition of change in
control will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. There may be a degree of
uncertainty in interpreting this phrase. As a consequence, if holders elect to
exercise their rights following the occurrence of a transaction which they
believe constitutes a transfer of all or substantially all of the assets and
we contest, we cannot guarantee how a court would interpret this phrase under
applicable law. This, may prevent the trustee or the holders from successfully
asserting that a change in control has occurred.
The change in control purchase feature make more difficult or discourage a
takeover of Citrix and the removal of incumbent management. We are not aware of
any specific effort to accumulate shares of our common stock or to obtain
control of us by means of a merger, tender offer, solicitation or otherwise. In
addition, the change in control purchase feature is not part of a plan by our
management to adopt a series of anti-takeover provisions. Instead, the change in
control purchase feature is a result of negotiations between us and the initial
purchaser in the initial private placement.
In the future, we could enter into transactions that would not constitute a
change in control but that would increase our outstanding indebtedness or
otherwise adversely affect the debenture holders. Neither we nor our
subsidiaries are prohibited from incurring additional debt or undertake
recapitalizations. Should we incur significant amounts of additional debt, it
may adversely effect our ability to service our debt, including the debentures.
In addition, if a change in control were to occur, we may not have enough
funds to pay the change in control purchase price. In addition, we may in the
future incur other indebtedness that may have similar change of control
provisions permitting its holders to accelerate or to require us to repurchase
our indebtedness upon the occurrence of similar events. Should we fail to
repurchase the debentures when required following a change in control, we will
be in default under the indenture whether or not repurchase is permitted by the
related subordination provisions.
Your option to have us purchase all or part of your debentures upon the
occurrence of a change of control is the only provision designed to afford you
with protection in the event of takeovers, recapitalizations, highly leveraged
transactions or similar restructurings as described above. The indenture does
not contain any covenants or other provisions designed to afford you additional
protections in similar circumstances.
If definitive debentures are issued under the limited circumstances
described above, holders who elect to exercise the option to have their
debentures repurchased following a change in control must surrender their
23
<PAGE>
definitive debentures and related documentation at the office of a paying agent.
If only a portion is submitted for purchase, the holder will receive a new
definitive debenture for the principal amount of the debentures that have not
been submitted for purchase.
The debentures are subordinated
The debentures are subordinated to all existing and future senior
indebtedness. The holders of senior indebtedness will be entitled to receive
payment in full before the holders of debentures will be entitled to receive any
payment on the debentures if we pay or distribute assets in any of the following
circumstances:
. dissolution;
. winding up;
. voluntary or involuntary bankruptcy;
. insolvency;
. liquidation; or
. reorganization.
If we default in payment on any senior indebtedness, we will not make
payments on the debentures until:
. we have paid in full the senior indebtedness;
. we have cured or received a waiver from the holder of senior
indebtedness; or
. the default has ceased.
Upon an event of default on any senior indebtedness, other than a payment
default, which permits a holder of senior indebtedness to accelerate its
maturity, and if a holder of senior indebtedness provides written notice of
default to the trustee, then we will not make payments on the debentures until
the default has been cured, waived or has ceased to exist.
We may, however, resume payments, not otherwise prohibited by the previous
sentence, on the debentures for a period of more than 180 days after the notice
of default is given, unless the maturity of the senior indebtedness has been
accelerated. If the senior indebtedness has been accelerated, we will not make
any payment on the debentures until the acceleration has been waived, rescinded
or annulled or until the senior indebtedness has been paid in full.
Holders of senior indebtedness may not give more than one default notice
with respect to the same issue of senior indebtedness within a period of 360
consecutive days. If a default existed on the date of any default notice and the
default was known to the holders of senior indebtedness, they may not make the
default the basis for giving a subsequent default notice.
In the event that the trustee, any paying agent or any holder of debentures
receives any payment or distribution of assets from us in violation of these
subordination provisions before all senior indebtedness is paid in full, the
payment or distribution will be held in trust for holders of senior indebtedness
or their representatives to the extent necessary to make payment in full of all
senior indebtedness.
If we file for bankruptcy, dissolve or reorganize, holders of senior
indebtedness may receive more ratably, and holders of the debentures may receive
less ratably, than other of our creditors. The subordination will not prevent
the occurrence of any event of default under the indenture.
As of March 31, 1999, we had no material indebtedness outstanding that
would constitute senior indebtedness. The indenture does not limit the amount of
indebtedness, including senior indebtedness, that Citrix or any subsidiary can
create, incur, assume or guarantee.
24
<PAGE>
Definitions
The term capitalized lease obligation means any obligation under a lease
or other similar agreement of any real, personal or mixed property that is
required to be classified and accounted for as a capital lease obligation under
generally accepted accounting principles.
The term currency agreement means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect us
against fluctuations in currency values.
The term indebtedness with respect to any person means:
. all liabilities for borrowed money or for the deferred purchase price of
property or services, excluding any trade accounts payable and other
current liabilities incurred in the ordinary course of business;
. all obligations evidenced by bonds, notes, debentures or other similar
instruments;
. all capitalized lease obligations;
. all guarantees of indebtedness;
. all obligations in respect of currency agreements and interest rate
protection obligations; and
. any amendment or modification of any liability of the types referred to
above.
The term interest rate protection agreement means any arrangement between
us and any other person in which the person is entitled to receive periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by the person
calculated by applying a fixed or a floating rate of interest on the same
notional amount, including, without limitation, interest rate swaps, caps,
floors, collars and similar agreements.
The term interest rate protection obligations means our obligations
pursuant to an interest rate protection agreement.
The term senior indebtedness means the principal of and premium, if any,
interest and other amounts payable on or in respect of any of our current or
future indebtedness unless the instrument creating or evidencing the
indebtedness expressly provides that the indebtedness will not be senior in
right of payment to, will be junior in right of payment to, or will be on the
same basis in right of payment with, the debentures. However, the term senior
indebtedness will not include:
. indebtedness evidenced by the debentures; and
. our indebtedness to one of our subsidiaries.
The term significant subsidiary means any subsidiary of Citrix which is a
significant subsidiary within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC, as in effect on the date of the indenture.
The term voting stock means any class or classes of capital stock
pursuant to which the holders of the stock under ordinary circumstances have the
power to vote in the election of the board of directors, managers or trustees of
any person, irrespective of whether or not capital stock of any other class or
classes will or may have voting power by reason of any contingency happening.
Circumstances when we are in default
We will be in default under the indenture if:
(1) we default in payment of:
. the principal amount at maturity, or the restated principal amount
if we exercise our option to have interest instead of original
issue discount accrue on the debentures following a tax event;
. issue price;
25
<PAGE>
. accrued original issue discount, or the accrued and unpaid interest
if we exercise our option to have interest instead of original
issue discount accrue on the debentures following a tax event;
. redemption price;
. repurchase price;
. change in control purchase price; or
. any interest when due.
(2) we fail to comply with any of our other covenants in the indenture
after notice for a period of 60 days;
(3) we fail to deliver common stock upon conversion for a period of five
days;
(4) we default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by us or any significant subsidiary
having an aggregate outstanding principal amount in excess of
$10,000,000, which results in the indebtedness being accelerated,
without the indebtedness being discharged or the acceleration
rescinded or annulled within 20 days after receipt of notice as
provided in the indenture; or
(5) we experience certain events of bankruptcy, insolvency or
reorganization affecting us or any significant subsidiary.
The trustee will give notice to holders of the debentures of any continuing
default known to the trustee within 90 days after the occurrence of the default.
However, the trustee may withhold notice if it determines in good faith that
withholding the notice is in the interests of the holders of the debentures.
If we default under the circumstances described in items (1) through (4)
above and the default continues, the trustee or the holders of at least 25% in
principal amount at maturity of the debentures then outstanding may declare, by
giving proper notice, the issue price plus accrued original issue discount on
the outstanding debentures immediately due and payable immediately. If we
exercise our option to have interest instead of original issue discount accrue
on the debentures following a tax event, the declaration of acceleration
referred to above will make the restated principal amount plus accrued and
unpaid interest immediately payable.
If we default under the circumstances described in item (5) above with
respect to the Company, all unpaid issue price plus accrued original issue
discount and interest, if any, on the outstanding debentures will automatically
become immediately due and payable. If we exercise our option to have interest
instead of original issue discount accrue on the debentures following a tax
event, the restated principal amount plus accrued and unpaid interest will
become automatically and immediately payable.
Interest will accrue to the extent permitted by law at the rate of 6.25%
per year, compounded semi-annually, and be payable on demand upon a default in
the payment of:
. the principal amount at maturity;
. issue price;
. accrued original issue discount;
. redemption price;
. repurchase price;
. change in control purchase price; or
. any interest due.
The accrual of interest on overdue amounts shall be instead of, and not in
addition to, the continued accrual of original issue discount. If we exercise
our option to have interest instead of original issue discount accrue on the
debentures following a tax event, interest will accrue at the same rate and
under the same terms on the restated principal amount and any accrued and unpaid
interest.
26
<PAGE>
Holders of a majority in principal amount at maturity of the outstanding
debentures may waive certain existing defaults or events of default and its
consequences on behalf of all holders. However, the holders may not waive any of
the following:
. existing default in the payment on the debentures;
. any default with respect to the conversion rights of the holders; or
. any default with respect to any provision of the indenture that cannot
be modified or amended without the consent of each affected holder.
A holder may pursue remedies under the indenture against us if:
. the holder gives the trustee written notice of a continuing event of
default;
. holders of at least 25% in principal amount at maturity of the
outstanding debentures make a written request to the trustee to pursue
the remedy;
. the holders offer satisfactory indemnity to the trustee against any
loss, liability or expense;
. the trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
. the trustee has not have received during the 60-day period a contrary
direction from the holders of a majority in principal amount at maturity
of the outstanding debentures.
We must deliver an officers' certificate to the trustee within 90 days
after the end of our fiscal year which certifies that, to the officers'
knowledge, we are in compliance with all conditions and covenants required under
the indenture. The officers must also state whether or not they know of any
default or event of default, and if so, describe the default and the efforts to
remedy the default.
Amendments
Citrix and the trustee may amend or supplement the indenture or the
debentures with the written consent of the holders of at least a majority in
principal amount at maturity of the outstanding debentures. The holders of a
majority in principal amount at maturity of the debentures outstanding may waive
compliance in a particular instance by us with any provision of the indenture or
the debentures without notice to any holder. However, each affected holder must
consent to any amendment, supplement or waiver which:
. reduces the percentage of holders that must consent to an amendment,
supplement or waiver;
. alters the accrual rate of original issue discount or the interest rate;
. reduces the principal amount at maturity, restated principal amount,
issue price, repurchase price or change in control purchase price;
. extends the stated maturity of any debenture;
. changes the definition of the term change in control applicable to any
debenture;
. changes the purchase date after a change in control;
. adversely alters any other change in control provision or any redemption
provision;
. adversely alters the conversion or purchase provisions;
. reduces the percentage necessary to waive defaults or events of default;
. modifies the subordination provisions in a manner adverse to the
debenture holders;
. changes the currency of any debenture; or
. impairs the right to enforce payment or conversion of the debentures.
Citrix and the trustee may amend or supplement the indenture without the
without consent of holders in the following situations:
. to comply with certain conversion adjustment, liquidation and merger
provisions described in the indenture;
. to cure any ambiguity, defect or inconsistency or to make any other
change that does not adversely affect the rights of the holders;
27
<PAGE>
. to comply with the provisions of the Trust Indenture Act of 1939; or
. to appoint a successor trustee.
No amendment may be made to the subordination provisions if it adversely
affects any holders of senior indebtedness, unless the holders consent to the
amendment, as required pursuant to the terms of the senior indebtedness.
We have the option to convert the debentures to semiannual coupon debentures on
a tax event
From and after the date a tax event occurs, we will have the option to
elect to pay interest at 5.25% per year on the debentures instead of allowing
original issue discount to accrue. The principal amount, which will be
restated, will be calculated by adding the issue price and the original discount
which had accrued up until the date on which we exercise the option. If we
elect this option, interest will be based on a 360-day year comprised of twelve
30-day months. Interest will accrue from the most recent date to which interest
has been paid, or from the option exercise date if no interest has been paid.
The interest on the restated principal amount will be payable semiannually on
March 22 to holders of record on the immediately preceding March 7 and on
September 22 to holders of record on the immediately preceding September 7.
A tax event occurs when we receive an opinion from experienced
independent tax counsel that states that:
. any amendment, or change or announced prospective change in the laws or
regulations of the United States or any of its political subdivisions or
taxing authorities of the United States, or
. any amendment, change, interpretation or application of the laws or
regulations by any legislative body, court, government agency or
regulatory authority,
which, if enacted, presents more than an insubstantial risk that interest,
including original issue discount, payable on the debentures either:
. would not be deductible on a current accrual basis, or
. would not be deductible under any other method,
in whole or in part, by Citrix for United States federal income tax purposes.
President Clinton's fiscal year 1997 budget proposed a series of tax law
changes. If enacted and applied to the debentures, we would have been prevented
from deducting interest, including original issue discount, payable on the
debentures on a current accrual basis. In addition, we may have been prevented
from deducting some or all of the interest, including original issue discount,
payable on the debentures under any other method for United States federal
income tax purposes. This proposal was not adopted by Congress and was not part
of the Taxpayer Relief Act of 1997. However, a similar proposal was included in
President Clinton's fiscal year 1998 budget proposal introduced in February
1998. This proposal was also not adopted by Congress and was not part of the
Internal Revenue Services Restructuring and Reform Bill of 1998 or the Tax and
Trade Relief Extension Act of 1998. Another similar proposal has been recently
included in President Clinton's fiscal year 1999 budget proposal introduced in
February 1999.
If this or a similar proposal were ever enacted and applied to the
debentures in a manner that would limit our ability to:
. deduct the original issue discount payable on the debentures on a
current accrual basis, or
. deduct the original issue discount payable on the debentures under any
other method for United States federal income tax purposes,
such enactment would result in a tax event. As a consequence, the terms of the
debentures would be subject to modification at our option.
28
<PAGE>
The modification of the terms of the debentures by us upon a tax event as
described above could alter the timing of income recognition by holders of the
debentures.
Your registration rights
We have entered into a registration rights agreement with the initial
purchaser. Pursuant to the agreement, we have agreed, at our own expense and
for the benefit of the holders of the debentures, to:
. use reasonable best efforts to file a shelf registration statement with
the SEC on Form S-3 covering resales of the debentures and the common
stock issuable upon their conversion pursuant to Rule 415 under the
Securities Act;
. use reasonable best efforts to cause the shelf registration statement to
be declared effective under the Securities Act; and use reasonable best
efforts to keep the shelf registration statement effective after its
effective date until the earliest of the following dates:
- the second anniversary of the effective date of the registration
statement;
- the time when the registrable securities have been sold pursuant to
the shelf registration statement, transferred pursuant to Rule 144
under the Securities Act or otherwise transferred in such a way
that the securities are not subject to transfer restrictions under
the Securities Act and no longer require a restrictive legend under
the Securities Act; or
- the time when company counsel is of the opinion that all of the
registrable securities held by non-affiliates from the time of
issuance are eligible for sale pursuant to Rule 144(k) or a
successor rule under the Securities Act.
This prospectus is a part of a shelf registration statement. We may
suspend the use of the prospectus during certain black-out periods. We are
entitled to enact these black-out periods if we determine in good faith that it
is in our best interest and if we provide the registered holders with written
notice of the suspension. The period may not exceed 30 days in any three-month
period and may not exceed 90 days in the aggregate for all periods in any
12-month period.
We have agreed to pay the following predetermined liquidated damages to
holders of debentures and holders of common stock issued upon conversion of the
debentures if we fail to meet certain obligations under the registration rights
agreement:
. If the shelf registration statement has not been filed with the
Commission on or prior to the 60th day after the date of original
issuance of the debentures, additional interest will accrue on the
debentures and common stock issued upon conversion of the debentures at
a rate of 0.25% per year.
. If the shelf registration statement has not been declared effective by
the Commission on or prior to the 180th day after the first date of
original issuance of the debentures, additional interest will accrue on
the debentures and common stock issued upon conversion of the debentures
at a rate of 0.5% per year.
. If the shelf registration statement, once filed and declared effective,
ceases to be effective or usable in connection with resales of
debentures and the common stock issuable upon conversion, additional
interest will accrue on the debentures and common stock issued upon
conversion of the debentures at a rate of 0.5% per year.
The additional interest will accrue from and including the date on which any
registration default occurs until, but excluding, the date on which all
registration defaults have been cured.
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<PAGE>
After the shelf registration statement is filed, we will:
. provide a copy of the prospectus to each holder for whom the shelf
registration statement was filed;
. notify each such holder when the shelf registration statement has become
effective; and
. take other actions required to permit resales of the debentures and the
common stock issuable upon the conversion of the debentures.
A beneficial holder selling securities pursuant to the shelf registration
statement generally is required to be named as a selling security holder in the
prospectus and to deliver a prospectus to purchasers. The selling securityholder
will be subject to certain of the civil liability provisions under the
Securities Act and will be bound by provisions of the registration rights
agreement, including indemnification obligations.
We have the ability to discharge the indenture
We may satisfy and discharge our obligations under the indenture by
delivering all outstanding debentures for cancellation to the trustee or, after
the debentures have become due and payable, by depositing enough cash or common
stock, when applicable, to pay all of the outstanding debentures and all other
sums payable under the indenture by us with the trustee, the paying agent or the
conversion agent.
Effect if we merge or consolidate with another corporation
We may consolidate or merge with any other corporation, and we may sell,
lease, convey, assign or otherwise transfer all or substantially all our
property and assets to any other corporation, provided:
. the resulting, surviving or successor corporation is organized and
existing under the laws of the United States of America, any state in
the United States or the District of Columbia;
. the resulting, surviving or successor corporation expressly assumes all
of our obligations under the debentures and the indenture by a
supplemental indenture executed and delivered to the trustee;
. no default or event of default would occur nor would continue
immediately after giving effect to such transaction; and
. certain other conditions are met.
Thereafter, in any transaction, other than a lease, in which we are not the
surviving or resulting corporation, we will be released from all of our
obligations under the indenture and the debentures.
Limitations of claims in bankruptcy
Under bankruptcy law, if a bankruptcy proceeding is commenced with respect
to us, a holder is limited to claiming the issue price of the debenture plus
that portion of the original issue discount that has accrued from the issue date
to the commencement of the bankruptcy proceeding. In addition, the holders of
the debentures will be effectively subordinated to the indebtedness and other
obligations of our subsidiaries.
The trustee
State Street Bank & Trust Company has agreed to serve as the trustee under
the indenture. The trustee will be permitted to deal with us and any of our
affiliates with the same rights as if it were not trustee. However, under the
Trust Indenture Act of 1939, if the trustee has any conflicting interests and a
default exists on the debentures, it must either eliminate the conflict or
resign.
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<PAGE>
The holders of a majority in principal amount at maturity of all
outstanding debentures have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy or power available to the
trustee as long as the direction:
. does not conflict with any law;
. does not conflict with the indenture;
. is not unduly prejudicial to the rights of another holder or the
trustee; and
. does not involve the trustee in personal liability.
31
<PAGE>
DESCRIPTION OF CAPITAL STOCK
We have authorized capital stock of 400,000,000 shares of common stock,
$.001 par value per share, and 5,000,000 shares of preferred stock, $.01 par
value per share.
The following summary of certain provisions of the common stock and
preferred stock does not purport to be complete and is subject to and qualified
in its entirety by applicable law and by our Amended and Restated Certificate of
Incorporation and By-laws, as amended.
Our common stock
Holders of common stock are entitled to one vote per share on matters to be
voted upon by the stockholders. The common stock has no cumulative voting
rights. Holders of common stock are entitled to receive ratable dividends out
of legally available funds as declared by the board of directors. Upon
liquidation, dissolution or winding up of Citrix, holders of common stock share
ratably in the assets available for distribution to our stockholders. The
holders of common stock have no preemptive, subscription, redemption or
conversion rights and are subject to the preferential rights of any outstanding
preferred stock.
Our preferred stock
Our Board of Directors has the authority, without further stockholder
approval, to issue up to 5,000,000 shares of preferred stock in one or more
series and to fix its relative rights, preferences, privileges, qualifications,
limitations and restrictions. By issuing preferred stock in certain
circumstances, we may in effect:
. delay, defer or prevent a change in control of Citrix;
. discourage bids for our common stock at a premium over the market price
of the common stock;
. adversely affect the market price of our common stock; and
. adversely affect the voting and other rights of the holders of our
common stock.
No shares of preferred stock are currently outstanding. We have no present
plans to issue any shares of preferred stock.
We have taken certain anti-takeover measures
Our certificate of incorporation and by-laws contain several other
provisions that are commonly considered to have an anti-takeover effect,
including:
. classifying the board of directors into three classes with staggered
three-year terms;
. prohibiting stockholder action by written consent;
. requiring 75% stockholder approval for certain actions taken with
respect to the certificate;
. allowing the directors to enlarge the size of the board and fill any
vacancies on the board;
. prohibiting nominations for directors by stockholders at any annual or
special meeting unless the stockholder intending to make a nomination
notifies us of its intention a specified period in advance and furnishes
certain information;
. requiring that special meetings of our stockholders be called only by
the president, the chairman of the board or a majority of the directors;
and
. requiring advance notice of business to be brought by a stockholder
before the annual meeting.
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<PAGE>
Section 203 of the Delaware General Corporation Law applies to corporate
takeovers of Delaware corporations. With some exceptions, Section 203 prevents
a corporation from engaging in any business combination with any interested
stockholder. In general, an interested stockholder is a stockholder owning 15%
or more of the corporation's outstanding voting stock for a three-year period
following the date that the stockholder becomes an interested stockholder,
unless:
. prior to the date that the stockholder becomes an interested
stockholder, the corporation's board of directors approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder;
. upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding certain shares; or
. at or subsequent to the date that the stockholder becomes an interested
stockholder, the business combination is approved by the board of
directors of the corporation and by the affirmative votes of at least
two-thirds of the outstanding voting stock that is not owned by the
interested stockholder.
We are a Delaware corporation that is subject to Section 203 and have not
opted out of its provisions.
The foregoing provisions of Delaware law and provisions of our certificate
of incorporation and by-laws could discourage a proxy contest or make more
difficult the acquisition of a substantial block of our common stock.
The transfer agent and registrar
EquiServe Limited Partnership is the transfer agent and registrar for our
common stock.
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<PAGE>
SELLING SECURITYHOLDERS
We originally issued the debentures in a private placement. The debentures
were resold by the initial purchaser to qualified institutional buyers within
the meaning of Rule 144A under the Securities Act in transactions exempt from
registration under the Securities Act. The debentures and the conversion shares
that may be offered pursuant to this prospectus will be offered by the selling
securityholders, which includes their transferees, pledgees or donees or their
successors. The following table sets forth certain information concerning the
principal amount of debentures beneficially owned by each selling securityholder
and the number of conversion shares that may be offered from time to time
pursuant to this prospectus.
The number of conversion shares shown in the table below assumes conversion
of the full amount of debentures held by such holder at the initial conversion
rate of 7.0306 shares per $1,000 principal amount at maturity of debentures.
This conversion rate is subject to certain adjustments. Accordingly, the number
of shares of common stock issuable upon conversion of the debentures may
increase or decrease from time to time. Under the terms of the indenture,
fractional shares will not be issued upon conversion of the debentures. Cash
will be paid instead of fractional shares, if any. As of May 1, 1999, we had
87,269,955 shares of common stock outstanding.
<TABLE>
<CAPTION>
Principal Amount at Number Of
Maturity of Debentures Percentage Of Conversion
Beneficially Owned Debentures Shares That
Name That May Be Sold Outstanding May Be Sold
---- ---------------- ----------- -----------
<S> <C> <C> <C>
SG Cowen Securities Corporation $ 21,600,000 2.54% 151,860
Salomon Smith Barney Inc. 1,200,000 0.14% 8,436
R2 Investments, LDC 6,500,000 0.76% 45,698
MainStay Convertible Fund 500,000 0.06% 3,515
San Diego City Retirement 1,360,000 0.16% 9,561
Arkansas Teachers Retirement 3,180,000 0.37% 22,357
San Diego County Convertible 3,400,000 0.40% 23,904
Boston Museum of Fine Arts 180,000 0.02% 1,265
Engineers Joint Pension Fund 490,000 0.06% 3,444
Wake Forest University 1,220,000 0.14% 8,577
Nicholas Applegate Convertible Fund 5,010,000 0.59% 35,223
Baptist Health of South Florida 250,000 0.03% 1,757
OCM Convertible Trust 7,405,000 0.87% 52,061
Delta Air Lines Master Trust 3,015,000 0.35% 21,197
State Employees' Retirement Fund of
the State of Delaware 2,590,000 0.30% 18,209
State of Connecticut Combined
Investment Funds 8,710,000 1.02% 61,236
Partner Reinsurance Company, Ltd. 1,300,000 0.15% 9,139
Chrysler Corporation Master Retirement
Trust 7,405,000 0.87% 52,061
Raytheon Company Master Pension Trust 3,730,000 0.44% 26,224
Motion Picture Industry Health Plan--
Active Member Fund 890,000 0.10% 6,257
Motion Picture Industry Health Plan--
Retiree Member Fund 445,000 0.05% 3,128
Vanguard Convertible Securities Fund, Inc. 5,760,000 0.68% 40,496
Jackson Investment Fund Ltd. 9,155,000 1.08% 64,365
Ellsworth Convertible Growth and Income
Fund, Inc. 1,000,000 0.12% 7,030
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Principal Amount at Number Of
aturity of Debentures Percentage Of Conversion
Beneficially Owned Debentures Shares That
Name That May Be Sold Outstanding May Be Sold
---- ---------------- ----------- -----------
<S> <C> <C> <C>
Bancroft Convertible Fund, Inc. 1,000,000 0.12% 7,030
Associated Electric and Gas Insurance
Services Limited 1,600,000 0.19% 11,248
Any other holder of debentures or future
transferee from any such holder/1/ 751,105,000 88.39% 5,280,732
------------ ------- ---------
Total $850,000,000 100.00% 5,976,010
============ ======= =========
</TABLE>
- ---------------
/1/Information concerning other selling holders of debentures will be set
forth in prospectus supplements from time to time, if required.
The preceding table has been prepared based upon the information furnished
to us by the selling securityholders named above.
None of the selling securityholders has had any position, office or other
material relationship with us or our affiliates within the past three years.
The selling securityholders identified above may have sold, transferred or
otherwise disposed of some or all of their debentures since the date on which
the information in the preceding table is presented in transactions exempt from
the registration requirements of the Securities Act. Information concerning the
selling securityholders may change from time to time and, if necessary, we will
supplement this prospectus accordingly. We cannot give an estimate as to the
amount of the debentures or conversion shares that will be held by the selling
securityholders upon the termination of this offering because the selling
securityholders may offer some or all of their debentures or conversion shares
pursuant to the offering contemplated by this prospectus. See "Plan of
Distribution."
35
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relevant to you as a holder of the debentures. This summary is
based upon the Internal Revenue Code of 1986, as amended, Treasury Regulations,
Internal Revenue Service rulings and judicial decisions now in effect. All of
these may change, possibly with retroactive effect, or be interpreted
differently. There can be no assurance that the Internal Revenue Service will
not challenge one or more of the conclusions described. We have not obtained,
and we do not intend to obtain, a ruling from the Internal Revenue Service on
the United States federal income tax consequences of acquiring or holding
debentures.
This discussion does not deal with all aspects of United States federal
income taxation that may be relevant to you in light of your circumstances, for
example, if you are subject to the alternative minimum tax provisions of the
Code. Also, it is not intended to be applicable to all categories of investors,
some of which may be subject to special rules, such as dealers in securities,
banks, insurance companies, tax exempt organizations, holders who are not U.S.
persons and persons holding debentures or the underlying common stock as part of
a hedging or conversion transaction or straddle or other risk reduction
transaction. The discussion also does not discuss the tax consequences arising
under the laws of any state, local or foreign jurisdiction. In addition, this
discussion is limited to purchasers of debentures who hold the debentures and
common stock into which the debentures are converted as "capital assets" within
the meaning of Section 1221 of the Code. Persons considering the purchase,
ownership, conversion or other disposition of debentures should consult their
own tax advisors regarding the federal income tax consequences and the
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.
We have been advised by our counsel, Testa, Hurwitz & Thibeault, LLP, that
in its opinion the debentures are properly treated as indebtedness for United
States federal income tax purposes. Our counsel has further advised us that the
following does not purport to discuss all tax matters relating to the
debentures. However, based upon the debentures being treated as indebtedness,
our counsel is of the opinion that the following are the material federal income
tax consequences of the debentures, subject to the qualifications set forth
above.
The debentures have original issue discount
The debentures were issued with a substantial amount of original issue
discount for federal income tax purposes. You are generally required to include
original issue discount in gross income as it accrues, regardless of your method
of accounting for federal income tax purposes. Therefore, you will be required
to include amounts in gross income without regard to when the cash or other
payments to which such income is attributable are received.
The amount of original issue discount with respect to each debenture is an
amount equal to the excess of the stated redemption price at maturity of the
debenture over its issue price. The issue price is the initial price at which a
substantial number of debentures were sold for money. The stated redemption
price at maturity of each debenture will include all cash payments, including
principal and interest, required to be made on the debenture through maturity.
You must include in gross income for federal income tax purposes the sum of
the daily portion of original issue discount with respect to the debenture for
each day during the taxable year or portion of a taxable year on which you hold
a debenture. This sum is called accrued original issue discount. The daily
portion is determined by allocating to each day of an accrual period a pro rata
portion of an amount equal to the adjusted issue price of the debenture at the
beginning of the accrual period multiplied by the yield to maturity of the
debenture. The accrual period of a debenture may be of any length and may vary
in length over the term of the debenture, provided that each accrual period is
no longer than one year and each scheduled payment of principal or interest
occurs at the end of an accrual period or on the first day of an accrual period.
The adjusted issue price of the debenture at the start of any accrual period is
the issue price of the debenture increased by the accrued original issue
discount for each prior accrual period. Under these rules, you will have to
include in gross income increasingly greater amounts of original issue discount
in each successive accrual period. Any amount included in income as original
issue discount will increase your tax basis in the debenture.
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<PAGE>
There are several circumstances under which we could make a payment on a
debenture which would affect the yield to maturity of a debenture, including
such circumstances as paying additional interest due to the failure to effect
the shelf registration statement. According to Treasury Regulations, the
possibility of a change in the yield will not be treated as affecting the amount
of original issue discount required to be realized by you, or the timing of such
recognition, if the likelihood of the change as of the date the debt obligations
are issued is remote. We intend to report on the basis that there is no
alternative payment schedule that would alter the yield on the debentures.
We will be required to furnish information regarding the amount of the
original issue discount attributable to that year annually to the Internal
Revenue Service and to certain noncorporate holders. For this purpose, we will
use a six-month accrual period which ends on the day in each calendar year
corresponding to the maturity date of the debenture or the date six months
before such maturity date.
Disposing of or converting the debentures
Except as described below and under "--Market discount rules", gain or loss
upon a sale or other disposition of a debenture will generally be capital gain
or loss. If the debenture is held for more than one year, the capital gain or
loss will be long term. You will realize gain or loss equal to the amount
realized on the sale or other disposition of the debenture less your adjusted
tax basis in the debenture. Net capital gains of individuals are, under certain
circumstances, taxed at lower rates than items of ordinary income. Individuals'
long-term capital gains are taxed at a maximum 20% federal tax rate.
Corporations are taxed on net capital gain at a maximum federal tax rate of 35%.
Your conversion of a debenture into common stock is generally not a taxable
event, except for cash received in lieu of a fractional share. On the date of
conversion, your obligation to include in gross income the daily portions of
original issue discount will terminate prospectively. Your basis in the common
stock received on conversion of a debenture will be the same as your basis in
the debenture at the time of conversion, exclusive of any tax basis allocable to
a fractional share. Your holding period for the common stock received on
conversion will include the holding period of the debenture converted, assuming
each is held as a capital asset. However, your holding period for common stock
treated as received for accrued original issue discount may commence on the day
following the date of conversion.
If you elect to exercise your option to tender a debenture to us on a
repurchase date and we issue common stock in satisfaction of all or part of the
repurchase price, the exchange of the debenture for common stock should qualify
as a reorganization or as an otherwise nontaxable transaction for federal income
tax purposes. If the repurchase price is paid solely in common stock, you would
generally not recognize a gain or loss except as described below with respect to
a fractional share. If the repurchase price is paid in a combination of shares
of common stock and cash other than cash received in lieu of a fractional share,
you would recognize gain but not loss. However, you would recognize gain only to
the extent the gain does not exceed the cash received. Your tax basis in the
common stock received in the exchange will be the same as your tax basis in the
debenture tendered to us in exchange, exclusive of any tax basis allocable to a
fractional share interest, decreased by the amount of cash, if any, other than
cash received in lieu of a fractional share, received in exchange and increased
by the amount of gain recognized by you on the exchange, other than gain with
respect to fractional share. Your holding period for common stock received in
the exchange will include your holding period for the debenture tendered to us
in exchange, assuming each is held as a capital asset. However, your holding
period for common stock treated as received for accrued original issue discount
may commence on the day following the repurchase date.
Cash received in lieu of a fractional share of common stock upon conversion
of a debenture or upon a put of a debenture to us on a repurchase date should be
treated as a payment in exchange for the fractional share. Accordingly, if the
common stock is a capital asset in your hands, the receipt of cash in lieu of a
fractional share of common stock should generally result in capital gain or
loss, if any, measured by the difference between the cash received for the
fractional share and your basis in the fractional share.
If you elect to exercise your option to tender a debenture to us on a
repurchase date or a change in control purchase date and we deliver cash in
satisfaction of the purchase price, you would recognize gain or loss, measured
37
<PAGE>
by the difference between the amount of cash transferred by us to you and your
adjusted tax basis in the tendered debenture. Gain or loss recognized by you
would generally be capital gain or loss.
If you sell a debenture in the market, it will be a taxable sale with the
same results to you as a tender to us with a payment in cash.
If you realize gain or loss upon a sale or other disposition of the common
stock received upon conversion of a debenture or in satisfaction of the purchase
price of a debenture put to us you will generally realize a capital gain or loss
if you hold the common stock as a capital asset. This gain or loss will be
considered long-term if the holding period for the common stock is more than one
year. The gain or loss will equal the amount realized on the sale or other
disposition of the common stock received by you less your adjusted tax basis in
the common stock. Individuals' long-term capital gains are taxed at a maximum
20% federal tax rate. Corporations are taxed on net capital gain at a maximum
federal tax rate of 35%.
Market discount rules
Generally, the market discount rules discussed below do not apply if you
acquired a debenture when we originally issued them. These rules apply, however,
to any debenture you purchased at original issue if your tax basis in the
debenture is less than the debenture's issue price and to any debenture you
purchase after original issue at a price less than its stated redemption price
at maturity.
You should treat gain on the disposition, including a redemption, of a
debenture that has accrued market discount as ordinary income, not capital gain,
to the extent of the accrued market discount if the accrued market discount
exceeds the statutory minimum amount. Market discount is the excess, if any,
of
. the adjusted issue price over
. the tax basis of the debenture in your hands immediately after you acquired it
Unless you elect otherwise, the accrued market discount is the market discount
multiplied by a fraction, the numerator of which is the number of days you have
held the debenture and the denominator of which is the number of days between
the date you acquired the debenture and its maturity date. If you acquire a
debenture at market discount you may be required to defer the deduction of all
or a portion of the interest on any indebtedness you incurred or maintained to
carry the debenture until you dispose of it in a taxable transaction.
If you dispose of a debenture you acquired at market discount in any
transaction other than a sale, exchange or involuntary conversion, even if the
transaction is otherwise nontaxable, for example, a gift, you will be considered
to have realized an amount equal to the fair market value of the debenture.
Accordingly, you must recognize as ordinary income any accrued market discount
to the extent of the deemed gain. To the extent you exchange or convert a
debenture into common stock in a transaction otherwise tax free, any accrued
market discount will carry over and generally be recognized upon a disposition
of the common stock.
You may elect to include the market discount in income as it accrues,
either on a straight-line basis or on a constant interest rate basis. This
election would apply to all market discount obligations you acquired on or after
the first day of the first taxable year to which your election applies. You may
revoke this election only with the consent of the Internal Revenue Service. If
you elect to include market discount in income currently, the rules regarding
ordinary income recognition from sales and other transactions and to deferral of
interest deductions will not apply to you.
Acquisition premium
You will be considered to have acquisition premium to the extent your
initial tax basis in a debenture is greater than the adjusted issue price of the
debenture but less than the stated redemption price at maturity of the
debenture. Acquisition premium may offset the amount of original issue discount
on the debenture that you are required to include in income.
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<PAGE>
Dividends on the common stock
You will generally be required to include distributions, if any, made on
the common stock as ordinary income to the extent of your ratable share of our
current or accumulated earnings and profits.
If we make a distribution of property to our stockholders that would be
taxable to the stockholders as a dividend for United States federal income tax
purposes and if the conversion rate of the debentures is increased in accordance
with the anti-dilution provisions of the debentures, the increase may be deemed
to be the payment of a taxable dividend to you. For example, if the conversion
rate is increased in the event of distributions of evidences of our indebtedness
or assets or increased in the event of an extraordinary cash dividend, you will
generally be deemed to receive a taxable dividend. However, if the conversion
rate is increased in the event of stock dividends or the distribution of rights
to subscribe for common stock, you will generally not be deemed to receive a
taxable dividend.
Backup withholding and information reporting
Information reporting will apply to any payments of interest or dividends
made by us on the debentures or shares of common stock, or the proceeds of the
sale or other disposition of the debentures or shares of common stock, with
respect to certain noncorporate holders. Backup withholding may apply at a rate
of 31% unless the recipient of the payment supplies a taxpayer identification
number, certified under penalties of perjury, and certain other information or
otherwise establishes an exemption from backup withholding. Any amount withheld
under the backup withholding rules will be allowable as a credit against your
federal income tax, provided the required information is provided to the
Internal Revenue Service.
Modification of the terms of the debentures following a tax event
If we modify the terms of the debentures following a tax, the timing of
income recognition by you could be altered. See "Description of Debentures--We
have the option to convert the debentures to semiannual coupon debentures on a
tax event."
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<PAGE>
PLAN OF DISTRIBUTION
The selling securityholders and their successors, which includes their
transferees, pledgees or donees or their successors, may sell the debentures and
the underlying common stock directly to purchasers or through underwriters,
broker-dealers or agents. Underwriters, broker dealers or agents may receive
compensation in the form of discounts, concessions or commissions from the
selling securityholders or the purchasers. These discounts, concessions or
commissions may be in excess of those customary in the types of transactions
involved.
The debentures and the underlying common stock may be sold in one or more
transactions at fixed prices:
. at prevailing market prices at the time of sale;
. at prices related to such prevailing market prices;
. at varying prices determined at the time of sale; or
. at negotiated prices.
Such sales may be effected in transactions in the following manner:
. on any national securities exchange or quotation service on which the
debentures or the common stock may be listed or quoted at the time of
sale;
. in the over-the-counter market;
. in transactions otherwise than on such exchanges or services or in the
over-the-counter market;
. through the writing of options, whether such options are listed on an
options exchange or otherwise; or
. through the settlement of short sales.
Selling securityholders may enter into hedging transactions with broker-dealers
or other financial institutions which may in turn engage in short sales of the
debentures or the underlying common stock and deliver these securities to close
out such short positions, or loan or pledge the debentures or the common stock
into which the debentures are convertible to broker-dealers that in turn may
sell these securities.
The aggregate proceeds to the selling securityholders from the sale of
the debentures or underlying common stock will be the purchase price of the
debentures or common stock less any discounts and commissions. A selling
securityholder reserves the right to accept and, together with their agents, to
reject, any proposed purchase of debentures or common stock to be made directly
or through agents. We will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on The Nasdaq National
Market. We do not intend to list the debentures for trading on any national
securities exchange or on The Nasdaq National Market. We cannot guarantee that
any trading market will develop for the debentures.
The debentures and underlying common stock may be sold in some states
only through registered or licensed brokers or dealers. In addition, in some
states the debentures and underlying common stock may not be sold unless they
have been registered or qualified for sale or an exemption from registration.
The selling securityholders and any underwriters, broker-dealers or
agents that participate in the sale of the debentures and common stock into
which the debentures are convertible may be "underwriters" within the meaning of
Section 2(11) of the Securities Act. Any discounts, commissions, concessions or
profit they earn on any resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling securityholders who are
"underwriters" within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act. The
selling securityholders have acknowledged that they understand their obligations
to comply with the provisions of the Securities Exchange Act and the rules
thereunder relating to stock manipulation, particularly Regulation M, and have
agreed that they will not engage in any transaction in violation of such
provisions.
40
<PAGE>
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. A selling
securityholder may not sell any debentures or common stock described herein and
may not transfer, devise or gift such securities by other means not described in
this prospectus.
If required, the specific debentures or common stock to be sold, the names
of the selling securityholders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a post-
effective amendment to the registration statement of which this prospectus is a
part.
LEGAL MATTERS
Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts will pass upon the
validity of the securities offered by this prospectus.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedules included in our Annual Report on Form 10-K
for the years ended December 31, 1998 and 1997, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. Our financial statements and schedules are incorporated
by reference on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
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<PAGE>
[CITRIX LOGO APPEARS HERE]
$850,000,000
Zero Coupon Convertible
Subordinated Debentures
Due March 22, 2019
PROSPECTUS
May , 1999
--
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities being registered hereby are estimated as follows:
<TABLE>
<S> <C>
Registration fee under Securities Act...................... $ 83,818
Nasdaq additional share listing fee........................ $ 17,500
Legal fees and expenses*................................... $ 330,000
Printing*.................................................. $ 200,000
Accounting fees and expenses*.............................. $ 150,000
Miscellaneous*............................................. $ 100,000
---------
Total................................................ $ 881,318
=========
</TABLE>
- -----------------------------------
* Estimated amount.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and our charter and by-laws provide
for indemnification of our directors and officers for liabilities and expenses
that they may incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner reasonably
believed to be in, or not opposed to, the best interests of Citrix and, with
respect to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. Reference is made to our charter and
by-laws filed as exhibits to our Registration Statement on Form S-1
(No. 33-98542) and incorporated by reference herein.
The Purchase Agreement with Credit Suisse First Boston Corporation provides
that the Initial Purchasers are obligated, under certain circumstances, to
indemnify directors, officers and controlling persons of Citrix against certain
liabilities, including liabilities under the Securities Act of 1933. Reference
is made to the form of Purchase Agreement filed as Exhibit 1.1 to our Form 10-Q
for the quarter ended March 31, 1999.
In addition, Citrix has an existing directors and officers liability
insurance policy.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<C> <S>
4.1 Indenture by and between the Company and State Street Bank and
Trust Company as Trustee dated as of March 22, 1999, including the
form of Debenture.*
4.2 Form of Debenture (included in Exhibit 4.1).*
4.3 Registration Rights Agreement by and between the Company and
Credit Suisse First Boston Corporation dated as of March 22,
1999.*
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
5 Opinion of Testa, Hurwitz & Thibeault, LLP
12 Statement Re: Computation of Ratios.
23 Consent of Ernst & Young LLP, West Palm Beach, Florida.
24 Power of Attorney (included on page II-4).
25 Statement of Eligibility of Trustee
</TABLE>
* Incorporated by reference to the corresponding exhibits set forth in our
quarterly report on Form 10-Q for the quarter ended March 31, 1999.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
- -----------------
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(4) That, for the purpose of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
II-2
<PAGE>
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and persons controlling of
the registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable; and
(6) To file an application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Citrix Systems,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Ft. Lauderdale, State of Florida, on May 20, 1999.
CITRIX SYSTEMS, INC.
By: /s/ Mark B. Templeton
----------------------
Mark B. Templeton
President and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
Each person whose individual signature appears below hereby authorizes Mark
B. Templeton, Edward E. Iacobucci and James J. Felcyn, Jr., and each of them,
with full power of substitution and full power to act without the other, his or
her true and lawful attorney-in-fact and agent in his or her name, place and
stead, to execute in the name and on behalf of each person, individually and in
each capacity stated below, and to file, any and all amendments to this
Registration Statement, including any and all post-effective amendments, and any
related Rule 462(b) Registration Statement and any amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant and in the capacities indicated below on the dates indicated.
<TABLE>
<CAPTION>
Signature Title(s) Date
- ------------------------------- ------------------------------------------- -----------------
<S> <C> <C>
/s/ Edward E. Iacobucci Chairman of the Board of Directors May 20, 1999
- --------------------------------
Edward E. Iacobucci
/s/ Mark B. Templeton President, Chief Executive Officer and May 20, 1999
- -------------------------------- Director (Principal Executive Officer)
Mark B. Templeton
/s/ James J. Felcyn, Jr. Vice President, Finance and May 20, 1999
- -------------------------------- Administration and Chief Financial
James J. Felcyn, Jr. Officer (Principal Financial Officer)
/s/ Marc-Andre Boisseau Vice President, Controller (Principal May 20, 1999
- -------------------------------- Accounting Officer)
Marc-Andre Boisseau
/s/ Michael W. Brown Director May 20, 1999
- --------------------------------
Michael W. Brown
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title(s) Date
- ------------------------------- ------------------------------------------- -----------------
<S> <C> <C>
/s/ Kevin R. Compton Director May 20, 1999
- --------------------------------
Kevin R. Compton
/s/ Stephen M. Dow Director May 20, 1999
- --------------------------------
Stephen M. Dow
/s/ Robert N. Goldman Director May 20, 1999
- --------------------------------
Robert N. Goldman
/s/ Tyrone F. Pike Director May 20, 1999
- --------------------------------
Tyrone F. Pike
/s/ Roger W. Roberts Director May 20, 1999
- --------------------------------
Roger W. Roberts
/s/ John W. White Director May 20, 1999
- --------------------------------
John W. White
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER EXHIBIT PAGE NUMBER
- ------ ------- -----------
<C> <S> <C>
4.1 Indenture by and between the Company and
State Street Bank and Trust Company as
Trustee dated as of March 22, 1999,
including the form of Debenture.*
4.2 Form of Debenture
(included in Exhibit 4.1).*
4.3 Registration Rights Agreement by and
between the Company and Credit Suisse
First Boston Corporation dated as of
March 22, 1999.*
5 Opinion of Testa, Hurwitz & Thibeault, LLP
12 Statement Re: Computation of Ratios.
23 Consent of Ernst & Young LLP,
West Palm Beach, Florida.
24 Power of Attorney (included on page II-4).
25 Statement of Eligibility of Trustee
</TABLE>
* Incorporated by reference to the corresponding exhibits set forth in our
quarterly report on Form 10-Q for the quarter ended March 31, 1999.
<PAGE>
Exhibit 5
May 20, 1999
Citrix Systems, Inc.
6400 NW 6th Way
Fort Lauderdale, FL 33309
Re: S-3 Registration Statement
--------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 filed by Citrix
Systems, Inc. (the "Company") with the Securities and Exchange Commission on or
about May 20, 1999 (the "Registration Statement") in connection with the
registration under the Securities Act of 1933 of $850,000,000 aggregate
principal amount at maturity of Zero Coupon Convertible Subordinated Debentures
due March 22, 2019 (the "Debentures") and shares of Common Stock issuable upon
conversion of the Debentures (the "Conversion Shares") to be sold by certain
securityholders listed in the Registration Statement (the "Selling
Securityholders").
Based upon such investigation as we have deemed necessary, we are of the
opinion that (1) the Debentures, when sold by the Selling Securityholders in the
manner described in the Registration Statement, will be legally and validly
issued and will represent binding obligations of the Company and (2) the
Conversion Shares, when sold by the Selling Securityholders in the manner
referred to in the Registration Statement, will be legally and validly issued,
fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5 to the Registration
Statement and to the reference to our firm in the Prospectus under the caption
"Legal Matters."
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE>
Exhibit 12
CITRIX SYSTEMS, INC.
STATEMENT RE: COMPUTATION OF RATIOS
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended
-------------------------------------------- March 31,
1994 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated pre-tax income from continuing
operations 242 1,988 22,263 64,622 95,472 40,263
Interest 13 36 19 11 133 39
Net amortization of debt discount and issuance of
expense 716 - - - - 404
Interest portion of rental expense 139 109 207 238 929 351
- ------------------------------------------------------------------------------------------------------------
Earnings 1,110 2,133 22,489 64,871 96,534 41,057
- ------------------------------------------------------------------------------------------------------------
Interest 13 36 19 11 133 39
Net amortization of debt discount and issuance
expense 716 - - - - 404
Interest portion of rental expense 139 109 207 238 929 351
- ------------------------------------------------------------------------------------------------------------
Fixed Charges 868 145 226 249 1,062 794
- ------------------------------------------------------------------------------------------------------------
Ratio of Earnings to Fixed Charges 1.28 14.71 99.65 260.18 90.90 51.71
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 23
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in the
Prospectus constituting a part of this Registration Statement on Form S-3 and to
the incorporation by reference therein of our report dated February 19, 1999,
except for Note 17 as to which the date is March 1, 1999, with respect to the
consolidated financial statements and schedule of Citrix Systems, Inc. included
in its Annual Report on Form 10-K for the year ended December 31, 1998, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
West Palm Beach, Florida
May 18, 1999
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
_________
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
Citrix Systems, Inc.
(Exact name of obligor as specified in its charter)
DELAWARE 75-2275152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6400 NW 6/th/ Way
Fort Lauderdale, FL 33309
(Address of principal executive offices) (Zip Code)
Convertible Subordinated Debentures
(Title of indenture securities)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its parent,
State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No.
1 to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange
Commission as Exhibit 3 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No. 22-
17940) and is incorporated herein by reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to
the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Eastern Edison
Company (File No. 33-37823) and is incorporated herein by
reference thereto.
1
<PAGE>
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority is annexed hereto as Exhibit 7 and made a
part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the May 6, 1999.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Gerald R. Wheeler
----------------------
NAME: GERALD R. WHEELER
TITLE: VICE PRESIDENT
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by CITRIX SYSTEMS,
INC.. of its CONVERTIBLE SUBORDINATED DEBENTURES, we hereby consent that
reports of examination by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Gerald R. Wheeler
---------------------
NAME: GERALD R. WHEELER
TITLE : VIVE PRESIDENT
DATED: MAY 6, 1999
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business December 31, 1998,
-----------------
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin....................................................... 1,209,293
Interest-bearing balances................................................................................ 12,007,895
Securities.................................................................................................... 9,705,731
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary...................................................................... 9,734,476
Loans and lease financing receivables:
Loans and leases, net of unearned income................................................................. 6,973,125
Allowance for loan and lease losses...................................................................... 84,308
Allocated transfer risk reserve.......................................................................... 0
Loans and leases, net of unearned income and allowances.................................................. 6,888,817
Assets held in trading accounts............................................................................... 1,574,999
Premises and fixed assets..................................................................................... 523,514
Other real estate owned....................................................................................... 0
Investments in unconsolidated subsidiaries.................................................................... 612
Customers' liability to this bank on acceptances outstanding.................................................. 47,334
Intangible assets............................................................................................. 212,743
Other assets.................................................................................................. 1,279,224
----------
Total assets.................................................................................................. 43,184,638
==========
LIABILITIES
Deposits:
In domestic offices...................................................................................... 10,852,862
Noninterest-bearing...................................................................................... 8,331,830
Interest-bearing......................................................................................... 2,521,032
In foreign offices and Edge subsidiary................................................................... 16,761,573
Noninterest-bearing...................................................................................... 83,010
Interest-bearing......................................................................................... 16,678,563
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary...................................................................... 10,041,324
Demand notes issued to the U.S. Treasury...................................................................... 108,420
Trading liabilities.......................................................................... 1,240,938
Other borrowed money.......................................................................................... 322,331
Subordinated notes and debentures............................................................................. 0
Bank's liability on acceptances executed and outstanding...................................................... 47,334
Other liabilities............................................................................................. 1,126,058
Total liabilities............................................................................................. 40,500,840
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................................................. 0
Common stock.................................................................................................. 29,931
Surplus....................................................................................................... 468,511
Undivided profits and capital reserves/Net unrealized holding gains (losses).................................. 2,164,055
Net unrealized holding gains (losses) on available-for-sale securities....................... 21,638
Cumulative foreign currency translation adjustments........................................................... (337)
Total equity capital.......................................................................................... 2,683,798
----------
Total liabilities and equity capital.......................................................................... 43,184,638
----------
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
