“Over the next decade, delivering applications to people—wherever they work and play—will become a defining issue for IT. Why? Because applications Citrix Systems, Inc. are the language of business. Winners will be fl uent with application delivery. 2006 Others will lag behind, struggling with the Annual Report pace of change in an increasingly dynamic world.” – Mark Templeton, President and CEO, Citrix Systems 2006 Annual Report Citrix Systems, Inc. 851 West Cypress Creek Road Fort Lauderdale, FL 33309 USA www.citrix.com Revenue Earnings per Share Operating Cash Flow Corporate Information ( millions) ( millions) Citrix Systems, Inc. is the global leader and the most trusted name in application delivery infrastructure. More than 200,000 $1,134 $0.97 $329 $0.93 organizations worldwide rely on Citrix to deliver any application to users anywhere with the best performance, highest security $293 and lowest cost. $265 $909 $0.75 Citrix customers include 100% of the Fortune 100 companies and 98% of the Fortune Global 500, as well as hundreds of $741 thousands of small businesses and prosumers. Citrix has approximately 6,200 channel and alliance partners in more than 100 countries. Annual revenue in 2006 was $1.1 billion. Learn more at www.citrix.com. Corporate Headquarters Online Division Headquarters Silicon Valley Headquarters Ft. Lauderdale, FL, USA Santa Barbara, CA, USA Santa Clara, CA, USA EMEA Headquarters Pacifi c Headquarters Latin America Headquarters Schaffhausen, Switzerland Hong Kong, China Coral Gables, FL, USA India Development Center Sydney Development Center UK Development Center ‘04 ‘05 ‘06 ‘04 ‘05 ‘06 ‘04 ‘05 ‘06 Bangalore, India Sydney, Australia Chalfont, United Kingdom Stockholder Information Financial Highlights Corporate Offi cers Investor Relations Year Ended December 31, Mark B. Templeton Citrix’s stock trades on the NASDAQ Global Select Market under the ticker symbol CTXS. (In thousands, except per share data) 2006 2005 2004 President and Chief Executive Offi cer John C. Burris The Citrix Annual Report and Form 10-K are available Net revenues $ 1,134,319 $ 908,722 $ 741,157 Senior Vice President, Worldwide Sales and Services electronically at www.citrix.com/annualreport. Cost of revenues: David R. Friedman For further information about Citrix, additional copies Cost of license revenues 32,911 14,404 3,824 General Counsel and Senior Vice President, of this report, Form 10-K, or other fi nancial information Cost of services revenues 46,585 26,929 16,705 Human Resources and Secretary without charge, contact: Amortization of product related intangible assets 19,202 16,766 6,127 David J. Henshall Citrix Systems, Inc. Senior Vice President and Chief Financial Offi cer Attn: Investor Relations Total cost of revenues 98,698 58,099 26,656 Wes R. Wasson 851 West Cypress Creek Road Gross margin 1,035,621 850,623 714,501 Corporate Vice President, Worldwide Marketing Fort Lauderdale, FL 33309 United States Operating expenses: Board of Directors Tel: +1 954 267 3000 Tel: +1 800 424 8749 Research and development 155,331 108,751 86,654 Thomas F. Bogan www.citrix.com/investors Sales, marketing and support 480,343 394,153 337,777 Partner, Greylock Partners General and administrative 178,669 125,425 105,799 Murray J. Demo Transfer Agent and Registrar Amortization of other intangible assets 16,934 11,622 6,204 Executive Vice President and Chief Financial Offi cer, Computershare Trust Company, N.A. Postini, Inc. P.O. Box 43023 In-process research and development 1,000 7,000 19,100 Stephen M. Dow Providence, RI 02940-3023 Total operating expenses 832,277 646,951 555,534 General Partner, Sevin Rosen Funds Tel: +1 877 282 1168 www.computershare.com Income from operations 203,344 203,672 158,967 Asiff Hirji Senior Director, TPG Capital, L.P. Independent Registered Public Accountants Other income (expense), net 39,737 20,682 12,588 Gary E. Morin Ernst & Young LLP Former Executive Vice President and Write-off of deferred debt issuance costs – – (7,219) 1 Clearlake Centre, Suite 900 Chief Financial Offi cer, Lexmark International, Inc. 250 South Australian Ave Income before income taxes 243,081 224,354 164,336 Godfrey R. Sullivan West Palm Beach, FL 33401 Former President, Hyperion Solution Corp., a wholly owned Income taxes 60,084 58,745 33,049 subsidiary of Oracle Corp. Annual Meeting of Stockholders Net income $ 182,997 $ 165,609 $ 131,287 Mark B. Templeton The Annual Meeting of Stockholders of Citrix Systems, Inc. President and Chief Executive Offi cer, will be held on October 18, 2007 at 2:00 p.m. Earnings per common share - diluted $ 0.97 $ 0.93 $ 0.75 Citrix Systems, Inc. 1801 NW 49th Street Ft. Lauderdale, FL 33309 Weighted average shares outstanding - diluted 187,725 177,771 174,374 United States Mark Templeton President and CEO Dear Fellow Stockholder: In each of my letters over the past four years, I’ve discussed the strategic transformation of Citrix with you. When I wrote the 2002 letter, we were coming off our most diffi cult year since going public in 1995. At that time, we set bold objectives to double our revenue to $1 billion by 2006, and to lead the software market for delivering applications on demand. To succeed, we needed new competencies in strategic planning, product innovation, acquisition integration and business scalability. We’ve made great progress on each of these dimensions. I’m proud to report 2006 revenue of $1.134 billion. Credit goes to the Citrix employees, business partners and families who are responsible for these excellent results. Thank you for your trust and confi dence. Exceeding $1 billion is a signifi cant milestone Th ere’s also strength in the growing diversity achieved by less than two dozen software of our revenue streams—product licensing, companies in history. This achieve ment license updates, technical services and online underscores our ability to take a long-term services. In 2006, product licensing was up approach, to achieve meaningful objectives, 19%—the largest increase we’ve experienced and to invest in technologies that make our this decade. License updates grew 23%, driven customers successful. It’s also a level that even largely by the success of our Subscription fewer have been able to sustain. Advantage program. Revenue from technical services was up over 30% compared to 2005. Financially, our goal is to deliver reliable And, our Online Division’s “software-as-a- revenue growth with increasing operating service” business grew an impressive 50% to profit and cash flow. Over the past four almost $150 million. years, we’ve averaged over 21% growth in revenue and over 22% in GAAP EPS growth. In 2006, we on-boarded over 550 new Operating cash fl ow is up from $265 million in employees and completed two strategic 2004 to $329 million in 2006. Th ese fi nancial acquisitions— Refl ectent Soft ware and Orbital results give us the strength to invest for growth. Data. Th ese new teams bring us talent, experience and deep expertise in fast-growing application delivery market segments. Citrix Systems, Inc. 2006 Annual Report 1 Acquisitions have accelerated our market We’ve taken a pragmatic approach to leadership, and have helped us further diversify inte grating these businesses into our ongoing routes to customers. Th ey’ve also expanded our operations, focusing on people, on culture mix of form factors for providing software— and on building a bigger opportunity for as downloadable media, as a subscription everyone. Smart selection and successful service and as an easy-to-install hardware acquisition integration are allowing us appliance. to deliver excellent fi nancial results and to dramatically improve our value—to customers, employees and investors. Globalization Consolidation Flex Working Security Branch Expansion Compliance Mobility Continuity E-Commerce Web Services Signifi cant business, technical and evolutionary forces are increasing the distance between where people work and where applications are best hosted. Vision, Technology and Market Alignment We are being rewarded for our long-term The pace of change for our customers— approach, for staying aggressive with our along political, business and technological strategy, and for making a diff erence with dimensions—is far exceeding expectations customers. Today, Citrix has the core tech- and preparation. Today’s dynamic world is nologies that make it possible for anyone to infl uenced by several mega-forces. Globaliza- work from anywhere. Systematically, we’re tion is shift ing the optimal location of business enabling customers to break the rigid con- processes and workforces in fundamental ways. nections between where people work and Geo-political and geo-physical events are dis- where applications are best managed. rupting the workforce more frequently, costing businesses, governments and individuals mil- In my 12 years with Citrix, I have not seen lions in lost productivity and revenue. Industries, a time when our vision, technology and corporations and datacenters are consolidating products are better aligned with customer at a record pace, creating ever more complex needs, making us more market-relevant business situations to be serviced by IT organi- and strategic. All signs indicate that our zations. Every day, governments are holding relevance is increasing faster than ever. 2 businesses more “information accountable” delivery services. Imagine China’s Th ree Gorges through increased regulation, disclosure and Hydroelectric Dam without the electrical grid compliance inspection. And a younger work- that delivers the power. Imagine DirecTV force—called “Echo Boomers”—is becoming a without the satellites to deliver high-defi nition major driver of new applications and workstyles. programming to our homes. Now, imagine the value of business applications without a system Are these opportunities or threats? for secure, reliable delivery—anywhere. We believe there are opportunities for those The fact is, most IT organizations have not who can seize the business advantages of taken a holistic, architectural approach to tapping into off shore talent, having granular application delivery.