Item 2.05 Costs Associated With Exit or Disposal Activities.
Consistent with its previously-announced plans intended to improve operational
efficiency, on November 14, 2021, the board of directors of Citrix Systems, Inc.
(the "Company") approved a restructuring program (the "Restructuring Program").
The Restructuring Program will include, among other things, the elimination of
full-time positions, termination of certain contracts, and asset impairments,
primarily related to facilities consolidations. Any position elimination
proposals in countries outside the United States will be subject to local law
and consultation requirements.
The Company currently expects to record in the aggregate approximately
$130 million to $240 million in pre-tax restructuring and asset impairment
charges associated with the Restructuring Program. Included in these pre-tax
charges are approximately $65 million to $90 million related to employee
severance arrangements, approximately $40 million to $75 million related to the
impairment of right of use and other assets from the consolidation of
facilities, approximately $20 million to $35 million in contract termination
costs, approximately $5 million to $40 million related to the impairment of
certain acquired intangible assets and other charges associated with the
Restructuring Program. The majority of these charges will result in future cash
expenditures, and the program is expected to be substantially completed over an
approximate eighteen-month period.
Item 2.06 Material Impairments.
The information contained in Item 2.05 is incorporated into this Item 2.06 by
reference.
The non-cash impairment charges described in Item 2.05 and incorporated into
Item 2.06 by reference are preliminary estimates and the actual amounts may be
materially different from these estimates. Given that many of the activities
associated with these charges will not be complete until the Company finalizes
its fourth quarter 2021 financial statements, the Company cannot reasonably give
a further breakdown of these charges as of the date of this Current Report on
Form 8-K. The Company expects to provide further detail in its upcoming Annual
Report on Form 10-K.
This report contains forward-looking statements which are made pursuant to the
safe harbor provisions of Section 27A of the Securities Act of 1933 and of
Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that
statements in this report, which are not strictly historical statements,
including, without limitation, statements regarding the Company's plans to
improve operational efficiency and the estimated costs, timing and impairment
charges associated with the Restructuring Program, constitute forward-looking
statements. The forward-looking statements in this report are not guarantees of
future performance. Those statements involve a number of factors that could
cause actual results to differ materially, including the failure to achieve
anticipated cost savings from the Restructuring Program and other cost savings
initiatives, additional unexpected costs and charges related to the
Restructuring Program, and disruptions to execution due to the Restructuring
Program, as well as other risks detailed in the Company's filings with the
Securities and Exchange Commission (the "SEC"). Readers are cautioned not to
place undue reliance on any forward-looking statements, which only speak as of
the date made. The Company assumes no obligation to update any forward-looking
information contained in this report.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In connection with the Restructuring Program, Paul J. Hough will transition from
serving as Executive Vice President and Chief Product Officer of the Company to
serving as an advisor to the Company's Chief Executive Officer effective on
November 15, 2021. As part of this transition, on November 12, 2021, the Company
entered into an amendment to the existing Executive Agreement with Mr. Hough
pursuant to which Mr. Hough will remain entitled to certain payments and
accelerated vesting of outstanding equity awards upon termination of his
employment with the Company under certain circumstances as provided in the
Executive Agreement. A summary of Mr. Hough's Executive Agreement is set forth
in the Company's proxy statement for its 2021 Annual Meeting of Shareholders
filed with the SEC on April 16, 2021 under the caption "Executive
Compensation-Potential Payments upon Termination or Change in Control-Other
Named Executive Officers," which summary is incorporated herein by reference.
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