Citrix 2000 Annual Report Download - page 48

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CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS −− (CONTINUED)
Accounting for Stock−Based Compensation
SFAS No. 123, "Accounting for Stock−Based Compensation," defines a fair
value method of accounting for issuance of stock options and other equity
instruments. Under the fair value method, compensation cost is measured at the
grant date based on the fair value of the award and is recognized over the
service period, which is usually the vesting period. Pursuant to SFAS No. 123,
companies are not required to adopt the fair value method of accounting for
employee stock−based transactions. Companies are permitted to continue to
account for such transactions under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," (APB Opinion 25) but are required to
disclose in a note to the consolidated financial statements pro forma net income
and per share amounts as if the Company had applied the methods prescribed by
SFAS No. 123.
The Company applies APB Opinion 25 and related interpretations in
accounting for its plans and has complied with the disclosure requirements of
SFAS No. 123.
Earnings Per Share
Dilutive common stock equivalents consist of stock options (calculated
using the treasury stock method) and put warrants (calculated using the reverse
treasury stock method). All common share and per share data, except par value
per share, have been retroactively adjusted to reflect the three−for−two stock
split of the Company's Common Stock effective February 20, 1998, the two−for−one
stock split of the Company's Common Stock effective March 25, 1999 and the
two−for−one stock split of the Company's Common Stock effective February 16,
2000, which are further discussed in Note 7. The convertible subordinated
debentures are common stock equivalents but have been excluded from the diluted
earnings per share calculation, as their effect is anti−dilutive.
Software Developed or Obtained for Internal Use
In 1999, the Company adopted Accounting Standards Executive Committee
Statement of Position ("SOP") 98−1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." The SOP requires the
capitalization of certain costs incurred after the date of adoption in
connection with developing or obtaining software for internal use. These costs
generally include external direct costs of materials and services used in the
project and internal costs such as payroll and benefits of those employees
directly associated with the development of the software. The amount of costs
capitalized in 2000 and 1999 relating to internal use software were $11.3
million and $5.4 million, respectively, consisting principally of software
purchased from and services provided by external vendors. These costs are being
amortized over the estimated useful life of the software developed, which is
generally three years, except for the enterprise resource planning system that
will be amortized over seven years. These costs are included in property and
equipment, net, in the accompanying consolidated balance sheets.
Reclassifications
Certain reclassifications of the prior years' financial statements have
been made to conform to the current year's presentation.
3. ACQUISITIONS AND LICENSED TECHNOLOGY
In February 1998, June 1998, July 1998, and July 1999, the Company
completed the acquisitions of Insignia Solutions, plc for approximately $17.5
million, APM Limited for approximately $40.4 million, VDOnet Corporation Limited
for approximately $7.9 million, and ViewSoft, Inc. for approximately $33.5
million, respectively. A portion of the purchase price for each of these
acquisitions was allocated to in−process research and development ("IPR&D"),
which had not reached technological feasibility and had no
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