Citrix 2006 Annual Report Download - page 105

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Citrix Systems, Inc.  Annual Report
the counterparty an amount equivalent to its loss, not to
exceed the notional value of the contract. The primary risk
associated with these contracts was the default risk of the
underlying issuers. The risk levels of these instruments
were equivalent to “AAA,” or better single securities. As a
result of the termination of the credit default contracts, the
Company realized a net gain of $0.4 million in 2005, which
is included in other (expense) income, net.
15. Earnings Per Share
The following table sets forth the computation of basic and
diluted earnings per share:
Year Ended December 31,
(In thousands, except per share information) 2006 2005 2004
(restated) (restated)
Numerator:
Net income $ 182,997 $ 165,609 $ 131,287
Denominator:
Denominator for basic earnings per share — weighted average shares 180,992 172,221 168,868
Effect of dilutive securities:
Employee stock awards 6,733 5,550 5,284
Contingent consideration related to acquisition —— 222
Denominator for diluted earnings per share — adjusted weighted-average
shares 187,725 177,771 174,374
Basic earnings per share $ 1.01 $ 0.96 $ 0.78
Diluted earnings per share $ 0.97 $ 0.93 $ 0.75
Antidilutive weighted average shares 17,892 26,134 29,245
16. Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements, which defines fair value, establishes
guidelines for measuring fair value and expands disclosures
regarding fair value measurements. SFAS No. 157 does
not require any new fair value measurements but rather
eliminates inconsistencies in guidance found in various
prior accounting pronouncements. SFAS No. 157 is
effective for fiscal years beginning after November 15,
2007. Earlier adoption is permitted, provided the company
has not yet issued financial statements, including for interim
periods, for that fiscal year. The Company is currently
evaluating the impact of SFAS No. 157, but does not expect
that the adoption of SFAS No. 157 will have a material
impact on the Company’s consolidated financial position,
results of operations or cash flows.
In September 2006, the Securities and Exchange
Commission (the “SEC”) issued SAB No. 108, Considering
the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements. SAB
No. 108 is effective for fiscal years ending on or after
November 15, 2006, with earlier adoption encouraged. The
primary concepts set forth in SAB No. 108 are as follows:
(a) registrants should quantify errors using both the “rollover”
approach (current year statement of operations effect) and
“iron curtain” approach (year end balance sheet effect) and
evaluate whether either approach results in quantifying
a misstatement that, when all relevant quantitative
and qualitative factors are considered, is material; (b) if
correcting an item in the current year materially affects the
current year but the item was not material in any prior years,
the prior year financial statements should be corrected,
even though such revision previously was and continues
to be immaterial to the prior year financial statements;
however, in this circumstance, the correction can be made
the next time the prior year financial statements are filed;
(c) for purposes of evaluating materiality under the “iron
curtain” approach, all uncorrected errors on the balance
sheet are presumed to be reversed into the statement
of operations in the current period even though some or
all of the uncorrected difference may relate to periods
prior to the latest statement of operations presented and,