Citrix 2006 Annual Report Download - page 90

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for issuance under the 2005 Plan by 5,400,000 shares
and to increase the number of shares issuable pursuant
to restricted stock, restricted stock units, performance
units or stock grants by 1,000,000 shares. Under the 2005
Plan, ISOs must be granted at exercise prices no less
than fair market value on the date of grant, except for ISOs
granted to employees who own more than 10% of the
Company’s combined voting power, for which the exercise
prices must be no less than 110% of the market value at
the date of grant. NSOs and SARs must be granted at
no less than market value on the date of grant, or in the
case of SARs in tandem with options, at the exercise price
of the related option. Non-vested stock awards may be
granted for such consideration in cash, other property
or services, or a combination thereof, as determined by
the Company’s Compensation Committee of its Board of
Directors. All stock-based awards are exercisable upon
vesting. As of December 31, 2006, there were 35,234,053
shares of common stock reserved for issuance pursuant to
the Company’s stock-based compensation plans and the
Company had authorization under its 2005 Plan to grant
8,109,970 additional stock-based awards.
The 2005 ESPP was originally adopted by the Company’s
Board of Directors and approved by the Company’s
stockholders in 2005. The 2005 ESPP replaced the
Company’s 1995 ESPP under which no more shares
may be granted. Under the 2005 ESPP, all full-time and
certain part-time employees of the Company are eligible
to receive options to purchase common stock of the
Company twice per year at the end of a six month payment
period (a “Payment Period”). During each Payment Period,
eligible employees who so elect may authorize payroll
deductions in an amount no less than 1% nor greater than
10% of his or her base pay for each payroll period in the
Payment Period. At the end of each Payment Period, the
accumulated deductions are used to purchase shares of
common stock from the Company up to a maximum of
12,000 shares for any one employee during a Payment
Period. Shares are purchased at a price equal to 85% of
the fair market value of the Company’s common stock on
the last business day of a Payment Period. Employees
who, after exercising their rights to purchase shares of
common stock under the 2005 ESPP, would own shares of
5% or more of the voting power of the Company’s common
stock, are ineligible to participate under the 2005 ESPP.
The 2005 ESPP provides for the issuance of a maximum of
10,000,000 shares of common stock. As of December 31,
2006, 338,715 shares had been issued under the
2005 ESPP.
Adoption of SFAS No. 123R and Transition
As a result of adopting SFAS No. 123R on January 1,
2006, the Company’s income before income taxes and
net income for 2006 are $44.9 million and $33.8 million
lower, respectively, than if the Company had continued to
account for stock-based compensation under APB Opinion
No. 25. The Company’s basic and diluted earnings per
share for 2006 are $0.19 and $0.18, respectively lower than
if the Company had continued to account for stock-based
compensation under APB Opinion No. 25.
Prior to the adoption of SFAS No. 123R, the Company
presented all tax benefits from deductions resulting from
the exercise of stock options as operating cash flows in its
statement of cash flows. SFAS No. 123R requires that the
portion of benefits resulting from tax deductions in excess
of recognized compensation (the “excess tax benefits”) be
presented as financing cash flows. The excess tax benefits
were approximately $51.9 million, for 2006, and would
have been presented as an operating cash inflow prior to
the adoption SFAS No. 123R. In addition, the Company
previously presented deferred compensation as a separate
component of stockholders’ equity. Upon adoption, of
SFAS No. 123R, the Company reclassified the balance in
deferred compensation to additional paid-in capital on its
accompanying condensed consolidated balance sheet.