Citrix 2007 Annual Report Download - page 100

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CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company estimated the expected volatility factor based upon implied and historical data. The
approximate risk free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues
with remaining terms equivalent to the Company’s expected term. The expected term of the Company’s stock
options was based on the historical exercise patterns considering changes in vesting periods and contractual
terms. The weighted average fair value of stock options granted during 2005 was $9.18. The total intrinsic value
of stock options exercised during 2005 was $62.9 million. Forfeitures were recognized as they occurred.
Expense Information under SFAS No. 123R
As required by SFAS No. 123R, the Company estimates forfeitures of employee stock options and
recognizes compensation costs only for those awards expected to vest. Forfeiture rates are determined based on
historical experience. The Company also considers whether there have been any significant changes in facts and
circumstances that would affect its forfeiture rate quarterly. Estimated forfeitures are adjusted to actual forfeiture
experience as needed. The Company recorded stock-based compensation costs, related deferred tax assets and tax
benefits of $65.5 million, $15.6 million and $26.6 million, respectively, in 2007 and $61.6 million, $9.6 million
and $57.1 million, respectively, in 2006.
The detail of the total stock-based compensation recognized by income statement classification is as follows
(in thousands):
Income Statement Classifications 2007 2006
Cost of services revenues ........................................... $ 1,479 $ 2,100
Research and development .......................................... 21,719 18,209
Sales, marketing and support ........................................ 24,365 24,095
General and administrative .......................................... 17,928 17,192
Total ....................................................... $65,491 $61,596
Extensions of Expired Stock Options
As a result of the Company’s failure to file its periodic reports with the SEC on a timely basis, including its
Annual Report on Form 10-K for the year ended December 31, 2006 and its Quarterly Reports on Form 10-Q for
the quarters ended March 31, 2007 and June 30, 2007, and the Company’s determination that previously filed
financial statements should no longer be relied upon, the Company voluntarily suspended the exercise of
employee stock options beginning on March 14, 2007 through September 7, 2007. The Company extended the
90-day post-termination exercise period for certain former employees whose options would have expired during
the voluntary suspension to allow for a 30-day period to exercise in-the-money options after the Company
became current with its SEC filings. This modification resulted in a compensation charge of approximately $3.7
million that was recorded in 2007 and is included in the table above. The Company also agreed to extend the
exercise period for current employees whose options expired during the voluntary suspension to allow for a
30-day period to exercise in-the-money options after the Company became current with its SEC filings. This
modification resulted in a $0.7 million compensation charge that was recorded in 2007 and is included in the
table above.
Tender Offer to Amend Exercise Prices
On September 11, 2007, the Company filed an Offer to Amend on Schedule TO with the SEC and
commenced an offer (the “Offer”) to amend certain outstanding and restated options that had been granted to
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