Citrix 2007 Annual Report Download - page 101

CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
employees with exercise prices per share that were less than the fair market value per share used for financial
accounting purposes, which options are referred to as discounted options.
The terms of the Offer provided that current employees, who are not Section 16 officers of the Company,
could elect to have discounted options amended to increase their exercise price per share to be equal to the fair
market value used for financial reporting purposes and to receive a cash payment with respect to such amended
options equal to the difference between the amended exercise price and the original exercise price of each
discounted option, less applicable withholding taxes. During the election period, which was from September 11,
2007 through October 8, 2007, the Company had received elections from eligible employees agreeing to amend
and increase to fair value the exercise price with respect to 551,408 options. Under the terms of the Offer, the
Company made cash payments in January 2008 totaling approximately $1.4 million to the individuals who
elected to amend their discounted options. In 2007, the Company recognized an incremental expense of
approximately $0.9 million representing the incremental fair value of the options following the modification to
increase the exercise price and to settle the difference in cash. In addition, the Company recorded the remaining
portion of the cash payment of $0.5 million as a charge to stockholders’ equity, as the payment represents a cash
settlement of a portion of the original award that had been previously expensed.
Stock Options
As part of the Company’s 2007 Acquisitions, it assumed 3,389,668 options, to purchase shares of its
common stock, all of which have a five year life and vest over three years at a rate of 33.3% of the shares
underlying the option one year from date of grant and at a rate of 2.78% monthly thereafter. All other options
granted during the year were granted pursuant to the Company’s 2005 Plan. Options granted pursuant to the 2005
Plan typically have a five year life and vest over three years at a rate of 33.3% of the shares underlying the option
one year from date of grant and at a rate of 2.78% monthly thereafter. A summary of the status and activity of the
Company’s fixed option awards is as follows:
Options
Number of
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
(in years)
Aggregate
Intrinsic
Value
(in thousands)
Outstanding at December 31, 2006 ................. 26,878,390 $ 29.55 3.74
Granted ...................................... 8,303,443 24.35
Exercised ..................................... (5,352,521) 21.11
Forfeited or expired ............................. (1,054,054) 28.36
Outstanding at December 31, 2007 ................. 28,775,258 29.56 3.38 $ 347,253
Vested or expected to vest at December 31, 2007 ...... 26,772,552 29.79 3.31 $ 322,470
Exercisable at December 31, 2007 ................. 17,856,526 31.71 2.74 $ 207,372
For the year ended December 31, 2007, the Company recognized stock-based compensation expense of
$54.6 million related to options including the amounts recognized in conjunction with the extension of expired
stock options and the Tender Offer, and for the year ended December 31, 2006, it recognized $56.1 million
related to stock options. As of December 31, 2007, there was $160.5 million of total unrecognized compensation
cost related to stock options. That cost is expected to be recognized over a weighted-average period of 2.35 years.
The total intrinsic value of stock options exercised during 2007 and 2006 was $92.8 million and $180.0 million,
respectively.
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