Citrix 2007 Annual Report Download - page 117

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CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
respectively and liabilities of $5.9 million and $2.8 million, respectively. A substantial portion of the Company’s
overseas expenses are and will continue to be transacted in local currencies. To protect against fluctuations in
operating expenses and the volatility of future cash flows caused by changes in currency exchange rates, the
Company has established a program that uses foreign exchange forward contracts to hedge its exposure to these
potential changes. The terms of these instruments, and the hedged transactions to which they relate, generally do
not exceed 12 months. Currencies hedged are Euros, British pounds sterling, Australian dollars, Swiss francs,
Indian rupees, Japanese yen, Singapore dollars, Hong Kong dollars, Canadian dollars, Danish krone and Swedish
krona. There was no material ineffectiveness of the Company’s foreign currency forward contracts for 2007,
2006 or 2005.
Fair Value Hedges. From time to time, the Company uses interest rate swap instruments to hedge against
the changes in fair value of certain of its available-for-sale securities due to changes in interest rates. Each of the
instruments swap the fixed rate interest on the underlying investments for a variable rate based on LIBOR plus a
specified margin. Changes in the fair value of the swap instruments are recorded in earnings along with related
designated changes in the value of the underlying investments. There were no material fair value hedges
outstanding as of December 31, 2007 or 2006. There was no material ineffectiveness of the Company’s interest
rate swaps for the period that they were held during 2005.
Derivatives not Designated as Hedges. From time to time, the Company utilizes certain derivative
instruments that either do not qualify or are not designated for hedge accounting treatment under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, and its related interpretations. Accordingly,
changes in the fair value of these contracts, if any, are recorded in other expense, net.
14. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
Year Ended December 31,
2007 2006 2005
(In thousands, except per
share information)
Numerator:
Net income ................................................. $214,483 $182,997 $165,609
Denominator:
Denominator for basic earnings per share—weighted average shares .... 181,501 180,992 172,221
Effect of dilutive securities:
Employee stock awards ................................... 5,879 6,733 5,550
Denominator for diluted earnings per share—adjusted weighted-average
shares ................................................... 187,380 187,725 177,771
Basic earnings per share ........................................... $ 1.18 $ 1.01 $ 0.96
Diluted earnings per share ......................................... $ 1.14 $ 0.97 $ 0.93
Antidilutive weighted average shares ................................ 17,096 17,892 26,134
15. 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.
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