Regulation

Citrix to Restate Financials from 2004 to 2006

Errors found related to stock-option backdating issues identified by its audit committee, which says no current executives were involved.
Stephen TaubJune 14, 2007

Citrix Systems Inc. said it will restate its 2004 and 2005 financial reports and interim quarterly filings for 2005 and 2006 to reflect additional non-cash stock-based compensation expenses and tax effects related to previously granted stock options.

The amount of the additional non-cash compensation expense and tax impact hasn’t bee determined yet, the infrastructure software maker said, adding that it plans to request a consultation on certain interpretive issues with the Securities and Exchange Commission’s Office of Chief Accountant.

Citrix said its audit committee had concluded that from 1996 until mid-1998 the company followed processes and procedures that likely led to the backdating of options grant dates for employees and executives. The committee found that none of the company’s current executives were responsible for the backdating, Citrix said.

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In early March the company said it had identified errors in connection with stock option grants made from 1996 through 1998, and two weeks later it said it would restate prior results because it used incorrect measurement dates for accounting purposes for certain historical stock option grants. The company conceded that non-cash stock-based compensation expenses should have been recorded over the vesting period of those options, and that the amount of the expenses is material.

In its announcement this week, Citrix blamed the errors mainly on delays in obtaining written approvals of grants, incomplete adherence to grant procedures, and grant-releated process deficiencies in the cases of grants from 1996 through late-2003. Many of the errors, it said, resulted from delays in obtaining written approval of grants for which the grant dates were selected in advance. After late 2003, there were only a few issues caused by administrative errors.

Citrix also said that its audit committee’s investigation concluded that there was no intentional wrongdoing by any current executive of the company in connection with company stock option grants and procedures during the review period from 1996 through 2006.

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