Cisco and Juniper Financial Analysis
In view of comparing the various accounting parameters of Cisco and Juniper, financial statements for the fiscal year 2006 are used for both the companies.
Stock Options grants:
Both the Companies have adopted the Statement of financial accounting standards No. 123 (revised 2004) SFAS 123(R). This standard requires the measurement and recognition of compensation expense for all share based payment awards made to employees and directors including employee stock options and employee stock purchases based on estimated fair value.
In 2006 Juniper had to restate its past financial results after an internal audit found problems with the way the company accounted for the stock options grants.
The investigation concluded that the recorded grant dates of certain stock-options differed from the actual measurement dates that should have been used for the accounting purposes. The company had indulged in backdating of stock options that were not accounted properly.
Backdating means that the company awards its employees stock options on a date when its share price was low. Due to this the stock options of the employees become more valuable.
Backdating can lead to overstating of earnings by a company. After Juniper recognized this discrepancy, they adjusted the measurement dates for options covering a total of 110.5 million shares of common stock covered by options granted during the relevant period. They recorded approximately $900 million charge as a result of the improprieties in its stock option granting practices.
Juniper adopted SFAS123(R) on January 1 , 2006.
Its restated balance for common stock shares at December 2005 was 568.24 million.
During the year 2006 in connection with employee stock purchase plan, the company issued 1.74 million shares.
Stock options exercised by the employees were 9.31 million shares.
The company repurchased and retired 10.07 million shares.
This left a balance of 569.23 million shares as of the end of
Stock Options grants:
Both the Companies have adopted the Statement of financial accounting standards No. 123 (revised 2004) SFAS 123(R). This standard requires the measurement and recognition of compensation expense for all share based payment awards made to employees and directors including employee stock options and employee stock purchases based on estimated fair value.
In 2006 Juniper had to restate its past financial results after an internal audit found problems with the way the company accounted for the stock options grants.
The investigation concluded that the recorded grant dates of certain stock-options differed from the actual measurement dates that should have been used for the accounting purposes. The company had indulged in backdating of stock options that were not accounted properly.
Backdating means that the company awards its employees stock options on a date when its share price was low. Due to this the stock options of the employees become more valuable.
Backdating can lead to overstating of earnings by a company. After Juniper recognized this discrepancy, they adjusted the measurement dates for options covering a total of 110.5 million shares of common stock covered by options granted during the relevant period. They recorded approximately $900 million charge as a result of the improprieties in its stock option granting practices.
Juniper adopted SFAS123(R) on January 1 , 2006.
Its restated balance for common stock shares at December 2005 was 568.24 million.
During the year 2006 in connection with employee stock purchase plan, the company issued 1.74 million shares.
Stock options exercised by the employees were 9.31 million shares.
The company repurchased and retired 10.07 million shares.
This left a balance of 569.23 million shares as of the end of