Citrix 2009 Annual Report Download - page 102

CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
there have been no successful auctions for the securities held in its portfolio since the failures began. In
November 2008, the Company formally accepted the terms of a settlement (the “Settlement”) from UBS. Upon
accepting the terms of the Settlement, the Company received an enforceable, non-transferrable right (the “Put
Option”) that enables it to sell its auction rate securities back to UBS during the period between June 30, 2010
and July 2, 2012 at par value. Accordingly, the Company recorded the fair value of the Put Option in other assets
in the accompanying consolidated balance sheet and contemporaneously made the fair value election as
permitted by the authoritative guidance which states that companies may elect the fair value option for eligible
financial assets.Subsequently, the Company records changes in the fair value of the Put Option in earnings.
During the year ended December 31, 2009, the Company recorded a gain of $1.5 million related to its
investments in auction rate securities and a corresponding loss of $1.3 million related to the Put Option, both of
which are included in other income (expense), net, in the accompanying consolidated statements of income. See
Note 5 for additional information regarding the Put Option and auction rate securities.
5. FAIR VALUE MEASUREMENTS
On January 1, 2008, the Company adopted the authoritative guidance for fair value measurements for
financial assets and financial liabilities. The authoritative guidance, which, among other things, defines fair
value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset
and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as
the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a
liability in an orderly transaction between market participants. As such, fair value is a market-based measurement
that should be determined based on assumptions that market participants would use in pricing an asset or
liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value as follows:
•Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;
•Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or
indirectly; and
•Level 3. Unobservable inputs in which there is little or no market data, which require the reporting
entity to develop its own assumptions.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
As of December 31,
2009
Quoted
Prices In
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
(In thousands)
Short-term investments—available-for-sale .... $338,168 $338,168 $ — $ —
Prepaid expenses and other current assets ...... 8,981 — 8,981 —
Other assets ............................. 6,048 — — 6,048
Long-term investments—trading ............. 38,689 — — 38,689
Long-term investments—available-for-sale .... 568,957 523,861 — 45,096
Accrued expenses and other current liabilities . . 4,141 — 4,141 —
The Company measures its cash flow hedges, which are classified as prepaid expenses and other current
assets and accrued expenses and other current liabilities, at fair value based on indicative prices in active markets
and generally measures its investments in available-for-sale securities at fair value based on quoted prices in
active markets for identical securities.
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