Citrix 2012 Annual Report Download - page 81

Download and view the complete annual report

Please find page 81 of the 2012 Citrix annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

F-15
accumulated other comprehensive loss. Foreign currency transaction gains and losses are the result of exchange rate changes on
transactions denominated in currencies other than the functional currency, including U.S. dollars. The remeasurement of those
foreign currency transactions is included in determining net income or loss for the period of exchange. Remeasurement and
foreign currency transaction gains of approximately $3.3 million, $4.7 million and $3.5 million for the years ended
December 31, 2012, 2011, and 2010, respectively, are included in other income (expense), net, in the accompanying
consolidated statements of income.
Derivatives and Hedging Activities
In accordance with the authoritative guidance, the Company records derivatives at fair value as either assets or liabilities
on the balance sheet. For derivatives that are designated as and qualify as effective cash flow hedges, the portion of gain or loss
on the derivative instrument effective at offsetting changes in the hedged item is reported as a component of accumulated other
comprehensive (loss) income and reclassified into earnings as operating expense, net, when the hedged transaction affects
earnings. For derivative instruments that are designated as and qualify as effective fair value hedges, the gain or loss on the
derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, is recognized in
current earnings as interest income or interest expense during the period of the change in fair values. Derivatives not designated
as hedging instruments are adjusted to fair value through earnings as other income (expense), net, in the period during which
changes in fair value occur. The application of the authoritative guidance could impact the volatility of earnings.
The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-
management objective and strategy for undertaking various hedge transactions. This process includes attributing all derivatives
that are designated as cash flow hedges to floating rate assets or liabilities or forecasted transactions and attributing all
derivatives that are designated as fair value hedges to fixed rate assets or liabilities. The Company also formally assesses, both
at the inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in cash
flows or fair value of the hedged item. Fluctuations in the value of the derivative instruments are generally offset by changes in
the hedged item; however, if it is determined that a derivative is not highly effective as a hedge or if a derivative ceases to be a
highly effective hedge, the Company will discontinue hedge accounting prospectively for the affected derivative.
The Company is exposed to risk of default by its hedging counterparties. Although this risk is concentrated among a
limited number of counterparties, the Company’s foreign exchange hedging policy attempts to minimize this risk by placing
limits on the amount of exposure that may exist with any single financial institution at a time.
Pension Liability
The Company provides retirement benefits to certain employees who are not U.S. based. Generally, benefits under these
programs are based on an employee’s length of service and level of compensation. The majority of these programs are
commonly referred to as termination indemnities, which provide retirement benefits in accordance with programs mandated by
the governments of the countries in which such employees work.
The Company had accrued $9.8 million and $5.1 million for these pension liabilities at December 31, 2012 and 2011,
respectively. Expenses for the program for 2012, 2011 and 2010 amounted to $1.5 million, $1.8 million and $1.1 million,
respectively.
Advertising Costs
The Company expenses advertising costs as incurred. The Company has advertising agreements with, and purchases
advertising from, online media providers to advertise its SaaS. The Company also has cooperative advertising agreements with
certain distributors and resellers whereby the Company will reimburse distributors and resellers for qualified advertising of
Company products. Reimbursement is made once the distributor, reseller or provider provides substantiation of qualified
expenses. The Company estimates the impact of these expenses and recognizes them at the time of product sales as a reduction
of net revenue in the accompanying consolidated statements of income. The total costs the Company recognized related to
advertising were approximately $137.5 million, $130.8 million and $123.0 million, during the years ended December 31, 2012,
2011 and 2010, respectively.
CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS