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CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-22
markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly
(Level 2 inputs) in determining fair value, and accordingly, the Company classifies all of its fixed income available-for-sale
securities as Level 2.
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 (Level 2 inputs).
Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
The Company has invested in convertible debt securities of certain early-stage entities that are classified as available-for-
sale investments. As quoted prices in active markets or other observable inputs were not available for these investments, in
order to measure them at fair value, the Company utilized a discounted cash flow model using a discount rate reflecting the
market risk inherent in holding securities of an early-stage enterprise, adjusted by the probability-weighted exit possibilities
associated with the convertible debt securities. This methodology required the Company to make assumptions that were not
directly or indirectly observable regarding the fair value of the convertible debt securities; accordingly they are a Level 3
valuation and included in the table below.
Investments
(in thousands)
Balance at December 31, 2012 $ 3,341
Purchases of Level 3 securities 9,700
Transfers out of Level 3 (2,750)
Balance at December 31, 2013 $ 10,291
Transfers out of Level 3 relate to certain of the Company's investments in convertible debt securities of early-stage
entities that were previously classified as available-for-sale investments to cost method investments upon conversion to equity
ownership, which are included in Other assets in the accompanying consolidated balance sheets.
Assets Measured at Fair Value on a Non-recurring Basis Using Significant Unobservable Inputs (Level 3)
During 2013 and 2012, certain cost method investments with a combined carrying value of $9.3 million and $13.0
million, respectively, were determined to be impaired and have been written down to their fair values of $5.6 million and $9.5
million, respectively, resulting in impairment charges of $3.7 million and $3.5 million, respectively. The impairment charges
are included in Other (expense) income, net in the accompanying consolidated financial statements for the years ended
December 31, 2013 and 2012. In determining the fair value of cost method investments, the Company considers many factors
including but not limited to operating performance of the investee, the amount of cash that the investee has on-hand, the ability
to obtain additional financing and the overall market conditions in which the investee operates. The fair value of the cost
method investment represents a Level 3 valuation as the assumptions used in valuing this investment were not directly or
indirectly observable. See Note 4 for more information regarding cost method investments.
Additional Disclosures Regarding Fair Value Measurements
The carrying value of accounts receivable, accounts payable and accrued expenses and other current liabilities
approximate their fair value due to the short maturity of these items.
6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses consist of the following:
December 31,
2013 2012
(In thousands)
Accrued compensation and employee benefits $ 141,065 $ 130,835
Other accrued expenses 116,541 126,300
Total $ 257,606 $ 257,135