Citrix 2014 Annual Report Download - page 87

CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-19
5. FAIR VALUE MEASUREMENTS
The authoritative guidance defines fair value as an 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.
Available-for-sale securities included in Level 2 are valued utilizing inputs obtained from an independent pricing service
(the “Service”) which uses quoted market prices for identical or comparable instruments rather than direct observations of
quoted prices in active markets. The Service gathers observable inputs for all of the Company’s fixed income securities from a
variety of industry data providers including, for example, large custodial institutions and other third-party sources. Once the
observable inputs are gathered by the Service, all data points are considered and an average price is determined. The Service’s
providers utilize a variety of inputs to determine their quoted prices. These inputs may include interest rates, known historical
trades, yield curve information, benchmark data, prepayment speeds, credit quality and broker/dealer quotes. Substantially all
of the Company’s available-for-sale investments are valued utilizing inputs obtained from the Service and accordingly are
categorized as Level 2 in the table below. The Company periodically independently assesses the pricing obtained from the
Service and historically has not adjusted the Service's pricing as a result of this assessment. Available-for-sale securities are
included in Level 3 when relevant observable inputs for a security are not available.
The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and
may affect the classification of assets and liabilities within the fair value hierarchy. In certain instances, the inputs used to
measure fair value may meet the definition of more than one level of the fair value hierarchy. The input with the lowest level
priority is used to determine the applicable level in the fair value hierarchy.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
As of December 31,
2014
Quoted
Prices In
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
(in thousands)
Assets:
Cash and cash equivalents:
Cash $ 230,370 $ 230,370 $ — $ —
Money market funds 29,512 29,512 — —
Corporate securities 267 — 267 —
Available-for-sale securities:
Agency securities 638,313 — 638,313 —
Corporate securities 794,115 — 788,042 6,073
Municipal securities 48,730 — 48,730 —
Government securities 121,212 — 121,212 —
Prepaid expenses and other current assets:
Foreign currency derivatives 1,206 — 1,206 —
Total assets $ 1,863,725 $ 259,882 $ 1,597,770 $ 6,073
Accrued expenses and other current liabilities:
Foreign currency derivatives 9,692 — 9,692 —
Total liabilities $ 9,692 $ — $ 9,692 $ —