Citrix 2014 Annual Report Download - page 95

CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-27
and asserted that the patents-in-suit were invalid. A jury trial was held on SSL Services' claims, and on June 18, 2012, the jury
found that the Company does not infringe the '796 patent and found that the Company willfully infringes the '011 patent
through the sale and use of certain products. The jury awarded SSL Services $10.0 million. On September 17, 2012, the court
issued a final judgment confirming the jury award of $10.0 million in damages and added $5.0 million in enhanced damages
and approximately $5.0 million in prejudgment interest on the damages award. In October 2014, the Federal Circuit Court of
Appeals affirmed the district court’s judgment in all material respects. Accordingly, for the year ended December 31, 2014, the
Company recorded an accrual for estimated damages and related interest of approximately $20.7 million, which is included in
Accrued expenses and other current liabilities in the accompanying consolidated balance sheets and General and administrative
expense in the accompanying consolidated statements of income.
In addition to the SSL Matter and due to the nature of the Company's business, the Company is subject to patent
infringement claims, including current suits against it or one or more of its wholly-owned subsidiaries alleging infringement by
various Company products and services (the "Other Matters"). The Company believes that it has meritorious defenses to the
allegations made in its pending cases and intends to vigorously defend these lawsuits; however, it is unable currently to
determine the ultimate outcome of these or similar matters or the potential exposure to loss, if any. In addition, the Company is
a defendant in various litigation matters generally arising out of the normal course of business. Although it is difficult to predict
the ultimate outcomes of these cases, the Company believes that it is not reasonably possible that the ultimate outcomes will
materially and adversely affect its business, financial position, results of operations or cash flows.
Guarantees
The authoritative guidance requires certain guarantees to be recorded at fair value and requires a guarantor to make
disclosures, even when the likelihood of making any payments under the guarantee is remote. For those guarantees and
indemnifications that do not fall within the initial recognition and measurement requirements of the authoritative guidance, the
Company must continue to monitor the conditions that are subject to the guarantees and indemnifications, as required under
existing generally accepted accounting principles, to identify if a loss has been incurred. If the Company determines that it is
probable that a loss has been incurred, any such estimable loss would be recognized. The initial recognition and measurement
requirements do not apply to the provisions contained in the majority of the Company’s software license agreements that
indemnify licensees of the Company’s software from damages and costs resulting from claims alleging that the Company’s
software infringes the intellectual property rights of a third party. The Company has not made material payments pursuant to
these provisions as of December 31, 2014. The Company has not identified any losses that are probable under these provisions
and, accordingly, the Company has not recorded a liability related to these indemnification provisions.
Purchase Obligations
The Company has agreements with suppliers to purchase inventory and estimates its non-cancelable obligations under
these agreements for the fiscal year ended December 31, 2015 to be approximately $10.7 million. The Company also has
contingent obligations to purchase inventory for the fiscal year ended December 31, 2015, which are based on amount of usage,
of approximately $16.4 million. The Company does not have any purchase obligations beyond December 31, 2015.