Citrix 2009 Annual Report Download - page 19

customers. Our partner development organization actively supports our VADs and VARs to improve their
commitment and capabilities with Citrix solutions. Our customer sales organization consists of field-based
systems sales engineers and corporate sales professionals who work directly with our largest customers and
coordinate integration services provided by our VARs and SIs. Additional sales personnel, working in central
locations and in the field, provide additional support including recruitment of prospective partners and technical
training with respect to our products.
Although we work with multiple VADs and VARs, one distributor, Ingram Micro, accounted for 14% of our
total net revenues in 2009, 12% of our total net revenues in 2008 and 10% of our total net revenues in 2007. Our
channel distributor arrangements with Ingram Micro consist of several non-exclusive, independently negotiated
agreements with its subsidiaries, each of which covers different countries or regions. Each of these agreements is
separately negotiated and is independent of any other contract (such as a master distribution agreement). None of
these contracts was individually responsible for over 10% of our total net revenues in each of the last three fiscal
years. In addition, there was no individual VAR that accounted for over 10% of our total net revenues in 2009,
2008 and 2007.
The Citrix Partner Network™ includes three categories of partners: Citrix Solution Advisors™, Citrix
Ready Technology Partners™, and Citrix Global SIs™. This network represents the knowledge, skills and
experience of the entire spectrum of our partners around the world, and makes it easier for end-users to engage
their services and benefit from their solutions. Equally important, the Citrix Partner Network is designed to help
partners build their business by sharing in opportunities for virtualization and networking optimization solutions
that arise from mutual customers and complement the sale of their own products.
We provide most of our channel distributors with stock-balancing and price protection rights, although the
amount of inventory on hand with channel distributors is very small. These amounts are estimated and provided
for at the time of sale as a reduction of revenue. Stock balancing rights permit channel distributors to return
products to us up to the 45th day of the fiscal quarter, subject to ordering an equal dollar amount of our other
products prior to the last day of the same fiscal quarter. We are not obligated to accept product returns from our
channel distributors under any other conditions, unless the product item is defective in manufacture. Product
items returned to us under the stock-balancing program must be in new, unused and unopened condition. Price
protection rights require that we grant retroactive price adjustments for inventories of our products held by
channel distributors or VARs if we lower our prices for such products. In the event that we decide to reduce our
prices, we will establish a reserve to cover exposure to channel distributor inventory. We have not reduced and
have no current plans to reduce the prices of our products for inventory currently held by channel distributors or
VARs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical
Accounting Policies and Estimates” and Note 2 to our consolidated financial statements included in this Annual
Report on Form 10-K for the year ended December 31, 2009 for information regarding our revenue recognition
policy.
International revenues (sales outside the United States) accounted for approximately 43.6% of our net
revenues for the year ended December 31, 2009, 45.8% of our net revenues for the year ended December 31,
2008 and 44.5% of our net revenues for the year ended December 31, 2007. For detailed information on our
international revenues, please refer to Note 12 to our consolidated financial statements included in this Annual
Report on Form 10-K for the year ended December 31, 2009.
Operations
For our application networking products, including NetScaler, Access Gateway and Repeater, we employ
manufacturing capabilities that are both internal and through independent contractors to provide a redundant
source of manufacture and assembly. Internal manufacturing capabilities and independent contractors provide us
with the flexibility needed to meet our customer product and delivery requirements. We have manufacturing
relationships primarily with Flextronics and Super Micro Computer, Inc., under which we have subcontracted the
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