Citrix 2012 Annual Report Download - page 14

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Corporation, Epic Systems Corporation, McKesson Corporation, Microsoft, Oracle Corporation, SAP AG and Siemens Medical
Health Solutions, among many others.
Our corporate marketing organization provides sales event support, sales collateral, advertising, direct mail, industry
analyst relations and public relations coverage to our indirect channels to aid in market development and in attracting new
customers. Our partner development organization actively supports our partners 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 partners.
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 have thousands of partnerships, one distributor, Ingram Micro, accounted for 16% of our net revenues in
2012, 17% of our total net revenues in 2011 and 17% of our total net revenues in 2010. Our 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), one of which 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
2012, 2011 and 2010.
We are not obligated to accept product returns from our channel distributors under any conditions, unless the product
item is defective in manufacture. 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, 2012 for information regarding our revenue recognition policy.
International revenues (sales outside the United States) accounted for approximately 45.3% of our net revenues for the
year ended December 31, 2012, 43.2% of our net revenues for the year ended December 31, 2011 and 42.7% of our net
revenues for the year ended December 31, 2010. For detailed information on our international revenues, please refer to Note 11
to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2012.
Segment Revenue
Our revenues are derived from our Enterprise division products, which primarily include Mobile and Desktop products,
Networking and Cloud products and related license updates and maintenance, support and professional services and from our
Online Services division's Collaboration and Data products. The Enterprise division and the Online Services division constitute
our two reportable segments. See Note 11 to our consolidated financial statements included in this Annual Report on Form 10-
K for the year ended December 31, 2012.
Operations
For our Cloud Networking products, including NetScaler and Cloud Bridge, we employ manufacturing capabilities
through independent contractors to provide a redundant source of manufacture and assembly. Independent contractors provide
us with the flexibility needed to meet our customer product and delivery requirements. We have manufacturing relationships
primarily with Flextronics, Super Micro Computer, Inc., Hewlett Packard and IBM (primarily for Bytemobile Smart Capacity)
under which we have subcontracted the majority of our hardware manufacturing activity. These third-party contract
manufacturers also provide final test, warehousing and shipping services. This subcontracting activity extends from prototypes
to full production and includes activities such as material procurement, final assembly, test, control, shipment to our customers
and repairs. Together with our contract manufacturers, we design, specify and monitor the tests that are required to meet
internal and external quality standards. Our contract manufacturers manufacture our products based on forecasted demand for
our products. Each of the contract manufacturers procures components necessary to assemble the products in our forecast and
test the products according to our specifications. We are dual-sourced on our components, however, in some instances, those
sources may be located in the same geographic area. Accordingly, if a natural disaster occurred in one of those areas, we may
need to seek additional sources. Products are then shipped to our channel distributors, VARs or end-users. If the products go
unsold for specified periods of time, we may incur carrying charges or obsolete material charges for products ordered to meet
our forecast or customer orders. In 2012, we did not experience any material difficulties or significant delays in the
manufacture and assembly of our products.
We control all purchasing, inventory, scheduling, order processing and accounting functions related to our operations. For
our software products, production, warehousing and shipping are performed by our independent contractor HP, Ireland. Master
software CD-ROMs, development of user manuals, packaging designs, initial product quality control and testing are primarily
performed at our facilities. In some cases, independent contractors also duplicate CD-ROMs, print documentation and package
and assemble products to our specifications.