Citrix 2014 Annual Report Download - page 16

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supports our partners to improve their commitment and capabilities with Citrix solutions. Our customer sales organization
consists of field-based 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 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 13% of our net revenues in
2014, 14% of our total net revenues in 2013 and 16% of our total net revenues in 2012. 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 agreement is negotiated separately 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 2014,
2013 and 2012.
We are not obligated to accept product returns from our 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, 2014 for information regarding our revenue recognition policy.
International revenues (sales outside the United States) accounted for approximately 45.2% of our net revenues for the
year ended December 31, 2014, 45.4% of our net revenues for the year ended December 31, 2013 and 45.3% of our net
revenues for the year ended December 31, 2012. 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, 2014.
Segment Revenue
Our revenues are derived from our Enterprise and Service Provider division products, which primarily include Workspace
Services solutions, Delivery Networking products and related license updates and maintenance, support and professional
services and from our Mobility Apps division's Communications Cloud, Documents Cloud and Workflow Cloud products. The
Enterprise and Service Provider division and the Mobility Apps 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, 2014.
Operations
For our Cloud Networking products, including NetScaler and CloudBridge, we use independent contractors to provide a
redundant source of manufacture and assembly capabilities. Independent contractors provide us with the flexibility needed to
meet our product quality and delivery requirements. We have manufacturing relationships that we enter into in the ordinary
course of business, primarily with Flextronics and IBM (primarily for ByteMobile Smart Capacity) under which we have
subcontracted the majority of our hardware manufacturing activity, generally on a purchase order basis. 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 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 2014, 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 contractors HP, Ireland and
Digital River. 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.
While it is generally our practice to promptly ship product upon receipt of properly finalized purchase orders, we
sometimes have orders that have not shipped upon receipt of a purchase order. Although the amount of such product license
orders may vary, the amount, if any, of such orders at the end of a fiscal year is not material to our business. We do not believe
that backlog, as of any particular date, is a reliable indicator of future performance.