Citrix 2014 Annual Report Download - page 99

CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-31
carryforward exists. Under the new standard, the Company's unrecognized tax benefit, or a portion of an unrecognized tax
benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss
carryforward, a similar tax loss, or a tax credit carryforward. The Company adopted this standard on January 1, 2014, and as of
December 31, 2014 the Company is offsetting unrecognized tax benefits of $6.3 million against short-term deferred tax assets
and $21.9 million against long-term deferred tax assets.
The Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense.
During the year ended December 31, 2014, the Company recognized $0.8 million of expense related to interest and penalties.
The Company has no amounts accrued for the payment of interest and penalties at December 31, 2014.
The federal research and development credit expired on December 31, 2013. On December 19, 2014, the Tax Increase
Prevention Act of 2014 was signed into law. Under this act, the federal research and development credit was retroactively
extended for amounts paid or incurred after December 31, 2013 and before January 1, 2015. The effects of these changes in the
tax law result in net tax benefits of approximately $12.3 million, which was recognized in the fourth quarter of 2014, the
quarter in which the law was enacted. This credit has not been extended for the 2015 tax year and may increase the effective tax
rate in future years if not extended.
11. SEGMENT INFORMATION
The Enterprise and Service Provider division and the Mobility Apps division constitute the Company’s two reportable
segments. The Company does not engage in intercompany revenue transfers between segments. The Company’s chief operating
decision maker (“CODM”) evaluates the Company’s performance based primarily on profitability from its Enterprise and
Service Provider division products and Mobility Apps division products. Segment profit for each segment includes certain
research and development, sales, marketing, general and administrative expenses directly attributable to the segment as well as
other corporate costs allocated to the segment and excludes certain expenses that are managed outside of the reportable
segments. Costs excluded from segment profit primarily consist of certain restructuring charges, stock-based compensation
costs, charges or benefits related to significant litigation that are not anticipated to be ongoing costs, amortization of product
related intangible assets, amortization of other intangible assets, net interest and Other (expense) income, net. Accounting
policies of the Company’s segments are the same as its consolidated accounting policies.
International revenues (sales outside of the United States) accounted for approximately 45.2%, 45.4% and 45.3% of the
Company’s net revenues for the year ended December 31, 2014, 2013, and 2012, respectively. Net revenues and segment profit
for 2014, 2013 and 2012 classified by the Company’s reportable segments, are presented below:
2014 2013 2012
(In thousands)
Net revenues:
Enterprise and Service Provider division $ 2,491,294 $ 2,335,562 $ 2,074,800
Mobility Apps division 651,562 582,872 511,323
Consolidated $ 3,142,856 $ 2,918,434 $ 2,586,123
Segment profit:
Enterprise and Services Provider division $ 589,076 $ 588,138 $ 562,794
Mobility Apps division 115,998 116,061 92,498
Unallocated expenses (1):
Amortization of intangible assets (192,325)(139,541)(114,574)
Patent litigation charge (20,727)— —
Restructuring (20,424)— —
Net interest and other (expense) income (26,605) 7,173 19,451
Stock-based compensation (169,287)(183,941)(149,940)
Consolidated income before income taxes $ 275,706 $ 387,890 $ 410,229
(1) Represents expenses presented to management on a consolidated basis only and not allocated to the operating segments.