Deferred Income and Allowances on Sales to Distributors

12 Months Ended

Dec. 31, 2014

Deferred Revenue Disclosure [Abstract]

Deferred Income and Allowances on Sales to Distributors

Deferred Income and Allowances on Sales to Distributors

Deferred income and allowances on sales to distributors consisted of the following:

(In thousands)	December 31, 2014			December 31, 2013
Deferred revenue on shipments to distributors	$	369,560		$	512,872
Deferred cost of sales on shipments to distributors	(32,172		)	(33,809		)
Deferred income on shipments to distributors	337,388			479,063
Other deferred revenue (1)	6,780			8,683
Total	$	344,168		$	487,746

(1) Principally represents revenue deferred on our maintenance contracts, software and intellectual property licenses.

The Deferred income and allowances on sales to distributor activity was as follows:

(In thousands)	2014			2013
Balance at beginning of period	$	487,746		$	345,993
Deferred revenue recognized upon shipment to distributors	5,964,101			5,870,096
Deferred costs of sales recognized upon shipments to distributors	(290,686		)	(269,969		)
Revenue recognized upon sell-through to end customers	(1,136,036		)	(1,055,137		)
Costs of sales recognized upon sell-through to end customers	285,735			260,326
Earned distributor price concessions (1)	(4,905,291		)	(4,575,430		)
Returns	(59,457		)	(88,058		)
Other	(1,944		)	(75		)
Balance at end of period	$	344,168		$	487,746

(1) Average aggregate price concessions typically range from 70% to 85% of our list price on an annual basis, depending upon the composition of our sales, volumes, and factors associated with the timing of shipments to distributors.

We sell the majority of our products to distributors worldwide at a list price. However, distributors resell our products to end customers at a very broad range of individually negotiated prices based on a variety of factors, including customer, product, quantity, geography and competitive differentiation. The majority of our distributors' sales to their customers are priced at a discount from our list price. Under these circumstances, we remit back to the distributor a portion of its original purchase price after the resale transaction is completed, and we validate the distributor's resale information, including end customer, device, quantity and price, against the distributor price concession that we have approved in advance. To receive a price concession, distributors must submit the price concession claims to us for approval within 60 days of the resale of the product to an end customer. It is our practice to apply these negotiated price discounts to future purchases, requiring the distributor to settle receivable balances, on a current basis, generally within 30 days, for amounts originally invoiced.