Deferred Income and Allowances on Sales to Distributors

3 Months Ended

Mar. 27, 2015

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)	March 27, 2015			December 31, 2014
Deferred revenue on shipment to distributors	$	440,453		$	369,560
Deferred cost of sales on shipment to distributors	(35,479		)	(32,172		)
Deferred income on shipment to distributors	404,974			337,388
Other deferred revenue(1)	6,584			6,780
Total	$	411,558		$	344,168

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

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

	Three Months Ended
(In thousands)	March 27, 2015			March 28, 2014
Balance at beginning of period	$	344,168		$	487,746
Deferred revenue recognized upon shipment to distributors	1,478,292			1,354,597
Deferred cost of sales recognized upon shipment to distributors	(70,524		)	(66,527		)
Revenue recognized upon sell-through to end customers	(249,284		)	(277,671		)
Cost of sales recognized upon sell-through to end customers	66,651			66,733
Earned distributor price concessions (1)	(1,147,370		)	(1,137,745		)
Returns	(10,198		)	(11,163		)
Other	(177		)	(1,451		)
Balance at end of period	$	411,558		$	414,519

(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 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, a distributor must submit the price concession claim 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.