Document and Entity Information

Document and Entity Information (USD $)	12 Months Ended
Document and Entity Information (USD $)	Sep. 30, 2010	Nov. 18, 2010	Mar. 31, 2010
Document and Entity Information
Document Type	10-K
Amendment Flag	false
Document Period End Date	2010-09-30
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	FY
Entity Registrant Name	F5 NETWORKS INC
Entity Central Index Key	0001048695
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 4,894,123,041
Entity Common Stock, Shares Outstanding		80,850,089

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	12 Months Ended
CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	Sep. 30, 2010	Sep. 30, 2009
ASSETS
Cash and cash equivalents	$ 168,754	$ 110,837
Short-term investments	259,742	206,291
Accounts receivable, net of allowances of $4,319 and $3,651	112,132	106,973
Inventories	18,815	13,819
Deferred tax assets	8,767	8,010
Other current assets	37,745	22,252
Total current assets	605,955	468,182
Restricted cash	195	2,729
Property and equipment, net	34,157	39,371
Long-term investments	433,570	257,294
Deferred tax assets	37,864	49,018
Goodwill	234,700	231,883
Other assets, net	15,751	20,168
Total assets	1,362,192	1,068,645
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	21,180	18,891
Accrued liabilities	61,768	53,232
Deferred revenue	204,137	150,891
Total current liabilities	287,085	223,014
Other long-term liabilities	16,153	14,373
Deferred revenue, long-term	55,256	32,238
Total long-term liabilities	71,409	46,611
Commitments and contingencies (Note 8)
Shareholders' equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding
Common stock, no par value; 200,000 shares authorized, 80,355 and 78,325 shares issued and outstanding	517,215	462,786
Accumulated other comprehensive loss	(3,241)	(2,337)
Retained earnings	489,724	338,571
Total shareholders' equity	1,003,698	799,020
Total liabilities and shareholders' equity	$ 1,362,192	$ 1,068,645

CONSOLIDATED BALANCE SHEETS (Parenthetical)

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data	Sep. 30, 2010	Sep. 30, 2009
CONSOLIDATED BALANCE SHEETS (Parenthetical)
Accounts receivable, allowances	$ 4,319	$ 3,651
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0	$ 0
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	80,355	78,325
Common stock, shares outstanding	80,355	78,325

CONSOLIDATED INCOME STATEMENTS

CONSOLIDATED INCOME STATEMENTS (USD $) In Thousands, except Per Share data	12 Months Ended
	Sep. 30, 2010	Sep. 30, 2009	Sep. 30, 2008
Net revenues
Products	$ 561,142	$ 406,529	$ 452,929
Services	320,830	246,550	197,244
Total	881,972	653,079	650,173
Cost of net revenues
Products	113,834	95,209	102,400
Services	58,118	47,517	46,618
Total	171,952	142,726	149,018
Gross profit	710,020	510,353	501,155
Operating expenses
Sales and marketing	293,201	225,193	237,175
Research and development	118,314	103,664	103,394
General and administrative	68,503	55,243	56,001
Loss on facility exit and sublease			5,271
Restructuring charges		4,329
Total	480,018	388,429	401,841
Income from operations	230,002	121,924	99,314
Other income, net	7,625	9,724	18,950
Income before income taxes	237,627	131,648	118,264
Provision for income taxes	86,474	40,113	43,933
Net income	$ 151,153	$ 91,535	$ 74,331
Net income per share - basic	$ 1.9	$ 1.16	$ 0.9
Weighted average shares - basic	79,609	78,842	82,290
Net income per share - diluted	$ 1.86	$ 1.14	$ 0.89
Weighted average shares - diluted	81,049	80,073	83,428

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (USD $) In Thousands	Common Stock	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total
Balance - value at Sep. 30, 2007	$ 598,436	$ (564)	$ 172,705	$ 770,577
Balance - shares at Sep. 30, 2007	84,379
Exercise of employee stock options - value	7,794			7,794
Exercise of employee stock options - shares	664
Issuance of stock under employee stock purchase plan - value	10,708			10,708
Issuance of stock under employee stock purchase plan - shares	473
Issuance of restricted stock - shares	1,284
Repurchase of common stock - value	(200,000)			(200,000)
Repurchase of common stock - shares	(7,706)
Tax benefit (loss) from employee stock transactions	(221)			(221)
Stock-based compensation	60,582			60,582
Net income			74,331	74,331
Foreign currency translation adjustment		(1,614)
Unrealized gain (loss) on securities, net of tax		(3,898)
Comprehensive income				68,819
Balance - value at Sep. 30, 2008	477,299	(6,076)	247,036	718,259
Balance - shares at Sep. 30, 2008	79,094
Exercise of employee stock options - value	7,243			7,243
Exercise of employee stock options - shares	498
Issuance of stock under employee stock purchase plan - value	11,574			11,574
Issuance of stock under employee stock purchase plan - shares	561
Issuance of restricted stock - shares	1,516
Repurchase of common stock - value	(87,436)			(87,436)
Repurchase of common stock - shares	(3,344)
Tax benefit (loss) from employee stock transactions	(1,958)			(1,958)
Stock-based compensation	56,064			56,064
Net income			91,535	91,535
Foreign currency translation adjustment		387
Unrealized gain (loss) on securities, net of tax		3,352
Comprehensive income				95,274
Balance - value at Sep. 30, 2009	462,786	(2,337)	338,571	799,020
Balance - shares at Sep. 30, 2009	78,325			78,325
Exercise of employee stock options - value	17,618			17,618
Exercise of employee stock options - shares	911
Issuance of stock under employee stock purchase plan - value	13,936			13,936
Issuance of stock under employee stock purchase plan - shares	458
Issuance of restricted stock - shares	1,849
Repurchase of common stock - value	(75,000)			(75,000)
Repurchase of common stock - shares	(1,188)
Tax benefit (loss) from employee stock transactions	27,102			27,102
Stock-based compensation	70,773			70,773
Net income			151,153	151,153
Foreign currency translation adjustment		(771)
Unrealized gain (loss) on securities, net of tax		(133)
Comprehensive income				150,249
Balance - value at Sep. 30, 2010	$ 517,215	$ (3,241)	$ 489,724	$ 1,003,698
Balance - shares at Sep. 30, 2010	80,355			80,355

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	Sep. 30, 2010	Sep. 30, 2009	Sep. 30, 2008
Operating activities
Net income	$ 151,153	$ 91,535	$ 74,331
Adjustments to reconcile net income to net cash provided by operating activities:
Realized (gain) loss on disposition of assets and investments	(125)	(9)	58
Stock-based compensation	70,773	56,064	60,582
Provisions for doubtful accounts and sales returns	1,206	2,638	2,749
Depreciation and amortization	23,833	26,407	23,623
Deferred income taxes	8,243	(6,057)	(5,606)
Gain on auction rate securities put option	(1,491)	(3,901)
Loss on trading auction rate securities	1,491	3,901
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	(6,365)	(12,555)	(7,940)
Inventories	(4,996)	(3,671)	523
Other current assets	(17,064)	(523)	428
Other assets	(1,466)	(226)	(3,544)
Accounts payable and accrued liabilities	12,157	10,248	4,006
Deferred revenue	76,263	38,130	44,482
Net cash provided by operating activities	313,612	201,981	193,692
Investing activities
Purchases of investments	(877,003)	(414,857)	(494,082)
Sales and maturities of investments	648,875	328,110	535,494
Receipt of restricted cash	2,530	13	1,216
Acquisition of intangible assets		(706)
Acquisition of businesses, net of cash acquired			(995)
Purchases of property and equipment	(12,625)	(11,669)	(27,923)
Net cash (used in) provided by investing activities	(238,223)	(99,109)	13,710
Financing activities
Excess tax benefits from share-based compensation	26,532	(1,958)	(221)
Proceeds from the exercise of stock options and the purchases of stock under employee stock purchase plan	31,670	18,688	18,502
Repurchase of common stock	(75,000)	(87,436)	(200,000)
Net cash used in financing activities	(16,798)	(70,706)	(181,719)
Net increase in cash and cash equivalents	58,591	32,166	25,683
Effect of exchange rate changes on cash and cash equivalents	(674)	368	(1,676)
Cash and cash equivalents, beginning of year	110,837	78,303	54,296
Cash and cash equivalents, end of year	168,754	110,837	78,303
Supplemental Information
Cash paid for taxes	$ 67,120	$ 48,586	$ 48,804

Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2010

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

1.	Summary of Significant Accounting Policies

The Company

F5 Networks, Inc. (the "Company") provides products and services to help companies manage their Internet Protocol (IP) traffic and file storage infrastructure efficiently and securely. The Company's application delivery networking products improve the performance, availability and security of applications on Internet-based networks. Internet traffic between network-based applications and clients passes through these devices where the content is inspected to ensure that it is safe and modified as necessary to ensure that it is delivered securely and in a way that optimizes the performance of both the network and the applications. The Company's storage virtualization products simplify and reduce the cost of managing files and file storage devices, and ensure fast, secure, easy access to files for users and applications. The Company also offers a broad range of services that include consulting, training, maintenance and other technical support services.

Accounting Principles

The Company's consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America ("GAAP").

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates are used in accounting for revenue recognition, reserves for doubtful accounts, product returns, obsolete and excess inventory, valuation allowances on deferred tax assets and purchase price allocations. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company invests its cash and cash equivalents in deposits with four major financial institutions, which, at times, exceed federally insured limits. The Company has not experienced any losses on its cash and cash equivalents.

Investments

The Company classifies the majority of its investment securities as available-for-sale. Investment securities, consisting of corporate and municipal bonds and notes and United States government securities, are reported at fair value with the related unrealized gains and losses included as a component of accumulated other comprehensive income (loss) in shareholders' equity. Realized gains and losses and declines in value of securities judged to be other than temporary are included in other income (expense). The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. Investments in securities with maturities of less than one year or where management's intent is to use the investments to fund current operations are classified as short-term investments. Investments with maturities of greater than one year, as well as certain auction rate securities ("ARS") that the Company believes it will not be able to liquidate in the next twelve months, are classified as long-term investments.

The Company has ARS that are classified as available-for-sale securities and are reported as long-term. The Company has no intent to sell, won't be required to sell, and believes it will hold these securities until recovery. The Company uses the income approach to estimate the fair value of ARS. The assumptions the Company used in preparing the discounted cash flow model include estimates for interest rates; estimates for discount rates using yields of comparable traded instruments adjusted for illiquidity and other risk factors, amount of anticipated future cash flows and expected holding periods for the ARS.

Concentration of Credit Risk

The Company extends credit to customers and is therefore subject to credit risk. The Company performs initial and ongoing credit evaluations of its customers' financial condition and does not require collateral. An allowance for doubtful accounts is recorded to account for potential bad debts. Estimates are used in determining the allowance for doubtful accounts and are based upon an assessment of selected accounts and as a percentage of remaining accounts receivable by aging category. In determining these percentages, the Company evaluates historical write-offs, and current trends in customer credit quality, as well as changes in credit policies. At September 30, 2010, Avnet Technology Solutions, Ingram Micro, Inc. and Tech Data accounted for 13.2%, 13.2% and 11.8% of the Company's accounts receivable, respectively. At September 30, 2009, Avnet Technology Solutions and Ingram Micro, Inc. accounted for 11.6% and 10.7% of the Company's accounts receivable, respectively.

The Company maintains its cash and investment balances with high credit quality financial institutions. Included within the Company's investment portfolio are investments in ARS. The Company's ARS investments are currently not liquid as a result of continued auction failures. If the issuers are not able to meet their payment obligations or if the Company sells its ARS investments before they recover, the Company may lose some or all of its principal invested or may be required to further reduce the carrying value.

Fair Value of Financial Instruments

Short-term and long-term investments are recorded at fair value as the underlying securities are classified as available-for-sale with any unrealized gain or loss being recorded to other comprehensive income. The fair value for securities held is determined using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency with the exception of ARS, which fair market value is estimated using a discounted cash flow model.

Inventories

The Company outsources the manufacturing of its pre-configured hardware platforms to contract manufacturers, who assemble each product to the Company's specifications. As protection against component shortages and to provide replacement parts for its service teams, the Company also stocks limited supplies of certain key product components. The Company reduces inventory to net realizable value based on excess and obsolete inventories determined primarily by historical usage and forecasted demand. Inventories consist of hardware and related component parts and are recorded at the lower of cost or market (as determined by the first-in, first-out method).

Inventories consist of the following (in thousands):


	Years Ended
	September 30,
	2010		2009

Finished goods	$	14,949	$	8,326
Raw materials		3,866		5,493

	$	18,815	$	13,819

Restricted Cash

For fiscal year 2009, restricted cash primarily represented escrow accounts established in connection with lease agreements for the Company's corporate headquarters and, to a lesser extent, the Company's international facilities. Under the terms of the lease for the Company's corporate headquarters, the amount required to be held in escrow was reduced and eventually eliminated at various dates throughout the duration of the lease term. As of September 30, 2010, the Company was no longer subject to escrow requirements in connection with its corporate headquarters.

Property and Equipment

Property and equipment is stated at cost. Depreciation of property and equipment are provided using the straight-line method over the estimated useful lives of the assets, ranging from two to five years. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful life of the improvements. The cost of normal maintenance and repairs is charged to expense as incurred and expenditures for major improvements are capitalized at cost. Gains or losses on the disposition of assets are reflected in the income statements at the time of disposal.

Property and equipment consist of the following (in thousands):


	Years Ended
	September 30,
	2010			2009

Computer equipment	$	59,557		$	54,974
Office furniture and equipment		9,793			9,467
Leasehold improvements		36,462			35,092

		105,812			99,533
Accumulated depreciation and amortization		(71,655	)		(60,162	)

	$	34,157		$	39,371

Depreciation and amortization expense totaled approximately $17.8 million, $18.4 million, and $16.3 million for the fiscal years ended September 30, 2010, 2009 and 2008, respectively.

Goodwill

Goodwill represents the excess purchase price over the estimated fair value of net assets acquired as of the acquisition date. The Company tests goodwill for impairment on an annual basis and between annual tests when impairment indicators are identified, and goodwill is written down when impaired. Goodwill was recorded in connection with the acquisition of Acopia Networks, Inc. in fiscal year 2007, Swan Labs, Inc. in fiscal year 2006, MagniFire Websystems, Inc. in fiscal year 2004 and uRoam, Inc. in fiscal year 2003.

The Company performs its annual goodwill impairment test during the second fiscal quarter, or whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. The first step of the test identifies whether potential impairment may have occurred, while the second step of the test measures the amount of the impairment, if any. Impairment is recognized when the carrying amount of goodwill exceeds its fair value. For its annual goodwill impairment analysis, the Company operates under one reporting unit. The Company determined the fair value of its reporting unit based on the Company's enterprise value. In March 2010, the Company completed its annual impairment test and concluded there was no impairment of goodwill. The Company also considered potential impairment indicators at September 30, 2010 and noted no indicators of impairment.

Other Assets

Other assets primarily consist of software development costs, acquired and developed technology and customer relationships.

Software development costs are charged to research and development expense in the period incurred until technological feasibility is established. Thereafter, until the product is released for sale, software development costs are capitalized and reported at the lower of unamortized cost or net realizable value of each product. Capitalized software development costs are amortized over the remaining estimated economic life of the product. The establishment of technological feasibility and the ongoing assessment of recoverability of costs require considerable judgment by the Company with respect to certain internal and external factors, including, but not limited to, anticipated future gross product revenues, estimated economic life and changes in hardware and software technology. The Company did not capitalize any software development costs in fiscal years 2010 and 2009. During fiscal year 2008, the Company capitalized $1.7 million of software development costs. Amortization expense related to capitalized software development was $421,000, $421,000, and $202,000 for fiscal years 2010, 2009, and 2008, respectively and has been recorded as additional cost of product revenues.

Acquired and developed technology and customer relationship assets are recorded at cost and amortized over their estimated useful lives of five years. The estimated useful life of these assets is assessed and evaluated for reasonableness periodically. Acquired technology of $15.0 million in fiscal 2007 and $8.0 million in fiscal 2006 was recorded in connection with the acquisitions of Acopia and Swan Labs, respectively. Amortization expense related to acquired technology, which is charged to cost of product revenues, totaled $4.6 million, $5.3 million and $6.1 million during the fiscal years 2010, 2009 and 2008, respectively.

Amortization expense of all other intangible assets, including customer relationships, patents and trademarks was approximately $1.0 million during each of the fiscal years 2010, 2009 and 2008.

Impairment of Long-Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable. When such events occur, management determines whether there has been impairment by comparing the anticipated undiscounted net future cash flows to the related asset's carrying value. If impairment exists, the asset is written down to its estimated fair value. No impairment of long-lived assets was noted as of and for the year ended September 30, 2010.

Revenue Recognition

The Company's products are integrated with software that is essential to the functionality of the equipment. Accordingly, the Company recognizes revenue in accordance with the accounting guidance for software products.

The Company sells products through distributors, resellers, and directly to end users. The Company recognizes product revenue upon shipment, net of estimated returns, provided that collection is determined to be reasonably assured and no significant performance obligations remain. In certain regions where the Company does not have the ability to reasonably estimate returns, the Company defers revenue on sales to its distributors until they have received information from the channel partner indicating that the distributor has sold the product to its customer. Payment terms to domestic customers are generally net 30 days to net 45 days. Payment terms to international customers range from net 30 days to net 120 days based on normal and customary trade practices in the individual markets. The Company offers extended payment terms to certain customers, in which case, revenue is recognized when payments are due.

Whenever product, training services and post-contract customer support ("PCS") elements are sold together, a portion of the sales price is allocated to each element based on their respective fair values as determined when the individual elements are sold separately. Where fair value of certain elements is not available, the Company recognizes revenue on the "residual method" based on the fair value of undelivered elements. Revenues from the sale of product are recognized when the product has been shipped and the customer is obligated to pay for the product. When rights of return are present and the Company cannot estimate returns, it recognizes revenue when such rights of return lapse. Revenues for PCS are recognized on a straight-line basis over the service contract term. PCS includes a limited period of telephone support updates, repair or replacement of any failed product or component that fails during the term of the agreement, bug fixes and rights to upgrades, when and if available. Consulting services are customarily billed at fixed hourly rates, plus out-of-pocket expenses, and revenues are recognized when the consulting has been completed. Training revenue is recognized when the training has been completed.

FASB ASC Topic 985-605-25, Software, Revenue Recognition, Multiple Elements, ("ASC 985-605-25"), as amended, requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair values of those elements. The fair value of an element must be based on vendor specific objective evidence ("VSOE"). The Company establishes VSOE for its products, training services, PCS and consulting services based on the sales price charged for each element when sold separately. The sales price is discounted from the applicable list price based on various factors including the type of customer, volume of sales, geographic region and program level. The Company's list prices are generally not fair value as discounts may be given based on the factors enumerated above. The Company believes that the fair value of its consulting services is represented by the billable consulting rate per hour, based on the rates they charge customers when they purchase standalone consulting services. The price of consulting services is not based on the type of customer, volume of sales, geographic region or program level.

The Company uses historical sales transactions to determine whether VSOE can be established for each of the elements. In most instances, VSOE of fair value is the sales price of actual standalone (unbundled) transactions within the past 12 month period that are priced within a reasonable range, which the Company has determined to be plus or minus 15% of the median sales price of each respective price list.

VSOE of PCS is based on standalone sales since the Company does not provide stated renewal rates to its customers. In accordance with the Company's PCS pricing practice (supported by standalone renewal sales), renewal contracts are priced as a percentage of the undiscounted product list price. The PCS renewal percentages may vary, depending on the type and length of PCS purchased. The Company offers standard and premium PCS, and the term generally ranges from one to three years. The Company employs a bell-shaped-curve approach in evaluating VSOE of fair value of PCS. Under this approach, the Company considers VSOE of the fair value of PCS to exist when a substantial majority of its standalone PCS sales fall within a narrow range of pricing.

The Company has established and regularly validates the VSOE of fair value for elements in its multiple element arrangements. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis and excluded from revenues.

Shipping and Handling

Shipping and handling fees charged to the Company's customers are recognized as product revenue in the period shipped and the related costs for providing these services are recorded as a cost of sale.

Guarantees and Product Warranties

In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, resellers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. The Company has entered into indemnification agreements with its officers and directors, and the Company's bylaws contain similar indemnification obligations to the Company's agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

The Company offers warranties of one year for hardware for those customers without service contracts, with the option of purchasing additional warranty coverage in yearly increments. The Company accrues for warranty costs as part of its cost of sales based on associated material product costs and technical support labor costs. Accrued warranty costs as of September 30, 2010, 2009 and 2008 were not considered material.

Research and Development

Research and development expenses consist of salaries and related benefits of product development personnel, prototype materials and expenses related to the development of new and improved products, and an allocation of facilities and depreciation expense. Research and development expenses are reflected in the statements of income as incurred.

Advertising

Advertising costs are expensed as incurred. The Company incurred $2.1 million, $1.3 million and $1.5 million in advertising costs during the fiscal years 2010, 2009 and 2008, respectively.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Deferred income tax assets and liabilities are determined based upon differences between the financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The realization of deferred tax assets is based on historical tax positions and estimates of future taxable income. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized.

In fiscal year 2008, the Company began assessing whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefits to be recognized in the financial statements from such a position is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The new guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

Foreign Currency

The functional currency for the Company's foreign subsidiaries is the local currency in which the respective entity is located, with the exception of F5 Networks, Ltd., in the United Kingdom that uses the U.S. dollar as its functional currency. An entity's functional currency is determined by the currency of the economic environment in which the majority of cash is generated and expended by the entity. The financial statements of all majority-owned subsidiaries and related entities, with a functional currency other than the U.S. dollar, have been translated into U.S. dollars. All assets and liabilities of the respective entities are translated at year-end exchange rates and all revenues and expenses are translated at average rates during the respective period. Translation adjustments are reported as a separate component of accumulated other comprehensive income (loss) in shareholders' equity.

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency, including U.S. dollars. Gains and losses on those foreign currency transactions are included in determining net income or loss for the period of exchange. The net effect of foreign currency gains and losses was not significant during the fiscal years ended September 30, 2010, 2009 and 2008.

Segments

Management has determined that the Company was organized as, and operated in, one reportable operating segment for fiscal year 2010 and prior years: the development, marketing and sale of application delivery networking products that optimize the security, performance and availability of network applications, servers and storage systems.

Stock-Based Compensation

The Company accounts for stock-based compensation using the straight-line attribution method for recognizing compensation expense. The Company recognized $70.8 million, $56.1 million and $60.6 million of stock-based compensation expense for the fiscal years ended September 30, 2010, 2009 and 2008, respectively. As of September 30, 2010, there was $98.4 million of total unrecognized stock-based compensation cost, the majority of which will be recognized over the next two years. Going forward, stock-based compensation expenses may increase as the Company issues additional equity-based awards to continue to attract and retain key employees.

The Company issues incentive awards to its employees through stock-based compensation consisting of restricted stock units ("RSUs"). On August 2, 2010, the Company awarded approximately 910,000 RSUs to employees and executive officers pursuant to the Company's annual equity and retention awards programs. The value of RSUs is determined using the fair value method, which in this case, is based on the number of shares granted and the quoted price of the Company's common stock on the date of grant. No stock options were granted in fiscal years 2010, 2009 and 2008. In determining the fair value of shares issued under the Employee Stock Purchase Plan ("ESPP"), the Company uses the Black-Scholes option pricing model that employs the following key assumptions.


	Employee Stock Purchase Plan
	Years Ended September 30,
	2010			2009			2008

Risk-free interest rate		0.25	%		0.31	%		1.73	%
Expected dividend		—			—			—
Expected term		0.5 years			0.5 years			0.5 years
Expected volatility		41.04	%		47.00	%		65.91	%

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company does not anticipate declaring dividends in the foreseeable future. Expected volatility is based on the annualized daily historical volatility of the Company's stock price commensurate with the expected life of the ESPP option. Expected term of the ESPP option is based on an offering period of six months. The assumptions above are based on management's best estimates at that time, which impact the fair value of the ESPP option calculated under the Black-Scholes methodology and, ultimately, the expense that will be recognized over the life of the ESPP option.

The Company recognizes compensation expense for only the portion of restricted stock units that are expected to vest. Therefore, the Company applies estimated forfeiture rates that are derived from historical employee termination behavior. Based on historical differences with forfeitures of stock-based awards granted to the Company's executive officers and Board of Directors versus grants awarded to all other employees, the Company has developed separate forfeiture expectations for these two groups. The estimated forfeiture rate for grants awarded to the Company's executive officers and Board of Directors was approximately 3% and the estimated forfeiture rate for grants awarded to all other employees was approximately 10% in fiscal 2010. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

In August 2010, the Company granted 181,334 and 83,000 RSUs to certain current executive officers as part of the annual equity and retention awards programs, respectively. Fifty percent of the aggregate number of RSUs granted as part of the annual equity awards program vest in equal quarterly increments over three years, until such portion of the grant is fully vested on August 1, 2013.

One-sixth of the annual equity awards RSU grant, or a portion thereof, is subject to the Company achieving specified quarterly revenue and EBITDA goals during the period beginning in the fourth quarter of fiscal year 2010 through the third quarter of fiscal year 2011. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 33.33% of this annual equity awards RSU grant shall be subject to performance based vesting for each of the four quarter periods beginning with the third quarters of fiscal years 2011 and 2012 (16.66% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods. All RSUs granted as part of the retention awards program fully vest on August 1, 2013.

In August 2009, the Company granted 420,000 RSUs to certain current executive officers. Fifty percent of the aggregate number of RSUs granted at such time vest in equal quarterly increments over two years, until such portion of the grant is fully vested on August 1, 2011. Twenty-five percent of the RSU grant, or a portion thereof, was subject to the Company achieving specified quarterly revenue and EBITDA goals during the period beginning in the fourth quarter of fiscal year 2009 through the third quarter of fiscal year 2010 and the remaining twenty-five percent is subject to the Company achieving specified quarterly revenue and EBITDA goals during the period beginning in the fourth quarter of fiscal year 2010 through the third quarter of fiscal year 2011. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold.

In August 2008, the Company granted 383,400 RSUs to certain current executive officers. Fifty percent of the aggregate number of RSUs granted at such time vest in equal quarterly increments over two years, until such portion of the grant was fully vested on August 1, 2010. Twenty-five percent of the RSU grant, or a portion thereof, was subject to the Company achieving specified percentage increases in total revenue during the period beginning in the fourth quarter of fiscal year 2008 through the third quarter of fiscal year 2009, relative to the same periods in fiscal years 2007 and 2008. Approximately half of this twenty-five percent was earned in fiscal year 2009. The remaining twenty-five percent was subject to the Company achieving specified quarterly revenue and EBITDA goals during the period beginning in the fourth quarter of fiscal year 2009

through the third quarter of fiscal year 2010, as set by the Compensation Committee of the Company's Board of Directors. This twenty-five percent was fully earned in fiscal year 2010.

The Company recognizes compensation costs for awards with performance conditions when it concludes it is probable that the performance condition will be achieved. The Company reassesses the probability of vesting at each balance sheet date and adjusts compensation costs based on the probability assessment.

Earnings Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):


	Years Ended September 30,
	2010		2009		2008

Numerator
Net income	$	151,153	$	91,535	$	74,331
Denominator
Weighted average shares outstanding — basic		79,609		78,842		82,290
Dilutive effect of common shares from stock options and restricted stock units		1,440		1,231		1,138

Weighted average shares outstanding — diluted		81,049		80,073		83,428

Basic net income per share	$	1.90	$	1.16	$	0.90

Diluted net income per share	$	1.86	$	1.14	$	0.89

An immaterial amount of common shares potentially issuable from stock options for the year ended September 30, 2010, are excluded from the calculation of diluted earnings per share because the exercise price was greater than the average market price of common stock for the respective period. Approximately 0.4 million and 0.6 million of common shares potentially issuable from stock options for the years ended September 30, 2009 and 2008, respectively, are excluded from the calculation of diluted earnings per share because the exercise price was greater than the average market price of common stock for the respective period.

Recent Accounting Pronouncements

In December 2007, the FASB issued ASC 810-10, Consolidation — Overall ("ASC 810-10"), which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The Company adopted ASC 810-10 in the first quarter of fiscal year 2010. The adoption of this statement did not have any impact on the Company's consolidated financial position, results of operations or cash flows.

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements, (amendments to FASB ASC Topic 605, Revenue Recognition) ("ASU 2009-13") and ASU 2009-14, Certain Arrangements That Include Software Elements, (amendments to FASB ASC Topic 985, Software) ("ASU 2009-14"). ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-14 removes tangible products from the scope of software revenue guidance and provides guidance on determining whether software deliverables in an arrangement that includes a tangible product are covered by the scope of the software revenue guidance. ASU 2009-13 and ASU 2009-14 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company adopted ASU 2009-13 and ASU 2009-14 in the first quarter of fiscal year 2011. The adoption of these statements did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820) — Improving Disclosures about Fair Value Measurements ("ASU 2010-06"). ASU 2010-06 increases disclosures to include transfers in and out of Levels 1 and 2 and clarifies inputs, valuation techniques and level of disaggregation to be disclosed. The Company adopted ASU 2010-06 in the second quarter of fiscal year 2010. The adoption of this statement did not have any impact on the Company's consolidated financial position, results of operations or cash flows.

Fair Value Measurements

12 Months Ended

Sep. 30, 2010

Fair Value Measurements

Fair Value Measurements

2.	Fair Value Measurements

In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Company determines fair value using a fair value hierarchy that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity, and the reporting entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances and expands disclosure about fair value measurements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, essentially the exit price.

The levels of fair value hierarchy are:

Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date.

Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Unobservable inputs for which there is little or no market data available. These inputs reflect management's assumptions of what market participants would use in pricing the asset or liability.

Level 1 investments are valued based on quoted market prices in active markets and include the Company's cash equivalent investments. Level 2 investments, which include investments that are valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency, include the Company's certificates of deposit, corporate bonds and notes, municipal bonds and notes and U.S. government securities. Fair values for the Company's level 2 investments are based on similar assets without applying significant judgments. In addition, all of the Company's level 2 investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments.

A financial instrument's level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes "observable" requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 30, 2010, were as follows (in thousands):


	Fair Value Measurements at Reporting Date Using
	Quoted Prices in		Significant
	Active Markets for		Other Observable		Significant		Fair Value at
	Identical Securities		Inputs		Unobservable Inputs		September 30,
	(Level 1)		(Level 2)		(Level 3)		2010

Cash equivalents	$	26,987	$	—	$	—	$	26,987
Short-term investments
Available-for-sale securities — corporate bonds and notes		—		120,124		—		120,124
Available-for-sale securities — municipal bonds and notes		—		77,063		—		77,063
Available-for-sale securities — U.S. government securities		—		62,555		—		62,555
Long-term investments
Available-for-sale securities — corporate bonds and notes		—		174,053		—		174,053
Available-for-sale securities — municipal bonds and notes		—		22,094		—		22,094
Available-for-sale securities — U.S. government securities		—		221,380		—		221,380
Available-for-sale securities — auction rate securities		—		—		16,043		16,043

Total	$	26,987	$	677,269	$	16,043	$	720,299

The Company's financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 30, 2009, were as follows (in thousands):


	Fair Value Measurements at Reporting Date Using
	Quoted Prices in		Significant
	Active Markets for		Other Observable		Significant		Fair Value at
	Identical Securities		Inputs		Unobservable Inputs		September 30,
	(Level 1)		(Level 2)		(Level 3)		2009

Cash equivalents	$	19,789	$	—	$	—	$	19,789
Short-term investments
Available-for-sale securities — certificates of deposit		—		3,122		—		3,122
Available-for-sale securities — corporate bonds and notes		—		34,524		—		34,524
Available-for-sale securities — municipal bonds and notes		—		107,345		—		107,345
Available-for-sale securities — U.S. government securities		—		36,741		—		36,741
Trading securities — auction rate securities		—		—		24,559		24,559
Long-term investments
Available-for-sale securities — corporate bonds and notes		—		48,678		—		48,678
Available-for-sale securities — municipal bonds and notes		—		72,979		—		72,979
Available-for-sale securities — U.S. government securities		—		120,092		—		120,092
Available-for-sale securities — auction rate securities		—		—		15,545		15,545
Put option		—		—		1,491		1,491

Total	$	19,789	$	423,481	$	41,595	$	484,865

Due to the auction failures of the Company's auction rate securities ("ARS") that began in the second quarter of fiscal year 2008, there are still no quoted prices in active markets for similar assets as of September 30, 2010. Therefore, the Company has classified its ARS as level 3 financial assets. The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the tables above that used significant unobservable inputs (Level 3) (in thousands):


	2010			2009

Balance, beginning of period	$	41,595		$	47,522
Total losses realized or unrealized:
Included in earnings (other income, net)		1,491			1,091
Included in other comprehensive income		498			(1,309	)
Recognition of put option to earnings		(1,491	)		1,491
Settlements		(26,050	)		(7,200	)
Transfers into and/or out of level 3		—			—

Balance, end of period	$	16,043		$	41,595

Gains (losses) attributable to assets still held as of the end of the period		498			(1,309	)

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable or there is limited market activity such that the determination of fair value requires significant judgment or estimation. Level 3 investment securities primarily include certain ARS for which there was a decrease in the observation of market pricing. At September 30, 2010, the values of these securities were estimated primarily using discounted cash flow analysis that incorporated transaction details such as contractual terms, maturity, timing and amount of future cash flows, as well as assumptions about liquidity and credit valuation adjustments of marketplace participants at September 30, 2010.

The Company adopted the fair value hierarchy for financial assets and liabilities on October 1, 2008, the first day of fiscal year 2009. On October 1, 2009, the first day of fiscal year 2010, the Company applied the fair value hierarchy to all non-financial assets and liabilities. The adoption did not have a material effect on the consolidated financial statements. The Company's non-financial assets and liabilities, which include goodwill, intangible assets, and long-lived assets, are not required to be carried at fair value on a recurring basis. These non-financial assets and liabilities are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. The Company reviews goodwill and intangible assets for impairment annually, during the second quarter of each fiscal year, or as circumstances indicate the possibility of impairment. The Company monitors the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate its carrying amount may not be recoverable. During the year ended September 30, 2010, the Company did not recognize any impairment charges related to goodwill, intangible assets, or long-lived assets.

- Definition

This element represents the disclosure related to the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods.

+ References+ Details

Short-Term and Long-Term Investments

12 Months Ended

Sep. 30, 2010

Short-Term and Long-Term Investments

Short-Term and Long-Term Investments

3.	Short-Term and Long-Term Investments

Short-term investments consist of the following (in thousands):


	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value

September 30, 2010
Corporate bonds and notes	$	119,829	$	318	$	(23	)	$	120,124
Municipal bonds and notes		76,886		182		(5	)		77,063
U.S. government securities		62,390		165		—			62,555

	$	259,105	$	665	$	(28	)	$	259,742


	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value

September 30, 2009
Certificates of deposit	$	3,120	$	2	$	—		$	3,122
Corporate bonds and notes		34,325		201		(2	)		34,524
Municipal bonds and notes		106,491		854		—			107,345
Auction rate securities		24,559		—		—			24,559
U.S. government securities		36,646		96		(1	)		36,741

	$	205,141	$	1,153	$	(3	)	$	206,291

Long-term investments consist of the following (in thousands):


	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value

September 30, 2010
Corporate bonds and notes	$	172,493	$	1,582	$	(22	)	$	174,053
Municipal bonds and notes		22,045		67		(18	)		22,094
Auction rate securities		19,000		—		(2,957	)		16,043
U.S. government securities		221,262		200		(82	)		221,380

	$	434,800	$	1,849	$	(3,079	)	$	433,570


	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value

September 30, 2009
Corporate bonds and notes	$	48,194	$	508	$	(24	)	$	48,678
Municipal bonds and notes		72,202		777		—			72,979
Auction rate securities		19,000		—		(3,455	)		15,545
U.S. government securities		119,447		649		(4	)		120,092

	$	258,843	$	1,934	$	(3,483	)	$	257,294

The amortized cost and fair value of fixed maturities at September 30, 2010, by contractual years-to-maturity, are presented below (in thousands):


	Cost or
	Amortized
	Cost		Fair Value

One year or less	$	259,105	$	259,742
Over one year		434,800		433,570

	$	693,905	$	693,312

The cost or amortized cost values of the Company's ARS include $19.0 million of available-for-sale securities as of September 30, 2010 and $19.0 million of available-for-sale securities and $24.6 million of trading investment securities as of September 30, 2009.

The following table summarizes investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of September 30, 2010 (in thousands):


						12 Months or
	Less Than 12 Months					Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses

September 30, 2010
Corporate bonds and notes	$	51,981	$	(45	)	$	—	$	—		$	51,981	$	(45	)
Municipal bonds and notes		9,691		(23	)		—		—			9,691		(23	)
Auction rate securities		—		—			16,043		(2,957	)		16,043		(2,957	)
U.S. government securities		96,927		(82	)		—		—			96,927		(82	)

Total	$	158,599	$	(150	)	$	16,043	$	(2,957	)	$	174,642	$	(3,107	)

The Company invests in securities that are rated investment grade or better. The unrealized losses on investments for fiscal year 2010 were primarily caused by reductions in the values of the ARS due to the illiquid markets and were partially offset by unrealized gains related to interest rate decreases.

ARS are variable-rate debt securities. The Company limits its investments in ARS to securities that carry an AAA/A- (or equivalent) rating from recognized rating agencies and limits the amount of credit exposure to any one issuer. At the time of the Company's initial investment and at the date of this report, all ARS were in compliance with the Company's investment policy. In the past, the auction process allowed investors to obtain immediate liquidity if so desired by selling the securities at their face amounts. Liquidity for these securities has historically been provided by an auction process that resets interest rates on these investments on average every 7-35 days. However, as has been reported in the financial press, the disruptions in the credit markets adversely affected the auction market for these types of securities.

Beginning in February 2008, auctions failed for approximately $53.4 million in par value of municipal ARS the Company held because sell orders exceeded buy orders. The funds associated with failed auctions will not be accessible until the issuer calls the security, a successful auction occurs, a buyer is found outside the auction process or the security otherwise matures.

In October 2008, the Company entered into an agreement ("the Agreement") with UBS whereby UBS would purchase eligible ARS it sold to the Company prior to February 13, 2008. Under the terms of the Agreement, and at the Company's discretion, UBS will purchase eligible ARS from the Company at par value ("put option") during the period of June 30, 2010 through July 2, 2012. As of September 30, 2010, UBS has purchased all of the eligible ARS the Company held for par value of $34.4 million.

- Definition

This item represents the entire disclosure related to Investments in Certain Debt and Equity Securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets).

+ References+ Details

Business Combinations

12 Months Ended

Sep. 30, 2010

Business Combinations

Business Combinations

4.	Business Combinations

The Company's previous acquisitions were accounted for under the purchase method of accounting. The total purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values. The excess of the purchase price over those fair values was recorded as goodwill. The fair value assigned to the tangible and intangible assets acquired and liabilities assumed was based on estimates and assumptions provided by management, and other information compiled by management, including independent valuations, prepared by valuation specialists that utilized established valuation techniques appropriate for the technology industry. Goodwill was not amortized but instead is tested for impairment at least annually.

Balance Sheet Details

12 Months Ended

Sep. 30, 2010

Balance Sheet Details

Balance Sheet Details

5.	Balance Sheet Details

Other Assets

Other assets consist of the following (in thousands):


	Years Ended
	September 30,
	2010		2009

Acquired and developed technology and software development cost	$	6,374	$	11,393
Deposits and other		9,377		8,775

	$	15,751	$	20,168

Amortization expense related to other assets was approximately $6.0 million, $6.7 million, and $7.3 million for the fiscal years ended September 30, 2010, 2009 and 2008, respectively.

Intangible assets consist of the following (in thousands):


	2010							2009
	Gross							Gross
	Carrying		Accumulated			Net Carrying		Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount

Acquired and developed technology and software development cost	$	33,474	$	(27,100	)	$	6,374	$	33,474	$	(22,081	)	$	11,393
Customer relationships		2,699		(1,894	)		805		2,699		(1,354	)		1,345
Patents and trademarks		2,964		(1,832	)		1,132		2,964		(1,459	)		1,505
Trade names		200		(123	)		77		200		(83	)		117
Non-compete covenants		200		(200	)		—		200		(139	)		61

	$	39,537	$	(31,149	)	$	8,388	$	39,537	$	(25,116	)	$	14,421

Estimated amortization expense for intangible assets for the five succeeding fiscal years is as follows (in thousands):


2011	$	4,188
2012	$	3,613
2013	$	118
2014	$	51
2015	$	51

	$	8,021

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	Years Ended
	September 30,
	2010		2009

Payroll and benefits	$	40,904	$	33,302
Sales and marketing		2,522		1,768
Restructuring		—		478
Income tax accruals		2,458		8,230
Other		15,884		9,454

	$	61,768	$	53,232

Other Long Term Liabilities

Other long term liabilities consist of the following (in thousands):


	Years Ended
	September 30,
	2010		2009

Income tax accrual	$	7,029	$	6,050
Deferred rent and other		9,124		8,323

	$	16,153	$	14,373

Income Taxes

12 Months Ended

Sep. 30, 2010

Income Taxes

Income Taxes

6.	Income Taxes

The United States and international components of income before income taxes are as follows (in thousands):


	Years Ended September 30,
	2010		2009		2008

United States	$	225,698	$	128,537	$	109,344
International		11,929		3,111		8,920

	$	237,627	$	131,648	$	118,264

The provision for income taxes (benefit) consists of the following (in thousands):


	Years Ended September 30,
	2010			2009			2008

Current
U.S. federal	$	79,802		$	41,948		$	45,820
State		4,722			1,631			1,718
Foreign		3,230			1,790			2,489

Total		87,754			45,369			50,027
Deferred
U.S. federal		(2,049	)		(3,317	)		(5,783	)
State		(1,091	)		25			(331	)
Foreign		1,860			(1,964	)		20

Total		(1,280	)		(5,256	)		(6,094	)

	$	86,474		$	40,113		$	43,933

The effective tax rate differs from the U.S. federal statutory rate as follows (in thousands):


	Years Ended September 30,
	2010			2009			2008

Income tax provision at statutory rate	$	83,170		$	46,075		$	41,393
State taxes, net of federal benefit		2,871			2,121			2,187
Impact of foreign income taxes		915			(1,262	)		(696	)
Research and development and other credits		(2,124	)		(5,954	)		(1,709	)
Domestic manufacturing deduction		(3,766	)		(3,346	)		(2,326	)
Impact of stock compensation		2,825			2,411			4,491
Other		2,583			68			593

	$	86,474		$	40,113		$	43,933

The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities are as follows (in thousands):


	Years Ended September 30,
	2010			2009

Deferred tax assets
Net operating loss carry-forwards	$	5,672		$	27,853
Allowance for doubtful accounts		1,644			1,581
Accrued compensation and benefits		4,003			3,399
Inventories and related reserves		2,063			1,871
Other accruals and reserves		30,336			22,469
Depreciation		5,239			3,169
Tax credit carry-forwards		4,065			4,296

		53,022			64,638
Deferred tax liabilities
Purchased intangibles and other		(6,391	)		(7,610	)

Net deferred tax assets	$	46,631		$	57,028

At September 30, 2010, the Company had U.S. net operating loss carry-forwards of approximately $16.1 million. All U.S. net operating loss carry-forwards relate to entities acquired by the Company and are limited in use by I.R.C. Sec. 382. At September 30, 2010, the Company had federal research and development credit carry-forwards of approximately $2.4 million which, if not utilized, will begin to expire in 2022. The aforementioned credit carry-forwards relate to entities acquired by the Company and are limited in use under I.R.C. Sec. 383. The Company also had state research and development and investment credit carry-forwards of approximately $2.9 million, some of which if not utilized, may begin to expire in fiscal year 2024. The deferred tax asset related to net operating loss carry-forwards at September 30, 2010 decreased significantly compared to September 30, 2009 as a result of the Company's increased utilization of federal net operating losses for fiscal year 2010 and prior years.

United States income and foreign withholding taxes have not been provided on approximately $13.4 million of undistributed earnings from the Company's international subsidiaries. The Company has not recognized a deferred tax liability for the undistributed earnings of its foreign subsidiaries because the Company currently does not expect to remit those earnings in the foreseeable future. Determination of the amount of unrecognized deferred tax liability related to undistributed earnings of foreign subsidiaries is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs.

The increase in effective tax rate in fiscal year 2010 over fiscal year 2009 was primarily due to the expiration of the federal research and development credit at December 31, 2009 and a favorable adjustment related to equity awards in a major foreign tax jurisdiction which was reflected in the effective tax rate for fiscal year 2009.

The Company recognizes the financial statement impact of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest impact that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits in fiscal years 2010, 2009 and 2008:


	2010			2009		2008

Balance, beginning of period	$	5,841		$	4,075	$	3,810
Gross increases related to prior period tax positions		442			642		—
Gross increases related to current period tax positions		432			1,124		265
Reductions due to lapses of statute of limitations		(147	)		—		—

Balance, end of period	$	6,568		$	5,841	$	4,075

The Company recognizes interest and, if applicable, penalties (not included in the "unrecognized tax benefits" table above) for any uncertain tax positions. This interest and penalty expense will be a component of income tax expense. In the years ended September 30, 2010, 2009 and 2008 the Company accrued approximately $390,000, $193,000 and $146,000, respectively, of interest expense related to its liability for unrecognized tax benefits. No penalties were recognized in fiscal years 2010, 2009 and 2008 or accrued for at September 30, 2010, 2009 and 2008.

All unrecognized tax benefits, if recognized, would affect the effective tax rate. The Company does not anticipate that total unrecognized tax benefits will significantly change within the next twelve months.

The Company and its subsidiaries are subject to U.S. federal income tax as well as the income tax of multiple state and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters for fiscal years through September 30, 2006. Major jurisdictions where there are wholly owned subsidiaries of F5 Networks, Inc. which require income tax filings include the United Kingdom, Japan, Australia and Germany. Periods open for review by local taxing authorities are fiscal years 2008, 2009, 2006 and 2005 for the United Kingdom, Japan, Australia and Germany, respectively. Within the next four fiscal quarters, the statute of limitations will begin to close on the fiscal years ended 2006 and 2007 tax returns filed in various states and the fiscal year ended 2007 federal income tax return.

Shareholders' Equity

12 Months Ended

Sep. 30, 2010

Shareholders' Equity

Shareholders' Equity

7.	Shareholders' Equity

Common Stock

Equity Incentive Plans

The majority of awards consist of restricted stock units and to a lesser degree, stock options. Employees vest in restricted stock units and stock options ratably over the corresponding service term, generally one to four years. The Company's stock options expire 10 years from the date of grant. Restricted stock units are payable in shares of the Company's common stock as the periodic vesting requirements are satisfied. The value of a restricted stock unit is based upon the fair market value of the Company's common stock on the date of grant. The value of restricted stock units is determined using the intrinsic value method and is based on the number of shares granted and the quoted price of the Company's common stock on the date of grant. Alternatively, the Company used the Black-Scholes option pricing model to determine the fair value of its stock options. Compensation expense related to restricted stock units and stock options is recognized over the vesting period. The Company has adopted a number of stock-based compensation plans as discussed below.

1998 Equity Incentive Plan. In November 1998, the Company adopted the 1998 Equity Incentive Plan, or the 1998 Plan, which provided for discretionary grants of non-qualified and incentive stock options, stock purchase awards and stock bonuses for employees and other service providers. The 1998 Plan expired on November 11, 2008 and no shares remain available for awards under the 1998 Plan. Upon certain changes in control of the Company, all outstanding and unvested options or stock awards under the 1998 Plan will vest at the rate of 50%, unless assumed or substituted by the acquiring entity. During the fiscal years 2010 and 2009, the Company issued no stock options, stock purchase awards or stock bonuses under this plan. As of September 30, 2010, there were options to purchase 182,065 shares outstanding under the 1998 Plan.

1999 Employee Stock Purchase Plan. In May 1999, the board of directors approved the adoption of the 1999 Employee Stock Purchase Plan, or the Employee Stock Purchase Plan. A total of 6,000,000 shares of common stock have been reserved for issuance under the Employee Stock Purchase Plan. The Employee Stock Purchase Plan permits eligible employees to acquire shares of the Company's common stock through periodic payroll deductions of up to 15% of base compensation. No employee may purchase more than $25,000 worth of stock, determined at the fair market value of the shares at the time such option is granted, in one calendar year. The Employee Stock Purchase Plan has been implemented in a series of offering periods, each 6 months in duration. The price at which the common stock may be purchased is 85% of the lesser of the fair market value of the Company's common stock on the first day of the applicable offering period or on the last day of the respective purchase period. As of September 30, 2010 there were 1,974,462 shares available for awards under the Employee Stock Purchase Plan.

2000 Equity Incentive Plan. In July 2000, the Company adopted the 2000 Employee Equity Incentive Plan, or the 2000 Plan, which provides for discretionary grants of non-qualified stock options, stock purchase awards and stock bonuses for non-executive employees and other service providers. A total of 7,000,000 shares of common stock were reserved for issuance under the 2000 Plan. Upon certain changes in control of the Company, all outstanding and unvested options or stock awards under the 2000 Plan will vest at the rate of 50%, unless assumed or substituted by the acquiring entity. As of September 30, 2010, there were options to purchase 214,442 shares outstanding and no shares available for awards under the 2000 Plan. The Company terminated the 2000 Plan effective November 1, 2008 and no additional shares may be issued from the 2000 Plan.

Acquisition Incentive Plans. In connection with the Company's acquisition of Acopia, the Company assumed the Acopia 2001 Stock Incentive Plan, or the Acopia Plan. Unvested options to acquire Acopia's common stock were converted into options to acquire the Company's common stock in connection with the acquisition. A total of 2,230,703 shares of common stock were reserved for issuance under the Acopia Plan. The plan provides for discretionary grants of non-qualified and incentive stock options, restricted stock awards and other stock-based awards to persons who were employees, officers, directors, consultants or advisors to Acopia on or prior to September 12, 2007. During the fiscal year 2010, the Company issued no stock options or restricted stock units under the Acopia Plan. As of September 30, 2010, there were options to purchase 46,829 shares outstanding and no shares available for awards under the Acopia Plan. The Company terminated the Acopia Plan effective November 1, 2008 and no additional shares may be issued from the Acopia Plan.

2005 Equity Incentive Plan. In December 2004, the Company adopted the 2005 Equity Incentive Plan, or the 2005 Plan, which provides for discretionary grants of non-statutory stock options and stock units for employees, including officers, and other service providers. A total of 12,400,000 shares of common stock have been reserved for issuance under the 2005 Plan. Upon certain changes in control of the Company, all outstanding and unvested options or stock awards under the 2005 Plan will vest at the rate of 50%, unless assumed or substituted by the acquiring entity. During the fiscal year 2010, the Company issued no stock options and 994,439 restricted stock units under the 2005 Plan. As of September 30, 2010, there were options to purchase 30,000 shares outstanding and 4,289,200 shares available for new awards under the 2005 Plan.

A majority of the restricted stock units granted in fiscal years 2010, 2009 and 2008 vest quarterly over a two-year period. The restricted stock units were granted during fiscal years 2010, 2009 and 2008 with a per-share weighted average fair value of $86.32, $36.31 and $30.47, respectively. The fair value of restricted stock vested during fiscal years 2010, 2009 and 2008 was $116.4 million, $41.0 million and $36.5 million, respectively.

A summary of restricted stock unit activity under the 2005 Plan is as follows:


				Weighted
				Average
	Outstanding			Grant Date
	Stock Units			Fair Value

Balance, September 30, 2009		2,806,259		$	35.51
Units granted		994,439			86.32
Units vested		(1,725,354	)		33.55
Units cancelled		(90,019	)		38.54

Balance, September 30, 2010		1,985,325		$	62.52

A summary of stock option activity under all of the Company's plans is as follows:


	Options Outstanding
				Weighted
				Average
	Number of			Exercise Price
	Shares			per Share

Balance, September 30, 2009		1,418,991		$	17.99
Options exercised		(911,014	)		19.34
Options cancelled		(24,937	)		55.61

Balance, September 30, 2010		483,040		$	13.51

No stock options were granted in fiscal years 2010, 2009 and 2008.

The total intrinsic value of options exercised during fiscal 2010, 2009 and 2008 was $36.6 million, $8.4 million and $10.2 million, respectively.


			Weighted		Weighted
			Average		Average
			Remaining		Exercise		Aggregate
	Number of		Contractual		Price		Intrinsic
	Shares		Life (in Years)		per Share		Value(1)
	(In thousands)

Stock options outstanding		483,040		3.30	$	13.51	$	43,616

Exercisable		470,690		3.21	$	12.97	$	42,755

Vested and expected to vest		482,832		3.30	$	13.51	$	43,602


(1)		Aggregate intrinsic value represents the difference between the fair value of the Company's common stock underlying these options at September 30, 2010 and the related exercise prices.

As of September 30, 2010, equity based awards (including stock options and restricted stock units) are available for future issuance as follows:


	Awards
	Available for
	Grant

Balance, September 30, 2009		5,193,620
Granted		(994,439	)
Cancelled		138,144
Additional shares reserved (terminated), net		(48,125	)

Balance, September 30, 2010		4,289,200

- Definition

Disclosures related to accounts comprising shareholders' equity, including other comprehensive income. Includes: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables; effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References+ Details

Commitments and Contingencies

12 Months Ended

Sep. 30, 2010

Commitments and Contingencies

Commitments and Contingencies

8.	Commitments and Contingencies

Operating Leases

The majority of the Company's operating lease payments relate to the Company's three building corporate headquarters in Seattle, Washington. The lease for all three buildings was amended and restated in April of 2010. This lease will now expire in 2022 with an option for renewal. One of the buildings has been partially subleased through 2012. The Company also leases additional office space for product development and sales and support personnel in the United States and internationally.

In October 2006, the Company entered into an agreement to lease a total of approximately 137,000 square feet of office space in a building known as 333 Elliott West, which is adjacent to the three buildings that serve as the Company's corporate headquarters. The lease expires in 2018. During 2008, the Company entered into two separate sublease agreements to sublease approximately 112,500 square feet of building 333 Elliott West. One sublease will expire in 2013. In March 2010, the Company amended the second sublease, which expanded the subleased space by approximately 11,700 square feet and extended the term of the sublease to 2018.

Future minimum operating lease payments, net of sublease income, are as follows (in thousands):


	Gross Lease		Sublease		Net Lease
	Payments		Income		Payments

2011		16,661		7,161		9,500
2012		16,423		6,824		9,599
2013		15,439		3,274		12,165
2014		15,027		339		14,688
2015		14,409		85		14,324
Thereafter		73,780		—		73,780

	$	151,739	$	17,683	$	134,056

Rent expense under non-cancelable operating leases amounted to approximately $17.5 million, $15.6 million, and $15.8 million for the fiscal years ended September 30, 2010, 2009, and 2008, respectively.

Purchase Obligations

Purchase obligations are comprised of purchase commitments with the Company's contract manufacturers. The agreement with the Company's primary contract manufacturer allows them to procure component inventory on the Company's behalf based on the Company's production forecast. The Company is obligated to purchase component inventory that the contract manufacturer procures in accordance with the forecast, unless cancellation is given within applicable lead times. As of September 30, 2010, the Company's purchase obligations were $14.3 million.

Litigation

Derivative Suits. Beginning on or about May 24, 2006, several derivative actions were filed against certain of the Company's current and former directors and officers. These derivative lawsuits were filed in: (1) the Superior Court of King County, Washington, as In re F5 Networks, Inc. State Court Derivative Litigation (Case No. 06-2-17195-1 SEA), which consolidates Adams v. Amdahl, et al. (Case No. 06-2-17195-1 SEA), Wright v. Amdahl, et al. (Case No. 06-2-19159-5 SEA), and Sommer v. McAdam, et al. (Case No. 06-2-26248-4 SEA) (the "State Court Derivative Litigation"); and (2) in the U.S. District Court for the Western District of Washington, as In re F5 Networks, Inc. Derivative Litigation, Master File No. C06-0794RSL, which consolidates Hutton v. McAdam, et al. (Case No. 06-794RSL), Locals 302 and 612 of the International Union of Operating Engineers-Employers Construction Industry Retirement Trust v. McAdam et al. (Case No. C06-1057RSL), and Easton v. McAdam et al. (Case No. C06-1145RSL) (the "Federal Court Derivative Litigation"). On August 2, 2007, another derivative lawsuit, Barone v. McAdam et al. (Case No. C07-1200P) was filed in the U.S. District Court for the Western District of Washington. The Barone lawsuit was designated a related case to the Federal Court Derivative Litigation on September 4, 2007. The complaints generally allege that certain of the Company's current and former directors and officers, including, in general, each of the Company's current outside directors (other than Deborah L. Bevier, Scott Thompson, and John Chapple who joined the Board of Directors in July 2006, January 2008, and September 2010, respectively) breached their fiduciary duties to the Company by engaging in alleged wrongful conduct concerning the manipulation of certain stock option grant dates.

On September 24, 2010, the Company entered into a Stipulation of Settlement (the "Stipulation") in connection with the Federal Court Derivative Litigation. On October 21, 2010, the United States District Court for the Western District of Washington issued an order granting preliminary approval of the settlement resolving the claims asserted by the plaintiffs against the individual defendants. A hearing to determine whether the Court should issue an order finally approving the proposed settlement has been scheduled for January 6, 2011. Effectiveness of the settlement of the Federal Court Derivative Litigation is conditioned on dismissal of the State Court Derivative Litigation. A copy of the Stipulation may be found under the "About F5-Investor Relations-Corporate Governance" section of the Company's website, www.f5.com.

SEC and Department of Justice Inquiries. The Company previously received notice from both the SEC and the Department of Justice that they were conducting informal inquiries into the Company's historical stock option practices, and has fully cooperated with both agencies. In January 2010, the Company received notice from the SEC that the investigation concerning the Company's historical stock option practices has been completed and that no enforcement action has been recommended. The Company currently believes that the Department of Justice will take no further action in connection with its inquiry into the Company's historical stock option practices.

The Company is not aware of any additional pending legal proceedings that, individually or in the aggregate, would have a material adverse effect on the Company's business, operating results, or financial condition. The Company may in the future be party to litigation arising in the ordinary course of business, including claims that we allegedly infringe upon third-party intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

Restructuring Charges

12 Months Ended

Sep. 30, 2010

Restructuring Charges

Restructuring Charges

9.	Restructuring Charges

In January 2009, the Company initiated a restructuring plan to reduce its operating expenses which included the consolidation of facilities, accelerated depreciation on tenant improvements and a reduction in workforce. These initiatives are intended to conserve or generate cash in response to the uncertainties associated with the recent deterioration in the global economy. As a result of these initiatives, the Company recorded a restructuring charge of $4.3 million in the second quarter of fiscal 2009. All accrued restructuring costs had been incurred as of September 30, 2010.

Facility Exit and Sublease Agreements

12 Months Ended

Sep. 30, 2010

Facility Exit and Sublease Agreements

Facility Exit and Sublease Agreements

10.

Facility Exit and Sublease Agreements

During fiscal year 2008, the Company exited a research and development facility in Bellevue, Washington for which it has remaining operating lease obligations through 2014. In addition, the Company consolidated its corporate headquarters, partially subleasing the building located at 333 Elliott Avenue West in Seattle, Washington for which it has remaining operating lease obligations through 2018. As a result of the expected loss on the facility exit and sublease agreements, the Company recorded a charge of $5.3 million in the fourth quarter of fiscal 2008.

Employee Benefit Plans

12 Months Ended

Sep. 30, 2010

Employee Benefit Plans

Employee Benefit Plans

11.

Employee Benefit Plans

The Company has a 401(k) savings plan whereby eligible employees may voluntarily contribute a percentage of their compensation. The Company may, at its discretion, match a portion of the employees' eligible contributions. Contributions by the Company to the plan during the years ended September 30, 2010, 2009, and 2008 were approximately $3.8 million, $3.3 million and $3.5 million, respectively. Contributions made by the Company vest over four years.

- Definition

Description containing the entire pension and other postretirement benefits disclosure as a single block of text.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS106-2
-Paragraph 20, 21, 22

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5, 6, 7, 8

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 87
-Paragraph 264

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Implementation Guide (Q and A)
-Number FAS88
-Paragraph 63

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 158
-Paragraph 7, 21, 22

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph b

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 30
-Paragraph 26

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 106
-Paragraph 518

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 03-2
-Paragraph 8

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 8
-Subparagraph m

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph h

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph a

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph q

+ Details

Geographic Sales and Significant Customers

12 Months Ended

Sep. 30, 2010

Geographic Sales and Significant Customers

Geographic Sales and Significant Customers

12.

Geographic Sales and Significant Customers

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company does business in four main geographic regions: the Americas (primarily the United States); Europe, the Middle East, and Africa (EMEA); Japan; and the Asia Pacific region (APAC). The Company's chief operating decision-making group reviews financial information presented on a consolidated basis accompanied by information about revenues by geographic region. The Company's foreign offices conduct sales, marketing and support activities. Revenues are attributed by geographic location based on the location of the customer. The Company's assets are primarily located in the United States and not allocated to any specific region. Therefore, geographic information is presented only for net revenue.

The following presents revenues by geographic region (in thousands):


	Years Ended September 30,
	2010		2009		2008

Americas	$	517,269	$	361,230	$	373,906
EMEA		201,259		150,776		138,810
Japan		59,151		56,792		58,736
Asia Pacific		104,293		84,281		78,721

	$	881,972	$	653,079	$	650,173

Net revenues from international customers are primarily denominated in U.S. dollars and totaled $364.7 million, $291.8 million, and $276.3 million for the years ended September 30, 2010, 2009 and 2008, respectively. One worldwide distributor accounted for 14.5%, 15.4% and 14.0% of total net revenue for the fiscal years 2010, 2009 and 2008, respectively. Another worldwide distributor accounted for 10.2% of total net revenue for fiscal year 2010. Another worldwide distributor accounted for 10.5% of total net revenue for fiscal year 2008.

Quarterly Results of Operations

12 Months Ended

Sep. 30, 2010

Quarterly Results of Operations

Quarterly Results of Operations

13.

Quarterly Results of Operations

The following presents the Company's unaudited quarterly results of operations for the eight quarters ended September 30, 2010. The information should be read in conjunction with the Company's financial statements and related notes included elsewhere in this report. This unaudited information has been prepared on the same basis as the audited financial statements and includes all adjustments, consisting only of normal recurring adjustments that were considered necessary for a fair statement of the Company's operating results for the quarters presented.


	Three Months Ended
	Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
	2010		2010		2010		2009		2009		2009		2009		2008
	(Unaudited and in thousands)

Net revenues
Products	$	164,972	$	147,393	$	129,559	$	119,218	$	108,880	$	95,619	$	94,135	$	107,895
Services		89,302		83,081		76,509		71,938		66,250		62,612		60,014		57,674

Total		254,274		230,474		206,068		191,156		175,130		158,231		154,149		165,569

Cost of net revenues
Products		31,045		29,328		27,419		26,042		24,294		21,955		25,037		23,923
Services		15,783		15,251		13,997		13,087		12,162		11,710		11,545		12,100

Total		46,828		44,579		41,416		39,129		36,456		33,665		36,582		36,023

Gross profit		207,446		185,895		164,652		152,027		138,674		124,566		117,567		129,546

Operating expenses
Sales and marketing		80,696		77,219		69,644		65,642		58,395		55,427		51,933		59,438
Research and development		31,571		30,889		29,134		26,720		25,515		25,070		25,977		27,102
General and administrative		18,876		17,658		16,016		15,953		14,619		12,764		12,055		15,805
Restructuring charges		—		—		—		—		—		—		4,329		—

Total operating expenses		131,143		125,766		114,794		108,315		98,529		93,261		94,294		102,345

Income from operations		76,303		60,129		49,858		43,712		40,145		31,305		23,273		27,201
Other income, net		68		3,561		2,291		1,705		1,682		3,027		2,136		2,879

Income before income taxes		76,371		63,690		52,149		45,417		41,827		34,332		25,409		30,080

Provision (benefit) for income taxes		28,136		23,195		19,005		16,138		13,477		11,556		6,423		8,657

Net income	$	48,235	$	40,495	$	33,144	$	29,279	$	28,350	$	22,776	$	18,986	$	21,423

Net income per share — basic	$	0.60	$	0.51	$	0.42	$	0.37	$	0.36	$	0.29	$	0.24	$	0.27

Weighted average shares — basic		80,268		79,864		79,394		78,906		78,499		78,603		78,925		79,337

Net income per share — diluted	$	0.59	$	0.50	$	0.41	$	0.36	$	0.36	$	0.29	$	0.24	$	0.27

Weighted average shares — diluted		81,253		81,031		80,737		80,333		79,613		79,612		79,570		80,003

- Definition

This element can be used to disclose the entire quarterly financial data disclosure in the annual financial statements as a single block of text. The disclosure includes a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income (loss) before extraordinary items and cumulative effect of a change in accounting principle and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished. Alternatively, the details of this disclosure can be reported using the elements in this group, or by using other taxonomy elements and applying the appropriate quarterly date and period contexts when creating an instance document. For example, the element for "Interest and Dividend Income, Operating" may be used by financial institutions from the Statement of Income, applying the appropriate quarterly date and period context when creating an instance document.

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