Document And Entity Information
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Document And Entity Information
 3 Months Ended
Jun. 30, 2012
Aug. 02, 2012
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2012  
Document Fiscal Year Focus 2012  
Document Fiscal Period Focus Q3  
Entity Registrant Name F5 NETWORKS INC  
Entity Central Index Key 0001048695  
Current Fiscal Year End Date --09-30  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   79,027,542

Consolidated Balance Sheets
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Sep. 30, 2011
ASSETS    
Cash and cash equivalents $ 195,607 $ 216,784
Short-term investments 324,050 325,766
Accounts receivable, net of allowances of $3,016 and $2,898 193,705 165,676
Inventories 17,038 17,149
Deferred tax assets 8,702 8,391
Other current assets 43,785 29,907
Total current assets 782,887 763,673
Property and equipment, net 54,257 47,998
Long-term investments 587,342 470,203
Deferred tax assets 34,942 34,762
Goodwill 347,901 234,691
Other assets, net 30,737 17,222
Total assets 1,838,066 1,568,549
LIABILITIES AND SHAREHOLDERS' EQUITY    
Accounts payable 32,007 33,525
Accrued liabilities 69,708 67,902
Deferred revenue 344,925 270,880
Total current liabilities 446,640 372,307
Other long-term liabilities 20,314 18,388
Deferred revenue, long-term 88,944 72,418
Total long-term liabilities 109,258 90,806
Commitments and contingencies (Note 5)      
Shareholders' equity    
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding      
Common stock, no par value; 200,000 shares authorized, 79,013 and 79,145 shares issued and outstanding 349,411 380,737
Accumulated other comprehensive loss (5,833) (6,422)
Retained earnings 938,590 731,121
Total shareholders' equity 1,282,168 1,105,436
Total liabilities and shareholders' equity $ 1,838,066 $ 1,568,549

Consolidated Balance Sheets (Parenthetical)
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Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2012
Sep. 30, 2011
Consolidated Balance Sheets [Abstract]    
Accounts receivable, allowances $ 3,016 $ 2,898
Preferred stock, par value $ 0.00 $ 0.00
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.00 $ 0.00
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 79,013,000 79,145,000
Common stock, shares outstanding 79,013,000 79,145,000

Consolidated Income Statements
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Consolidated Income Statements (USD $)
In Thousands, except Per Share data, unless otherwise specified
 3 Months Ended 9 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Net revenues        
Products $ 207,118 $ 179,327 $ 608,837 $ 524,529
Services 145,516 111,386 405,851 312,690
Total 352,634 290,713 1,014,688 837,219
Cost of net revenues        
Products 34,482 31,803 101,350 94,840
Services 25,805 20,645 72,137 57,244
Total 60,287 52,448 173,487 152,084
Gross profit 292,347 238,265 841,201 685,135
Operating expenses        
Sales and marketing 112,064 93,633 329,297 269,790
Research and development 46,985 35,245 129,675 102,358
General and administrative 23,298 21,126 67,760 61,656
Total 182,347 150,004 526,732 433,804
Income from operations 110,000 88,261 314,469 251,331
Other income, net 1,713 1,889 5,002 6,002
Income before income taxes 111,713 90,150 319,471 257,333
Provision for income taxes 39,377 27,601 112,002 83,546
Net income $ 72,336 $ 62,549 $ 207,469 $ 173,787
Net income per share - basic $ 0.91 $ 0.77 $ 2.62 $ 2.15
Weighted average shares - basic 79,135 80,866 79,188 80,773
Net income per share - diluted $ 0.91 $ 0.77 $ 2.60 $ 2.13
Weighted average shares - diluted 79,655 81,497 79,834 81,655

Consolidated Statement Of Shareholders' Equity And Comprehensive Income
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Consolidated Statement Of Shareholders' Equity And Comprehensive Income (USD $)
In Thousands, except Share data
Common Stock [Member]
Accumulated Other Comprehensive Income/(Loss) [Member]
Retained Earnings [Member]
Total
Balance at Sep. 30, 2011 $ 380,737 $ (6,422) $ 731,121 $ 1,105,436
Balance, shares at Sep. 30, 2011 79,145,000     79,145,000
Exercise of employee stock options 901     901
Exercise of employee stock options, shares 99,000      
Issuance of stock under employee stock purchase plan 24,044     24,044
Issuance of stock under employee stock purchase plan, shares 281,000      
Issuance of restricted stock, shares 637,000      
Repurchase of common stock (134,776)     (134,776)
Repurchase of common stock, shares (1,149,000)      
Tax benefit from employee stock transactions 9,500     9,500
Stock-based compensation 69,005     69,005
Net income     207,469 207,469
Foreign currency translation adjustment   (460)   (460)
Unrealized gain on securities, net of tax   1,049   1,049
Comprehensive income       208,058
Balance at Jun. 30, 2012 $ 349,411 $ (5,833) $ 938,590 $ 1,282,168
Balance, shares at Jun. 30, 2012 79,013,000     79,013,000

Consolidated Statements Of Cash Flows
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Consolidated Statements Of Cash Flows (USD $)
In Thousands, unless otherwise specified
 9 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Operating activities    
Net income $ 207,469 $ 173,787
Adjustments to reconcile net income to net cash provided by operating activities:    
Realized loss (gain) on disposition of assets and investments 552 (203)
Stock-based compensation 69,005 67,613
Provisions for doubtful accounts and sales returns 1,061 453
Depreciation and amortization 24,987 15,715
Deferred income taxes (1,057) (387)
Changes in operating assets and liabilities, net of amounts acquired:    
Accounts receivable (28,229) (43,062)
Inventories 111 874
Other current assets (13,852) 8,452
Other assets (244) (365)
Accounts payable and accrued liabilities (3,089) 10,086
Deferred revenue 90,168 62,481
Net cash provided by operating activities 346,882 295,444
Investing activities    
Purchases of investments (780,493) (692,812)
Maturities of investments 636,010 548,789
Sales of investments 24,519 80,977
Increase in restricted cash (30) (406)
Acquisition of intangible assets (250) (80)
Acquisition of businesses, net of cash acquired (128,335)  
Purchases of property and equipment (18,544) (20,544)
Net cash used in investing activities (267,123) (84,076)
Financing activities    
Excess tax benefit from stock-based compensation 9,426 20,221
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan 24,942 21,131
Repurchase of common stock (134,776) (121,526)
Net cash used in financing activities (100,408) (80,174)
Net (decrease) increase in cash and cash equivalents (20,649) 131,194
Effect of exchange rate changes on cash and cash equivalents (528) (144)
Cash and cash equivalents, beginning of period 216,784 168,754
Cash and cash equivalents, end of period $ 195,607 $ 299,804

Summary Of Significant Accounting Policies
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Summary Of Significant Accounting Policies
 9 Months Ended
Jun. 30, 2012
Summary Of Significant Accounting Policies [Abstract]  
Summary Of Significant Accounting Policies

1. Summary of Significant Accounting Policies

 

Description of Business

 

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. With the purchase of Traffix Communication Systems Ltd. (Traffix Systems) in February 2012, the Company acquired a line of Diameter signaling products that enable full connectivity, enhanced scalability, and comprehensive control for telecommunications operators. These products enable operators to control their signaling networks effectively in the migration to next-generation networks and in future expansion of their subscriber bases and service portfolios. The Company also offers a broad range of services that include consulting, training, maintenance and other technical support services.

 

Basis of Presentation

 

The year end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for their fair statement in conformity with accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

 

Certain reclassifications have been made to the prior year’s financial statements to conform to the fiscal year 2012 presentation. Such reclassifications did not affect total revenues, operating income or net income.

 

Revenue Recognition

 

The Company sells products through distributors, resellers, and directly to end users. Revenue is recognized provided that all of the following criteria have been met:

 

•        Persuasive evidence of an arrangement exists. Evidence of an arrangement generally consists of a purchase order issued pursuant to the terms and conditions of a distributor, reseller or end user agreement.

 

•        Delivery has occurred. The Company uses shipping or related documents, or written evidence of customer acceptance, when applicable, to verify delivery or completion of any performance terms.

 

•        The sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.

 

•        Collectability is reasonably assured. The Company assesses collectability primarily based on the creditworthiness of the customer as determined by credit checks and related analysis, as well as the Customer’s payment history.

 

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 product has been sold to the end-user 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. Revenue from the sale of products is 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.

 

In October 2009, the Financial Accounting Standards Board (FASB) amended the accounting standards for revenue recognition to remove from the scope of industry-specific software revenue recognition guidance any tangible products containing software components and non-software components that operate together to deliver the products essential functionality. In addition, the FASB amended the accounting standards for certain multiple element revenue arrangements to:

 

•     Provide updated guidance on whether multiple elements exist, how the elements in an arrangement should be separated, and how the arrangement consideration should be allocated to the separate elements;

 

•     Require an entity to allocate arrangement consideration to each element based on a selling price hierarchy, where the selling price for an element is based on vendor-specific objective evidence (VSOE), if available, third-party evidence (TPE), if available and VSOE is not available; or the best estimate of selling price (BESP), if neither VSOE or TPE is available; and

 

•     Eliminate the use of the residual method and require an entity to allocate arrangement consideration using the selling price hierarchy.

 

The majority of the Company’s products are hardware appliances which contain software essential to the overall functionality of the products. Accordingly, the Company no longer recognizes revenue on sales of these products in accordance with the industry-specific software revenue recognition guidance.

 

For all transactions entered into prior to the first quarter of fiscal year 2011 and for sales of nonessential and stand-alone software after October 1, 2010, the Company allocates revenue for arrangements with multiple elements based on the software revenue recognition guidance. Software revenue recognition guidance 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 VSOE. Where fair value of certain elements is not available, revenue is recognized on the “residual method” based on the fair value of undelivered elements. If evidence of the fair value of one or more undelivered elements does not exist, all revenue is deferred and recognized at the earlier of the delivery of those elements or the establishment of fair value of the remaining undelivered elements.

 

For transactions entered into subsequent to the adoption of the amended revenue recognition standards that are multiple-element arrangements, the arrangement consideration is allocated to each element based on the relative selling prices of all of the elements in the arrangement using the fair value hierarchy in the amended revenue recognition guidance.

 

Consistent with the methodology used under the previous accounting guidance, 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 is typically not able to determine TPE for its products or services. TPE is determined based on competitor prices for similar elements when sold separately. Generally, the Company’s go-to-market strategy differs from that of other competitive products or services in its markets and the Company’s offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine the selling prices on a stand-alone basis of similar products offered by its competitors.

 

When the Company is unable to establish selling price of its non-software elements using VSOE or TPE, the Company uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company is generally not able to establish VSOE for non-software product sales. Under software revenue recognition guidance, these product sales were accounted for utilizing the residual method. With the adoption of the new revenue recognition guidance, the Company has been able to establish BESP for non-software product sales through the list price, less a discount deemed appropriate to maintain a reasonable gross margin. Management regularly reviews the gross margin information. Non-software product BESP is determined through our review of historical sales transactions within the past 12 month period. Additional factors considered in determining an appropriate BESP include, but are not limited to, cost of products, pricing practices, geographies, customer classes, and distribution channels.

 

The Company has established and regularly validates the VSOE of fair value and BESP 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.

 

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 Traffix Systems in fiscal year 2012, 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.

 

In September 2011, the FASB approved changes to the goodwill impairment guidance which are intended to reduce the cost and complexity of the annual impairment test. The changes provide entities the option to perform a qualitative assessment to determine whether further impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (i.e. greater than 50% chance) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required.

 

The revised guidance includes examples of events and circumstances that might indicate that a reporting unit’s fair value is less than its carrying amount. These include macro-economic conditions such as deterioration in the entity’s operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers.

 

The changes are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. However, earlier adoption is permitted. The Company opted to early adopt this guidance for its annual goodwill impairment test performed in the second quarter of fiscal 2012.

 

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the provisions of authoritative guidance require that the Company perform a two-step impairment test on goodwill. 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 and determines the fair value of its reporting unit based on the Company’s enterprise value. In March 2012, the Company completed a qualitative assessment of potential impairment indicators and concluded that it was more-likely-than-not that the fair value of its reporting unit exceeded its carrying amount.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation using the straight-line attribution method for recognizing compensation expense. The Company recognized $23.5 million and $22.9 million of stock-based compensation expense for the three months ended June 30, 2012 and 2011, respectively, and $69.0 million and $67.6 million for the nine months ended June 30, 2012 and 2011, respectively. As of June 30, 2012, there was $83.9 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 July 30, 2012, the Company’s Compensation Committee approved 789,225 RSUs to non-executive officer employees pursuant to the Company’s annual equity awards program. 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. 

 

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 Company’s estimated forfeiture rate in the third quarter of fiscal year 2012 is 6.2% for grants awarded to the Company’s executive officers and Board of Directors, and 8.7% for grants awarded to all other employees. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

 

In November 2011, as part of the annual review of executive compensation by the Compensation Committee of the Board of Directors and a change in the grant date for the Company’s annual equity awards program for the executive officers, the Company granted 82,968 RSUs to certain current executive officers. Fifty percent of the aggregate number of RSUs vest in equal quarterly increments over three years, until such portion of the grant is fully vested on November 1, 2014. One-sixth of the RSU grant, or a portion thereof, is subject to the Company achieving specified quarterly revenue and EBITDA goals during fiscal year 2012. 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 quarterly performance based vesting for fiscal years 2013 and 2014 (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.

 

In August 2011, the Company granted 170,390 RSUs to certain current executive officers as part of the annual equity awards program. 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, 2014. One-sixth of the annual equity awards 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 2011 through the third quarter of fiscal year 2012. 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 fourth quarters of fiscal years 2012 and 2013 (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.

 

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, was 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 fourth 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.

 

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.

 

Common Stock Repurchase

 

On October 25, 2011, the Company announced that its Board of Directors authorized an additional $200 million for its common stock share repurchase program. This new authorization is incremental to the existing $400 million program, initially approved in October 2010 and expanded in August 2011. Acquisitions for the share repurchase programs will be made from time to time in private transactions or open market purchases as permitted by securities laws and other legal requirements. The programs can be terminated at any time. As of August 2, 2012, the Company had repurchased and retired 8,725,125 shares at an average price of $65.74 per share and the Company had $226.0 million remaining to purchase shares as part of its repurchase programs.

 

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 Company’s nonvested restricted stock awards and restricted stock units do not have nonforfeitable rights to dividends or dividend equivalents.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

72,336

 

$

62,549

 

$

207,469

 

$

173,787

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 

79,135

 

 

80,866

 

 

79,188

 

 

80,773

Dilutive effect of common shares from stock options and restricted stock units

 

 

520

 

 

631

 

 

646

 

 

882

Weighted average shares outstanding — diluted

 

 

79,655

 

 

81,497

 

 

79,834

 

 

81,655

Basic net income per share

 

$

0.91

 

$

0.77

 

$

2.62

 

$

2.15

Diluted net income per share

 

$

0.91

 

$

0.77

 

$

2.60

 

$

2.13

 

 

 

An immaterial amount of common shares potentially issuable from stock options for the three and nine months ended June 30, 2012 and 2011, 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.

 

Comprehensive Income

 

Comprehensive income includes certain changes in equity that are excluded from net income. Specifically, unrealized gains (losses) on securities and foreign currency translation adjustments are included in accumulated other comprehensive loss. Comprehensive income and its components were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Net Income

 

$

72,336

 

$

62,549

 

$

207,469

 

$

173,787

Unrealized gain on securities, net of tax

 

 

516

 

 

1,273

 

 

1,049

 

 

310

Foreign currency translation adjustment

 

 

(287)

 

 

(101)

 

 

(460)

 

 

(529)

Total comprehensive income

 

$

72,565

 

$

63,721

 

$

208,058

 

$

173,568

 

 

Recent Accounting Pronouncements

 

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (ASU 2011-04), which amends current fair value measurement and disclosure guidance to converge with International Financial Reporting Standards (IFRS) and provides increased transparency around valuation inputs and investment categorization. The Company adopted ASU 2011-04 in the second quarter of fiscal 2012. The adoption of ASU 2011-04 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

 

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income, Presentation of Comprehensive Income (ASU 2011-05), which eliminates the option of presenting other comprehensive income as part of the statement of changes in stockholders’ equity and instead requires the entity to present other comprehensive income as either a single statement of comprehensive income combined with net income or as two separate but continuous statements. The amendments in this standard are to be applied retrospectively and are effective for fiscal years, and interim periods within those years beginning after December 15, 2011. The Company will adopt ASU 2011-05 in the first quarter of fiscal 2013 and does not expect the adoption of this standard to have an impact on its consolidated financial statements.

 

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05  (ASU 2011-12), which defers the changes in ASU 2011-05 that relate to the presentation of reclassification adjustments to other comprehensive income. No other requirements in ASU 2011-05 are affected by this deferral. Similar to ASU 2011-05, the Company will adopt ASU 2011-12 in the first quarter of fiscal 2013 and does not expect the adoption of this standard to have an impact on its consolidated financial statements.

Summary Of Significant Accounting Policies (Policy)
v0.0.0.0
Summary Of Significant Accounting Policies (Policy)
 9 Months Ended
Jun. 30, 2012
Summary Of Significant Accounting Policies [Abstract]  
Description Of Business

Description of Business

 

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. With the purchase of Traffix Communication Systems Ltd. (Traffix Systems) in February 2012, the Company acquired a line of Diameter signaling products that enable full connectivity, enhanced scalability, and comprehensive control for telecommunications operators. These products enable operators to control their signaling networks effectively in the migration to next-generation networks and in future expansion of their subscriber bases and service portfolios. The Company also offers a broad range of services that include consulting, training, maintenance and other technical support services.
Basis Of Presentation

Basis of Presentation

 

The year end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for their fair statement in conformity with accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

 

Certain reclassifications have been made to the prior year’s financial statements to conform to the fiscal year 2012 presentation. Such reclassifications did not affect total revenues, operating income or net income.

 
Revenue Recognition

Revenue Recognition

 

The Company sells products through distributors, resellers, and directly to end users. Revenue is recognized provided that all of the following criteria have been met:

 

•        Persuasive evidence of an arrangement exists. Evidence of an arrangement generally consists of a purchase order issued pursuant to the terms and conditions of a distributor, reseller or end user agreement.

 

•        Delivery has occurred. The Company uses shipping or related documents, or written evidence of customer acceptance, when applicable, to verify delivery or completion of any performance terms.

 

•        The sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.

 

•        Collectability is reasonably assured. The Company assesses collectability primarily based on the creditworthiness of the customer as determined by credit checks and related analysis, as well as the Customer’s payment history.

 

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 product has been sold to the end-user 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. Revenue from the sale of products is 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.

 

In October 2009, the Financial Accounting Standards Board (FASB) amended the accounting standards for revenue recognition to remove from the scope of industry-specific software revenue recognition guidance any tangible products containing software components and non-software components that operate together to deliver the products essential functionality. In addition, the FASB amended the accounting standards for certain multiple element revenue arrangements to:

 

•     Provide updated guidance on whether multiple elements exist, how the elements in an arrangement should be separated, and how the arrangement consideration should be allocated to the separate elements;

 

•     Require an entity to allocate arrangement consideration to each element based on a selling price hierarchy, where the selling price for an element is based on vendor-specific objective evidence (VSOE), if available, third-party evidence (TPE), if available and VSOE is not available; or the best estimate of selling price (BESP), if neither VSOE or TPE is available; and

 

•     Eliminate the use of the residual method and require an entity to allocate arrangement consideration using the selling price hierarchy.

 

The majority of the Company’s products are hardware appliances which contain software essential to the overall functionality of the products. Accordingly, the Company no longer recognizes revenue on sales of these products in accordance with the industry-specific software revenue recognition guidance.

 

For all transactions entered into prior to the first quarter of fiscal year 2011 and for sales of nonessential and stand-alone software after October 1, 2010, the Company allocates revenue for arrangements with multiple elements based on the software revenue recognition guidance. Software revenue recognition guidance 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 VSOE. Where fair value of certain elements is not available, revenue is recognized on the “residual method” based on the fair value of undelivered elements. If evidence of the fair value of one or more undelivered elements does not exist, all revenue is deferred and recognized at the earlier of the delivery of those elements or the establishment of fair value of the remaining undelivered elements.

 

For transactions entered into subsequent to the adoption of the amended revenue recognition standards that are multiple-element arrangements, the arrangement consideration is allocated to each element based on the relative selling prices of all of the elements in the arrangement using the fair value hierarchy in the amended revenue recognition guidance.

 

Consistent with the methodology used under the previous accounting guidance, 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 is typically not able to determine TPE for its products or services. TPE is determined based on competitor prices for similar elements when sold separately. Generally, the Company’s go-to-market strategy differs from that of other competitive products or services in its markets and the Company’s offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine the selling prices on a stand-alone basis of similar products offered by its competitors.

 

When the Company is unable to establish selling price of its non-software elements using VSOE or TPE, the Company uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company is generally not able to establish VSOE for non-software product sales. Under software revenue recognition guidance, these product sales were accounted for utilizing the residual method. With the adoption of the new revenue recognition guidance, the Company has been able to establish BESP for non-software product sales through the list price, less a discount deemed appropriate to maintain a reasonable gross margin. Management regularly reviews the gross margin information. Non-software product BESP is determined through our review of historical sales transactions within the past 12 month period. Additional factors considered in determining an appropriate BESP include, but are not limited to, cost of products, pricing practices, geographies, customer classes, and distribution channels.

 

The Company has established and regularly validates the VSOE of fair value and BESP 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.

 
Goodwill

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 Traffix Systems in fiscal year 2012, 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.

 

In September 2011, the FASB approved changes to the goodwill impairment guidance which are intended to reduce the cost and complexity of the annual impairment test. The changes provide entities the option to perform a qualitative assessment to determine whether further impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (i.e. greater than 50% chance) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required.

 

The revised guidance includes examples of events and circumstances that might indicate that a reporting unit’s fair value is less than its carrying amount. These include macro-economic conditions such as deterioration in the entity’s operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers.

 

The changes are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. However, earlier adoption is permitted. The Company opted to early adopt this guidance for its annual goodwill impairment test performed in the second quarter of fiscal 2012.

 

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the provisions of authoritative guidance require that the Company perform a two-step impairment test on goodwill. 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 and determines the fair value of its reporting unit based on the Company’s enterprise value. In March 2012, the Company completed a qualitative assessment of potential impairment indicators and concluded that it was more-likely-than-not that the fair value of its reporting unit exceeded its carrying amount.
Stock-Based Compensation

Stock-Based Compensation

 

The Company accounts for stock-based compensation using the straight-line attribution method for recognizing compensation expense. The Company recognized $23.5 million and $22.9 million of stock-based compensation expense for the three months ended June 30, 2012 and 2011, respectively, and $69.0 million and $67.6 million for the nine months ended June 30, 2012 and 2011, respectively. As of June 30, 2012, there was $83.9 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 July 30, 2012, the Company’s Compensation Committee approved 789,225 RSUs to non-executive officer employees pursuant to the Company’s annual equity awards program. 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. 

 

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 Company’s estimated forfeiture rate in the third quarter of fiscal year 2012 is 6.2% for grants awarded to the Company’s executive officers and Board of Directors, and 8.7% for grants awarded to all other employees. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

 

In November 2011, as part of the annual review of executive compensation by the Compensation Committee of the Board of Directors and a change in the grant date for the Company’s annual equity awards program for the executive officers, the Company granted 82,968 RSUs to certain current executive officers. Fifty percent of the aggregate number of RSUs vest in equal quarterly increments over three years, until such portion of the grant is fully vested on November 1, 2014. One-sixth of the RSU grant, or a portion thereof, is subject to the Company achieving specified quarterly revenue and EBITDA goals during fiscal year 2012. 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 quarterly performance based vesting for fiscal years 2013 and 2014 (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.

 

In August 2011, the Company granted 170,390 RSUs to certain current executive officers as part of the annual equity awards program. 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, 2014. One-sixth of the annual equity awards 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 2011 through the third quarter of fiscal year 2012. 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 fourth quarters of fiscal years 2012 and 2013 (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.

 

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, was 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 fourth 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.

 

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.
Common Stock Repurchase

Common Stock Repurchase

 

On October 25, 2011, the Company announced that its Board of Directors authorized an additional $200 million for its common stock share repurchase program. This new authorization is incremental to the existing $400 million program, initially approved in October 2010 and expanded in August 2011. Acquisitions for the share repurchase programs will be made from time to time in private transactions or open market purchases as permitted by securities laws and other legal requirements. The programs can be terminated at any time. As of August 2, 2012, the Company had repurchased and retired 8,725,125 shares at an average price of $65.74 per share and the Company had $226.0 million remaining to purchase shares as part of its repurchase programs.
Earnings Per Share

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 Company’s nonvested restricted stock awards and restricted stock units do not have nonforfeitable rights to dividends or dividend equivalents.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

72,336

 

$

62,549

 

$

207,469

 

$

173,787

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 

79,135

 

 

80,866

 

 

79,188

 

 

80,773

Dilutive effect of common shares from stock options and restricted stock units

 

 

520

 

 

631

 

 

646

 

 

882

Weighted average shares outstanding — diluted

 

 

79,655

 

 

81,497

 

 

79,834

 

 

81,655

Basic net income per share

 

$

0.91

 

$

0.77

 

$

2.62

 

$

2.15

Diluted net income per share

 

$

0.91

 

$

0.77

 

$

2.60

 

$

2.13

 

 

 

An immaterial amount of common shares potentially issuable from stock options for the three and nine months ended June 30, 2012 and 2011, 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.

 
Comprehensive Income

Comprehensive Income

 

Comprehensive income includes certain changes in equity that are excluded from net income. Specifically, unrealized gains (losses) on securities and foreign currency translation adjustments are included in accumulated other comprehensive loss. Comprehensive income and its components were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Net Income

 

$

72,336

 

$

62,549

 

$

207,469

 

$

173,787

Unrealized gain on securities, net of tax

 

 

516

 

 

1,273

 

 

1,049

 

 

310

Foreign currency translation adjustment

 

 

(287)

 

 

(101)

 

 

(460)

 

 

(529)

Total comprehensive income

 

$

72,565

 

$

63,721

 

$

208,058

 

$

173,568

 

 

Summary Of Significant Accounting Policies (Tables)
v0.0.0.0
Summary Of Significant Accounting Policies (Tables)
 9 Months Ended
Jun. 30, 2012
Summary Of Significant Accounting Policies [Abstract]  
Schedule Of Computation Of Basic And Diluted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

72,336

 

$

62,549

 

$

207,469

 

$

173,787

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 

79,135

 

 

80,866

 

 

79,188

 

 

80,773

Dilutive effect of common shares from stock options and restricted stock units

 

 

520

 

 

631

 

 

646

 

 

882

Weighted average shares outstanding — diluted

 

 

79,655

 

 

81,497

 

 

79,834

 

 

81,655

Basic net income per share

 

$

0.91

 

$

0.77

 

$

2.62

 

$

2.15

Diluted net income per share

 

$

0.91

 

$

0.77

 

$

2.60

 

$

2.13
Schedule Of Comprehensive Income And Its Components

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Net Income

 

$

72,336

 

$

62,549

 

$

207,469

 

$

173,787

Unrealized gain on securities, net of tax

 

 

516

 

 

1,273

 

 

1,049

 

 

310

Foreign currency translation adjustment

 

 

(287)

 

 

(101)

 

 

(460)

 

 

(529)

Total comprehensive income

 

$

72,565

 

$

63,721

 

$

208,058

 

$

173,568

Summary Of Significant Accounting Policies (Narrative) (Details)
v0.0.0.0
Summary Of Significant Accounting Policies (Narrative) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
 0 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended 1 Months Ended 3 Months Ended 9 Months Ended
Aug. 02, 2012
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Nov. 30, 2011
Annual Equity Program [Member]
Aug. 31, 2011
Annual Equity Program [Member]
Aug. 31, 2010
Annual Equity Program [Member]
Jul. 30, 2011
Annual Equity Program [Member]
Aug. 31, 2010
Retention Awards Program [Member]
Jun. 30, 2012
Executive Officers And Board Of Directors [Member]
Jun. 30, 2012
Other Employees [Member]
Jun. 30, 2012
October 25, 2011 Program [Member]
Jun. 30, 2012
Minimum [Member]
D
Y
Jun. 30, 2012
Maximum [Member]
D
Y
Schedule Of Summary Of Significant Accounting Policies [Line Items]                              
Domestic accounts receivable terms of payment, in days                           30 45
International accounts receivable terms of payment, in days                           30 120
Range of VSOE to median sales price       15.00%                      
PCS maturity term, years                           1 3
Share-based compensation expense   $ 23.5 $ 22.9 $ 69.0 $ 67.6                    
Rate for grant awarded                     6.20% 8.70%      
Unrecognized stock-based compensation cost   83.9   83.9                      
Unrecognized stock-based compensation cost, period for recognition, years       2 years                      
Approved RSUs to employees and executive officers by compensation committee                 789,225            
Approved RSUs to employees and executive officers pursuant to the Company's annual equity awards program           82,968 170,390 181,334   83,000          
Percentage of the aggregate number of RSUs granted that vest in equal quarterly increments           50.00% 50.00% 50.00%              
Annual equity awards program vesting period, years           3 years 3 years 3 years              
Percentage of quarterly performance stock grant based on achieving quarterly revenue goal           50.00% 50.00% 50.00%              
Percentage of quarterly revenue goal to be achieved for performance stock grant           80.00% 80.00% 80.00%              
Percentage of quarterly performance stock grant based on achieving EBITDA goal           50.00% 50.00% 50.00%              
Percentage of achievement threshold to which the goals are entitled           80.00% 80.00% 80.00%              
Percentage of over-achievement threshold to which the goals are entitled           100.00% 100.00% 100.00%              
Percentage of annual equity awards RSU grant subject to performance based vesting           33.33% 33.33% 33.33%              
Percentage of annual equity awards RSU grant subject to performance based vesting in each period           16.66% 16.66% 16.66%              
Stock repurchase program, authorized amount       400                 200    
Shares repurchased and retired 8,725,125                            
Average price of shares repurchased $ 65.74                            
Stock repurchase program, remaining value amount of shares authorized to be repurchased $ 226.0                            

Summary Of Significant Accounting Policies (Schedule Of Computation Of Basic And Diluted Net Income Per Share) (Details)
v0.0.0.0
Summary Of Significant Accounting Policies (Schedule Of Computation Of Basic And Diluted Net Income Per Share) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
 3 Months Ended 9 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Summary Of Significant Accounting Policies [Abstract]        
Net income $ 72,336 $ 62,549 $ 207,469 $ 173,787
Weighted average shares outstanding - basic 79,135 80,866 79,188 80,773
Dilutive effect of common shares from stock options and restricted stock units 520 631 646 882
Weighted average shares outstanding - diluted 79,655 81,497 79,834 81,655
Basic net income per share $ 0.91 $ 0.77 $ 2.62 $ 2.15
Diluted net income per share $ 0.91 $ 0.77 $ 2.60 $ 2.13

Summary Of Significant Accounting Policies (Schedule Of Comprehensive Income And Its Components) (Details)
v0.0.0.0
Summary Of Significant Accounting Policies (Schedule Of Comprehensive Income And Its Components) (Details) (USD $)
In Thousands, unless otherwise specified
 3 Months Ended 9 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Summary Of Significant Accounting Policies [Abstract]        
Net Income $ 72,336 $ 62,549 $ 207,469 $ 173,787
Unrealized gain on securities, net of tax 516 1,273 1,049 310
Foreign currency translation adjustment (287) (101) (460) (529)
Comprehensive income $ 72,565 $ 63,721 $ 208,058 $ 173,568

Fair Value Measurements
v0.0.0.0
Fair Value Measurements
 9 Months Ended
Jun. 30, 2012
Fair Value Measurements [Abstract]  
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, actual trade data, benchmark yields 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, U.S. government securities and U.S. government agency 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 June 30, 2012, were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

 

 

Quoted Prices in

 

Significant

 

Significant

 

 

 

 

 

Active Markets for

 

Other Observable

 

Unobservable

 

Fair Value at

 

 

Identical Securities

 

Inputs

 

Inputs

 

June 30,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2012

Cash equivalents

 

$

30,135

 

$

—

 

$

—

 

$

30,135

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — certificates of deposit

 

 

—

 

 

3,536

 

 

—

 

 

3,536

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 

175,658

 

 

—

 

 

175,658

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 

53,227

 

 

—

 

 

53,227

Available-for-sale securities — U.S. government agency securities

 

 

—

 

 

91,629

 

 

—

 

 

91,629

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 

173,580

 

 

—

 

 

173,580

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 

35,185

 

 

—

 

 

35,185

Available-for-sale securities — U.S. government securities

 

 

—

 

 

4,978

 

 

—

 

 

4,978

Available-for-sale securities — U.S. government agency securities

 

 

—

 

 

364,492

 

 

—

 

 

364,492

Available-for-sale securities — auction rate securities

 

 

—

 

 

—

 

 

9,107

 

 

9,107

Total

 

$

30,135

 

$

902,285

 

$

9,107

 

$

941,527

 

 

 

 

The Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 30, 2011, were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

 

 

Quoted Prices in

 

Significant

 

Significant

 

 

 

 

 

Active Markets for

 

Other Observable

 

Unobservable

 

Fair Value at

 

 

Identical Securities

 

Inputs

 

Inputs

 

September 30,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2011

Cash equivalents

 

$

33,740

 

$

—

 

$

—

 

$

33,740

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 

137,156

 

 

—

 

 

137,156

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 

82,715

 

 

—

 

 

82,715

Available-for-sale securities — U.S. government securities

 

 

—

 

 

799

 

 

 

 

 

799

Available-for-sale securities — U.S. government agency securities

 

 

—

 

 

105,096

 

 

—

 

 

105,096

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 

141,150

 

 

—

 

 

141,150

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 

30,714

 

 

—

 

 

30,714

Available-for-sale securities — U.S. government agency securities

 

 

—

 

 

285,329

 

 

—

 

 

285,329

Available-for-sale securities — auction rate securities

 

 

—

 

 

—

 

 

13,010

 

 

13,010

Total

 

$

33,740

 

$

782,959

 

$

13,010

 

$

829,709

 

 

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 June 30, 2012. 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 table above that used significant unobservable inputs (Level 3) (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Balance, beginning of period

 

$

13,193

 

$

16,380

 

$

13,010

 

$

16,043

Total gains realized or unrealized:

 

 

 

 

 

 

 

 

 

 

 

 

Included in other comprehensive income

 

 

914

 

 

610

 

 

1,097

 

 

947

Settlements

 

 

(5,000)

 

 

(4,000)

 

 

(5,000)

 

 

(4,000)

Balance, end of period

 

$

9,107

 

$

12,990

 

$

9,107

 

$

12,990

Unrealized gains attributable to assets still held as of end of period

 

 

914

 

 

610

 

 

1,097

 

 

947

 

 

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 June 30, 2012, 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 June 30, 2012. Significant fluctuations in any of these inputs in isolation would result in changes in the fair value of the Company’s ARS.

 

The Company uses the fair value hierarchy for financial assets and liabilities. 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 three and nine months ended June 30, 2012, the Company did not recognize any impairment charges related to goodwill, intangible assets, or long-lived assets.  

    

Fair Value Measurements (Tables)
v0.0.0.0
Fair Value Measurements (Tables)
 9 Months Ended
Jun. 30, 2012
Fair Value Measurements [Abstract]  
Schedule Of Financial Assets Measured At Fair Value On A Recurring Basis

The Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements at June 30, 2012, were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

 

 

Quoted Prices in

 

Significant

 

Significant

 

 

 

 

 

Active Markets for

 

Other Observable

 

Unobservable

 

Fair Value at

 

 

Identical Securities

 

Inputs

 

Inputs

 

June 30,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2012

Cash equivalents

 

$

30,135

 

$

—

 

$

—

 

$

30,135

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — certificates of deposit

 

 

—

 

 

3,536

 

 

—

 

 

3,536

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 

175,658

 

 

—

 

 

175,658

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 

53,227

 

 

—

 

 

53,227

Available-for-sale securities — U.S. government agency securities

 

 

—

 

 

91,629

 

 

—

 

 

91,629

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 

173,580

 

 

—

 

 

173,580

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 

35,185

 

 

—

 

 

35,185

Available-for-sale securities — U.S. government securities

 

 

—

 

 

4,978

 

 

—

 

 

4,978

Available-for-sale securities — U.S. government agency securities

 

 

—

 

 

364,492

 

 

—

 

 

364,492

Available-for-sale securities — auction rate securities

 

 

—

 

 

—

 

 

9,107

 

 

9,107

Total

 

$

30,135

 

$

902,285

 

$

9,107

 

$

941,527

 

 

 

 

The Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 30, 2011, were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

 

 

Quoted Prices in

 

Significant

 

Significant

 

 

 

 

 

Active Markets for

 

Other Observable

 

Unobservable

 

Fair Value at

 

 

Identical Securities

 

Inputs

 

Inputs

 

September 30,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2011

Cash equivalents

 

$

33,740

 

$

—

 

$

—

 

$

33,740

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 

137,156

 

 

—

 

 

137,156

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 

82,715

 

 

—

 

 

82,715

Available-for-sale securities — U.S. government securities

 

 

—

 

 

799

 

 

 

 

 

799

Available-for-sale securities — U.S. government agency securities

 

 

—

 

 

105,096

 

 

—

 

 

105,096

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 

141,150

 

 

—

 

 

141,150

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 

30,714

 

 

—

 

 

30,714

Available-for-sale securities — U.S. government agency securities

 

 

—

 

 

285,329

 

 

—

 

 

285,329

Available-for-sale securities — auction rate securities

 

 

—

 

 

—

 

 

13,010

 

 

13,010

Total

 

$

33,740

 

$

782,959

 

$

13,010

 

$

829,709

 

 
Schedule Of Reconciliation Of Items Measured At Fair Value On A Recurring Basis That Used Significant Unobservable Inputs (Level 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Balance, beginning of period

 

$

13,193

 

$

16,380

 

$

13,010

 

$

16,043

Total gains realized or unrealized:

 

 

 

 

 

 

 

 

 

 

 

 

Included in other comprehensive income

 

 

914

 

 

610

 

 

1,097

 

 

947

Settlements

 

 

(5,000)

 

 

(4,000)

 

 

(5,000)

 

 

(4,000)

Balance, end of period

 

$

9,107

 

$

12,990

 

$

9,107

 

$

12,990

Unrealized gains attributable to assets still held as of end of period

 

 

914

 

 

610

 

 

1,097

 

 

947

Fair Value Measurements (Schedule Of Financial Assets Measured At Fair Value On A Recurring Basis) (Details)
v0.0.0.0
Fair Value Measurements (Schedule Of Financial Assets Measured At Fair Value On A Recurring Basis) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Sep. 30, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Cash equivalents, fair value $ 30,135 $ 33,740
Investments, fair value 911,392  
Financial assets measured at fair value on a recurring basis, total 941,527 829,709
Quoted Prices In Active Markets For Identical Securities (Level 1) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Cash equivalents, fair value 30,135 33,740
Financial assets measured at fair value on a recurring basis, total 30,135 33,740
Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Financial assets measured at fair value on a recurring basis, total 902,285 782,959
Significant Unobservable Inputs (Level 3) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Financial assets measured at fair value on a recurring basis, total 9,107 13,010
Short-Term Investments [Member] | Certificates Of Deposit [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 3,536  
Short-Term Investments [Member] | Certificates Of Deposit [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 3,536  
Short-Term Investments [Member] | Corporate Bonds And Notes [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 175,658 137,156
Short-Term Investments [Member] | Corporate Bonds And Notes [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 175,658 137,156
Short-Term Investments [Member] | Municipal Bonds And Notes [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 53,227 82,715
Short-Term Investments [Member] | Municipal Bonds And Notes [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 53,227 82,715
Short-Term Investments [Member] | U.S. Government Securities [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value   799
Short-Term Investments [Member] | U.S. Government Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value   799
Short-Term Investments [Member] | U.S. Government Agency Securities [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 91,629 105,096
Short-Term Investments [Member] | U.S. Government Agency Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 91,629 105,096
Long-Term Investments [Member] | Corporate Bonds And Notes [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 173,580 141,150
Long-Term Investments [Member] | Corporate Bonds And Notes [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 173,580 141,150
Long-Term Investments [Member] | Municipal Bonds And Notes [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 35,185 30,714
Long-Term Investments [Member] | Municipal Bonds And Notes [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 35,185 30,714
Long-Term Investments [Member] | U.S. Government Securities [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 4,978  
Long-Term Investments [Member] | U.S. Government Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 4,978  
Long-Term Investments [Member] | U.S. Government Agency Securities [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 364,492 285,329
Long-Term Investments [Member] | U.S. Government Agency Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 364,492 285,329
Long-Term Investments [Member] | Auction Rate Securities [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value 9,107 13,010
Long-Term Investments [Member] | Auction Rate Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Investments, fair value $ 9,107 $ 13,010

Fair Value Measurements (Schedule Of Reconciliation Of Items Measured At Fair Value On A Recurring Basis That Used Significant Unobservable Inputs (Level 3)) (Details)
v0.0.0.0
Fair Value Measurements (Schedule Of Reconciliation Of Items Measured At Fair Value On A Recurring Basis That Used Significant Unobservable Inputs (Level 3)) (Details) (USD $)
In Thousands, unless otherwise specified
 3 Months Ended 9 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Fair Value Measurements [Abstract]        
Balance, beginning of period $ 13,193 $ 16,380 $ 13,010 $ 16,043
Total gains realized or unrealized: Included in other comprehensive income 914 610 1,097 947
Settlements (5,000) (4,000) (5,000) (4,000)
Balance, end of period 9,107 12,990 9,107 12,990
Unrealized gains attributable to assets still held as of end of period $ 914 $ 610 $ 1,097 $ 947

Short-Term And Long-Term Investments
v0.0.0.0
Short-Term And Long-Term Investments
 9 Months Ended
Jun. 30, 2011
Short-Term And Long-Term Investments [Abstract]  
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

 

 

 

June 30, 2012

 

Cost

 

Gains

 

Losses

 

Fair Value

Certificates of deposit

 

$

3,543

 

$

 -

 

$

(7)

 

$

3,536

Corporate bonds and notes

 

 

175,279

 

 

419

 

 

(40)

 

 

175,658

Municipal bonds and notes

 

 

53,167

 

 

68

 

 

(8)

 

 

53,227

U.S. government agency securities

 

 

91,617

 

 

20

 

 

(8)

 

 

91,629

 

 

$

323,606

 

$

507

 

$

(63)

 

$

324,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

September 30, 2011

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$

137,087

 

$

251

 

$

(182)

 

$

137,156

Municipal bonds and notes

 

 

82,687

 

 

62

 

 

(34)

 

 

82,715

U.S. government securities

 

 

799

 

 

 -

 

 

 -

 

 

799

U.S. government agency securities

 

 

105,050

 

 

55

 

 

(9)

 

 

105,096

 

 

$

325,623

 

$

368

 

$

(225)

 

$

325,766

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

June 30, 2012

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$

173,466

 

$

401

 

$

(287)

 

$

173,580

Municipal bonds and notes

 

 

35,050

 

 

140

 

 

(5)

 

 

35,185

Auction rate securities

 

 

10,000

 

 

 -

 

 

(893)

 

 

9,107

U.S. government securities

 

 

4,981

 

 

 -

 

 

(3)

 

 

4,978

U.S. government agency securities

 

 

364,509

 

 

109

 

 

(126)

 

 

364,492

 

 

$

588,006

 

$

650

 

$

(1,314)

 

$

587,342

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

September 30, 2011

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$

141,315

 

$

415

 

$

(580)

 

$

141,150

Municipal bonds and notes

 

 

30,575

 

 

151

 

 

(12)

 

 

30,714

Auction rate securities

 

 

15,000

 

 

 -

 

 

(1,990)

 

 

13,010

U.S. government agency securities

 

 

285,334

 

 

164

 

 

(169)

 

 

285,329

 

 

$

472,224

 

$

730

 

$

(2,751)

 

$

470,203

 

 

The amortized cost and fair value of fixed maturities at June 30, 2012, by contractual years-to-maturity, are presented below (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

 

 

 

 

Amortized

 

 

 

 

 

Cost

 

Fair Value

One year or less

 

$

323,606

 

$

324,050

Over one year

 

 

588,006

 

 

587,342

 

 

$

911,612

 

$

911,392

 

 

The cost or amortized cost values of the Company’s fixed maturities include $10.0 million and $15.0 million of available-for-sale ARS as of June 30, 2012 and September 30, 2011, respectively.

 

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 June 30, 2012 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

12 Months or Greater

 

Total

 

 

 

 

 

Gross

 

 

 

 

Gross

 

 

 

 

Gross

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

June 30, 2012

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

Certificates of deposit

 

$

3,536

 

$

(7)

 

$

 -

 

$

 -

 

$

3,536

 

$

(7)

Corporate bonds and notes

 

 

119,914

 

 

(272)

 

 

12,221

 

 

(55)

 

 

132,135

 

 

(327)

Municipal bonds and notes

 

 

13,020

 

 

(13)

 

 

 -

 

 

 -

 

 

13,020

 

 

(13)

Auction rate securities

 

 

 -

 

 

 -

 

 

 9,107

 

 

 (893)

 

 

9,107

 

 

(893)

U.S. government securities

 

 

 4,978

 

 

 (3)

 

 

 -

 

 

 -

 

 

 4,978

 

 

(3)

U.S. government agency securities

 

 

236,738

 

 

(134)

 

 

 -

 

 

 -

 

 

 236,738

 

 

(134)

Total

 

$

378,186

 

$

(429)

 

$

21,328

 

$

(948)

 

$

399,514

 

$

(1,377)

 

 

The Company invests in securities that are rated investment grade or better. The unrealized losses on investments for the first nine months of fiscal year 2012 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.

Short-Term And Long-Term Investments (Tables)
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Short-Term And Long-Term Investments (Tables)
 9 Months Ended
Jun. 30, 2012
Schedule of Investments [Line Items]  
Schedule Of Amortized Cost And Fair Value Of Fixed Maturities By Contractual Years-To-Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

 

 

 

 

Amortized

 

 

 

 

 

Cost

 

Fair Value

One year or less

 

$

323,606

 

$

324,050

Over one year

 

 

588,006

 

 

587,342

 

 

$

911,612

 

$

911,392
Schedule Of Investments That Have Been In A Continuous Unrealized Loss Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

12 Months or Greater

 

Total

 

 

 

 

 

Gross

 

 

 

 

Gross

 

 

 

 

Gross

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

June 30, 2012

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

Certificates of deposit

 

$

3,536

 

$

(7)

 

$

 -

 

$

 -

 

$

3,536

 

$

(7)

Corporate bonds and notes

 

 

119,914

 

 

(272)

 

 

12,221

 

 

(55)

 

 

132,135

 

 

(327)

Municipal bonds and notes

 

 

13,020

 

 

(13)

 

 

 -

 

 

 -

 

 

13,020

 

 

(13)

Auction rate securities

 

 

 -

 

 

 -

 

 

 9,107

 

 

 (893)

 

 

9,107

 

 

(893)

U.S. government securities

 

 

 4,978

 

 

 (3)

 

 

 -

 

 

 -

 

 

 4,978

 

 

(3)

U.S. government agency securities

 

 

236,738

 

 

(134)

 

 

 -

 

 

 -

 

 

 236,738

 

 

(134)

Total

 

$

378,186

 

$

(429)

 

$

21,328

 

$

(948)

 

$

399,514

 

$

(1,377)
Short-Term Investments [Member]
  
Schedule of Investments [Line Items]  
Schedule Of Short-Term And Long-Term Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

June 30, 2012

 

Cost

 

Gains

 

Losses

 

Fair Value

Certificates of deposit

 

$

3,543

 

$

 -

 

$

(7)

 

$

3,536

Corporate bonds and notes

 

 

175,279

 

 

419

 

 

(40)

 

 

175,658

Municipal bonds and notes

 

 

53,167

 

 

68

 

 

(8)

 

 

53,227

U.S. government agency securities

 

 

91,617

 

 

20

 

 

(8)

 

 

91,629

 

 

$

323,606

 

$

507

 

$

(63)

 

$

324,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

September 30, 2011

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$

137,087

 

$

251

 

$

(182)

 

$

137,156

Municipal bonds and notes

 

 

82,687

 

 

62

 

 

(34)

 

 

82,715

U.S. government securities

 

 

799

 

 

 -

 

 

 -

 

 

799

U.S. government agency securities

 

 

105,050

 

 

55

 

 

(9)

 

 

105,096

 

 

$

325,623

 

$

368

 

$

(225)

 

$

325,766
Long-Term Investments [Member]
  
Schedule of Investments [Line Items]  
Schedule Of Short-Term And Long-Term Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

June 30, 2012

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$

173,466

 

$

401

 

$

(287)

 

$

173,580

Municipal bonds and notes

 

 

35,050

 

 

140

 

 

(5)

 

 

35,185

Auction rate securities

 

 

10,000

 

 

 -

 

 

(893)

 

 

9,107

U.S. government securities

 

 

4,981

 

 

 -

 

 

(3)

 

 

4,978

U.S. government agency securities

 

 

364,509

 

 

109

 

 

(126)

 

 

364,492

 

 

$

588,006

 

$

650

 

$

(1,314)

 

$

587,342

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

September 30, 2011

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$

141,315

 

$

415

 

$

(580)

 

$

141,150

Municipal bonds and notes

 

 

30,575

 

 

151

 

 

(12)

 

 

30,714

Auction rate securities

 

 

15,000

 

 

 -

 

 

(1,990)

 

 

13,010

U.S. government agency securities

 

 

285,334

 

 

164

 

 

(169)

 

 

285,329

 

 

$

472,224

 

$

730

 

$

(2,751)

 

$

470,203

Short-Term And Long-Term Investments (Schedule Of Short-Term And Long-Term Investments) (Details)
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Short-Term And Long-Term Investments (Schedule Of Short-Term And Long-Term Investments) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Sep. 30, 2011
Schedule of Investments [Line Items]    
Cost or Amortized Cost $ 911,612  
Fair Value 911,392  
Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 323,606 325,623
Gross Unrealized Gains 507 368
Gross Unrealized Losses (63) (225)
Fair Value 324,050 325,766
Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 588,006 472,224
Gross Unrealized Gains 650 730
Gross Unrealized Losses (1,314) (2,751)
Fair Value 587,342 470,203
Certificates Of Deposit [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 3,543  
Gross Unrealized Losses (7)  
Fair Value 3,536  
Corporate Bonds And Notes [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 175,279 137,087
Gross Unrealized Gains 419 251
Gross Unrealized Losses (40) (182)
Fair Value 175,658 137,156
Corporate Bonds And Notes [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 173,466 141,315
Gross Unrealized Gains 401 415
Gross Unrealized Losses (287) (580)
Fair Value 173,580 141,150
Municipal Bonds And Notes [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 53,167 82,687
Gross Unrealized Gains 68 62
Gross Unrealized Losses (8) (34)
Fair Value 53,227 82,715
Municipal Bonds And Notes [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 35,050 30,575
Gross Unrealized Gains 140 151
Gross Unrealized Losses (5) (12)
Fair Value 35,185 30,714
Auction Rate Securities [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 10,000 15,000
Gross Unrealized Losses (893) (1,990)
Fair Value 9,107 13,010
U.S. Government Securities [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost   799
Fair Value   799
U.S. Government Securities [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 4,981  
Gross Unrealized Losses (3)  
Fair Value 4,978  
U.S. Government Agency Securities [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 91,617 105,050
Gross Unrealized Gains 20 55
Gross Unrealized Losses (8) (9)
Fair Value 91,629 105,096
U.S. Government Agency Securities [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 364,509 285,334
Gross Unrealized Gains 109 164
Gross Unrealized Losses (126) (169)
Fair Value $ 364,492 $ 285,329

Short-Term And Long-Term Investments (Schedule Of Amortized Cost And Fair Value Of Fixed Maturities By Contractual Years-To-Maturity) (Details)
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Short-Term And Long-Term Investments (Schedule Of Amortized Cost And Fair Value Of Fixed Maturities By Contractual Years-To-Maturity) (Details) (USD $)
Jun. 30, 2012
Sep. 30, 2011
Short-Term And Long-Term Investments [Abstract]    
Cost or Amortized Cost, Fixed Maturities, One year or less $ 323,606,000  
Cost or Amortized Cost, Fixed Maturities, Over one year 588,006,000  
Cost or Amortized Cost 911,612,000  
Fair Value, Fixed Maturities, One year or less 324,050,000  
Fair Value, Fixed Maturities, Over one year 587,342,000  
Fair Value 911,392,000  
Amortized cost of available-for-sale ARS $ 10,000,000 $ 15,000,000

Short-Term And Long-Term Investments (Schedule Of Investments That Have Been In A Continuous Unrealized Loss Position) (Details)
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Short-Term And Long-Term Investments (Schedule Of Investments That Have Been In A Continuous Unrealized Loss Position) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months $ 378,186
Fair Value, Continuous Loss Position, Unrealized Loss, 12 Months or Greater 21,328
Fair Value, Continuous Loss Position, Unrealized Loss, Total 399,514
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (429)
Gross Unrealized Losses, Continuous Loss Position, 12 Months or Greater (948)
Gross Unrealized Losses, Continuous Loss Position, Total (1,377)
Certificates Of Deposit [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months 3,536
Fair Value, Continuous Loss Position, Unrealized Loss, Total 3,536
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (7)
Gross Unrealized Losses, Continuous Loss Position, Total (7)
Corporate Bonds And Notes [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months 119,914
Fair Value, Continuous Loss Position, Unrealized Loss, 12 Months or Greater 12,221
Fair Value, Continuous Loss Position, Unrealized Loss, Total 132,135
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (272)
Gross Unrealized Losses, Continuous Loss Position, 12 Months or Greater (55)
Gross Unrealized Losses, Continuous Loss Position, Total (327)
Municipal Bonds And Notes [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months 13,020
Fair Value, Continuous Loss Position, Unrealized Loss, Total 13,020
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (13)
Gross Unrealized Losses, Continuous Loss Position, Total (13)
Auction Rate Securities [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, 12 Months or Greater 9,107
Fair Value, Continuous Loss Position, Unrealized Loss, Total 9,107
Gross Unrealized Losses, Continuous Loss Position, 12 Months or Greater (893)
Gross Unrealized Losses, Continuous Loss Position, Total (893)
U.S. Government Securities [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months 4,978
Fair Value, Continuous Loss Position, Unrealized Loss, Total 4,978
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (3)
Gross Unrealized Losses, Continuous Loss Position, Total (3)
U.S. Government Agency Securities [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months 236,738
Fair Value, Continuous Loss Position, Unrealized Loss, Total 236,738
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (134)
Gross Unrealized Losses, Continuous Loss Position, Total $ (134)

Inventories
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Inventories
 9 Months Ended
Jun. 30, 2012
Inventories [Abstract]  
Inventories

4. 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):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

September 30,

 

 

2012

 

2011

Finished goods

 

$

13,129

 

$

12,917

Raw materials

 

 

3,909

 

 

4,232

 

 

$

17,038

 

$

17,149

Inventories (Tables)
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Inventories (Tables)
 9 Months Ended
Jun. 30, 2012
Inventories [Abstract]  
Schedule Of Inventories

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

September 30,

 

 

2012

 

2011

Finished goods

 

$

13,129

 

$

12,917

Raw materials

 

 

3,909

 

 

4,232

 

 

$

17,038

 

$

17,149

Inventories (Schedule of Inventories) (Details)
v0.0.0.0
Inventories (Schedule of Inventories) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Sep. 30, 2011
Inventories [Abstract]    
Finished goods $ 13,129 $ 12,917
Raw materials 3,909 4,232
Inventories, Total $ 17,038 $ 17,149

Commitments And Contingencies
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Commitments And Contingencies
 9 Months Ended
Jun. 30, 2012
Commitments And Contingencies [Abstract]  
Commitments And Contingencies

5. Commitments and Contingencies

 

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 June 30, 2012 and June 30, 2011 were not material.

 

Purchase Commitments

 

The Company currently has arrangements with contract manufacturers and other suppliers for the manufacturing of its products. The arrangement with the primary contract manufacturer allows them to procure component inventory on the Company’s behalf based on a rolling production forecast provided by the Company. The Company is obligated to the purchase of component inventory that the contract manufacturer procures in accordance with the forecast, unless they give notice of order cancellation in advance of applicable lead times. As of June 30, 2012, the Company was committed to purchase approximately $15.4 million of such inventory during the next 30 day period.

 

Legal Proceedings

 

The Company is not aware of any 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.

Commitments And Contingencies (Details)
v0.0.0.0
Commitments And Contingencies (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Commitments And Contingencies [Abstract]  
Contract manufacturers' purchase obligations $ 15.4

Income Taxes
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Income Taxes
 9 Months Ended
Jun. 30, 2012
Income Taxes [Abstract]  
Income Taxes

6. Income Taxes

 

     The effective tax rate was 35.2% and 30.6% for the three months ended June 30, 2012 and 2011, respectively. The increase in effective tax rate is primarily due to the expiration of the United States federal credit for Increasing Research Activities at December 31, 2011 and a favorable adjustment due to a change in the company’s uncertain tax positions which was reflected in the effective tax rate for the three months ended June 30, 2011.

 

     At June 30, 2012, the Company has classified approximately $4.5 million of uncertain tax positions as a non-current liability. It is reasonably possible that the Company’s existing liabilities for uncertain tax benefits may change within the next twelve months primarily due to the expiration of statutes of limitations. At this time the Company cannot reasonably estimate a range of potential changes in such benefits.

 

     The Company recognizes interest and, if applicable, penalties for any uncertain tax positions. This interest and penalty expense will be a component of income tax expense. For the three months ended June 30, 2012, the Company accrued an immaterial amount of interest expense related to its liability for unrecognized tax benefits. All unrecognized tax benefits, if recognized, would affect the effective tax rate.

 

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, 2008. 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. The earliest periods open for review by local taxing authorities are fiscal years 2010 for the United Kingdom and Japan, and 2007 for Australia and Germany. Within the next four fiscal quarters, the statute of limitations will begin to close on the fiscal years ended 2008 and 2009 tax returns filed in various states and the fiscal year ended 2009 federal income tax return.

    

Income Taxes (Details)
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Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
 3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Income Taxes [Abstract]    
Effective tax rate 35.20% 30.60%
Unrecognized tax liabilities $ 4.5  

Geographic Sales And Significant Customers
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Geographic Sales And Significant Customers
 9 Months Ended
Jun. 30, 2012
Geographic Sales And Significant Customers [Abstract]  
Geographic Sales And Significant Customers

7. 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):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Americas:

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

187,404

 

$

151,471

 

$

539,609

 

$

450,108

Other

 

 

14,053

 

 

13,648

 

 

49,287

 

 

36,732

Total Americas

 

 

201,457

 

 

165,119

 

 

588,896

 

 

486,840

EMEA

 

 

74,720

 

 

58,704

 

 

214,140

 

 

178,290

Japan

 

 

23,474

 

 

21,499

 

 

66,623

 

 

53,624

Asia Pacific

 

 

52,983

 

 

45,391

 

 

145,029

 

 

118,465

 

 

$

352,634

 

$

290,713

 

$

1,014,688

 

$

837,219

 

 

Two worldwide distributors of the Company’s products accounted for 17.3% and 14.8% of total net revenue for the three month period ended June 30, 2012. Two worldwide distributors accounted for 17.3% and 14.2% of total net revenue for the nine month period ended June 30, 2012. Two worldwide distributors of the Company’s products accounted for 16.4% and 10.6% of total net revenue for the three month period ended June 30, 2011. Two worldwide distributors accounted for 18.3% and 10.1% of total net revenue for the nine month period ended June 30, 2011. Two worldwide distributors accounted for 13.5% and 11.0% of the Company’s accounts receivable as of June 30, 2012. Two worldwide distributors accounted for 15.7% and 11.1% of the Company’s accounts receivable as of June 30, 2011. No other distributors accounted for more than 10% of total net revenue or receivables.

    

Geographic Sales And Significant Customers (Tables)
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Geographic Sales And Significant Customers (Tables)
 9 Months Ended
Jun. 30, 2012
Geographic Sales And Significant Customers [Abstract]  
Schedule Of Revenues By Geographic Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

Americas:

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

187,404

 

$

151,471

 

$

539,609

 

$

450,108

Other

 

 

14,053

 

 

13,648

 

 

49,287

 

 

36,732

Total Americas

 

 

201,457

 

 

165,119

 

 

588,896

 

 

486,840

EMEA

 

 

74,720

 

 

58,704

 

 

214,140

 

 

178,290

Japan

 

 

23,474

 

 

21,499

 

 

66,623

 

 

53,624

Asia Pacific

 

 

52,983

 

 

45,391

 

 

145,029

 

 

118,465

 

 

$

352,634

 

$

290,713

 

$

1,014,688

 

$

837,219

Geographic Sales And Significant Customers (Details)
v0.0.0.0
Geographic Sales And Significant Customers (Details) (USD $)
In Thousands, unless otherwise specified
 3 Months Ended 9 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Segment Reporting Information [Line Items]        
Sales Revenue, Net $ 352,634 $ 290,713 $ 1,014,688 $ 837,219
United States [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 187,404 151,471 539,609 450,108
Other [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 14,053 13,648 49,287 36,732
Americas [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 201,457 165,119 588,896 486,840
EMEA [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 74,720 58,704 214,140 178,290
Japan [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 23,474 21,499 66,623 53,624
Asia Pacific [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net $ 52,983 $ 45,391 $ 145,029 $ 118,465
Worldwide Distributor 1 [Member]
        
Segment Reporting Information [Line Items]        
Net revenues from worldwide distributor, percent 17.30% 16.40% 17.30% 18.30%
Worldwide distributors accounted for account receivable, percent 13.50% 15.70% 13.50% 15.70%
Worldwide Distributor 2 [Member]
        
Segment Reporting Information [Line Items]        
Net revenues from worldwide distributor, percent 14.80% 10.60% 14.20% 10.10%
Worldwide distributors accounted for account receivable, percent 11.00% 11.10% 11.00% 11.10%
Worldwide Distributor 3 [Member]
        
Segment Reporting Information [Line Items]        
Maximum percentage on net revenue and receivables accounted for other distributors     10.00%  

Business Combinations
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Business Combinations
 9 Months Ended
Jun. 30, 2012
Business Combinations [Abstract]  
Business Combinations

8. Business Combinations

 

The Company’s acquisitions are accounted for under the acquisition method. The total purchase price is 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 is recorded as goodwill. The fair value assigned to the tangible and intangible assets acquired and liabilities assumed are based on estimates and assumptions provided by management. Goodwill is not amortized but instead is tested for impairment at least annually, as described in Note 1.

 

 

Fiscal Year 2012 Acquisition of Traffix Communication Systems Ltd.

 

 

On February 22, 2012, the Company acquired all issued and outstanding shares of Traffix Communication Systems Ltd. and subsidiaries (Traffix Systems), a privately held Israeli corporation headquartered in Hod HaSharon, Israel for $133.7 million in cash. Direct transaction costs associated with the acquisition were approximately $0.8 million and were expensed in the second quarter of fiscal 2012. Traffix Systems provides Diameter signaling products for telecommunications service providers. The Company expects to advance its competitive advantage in the worldwide marketplace by leveraging Traffix System's signaling processing technology and general expertise and the Company’s own data routing technology. As a result of the acquisition, the Company acquired all the assets of Traffix Systems, all property, equipment and other assets that Traffix Systems used in its business and assumed all the liabilities of Traffix Systems. The results of operations of Traffix Systems have been included in the Company’s consolidated financial statements from the date of acquisition. Pro forma results of operations for this acquisition have not been presented as this transaction is not considered a material acquisition and the effects were not material to the Company’s financial results for the three and nine months ended June 30, 2012.

 

 

 

The purchase price allocation is as follows (in thousands):

 

 

 

 

 

Assets acquired

                   

Cash

$       5,388

Fair value of current assets

         1,123

Property and equipment, net

             406

Developed technology, customer relationships and other intangibles

       17,624

Goodwill

     113,210

Total assets acquired

$  137,751

Liabilities assumed

                   

Accrued liabilities

$      (3,627)

Deferred revenue

           (402)

Total liabilities assumed

        (4,029)

Net assets acquired

$  133,722

 

Of the total estimated purchase price, $14.9 million was allocated to developed technology, and $2.7 million to customer relationships and other intangibles. To determine the value of developed technology, the income approach was used, which included estimates and assumptions provided by Traffix Systems and Company management, which are considered those of a market participant. The income approach estimates the fair value of an asset based on its earnings and cash flow capacity.  A combination of the income and cost approaches were used to determine the fair value of customer relationships and other intangibles. The cost approach requires an estimation of the costs required by a market participant to reproduce the asset. Goodwill generated from this transaction is primarily related to expected synergies of the technology and expanded opportunities within the telecommunications industry.  The purchase price is anticipated to be recovered in subsequent years under Israeli tax law..

 

 

Developed technology will be amortized on a straight-line basis over its estimated useful life of five years and included in cost of net product revenues. Customer relationships will be amortized on a straight-line basis over its estimated useful life of ten years and included in general and administrative expenses.  The estimated useful lives for the acquired intangible assets were based on the expected future cash flows associated with the respective asset.

 

The fair value of replacement stock-based compensation awards issued by the Company attributable to precombination services was immaterial and has not been reflected in the consideration transferred.

Business Combinations (Tables)
v0.0.0.0
Business Combinations (Tables)
 9 Months Ended
Jun. 30, 2012
Business Combinations [Abstract]  
Schedule Of Purchase Price Allocation

 

 

Assets acquired

                   

Cash

$       5,388

Fair value of current assets

         1,123

Property and equipment, net

             406

Developed technology, customer relationships and other intangibles

       17,624

Goodwill

     113,210

Total assets acquired

$  137,751

Liabilities assumed

                   

Accrued liabilities

$      (3,627)

Deferred revenue

           (402)

Total liabilities assumed

        (4,029)

Net assets acquired

$  133,722

Business Combinations (Narrative) (Details)
v0.0.0.0
Business Combinations (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
 9 Months Ended
Feb. 22, 2012
Traffix Systems [Member]
Jun. 30, 2012
Customer Relationships [Member]
Jun. 30, 2012
Developed Technology Rights [Member]
Business acquisition, cash paid $ 133.7    
Business acquisition, transaction costs 0.8    
Estimated purchase price   $ 2.7 $ 14.9
Amortization period   10 years 5 years

Business Combinations (Schedule Of Purchase Price Allocation) (Details)
v0.0.0.0
Business Combinations (Schedule Of Purchase Price Allocation) (Details) (USD $)
In Thousands, unless otherwise specified
Feb. 22, 2012
Business Combinations [Abstract]  
Cash $ 5,388
Fair value of current assets 1,123
Property and equipment, net 406
Developed technology, customer relationships and other intangibles 17,624
Goodwill 113,210
Total assets acquired 137,751
Accrued liabilities (3,627)
Deferred revenue (402)
Total liabilities assumed (4,029)
Net assets acquired $ 133,722