Document And Entity Information
v0.0.0.0
Document And Entity Information
 6 Months Ended
Mar. 31, 2013
May 03, 2013
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2013  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q2  
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   78,799,170

Consolidated Balance Sheets
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Sep. 30, 2012
ASSETS    
Cash and cash equivalents $ 229,662 $ 211,181
Short-term investments 293,186 320,970
Accounts receivable, net of allowances of $3,113 and $3,254 192,796 185,172
Inventories 17,963 17,410
Deferred tax assets 10,578 10,362
Other current assets 60,239 30,986
Total current assets 804,424 776,081
Property and equipment, net 63,182 59,604
Long-term investments 662,822 662,803
Deferred tax assets 31,165 35,478
Goodwill 447,799 348,239
Other assets, net 56,517 28,996
Total assets 2,065,909 1,911,201
LIABILITIES AND SHAREHOLDERS' EQUITY    
Accounts payable 39,100 27,026
Accrued liabilities 84,966 86,409
Deferred revenue 396,678 352,594
Total current liabilities 520,744 466,029
Other long-term liabilities 23,006 21,078
Deferred revenue, long-term 93,980 94,694
Total long-term liabilities 116,986 115,772
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, 78,380 and 78,715 shares issued and outstanding 294,875 326,922
Accumulated other comprehensive loss (5,908) (3,829)
Retained earnings 1,139,212 1,006,307
Total shareholders' equity 1,428,179 1,329,400
Total liabilities and shareholders' equity $ 2,065,909 $ 1,911,201

Consolidated Balance Sheets (Parenthetical)
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Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2013
Sep. 30, 2012
Consolidated Balance Sheets [Abstract]    
Accounts receivable, allowances $ 3,113 $ 3,254
Preferred stock, par value $ 0 $ 0
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0 $ 0
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 78,380,000 78,715,000
Common stock, shares outstanding 78,380,000 78,715,000

Consolidated Income Statements
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Consolidated Income Statements (USD $)
In Thousands, except Per Share data, unless otherwise specified
 3 Months Ended 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Net revenues        
Products $ 185,107 $ 205,165 $ 389,819 $ 401,719
Services 165,125 134,457 325,864 260,335
Total 350,232 339,622 715,683 662,054
Cost of net revenues        
Products 29,773 33,668 61,565 66,868
Services 30,529 23,926 59,622 46,332
Total 60,302 57,594 121,187 113,200
Gross profit 289,930 282,028 594,496 548,854
Operating expenses        
Sales and marketing 119,031 110,995 241,299 217,233
Research and development 52,534 43,568 101,075 82,690
General and administrative 25,889 22,785 50,562 44,462
Total 197,454 177,348 392,936 344,385
Income from operations 92,476 104,680 201,560 204,469
Other income, net 2,118 1,428 3,668 3,289
Income before income taxes 94,594 106,108 205,228 207,758
Provision for income taxes 31,182 37,467 72,323 72,625
Net income $ 63,412 $ 68,641 $ 132,905 $ 135,133
Net income per share - basic $ 0.81 $ 0.87 $ 1.69 $ 1.71
Weighted average shares - basic 78,601 79,156 78,696 79,214
Net income per share - diluted $ 0.80 $ 0.86 $ 1.68 $ 1.69
Weighted average shares - diluted 79,114 79,775 79,263 79,853

Consolidated Statements Of Comprehensive Income
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Consolidated Statements Of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
 3 Months Ended 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Consolidated Statements Of Comprehensive Income [Abstract]        
Net income $ 63,412 $ 68,641 $ 132,905 $ 135,133
Other comprehensive income:        
Foreign currency translation adjustment (1,235) 90 (1,492) (173)
Unrealized (loss) gain on securities, net of tax (134) 620 (587) 533
Total other comprehensive (loss) income (1,369) 710 (2,079) 360
Comprehensive income $ 62,043 $ 69,351 $ 130,826 $ 135,493

Consolidated Statements Of Cash Flows
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Consolidated Statements Of Cash Flows (USD $)
In Thousands, unless otherwise specified
 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Operating activities    
Net income $ 132,905 $ 135,133
Adjustments to reconcile net income to net cash provided by operating activities:    
Realized (gain) loss on disposition of assets and investments (217) 457
Stock-based compensation 54,320 45,468
Provisions for doubtful accounts and sales returns 578 633
Depreciation and amortization 19,913 14,935
Deferred income taxes (1,313) (1,645)
Changes in operating assets and liabilities, net of amounts acquired:    
Accounts receivable (8,202) (18,139)
Inventories (553) 125
Other current assets (29,198) (17,252)
Other assets 621 688
Accounts payable and accrued liabilities 13,243 3,933
Deferred revenue 43,371 69,147
Net cash provided by operating activities 225,468 233,483
Investing activities    
Purchases of investments (446,978) (482,403)
Maturities of investments 329,141 375,746
Sales of investments 138,171 76,444
Increase in restricted cash (729) (25)
Acquisition of intangible assets   (250)
Acquisition of businesses, net of cash acquired (124,918) (128,335)
Purchases of property and equipment (14,769) (12,818)
Net cash used in investing activities (120,082) (171,641)
Financing activities    
Excess tax benefit from stock-based compensation 2,395 5,456
Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan 12,040 10,093
Repurchase of common stock (100,000) (84,776)
Net cash used in financing activities (85,565) (69,227)
Net increase (decrease) in cash and cash equivalents 19,821 (7,385)
Effect of exchange rate changes on cash and cash equivalents (1,340) 60
Cash and cash equivalents, beginning of period 211,181 216,784
Cash and cash equivalents, end of period $ 229,662 $ 209,459

Summary Of Significant Accounting Policies
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Summary Of Significant Accounting Policies
 6 Months Ended
Mar. 31, 2013
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 servers and other network resources. 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 principal products are application delivery controllers that include the BIG-IP family of appliances and a line of scalable VIPRION systems. The Company’s recently acquired line of Diameter signaling and routing products enable full connectivity, enhanced scalability, and comprehensive control of signaling traffic in service providers’ evolving packet core networks. 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. In February 2013, the Company acquired LineRate Systems, Inc., a developer of software defined network services technology. 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, 2012.

 

Certain prior year amounts, specifically relating to cash flows in connection with the disposition of investments, have been reclassified from sales of investments to maturities of investments to conform to the current year presentation in the Consolidated Statement of Cash Flows. There was no change to the net cash used in investing activities as a result of this reclassification. This reclassification did not affect total revenue, 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.

 

Revenue from the sale of products is generally 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, revenue is recognized when such rights of return lapse. 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 information is received 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.

 

Revenues for post-contract customer support (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.

 

The majority of the Company’s products are hardware appliances which contain software essential to the overall functionality of the products. Hardware appliances are generally sold with PCS and on occasion, with consulting and/or training services. Arrangement consideration in such multiple element transactions  is allocated to each element based on a fair value 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.

 

For sales of nonessential and stand-alone software, the Company allocates revenue for arrangements with multiple elements based on 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 delivered elements is not available, revenue is recognized on the “residual method” based on the fair value of undelivered elements. If evidence of 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.

 

The Company establishes VSOE for its products, PCS, consulting and training 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 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, when a substantial majority of transactions are priced within a narrow range, which the Company has determined to be plus or minus 15% of the median sales price.

 

The Company believes that the VSOE of fair value of training and consulting services is represented by the billable rate per hour, based on the rates charged to customers when they purchase standalone training or 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 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 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. Instead, the Company has been able to establish BESP 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 the Company’s 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 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 and Acquired Intangible Assets

 

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 LineRate Systems, Inc. in February 2013, 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. For its annual goodwill impairment test, the Company operates under one reporting unit and the fair value of its reporting unit is determined by the Company’s enterprise value. The Company performs its annual goodwill impairment test during the second fiscal quarter.

 

As part of the annual goodwill impairment test, the Company first performs a qualitative assessment to determine whether further impairment testing is necessary. If, as a result of its qualitative assessment, it is more-likely-than-not (i.e. greater than 50% chance) that the fair value of the Company’s reporting unit is less than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required.

 

Examples of events and circumstances that might indicate that a reporting unit’s fair value is less than its carrying amount 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.

 

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the Company’s 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. In March 2013, 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.

 

Acquired in-process research and development (IPR&D) are intangible assets initially recognized at fair value and classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. During the development period, these assets will not be amortized as charges to earnings; instead these assets will be tested for impairment on an annual basis or more frequently if impairment indicators are identified. IPR&D was recorded in connection with the acquisition of LineRate Systems, Inc. in February 2013.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation using the straight-line attribution method for recognizing compensation expense. The Company recognized $27.6 million and $23.3 million of stock-based compensation expense for the three months ended March 31, 2013 and 2012, respectively, and $54.3 million and $45.5 million for the six months ended March 31, 2013 and 2012, respectively. As of March 31, 2013, there was $118.6 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). 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 second quarter of fiscal year 2013 is 5.3% for grants awarded to the Company’s executive officers and Board of Directors, and 7.6% 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 2012, the Company granted 290,415 RSUs to certain current executive officers as part of the annual equity awards program. Fifty percent of the aggregate number of RSUs vest in equal quarterly increments over four years, until such portion of the grant is fully vested on November 1, 2016. One-eighth of the RSU grant, or a portion thereof, is subject to the Company achieving specified quarterly revenue and EBITDA goals during fiscal year 2013. 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 37.5% of this annual equity awards RSU grant shall be subject to quarterly performance based vesting for fiscal years 2014, 2015 and 2016 (12.5% 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 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 from August 1 to November 1, 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, was 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 April 24,  2013, 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 $600 million program, initially approved in October 2010 and expanded in August 2011 and October 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 May 3, 2013, the Company had repurchased and retired 10,300,034 shares at an average price of $70.13 per share and the Company had $277.2 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

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$
63,412 

 

$
68,641 

 

$
132,905 

 

$
135,133 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 
78,601 

 

 
79,156 

 

 
78,696 

 

 
79,214 

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

 

 
513 

 

 
619 

 

 
567 

 

 
639 

Weighted average shares outstanding — diluted

 

 
79,114 

 

 
79,775 

 

 
79,263 

 

 
79,853 

Basic net income per share

 

$
0.81 

 

$
0.87 

 

$
1.69 

 

$
1.71 

Diluted net income per share

 

$
0.80 

 

$
0.86 

 

$
1.68 

 

$
1.69 

 

 

An immaterial amount of common shares potentially issuable from stock options for the three and six months ended March 31, 2013 and 2012, 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 or losses on securities and foreign currency translation adjustments are included in accumulated other comprehensive loss.

 

 

Recent Accounting Pronouncements

 

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income (ASU 2013-02), to improve the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 requires presentation, either on the face of the financial statements or in the notes, of amounts reclassified out of accumulated other comprehensive income by component and by net income line item. ASU 2013-02 is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2012. The Company will adopt ASU 2013-02 in the first quarter of fiscal 2014 and does not expect the adoption of this standard to have an impact on its consolidated financial statements.

   


Summary Of Significant Accounting Policies (Policy)
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Summary Of Significant Accounting Policies (Policy)
 6 Months Ended
Mar. 31, 2013
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 servers and other network resources. 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 principal products are application delivery controllers that include the BIG-IP family of appliances and a line of scalable VIPRION systems. The Company’s recently acquired line of Diameter signaling and routing products enable full connectivity, enhanced scalability, and comprehensive control of signaling traffic in service providers’ evolving packet core networks. 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. In February 2013, the Company acquired LineRate Systems, Inc., a developer of software defined network services technology. 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, 2012.

 

Certain prior year amounts, specifically relating to cash flows in connection with the disposition of investments, have been reclassified from sales of investments to maturities of investments to conform to the current year presentation in the Consolidated Statement of Cash Flows. There was no change to the net cash used in investing activities as a result of this reclassification. This reclassification did not affect total revenue, 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.

 

Revenue from the sale of products is generally 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, revenue is recognized when such rights of return lapse. 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 information is received 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.

 

Revenues for post-contract customer support (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.

 

The majority of the Company’s products are hardware appliances which contain software essential to the overall functionality of the products. Hardware appliances are generally sold with PCS and on occasion, with consulting and/or training services. Arrangement consideration in such multiple element transactions  is allocated to each element based on a fair value 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.

 

For sales of nonessential and stand-alone software, the Company allocates revenue for arrangements with multiple elements based on 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 delivered elements is not available, revenue is recognized on the “residual method” based on the fair value of undelivered elements. If evidence of 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.

 

The Company establishes VSOE for its products, PCS, consulting and training 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 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, when a substantial majority of transactions are priced within a narrow range, which the Company has determined to be plus or minus 15% of the median sales price.

 

The Company believes that the VSOE of fair value of training and consulting services is represented by the billable rate per hour, based on the rates charged to customers when they purchase standalone training or 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 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 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. Instead, the Company has been able to establish BESP 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 the Company’s 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 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 And Acquired Intangible Assets

Goodwill and Acquired Intangible Assets

 

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 LineRate Systems, Inc. in February 2013, 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. For its annual goodwill impairment test, the Company operates under one reporting unit and the fair value of its reporting unit is determined by the Company’s enterprise value. The Company performs its annual goodwill impairment test during the second fiscal quarter.

 

As part of the annual goodwill impairment test, the Company first performs a qualitative assessment to determine whether further impairment testing is necessary. If, as a result of its qualitative assessment, it is more-likely-than-not (i.e. greater than 50% chance) that the fair value of the Company’s reporting unit is less than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required.

 

Examples of events and circumstances that might indicate that a reporting unit’s fair value is less than its carrying amount 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.

 

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the Company’s 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. In March 2013, 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.

 

Acquired in-process research and development (IPR&D) are intangible assets initially recognized at fair value and classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. During the development period, these assets will not be amortized as charges to earnings; instead these assets will be tested for impairment on an annual basis or more frequently if impairment indicators are identified. IPR&D was recorded in connection with the acquisition of LineRate Systems, Inc. in February 2013.

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 $27.6 million and $23.3 million of stock-based compensation expense for the three months ended March 31, 2013 and 2012, respectively, and $54.3 million and $45.5 million for the six months ended March 31, 2013 and 2012, respectively. As of March 31, 2013, there was $118.6 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). 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 second quarter of fiscal year 2013 is 5.3% for grants awarded to the Company’s executive officers and Board of Directors, and 7.6% 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 2012, the Company granted 290,415 RSUs to certain current executive officers as part of the annual equity awards program. Fifty percent of the aggregate number of RSUs vest in equal quarterly increments over four years, until such portion of the grant is fully vested on November 1, 2016. One-eighth of the RSU grant, or a portion thereof, is subject to the Company achieving specified quarterly revenue and EBITDA goals during fiscal year 2013. 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 37.5% of this annual equity awards RSU grant shall be subject to quarterly performance based vesting for fiscal years 2014, 2015 and 2016 (12.5% 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 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 from August 1 to November 1, 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, was 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 April 24,  2013, 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 $600 million program, initially approved in October 2010 and expanded in August 2011 and October 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 May 3, 2013, the Company had repurchased and retired 10,300,034 shares at an average price of $70.13 per share and the Company had $277.2 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

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$
63,412 

 

$
68,641 

 

$
132,905 

 

$
135,133 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 
78,601 

 

 
79,156 

 

 
78,696 

 

 
79,214 

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

 

 
513 

 

 
619 

 

 
567 

 

 
639 

Weighted average shares outstanding — diluted

 

 
79,114 

 

 
79,775 

 

 
79,263 

 

 
79,853 

Basic net income per share

 

$
0.81 

 

$
0.87 

 

$
1.69 

 

$
1.71 

Diluted net income per share

 

$
0.80 

 

$
0.86 

 

$
1.68 

 

$
1.69 

 

 

An immaterial amount of common shares potentially issuable from stock options for the three and six months ended March 31, 2013 and 2012, 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 or losses on securities and foreign currency translation adjustments are included in accumulated other comprehensive loss.

 

 

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income (ASU 2013-02), to improve the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 requires presentation, either on the face of the financial statements or in the notes, of amounts reclassified out of accumulated other comprehensive income by component and by net income line item. ASU 2013-02 is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2012. The Company will adopt ASU 2013-02 in the first quarter of fiscal 2014 and does not expect the adoption of this standard to have an impact on its consolidated financial statements.


Summary Of Significant Accounting Policies (Tables)
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Summary Of Significant Accounting Policies (Tables)
 6 Months Ended
Mar. 31, 2013
Summary Of Significant Accounting Policies [Abstract]  
Schedule Of Computation Of Basic And Diluted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$
63,412 

 

$
68,641 

 

$
132,905 

 

$
135,133 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 
78,601 

 

 
79,156 

 

 
78,696 

 

 
79,214 

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

 

 
513 

 

 
619 

 

 
567 

 

 
639 

Weighted average shares outstanding — diluted

 

 
79,114 

 

 
79,775 

 

 
79,263 

 

 
79,853 

Basic net income per share

 

$
0.81 

 

$
0.87 

 

$
1.69 

 

$
1.71 

Diluted net income per share

 

$
0.80 

 

$
0.86 

 

$
1.68 

 

$
1.69 

 


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 6 Months Ended 1 Months Ended 3 Months Ended 0 Months Ended 6 Months Ended
May 03, 2013
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Nov. 30, 2012
Annual Equity Program [Member]
Nov. 30, 2011
Annual Equity Program [Member]
Aug. 31, 2011
Annual Equity Program [Member]
Aug. 31, 2010
Annual Equity Program [Member]
Aug. 31, 2010
Retention Awards Program [Member]
Mar. 31, 2013
Executive Officers And Board Of Directors [Member]
Mar. 31, 2013
Other Employees [Member]
Apr. 24, 2013
October 25, 2011 Program [Member]
Mar. 31, 2013
Minimum [Member]
Mar. 31, 2013
Maximum [Member]
Schedule Of Summary Of Significant Accounting Policies [Line Items]                              
Domestic accounts receivable terms of payment, in days                           30 days 45 days
International accounts receivable terms of payment, in days                           30 days 120 days
Range of VSOE to median sales price       15.00%                      
Share-based compensation expense   $ 27.6 $ 23.3 $ 54.3 $ 45.5                    
Unrecognized stock-based compensation cost   118.6   118.6                      
Unrecognized stock-based compensation cost, period for recognition       2 years                      
Approved RSUs to employees and executive officers pursuant to the Company's annual equity awards program           290,415 82,968 170,390 181,334 83,000          
Rate for grant awarded                     5.30% 7.60%      
Percentage of the aggregate number of RSUs granted that vest in equal quarterly increments           50.00% 50.00% 50.00% 50.00%            
Portion of RSU grant subject to Company achieving specified quarterly revenue and EBITDA goals           0.125 0.16667 0.16667 0.16667            
Annual equity awards program vesting period, years           4 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% 50.00%            
Percentage of quarterly revenue goal to be achieved for performance stock grant           80.00% 80.00% 80.00% 80.00%            
Percentage of quarterly performance stock grant based on achieving EBITDA goal           50.00% 50.00% 50.00% 50.00%            
Percentage of achievement threshold to which the goals are entitled           80.00% 80.00% 80.00% 80.00%            
Threshold percentage of targeted goals above which quarterly performance stock grant is paid linearly           80.00% 80.00% 80.00% 80.00%            
Percentage of over-achievement threshold to which the goals are entitled           100.00% 100.00% 100.00% 100.00%            
Percentage of annual equity awards RSU grant subject to performance based vesting           37.50% 33.33% 33.33% 33.33%            
Percentage of annual equity awards RSU grant subject to performance based vesting in each period           12.50% 16.66% 16.66% 16.66%            
Stock repurchase program, authorized amount       600                 200    
Shares repurchased and retired 10,300,034                            
Average price of shares repurchased $ 70.13                            
Stock repurchase program, remaining authorized amount to repurchase shares $ 277.2                            

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 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Summary Of Significant Accounting Policies [Abstract]        
Net income $ 63,412 $ 68,641 $ 132,905 $ 135,133
Weighted average shares outstanding - basic 78,601 79,156 78,696 79,214
Dilutive effect of common shares from stock options and restricted stock 513 619 567 639
Weighted average shares outstanding - diluted 79,114 79,775 79,263 79,853
Basic net income per share $ 0.81 $ 0.87 $ 1.69 $ 1.71
Diluted net income per share $ 0.80 $ 0.86 $ 1.68 $ 1.69

Fair Value Measurements
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Fair Value Measurements
 6 Months Ended
Mar. 31, 2013
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 that the Company has the ability to access.

 

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 March 31, 2013, 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

 

March 31,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2013

Cash equivalents

 

$
21,026 

 

$

—

 

$

—

 

$
21,026 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 
157,174 

 

 

—

 

 
157,174 

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 
62,826 

 

 

—

 

 
62,826 

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

 

 

—

 

 
4,994 

 

 

—

 

 
4,994 

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

 

 

—

 

 
68,192 

 

 

—

 

 
68,192 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 
214,743 

 

 

—

 

 
214,743 

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 
22,901 

 

 

—

 

 
22,901 

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

 

 

—

 

 
4,997 

 

 

—

 

 
4,997 

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

 

 

—

 

 
416,133 

 

 

—

 

 
416,133 

Available-for-sale securities — auction rate securities

 

 

—

 

 

—

 

 
4,048 

 

 
4,048 

Total

 

$
21,026 

 

$
951,960 

 

$
4,048 

 

$
977,034 

 

 

 

 

The Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 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

 

September 30,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2012

Cash equivalents

 

$
35,658 

 

$

—

 

$

—

 

$
35,658 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — certificates of deposit

 

 

—

 

 
3,533 

 

 

—

 

 
3,533 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 
193,990 

 

 

—

 

 
193,990 

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 
63,422 

 

 

 

 

 
63,422 

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

 

 

—

 

 
60,025 

 

 

—

 

 
60,025 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 
229,441 

 

 

—

 

 
229,441 

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 
30,307 

 

 

—

 

 
30,307 

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

 

 

—

 

 
4,995 

 

 

—

 

 
4,995 

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

 

 

—

 

 
393,310 

 

 

—

 

 
393,310 

Available-for-sale securities — auction rate securities

 

 

—

 

 

—

 

 
4,750 

 

 
4,750 

Total

 

$
35,658 

 

$
979,023 

 

$
4,750 

 

$
1,019,431 

 

 

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 March 31, 2013. 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

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Balance, beginning of period

 

$
4,600 

 

$
13,064 

 

$
4,750 

 

$
13,010 

Total gains (losses) realized or unrealized:

 

 

 

 

 

 

 

 

 

 

 

 

Included in other comprehensive income

 

 
48 

 

 
129 

 

 
(102)

 

 
183 

Settlements

 

 
(600)

 

 

—

 

 
(600)

 

 

—

Balance, end of period

 

$
4,048 

 

$
13,193 

 

$
4,048 

 

$
13,193 

Unrealized gains (losses) attributable to assets still held as of end of period

 

 
48 

 

 
129 

 

 
(102)

 

 
183 

 

 

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 March  31, 2013, 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 March  31, 2013. 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 months ended March 31, 2013, 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)
 6 Months Ended
Mar. 31, 2013
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 March 31, 2013, 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

 

March 31,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2013

Cash equivalents

 

$
21,026 

 

$

—

 

$

—

 

$
21,026 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 
157,174 

 

 

—

 

 
157,174 

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 
62,826 

 

 

—

 

 
62,826 

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

 

 

—

 

 
4,994 

 

 

—

 

 
4,994 

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

 

 

—

 

 
68,192 

 

 

—

 

 
68,192 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 
214,743 

 

 

—

 

 
214,743 

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 
22,901 

 

 

—

 

 
22,901 

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

 

 

—

 

 
4,997 

 

 

—

 

 
4,997 

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

 

 

—

 

 
416,133 

 

 

—

 

 
416,133 

Available-for-sale securities — auction rate securities

 

 

—

 

 

—

 

 
4,048 

 

 
4,048 

Total

 

$
21,026 

 

$
951,960 

 

$
4,048 

 

$
977,034 

 

 

 

 

The Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 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

 

September 30,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2012

Cash equivalents

 

$
35,658 

 

$

—

 

$

—

 

$
35,658 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — certificates of deposit

 

 

—

 

 
3,533 

 

 

—

 

 
3,533 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 
193,990 

 

 

—

 

 
193,990 

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 
63,422 

 

 

 

 

 
63,422 

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

 

 

—

 

 
60,025 

 

 

—

 

 
60,025 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

—

 

 
229,441 

 

 

—

 

 
229,441 

Available-for-sale securities — municipal bonds and notes

 

 

—

 

 
30,307 

 

 

—

 

 
30,307 

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

 

 

—

 

 
4,995 

 

 

—

 

 
4,995 

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

 

 

—

 

 
393,310 

 

 

—

 

 
393,310 

Available-for-sale securities — auction rate securities

 

 

—

 

 

—

 

 
4,750 

 

 
4,750 

Total

 

$
35,658 

 

$
979,023 

 

$
4,750 

 

$
1,019,431 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Balance, beginning of period

 

$
4,600 

 

$
13,064 

 

$
4,750 

 

$
13,010 

Total gains (losses) realized or unrealized:

 

 

 

 

 

 

 

 

 

 

 

 

Included in other comprehensive income

 

 
48 

 

 
129 

 

 
(102)

 

 
183 

Settlements

 

 
(600)

 

 

—

 

 
(600)

 

 

—

Balance, end of period

 

$
4,048 

 

$
13,193 

 

$
4,048 

 

$
13,193 

Unrealized gains (losses) attributable to assets still held as of end of period

 

 
48 

 

 
129 

 

 
(102)

 

 
183 

 


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
Mar. 31, 2013
Sep. 30, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items]    
Cash equivalents, fair value $ 21,026 $ 35,658
Investments, fair value 956,008  
Financial assets measured at fair value on a recurring basis, total 977,034 1,019,431
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 21,026 35,658
Financial assets measured at fair value on a recurring basis, total 21,026 35,658
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 951,960 979,023
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 4,048 4,750
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   3,533
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   3,533
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 157,174 193,990
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 157,174 193,990
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 62,826 63,422
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 62,826 63,422
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 4,994  
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 4,994  
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 68,192 60,025
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 68,192 60,025
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 214,743 229,441
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 214,743 229,441
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 22,901 30,307
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 22,901 30,307
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 4,997 4,995
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 4,997 4,995
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 416,133 393,310
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 416,133 393,310
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 4,048 4,750
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 $ 4,048 $ 4,750

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 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Fair Value Measurements [Abstract]        
Balance, beginning of period $ 4,600 $ 13,064 $ 4,750 $ 13,010
Total gains (losses) realized or unrealized: Included in other comprehensive income 48 129 (102) 183
Settlements (600)   (600)  
Balance, end of period 4,048 13,193 4,048 13,193
Unrealized gains (losses) attributable to assets still held as of end of period $ 48 $ 129 $ (102) $ 183

Short-Term And Long-Term Investments
v0.0.0.0
Short-Term And Long-Term Investments
 6 Months Ended
Mar. 31, 2013
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

 

 

 

March 31, 2013

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$
156,831 

 

$
357 

 

$
(14)

 

$
157,174 

Municipal bonds and notes

 

 
62,725 

 

 
103 

 

 
(2)

 

 
62,826 

U.S. government securities

 

 
4,995 

 

 

 -

 

 
(1)

 

 
4,994 

U.S. government agency securities

 

 
68,176 

 

 
20 

 

 
(4)

 

 
68,192 

 

 

$
292,727 

 

$
480 

 

$
(21)

 

$
293,186 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

September 30, 2012

 

Cost

 

Gains

 

Losses

 

Fair Value

Certificates of deposit

 

$
3,528 

 

$
5 

 

$

 -

 

$
3,533 

Corporate bonds and notes

 

 
193,548 

 

 
482 

 

 
(40)

 

 
193,990 

Municipal bonds and notes

 

 
63,371 

 

 
61 

 

 
(10)

 

 
63,422 

U.S. government agency securities

 

 
60,010 

 

 
15 

 

 

 -

 

 
60,025 

 

 

$
320,457 

 

$
563 

 

$
(50)

 

$
320,970 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

March 31, 2013

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$
214,287 

 

$
593 

 

$
(137)

 

$
214,743 

Municipal bonds and notes

 

 
22,816 

 

 
85 

 

 

 -

 

 
22,901 

Auction rate securities

 

 
4,400 

 

 

 -

 

 
(352)

 

 
4,048 

U.S. government securities

 

 
4,986 

 

 
11 

 

 

 -

 

 
4,997 

U.S. government agency securities

 

 
415,965 

 

 
261 

 

 
(93)

 

 
416,133 

 

 

$
662,454 

 

$
950 

 

$
(582)

 

$
662,822 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

September 30, 2012

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$
228,438 

 

$
1,063 

 

$
(60)

 

$
229,441 

Municipal bonds and notes

 

 
30,177 

 

 
138 

 

 
(8)

 

 
30,307 

Auction rate securities

 

 
5,000 

 

 

 -

 

 
(250)

 

 
4,750 

U.S. government securities

 

 
4,983 

 

 
12 

 

 

 -

 

 
4,995 

U.S. government agency securities

 

 
392,959 

 

 
389 

 

 
(38)

 

 
393,310 

 

 

$
661,557 

 

$
1,602 

 

$
(356)

 

$
662,803 

 

 

The amortized cost and fair value of fixed maturities at March 31, 2013, by contractual years-to-maturity, are presented below (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

 

 

 

 

Amortized

 

 

 

 

 

Cost

 

Fair Value

One year or less

 

$
292,727 

 

$
293,186 

Over one year

 

 
662,454 

 

 
662,822 

 

 

$
955,181 

 

$
956,008 

 

 

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 March 31, 2013 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

12 Months or Greater

 

Total

 

 

 

 

 

Gross

 

 

 

 

Gross

 

 

 

 

Gross

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

March 31, 2013

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

Corporate bonds and notes

 

$
110,750 

 

$
(146)

 

$
3,710 

 

$
(5)

 

$
114,460 

 

$
(151)

Municipal bonds and notes

 

 
6,727 

 

 
(2)

 

 

 -

 

 

 -

 

 
6,727 

 

 
(2)

Auction rate securities

 

 

 -

 

 

 -

 

 
4,048 

 

 
(352)

 

 
4,048 

 

 
(352)

U.S. government securities

 

 
4,994 

 

 
(1)

 

 

 -

 

 

 -

 

 
4,994 

 

 
(1)

U.S. government agency securities

 

 
173,061 

 

 
(97)

 

 

 -

 

 

 -

 

 
173,061 

 

 
(97)

Total

 

$
295,532 

 

$
(246)

 

$
7,758 

 

$
(357)

 

$
303,290 

 

$
(603)

 

 

The Company invests in securities that are rated investment grade or better. The unrealized losses on investments for the first six months of fiscal year 2013 were primarily caused by reductions in the values of the ARS due to the illiquid markets.

 

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. The Company does not intend to sell nor is it more likely than not that it will be required to sell these investments before their anticipated recovery.


Short-Term And Long-Term Investments (Tables)
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Short-Term And Long-Term Investments (Tables)
 6 Months Ended
Mar. 31, 2013
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

 

$
292,727 

 

$
293,186 

Over one year

 

 
662,454 

 

 
662,822 

 

 

$
955,181 

 

$
956,008 

 

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

March 31, 2013

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

Corporate bonds and notes

 

$
110,750 

 

$
(146)

 

$
3,710 

 

$
(5)

 

$
114,460 

 

$
(151)

Municipal bonds and notes

 

 
6,727 

 

 
(2)

 

 

 -

 

 

 -

 

 
6,727 

 

 
(2)

Auction rate securities

 

 

 -

 

 

 -

 

 
4,048 

 

 
(352)

 

 
4,048 

 

 
(352)

U.S. government securities

 

 
4,994 

 

 
(1)

 

 

 -

 

 

 -

 

 
4,994 

 

 
(1)

U.S. government agency securities

 

 
173,061 

 

 
(97)

 

 

 -

 

 

 -

 

 
173,061 

 

 
(97)

Total

 

$
295,532 

 

$
(246)

 

$
7,758 

 

$
(357)

 

$
303,290 

 

$
(603)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

March 31, 2013

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$
156,831 

 

$
357 

 

$
(14)

 

$
157,174 

Municipal bonds and notes

 

 
62,725 

 

 
103 

 

 
(2)

 

 
62,826 

U.S. government securities

 

 
4,995 

 

 

 -

 

 
(1)

 

 
4,994 

U.S. government agency securities

 

 
68,176 

 

 
20 

 

 
(4)

 

 
68,192 

 

 

$
292,727 

 

$
480 

 

$
(21)

 

$
293,186 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

September 30, 2012

 

Cost

 

Gains

 

Losses

 

Fair Value

Certificates of deposit

 

$
3,528 

 

$
5 

 

$

 -

 

$
3,533 

Corporate bonds and notes

 

 
193,548 

 

 
482 

 

 
(40)

 

 
193,990 

Municipal bonds and notes

 

 
63,371 

 

 
61 

 

 
(10)

 

 
63,422 

U.S. government agency securities

 

 
60,010 

 

 
15 

 

 

 -

 

 
60,025 

 

 

$
320,457 

 

$
563 

 

$
(50)

 

$
320,970 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

March 31, 2013

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$
214,287 

 

$
593 

 

$
(137)

 

$
214,743 

Municipal bonds and notes

 

 
22,816 

 

 
85 

 

 

 -

 

 
22,901 

Auction rate securities

 

 
4,400 

 

 

 -

 

 
(352)

 

 
4,048 

U.S. government securities

 

 
4,986 

 

 
11 

 

 

 -

 

 
4,997 

U.S. government agency securities

 

 
415,965 

 

 
261 

 

 
(93)

 

 
416,133 

 

 

$
662,454 

 

$
950 

 

$
(582)

 

$
662,822 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost or

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

September 30, 2012

 

Cost

 

Gains

 

Losses

 

Fair Value

Corporate bonds and notes

 

$
228,438 

 

$
1,063 

 

$
(60)

 

$
229,441 

Municipal bonds and notes

 

 
30,177 

 

 
138 

 

 
(8)

 

 
30,307 

Auction rate securities

 

 
5,000 

 

 

 -

 

 
(250)

 

 
4,750 

U.S. government securities

 

 
4,983 

 

 
12 

 

 

 -

 

 
4,995 

U.S. government agency securities

 

 
392,959 

 

 
389 

 

 
(38)

 

 
393,310 

 

 

$
661,557 

 

$
1,602 

 

$
(356)

 

$
662,803 

 


Short-Term And Long-Term Investments (Schedule Of Short-Term And Long-Term Investments) (Details)
v0.0.0.0
Short-Term And Long-Term Investments (Schedule Of Short-Term And Long-Term Investments) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Sep. 30, 2012
Schedule of Investments [Line Items]    
Cost or Amortized Cost $ 955,181  
Fair Value 956,008  
Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 292,727 320,457
Gross Unrealized Gains 480 563
Gross Unrealized Losses (21) (50)
Fair Value 293,186 320,970
Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 662,454 661,557
Gross Unrealized Gains 950 1,602
Gross Unrealized Losses (582) (356)
Fair Value 662,822 662,803
Certificates Of Deposit [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost   3,528
Gross Unrealized Gains   5
Fair Value   3,533
Corporate Bonds And Notes [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 156,831 193,548
Gross Unrealized Gains 357 482
Gross Unrealized Losses (14) (40)
Fair Value 157,174 193,990
Corporate Bonds And Notes [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 214,287 228,438
Gross Unrealized Gains 593 1,063
Gross Unrealized Losses (137) (60)
Fair Value 214,743 229,441
Municipal Bonds And Notes [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 62,725 63,371
Gross Unrealized Gains 103 61
Gross Unrealized Losses (2) (10)
Fair Value 62,826 63,422
Municipal Bonds And Notes [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 22,816 30,177
Gross Unrealized Gains 85 138
Gross Unrealized Losses   (8)
Fair Value 22,901 30,307
Auction Rate Securities [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 4,400 5,000
Gross Unrealized Losses (352) (250)
Fair Value 4,048 4,750
U.S. Government Securities [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 4,995  
Gross Unrealized Losses (1)  
Fair Value 4,994  
U.S. Government Securities [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 4,986 4,983
Gross Unrealized Gains 11 12
Fair Value 4,997 4,995
U.S. Government Agency Securities [Member] | Short-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 68,176 60,010
Gross Unrealized Gains 20 15
Gross Unrealized Losses (4)  
Fair Value 68,192 60,025
U.S. Government Agency Securities [Member] | Long-Term Investments [Member]
    
Schedule of Investments [Line Items]    
Cost or Amortized Cost 415,965 392,959
Gross Unrealized Gains 261 389
Gross Unrealized Losses (93) (38)
Fair Value $ 416,133 $ 393,310

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 $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Short-Term And Long-Term Investments [Abstract]  
Cost or Amortized Cost, Fixed Maturities, One year or less $ 292,727
Cost or Amortized Cost, Fixed Maturities, Over one year 662,454
Cost or Amortized Cost 955,181
Fair Value, Fixed Maturities, One year or less 293,186
Fair Value, Fixed Maturities, Over one year 662,822
Fair Value $ 956,008

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
 6 Months Ended
Mar. 31, 2013
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months $ 295,532
Fair Value, Continuous Loss Position, Unrealized Loss, 12 Months or Greater 7,758
Fair Value, Continuous Loss Position, Unrealized Loss, Total 303,290
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (246)
Gross Unrealized Losses, Continuous Loss Position, 12 Months or Greater (357)
Gross Unrealized Losses, Continuous Loss Position, Total (603)
Corporate Bonds And Notes [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months 110,750
Fair Value, Continuous Loss Position, Unrealized Loss, 12 Months or Greater 3,710
Fair Value, Continuous Loss Position, Unrealized Loss, Total 114,460
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (146)
Gross Unrealized Losses, Continuous Loss Position, 12 Months or Greater (5)
Gross Unrealized Losses, Continuous Loss Position, Total (151)
Municipal Bonds And Notes [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months 6,727
Fair Value, Continuous Loss Position, Unrealized Loss, Total 6,727
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (2)
Gross Unrealized Losses, Continuous Loss Position, Total (2)
Auction Rate Securities [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, 12 Months or Greater 4,048
Fair Value, Continuous Loss Position, Unrealized Loss, Total 4,048
Gross Unrealized Losses, Continuous Loss Position, 12 Months or Greater (352)
Gross Unrealized Losses, Continuous Loss Position, Total (352)
U.S. Government Securities [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Fair Value, Continuous Loss Position, Unrealized Loss, Less Than 12 Months 4,994
Fair Value, Continuous Loss Position, Unrealized Loss, Total 4,994
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (1)
Gross Unrealized Losses, Continuous Loss Position, Total (1)
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 173,061
Fair Value, Continuous Loss Position, Unrealized Loss, Total 173,061
Gross Unrealized Losses, Continuous Loss Position, Less Than 12 Months (97)
Gross Unrealized Losses, Continuous Loss Position, Total $ (97)
Minimum [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Liquidity days for the security provided by auction process 7 days
Maximum [Member]
  
Schedule of Available-for-sale Securities [Line Items]  
Liquidity days for the security provided by auction process 35 days

Inventories
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Inventories
 6 Months Ended
Mar. 31, 2013
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):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

September 30,

 

 

2013

 

2012

Finished goods

 

$
13,543 

 

$
13,565 

Raw materials

 

 
4,420 

 

 
3,845 

 

 

$
17,963 

 

$
17,410 

 


Inventories (Tables)
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Inventories (Tables)
 6 Months Ended
Mar. 31, 2013
Inventories [Abstract]  
Schedule Of Inventories

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

September 30,

 

 

2013

 

2012

Finished goods

 

$
13,543 

 

$
13,565 

Raw materials

 

 
4,420 

 

 
3,845 

 

 

$
17,963 

 

$
17,410 

 


Inventories (Schedule of Inventories) (Details)
v0.0.0.0
Inventories (Schedule of Inventories) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Sep. 30, 2012
Inventories [Abstract]    
Finished goods $ 13,543 $ 13,565
Raw materials 4,420 3,845
Inventories, Total $ 17,963 $ 17,410

Commitments And Contingencies
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Commitments And Contingencies
 6 Months Ended
Mar. 31, 2013
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 March 31, 2013 and March 31, 2012 were not material.

 

Commitments

 

As of March 31, 2013, the Company’s principal commitments consisted of obligations outstanding under operating leases. The Company leases its facilities under operating leases that expire at various dates through 2023. There have been no material changes in the Company’s principal lease commitments compared to those discussed in the Form 10-K.

 

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 March 31, 2013, the Company was committed to purchase approximately $18.1 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
 6 Months Ended
Mar. 31, 2013
Commitments And Contingencies [Abstract]  
Contract manufacturers' purchase obligations $ 18.1
Contract manufacturers' purchase obligations, period 30 days

Income Taxes
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Income Taxes
 6 Months Ended
Mar. 31, 2013
Income Taxes [Abstract]  
Income Taxes

6. Income Taxes

 

The effective tax rate was 33.0% and 35.3% for the three months ended March 31, 2013 and 2012, respectively. The decrease in effective tax rate is primarily due to the tax benefit received as a result of the reinstatement of the United States federal Credit for Increasing Research Activities retroactive to January 1, 2012.

 

The effective tax rate was 35.2% and 35.0% for the six months ended March 31, 2013 and 2012, respectively. The tax benefit received as a result of the reinstatement of the United States federal Credit for Increasing Research Activities for the six months ended March 31, 2013 was offset by an increase in nondeductible expenses, primarily stock-based compensation, compared to the six months ended March 31, 2012.   

 

As of March 31, 2013, the Company has $7.9 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate. It is reasonably possible that the Company’s existing liabilities for unrecognized tax benefits may change within the next twelve months primarily due to the expiration of statutes of limitations. The Company recognizes interest and, if applicable, penalties for any uncertain tax positions as a component of income tax expense.  

     

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 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Income Taxes [Abstract]        
Effective tax rate 33.00% 35.30% 35.20% 35.00%
Unrecognized tax benefit (liability) $ 7.9   $ 7.9  

Geographic Sales And Significant Customers
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Geographic Sales And Significant Customers
 6 Months Ended
Mar. 31, 2013
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

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Americas:

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$
172,410 

 

$
181,218 

 

$
367,248 

 

$
352,205 

Other

 

 
17,381 

 

 
16,513 

 

 
35,560 

 

 
35,234 

Total Americas

 

 
189,791 

 

 
197,731 

 

 
402,808 

 

 
387,439 

EMEA

 

 
80,930 

 

 
71,348 

 

 
163,788 

 

 
139,420 

Japan

 

 
21,852 

 

 
22,947 

 

 
39,895 

 

 
43,149 

Asia Pacific

 

 
57,659 

 

 
47,596 

 

 
109,192 

 

 
92,046 

 

 

$
350,232 

 

$
339,622 

 

$
715,683 

 

$
662,054 

 

 

Three worldwide distributors of the Company’s products accounted for 16.3%,  13.4%, and 11.1% of total net revenue for the three month period ended March 31, 2013. Three worldwide distributors of the Company’s products accounted for 16.6%, 14.3%, and 11.1% of total net revenue for the six month period ended March 31, 2013. Two worldwide distributors of the Company’s products accounted for 16.6% and 13.9% of total net revenue for the three month period ended March 31, 2012. Two worldwide distributors accounted for 17.2% and 13.8% of total net revenue for the six month period ended March 31, 2012. One worldwide distributor accounted for 13.5% of the Company’s accounts receivable as of March  31, 2013.  One worldwide distributor accounted for 18.0% of the Company’s accounts receivable as of March  31, 2012. 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)
 6 Months Ended
Mar. 31, 2013
Geographic Sales And Significant Customers [Abstract]  
Schedule Of Revenues By Geographic Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Americas:

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$
172,410 

 

$
181,218 

 

$
367,248 

 

$
352,205 

Other

 

 
17,381 

 

 
16,513 

 

 
35,560 

 

 
35,234 

Total Americas

 

 
189,791 

 

 
197,731 

 

 
402,808 

 

 
387,439 

EMEA

 

 
80,930 

 

 
71,348 

 

 
163,788 

 

 
139,420 

Japan

 

 
21,852 

 

 
22,947 

 

 
39,895 

 

 
43,149 

Asia Pacific

 

 
57,659 

 

 
47,596 

 

 
109,192 

 

 
92,046 

 

 

$
350,232 

 

$
339,622 

 

$
715,683 

 

$
662,054 

 


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 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Segment Reporting Information [Line Items]        
Sales Revenue, Net $ 350,232 $ 339,622 $ 715,683 $ 662,054
United States [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 172,410 181,218 367,248 352,205
Other [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 17,381 16,513 35,560 35,234
Americas [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 189,791 197,731 402,808 387,439
EMEA [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 80,930 71,348 163,788 139,420
Japan [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net 21,852 22,947 39,895 43,149
Asia Pacific [Member]
        
Segment Reporting Information [Line Items]        
Sales Revenue, Net $ 57,659 $ 47,596 $ 109,192 $ 92,046
Worldwide Distributor 1 [Member]
        
Segment Reporting Information [Line Items]        
Net revenues from worldwide distributor, percent 16.30% 16.60% 16.60% 17.20%
Worldwide distributors accounted for account receivable, percent 13.50% 18.00% 13.50% 18.00%
Worldwide Distributor 2 [Member]
        
Segment Reporting Information [Line Items]        
Net revenues from worldwide distributor, percent 13.40% 13.90% 14.30% 13.80%
Worldwide Distributor 3 [Member]
        
Segment Reporting Information [Line Items]        
Net revenues from worldwide distributor, percent 11.10%   11.10%  

Business Combinations
v0.0.0.0
Business Combinations
 6 Months Ended
Mar. 31, 2013
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 2013 Acquisition of LineRate Systems, Inc.

 

On February 11, 2013, the Company acquired all issued and outstanding shares of LineRate Systems, Inc. (LineRate Systems), a privately held Delaware corporation headquartered in Louisville, Colorado for $125.3 million. Direct transaction costs associated with the acquisition were approximately $0.3 million and were expensed in the second quarter of fiscal 2013. LineRate Systems is a developer of software defined network service solutions for packet core operators, and cloud and web service providers. Through this acquisition, the Company gains access to LineRate Systems’ layer 7+ networking services technology, intellectual property, and engineering talent. As a result of the acquisition, the Company acquired all the assets and assumed all the liabilities of LineRate Systems. The results of operations of LineRate 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 six months ended March 31, 2013.

 

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

 

 

 

Assets acquired

 

Cash
$
82 

Current assets
556 

Property and equipment, net
415 

In-process research and development
29,853 

Goodwill
99,560 

 

 

Total assets acquired
$
130,466 

 

 

Liabilities assumed

 

Accrued liabilities
$
(396)

Deferred tax liabilities, net
(4,763)

 

 

Total liabilities assumed
(5,159)

 

 

Net assets acquired
$
125,307 

 

 

 

Of the total estimated purchase price, $29.9 million was allocated to in-process research and development (IPR&D), which consists of existing research and development projects at the time of acquisition. IPR&D acquired from LineRate Systems is included in other assets, net on the balance sheet as of March 31, 2013. IPR&D assets are initially recognized at fair value and are classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the acquisition date, this asset will not be amortized as charges to earnings; instead this asset will be subject to periodic impairment testing. Upon successful completion of the development process for the acquired IPR&D project, the asset would then be considered a finite-lived intangible asset and amortization of the asset will commence. The Company expects to complete the IPR&D project in 2014, at which point amortization will begin over its estimated useful life of ten years. To determine the fair value of IPR&D, the multi-period excess earnings method under the income approach was used, which included estimates and assumptions provided by LineRate Systems and Company management. The income approach estimates the fair value of an asset based on its earnings and cash flow capacity, which are discounted to present value.  A discount rate of 35% was used to value the project based on the implied rate of return of the transaction, adjusted to reflect additional risks inherent in the acquired project. Goodwill generated from this transaction is primarily related to expected synergies, and is not expected to be deductible for federal tax purposes. 

 

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)
 6 Months Ended
Mar. 31, 2013
Business Combinations [Abstract]  
Schedule Of Purchase Price Allocation

 

 

Assets acquired

 

Cash
$
82 

Current assets
556 

Property and equipment, net
415 

In-process research and development
29,853 

Goodwill
99,560 

 

 

Total assets acquired
$
130,466 

 

 

Liabilities assumed

 

Accrued liabilities
$
(396)

Deferred tax liabilities, net
(4,763)

 

 

Total liabilities assumed
(5,159)

 

 

Net assets acquired
$
125,307 

 

 

 


Business Combinations (Narrative) (Details)
v0.0.0.0
Business Combinations (Narrative) (Details) (USD $)
 0 Months Ended
Feb. 11, 2013
Business acquisition, cash paid $ 125,300,000
Business acquisition, transaction costs 300,000
Non amortizable intangible assets 29,853,000
Discount rate 35.00%
In-Process Research And Development [Member]
  
Non amortizable intangible assets $ 29,900,000

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. 11, 2013
Business Combinations [Abstract]  
Cash $ 82
Current assets 556
Property and equipment, net 415
In-process research and development 29,853
Goodwill 99,560
Total assets acquired 130,466
Accrued liabilities (396)
Deferred tax liabilities, net (4,763)
Total liabilities assumed (5,159)
Net assets acquired $ 125,307