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Form 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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75-2275152
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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851 West Cypress Creek Road
Fort Lauderdale, Florida
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33309
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(Address of principal executive offices)
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(Zip Code)
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x
Large accelerated filer
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o
Accelerated filer
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o
Non-accelerated filer
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o
Smaller reporting company
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Page
Number
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PART I:
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II:
|
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|
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Item 1.
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||
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Item 1A.
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Item 2.
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Item 5.
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Item 6.
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June 30,
2013 |
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December 31,
2012 |
||||
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(In thousands, except par value)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
263,153
|
|
|
$
|
643,609
|
|
Short-term investments — available-for-sale
|
436,997
|
|
|
285,022
|
|
||
Accounts receivable, net of allowances of $6,278 and $6,448 at June 30, 2013 and December 31, 2012, respectively
|
493,671
|
|
|
630,956
|
|
||
Inventories, net
|
13,697
|
|
|
10,723
|
|
||
Prepaid expenses and other current assets
|
123,753
|
|
|
106,579
|
|
||
Current portion of deferred tax assets, net
|
40,087
|
|
|
36,846
|
|
||
Total current assets
|
1,371,358
|
|
|
1,713,735
|
|
||
Long-term investments — available-for-sale
|
819,590
|
|
|
595,313
|
|
||
Property and equipment, net
|
311,316
|
|
|
303,294
|
|
||
Goodwill
|
1,762,714
|
|
|
1,518,219
|
|
||
Other intangible assets, net
|
558,416
|
|
|
556,205
|
|
||
Long-term portion of deferred tax assets, net
|
111,267
|
|
|
43,097
|
|
||
Other assets
|
61,350
|
|
|
66,539
|
|
||
|
$
|
4,996,011
|
|
|
$
|
4,796,402
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
72,613
|
|
|
$
|
71,116
|
|
Accrued expenses and other current liabilities
|
255,230
|
|
|
257,135
|
|
||
Income taxes payable
|
14,892
|
|
|
49,346
|
|
||
Current portion of deferred revenues
|
1,007,887
|
|
|
965,276
|
|
||
Total current liabilities
|
1,350,622
|
|
|
1,342,873
|
|
||
Long-term portion of deferred revenues
|
263,476
|
|
|
232,719
|
|
||
Other liabilities
|
105,724
|
|
|
99,033
|
|
||
Commitments and contingencies
|
—
|
|
|
—
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock at $.01 par value: 5,000 shares authorized, none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock at $.001 par value: 1,000,000 shares authorized; 289,389 and 287,123 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively
|
289
|
|
|
287
|
|
||
Additional paid-in capital
|
3,856,482
|
|
|
3,691,111
|
|
||
Retained earnings
|
2,688,167
|
|
|
2,564,018
|
|
||
Accumulated other comprehensive loss
|
(16,975
|
)
|
|
(7,705
|
)
|
||
|
6,527,963
|
|
|
6,247,711
|
|
||
Less — common stock in treasury, at cost (102,602 and 100,781 shares at June 30, 2013 and December 31, 2012, respectively)
|
(3,251,774
|
)
|
|
(3,125,934
|
)
|
||
Total stockholders' equity
|
3,276,189
|
|
|
3,121,777
|
|
||
|
$
|
4,996,011
|
|
|
$
|
4,796,402
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(In thousands, except per share information)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Product and licenses
|
$
|
227,215
|
|
|
$
|
187,917
|
|
|
$
|
420,298
|
|
|
$
|
366,281
|
|
Software as a service
|
143,858
|
|
|
125,510
|
|
|
281,424
|
|
|
246,243
|
|
||||
License updates and maintenance
|
322,895
|
|
|
272,537
|
|
|
638,633
|
|
|
537,062
|
|
||||
Professional services
|
36,416
|
|
|
29,246
|
|
|
62,928
|
|
|
55,119
|
|
||||
Total net revenues
|
730,384
|
|
|
615,210
|
|
|
1,403,283
|
|
|
1,204,705
|
|
||||
Cost of net revenues:
|
|
|
|
|
|
|
|
||||||||
Cost of product and license revenues
|
31,700
|
|
|
20,854
|
|
|
57,494
|
|
|
39,658
|
|
||||
Cost of services and maintenance revenues
|
71,198
|
|
|
56,404
|
|
|
135,609
|
|
|
107,408
|
|
||||
Amortization of product related intangible assets
|
24,342
|
|
|
17,100
|
|
|
49,051
|
|
|
33,635
|
|
||||
Total cost of net revenues
|
127,240
|
|
|
94,358
|
|
|
242,154
|
|
|
180,701
|
|
||||
Gross margin
|
603,144
|
|
|
520,852
|
|
|
1,161,129
|
|
|
1,024,004
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
132,299
|
|
|
110,028
|
|
|
262,791
|
|
|
213,650
|
|
||||
Sales, marketing and services
|
317,096
|
|
|
262,139
|
|
|
614,778
|
|
|
510,596
|
|
||||
General and administrative
|
67,343
|
|
|
61,299
|
|
|
130,128
|
|
|
121,155
|
|
||||
Amortization of other intangible assets
|
10,518
|
|
|
5,194
|
|
|
20,936
|
|
|
15,661
|
|
||||
Total operating expenses
|
527,256
|
|
|
438,660
|
|
|
1,028,633
|
|
|
861,062
|
|
||||
Income from operations
|
75,888
|
|
|
82,192
|
|
|
132,496
|
|
|
162,942
|
|
||||
Interest income
|
2,021
|
|
|
2,828
|
|
|
3,983
|
|
|
5,906
|
|
||||
Other (expense) income, net
|
(646
|
)
|
|
525
|
|
|
(1,412
|
)
|
|
1,247
|
|
||||
Income before income taxes
|
77,263
|
|
|
85,545
|
|
|
135,067
|
|
|
170,095
|
|
||||
Income tax expense (benefit)
|
12,802
|
|
|
(6,461
|
)
|
|
10,918
|
|
|
9,822
|
|
||||
Net income
|
$
|
64,461
|
|
|
$
|
92,006
|
|
|
$
|
124,149
|
|
|
$
|
160,273
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.34
|
|
|
$
|
0.49
|
|
|
$
|
0.66
|
|
|
$
|
0.86
|
|
Diluted
|
$
|
0.34
|
|
|
$
|
0.49
|
|
|
$
|
0.66
|
|
|
$
|
0.85
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
187,229
|
|
|
186,372
|
|
|
186,945
|
|
|
186,052
|
|
||||
Diluted
|
188,486
|
|
|
189,279
|
|
|
188,750
|
|
|
189,082
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|||||||||
|
(In thousands)
|
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
$
|
64,461
|
|
|
$
|
92,006
|
|
|
$
|
124,149
|
|
|
$
|
160,273
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|||||||||
Change in foreign currency translation adjustment
|
3,985
|
|
|
(11,802
|
)
|
|
(2,829
|
)
|
|
(9,850
|
)
|
|||||
Available for sale securities:
|
|
|
|
|
|
|
|
|||||||||
Change in net unrealized gains
|
(2,715
|
)
|
|
1,023
|
|
|
(3,093
|
)
|
—
|
|
2,457
|
|
||||
Less: reclassification adjustment for net losses (gains) included in net income
|
54
|
|
|
(3,055
|
)
|
|
(31
|
)
|
|
(2,862
|
)
|
|||||
Net change (net of tax effect)
|
(2,661
|
)
|
|
(2,032
|
)
|
|
(3,124
|
)
|
|
(405
|
)
|
|||||
Loss on pension liability
|
—
|
|
|
—
|
|
|
(334
|
)
|
|
—
|
|
|||||
Cash flow hedges:
|
|
|
|
|
|
|
|
|||||||||
Change in unrealized gains
|
(1,846
|
)
|
|
(4,378
|
)
|
|
(5,295
|
)
|
|
(2,344
|
)
|
|||||
Less: reclassification adjustment for net losses included in net income
|
1,788
|
|
|
779
|
|
|
2,312
|
|
|
2,306
|
|
|||||
Net change (net of tax effect)
|
(58
|
)
|
|
(3,599
|
)
|
|
(2,983
|
)
|
|
(38
|
)
|
|||||
Other comprehensive income (loss)
|
1,266
|
|
|
(17,433
|
)
|
|
(9,270
|
)
|
|
(10,293
|
)
|
|||||
Comprehensive income
|
$
|
65,727
|
|
|
$
|
74,573
|
|
|
$
|
114,879
|
|
|
$
|
149,980
|
|
|
Six Months Ended June 30,
|
||||||
|
2013
|
|
2012
|
||||
|
(In thousands)
|
||||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
124,149
|
|
|
$
|
160,273
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Amortization of intangible assets
|
69,987
|
|
|
49,296
|
|
||
Depreciation and amortization of property and equipment
|
60,499
|
|
|
46,049
|
|
||
Stock-based compensation expense
|
91,413
|
|
|
68,819
|
|
||
Gain on investments
|
(1,032
|
)
|
|
(6,885
|
)
|
||
Provision for doubtful accounts
|
1,066
|
|
|
386
|
|
||
Provision for product returns
|
3,056
|
|
|
6,437
|
|
||
Provision for inventory reserves
|
638
|
|
|
903
|
|
||
Tax effect of stock-based compensation
|
25,908
|
|
|
23,078
|
|
||
Excess tax benefit from exercise of stock options
|
(29,263
|
)
|
|
(23,979
|
)
|
||
Deferred income tax benefit
|
(39,371
|
)
|
|
(31,883
|
)
|
||
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies
|
2,936
|
|
|
186
|
|
||
Other non-cash items
|
220
|
|
|
548
|
|
||
Total adjustments to reconcile net income to net cash provided by operating activities
|
186,057
|
|
|
132,955
|
|
||
Changes in operating assets and liabilities, net of the effects of acquisitions:
|
|
|
|
||||
Accounts receivable
|
137,994
|
|
|
70,899
|
|
||
Inventories
|
(3,914
|
)
|
|
945
|
|
||
Prepaid expenses and other current assets
|
(17,393
|
)
|
|
(31,758
|
)
|
||
Other assets
|
6,607
|
|
|
(814
|
)
|
||
Income taxes, net
|
(49,460
|
)
|
|
2,079
|
|
||
Accounts payable
|
(422
|
)
|
|
3,155
|
|
||
Accrued expenses and other current liabilities
|
6,508
|
|
|
5,008
|
|
||
Deferred revenues
|
61,078
|
|
|
68,480
|
|
||
Other liabilities
|
7,177
|
|
|
(408
|
)
|
||
Total changes in operating assets and liabilities, net of the effects of acquisitions
|
148,175
|
|
|
117,586
|
|
||
Net cash provided by operating activities
|
458,381
|
|
|
410,814
|
|
||
Investing Activities
|
|
|
|
||||
Purchases of available-for-sale investments
|
(993,242
|
)
|
|
(550,002
|
)
|
||
Proceeds from sales of available-for-sale investments
|
375,349
|
|
|
702,711
|
|
||
Proceeds from maturities of available-for-sale investments
|
237,880
|
|
|
245,133
|
|
||
Purchases of property and equipment
|
(66,781
|
)
|
|
(51,247
|
)
|
||
Proceeds from the sales of cost method investments
|
1,500
|
|
|
6,475
|
|
||
Purchases of cost method investments
|
(2,467
|
)
|
|
(2,547
|
)
|
||
Cash paid for acquisitions, net of cash acquired
|
(324,049
|
)
|
|
(82,378
|
)
|
||
Cash paid for licensing agreements and product related intangible assets
|
(4,494
|
)
|
|
(12,000
|
)
|
||
Net cash (used in) provided by investing activities
|
(776,304
|
)
|
|
256,145
|
|
||
Financing Activities
|
|
|
|
||||
Proceeds from issuance of common stock under stock-based compensation plans
|
34,959
|
|
|
61,489
|
|
||
Repayment of acquired debt
|
—
|
|
|
(7,737
|
)
|
||
Excess tax benefit from exercise of stock options
|
29,263
|
|
|
23,979
|
|
||
Stock repurchases, net
|
(101,036
|
)
|
|
(99,996
|
)
|
||
Cash paid for tax withholding on vested stock awards
|
(24,804
|
)
|
|
(15,062
|
)
|
||
Other
|
912
|
|
|
1,050
|
|
||
Net cash used in financing activities
|
(60,706
|
)
|
|
(36,277
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1,827
|
)
|
|
(2,138
|
)
|
||
Change in cash and cash equivalents
|
(380,456
|
)
|
|
628,544
|
|
||
Cash and cash equivalents at beginning of period
|
643,609
|
|
|
333,296
|
|
||
Cash and cash equivalents at end of period
|
$
|
263,153
|
|
|
$
|
961,840
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
64,461
|
|
|
$
|
92,006
|
|
|
$
|
124,149
|
|
|
$
|
160,273
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per share — weighted-average shares outstanding
|
187,229
|
|
|
186,372
|
|
|
186,945
|
|
|
186,052
|
|
||||
Effect of dilutive employee stock awards
|
1,257
|
|
|
2,907
|
|
|
1,805
|
|
|
3,030
|
|
||||
Denominator for diluted earnings per share — weighted-average shares outstanding
|
188,486
|
|
|
189,279
|
|
|
188,750
|
|
|
189,082
|
|
||||
Basic earnings per share
|
$
|
0.34
|
|
|
$
|
0.49
|
|
|
$
|
0.66
|
|
|
$
|
0.86
|
|
Diluted earnings per share
|
$
|
0.34
|
|
|
$
|
0.49
|
|
|
$
|
0.66
|
|
|
$
|
0.85
|
|
Anti-dilutive weighted-average shares
|
6,270
|
|
|
3,326
|
|
|
4,689
|
|
|
4,103
|
|
|
Zenprise
|
||||
|
Purchase Price Allocation
|
|
Asset Life
|
||
Current assets
|
$
|
10,943
|
|
|
|
Other assets
|
668
|
|
|
|
|
Property and equipment
|
431
|
|
|
Various
|
|
Deferred tax assets, non-current
|
35,656
|
|
|
|
|
Intangible assets
|
69,200
|
|
|
1-7 years
|
|
Goodwill
|
249,392
|
|
|
Indefinite
|
|
Assets acquired
|
366,290
|
|
|
|
|
Current liabilities assumed
|
(8,475
|
)
|
|
|
|
Long-term liabilities assumed
|
(3,107
|
)
|
|
|
|
Deferred tax liabilities, non-current
|
(27,714
|
)
|
|
|
|
Net assets acquired
|
$
|
326,994
|
|
|
|
|
Zenprise
|
|
Asset Life
|
||
Trade names
|
$
|
2,400
|
|
|
3.0 years
|
Non-compete agreements
|
700
|
|
|
1.0 year
|
|
Customer relationships
|
18,300
|
|
|
7.0 years
|
|
Core and product technologies
|
47,800
|
|
|
6.0 years
|
|
Total
|
$
|
69,200
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenues
|
$
|
730,384
|
|
|
$
|
616,854
|
|
|
$
|
1,403,344
|
|
|
$
|
1,207,346
|
|
Income from operations
|
75,888
|
|
|
70,176
|
|
|
132,230
|
|
|
139,293
|
|
||||
Net income
|
64,461
|
|
|
84,314
|
|
|
123,980
|
|
|
145,114
|
|
||||
Per share - basic
|
0.34
|
|
|
0.45
|
|
|
0.66
|
|
|
0.78
|
|
||||
Per share - diluted
|
0.34
|
|
|
0.45
|
|
|
0.66
|
|
|
0.77
|
|
|
Bytemobile
|
||||
|
Purchase Price Allocation
|
|
Asset Life
|
||
Current assets
|
$
|
57,837
|
|
|
|
Other assets
|
7,406
|
|
|
|
|
Property and equipment
|
2,484
|
|
|
Various
|
|
Deferred tax assets, non-current
|
40,176
|
|
|
|
|
Intangible assets
|
248,900
|
|
|
1-9 years
|
|
Goodwill
|
223,908
|
|
|
Indefinite
|
|
Assets acquired
|
580,711
|
|
|
|
|
Current liabilities assumed
|
(62,387
|
)
|
|
|
|
Long-term liabilities assumed
|
(4,487
|
)
|
|
|
|
Deferred tax liabilities, non-current
|
(108,703
|
)
|
|
|
|
Net assets acquired
|
$
|
405,134
|
|
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||||||||||||||||||||||||||
Description of the
Securities
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||||||||||
Agency securities
|
$
|
461,338
|
|
|
$
|
1,465
|
|
|
$
|
(978
|
)
|
|
$
|
461,825
|
|
|
$
|
400,365
|
|
|
$
|
2,347
|
|
|
$
|
(5
|
)
|
|
$
|
402,707
|
|
Corporate securities
|
629,911
|
|
|
578
|
|
|
(1,015
|
)
|
|
629,474
|
|
|
404,546
|
|
|
947
|
|
|
(171
|
)
|
|
405,322
|
|
||||||||
Municipal securities
|
64,238
|
|
|
17
|
|
|
(171
|
)
|
|
64,084
|
|
|
32,214
|
|
|
114
|
|
|
(15
|
)
|
|
32,313
|
|
||||||||
Government securities
|
101,295
|
|
|
62
|
|
|
(153
|
)
|
|
101,204
|
|
|
39,863
|
|
|
131
|
|
|
(1
|
)
|
|
39,993
|
|
||||||||
Total
|
$
|
1,256,782
|
|
|
$
|
2,122
|
|
|
$
|
(2,317
|
)
|
|
$
|
1,256,587
|
|
|
$
|
876,988
|
|
|
$
|
3,539
|
|
|
$
|
(192
|
)
|
|
$
|
880,335
|
|
•
|
Level 1.
Observable inputs such as quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2
. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
•
|
Level 3
. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
|
As of June 30, 2013
|
|
Quoted
Prices In
Active Markets
for Identical
Assets (Level 1)
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
204,621
|
|
|
$
|
204,621
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market funds
|
47,065
|
|
|
47,065
|
|
|
—
|
|
|
—
|
|
||||
Corporate securities
|
3,247
|
|
|
—
|
|
|
3,247
|
|
|
—
|
|
||||
Agency securities
|
5,020
|
|
|
—
|
|
|
5,020
|
|
|
—
|
|
||||
Municipal securities
|
3,200
|
|
|
—
|
|
|
3,200
|
|
|
—
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Agency securities
|
461,825
|
|
|
—
|
|
|
461,825
|
|
|
—
|
|
||||
Corporate securities
|
629,474
|
|
|
—
|
|
|
620,383
|
|
|
9,091
|
|
||||
Municipal securities
|
64,084
|
|
|
—
|
|
|
64,084
|
|
|
—
|
|
||||
Government securities
|
101,204
|
|
|
—
|
|
|
101,204
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
4,581
|
|
|
—
|
|
|
4,581
|
|
|
—
|
|
||||
Total assets
|
$
|
1,524,321
|
|
|
$
|
251,686
|
|
|
$
|
1,263,544
|
|
|
$
|
9,091
|
|
Accrued expenses and other current liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
7,086
|
|
|
—
|
|
|
7,086
|
|
|
—
|
|
||||
Total liabilities
|
$
|
7,086
|
|
|
$
|
—
|
|
|
$
|
7,086
|
|
|
$
|
—
|
|
|
As of December 31, 2012
|
|
Quoted
Prices In
Active Markets
for Identical
Assets (Level 1)
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
503,614
|
|
|
$
|
503,614
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market funds
|
123,519
|
|
|
123,519
|
|
|
—
|
|
|
—
|
|
||||
Corporate securities
|
16,476
|
|
|
—
|
|
|
16,476
|
|
|
—
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Agency securities
|
402,707
|
|
|
—
|
|
|
402,707
|
|
|
—
|
|
||||
Corporate securities
|
405,322
|
|
|
—
|
|
|
401,981
|
|
|
3,341
|
|
||||
Municipal securities
|
32,313
|
|
|
—
|
|
|
32,313
|
|
|
—
|
|
||||
Government securities
|
39,993
|
|
|
—
|
|
|
39,993
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
4,157
|
|
|
—
|
|
|
4,157
|
|
|
—
|
|
||||
Total assets
|
$
|
1,528,101
|
|
|
$
|
627,133
|
|
|
$
|
897,627
|
|
|
$
|
3,341
|
|
Accrued expenses and other current liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
4,162
|
|
|
—
|
|
|
4,162
|
|
|
—
|
|
||||
Total liabilities
|
$
|
4,162
|
|
|
$
|
—
|
|
|
$
|
4,162
|
|
|
$
|
—
|
|
|
Investments
|
||
|
(in thousands)
|
||
Balance at December 31, 2012
|
$
|
3,341
|
|
Purchases of Level 3 securities
|
6,000
|
|
|
Transfers out of Level 3
|
(250
|
)
|
|
Balance at June 30, 2013
|
$
|
9,091
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Six Months Ended
|
||||||||
Income Statement Classifications
|
June 30, 2013
|
|
June 30, 2012
|
|
June 30, 2013
|
|
June 30, 2012
|
||||||||
Cost of services and maintenance revenues
|
$
|
625
|
|
|
$
|
507
|
|
|
$
|
1,259
|
|
|
$
|
957
|
|
Research and development
|
16,503
|
|
|
14,055
|
|
|
32,156
|
|
|
25,199
|
|
||||
Sales, marketing and services
|
17,487
|
|
|
13,307
|
|
|
32,661
|
|
|
23,277
|
|
||||
General and administrative
|
13,242
|
|
|
10,393
|
|
|
25,337
|
|
|
19,386
|
|
||||
Total
|
$
|
47,857
|
|
|
$
|
38,262
|
|
|
$
|
91,413
|
|
|
$
|
68,819
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Six Months Ended
|
|||
|
June 30, 2012
|
|
June 30, 2013
|
|
June 30, 2012
|
|||
Expected volatility factor
|
0.41
|
|
|
0.39
|
|
|
0.38 - 0.41
|
|
Approximate risk free interest rate
|
0.68
|
%
|
|
0.44
|
%
|
|
0.65% - 0.68%
|
|
Expected term (in years)
|
3.91
|
|
|
3.35
|
|
|
3.91
|
|
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
|
|
||
|
March 2013 Grant
|
March 2012 Grant
|
||
Expected volatility factor
|
0.16 - 0.42
|
|
0.21 - 0.39
|
|
Risk free interest rate
|
0.33
|
%
|
0.47
|
%
|
Expected dividend yield
|
0
|
%
|
0
|
%
|
|
Balance at January 1, 2013
|
|
Additions
|
|
|
Other
|
|
|
Balance at June 30, 2013
|
||||||||
Infrastructure
|
$
|
1,158,580
|
|
|
$
|
249,393
|
|
|
|
$
|
(2,025
|
)
|
(2)
|
|
$
|
1,405,948
|
|
SaaS
|
359,639
|
|
|
—
|
|
|
|
(2,873
|
)
|
(3)
|
|
356,766
|
|
||||
Consolidated
|
$
|
1,518,219
|
|
|
$
|
249,393
|
|
(1)
|
|
$
|
(4,898
|
)
|
|
|
$
|
1,762,714
|
|
|
|
(1)
|
Amount relates to Zenprise acquisition. See Note 4 for more information regarding the Company’s acquisitions.
|
(2)
|
Amount primarily relates to adjustments to the preliminary purchase price allocation associated with the Bytemobile acquisition, primarily related to adjustments of certain income tax assets and liabilities of $
7.3 million
, partially offset by a $
5.9 million
adjustment to current portion of deferred revenues.
|
(3)
|
Amount primarily relates to foreign currency translation.
|
|
June 30, 2013
|
|
December 31, 2012
|
||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Product related intangible assets
|
$
|
667,341
|
|
|
$
|
383,917
|
|
|
$
|
620,032
|
|
|
$
|
339,608
|
|
Other
|
471,030
|
|
|
196,038
|
|
|
446,601
|
|
|
170,820
|
|
||||
Total
|
$
|
1,138,371
|
|
|
$
|
579,955
|
|
|
$
|
1,066,633
|
|
|
$
|
510,428
|
|
Year ending December 31,
|
|
||
2013
|
$
|
138,861
|
|
2014
|
130,015
|
|
|
2015
|
108,128
|
|
|
2016
|
85,935
|
|
|
2017
|
58,336
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
Infrastructure
|
$
|
586,526
|
|
|
$
|
489,700
|
|
|
$
|
1,121,859
|
|
|
$
|
958,462
|
|
SaaS
|
143,858
|
|
|
125,510
|
|
|
281,424
|
|
|
246,243
|
|
||||
Consolidated
|
$
|
730,384
|
|
|
$
|
615,210
|
|
|
$
|
1,403,283
|
|
|
$
|
1,204,705
|
|
Segment profit:
|
|
|
|
|
|
|
|
||||||||
Infrastructure
|
$
|
132,591
|
|
|
$
|
123,776
|
|
|
$
|
245,847
|
|
|
$
|
240,949
|
|
SaaS
|
26,014
|
|
|
18,972
|
|
|
48,049
|
|
|
40,108
|
|
||||
Unallocated expenses
(1)
:
|
|
|
|
|
|
|
|
||||||||
Amortization of intangible assets
|
(34,860
|
)
|
|
(22,294
|
)
|
|
(69,987
|
)
|
|
(49,296
|
)
|
||||
Net interest and other income
|
1,375
|
|
|
3,353
|
|
|
2,571
|
|
|
7,153
|
|
||||
Stock-based compensation
|
(47,857
|
)
|
|
(38,262
|
)
|
|
(91,413
|
)
|
|
(68,819
|
)
|
||||
Consolidated income before income taxes
|
$
|
77,263
|
|
|
$
|
85,545
|
|
|
$
|
135,067
|
|
|
$
|
170,095
|
|
|
|
(1)
|
Represents expenses presented to management on a consolidated basis only and not allocated to the operating segments.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
Infrastructure
|
|
|
|
|
|
|
|
||||||||
Mobile and Desktop revenues
(1)
|
$
|
382,234
|
|
|
$
|
345,134
|
|
|
$
|
740,224
|
|
|
$
|
685,537
|
|
Networking and Cloud Solutions revenues
(2)
|
164,786
|
|
|
112,681
|
|
|
312,279
|
|
|
212,992
|
|
||||
Professional services
(3)
|
36,416
|
|
|
29,246
|
|
|
62,928
|
|
|
55,119
|
|
||||
Other
|
3,090
|
|
|
2,639
|
|
|
6,428
|
|
|
4,814
|
|
||||
Total Infrastructure revenues
|
586,526
|
|
|
489,700
|
|
|
1,121,859
|
|
|
958,462
|
|
||||
SaaS revenues
|
143,858
|
|
|
125,510
|
|
|
281,424
|
|
|
246,243
|
|
||||
Total net revenues
|
$
|
730,384
|
|
|
$
|
615,210
|
|
|
$
|
1,403,283
|
|
|
$
|
1,204,705
|
|
|
|
(1)
|
Mobile and Desktop revenues are primarily comprised of sales from the Company’s desktop virtualization products, XenDesktop and XenApp, and the Company's Mobility products which include XenMobile and related license updates and maintenance and support.
|
(2)
|
Networking and Cloud revenues are primarily comprised of sales from the Company’s cloud networking products which include NetScaler, CloudBridge and Bytemobile Smart Capacity, and the Company’s cloud platform products which include XenServer, CloudPlatform and CloudPortal and related license updates and maintenance and support.
|
(3)
|
Professional services revenues are primarily comprised of revenues from consulting services and product training and certification services.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
Infrastructure
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
322,911
|
|
|
$
|
259,769
|
|
|
$
|
619,345
|
|
|
$
|
512,252
|
|
EMEA
|
191,015
|
|
|
163,976
|
|
|
365,417
|
|
|
324,047
|
|
||||
Asia-Pacific
|
72,600
|
|
|
65,955
|
|
|
137,097
|
|
|
122,163
|
|
||||
Total Infrastructure revenues
|
586,526
|
|
|
489,700
|
|
|
1,121,859
|
|
|
958,462
|
|
||||
SaaS
|
|
|
|
|
|
|
|
||||||||
Americas
|
120,680
|
|
|
106,784
|
|
|
236,910
|
|
|
210,011
|
|
||||
EMEA
|
18,001
|
|
|
15,578
|
|
|
34,744
|
|
|
30,033
|
|
||||
Asia-Pacific
|
5,177
|
|
|
3,148
|
|
|
9,770
|
|
|
6,199
|
|
||||
Total SaaS revenues
|
143,858
|
|
|
125,510
|
|
|
281,424
|
|
|
246,243
|
|
||||
Total net revenues
|
$
|
730,384
|
|
|
$
|
615,210
|
|
|
$
|
1,403,283
|
|
|
$
|
1,204,705
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||
|
(In thousands)
|
||||||||||||||
|
June 30, 2013
|
|
December 31, 2012
|
|
June 30, 2013
|
|
December 31, 2012
|
||||||||
Derivatives Designated as
Hedging Instruments
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
Foreign currency forward contracts
|
Prepaid
expenses
and other
current
assets
|
|
$3,223
|
|
Prepaid
expenses
and other
current
assets
|
|
$4,157
|
|
Accrued
expenses
and other
current
liabilities
|
|
$6,463
|
|
Accrued
expenses
and other
current
liabilities
|
|
$4,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||
|
(In thousands)
|
||||||||||||||
|
June 30, 2013
|
|
December 31, 2012
|
|
June 30, 2013
|
|
December 31, 2012
|
||||||||
Derivatives Not Designated as
Hedging Instruments
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
Foreign currency forward contracts
|
Prepaid
expenses
and other
current
assets
|
|
$1,358
|
|
Prepaid
expenses
and other
current
assets
|
|
$448
|
|
Accrued
expenses
and other
current
liabilities
|
|
$623
|
|
Accrued
expenses
and other
current
liabilities
|
|
$52
|
|
For the Three Months Ended June 30,
|
||||||||
|
(In thousands)
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
Location of Gain
(Loss) Recognized in Income on
Derivative
|
|
Amount of Gain (Loss) Recognized in Income on Derivative
|
||||||
|
|
|
2013
|
|
2012
|
||||
Foreign currency forward contracts
|
Other (expense) income, net
|
|
$
|
2,006
|
|
|
$
|
(1,163
|
)
|
|
|
|
|
|
|
||||
|
For the Six Months Ended June 30,
|
||||||||
|
(In thousands)
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
Location of Gain (Loss) Recognized in Income on
Derivative
|
|
Amount of Gain (Loss) Recognized in Income on Derivative
|
||||||
|
|
|
2013
|
|
2012
|
||||
Foreign currency forward contracts
|
Other (expense) income, net
|
|
$
|
1,727
|
|
|
$
|
(1,339
|
)
|
Foreign Currency
|
Currency
Denomination
|
Australian Dollar
|
AUD 8,104
|
Pounds Sterling
|
GBP 30,500
|
Canadian Dollar
|
CAD 6,700
|
Chinese Yuan Renminbi
|
CNY 73,520
|
Danish Krone
|
DKK 4,600
|
Euro
|
EUR 29,897
|
Hong Kong Dollar
|
HKD 51,245
|
Indian Rupee
|
INR 1,085,542
|
Japanese Yen
|
JPY 407,100
|
New Zealand Dollar
|
NZD 100
|
Singapore Dollar
|
SGD 11,300
|
Swiss Franc
|
CHF 26,107
|
|
Foreign currency
|
|
Unrealized gain (loss) on available-for-sale securities
|
|
Unrealized (loss) gain on derivative instruments
|
|
Other comprehensive loss on pension liability
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance at December 31, 2012
|
$
|
(3,024
|
)
|
|
$
|
2,426
|
|
|
$
|
(10
|
)
|
|
$
|
(7,097
|
)
|
|
$
|
(7,705
|
)
|
Other comprehensive loss before reclassifications
|
(2,829
|
)
|
|
(3,093
|
)
|
|
(5,295
|
)
|
|
(334
|
)
|
|
(11,551
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(31
|
)
|
|
2,312
|
|
|
—
|
|
|
2,281
|
|
|||||
Net current period other comprehensive loss
|
(2,829
|
)
|
|
(3,124
|
)
|
|
(2,983
|
)
|
|
(334
|
)
|
|
(9,270
|
)
|
|||||
Balance at June 30, 2013
|
$
|
(5,853
|
)
|
|
$
|
(698
|
)
|
|
$
|
(2,993
|
)
|
|
$
|
(7,431
|
)
|
|
$
|
(16,975
|
)
|
|
|
For the three months ended June 30,
|
||||
|
|
(In thousands)
|
||||
Details about accumulated other comprehensive loss components
|
|
Amount reclassified from accumulated other comprehensive loss, net of tax
|
|
Affected line item in the Condensed Consolidated Statements of Income
|
||
Unrealized net losses on available-for-sale securities
|
|
$
|
(54
|
)
|
|
Other (expense) income, net
|
Unrealized net losses on cash flow hedges
|
|
(1,788
|
)
|
|
Operating expenses *
|
|
|
|
$
|
(1,842
|
)
|
|
|
|
|
For the six months ended June 30,
|
||||
|
|
(In thousands)
|
||||
Details about accumulated other comprehensive loss components
|
|
Amount reclassified from accumulated other comprehensive loss, net of tax
|
|
Affected line item in the Condensed Consolidated Statements of Income
|
||
Unrealized net gains on available-for-sale securities
|
|
$
|
31
|
|
|
Other (expense) income, net
|
Unrealized net losses on cash flow hedges
|
|
(2,312
|
)
|
|
Operating expenses *
|
|
|
|
$
|
(2,281
|
)
|
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Product and licenses revenue increased 20.9% to $
227.2 million
;
|
•
|
Software as a service revenue increased 14.6% to $
143.9 million
;
|
•
|
License updates and maintenance revenue increased 18.5% to $
322.9 million
;
|
•
|
Professional services revenue increased 24.5% to $
36.4 million
;
|
•
|
Gross margin as a percentage of revenue decreased 2.1% to 82.6%;
|
•
|
Operating income decreased 7.7% to $
75.9 million
; and
|
•
|
Diluted net income per share decreased 29.6% to $
0.34
.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30, 2013
|
|
June 30, 2013
|
||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
vs. June 30, 2012
|
|
vs. June 30, 2012
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product and licenses
|
$
|
227,215
|
|
|
$
|
187,917
|
|
|
$
|
420,298
|
|
|
$
|
366,281
|
|
|
20.9
|
%
|
|
14.7
|
%
|
Software as a service
|
143,858
|
|
|
125,510
|
|
|
281,424
|
|
|
246,243
|
|
|
14.6
|
|
|
14.3
|
|
||||
License updates and maintenance
|
322,895
|
|
|
272,537
|
|
|
638,633
|
|
|
537,062
|
|
|
18.5
|
|
|
18.9
|
|
||||
Professional services
|
36,416
|
|
|
29,246
|
|
|
62,928
|
|
|
55,119
|
|
|
24.5
|
|
|
14.2
|
|
||||
Total net revenues
|
730,384
|
|
|
615,210
|
|
|
1,403,283
|
|
|
1,204,705
|
|
|
18.7
|
|
|
16.5
|
|
||||
Cost of net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of product and license revenues
|
31,700
|
|
|
20,854
|
|
|
57,494
|
|
|
39,658
|
|
|
52.0
|
|
|
45.0
|
|
||||
Cost of services and maintenance revenues
|
71,198
|
|
|
56,404
|
|
|
135,609
|
|
|
107,408
|
|
|
26.2
|
|
|
26.3
|
|
||||
Amortization of product related intangible assets
|
24,342
|
|
|
17,100
|
|
|
49,051
|
|
|
33,635
|
|
|
42.4
|
|
|
45.8
|
|
||||
Total cost of net revenues
|
127,240
|
|
|
94,358
|
|
|
242,154
|
|
|
180,701
|
|
|
34.8
|
|
|
34.0
|
|
||||
Gross margin
|
603,144
|
|
|
520,852
|
|
|
1,161,129
|
|
|
1,024,004
|
|
|
15.8
|
|
|
13.4
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
132,299
|
|
|
110,028
|
|
|
262,791
|
|
|
213,650
|
|
|
20.2
|
|
|
23.0
|
|
||||
Sales, marketing and services
|
317,096
|
|
|
262,139
|
|
|
614,778
|
|
|
510,596
|
|
|
21.0
|
|
|
20.4
|
|
||||
General and administrative
|
67,343
|
|
|
61,299
|
|
|
130,128
|
|
|
121,155
|
|
|
9.9
|
|
|
7.4
|
|
||||
Amortization of other intangible assets
|
10,518
|
|
|
5,194
|
|
|
20,936
|
|
|
15,661
|
|
|
102.5
|
|
|
33.7
|
|
||||
Total operating expenses
|
527,256
|
|
|
438,660
|
|
|
1,028,633
|
|
|
861,062
|
|
|
20.2
|
|
|
19.5
|
|
||||
Income from operations
|
75,888
|
|
|
82,192
|
|
|
132,496
|
|
|
162,942
|
|
|
(7.7
|
)
|
|
(18.7
|
)
|
||||
Interest income
|
2,021
|
|
|
2,828
|
|
|
3,983
|
|
|
5,906
|
|
|
(28.5
|
)
|
|
(32.6
|
)
|
||||
Other (expense) income, net
|
(646
|
)
|
|
525
|
|
|
(1,412
|
)
|
|
1,247
|
|
|
*
|
|
|
*
|
|
||||
Income before income taxes
|
77,263
|
|
|
85,545
|
|
|
135,067
|
|
|
170,095
|
|
|
(9.7
|
)
|
|
(20.6
|
)
|
||||
Income tax expense (benefit)
|
12,802
|
|
|
(6,461
|
)
|
|
10,918
|
|
|
9,822
|
|
|
*
|
|
|
11.2
|
|
||||
Net income
|
$
|
64,461
|
|
|
$
|
92,006
|
|
|
$
|
124,149
|
|
|
$
|
160,273
|
|
|
(29.9
|
)
|
|
(22.5
|
)
|
*
|
not meaningful
|
•
|
Mobile and Desktop is primarily comprised of our desktop virtualization products, which include XenDesktop and XenApp and our mobility products which include XenMobile products; and
|
•
|
Networking and Cloud is primarily comprised of our cloud networking products, which include NetScaler, CloudBridge and Bytemobile Smart Capacity, and our cloud platform products which include XenServer, CloudPlatform and CloudPortal.
|
•
|
Our Subscription Advantage program, an annual renewable program that provides subscribers with automatic delivery of unspecified software upgrades, enhancements and maintenance releases when and if they become available during the term of the subscription, for which fees are recognized ratably over the term of the contract, which is typically 12 to 24 months; and
|
•
|
Our maintenance fees, which include technical support and hardware and software maintenance, and are recognized ratably over the contract term.
|
•
|
Fees from consulting services related to implementation of our products, which are recognized as the services are provided; and
|
•
|
Fees from product training and certification, which are recognized as the services are provided.
|
•
|
Collaboration products, which primarily include GoToMeeting, GoToWebinar and GoToTraining;
|
•
|
Data Sharing product, ShareFile;
|
•
|
Remote Access product, GoToMyPC; and
|
•
|
Remote IT Support products, which primarily include GoToAssist.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30, 2013
|
|
June 30, 2013
|
||||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
vs. June 30, 2012
|
|
vs. June 30, 2012
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Product and licenses
|
$
|
227,215
|
|
|
$
|
187,917
|
|
|
$
|
420,298
|
|
|
$
|
366,281
|
|
|
$
|
39,298
|
|
|
$
|
54,017
|
|
Software as a service
|
143,858
|
|
|
125,510
|
|
|
281,424
|
|
|
246,243
|
|
|
18,348
|
|
|
35,181
|
|
||||||
License updates and maintenance
|
322,895
|
|
|
272,537
|
|
|
638,633
|
|
|
537,062
|
|
|
50,358
|
|
|
101,571
|
|
||||||
Professional services
|
36,416
|
|
|
29,246
|
|
|
62,928
|
|
|
55,119
|
|
|
7,170
|
|
|
7,809
|
|
||||||
Total net revenues
|
$
|
730,384
|
|
|
$
|
615,210
|
|
|
$
|
1,403,283
|
|
|
$
|
1,204,705
|
|
|
$
|
115,174
|
|
|
$
|
198,578
|
|
|
|
|
|
|
|
|
|
|
Increase for the
|
||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30, 2013
|
|
June 30, 2013
|
||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
vs. June 30, 2012
|
|
vs. June 30, 2012
|
||||||||||
Infrastructure
|
$
|
586,526
|
|
|
$
|
489,700
|
|
|
$
|
1,121,859
|
|
|
$
|
958,462
|
|
|
19.8
|
%
|
|
17.0
|
%
|
SaaS
|
143,858
|
|
|
125,510
|
|
|
281,424
|
|
|
246,243
|
|
|
14.6
|
%
|
|
14.3
|
%
|
||||
Net revenues
|
$
|
730,384
|
|
|
$
|
615,210
|
|
|
$
|
1,403,283
|
|
|
$
|
1,204,705
|
|
|
18.7
|
%
|
|
16.5
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30, 2013
|
|
June 30, 2013
|
||||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
vs. June 30, 2012
|
|
vs. June 30, 2012
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Cost of product and license revenues
|
$
|
31,700
|
|
|
$
|
20,854
|
|
|
$
|
57,494
|
|
|
$
|
39,658
|
|
|
$
|
10,846
|
|
|
$
|
17,836
|
|
Cost of services and maintenance revenues
|
71,198
|
|
|
56,404
|
|
|
135,609
|
|
|
107,408
|
|
|
14,794
|
|
|
28,201
|
|
||||||
Amortization of product related intangible assets
|
24,342
|
|
|
17,100
|
|
|
49,051
|
|
|
33,635
|
|
|
7,242
|
|
|
15,416
|
|
||||||
Total cost of net revenues
|
$
|
127,240
|
|
|
$
|
94,358
|
|
|
$
|
242,154
|
|
|
$
|
180,701
|
|
|
$
|
32,882
|
|
|
$
|
61,453
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30, 2013
|
|
June 30, 2013
|
||||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
vs. June 30, 2012
|
|
vs. June 30, 2012
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Research and development
|
$
|
132,299
|
|
|
$
|
110,028
|
|
|
$
|
262,791
|
|
|
$
|
213,650
|
|
|
$
|
22,271
|
|
|
$
|
49,141
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30, 2013
|
|
June 30, 2013
|
||||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
vs. June 30, 2012
|
|
vs. June 30, 2012
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Sales, marketing and services
|
$
|
317,096
|
|
|
$
|
262,139
|
|
|
$
|
614,778
|
|
|
$
|
510,596
|
|
|
$
|
54,957
|
|
|
$
|
104,182
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30, 2013
|
June 30, 2013
|
||||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
vs. June 30, 2012
|
vs. June 30, 2012
|
||||||||||||
|
(In thousands)
|
|||||||||||||||||||||
General and administrative
|
$
|
67,343
|
|
|
$
|
61,299
|
|
|
$
|
130,128
|
|
|
$
|
121,155
|
|
|
$
|
6,044
|
|
$
|
8,973
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30, 2013
|
|
June 30, 2013
|
||||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
vs. June 30, 2012
|
|
vs. June 30, 2012
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Other (expense) income, net
|
$
|
(646
|
)
|
|
$
|
525
|
|
|
$
|
(1,412
|
)
|
|
$
|
1,247
|
|
|
$
|
(1,171
|
)
|
|
$
|
(2,659
|
)
|
|
June 30, 2013
|
|
December 31, 2012
|
|
2013 Compared to 2012
|
||||||
|
(In thousands)
|
||||||||||
Cash, cash equivalents and investments
|
$
|
1,519,740
|
|
|
$
|
1,523,944
|
|
|
$
|
(4,204
|
)
|
•
|
Level 1.
Observable inputs such as quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2
. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
•
|
Level 3
. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
|
Investments
|
||
|
(in thousands)
|
||
Balance at December 31, 2012
|
$
|
3,341
|
|
Purchases of Level 3 securities
|
6,000
|
|
|
Transfers out of Level 3
|
(250
|
)
|
|
Balance at June 30, 2013
|
$
|
9,091
|
|
|
June 30, 2013
|
|
December 31, 2012
|
|
2013 Compared to 2012
|
||||||
|
(In thousands)
|
||||||||||
Accounts receivable
|
$
|
499,949
|
|
|
$
|
637,403
|
|
|
$
|
(137,454
|
)
|
Allowance for returns
|
(2,167
|
)
|
|
(2,564
|
)
|
|
397
|
|
|||
Allowance for doubtful accounts
|
(4,111
|
)
|
|
(3,883
|
)
|
|
(228
|
)
|
|||
Accounts receivable, net
|
$
|
493,671
|
|
|
$
|
630,956
|
|
|
$
|
(137,285
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
harm to our reputation or brand, which could lead some customers to seek to cancel subscriptions, stop using certain of our products or services, reduce or delay future purchases of our products or services, or use competing products or services;
|
•
|
individual and/or class action lawsuits, which could result in financial judgments against us and which would cause us to incur legal fees and costs;
|
•
|
state or federal enforcement action, which could result in fines and/or penalties and which would cause us to incur legal fees and costs; and/or
|
•
|
additional costs associated with responding to the cyberattack, such as investigative and remediation costs, and the costs of providing individuals and/or data owners with notice of the breach, legal fees, the costs of any additional fraud detection activities required by credit card associations, and costs incurred by credit card issuers associated with the compromise and additional monitoring of systems for further fraudulent activity.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
Total Number
of Shares
(or Units)
Purchased
(1)
|
|
Average Price
Paid per Share
(or Unit)
|
|
Total Number of Shares
(or Units) Purchased as
Part of Publicly
Announced Plans or
Programs
|
|
Maximum Number (or Approximate Dollar Value)
of Shares (or Units) that
may yet be Purchased
under the Plans or
Programs (in thousands) (2)
|
||||||
April 1, 2013 through April 30, 2013
|
85,126
|
|
|
$
|
62.62
|
|
|
79,900
|
|
|
$
|
269,287
|
|
May 1, 2013 through May 31, 2013
|
543,882
|
|
|
64.89
|
|
|
534,850
|
|
|
234,575
|
|
||
June 1, 2013 through June 30, 2013
|
9,538
|
|
|
64.37
|
|
|
—
|
|
|
234,575
|
|
||
Total
|
638,546
|
|
|
|
|
614,750
|
|
|
$
|
234,575
|
|
|
|
|
|
|
(1)
|
Represents shares acquired in open market purchases and
23,796
shares withheld from stock units that vested in the
second
quarter of
2013
to satisfy minimum tax withholding obligations that arose on the vesting of stock units. We expended approximately
$39.7 million
during the quarter ended
June 30, 2013
for repurchases of our common stock. For more information see Note 13 to our condensed consolidated financial statements.
|
(2)
|
Shares withheld from stock units that vested to satisfy minimum tax withholding obligations that arose on the vesting of stock units do not deplete the dollar amount available for purchases under the repurchase program.
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
(a)
|
List of exhibits
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Citrix Systems, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 29, 2013)
|
|
|
|
3.2
|
|
Amended and Restated By-Laws of Citrix Systems, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 29, 2013)
|
|
|
|
10.1*
|
|
Fifth Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan
|
|
|
|
10.2*
|
|
Sixth Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 29, 2013)
|
|
|
|
31.1
|
|
Rule 13a-14(a) / 15d-14(a) Certification
|
|
|
|
31.2
|
|
Rule 13a-14(a) / 15d-14(a) Certification
|
|
|
|
32.1†
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101††
|
|
The following financial statements from Citrix Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, as filed with the SEC on August 6, 2013, formatted in XBRL, as follows:
|
|
|
|
|
|
(i) the Condensed Consolidated Balance Sheets
|
|
|
|
|
|
(ii) the Condensed Consolidated Statements of Income
|
|
|
|
|
|
(iii) the Condensed Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
(iv) the Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
(v) the Notes to Condensed Consolidated Financial Statements, tagged in summary and detail
|
|
|
|
*
|
Indicates a management contract or a compensatory plan, contract or arrangement.
|
†
|
Furnished herewith.
|
††
|
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
|
|
|
|
|
CITRIX SYSTEMS, INC.
|
|
|
|
|
|
By:
|
/s/ D
AVID
J. H
ENSHALL
|
|
|
David J. Henshall
|
|
|
Executive Vice President, Operations and Chief Financial Officer
|
|
|
(Authorized Officer and Principal Financial Officer)
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Citrix Systems, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 29, 2013)
|
|
|
|
3.2
|
|
Amended and Restated By-Laws of Citrix Systems, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 29, 2013)
|
|
|
|
10.1*
|
|
Fifth Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan
|
|
|
|
10.2*
|
|
Sixth Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 29, 2013)
|
|
|
|
31.1
|
|
Rule 13a-14(a) / 15d-14(a) Certification
|
|
|
|
31.2
|
|
Rule 13a-14(a) / 15d-14(a) Certification
|
|
|
|
32.1†
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101††
|
|
The following financial statements from Citrix Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, as filed with the SEC on August 6, 2013, formatted in XBRL, as follows:
|
|
|
|
|
|
(i) the Condensed Consolidated Balance Sheets
|
|
|
|
|
|
(ii) the Condensed Consolidated Statements of Income
|
|
|
|
|
|
(iii) the Condensed Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
(iv) the Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
(v) the Notes to Condensed Consolidated Financial Statements, tagged in summary and detail
|
|
|
|
*
|
Indicates a management contract or a compensatory plan, contract or arrangement.
|
†
|
Furnished herewith.
|
††
|
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
|
|
1.
|
Section 7.2(c) of the Plan is hereby amended by deleting such section in its entirety and substituting the following in lieu thereof:
|
|
2.
|
Section 7.3(c) of the Plan is hereby amended by deleting the last sentence of such section and substituting the following in lieu thereof:
|
|
3.
|
Except herein above provided, the Plan is hereby ratified, confirmed and approved in all respects.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Citrix Systems, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
By:
|
/s/ MARK B. TEMPLETON
|
|
|
Mark B. Templeton
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Citrix Systems, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
By:
|
/s/ DAVID J. HENSHALL
|
|
|
David J. Henshall
|
|
|
Executive Vice President, Operations
|
|
|
and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
By:
|
/s/ MARK B. TEMPLETON
|
|
|
Mark B. Templeton
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ DAVID J. HENSHALL
|
|
|
David J. Henshall
|
|
|
Executive Vice President, Operations and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|
|