þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
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3661
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77-0443568
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(State or other jurisdiction of incorporation or organization)
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(Primary standard industrial code number)
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(I.R.S. employer identification no.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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The NASDAQ Global Select Market
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Large accelerated filer
o
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Accelerated Filer
þ
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Non-accelerated filer
o
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Smaller reporting company
o
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(do not check if a smaller reporting company)
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Page
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PART I
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Item 1
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4
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Item 1A
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14
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Item 1B
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30
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Item 2
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30
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Item 3
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30
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Item 4
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30
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PART II
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Item 5
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31
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Item 6
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33
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Item 7
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34
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Item 7A
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49
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Item 8
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50
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Item 9
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79
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Item 9A
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79
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Item 9B
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82
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PART III
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Item 10
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82
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Item 11
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82
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Item 12
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82
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Item 13
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82
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Item 14
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82
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PART IV
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Item 15
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82
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83
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● | IP Phones and Docking Stations : We offer a range of innovative, high performance designed business phones and docking stations to meet the needs of the different types of end-users across the enterprise. Our phones are designed to provide superior ergonomics, sound quality and appearance. We offer a variety of phones that vary by user interface style and size, sound quality, line capacity and Gigabit Ethernet support. A large color touch screen graphical user interface with haptic feedback is available to provide a rich user experience and high functionality. Our products use beam forming microphones to provide enhanced speakerphone sound quality. ShoreTel IP Phones are designed to function with minimal configuration, simplifying installation. Remote workers can also utilize several ShoreTel IP Phone models using an integrated Virtual Private Network (VPN) feature. Mobile workers can also select Wi-Fi enabled phones that work with the open interfaces of our system. In 2013, we introduced the ShoreTel Dock, a docking station for the mobile generation that turns smart phones and tablets into desk phones, now available for Apple iPad® and iPhone® devices. The ShoreTel Dock offers a dial keypad for dialing frequent numbers, high quality speaker for lengthy calls or calls with multiple people in a room, power for charging devices and other essential capabilities for enabling these devices to be a preferred form of communication for those that choose it. |
● | Unified Messaging: Unified Messaging solutions enable users to obtain voice mail messages from a variety of devices, including desktop phones, and various third party tablets and smartphones. In addition, our technology is integrated with Microsoft Outlook, enabling end users to receive, send, be notified of and play voice mail messages through their laptops. |
● | Automated Attendant: Our Automated Attendant software provides end users with an automated call answering and routing capability that enables the enterprise to direct callers to appropriate individuals, groups or messages. |
● | PC Clients : ShoreTel Communicator is designed for users across an organization, whether an operator, a contact center agent, a knowledge worker or a mobile worker. Available on multiple operating systems, ShoreTel Communicator makes it easy for people to communicate any way they choose: by video, voice (wired or wireless), instant messaging (IM), and more. One single application interface makes training simple and reduces the IT workload because there is just a single application to support and no additional servers to deploy and maintain. |
● | Conferencing and Collaboration: ShoreTel enables enterprises to conduct large audio conferences and provides collaboration tools for application sharing, desktop sharing, and instant messaging and end-user presence information. |
● | Microsoft Integration : For customers seeking to leverage their investment in Microsoft’s Unified Communications portfolio, ShoreTel offers a range of integration options. Users can leverage their Microsoft Exchange messaging platform and Microsoft Office. |
● | ShoreTel Mobility Client: The ShoreTel Mobility Client for mobile devices is designed to extend UC applications with location technology information for more than 50 different single- and dual-mode (WiFi and cellular) mobile handsets. This includes many popular Apple, Blackberry and Android-based devices from a variety of manufacturers. End users can use their enterprise desk phone features such as extension dialing, call transfer and directory query on their smartphones. Additionally, they can make and receive calls from both enterprise and personal cellular numbers while the best network (WiFi or cellular) is automatically selected. Seamless and automatic network handover helps call continuity across networks, and moves calls to WiFi when available, thereby reducing usage costs. The ShoreTel Dock extends the ShoreTel Mobility experience with docking capabilities of smart phones and tables for users in the office. The ShoreTel Dock for Apple iPad® and iPhone® devices is currently shipping and the ShoreTel Dock is expected to be available for other devices in the future. |
● | ShoreTel Mobility Router: The ShoreTel Mobility Router is a scalable network appliance that integrates enterprise wireless LANs, carrier cellular networks, IP telephony and location technology to extend voice and UC to mobile devices. The router allows users to make and receive calls from both the enterprise and personal mobile phone numbers and automatically selects the best network (WiFi or cellular) with fast and automatic network handover, to optimize cost, call quality and battery life of the mobile phone. |
● | ShoreTel Voice Switches: We offer a range of ShoreTel designed switches of varying capabilities to meet the needs of enterprises of all sizes. The modular nature of our switches allows our enterprise customers to easily expand their system capacity by deploying additional switches across their network. ShoreTel Voice Switches are comprised of off-the-shelf, embedded microprocessors and networking components, such as Ethernet controllers, and customized integrated circuits. ShoreTel Voice Switches run on an embedded Linux operating system, and use random access memory and flash memory as well as our switch call management software for application processing. Our switches provide call management functionality. Each switch in the system is capable of independently establishing and terminating calls without relying on a centralized call control server. As a result, enterprise Unified Communications can survive a variety of LAN, WAN and hardware failures. The reliability of our switches is enhanced by two key design features: (i) the use of flash memory instead of disk drives and (ii) running an embedded operating system optimized for real-time processing, such as call management. Unlike disk drives, flash memory does not rely on mechanical movement, and therefore is less likely to break down. Furthermore, our embedded operating system enables a higher performing and more reliable software platform relative to server-centric IP systems because it is optimized for real-time processing. The reliability of the system can be further improved by adding an additional switch anywhere in the network to create “n+1” redundancy, rather than requiring a dedicated back-up switch for each primary switch to improve reliability as needed by alternative systems. In addition, our switches connect to the public telephone network through one of several interfaces, including SIP trunking services, analog lines and high-density T1 and E1 interfaces. |
● | ShoreTel Service Appliances: We offer a range of ShoreTel designed appliances for specific applications, such as instant messaging, conferencing and collaboration. The administration of these service appliances is functionally integrated with the IP Telephony Web Administration. Appliances are automatically recognized by the ShoreTel Director software and user functions are seamlessly integrated with the user management application, eliminating the complexity found with other systems. |
● | ShoreTel Director: ShoreTel Director provides enterprises with a single point of system management, enabling IT administrators to view and manage the entire system from any location using a single application. A new end user’s extension, mailbox and automated attendant profile can be added from a single management screen, avoiding the additional work required with most PBXs, voice mail systems and automated attendants. |
● | Small Business Edition 100: Our Small Business Edition (SBE 100) solution is targeted for smaller businesses with up to 100 users who are in their early stages or are currently operating on a relatively smaller scale than our enterprise customers. The solution is a bundled solution consisting of system software, user licenses and voice switches. This solution allows our business customers to economically scale our products and solutions as their organizations begin to grow and expand. Businesses that grow beyond the capacity of the SBE 100 solution may expand their investment by adding additional switches and licenses, while preserving their original investment and avoiding costly upgrades. |
● | ShoreTel IP Phones: ShoreTel designs and provides IP phones which incorporate the most recent applications, including visual voice mail, speaker phones supporting seven octaves of sound for superior clarity and performance, and integrated diagnostics for simplifying installation and management. Our phones also leverage industry standards, such as Session Initiation Protocol (SIP) and Media Gateway Control Protocol (MGCP) which allow our phones to be easily managed by system administrators |
● | allows a geographically-distributed system to operate and be managed as a single system, while leveraging common services such as centralized SIP trunking circuits; |
● | enables calling between ShoreTel Voice Switches and allows calls to be distributed among voice switches instead of using a single centralized call control server; |
● | enables ShoreTel Voice Switches to obtain call routing information; |
● | monitors the bandwidth consumed on each WAN segment and prevents the system from exceeding bandwidth limitations; |
● | monitors all call activity on ShoreTel Voice Switches, and enables integration of ShoreTel and third-party applications; |
● | coordinates the functions of all servers and ShoreTel Voice Switches on the system, allowing them to perform as a single, virtual server; |
● | enables remote ShoreTel and third-party applications to access and modify our systems; |
● | enables the ShoreTel Voice Switches to communicate with the application server, and receive system configuration information; |
● | allows each ShoreTel Voice Switch to maintain a comprehensive view of the system; |
● | provides a graphical user interface for our phones; and |
● | allows the system to scale from small to large simply by adding additional components. |
● | Professional services include standard and custom software development to extend system capabilities, enable UC integration with other enterprise applications, streamline business processes and address enterprise customer-specific business opportunities and collaborate with third party developers through ShoreTel’s Software Development Kit (SDK) program, the ShoreTel Innovation Network. Our resellers and enterprise support customers can also use additional services such as our Technical Account Management (TCM) and Network Services programs, which include our Network Optimization and UC and ECC HealthCheck offerings. |
● | System design and installation services include the assessment of network capabilities used in UC, contact center and mobility requirements of a particular enterprise, the configuration of systems to meet customer specifications and maximize operating efficiencies, management of the installation, and the subsequent testing and implementation of our systems. |
● | Training services include certification programs for resellers, training programs at enterprise customer or reseller locations and self-paced, computer-based desktop training programs. |
● | Our technical support services include web-based access support services and tools, access to technical support engineers, hardware replacement, software updates and monitoring capabilities. These services are offered under support contracts with terms of up to five years. |
● | ShoreTel designed modular software architecture and service creation environment for rapid design; |
● | development and introduction of new services; |
● | experience in customer implementations; |
● | complete portfolio of operational services for billing, system management, and other requirements; and |
● | support for industry standard interfaces, enabling support for third party devices from other vendors. |
● | avoid costly capital expenditures for the establishment of manufacturing operations; |
● | focus on the design, development, sales and support of our hardware products; and |
● | leverage the scale, expertise and purchasing power of specialized contract manufacturers. |
● | Providers of premise-based business communication solutions, including Alcatel-Lucent, Aastra, Avaya, Cisco, Digium, Interactive Intelligence, Mitel, NEC and Siemens Enterprise Networks |
● | Providers of Unified Communications software applications, including Alcatel Lucent, Aastra, Avaya, Cisco Systems, Huawei, IBM, Interactive Intelligence, Siemens Enterprise Communications, Microsoft, Mitel, NEC and Toshiba |
● | Providers of hosted communication service providers including Tier 1 operators such as AT&T, British Telecom, Verizon, incumbent local exchange carriers, and competitive local exchange carriers, and independent providers such as 8x8, Ring Central, West IP Communications, and Thinking Phones |
· | Providers of hosted communication service providers based on technologies from Avaya, Broadsoft, Cisco Systems, Microsoft, Mitel, Siemens Enterprise Networks, and other technology platform vendors. |
Name
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Age
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Position as of September 1, 2013
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Don Joos
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43
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President and Chief Executive Officer
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Michael E. Healy
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52
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Senior Vice President and Chief Financial Officer
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Allen Seto
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37
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Vice President and General Counsel
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Keith Nealon
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41
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President and General Manager of the Cloud Division
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David Petts
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50
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Senior Vice President, Worldwide Sales
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Pankaj Malhotra
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45
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Senior Vice President, Engineering
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●
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unanticipated costs or liabilities associated with the acquisition;
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●
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incurrence of acquisition-related direct and indirect costs;
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diversion of management's attention from other business concerns;
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risks related to entering into new markets;
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harm to our existing business relationships with business partners and customers as a result of the acquisition;
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the potential loss of key employees;
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use of resources that are needed in other parts of our business;
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risks associated with unknown liabilities for sales, use, telecom, utility and other taxes;
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use of substantial portions of our available cash to consummate the acquisition; and
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risks and costs associated with financing the acquisition.
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greater market presence, name recognition and brand reputation;
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larger distribution channels;
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a larger installed base of telecommunications and networking systems with enterprise customers;
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larger and more geographically distributed services and support organizations and capabilities;
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a broader offering of telecommunications and networking products, applications and services;
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a more established international presence to address the needs of global enterprises;
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larger patent and intellectual property portfolios;
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longer operating histories;
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a longer history of implementing large-scale telecommunications or networking systems;
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more established relationships with industry participants, customers, suppliers, distributors and other technology companies;
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the ability to acquire technologies or consolidate with other companies in the industry to compete more effectively; and
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the ability to bundle a broader offering of telecom and networking equipment and services into an IP PBX offering, and offer these products as part of a hosted services offering.
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initial costs of implementation for a new system;
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quality of infrastructure;
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security concerns;
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equipment, software or other technology failures;
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regulatory encroachments;
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inconsistent quality of service;
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perceived unreliability or poor voice quality over IP networks as compared to circuit-switched networks; and
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lack of availability of cost-effective, high-speed network capacity.
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the timing of customers’ budget cycles and approval processes;
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a technical evaluation or trial by potential enterprise customers;
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our ability to introduce new products, features or functionality in a manner that suits the needs of a particular enterprise customer;
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the announcement or introduction of competing products; and
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the strength of existing relationships between our competitors and potential enterprise customers.
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supplier capacity constraints;
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price increases;
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purchasing lead times;
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inventory buildup;
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timely delivery; and
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component quality.
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the ability of our products to compete with the products and solutions offered by our competitors;
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the cost of our products;
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the reliability of our products;
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the timeliness of the introduction and delivery of our products; and
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the market acceptance of our products.
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our ability to comply with differing technical and environmental standards and certification requirements outside the United States;
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difficulties and costs associated with staffing and managing foreign operations;
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lower gross margins due to higher discounting;
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greater difficulty collecting accounts receivable and longer payment cycles;
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the need to adapt our products for specific countries;
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availability of reliable broadband connectivity and wide area networks in targeted areas for expansion;
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unexpected changes in regulatory requirements;
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tariffs, export controls and other non-tariff barriers such as quotas and local content rules;
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more limited protection for intellectual property rights in some countries;
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adverse tax consequences;
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fluctuations in currency exchange rates, which could increase the price of our products outside of the United States, increase the expenses of our international operations and expose us to foreign currency exchange rate risk;
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restrictions on the transfer of funds;
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new and different sources of competition;
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less access to the end customer due to our use of two-tier distribution internationally.
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issuing additional common stock or other equity securities;
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issuing debt securities; or
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borrowing funds under a credit facility.
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·
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cause our customers to seek damages for losses incurred;
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·
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require us to replace existing equipment or add redundant facilities;
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·
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affect our reputation as a reliable provider of hosting services;
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·
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cause existing customers to cancel or elect to not renew their contracts; or
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·
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make it more difficult for us to attract new customers.
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fluctuations in the overall stock market;
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the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
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actual or anticipated fluctuations in our operating results;
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changes in operating performance and stock market valuations of other technology companies generally, or those that sell enterprise communication products in particular;
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changes in financial estimates by any securities analysts who follow our company, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our stock;
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ratings downgrades by any securities analysts who follow our company;
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the public’s response to our press releases or other public announcements, including our filings with the SEC;
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announcements by us or our competitors of significant technical innovations, customer wins or losses, acquisitions, strategic partnerships, joint ventures or capital commitments;
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introduction of technologies or product enhancements that reduce the need for our products;
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market conditions or trends in our industry or the economy as a whole;
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lawsuits threatened or filed against us and the outcome of such lawsuits;
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●
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shareholder activism;
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future sales of our common stock by our officers, directors and significant stockholders; and
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●
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other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
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adverse conditions specific to the IP telecommunications market, including decreased demand due to overall economic conditions or reduced discretionary spending by enterprises, rates of adoption of IP telecommunications systems and introduction of new standards;
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our ability to attract and retain larger and more productive channel partners;
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the purchasing and budgeting cycles of enterprise customers, in particular, the tendency of some customers to wait until the end of a quarter in the hopes of obtaining a better price;
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the timing and volume of shipments of our products during a quarter, particularly as we experience an increased level of sales occurring towards the end of a quarter;
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delays in purchasing decisions by our customers from one quarter to the next, or later;
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seasonality in our target markets;
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our ability to attract new channel partners, retain existing channel partners, and their ability to generate revenues;
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changes in accounting rules;
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the timing of recognition of revenue from sales to our customers;
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changes in the mix of our products and services sold during a particular period;
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our ability to control costs, including third-party manufacturing costs and costs of components;
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our ability to maintain sufficient production volumes for our products from our contract manufacturers;
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volatility in our stock price, which may lead to higher stock-based compensation expenses
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volatility and fluctuation in foreign currency exchange rates;
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the timing of costs related to the development or acquisition of technologies or businesses;
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our ability to successfully expand our international operations;
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general economic conditions or economic recession;
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decline in interest rates on our investments; and
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publicly-announced litigation, and the impact of such litigation on our operating results.
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prohibit stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;
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limit who may call a special meeting of stockholders;
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established a classified board of directors, so that not all members of our board of directors may be elected at one time;
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provide our board of directors with the ability to designate the terms of and issue a new series of preferred stock without stockholder approval;
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require the approval of two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal certain provisions of our certificate of incorporation;
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allow a majority of the authorized number of directors to adopt, amend or repeal our bylaws without stockholder approval;
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do not permit cumulative voting in the election of our directors, which would otherwise permit less than a majority of stockholders to elect directors; and
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set limitations on the removal of directors.
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Year Ended June 30, 2013
|
High
|
Low
|
||||||
First Quarter
|
$
|
4.77
|
$
|
3.91
|
||||
Second Quarter
|
5.13
|
4.13
|
||||||
Third Quarter
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5.07
|
3.55
|
||||||
Fourth Quarter
|
4.41
|
3.35
|
||||||
|
||||||||
Year Ended June 30, 2012
|
High
|
Low
|
||||||
First Quarter
|
$
|
10.70
|
$
|
4.76
|
||||
Second Quarter
|
6.88
|
4.70
|
||||||
Third Quarter
|
7.13
|
5.15
|
||||||
Fourth Quarter
|
5.75
|
3.82
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
||||||||||||||||||
ShoreTel, Inc.
|
$
|
100.00
|
$
|
181.00
|
$
|
104.98
|
$
|
230.77
|
$
|
99.10
|
$
|
91.18
|
||||||||||||
S&P Small Cap 500 Index
|
100.00
|
73.78
|
84.43
|
110.35
|
116.36
|
140.33
|
||||||||||||||||||
NASDAQ Telecommunications Index
|
100.00
|
72.72
|
96.39
|
142.67
|
152.63
|
207.30
|
Plan Category
|
Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options,
Warrants and
Rights
|
Weighted
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights
|
Number of
Securities
Remaining
Available for
Future Issuances
under Equity
Compensation
Plans (Excluding)
Securities
Column (a)
|
|||||||||
|
(a)
|
(b)
|
(c)
|
|||||||||
|
(In thousands, except per share amounts)
|
|||||||||||
Equity compensation plans approved by security holders (1)
|
10,208
|
$
|
4.75
|
8,119
|
||||||||
Equity compensation plans not approved by security holders
|
—
|
—
|
—
|
|||||||||
Total
|
10,208
|
$
|
4.75
|
8,119
|
(1) | The number of securities remaining available for future issuance in column (c) includes 8,119,000 shares of common stock authorized and available for issuance under our 2007 Employee Stock Purchase Plan (ESPP) and our 2007 Equity Incentive Plan (2007 Plan). The number of shares authorized for issuance under the ESPP is subject to an annual increase equal to 1% of the outstanding shares on the date of the annual increase or an amount determined by the Board of Directors and the number of shares authorized for issuance under the 2007 Plan is subject to an annual increase equal to 5% of the outstanding shares on the date of the annual increase or an amount determined by the Board of Directors. The number of securities to be issued to participants in column (a) does not include shares of common stock to be issued to participants in consideration of aggregate participant contributions under the ESPP as of June 30, 2013. |
|
Year Ended June 30,
|
|||||||||||||||||||
|
2013
|
2012 (a)
|
2011
|
2010
|
2009
|
|||||||||||||||
|
(In thousands, except per share amounts)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|||||||||||||||
Product
|
$
|
186,190
|
$
|
182,009
|
$
|
159,693
|
$
|
117,138
|
$
|
109,555
|
||||||||||
Hosted and related services
|
70,277
|
15,547
|
-
|
-
|
-
|
|||||||||||||||
Support and services
|
57,076
|
49,076
|
40,419
|
31,326
|
25,267
|
|||||||||||||||
Total revenue
|
313,543
|
246,632
|
200,112
|
148,464
|
134,822
|
|||||||||||||||
Cost of revenue:
|
||||||||||||||||||||
Product (1)
|
63,941
|
61,884
|
52,957
|
40,471
|
38,149
|
|||||||||||||||
Hosted and related services (1)
|
44,526
|
9,804
|
-
|
-
|
-
|
|||||||||||||||
Support and services (1)
|
16,624
|
16,465
|
13,688
|
11,580
|
11,048
|
|||||||||||||||
Total cost of revenue
|
125,091
|
88,153
|
66,645
|
52,051
|
49,197
|
|||||||||||||||
Gross profit
|
188,452
|
158,479
|
133,467
|
96,413
|
85,625
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Research and development (1)
|
52,992
|
51,909
|
45,548
|
33,596
|
30,724
|
|||||||||||||||
Sales and marketing (1)
|
120,222
|
94,797
|
74,859
|
55,973
|
44,652
|
|||||||||||||||
General and administrative (1)
|
38,102
|
27,468
|
24,890
|
19,888
|
19,596
|
|||||||||||||||
Acquisition-related costs
|
-
|
4,524
|
340
|
-
|
-
|
|||||||||||||||
Litigation settlement
|
-
|
-
|
-
|
-
|
4,110
|
|||||||||||||||
Total operating expenses
|
211,316
|
178,698
|
145,637
|
109,457
|
99,082
|
|||||||||||||||
Loss from operations
|
(22,864
|
)
|
(20,219
|
)
|
(12,170
|
)
|
(13,044
|
)
|
(13,457
|
)
|
||||||||||
Other income (expense):
|
||||||||||||||||||||
Interest income
|
140
|
237
|
625
|
567
|
1,400
|
|||||||||||||||
Interest expense
|
(1,722
|
)
|
(560
|
)
|
(127
|
)
|
(159
|
)
|
(29
|
)
|
||||||||||
Other income (expense), net
|
(830
|
)
|
(1,142
|
)
|
142
|
(324
|
)
|
(230
|
)
|
|||||||||||
Total other income (expense)
|
(2,412
|
)
|
(1,465
|
)
|
640
|
84
|
1,141
|
|||||||||||||
Loss before provision for (benefit from) income taxes
|
(25,276
|
)
|
(21,684
|
)
|
(11,530
|
)
|
(12,960
|
)
|
(12,316
|
)
|
||||||||||
Provision for (benefit from) income taxes
|
426
|
(947
|
)
|
(67
|
)
|
(156
|
)
|
343
|
||||||||||||
Net loss
|
$
|
(25,702
|
)
|
$
|
(20,737
|
)
|
$
|
(11,463
|
)
|
$
|
(12,804
|
)
|
$
|
(12,659
|
)
|
|||||
Net loss per common share (2):
|
||||||||||||||||||||
Basic and diluted
|
$
|
(0.44
|
)
|
$
|
(0.41
|
)
|
$
|
(0.25
|
)
|
$
|
(0.29
|
)
|
$
|
(0.29
|
)
|
|||||
Shares used in computing net loss per share:
|
||||||||||||||||||||
Basic and diluted
|
58,633
|
50,591
|
46,177
|
44,804
|
43,714
|
(a) | The fiscal year ended June 30, 2012 includes the impact of the acquisition of M5 Networks, Inc., which was completed in the third fiscal quarter. |
(1) | Includes stock-based compensation expense as follows: |
|
Year Ended June 30,
|
|||||||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||
|
(In thousands)
|
|||||||||||||||||||
Cost of product revenue
|
$
|
110
|
$
|
132
|
$
|
123
|
$
|
139
|
$
|
113
|
||||||||||
Cost of hosted and related services
|
188
|
37
|
-
|
-
|
-
|
|||||||||||||||
Cost of support and services revenue
|
760
|
836
|
678
|
838
|
799
|
|||||||||||||||
Research and development
|
2,789
|
3,614
|
3,497
|
3,064
|
2,829
|
|||||||||||||||
Sales and marketing
|
2,921
|
4,031
|
3,140
|
3,400
|
3,468
|
|||||||||||||||
General and administrative
|
3,837
|
3,993
|
3,741
|
3,213
|
2,549
|
|||||||||||||||
Total stock-based compensation expense
|
$
|
10,605
|
$
|
12,643
|
$
|
11,179
|
$
|
10,654
|
$
|
9,758
|
|
As of June 30,
|
|||||||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||
|
(In thousands) | |||||||||||||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|||||||||||||||
Cash, cash equivalents and short-term investments
|
$
|
51,276
|
$
|
55,495
|
$
|
105,752
|
$
|
115,801
|
$
|
107,666
|
||||||||||
Working capital
|
24,683
|
30,689
|
109,855
|
112,836
|
111,617
|
|||||||||||||||
Total assets
|
299,787
|
303,153
|
187,101
|
170,721
|
155,624
|
|||||||||||||||
Line of credit, net of debt issuance costs
|
29,004
|
19,946
|
—
|
—
|
—
|
|||||||||||||||
Total stockholders’ equity
|
156,140
|
170,232
|
121,424
|
114,466
|
113,772
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Revenue:
|
|
|
|
|||||||||
Product
|
59
|
%
|
74
|
%
|
80
|
%
|
||||||
Hosted and related services
|
23
|
6
|
—
|
|||||||||
Support and services
|
18
|
20
|
20
|
|||||||||
Total revenue
|
100
|
100
|
100
|
|||||||||
Cost of revenue:
|
||||||||||||
Product
|
21
|
25
|
26
|
|||||||||
Hosted and related services
|
14
|
4
|
—
|
|||||||||
Support and services
|
5
|
7
|
7
|
|||||||||
Total cost of revenue
|
40
|
36
|
33
|
|||||||||
Gross profit
|
60
|
64
|
67
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
17
|
21
|
23
|
|||||||||
Sales and marketing
|
38
|
38
|
37
|
|||||||||
General and administrative
|
12
|
11
|
13
|
|||||||||
Acquisition-related costs
|
—
|
2
|
—
|
|||||||||
Total operating expenses
|
67
|
72
|
73
|
|||||||||
Operating loss
|
(7
|
)
|
(8
|
)
|
(6
|
)
|
||||||
Other income (expense):
|
||||||||||||
Interest income
|
—
|
—
|
—
|
|||||||||
Interest expense
|
(1
|
)
|
—
|
—
|
||||||||
Other income (expense), net
|
—
|
—
|
—
|
|||||||||
Total other income (expense)
|
(1
|
)
|
—
|
—
|
||||||||
Loss before provision for (benefit from) income taxes
|
(8
|
)
|
(8
|
)
|
(6
|
)
|
||||||
Provision for (benefit from) income taxes
|
—
|
—
|
—
|
|||||||||
Net loss
|
(8
|
)%
|
(8
|
)%
|
(6
|
)%
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2013
|
June 30,
2012
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Revenue
|
$
|
313,543
|
$
|
246,632
|
$
|
66,911
|
27
|
%
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2013
|
June 30,
2012
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Cost of revenue
|
$
|
125,091
|
$
|
88,153
|
$
|
36,938
|
42
|
%
|
||||||||
Gross profit
|
188,452
|
158,479
|
29,973
|
19
|
%
|
|||||||||||
Gross margin
|
60
|
%
|
64
|
%
|
n/
|
a
|
(4
|
%)
|
· | Integration to common hardware platforms; |
· | Integration of our customer support service teams; |
· | Consolidation of data centers; |
· | Development of our next generation product. |
|
Year Ended
|
|||||||||||||||
|
June 30,
2013
|
June 30,
2012
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Research and development
|
$
|
52,992
|
$
|
51,909
|
$
|
1,083
|
2
|
%
|
||||||||
Sales and marketing
|
120,222
|
94,797
|
25,425
|
27
|
%
|
|||||||||||
General and administration
|
38,102
|
27,468
|
10,634
|
39
|
%
|
|||||||||||
Acquisition-related costs
|
-
|
4,524
|
(4,524
|
)
|
(100
|
%)
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2013
|
June 30,
2012
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Interest income
|
$
|
140
|
$
|
237
|
$
|
(97
|
)
|
(41
|
%)
|
|||||||
Interest expense
|
(1,722
|
)
|
(560
|
)
|
(1,162
|
)
|
208
|
%
|
||||||||
Other income (expense), net
|
(830
|
)
|
(1,142
|
)
|
312
|
(27
|
%)
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2013
|
June 30,
2012
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Provision for (benefit from) income taxes
|
$
|
426
|
$
|
(947
|
)
|
$
|
1,373
|
(145
|
%)
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2012
|
June 30,
2011
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Revenue
|
$
|
246,632
|
$
|
200,112
|
$
|
46,520
|
23
|
%
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2012
|
June 30,
2011
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Cost of revenue
|
$
|
88,153
|
$
|
66,645
|
$
|
21,508
|
32
|
%
|
||||||||
Gross profit
|
158,479
|
133,467
|
25,012
|
19
|
%
|
|||||||||||
Gross margin
|
64
|
%
|
67
|
%
|
n/
|
a
|
(3
|
%)
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2012
|
June 30,
2011
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Research and development
|
$
|
51,909
|
$
|
45,548
|
$
|
6,361
|
14
|
%
|
||||||||
Sales and marketing
|
94,797
|
74,859
|
19,938
|
27
|
%
|
|||||||||||
General and administration
|
27,468
|
24,890
|
2,578
|
10
|
%
|
|||||||||||
Acquisition-related costs
|
4,524
|
340
|
4,184
|
1231
|
%
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2012
|
June 30,
2011
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Other income (expense), net
|
$
|
(1,465
|
)
|
$
|
640
|
$
|
(2,105
|
)
|
(329
|
%)
|
|
Year Ended
|
|||||||||||||||
|
June 30,
2012
|
June 30,
2011
|
Change $
|
Change %
|
||||||||||||
(in thousands, except percentages)
|
|
|
|
|
||||||||||||
Provision for (benefit from) income taxes
|
$
|
(947
|
)
|
$
|
(67
|
)
|
$
|
(880
|
)
|
1313
|
%
|
|
Year ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Cash and cash equivalents
|
$
|
43,775
|
$
|
37,120
|
$
|
89,695
|
||||||
Short-term investments
|
7,501
|
18,375
|
16,057
|
|||||||||
Total
|
$
|
51,276
|
$
|
55,495
|
$
|
105,752
|
|
June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
|
(In thousands)
|
|||||||||||
Cash provided by operating activities
|
$
|
10,263
|
$
|
10,315
|
$
|
1,310
|
||||||
Cash provided by (used in) investing activities
|
$
|
(12,315
|
)
|
$
|
(85,805
|
)
|
$
|
12,566
|
||||
Cash provided by financing activities
|
$
|
8,707
|
$
|
22,915
|
$
|
7,393
|
|
Payments Due by Period
|
|||||||||||||||||||
|
Total
|
Less Than
|
1-3 Years
|
3-5 Years
|
Thereafter
|
|||||||||||||||
(In thousands)
|
|
1 Year
|
|
|
|
|||||||||||||||
Operating lease obligations
|
$
|
17,621
|
$
|
3,819
|
$
|
5,411
|
$
|
5,101
|
$
|
3,290
|
||||||||||
Capital lease obligations
|
1,819
|
1,442
|
377
|
-
|
-
|
|||||||||||||||
Line of credit
|
29,332
|
-
|
-
|
29,332
|
-
|
|||||||||||||||
Non-cancellable purchase commitments (inventory and software licenses)
|
24,047
|
23,149
|
898
|
-
|
-
|
|||||||||||||||
Outstanding letters of credit
|
635
|
635
|
-
|
-
|
-
|
|||||||||||||||
Purchase consideration
|
3,577
|
3,577
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
77,031
|
$
|
32,622
|
$
|
6,686
|
$
|
34,433
|
$
|
3,760
|
● | Revenue recognition; |
● | Stock-based compensation; |
● | Goodwill and purchased-intangible assets, and |
● | Accounting for income taxes |
|
Decrease in interest rates
|
Increase in interest rates
|
||||||||||||||||||||||
(in thousands)
|
-100 BPS
|
-50 BPS
|
-25 BPS
|
25 BPS
|
50 BPS
|
100 BPS
|
||||||||||||||||||
Total fair market value
|
$
|
13,838
|
$
|
13,810
|
$
|
13,796
|
$
|
13,768
|
$
|
13,753
|
$
|
13,725
|
||||||||||||
Percentage change in fair market value
|
0.4
|
%
|
0.2
|
%
|
0.1
|
%
|
-0.1
|
%
|
-0.2
|
%
|
-0.4
|
%
|
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm
|
51
|
Consolidated Balance Sheets
|
52
|
Consolidated Statements of Operations
|
53
|
Consolidated Statements of Comprehensive Income (Loss)
|
54
|
Consolidated Statements of Stockholders’ Equity
|
55
|
Consolidated Statements of Cash Flows
|
56
|
Notes to Consolidated Financial Statements
|
57
|
|
June 30,
|
|||||||
|
2013
|
2012
|
||||||
ASSETS
|
|
|
||||||
Current assets:
|
|
|
||||||
Cash and cash equivalents
|
$
|
43,775
|
$
|
37,120
|
||||
Short-term investments
|
7,501
|
18,375
|
||||||
Accounts receivable, net of allowances of $639 and $774 as of June 30, 2013 and 2012, respectively
|
37,118
|
34,198
|
||||||
Inventories
|
18,891
|
20,212
|
||||||
Indemnification asset
|
6,277
|
6,570
|
||||||
Prepaid expenses and other current assets
|
6,417
|
5,275
|
||||||
Total current assets
|
119,979
|
121,750
|
||||||
Property and equipment - net
|
15,625
|
10,495
|
||||||
Goodwill
|
122,750
|
122,665
|
||||||
Intangible assets
|
38,138
|
45,304
|
||||||
Other assets
|
3,295
|
2,939
|
||||||
Total assets
|
$
|
299,787
|
$
|
303,153
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
9,790
|
$
|
9,697
|
||||
Accrued liabilities and other
|
17,766
|
16,134
|
||||||
Accrued employee compensation
|
13,159
|
12,151
|
||||||
Accrued taxes and surcharges
|
11,312
|
7,852
|
||||||
Purchase consideration
|
3,577
|
9,398
|
||||||
Deferred revenue
|
39,692
|
35,829
|
||||||
Total current liabilities
|
95,296
|
91,061
|
||||||
|
||||||||
Line of credit, net of debt issuance costs
|
29,004
|
19,946
|
||||||
Long-term deferred revenue
|
15,294
|
13,683
|
||||||
Long-term purchase consideration
|
-
|
3,305
|
||||||
Other long-term liabilities
|
4,053
|
4,926
|
||||||
Total liabilities
|
143,647
|
132,921
|
||||||
Commitments and contingencies (Note 12)
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock, par value $.001 per share, authorized 5,000 shares; none issued and outstanding
|
-
|
-
|
||||||
Common stock and additional paid-in capital, par value $.001 per share, authorized 500,000; issued and outstanding, 59,168 and 58,057 shares as of June 30, 2013 and 2012, respectively
|
322,260
|
310,646
|
||||||
Accumulated other comprehensive income (loss)
|
(2
|
)
|
2
|
|||||
Accumulated deficit
|
(166,118
|
)
|
(140,416
|
)
|
||||
Total stockholders’ equity
|
156,140
|
170,232
|
||||||
Total liabilities and stockholders’ equity
|
$
|
299,787
|
$
|
303,153
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
|
(Amounts in thousands, except per share amounts)
|
|||||||||||
Revenue:
|
|
|
|
|||||||||
Product
|
$
|
186,190
|
$
|
182,009
|
$
|
159,693
|
||||||
Hosted and related services
|
70,277
|
15,547
|
-
|
|||||||||
Support and services
|
57,076
|
49,076
|
40,419
|
|||||||||
Total revenue
|
313,543
|
246,632
|
200,112
|
|||||||||
Cost of revenue:
|
||||||||||||
Product
|
63,941
|
61,884
|
52,957
|
|||||||||
Hosted and related services
|
44,526
|
9,804
|
-
|
|||||||||
Support and services
|
16,624
|
16,465
|
13,688
|
|||||||||
Total cost of revenue
|
125,091
|
88,153
|
66,645
|
|||||||||
Gross profit
|
188,452
|
158,479
|
133,467
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
52,992
|
51,909
|
45,548
|
|||||||||
Sales and marketing
|
120,222
|
94,797
|
74,859
|
|||||||||
General and administrative
|
38,102
|
27,468
|
24,890
|
|||||||||
Acquisition-related costs
|
-
|
4,524
|
340
|
|||||||||
Total operating expenses
|
211,316
|
178,698
|
145,637
|
|||||||||
Loss from operations
|
(22,864
|
)
|
(20,219
|
)
|
(12,170
|
)
|
||||||
Other income (expense):
|
||||||||||||
Interest income
|
140
|
237
|
625
|
|||||||||
Interest expense
|
(1,722
|
)
|
(560
|
)
|
(127
|
)
|
||||||
Other income (expense), net
|
(830
|
)
|
(1,142
|
)
|
142
|
|||||||
Total other income (expense)
|
(2,412
|
)
|
(1,465
|
)
|
640
|
|||||||
Loss before provision for (benefit from) income tax
|
(25,276
|
)
|
(21,684
|
)
|
(11,530
|
)
|
||||||
Provision for (benefit from) income taxes
|
426
|
(947
|
)
|
(67
|
)
|
|||||||
Net loss
|
$
|
(25,702
|
)
|
$
|
(20,737
|
)
|
$
|
(11,463
|
)
|
|||
Net loss per common share, basic and diluted
|
$
|
(0.44
|
)
|
$
|
(0.41
|
)
|
$
|
(0.25
|
)
|
|||
Shares used in computing net loss per common share, basic and diluted
|
58,633
|
50,591
|
46,177
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
|
(In thousands)
|
|||||||||||
Net loss
|
$
|
(25,702
|
)
|
$
|
(20,737
|
)
|
$
|
(11,463
|
)
|
|||
Other comprehensive loss, net of tax:
|
||||||||||||
Unrealized loss on short-term investments
|
(4
|
)
|
(38
|
)
|
(151
|
)
|
||||||
Other comprehensive loss
|
(4
|
)
|
(38
|
)
|
(151
|
)
|
||||||
|
||||||||||||
Comprehensive loss
|
$
|
(25,706
|
)
|
$
|
(20,775
|
)
|
$
|
(11,614
|
)
|
|
Common Stock and Additional Paid-In-Capital
|
Accumulated Other
|
|
Total
|
||||||||||||||||
|
Shares
|
Amount
|
Comprehensive
Income (Loss)
|
Accumulated
Deficit
|
Stockholders’
Equity
|
|||||||||||||||
|
(Amounts in thousands)
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
BALANCE - June 30, 2010
|
45,370
|
$
|
222,491
|
$
|
191
|
$
|
(108,216
|
)
|
$
|
114,466
|
||||||||||
|
||||||||||||||||||||
Common stock issued under stock-based compensation plans, net of taxes
|
2,085
|
7,393
|
7,393
|
|||||||||||||||||
Stock-based compensation expense
|
11,179
|
11,179
|
||||||||||||||||||
Unrealized loss on short term investments, net
|
(151
|
)
|
(151
|
)
|
||||||||||||||||
Net loss
|
(11,463
|
)
|
(11,463
|
)
|
||||||||||||||||
|
||||||||||||||||||||
BALANCE - June 30, 2011
|
47,455
|
241,063
|
40
|
(119,679
|
)
|
121,424
|
||||||||||||||
|
||||||||||||||||||||
Common stock issued under stock-based compensation plans, net of taxes
|
1,102
|
3,265
|
3,265
|
|||||||||||||||||
Stock-based compensation expense
|
12,643
|
12,643
|
||||||||||||||||||
Issuance of common shares as consideration in the acquisition of M5 Networks, Inc.
|
9,500
|
53,675
|
53,675
|
|||||||||||||||||
Unrealized loss on short term investments, net
|
(38
|
)
|
(38
|
)
|
||||||||||||||||
Net loss
|
(20,737
|
)
|
(20,737
|
)
|
||||||||||||||||
|
||||||||||||||||||||
BALANCE - June 30, 2012
|
58,057
|
310,646
|
2
|
(140,416
|
)
|
170,232
|
||||||||||||||
|
||||||||||||||||||||
Common stock issued under stock-based compensation plans, net of taxes
|
1,111
|
1,009
|
1,009
|
|||||||||||||||||
Stock-based compensation expense
|
10,605
|
10,605
|
||||||||||||||||||
Unrealized loss on short term investments, net
|
(4
|
)
|
(4
|
)
|
||||||||||||||||
Net loss
|
(25,702
|
)
|
(25,702
|
)
|
||||||||||||||||
|
||||||||||||||||||||
BALANCE - June 30, 2013
|
59,168
|
$
|
322,260
|
$
|
(2
|
)
|
$
|
(166,118
|
)
|
$
|
156,140
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
|
(In thousands)
|
|||||||||||
Cash flows from operating activities:
|
|
|
|
|||||||||
Net loss
|
$
|
(25,702
|
)
|
$
|
(20,737
|
)
|
$
|
(11,463
|
)
|
|||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
15,816
|
8,998
|
4,664
|
|||||||||
Amortization of premium on investments
|
191
|
236
|
610
|
|||||||||
Stock-based compensation expense
|
10,605
|
12,643
|
11,179
|
|||||||||
Loss on disposal of property and equipment and other assets
|
95
|
27
|
97
|
|||||||||
Release of deferred tax valuation allowance
|
-
|
(1,280
|
)
|
-
|
||||||||
Provision for doubtful accounts receivable
|
140
|
140
|
-
|
|||||||||
Change in fair value of purchase consideration
|
874
|
203
|
-
|
|||||||||
Changes in assets and liabilities, net of the effect of acquisitions:
|
||||||||||||
Accounts receivable
|
(3,060
|
)
|
2,216
|
(9,156
|
)
|
|||||||
Inventories
|
1,557
|
(1,071
|
)
|
(8,701
|
)
|
|||||||
Indemnification asset
|
293
|
(6,570
|
)
|
-
|
||||||||
Prepaid expenses and other current assets
|
(942
|
)
|
(1,185
|
)
|
4,299
|
|||||||
Other assets
|
(356
|
)
|
(1,050
|
)
|
520
|
|||||||
Accounts payable
|
307
|
1,307
|
(1,333
|
)
|
||||||||
Accrued liabilities and other
|
1,371
|
(1,833
|
)
|
(929
|
)
|
|||||||
Accrued employee compensation
|
1,008
|
1,129
|
2,654
|
|||||||||
Accrued taxes and surcharges
|
3,460
|
6,570
|
-
|
|||||||||
Purchase consideration
|
(868
|
)
|
-
|
-
|
||||||||
Deferred revenue
|
5,474
|
10,572
|
8,869
|
|||||||||
Net cash provided by operating activities
|
10,263
|
10,315
|
1,310
|
|||||||||
|
||||||||||||
Cash flows from investing activities:
|
||||||||||||
Purchases of property and equipment
|
(11,541
|
)
|
(4,228
|
)
|
(5,883
|
)
|
||||||
Purchases of investments
|
(11,210
|
)
|
(40,500
|
)
|
(3,136
|
)
|
||||||
Proceeds from sale/maturities of investments
|
21,889
|
37,908
|
33,694
|
|||||||||
Purchase of software licenses, patents and other intangible assets
|
(2,321
|
)
|
(550
|
)
|
(770
|
)
|
||||||
Proceeds from sale of property and equipment
|
-
|
-
|
36
|
|||||||||
Business acquisitions, net of cash acquired
|
-
|
(78,435
|
)
|
(11,375
|
)
|
|||||||
Payments of purchase consideration associated with acquistions
|
(9,132
|
)
|
-
|
-
|
||||||||
Net cash provided by (used in) investing activities
|
(12,315
|
)
|
(85,805
|
)
|
12,566
|
|||||||
|
||||||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from issuance of common stock
|
1,901
|
3,855
|
7,915
|
|||||||||
Taxes paid on vested and released stock awards
|
(892
|
)
|
(590
|
)
|
(522
|
)
|
||||||
Borrowings from line of credit
|
25,982
|
25,332
|
-
|
|||||||||
Payments made under the line of credit
|
(17,008
|
)
|
(5,000
|
)
|
-
|
|||||||
Payments made under capital leases
|
(1,276
|
)
|
(276
|
)
|
||||||||
Debt issuance costs
|
-
|
(406
|
)
|
-
|
||||||||
Net cash provided by financing activities
|
8,707
|
22,915
|
7,393
|
|||||||||
|
||||||||||||
Net increase (decrease) in cash and cash equivalents
|
6,655
|
(52,575
|
)
|
21,269
|
||||||||
Cash and cash equivalents at beginning of year
|
37,120
|
89,695
|
68,426
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
43,775
|
$
|
37,120
|
$
|
89,695
|
||||||
|
||||||||||||
Supplemental cash flow disclosure:
|
||||||||||||
Cash paid for interest
|
$
|
949
|
$
|
360
|
$
|
139
|
||||||
Cash paid (refunds received) for income taxes
|
$
|
283
|
$
|
329
|
$
|
(2,105
|
)
|
|||||
|
||||||||||||
Noncash financing and investing activities:
|
||||||||||||
Fair value of contingent consideration payable to M5 Networks, Inc.
|
$
|
-
|
$
|
12,500
|
$
|
-
|
||||||
Shares issued as consideration in the acquisition of M5 Networks, Inc.
|
$
|
-
|
$
|
53,675
|
$
|
-
|
||||||
Property and equipment acquired on capital lease
|
$
|
379
|
$
|
13
|
$
|
-
|
||||||
Unpaid portion of property and equipment purchases included in period-end accounts payable
|
$
|
20
|
$
|
234
|
$
|
191
|
|
June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Allowance for doubtful accounts - beginning
|
$
|
774
|
$
|
737
|
$
|
876
|
||||||
Current period provision
|
140
|
140
|
-
|
|||||||||
Write-offs charged to allowance, net of recoveries
|
(275
|
)
|
(103
|
)
|
(139
|
)
|
||||||
Allowance for doubtful accounts - ending
|
$
|
639
|
$
|
774
|
$
|
737
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Cost of product revenue
|
$
|
110
|
$
|
132
|
$
|
123
|
||||||
Cost of hosted and related services revenue
|
188
|
37
|
-
|
|||||||||
Cost of support and services revenue
|
760
|
836
|
678
|
|||||||||
Research and development
|
2,789
|
3,614
|
3,497
|
|||||||||
Sales and marketing
|
2,921
|
4,031
|
3,140
|
|||||||||
General and administrative
|
3,837
|
3,993
|
3,741
|
|||||||||
Total stock-based compensation expense
|
$
|
10,605
|
$
|
12,643
|
$
|
11,179
|
(in thousands)
|
|
|||
Cash
|
$
|
80,932
|
||
Fair value of shares issued
|
53,675
|
|||
Fair value of contingent consideration
|
12,500
|
|||
|
$
|
147,107
|
|
(in thousands)
|
Estimated useful lives
(in years) |
|||||
Current assets
|
$
|
5,870
|
|
||||
Intangible assets:
|
|
||||||
Existing technology
|
15,700
|
3-8
|
|||||
In process research and development
|
1,700
|
(a)
|
|||||
Customer relationships
|
23,000
|
7
|
|||||
Non-compete agreements
|
300
|
2
|
|||||
Goodwill
|
115,335
|
||||||
Other long-term assets
|
2,651
|
||||||
Deferred tax liability, net
|
(1,145
|
)
|
|||||
Other liabilities assumed
|
(16,304
|
)
|
|||||
|
$
|
147,107
|
(a) | In process research and development is not amortized until the associated project has been completed. Alternatively, if the associated project is determined not to be viable, it will be expensed. |
Tangible assets
|
$
|
261
|
||
Goodwill
|
7,415
|
|||
Intangible assets:
|
||||
Existing technology
|
2,800
|
|||
In process research and development
|
1,120
|
|||
Customer relationships
|
300
|
|||
Liabilities assumed
|
(521
|
)
|
||
|
$
|
11,375
|
|
(Unaudited)
|
|||||||
|
Year Ended
|
|||||||
In thousands, except per share amounts
|
June 30,
2012
|
June 30,
2011
|
||||||
Total revenue
|
$
|
287,549
|
$
|
238,507
|
||||
Net loss
|
(23,324
|
)
|
(33,488
|
)
|
||||
Basic and diluted earnings per share
|
$
|
(0.41
|
)
|
$
|
(0.60
|
)
|
|
As of June 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(Amounts in thousands)
|
|||||||
Inventories:
|
|
|
||||||
Raw materials
|
$
|
128
|
$
|
130
|
||||
Distributor inventory
|
1,687
|
1,858
|
||||||
Finished goods
|
17,076
|
18,224
|
||||||
Total inventories
|
$
|
18,891
|
$
|
20,212
|
||||
|
||||||||
|
||||||||
Property and equipment:
|
||||||||
Computer equipment and tooling
|
$
|
23,172
|
$
|
16,381
|
||||
Software
|
3,080
|
2,710
|
||||||
Furniture and fixtures
|
3,072
|
2,210
|
||||||
Leasehold improvements & others
|
6,330
|
2,985
|
||||||
Total property and equipment
|
35,654
|
24,286
|
||||||
Less accumulated depreciation and amortization
|
(20,029
|
)
|
(13,791
|
)
|
||||
Property and equipment – net
|
$
|
15,625
|
$
|
10,495
|
||||
|
||||||||
Deferred revenue:
|
||||||||
Product
|
$
|
4,893
|
$
|
5,803
|
||||
Support and services
|
47,074
|
40,963
|
||||||
Hosted and related services
|
3,019
|
2,746
|
||||||
Total deferred revenue
|
$
|
54,986
|
$
|
49,512
|
|
June 30, 2013
|
|||||||||||||||
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Gains
|
Fair Value
|
||||||||||||
Corporate notes and commercial paper
|
$
|
6,107
|
$
|
1
|
$
|
(3
|
)
|
$
|
6,105
|
|||||||
U.S. Government agency securities
|
1,396
|
-
|
-
|
1,396
|
||||||||||||
Total short-term investments
|
$
|
7,503
|
$
|
1
|
$
|
(3
|
)
|
$
|
7,501
|
|
June 30, 2012
|
|||||||||||||||
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Corporate notes and commercial paper
|
$
|
10,667
|
$
|
6
|
$
|
(2
|
)
|
$
|
10,671
|
|||||||
U.S. Government agency securities
|
7,706
|
-
|
(2
|
)
|
7,704
|
|||||||||||
Total short-term investments
|
$
|
18,373
|
$
|
6
|
$
|
(4
|
)
|
$
|
18,375
|
|
June 30, 2013
|
|||||||
|
Amortized
Cost
|
Fair Value
|
||||||
Less than 1 year
|
$
|
4,912
|
$
|
4,912
|
||||
Due in 1 to 3 years
|
2,591
|
2,589
|
||||||
|
$
|
7,503
|
$
|
7,501
|
||||
|
||||||||
|
June 30, 2012
|
|||||||
|
Amortized
Cost
|
Fair Value
|
||||||
Less than 1 year
|
$
|
10,312
|
$
|
10,316
|
||||
Due in 1 to 3 years
|
8,061
|
8,059
|
||||||
|
$
|
18,373
|
$
|
18,375
|
|
Premise
Segment
|
Hosted
Segment
|
Total
|
|||||||||
As of June 30, 2011
|
$
|
7,415
|
$
|
-
|
$
|
7,415
|
||||||
Addition (See Note 2)
|
-
|
115,250
|
115,250
|
|||||||||
|
||||||||||||
As of June 30, 2012
|
7,415
|
115,250
|
122,665
|
|||||||||
|
||||||||||||
Addition
|
-
|
85
|
85
|
|||||||||
As of June 30, 2013
|
$
|
7,415
|
$
|
115,335
|
$
|
122,750
|
|
June 30, 2013
|
June 30, 2012
|
||||||||||||||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||||||||||||
Patents
|
$
|
3,810
|
$
|
(2,446
|
)
|
$
|
1,364
|
$
|
3,485
|
$
|
(1,673
|
)
|
$
|
1,812
|
||||||||||
Technology
|
22,948
|
(8,832
|
)
|
14,116
|
22,848
|
(3,673
|
)
|
19,175
|
||||||||||||||||
Customer relationships
|
23,300
|
(4,448
|
)
|
18,852
|
23,300
|
(1,042
|
)
|
22,258
|
||||||||||||||||
Non-compete agreements
|
300
|
(191
|
)
|
109
|
300
|
(41
|
)
|
259
|
||||||||||||||||
Intangible assets in process and other
|
3,697
|
-
|
3,697
|
1,800
|
-
|
1,800
|
||||||||||||||||||
Intangible assets
|
$
|
54,055
|
$
|
(15,917
|
)
|
$
|
38,138
|
$
|
51,733
|
$
|
(6,429
|
)
|
$
|
45,304
|
Years Ending June 30,
|
|
|||
2014
|
$
|
8,973
|
||
2015
|
7,080
|
|||
2016
|
6,399
|
|||
2017
|
5,519
|
|||
2018
|
3,579
|
|||
Thereafter
|
2,891
|
|||
Total
|
$
|
34,441
|
● | Level 1 — Quoted prices in active markets for identical assets or liabilities. |
● | Level 2 — Observable inputs other than quoted prices included within Level 1, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are observable or are derived principally from, or corroborated by, observable market data by correlation or other means. |
● | Level 3 — Unobservable inputs that are supported by little or no market activity, are significant to the fair value of the assets or liabilities, and reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. |
|
June 30, 2013
|
|||||||||||||||
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
|
|
|
|
||||||||||||
Cash and cash equivalents:
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
6,280
|
$
|
6,280
|
$
|
-
|
$
|
-
|
||||||||
Short-term investments:
|
||||||||||||||||
Corporate notes and commercial paper
|
6,105
|
-
|
6,105
|
-
|
||||||||||||
U.S. Government agency securities
|
1,396
|
-
|
1,396
|
-
|
||||||||||||
Total assets measured and recorded at fair value
|
$
|
13,781
|
$
|
6,280
|
$
|
7,501
|
$
|
-
|
||||||||
Liabilities:
|
||||||||||||||||
Acquisition-related purchase consideration (See Note 2)
|
$
|
3,577
|
$
|
-
|
$
|
3,577
|
$
|
-
|
|
June 30, 2012
|
|||||||||||||||
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
|
|
|
|
||||||||||||
Cash and cash equivalents:
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
10,322
|
$
|
10,322
|
$
|
-
|
$
|
-
|
||||||||
Short-term investments:
|
||||||||||||||||
Corporate notes and commercial paper
|
10,671
|
-
|
10,671
|
-
|
||||||||||||
U.S. Government agency securities
|
7,704
|
-
|
7,704
|
-
|
||||||||||||
Total assets measured and recorded at fair value
|
$
|
28,697
|
$
|
10,322
|
$
|
18,375
|
$
|
-
|
||||||||
Liabilities:
|
||||||||||||||||
Acquisition-related purchase consideration (See Note 2)
|
$
|
12,703
|
$
|
-
|
$
|
-
|
$
|
12,703
|
|
Acquisition-
Related
Consideration
|
|||
Level 3 transfer out value
|
$
|
(3,525
|
)
|
|
Level 2 transfer in value
|
3,525
|
|||
Gain (loss) on transfer
|
$
|
-
|
|
Fair Value
|
|||
As of June 30, 2011
|
$
|
-
|
||
Add: Fair value of purchase consideration acquired
|
12,500
|
|||
Add: Adjustment to purchase consideration
|
203
|
|||
As of June 30, 2012
|
$
|
12,703
|
||
Add: Adjustment to purchase consideration
|
874
|
|||
Less: Payment of purchase consideration
|
(10,000
|
)
|
||
As of June 30, 2013
|
$
|
3,577
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Numerator:
|
|
|
|
|||||||||
Net loss
|
$
|
(25,702
|
)
|
$
|
(20,737
|
)
|
$
|
(11,463
|
)
|
|||
Denominator:
|
||||||||||||
Weighted average common shares outstanding (basic and diluted)
|
58,633
|
50,591
|
46,177
|
|||||||||
Net loss per share
|
||||||||||||
Basic and diluted
|
$
|
(0.44
|
)
|
$
|
(0.41
|
)
|
$
|
(0.25
|
)
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Domestic
|
$
|
(25,568
|
)
|
$
|
(21,834
|
)
|
$
|
(11,981
|
)
|
|||
Foreign
|
292
|
150
|
451
|
|||||||||
Total
|
$
|
(25,276
|
)
|
$
|
(21,684
|
)
|
$
|
(11,530
|
)
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Current:
|
|
|
|
|||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
(415
|
)
|
|||||
State
|
175
|
266
|
149
|
|||||||||
Foreign
|
108
|
85
|
207
|
|||||||||
Total current income tax
|
283
|
351
|
(59
|
)
|
||||||||
|
||||||||||||
Deferred:
|
||||||||||||
Federal
|
-
|
-
|
-
|
|||||||||
State
|
135
|
(1,280
|
)
|
-
|
||||||||
Foreign
|
8
|
(18
|
)
|
(8
|
)
|
|||||||
Total deferred income tax
|
143
|
(1,298
|
)
|
(8
|
)
|
|||||||
Provision for (benefit from) income taxes
|
$
|
426
|
$
|
(947
|
)
|
$
|
(67
|
)
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Benefit from income tax at federal statutory rate
|
$
|
(8,593
|
)
|
$
|
(7,346
|
)
|
$
|
(3,921
|
)
|
|||
Stock-based compensation
|
203
|
381
|
105
|
|||||||||
Credits
|
(695
|
)
|
(850
|
)
|
(1,622
|
)
|
||||||
State taxes
|
181
|
173
|
149
|
|||||||||
Net operating loss carryback
|
-
|
-
|
(299
|
)
|
||||||||
Other
|
545
|
(50
|
)
|
288
|
||||||||
Increase in valuation allowance
|
8,785
|
6,745
|
5,233
|
|||||||||
Total
|
$
|
426
|
$
|
(947
|
)
|
$
|
(67
|
)
|
|
June 30,
|
|||||||
|
2013
|
2012
|
||||||
Deferred Tax Assets
|
|
|
||||||
Net operating loss carryforwards
|
$
|
35,136
|
$
|
33,223
|
||||
Tax credit carryforwards
|
13,618
|
11,589
|
||||||
Stock compensation
|
15,779
|
14,110
|
||||||
Other
|
11,823
|
9,351
|
||||||
Gross deferred tax assets
|
76,356
|
68,273
|
||||||
Valuation allowance
|
(64,998
|
)
|
(53,372
|
)
|
||||
Total deferred tax assets
|
11,358
|
14,901
|
||||||
Deferred Tax Liabilities
|
||||||||
Acquistion intangibles
|
(11,288
|
)
|
(14,822
|
)
|
||||
Total deferred tax liabilities
|
(11,288
|
)
|
(14,822
|
)
|
||||
Total net deferred tax assets
|
$
|
70
|
$
|
79
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Beginning balance
|
$
|
3,576
|
$
|
3,074
|
$
|
2,091
|
||||||
Decrease in tax positions for prior years
|
(22
|
)
|
(148
|
)
|
(183
|
)
|
||||||
Increase in tax positions for current year
|
506
|
650
|
1,166
|
|||||||||
Ending balance
|
$
|
4,060
|
$
|
3,576
|
$
|
3,074
|
Reserved under stock option plans
|
17,817
|
|||
Reserved under employee stock purchase plan
|
510
|
|||
Total
|
18,327
|
|
Shares
Subject to
Options
Outstanding
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
(in years)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Balance at July 1, 2012
|
8,944
|
$
|
5.65
|
|
|
|||||||||||
Options granted
|
1,867
|
$
|
4.24
|
|
|
|||||||||||
Options exercised
|
(147
|
)
|
$
|
2.55
|
|
|
||||||||||
Options cancelled/forfeited
|
(1,766
|
)
|
$
|
5.46
|
|
|
||||||||||
Balance at June 30, 2013
|
8,898
|
$
|
5.45
|
5.69
|
$
|
2,074
|
||||||||||
Options exercisable at June 30, 2013
|
5,926
|
$
|
5.41
|
4.21
|
$
|
2,016
|
||||||||||
Vested and expected to vest at June 30, 2013
|
8,142
|
$
|
5.47
|
5.37
|
$
|
2,053
|
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||
Exercise Prices
|
Number
Outstanding
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
Weighted
Average
Exercise
Price
|
Number
Outstanding
|
Weighted
Average
Exercise
Price
|
||||||||||||||||
$0.10 – 1.00
|
496
|
1.11
|
$
|
0.67
|
496
|
$
|
0.67
|
||||||||||||||
$2.50 – 3.91
|
554
|
4.67
|
3.29
|
423
|
3.20
|
||||||||||||||||
$4.02 – 4.14
|
497
|
9.16
|
4.13
|
-
|
-
|
||||||||||||||||
$4.17 – 4.80
|
1,572
|
8.17
|
4.43
|
427
|
4.53
|
||||||||||||||||
$4.82
|
1,721
|
2.24
|
4.82
|
1,721
|
4.82
|
||||||||||||||||
$4.93 – 5.10
|
440
|
4.86
|
4.98
|
431
|
4.98
|
||||||||||||||||
$5.14 - 5.56
|
929
|
6.45
|
5.31
|
580
|
5.41
|
||||||||||||||||
$5.63 - 7.41
|
704
|
5.54
|
6.27
|
621
|
6.25
|
||||||||||||||||
$8.41 - 11.40
|
1,193
|
7.43
|
7.77
|
694
|
7.76
|
||||||||||||||||
$8.29 – 13.73
|
792
|
6.76
|
10.32
|
533
|
10.52
|
||||||||||||||||
Total Outstanding
|
8,898
|
5.69
|
$
|
5.45
|
5,926
|
$
|
5.41
|
|
|
Year Ended June 30,
|
||||
|
|
2013
|
|
2012
|
|
2011
|
Expected life from grant date of option
|
|
5.32-5.48 years
|
|
6.08 years
|
|
5.75-6.26 years
|
Risk-free interest rate
|
|
0.67-0.91%
|
|
0.79-1.15%
|
|
1.43-2.12%
|
Expected volatility
|
|
68-69%
|
|
65-66%
|
|
57%
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
0%
|
|
|
Year Ended June 30,
|
||||
|
|
2013
|
|
2012
|
|
2011
|
Expected life from grant date of ESPP
|
|
0.50 years
|
|
0.50 years
|
|
0.50 years
|
Risk-free interest rate
|
|
0.09-0.15%
|
|
0.07-0.15%
|
|
0.10-0.20%
|
Expected volatility
|
|
42-57%
|
|
52-74%
|
|
46-52%
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
0%
|
|
Shares
|
Weighted-
Average
Grant Date
Fair Value
|
||||||
Outstanding - July 1, 2012
|
1,641
|
$
|
5.88
|
|||||
Awarded
|
709
|
4.23
|
||||||
Released
|
(732
|
)
|
5.43
|
|||||
Forfeited
|
(308
|
)
|
5.88
|
|||||
Outstanding - June 30, 2013
|
1,310
|
$
|
5.24
|
Years Ending June 30,
|
Operating leases
|
Capital leases
|
||||||
2014
|
$
|
3,819
|
$
|
1,442
|
||||
2015
|
2,876
|
377
|
||||||
2016
|
2,535
|
-
|
||||||
2017
|
2,333
|
-
|
||||||
2018
|
1,828
|
-
|
||||||
Therafter
|
4,230
|
-
|
||||||
Total minimum lease payments
|
$
|
17,621
|
1,819
|
|||||
|
||||||||
Less: Amount representing interest
|
(118
|
)
|
||||||
Present value of total minimum lease payments
|
1,701
|
|||||||
Less: Current portion liability
|
(1,334
|
)
|
||||||
Capital lease obligation, net of current portion
|
$
|
367
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Revenues:
|
|
|
|
|||||||||
Premise
|
$
|
243,266
|
$
|
231,085
|
$
|
200,112
|
||||||
Hosted
|
70,277
|
15,547
|
-
|
|||||||||
Total revenues
|
$
|
313,543
|
$
|
246,632
|
$
|
200,112
|
||||||
|
||||||||||||
Gross profit:
|
||||||||||||
Premise
|
$
|
162,701
|
$
|
152,736
|
$
|
133,467
|
||||||
Hosted
|
25,751
|
5,743
|
-
|
|||||||||
Total gross profit
|
$
|
188,452
|
$
|
158,479
|
$
|
133,467
|
|
Year Ended June 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
United States of America
|
$
|
283,276
|
$
|
217,585
|
$
|
177,049
|
||||||
International
|
30,267
|
29,047
|
23,063
|
|||||||||
Total
|
$
|
313,543
|
$
|
246,632
|
$
|
200,112
|
|
As at June 30,
|
|||||||
|
2013
|
2012
|
||||||
United States of America
|
$
|
14,929
|
$
|
10,230
|
||||
International
|
696
|
265
|
||||||
Total
|
$
|
15,625
|
$
|
10,495
|
|
June 30, 2012
|
|||||||
|
Local Currency
Amount
|
Notional Contract
Amount (USD)
|
||||||
Australian dollar
|
$
|
970
|
$
|
985
|
||||
British pound
|
£
|
1,140
|
1,780
|
|||||
Euro
|
€
|
480
|
604
|
|||||
Total
|
$
|
3,369
|
|
Three Months Ended
|
|||||||||||||||||||||||||||||||
|
Jun. 30, 2013
|
Mar. 31, 2013
|
Dec. 31, 2012
|
Sept. 30, 2012
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
Sept. 30, 2011
|
||||||||||||||||||||||||
|
(In thousands, except per share amounts)
|
|||||||||||||||||||||||||||||||
Total revenue
|
$
|
85,603
|
$
|
78,320
|
$
|
74,636
|
$
|
74,984
|
$
|
78,458
|
$
|
56,304
|
$
|
58,012
|
$
|
53,858
|
||||||||||||||||
Gross profit
|
51,258
|
47,440
|
43,888
|
45,866
|
47,791
|
37,260
|
37,940
|
35,488
|
||||||||||||||||||||||||
Net loss
|
(2,300
|
)
|
(5,011
|
)
|
(10,354
|
)
|
(8,037
|
)
|
(5,045
|
)
|
(8,512
|
)
|
(2,538
|
)
|
(4,642
|
)
|
||||||||||||||||
Basic and diluted net loss per common share
|
$
|
(0.04
|
)
|
$
|
(0.09
|
)
|
$
|
(0.18
|
)
|
$
|
(0.14
|
)
|
$
|
(0.09
|
)
|
$
|
(0.17
|
)
|
$
|
(0.05
|
)
|
$
|
(0.10
|
)
|
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
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ShoreTel, Inc.
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By:
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/s/ MICHAEL E. HEALY
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Michael E. Healy
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|
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Chief Financial Officer
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Name
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|
Title
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|
Date
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|
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/s/ DON JOOS
|
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President and
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September 12, 2013
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Don Joos
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Chief Executive Officer and Director
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(Principal Executive Officer)
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/s/ MICHAEL E. HEALY
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Chief Financial Officer
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September 12, 2013
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Michael E. Healy
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(Principal Financial Officer and
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|
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Principal Accounting Officer)
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/s/ CHARLES D. KISSNER
|
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Chairman of the Board
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September 12, 2013
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Charles D. Kissner
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/s/ MARK F. BREGMAN
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Director
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September 12, 2013
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Mark F. Bregman
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/s/ GARY J. DAICHENDT
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Director
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September 12, 2013
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Gary J. Daichendt
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/s/ KENNETH DENMAN
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Director
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September 12, 2013
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Kenneth Denman
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/s/ MICHAEL GREGOIRE
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Director
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September 12, 2013
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Michael Gregoire
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/s/ EDWARD F. THOMPSON
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Director
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September 12, 2013
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Edward F. Thompson
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|
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Exhibit
Number
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|
Exhibit Title
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2.1
|
|
Agreement and Plan of Reorganization by and among the Company, M5 Networks, Inc., Mets Acquisition Corp., Mets Acquisition II LLC, and Fortis Advisors LLC, dated January 31, 2012 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2011 filed on February 9, 2012).
|
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3.1
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Third Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the year ended June 30, 2007 filed on September 27, 2007).
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|
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3.2
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Third Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.01 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, filed on November 9, 2009).
|
|
|
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4.1
|
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Form of the Company’s Common Stock certificate (incorporated by reference to Exhibit 4.1 of Amendment No. 5 to the Company’s Registration Statement on Form S-1 (File No. 333-140630)).
|
|
|
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4.2
|
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Seventh Amended and Restated Rights Agreement dated October 20, 2004 by and among the Company and certain of its equity holders (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-1 (File No. 333-140630)).
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|
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10.1+
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Form of Indemnity Agreement between the Company and each of its directors and executive officers (incorporated by reference to Exhibit 10.1 of Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-140630)).
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|
|
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10.2+
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1997 Stock Option Plan and forms of stock option agreement and stock option exercise agreement (incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement on Form S-1 (File No. 333-140630)).
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|
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10.3+
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2007 Equity Incentive Plan and forms of stock option agreement and stock option exercise agreement (incorporated by reference to Exhibit 10.3 of Amendment No. 3 to the Company’s Registration Statement on Form S-1 (File No. 333-140630)).
|
|
|
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10.4+
|
|
2007 Employee Stock Purchase Plan, as amended on November 2, 2010 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010 filed on February 4, 2011).
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|
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Executive Employment Agreement dated August 12, 2013, by the Company and Donald Joos.
|
|
|
|
|
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Transitional Offer letter dated August 7, 2013, by the Company and Peter Blackmore.
|
10.7+
|
|
Offer Letter, dated April 22, 2007, by the Company and Michael E. Healy (incorporated by reference to Exhibit 10.19 of Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-140630)).
|
|
|
|
|
Fiscal 2014 Executive Incentive Compensation
|
|
|
|
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10.9+
|
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Non-employee director compensation guidelines (incorporated by reference to the Company’s Form 8-K filed on February 12, 2008).
|
|
|
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10.10+
|
|
Form of "Tier 2" Retention Incentive Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed on May 9, 2011).
|
|
|
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10.11+
|
|
Form of Form of "Tier 3" Retention Incentive Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed on May 9, 2011).
|
|
|
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10.12
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|
Manufacturing Services Agreement, dated October 28, 2005, between the Company and Jabil Circuit, Inc. (incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement on Form S-1 (File No. 333-140630)).
|
10.13
|
Lease Agreement between River Place Corporate Park, LP and the Company, dated June 30, 2008, and as amended on September 16, 2009, December 2009, and December 10, 2010 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010 filed on February 4, 2011).
|
|
|
||
10.14
|
Office Lease Oakmead West, dated April 20, 2007, between the Company and Carr NP Properties, L.L.C., and Amendment No. 1 thereto (incorporated by reference to Exhibit 10.18 to Amendment No. 2 of the Company’s Registration Statement on Form S-1 (File No. 333-140630) and Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended June 30, 2009 filed on September 10, 2009).
|
|
|
||
10.15
|
Lease Agreement, dated July 21, 2011 between the Company and BRE/US Industrial PropTerties, L.L.C. (incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the year ended June 30, 2011 filed on September 12, 2011).
|
|
|
||
10.16
|
Board Observer Rights Agreement dated August 17, 2011 between the Company and Edwin J. Basart (incorporated by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K for the year ended June 30, 2011 filed on September 12, 2011).
|
|
|
||
10.17
|
$50,000,000 Senior Secured Credit Facilities Credit Agreement dated as of March 15, 2012 among the Company, the lenders named therein and Silicon Valley Bank (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed on May 10, 2012) and Amendment Letter (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, filed February 8, 2013.)
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|
|
||
Subsidiaries.
|
||
|
||
Consent of independent registered public accounting firm.
|
||
|
||
24.1
|
Power of Attorney (included on the signature page).
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|
|
||
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
|
||
|
||
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|
||
|
||
Section 1350 Certification of Chief Executive Officer.
|
||
|
||
Section 1350 Certification of Chief Financial Officer
|
+ | Management Compensatory Plan or Arrangement |
|
EXECUTIVE
|
|
|
|
|
|
/s/ Don Joos
|
|
|
|
|
|
SHORETEL, INC.
|
|
|
By:
|
/s/ Chuck Kissner
|
|
Title:
|
Chairman of the Board
|
a.
|
In understanding the terms of the Release and my rights, I have been advised to consult with an attorney of my choice prior to executing the Release. I understand that nothing in this Release is intended to constitute an unlawful release or waiver of any of my rights under any laws and/or to prevent, impede, or interfere with my ability and/or rights, if any: (a) under applicable workers’ compensation laws; (b) to seek unemployment benefits; (c) to file a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, or any applicable state agency; (d) provide truthful testimony if under subpoena to do so, (e) file a claim with any state or federal agency or to participate or cooperate in such a matter, and/or (f) to challenge the validity of this release. Furthermore, notwithstanding any provisions and covenants herein, the Release shall not waive (a) any rights to indemnification I may have as an officer or director of Employer or otherwise in connection with my employment with Employer, under applicable law or Employer’s bylaws or other governing instruments or any agreement addressing such subject matter between Employer and me (including any fiduciary insurance policy maintained by Employer under which I am covered) or under any merger or acquisition agreement addressing such subject matter, (b) any obligations owed to me pursuant to the Agreement, (c) my rights of insurance under any liability policy covering Employer’s officers (in addition to the rights under subsection (a) above), or (d) any accrued but unpaid wages; any reimbursement for business expenses pursuant to Employer’s policies for such reimbursements, any outstanding claims for benefits or payments under any benefit plans of Employer or subsidiaries, any accrued but unused vacation, any ongoing agreements evidencing outstanding equity awards granted to me, any obligations owed to me pursuant to the terms of outstanding written agreements between myself and Employer and any claims I may not release as a matter of law, including indemnification claims under applicable law. To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be resolved through binding arbitration pursuant to Subsection i below, and the arbitration provision set forth in the Agreement.
|
b.
|
I understand and agree that Employer will not provide me with the Severance Benefits unless I execute the Release. I also understand that I have received or will receive, regardless of the execution of the Release, all wages owed to me together with any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.
|
c.
|
As part of my existing and continuing obligations to Employer, I have returned to Employer all documents (and all copies thereof) and other property belonging to Employer that I have had in my possession at any time, including but not limited to files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of Employer (and all reproductions thereof). I understand that, even if I did not sign the Release, I am still bound by any and all confidential/proprietary/trade secret information, non-disclosure and inventions assignment agreement(s) signed by me in connection with my employment with Employer, or with a predecessor or successor of Employer, pursuant to the terms of such agreement(s).
|
d.
|
I represent and warrant that I am the sole owner of all claims relating to my employment with Employer and/or with any predecessor of Employer, and that I have not assigned or transferred any claims relating to my employment to any other person or entity.
|
e.
|
I agree to keep the Severance Benefits and the provisions of this Release confidential and not to reveal their contents to anyone except my lawyer, my spouse or other immediate family member, and/or my financial consultant, or as required by legal process or applicable law.
|
f.
|
I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or me.
|
g.
|
I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or myself.
|
h.
|
I agree that I will not make any negative or disparaging statements or comments, either as fact or as opinion, about the Employer, its employees, officers, directors, shareholders, vendors, products or services, business, technologies, market position or performance. Furthermore, the Employer agrees that it will not make any negative or disparaging statement or comments, either as fact or as opinion, about Mr. Joos. For purposes of this paragraph and the Employer’s covenant not to disparage Mr. Joos, the Employer shall mean employees of the Employer with positions of Vice-President or above. Nothing in this paragraph shall prohibit either party from providing truthful information in response to a subpoena or other legal process.
|
i.
|
Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of the Release shall be settled by arbitration in accordance with the arbitration provision of the Agreement. If for any reason the arbitration procedure set forth in the Agreement is unavailable, I agree to arbitration under the employment arbitration rules of the American Arbitration Association or any successor hereto. The parties further agree that the arbitrator shall not be empowered to add to, subtract from, or modify, alter or amend the terms of the Release. Any applicable arbitration rules or policies shall be interpreted in a manner so as to ensure their enforceability under applicable state or federal law.
|
j.
|
I agree that I have had at least twenty-one (21) calendar days in which to consider whether to execute the Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release. I understand that the offer of the Severance Benefits and the Release shall expire on the twenty-second (22nd) calendar day after my employment termination date if I have not accepted it by that time. I further understand that Employer’s obligations under the Release shall not become effective or enforceable until the eighth (8th) calendar day after the date I sign the Release provided that I have timely delivered it to Employer (the “Effective Date”) and that in the seven (7) day period following the date I deliver a signed copy of the Release to Employer I understand that I may revoke my acceptance of the Release. I understand that the Severance Benefits will become available to me after the Effective Date.
|
k.
|
In executing the Release, I acknowledge that I have not relied upon any statement made by Employer, or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein. Once effective and enforceable, this agreement can only be changed by another written agreement signed by me and an authorized representative of Employer.
|
l.
|
Should any provision of the Release be determined by an arbitrator, court of competent jurisdiction, or government agency to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect. Specifically, should a court, arbitrator, or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release and the waiver of unknown claims above shall otherwise remain effective to release any and all other claims. I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.
|
|
Date delivered to employee _______________, _____.
|
|
|
|
Executed this _______ day of _______________, _____.
|
|
|
|
Signature
|
|
|
|
|
|
Name (Please Print)
|
COMPANY:
|
|
INDEMNITEE:
|
||
SHORETEL, INC.
|
|
|
||
By:
|
|
|
|
|
Name
|
|
|
|
|
Title:
|
|
|
|
|
Address
|
960 Stewart Dr.
|
|
Address:
|
|
|
Sunnyvale, CA 94085
|
|
|
|
/s/ Chuck Kissner
|
|
|
|
Chuck Kissner
|
|
Chairman of the Board
|
|
I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future
|
|
/s/ Peter Blackmore
|
August 7, 2013
|
Peter Blackmore
|
Date
|
· | Participation in this plan is not an agreement (express or implied) between the Plan participant and the Company that the participant will be employed by the Company for any specific period of time, nor is there any agreement for continuing or long-term employment. The Plan participant and the Company each have right to terminate the employment relationship at any time for any reason. This at-will employment relationship may only be modified by an agreement signed by the participant and the CEO. |
· | Any determination of performance, payment or other matter under this plan by the Board of Directors or Compensation Committee is binding. |
· | This summary highlights the principal features of the Plan, but does not describe every situation that can occur. The Compensation Committee retains the right to interpret, revise, modify or terminate the Plan at its sole discretion at any time. |
· | The executive must be employed in a full time capacity for at least one-half of the Designated Fiscal Period, or such other period as determined by the Compensation Committee, to be eligible to participate in this Plan, and must be employed at the time bonuses are paid in order to receive a bonus, unless otherwise approved by the Compensation Committee or required pursuant to a separate agreement with the executive. |
· | This Plan is intended to be effective commencing fiscal year 2014, and shall remain in effect for subsequent fiscal periods until amended or terminated by the Compensation Committee. |
Subsidiary Name
|
Jurisdiction
|
ShoreTel International, Inc.
|
Delaware, USA
|
ShoreTel Pty Ltd
|
Australia
|
ShoreTel UK Ltd
|
UK
|
ShoreTel GmbH
|
Germany
|
ShoreTel Singapore Pte. Ltd.
|
Singapore
|
ShoreTel Canada Limited
|
Canada
|
ShoreTel Philippines Corporation
|
Philippines
|
ShoreTel Communications Private Limited
|
India
|
Agito Networks, Inc.
|
Delaware, USA
|
M5 Networks, LLC
|
Delaware, USA
|
M5 Callfinity, Inc.
|
Massachusetts, USA
|
M5 Acquisition Corp
|
Delaware, USA
|
M5 Telecom-USA, Inc.
|
Delaware, USA
|
1. | I have reviewed this Annual Report on Form 10-K of ShoreTel, 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(s) 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 the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) 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): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: September 12, 2013
|
/s/ DON JOOS
|
|
Don Joos
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. | I have reviewed this Annual Report on Form 10-K of ShoreTel, 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(s) 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 the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) 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): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: September 12, 2013
|
/s/ MICHAEL E. HEALY
|
|
Michael E. Healy
|
|
Chief Financial Officer
|
|
(Principal Accounting and Financial Officer)
|
Dated: September 12, 2013
|
By:
|
/s/ DON JOOS
|
|
Name:
|
Don Joos
|
|
Title:
|
President and Chief Executive
|
|
|
Officer (Principal Executive Officer)
|
Dated: September 12, 2013
|
By:
|
/s/ MICHAEL E. HEALY
|
|
Name:
|
Michael E. Healy
|
|
Title:
|
Chief Financial Officer
|
|
|
(Principal Accounting and Financial Officer)
|