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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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77-0560389
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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899 Kifer Road
Sunnyvale, California
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94086
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(Address of principal executive offices)
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(Zip Code)
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Common Stock, $0.001 Par Value
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The NASDAQ Stock Market LLC
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(Title of each class)
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(Name of exchange on which registered)
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Page
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Part I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Part III
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Item 10.
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||
Item 11.
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Item 12.
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Item 13.
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Item 14.
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Part IV
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Item 15.
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||
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•
|
FortiAP, secure wireless access points;
|
•
|
FortiWeb, security for web-based applications;
|
•
|
FortiMail, multi-feature, high performance messaging security;
|
•
|
FortiDB, centrally managed database-specific security;
|
•
|
FortiClient, endpoint security for desktops, laptops and mobile devices which is primarily used in conjunction with our FortiGate appliances;
|
•
|
FortiScan, endpoint vulnerability assessment and remediation;
|
•
|
FortiSwitch, Ethernet switches;
|
•
|
FortiBridge, bypass appliances to help ensure network availability;
|
•
|
FortiAuthenticator, scalable secure authentication for enterprise networks;
|
•
|
FortiADC, Application Delivery Controller (“ADC”) optimizing the availability and performance of mobile, cloud, and enterprise applications;
|
•
|
FortiSandbox, detecting and mitigating Advanced Persistent Threats (“APTs”);
|
•
|
FortiCache, reducing the cost of and impact of cached internet content;
|
•
|
FortiDNS, providing secure Domain Name System (“DNS”) caching;
|
•
|
FortiDDoS, protection against Distributed Denial of Service (“DDOS”) attacks; and
|
•
|
FortiVoice, business telephone communication.
|
•
|
helping enable FortiGate appliances to be configured into different security environments such as our Internal Network Firewall, Next Generation Firewall, and the Data Center Firewall;
|
•
|
configuration of the physical aspects of the appliance such as ports, Wi-Fi and switching;
|
•
|
key network functions such as routing and deployment modes (network routing, transparent, sniffer, etc.);
|
•
|
implementation of security updates delivering advanced threat protection, such as IPS, antivirus, and application control;
|
•
|
access to cloud-based web and email filtering databases;
|
•
|
security policy objects and enforcement;
|
•
|
data leak prevention and document finger printing; and
|
•
|
real-time reporting and logging.
|
•
|
the level of demand for our products and services, which may render forecasts inaccurate;
|
•
|
the timing of channel partner and end-customer orders and our reliance on a concentration of shipments at the end of each quarter;
|
•
|
the timing of shipments, which may depend on many factors such as inventory levels, logistics, shipping delays at ports or otherwise, our ability to ship new products on schedule and to accurately forecast inventory requirements, and potential delays in the manufacturing process;
|
•
|
inventory imbalances, such as those related to new products and the end of life of existing products;
|
•
|
the mix of products sold, the mix of revenue between products and services and the degree to which products and services are bundled and sold together for a package price;
|
•
|
the budgeting cycles and purchasing practices of our channel partners and end-customers;
|
•
|
seasonal buying patterns of our end-customers;
|
•
|
timing and level of our investments in sales and marketing;
|
•
|
the timing of revenue recognition for our sales, which may be affected by both the mix of sales by our “sell-in” versus our “sell-through” channel partners, and the accuracy and timing of point of sale reporting by our “sell-through” channel partners, which impacts our ability to recognize revenue;
|
•
|
the level of perceived threats to network security, which may fluctuate from period to period;
|
•
|
changes in end-customer, distributor or reseller requirements or market needs and buying practices and patterns;
|
•
|
changes in the growth rate of the network security markets;
|
•
|
the timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape of our industry, including consolidation among our competitors, partners, or end-customers;
|
•
|
deferral of orders from end-customers in anticipation of new products or product enhancements announced by us or our competitors;
|
•
|
increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates, as a significant portion of our expenses are incurred and paid in currencies other than the U.S. dollar;
|
•
|
decisions by potential end-customers to purchase network security solutions from newer technology providers, from larger, more established security vendors or from their primary network equipment vendors;
|
•
|
price competition, and increased competitiveness in general in our market;
|
•
|
changes in customer renewal rates for our services;
|
•
|
changes in the payment terms of services contracts or the length of services contracts sold;
|
•
|
changes in our estimated annual effective tax rates;
|
•
|
changes in circumstances and challenges in business conditions, including decreased demand, which may negatively impact our channel partners’ ability to sell the current inventory they hold and negatively impact their future purchases of products from us;
|
•
|
increased expenses, unforeseen liabilities or write-downs and any impact on results of operations from any acquisition consummated;
|
•
|
our channel partners may have insufficient financial resources and may not be able to withstand changes and challenges in business conditions;
|
•
|
disruptions in our channel or termination of our relationship with important channel partners;
|
•
|
insolvency, credit, or other difficulties confronting our key suppliers or channel partners, affecting their ability to purchase or pay for our products and services, which could disrupt our supply or distribution chain;
|
•
|
general economic conditions, both in our domestic and foreign markets; and
|
•
|
future accounting pronouncements or changes in our accounting policies.
|
•
|
economic or political instability in foreign markets;
|
•
|
greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods;
|
•
|
changes in regulatory requirements;
|
•
|
difficulties and costs of staffing and managing foreign operations;
|
•
|
the uncertainty of protection for intellectual property rights in some countries;
|
•
|
costs of compliance with foreign policies, laws and regulations and the risks and costs of non-compliance with such policies, laws and regulations;
|
•
|
protectionist policies and penalties, and local laws and requirements that may be adversely impact U.S. headquartered business’s sales in certain countries outside of the United States;
|
•
|
costs of complying with U.S. or other foreign laws and regulations for foreign operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010, import and export control laws, tariffs, trade barriers, and economic sanctions;
|
•
|
other regulatory or contractual limitations on our ability to sell our products in certain foreign markets, and the risks and costs of non-compliance;
|
•
|
heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales or sales-related arrangements that could disrupt the sales team through terminations of employment or
|
•
|
our ability to effectively implement and maintain adequate internal controls to properly manage our international sales and operations;
|
•
|
the potential for political unrest, terrorism, hostilities, war, or natural disasters;
|
•
|
management communication and integration problems resulting from cultural differences and geographic dispersion; and
|
•
|
multiple and possibly overlapping tax structures.
|
•
|
increased competition from competitors that traditionally target enterprises, service providers and government organizations and that may already have purchase commitments from those end-customers;
|
•
|
increased purchasing power and leverage held by large end-customers in negotiating contractual arrangements;
|
•
|
unanticipated changes in the capital resources of or purchasing behavior of large end-customers, including changes in the volume and frequency of their purchases;
|
•
|
more stringent support requirements in our support service contracts, including stricter support response times, more complex requirements, and increased penalties for any failure to meet support requirements; and
|
•
|
longer sales cycles and the associated risk that substantial time and resources may be spent on a potential end-customer that elects not to purchase our products and services.
|
•
|
expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate or work-around errors or defects or to address and eliminate vulnerabilities;
|
•
|
loss of existing or potential end-customers or channel partners;
|
•
|
delayed or lost revenue;
|
•
|
delay or failure to attain market acceptance;
|
•
|
negative publicity, which will harm our reputation; and
|
•
|
litigation, regulatory inquiries or investigations that may be costly and harm our reputation and, in some instances, subject us to potential liability that is not contractually limited.
|
•
|
a potential inability to obtain an adequate supply of required parts or components when required;
|
•
|
financial or other difficulties faced by our suppliers;
|
•
|
infringement or misappropriation of our intellectual property;
|
•
|
price increases;
|
•
|
failure of a component to meet environmental or other regulatory requirements;
|
•
|
failure to meet delivery obligations in a timely fashion; and
|
•
|
failure in component quality.
|
•
|
public sector budgetary cycles,
|
•
|
funding authorizations and requirements unique to government agencies, with funding or purchasing reductions or delays adversely affecting public sector demand for our products,
|
•
|
geopolitical matters, and
|
•
|
rules and regulations applicable to certain government sales.
|
•
|
earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates;
|
•
|
the mix of earnings in countries with differing statutory tax rates or withholding taxes;
|
•
|
changes in the valuation of our deferred tax assets and liabilities;
|
•
|
expiration of, or lapses in the research and development tax credit laws;
|
•
|
transfer pricing adjustments;
|
•
|
an increase in non-deductible expenses for tax purposes, including certain stock-based compensation expense, write-offs of acquired in-process research and development, and impairment of goodwill;
|
•
|
tax costs related to intercompany realignments;
|
•
|
tax assessments resulting from income tax audits or any related tax interest or penalties that could significantly affect our provision for income taxes for the period in which the settlement takes place;
|
•
|
a change in our decision to indefinitely reinvest foreign earnings;
|
•
|
changes in accounting principles; or
|
•
|
changes in tax laws and regulations including possible changes in the United States to the taxation of earnings of our foreign subsidiaries, and the deductibility of expenses attributable to foreign income, or the foreign tax credit rules, or changes to the U.S. income tax rate, which would necessitate a revaluation of our deferred tax assets and liabilities.
|
•
|
delays in releasing our new products or enhancements to the market;
|
•
|
failure to accurately predict market demand in terms of product functionality and to supply products that meet this demand in a timely fashion;
|
•
|
failure of our sales force and partners to focus on selling new products;
|
•
|
inability to interoperate effectively with the networks or applications of our prospective end-customers;
|
•
|
inability to protect against new types of attacks or techniques used by hackers;
|
•
|
actual or perceived defects, vulnerabilities, errors or failures;
|
•
|
negative publicity about their performance or effectiveness;
|
•
|
introduction or anticipated introduction of competing products by our competitors;
|
•
|
poor business conditions for our end-customers, causing them to delay IT purchases;
|
•
|
easing of regulatory requirements around security; and
|
•
|
reluctance of customers to purchase products incorporating open source software.
|
•
|
greater name recognition and longer operating histories;
|
•
|
larger sales and marketing budgets and resources;
|
•
|
broader distribution and established relationships with distribution partners and end-customers;
|
•
|
access to larger customer bases;
|
•
|
greater customer support resources;
|
•
|
greater resources to make acquisitions;
|
•
|
lower labor and development costs; and
|
•
|
substantially greater financial, technical and other resources.
|
•
|
providing for a classified board of directors whose members serve staggered three-year terms;
|
•
|
authorizing “blank check” preferred stock, which could be issued by the board without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;
|
•
|
limiting the liability of, and providing indemnification to, our directors and officers;
|
•
|
limiting the ability of our stockholders to call and bring business before special meetings;
|
•
|
requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;
|
•
|
providing that certain litigation matters may only be brought against us in state or federal courts in the State of Delaware;
|
•
|
controlling the procedures for the conduct and scheduling of board and stockholder meetings; and
|
•
|
providing the board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings.
|
ITEM 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
2014
|
|
2013
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
Fourth Quarter
|
$
|
31.31
|
|
|
$
|
23.44
|
|
|
$
|
21.98
|
|
|
$
|
16.76
|
|
Third Quarter
|
$
|
26.78
|
|
|
$
|
23.69
|
|
|
$
|
21.43
|
|
|
$
|
17.28
|
|
Second Quarter
|
$
|
25.13
|
|
|
$
|
20.36
|
|
|
$
|
22.98
|
|
|
$
|
16.53
|
|
First Quarter
|
$
|
23.86
|
|
|
$
|
19.02
|
|
|
$
|
25.00
|
|
|
$
|
19.06
|
|
|
|
December 2009
|
|
December 2010
|
|
December 2011
|
|
December 2012
|
|
December 2013
|
|
December 2014
|
||||||||||||
Fortinet, Inc.
|
|
$
|
100
|
|
|
$
|
184
|
|
|
$
|
248
|
|
|
$
|
239
|
|
|
$
|
218
|
|
|
$
|
349
|
|
NASDAQ Composite
|
|
$
|
100
|
|
|
$
|
117
|
|
|
$
|
115
|
|
|
$
|
133
|
|
|
$
|
184
|
|
|
$
|
209
|
|
NASDAQ Computer
|
|
$
|
100
|
|
|
$
|
117
|
|
|
$
|
118
|
|
|
$
|
133
|
|
|
$
|
175
|
|
|
$
|
210
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plan or Program
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
October 1 - October 31, 2014
|
|
178,967
|
|
|
$
|
24.74
|
|
|
178,967
|
|
|
$
|
123,429
|
|
November 1 - November 30, 2014
|
|
35,000
|
|
|
$
|
26.71
|
|
|
35,000
|
|
|
$
|
122,494
|
|
December 1 - December 31, 2014
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
122,494
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
770,364
|
|
|
$
|
615,297
|
|
|
$
|
533,639
|
|
|
$
|
433,576
|
|
|
$
|
324,696
|
|
Operating income
|
$
|
59,324
|
|
|
$
|
72,090
|
|
|
$
|
100,475
|
|
|
$
|
88,904
|
|
|
$
|
55,341
|
|
Net income
|
$
|
25,343
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
|
$
|
62,492
|
|
|
$
|
41,245
|
|
Net income per share
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.15
|
|
|
$
|
0.27
|
|
|
$
|
0.42
|
|
|
$
|
0.41
|
|
|
$
|
0.29
|
|
Diluted
|
$
|
0.15
|
|
|
$
|
0.26
|
|
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
0.26
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
163,831
|
|
|
162,435
|
|
|
158,074
|
|
|
152,581
|
|
|
140,726
|
|
|||||
Diluted
|
169,289
|
|
|
168,183
|
|
|
166,329
|
|
|
163,781
|
|
|
156,406
|
|
|
As of December 31,
|
||||||||||||||||||
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|||||||||||
(in thousands)
|
|||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and investments
|
$
|
991,744
|
|
|
$
|
843,045
|
|
|
$
|
739,586
|
|
|
$
|
538,687
|
|
|
$
|
387,460
|
|
Total assets
|
$
|
1,424,774
|
|
|
$
|
1,168,464
|
|
|
$
|
975,497
|
|
|
$
|
734,747
|
|
|
$
|
545,422
|
|
Total stockholders’ equity
|
$
|
675,966
|
|
|
$
|
585,760
|
|
|
$
|
510,934
|
|
|
$
|
358,354
|
|
|
$
|
232,454
|
|
•
|
variability in sales in certain product categories from year to year and between quarters;
|
•
|
expected impact of sales of certain products;
|
•
|
the proportion of our revenue that consists of our product and service and other revenue, and the mix of billings between products and services;
|
•
|
the impact of our product innovation strategy;
|
•
|
growing our sales to large enterprises, service providers, and government organizations;
|
•
|
trends in revenue, costs of revenue, and gross margin;
|
•
|
trends in our operating expenses, including personnel costs, research and development expense, sales and marketing expense and general and administrative expense, and expectations regarding these expenses as a percentage of revenue;
|
•
|
continued investments in research and development to strengthen our technology leadership position and the impact of those investments;
|
•
|
continued investments in sales and marketing to drive market share gains and the impact of those investments;
|
•
|
expectations regarding uncertain tax benefits and our effective tax rate;
|
•
|
expectations regarding spending related to capital expenditures;
|
•
|
competition in our markets;
|
•
|
the sufficiency of our existing cash, cash equivalents and investments to meet our cash needs for at least the next 12 months;
|
•
|
as well as other statements regarding our future operations, financial condition and prospects and business strategies.
|
•
|
We recorded total revenue of
$770.4 million
in fiscal
2014
, an increase of
25%
compared to fiscal
2013
. Product revenue was
$360.6 million
, an increase of
30%
compared to fiscal
2013
. Services and other revenue was
$409.8 million
in fiscal
2014
, an increase of
22%
compared to fiscal
2013
.
|
•
|
Cash, cash equivalents and investments were
$991.7 million
as of
December 31, 2014
, an increase of
$148.7 million
, or
18%
, from
December 31, 2013
.
|
•
|
Deferred revenue was
$558.8 million
as of
December 31, 2014
, an increase of
$126.1 million
, or
29%
, from
December 31, 2013
.
|
•
|
We generated cash flows from operating activities of
$196.6 million
in fiscal
2014
, an increase of
$49.2 million
, or
33%
, compared to fiscal
2013
.
|
•
|
We received $20.0 million pursuant to a six-year mutual covenant-not-to-sue and release agreement with Palo Alto Networks, Inc. in January 2014.
|
•
|
We repurchased 1.6 million shares of common stock under our previously-announced Share Repurchase Program for an aggregate purchase price of $38.6 million in fiscal 2014.
|
|
Year Ended or As of December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Revenue
|
$
|
770,364
|
|
|
$
|
615,297
|
|
|
$
|
533,639
|
|
Deferred revenue
|
$
|
558,757
|
|
|
$
|
432,628
|
|
|
$
|
363,185
|
|
Increase in deferred revenue
|
$
|
126,129
|
|
|
$
|
69,443
|
|
|
$
|
68,352
|
|
Billings (non-GAAP)
|
$
|
896,493
|
|
|
$
|
684,190
|
|
|
$
|
601,991
|
|
Cash, cash equivalents and investments
|
$
|
991,744
|
|
|
$
|
843,045
|
|
|
$
|
739,586
|
|
Net cash provided by operating activities
|
$
|
196,582
|
|
|
$
|
147,384
|
|
|
$
|
183,866
|
|
Free cash flow (non-GAAP)
|
$
|
164,385
|
|
|
$
|
133,507
|
|
|
$
|
161,783
|
|
|
Year Ended December 31,
|
||||||||||
2014
|
|
2013
|
|
2012
|
|||||||
(in thousands)
|
|||||||||||
Billings:
|
|
|
|
|
|
||||||
Revenue
|
$
|
770,364
|
|
|
$
|
615,297
|
|
|
$
|
533,639
|
|
Increase in deferred revenue
|
126,129
|
|
|
69,443
|
|
|
68,352
|
|
|||
Less deferred revenue balance acquired in business combination
|
—
|
|
|
(550
|
)
|
|
—
|
|
|||
Total billings (Non-GAAP)
|
$
|
896,493
|
|
|
$
|
684,190
|
|
|
$
|
601,991
|
|
|
Year Ended December 31,
|
||||||||||
2014
|
|
2013
|
|
2012
|
|||||||
(in thousands)
|
|||||||||||
Free Cash Flow:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
196,582
|
|
|
$
|
147,384
|
|
|
$
|
183,866
|
|
Less purchases of property and equipment
|
(32,197
|
)
|
|
(13,877
|
)
|
|
(22,083
|
)
|
|||
Free cash flow (Non-GAAP)
|
$
|
164,385
|
|
|
$
|
133,507
|
|
|
$
|
161,783
|
|
•
|
Product revenue
. Product revenue is generated from sales of our appliances. The substantial majority of our product revenue has been generated by our FortiGate line of appliances, and we do not expect this to change in the foreseeable future. Product revenue also includes revenue derived from sales of FortiManager, FortiAnalyzer, FortiSwitch, FortiMail, FortiDB, FortiWeb, FortiAP, FortiScan, FortiCarrier, FortiBalancer, FortiCache, FortiVoice, FortiBridge, FortiDDoS, FortiDNS, FortiSandbox, FortiADC, and FortiAuthenticator appliances, and our FortiClient and virtual domain, or VDOM, software. For arrangements which include end-customer acceptance criteria, revenue is recognized upon acceptance. We recognize product revenue on sales to distributors that have no general right of return and direct sales to end-customers upon shipment, once all other revenue recognition criteria have been met. Certain distributors that stock our products are
|
•
|
Services revenue
. Services revenue is generated primarily from FortiGuard security subscription and FortiCare technical support services for software updates, maintenance releases and patches, Internet access to technical content, telephone and Internet access to technical support personnel and hardware support, and FortiGuard security subscription services related to application control, antivirus, intrusion prevention, web filtering, anti-spam and vulnerability management updates. We recognize revenue from FortiGuard security subscription and FortiCare technical support services over the service performance period. Our typical contractual support and subscription term is one to three years. We also generate a small portion of our revenue from professional services and training services, and we recognize this revenue as the services are provided. As a percentage of total revenue, we expect our services revenue to remain at comparable levels or increase as our customers renew existing service contracts and we expand our customer base. Our services revenue growth rate depends significantly on the growth of our customer base and the renewal of service contracts by our customers.
|
•
|
Cost of product revenue
. A substantial majority of the cost of product revenue consists of costs of materials used in production, as well as costs paid to our third-party contract manufacturers. Our cost of product revenue also includes supplies, shipping costs, personnel costs associated with logistics and quality control, warranty costs, facility-related costs, excess and obsolete inventory costs, and impairment of intangible assets, if applicable. Personnel costs include salaries, benefits and bonuses, as well as stock-based compensation.
|
•
|
Cost of services revenue
. Cost of services revenue is primarily comprised of salaries, benefits and bonuses, as well as stock-based compensation associated with our FortiGuard Labs and our FortiCare technical support teams. Cost of service revenue also includes replacement products and supplies, facility-related costs, including depreciation expense, and professional services and training teams. We expect our cost of services revenue will increase slightly as a percentage of revenue as we continue to invest in FortiGuard security subscription and FortiCare technical support services to meet the needs of our customer base and service levels expected by our enterprise customers.
|
•
|
Research and development
. Research and development expense consists primarily of salaries, benefits and bonuses, as well as stock-based compensation. Additional research and development expenses include ASIC and system prototypes and certification-related expenses, depreciation of capital equipment and facility-
|
•
|
Sales and marketing
. Sales and marketing expense is the largest component of our operating expenses and primarily consists of salaries, benefits, bonuses and commissions, as well as stock-based compensation. Additional sales and marketing expenses include promotional and other marketing expenses, travel, depreciation of capital equipment and facility-related expenses. We intend to hire additional personnel focused on sales and marketing and expand our sales and marketing efforts worldwide in order to capture additional market share in the high-return enterprise market, where customers tend to provide a higher lifetime value.
|
•
|
General and administrative
. General and administrative expense consists of salaries, benefits and bonuses, as well as stock-based compensation, as well as professional fees, depreciation of capital equipment and software, and facility-related expenses. General and administrative personnel include our executive, finance, human resources, information technology and legal organizations. Our professional fees principally consist of outside legal, auditing, accounting, tax, information technology and other consulting costs.
|
•
|
Persuasive evidence of an arrangement exists.
Binding contracts or purchase orders are generally used to determine the existence of an arrangement.
|
•
|
Delivery has occurred or services have been rendered.
Delivery occurs when we fulfill an order and title and risk of loss has been transferred. Services revenue is deferred and recognized ratably over the contract service period, which is typically from one to three years and is generally recognized upon delivery or completion of service.
|
•
|
Sales price is fixed or determinable.
We assess whether the sales price is fixed or determinable based on the payment terms associated with the transaction and when the sales price is deemed final.
|
•
|
Collectability is reasonably assured
. We assess collectability based primarily on creditworthiness as determined by credit checks, analysis, and payment history.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Product
|
$
|
360,558
|
|
|
$
|
278,046
|
|
|
$
|
248,948
|
|
Services and other
|
409,806
|
|
|
337,251
|
|
|
284,691
|
|
|||
Total revenue
|
770,364
|
|
|
615,297
|
|
|
533,639
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Product
|
151,300
|
|
|
114,611
|
|
|
93,971
|
|
|||
Services and other
|
79,709
|
|
|
66,032
|
|
|
53,449
|
|
|||
Total cost of revenue
|
231,009
|
|
|
180,643
|
|
|
147,420
|
|
|||
Gross profit:
|
|
|
|
|
|
||||||
Product
|
209,258
|
|
|
163,435
|
|
|
154,977
|
|
|||
Services and other
|
330,097
|
|
|
271,219
|
|
|
231,242
|
|
|||
Total gross profit
|
539,355
|
|
|
434,654
|
|
|
386,219
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
122,880
|
|
|
102,660
|
|
|
81,078
|
|
|||
Sales and marketing
|
315,804
|
|
|
224,991
|
|
|
179,155
|
|
|||
General and administrative
|
41,347
|
|
|
34,913
|
|
|
25,511
|
|
|||
Total operating expenses
|
480,031
|
|
|
362,564
|
|
|
285,744
|
|
|||
Operating income
|
59,324
|
|
|
72,090
|
|
|
100,475
|
|
|||
Interest income
|
5,393
|
|
|
5,306
|
|
|
5,006
|
|
|||
Other expense—net
|
(3,168
|
)
|
|
(1,455
|
)
|
|
(485
|
)
|
|||
Income before income taxes
|
61,549
|
|
|
75,941
|
|
|
104,996
|
|
|||
Provision for income taxes
|
36,206
|
|
|
31,668
|
|
|
38,160
|
|
|||
Net income
|
$
|
25,343
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
|
Year Ended December 31,
|
|||||||
2014
|
|
2013
|
|
2012
|
||||
(as percentage of total revenue)
|
||||||||
Revenue:
|
|
|
|
|
|
|||
Product
|
47
|
%
|
|
45
|
%
|
|
47
|
%
|
Services and other
|
53
|
|
|
55
|
|
|
53
|
|
Total revenue
|
100
|
|
|
100
|
|
|
100
|
|
Cost of revenue:
|
|
|
|
|
|
|||
Product
|
20
|
|
|
19
|
|
|
18
|
|
Services and other
|
10
|
|
|
11
|
|
|
10
|
|
Total cost of revenue
|
30
|
|
|
29
|
|
|
28
|
|
Gross profit:
|
|
|
|
|
|
|||
Product
|
58
|
|
|
59
|
|
|
62
|
|
Services and other
|
81
|
|
|
80
|
|
|
81
|
|
Total gross profit
|
70
|
|
|
71
|
|
|
72
|
|
Operating expenses:
|
|
|
|
|
|
|||
Research and development
|
16
|
|
|
17
|
|
|
15
|
|
Sales and marketing
|
41
|
|
|
36
|
|
|
33
|
|
General and administrative
|
5
|
|
|
6
|
|
|
5
|
|
Total operating expenses
|
62
|
|
|
59
|
|
|
53
|
|
Operating income
|
8
|
|
|
12
|
|
|
19
|
|
Interest income
|
1
|
|
|
—
|
|
|
1
|
|
Other expense—net
|
—
|
|
|
—
|
|
|
—
|
|
Income before income taxes
|
8
|
|
|
12
|
|
|
20
|
|
Provision for income taxes
|
5
|
|
|
5
|
|
|
7
|
|
Net income
|
3
|
%
|
|
7
|
%
|
|
13
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||||||||
2014
|
|
2013
|
|
|
|
|
||||||||||||||
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Change
|
|
% Change
|
||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
360,558
|
|
|
47
|
%
|
|
$
|
278,046
|
|
|
45
|
%
|
|
$
|
82,512
|
|
|
30
|
%
|
Services and other
|
409,806
|
|
|
53
|
|
|
337,251
|
|
|
55
|
|
|
72,555
|
|
|
22
|
|
|||
Total revenue
|
$
|
770,364
|
|
|
100
|
%
|
|
615,297
|
|
|
100
|
%
|
|
$
|
155,067
|
|
|
25
|
%
|
|
Revenue by geography:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Americas
|
$
|
324,659
|
|
|
42
|
%
|
|
$
|
252,786
|
|
|
41
|
%
|
|
$
|
71,873
|
|
|
28
|
%
|
Europe, Middle East and Africa (“EMEA”)
|
270,537
|
|
|
35
|
|
|
208,979
|
|
|
34
|
|
|
61,558
|
|
|
29
|
|
|||
Asia Pacific and Japan (“APAC”)
|
175,168
|
|
|
23
|
|
|
153,532
|
|
|
25
|
|
|
21,636
|
|
|
14
|
|
|||
Total revenue
|
$
|
770,364
|
|
|
100
|
%
|
|
$
|
615,297
|
|
|
100
|
%
|
|
$
|
155,067
|
|
|
25
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
2014
|
|
2013
|
|
Change
|
|
% Change
|
||||||||
(in thousands, except percentages)
|
||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Product
|
$
|
151,300
|
|
|
$
|
114,611
|
|
|
$
|
36,689
|
|
|
32
|
%
|
Services and other
|
79,709
|
|
|
66,032
|
|
|
13,677
|
|
|
21
|
|
|||
Total cost of revenue
|
$
|
231,009
|
|
|
$
|
180,643
|
|
|
$
|
50,366
|
|
|
28
|
%
|
Gross margin (%):
|
|
|
|
|
|
|
|
|||||||
Product
|
58.0
|
%
|
|
58.8
|
%
|
|
(0.8
|
)%
|
|
|
||||
Services and other
|
80.5
|
|
|
80.4
|
|
|
0.1
|
|
|
|
||||
Total gross margin
|
70.0
|
%
|
|
70.6
|
%
|
|
(0.6
|
)%
|
|
|
|
Year Ended December 31,
|
|
Change
|
|
% Change
|
|||||||||||||||
2014
|
|
2013
|
|
|||||||||||||||||
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
|||||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
122,880
|
|
|
16
|
%
|
|
$
|
102,660
|
|
|
17
|
%
|
|
$
|
20,220
|
|
|
20
|
%
|
Sales and marketing
|
315,804
|
|
|
41
|
|
|
224,991
|
|
|
36
|
|
|
90,813
|
|
|
40
|
|
|||
General and administrative
|
41,347
|
|
|
5
|
|
|
34,913
|
|
|
6
|
|
|
6,434
|
|
|
18
|
|
|||
Total operating expenses
|
$
|
480,031
|
|
|
62
|
%
|
|
$
|
362,564
|
|
|
59
|
%
|
|
$
|
117,467
|
|
|
32
|
%
|
|
Year Ended December 31,
|
|
Change
|
|
% Change
|
|||||||||
2014
|
|
2013
|
|
|||||||||||
(in thousands, except percentages)
|
||||||||||||||
Provision for income taxes
|
$
|
36,206
|
|
|
$
|
31,668
|
|
|
$
|
4,538
|
|
|
14
|
%
|
Effective tax rate (%)
|
59
|
%
|
|
42
|
%
|
|
17
|
%
|
|
—
|
|
|
Year Ended December 31,
|
|
Change
|
|
% Change
|
|||||||||||||||
2013
|
|
2012
|
|
|||||||||||||||||
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
|||||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
$
|
278,046
|
|
|
45
|
%
|
|
$
|
248,948
|
|
|
47
|
%
|
|
$
|
29,098
|
|
|
12
|
%
|
Services and other
|
337,251
|
|
|
55
|
|
|
284,691
|
|
|
53
|
|
|
52,560
|
|
|
18
|
|
|||
Total revenue
|
$
|
615,297
|
|
|
100
|
%
|
|
$
|
533,639
|
|
|
100
|
%
|
|
$
|
81,658
|
|
|
15
|
%
|
Revenue by Geography:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Americas
|
$
|
252,786
|
|
|
41
|
%
|
|
$
|
217,056
|
|
|
41
|
%
|
|
$
|
35,730
|
|
|
16
|
%
|
EMEA
|
208,979
|
|
|
34
|
|
|
184,175
|
|
|
35
|
|
|
24,804
|
|
|
13
|
|
|||
APAC
|
153,532
|
|
|
25
|
|
|
132,408
|
|
|
24
|
|
|
21,124
|
|
|
16
|
|
|||
Total revenue
|
$
|
615,297
|
|
|
100
|
%
|
|
$
|
533,639
|
|
|
100
|
%
|
|
$
|
81,658
|
|
|
15
|
%
|
|
Year Ended December 31,
|
|
Change
|
|
% Change
|
|||||||||
2013
|
|
2012
|
|
|||||||||||
(in thousands, except percentages)
|
||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Product
|
$
|
114,611
|
|
|
$
|
93,971
|
|
|
$
|
20,640
|
|
|
22
|
%
|
Services and other
|
66,032
|
|
|
53,449
|
|
|
12,583
|
|
|
24
|
|
|||
Total cost of revenue
|
$
|
180,643
|
|
|
$
|
147,420
|
|
|
$
|
33,223
|
|
|
23
|
%
|
Gross margin (%):
|
|
|
|
|
|
|
|
|||||||
Product
|
58.8
|
%
|
|
62.3
|
%
|
|
(3.5
|
)%
|
|
|
||||
Services and other
|
80.4
|
|
|
81.2
|
|
|
(0.8
|
)
|
|
|
||||
Total gross margin
|
70.6
|
%
|
|
72.4
|
%
|
|
(1.8
|
)%
|
|
|
|
Year Ended December 31,
|
|
Change
|
|
% Change
|
|||||||||||||||
2013
|
|
2012
|
|
|||||||||||||||||
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
|||||||||||||
(in thousands, except percentages)
|
||||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
102,660
|
|
|
17
|
%
|
|
$
|
81,078
|
|
|
15
|
%
|
|
$
|
21,582
|
|
|
27
|
%
|
Sales and marketing
|
224,991
|
|
|
36
|
|
|
179,155
|
|
|
33
|
|
|
45,836
|
|
|
26
|
|
|||
General and administrative
|
34,913
|
|
|
6
|
|
|
25,511
|
|
|
5
|
|
|
9,402
|
|
|
37
|
|
|||
Total operating expenses
|
$
|
362,564
|
|
|
59
|
%
|
|
$
|
285,744
|
|
|
53
|
%
|
|
$
|
76,820
|
|
|
27
|
%
|
|
Year Ended December 31,
|
|
Change
|
|
% Change
|
|||||||||
2013
|
|
2012
|
|
|||||||||||
(in thousands, except percentages)
|
||||||||||||||
Provision for income taxes
|
$
|
31,668
|
|
|
$
|
38,160
|
|
|
$
|
(6,492
|
)
|
|
(17
|
)%
|
Effective tax rate (%)
|
42
|
%
|
|
36
|
%
|
|
6
|
%
|
|
—
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec 31,
2014 |
|
Sept 30,
2014 |
|
Jun 30,
2014 |
|
Mar 31,
2014 |
|
Dec 31,
2013 |
|
Sept 30,
2013 |
|
Jun 30,
2013 |
|
Mar 31,
2013 |
||||||||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
$
|
110,678
|
|
|
$
|
87,731
|
|
|
$
|
85,384
|
|
|
$
|
76,765
|
|
|
$
|
83,884
|
|
|
$
|
69,687
|
|
|
$
|
66,525
|
|
|
$
|
57,950
|
|
Services and other
|
113,291
|
|
|
105,617
|
|
|
98,714
|
|
|
92,184
|
|
|
93,466
|
|
|
85,012
|
|
|
80,903
|
|
|
77,870
|
|
||||||||
Total revenue
|
223,969
|
|
|
193,348
|
|
|
184,098
|
|
|
168,949
|
|
|
177,350
|
|
|
154,699
|
|
|
147,428
|
|
|
135,820
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
(1)(2)
|
46,070
|
|
|
35,636
|
|
|
37,455
|
|
|
32,139
|
|
|
37,579
|
|
|
27,126
|
|
|
26,948
|
|
|
22,958
|
|
||||||||
Services and other
(1)
|
19,554
|
|
|
21,249
|
|
|
20,302
|
|
|
18,604
|
|
|
16,298
|
|
|
16,804
|
|
|
16,760
|
|
|
16,170
|
|
||||||||
Total cost of revenue
|
65,624
|
|
|
56,885
|
|
|
57,757
|
|
|
50,743
|
|
|
53,877
|
|
|
43,930
|
|
|
43,708
|
|
|
39,128
|
|
||||||||
Total gross profit
|
158,345
|
|
|
136,463
|
|
|
126,341
|
|
|
118,206
|
|
|
123,473
|
|
|
110,769
|
|
|
103,720
|
|
|
96,692
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Research and development
(1)
|
33,097
|
|
|
30,790
|
|
|
29,938
|
|
|
29,055
|
|
|
27,747
|
|
|
26,421
|
|
|
25,158
|
|
|
23,334
|
|
||||||||
Sales and marketing
(1)
|
93,228
|
|
|
80,433
|
|
|
74,817
|
|
|
67,326
|
|
|
62,331
|
|
|
56,687
|
|
|
55,997
|
|
|
49,976
|
|
||||||||
General and administrative
(1)
|
12,104
|
|
|
9,789
|
|
|
10,444
|
|
|
9,010
|
|
|
8,752
|
|
|
9,382
|
|
|
8,788
|
|
|
7,991
|
|
||||||||
Total operating expenses
|
138,429
|
|
|
121,012
|
|
|
115,199
|
|
|
105,391
|
|
|
98,830
|
|
|
92,490
|
|
|
89,943
|
|
|
81,301
|
|
||||||||
Operating income
|
19,916
|
|
|
15,451
|
|
|
11,142
|
|
|
12,815
|
|
|
24,643
|
|
|
18,279
|
|
|
13,777
|
|
|
15,391
|
|
||||||||
Interest income
|
1,402
|
|
|
1,339
|
|
|
1,319
|
|
|
1,333
|
|
|
1,318
|
|
|
1,282
|
|
|
1,337
|
|
|
1,369
|
|
||||||||
Other (expense) income—net
|
(1,200
|
)
|
|
(1,005
|
)
|
|
(574
|
)
|
|
(389
|
)
|
|
(419
|
)
|
|
(1,151
|
)
|
|
(100
|
)
|
|
215
|
|
||||||||
Income before income taxes
|
20,118
|
|
|
15,785
|
|
|
11,887
|
|
|
13,759
|
|
|
25,542
|
|
|
18,410
|
|
|
15,014
|
|
|
16,975
|
|
||||||||
Provision for income taxes
|
13,305
|
|
|
11,729
|
|
|
5,806
|
|
|
5,366
|
|
|
13,526
|
|
|
7,381
|
|
|
6,035
|
|
|
4,726
|
|
||||||||
Net income
|
$
|
6,813
|
|
|
$
|
4,056
|
|
|
$
|
6,081
|
|
|
$
|
8,393
|
|
|
$
|
12,016
|
|
|
$
|
11,029
|
|
|
$
|
8,979
|
|
|
$
|
12,249
|
|
Net income per share
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
|
$
|
0.08
|
|
|
Diluted
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec 31,
2014 |
|
Sept 30,
2014 |
|
Jun 30,
2014 |
|
Mar 31,
2014 |
|
Dec 31,
2013 |
|
Sept 30,
2013 |
|
Jun 30,
2013 |
|
Mar 31,
2013 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cost of product revenue
|
$
|
132
|
|
|
$
|
60
|
|
|
$
|
178
|
|
|
$
|
113
|
|
|
$
|
106
|
|
|
$
|
91
|
|
|
$
|
96
|
|
|
$
|
90
|
|
Cost of services revenue
|
1,612
|
|
|
1,522
|
|
|
1,363
|
|
|
1,329
|
|
|
1,298
|
|
|
1,297
|
|
|
1,226
|
|
|
1,020
|
|
||||||||
Research and development
|
4,706
|
|
|
4,505
|
|
|
4,171
|
|
|
3,882
|
|
|
3,666
|
|
|
3,548
|
|
|
3,291
|
|
|
2,766
|
|
||||||||
Sales and marketing
|
7,854
|
|
|
7,397
|
|
|
5,747
|
|
|
5,746
|
|
|
5,599
|
|
|
5,215
|
|
|
4,594
|
|
|
4,118
|
|
||||||||
General and administrative
|
2,377
|
|
|
1,183
|
|
|
3,257
|
|
|
1,860
|
|
|
2,018
|
|
|
1,627
|
|
|
1,500
|
|
|
1,305
|
|
||||||||
Total stock-based compensation expense
|
$
|
16,681
|
|
|
$
|
14,667
|
|
|
$
|
14,716
|
|
|
$
|
12,930
|
|
|
$
|
12,687
|
|
|
$
|
11,778
|
|
|
$
|
10,707
|
|
|
$
|
9,299
|
|
(2)
|
Includes amortization expense and impairment charges related to certain intangible assets as follows:
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec 31,
2014 |
|
Sept 30,
2014 |
|
Jun 30,
2014 |
|
Mar 31,
2014 |
|
Dec 31,
2013 |
|
Sept 30,
2013 |
|
Jun 30,
2013 |
|
Mar 31,
2013 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Amortization expense of certain intangible assets
|
$
|
244
|
|
|
$
|
244
|
|
|
$
|
408
|
|
|
$
|
511
|
|
|
$
|
508
|
|
|
$
|
423
|
|
|
$
|
354
|
|
|
$
|
266
|
|
Impairment charges related to certain intangible assets
|
|
|
—
|
|
|
2,404
|
|
|
—
|
|
|
469
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total amortization expense and impairment charges related to certain intangible assets
|
$
|
244
|
|
|
$
|
244
|
|
|
$
|
2,812
|
|
|
$
|
511
|
|
|
$
|
977
|
|
|
$
|
423
|
|
|
$
|
354
|
|
|
$
|
266
|
|
|
December 31
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
283,254
|
|
|
$
|
115,873
|
|
|
$
|
122,975
|
|
Investments
|
708,490
|
|
|
727,172
|
|
|
616,611
|
|
|||
Total cash, cash equivalents and investments
|
$
|
991,744
|
|
|
$
|
843,045
|
|
|
$
|
739,586
|
|
Working capital
|
$
|
550,409
|
|
|
$
|
322,485
|
|
|
$
|
249,970
|
|
|
|
|
|
|
|
||||||
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Cash provided by operating activities
|
$
|
196,582
|
|
|
$
|
147,384
|
|
|
$
|
183,866
|
|
Cash used in investing activities
|
(29,350
|
)
|
|
(146,734
|
)
|
|
(182,711
|
)
|
|||
Cash (used in) provided by financing activities
|
749
|
|
|
(6,423
|
)
|
|
50,156
|
|
|||
Effect of exchange rates on cash and cash equivalents
|
(600
|
)
|
|
(1,329
|
)
|
|
(326
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
167,381
|
|
|
$
|
(7,102
|
)
|
|
$
|
50,985
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating leases
(1)
|
$
|
42,624
|
|
|
$
|
11,535
|
|
|
$
|
23,365
|
|
|
$
|
7,274
|
|
|
$
|
450
|
|
Purchase commitments
(2)
|
62,804
|
|
|
62,804
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other contracts
(3)
|
21,006
|
|
|
18,169
|
|
|
2,837
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
126,434
|
|
|
$
|
92,508
|
|
|
$
|
26,202
|
|
|
$
|
7,274
|
|
|
$
|
450
|
|
(1)
|
Consists of contractual obligations from non-cancelable office space under operating leases.
|
(2)
|
Consists of minimum purchase commitments with independent contract manufacturers.
|
(3)
|
Consists of an estimate of all open purchase orders and contractual obligations in the ordinary course of business, other than commitments with contract manufacturers and suppliers, for which we have not received the goods or services. Purchase obligations do not include contracts that may be cancelled without penalty. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services. No tax liabilities related to uncertain tax positions have been included in the table. As of
December 31, 2014
, we had
$45.1 million
of long-term tax liabilities, including interest, related to uncertain tax positions. Because of the high degree of uncertainty regarding the settlement of these liabilities, we are unable to estimate the years in which future cash outflows may occur.
|
ITEM 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
|
|
|
Year Ended December 31,
|
||||||||||
2014
|
|
2013
|
|
2012
|
|||||||
REVENUE:
|
|
|
|
|
|
||||||
Product
|
$
|
360,558
|
|
|
$
|
278,046
|
|
|
$
|
248,948
|
|
Services and other
|
409,806
|
|
|
337,251
|
|
|
284,691
|
|
|||
Total revenue
|
770,364
|
|
|
615,297
|
|
|
533,639
|
|
|||
COST OF REVENUE:
|
|
|
|
|
|
||||||
Product
|
151,300
|
|
|
114,611
|
|
|
93,971
|
|
|||
Services and other
|
79,709
|
|
|
66,032
|
|
|
53,449
|
|
|||
Total cost of revenue
|
231,009
|
|
|
180,643
|
|
|
147,420
|
|
|||
GROSS PROFIT:
|
|
|
|
|
|
||||||
Product
|
209,258
|
|
|
163,435
|
|
|
154,977
|
|
|||
Services and other
|
330,097
|
|
|
271,219
|
|
|
231,242
|
|
|||
Total gross profit
|
539,355
|
|
|
434,654
|
|
|
386,219
|
|
|||
OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Research and development
|
122,880
|
|
|
102,660
|
|
|
81,078
|
|
|||
Sales and marketing
|
315,804
|
|
|
224,991
|
|
|
179,155
|
|
|||
General and administrative
|
41,347
|
|
|
34,913
|
|
|
25,511
|
|
|||
Total operating expenses
|
480,031
|
|
|
362,564
|
|
|
285,744
|
|
|||
OPERATING INCOME
|
59,324
|
|
|
72,090
|
|
|
100,475
|
|
|||
INTEREST INCOME
|
5,393
|
|
|
5,306
|
|
|
5,006
|
|
|||
OTHER EXPENSE—Net
|
(3,168
|
)
|
|
(1,455
|
)
|
|
(485
|
)
|
|||
INCOME BEFORE INCOME TAXES
|
61,549
|
|
|
75,941
|
|
|
104,996
|
|
|||
PROVISION FOR INCOME TAXES
|
36,206
|
|
|
31,668
|
|
|
38,160
|
|
|||
NET INCOME
|
$
|
25,343
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
Net income per share (Note 8):
|
|
|
|
|
|
||||||
Basic
|
$
|
0.15
|
|
|
$
|
0.27
|
|
|
$
|
0.42
|
|
Diluted
|
$
|
0.15
|
|
|
$
|
0.26
|
|
|
$
|
0.40
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
163,831
|
|
|
162,435
|
|
|
158,074
|
|
|||
Diluted
|
169,289
|
|
|
168,183
|
|
|
166,329
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net income
|
$
|
25,343
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
Other comprehensive (loss) income—net of taxes:
|
|
|
|
|
|
||||||
Foreign currency translation (losses) gains
|
(333
|
)
|
|
(1,617
|
)
|
|
524
|
|
|||
Unrealized (losses) gains on investments
|
(1,708
|
)
|
|
(587
|
)
|
|
3,331
|
|
|||
Tax benefit (provision) related to items of other comprehensive income or loss
|
600
|
|
|
205
|
|
|
(1,166
|
)
|
|||
Other comprehensive (loss) income—net of taxes
|
(1,441
|
)
|
|
(1,999
|
)
|
|
2,689
|
|
|||
Comprehensive income
|
$
|
23,902
|
|
|
$
|
42,274
|
|
|
$
|
69,525
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive (Loss)
Income
|
|
Retained Earnings
|
|
Total
Stockholders’
Equity
|
||||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
BALANCE—December 31, 2011
|
156,401
|
|
|
$
|
156
|
|
|
(1,409
|
)
|
|
$
|
(2,995
|
)
|
|
$
|
317,026
|
|
|
$
|
402
|
|
|
$
|
43,765
|
|
|
$
|
358,354
|
|
Issuance of common stock upon exercise of stock options
|
4,779
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
27,178
|
|
|
—
|
|
|
—
|
|
|
27,183
|
|
||||||
Issuance of common stock in connection with employee stock purchase plan
|
577
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
10,903
|
|
|
—
|
|
|
—
|
|
|
10,904
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,690
|
|
|
—
|
|
|
—
|
|
|
30,690
|
|
||||||
Income tax benefit associated with stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,278
|
|
|
—
|
|
|
—
|
|
|
14,278
|
|
||||||
Net unrealized gain on investments - net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,165
|
|
|
—
|
|
|
2,165
|
|
||||||
Net change in cumulative translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
524
|
|
|
—
|
|
|
524
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66,836
|
|
|
66,836
|
|
||||||
BALANCE—December 31, 2012
|
161,757
|
|
|
$
|
162
|
|
|
(1,409
|
)
|
|
$
|
(2,995
|
)
|
|
$
|
400,075
|
|
|
$
|
3,091
|
|
|
$
|
110,601
|
|
|
$
|
510,934
|
|
Issuance of common stock upon exercise of stock options
|
2,488
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
12,886
|
|
|
—
|
|
|
—
|
|
|
12,888
|
|
||||||
Issuance of common stock in connection with employee stock purchase plan
|
672
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
12,695
|
|
|
—
|
|
|
—
|
|
|
12,696
|
|
||||||
Issuance of common stock upon vesting of restricted stock units
|
228
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Tax withholding upon vesting of restricted stock awards
|
(70
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,452
|
)
|
|
—
|
|
|
—
|
|
|
(1,452
|
)
|
||||||
Repurchase and retirement of common stock
|
(3,540
|
)
|
|
(4
|
)
|
|
1,409
|
|
|
2,995
|
|
|
(8,929
|
)
|
|
—
|
|
|
(33,011
|
)
|
|
(38,949
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,909
|
|
|
—
|
|
|
—
|
|
|
43,909
|
|
||||||
Income tax benefit associated with stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,460
|
|
|
—
|
|
|
—
|
|
|
3,460
|
|
||||||
Net unrealized loss on investments - net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(382
|
)
|
|
—
|
|
|
(382
|
)
|
||||||
Net change in cumulative translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,617
|
)
|
|
—
|
|
|
(1,617
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,273
|
|
|
44,273
|
|
||||||
BALANCE—December 31, 2013
|
161,535
|
|
|
$
|
161
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
462,644
|
|
|
$
|
1,092
|
|
|
$
|
121,863
|
|
|
$
|
585,760
|
|
Issuance of common stock upon exercise of stock options
|
4,763
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
42,426
|
|
|
—
|
|
|
—
|
|
|
42,431
|
|
||||||
Issuance of common stock in connection with employee stock purchase plan
|
770
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
13,990
|
|
|
—
|
|
|
—
|
|
|
13,991
|
|
||||||
Issuance of common stock upon vesting of restricted stock units
|
1,483
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Tax withholding upon vesting of restricted stock awards
|
(461
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,598
|
)
|
|
—
|
|
|
—
|
|
|
(10,598
|
)
|
||||||
Repurchase and retirement of common stock
|
(1,647
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(4,994
|
)
|
|
—
|
|
|
(33,561
|
)
|
|
(38,557
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58,994
|
|
|
—
|
|
|
—
|
|
|
58,994
|
|
||||||
Income tax benefit associated with stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
43
|
|
||||||
Net unrealized loss on investments - net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,108
|
)
|
|
—
|
|
|
(1,108
|
)
|
||||||
Net change in cumulative translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(333
|
)
|
|
—
|
|
|
(333
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,343
|
|
|
25,343
|
|
||||||
BALANCE—December 31, 2014
|
166,443
|
|
|
$
|
166
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
562,504
|
|
|
$
|
(349
|
)
|
|
$
|
113,645
|
|
|
$
|
675,966
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
25,343
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
22,028
|
|
|
15,623
|
|
|
11,564
|
|
|||
Amortization of investment premiums
|
8,703
|
|
|
11,634
|
|
|
12,962
|
|
|||
Stock-based compensation
|
58,994
|
|
|
43,909
|
|
|
30,690
|
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
(2,974
|
)
|
|
(12,069
|
)
|
|||
Other non-cash items—net
|
4,140
|
|
|
961
|
|
|
881
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable—net
|
(55,888
|
)
|
|
(22,080
|
)
|
|
(12,120
|
)
|
|||
Inventory
|
(32,459
|
)
|
|
(35,093
|
)
|
|
(11,303
|
)
|
|||
Deferred tax assets
|
9,072
|
|
|
(18,750
|
)
|
|
(9,254
|
)
|
|||
Prepaid expenses and other current assets
|
(16,000
|
)
|
|
(907
|
)
|
|
791
|
|
|||
Other assets
|
(1,302
|
)
|
|
1,243
|
|
|
2,470
|
|
|||
Accounts payable
|
18,033
|
|
|
10,485
|
|
|
961
|
|
|||
Accrued liabilities
|
7,120
|
|
|
3,602
|
|
|
2,171
|
|
|||
Accrued payroll and compensation
|
10,835
|
|
|
6,013
|
|
|
4,599
|
|
|||
Other liabilities
|
14,318
|
|
|
(1,948
|
)
|
|
(1,870
|
)
|
|||
Deferred revenue
|
127,416
|
|
|
68,871
|
|
|
68,292
|
|
|||
Income taxes payable
|
(3,771
|
)
|
|
22,522
|
|
|
28,265
|
|
|||
Net cash provided by operating activities
|
196,582
|
|
|
147,384
|
|
|
183,866
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of investments
|
(497,084
|
)
|
|
(552,778
|
)
|
|
(601,087
|
)
|
|||
Sales of investments
|
41,755
|
|
|
57,897
|
|
|
26,268
|
|
|||
Maturities of investments
|
458,193
|
|
|
369,659
|
|
|
415,440
|
|
|||
Purchases of property and equipment
|
(32,197
|
)
|
|
(13,877
|
)
|
|
(22,083
|
)
|
|||
Payments made in connection with business acquisitions—net of cash acquired
|
(17
|
)
|
|
(7,635
|
)
|
|
(1,249
|
)
|
|||
Net cash used in investing activities
|
(29,350
|
)
|
|
(146,734
|
)
|
|
(182,711
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
55,324
|
|
|
25,584
|
|
|
38,087
|
|
|||
Taxes paid related to net share settlement of equity awards
|
(10,598
|
)
|
|
(1,452
|
)
|
|
—
|
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
2,974
|
|
|
12,069
|
|
|||
Repurchase and retirement of common stock
|
(43,977
|
)
|
|
(33,529
|
)
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
749
|
|
|
(6,423
|
)
|
|
50,156
|
|
|||
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
(600
|
)
|
|
(1,329
|
)
|
|
(326
|
)
|
|||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
167,381
|
|
|
(7,102
|
)
|
|
50,985
|
|
|||
CASH AND CASH EQUIVALENTS—Beginning of year
|
115,873
|
|
|
122,975
|
|
|
71,990
|
|
|||
CASH AND CASH EQUIVALENTS—End of year
|
$
|
283,254
|
|
|
$
|
115,873
|
|
|
$
|
122,975
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for income taxes—net
|
$
|
40,551
|
|
|
$
|
25,445
|
|
|
$
|
17,088
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Liability for purchase of property and equipment and asset retirement obligations
|
$
|
3,275
|
|
|
$
|
4,253
|
|
|
$
|
398
|
|
Liability incurred in connection with business acquisition
|
$
|
—
|
|
|
$
|
100
|
|
|
$
|
201
|
|
Liability incurred for repurchase of common stock
|
$
|
—
|
|
|
$
|
5,420
|
|
|
$
|
—
|
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
Estimated Useful Lives
|
Building and building improvements
|
20 years
|
Evaluation units
|
1 year
|
Computer equipment and software
|
1 - 2 years
|
Furniture and fixtures
|
3 - 5 years
|
Leasehold improvements
|
Shorter of useful life or lease term
|
•
|
Persuasive evidence of an arrangement exists.
Binding contracts or purchase orders are generally used to determine the existence of an arrangement.
|
•
|
Delivery has occurred or services have been rendered.
Delivery occurs when we fulfill an order and title and risk of loss has been transferred. Services revenue is deferred and recognized ratably over the contract service period, which is typically from
one
to
three
years and is generally recognized upon delivery or completion of service.
|
•
|
Sales price is fixed or determinable.
We assess whether the sales price is fixed or determinable based on the payment terms associated with the transaction and when the sales price is deemed final.
|
•
|
Collectability is reasonably assured.
We assess collectability based primarily on creditworthiness as determined by credit checks, analysis, and payment history.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Accrued warranty balance—beginning of the period
|
$
|
3,037
|
|
|
$
|
2,309
|
|
|
$
|
2,582
|
|
Warranty costs incurred
|
(3,653
|
)
|
|
(3,444
|
)
|
|
(2,669
|
)
|
|||
Provision for warranty for the year, including warranty liabilities assumed in connection with an acquisition
|
5,209
|
|
|
3,965
|
|
|
2,639
|
|
|||
Adjustment related to pre-existing warranties
|
(324
|
)
|
|
207
|
|
|
(243
|
)
|
|||
Accrued warranty balance—end of the period
|
$
|
4,269
|
|
|
$
|
3,037
|
|
|
$
|
2,309
|
|
|
Buy/Sell
|
|
Notional
|
||
Balance Sheet Contracts:
|
|
|
|
||
Currency—As of December 31, 2014
|
|
|
|
||
CAD
|
Buy
|
|
$
|
6,879
|
|
|
|
|
|
||
Currency—As of December 31, 2013
|
|
|
|
||
CAD
|
Buy
|
|
$
|
21,867
|
|
|
|
|
|
|
December 31, 2014
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Corporate debt securities
|
$
|
589,526
|
|
|
$
|
365
|
|
|
$
|
(875
|
)
|
|
$
|
589,016
|
|
Commercial paper
|
51,156
|
|
|
3
|
|
|
(4
|
)
|
|
51,155
|
|
||||
Municipal bonds
|
39,745
|
|
|
15
|
|
|
(39
|
)
|
|
39,721
|
|
||||
Certificates of deposit and term deposits
(1)
|
22,854
|
|
|
—
|
|
|
—
|
|
|
22,854
|
|
||||
U.S. government and agency securities
|
5,749
|
|
|
1
|
|
|
(6
|
)
|
|
5,744
|
|
||||
Total available-for-sale securities
|
$
|
709,030
|
|
|
$
|
384
|
|
|
$
|
(924
|
)
|
|
$
|
708,490
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2013
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Corporate debt securities
|
$
|
603,185
|
|
|
$
|
1,506
|
|
|
$
|
(374
|
)
|
|
$
|
604,317
|
|
Commercial paper
|
69,356
|
|
|
7
|
|
|
—
|
|
|
69,363
|
|
||||
Municipal bonds
|
38,815
|
|
|
48
|
|
|
(20
|
)
|
|
38,843
|
|
||||
Certificates of deposit and term deposits
(1)
|
12,645
|
|
|
3
|
|
|
—
|
|
|
12,648
|
|
||||
U.S. government and agency securities
|
2,000
|
|
|
1
|
|
|
—
|
|
|
2,001
|
|
||||
Total available-for-sale securities
|
$
|
726,001
|
|
|
$
|
1,565
|
|
|
$
|
(394
|
)
|
|
$
|
727,172
|
|
|
|
|
|
|
|
|
|
||||||||
(1)
The majority of our certificates of deposit and term deposits are foreign deposits.
|
|
December 31, 2014
|
||||||||||||||||||||||
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
Corporate debt securities
|
$
|
317,011
|
|
|
$
|
(858
|
)
|
|
$
|
6,011
|
|
|
$
|
(17
|
)
|
|
$
|
323,022
|
|
|
$
|
(875
|
)
|
Commercial paper
|
8,185
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
8,185
|
|
|
(4
|
)
|
||||||
Municipal bonds
|
26,684
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
26,684
|
|
|
(39
|
)
|
||||||
U.S. government and agency securities
|
4,745
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
4,745
|
|
|
(6
|
)
|
||||||
Total available-for-sale securities
|
$
|
356,625
|
|
|
$
|
(907
|
)
|
|
$
|
6,011
|
|
|
$
|
(17
|
)
|
|
$
|
362,636
|
|
|
$
|
(924
|
)
|
|
December 31, 2013
|
||||||||||||||||||||||
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
Corporate debt securities
|
$
|
182,795
|
|
|
$
|
(374
|
)
|
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
183,295
|
|
|
$
|
(374
|
)
|
Commercial paper
|
7,897
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,897
|
|
|
—
|
|
||||||
Municipal bonds
|
14,736
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
14,736
|
|
|
(20
|
)
|
||||||
Total available-for-sale securities
|
$
|
205,428
|
|
|
$
|
(394
|
)
|
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
205,928
|
|
|
$
|
(394
|
)
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Due within one year
|
$
|
436,766
|
|
|
$
|
375,497
|
|
Due within one to three years
|
271,724
|
|
|
351,675
|
|
||
Total
|
$
|
708,490
|
|
|
$
|
727,172
|
|
|
December 31, 2014
|
|
|
|
December 31, 2013
|
|
|
||||||||||||||||||||||||
|
Aggregate
Fair
Value
|
|
Quoted
Prices in
Active
Markets For
Identical
Assets
|
|
Significant
Other
Observable
Remaining
Inputs
|
|
Significant
Other
Unobservable
Remaining
Inputs
|
|
Aggregate
Fair
Value
|
|
Quoted
Prices in
Active
Markets For
Identical
Assets
|
|
Significant
Other
Observable
Remaining
Inputs
|
|
Significant
Other
Unobservable
Remaining
Inputs
|
||||||||||||||||
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt securities
|
$
|
589,016
|
|
|
$
|
—
|
|
|
$
|
589,016
|
|
|
$
|
—
|
|
|
$
|
604,317
|
|
|
$
|
—
|
|
|
$
|
604,317
|
|
|
$
|
—
|
|
Commercial paper
|
51,155
|
|
|
—
|
|
|
51,155
|
|
|
—
|
|
|
71,363
|
|
|
—
|
|
|
71,363
|
|
|
—
|
|
||||||||
Municipal bonds
|
39,721
|
|
|
—
|
|
|
39,721
|
|
|
—
|
|
|
38,843
|
|
|
—
|
|
|
38,843
|
|
|
—
|
|
||||||||
Certificates of deposit and term deposits
|
22,854
|
|
|
—
|
|
|
22,854
|
|
|
—
|
|
|
12,648
|
|
|
—
|
|
|
12,648
|
|
|
—
|
|
||||||||
Money market funds
|
13,311
|
|
|
13,311
|
|
|
—
|
|
|
—
|
|
|
5,724
|
|
|
5,724
|
|
|
—
|
|
|
—
|
|
||||||||
U.S. government and agency securities
|
5,744
|
|
|
1,998
|
|
|
3,746
|
|
|
—
|
|
|
2,001
|
|
|
—
|
|
|
2,001
|
|
|
—
|
|
||||||||
Total
|
$
|
721,801
|
|
|
$
|
15,309
|
|
|
$
|
706,492
|
|
|
$
|
—
|
|
|
$
|
734,896
|
|
|
$
|
5,724
|
|
|
$
|
729,172
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,850
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,850
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,850
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Reported as:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents
|
$
|
13,311
|
|
|
|
|
|
|
|
|
$
|
7,724
|
|
|
|
|
|
|
|
||||||||||||
Short-term investments
|
436,766
|
|
|
|
|
|
|
|
|
375,497
|
|
|
|
|
|
|
|
||||||||||||||
Long-term investments
|
271,724
|
|
|
|
|
|
|
|
|
351,675
|
|
|
|
|
|
|
|
||||||||||||||
Total
|
$
|
721,801
|
|
|
|
|
|
|
|
|
$
|
734,896
|
|
|
|
|
|
|
|
As of December 31, 2013
|
$1,850
|
Less change in fair value of contingent consideration
|
(1,850)
|
As of December 31, 2014
|
$—
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Raw materials
|
$
|
10,617
|
|
|
$
|
8,355
|
|
Finished goods
|
58,860
|
|
|
40,317
|
|
||
Inventory
|
$
|
69,477
|
|
|
$
|
48,672
|
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Land
|
$
|
13,895
|
|
|
$
|
13,895
|
|
Building and building improvements
|
20,166
|
|
|
610
|
|
||
Evaluation units
|
31,474
|
|
|
23,442
|
|
||
Computer equipment and software
|
31,821
|
|
|
22,442
|
|
||
Furniture and fixtures
|
5,096
|
|
|
1,697
|
|
||
Construction-in-progress
|
3,902
|
|
|
10,947
|
|
||
Leasehold improvements
|
7,998
|
|
|
5,417
|
|
||
Total property and equipment
|
114,352
|
|
|
78,450
|
|
||
Less: accumulated depreciation
|
(55,433
|
)
|
|
(41,798
|
)
|
||
Property and equipment—net
|
$
|
58,919
|
|
|
$
|
36,652
|
|
Cash and cash equivalents
|
$
|
206
|
|
Other current assets
|
501
|
|
|
Finite-lived intangible assets
|
2,800
|
|
|
Indefinite-lived intangible assets
|
2,600
|
|
|
Goodwill
|
2,824
|
|
|
Other assets
|
88
|
|
|
Total assets acquired
|
9,019
|
|
|
Current liabilities
|
1,030
|
|
|
Long-term liabilities
|
2,004
|
|
|
Total liabilities assumed
|
3,034
|
|
|
Total purchase price
|
$
|
5,985
|
|
|
December 31, 2014
|
||||||||||||
|
Weighted-Average Useful Life (in Years)
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||
Other intangible assets—net:
|
|
|
|
|
|
|
|
||||||
Developed technology
|
3.6
|
|
$
|
5,606
|
|
|
$
|
3,128
|
|
|
$
|
2,478
|
|
Customer relationships
|
6.0
|
|
500
|
|
|
146
|
|
|
354
|
|
|||
Total other intangible assets—net
|
|
|
$
|
6,106
|
|
|
$
|
3,274
|
|
|
$
|
2,832
|
|
|
December 31, 2013
|
||||||||||||
|
Weighted-Average Useful Life (in Years)
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||
Other intangible assets—net:
|
|
|
|
|
|
|
|
||||||
Developed technology
|
4.6
|
|
$
|
8,971
|
|
|
$
|
2,568
|
|
|
$
|
6,403
|
|
Customer relationships
|
6.0
|
|
500
|
|
|
62
|
|
|
438
|
|
|||
Total other intangible assets—net
|
|
|
$
|
9,471
|
|
|
$
|
2,630
|
|
|
$
|
6,841
|
|
|
Amount
|
||
Fiscal Years:
|
|
||
2015
|
$
|
1,091
|
|
2016
|
785
|
|
|
2017
|
425
|
|
|
2018
|
425
|
|
|
2019
|
106
|
|
|
Total
|
$
|
2,832
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
25,343
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Basic shares:
|
|
|
|
|
|
||||||
Weighted-average common stock outstanding-basic
|
163,831
|
|
|
162,435
|
|
|
158,074
|
|
|||
Diluted shares:
|
|
|
|
|
|
||||||
Weighted-average common stock outstanding-basic
|
163,831
|
|
|
162,435
|
|
|
158,074
|
|
|||
Effect of potentially dilutive securities:
|
|
|
|
|
|
||||||
Stock options
|
4,583
|
|
|
5,685
|
|
|
8,214
|
|
|||
RSUs
|
844
|
|
|
35
|
|
|
—
|
|
|||
ESPP
|
31
|
|
|
28
|
|
|
41
|
|
|||
Weighted-average shares used to compute diluted net income per share
|
169,289
|
|
|
168,183
|
|
|
166,329
|
|
|||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.15
|
|
|
$
|
0.27
|
|
|
$
|
0.42
|
|
Diluted
|
$
|
0.15
|
|
|
$
|
0.26
|
|
|
$
|
0.40
|
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Product
|
$
|
4,642
|
|
|
$
|
2,915
|
|
Services and other
|
554,115
|
|
|
429,713
|
|
||
Total deferred revenue
|
$
|
558,757
|
|
|
$
|
432,628
|
|
Reported As:
|
|
|
|
||||
Current
|
$
|
368,929
|
|
|
$
|
293,664
|
|
Non-current
|
189,828
|
|
|
138,964
|
|
||
Total deferred revenue
|
$
|
558,757
|
|
|
$
|
432,628
|
|
|
Total
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Thereafter
|
||||||||||||||
Operating lease commitments
|
$
|
42,624
|
|
|
$
|
11,535
|
|
|
$
|
9,265
|
|
|
$
|
7,368
|
|
|
$
|
6,732
|
|
|
$
|
4,726
|
|
|
$
|
2,998
|
|
Less: Sublease rental income
|
431
|
|
|
431
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Operating lease commitments—net
|
42,193
|
|
|
11,104
|
|
|
9,265
|
|
|
7,368
|
|
|
6,732
|
|
|
4,726
|
|
|
2,998
|
|
|||||||
Inventory purchase commitments
|
62,804
|
|
|
62,804
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other contractual commitments
|
21,006
|
|
|
18,169
|
|
|
1,861
|
|
|
976
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
$
|
126,003
|
|
|
$
|
92,077
|
|
|
$
|
11,126
|
|
|
$
|
8,344
|
|
|
$
|
6,732
|
|
|
$
|
4,726
|
|
|
$
|
2,998
|
|
|
Options Outstanding
|
|||||||||||
|
Number
of Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Balance—December 31, 2011
|
21,389
|
|
|
$
|
9.14
|
|
|
|
|
|
||
Granted
|
3,401
|
|
|
26.38
|
|
|
|
|
|
|||
Forfeited
|
(1,441
|
)
|
|
19.31
|
|
|
|
|
|
|||
Exercised
|
(4,778
|
)
|
|
5.69
|
|
|
|
|
|
|||
Balance—December 31, 2012
|
18,571
|
|
|
12.40
|
|
|
|
|
|
|||
Granted
|
258
|
|
|
20.89
|
|
|
|
|
|
|||
Forfeited
|
(820
|
)
|
|
22.14
|
|
|
|
|
|
|||
Exercised
|
(2,488
|
)
|
|
5.18
|
|
|
|
|
|
|||
Balance—December 31, 2013
|
15,521
|
|
|
13.18
|
|
|
|
|
|
|
||
Granted
|
387
|
|
|
23.08
|
|
|
|
|
|
|||
Forfeited
|
(443
|
)
|
|
24.21
|
|
|
|
|
|
|||
Exercised
|
(4,763
|
)
|
|
8.91
|
|
|
|
|
|
|||
Balance—December 31, 2014
|
10,702
|
|
|
$
|
14.98
|
|
|
|
|
|
||
Options vested and expected to vest—December 31, 2014
|
10,668
|
|
|
$
|
14.96
|
|
|
2.71
|
|
$
|
167,477
|
|
Options exercisable—December 31, 2014
|
9,125
|
|
|
$
|
13.45
|
|
|
2.38
|
|
$
|
157,027
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Weighted-average fair value per share granted
|
$
|
8.90
|
|
|
$
|
8.42
|
|
|
$
|
11.13
|
|
Intrinsic value of options exercised
|
76,731
|
|
|
41,484
|
|
|
92,323
|
|
|||
Fair value of options vested
|
17,098
|
|
|
26,411
|
|
|
25,350
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
|
Number
Outstanding
|
|
Weighted-
Average
Remaining
Contractual
Life (Years)
|
|
Weighted-
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted-
Average
Exercise
Price
|
||||||
$0.98–$1.20
|
|
646
|
|
|
1.17
|
|
$
|
1.04
|
|
|
642
|
|
|
$
|
1.04
|
|
3.74–4.65
|
|
2,844
|
|
|
0.80
|
|
3.75
|
|
|
2,844
|
|
|
3.75
|
|
||
5.50–6.25
|
|
83
|
|
|
1.82
|
|
5.66
|
|
|
83
|
|
|
5.66
|
|
||
8.43–8.99
|
|
1,050
|
|
|
2.19
|
|
8.53
|
|
|
1,049
|
|
|
8.53
|
|
||
15.28–19.94
|
|
177
|
|
|
3.52
|
|
16.33
|
|
|
143
|
|
|
15.52
|
|
||
20.13–24.92
|
|
3,884
|
|
|
3.75
|
|
21.32
|
|
|
2,988
|
|
|
21.10
|
|
||
26.49–26.70
|
|
2,018
|
|
|
4.18
|
|
26.69
|
|
|
1,376
|
|
|
26.70
|
|
||
|
|
10,702
|
|
|
|
|
|
|
9,125
|
|
|
|
|
|
Restricted Stock Units Outstanding
|
|||||
|
Number of Shares
|
|
Weighted-Average Grant-Date-Fair Value per Share
|
|||
Balance—December 31, 2011
|
—
|
|
|
$
|
—
|
|
Granted
|
873
|
|
|
23.79
|
|
|
Forfeited
|
(43
|
)
|
|
24.76
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Balance—December 31, 2012
|
830
|
|
|
23.73
|
|
|
Granted
|
4,104
|
|
|
21.75
|
|
|
Forfeited
|
(507
|
)
|
|
21.48
|
|
|
Vested
|
(228
|
)
|
|
23.89
|
|
|
Balance—December 31, 2013
|
4,199
|
|
|
22.00
|
|
|
Granted
|
4,047
|
|
|
23.13
|
|
|
Forfeited
|
(472
|
)
|
|
21.92
|
|
|
Vested
|
(1,483
|
)
|
|
22.23
|
|
|
Balance—December 31, 2014
|
6,291
|
|
|
$
|
22.93
|
|
RSUs expected to vest—December 31, 2014
|
5,933
|
|
|
$
|
22.90
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Shares withheld for taxes
|
461
|
|
|
70
|
|
|
—
|
|
|||
Amount withheld for taxes
|
$
|
10,598
|
|
|
$
|
1,452
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||
|
2014
|
|
2013
|
||
Expected term in years
|
3.0
|
|
|
3.0
|
|
Volatility
|
46.3
|
%
|
|
50.1
|
%
|
Risk-free interest rate
|
0.9
|
%
|
|
0.7
|
%
|
Dividend rate
|
—
|
%
|
|
—
|
%
|
|
December 31,
2014 |
|
Outstanding stock options and RSUs
|
16,993
|
|
Reserved for future stock option, RSU and other equity award grants
|
32,431
|
|
Reserved for future ESPP issuances
|
5,981
|
|
Total common stock reserved for future issuances
|
55,405
|
|
|
Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Expected term in years
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
Volatility
|
34.1
|
%
|
|
44.0
|
%
|
|
53.7
|
%
|
Risk-free interest rate
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Dividend rate
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Weighted-average fair value per share granted
|
$
|
5.91
|
|
|
$
|
6.11
|
|
|
$
|
7.06
|
|
Shares issued under the ESPP
|
770
|
|
|
672
|
|
|
577
|
|
|||
Weighted-average price per share issued
|
$
|
18.17
|
|
|
$
|
18.88
|
|
|
$
|
18.90
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Cost of product revenue
|
$
|
483
|
|
|
$
|
383
|
|
|
$
|
333
|
|
Cost of services and other revenue
|
5,826
|
|
|
4,841
|
|
|
3,736
|
|
|||
Research and development
|
17,264
|
|
|
13,271
|
|
|
9,226
|
|
|||
Sales and marketing
|
26,744
|
|
|
19,526
|
|
|
12,793
|
|
|||
General and administrative
|
8,677
|
|
|
6,450
|
|
|
4,602
|
|
|||
Total stock-based compensation expense
|
$
|
58,994
|
|
|
$
|
44,471
|
|
|
$
|
30,690
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Stock options
|
$
|
17,555
|
|
|
$
|
20,806
|
|
|
$
|
24,506
|
|
RSUs
|
37,068
|
|
|
18,968
|
|
|
1,714
|
|
|||
ESPP
|
4,371
|
|
|
4,697
|
|
|
4,470
|
|
|||
Total stock-based compensation expense
|
$
|
58,994
|
|
|
$
|
44,471
|
|
|
$
|
30,690
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Income tax benefit associated with stock-based compensation
|
$
|
11,086
|
|
|
$
|
8,331
|
|
|
$
|
5,870
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Domestic
|
$
|
35,778
|
|
|
$
|
83,076
|
|
|
$
|
95,730
|
|
Foreign
|
25,771
|
|
|
(7,135
|
)
|
|
9,266
|
|
|||
Total income before income taxes
|
$
|
61,549
|
|
|
$
|
75,941
|
|
|
$
|
104,996
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
17,717
|
|
|
$
|
43,384
|
|
|
$
|
43,765
|
|
State
|
1,110
|
|
|
2,490
|
|
|
1,992
|
|
|||
Foreign
|
8,921
|
|
|
4,175
|
|
|
2,266
|
|
|||
Total current
|
$
|
27,748
|
|
|
$
|
50,049
|
|
|
$
|
48,023
|
|
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
6,742
|
|
|
$
|
(17,149
|
)
|
|
$
|
(9,677
|
)
|
State
|
(36
|
)
|
|
(1,232
|
)
|
|
(186
|
)
|
|||
Foreign
|
1,752
|
|
|
—
|
|
|
—
|
|
|||
Total deferred
|
8,458
|
|
|
(18,381
|
)
|
|
(9,863
|
)
|
|||
Provision for income taxes
|
$
|
36,206
|
|
|
$
|
31,668
|
|
|
$
|
38,160
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Tax at federal statutory tax rate
|
$
|
21,542
|
|
|
$
|
26,579
|
|
|
$
|
36,749
|
|
Stock-based compensation expense
|
7,367
|
|
|
4,571
|
|
|
1,570
|
|
|||
State taxes—net of federal benefit
|
975
|
|
|
419
|
|
|
1,186
|
|
|||
Domestic production activities deduction
|
—
|
|
|
(3,256
|
)
|
|
(1,813
|
)
|
|||
Foreign tax credit
|
(4,433
|
)
|
|
(2,853
|
)
|
|
(2,348
|
)
|
|||
Research and development credit
|
(880
|
)
|
|
(1,650
|
)
|
|
(144
|
)
|
|||
Foreign income taxed at different rates
|
(406
|
)
|
|
2,927
|
|
|
(1,626
|
)
|
|||
Foreign withholding taxes
|
9,085
|
|
|
6,622
|
|
|
2,185
|
|
|||
Other
|
2,956
|
|
|
(1,691
|
)
|
|
2,401
|
|
|||
Total provision for income taxes
|
$
|
36,206
|
|
|
$
|
31,668
|
|
|
$
|
38,160
|
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforward
|
$
|
1,293
|
|
|
$
|
2,183
|
|
Deferred revenue
|
31,545
|
|
|
47,341
|
|
||
Nondeductible reserves and accruals
|
20,904
|
|
|
16,055
|
|
||
Depreciation and amortization
|
193
|
|
|
(465
|
)
|
||
General business credit carryforward
|
2,155
|
|
|
439
|
|
||
Stock-based compensation expense
|
16,463
|
|
|
15,468
|
|
||
Other
|
11
|
|
|
17
|
|
||
Total deferred tax assets
|
$
|
72,564
|
|
|
$
|
81,038
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Unrecognized tax benefits, beginning of year
|
$
|
29,604
|
|
|
$
|
27,808
|
|
|
$
|
19,269
|
|
Gross increases for tax positions related to the current year
|
14,547
|
|
|
4,713
|
|
|
7,550
|
|
|||
Gross increases for tax positions related to the prior year
|
—
|
|
|
405
|
|
|
1,479
|
|
|||
Gross decreases for tax positions related to the prior year
|
—
|
|
|
(3,322
|
)
|
|
(490
|
)
|
|||
Unrecognized tax benefits, end of year
|
$
|
44,151
|
|
|
$
|
29,604
|
|
|
$
|
27,808
|
|
|
Year Ended December 31,
|
||||||||||
Revenue
|
2014
|
|
2013
|
|
2012
|
||||||
Americas:
|
|
|
|
|
|
||||||
United States
|
$
|
200,294
|
|
|
$
|
162,327
|
|
|
$
|
145,369
|
|
Other Americas
|
124,365
|
|
|
90,459
|
|
|
71,687
|
|
|||
Total Americas
|
324,659
|
|
|
252,786
|
|
|
217,056
|
|
|||
Europe, Middle East, and Africa (“EMEA”)
|
270,537
|
|
|
208,979
|
|
|
184,175
|
|
|||
Asia Pacific and Japan (“APAC”)
|
175,168
|
|
|
153,532
|
|
|
132,408
|
|
|||
Total revenue
|
$
|
770,364
|
|
|
$
|
615,297
|
|
|
$
|
533,639
|
|
|
|
|
|
||||
Property and Equipment
—
net
|
December 31,
2014 |
|
December 31,
2013 |
||||
Americas:
|
|
|
|
||||
United States
|
$
|
46,116
|
|
|
$
|
29,334
|
|
Canada
|
6,054
|
|
|
4,372
|
|
||
Other Americas
|
875
|
|
|
45
|
|
||
Total Americas
|
53,045
|
|
|
33,751
|
|
||
EMEA
|
3,256
|
|
|
1,273
|
|
||
APAC
|
2,618
|
|
|
1,628
|
|
||
Total property and equipment—net
|
$
|
58,919
|
|
|
$
|
36,652
|
|
|
December 31, 2014
|
||||||||||||||
|
Foreign Currency Translation Gains and Losses
|
|
Unrealized Gains and Losses on Investments
|
|
Tax benefit or provision related to items of other comprehensive income or loss
|
|
Total
|
||||||||
Beginning balance
|
$
|
333
|
|
|
$
|
1,168
|
|
|
$
|
(409
|
)
|
|
$
|
1,092
|
|
Other comprehensive loss before reclassifications
|
|
|
(1,694
|
)
|
|
595
|
|
|
(1,099
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive (loss) income
|
(333
|
)
|
|
(14
|
)
|
|
5
|
|
|
(342
|
)
|
||||
Net current-period other comprehensive loss
|
(333
|
)
|
|
(1,708
|
)
|
|
600
|
|
|
(1,441
|
)
|
||||
Ending balance
|
$
|
—
|
|
|
$
|
(540
|
)
|
|
$
|
191
|
|
|
$
|
(349
|
)
|
|
December 31, 2013
|
||||||||||||||
|
Foreign Currency Translation Gains and Losses
|
|
Unrealized Gains and Losses on Investments
|
|
Tax benefit or provision related to items of other comprehensive income or loss
|
|
Total
|
||||||||
Beginning balance
|
$
|
1,950
|
|
|
$
|
1,755
|
|
|
$
|
(614
|
)
|
|
$
|
3,091
|
|
Other comprehensive loss before reclassifications
|
(1,617
|
)
|
|
(573
|
)
|
|
200
|
|
|
(1,990
|
)
|
||||
Amounts reclassified from accumulated other comprehensive (loss) income
|
—
|
|
|
(14
|
)
|
|
5
|
|
|
(9
|
)
|
||||
Net current-period other comprehensive loss
|
(1,617
|
)
|
|
(587
|
)
|
|
205
|
|
|
(1,999
|
)
|
||||
Ending balance
|
$
|
333
|
|
|
$
|
1,168
|
|
|
$
|
(409
|
)
|
|
$
|
1,092
|
|
December 31, 2014
|
||||||
Details about Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
||
Foreign currency translation losses
|
|
$
|
(333
|
)
|
|
Other expense—net
|
Unrealized gains on investments
|
|
$
|
(14
|
)
|
|
Other expense—net
|
Tax provision related to items of other comprehensive income or loss
|
|
5
|
|
|
Provision for income taxes
|
|
Total reclassification for the period
|
|
$
|
(342
|
)
|
|
|
December 31, 2013
|
||||||
Details about Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
||
Unrealized gains on investments
|
|
$
|
(14
|
)
|
|
Other expense—net
|
Tax provision related to items of other comprehensive income or loss
|
|
5
|
|
|
Provision for income taxes
|
|
Total reclassification for the period
|
|
$
|
(9
|
)
|
|
|
1.
|
Financial Statements
: The information concerning Fortinet’s financial statements and the Report of Independent Registered Public Accounting Firm required by this Item 15(a)(1) is incorporated by reference herein to the section of this Annual Report on Form 10-K in Part II, Item 8, titled “Financial Statements and Supplementary Data.”
|
2.
|
Financial Statement Schedule
: The following financial statement schedule of Fortinet, Inc., for the fiscal years ended
December 31, 2014
,
2013
and
2012
, is filed as part of this Annual Report on Form 10-K and should be read in conjunction with our consolidated financial statements.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Sales Returns Reserve:
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
4,573
|
|
|
$
|
2,267
|
|
|
$
|
2,351
|
|
Charged (credited) to costs and expenses, net of deductions
|
1,269
|
|
|
2,306
|
|
|
(84
|
)
|
|||
Ending balance
|
$
|
5,842
|
|
|
$
|
4,573
|
|
|
$
|
2,267
|
|
|
|
|
|
|
|
||||||
Allowance for Doubtful Accounts:
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
32
|
|
|
$
|
115
|
|
|
$
|
336
|
|
Charged (credited) to costs and expenses, net of write-offs
|
330
|
|
|
(83
|
)
|
|
(221
|
)
|
|||
Ending balance
|
$
|
362
|
|
|
$
|
32
|
|
|
$
|
115
|
|
|
|
|
|
|
|
3.
|
Exhibits
: See Item 15(b) below. We have filed, or incorporated into this Annual Report on Form 10-K by reference, the exhibits listed on the accompanying Exhibit Index immediately following the signature page of this Annual Report on Form 10-K.
|
FORTINET, INC.
|
||
|
|
|
|
By:
|
/s/ Andrew Del Matto
|
|
|
Andrew Del Matto, Chief Financial Officer
|
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Ken Xie
|
|
Chief Executive Officer and Chairman
|
|
February 27, 2015
|
Ken Xie
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Andrew Del Matto
|
|
Chief Financial Officer
|
|
February 27, 2015
|
Andrew Del Matto
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Michael Xie
|
|
President, Chief Technology Officer and Director
|
|
February 27, 2015
|
Michael Xie
|
|
|
|
|
|
|
|
|
|
/s/ Ming Hsieh
|
|
Director
|
|
February 27, 2015
|
Ming Hsieh
|
|
|
|
|
|
|
|
|
|
/s/ Chenming Hu
|
|
Director
|
|
February 27, 2015
|
Chenming Hu
|
|
|
|
|
|
|
|
|
|
/s/ Hong Liang Lu
|
|
Director
|
|
February 27, 2015
|
Hong Liang Lu
|
|
|
|
|
|
|
|
|
|
/s/ William H. Neukom
|
|
Director
|
|
February 27, 2015
|
William H. Neukom
|
|
|
|
|
|
|
|
|
|
/s/ Christopher B. Paisley
|
|
Director
|
|
February 27, 2015
|
Christopher B. Paisley
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
Incorporated by reference herein
|
|
|
|
|
|
|
|
|
Form
|
|
Date
|
|
Exhibit
Number
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation
|
|
Registration Statement on Form S-l (File No. 333-161190)
|
|
August 10, 2009
|
|
3.2
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Bylaws
|
|
Current Report on Form 8-K (File No. 001-34511)
|
|
April 21, 2014
|
|
3.4
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Specimen common stock certificate of the Company
|
|
Registration Statement on Form S-l, as amended (File No. 333-161190)
|
|
November 2, 2009
|
|
4.1
|
|
|
|
|
|
|
|
|
|
10.1
†
|
|
Forms of Indemnification Agreement between the Company and its directors and officers
|
|
Registration Statement on Form S-l (File No. 333-161190)
|
|
August 10, 2009
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.2
†
|
|
2000 Stock Plan and forms of agreement thereunder
|
|
Registration Statement on Form S-l (File No. 333-161190)
|
|
August 10, 2009
|
|
10.2
|
|
|
|
|
|
|
|
|
|
10.3
†
|
|
2008 Stock Plan and forms of agreement thereunder
|
|
Registration Statement on Form S-l (File No. 333-161190)
|
|
August 10, 2009
|
|
10.3
|
|
|
|
|
|
|
|
|
|
10.4
†
|
|
2009 Equity Incentive Plan and forms of restricted stock unit award and restricted stock agreement thereunder
|
|
Registration Statement on Form S-l (File No. 333-161190)
|
|
August 10, 2009
|
|
10.4
|
|
|
|
|
|
|
|
|
|
10.5
†
|
|
Forms of stock option agreement under 2009 Equity Incentive Plan
|
|
Annual Report on Form 10-K (File No. 001-34511)
|
|
February 28, 2012
|
|
10.5
|
|
|
|
|
|
|
|
|
|
10.6
†
|
|
Form of performance stock unit award agreement under 2009 Equity Incentive Plan
|
|
Quarterly Report on Form 10-Q (File No. 001-34511)
|
|
August 6, 2013
|
|
99.1
|
|
|
|
|
|
|
|
|
|
10.7
†
*
|
|
Forms of restricted stock unit award and performance stock unit award agreement under 2009 Equity Incentive Plan (Additional Forms)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
†
|
|
Fortinet, Inc. 2011 Employee Stock Purchase Plan
|
|
Current Report on Form 8-K (File No. 001-34511)
|
|
June 27, 2011
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.9
†
|
|
Fortinet, Inc. Bonus Plan
|
|
Current Report on Form 8-K (File No. 001-34511)
|
|
January 26, 2010
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.10
†
|
|
Fortinet, Inc. Cash and Equity Incentive Plan
|
|
Quarterly Report on Form 10-Q (File No. 001-34511)
|
|
November 5, 2013
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.11
†
|
|
Form of Change of Control Agreement between the Company and its directors
|
|
Registration Statement on Form S-1, as amended (File No. 001-34511)
|
|
August 10, 2009
|
|
10.11
|
|
|
|
|
|
|
|
|
|
10.12
†
|
|
Separation and Change of Control Agreement, dated as of August 7, 2009, between the Company and Ken Xie
|
|
Registration Statement on Form S-l, as amended (File No. 333-161190)
|
|
August 10, 2009
|
|
10.5
|
|
|
|
|
|
|
|
|
|
10.13
†
|
|
Separation and Change of Control Agreement, dated as of August 7, 2009, between the Company and Michael Xie
|
|
Registration Statement on Form S-l, as amended (File No. 333-161190)
|
|
August 10, 2009
|
|
10.6
|
|
|
|
|
|
|
|
|
|
10.14
†
|
|
Separation and Change of Control Agreement, dated as of August 7, 2009, between the Company and John Whittle
|
|
Registration Statement on Form S-l, as amended (File No. 333-161190)
|
|
August 10, 2009
|
|
10.8
|
|
|
|
|
|
|
|
|
|
10.15
†
|
|
Offer Letter, dated as of August 31, 2007, by and between the Company and John Whittle
|
|
Registration Statement on Form S-l, as amended (File No. 333-161190)
|
|
August 10, 2009
|
|
10.10
|
|
|
|
|
|
|
|
|
|
10.16
†
|
|
Offer Letter, dated as of December 17, 2013, by and between the Company and Andrew Del Matto
|
|
Current Report on Form 8-K (File No. 001-34511)
|
|
December 20, 2013
|
|
99.1
|
|
|
|
|
|
|
|
|
|
10.17
†
|
|
Letter regarding stock grants, dated as of December 17, 2013, between the Company and Andrew Del Matto
|
|
Current Report on Form 8-K (File No. 001-34511)
|
|
December 20, 2013
|
|
99.2
|
|
|
|
|
|
|
|
|
|
10.18
†
|
|
Change of Control Severance Agreement, dated as of December 17, 2013, between registrant and Andrew Del Matto
|
|
Current Report on Form 8-K (File No. 001-34511)
|
|
December 20, 2013
|
|
99.3
|
|
|
|
|
|
|
|
|
|
10.19
†
|
|
Amendment 1 to Change of Control Severance Agreement, dated as of July 31, 2014, between the Company and Ken Xie
|
|
Quarterly Report on Form 10-Q (File No.001-34511)
|
|
August 5, 2014
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.20
†
|
|
Amendment 1 to Change of Control Severance Agreement, dated as of July 31, 2014, between the Company and Michael Xie
|
|
Quarterly Report on Form 10-Q (File No.001-34511)
|
|
August 5, 2014
|
|
10.2
|
|
|
|
|
|
|
|
|
|
10.21
†
|
|
Amendment 1 to Change of Control Severance Agreement, dated as of July 31, 2014, between the Company and John Whittle
|
|
Quarterly Report on Form 10-Q (File No.001-34511)
|
|
August 5, 2014
|
|
10.3
|
|
|
|
|
|
|
|
|
|
21.1*
|
|
List of subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1*
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1*
|
|
Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K)
|
|
|
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1*
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
Grant Number
|
|
|
|
|
|
Date of Grant
|
|
|
|
|
|
Vesting Commencement Date
|
|
|
|
|
|
Number of Restricted Stock Units:
|
|
|
PARTICIPANT:
|
|
FORTINET, INC.
|
|
|
|
|
|
|
Signature
|
|
By
|
|
|
|
Print Name
|
|
Title
|
|
|
|
Residence Address
:
|
|
|
|
|
|
|
|
|
a.
|
the grant of the Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;
|
b.
|
all decisions with respect to future Restricted Stock Units or other grants, if any, will be at the sole discretion of the Company;
|
c.
|
Participant is voluntarily participating in the Plan;
|
d.
|
the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income and value of same, are not intended to replace any pension rights or compensation;
|
e.
|
the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
|
f.
|
the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;
|
g.
|
unless otherwise agreed with the Company, the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income and value of same, are not granted as consideration for, or in connection with, the service Participant may provide as a director of any Parent or Subsidiary of the Company.
|
h.
|
no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from the termination of Participant's status as a Service Provider for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or rendering services or the terms of Participant’s employment or service agreement, if any), and in consideration of the grant of the Restricted Stock Units to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company,
any Parent or Subsidiary or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company,
any Parent or Subsidiary
and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim; and
|
i.
|
unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; and
|
j.
|
the following provisions apply only if Participant is providing services outside the United States:
|
If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant Restricted Stock Units or other Awards or administer or maintain such Awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.
|
Selanjutnya, Peserta memahami bahawa dia memberikan persetujuan di sini secara sukarela. Jika Peserta tidak bersetuju, atau jika Peserta kemudian membatalkan persetujuannya, status pekerjaan atau perkhidmatan dan kerjayanya dengan Majikan tidak akan terjejas; satunya akibat jika dia tidak bersetuju atau menarik balik persetujuannya adalah bahawa Syarikat tidak akan dapat menganugerahkan kepada Peserta Unit Saham Terbatas atau Anugerah lain atau mentadbir atau mengekalkan Anugerah tersebut. Oleh itu, Peserta fahami bahawa keengganan atau penarikan balik persetujuannya boleh menjejaskan keupayaannya untuk mengambil bahagian dalam Pelan. Untuk maklumat lanjut mengenai akibat keengganannya untuk memberikan keizinan atau penarikan balik keizinan, Peserta fahami bahawa dia boleh menghubungi wakil sumber manusia tempatannya.
|
Grant Number
|
|
|
|
|
|
Date of Grant
|
|
|
|
|
|
Performance Period Start Date
|
|
|
|
|
|
Target Number of PSUs:
|
|
|
PARTICIPANT:
|
|
FORTINET, INC.
|
|
|
|
|
|
|
Signature
|
|
By
|
|
|
|
Print Name
|
|
Title
|
|
|
|
Residence Address
:
|
|
|
|
|
|
|
|
|
Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Award Agreement and any other PSU grant materials by and among, as applicable, the Employer, the Company and any Parent or Subsidiary for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.
|
Peserta dengan ini secara eksplisit dan tanpa sebarang keraguan mengizinkan pengumpulan, penggunaan dan pemindahan, dalam bentuk elektronik atau lain-lain, data peribadi Peserta seperti yang dinyatakan dalam Perjanjian Penganugerahan ini dan apa-apa bahan geran PSU yang lain oleh dan di antara, sebagaimana yang berkenaan, Majikan, Syarikat, dan mana-mana Syarikat Induk atau Anak Syarikat untuk tujuan ekslusif bagi pelaksanaan, pentadbiran dan pengurusan penyertaan Peserta dalam Pelan tersebut.
|
Entity
|
|
Jurisdiction of Incorporation
|
|
|
|
Fortinet International, Inc.
|
|
Cayman Islands
|
Fortinet UK, Ltd.
|
|
United Kingdom
|
Fortinet Technologies (Canada), Inc.
|
|
Canada
|
Fortinet Japan K.K.
|
|
Japan
|
Fortinet Information Technology (Beijing) Co., Ltd.
|
|
China
|
Fortinet Information Technology (Tianjin) Co., Ltd.
|
|
China
|
Fortinet Malaysia SDN. BHD.
|
|
Malaysia
|
Fortinet Singapore Private Limited
|
|
Singapore
|
Fortinet Technologies India Private Limited
|
|
India
|
Fortinet S.A.R.L.
|
|
France
|
Fortinet GmbH
|
|
Germany
|
Fortinet Federal, Inc.
|
|
U.S.A.
|
Fortinet BV
|
|
Netherlands
|
Fortinet Mexico
|
|
Mexico
|
1.
|
I have reviewed this Annual Report on Form 10-K of Fortinet, 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 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
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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.
|
|
|
|
/s/ Ken Xie
|
|
Ken Xie
|
|
Chief Executive Officer and Chairman
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Fortinet, 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 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.
|
|
|
|
/s/ Andrew Del Matto
|
|
Andrew Del Matto
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
|
|
By:
|
/s/ Ken Xie
|
Date:
|
February 27, 2015
|
Name:
|
Ken Xie
|
|
|
Title:
|
Chief Executive Officer and Chairman
(Principal Executive Officer)
|
|
|
|
|
|
|
By:
|
/s/ Andrew Del Matto
|
Date:
|
February 27, 2015
|
Name:
|
Andrew Del Matto
|
|
|
Title:
|
Chief Financial Officer
(Principal Financial Officer)
|