Document And Entity Information
v0.0.0.0
Document And Entity Information
6 Months Ended
Mar. 31, 2013
May 03, 2013
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2013  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q2  
Entity Registrant Name F5 NETWORKS INC  
Entity Central Index Key 0001048695  
Current Fiscal Year End Date --09-30  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   78,799,170

Consolidated Balance Sheets
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Sep. 30, 2012
ASSETS    
Cash and cash equivalents $ 229,662 $ 211,181
Short-term investments 293,186 320,970
Accounts receivable, net of allowances of $3,113 and $3,254 192,796 185,172
Inventories 17,963 17,410
Deferred tax assets 10,578 10,362
Other current assets 60,239 30,986
Total current assets 804,424 776,081
Property and equipment, net 63,182 59,604
Long-term investments 662,822 662,803
Deferred tax assets 31,165 35,478
Goodwill 447,799 348,239
Other assets, net 56,517 28,996
Total assets 2,065,909 1,911,201
LIABILITIES AND SHAREHOLDERS' EQUITY    
Accounts payable 39,100 27,026
Accrued liabilities 84,966 86,409
Deferred revenue 396,678 352,594
Total current liabilities 520,744 466,029
Other long-term liabilities 23,006 21,078
Deferred revenue, long-term 93,980 94,694
Total long-term liabilities 116,986 115,772
Commitments and contingencies (Note 5)      
Shareholders' equity    
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding      
Common stock, no par value; 200,000 shares authorized, 78,380 and 78,715 shares issued and outstanding 294,875 326,922
Accumulated other comprehensive loss (5,908) (3,829)
Retained earnings 1,139,212 1,006,307
Total shareholders' equity 1,428,179 1,329,400
Total liabilities and shareholders' equity $ 2,065,909 $ 1,911,201

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

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

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

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

Summary Of Significant Accounting Policies
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Summary Of Significant Accounting Policies
6 Months Ended
Mar. 31, 2013
Summary Of Significant Accounting Policies [Abstract]  
Summary Of Significant Accounting Policies

1. Summary of Significant Accounting Policies

 

Description of Business

 

F5 Networks, Inc. (the “Company”) provides products and services to help companies manage their Internet Protocol (IP) traffic and file storage infrastructure efficiently and securely. The Company’s application delivery networking products improve the performance, availability and security of servers and other network resources. Internet traffic between network-based applications and clients passes through these devices where the content is inspected to ensure that it is safe and modified as necessary to ensure that it is delivered securely and in a way that optimizes the performance of both the network and the applications. The Company’s principal products are application delivery controllers that include the BIG-IP family of appliances and a line of scalable VIPRION systems. The Company’s recently acquired line of Diameter signaling and routing products enable full connectivity, enhanced scalability, and comprehensive control of signaling traffic in service providers’ evolving packet core networks. The Company’s storage virtualization products simplify and reduce the cost of managing files and file storage devices, and ensure fast, secure, easy access to files for users and applications. In February 2013, the Company acquired LineRate Systems, Inc., a developer of software defined network services technology. The Company also offers a broad range of services that include consulting, training, maintenance and other technical support services.

 

Basis of Presentation

 

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for their fair statement in conformity with accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

 

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

 

Revenue Recognition

 

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

 

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

 

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

 

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

 

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

 

Revenue from the sale of products is generally recognized when the product has been shipped and the customer is obligated to pay for the product. When rights of return are present and the Company cannot estimate returns, revenue is recognized when such rights of return lapse. In certain regions where the Company does not have the ability to reasonably estimate returns, the Company defers revenue on sales to its distributors until information is received from the channel partner indicating that the product has been sold to the end-user customer. Payment terms to domestic customers are generally net 30 days to net 45 days. Payment terms to international customers range from net 30 days to net 120 days based on normal and customary trade practices in the individual markets. The Company offers extended payment terms to certain customers, in which case, revenue is recognized when payments are due.

 

Revenues for post-contract customer support (PCS) are recognized on a straight-line basis over the service contract term. PCS includes a limited period of telephone support updates, repair or replacement of any failed product or component that fails during the term of the agreement, bug fixes and rights to upgrades, when and if available. Consulting services are customarily billed at fixed hourly rates, plus out-of-pocket expenses, and revenues are recognized when the consulting has been completed. Training revenue is recognized when the training has been completed.

 

The majority of the Company’s products are hardware appliances which contain software essential to the overall functionality of the products. Hardware appliances are generally sold with PCS and on occasion, with consulting and/or training services. Arrangement consideration in such multiple element transactions  is allocated to each element based on a fair value hierarchy, where the selling price for an element is based on vendor specific objective evidence (VSOE), if available, third-party evidence (TPE), if available and VSOE is not available; or the best estimate of selling price (BESP), if neither VSOE or TPE is available.

 

For sales of nonessential and stand-alone software, the Company allocates revenue for arrangements with multiple elements based on software revenue recognition guidance. Software revenue recognition guidance requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair values of those elements. The fair value of an element must be based on VSOE. Where fair value of delivered elements is not available, revenue is recognized on the “residual method” based on the fair value of undelivered elements. If evidence of fair value of one or more undelivered elements does not exist, all revenue is deferred and recognized at the earlier of the delivery of those elements or the establishment of fair value of the remaining undelivered elements.

 

The Company establishes VSOE for its products, PCS, consulting and training services based on the sales price charged for each element when sold separately. The sales price is discounted from the applicable list price based on various factors including the type of customer, volume of sales, geographic region and program level. The Company’s list prices are generally not fair value as discounts may be given based on the factors enumerated above. The Company uses historical sales transactions to determine whether VSOE can be established for each of the elements. In most instances, VSOE of fair value is the sales price of actual standalone (unbundled) transactions within the past 12 month period, when a substantial majority of transactions are priced within a narrow range, which the Company has determined to be plus or minus 15% of the median sales price.

 

The Company believes that the VSOE of fair value of training and consulting services is represented by the billable rate per hour, based on the rates charged to customers when they purchase standalone training or consulting services. The price of consulting services is not based on the type of customer, volume of sales, geographic region or program level.

 

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

 

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

 

The Company regularly validates the VSOE of fair value and BESP for elements in its multiple element arrangements. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis and excluded from revenues.

 

Goodwill and Acquired Intangible Assets

 

Goodwill represents the excess purchase price over the estimated fair value of net assets acquired as of the acquisition date. The Company tests goodwill for impairment on an annual basis and between annual tests when impairment indicators are identified, and goodwill is written down when impaired. Goodwill was recorded in connection with the acquisition of LineRate Systems, Inc. in February 2013, Traffix Systems in fiscal year 2012, Acopia Networks, Inc. in fiscal year 2007, Swan Labs, Inc. in fiscal year 2006, MagniFire Websystems, Inc. in fiscal year 2004 and uRoam, Inc. in fiscal year 2003. For its annual goodwill impairment test, the Company operates under one reporting unit and the fair value of its reporting unit is determined by the Company’s enterprise value. The Company performs its annual goodwill impairment test during the second fiscal quarter.

 

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

 

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

 

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the Company’s reporting unit is less than its carrying amount, the provisions of authoritative guidance require that the Company perform a two-step impairment test on goodwill. The first step of the test identifies whether potential impairment may have occurred, while the second step of the test measures the amount of the impairment, if any. Impairment is recognized when the carrying amount of goodwill exceeds its fair value. In March 2013, the Company completed a qualitative assessment of potential impairment indicators and concluded that it was more-likely-than-not that the fair value of its reporting unit exceeded its carrying amount.

 

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

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation using the straight-line attribution method for recognizing compensation expense. The Company recognized $27.6 million and $23.3 million of stock-based compensation expense for the three months ended March 31, 2013 and 2012, respectively, and $54.3 million and $45.5 million for the six months ended March 31, 2013 and 2012, respectively. As of March 31, 2013, there was $118.6 million of total unrecognized stock-based compensation cost, the majority of which will be recognized over the next two years. Going forward, stock-based compensation expenses may increase as the Company issues additional equity-based awards to continue to attract and retain key employees.

 

The Company issues incentive awards to its employees through stock-based compensation consisting of restricted stock units (RSUs). The value of RSUs is determined using the fair value method, which in this case, is based on the number of shares granted and the quoted price of the Company’s common stock on the date of grant. 

 

The Company recognizes compensation expense for only the portion of restricted stock units that are expected to vest. Therefore, the Company applies estimated forfeiture rates that are derived from historical employee termination behavior. Based on historical differences with forfeitures of stock-based awards granted to the Company’s executive officers and Board of Directors versus grants awarded to all other employees, the Company has developed separate forfeiture expectations for these two groups. The Company’s estimated forfeiture rate in the second quarter of fiscal year 2013 is 5.3% for grants awarded to the Company’s executive officers and Board of Directors, and 7.6% for grants awarded to all other employees. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

 

In November 2012, the Company granted 290,415 RSUs to certain current executive officers as part of the annual equity awards program. Fifty percent of the aggregate number of RSUs vest in equal quarterly increments over four years, until such portion of the grant is fully vested on November 1, 2016. One-eighth of the RSU grant, or a portion thereof, is subject to the Company achieving specified quarterly revenue and EBITDA goals during fiscal year 2013. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 37.5% of this annual equity awards RSU grant shall be subject to quarterly performance based vesting for fiscal years 2014, 2015 and 2016 (12.5% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods.

 

In November 2011, as part of the annual review of executive compensation by the Compensation Committee of the Board of Directors and a change in the grant date for the Company’s annual equity awards program for the executive officers from August 1 to November 1, the Company granted 82,968 RSUs to certain current executive officers. Fifty percent of the aggregate number of RSUs vest in equal quarterly increments over three years, until such portion of the grant is fully vested on November 1, 2014. One-sixth of the RSU grant, or a portion thereof, was subject to the Company achieving specified quarterly revenue and EBITDA goals during fiscal year 2012. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 33.33% of this annual equity awards RSU grant shall be subject to quarterly performance based vesting for fiscal years 2013 and 2014 (16.66% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods.

 

In August 2011, the Company granted 170,390 RSUs to certain current executive officers as part of the annual equity awards program. Fifty percent of the aggregate number of RSUs granted as part of the annual equity awards program vest in equal quarterly increments over three years, until such portion of the grant is fully vested on August 1, 2014. One-sixth of the annual equity awards RSU grant, or a portion thereof, was subject to the Company achieving specified quarterly revenue and EBITDA goals during the period beginning in the fourth quarter of fiscal year 2011 through the third quarter of fiscal year 2012. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 33.33% of this annual equity awards RSU grant shall be subject to performance based vesting for each of the four quarter periods beginning with the fourth quarters of fiscal years 2012 and 2013 (16.66% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods.

 

In August 2010, the Company granted 181,334 and 83,000 RSUs to certain current executive officers as part of the annual equity and retention awards programs, respectively. Fifty percent of the aggregate number of RSUs granted as part of the annual equity awards program vest in equal quarterly increments over three years, until such portion of the grant is fully vested on August 1, 2013. One-sixth of the annual equity awards RSU grant, or a portion thereof, was subject to the Company achieving specified quarterly revenue and EBITDA goals during the period beginning in the fourth quarter of fiscal year 2010 through the third quarter of fiscal year 2011. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 33.33% of this annual equity awards RSU grant shall be subject to performance based vesting for each of the four quarter periods beginning with the fourth quarters of fiscal years 2011 and 2012 (16.66% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods. All RSUs granted as part of the retention awards program fully vest on August 1, 2013.

 

The Company recognizes compensation costs for awards with performance conditions when it concludes it is probable that the performance condition will be achieved. The Company reassesses the probability of vesting at each balance sheet date and adjusts compensation costs based on the probability assessment.

 

Common Stock Repurchase

 

On April 24,  2013, the Company announced that its Board of Directors authorized an additional $200 million for its common stock share repurchase program. This new authorization is incremental to the existing $600 million program, initially approved in October 2010 and expanded in August 2011 and October 2011. Acquisitions for the share repurchase programs will be made from time to time in private transactions or open market purchases as permitted by securities laws and other legal requirements. The programs can be terminated at any time. As of May 3, 2013, the Company had repurchased and retired 10,300,034 shares at an average price of $70.13 per share and the Company had $277.2 million remaining to purchase shares as part of its repurchase programs.

 

Earnings Per Share

 

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. The Company’s nonvested restricted stock awards and restricted stock units do not have nonforfeitable rights to dividends or dividend equivalents.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

63,412 

 

$

68,641 

 

$

132,905 

 

$

135,133 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 

78,601 

 

 

79,156 

 

 

78,696 

 

 

79,214 

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

 

 

513 

 

 

619 

 

 

567 

 

 

639 

Weighted average shares outstanding — diluted

 

 

79,114 

 

 

79,775 

 

 

79,263 

 

 

79,853 

Basic net income per share

 

$

0.81 

 

$

0.87 

 

$

1.69 

 

$

1.71 

Diluted net income per share

 

$

0.80 

 

$

0.86 

 

$

1.68 

 

$

1.69 

 

 

An immaterial amount of common shares potentially issuable from stock options for the three and six months ended March 31, 2013 and 2012, are excluded from the calculation of diluted earnings per share because the exercise price was greater than the average market price of common stock for the respective period.

 

Comprehensive Income

 

Comprehensive income includes certain changes in equity that are excluded from net income. Specifically, unrealized gains or losses on securities and foreign currency translation adjustments are included in accumulated other comprehensive loss.

 

 

Recent Accounting Pronouncements

 

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

   


Summary Of Significant Accounting Policies (Policy)
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Summary Of Significant Accounting Policies (Policy)
6 Months Ended
Mar. 31, 2013
Summary Of Significant Accounting Policies [Abstract]  
Description Of Business

Description of Business

 

F5 Networks, Inc. (the “Company”) provides products and services to help companies manage their Internet Protocol (IP) traffic and file storage infrastructure efficiently and securely. The Company’s application delivery networking products improve the performance, availability and security of servers and other network resources. Internet traffic between network-based applications and clients passes through these devices where the content is inspected to ensure that it is safe and modified as necessary to ensure that it is delivered securely and in a way that optimizes the performance of both the network and the applications. The Company’s principal products are application delivery controllers that include the BIG-IP family of appliances and a line of scalable VIPRION systems. The Company’s recently acquired line of Diameter signaling and routing products enable full connectivity, enhanced scalability, and comprehensive control of signaling traffic in service providers’ evolving packet core networks. The Company’s storage virtualization products simplify and reduce the cost of managing files and file storage devices, and ensure fast, secure, easy access to files for users and applications. In February 2013, the Company acquired LineRate Systems, Inc., a developer of software defined network services technology. The Company also offers a broad range of services that include consulting, training, maintenance and other technical support services.

Basis Of Presentation

Basis of Presentation

 

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for their fair statement in conformity with accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

 

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

 

Revenue Recognition

Revenue Recognition

 

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

 

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

 

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

 

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

 

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

 

Revenue from the sale of products is generally recognized when the product has been shipped and the customer is obligated to pay for the product. When rights of return are present and the Company cannot estimate returns, revenue is recognized when such rights of return lapse. In certain regions where the Company does not have the ability to reasonably estimate returns, the Company defers revenue on sales to its distributors until information is received from the channel partner indicating that the product has been sold to the end-user customer. Payment terms to domestic customers are generally net 30 days to net 45 days. Payment terms to international customers range from net 30 days to net 120 days based on normal and customary trade practices in the individual markets. The Company offers extended payment terms to certain customers, in which case, revenue is recognized when payments are due.

 

Revenues for post-contract customer support (PCS) are recognized on a straight-line basis over the service contract term. PCS includes a limited period of telephone support updates, repair or replacement of any failed product or component that fails during the term of the agreement, bug fixes and rights to upgrades, when and if available. Consulting services are customarily billed at fixed hourly rates, plus out-of-pocket expenses, and revenues are recognized when the consulting has been completed. Training revenue is recognized when the training has been completed.

 

The majority of the Company’s products are hardware appliances which contain software essential to the overall functionality of the products. Hardware appliances are generally sold with PCS and on occasion, with consulting and/or training services. Arrangement consideration in such multiple element transactions  is allocated to each element based on a fair value hierarchy, where the selling price for an element is based on vendor specific objective evidence (VSOE), if available, third-party evidence (TPE), if available and VSOE is not available; or the best estimate of selling price (BESP), if neither VSOE or TPE is available.

 

For sales of nonessential and stand-alone software, the Company allocates revenue for arrangements with multiple elements based on software revenue recognition guidance. Software revenue recognition guidance requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair values of those elements. The fair value of an element must be based on VSOE. Where fair value of delivered elements is not available, revenue is recognized on the “residual method” based on the fair value of undelivered elements. If evidence of fair value of one or more undelivered elements does not exist, all revenue is deferred and recognized at the earlier of the delivery of those elements or the establishment of fair value of the remaining undelivered elements.

 

The Company establishes VSOE for its products, PCS, consulting and training services based on the sales price charged for each element when sold separately. The sales price is discounted from the applicable list price based on various factors including the type of customer, volume of sales, geographic region and program level. The Company’s list prices are generally not fair value as discounts may be given based on the factors enumerated above. The Company uses historical sales transactions to determine whether VSOE can be established for each of the elements. In most instances, VSOE of fair value is the sales price of actual standalone (unbundled) transactions within the past 12 month period, when a substantial majority of transactions are priced within a narrow range, which the Company has determined to be plus or minus 15% of the median sales price.

 

The Company believes that the VSOE of fair value of training and consulting services is represented by the billable rate per hour, based on the rates charged to customers when they purchase standalone training or consulting services. The price of consulting services is not based on the type of customer, volume of sales, geographic region or program level.

 

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

 

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

 

The Company regularly validates the VSOE of fair value and BESP for elements in its multiple element arrangements. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis and excluded from revenues.

 

Goodwill And Acquired Intangible Assets

Goodwill and Acquired Intangible Assets

 

Goodwill represents the excess purchase price over the estimated fair value of net assets acquired as of the acquisition date. The Company tests goodwill for impairment on an annual basis and between annual tests when impairment indicators are identified, and goodwill is written down when impaired. Goodwill was recorded in connection with the acquisition of LineRate Systems, Inc. in February 2013, Traffix Systems in fiscal year 2012, Acopia Networks, Inc. in fiscal year 2007, Swan Labs, Inc. in fiscal year 2006, MagniFire Websystems, Inc. in fiscal year 2004 and uRoam, Inc. in fiscal year 2003. For its annual goodwill impairment test, the Company operates under one reporting unit and the fair value of its reporting unit is determined by the Company’s enterprise value. The Company performs its annual goodwill impairment test during the second fiscal quarter.

 

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

 

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

 

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the Company’s reporting unit is less than its carrying amount, the provisions of authoritative guidance require that the Company perform a two-step impairment test on goodwill. The first step of the test identifies whether potential impairment may have occurred, while the second step of the test measures the amount of the impairment, if any. Impairment is recognized when the carrying amount of goodwill exceeds its fair value. In March 2013, the Company completed a qualitative assessment of potential impairment indicators and concluded that it was more-likely-than-not that the fair value of its reporting unit exceeded its carrying amount.

 

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

Stock-Based Compensation

Stock-Based Compensation

 

The Company accounts for stock-based compensation using the straight-line attribution method for recognizing compensation expense. The Company recognized $27.6 million and $23.3 million of stock-based compensation expense for the three months ended March 31, 2013 and 2012, respectively, and $54.3 million and $45.5 million for the six months ended March 31, 2013 and 2012, respectively. As of March 31, 2013, there was $118.6 million of total unrecognized stock-based compensation cost, the majority of which will be recognized over the next two years. Going forward, stock-based compensation expenses may increase as the Company issues additional equity-based awards to continue to attract and retain key employees.

 

The Company issues incentive awards to its employees through stock-based compensation consisting of restricted stock units (RSUs). The value of RSUs is determined using the fair value method, which in this case, is based on the number of shares granted and the quoted price of the Company’s common stock on the date of grant. 

 

The Company recognizes compensation expense for only the portion of restricted stock units that are expected to vest. Therefore, the Company applies estimated forfeiture rates that are derived from historical employee termination behavior. Based on historical differences with forfeitures of stock-based awards granted to the Company’s executive officers and Board of Directors versus grants awarded to all other employees, the Company has developed separate forfeiture expectations for these two groups. The Company’s estimated forfeiture rate in the second quarter of fiscal year 2013 is 5.3% for grants awarded to the Company’s executive officers and Board of Directors, and 7.6% for grants awarded to all other employees. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

 

In November 2012, the Company granted 290,415 RSUs to certain current executive officers as part of the annual equity awards program. Fifty percent of the aggregate number of RSUs vest in equal quarterly increments over four years, until such portion of the grant is fully vested on November 1, 2016. One-eighth of the RSU grant, or a portion thereof, is subject to the Company achieving specified quarterly revenue and EBITDA goals during fiscal year 2013. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 37.5% of this annual equity awards RSU grant shall be subject to quarterly performance based vesting for fiscal years 2014, 2015 and 2016 (12.5% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods.

 

In November 2011, as part of the annual review of executive compensation by the Compensation Committee of the Board of Directors and a change in the grant date for the Company’s annual equity awards program for the executive officers from August 1 to November 1, the Company granted 82,968 RSUs to certain current executive officers. Fifty percent of the aggregate number of RSUs vest in equal quarterly increments over three years, until such portion of the grant is fully vested on November 1, 2014. One-sixth of the RSU grant, or a portion thereof, was subject to the Company achieving specified quarterly revenue and EBITDA goals during fiscal year 2012. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 33.33% of this annual equity awards RSU grant shall be subject to quarterly performance based vesting for fiscal years 2013 and 2014 (16.66% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods.

 

In August 2011, the Company granted 170,390 RSUs to certain current executive officers as part of the annual equity awards program. Fifty percent of the aggregate number of RSUs granted as part of the annual equity awards program vest in equal quarterly increments over three years, until such portion of the grant is fully vested on August 1, 2014. One-sixth of the annual equity awards RSU grant, or a portion thereof, was subject to the Company achieving specified quarterly revenue and EBITDA goals during the period beginning in the fourth quarter of fiscal year 2011 through the third quarter of fiscal year 2012. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 33.33% of this annual equity awards RSU grant shall be subject to performance based vesting for each of the four quarter periods beginning with the fourth quarters of fiscal years 2012 and 2013 (16.66% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods.

 

In August 2010, the Company granted 181,334 and 83,000 RSUs to certain current executive officers as part of the annual equity and retention awards programs, respectively. Fifty percent of the aggregate number of RSUs granted as part of the annual equity awards program vest in equal quarterly increments over three years, until such portion of the grant is fully vested on August 1, 2013. One-sixth of the annual equity awards RSU grant, or a portion thereof, was subject to the Company achieving specified quarterly revenue and EBITDA goals during the period beginning in the fourth quarter of fiscal year 2010 through the third quarter of fiscal year 2011. In each case, 50% of the quarterly performance stock grant is based on achieving at least 80% of the quarterly revenue goal and the other 50% is based on achieving at least 80% of the quarterly EBITDA goal. The quarterly performance stock grant is paid linearly above 80% of the targeted goals. At least 100% of both goals must be attained in order for the quarterly performance stock grant to be awarded over 100%. Each goal is evaluated individually and subject to the 80% achievement threshold and 100% over-achievement threshold. The remaining 33.33% of this annual equity awards RSU grant shall be subject to performance based vesting for each of the four quarter periods beginning with the fourth quarters of fiscal years 2011 and 2012 (16.66% in each period). The Compensation Committee of the Board of Directors will set applicable performance targets and vesting formulas for each of these periods. All RSUs granted as part of the retention awards program fully vest on August 1, 2013.

 

The Company recognizes compensation costs for awards with performance conditions when it concludes it is probable that the performance condition will be achieved. The Company reassesses the probability of vesting at each balance sheet date and adjusts compensation costs based on the probability assessment.

Common Stock Repurchase

Common Stock Repurchase

 

On April 24,  2013, the Company announced that its Board of Directors authorized an additional $200 million for its common stock share repurchase program. This new authorization is incremental to the existing $600 million program, initially approved in October 2010 and expanded in August 2011 and October 2011. Acquisitions for the share repurchase programs will be made from time to time in private transactions or open market purchases as permitted by securities laws and other legal requirements. The programs can be terminated at any time. As of May 3, 2013, the Company had repurchased and retired 10,300,034 shares at an average price of $70.13 per share and the Company had $277.2 million remaining to purchase shares as part of its repurchase programs.

Earnings Per Share

Earnings Per Share

 

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. The Company’s nonvested restricted stock awards and restricted stock units do not have nonforfeitable rights to dividends or dividend equivalents.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

63,412 

 

$

68,641 

 

$

132,905 

 

$

135,133 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 

78,601 

 

 

79,156 

 

 

78,696 

 

 

79,214 

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

 

 

513 

 

 

619 

 

 

567 

 

 

639 

Weighted average shares outstanding — diluted

 

 

79,114 

 

 

79,775 

 

 

79,263 

 

 

79,853 

Basic net income per share

 

$

0.81 

 

$

0.87 

 

$

1.69 

 

$

1.71 

Diluted net income per share

 

$

0.80 

 

$

0.86 

 

$

1.68 

 

$

1.69 

 

 

An immaterial amount of common shares potentially issuable from stock options for the three and six months ended March 31, 2013 and 2012, are excluded from the calculation of diluted earnings per share because the exercise price was greater than the average market price of common stock for the respective period.

 

Comprehensive Income

Comprehensive Income

 

Comprehensive income includes certain changes in equity that are excluded from net income. Specifically, unrealized gains or losses on securities and foreign currency translation adjustments are included in accumulated other comprehensive loss.

 

 

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

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


Summary Of Significant Accounting Policies (Tables)
v0.0.0.0
Summary Of Significant Accounting Policies (Tables)
6 Months Ended
Mar. 31, 2013
Summary Of Significant Accounting Policies [Abstract]  
Schedule Of Computation Of Basic And Diluted Net Income Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

March 31,

 

March 31,

 

 

2013

 

2012

 

2013

 

2012

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

63,412 

 

$

68,641 

 

$

132,905 

 

$

135,133 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

 

78,601 

 

 

79,156 

 

 

78,696 

 

 

79,214 

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

 

 

513 

 

 

619 

 

 

567 

 

 

639 

Weighted average shares outstanding — diluted

 

 

79,114 

 

 

79,775 

 

 

79,263 

 

 

79,853 

Basic net income per share

 

$

0.81 

 

$

0.87 

 

$

1.69 

 

$

1.71 

Diluted net income per share

 

$

0.80 

 

$

0.86 

 

$

1.68 

 

$

1.69 

 


Summary Of Significant Accounting Policies (Narrative) (Details)
v0.0.0.0
Summary Of Significant Accounting Policies (Narrative) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended 3 Months Ended 0 Months Ended 6 Months Ended
May 03, 2013
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Nov. 30, 2012
Annual Equity Program [Member]
Nov. 30, 2011
Annual Equity Program [Member]
Aug. 31, 2011
Annual Equity Program [Member]
Aug. 31, 2010
Annual Equity Program [Member]
Aug. 31, 2010
Retention Awards Program [Member]
Mar. 31, 2013
Executive Officers And Board Of Directors [Member]
Mar. 31, 2013
Other Employees [Member]
Apr. 24, 2013
October 25, 2011 Program [Member]
Mar. 31, 2013
Minimum [Member]
Mar. 31, 2013
Maximum [Member]
Schedule Of Summary Of Significant Accounting Policies [Line Items]                              
Domestic accounts receivable terms of payment, in days                           30 days 45 days
International accounts receivable terms of payment, in days                           30 days 120 days
Range of VSOE to median sales price       15.00%                      
Share-based compensation expense   $ 27.6 $ 23.3 $ 54.3 $ 45.5                    
Unrecognized stock-based compensation cost   118.6   118.6                      
Unrecognized stock-based compensation cost, period for recognition       2 years                      
Approved RSUs to employees and executive officers pursuant to the Company's annual equity awards program           290,415 82,968 170,390 181,334 83,000          
Rate for grant awarded                     5.30% 7.60%      
Percentage of the aggregate number of RSUs granted that vest in equal quarterly increments           50.00% 50.00% 50.00% 50.00%            
Portion of RSU grant subject to Company achieving specified quarterly revenue and EBITDA goals           0.125 0.16667 0.16667 0.16667            
Annual equity awards program vesting period, years           4 years 3 years 3 years 3 years            
Percentage of quarterly performance stock grant based on achieving quarterly revenue goal           50.00% 50.00% 50.00% 50.00%            
Percentage of quarterly revenue goal to be achieved for performance stock grant           80.00% 80.00% 80.00% 80.00%            
Percentage of quarterly performance stock grant based on achieving EBITDA goal           50.00% 50.00% 50.00% 50.00%            
Percentage of achievement threshold to which the goals are entitled           80.00% 80.00% 80.00% 80.00%            
Threshold percentage of targeted goals above which quarterly performance stock grant is paid linearly           80.00% 80.00% 80.00% 80.00%            
Percentage of over-achievement threshold to which the goals are entitled           100.00% 100.00% 100.00% 100.00%            
Percentage of annual equity awards RSU grant subject to performance based vesting           37.50% 33.33% 33.33% 33.33%            
Percentage of annual equity awards RSU grant subject to performance based vesting in each period           12.50% 16.66% 16.66% 16.66%            
Stock repurchase program, authorized amount       600                 200    
Shares repurchased and retired 10,300,034                            
Average price of shares repurchased $ 70.13                            
Stock repurchase program, remaining authorized amount to repurchase shares $ 277.2                            

Summary Of Significant Accounting Policies (Schedule Of Computation Of Basic And Diluted Net Income Per Share) (Details)
v0.0.0.0
Summary Of Significant Accounting Policies (Schedule Of Computation Of Basic And Diluted Net Income Per Share) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Summary Of Significant Accounting Policies [Abstract]        
Net income $ 63,412 $ 68,641 $ 132,905 $ 135,133
Weighted average shares outstanding - basic 78,601 79,156 78,696 79,214
Dilutive effect of common shares from stock options and restricted stock 513 619 567 639
Weighted average shares outstanding - diluted 79,114 79,775 79,263 79,853
Basic net income per share $ 0.81 $ 0.87 $ 1.69 $ 1.71
Diluted net income per share $ 0.80 $ 0.86 $ 1.68 $ 1.69

Fair Value Measurements
v0.0.0.0
Fair Value Measurements
6 Months Ended
Mar. 31, 2013
Fair Value Measurements [Abstract]  
Fair Value Measurements

2. Fair Value Measurements

 

In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Company determines fair value using a fair value hierarchy that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances and expands disclosure about fair value measurements.

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, essentially the exit price.

 

The levels of fair value hierarchy are:

 

Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date that the Company has the ability to access.

 

Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Unobservable inputs for which there is little or no market data available. These inputs reflect management’s assumptions of what market participants would use in pricing the asset or liability.

 

Level 1 investments are valued based on quoted market prices in active markets and include the Company’s cash equivalent investments. Level 2 investments, which include investments that are valued based on quoted prices in markets that are not active, broker or dealer quotations, actual trade data, benchmark yields or alternative pricing sources with reasonable levels of price transparency, include the Company’s certificates of deposit, corporate bonds and notes, municipal bonds and notes, U.S. government securities and U.S. government agency securities. Fair values for the Company’s level 2 investments are based on similar assets without applying significant judgments. In addition, all of the Company’s level 2 investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments.

 

A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

 

The Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements at March 31, 2013, were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

 

 

Quoted Prices in

 

Significant

 

Significant

 

 

 

 

 

Active Markets for

 

Other Observable

 

Unobservable

 

Fair Value at

 

 

Identical Securities

 

Inputs

 

Inputs

 

March 31,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2013

Cash equivalents

 

$

21,026 

 

$

 

$

 

$

21,026 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

 

 

157,174 

 

 

 

 

157,174 

Available-for-sale securities — municipal bonds and notes

 

 

 

 

62,826 

 

 

 

 

62,826 

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

 

 

 

 

4,994 

 

 

 

 

4,994 

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

 

 

 

 

68,192 

 

 

 

 

68,192 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

 

 

214,743 

 

 

 

 

214,743 

Available-for-sale securities — municipal bonds and notes

 

 

 

 

22,901 

 

 

 

 

22,901 

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

 

 

 

 

4,997 

 

 

 

 

4,997 

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

 

 

 

 

416,133 

 

 

 

 

416,133 

Available-for-sale securities — auction rate securities

 

 

 

 

 

 

4,048 

 

 

4,048 

Total

 

$

21,026 

 

$

951,960 

 

$

4,048 

 

$

977,034 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

 

 

Quoted Prices in

 

Significant

 

Significant

 

 

 

 

 

Active Markets for

 

Other Observable

 

Unobservable

 

Fair Value at

 

 

Identical Securities

 

Inputs

 

Inputs

 

September 30,

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2012

Cash equivalents

 

$

35,658 

 

$

 

$

 

$

35,658 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — certificates of deposit

 

 

 

 

3,533 

 

 

 

 

3,533 

Available-for-sale securities — corporate bonds and notes

 

 

 

 

193,990 

 

 

 

 

193,990 

Available-for-sale securities — municipal bonds and notes

 

 

 

 

63,422 

 

 

 

 

 

63,422 

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

 

 

 

 

60,025 

 

 

 

 

60,025 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities — corporate bonds and notes

 

 

 

 

229,441 

 

 

 

 

229,441 

Available-for-sale securities — municipal bonds and notes

 

 

 

 

30,307 

 

 

 

 

30,307 

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

 

 

 

 

4,995 

 

 

 

 

4,995 

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

 

 

 

 

393,310 

 

 

 

 

393,310 

Available-for-sale securities — auction rate securities