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Estimated Useful Life (years) | |
Computers, equipment, and software | 3 to 5 |
Furniture and fixtures | 5 |
Building and building improvements | 7 to 40 |
Land improvements | 10 to 40 |
Leasehold improvements | Lease term, not to exceed 10 years |
• | Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement. |
• | Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. |
• | Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment. |
• | Collectability is reasonably assured. The Company assesses collectability based on creditworthiness of customers as determined by its credit checks, their payment histories, or changes in circumstances that indicate that collectability is not reasonably assured. |
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2013 Acquisitions | 2012 Acquisitions | 2011 Acquisitions | |||||||||
Net tangible assets acquired | $ | 0.1 | $ | 3.5 | $ | 1.7 | |||||
Intangible assets acquired | 9.9 | 54.1 | 28.4 | ||||||||
Goodwill | — | 129.7 | 0.4 | ||||||||
Total | $ | 10.0 | $ | 187.3 | $ | 30.5 |
Contrail | Mykonos | BitGravity | |||||||||||||||
Weighted Average Estimated Useful Life (In Years) | Amount | Weighted Average Estimated Useful Life (In Years) | Amount | Weighted Average Estimated Useful Life (In Years) | Amount | ||||||||||||
Existing technology | — | $ | — | 6 | $ | 19.3 | 3 | $ | 12.4 | ||||||||
Trade name and trademarks | — | — | 7 | 1.0 | — | — | |||||||||||
In-process research and development | N/A | 17.4 | N/A | 4.0 | — | — | |||||||||||
Total | — | $ | 17.4 | 6 | $ | 24.3 | 3 | $ | 12.4 |
OpNext | Brilliant | ||||||||||
Weighted Average Estimated Useful Life (In Years) | Amount | Weighted Average Estimated Useful Life (In Years) | Amount | ||||||||
Existing or core technology | 10 | $ | 20.6 | 5 | $ | 1.3 | |||||
Support agreements and related relationships | 4 | 5.1 | — | — | |||||||
Patents | — | — | 5 | 1.4 | |||||||
Total | 9 | $ | 25.7 | 5 | $ | 2.7 |
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Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
As of December 31, 2013 | |||||||||||||||
Fixed income securities: | |||||||||||||||
Asset-backed securities | $ | 249.9 | $ | 0.1 | $ | (0.1 | ) | $ | 249.9 | ||||||
Certificates of deposit | 27.6 | — | — | 27.6 | |||||||||||
Commercial paper | 6.9 | — | — | 6.9 | |||||||||||
Corporate debt securities | 813.6 | 2.0 | (0.3 | ) | 815.3 | ||||||||||
Foreign government debt securities | 10.7 | — | — | 10.7 | |||||||||||
Government-sponsored enterprise obligations | 306.2 | 0.1 | (0.1 | ) | 306.2 | ||||||||||
U.S. government securities | 303.3 | 0.1 | (0.1 | ) | 303.3 | ||||||||||
Total fixed income securities | 1,718.2 | 2.3 | (0.6 | ) | 1,719.9 | ||||||||||
Money market funds | 1,043.7 | — | — | 1,043.7 | |||||||||||
Mutual funds | 3.9 | 0.1 | — | 4.0 | |||||||||||
Publicly-traded equity securities | 12.0 | 104.5 | (1.9 | ) | 114.6 | ||||||||||
Total available-for-sale securities | 2,777.8 | 106.9 | (2.5 | ) | 2,882.2 | ||||||||||
Trading securities in mutual funds(*) | 15.4 | — | — | 15.4 | |||||||||||
Total | $ | 2,793.2 | $ | 106.9 | $ | (2.5 | ) | $ | 2,897.6 | ||||||
Reported as: | |||||||||||||||
Cash equivalents | $ | 996.2 | $ | — | $ | — | $ | 996.2 | |||||||
Restricted investments | 87.5 | 0.1 | — | 87.6 | |||||||||||
Short-term investments | 459.0 | 104.9 | (2.0 | ) | 561.9 | ||||||||||
Long-term investments | 1,250.5 | 1.9 | (0.5 | ) | 1,251.9 | ||||||||||
Total | $ | 2,793.2 | $ | 106.9 | $ | (2.5 | ) | $ | 2,897.6 |
(*) | Balance includes the Company's non-qualified deferred compensation plan assets. |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
As of December 31, 2012 | |||||||||||||||
Fixed income securities: | |||||||||||||||
Asset-backed securities | $ | 226.2 | $ | 0.3 | $ | (0.1 | ) | $ | 226.4 | ||||||
Certificates of deposit | 42.5 | — | — | 42.5 | |||||||||||
Commercial paper | 22.4 | — | — | 22.4 | |||||||||||
Corporate debt securities | 533.4 | 2.3 | (0.1 | ) | 535.6 | ||||||||||
Foreign government debt securities | 5.0 | — | — | 5.0 | |||||||||||
Government-sponsored enterprise obligations | 270.7 | 0.3 | — | 271.0 | |||||||||||
U.S. government securities | 494.4 | 0.1 | — | 494.5 | |||||||||||
Total fixed income securities | 1,594.6 | 3.0 | (0.2 | ) | 1,597.4 | ||||||||||
Money market funds | 1,145.2 | — | — | 1,145.2 | |||||||||||
Mutual funds | 2.9 | 0.1 | — | 3.0 | |||||||||||
Publicly-traded equity securities | 3.0 | — | (0.1 | ) | 2.9 | ||||||||||
Total available-for-sale securities | 2,745.7 | 3.1 | (0.3 | ) | 2,748.5 | ||||||||||
Trading securities in mutual funds(*) | 12.6 | — | — | 12.6 | |||||||||||
Total | $ | 2,758.3 | $ | 3.1 | $ | (0.3 | ) | $ | 2,761.1 | ||||||
Reported as: | |||||||||||||||
Cash equivalents | $ | 1,225.9 | $ | — | $ | — | $ | 1,225.9 | |||||||
Restricted investments | 105.5 | 0.1 | — | 105.6 | |||||||||||
Short-term investments | 441.3 | 0.3 | (0.1 | ) | 441.5 | ||||||||||
Long-term investments | 985.6 | 2.7 | (0.2 | ) | 988.1 | ||||||||||
Total | $ | 2,758.3 | $ | 3.1 | $ | (0.3 | ) | $ | 2,761.1 |
(*) | Balance includes the Company's non-qualified deferred compensation plan assets. |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Due within one year | $ | 467.7 | $ | 0.3 | $ | — | $ | 468.0 | |||||||
Due between one and five years | 1,250.5 | 2.0 | (0.6 | ) | 1,251.9 | ||||||||||
Total | $ | 1,718.2 | $ | 2.3 | $ | (0.6 | ) | $ | 1,719.9 |
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
Asset-backed securities(1) | $ | 153.0 | $ | (0.1 | ) | $ | 0.6 | $ | — | $ | 153.6 | $ | (0.1 | ) | |||||||||
Corporate debt securities(1) | 156.1 | (0.3 | ) | 9.7 | — | 165.8 | (0.3 | ) | |||||||||||||||
Foreign government debt securities(2) | 10.0 | — | — | — | 10.0 | — | |||||||||||||||||
Government-sponsored enterprise obligations | 123.1 | (0.1 | ) | — | — | 123.1 | (0.1 | ) | |||||||||||||||
U.S. government securities | 119.7 | (0.1 | ) | — | — | 119.7 | (0.1 | ) | |||||||||||||||
Total fixed income securities | 561.9 | (0.6 | ) | 10.3 | — | 572.2 | (0.6 | ) | |||||||||||||||
Publicly-traded equity securities | 6.8 | (1.9 | ) | — | — | 6.8 | (1.9 | ) | |||||||||||||||
Total available-for sale securities | $ | 568.7 | $ | (2.5 | ) | $ | 10.3 | $ | — | $ | 579.0 | $ | (2.5 | ) |
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
As of December 31, 2012 | |||||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
Asset-backed securities (1) | $ | 55.1 | $ | (0.1 | ) | $ | 0.1 | $ | — | $ | 55.2 | $ | (0.1 | ) | |||||||||
Certificates of deposit(2) | 0.3 | — | — | — | 0.3 | — | |||||||||||||||||
Commercial paper(2) | 10.0 | — | — | — | 10.0 | — | |||||||||||||||||
Corporate debt securities | 116.0 | (0.1 | ) | — | — | 116.0 | (0.1 | ) | |||||||||||||||
Government-sponsored enterprise obligations(2) | 30.0 | — | — | — | 30.0 | — | |||||||||||||||||
U.S. government securities(2) | 68.2 | — | — | — | 68.2 | — | |||||||||||||||||
Total fixed income securities | 279.6 | (0.2 | ) | 0.1 | — | 279.7 | (0.2 | ) | |||||||||||||||
Publicly-traded equity securities | 2.9 | (0.1 | ) | — | — | 2.9 | (0.1 | ) | |||||||||||||||
Total available-for-sale securities | $ | 282.5 | $ | (0.3 | ) | $ | 0.1 | $ | — | $ | 282.6 | $ | (0.3 | ) |
|
Fair Value Measurements at December 31, 2013 Using: | |||||||||||||||
Quoted Prices in Active Markets For Identical Assets | Significant Other Observable Remaining Inputs | Significant Other Unobservable Remaining Inputs | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Assets measured at fair value: | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Asset-backed securities | $ | — | $ | 249.9 | $ | — | $ | 249.9 | |||||||
Certificates of deposit | — | 27.6 | — | 27.6 | |||||||||||
Commercial paper | — | 6.9 | — | 6.9 | |||||||||||
Corporate debt securities | — | 815.3 | — | 815.3 | |||||||||||
Foreign government debt securities | — | 10.7 | — | 10.7 | |||||||||||
Government-sponsored enterprise obligations | — | 306.2 | — | 306.2 | |||||||||||
Money market funds (1) | 1,043.7 | — | — | 1,043.7 | |||||||||||
Mutual funds (2) | 4.0 | — | — | 4.0 | |||||||||||
Publicly-traded equity securities | 114.6 | — | — | 114.6 | |||||||||||
U.S. government securities | 197.2 | 106.1 | — | 303.3 | |||||||||||
Total available-for-sale securities | 1,359.5 | 1,522.7 | — | 2,882.2 | |||||||||||
Trading securities in mutual funds (3) | 15.4 | — | — | 15.4 | |||||||||||
Derivative assets: | |||||||||||||||
Foreign exchange contracts | — | 3.0 | — | 3.0 | |||||||||||
Total assets measured at fair value | $ | 1,374.9 | $ | 1,525.7 | $ | — | $ | 2,900.6 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Derivative liabilities: | |||||||||||||||
Foreign exchange contracts | $ | — | $ | (0.7 | ) | $ | — | $ | (0.7 | ) | |||||
Total liabilities measured at fair value | $ | — | $ | (0.7 | ) | $ | — | $ | (0.7 | ) | |||||
Total assets measured at fair value, reported as: | |||||||||||||||
Cash equivalents | $ | 965.1 | $ | 31.1 | $ | — | $ | 996.2 | |||||||
Restricted investments | 87.6 | — | — | 87.6 | |||||||||||
Short-term investments | 246.5 | 315.4 | — | 561.9 | |||||||||||
Long-term investments | 75.7 | 1,176.2 | — | 1,251.9 | |||||||||||
Prepaid expenses and other current assets | — | 3.0 | — | 3.0 | |||||||||||
Total assets measured at fair value | $ | 1,374.9 | $ | 1,525.7 | $ | — | $ | 2,900.6 | |||||||
Total liabilities measured at fair value, reported as: | |||||||||||||||
Other accrued liabilities | $ | — | $ | (0.7 | ) | $ | — | $ | (0.7 | ) | |||||
Total liabilities measured at fair value | $ | — | $ | (0.7 | ) | $ | — | $ | (0.7 | ) |
(1) | Balance includes $83.6 million of restricted investments measured at fair market value, related to the Company's D&O trust and acquisitions related escrows. |
(2) | Balance relates to the restricted investments measured at fair market value of the Company's India Gratuity Trust. |
(3) | Balance relates to the investments measured at fair value related to the Company's non-qualified deferred compensation plan assets. |
Fair Value Measurements at December 31, 2012 Using: | |||||||||||||||
Quoted Prices in Active Markets For Identical Assets | Significant Other Observable Remaining Inputs | Significant Other Unobservable Remaining Inputs | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Assets measured at fair value: | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Asset-backed securities | $ | — | $ | 226.4 | $ | — | $ | 226.4 | |||||||
Certificates of deposit | — | 42.5 | — | 42.5 | |||||||||||
Commercial paper | — | 22.4 | — | 22.4 | |||||||||||
Corporate debt securities | — | 535.6 | — | 535.6 | |||||||||||
Foreign government debt securities | — | 5.0 | — | 5.0 | |||||||||||
Government-sponsored enterprise obligations | 254.9 | 16.1 | — | 271.0 | |||||||||||
Money market funds (1) | 1,145.2 | — | — | 1,145.2 | |||||||||||
Mutual funds (2) | 1.0 | 2.0 | — | 3.0 | |||||||||||
Publicly-traded equity securities | 2.9 | — | — | 2.9 | |||||||||||
U.S. government securities | 275.9 | 218.6 | — | 494.5 | |||||||||||
Total available-for-sale securities | 1,679.9 | 1,068.6 | — | 2,748.5 | |||||||||||
Trading securities in mutual funds (3) | 12.6 | — | — | 12.6 | |||||||||||
Derivative assets: | |||||||||||||||
Foreign exchange contracts | — | 3.5 | — | 3.5 | |||||||||||
Total assets measured at fair value | $ | 1,692.5 | $ | 1,072.1 | $ | — | $ | 2,764.6 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Derivative liabilities: | |||||||||||||||
Foreign exchange contracts | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Total liabilities measured at fair value | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Total assets measured at fair value, reported as: | |||||||||||||||
Cash equivalents | $ | 1,048.7 | $ | 177.2 | $ | — | $ | 1,225.9 | |||||||
Restricted investments | 103.6 | 2.0 | — | 105.6 | |||||||||||
Short-term investments | 224.4 | 217.1 | — | 441.5 | |||||||||||
Long-term investments | 315.8 | 672.3 | — | 988.1 | |||||||||||
Prepaid expenses and other current assets | — | 3.5 | — | 3.5 | |||||||||||
Total assets measured at fair value | $ | 1,692.5 | $ | 1,072.1 | $ | — | $ | 2,764.6 | |||||||
Total liabilities measured at fair value, reported as: | |||||||||||||||
Other accrued liabilities | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Total liabilities measured at fair value | $ | — | $ | 0.1 | $ | — | $ | 0.1 |
(1) | Balance includes $102.6 million of restricted investments measured at fair market value, related to the Company's D&O trust and acquisition related escrows. |
(2) | Balance relates to the restricted investments measured at fair market value of the Company's India Gratuity Trust. |
(3) | Balance relates to the investments measured at fair value related to the Company's non-qualified deferred compensation plan assets. |
As of December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Fair Value | Losses | Fair Value | Losses | ||||||||||||
Privately-held investments | $ | 2.0 | $ | (2.8 | ) | $ | — | $ | (20.0 | ) | |||||
Purchased intangible assets, net | $ | — | — | $ | — | (5.4 | ) | ||||||||
Total losses for nonrecurring basis | $ | (2.8 | ) | $ | (25.4 | ) |
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As of December 31, | |||||||
2013 | 2012 | ||||||
Cash flow hedges | $ | 137.6 | $ | 85.8 | |||
Non-designated derivatives | 144.4 | 112.8 | |||||
Total | $ | 282.0 | $ | 198.6 |
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PSD | SSD | Total | |||||||||
December 31, 2011 | $ | 1,795.6 | $ | 2,132.5 | $ | 3,928.1 | |||||
Additions due to business combinations | 70.7 | 59.6 | 130.3 | ||||||||
Adjustments to goodwill | — | (0.6 | ) | (0.6 | ) | ||||||
December 31, 2012 | 1,866.3 | 2,191.5 | 4,057.8 | ||||||||
Reclassifications | (249.6 | ) | 249.6 | — | |||||||
Foreign currency translation adjustment | (0.1 | ) | — | (0.1 | ) | ||||||
December 31, 2013 | $ | 1,616.6 | $ | 2,441.1 | $ | 4,057.7 |
Gross | Accumulated Amortization | Impairments and Other Charges | Net | ||||||||||||
As of December 31, 2013 | |||||||||||||||
Intangible assets with finite lives: | |||||||||||||||
Technologies and patents | $ | 581.4 | $ | (453.4 | ) | $ | (30.5 | ) | $ | 97.5 | |||||
Customer contracts, support agreements, and related relationships | 74.3 | (62.7 | ) | (2.2 | ) | 9.4 | |||||||||
Total purchased intangible assets | $ | 655.7 | $ | (516.1 | ) | $ | (32.7 | ) | $ | 106.9 | |||||
As of December 31, 2012 | |||||||||||||||
Intangible assets with finite lives: | |||||||||||||||
Technologies and patents | $ | 554.1 | $ | (425.0 | ) | $ | (30.5 | ) | $ | 98.6 | |||||
Customer contracts, support agreements, and related relationships | 74.3 | (59.2 | ) | (2.2 | ) | 12.9 | |||||||||
Total intangible assets with finite lives | 628.4 | (484.2 | ) | (32.7 | ) | 111.5 | |||||||||
IPR&D with indefinite lives | 17.4 | — | — | 17.4 | |||||||||||
Total purchased intangible assets | $ | 645.8 | $ | (484.2 | ) | $ | (32.7 | ) | $ | 128.9 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Cost of revenues | $ | 27.3 | $ | 27.6 | $ | 21.7 | |||||
Operating expenses: | |||||||||||
Sales and marketing | 3.4 | 3.5 | 4.1 | ||||||||
General and administrative | 1.2 | 1.2 | 1.3 | ||||||||
Total operating expenses | 4.6 | 4.7 | 5.4 | ||||||||
Total | $ | 31.9 | $ | 32.3 | $ | 27.1 |
Years Ending December 31, | Amount | ||
2014 | $ | 36.2 | |
2015 | 32.6 | ||
2016 | 18.5 | ||
2017 | 10.5 | ||
2018 | 3.7 | ||
Thereafter | 5.4 | ||
Total | $ | 106.9 |
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As of December 31, | |||||||
2013 | 2012 | ||||||
Production materials | $ | 51.3 | $ | 53.1 | |||
Finished goods | 1.4 | 4.1 | |||||
Inventories | $ | 52.7 | $ | 57.2 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Computers and equipment | $ | 794.6 | $ | 711.8 | |||
Software | 108.4 | 106.6 | |||||
Leasehold improvements | 202.6 | 206.5 | |||||
Furniture and fixtures | 42.5 | 28.7 | |||||
Building and building improvements | 242.6 | 206.1 | |||||
Land and land improvements | 238.9 | 208.2 | |||||
Construction-in-process | 79.5 | 112.7 | |||||
Property and equipment, gross | 1,709.1 | 1,580.6 | |||||
Accumulated depreciation | (826.8 | ) | (768.7 | ) | |||
Property and equipment, net | $ | 882.3 | $ | 811.9 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Privately-held investments | $ | 57.2 | $ | 32.0 | |||
Licensed software | 90.4 | 84.4 | |||||
Federal income tax receivable | 20.0 | — | |||||
Financed customer receivable | 19.9 | — | |||||
Inventory | 15.2 | — | |||||
Prepaid costs, deposits, and other | 31.1 | 21.9 | |||||
Other long-term assets | $ | 233.8 | $ | 138.3 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Beginning balance | $ | 29.7 | $ | 28.3 | |||
Provisions made during the period, net | 28.8 | 31.9 | |||||
Adjustments related to pre-existing warranties | (2.1 | ) | — | ||||
Actual costs incurred during the period | (28.4 | ) | (30.5 | ) | |||
Ending balance | $ | 28.0 | $ | 29.7 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Deferred product revenue: | |||||||
Undelivered product commitments and other product deferrals | $ | 184.9 | $ | 256.9 | |||
Distributor inventory and other sell-through items | 118.7 | 138.4 | |||||
Deferred gross product revenue | 303.6 | 395.3 | |||||
Deferred cost of product revenue | (58.6 | ) | (99.4 | ) | |||
Deferred product revenue, net | 245.0 | 295.9 | |||||
Deferred service revenue | 824.3 | 627.5 | |||||
Total | $ | 1,069.3 | $ | 923.4 | |||
Reported as: | |||||||
Current | $ | 705.8 | $ | 693.5 | |||
Long-term | 363.5 | 229.9 | |||||
Total | $ | 1,069.3 | $ | 923.4 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Interest income | $ | 8.7 | $ | 11.0 | $ | 9.7 | |||||
Interest expense | (58.4 | ) | (52.9 | ) | (49.5 | ) | |||||
Other | 9.3 | 25.3 | (7.0 | ) | |||||||
Other expense, net | $ | (40.4 | ) | $ | (16.6 | ) | $ | (46.8 | ) |
|
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Severance | $ | 22.9 | $ | 36.7 | $ | 15.3 | |||||
Facilities | 10.0 | 5.8 | 0.2 | ||||||||
Contract terminations and other | 14.6 | 57.2 | 15.1 | ||||||||
Total | $ | 47.5 | $ | 99.7 | $ | 30.6 | |||||
Reported as: | |||||||||||
Cost of revenues | $ | 8.4 | $ | 52.9 | $ | — | |||||
Restructuring and other charges | 39.1 | 46.8 | 30.6 | ||||||||
Total | $ | 47.5 | $ | 99.7 | $ | 30.6 |
December 31, 2012 | Charges | Cash Payments | Non-cash Settlements and Other | December 31, 2013 | |||||||||||||||
Severance | $ | 10.6 | $ | 22.9 | $ | (27.8 | ) | $ | (0.1 | ) | $ | 5.6 | |||||||
Facilities | 5.2 | 10.0 | (6.0 | ) | (4.1 | ) | 5.1 | ||||||||||||
Contract terminations and other | 2.4 | 14.6 | (9.3 | ) | (0.6 | ) | 7.1 | ||||||||||||
Total | $ | 18.2 | $ | 47.5 | $ | (43.1 | ) | $ | (4.8 | ) | $ | 17.8 |
|
As of December 31, 2013 | ||||||
Amount | Effective Interest Rates | |||||
Senior notes: | ||||||
3.10% fixed-rate notes, due 2016 | $ | 300.0 | 3.12 | % | ||
4.60% fixed-rate notes, due 2021 | 300.0 | 4.63 | % | |||
5.95% fixed-rate notes, due 2041 | 400.0 | 6.01 | % | |||
Total senior notes | 1,000.0 | |||||
Unaccreted discount | (0.7 | ) | ||||
Total | $ | 999.3 |
|
Shares Repurchased | Average price per share | Amount Repurchased | ||||||||
2013 | ||||||||||
Repurchases under stock repurchase programs | 28.9 | $ | 19.76 | $ | 570.6 | |||||
Repurchases for tax withholding | 0.4 | $ | 20.23 | $ | 7.2 | |||||
2012 | ||||||||||
Repurchases under stock repurchase programs | 35.8 | $ | 18.05 | $ | 645.6 | |||||
Repurchases for tax withholding | 0.2 | $ | 23.40 | $ | 5.0 | |||||
2011 | ||||||||||
Repurchases under stock repurchase programs | 17.5 | $ | 30.93 | $ | 541.2 | |||||
Repurchases for tax withholding | 0.2 | $ | 35.98 | $ | 7.4 |
Unrealized Gains (Losses) on Available-for- Sale Securities(1) | Unrealized Gains (Losses) on Cash Flow Hedges(2) | Foreign Currency Translation Adjustments | Total | ||||||||||||
Balance as of December 31, 2011 | $ | 0.1 | $ | (10.9 | ) | $ | (6.8 | ) | $ | (17.6 | ) | ||||
Other comprehensive gain before reclassifications | 3.2 | 7.4 | 6.4 | 17.0 | |||||||||||
Amount reclassified from accumulated other comprehensive income | (1.2 | ) | 6.5 | — | 5.3 | ||||||||||
Other comprehensive gain | 2.0 | 13.9 | 6.4 | 22.3 | |||||||||||
Balance as of December 31, 2012 | $ | 2.1 | $ | 3.0 | $ | (0.4 | ) | $ | 4.7 | ||||||
Other comprehensive gain (loss) before reclassifications | 65.1 | 0.7 | (3.4 | ) | 62.4 | ||||||||||
Amount reclassified from accumulated other comprehensive income | (1.0 | ) | (1.5 | ) | — | (2.5 | ) | ||||||||
Other comprehensive gain (loss) | 64.1 | (0.8 | ) | (3.4 | ) | 59.9 | |||||||||
Balance as of December 31, 2013 | $ | 66.2 | $ | 2.2 | $ | (3.8 | ) | $ | 64.6 |
(1) | The reclassifications out of accumulated other comprehensive income during the years ended December 31, 2013 and December 31, 2012 for realized gains on available-for-sale securities of $1.0 million and $1.2 million, respectively, are included in other expense, net, in the Consolidated Statements of Operations. |
(2) | The reclassifications out of accumulated other comprehensive income during the year ended December 31, 2013 for realized gains on cash flow hedges are included within cost of revenues of $1.1 million and sales and marketing of $4.3 million and for realized losses within research and development of $3.4 million and general and administrative of $0.5 million for which the hedged transactions relate in the Consolidated Statements of Operations. The reclassifications out of accumulated other comprehensive income during the year ended December 31, 2012 for realized losses on cash flow hedges are included within cost of revenues of $0.9 million, research and development of $2.3 million, sales and marketing of $2.0 million, and general and administrative of $1.3 million for which the hedged transactions relate in the Consolidated Statements of Operations. |
|
Outstanding Options | ||||||||||||
Number of Shares | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term (In Years) | Aggregate Intrinsic Value | |||||||||
Balance as of December 31, 2010 | 49.4 | $ | 21.90 | 4.1 | $ | 744.5 | ||||||
Granted | 5.6 | 37.17 | ||||||||||
Canceled | (1.9 | ) | 26.76 | |||||||||
Exercised | (13.9 | ) | 21.13 | |||||||||
Expired | (0.6 | ) | 34.32 | |||||||||
Balance as of December 31, 2011 | 38.6 | $ | 23.98 | 3.7 | $ | 75.3 | ||||||
Granted | 3.1 | 22.81 | ||||||||||
Assumed(*) | 0.9 | 0.57 | ||||||||||
Canceled | (2.8 | ) | 26.64 | |||||||||
Exercised | (3.6 | ) | 11.71 | |||||||||
Expired | (2.1 | ) | 26.97 | |||||||||
Balance as of December 31, 2012 | 34.1 | $ | 24.13 | 3.1 | $ | 52.5 | ||||||
Granted | — | — | ||||||||||
Canceled | (1.3 | ) | 29.56 | |||||||||
Exercised | (5.6 | ) | 15.58 | |||||||||
Expired | (4.1 | ) | 28.35 | |||||||||
Balance as of December 31, 2013 | 23.1 | $ | 25.15 | 2.4 | $ | 44.6 | ||||||
As of December 31, 2013: | ||||||||||||
Vested and expected-to-vest options | 22.8 | $ | 25.24 | 2.4 | $ | 42.0 | ||||||
Exercisable options | 20.5 | $ | 25.40 | 2.0 | $ | 30.0 |
(*) | Stock options assumed in connection with the acquisition of Contrail. |
Options Outstanding | Options Exercisable | |||||||||||||||
Range of Exercise Price (In dollars) | Number Outstanding (In millions) | Weighted Average Remaining Contractual Life (In years) | Weighted Average Exercise Price (In dollars) | Number Exercisable (In millions) | Weighted Average Exercise Price (In dollars) | |||||||||||
$0.03 - $15.09 | 2.9 | 3.9 | $ | 10.89 | 2.3 | $ | 13.76 | |||||||||
$16.00 - $21.12 | 2.4 | 1.4 | 18.41 | 2.3 | 18.33 | |||||||||||
$21.43 - $23.84 | 2.4 | 2.2 | 22.46 | 2.1 | 22.60 | |||||||||||
$23.89 - $24.20 | 2.6 | 2.3 | 24.16 | 2.1 | 24.15 | |||||||||||
$24.25 - $25.49 | 2.3 | 1.3 | 25.07 | 2.3 | 25.07 | |||||||||||
$25.50 - $26.90 | 3.2 | 1.8 | 26.55 | 3.2 | 26.55 | |||||||||||
$26.97 - $29.89 | 3.1 | 2.6 | 28.54 | 2.9 | 28.52 | |||||||||||
$29.93 - $38.93 | 2.2 | 2.2 | 33.31 | 1.9 | 33.16 | |||||||||||
$40.26 - $40.26 | 1.1 | 4.0 | 40.26 | 0.8 | 40.26 | |||||||||||
$44.00 - $44.00 | 0.9 | 4.1 | 44.00 | 0.6 | 44.00 | |||||||||||
$0.03 - $44.00 | 23.1 | 2.4 | $ | 25.15 | 20.5 | $ | 25.40 |
Outstanding RSUs, RSAs, and PSAs | ||||||||||||
Number of Shares | Weighted Average Grant-Date Fair Value per Share | Weighted Average Remaining Contractual Term (In Years) | Aggregate Intrinsic Value | |||||||||
Balance as of December 31, 2010 | 14.2 | $ | 25.94 | 1.7 | $ | 522.9 | ||||||
RSUs granted | 7.3 | 31.75 | ||||||||||
PSAs granted(1) | 4.5 | 38.64 | ||||||||||
RSUs vested(6) | (1.7 | ) | 23.26 | |||||||||
PSAs vested(6) | (0.8 | ) | 24.76 | |||||||||
RSUs canceled | (1.0 | ) | 31.57 | |||||||||
PSAs canceled | (2.9 | ) | 30.72 | |||||||||
Balance as of December 31, 2011 | 19.6 | $ | 30.27 | 1.5 | $ | 400.5 | ||||||
RSUs granted | 9.9 | 20.79 | ||||||||||
RSUs assumed(3)(4) | 0.2 | 22.21 | ||||||||||
PSAs granted(2) | 2.2 | 23.07 | ||||||||||
RSAs assumed(4) | 5.8 | 19.59 | ||||||||||
RSUs vested(6) | (3.1 | ) | 27.04 | |||||||||
PSAs vested(6) | (1.9 | ) | 18.21 | |||||||||
RSAs vested(6) | (0.7 | ) | 19.59 | |||||||||
RSUs canceled | (2.9 | ) | 27.77 | |||||||||
PSAs canceled | (2.3 | ) | 29.71 | |||||||||
Balance as of December 31, 2012 | 26.8 | $ | 27.76 | 1.7 | $ | 565.0 | ||||||
RSUs granted | 10.3 | 20.32 | ||||||||||
PSAs granted(5) | 2.2 | 21.27 | ||||||||||
RSUs vested(6) | (6.1 | ) | 26.15 | |||||||||
PSAs vested(6) | (1.1 | ) | 28.52 | |||||||||
RSAs vested(6) | (1.6 | ) | 19.59 | |||||||||
RSUs canceled | (3.4 | ) | 22.99 | |||||||||
PSAs canceled | (1.7 | ) | 29.10 | |||||||||
Balance at December 31, 2013 | 25.4 | $ | 23.44 | 1.1 | $ | 573.5 | ||||||
As of December 31, 2013: | ||||||||||||
Vested and expected-to-vest RSUs, RSAs and PSAs | 20.8 | $ | 23.77 | 1.0 | $ | 469.2 |
(1) | The number of shares subject to PSAs granted represents the aggregate maximum number of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to these PSAs that would be issued if performance goals determined by the Compensation Committee are achieved is estimated at 1.9 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is 0 to 4.5 million shares. |
(2) | The number of shares subject to PSAs granted represents the aggregate maximum number of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to these PSAs that would be issued if performance goals determined by the Compensation Committee are achieved at target is 0.9 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is 0 to 2.2 million shares. |
(3) | RSUs assumed in connection with the acquisition of Mykonos. |
(4) | RSUs and RSAs assumed in connection with the acquisition of Contrail. |
(5) | The number of shares subject to PSAs granted represents the aggregate maximum number of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to these PSAs that would be issued if performance goals determined by the Compensation Committee are achieved at target is 1.1 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is 0 to 2.2 million shares. |
(6) | Total fair value of RSUs, RSAs, and PSAs vested during 2013, 2012, and 2011 was $221.5 million, $132.0 million, and $57.7 million, respectively. |
Number of Shares | ||
Balance as of December 31, 2012 | 57.3 | |
RSUs and PSAs granted (1) | (26.1 | ) |
RSUs and PSAs canceled (1) | 12.6 | |
Options canceled (2) | 1.2 | |
Options expired (2) | 4.1 | |
Balance as of December 31, 2013 | 49.1 |
(1) | RSUs and PSAs with a per share or unit purchase price lower than 100% of the fair market value of the Company's common stock on the day of the grant under the 2006 Plan are counted against shares authorized under the plan as two and one-tenth shares of common stock for each share subject to such award. The number of shares subject to PSAs granted represents the maximum number of shares that may be issued pursuant to the award over its full term. |
(2) | Includes canceled or expired options under the 1996 Plan and the 2000 Plan that expired after May 18, 2006, which become available for grant under the 2006 Plan according to its terms. |
Years Ended December 31, | |||||
2013 | 2012 | 2011 | |||
Stock Options: | |||||
Volatility | — | 45% | 43% | ||
Risk-free interest rate | — | 0.7% | 1.5% | ||
Expected life (years) | 0 years | 4.2 | 4.1 | ||
Dividend yield | — | — | — | ||
Weighted-average fair value per share | — | $8.47 | $13.17 | ||
ESPP: | |||||
Volatility | 36% | 47% | 41% | ||
Risk-free interest rate | 0.1% | 0.1% | 0.2% | ||
Expected life (years) | 0.5 | 0.5 | 0.5 | ||
Dividend yield | — | — | — | ||
Weighted-average fair value per share | $5.54 | $5.53 | $7.48 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Cost of revenues - Product | $ | 4.7 | $ | 4.6 | $ | 4.6 | |||||
Cost of revenues - Service | 15.4 | 17.0 | 15.7 | ||||||||
Research and development | 127.6 | 109.1 | 97.7 | ||||||||
Sales and marketing | 70.9 | 81.6 | 70.9 | ||||||||
General and administrative | 26.0 | 31.1 | 33.3 | ||||||||
Total | $ | 244.6 | $ | 243.4 | $ | 222.2 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Stock options | $ | 31.5 | $ | 58.9 | $ | 76.2 | |||||
RSUs, RSAs, and PSAs | 196.8 | 163.7 | 127.5 | ||||||||
ESPP | 16.3 | 20.8 | 18.5 | ||||||||
Total | $ | 244.6 | $ | 243.4 | $ | 222.2 |
Unrecognized Compensation Cost | Weighted Average Period (In Years) | ||||
Stock options | $ | 33.6 | 1.8 | ||
RSUs, RSAs, and PSAs | $ | 279.1 | 1.8 |
|
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
PSD product revenues: | |||||||||||
Routing | $ | 2,243.6 | $ | 1,946.8 | $ | 2,166.1 | |||||
Switching | 638.0 | 554.8 | 495.8 | ||||||||
Total PSD product revenues | 2,881.6 | 2,501.6 | 2,661.9 | ||||||||
PSD service revenues | 796.6 | 769.2 | 645.0 | ||||||||
Total PSD revenues | 3,678.2 | 3,270.8 | 3,306.9 | ||||||||
SSD product revenues: | |||||||||||
Security | 564.3 | 669.9 | 698.3 | ||||||||
Routing | 74.0 | 90.6 | 118.1 | ||||||||
Total SSD product revenues | 638.3 | 760.5 | 816.4 | ||||||||
SSD service revenues | 352.6 | 334.1 | 325.4 | ||||||||
Total SSD revenues | 990.9 | 1,094.6 | 1,141.8 | ||||||||
Total net revenues | $ | 4,669.1 | $ | 4,365.4 | $ | 4,448.7 | |||||
Segment contribution margin: | |||||||||||
PSD | $ | 1,621.0 | $ | 1,276.4 | $ | 1,426.8 | |||||
SSD | 398.4 | 473.6 | 504.4 | ||||||||
Total segment contribution margin | 2,019.4 | 1,750.0 | 1,931.2 | ||||||||
Corporate unallocated expenses (1) | (1,123.5 | ) | (1,068.7 | ) | (1,013.9 | ) | |||||
Amortization of purchased intangible assets (2) | (31.9 | ) | (32.3 | ) | (27.1 | ) | |||||
Share-based compensation expense | (244.6 | ) | (243.4 | ) | (222.2 | ) | |||||
Share-based payroll tax expense | (5.1 | ) | (1.1 | ) | (9.3 | ) | |||||
Restructuring and other charges (3) | (47.5 | ) | (99.7 | ) | (30.6 | ) | |||||
Acquisition-related charges (4) | (0.9 | ) | (2.0 | ) | (9.6 | ) | |||||
Other unallocated expense | — | 5.3 | — | ||||||||
Total operating income | 565.9 | 308.1 | 618.5 | ||||||||
Other expense, net | (40.4 | ) | (16.6 | ) | (46.8 | ) | |||||
Income before income taxes and noncontrolling interest | $ | 525.5 | $ | 291.5 | $ | 571.7 |
(1) | Amount includes unallocated costs for global functions such as sales, marketing, and general and administrative. |
(2) | Amount includes amortization expense of purchased intangible assets reported in cost of revenues and operating expenses. |
(3) | Amount includes restructuring and other charges reported in cost of revenues and operating expenses. |
(4) | Amount includes acquisition-related costs reported in cost of revenues and operating expenses. |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Americas: | |||||||||||
United States | $ | 2,381.5 | $ | 2,067.5 | $ | 2,015.8 | |||||
Other | 232.0 | 218.4 | 222.2 | ||||||||
Total Americas | 2,613.5 | 2,285.9 | 2,238.0 | ||||||||
Europe, Middle East, and Africa | 1,256.9 | 1,266.3 | 1,339.8 | ||||||||
Asia Pacific | 798.7 | 813.2 | 870.9 | ||||||||
Total | $ | 4,669.1 | $ | 4,365.4 | $ | 4,448.7 |
As of December 31, | |||||||
2013 | 2012 | ||||||
United States | $ | 801.3 | $ | 725.5 | |||
International | 81.0 | 86.4 | |||||
Property and equipment, net | $ | 882.3 | $ | 811.9 |
|
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Domestic | $ | 248.7 | $ | 114.1 | $ | 218.4 | |||||
Foreign | 276.8 | 177.4 | 353.3 | ||||||||
Total income before provision for income taxes and noncontrolling interest | $ | 525.5 | $ | 291.5 | $ | 571.7 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Current provision: | |||||||||||
Federal | $ | (12.9 | ) | $ | 94.3 | $ | 19.5 | ||||
States | (5.0 | ) | 8.4 | 0.9 | |||||||
Foreign | 32.5 | 37.1 | 47.8 | ||||||||
Total current provision | 14.6 | 139.8 | 68.2 | ||||||||
Deferred provision (benefit): | |||||||||||
Federal | 51.2 | (28.8 | ) | 23.0 | |||||||
States | (2.7 | ) | (1.5 | ) | 0.6 | ||||||
Foreign | 22.6 | 3.5 | (3.6 | ) | |||||||
Total deferred provision (benefit) | 71.1 | (26.8 | ) | 20.0 | |||||||
Income tax benefits attributable to employee stock plan activity | — | (8.0 | ) | 58.5 | |||||||
Total provision for income taxes | $ | 85.7 | $ | 105.0 | $ | 146.7 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Expected provision at 35% rate | $ | 184.0 | $ | 102.0 | $ | 200.1 | |||||
State taxes (benefit), net of federal benefit | (3.6 | ) | 2.0 | 2.0 | |||||||
Foreign income at different tax rates | (37.7 | ) | (11.6 | ) | (50.4 | ) | |||||
Research and development credits | (32.5 | ) | (0.5 | ) | (21.3 | ) | |||||
Share-based compensation | 25.6 | 22.4 | 16.7 | ||||||||
Settlement with tax authorities | (28.3 | ) | — | — | |||||||
Domestic production activities | (26.3 | ) | — | — | |||||||
Equity investment gain on acquisition | — | (5.3 | ) | — | |||||||
Other | 4.5 | (4.0 | ) | (0.4 | ) | ||||||
Total provision for income taxes | $ | 85.7 | $ | 105.0 | $ | 146.7 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Deferred tax assets: | |||||||
Net operating loss carry-forwards | $ | 1.1 | $ | 10.0 | |||
Foreign tax credit carry-forwards | 63.4 | 58.0 | |||||
Research and other credit carry-forwards | 106.6 | 95.3 | |||||
Deferred revenue | 71.0 | 98.6 | |||||
Stock-based compensation | 86.1 | 97.5 | |||||
Reserves and accruals not currently deductible | 153.9 | 175.2 | |||||
Other | 13.7 | 13.6 | |||||
Total deferred tax assets | 495.8 | 548.2 | |||||
Valuation allowance | (155.7 | ) | (141.0 | ) | |||
Deferred tax assets, net of valuation allowance | 340.1 | 407.2 | |||||
Deferred tax liabilities: | |||||||
Property and equipment basis differences | (3.1 | ) | (1.0 | ) | |||
Purchased intangibles | (10.1 | ) | (40.8 | ) | |||
Unremitted foreign earnings | (258.9 | ) | (229.1 | ) | |||
Deferred compensation and other | (38.7 | ) | — | ||||
Other | (0.4 | ) | (1.2 | ) | |||
Total deferred tax liabilities | (311.2 | ) | (272.1 | ) | |||
Net deferred tax assets | $ | 28.9 | $ | 135.1 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Current deferred tax assets | $ | 79.8 | $ | 172.6 | |||
Current deferred tax liabilities | — | — | |||||
Long-term deferred tax assets | 2.4 | — | |||||
Long-term deferred tax liabilities | (53.3 | ) | (37.5 | ) | |||
Total net deferred tax assets | $ | 28.9 | $ | 135.1 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Balance at beginning of year | $ | 136.1 | $ | 132.2 | $ | 116.4 | |||||
Tax positions related to current year: | |||||||||||
Additions | 15.8 | 8.8 | 17.6 | ||||||||
Tax positions related to prior years: | |||||||||||
Additions | 22.6 | 0.9 | 6.4 | ||||||||
Reductions | (2.2 | ) | — | — | |||||||
Settlements | (31.1 | ) | (1.2 | ) | (5.4 | ) | |||||
Lapses in statutes of limitations | (3.6 | ) | (4.6 | ) | (2.8 | ) | |||||
Balance at end of year | $ | 137.6 | $ | 136.1 | $ | 132.2 |
|
Years Ending December 31, | Amount | ||
2014 | $ | 49.4 | |
2015 | 38.4 | ||
2016 | 31.1 | ||
2017 | 26.8 | ||
2018 | 22.6 | ||
Thereafter | 56.9 | ||
Total | $ | 225.2 |
|
Year Ended December 31, 2013 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Net revenues: | ||||||||||||||||
Product | $ | 781.8 | $ | 863.8 | $ | 900.8 | $ | 973.5 | ||||||||
Service | 277.4 | 286.9 | 284.8 | 300.1 | ||||||||||||
Total net revenues | 1,059.2 | 1,150.7 | 1,185.6 | 1,273.6 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Product | 278.2 | 321.3 | 325.5 | 351.6 | ||||||||||||
Service | 110.2 | 108.9 | 113.6 | 118.4 | ||||||||||||
Total cost of revenues (2) | 388.4 | 430.2 | 439.1 | 470.0 | ||||||||||||
Gross margin | 670.8 | 720.5 | 746.5 | 803.6 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development(1) | 262.2 | 257.7 | 264.6 | 258.7 | ||||||||||||
Sales and marketing(4) | 256.1 | 267.1 | 269.5 | 283.2 | ||||||||||||
General and administrative(4) | 58.5 | 49.2 | 61.4 | 48.2 | ||||||||||||
Restructuring and other charges(2) | 7.0 | 8.0 | 6.0 | 18.1 | ||||||||||||
Total operating expenses | 583.8 | 582.0 | 601.5 | 608.2 | ||||||||||||
Operating income | 87.0 | 138.5 | 145.0 | 195.4 | ||||||||||||
Other expense, net | (10.1 | ) | (12.6 | ) | (7.5 | ) | (10.2 | ) | ||||||||
Income before income taxes | 76.9 | 125.9 | 137.5 | 185.2 | ||||||||||||
Income tax (benefit) provision | (14.1 | ) | 28.0 | 38.4 | 33.4 | |||||||||||
Net income | $ | 91.0 | $ | 97.9 | $ | 99.1 | $ | 151.8 | ||||||||
Net income per share:(3) | ||||||||||||||||
Basic | $ | 0.18 | $ | 0.19 | $ | 0.20 | $ | 0.30 | ||||||||
Diluted | $ | 0.18 | $ | 0.19 | $ | 0.19 | $ | 0.30 |
(1) | In the second quarter of 2013, the Company extended the useful lives of certain computers and equipment based on actual historical usage, which demonstrated longer useful lives, as well as the planned use of these assets. The change was accounted for as a change in estimate and applied prospectively. This change in accounting estimate decreased depreciation expense within research and development expense by approximately $11.0 million or $0.01 per diluted share for the second quarter of 2013, $9.4 million or $0.01 for the third quarter of 2013, and $7.9 million or $0.01 for the fourth quarter of 2013. |
(2) | In the third quarter of 2013, the Company implemented the 2013 Restructuring Plan for workforce reductions, contract terminations, and project cancellations and recorded restructuring charges of $7.4 million and $3.7 million to operating expenses and cost of revenues, respectively. In the fourth quarter of 2013, the Company continued to implement restructuring activities under the 2013 Restructuring Plan and primarily recorded charges to operating expenses of $17.6 million. |
(3) | Net income per share is computed independently. Therefore, the sum of the quarterly net income per share may not equal the total computed for the year or any cumulative interim period. |
(4) | Certain amounts in the prior quarters' Condensed Consolidated Statements of Operations have been reclassified to conform to the current year presentation. |
Year Ended December 31, 2012 | First Quarter | Second Quarter | Third Quarter(1) | Fourth Quarter | ||||||||||||
Net revenues: | ||||||||||||||||
Product | $ | 771.9 | $ | 804.7 | $ | 838.2 | $ | 847.3 | ||||||||
Service | 260.6 | 269.1 | 280.1 | 293.5 | ||||||||||||
Total net revenues | 1,032.5 | 1,073.8 | 1,118.3 | 1,140.8 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Product | 280.6 | 292.6 | 334.7 | 296.1 | ||||||||||||
Service | 117.8 | 113.3 | 109.8 | 111.7 | ||||||||||||
Total cost of revenues(2) | 398.4 | 405.9 | 444.5 | 407.8 | ||||||||||||
Gross margin | 634.1 | 667.9 | 673.8 | 733.0 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 269.6 | 268.7 | 288.2 | 275.1 | ||||||||||||
Sales and marketing(4) | 258.6 | 260.4 | 261.8 | 264.7 | ||||||||||||
General and administrative(4) | 56.2 | 48.9 | 50.0 | 51.7 | ||||||||||||
Restructuring and other charges(2) | 2.0 | 3.2 | 31.0 | 10.6 | ||||||||||||
Total operating expenses | 586.4 | 581.2 | 631.0 | 602.1 | ||||||||||||
Operating income | 47.7 | 86.7 | 42.8 | 130.9 | ||||||||||||
Other (expense) income, net | (24.4 | ) | 2.8 | (4.0 | ) | 9.0 | ||||||||||
Income before income taxes | 23.3 | 89.5 | 38.8 | 139.9 | ||||||||||||
Income tax provision | 7.0 | 31.8 | 22.0 | 44.2 | ||||||||||||
Net income | $ | 16.3 | $ | 57.7 | $ | 16.8 | $ | 95.7 | ||||||||
Net income per share(3) | ||||||||||||||||
Basic | $ | 0.03 | $ | 0.11 | $ | 0.03 | $ | 0.19 | ||||||||
Diluted | $ | 0.03 | $ | 0.11 | $ | 0.03 | $ | 0.19 |
(1) | During the third quarter of 2012, the Company recorded net out of period adjustments reducing income before income taxes and noncontrolling interest by $8.2 million. These net adjustments resulted in increased research and development expense by $18.6 million related to prototype development costs, partially offset by increased net revenues of $6.2 million related to the reversal of certain revenue obligations and reduced cost of revenues by $4.2 million related to inventory purchases. The Company assessed the materiality of these adjustments, using relevant quantitative and qualitative factors, and determined that these adjustments, both individually and in the aggregate, were not material to any previously reported period. |
(2) | In the third quarter of 2012, the Company implemented the 2012 Restructuring Plan for workforce reductions, facility consolidations or closures, and supply chain and procurement efficiencies and recorded restructuring charges of $29.5 million. In connection with its restructuring activities, the Company also recorded certain inventory and intangible asset impairment charges totaling $52.4 million to cost of revenues. In the fourth quarter of 2012, the Company continued to implement restructuring activities under the 2012 Restructuring Plan. |
(3) | Net income per share is computed independently. Therefore, the sum of the quarterly net income per share may not equal the total computed for the year or any cumulative interim period. |
(4) | Certain amounts in the prior quarters' Condensed Consolidated Statements of Operations have been reclassified to conform to the current year presentation. |
|
|
Allowance for Doubtful Accounts | Balance at Beginning of Year | Charged to (Reversed from) Costs and Expenses | Write-offs, Net of Recoveries | Balance at End of Year | |||||||||||
2013 | $ | 9.5 | $ | (3.8 | ) | $ | (0.3 | ) | $ | 5.4 | |||||
2012 | $ | 9.5 | $ | 0.1 | $ | (0.1 | ) | $ | 9.5 | ||||||
2011 | $ | 10.1 | $ | (0.2 | ) | $ | (0.4 | ) | $ | 9.5 |
Additions | |||||||||||||||||||
Sales Return Reserve | Balance at Beginning of Year | Charged as a Reduction in Revenues | Charged to Other Accounts | Used | Balance at End of Year | ||||||||||||||
2013 | $ | 52.7 | $ | 35.0 | $ | 61.5 | $ | (100.2 | ) | $ | 49.0 | ||||||||
2012 | $ | 52.0 | $ | 40.0 | $ | 48.6 | $ | (87.9 | ) | $ | 52.7 | ||||||||
2011 | $ | 52.8 | $ | 44.9 | $ | 64.6 | $ | (110.3 | ) | $ | 52.0 |
|
Estimated Useful Life (years) | |
Computers, equipment, and software | 3 to 5 |
Furniture and fixtures | 5 |
Building and building improvements | 7 to 40 |
Land improvements | 10 to 40 |
Leasehold improvements | Lease term, not to exceed 10 years |
• | Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement. |
• | Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. |
• | Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment. |
• | Collectability is reasonably assured. The Company assesses collectability based on creditworthiness of customers as determined by its credit checks, their payment histories, or changes in circumstances that indicate that collectability is not reasonably assured. |
|
Estimated Useful Life (years) | |
Computers, equipment, and software | 3 to 5 |
Furniture and fixtures | 5 |
Building and building improvements | 7 to 40 |
Land improvements | 10 to 40 |
Leasehold improvements | Lease term, not to exceed 10 years |
|
2013 Acquisitions | 2012 Acquisitions | 2011 Acquisitions | |||||||||
Net tangible assets acquired | $ | 0.1 | $ | 3.5 | $ | 1.7 | |||||
Intangible assets acquired | 9.9 | 54.1 | 28.4 | ||||||||
Goodwill | — | 129.7 | 0.4 | ||||||||
Total | $ | 10.0 | $ | 187.3 | $ | 30.5 |
Contrail | Mykonos | BitGravity | |||||||||||||||
Weighted Average Estimated Useful Life (In Years) | Amount | Weighted Average Estimated Useful Life (In Years) | Amount | Weighted Average Estimated Useful Life (In Years) | Amount | ||||||||||||
Existing technology | — | $ | — | 6 | $ | 19.3 | 3 | $ | 12.4 | ||||||||
Trade name and trademarks | — | — | 7 | 1.0 | — | — | |||||||||||
In-process research and development | N/A | 17.4 | N/A | 4.0 | — | — | |||||||||||
Total | — | $ | 17.4 | 6 | $ | 24.3 | 3 | $ | 12.4 |
OpNext | Brilliant | ||||||||||
Weighted Average Estimated Useful Life (In Years) | Amount | Weighted Average Estimated Useful Life (In Years) | Amount | ||||||||
Existing or core technology | 10 | $ | 20.6 | 5 | $ | 1.3 | |||||
Support agreements and related relationships | 4 | 5.1 | — | — | |||||||
Patents | — | — | 5 | 1.4 | |||||||
Total | 9 | $ | 25.7 | 5 | $ | 2.7 |
|
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
As of December 31, 2013 | |||||||||||||||
Fixed income securities: | |||||||||||||||
Asset-backed securities | $ | 249.9 | $ | 0.1 | $ | (0.1 | ) | $ | 249.9 | ||||||
Certificates of deposit | 27.6 | — | — | 27.6 | |||||||||||
Commercial paper | 6.9 | — | — | 6.9 | |||||||||||
Corporate debt securities | 813.6 | 2.0 | (0.3 | ) | 815.3 | ||||||||||
Foreign government debt securities | 10.7 | — | — | 10.7 | |||||||||||
Government-sponsored enterprise obligations | 306.2 | 0.1 | (0.1 | ) | 306.2 | ||||||||||
U.S. government securities | 303.3 | 0.1 | (0.1 | ) | 303.3 | ||||||||||
Total fixed income securities | 1,718.2 | 2.3 | (0.6 | ) | 1,719.9 | ||||||||||
Money market funds | 1,043.7 | — | — | 1,043.7 | |||||||||||
Mutual funds | 3.9 | 0.1 | — | 4.0 | |||||||||||
Publicly-traded equity securities | 12.0 | 104.5 | (1.9 | ) | 114.6 | ||||||||||
Total available-for-sale securities | 2,777.8 | 106.9 | (2.5 | ) | 2,882.2 | ||||||||||
Trading securities in mutual funds(*) | 15.4 | — | — | 15.4 | |||||||||||
Total | $ | 2,793.2 | $ | 106.9 | $ | (2.5 | ) | $ | 2,897.6 | ||||||
Reported as: | |||||||||||||||
Cash equivalents | $ | 996.2 | $ | — | $ | — | $ | 996.2 | |||||||
Restricted investments | 87.5 | 0.1 | — | 87.6 | |||||||||||
Short-term investments | 459.0 | 104.9 | (2.0 | ) | 561.9 | ||||||||||
Long-term investments | 1,250.5 | 1.9 | (0.5 | ) | 1,251.9 | ||||||||||
Total | $ | 2,793.2 | $ | 106.9 | $ | (2.5 | ) | $ | 2,897.6 |
(*) | Balance includes the Company's non-qualified deferred compensation plan assets. |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
As of December 31, 2012 | |||||||||||||||
Fixed income securities: | |||||||||||||||
Asset-backed securities | $ | 226.2 | $ | 0.3 | $ | (0.1 | ) | $ | 226.4 | ||||||
Certificates of deposit | 42.5 | — | — | 42.5 | |||||||||||
Commercial paper | 22.4 | — | — | 22.4 | |||||||||||
Corporate debt securities | 533.4 | 2.3 | (0.1 | ) | 535.6 | ||||||||||
Foreign government debt securities | 5.0 | — | — | 5.0 | |||||||||||
Government-sponsored enterprise obligations | 270.7 | 0.3 | — | 271.0 | |||||||||||
U.S. government securities | 494.4 | 0.1 | — | 494.5 | |||||||||||
Total fixed income securities | 1,594.6 | 3.0 | (0.2 | ) | 1,597.4 | ||||||||||
Money market funds | 1,145.2 | — | — | 1,145.2 | |||||||||||
Mutual funds | 2.9 | 0.1 | — | 3.0 | |||||||||||
Publicly-traded equity securities | 3.0 | — | (0.1 | ) | 2.9 | ||||||||||
Total available-for-sale securities | 2,745.7 | 3.1 | (0.3 | ) | 2,748.5 | ||||||||||
Trading securities in mutual funds(*) | 12.6 | — | — | 12.6 | |||||||||||
Total | $ | 2,758.3 | $ | 3.1 | $ | (0.3 | ) | $ | 2,761.1 | ||||||
Reported as: | |||||||||||||||
Cash equivalents | $ | 1,225.9 | $ | — | $ | — | $ | 1,225.9 | |||||||
Restricted investments | 105.5 | 0.1 | — | 105.6 | |||||||||||
Short-term investments | 441.3 | 0.3 | (0.1 | ) | 441.5 | ||||||||||
Long-term investments | 985.6 | 2.7 | (0.2 | ) | 988.1 | ||||||||||
Total | $ | 2,758.3 | $ | 3.1 | $ | (0.3 | ) | $ | 2,761.1 |
(*) | Balance includes the Company's non-qualified deferred compensation plan assets. |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Due within one year | $ | 467.7 | $ | 0.3 | $ | — | $ | 468.0 | |||||||
Due between one and five years | 1,250.5 | 2.0 | (0.6 | ) | 1,251.9 | ||||||||||
Total | $ | 1,718.2 | $ | 2.3 | $ | (0.6 | ) | $ | 1,719.9 |
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
Asset-backed securities(1) | $ | 153.0 | $ | (0.1 | ) | $ | 0.6 | $ | — | $ | 153.6 | $ | (0.1 | ) | |||||||||
Corporate debt securities(1) | 156.1 | (0.3 | ) | 9.7 | — | 165.8 | (0.3 | ) | |||||||||||||||
Foreign government debt securities(2) | 10.0 | — | — | — | 10.0 | — | |||||||||||||||||
Government-sponsored enterprise obligations | 123.1 | (0.1 | ) | — | — | 123.1 | (0.1 | ) | |||||||||||||||
U.S. government securities | 119.7 | (0.1 | ) | — | — | 119.7 | (0.1 | ) | |||||||||||||||
Total fixed income securities | 561.9 | (0.6 | ) | 10.3 | — | 572.2 | (0.6 | ) | |||||||||||||||
Publicly-traded equity securities | 6.8 | (1.9 | ) | — | — | 6.8 | (1.9 | ) | |||||||||||||||
Total available-for sale securities | $ | 568.7 | $ | (2.5 | ) | $ | 10.3 | $ | — | $ | 579.0 | $ | (2.5 | ) |
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
As of December 31, 2012 | |||||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
Asset-backed securities (1) | $ | 55.1 | $ | (0.1 | ) | $ | 0.1 | $ | — | $ | 55.2 | $ | (0.1 | ) | |||||||||
Certificates of deposit(2) | 0.3 | — | — | — | 0.3 | — | |||||||||||||||||
Commercial paper(2) | 10.0 | — | — | — | 10.0 | — | |||||||||||||||||
Corporate debt securities | 116.0 | (0.1 | ) | — | — | 116.0 | (0.1 | ) | |||||||||||||||
Government-sponsored enterprise obligations(2) | 30.0 | — | — | — | 30.0 | — | |||||||||||||||||
U.S. government securities(2) | 68.2 | — | — | — | 68.2 | — | |||||||||||||||||
Total fixed income securities | 279.6 | (0.2 | ) | 0.1 | — | 279.7 | (0.2 | ) | |||||||||||||||
Publicly-traded equity securities | 2.9 | (0.1 | ) | — | — | 2.9 | (0.1 | ) | |||||||||||||||
Total available-for-sale securities | $ | 282.5 | $ | (0.3 | ) | $ | 0.1 | $ | — | $ | 282.6 | $ | (0.3 | ) |
|
Fair Value Measurements at December 31, 2013 Using: | |||||||||||||||
Quoted Prices in Active Markets For Identical Assets | Significant Other Observable Remaining Inputs | Significant Other Unobservable Remaining Inputs | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Assets measured at fair value: | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Asset-backed securities | $ | — | $ | 249.9 | $ | — | $ | 249.9 | |||||||
Certificates of deposit | — | 27.6 | — | 27.6 | |||||||||||
Commercial paper | — | 6.9 | — | 6.9 | |||||||||||
Corporate debt securities | — | 815.3 | — | 815.3 | |||||||||||
Foreign government debt securities | — | 10.7 | — | 10.7 | |||||||||||
Government-sponsored enterprise obligations | — | 306.2 | — | 306.2 | |||||||||||
Money market funds (1) | 1,043.7 | — | — | 1,043.7 | |||||||||||
Mutual funds (2) | 4.0 | — | — | 4.0 | |||||||||||
Publicly-traded equity securities | 114.6 | — | — | 114.6 | |||||||||||
U.S. government securities | 197.2 | 106.1 | — | 303.3 | |||||||||||
Total available-for-sale securities | 1,359.5 | 1,522.7 | — | 2,882.2 | |||||||||||
Trading securities in mutual funds (3) | 15.4 | — | — | 15.4 | |||||||||||
Derivative assets: | |||||||||||||||
Foreign exchange contracts | — | 3.0 | — | 3.0 | |||||||||||
Total assets measured at fair value | $ | 1,374.9 | $ | 1,525.7 | $ | — | $ | 2,900.6 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Derivative liabilities: | |||||||||||||||
Foreign exchange contracts | $ | — | $ | (0.7 | ) | $ | — | $ | (0.7 | ) | |||||
Total liabilities measured at fair value | $ | — | $ | (0.7 | ) | $ | — | $ | (0.7 | ) | |||||
Total assets measured at fair value, reported as: | |||||||||||||||
Cash equivalents | $ | 965.1 | $ | 31.1 | $ | — | $ | 996.2 | |||||||
Restricted investments | 87.6 | — | — | 87.6 | |||||||||||
Short-term investments | 246.5 | 315.4 | — | 561.9 | |||||||||||
Long-term investments | 75.7 | 1,176.2 | — | 1,251.9 | |||||||||||
Prepaid expenses and other current assets | — | 3.0 | — | 3.0 | |||||||||||
Total assets measured at fair value | $ | 1,374.9 | $ | 1,525.7 | $ | — | $ | 2,900.6 | |||||||
Total liabilities measured at fair value, reported as: | |||||||||||||||
Other accrued liabilities | $ | — | $ | (0.7 | ) | $ | — | $ | (0.7 | ) | |||||
Total liabilities measured at fair value | $ | — | $ | (0.7 | ) | $ | — | $ | (0.7 | ) |
(1) | Balance includes $83.6 million of restricted investments measured at fair market value, related to the Company's D&O trust and acquisitions related escrows. |
(2) | Balance relates to the restricted investments measured at fair market value of the Company's India Gratuity Trust. |
(3) | Balance relates to the investments measured at fair value related to the Company's non-qualified deferred compensation plan assets. |
Fair Value Measurements at December 31, 2012 Using: | |||||||||||||||
Quoted Prices in Active Markets For Identical Assets | Significant Other Observable Remaining Inputs | Significant Other Unobservable Remaining Inputs | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Assets measured at fair value: | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Asset-backed securities | $ | — | $ | 226.4 | $ | — | $ | 226.4 | |||||||
Certificates of deposit | — | 42.5 | — | 42.5 | |||||||||||
Commercial paper | — | 22.4 | — | 22.4 | |||||||||||
Corporate debt securities | — | 535.6 | — | 535.6 | |||||||||||
Foreign government debt securities | — | 5.0 | — | 5.0 | |||||||||||
Government-sponsored enterprise obligations | 254.9 | 16.1 | — | 271.0 | |||||||||||
Money market funds (1) | 1,145.2 | — | — | 1,145.2 | |||||||||||
Mutual funds (2) | 1.0 | 2.0 | — | 3.0 | |||||||||||
Publicly-traded equity securities | 2.9 | — | — | 2.9 | |||||||||||
U.S. government securities | 275.9 | 218.6 | — | 494.5 | |||||||||||
Total available-for-sale securities | 1,679.9 | 1,068.6 | — | 2,748.5 | |||||||||||
Trading securities in mutual funds (3) | 12.6 | — | — | 12.6 | |||||||||||
Derivative assets: | |||||||||||||||
Foreign exchange contracts | — | 3.5 | — | 3.5 | |||||||||||
Total assets measured at fair value | $ | 1,692.5 | $ | 1,072.1 | $ | — | $ | 2,764.6 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Derivative liabilities: | |||||||||||||||
Foreign exchange contracts | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Total liabilities measured at fair value | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Total assets measured at fair value, reported as: | |||||||||||||||
Cash equivalents | $ | 1,048.7 | $ | 177.2 | $ | — | $ | 1,225.9 | |||||||
Restricted investments | 103.6 | 2.0 | — | 105.6 | |||||||||||
Short-term investments | 224.4 | 217.1 | — | 441.5 | |||||||||||
Long-term investments | 315.8 | 672.3 | — | 988.1 | |||||||||||
Prepaid expenses and other current assets | — | 3.5 | — | 3.5 | |||||||||||
Total assets measured at fair value | $ | 1,692.5 | $ | 1,072.1 | $ | — | $ | 2,764.6 | |||||||
Total liabilities measured at fair value, reported as: | |||||||||||||||
Other accrued liabilities | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Total liabilities measured at fair value | $ | — | $ | 0.1 | $ | — | $ | 0.1 |
(1) | Balance includes $102.6 million of restricted investments measured at fair market value, related to the Company's D&O trust and acquisition related escrows. |
(2) | Balance relates to the restricted investments measured at fair market value of the Company's India Gratuity Trust. |
(3) | Balance relates to the investments measured at fair value related to the Company's non-qualified deferred compensation plan assets. |
As of December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Fair Value | Losses | Fair Value | Losses | ||||||||||||
Privately-held investments | $ | 2.0 | $ | (2.8 | ) | $ | — | $ | (20.0 | ) | |||||
Purchased intangible assets, net | $ | — | — | $ | — | (5.4 | ) | ||||||||
Total losses for nonrecurring basis | $ | (2.8 | ) | $ | (25.4 | ) |
|
As of December 31, | |||||||
2013 | 2012 | ||||||
Cash flow hedges | $ | 137.6 | $ | 85.8 | |||
Non-designated derivatives | 144.4 | 112.8 | |||||
Total | $ | 282.0 | $ | 198.6 |
|
PSD | SSD | Total | |||||||||
December 31, 2011 | $ | 1,795.6 | $ | 2,132.5 | $ | 3,928.1 | |||||
Additions due to business combinations | 70.7 | 59.6 | 130.3 | ||||||||
Adjustments to goodwill | — | (0.6 | ) | (0.6 | ) | ||||||
December 31, 2012 | 1,866.3 | 2,191.5 | 4,057.8 | ||||||||
Reclassifications | (249.6 | ) | 249.6 | — | |||||||
Foreign currency translation adjustment | (0.1 | ) | — | (0.1 | ) | ||||||
December 31, 2013 | $ | 1,616.6 | $ | 2,441.1 | $ | 4,057.7 |
Gross | Accumulated Amortization | Impairments and Other Charges | Net | ||||||||||||
As of December 31, 2013 | |||||||||||||||
Intangible assets with finite lives: | |||||||||||||||
Technologies and patents | $ | 581.4 | $ | (453.4 | ) | $ | (30.5 | ) | $ | 97.5 | |||||
Customer contracts, support agreements, and related relationships | 74.3 | (62.7 | ) | (2.2 | ) | 9.4 | |||||||||
Total purchased intangible assets | $ | 655.7 | $ | (516.1 | ) | $ | (32.7 | ) | $ | 106.9 | |||||
As of December 31, 2012 | |||||||||||||||
Intangible assets with finite lives: | |||||||||||||||
Technologies and patents | $ | 554.1 | $ | (425.0 | ) | $ | (30.5 | ) | $ | 98.6 | |||||
Customer contracts, support agreements, and related relationships | 74.3 | (59.2 | ) | (2.2 | ) | 12.9 | |||||||||
Total intangible assets with finite lives | 628.4 | (484.2 | ) | (32.7 | ) | 111.5 | |||||||||
IPR&D with indefinite lives | 17.4 | — | — | 17.4 | |||||||||||
Total purchased intangible assets | $ | 645.8 | $ | (484.2 | ) | $ | (32.7 | ) | $ | 128.9 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Cost of revenues | $ | 27.3 | $ | 27.6 | $ | 21.7 | |||||
Operating expenses: | |||||||||||
Sales and marketing | 3.4 | 3.5 | 4.1 | ||||||||
General and administrative | 1.2 | 1.2 | 1.3 | ||||||||
Total operating expenses | 4.6 | 4.7 | 5.4 | ||||||||
Total | $ | 31.9 | $ | 32.3 | $ | 27.1 |
Years Ending December 31, | Amount | ||
2014 | $ | 36.2 | |
2015 | 32.6 | ||
2016 | 18.5 | ||
2017 | 10.5 | ||
2018 | 3.7 | ||
Thereafter | 5.4 | ||
Total | $ | 106.9 |
|
As of December 31, | |||||||
2013 | 2012 | ||||||
Production materials | $ | 51.3 | $ | 53.1 | |||
Finished goods | 1.4 | 4.1 | |||||
Inventories | $ | 52.7 | $ | 57.2 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Computers and equipment | $ | 794.6 | $ | 711.8 | |||
Software | 108.4 | 106.6 | |||||
Leasehold improvements | 202.6 | 206.5 | |||||
Furniture and fixtures | 42.5 | 28.7 | |||||
Building and building improvements | 242.6 | 206.1 | |||||
Land and land improvements | 238.9 | 208.2 | |||||
Construction-in-process | 79.5 | 112.7 | |||||
Property and equipment, gross | 1,709.1 | 1,580.6 | |||||
Accumulated depreciation | (826.8 | ) | (768.7 | ) | |||
Property and equipment, net | $ | 882.3 | $ | 811.9 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Privately-held investments | $ | 57.2 | $ | 32.0 | |||
Licensed software | 90.4 | 84.4 | |||||
Federal income tax receivable | 20.0 | — | |||||
Financed customer receivable | 19.9 | — | |||||
Inventory | 15.2 | — | |||||
Prepaid costs, deposits, and other | 31.1 | 21.9 | |||||
Other long-term assets | $ | 233.8 | $ | 138.3 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Beginning balance | $ | 29.7 | $ | 28.3 | |||
Provisions made during the period, net | 28.8 | 31.9 | |||||
Adjustments related to pre-existing warranties | (2.1 | ) | — | ||||
Actual costs incurred during the period | (28.4 | ) | (30.5 | ) | |||
Ending balance | $ | 28.0 | $ | 29.7 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Deferred product revenue: | |||||||
Undelivered product commitments and other product deferrals | $ | 184.9 | $ | 256.9 | |||
Distributor inventory and other sell-through items | 118.7 | 138.4 | |||||
Deferred gross product revenue | 303.6 | 395.3 | |||||
Deferred cost of product revenue | (58.6 | ) | (99.4 | ) | |||
Deferred product revenue, net | 245.0 | 295.9 | |||||
Deferred service revenue | 824.3 | 627.5 | |||||
Total | $ | 1,069.3 | $ | 923.4 | |||
Reported as: | |||||||
Current | $ | 705.8 | $ | 693.5 | |||
Long-term | 363.5 | 229.9 | |||||
Total | $ | 1,069.3 | $ | 923.4 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Interest income | $ | 8.7 | $ | 11.0 | $ | 9.7 | |||||
Interest expense | (58.4 | ) | (52.9 | ) | (49.5 | ) | |||||
Other | 9.3 | 25.3 | (7.0 | ) | |||||||
Other expense, net | $ | (40.4 | ) | $ | (16.6 | ) | $ | (46.8 | ) |
|
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Severance | $ | 22.9 | $ | 36.7 | $ | 15.3 | |||||
Facilities | 10.0 | 5.8 | 0.2 | ||||||||
Contract terminations and other | 14.6 | 57.2 | 15.1 | ||||||||
Total | $ | 47.5 | $ | 99.7 | $ | 30.6 | |||||
Reported as: | |||||||||||
Cost of revenues | $ | 8.4 | $ | 52.9 | $ | — | |||||
Restructuring and other charges | 39.1 | 46.8 | 30.6 | ||||||||
Total | $ | 47.5 | $ | 99.7 | $ | 30.6 |
December 31, 2012 | Charges | Cash Payments | Non-cash Settlements and Other | December 31, 2013 | |||||||||||||||
Severance | $ | 10.6 | $ | 22.9 | $ | (27.8 | ) | $ | (0.1 | ) | $ | 5.6 | |||||||
Facilities | 5.2 | 10.0 | (6.0 | ) | (4.1 | ) | 5.1 | ||||||||||||
Contract terminations and other | 2.4 | 14.6 | (9.3 | ) | (0.6 | ) | 7.1 | ||||||||||||
Total | $ | 18.2 | $ | 47.5 | $ | (43.1 | ) | $ | (4.8 | ) | $ | 17.8 |
|
As of December 31, 2013 | ||||||
Amount | Effective Interest Rates | |||||
Senior notes: | ||||||
3.10% fixed-rate notes, due 2016 | $ | 300.0 | 3.12 | % | ||
4.60% fixed-rate notes, due 2021 | 300.0 | 4.63 | % | |||
5.95% fixed-rate notes, due 2041 | 400.0 | 6.01 | % | |||
Total senior notes | 1,000.0 | |||||
Unaccreted discount | (0.7 | ) | ||||
Total | $ | 999.3 |
|
Shares Repurchased | Average price per share | Amount Repurchased | ||||||||
2013 | ||||||||||
Repurchases under stock repurchase programs | 28.9 | $ | 19.76 | $ | 570.6 | |||||
Repurchases for tax withholding | 0.4 | $ | 20.23 | $ | 7.2 | |||||
2012 | ||||||||||
Repurchases under stock repurchase programs | 35.8 | $ | 18.05 | $ | 645.6 | |||||
Repurchases for tax withholding | 0.2 | $ | 23.40 | $ | 5.0 | |||||
2011 | ||||||||||
Repurchases under stock repurchase programs | 17.5 | $ | 30.93 | $ | 541.2 | |||||
Repurchases for tax withholding | 0.2 | $ | 35.98 | $ | 7.4 |
Unrealized Gains (Losses) on Available-for- Sale Securities(1) | Unrealized Gains (Losses) on Cash Flow Hedges(2) | Foreign Currency Translation Adjustments | Total | ||||||||||||
Balance as of December 31, 2011 | $ | 0.1 | $ | (10.9 | ) | $ | (6.8 | ) | $ | (17.6 | ) | ||||
Other comprehensive gain before reclassifications | 3.2 | 7.4 | 6.4 | 17.0 | |||||||||||
Amount reclassified from accumulated other comprehensive income | (1.2 | ) | 6.5 | — | 5.3 | ||||||||||
Other comprehensive gain | 2.0 | 13.9 | 6.4 | 22.3 | |||||||||||
Balance as of December 31, 2012 | $ | 2.1 | $ | 3.0 | $ | (0.4 | ) | $ | 4.7 | ||||||
Other comprehensive gain (loss) before reclassifications | 65.1 | 0.7 | (3.4 | ) | 62.4 | ||||||||||
Amount reclassified from accumulated other comprehensive income | (1.0 | ) | (1.5 | ) | — | (2.5 | ) | ||||||||
Other comprehensive gain (loss) | 64.1 | (0.8 | ) | (3.4 | ) | 59.9 | |||||||||
Balance as of December 31, 2013 | $ | 66.2 | $ | 2.2 | $ | (3.8 | ) | $ | 64.6 |
(1) | The reclassifications out of accumulated other comprehensive income during the years ended December 31, 2013 and December 31, 2012 for realized gains on available-for-sale securities of $1.0 million and $1.2 million, respectively, are included in other expense, net, in the Consolidated Statements of Operations. |
(2) | The reclassifications out of accumulated other comprehensive income during the year ended December 31, 2013 for realized gains on cash flow hedges are included within cost of revenues of $1.1 million and sales and marketing of $4.3 million and for realized losses within research and development of $3.4 million and general and administrative of $0.5 million for which the hedged transactions relate in the Consolidated Statements of Operations. The reclassifications out of accumulated other comprehensive income during the year ended December 31, 2012 for realized losses on cash flow hedges are included within cost of revenues of $0.9 million, research and development of $2.3 million, sales and marketing of $2.0 million, and general and administrative of $1.3 million for which the hedged transactions relate in the Consolidated Statements of Operations. |
|
Outstanding Options | ||||||||||||
Number of Shares | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term (In Years) | Aggregate Intrinsic Value | |||||||||
Balance as of December 31, 2010 | 49.4 | $ | 21.90 | 4.1 | $ | 744.5 | ||||||
Granted | 5.6 | 37.17 | ||||||||||
Canceled | (1.9 | ) | 26.76 | |||||||||
Exercised | (13.9 | ) | 21.13 | |||||||||
Expired | (0.6 | ) | 34.32 | |||||||||
Balance as of December 31, 2011 | 38.6 | $ | 23.98 | 3.7 | $ | 75.3 | ||||||
Granted | 3.1 | 22.81 | ||||||||||
Assumed(*) | 0.9 | 0.57 | ||||||||||
Canceled | (2.8 | ) | 26.64 | |||||||||
Exercised | (3.6 | ) | 11.71 | |||||||||
Expired | (2.1 | ) | 26.97 | |||||||||
Balance as of December 31, 2012 | 34.1 | $ | 24.13 | 3.1 | $ | 52.5 | ||||||
Granted | — | — | ||||||||||
Canceled | (1.3 | ) | 29.56 | |||||||||
Exercised | (5.6 | ) | 15.58 | |||||||||
Expired | (4.1 | ) | 28.35 | |||||||||
Balance as of December 31, 2013 | 23.1 | $ | 25.15 | 2.4 | $ | 44.6 | ||||||
As of December 31, 2013: | ||||||||||||
Vested and expected-to-vest options | 22.8 | $ | 25.24 | 2.4 | $ | 42.0 | ||||||
Exercisable options | 20.5 | $ | 25.40 | 2.0 | $ | 30.0 |
(*) | Stock options assumed in connection with the acquisition of Contrail. |
Options Outstanding | Options Exercisable | |||||||||||||||
Range of Exercise Price (In dollars) | Number Outstanding (In millions) | Weighted Average Remaining Contractual Life (In years) | Weighted Average Exercise Price (In dollars) | Number Exercisable (In millions) | Weighted Average Exercise Price (In dollars) | |||||||||||
$0.03 - $15.09 | 2.9 | 3.9 | $ | 10.89 | 2.3 | $ | 13.76 | |||||||||
$16.00 - $21.12 | 2.4 | 1.4 | 18.41 | 2.3 | 18.33 | |||||||||||
$21.43 - $23.84 | 2.4 | 2.2 | 22.46 | 2.1 | 22.60 | |||||||||||
$23.89 - $24.20 | 2.6 | 2.3 | 24.16 | 2.1 | 24.15 | |||||||||||
$24.25 - $25.49 | 2.3 | 1.3 | 25.07 | 2.3 | 25.07 | |||||||||||
$25.50 - $26.90 | 3.2 | 1.8 | 26.55 | 3.2 | 26.55 | |||||||||||
$26.97 - $29.89 | 3.1 | 2.6 | 28.54 | 2.9 | 28.52 | |||||||||||
$29.93 - $38.93 | 2.2 | 2.2 | 33.31 | 1.9 | 33.16 | |||||||||||
$40.26 - $40.26 | 1.1 | 4.0 | 40.26 | 0.8 | 40.26 | |||||||||||
$44.00 - $44.00 | 0.9 | 4.1 | 44.00 | 0.6 | 44.00 | |||||||||||
$0.03 - $44.00 | 23.1 | 2.4 | $ | 25.15 | 20.5 | $ | 25.40 |
Outstanding RSUs, RSAs, and PSAs | ||||||||||||
Number of Shares | Weighted Average Grant-Date Fair Value per Share | Weighted Average Remaining Contractual Term (In Years) | Aggregate Intrinsic Value | |||||||||
Balance as of December 31, 2010 | 14.2 | $ | 25.94 | 1.7 | $ | 522.9 | ||||||
RSUs granted | 7.3 | 31.75 | ||||||||||
PSAs granted(1) | 4.5 | 38.64 | ||||||||||
RSUs vested(6) | (1.7 | ) | 23.26 | |||||||||
PSAs vested(6) | (0.8 | ) | 24.76 | |||||||||
RSUs canceled | (1.0 | ) | 31.57 | |||||||||
PSAs canceled | (2.9 | ) | 30.72 | |||||||||
Balance as of December 31, 2011 | 19.6 | $ | 30.27 | 1.5 | $ | 400.5 | ||||||
RSUs granted | 9.9 | 20.79 | ||||||||||
RSUs assumed(3)(4) | 0.2 | 22.21 | ||||||||||
PSAs granted(2) | 2.2 | 23.07 | ||||||||||
RSAs assumed(4) | 5.8 | 19.59 | ||||||||||
RSUs vested(6) | (3.1 | ) | 27.04 | |||||||||
PSAs vested(6) | (1.9 | ) | 18.21 | |||||||||
RSAs vested(6) | (0.7 | ) | 19.59 | |||||||||
RSUs canceled | (2.9 | ) | 27.77 | |||||||||
PSAs canceled | (2.3 | ) | 29.71 | |||||||||
Balance as of December 31, 2012 | 26.8 | $ | 27.76 | 1.7 | $ | 565.0 | ||||||
RSUs granted | 10.3 | 20.32 | ||||||||||
PSAs granted(5) | 2.2 | 21.27 | ||||||||||
RSUs vested(6) | (6.1 | ) | 26.15 | |||||||||
PSAs vested(6) | (1.1 | ) | 28.52 | |||||||||
RSAs vested(6) | (1.6 | ) | 19.59 | |||||||||
RSUs canceled | (3.4 | ) | 22.99 | |||||||||
PSAs canceled | (1.7 | ) | 29.10 | |||||||||
Balance at December 31, 2013 | 25.4 | $ | 23.44 | 1.1 | $ | 573.5 | ||||||
As of December 31, 2013: | ||||||||||||
Vested and expected-to-vest RSUs, RSAs and PSAs | 20.8 | $ | 23.77 | 1.0 | $ | 469.2 |
(1) | The number of shares subject to PSAs granted represents the aggregate maximum number of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to these PSAs that would be issued if performance goals determined by the Compensation Committee are achieved is estimated at 1.9 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is 0 to 4.5 million shares. |
(2) | The number of shares subject to PSAs granted represents the aggregate maximum number of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to these PSAs that would be issued if performance goals determined by the Compensation Committee are achieved at target is 0.9 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is 0 to 2.2 million shares. |
(3) | RSUs assumed in connection with the acquisition of Mykonos. |
(4) | RSUs and RSAs assumed in connection with the acquisition of Contrail. |
(5) | The number of shares subject to PSAs granted represents the aggregate maximum number of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to these PSAs that would be issued if performance goals determined by the Compensation Committee are achieved at target is 1.1 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is 0 to 2.2 million shares. |
(6) | Total fair value of RSUs, RSAs, and PSAs vested during 2013, 2012, and 2011 was $221.5 million, $132.0 million, and $57.7 million, respectively. |
Number of Shares | ||
Balance as of December 31, 2012 | 57.3 | |
RSUs and PSAs granted (1) | (26.1 | ) |
RSUs and PSAs canceled (1) | 12.6 | |
Options canceled (2) | 1.2 | |
Options expired (2) | 4.1 | |
Balance as of December 31, 2013 | 49.1 |
(1) | RSUs and PSAs with a per share or unit purchase price lower than 100% of the fair market value of the Company's common stock on the day of the grant under the 2006 Plan are counted against shares authorized under the plan as two and one-tenth shares of common stock for each share subject to such award. The number of shares subject to PSAs granted represents the maximum number of shares that may be issued pursuant to the award over its full term. |
(2) | Includes canceled or expired options under the 1996 Plan and the 2000 Plan that expired after May 18, 2006, which become available for grant under the 2006 Plan according to its terms. |
Years Ended December 31, | |||||
2013 | 2012 | 2011 | |||
Stock Options: | |||||
Volatility | — | 45% | 43% | ||
Risk-free interest rate | — | 0.7% | 1.5% | ||
Expected life (years) | 0 years | 4.2 | 4.1 | ||
Dividend yield | — | — | — | ||
Weighted-average fair value per share | — | $8.47 | $13.17 | ||
ESPP: | |||||
Volatility | 36% | 47% | 41% | ||
Risk-free interest rate | 0.1% | 0.1% | 0.2% | ||
Expected life (years) | 0.5 | 0.5 | 0.5 | ||
Dividend yield | — | — | — | ||
Weighted-average fair value per share | $5.54 | $5.53 | $7.48 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Cost of revenues - Product | $ | 4.7 | $ | 4.6 | $ | 4.6 | |||||
Cost of revenues - Service | 15.4 | 17.0 | 15.7 | ||||||||
Research and development | 127.6 | 109.1 | 97.7 | ||||||||
Sales and marketing | 70.9 | 81.6 | 70.9 | ||||||||
General and administrative | 26.0 | 31.1 | 33.3 | ||||||||
Total | $ | 244.6 | $ | 243.4 | $ | 222.2 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Stock options | $ | 31.5 | $ | 58.9 | $ | 76.2 | |||||
RSUs, RSAs, and PSAs | 196.8 | 163.7 | 127.5 | ||||||||
ESPP | 16.3 | 20.8 | 18.5 | ||||||||
Total | $ | 244.6 | $ | 243.4 | $ | 222.2 |
Unrecognized Compensation Cost | Weighted Average Period (In Years) | ||||
Stock options | $ | 33.6 | 1.8 | ||
RSUs, RSAs, and PSAs | $ | 279.1 | 1.8 |
|
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
PSD product revenues: | |||||||||||
Routing | $ | 2,243.6 | $ | 1,946.8 | $ | 2,166.1 | |||||
Switching | 638.0 | 554.8 | 495.8 | ||||||||
Total PSD product revenues | 2,881.6 | 2,501.6 | 2,661.9 | ||||||||
PSD service revenues | 796.6 | 769.2 | 645.0 | ||||||||
Total PSD revenues | 3,678.2 | 3,270.8 | 3,306.9 | ||||||||
SSD product revenues: | |||||||||||
Security | 564.3 | 669.9 | 698.3 | ||||||||
Routing | 74.0 | 90.6 | 118.1 | ||||||||
Total SSD product revenues | 638.3 | 760.5 | 816.4 | ||||||||
SSD service revenues | 352.6 | 334.1 | 325.4 | ||||||||
Total SSD revenues | 990.9 | 1,094.6 | 1,141.8 | ||||||||
Total net revenues | $ | 4,669.1 | $ | 4,365.4 | $ | 4,448.7 | |||||
Segment contribution margin: | |||||||||||
PSD | $ | 1,621.0 | $ | 1,276.4 | $ | 1,426.8 | |||||
SSD | 398.4 | 473.6 | 504.4 | ||||||||
Total segment contribution margin | 2,019.4 | 1,750.0 | 1,931.2 | ||||||||
Corporate unallocated expenses (1) | (1,123.5 | ) | (1,068.7 | ) | (1,013.9 | ) | |||||
Amortization of purchased intangible assets (2) | (31.9 | ) | (32.3 | ) | (27.1 | ) | |||||
Share-based compensation expense | (244.6 | ) | (243.4 | ) | (222.2 | ) | |||||
Share-based payroll tax expense | (5.1 | ) | (1.1 | ) | (9.3 | ) | |||||
Restructuring and other charges (3) | (47.5 | ) | (99.7 | ) | (30.6 | ) | |||||
Acquisition-related charges (4) | (0.9 | ) | (2.0 | ) | (9.6 | ) | |||||
Other unallocated expense | — | 5.3 | — | ||||||||
Total operating income | 565.9 | 308.1 | 618.5 | ||||||||
Other expense, net | (40.4 | ) | (16.6 | ) | (46.8 | ) | |||||
Income before income taxes and noncontrolling interest | $ | 525.5 | $ | 291.5 | $ | 571.7 |
(1) | Amount includes unallocated costs for global functions such as sales, marketing, and general and administrative. |
(2) | Amount includes amortization expense of purchased intangible assets reported in cost of revenues and operating expenses. |
(3) | Amount includes restructuring and other charges reported in cost of revenues and operating expenses. |
(4) | Amount includes acquisition-related costs reported in cost of revenues and operating expenses |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Americas: | |||||||||||
United States | $ | 2,381.5 | $ | 2,067.5 | $ | 2,015.8 | |||||
Other | 232.0 | 218.4 | 222.2 | ||||||||
Total Americas | 2,613.5 | 2,285.9 | 2,238.0 | ||||||||
Europe, Middle East, and Africa | 1,256.9 | 1,266.3 | 1,339.8 | ||||||||
Asia Pacific | 798.7 | 813.2 | 870.9 | ||||||||
Total | $ | 4,669.1 | $ | 4,365.4 | $ | 4,448.7 |
As of December 31, | |||||||
2013 | 2012 | ||||||
United States | $ | 801.3 | $ | 725.5 | |||
International | 81.0 | 86.4 | |||||
Property and equipment, net | $ | 882.3 | $ | 811.9 |
|
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Domestic | $ | 248.7 | $ | 114.1 | $ | 218.4 | |||||
Foreign | 276.8 | 177.4 | 353.3 | ||||||||
Total income before provision for income taxes and noncontrolling interest | $ | 525.5 | $ | 291.5 | $ | 571.7 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Current provision: | |||||||||||
Federal | $ | (12.9 | ) | $ | 94.3 | $ | 19.5 | ||||
States | (5.0 | ) | 8.4 | 0.9 | |||||||
Foreign | 32.5 | 37.1 | 47.8 | ||||||||
Total current provision | 14.6 | 139.8 | 68.2 | ||||||||
Deferred provision (benefit): | |||||||||||
Federal | 51.2 | (28.8 | ) | 23.0 | |||||||
States | (2.7 | ) | (1.5 | ) | 0.6 | ||||||
Foreign | 22.6 | 3.5 | (3.6 | ) | |||||||
Total deferred provision (benefit) | 71.1 | (26.8 | ) | 20.0 | |||||||
Income tax benefits attributable to employee stock plan activity | — | (8.0 | ) | 58.5 | |||||||
Total provision for income taxes | $ | 85.7 | $ | 105.0 | $ | 146.7 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Expected provision at 35% rate | $ | 184.0 | $ | 102.0 | $ | 200.1 | |||||
State taxes (benefit), net of federal benefit | (3.6 | ) | 2.0 | 2.0 | |||||||
Foreign income at different tax rates | (37.7 | ) | (11.6 | ) | (50.4 | ) | |||||
Research and development credits | (32.5 | ) | (0.5 | ) | (21.3 | ) | |||||
Share-based compensation | 25.6 | 22.4 | 16.7 | ||||||||
Settlement with tax authorities | (28.3 | ) | — | — | |||||||
Domestic production activities | (26.3 | ) | — | — | |||||||
Equity investment gain on acquisition | — | (5.3 | ) | — | |||||||
Other | 4.5 | (4.0 | ) | (0.4 | ) | ||||||
Total provision for income taxes | $ | 85.7 | $ | 105.0 | $ | 146.7 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Deferred tax assets: | |||||||
Net operating loss carry-forwards | $ | 1.1 | $ | 10.0 | |||
Foreign tax credit carry-forwards | 63.4 | 58.0 | |||||
Research and other credit carry-forwards | 106.6 | 95.3 | |||||
Deferred revenue | 71.0 | 98.6 | |||||
Stock-based compensation | 86.1 | 97.5 | |||||
Reserves and accruals not currently deductible | 153.9 | 175.2 | |||||
Other | 13.7 | 13.6 | |||||
Total deferred tax assets | 495.8 | 548.2 | |||||
Valuation allowance | (155.7 | ) | (141.0 | ) | |||
Deferred tax assets, net of valuation allowance | 340.1 | 407.2 | |||||
Deferred tax liabilities: | |||||||
Property and equipment basis differences | (3.1 | ) | (1.0 | ) | |||
Purchased intangibles | (10.1 | ) | (40.8 | ) | |||
Unremitted foreign earnings | (258.9 | ) | (229.1 | ) | |||
Deferred compensation and other | (38.7 | ) | — | ||||
Other | (0.4 | ) | (1.2 | ) | |||
Total deferred tax liabilities | (311.2 | ) | (272.1 | ) | |||
Net deferred tax assets | $ | 28.9 | $ | 135.1 |
Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Balance at beginning of year | $ | 136.1 | $ | 132.2 | $ | 116.4 | |||||
Tax positions related to current year: | |||||||||||
Additions | 15.8 | 8.8 | 17.6 | ||||||||
Tax positions related to prior years: | |||||||||||
Additions | 22.6 | 0.9 | 6.4 | ||||||||
Reductions | (2.2 | ) | — | — | |||||||
Settlements | (31.1 | ) | (1.2 | ) | (5.4 | ) | |||||
Lapses in statutes of limitations | (3.6 | ) | (4.6 | ) | (2.8 | ) | |||||
Balance at end of year | $ | 137.6 | $ | 136.1 | $ | 132.2 |
As of December 31, | |||||||
2013 | 2012 | ||||||
Current deferred tax assets | $ | 79.8 | $ | 172.6 | |||
Current deferred tax liabilities | — | — | |||||
Long-term deferred tax assets | 2.4 | — | |||||
Long-term deferred tax liabilities | (53.3 | ) | (37.5 | ) | |||
Total net deferred tax assets | $ | 28.9 | $ | 135.1 |
|
Years Ending December 31, | Amount | ||
2014 | $ | 49.4 | |
2015 | 38.4 | ||
2016 | 31.1 | ||
2017 | 26.8 | ||
2018 | 22.6 | ||
Thereafter | 56.9 | ||
Total | $ | 225.2 |
|
Year Ended December 31, 2013 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Net revenues: | ||||||||||||||||
Product | $ | 781.8 | $ | 863.8 | $ | 900.8 | $ | 973.5 | ||||||||
Service | 277.4 | 286.9 | 284.8 | 300.1 | ||||||||||||
Total net revenues | 1,059.2 | 1,150.7 | 1,185.6 | 1,273.6 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Product | 278.2 | 321.3 | 325.5 | 351.6 | ||||||||||||
Service | 110.2 | 108.9 | 113.6 | 118.4 | ||||||||||||
Total cost of revenues (2) | 388.4 | 430.2 | 439.1 | 470.0 | ||||||||||||
Gross margin | 670.8 | 720.5 | 746.5 | 803.6 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development(1) | 262.2 | 257.7 | 264.6 | 258.7 | ||||||||||||
Sales and marketing(4) | 256.1 | 267.1 | 269.5 | 283.2 | ||||||||||||
General and administrative(4) | 58.5 | 49.2 | 61.4 | 48.2 | ||||||||||||
Restructuring and other charges(2) | 7.0 | 8.0 | 6.0 | 18.1 | ||||||||||||
Total operating expenses | 583.8 | 582.0 | 601.5 | 608.2 | ||||||||||||
Operating income | 87.0 | 138.5 | 145.0 | 195.4 | ||||||||||||
Other expense, net | (10.1 | ) | (12.6 | ) | (7.5 | ) | (10.2 | ) | ||||||||
Income before income taxes | 76.9 | 125.9 | 137.5 | 185.2 | ||||||||||||
Income tax (benefit) provision | (14.1 | ) | 28.0 | 38.4 | 33.4 | |||||||||||
Net income | $ | 91.0 | $ | 97.9 | $ | 99.1 | $ | 151.8 | ||||||||
Net income per share:(3) | ||||||||||||||||
Basic | $ | 0.18 | $ | 0.19 | $ | 0.20 | $ | 0.30 | ||||||||
Diluted | $ | 0.18 | $ | 0.19 | $ | 0.19 | $ | 0.30 |
(1) | In the second quarter of 2013, the Company extended the useful lives of certain computers and equipment based on actual historical usage, which demonstrated longer useful lives, as well as the planned use of these assets. The change was accounted for as a change in estimate and applied prospectively. This change in accounting estimate decreased depreciation expense within research and development expense by approximately $11.0 million or $0.01 per diluted share for the second quarter of 2013, $9.4 million or $0.01 for the third quarter of 2013, and $7.9 million or $0.01 for the fourth quarter of 2013. |
(2) | In the third quarter of 2013, the Company implemented the 2013 Restructuring Plan for workforce reductions, contract terminations, and project cancellations and recorded restructuring charges of $7.4 million and $3.7 million to operating expenses and cost of revenues, respectively. In the fourth quarter of 2013, the Company continued to implement restructuring activities under the 2013 Restructuring Plan and primarily recorded charges to operating expenses of $17.6 million. |
(3) | Net income per share is computed independently. Therefore, the sum of the quarterly net income per share may not equal the total computed for the year or any cumulative interim period. |
(4) | Certain amounts in the prior quarters' Condensed Consolidated Statements of Operations have been reclassified to conform to the current year presentation. |
Year Ended December 31, 2012 | First Quarter | Second Quarter | Third Quarter(1) | Fourth Quarter | ||||||||||||
Net revenues: | ||||||||||||||||
Product | $ | 771.9 | $ | 804.7 | $ | 838.2 | $ | 847.3 | ||||||||
Service | 260.6 | 269.1 | 280.1 | 293.5 | ||||||||||||
Total net revenues | 1,032.5 | 1,073.8 | 1,118.3 | 1,140.8 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Product | 280.6 | 292.6 | 334.7 | 296.1 | ||||||||||||
Service | 117.8 | 113.3 | 109.8 | 111.7 | ||||||||||||
Total cost of revenues(2) | 398.4 | 405.9 | 444.5 | 407.8 | ||||||||||||
Gross margin | 634.1 | 667.9 | 673.8 | 733.0 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 269.6 | 268.7 | 288.2 | 275.1 | ||||||||||||
Sales and marketing(4) | 258.6 | 260.4 | 261.8 | 264.7 | ||||||||||||
General and administrative(4) | 56.2 | 48.9 | 50.0 | 51.7 | ||||||||||||
Restructuring and other charges(2) | 2.0 | 3.2 | 31.0 | 10.6 | ||||||||||||
Total operating expenses | 586.4 | 581.2 | 631.0 | 602.1 | ||||||||||||
Operating income | 47.7 | 86.7 | 42.8 | 130.9 | ||||||||||||
Other (expense) income, net | (24.4 | ) | 2.8 | (4.0 | ) | 9.0 | ||||||||||
Income before income taxes | 23.3 | 89.5 | 38.8 | 139.9 | ||||||||||||
Income tax provision | 7.0 | 31.8 | 22.0 | 44.2 | ||||||||||||
Net income | $ | 16.3 | $ | 57.7 | $ | 16.8 | $ | 95.7 | ||||||||
Net income per share(3) | ||||||||||||||||
Basic | $ | 0.03 | $ | 0.11 | $ | 0.03 | $ | 0.19 | ||||||||
Diluted | $ | 0.03 | $ | 0.11 | $ | 0.03 | $ | 0.19 |
(1) | During the third quarter of 2012, the Company recorded net out of period adjustments reducing income before income taxes and noncontrolling interest by $8.2 million. These net adjustments resulted in increased research and development expense by $18.6 million related to prototype development costs, partially offset by increased net revenues of $6.2 million related to the reversal of certain revenue obligations and reduced cost of revenues by $4.2 million related to inventory purchases. The Company assessed the materiality of these adjustments, using relevant quantitative and qualitative factors, and determined that these adjustments, both individually and in the aggregate, were not material to any previously reported period. |
(2) | In the third quarter of 2012, the Company implemented the 2012 Restructuring Plan for workforce reductions, facility consolidations or closures, and supply chain and procurement efficiencies and recorded restructuring charges of $29.5 million. In connection with its restructuring activities, the Company also recorded certain inventory and intangible asset impairment charges totaling $52.4 million to cost of revenues. In the fourth quarter of 2012, the Company continued to implement restructuring activities under the 2012 Restructuring Plan. |
(3) | Net income per share is computed independently. Therefore, the sum of the quarterly net income per share may not equal the total computed for the year or any cumulative interim period. |
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