0001262039-14-000025 | 10-Q | XBRL Viewer

Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2014

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share is as follows (in thousands, except per share amounts):



	Three Months Ended
	March 31, 2014		March 31, 2013
Numerator:
Net income	$	8,393	$	12,249

Denominator:
Basic shares:
Weighted-average common stock outstanding-basic	162,391		161,282
Diluted shares:
Weighted-average common stock outstanding-basic	162,391		161,282
Effect of potentially dilutive securities:
Stock options	5,196		6,457
RSUs	484		72
ESPP	43		12
Weighted-average shares used to compute diluted net income per share	168,114		167,823
Net income per share:
Basic	$	0.05	$	0.08
Diluted	$	0.05	$	0.07

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

The following weighted-average shares of common stock were excluded from the computation of diluted net income per share for the periods presented, as their effect would have been antidilutive (in thousands):



	Three Months Ended
	March 31, 2014	March 31, 2013
Stock options	5,079	6,751
RSUs	1,348	1,069
ESPP	358	331
	6,785	8,151

Business Combinations

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

BUSINESS COMBINATIONS

Coyote Point Systems

On March 21, 2013, we acquired all of the outstanding equity securities of Coyote Point Systems, Inc. (“Coyote”), a provider of application delivery, load balancing and acceleration solutions, for $6.0 million in cash. The acquisition also included a contingent obligation for up to $5.5 million in future earn-out payments to former stockholders of Coyote, if specified future operational objectives, service conditions and financial results are met within two years of the acquisition date. Of the maximum $5.5 million in contingent earn-out payments, up to $3.5 million will be payable after eighteen months from the acquisition date, and up to $2.0 million will be payable after two years from the acquisition date. As the future earn-out payments are also contingent upon one of Coyote's former stockholder's employment during the earn-out period, the estimated fair value of these contingent obligations is being recorded as compensation expense ratably over the earn-out periods. This acquisition complemented our network security strategy and allowed us and our channel partners to accelerate and further deliver on our vision of providing broad security and networking functionality to customers.

We accounted for this acquisition as a purchase of a business and, accordingly, the total purchase price was allocated to Coyote’s identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair value assigned to the intangible assets acquired was determined using the income approach which discounts expected cash flows to present value using our estimates and assumptions.

The following table summarizes the fair value of assets acquired and liabilities assumed (in thousands):



Cash and cash equivalents	$	206
Other current assets	501
Finite-lived intangible assets	2,800
Indefinite-lived intangible assets	2,600
Goodwill	2,824
Other assets	88
Total assets acquired	9,019
Current liabilities	1,030
Long-term liabilities	2,004
Total liabilities assumed	3,034
Total purchase price	$	5,985

Of the total acquired identified intangible assets, we allocated $2.3 million to developed technology, $0.5 million to customer relationships, and $2.6 million to in-process research and development (“IPR&D”) as of the acquisition date. Identified finite-lived intangible assets consist of developed technology and customer relationships that are being amortized as cost of revenue and sales and marketing expense, respectively, ratably on a straight-line basis, each over an estimated useful life of six years. Identified indefinite-lived intangible assets consisted of acquired IPR&D relating to existing research and development projects at the time of acquisition. The goodwill of $2.8 million represents the premium we paid over the fair value of the net tangible liabilities assumed and identified intangible assets acquired, due primarily to acquire developed and in-process technology. None of the goodwill recognized as a result of the acquisition is deductible for income tax purposes. The financial results of this acquisition were considered immaterial for purposes of pro-forma financial disclosures. During the three months ended September 30, 2013, we completed the development of technology associated with the IPR&D projects, and started amortizing this developed technology as cost of revenue ratably on a straight-line basis over an estimated useful life of 6 years.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

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+ Details

Foreign Currency Derivatives (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Notional amount of forward exchange contracts	$ 23,058	$ 21,867

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2014	Apr. 30, 2014
Document Information [Line Items]
Entity Registrant Name	FORTINET INC
Entity Central Index Key	0001262039
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		163,069,548,000

Goodwill and Other Intangible Assets—Net Goodwill (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013	Mar. 21, 2013
Business Acquisition [Line Items]
Goodwill	$ 2,824	$ 2,872
Coyote Point Systems, Inc. [Member]
Business Acquisition [Line Items]
Goodwill			$ 2,824

Accumulated Other Comprehensive Income (Reclassification Out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other (expense) income—net	$ (389)	$ 215
Provision for income taxes	(5,366)	(4,726)
NET INCOME	8,393	$ 12,249
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other (expense) income—net	(2)
Provision for income taxes	0
NET INCOME	$ (2)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Business Combinations (2013 Acquisitions) (Details) - USD ($) $ in Thousands	Mar. 21, 2013	Mar. 31, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Goodwill		$ 2,824	$ 2,872
Coyote Point Systems, Inc. [Member]
Business Acquisition [Line Items]
Cash paid to acquire business	$ 6,000
Contingent consideration	5,500
Cash and cash equivalents	206
Other current assets	501
Finite-lived intangible assets	2,800
Indefinite-lived intangible assets	2,600
Goodwill	2,824
Other assets	88
Total assets acquired	9,019
Current liabilities	1,030
Long-term liabilities	2,004
Total liabilities assumed	3,034
Total purchase price	5,985
Developed Technology [Member] \| Coyote Point Systems, Inc. [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets	$ 2,300
Useful life of finite-lived intangible assets	6 years
Customer Relationships [Member] \| Coyote Point Systems, Inc. [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets	$ 500
Useful life of finite-lived intangible assets	6 years
Payable after Eighteen Months from Acquisition Date [Member] \| Coyote Point Systems, Inc. [Member]
Business Acquisition [Line Items]
Contingent consideration	$ 3,500
Payable after Two Years from Acquisition Date [Member] \| Coyote Point Systems, Inc. [Member]
Business Acquisition [Line Items]
Contingent consideration	2,000
In Process Research and Development [Member] \| Coyote Point Systems, Inc. [Member]
Business Acquisition [Line Items]
Indefinite-lived intangible assets	$ 2,600

Net Income Per Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding, plus the dilutive effects of stock options, restricted stock units (“RSUs”), and employee stock purchase plan (“ESPP”). Potentially dilutive shares of common stock are determined by applying the treasury stock method.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share is as follows (in thousands, except per share amounts):



	Three Months Ended
	March 31, 2014		March 31, 2013
Numerator:
Net income	$	8,393	$	12,249

Denominator:
Basic shares:
Weighted-average common stock outstanding-basic	162,391		161,282
Diluted shares:
Weighted-average common stock outstanding-basic	162,391		161,282
Effect of potentially dilutive securities:
Stock options	5,196		6,457
RSUs	484		72
ESPP	43		12
Weighted-average shares used to compute diluted net income per share	168,114		167,823
Net income per share:
Basic	$	0.05	$	0.08
Diluted	$	0.05	$	0.07



	Three Months Ended
	March 31, 2014	March 31, 2013
Stock options	5,079	6,751
RSUs	1,348	1,069
ESPP	358	331
	6,785	8,151

Stockholders' Equity

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Our 2009 Equity Incentive Plan (the “Plan”) permits us to grant awards of stock options, stock appreciation rights, restricted stock, restricted stock units, and performance units or performance shares.

Employee Stock Options

The following table summarizes the weighted-average assumptions relating to our employee stock options:



	Three Months Ended
	March 31, 2014
Expected term in years	4.88
Volatility	44.5	%
Risk-free interest rate	1.7	%
Dividend rate	—

There were no stock options granted during the three months ended March 31, 2013.

The following table summarizes the stock option activity and related information for the periods presented below (in thousands, except exercise prices and contractual life):



	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance—December 31, 2013	15,521		$	13.18
Granted	187		21.46
Forfeited	(148	)	23.16
Exercised	(1,015	)	7.09
Balance—March 31, 2014	14,545		13.61
Options vested and expected to vest—March 31, 2014	14,509		$	13.59	3.14	$	135,393
Options exercisable—March 31, 2014	11,567		$	11.20	2.72	$	132,401

The aggregate intrinsic value represents the pre-tax difference between the exercise price of stock options and the quoted market price of our common stock on March 31, 2014, for all in-the-money options. As of March 31, 2014, total compensation expense related to unvested stock options granted to employees but not yet recognized was $34.2 million, net of estimated forfeitures. This expense is expected to be amortized on a straight-line basis over a weighted-average period of 1.70 years.

Additional information related to our stock options is summarized below (in thousands, except per share amounts):



	Three Months Ended
	March 31, 2014		March 31, 2013
Weighted-average fair value per share granted	$	8.65	$	—
Intrinsic value of options exercised	$	15,321	$	26,059
Fair value of options vested	$	4,562	$	11,004

Restricted Stock Units

The following table summarizes the activity and related information for RSUs for the periods presented below (in thousands, except per share amounts):



	Restricted Stock Units Outstanding
	Number of Shares		Weighted-Average Grant-Date-Fair Value per Share
Balance—December 31, 2013	4,199		$	22.00
Granted	1,852		21.48
Forfeited	(100	)	21.74
Vested	(516	)	23.25
Balance—March 31, 2014	5,435		$	21.74
RSUs expected to vest—March 31, 2014	5,120		$	21.78

As of March 31, 2014, total compensation expense related to unvested RSUs that were granted to employees and non-employees under the 2009 Plan, but not yet recognized, was $116.1 million, net of estimated forfeitures. This expense is expected to be amortized on a straight-line basis over a weighted-average vesting period of 3.25 years.

The following summarizes the number and value of the shares withheld for employee taxes for the three months ended March 31, 2014 (in thousands):



	Three Months Ended
	March 31, 2014		March 31, 2013
Shares withheld for taxes	171		—
Amount withheld for taxes	$	3,633	$	—

Employee Stock Purchase Plan

In determining the fair value of our ESPP, we use the Black-Scholes option pricing model that employs the following weighted-average assumptions:



	Three Months Ended
	March 31, 2014		March 31, 2013
Expected term in years	0.49		0.50
Volatility	36.9	%	48	%
Risk-free interest rate	0.08	%	0.10	%
Dividend rate	—		—

Additional information related to the ESPP is provided below (in thousands, except per share amounts):



	Three Months Ended
	March 31, 2014		March 31, 2013
Weighted-average fair value per share granted	$	5.76	$	6.83
Shares issued under the ESPP	424		329
Weighted-average price per share issued	$	17.18	$	19.91

Stock-based Compensation Expense

Stock-based compensation expense is included in costs and expenses as follows (in thousands):



	Three Months Ended
	March 31, 2014		March 31, 2013
Cost of product revenue	$	113	$	90
Cost of services and other revenue	1,329		1,020
Research and development	3,882		2,766
Sales and marketing	5,746		4,118
General and administrative	1,860		1,305
Total stock-based compensation expense	$	12,930	$	9,299

The following table summarizes stock-based compensation expense by award type (in thousands):



	Three Months Ended
	March 31, 2014		March 31, 2013
Stock options	$	4,692	$	5,486
RSUs	7,363		2,674
ESPP	875		1,139
Total stock-based compensation expense	$	12,930	$	9,299

Total income tax benefit associated with stock-based compensation that is recognized in the consolidated statements of operations is as follows (in thousands):



	Three Months Ended
	March 31, 2014		March 31, 2013
Income tax benefit associated with stock-based compensation	$	3,349	$	3,587

Share Repurchase Program

On December 6, 2013, our Board of Directors authorized a Share Repurchase Program (“the Program”) to repurchase up to $200.0 million of our outstanding common stock through December 31, 2014. Under the Program, share repurchases may be made by us from time to time in privately negotiated transactions or in open market transactions. The Program does not require us to purchase a minimum number of shares, and may be suspended, modified or discontinued at any time without prior notice. During the three months ended March 31, 2014, we repurchased 0.3 million shares of common stock under the Program in open market transactions for an aggregate purchase price of $7.5 million. The share repurchases were financed by available cash balances and cash flow from operations. As of March 31, 2014, $153.5 million remains authorized for future share repurchases under the Program.

Property and Equipment—Net

3 Months Ended

Mar. 31, 2014

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT—Net

Property and equipment—net consisted of the following (in thousands):



	March 31, 2014			December 31, 2013
Land	$	13,895		$	13,895
Building and building improvements	19,121			610
Evaluation units	24,951			23,442
Computer equipment, software and tooling	25,151			23,556
Furniture and fixtures	3,185			1,697
Construction-in-progress	634			10,947
Leasehold improvements	4,520			4,303
Total property and equipment	91,457			78,450
Less: accumulated depreciation	(43,983		)	(41,798		)
Property and equipment—net	$	47,474		$	36,652

Beginning in the first quarter of 2014, we reclassified certain fixed assets between categories in the table above to better reflect the nature of these fixed assets. Prior period amounts have also been reclassified to conform to the current period presentation. We believe the impact of the reclassification is not material.

Depreciation expense was $3.9 million and $3.2 million during the three months ended March 31, 2014 and March 31, 2013, respectively.

Financial Instruments and Fair Value (Tables)

3 Months Ended

Mar. 31, 2014

Financial Instruments and Fair Value [Abstract]

Summary of Investments [Table Text Block]

The following table summarizes our investments as of March 31, 2014 and December 31, 2013 (in thousands):



	March 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate debt securities	$	583,341	$	1,406	$	(280	)	$	584,467
Commercial paper	74,547		4		(2		)	74,549
Municipal bonds	38,207		50		(9		)	38,248
Certificates of deposit and term deposits	12,331		2		—			12,333
U.S. government and agency securities	5,748		3		(2		)	5,749
Total available-for-sale securities	$	714,174	$	1,465	$	(293	)	$	715,346



	December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate debt securities	$	603,185	$	1,506	$	(374	)	$	604,317
Commercial paper	69,356		7		—			69,363
Municipal bonds	38,815		48		(20		)	38,843
Certificates of deposit and term deposits	12,645		3		—			12,648
U.S. government and agency securities	2,000		1		—			2,001
Total available-for-sale securities	$	726,001	$	1,565	$	(394	)	$	727,172

Schedule of Unrealized Loss on Investments [Table Text Block]

The following table shows the gross unrealized losses and the related fair values of our investments that have been in a continuous unrealized loss position as of March 31, 2014 and December 31, 2013 (in thousands):



	March 31, 2014
	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate debt securities	$	148,132	$	(257	)	$	13,176	$	(23	)	$	161,308	$	(280	)
Commercial paper	12,094		(2		)	—		—			12,094		(2		)
Municipal bonds	4,776		(5		)	4,028		(4		)	8,804		(9		)
U.S. government and agency securities	2,748		(2		)	—		—			2,748		(2		)
Total available-for-sale securities	$	167,750	$	(266	)	$	17,204	$	(27	)	$	184,954	$	(293	)



	December 31, 2013
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate debt securities	$	182,795	$	(374	)	$	500	$	—	$	183,295	$	(374	)
Commercial paper	7,897		—			—		—		7,897		—
Municipal bonds	14,736		(20		)	—		—		14,736		(20		)
Total available-for-sale securities	$	205,428	$	(394	)	$	500	$	—	$	205,928	$	(394	)

Investments Classified by Contractual Maturity Date [Table Text Block]

The contractual maturities of our investments are as follows (in thousands):



	March 31, 2014		December 31, 2013
Due within one year	$	388,083	$	375,497
Due within one to three years	327,263		351,675
Total	$	715,346	$	727,172

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2014 and December 31, 2013 (in thousands):



	March 31, 2014								December 31, 2013
	Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs		Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
			(Level 1)		(Level 2)		(Level 3)				(Level 1)		(Level 2)		(Level 3)
Assets:
Corporate debt securities	$	584,467	$	—	$	584,467	$	—	$	604,317	$	—	$	604,317	$	—
Commercial paper	74,549		—		74,549		—		71,363		—		71,363		—
Municipal bonds	38,248		—		38,248		—		38,843		—		38,843		—
Certificates of deposit and term deposits	12,333		—		12,333		—		12,648		—		12,648		—
Money market funds	20,298		20,298		—		—		5,724		5,724		—		—
U.S. government and agency securities	5,749		—		5,749		—		2,001		—		2,001		—
Total	$	735,644	$	20,298	$	715,346	$	—	$	734,896	$	5,724	$	729,172	$	—

Liabilities:
Contingent consideration	$	707	$	—	$	—	$	707	$	1,850	$	—	$	—	$	1,850
Total	$	707	$	—	$	—	$	707	$	1,850	$	—	$	—	$	1,850

Reported as:
Cash equivalents	$	20,298							$	7,724
Short-term investments	388,083								375,497
Long-term investments	327,263								351,675
Total	$	735,644							$	734,896

Fair Value Inputs, Liabilities, Quantitative Information [Table Text Block]

The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of March 31, 2014 (in thousands except for percentage):



	March 31, 2014
	Fair Value	Valuation Technique	Significant Unobservable Input	Range
Contingent consideration	$707	Probability Weighted Income Approach	Revenue	$7,000 - $7,639

			Probability of occurrence (%)	20%-70%

Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block]

The change in the fair value of our contingent consideration liability is as follows (in thousands):



As of December 31, 2013	$1,850
Less adjustment to fair value of contingent consideration	(1,143)
As of March 31, 2014	$707

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Effective tax rate, percent	39.00%	28.00%
Unrecognized tax benefits	$ 33.8		$ 30.2
Unrecognized tax benefits that would favorably impact effective tax rate	33.2
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	$ 1.2

Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Inventory, Net [Abstract]
Raw materials	$ 5,089	$ 4,319
Finished goods	34,555	40,093
Consignment inventory	3,650	4,260
Inventory	$ 43,294	$ 48,672

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net income	$ 8,393	$ 12,249
Other comprehensive loss—net of taxes:
Foreign currency translation losses	(1,017)	(952)
Unrealized gains on investments	2	42
Tax provision related to items of other comprehensive income or loss	0	(15)
Other comprehensive loss—net of taxes	(1,015)	(925)
Comprehensive income	$ 7,378	$ 11,324

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Segment Information (Tables)

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Revenue from External Customers by Geographic Areas [Table Text Block]

The following table sets forth revenue by geographic region (in thousands):



	Three Months Ended
Revenue	March 31, 2014		March 31, 2013
Americas:
United States	$	44,793	$	34,788
Other Americas	27,639		17,839
Total Americas	72,432		52,627
Europe, Middle East, and Africa (“EMEA”)	56,643		47,326
Asia Pacific and Japan (“APAC”)	39,874		35,867
Total revenue	$	168,949	$	135,820

Long-lived Assets by Geographic Areas [Table Text Block]

The following table sets forth property and equipment by geographic region (in thousands):



Property and Equipment—Net	March 31, 2014		December 31, 2013
Americas:
United States	$	40,146	$	29,334
Canada	3,930		4,372
Other Americas	30		45
Total Americas	44,106		33,751
EMEA	1,647		1,273
APAC	1,721		1,628
Total property and equipment—net	$	47,474	$	36,652

Property and Equipment—Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	$ 91,457		$ 78,450
Less: accumulated depreciation	(43,983)		(41,798)
Property and equipment - net	47,474		36,652
Depreciation expense	3,900	$ 3,200
Land [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	13,895		13,895
Building and building improvements [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	19,121		610
Evaluation units [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	24,951		23,442
Computer equipment, software and tooling [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	25,151		23,556
Furniture and fixtures [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	3,185		1,697
Construction-in-progress [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	634		10,947
Leasehold improvements and tooling [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	$ 4,520		$ 4,303

Commitments and Contingencies Minimum Operating Lease Payments (Details) $ in Thousands	Mar. 31, 2014 USD ($)
Operating Lease Commitments:
Operating lease commitments, 2014 (remainder)	$ 6,543
Operating lease commitments, 2015	6,547
Operating lease commitments, 2016	5,385
Operating lease commitments, 2017	4,639
Operating lease commitments, 2018	3,649
Operating lease commitments, Thereafter	4,829
Operating lease commitments	31,592
Sublease Commitments:
Sublease rental income, 2014 (remainder)	585
Sublease rental income, 2015	455
Sublease rental income, 2016	0
Sublease rental income, 2017	0
Sublease rental income, 2018	0
Sublease rental income, Thereafter	0
Sublease rental income	1,040
Operating commitments, net:
Operating commitments, net, 2014 (remainder)	5,958
Operating commitments, net, 2015	6,092
Operating commitments, net, 2016	5,385
Operating commitments, net, 2017	4,639
Operating commitments, net, 2018	3,649
Operating commitments, net, Thereafter	4,829
Operating commitments, net	30,552
Purchase commitments:
Purchase commitments, 2014 (remainder)	38,880
Purchase commitments, 2015	0
Purchase commitments, 2016	0
Purchase commitments, 2017	0
Purchase commitments, 2018	0
Purchase commitments, Thereafter	0
Purchase commitments	38,880
Other contract commitments:
Other contract commitments, 2014 (remainder)	18,502
Other contract commitments, 2015	3,914
Other contract commitments, 2016	889
Other contract commitments, 2017	877
Other contract commitments, 2018	0
Other contract commitments, Thereafter	0
Other contract commitments	24,182
Contractual obligations, 2014 (remainder)	63,340
Contractual obligations, 2015	10,006
Contractual obligations, 2016	6,274
Contractual obligations, 2017	5,516
Contractual obligations, 2018	3,649
Contractual obligations, Thereafter	4,829
Contractual obligations	$ 93,614

Financial Instruments and Fair Value

3 Months Ended

Mar. 31, 2014

Financial Instruments and Fair Value [Abstract]

FINANCIAL INSTRUMENTS AND FAIR VALUE

The following table summarizes our investments as of March 31, 2014 and December 31, 2013 (in thousands):



	March 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate debt securities	$	583,341	$	1,406	$	(280	)	$	584,467
Commercial paper	74,547		4		(2		)	74,549
Municipal bonds	38,207		50		(9		)	38,248
Certificates of deposit and term deposits	12,331		2		—			12,333
U.S. government and agency securities	5,748		3		(2		)	5,749
Total available-for-sale securities	$	714,174	$	1,465	$	(293	)	$	715,346



	December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate debt securities	$	603,185	$	1,506	$	(374	)	$	604,317
Commercial paper	69,356		7		—			69,363
Municipal bonds	38,815		48		(20		)	38,843
Certificates of deposit and term deposits	12,645		3		—			12,648
U.S. government and agency securities	2,000		1		—			2,001
Total available-for-sale securities	$	726,001	$	1,565	$	(394	)	$	727,172



	March 31, 2014
	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate debt securities	$	148,132	$	(257	)	$	13,176	$	(23	)	$	161,308	$	(280	)
Commercial paper	12,094		(2		)	—		—			12,094		(2		)
Municipal bonds	4,776		(5		)	4,028		(4		)	8,804		(9		)
U.S. government and agency securities	2,748		(2		)	—		—			2,748		(2		)
Total available-for-sale securities	$	167,750	$	(266	)	$	17,204	$	(27	)	$	184,954	$	(293	)



	December 31, 2013
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate debt securities	$	182,795	$	(374	)	$	500	$	—	$	183,295	$	(374	)
Commercial paper	7,897		—			—		—		7,897		—
Municipal bonds	14,736		(20		)	—		—		14,736		(20		)
Total available-for-sale securities	$	205,428	$	(394	)	$	500	$	—	$	205,928	$	(394	)

The contractual maturities of our investments are as follows (in thousands):



	March 31, 2014		December 31, 2013
Due within one year	$	388,083	$	375,497
Due within one to three years	327,263		351,675
Total	$	715,346	$	727,172

Available-for-sale securities are reported at fair value, with unrealized gains and losses, net of tax, included as a separate component of stockholders’ equity and in total comprehensive income. Realized gains and losses on available-for-sale securities are included in Other (expense) income—net in our condensed consolidated statements of operations.

The unrealized losses on our available-for-sale securities were caused by fluctuations in market value and interest rates as a result of the economic environment. As the decline in market value are attributable to changes in market conditions and not credit quality, and because we have concluded currently that we neither intend to sell nor it is more likely than not that we will be required to sell these investments prior to a recovery of par value, we do not consider these investments to be other-than temporarily impaired as of March 31, 2014.

Realized gains and losses from the sale of available-for-sale securities were not significant in any of the periods presented.

The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2014 and December 31, 2013 (in thousands):



	March 31, 2014								December 31, 2013
	Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs		Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
			(Level 1)		(Level 2)		(Level 3)				(Level 1)		(Level 2)		(Level 3)
Assets:
Corporate debt securities	$	584,467	$	—	$	584,467	$	—	$	604,317	$	—	$	604,317	$	—
Commercial paper	74,549		—		74,549		—		71,363		—		71,363		—
Municipal bonds	38,248		—		38,248		—		38,843		—		38,843		—
Certificates of deposit and term deposits	12,333		—		12,333		—		12,648		—		12,648		—
Money market funds	20,298		20,298		—		—		5,724		5,724		—		—
U.S. government and agency securities	5,749		—		5,749		—		2,001		—		2,001		—
Total	$	735,644	$	20,298	$	715,346	$	—	$	734,896	$	5,724	$	729,172	$	—

Liabilities:
Contingent consideration	$	707	$	—	$	—	$	707	$	1,850	$	—	$	—	$	1,850
Total	$	707	$	—	$	—	$	707	$	1,850	$	—	$	—	$	1,850

Reported as:
Cash equivalents	$	20,298							$	7,724
Short-term investments	388,083								375,497
Long-term investments	327,263								351,675
Total	$	735,644							$	734,896

We classify investments within Level 1 if quoted prices are available in active markets for identical securities.

We classify items within Level 2 if the investments are valued using model driven valuations using observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Investments are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models.

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2014.

The fair value of contingent consideration arising from the acquisition of Coyote Point Systems (see Note 5), is classified within Level 3 of the fair value hierarchy since it is based on a probability-based approach that includes significant unobservable inputs. The significant unobservable inputs include projected revenues and the percentage probability of occurrence to value the payment. A significant increase (decrease) in the projected revenue in isolation could result in a significantly higher (lower) fair value measurement and significant increase (decrease) in the probability of occurrence between the outcomes in isolation could result in a significantly higher (lower) fair value measurement. The fair value of the contingent consideration is calculated on a quarterly basis by management based on a collaborative effort of our operations and finance and accounting groups. Potential valuation adjustments are made as additional information becomes available, including the progress toward achieving revenue targets as compared to initial projections, the impact of market competition, and changes in actual and projected product mix and average selling price. Any adjustments to the fair value of the contingent consideration are included in research and development expense in the condensed consolidated statements of operations.



	March 31, 2014
	Fair Value	Valuation Technique	Significant Unobservable Input	Range
Contingent consideration	$707	Probability Weighted Income Approach	Revenue	$7,000 - $7,639

			Probability of occurrence (%)	20%-70%

The change in the fair value of our contingent consideration liability is as follows (in thousands):



As of December 31, 2013	$1,850
Less adjustment to fair value of contingent consideration	(1,143)
As of March 31, 2014	$707

Stockholders' Equity , Share Repurchase Program (Details) - USD ($) shares in Millions, $ in Millions		3 Months Ended
	Dec. 06, 2013	Mar. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock repurchase program, authorized amount	$ 200.0
Stock repurchased in the period, shares		0.3
Stock repurchased in the period, value		$ 7.5
Remaining authorized repurchase amount under the program		$ 153.5

Employee Benefit Plan	3 Months Ended
Employee Benefit Plan	Mar. 31, 2014
Employee Benefit Plan [Abstract]
EMPLOYEE BENEFIT PLAN	EMPLOYEE BENEFIT PLAN Our tax-deferred savings plan, under the 401(k) Plan, allows participating employees to defer a portion of their pre-tax earnings, up to the IRS annual contribution limit. In Canada, we have a Group Registered Retirement Savings Plan program (the “RRSP”) which permits participants to make tax deductible contributions up to the maximum contribution limits under the Income Tax Act. Our board of directors approved 50% matching contributions on employee contributions up to 4% of each employee’s eligible earnings. Our matching contributions to the 401(k) Plans and RRSP for the three months ended March 31, 2014 and March 31, 2013 were $0.6 million and $0.5 million, respectively.

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
REVENUE:
Product	$ 76,765	$ 57,950
Services and other	92,184	77,870
Total revenue	168,949	135,820
COST OF REVENUE:
Product	32,139	22,958
Services and other	18,604	16,170
Total cost of revenue	50,743	39,128
GROSS PROFIT:
Product	44,626	34,992
Services and other	73,580	61,700
Total gross profit	118,206	96,692
OPERATING EXPENSES:
Research and development	29,055	23,334
Sales and marketing	67,326	49,976
General and administrative	9,010	7,991
Total operating expenses	105,391	81,301
OPERATING INCOME	12,815	15,391
INTEREST INCOME	1,333	1,369
OTHER (EXPENSE) INCOME—Net	(389)	215
INCOME BEFORE INCOME TAXES	13,759	16,975
PROVISION FOR INCOME TAXES	5,366	4,726
NET INCOME	$ 8,393	$ 12,249
Net income per share attributable to common stockholders (Note 7):
Basic (in dollars per share)	$ 0.05	$ 0.08
Diluted (in dollars per share)	$ 0.05	$ 0.07
Weighted-average shares outstanding:
Basic (in shares)	162,391	161,282
Diluted (in shares)	168,114	167,823

Summary of Significant Accounting Policies , Property and Equipment (Details)	3 Months Ended
	Mar. 31, 2014
Building and building improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	20 years
Evaluation units [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	1 year
Minimum [Member] \| Computer equipment, software and tooling [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	1 year
Minimum [Member] \| Furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Maximum [Member] \| Computer equipment, software and tooling [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	2 years
Maximum [Member] \| Furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years

Deferred Revenue

3 Months Ended

Mar. 31, 2014

Deferred Revenue Disclosure [Abstract]

DEFERRED REVENUE

Deferred revenue consisted of the following (in thousands):



	March 31, 2014		December 31, 2013
Product	$	3,527	$	2,915
Services and other	447,776		429,713
Total deferred revenue	$	451,303	$	432,628
Reported As:
Current	$	305,702	$	293,664
Non-current	145,601		138,964
Total deferred revenue	$	451,303	$	432,628

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2014
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES The effective tax rate was 39% for the three months ended March 31, 2014, compared to an effective tax rate of 28% for the three months ended March 31, 2013. The provision for income taxes for the periods presented is comprised of U.S. federal and state taxes, foreign income taxes, and withholding tax, as well as the inclusion of stock option benefits and cost allocations, which affected the transfer pricing calculations among the U.S. and some of our foreign subsidiaries. As of March 31, 2014 and December 31, 2013, unrecognized tax benefits were $33.8 million and $30.2 million, respectively. The total amount of $33.2 million in unrecognized tax benefits, would favorably impact the effective tax rate. It is our policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of March 31, 2014, we had accrued approximately $1.2 million for estimated interest related to uncertain tax positions. The State of California had been conducting an audit of our state income tax returns for fiscal 2010 and fiscal 2011. The audit was settled during the three months ended March 31, 2014 with no significant impact to our tax position or reserves.

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block]

The following table summarizes our future principal contractual obligations as of March 31, 2014 (in thousands):



	Total		2014 (remainder)		2015		2016		2017		2018		Thereafter
Operating lease commitments	$	31,592	$	6,543	$	6,547	$	5,385	$	4,639	$	3,649	$	4,829
Less: Sublease rental income	1,040		585		455		—		—		—		—
Operating lease commitments—net	30,552		5,958		6,092		5,385		4,639		3,649		4,829
Purchase commitments	38,880		38,880		—		—		—		—		—
Other contract commitments	24,182		18,502		3,914		889		877		—		—
Total	$	93,614	$	63,340	$	10,006	$	6,274	$	5,516	$	3,649	$	4,829

Schedule of Product Warranty Liability [Table Text Block]

Warranties—Accrued warranty activities are summarized as follows (in thousands):



	Three Months Ended
	March 31, 2014			March 31, 2013
Accrued warranty balance—beginning of the period	$	3,037		$	2,309
Warranty costs incurred	(756		)	(759		)
Provision for warranty for the period, including warranty liabilities assumed in connection with an acquisition	837			674
Changes in prior period estimates	(313		)	60
Accrued warranty balance—end of the period	$	2,805		$	2,284

Property and Equipment—Net (Tables)

3 Months Ended

Mar. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Property and equipment—net consisted of the following (in thousands):



	March 31, 2014			December 31, 2013
Land	$	13,895		$	13,895
Building and building improvements	19,121			610
Evaluation units	24,951			23,442
Computer equipment, software and tooling	25,151			23,556
Furniture and fixtures	3,185			1,697
Construction-in-progress	634			10,947
Leasehold improvements	4,520			4,303
Total property and equipment	91,457			78,450
Less: accumulated depreciation	(43,983		)	(41,798		)
Property and equipment—net	$	47,474		$	36,652

Stockholders' Equity , ESPP Information (Details) - Employee Stock Purchase Plan [Member] - $ / shares shares in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term in years	5 months 27 days	6 months
Volatility	36.90%	48.00%
Risk-free interest rate	0.08%	0.10%
Dividend rate	0.00%	0.00%
Weighted-average fair value per share granted (in dollars per share)	$ 5.76	$ 6.83
Shares issued under the ESPP (in shares)	424	329
Weighted-average price per share issued (in dollars per share)	$ 17.18	$ 19.91

Goodwill and Other Intangible Assets—Net Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Finite-Lived Intangible Assets, Net [Abstract]
Gross	$ 9,387		$ 9,471
Accumulated Amortization	3,169		2,630
Total	6,218		6,841
Amortization expense	500	$ 300
Fiscal Years:
2014 (remainder)	1,220
2015	1,567
2016	1,261
2017	900
2018	900
Thereafter	370
Total	6,218		6,841
Developed Technology [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross	8,887		8,971
Accumulated Amortization	3,086		2,568
Total	5,801		6,403
Fiscal Years:
Total	5,801		6,403
Customer Relationships [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross	500		500
Accumulated Amortization	83		62
Total	417		438
Fiscal Years:
Total	$ 417		$ 438

Financial Instruments and Fair Value , Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Estimate of Fair Value [Member] \| Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Fair Value Disclosure	$ 735,644	$ 734,896
Contingent consideration	707	1,850
Financial Liabilities, Fair Value Disclosure	707	1,850
Estimate of Fair Value [Member] \| Recurring [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Fair Value Disclosure	20,298	5,724
Estimate of Fair Value [Member] \| Recurring [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Fair Value Disclosure	715,346	729,172
Estimate of Fair Value [Member] \| U.S. government and agency securities [Member] \| Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	5,749	2,001
Estimate of Fair Value [Member] \| U.S. government and agency securities [Member] \| Recurring [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	5,749	2,001
Estimate of Fair Value [Member] \| Corporate debt securities [Member] \| Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	584,467	604,317
Estimate of Fair Value [Member] \| Corporate debt securities [Member] \| Recurring [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	584,467	604,317
Estimate of Fair Value [Member] \| Commercial paper [Member] \| Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	74,549	71,363
Estimate of Fair Value [Member] \| Commercial paper [Member] \| Recurring [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	74,549	71,363
Estimate of Fair Value [Member] \| Municipal bonds [Member] \| Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	38,248	38,843
Estimate of Fair Value [Member] \| Municipal bonds [Member] \| Recurring [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	38,248	38,843
Estimate of Fair Value [Member] \| Certificates of deposit and term deposits [Member] \| Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	12,333	12,648
Estimate of Fair Value [Member] \| Certificates of deposit and term deposits [Member] \| Recurring [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	12,333	12,648
Estimate of Fair Value [Member] \| Money market funds [Member] \| Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	20,298	5,724
Estimate of Fair Value [Member] \| Money market funds [Member] \| Recurring [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	20,298	5,724
Reported as [Member] \| Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Fair Value Disclosure	735,644	734,896
Reported as [Member] \| Recurring [Member] \| Cash equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	20,298	7,724
Reported as [Member] \| Recurring [Member] \| Short-term investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	388,083	375,497
Reported as [Member] \| Recurring [Member] \| Long-term investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	327,263	351,675
Income Approach Valuation Technique [Member] \| Estimate of Fair Value [Member] \| Recurring [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	707	1,850
Financial Liabilities, Fair Value Disclosure	707	$ 1,850
Contingent Liability [Member] \| Minimum [Member] \| Income Approach Valuation Technique [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Revenue	$ 7,000
Fair Value Inputs, Probability of Occurrence	20.00%
Contingent Liability [Member] \| Maximum [Member] \| Income Approach Valuation Technique [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs, Revenue	$ 7,639
Fair Value Inputs, Probability of Occurrence	70.00%

Stockholders' Equity , Restricted Stock Units Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Amount withheld for taxes	$ 3,633	$ 0
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Balance, beginning	4,199
Granted	1,852
Forfeited	(100)
Vested	(516)
Balance, ending	5,435
RSUs expected to vest—March 31, 2014	5,120
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Balance, weighted-average grant-date fair value per share (in dollars per share)—beginning	$ 22.00
Granted, weighted-average grant-date fair value per share (in dollars per share)	21.48
Forfeited, weighted-average grant-date fair value per share (in dollars per share)	21.74
Vested, weighted-average grant-date fair value per share (in dollars per share)	23.25
Balance, weighted-average grant-date fair value per share (in dollars per share)—ending	21.74
RSUs expected to vest, weighted-average grant-date fair value per share (in dollars per share)—March 31, 2014	$ 21.78
Compensation cost not yet recognized	$ 116,100
Compensation cost not yet recognized period of recognition	3 years 3 months
Shares withheld for taxes	171	0
Amount withheld for taxes	$ 3,633	$ 0

Business Combinations Business Combinations (Tables)

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

Schedule of Fair Value of Assets Acquired and Liabilities Assumed [Table Text Block]

The following table summarizes the fair value of assets acquired and liabilities assumed (in thousands):



Cash and cash equivalents	$	206
Other current assets	501
Finite-lived intangible assets	2,800
Indefinite-lived intangible assets	2,600
Goodwill	2,824
Other assets	88
Total assets acquired	9,019
Current liabilities	1,030
Long-term liabilities	2,004
Total liabilities assumed	3,034
Total purchase price	$	5,985

Commitments and Contingencies Warranties (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Movement in Standard Product Warranty Accrual [Roll Forward]
Accrual warranty balance - beginning of period	$ 3,037	$ 2,309
Warranty costs incurred	(756)	(759)
Provision for warranty for the period, including warranty liabilities assumed in connection with an acquisition	837	674
Changes in prior period estimates	(313)	60
Accrual warranty balance - end of period	$ 2,805	$ 2,284

Deferred Revenue (Tables)

3 Months Ended

Mar. 31, 2014

Deferred Revenue Disclosure [Abstract]

Deferred Revenue, by Arrangement, Disclosure [Table Text Block]

Deferred revenue consisted of the following (in thousands):



	March 31, 2014		December 31, 2013
Product	$	3,527	$	2,915
Services and other	447,776		429,713
Total deferred revenue	$	451,303	$	432,628
Reported As:
Current	$	305,702	$	293,664
Non-current	145,601		138,964
Total deferred revenue	$	451,303	$	432,628

Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2014

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following table summarizes the changes in accumulated balances of other comprehensive income for the three months ended March 31, 2014 (in thousands):



	March 31, 2014
	Foreign Currency Translation Gains And Losses			Unrealized Gains And Losses On Investments			Tax Benefit Or Provision Related To Items Of Other Comprehensive Income Or Loss			Total
Balance as of December 31, 2013	$	333		$	1,168		$	(409	)	$	1,092
Other comprehensive income before reclassifications	(1,019		)	6			—			(1,013		)
Amounts reclassified from accumulated other comprehensive income	—			(2		)	—			(2		)
Net current-period other comprehensive income	(1,019		)	4			—			(1,015		)
Balance as of March 31, 2014	$	(686	)	$	1,172		$	(409	)	$	77

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

The following table provides details about the reclassification out of accumulated other comprehensive income for the three months ended March 31, 2014 (in thousands):



March 31, 2014
Details About Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income			Affected Line Item In The Statement Where Net Income Is Presented
Unrealized gains on investments	$	(2	)	Other (expense) income—net
Tax provision related to items of other comprehensive income or loss	—			Provision for income taxes
Total reclassification for the period	$	(2	)

Goodwill and Other Intangible Assets—Net (Tables)

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets by Major Class [Table Text Block]

The following tables present other intangible assets (in thousands):



	March 31, 2014
	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Developed technology	$	8,887	$	3,086	$	5,801
Customer relationships	500		83		417
Total other intangible assets—net	$	9,387	$	3,169	$	6,218



	December 31, 2013
	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Developed technology	$	8,971	$	2,568	$	6,403
Customer relationships	500		62		438
Total other intangible assets—net	$	9,471	$	2,630	$	6,841

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The following table summarizes estimated future amortization expense of Other intangible assets—net (in thousands):



	Amount
Years Ending December 31:
2014 (remainder)	$	1,220
2015	1,567
2016	1,261
2017	900
2018	900
Thereafter	370
Total	$	6,218

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation and Preparation

Basis of Presentation and Preparation—The unaudited condensed consolidated financial statements of Fortinet, Inc. and its wholly owned subsidiaries (collectively, “we,” “us,” or “our”) have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) for interim financial information as well as the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, and should be read in conjunction with our audited consolidated financial statements as of and for the fiscal year ended December 31, 2013, contained in our Annual Report on Form 10-K (“Form 10-K”) filed with the SEC on March 3, 2014. In the opinion of management, all adjustments, which includes normal recurring adjustments, except as otherwise noted, considered necessary for a fair presentation have been included. All intercompany balances, transactions and cash flows have been eliminated. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the operating results for any subsequent quarter, for the full year or for any future periods. The condensed consolidated balance sheets as of December 31, 2013 are derived from the audited consolidated financial statements for the year ended December 31, 2013.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

There have been no material changes to our significant accounting policies for the three months ended March 31, 2014. During the quarter we prospectively modified the expected term calculation used in accounting for stock-based compensation expense and the estimated useful lives of building improvements and furniture and fixtures.

Stock-Based Compensation Expense

Stock-Based Compensation Expense—Beginning in the first quarter of fiscal 2014, we changed the methodology of calculating the expected term, which is one of the assumptions used in determining the fair value of our employee stock options under the Black Scholes option pricing model. The expected term represents the period that our stock-based awards are estimated to be outstanding. We believe that we have sufficient historical experience for determining the expected term of the stock option award, and therefore, we calculated our expected term based on historical experience instead of using the simplified method.

Property and Equipment

Property and Equipment—Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:



	Estimated Useful Lives
Building and building improvements	20 years
Evaluation units	1 year
Computer equipment, software and tooling	1-2 years
Furniture and fixtures	3 - 5 years
Leasehold improvements	Shorter of useful life or lease term

Effective March 2014, we moved into our new corporate headquarters. The useful life of building improvements placed into service during the three months ended March 31, 2014, in association with our new corporate headquarters is estimated to be 20 years. The useful life of furniture and fixtures now ranges from 3 to 5 years as we placed new furniture and fixtures into service at the new corporate headquarters.

Reclassification

Reclassification—Beginning in the first quarter of 2014, the amounts previously reported as Ratable and other revenue have been combined with the amounts previously reported as Services revenue in the Condensed Consolidated Statements of Operations. The combined amounts are being presented as Services and other revenue in the Condensed Consolidated Statements of Operations. The related Cost of revenue and Gross profit, including prior period amounts, have also been combined to conform to the current period presentation. The Ratable and other revenue amounts, including the related Cost of revenue and Gross profit amounts, are not material.

Inventory (Tables)

3 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Inventory [Table Text Block]

Inventory consisted of the following (in thousands):



	March 31, 2014		December 31, 2013
Raw materials	$	5,089	$	4,319
Finished goods	34,555		40,093
Consigned inventory	3,650		4,260
Inventory	$	43,294	$	48,672

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 8,393	$ 12,249
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,422	3,536
Amortization of investment premiums	2,513	3,051
Stock-based compensation	12,930	9,299
Excess tax benefit from stock-based compensation	(579)	(1,453)
Other non-cash items—net	(67)	(540)
Changes in operating assets and liabilities:
Accounts receivable—net	19,119	5,747
Inventory	3,326	(4,520)
Deferred tax assets	24	(8,970)
Prepaid expenses and other current assets	(287)	(217)
Other assets	45	417
Accounts payable	(6,042)	4,957
Accrued liabilities	(170)	2
Other liabilities	16,155	(13)
Accrued payroll and compensation	1,071	(2,416)
Deferred revenue	18,469	12,677
Income taxes payable	(18,420)	4,305
Net cash provided by operating activities	60,902	38,111
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments	(120,590)	(171,506)
Sales of investments	10,920	13,823
Maturities of investments	118,641	86,018
Purchases of property and equipment	(11,318)	(1,534)
Payments made in connection with acquisitions—net of cash acquired	(17)	(5,979)
Net cash used in investing activities	(2,364)	(79,178)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	14,471	14,464
Taxes paid related to net share settlement of equity awards	(3,633)	0
Excess tax benefit from stock-based compensation	579	1,453
Repurchase and retirement of common stock	(12,305)	0
Net cash (used in) provided by financing activities	(888)	15,917
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(555)	(441)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	57,095	(25,591)
CASH AND CASH EQUIVALENTS—Beginning of period	115,873	122,975
CASH AND CASH EQUIVALENTS—End of period	172,968	97,384
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes, net	22,136	8,579
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchase of property and equipment not yet paid	5,844	744
Liability incurred for repurchase of common stock	$ 657	$ 0

Consolidated Balance Sheets Parenthetical - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Allowance for doubtful accounts and sales returns	$ 4,467	$ 4,605
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	300,000	300,000
Common Stock, shares issued	162,981	161,535
Common Stock, shares outstanding	162,981	161,535

Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

SEGMENT INFORMATION

The following table sets forth revenue by geographic region (in thousands):



	Three Months Ended
Revenue	March 31, 2014		March 31, 2013
Americas:
United States	$	44,793	$	34,788
Other Americas	27,639		17,839
Total Americas	72,432		52,627
Europe, Middle East, and Africa (“EMEA”)	56,643		47,326
Asia Pacific and Japan (“APAC”)	39,874		35,867
Total revenue	$	168,949	$	135,820

During the three months ended March 31, 2014, Exclusive Networks Group and Ingram Micro, accounted for 14% and 10% of total revenue, respectively. During the three months ended March 31, 2013, Exclusive Networks Group accounted for 12% of total revenue.

The following table sets forth property and equipment by geographic region (in thousands):



Property and Equipment—Net	March 31, 2014		December 31, 2013
Americas:
United States	$	40,146	$	29,334
Canada	3,930		4,372
Other Americas	30		45
Total Americas	44,106		33,751
EMEA	1,647		1,273
APAC	1,721		1,628
Total property and equipment—net	$	47,474	$	36,652

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Topic 280
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599

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-Publisher FASB
-Name Accounting Standards Codification
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

The following table summarizes our future principal contractual obligations as of March 31, 2014 (in thousands):



	Total		2014 (remainder)		2015		2016		2017		2018		Thereafter
Operating lease commitments	$	31,592	$	6,543	$	6,547	$	5,385	$	4,639	$	3,649	$	4,829
Less: Sublease rental income	1,040		585		455		—		—		—		—
Operating lease commitments—net	30,552		5,958		6,092		5,385		4,639		3,649		4,829
Purchase commitments	38,880		38,880		—		—		—		—		—
Other contract commitments	24,182		18,502		3,914		889		877		—		—
Total	$	93,614	$	63,340	$	10,006	$	6,274	$	5,516	$	3,649	$	4,829

Operating Leases—We lease certain facilities under various non-cancelable operating leases, which expire through 2020. The terms of certain operating leases provide for renewal options. Future minimum payments under the non-cancelable operating leases totaled $31.6 million as of March 31, 2014. Rent expense is recognized using the straight-line method over the term of the lease. Rent expense was $2.7 million and $2.3 million during the three months ended March 31, 2014 and March 31, 2013, respectively.

Contract Manufacturer and Other Commitments—Our independent contract manufacturers procure components and build our products based on our forecasts. These forecasts are based on estimates of future demand for our products, which are in turn based on historical trends and an analysis from our sales and marketing organizations, adjusted for overall market conditions. In order to reduce manufacturing lead times and plan for adequate component supply, we may issue purchase orders to some of our independent contract manufacturers which may not be cancelable. As of March 31, 2014, we had $38.9 million of open purchase orders with our independent contract manufacturers that may not be cancelable.

In addition to commitments with contract manufacturers, we have open purchase orders and contractual obligations in the ordinary course of business for which we have not received goods or services. As of March 31, 2014, we had $24.2 million in other purchase commitments.

Warranties—Accrued warranty activities are summarized as follows (in thousands):



	Three Months Ended
	March 31, 2014			March 31, 2013
Accrued warranty balance—beginning of the period	$	3,037		$	2,309
Warranty costs incurred	(756		)	(759		)
Provision for warranty for the period, including warranty liabilities assumed in connection with an acquisition	837			674
Changes in prior period estimates	(313		)	60
Accrued warranty balance—end of the period	$	2,805		$	2,284

Litigation—We are involved in disputes, litigation, and other legal actions. We are defending these litigation matters, and while there can be no assurances and the outcome of these matters is currently not determinable, we currently believe that there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position. There are many uncertainties associated with any litigation and these actions or other third-party claims against us may cause us to incur costly litigation or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require us to make royalty payments, which could adversely affect our gross margins in future periods. If any of those events were to occur, our business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from our estimates, if any, which could result in the need to adjust the liability and record additional expenses. We have not recorded any material accrual for loss contingencies associated with such legal proceedings; determined that an unfavorable outcome is probable or reasonably possible; or determined that the amount or range of any possible loss is reasonably estimable.

Indemnification—Under the indemnification provisions of our standard sales contracts, we agree to defend our customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets, and to pay judgments entered on such claims. Our exposure under these indemnification provisions is generally limited by the terms of our contracts to the total amount paid by our customer under the agreement. However, certain agreements include indemnification provisions beyond indemnification for third party claims of intellectual property infringement and that could potentially expose us to losses in excess of the amount received under the agreement. To date, there have been no awards under such indemnification provisions.

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
CURRENT ASSETS:
Cash and cash equivalents	$ 172,968	$ 115,873
Short-term investments	388,083	375,497
Accounts receivable—net of allowance for doubtful accounts and sales returns of $4,467 and $4,605 as of March 31, 2014 and December 31, 2013, respectively	111,489	130,471
Inventory	43,294	48,672
Deferred tax assets	50,956	50,980
Prepaid expenses and other current assets	14,670	14,053
Total current assets	781,460	735,546
PROPERTY AND EQUIPMENT—Net	47,474	36,652
DEFERRED TAX ASSET—Non-current	30,058	30,058
LONG-TERM INVESTMENTS	327,263	351,675
GOODWILL	2,824	2,872
OTHER INTANGIBLE ASSETS—Net	6,218	6,841
OTHER ASSETS	4,734	4,820
TOTAL ASSETS	1,200,031	1,168,464
CURRENT LIABILITIES:
Accounts payable	27,603	35,599
Accrued liabilities	25,716	27,380
Accrued payroll and compensation	35,845	34,997
Income taxes payable	0	21,421
Deferred revenue	305,702	293,664
Total current liabilities	394,866	413,061
DEFERRED REVENUE—Non-current	145,601	138,964
INCOME TAXES PAYABLE—Non-current	32,860	30,208
OTHER LIABILITIES	16,610	471
Total liabilities	589,937	582,704
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value — 300,000 shares authorized; 162,981 and 161,535 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively	163	161
Additional paid-in capital	486,174	462,644
Accumulated other comprehensive income	77	1,092
Retained earnings	123,680	121,863
Total stockholders' equity	610,094	585,760
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,200,031	$ 1,168,464

Stockholders' Equity (Details) - Stock Options [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Expected term in years	4 years 10 months 17 days
Volatility	44.50%
Risk-free interest rate	1.70%
Dividend rate	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Balance - Beginning (in shares)	15,521
Granted (in shares)	187	0
Forfeited (in shares)	(148)
Exercised (in shares)	(1,015)
Balance - Ending (in shares)	14,545
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Balance - Beginning (in dollars per share)	$ 13.18
Granted (in dollars per share)	21.46
Forfeited (in dollars per share)	23.16
Exercised (in dollars per share)	7.09
Balance - Ending (in dollars per share)	$ 13.61
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options vested and expected to vest, Outstanding (in shares)	14,509
Options vested and expected to vest, Weighted average exercise price (in dollars per share)	$ 13.59
Options vested and expected to vest, Weighted average remaining contractual life (in years)	3 years 1 month 20 days
Options vested and expected to vest, Aggregate intrinsic value	$ 135,393
Options exercisable, Outstanding (in shares)	11,567
Options exercisable, Weighted average exercise price (in dollars per share)	$ 11.20
Options exercisable, Weighted average remaining contractual life (in years)	2 years 8 months 21 days
Options exercisable, Aggregate intrinsic value	$ 132,401
Compensation cost not yet recognized	$ 34,200
Compensation cost not yet recognized period of recognition	1 year 8 months 11 days
Weighted-average fair value per share granted	$ 8.65	$ 0.00
Intrinsic value of options exercised	$ 15,321	$ 26,059
Total fair value of awards vested	$ 4,562	$ 11,004

Employee Benefit Plan (Details) - USD ($) $ in Millions	3 Months Ended
Employee Benefit Plan (Details) - USD ($) $ in Millions	Mar. 31, 2014	Mar. 31, 2013
Employee Benefit Plan [Abstract]
Matching contribution on employee contributions, Percent	50.00%
Maximum contibution percentage of each employee's eligible earnings, Percent	4.00%
Matching contributions to the RRSP and 401(k) Plans	$ 0.6	$ 0.5

Deferred Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Deferred Revenue Arrangement [Line Items]
Short-term	$ 305,702	$ 293,664
Long-term	145,601	138,964
Total deferred revenue	451,303	432,628
Product [Member]
Deferred Revenue Arrangement [Line Items]
Total deferred revenue	3,527	2,915
Services and other [Member]
Deferred Revenue Arrangement [Line Items]
Total deferred revenue	$ 447,776	$ 429,713

Goodwill and Other Intangible Assets—Net

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS - NET

GOODWILL AND OTHER INTANGIBLE ASSETS—Net

We recorded $2.8 million of goodwill from the acquisition of Coyote. There were no impairments to goodwill during the three months ended March 31, 2014.

The following tables present other intangible assets (in thousands):



	March 31, 2014
	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Developed technology	$	8,887	$	3,086	$	5,801
Customer relationships	500		83		417
Total other intangible assets—net	$	9,387	$	3,169	$	6,218



	December 31, 2013
	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Developed technology	$	8,971	$	2,568	$	6,403
Customer relationships	500		62		438
Total other intangible assets—net	$	9,471	$	2,630	$	6,841

Amortization expense was $0.5 million and $0.3 million during the three months ended March 31, 2014 and March 31, 2013, respectively. The following table summarizes estimated future amortization expense of Other intangible assets—net (in thousands):



	Amount
Years Ending December 31:
2014 (remainder)	$	1,220
2015	1,567
2016	1,261
2017	900
2018	900
Thereafter	370
Total	$	6,218

Inventory

3 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

INVENTORY

Inventory consisted of the following (in thousands):



	March 31, 2014		December 31, 2013
Raw materials	$	5,089	$	4,319
Finished goods	34,555		40,093
Consigned inventory	3,650		4,260
Inventory	$	43,294	$	48,672

Foreign Currency Derivatives

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

FOREIGN CURRENCY DERIVATIVES

Foreign Currency Derivatives—Our sales contracts are primarily denominated in U.S. dollars and therefore substantially all of our revenue is not subject to foreign currency translation risk. However, a substantial portion of our operating expenses incurred outside the U.S. are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Canadian dollar (“CAD”). To help protect against significant fluctuations in value and the volatility of future cash flows caused by changes in currency exchange rates, we engage in foreign currency risk management activities to hedge balance sheet items denominated in CAD. We do not use these contracts for speculative or trading purposes. All of the derivative instruments are with high quality financial institutions and we monitor the creditworthiness of these parties. These contracts typically have maturities between one and three months. We record changes in the fair value of forward exchange contracts related to balance sheet accounts as Other (expense) income—net in the consolidated statement of operations.

Additionally, independent of any hedging activities, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statements of operations. Our hedging activities are intended to reduce, but not eliminate, the impact of currency exchange rate movements. As our hedging activities are relatively short-term in nature and are focused on CAD, long-term material changes in the value of the U.S. dollar against other foreign currencies, such as the EUR, GBP and JPY could adversely impact our operating expenses in the future.

The notional amount of forward exchange contracts to hedge balance sheet accounts as of March 31, 2014 and December 31, 2013 were (in thousands):



	Buy/Sell	Notional
Currency—As of March 31, 2014
CAD	Buy	$	23,058

Currency—As of December 31, 2013
CAD	Buy	$	21,867

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994

Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 16: http://www.xbrl.org/2003/role/presentationRef
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Reference 17: http://www.xbrl.org/2003/role/presentationRef
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Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Name Accounting Standards Codification
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+ Details

Net Income Per Share , Calculation of Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share [Line Items]
Net income	$ 8,393	$ 12,249
Basic shares:
Weighted-average common shares outstanding-basic (in shares)	162,391	161,282
Diluted shares:
Weighted-average common shares outstanding-basic (in shares)	162,391	161,282
Effect of potentially dilutive securities:
Weighted-average shares used to compute diluted net income per share (in shares)	168,114	167,823
Basic (in dollars per share)	$ 0.05	$ 0.08
Diluted (in dollars per share)	$ 0.05	$ 0.07
Stock Options [Member]
Effect of potentially dilutive securities:
Employee stock options and purchase rights (in shares)	5,196	6,457
Restricted Stock Units (RSUs) [Member]
Effect of potentially dilutive securities:
Employee stock options and purchase rights (in shares)	484	72
ESPP [Member]
Effect of potentially dilutive securities:
Employee stock options and purchase rights (in shares)	43	12

Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Operating lease commitments	$ 31,592
Rent expense	2,700	$ 2,300
Open purchase orders and other contractual obligations	38,880
Other contract commitments	$ 24,182

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



	Estimated Useful Lives
Building and building improvements	20 years
Evaluation units	1 year
Computer equipment, software and tooling	1-2 years
Furniture and fixtures	3 - 5 years
Leasehold improvements	Shorter of useful life or lease term

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions And Allocation of Recognized Period Costs [Table Text Block]

The following table summarizes the weighted-average assumptions relating to our employee stock options:



	Three Months Ended
	March 31, 2014
Expected term in years	4.88
Volatility	44.5	%
Risk-free interest rate	1.7	%
Dividend rate	—

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The following table summarizes the stock option activity and related information for the periods presented below (in thousands, except exercise prices and contractual life):



	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance—December 31, 2013	15,521		$	13.18
Granted	187		21.46
Forfeited	(148	)	23.16
Exercised	(1,015	)	7.09
Balance—March 31, 2014	14,545		13.61
Options vested and expected to vest—March 31, 2014	14,509		$	13.59	3.14	$	135,393
Options exercisable—March 31, 2014	11,567		$	11.20	2.72	$	132,401

Schedule of Share-based Compensation, Stock Options, Additional Information [Table Text Block]

Additional information related to our stock options is summarized below (in thousands, except per share amounts):



	Three Months Ended
	March 31, 2014		March 31, 2013
Weighted-average fair value per share granted	$	8.65	$	—
Intrinsic value of options exercised	$	15,321	$	26,059
Fair value of options vested	$	4,562	$	11,004

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

The following table summarizes the activity and related information for RSUs for the periods presented below (in thousands, except per share amounts):



	Restricted Stock Units Outstanding
	Number of Shares		Weighted-Average Grant-Date-Fair Value per Share
Balance—December 31, 2013	4,199		$	22.00
Granted	1,852		21.48
Forfeited	(100	)	21.74
Vested	(516	)	23.25
Balance—March 31, 2014	5,435		$	21.74
RSUs expected to vest—March 31, 2014	5,120		$	21.78

Schedule of Share-based Compensation, Shares Withheld for Taxes [Table Text Block]

The following summarizes the number and value of the shares withheld for employee taxes for the three months ended March 31, 2014 (in thousands):



	Three Months Ended
	March 31, 2014		March 31, 2013
Shares withheld for taxes	171		—
Amount withheld for taxes	$	3,633	$	—

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]

In determining the fair value of our ESPP, we use the Black-Scholes option pricing model that employs the following weighted-average assumptions:



	Three Months Ended
	March 31, 2014		March 31, 2013
Expected term in years	0.49		0.50
Volatility	36.9	%	48	%
Risk-free interest rate	0.08	%	0.10	%
Dividend rate	—		—

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Additional Information [Table Text Block]

Additional information related to the ESPP is provided below (in thousands, except per share amounts):



	Three Months Ended
	March 31, 2014		March 31, 2013
Weighted-average fair value per share granted	$	5.76	$	6.83
Shares issued under the ESPP	424		329
Weighted-average price per share issued	$	17.18	$	19.91

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

Stock-based compensation expense is included in costs and expenses as follows (in thousands):



	Three Months Ended
	March 31, 2014		March 31, 2013
Cost of product revenue	$	113	$	90
Cost of services and other revenue	1,329		1,020
Research and development	3,882		2,766
Sales and marketing	5,746		4,118
General and administrative	1,860		1,305
Total stock-based compensation expense	$	12,930	$	9,299

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs by Award Type [Table Text Block]

The following table summarizes stock-based compensation expense by award type (in thousands):



	Three Months Ended
	March 31, 2014		March 31, 2013
Stock options	$	4,692	$	5,486
RSUs	7,363		2,674
ESPP	875		1,139
Total stock-based compensation expense	$	12,930	$	9,299

Income Tax Benefit from Stock Option Plans [Table Text Block]

Total income tax benefit associated with stock-based compensation that is recognized in the consolidated statements of operations is as follows (in thousands):



	Three Months Ended
	March 31, 2014		March 31, 2013
Income tax benefit associated with stock-based compensation	$	3,349	$	3,587

Accumulated Other Comprehensive Income (Changes in Accumulated Balances of Other Comprehensive Income)(Details) $ in Thousands	3 Months Ended
	Mar. 31, 2014 USD ($)
Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	$ 1,092
Other comprehensive income before reclassifications	(1,013)
Amounts reclassified from accumulated other comprehensive income	(2)
Net current-period other comprehensive income	(1,015)
Ending balance	77
Accumulated Other Comprehensive Income, Tax [Roll Forward]
Beginning balance, tax	(409)
Other comprehensive income before reclassifications, tax	0
Amounts reclassified from accumulated other comprehensive income, tax	0
Net current-period other comprehensive income, tax	0
Ending balance, tax	(409)
Foreign Currency Translation Gains and Losses [Member]
Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	333
Other comprehensive income before reclassifications	(1,019)
Amounts reclassified from accumulated other comprehensive income	0
Net current-period other comprehensive income	(1,019)
Ending balance	(686)
Unrealized Gains and Losses on Investments [Member]
Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	1,168
Other comprehensive income before reclassifications	6
Amounts reclassified from accumulated other comprehensive income	(2)
Net current-period other comprehensive income	4
Ending balance	$ 1,172

Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2014

Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes in accumulated balances of other comprehensive income for the three months ended March 31, 2014 (in thousands):



	March 31, 2014
	Foreign Currency Translation Gains And Losses			Unrealized Gains And Losses On Investments			Tax Benefit Or Provision Related To Items Of Other Comprehensive Income Or Loss			Total
Balance as of December 31, 2013	$	333		$	1,168		$	(409	)	$	1,092
Other comprehensive income before reclassifications	(1,019		)	6			—			(1,013		)
Amounts reclassified from accumulated other comprehensive income	—			(2		)	—			(2		)
Net current-period other comprehensive income	(1,019		)	4			—			(1,015		)
Balance as of March 31, 2014	$	(686	)	$	1,172		$	(409	)	$	77

The following table provides details about the reclassification out of accumulated other comprehensive income for the three months ended March 31, 2014 (in thousands):



March 31, 2014
Details About Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income			Affected Line Item In The Statement Where Net Income Is Presented
Unrealized gains on investments	$	(2	)	Other (expense) income—net
Tax provision related to items of other comprehensive income or loss	—			Provision for income taxes
Total reclassification for the period	$	(2	)

- Definition

The entire disclosure for comprehensive income, which includes, but is not limited to, 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
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-URI http://asc.fasb.org/extlink&oid=28358780&loc=d3e689-108580

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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Reclassification Adjustments
-URI http://asc.fasb.org/extlink&oid=6522872

+ Details

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended
Segment Information (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Revenue	$ 168,949	$ 135,820
Property and equipment - net	47,474		$ 36,652
Americas [Member]
Segment Reporting Information [Line Items]
Revenue	72,432	52,627
Property and equipment - net	44,106		33,751
United States
Segment Reporting Information [Line Items]
Revenue	44,793	34,788
Property and equipment - net	40,146		29,334
Canada [Member]
Segment Reporting Information [Line Items]
Property and equipment - net	3,930		4,372
Other Americas [Member]
Segment Reporting Information [Line Items]
Revenue	27,639	17,839
Property and equipment - net	30		45
EMEA [Member]
Segment Reporting Information [Line Items]
Revenue	56,643	47,326
Property and equipment - net	1,647		1,273
APAC [Member]
Segment Reporting Information [Line Items]
Revenue	39,874	$ 35,867
Property and equipment - net	$ 1,721		$ 1,628
Exclusive Networks Group [Member] \| Sales Revenue [Member] \| Customer Concentration Risk [Member]
Segment Reporting Information [Line Items]
Largest customer, percentage	14.00%	12.00%
Ingram Micro [Member] \| Sales Revenue [Member] \| Customer Concentration Risk [Member]
Segment Reporting Information [Line Items]
Largest customer, percentage	10.00%

Financial Instruments and Fair Value Change to Contingent Consideration Liability (Details) - Estimate of Fair Value [Member] - Recurring [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2014 USD ($)
Movement in Contingent Consideration Liability [Roll Forward]
Contingent consideration liability, beginning	$ 1,850
Less adjustment to fair value of contingent consideration	(1,143)
Contingent consideration liability, ending	$ 707

Financial Instruments and Fair Value , Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 714,174	$ 726,001
Unrealized Gains	1,465	1,565
Unrealized Losses	(293)	(394)
Total	715,346	727,172
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	167,750	205,428
Less Than 12 Months, Unrealized Losses	(266)	(394)
12 Months or Greater, Fair Value	17,204	500
12 Months or Greater, Unrealized Losses	(27)	0
Total, Fair Value	184,954	205,928
Total, Unrealized Losses	(293)	(394)
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Due within one year	388,083	375,497
Due within one to three years	327,263	351,675
Total	715,346	727,172
U.S. government and agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,748	2,000
Unrealized Gains	3	1
Unrealized Losses	(2)	0
Total	5,749	2,001
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	2,748
Less Than 12 Months, Unrealized Losses	(2)
12 Months or Greater, Fair Value	0
12 Months or Greater, Unrealized Losses	0
Total, Fair Value	2,748
Total, Unrealized Losses	(2)
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Total	5,749	2,001
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	583,341	603,185
Unrealized Gains	1,406	1,506
Unrealized Losses	(280)	(374)
Total	584,467	604,317
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	148,132	182,795
Less Than 12 Months, Unrealized Losses	(257)	(374)
12 Months or Greater, Fair Value	13,176	500
12 Months or Greater, Unrealized Losses	(23)	0
Total, Fair Value	161,308	183,295
Total, Unrealized Losses	(280)	(374)
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Total	584,467	604,317
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	74,547	69,356
Unrealized Gains	4	7
Unrealized Losses	(2)	0
Total	74,549	69,363
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	12,094	7,897
Less Than 12 Months, Unrealized Losses	(2)	0
12 Months or Greater, Fair Value	0	0
12 Months or Greater, Unrealized Losses	0	0
Total, Fair Value	12,094	7,897
Total, Unrealized Losses	(2)	0
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Total	74,549	69,363
Municipal bonds [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	4,776	14,736
Less Than 12 Months, Unrealized Losses	(5)	(20)
12 Months or Greater, Fair Value	4,028	0
12 Months or Greater, Unrealized Losses	(4)	0
Total, Fair Value	8,804	14,736
Total, Unrealized Losses	(9)	(20)
Certificates of deposit and term deposits [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	12,331	12,645
Unrealized Gains	2	3
Unrealized Losses	0	0
Total	12,333	12,648
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Total	12,333	12,648
Municipal bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	38,207	38,815
Unrealized Gains	50	48
Unrealized Losses	(9)	(20)
Total	38,248	38,843
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Total	$ 38,248	$ 38,843

Stockholders' Equity , Allocation of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 12,930	$ 9,299
Income tax benefit from employee stock option plans	3,349	3,587
Cost of product revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	113	90
Cost of services and other revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	1,329	1,020
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	3,882	2,766
Selling and marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	5,746	4,118
General and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	1,860	1,305
Stock Options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	4,692	5,486
Restricted Stock Units (RSUs) [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	7,363	2,674
ESPP [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 875	$ 1,139

Foreign Currency Derivatives (Tables)

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]

The notional amount of forward exchange contracts to hedge balance sheet accounts as of March 31, 2014 and December 31, 2013 were (in thousands):



	Buy/Sell	Notional
Currency—As of March 31, 2014
CAD	Buy	$	23,058

Currency—As of December 31, 2013
CAD	Buy	$	21,867

Net Income Per Share , Anti Dilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities (in shares)	6,785	8,151
Stock Options [Member] \| Stock Compensation Plan [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities (in shares)	5,079	6,751
Restricted Stock Units (RSUs) [Member] \| Stock Compensation Plan [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities (in shares)	1,348	1,069
ESPP [Member] \| Stock Compensation Plan [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities (in shares)	358	331