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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 16, 2013
ARUBA NETWORKS, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-33347 02-0579097
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1344 Crossman Ave.
Sunnyvale, CA 94089
(Address of principal executive offices, including zip code)
(408) 227-4500
Registrant’s telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On August 22, 2013, Aruba Networks, Inc. (the “Company”) issued a press release announcing financial results for the fiscal quarter and year
ended July 31, 2013. The press release reported GAAP net loss of $16.3 million, or $(0.14) per share, for the fiscal quarter ended July 31, 2013, and GAAP
net loss of $32.3 million, or $(0.29) per share, for the fiscal year ended July 31, 2013. The press release also reported non-GAAP net income of $15.1
million, or $0.12 per diluted share, for the fiscal quarter ended July 31, 2013, and non-GAAP net income of $78.5 million, or $0.63 per diluted share, for the
fiscal year ended July 31, 2013.
As a result of a favorable adjustment to the Company’s income tax provision relating to the calculation of taxes on intercompany profits, the
Company is now reporting the following GAAP and non-GAAP impacts of this tax adjustment:
(All figures are “GAAP”, unless otherwise indicated)
Aruba Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amount)
(Unaudited)
Three months ended July 31, 2013 Year-end July 31, 2013
Previously
Reported Adjusted Change
Previously
Reported Adjusted Change
GAAP Loss before income taxes $ (20,569) $ (20,569) $ - $ (10,225) $ (10,225) $ -
GAAP Provision for (benefit from) income taxes (4,282) (4,988) (706) 22,089 21,383 (706)
GAAP Net loss $ (16,287) $ (15,581) $ 706 $ (32,314) $ (31,608) $ 706
GAAP Net loss per common share, basic $ (0.14) $ (0.14) $ 0.00 $ (0.29) $ (0.28) $ 0.01
GAAP Net loss per common share, diluted $ (0.14) $ (0.14) $ 0.00 $ (0.29) $ (0.28) $ 0.01
Non-GAAP Net income $ 15,068 $ 15,774 $ 706 $ 78,514 $ 79,220 $ 706
Non-GAAP Net income per common share, diluted $ 0.12 $ 0.13 $ 0.01 $ 0.63 $ 0.64 $ 0.01
As summarized in the table, the Company’s GAAP net loss decreased by $0.7 million to $15.6 million, and GAAP net loss per share remained
$(0.14) for the fiscal quarter ended July 31, 2013. For the fiscal year ended July 31, 2013, the Company’s GAAP net loss decreased by $0.7 million to $31.6
million, and GAAP net loss per share decreased to $(0.28).
This same favorable income tax adjustment increased non-GAAP net income by $0.7 million to $15.8 million, or $0.13 per diluted share, for the
fiscal quarter ended July 31, 2013. For the fiscal year ended July 31, 2013, non-GAAP net income increased by $0.7 million to $79.2 million, and non-
GAAP net income per diluted common share increased to $0.64.
The Company’s unaudited financial statements, including a reconciliation between GAAP and non-GAAP financial measures, are attached as
Exhibit 99.1. These financial statements should be read in conjunction with the audited consolidated financial statements and notes set forth in the
Company’s annual report on Form 10-K for the fiscal year ended July 31, 2013, when available.
The information in this Item 2.02 of Form 8-K is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
99.1 Amended Financial Tables
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ARUBA NETWORKS, INC.
By: /s/ Ava Hahn
Name: Ava Hahn
Title: General Counsel
Date: September 16, 2013
EXHIBIT INDEX
Exhibit
No. Description
99.1 Amended Financial Tables
Exhibit No. 99.1
Aruba Networks, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
As of July 31, 2013
Previously
Reported Adjusted Change
Assets
Current assets
Cash and cash equivalents $ 144,919 $ 144,919 $ -
Short-term investments 269,882 269,882 -
Accounts receivable, net 93,191 93,191 -
Inventory, net 28,895 28,895 -
Deferred cost of revenue 12,657 12,657 -
Prepaids and other 20,090 20,090 -
Deferred income tax assets, current 28,801 29,076 275
Total current assets 598,435 598,710 275
Property and equipment, net 27,536 27,536 -
Goodwill 67,242 67,242 -
Intangible assets, net 26,937 26,937 -
Deferred income tax assets, non-current 19,788 19,788 -
Other non-current assets 6,530 6,530 -
Total non-current assets 148,033 148,033 -
Total assets $ 746,468 $ 746,743 $ 275
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 119,523 $ 119,523 $ -
Income taxes payable, current 694 662 (32)
Deferred revenue, current 109,765 109,765 -
Total current liabilities 229,982 229,950 (32)
Deferred revenue, non-current 31,578 31,578 -
Other non-current liabilities 8,990 8,990 -
Total non-current liabilities 40,568 40,568 -
Total liabilities 270,550 270,518 (32)
Stockholders' equity
Common stock 11 11 -
Additional paid-in capital 623,554 623,155 (399)
Accumulated other comprehensive loss (1,540) (1,540) -
Accumulated deficit (146,107) (145,401) 706
Total stockholders' equity 475,918 476,225 307
Total liabilities and stockholders' equity $ 746,468 $ 746,743 $ 275
Aruba Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amount)
(Unaudited)
For the Three Months Ended July 31,
2013 For the Year Ended July 31, 2013
Previously
Reported Adjusted Change
Previously
Reported Adjusted Change
Revenue
Product $ 125,025 $ 125,025 $ - $ 496,343 $ 496,343 $ -
Professional services and support 28,039 28,039 - 103,701 103,701 -
Total revenue 153,064 153,064 - 600,044 600,044 -
Cost of revenue
Product 38,505 38,505 - 149,113 149,113 -
Professional services and support 7,228 7,228 - 27,366 27,366 -
Total cost of revenue 45,733 45,733 - 176,479 176,479 -
Gross profit 107,331 107,331 - 423,565 423,565 -
Operating expenses
Research and development 38,112 38,112 - 139,746 139,746 -
Sales and marketing 62,289 62,289 - 230,805 230,805 -
General and administrative 13,275 13,275 - 51,030 51,030 -
Legal settlement 14,000 14,000 - 14,000 14,000 -
Total operating expenses 127,676 127,676 - 435,581 435,581 -
Operating income (loss) (20,345) (20,345) - (12,016) (12,016) -
Other income (loss), net
Interest income 263 263 - 1,138 1,138 -
Other income (loss), net (487) (487) - 653 653 -
Total other income (loss), net (224) (224) - 1,791 1,791 -
Income (loss) before income taxes (20,569) (20,569) - (10,225) (10,225) -
Provision for (benefit from) income taxes (4,282) (4,988) (706) 22,089 21,383 (706)
Net loss $ (16,287) $ (15,581) $ 706 $ (32,314) $ (31,608) $ 706
Shares used in computing net loss per common share, basic 114,202 114,202 - 113,284 113,284 -
Net loss per common share, basic $ (0.14) $ (0.14) $ - $ (0.29) $ (0.28) $ 0.01
Shares used in computing net loss per common share, diluted 114,202 114,202 - 113,284 113,284 -
Net loss per common share, diluted $ (0.14) $ (0.14) $ - $ (0.29) $ (0.28) $ 0.01
Note: Certain prior year amounts have been reclassified to conform to the current year presentation.
Aruba Networks, Inc.
Condensed Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(In thousands, except per share amounts)
(Unaudited)
For the Three Months Ended July 31,
2013 For the Year Ended July 31, 2013
Previously
Reported Adjusted Change
Previously
Reported Adjusted Change
GAAP net loss $ (16,287) $ (15,581) $ 706 $ (32,314) $ (31,608) $ 706
Plus:
a) Stock-based compensation expenses 25,231 25,231 - 96,226 96,226 -
b) Payroll taxes on stock-based compensation expenses 342 342 - 2,596 2,596 -
c) Amortization expense of acquired intangible assets and
other acquisition-related expenses 3,230 3,230 - 10,843 10,843 -
d) Legal settlement 14,000 14,000 - 14,000 14,000 -
e) Change in valuation of contingent rights liability - - - (1,665) (1,665) -
f) Non-GAAP income tax effects (*) (11,448) (11,448) - (11,172) (11,172) -
-
Non-GAAP net income $ 15,068 $ 15,774 $ 706 $ 78,514 $ 79,220 $ 706
GAAP net loss per common share $ (0.14) $ (0.14) $ - $ (0.29) $ (0.28) $ 0.01
Plus:
a) Stock-based compensation expenses 0.21 0.21 - 0.79 0.79 -
b) Payroll taxes on stock-based compensation expenses - - - 0.02 0.02 -
c) Amortization expense of acquired intangible assets and
other acquisition-related expenses 0.03 0.03 - 0.10 0.10 -
d) Legal settlement 0.11 0.11 - 0.11 0.11 -
e) Change in valuation of contingent rights liability - - - (0.01) (0.01) -
f) Non-GAAP income tax effects (*) (0.09) (0.09) - (0.09) (0.09) -
Non-GAAP net income per common share (**) $ 0.12 $ 0.13 $ 0.01 $ 0.63 $ 0.64 $ 0.01
Shares used in computing diluted GAAP net loss per common
share 114,202 114,202 113,284 113,284
Shares used in computing diluted non-GAAP net income per
common share 122,880 122,880 124,102 124,102
(*) These adjustments reflect the income tax effects of presenting a non-GAAP income position compared to our GAAP net loss. In addition, for the three
months and twelve months ended July 31, 2013, we modified the non-GAAP reporting tax effects related to the internal transfer of certain intellectual property
(IP) in 2012 as part of our new corporate organization structure in order to align our non-GAAP reporting with the initial up-front buy-in for that IP. As a
result, non-GAAP net income and EPS increased by $4,256 and $0.03 in each period, all of which occurred in the fourth quarter of fiscal 2013. The benefit,
had we modified our tax calculation in fiscal 2012, would have been an additional $1,019 and $3,667 to non-GAAP net income and $0.01 and $0.03 to
EPS, respectively, for the three and twelve months ended July 31, 2012.
(**) The sum of the EPS impacts may not total to Non-GAAP net income per common share due to different share counts used in calculating GAAP loss per
common share and Non-GAAP income per common share. The GAAP loss per common share calculation uses a lower share count as it excludes potentially
dilutive shares which are included in calculating non-GAAP income per common share.
Aruba Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
For the Year Ended July 31, 2013
Previously
Reported Adjusted Change
Cash flows from operating activities
Net loss $ (32,314) $ (31,608) $ 706
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 23,701 23,701 -
Provision for doubtful accounts and sales reserves 797 797 -
Write-downs for excess and obsolete inventory 5,597 5,597 -
Stock-based compensation expense 96,226 96,226 -
Accretion of purchase discounts on short-term investments 1,413 1,413 -
Loss on disposal of fixed assets 269 269 -
Change in carrying value of contingent rights liability (1,665) (1,665) -
Deferred income taxes 38 (237) (275)
Excess tax benefit associated with stock-based compensation (10,305) (9,906) 399
Changes in operating assets and liabilities:
Accounts receivable (13,524) (13,524) -
Inventory (15,970) (15,970) -
Prepaids and other current assets (356) (356) -
Deferred costs (1,417) (1,417) -
Other current and non-current assets 6,119 6,119 -
Deferred revenue 38,282 38,282 -
Other current and non-current liabilities 43,856 43,856 -
Income taxes payable 12,067 11,636 (431)
Net cash provided by operating activities 152,814 153,213 399
Cash flows from investing activities
Purchases of short-term investments (287,183) (287,183) -
Proceeds from sales of short-term investments 75,806 75,806 -
Proceeds from maturities of short-term investments 151,718 151,718 -
Purchases of property and equipment (20,655) (20,655) -
Investments in privately-held companies (1,750) (1,750) -
Cash paid in acquisitions, net of cash acquired (16,767) (16,767) -
Net cash used in investing activities (98,831) (98,831) -
Cash flows from financing activities
Proceeds from issuance of common stock 33,194 33,194 -
Repurchases of common stock under stock repurchase program (86,211) (86,211) -
Excess tax benefit associated with stock-based compensation 10,305 9,906 (399)
Net cash provided (used in) by financing activities (42,712) (43,111) (399)
Effect of exchange rate changes on cash and cash equivalents 19 19 -
Net increase in cash and cash equivalents 11,290 11,290 -
Cash and cash equivalents, beginning of period 133,629 133,629 -
Cash and cash equivalents, end of period $ 144,919 $ 144,919 $ -
Supplemental disclosure of cash flow information
Income taxes paid $ 3,344 $ 3,344 $ -
Supplemental disclosure of non-cash investing and financing activities
Common stock issued in purchase acquisitions $ - $ - $ -
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Form 8-K and the
accompanying tables contain the following non-GAAP financial measures: non-GAAP net income and non-GAAP earnings per share (EPS). The presentation
of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented
in accordance with GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for
comparison purposes. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool.
In particular, many of the adjustments to Aruba’s GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in its
financial results for the foreseeable future.
Non-GAAP net income and EPS. Aruba defines non-GAAP net income as net income plus stock-based compensation expenses and related payroll taxes,
amortization expense of acquired intangible assets and other acquisition related expenses, non-recurring patent-infringement settlements, and the change in the
valuation of the contingent rights liability, less the related tax effects. During the current period, Aruba has modified the non-GAAP reporting of tax effects
related to the internal transfer of intellectual property (IP) in 2012 as part of its new corporate organization structure. Aruba management determined to exclude
these tax effects in fiscal 2013 to align its non-GAAP reporting with the initial up-front buy-in for that IP. Aruba defines non-GAAP EPS as non-GAAP net
income divided by the weighted average diluted shares outstanding. Aruba’s management regularly uses these non-GAAP financial measures to understand
and manage its business and believes that these non-GAAP financial measures provide meaningful supplemental information regarding the company’s
performance by excluding certain expenses that may not be indicative of Aruba’s “recurring operating results,” meaning its operating performance excluding
not only stock-based compensation expenses and related payroll taxes, but also discrete charges that are infrequent in nature. Further, Aruba’s management
excludes from non-GAAP net income the tax effects of these non-GAAP financial measures, as without excluding these tax effects, investors would only see the
gross effect that excluding these expenses had on the company’s operating results. Because of varying available valuation methodologies, subjective
assumptions and the variety of award types that companies can use, Aruba’s management believes that providing non-GAAP financial measures that exclude
stock-based compensation expenses allows investors to compare these results with those of other companies, as well as providing management with an
important tool for financial and operational decision making and for evaluating the company’s operating results over different periods of time. Similarly, by
excluding amortization expense of acquired intangible assets and other acquisition related expenses, non-recurring patent-infringement settlements and the
change in the valuation of the contingent rights liability, less the related tax effects, Aruba’s management believes that investors can better understand and
measure the company’s recurring operating results.
There are a number of limitations related to the use of non-GAAP net income and EPS versus net income and EPS calculated in accordance with GAAP. First,
these non-GAAP financial measures exclude some costs, namely stock-based compensation expenses and related payroll taxes, that are recurring. Stock-based
compensation expenses and related payroll taxes have been and will continue to be for the foreseeable future a significant recurring expense in Aruba’s
business. Second, stock-based awards are an important part of Aruba’s employees’ compensation and impact their performance. Third, the components of the
costs that Aruba excludes in its calculation of non-GAAP net income may differ from the components that its peer companies exclude when they report their
results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from these non-
GAAP financial measures and evaluates these non-GAAP financial measures together with their most directly comparable financial measures calculated in
accordance with GAAP. The accompanying tables provide reconciliations between these financial measures and their most directly comparable GAAP
equivalents.

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ARUN 2013 PR.pdf

  • 1. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 16, 2013 ARUBA NETWORKS, INC. (Exact name of registrant as specified in its charter) Delaware 001-33347 02-0579097 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1344 Crossman Ave. Sunnyvale, CA 94089 (Address of principal executive offices, including zip code) (408) 227-4500 Registrant’s telephone number, including area code Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
  • 2. Item 2.02. Results of Operations and Financial Condition. On August 22, 2013, Aruba Networks, Inc. (the “Company”) issued a press release announcing financial results for the fiscal quarter and year ended July 31, 2013. The press release reported GAAP net loss of $16.3 million, or $(0.14) per share, for the fiscal quarter ended July 31, 2013, and GAAP net loss of $32.3 million, or $(0.29) per share, for the fiscal year ended July 31, 2013. The press release also reported non-GAAP net income of $15.1 million, or $0.12 per diluted share, for the fiscal quarter ended July 31, 2013, and non-GAAP net income of $78.5 million, or $0.63 per diluted share, for the fiscal year ended July 31, 2013. As a result of a favorable adjustment to the Company’s income tax provision relating to the calculation of taxes on intercompany profits, the Company is now reporting the following GAAP and non-GAAP impacts of this tax adjustment: (All figures are “GAAP”, unless otherwise indicated) Aruba Networks, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amount) (Unaudited) Three months ended July 31, 2013 Year-end July 31, 2013 Previously Reported Adjusted Change Previously Reported Adjusted Change GAAP Loss before income taxes $ (20,569) $ (20,569) $ - $ (10,225) $ (10,225) $ - GAAP Provision for (benefit from) income taxes (4,282) (4,988) (706) 22,089 21,383 (706) GAAP Net loss $ (16,287) $ (15,581) $ 706 $ (32,314) $ (31,608) $ 706 GAAP Net loss per common share, basic $ (0.14) $ (0.14) $ 0.00 $ (0.29) $ (0.28) $ 0.01 GAAP Net loss per common share, diluted $ (0.14) $ (0.14) $ 0.00 $ (0.29) $ (0.28) $ 0.01 Non-GAAP Net income $ 15,068 $ 15,774 $ 706 $ 78,514 $ 79,220 $ 706 Non-GAAP Net income per common share, diluted $ 0.12 $ 0.13 $ 0.01 $ 0.63 $ 0.64 $ 0.01 As summarized in the table, the Company’s GAAP net loss decreased by $0.7 million to $15.6 million, and GAAP net loss per share remained $(0.14) for the fiscal quarter ended July 31, 2013. For the fiscal year ended July 31, 2013, the Company’s GAAP net loss decreased by $0.7 million to $31.6 million, and GAAP net loss per share decreased to $(0.28). This same favorable income tax adjustment increased non-GAAP net income by $0.7 million to $15.8 million, or $0.13 per diluted share, for the fiscal quarter ended July 31, 2013. For the fiscal year ended July 31, 2013, non-GAAP net income increased by $0.7 million to $79.2 million, and non- GAAP net income per diluted common share increased to $0.64. The Company’s unaudited financial statements, including a reconciliation between GAAP and non-GAAP financial measures, are attached as Exhibit 99.1. These financial statements should be read in conjunction with the audited consolidated financial statements and notes set forth in the Company’s annual report on Form 10-K for the fiscal year ended July 31, 2013, when available. The information in this Item 2.02 of Form 8-K is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended. Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description 99.1 Amended Financial Tables
  • 3. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ARUBA NETWORKS, INC. By: /s/ Ava Hahn Name: Ava Hahn Title: General Counsel Date: September 16, 2013
  • 5. Exhibit No. 99.1 Aruba Networks, Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) As of July 31, 2013 Previously Reported Adjusted Change Assets Current assets Cash and cash equivalents $ 144,919 $ 144,919 $ - Short-term investments 269,882 269,882 - Accounts receivable, net 93,191 93,191 - Inventory, net 28,895 28,895 - Deferred cost of revenue 12,657 12,657 - Prepaids and other 20,090 20,090 - Deferred income tax assets, current 28,801 29,076 275 Total current assets 598,435 598,710 275 Property and equipment, net 27,536 27,536 - Goodwill 67,242 67,242 - Intangible assets, net 26,937 26,937 - Deferred income tax assets, non-current 19,788 19,788 - Other non-current assets 6,530 6,530 - Total non-current assets 148,033 148,033 - Total assets $ 746,468 $ 746,743 $ 275 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 119,523 $ 119,523 $ - Income taxes payable, current 694 662 (32) Deferred revenue, current 109,765 109,765 - Total current liabilities 229,982 229,950 (32) Deferred revenue, non-current 31,578 31,578 - Other non-current liabilities 8,990 8,990 - Total non-current liabilities 40,568 40,568 - Total liabilities 270,550 270,518 (32) Stockholders' equity Common stock 11 11 - Additional paid-in capital 623,554 623,155 (399) Accumulated other comprehensive loss (1,540) (1,540) - Accumulated deficit (146,107) (145,401) 706 Total stockholders' equity 475,918 476,225 307 Total liabilities and stockholders' equity $ 746,468 $ 746,743 $ 275
  • 6. Aruba Networks, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amount) (Unaudited) For the Three Months Ended July 31, 2013 For the Year Ended July 31, 2013 Previously Reported Adjusted Change Previously Reported Adjusted Change Revenue Product $ 125,025 $ 125,025 $ - $ 496,343 $ 496,343 $ - Professional services and support 28,039 28,039 - 103,701 103,701 - Total revenue 153,064 153,064 - 600,044 600,044 - Cost of revenue Product 38,505 38,505 - 149,113 149,113 - Professional services and support 7,228 7,228 - 27,366 27,366 - Total cost of revenue 45,733 45,733 - 176,479 176,479 - Gross profit 107,331 107,331 - 423,565 423,565 - Operating expenses Research and development 38,112 38,112 - 139,746 139,746 - Sales and marketing 62,289 62,289 - 230,805 230,805 - General and administrative 13,275 13,275 - 51,030 51,030 - Legal settlement 14,000 14,000 - 14,000 14,000 - Total operating expenses 127,676 127,676 - 435,581 435,581 - Operating income (loss) (20,345) (20,345) - (12,016) (12,016) - Other income (loss), net Interest income 263 263 - 1,138 1,138 - Other income (loss), net (487) (487) - 653 653 - Total other income (loss), net (224) (224) - 1,791 1,791 - Income (loss) before income taxes (20,569) (20,569) - (10,225) (10,225) - Provision for (benefit from) income taxes (4,282) (4,988) (706) 22,089 21,383 (706) Net loss $ (16,287) $ (15,581) $ 706 $ (32,314) $ (31,608) $ 706 Shares used in computing net loss per common share, basic 114,202 114,202 - 113,284 113,284 - Net loss per common share, basic $ (0.14) $ (0.14) $ - $ (0.29) $ (0.28) $ 0.01 Shares used in computing net loss per common share, diluted 114,202 114,202 - 113,284 113,284 - Net loss per common share, diluted $ (0.14) $ (0.14) $ - $ (0.29) $ (0.28) $ 0.01 Note: Certain prior year amounts have been reclassified to conform to the current year presentation.
  • 7. Aruba Networks, Inc. Condensed Consolidated Statements of Operations (GAAP to Non-GAAP Reconciliation) (In thousands, except per share amounts) (Unaudited) For the Three Months Ended July 31, 2013 For the Year Ended July 31, 2013 Previously Reported Adjusted Change Previously Reported Adjusted Change GAAP net loss $ (16,287) $ (15,581) $ 706 $ (32,314) $ (31,608) $ 706 Plus: a) Stock-based compensation expenses 25,231 25,231 - 96,226 96,226 - b) Payroll taxes on stock-based compensation expenses 342 342 - 2,596 2,596 - c) Amortization expense of acquired intangible assets and other acquisition-related expenses 3,230 3,230 - 10,843 10,843 - d) Legal settlement 14,000 14,000 - 14,000 14,000 - e) Change in valuation of contingent rights liability - - - (1,665) (1,665) - f) Non-GAAP income tax effects (*) (11,448) (11,448) - (11,172) (11,172) - - Non-GAAP net income $ 15,068 $ 15,774 $ 706 $ 78,514 $ 79,220 $ 706 GAAP net loss per common share $ (0.14) $ (0.14) $ - $ (0.29) $ (0.28) $ 0.01 Plus: a) Stock-based compensation expenses 0.21 0.21 - 0.79 0.79 - b) Payroll taxes on stock-based compensation expenses - - - 0.02 0.02 - c) Amortization expense of acquired intangible assets and other acquisition-related expenses 0.03 0.03 - 0.10 0.10 - d) Legal settlement 0.11 0.11 - 0.11 0.11 - e) Change in valuation of contingent rights liability - - - (0.01) (0.01) - f) Non-GAAP income tax effects (*) (0.09) (0.09) - (0.09) (0.09) - Non-GAAP net income per common share (**) $ 0.12 $ 0.13 $ 0.01 $ 0.63 $ 0.64 $ 0.01 Shares used in computing diluted GAAP net loss per common share 114,202 114,202 113,284 113,284 Shares used in computing diluted non-GAAP net income per common share 122,880 122,880 124,102 124,102 (*) These adjustments reflect the income tax effects of presenting a non-GAAP income position compared to our GAAP net loss. In addition, for the three months and twelve months ended July 31, 2013, we modified the non-GAAP reporting tax effects related to the internal transfer of certain intellectual property (IP) in 2012 as part of our new corporate organization structure in order to align our non-GAAP reporting with the initial up-front buy-in for that IP. As a result, non-GAAP net income and EPS increased by $4,256 and $0.03 in each period, all of which occurred in the fourth quarter of fiscal 2013. The benefit, had we modified our tax calculation in fiscal 2012, would have been an additional $1,019 and $3,667 to non-GAAP net income and $0.01 and $0.03 to EPS, respectively, for the three and twelve months ended July 31, 2012. (**) The sum of the EPS impacts may not total to Non-GAAP net income per common share due to different share counts used in calculating GAAP loss per common share and Non-GAAP income per common share. The GAAP loss per common share calculation uses a lower share count as it excludes potentially dilutive shares which are included in calculating non-GAAP income per common share.
  • 8. Aruba Networks, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) For the Year Ended July 31, 2013 Previously Reported Adjusted Change Cash flows from operating activities Net loss $ (32,314) $ (31,608) $ 706 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 23,701 23,701 - Provision for doubtful accounts and sales reserves 797 797 - Write-downs for excess and obsolete inventory 5,597 5,597 - Stock-based compensation expense 96,226 96,226 - Accretion of purchase discounts on short-term investments 1,413 1,413 - Loss on disposal of fixed assets 269 269 - Change in carrying value of contingent rights liability (1,665) (1,665) - Deferred income taxes 38 (237) (275) Excess tax benefit associated with stock-based compensation (10,305) (9,906) 399 Changes in operating assets and liabilities: Accounts receivable (13,524) (13,524) - Inventory (15,970) (15,970) - Prepaids and other current assets (356) (356) - Deferred costs (1,417) (1,417) - Other current and non-current assets 6,119 6,119 - Deferred revenue 38,282 38,282 - Other current and non-current liabilities 43,856 43,856 - Income taxes payable 12,067 11,636 (431) Net cash provided by operating activities 152,814 153,213 399 Cash flows from investing activities Purchases of short-term investments (287,183) (287,183) - Proceeds from sales of short-term investments 75,806 75,806 - Proceeds from maturities of short-term investments 151,718 151,718 - Purchases of property and equipment (20,655) (20,655) - Investments in privately-held companies (1,750) (1,750) - Cash paid in acquisitions, net of cash acquired (16,767) (16,767) - Net cash used in investing activities (98,831) (98,831) - Cash flows from financing activities Proceeds from issuance of common stock 33,194 33,194 - Repurchases of common stock under stock repurchase program (86,211) (86,211) - Excess tax benefit associated with stock-based compensation 10,305 9,906 (399) Net cash provided (used in) by financing activities (42,712) (43,111) (399) Effect of exchange rate changes on cash and cash equivalents 19 19 - Net increase in cash and cash equivalents 11,290 11,290 - Cash and cash equivalents, beginning of period 133,629 133,629 - Cash and cash equivalents, end of period $ 144,919 $ 144,919 $ - Supplemental disclosure of cash flow information Income taxes paid $ 3,344 $ 3,344 $ -
  • 9. Supplemental disclosure of non-cash investing and financing activities Common stock issued in purchase acquisitions $ - $ - $ -
  • 10. Non-GAAP Financial Measures In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Form 8-K and the accompanying tables contain the following non-GAAP financial measures: non-GAAP net income and non-GAAP earnings per share (EPS). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to Aruba’s GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in its financial results for the foreseeable future. Non-GAAP net income and EPS. Aruba defines non-GAAP net income as net income plus stock-based compensation expenses and related payroll taxes, amortization expense of acquired intangible assets and other acquisition related expenses, non-recurring patent-infringement settlements, and the change in the valuation of the contingent rights liability, less the related tax effects. During the current period, Aruba has modified the non-GAAP reporting of tax effects related to the internal transfer of intellectual property (IP) in 2012 as part of its new corporate organization structure. Aruba management determined to exclude these tax effects in fiscal 2013 to align its non-GAAP reporting with the initial up-front buy-in for that IP. Aruba defines non-GAAP EPS as non-GAAP net income divided by the weighted average diluted shares outstanding. Aruba’s management regularly uses these non-GAAP financial measures to understand and manage its business and believes that these non-GAAP financial measures provide meaningful supplemental information regarding the company’s performance by excluding certain expenses that may not be indicative of Aruba’s “recurring operating results,” meaning its operating performance excluding not only stock-based compensation expenses and related payroll taxes, but also discrete charges that are infrequent in nature. Further, Aruba’s management excludes from non-GAAP net income the tax effects of these non-GAAP financial measures, as without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on the company’s operating results. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use, Aruba’s management believes that providing non-GAAP financial measures that exclude stock-based compensation expenses allows investors to compare these results with those of other companies, as well as providing management with an important tool for financial and operational decision making and for evaluating the company’s operating results over different periods of time. Similarly, by excluding amortization expense of acquired intangible assets and other acquisition related expenses, non-recurring patent-infringement settlements and the change in the valuation of the contingent rights liability, less the related tax effects, Aruba’s management believes that investors can better understand and measure the company’s recurring operating results. There are a number of limitations related to the use of non-GAAP net income and EPS versus net income and EPS calculated in accordance with GAAP. First, these non-GAAP financial measures exclude some costs, namely stock-based compensation expenses and related payroll taxes, that are recurring. Stock-based compensation expenses and related payroll taxes have been and will continue to be for the foreseeable future a significant recurring expense in Aruba’s business. Second, stock-based awards are an important part of Aruba’s employees’ compensation and impact their performance. Third, the components of the costs that Aruba excludes in its calculation of non-GAAP net income may differ from the components that its peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from these non- GAAP financial measures and evaluates these non-GAAP financial measures together with their most directly comparable financial measures calculated in accordance with GAAP. The accompanying tables provide reconciliations between these financial measures and their most directly comparable GAAP equivalents.