Aruba Networks Inc. (ARUN, Financial) filed Quarterly Report for the period ended 2009-04-30.
Aruba Networks Inc. has a market cap of $648.4 million; its shares were traded at around $7.62 with and P/S ratio of 3.6.
The number of shares of common stock subject to outstanding options did not change as a result of the exchange offer. New options issued as part of the exchange offer are subject to a new vesting schedule in which one-third of the shares subject to each new option grant will vest on the one-year anniversary of the new grant date with the remaining shares vesting in equal monthly installments over the following two years. The new options will have a maximum term of seven years following the new grant date. We will recognize $3.4 million in incremental stock-based compensation expense over the vesting period of the new grants. We recognized $0.6 million in incremental stock-based compensation expense arising from the new grants for the third quarter and first nine months of fiscal 2009.
We recognized $5.5 million and $18.2 million of stock-based compensation for the three and nine months ended April 30, 2009, respectively, and $4.3 million and $13.6 million for the three and nine months ended April 30, 2008.
We recognize revenue only when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable. Additionally, we recognize revenue from indirect sales channel partners upon persuasive evidence provided by our indirect channel customers of a sale to an end customer. If a sale to an end customer has not occurred by the end of the month, the goods remain in the partners inventory pending a sale to an end customer. This inventory is classified on the consolidated balance sheet as deferred costs until the sale to an end customer occurs and the persuasive evidence of the sale is provided. The amount of inventory held by resellers pending a sale to an end customer was $0.9 million and $1.7 million as of April 30, 2009 and July 31, 2008, respectively.
Inventory consists of hardware and related component parts and is stated at the lower of cost or market. Cost is computed using the standard cost, which approximates actual cost, on a first-in, first-out basis. We record inventory write-downs for potentially excess inventory based on forecasted demand, economic trends, technological obsolescence of our products and transition of inventory related to new product releases. If future demand or market conditions are less favorable than our projections, additional inventory write-downs could be required and would be reflected in cost of product revenues in the period the revision is made. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Inventory write-downs amounted to $1.9 million and $3.3 million in the three and nine months ended April 30, 2009, respectively, and $0.3 million and $0.8 million in the three and nine months ended April 30, 2008, respectively.
We record a provision for doubtful accounts based on historical experience and a detailed assessment of the collectibility of our accounts receivable. In estimating the allowance for doubtful accounts, our management considers, among other factors, (1) the aging of the accounts receivable, including trends within and ratios involving the age of the accounts receivable, (2) our historical write-offs, (3) the credit-worthiness of each customer, (4) the economic conditions of the customers industry, and (5) general economic conditions, especially given the recent financial crisis in todays economic environment. In cases where we are aware of circumstances that may impair a specific customers ability to meet their financial obligations to us, we record a specific allowance against amounts due from the customer, and thereby reduce the net recognized receivable to the amount we reasonably believe will be collected. The allowance for doubtful accounts was $0.5 million and $0.6 million at April 30, 2009 and July 31, 2008, respectively.
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Aruba Networks Inc. has a market cap of $648.4 million; its shares were traded at around $7.62 with and P/S ratio of 3.6.
Highlight of Business Operations:
On November 14, 2008, as a result of the macroeconomic downturn, our board of directors approved a plan to reduce our costs and streamline operations through a combination of a reduction in our work force and the closing of certain facilities. The majority of the reduction in our work force was completed in the second quarter of fiscal 2009 and the remaining reduction was completed in the third quarter of fiscal 2009. The reduction in our work force resulted in the termination of 46 employees worldwide, or about 8% of our global work force. Expenses associated with the work force reduction, which were comprised primarily of severance and benefits payments as well as professional fees associated with career transition services, totaled $1.1 million. Additionally, we closed facilities in California and North Carolina and incurred facility exit costs of $0.3 million as a result. These expenses were recorded in the second quarter of fiscal 2009. These cost reduction efforts, when added to our other cost control measures, resulted in a savings of approximately $2.0 million during the second quarter of fiscal 2009. We expect to realize an additional $5.0 million to $6.0 million in additional savings through the end of fiscal 2009 based on all of our cost reduction efforts.The number of shares of common stock subject to outstanding options did not change as a result of the exchange offer. New options issued as part of the exchange offer are subject to a new vesting schedule in which one-third of the shares subject to each new option grant will vest on the one-year anniversary of the new grant date with the remaining shares vesting in equal monthly installments over the following two years. The new options will have a maximum term of seven years following the new grant date. We will recognize $3.4 million in incremental stock-based compensation expense over the vesting period of the new grants. We recognized $0.6 million in incremental stock-based compensation expense arising from the new grants for the third quarter and first nine months of fiscal 2009.
We recognized $5.5 million and $18.2 million of stock-based compensation for the three and nine months ended April 30, 2009, respectively, and $4.3 million and $13.6 million for the three and nine months ended April 30, 2008.
We recognize revenue only when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable. Additionally, we recognize revenue from indirect sales channel partners upon persuasive evidence provided by our indirect channel customers of a sale to an end customer. If a sale to an end customer has not occurred by the end of the month, the goods remain in the partners inventory pending a sale to an end customer. This inventory is classified on the consolidated balance sheet as deferred costs until the sale to an end customer occurs and the persuasive evidence of the sale is provided. The amount of inventory held by resellers pending a sale to an end customer was $0.9 million and $1.7 million as of April 30, 2009 and July 31, 2008, respectively.
Inventory consists of hardware and related component parts and is stated at the lower of cost or market. Cost is computed using the standard cost, which approximates actual cost, on a first-in, first-out basis. We record inventory write-downs for potentially excess inventory based on forecasted demand, economic trends, technological obsolescence of our products and transition of inventory related to new product releases. If future demand or market conditions are less favorable than our projections, additional inventory write-downs could be required and would be reflected in cost of product revenues in the period the revision is made. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Inventory write-downs amounted to $1.9 million and $3.3 million in the three and nine months ended April 30, 2009, respectively, and $0.3 million and $0.8 million in the three and nine months ended April 30, 2008, respectively.
We record a provision for doubtful accounts based on historical experience and a detailed assessment of the collectibility of our accounts receivable. In estimating the allowance for doubtful accounts, our management considers, among other factors, (1) the aging of the accounts receivable, including trends within and ratios involving the age of the accounts receivable, (2) our historical write-offs, (3) the credit-worthiness of each customer, (4) the economic conditions of the customers industry, and (5) general economic conditions, especially given the recent financial crisis in todays economic environment. In cases where we are aware of circumstances that may impair a specific customers ability to meet their financial obligations to us, we record a specific allowance against amounts due from the customer, and thereby reduce the net recognized receivable to the amount we reasonably believe will be collected. The allowance for doubtful accounts was $0.5 million and $0.6 million at April 30, 2009 and July 31, 2008, respectively.
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