8-K

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) February 2, 2010

Quest Software, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-26937	33-0231678
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5 Polaris Way, Aliso Viejo, California	92656
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (949) 754-8000

(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:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ 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 February 2, 2010, Quest Software, Inc. (“Quest”) issued a press release announcing operating results for the quarter and year ended December 31, 2009. This press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, unless Quest specifically incorporates the foregoing information into those documents by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1 Press release issued by Quest Software, Inc. on February 2, 2010.

SIGNATURES

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.

	QUEST SOFTWARE, INC.
Date: February 2, 2010
	By:	/S/ SCOTT J. DAVIDSON
		Scott J. Davidson
		Senior Vice President, Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Exhibit Title or Description
99.1	Press release issued by Quest Software, Inc. on February 2, 2010.

EX-99.1

Exhibit 99.1

NEWS

For Immediate Release

Editorial Contact: Daphne Kent

614-726-4787

daphne.kent@quest.com

Investor Contacts: Thomas Patterson

949-754-8336

thomas.patterson@quest.com

Stephen Wideman

949-754-8142

stephen.wideman@quest.com

QUEST SOFTWARE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS

Company Achieves Fourth Quarter Revenues of $194.5 Million;

Posts $695.2 Million in Revenue for 2009

ALISO VIEJO, Calif., February 2, 2010 – Quest Software, Inc. (Nasdaq: QSFT) today reported financial results for the fourth quarter and year ended December 31, 2009. For the quarter, total revenues were $194.5 million, a 3.5% decrease compared to the prior year’s fourth quarter revenue of $201.6 million. For the year, total revenues in fiscal 2009 were $695.2 million, a 5.5% decrease compared to $735.4 million in fiscal 2008. Operating margins increased to 23.4% and 12.0% for the three and twelve months ended December 31, 2009, respectively, as compared to 19.7% and 11.1% for the three and twelve months ended December 31, 2008, respectively. On a non-GAAP basis, operating margins were 24.8% and 22.4% for the three and twelve months ended December 31, 2009, respectively.

Quest Software’s cash and investments at December 31, 2009, totaled $383.0 million, an increase of $21.0 million over the comparable balance at September 30, 2009. Quest Software generated cash flow from operations of $36.7 million in the fourth quarter of 2009.

“Overall, these results demonstrate our success through the year in expanding operating margins and delivering high-value solutions to our customers,” said Doug Garn, President and CEO of Quest Software. “We believe that we are entering 2010 with positive momentum in our existing and new markets and we remain enthusiastic in our ability to capitalize on the investments that we made in our people, products and infrastructure.”

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 2 of 10

GAAP Results

Quest Software’s net income for the fourth quarter of 2009 was $37.0 million, or $0.40 per fully diluted share. This compares to net income of $29.2 million, or $0.28 per share on a fully diluted basis, for the fourth quarter of 2008. Operating margins increased year-over-year from 19.7% to 23.4% in the fourth quarter, resulting in operating income of $45.5 million, which compares to $39.6 million for the corresponding period in 2008. Net income for the year ended December 31, 2009 was $70.4 million, or $0.75 per fully diluted share, versus net income of $68.0 million, or $0.64 per fully diluted share, for fiscal year 2008.

Non-GAAP Results

On a non-GAAP basis, net income for the fourth quarter of 2009 was $36.9 million, or $0.40 per fully diluted share. This compares to non-GAAP net income of $39.5 million, or $0.38 per share on a fully diluted basis, for the fourth quarter of 2008. The non-GAAP operating margin was 24.8% in the fourth quarter of 2009, resulting in non-GAAP operating income of $48.3 million, compared to non-GAAP operating margin and operating income of 26.1% and $52.6 million, respectively, for the corresponding period in 2008. For the year ended December 31, 2009, non-GAAP net income was $117.8 million, or $1.25 per fully diluted share. This compares to non-GAAP net income of $106.2 million, or $1.00 per fully diluted share, for the year ended December 31, 2008. The non-GAAP operating margin was 22.4% for fiscal year 2009, resulting in non-GAAP operating income of $155.6 million, compared to non-GAAP operating margin of 18.5% and non-GAAP operating income of $136.0 million for fiscal year 2008.

Non-GAAP results exclude the after-tax effects of amortization of intangible assets acquired with business combinations, share-based compensation expenses, acquisition-related costs, expenses and litigation loss provision associated with the pending settlement of the shareholder class action arising from Quest Software’s stock option investigation. A reconciliation of GAAP to non-GAAP financial results is included with this press release.

Quest Software’s management prepares and uses non-GAAP financial measures in the presentation of the Company’s results to provide a consistent understanding of its historical operating performance and comparisons with peer companies. Management believes that non-GAAP reporting provides a meaningful representation of the Company’s on-going economic performance and therefore uses non-GAAP reporting internally to evaluate and manage the Company’s operations. Management believes excluding charges such as those described above from its GAAP results facilitates investors’

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 3 of 10

understanding of the Company’s ongoing business operating results. These non-GAAP financial measures also facilitate comparisons to the operating results of the Company’s competitors and provide investors with transparency with respect to the supplemental information used by management in its operational and financial decision making. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for measures of financial performance prepared in conformity with GAAP.

Fourth Quarter and Full Year 2009 Conference Call Information

Quest Software will host a conference call today, Tuesday, February 2, 2010, at 2:00 p.m. Pacific Time, to discuss its results. A simultaneous webcast of the conference call will be available on Quest Software’s website in the Investor Relations section at www.quest.com/company/investor-relations.aspx. A webcast replay will be available on the same website through February 2, 2011. An audio replay of the conference call will also be available through February 9, 2010 by dialing (888) 203-1112 (from the U.S. or Canada) or 719-457-0820 (outside the U.S. and Canada), using confirmation code: 6033149.

About Quest Software, Inc.

Now more than ever, organizations need to work smart and improve efficiency. Quest Software creates and supports smart systems management products – helping our customers solve everyday IT challenges faster and easier. Visit www.quest.com for more information.

# # #

Quest and Quest Software are registered trademarks of Quest Software, Inc. The Quest Software logo and all other Quest Software product or service names and slogans are registered trademarks or trademarks of Quest Software, Inc. All other trademarks and registered trademarks are property of their respective owners.

Forward-Looking Statements

This release and the matters to be discussed on the conference call may include predictions, estimates and other information that might be considered forward-looking statements, including statements relating to expectations of future revenue and operating margin performance and other operating prospects. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including: risks associated with obtaining court approval of a stipulation of settlement of the shareholder class action, the impact of adverse changes in general economic conditions on Quest Software’s relationships with customers, strategic partners and vendors; reductions or delays in information technology spending; variations in demand or the size and timing of customer orders; competitive conditions in Quest Software’s various product areas; rapid technological change; risks associated with the development and market acceptance of new products and product strategies; disruptions caused by acquisitions of companies and/or technologies; fluctuating currency exchange rates and risks associated with international operations; the need to attract and retain qualified employees; and other risks inherent in software businesses. For a discussion of these and other related risks, please refer to Quest Software’s recent SEC filings, including the Annual Report on Form 10-K for the year ended December 31, 2008 and our Quarterly reports on Form 10-Q for subsequent periods, which are available on the SEC’s website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Quest Software undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 4 of 10

QUEST SOFTWARE, INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended December 31						Twelve Months Ended December 31
	2009			2008			2009		2008
Revenues:
Licenses	$	87,905		$	92,955		$	279,238	$	334,083
Services		106,626			108,644			415,998		401,294
Total revenues		194,531			201,599			695,236		735,377
Cost of revenues:
Licenses		1,841			2,476			7,581		8,586
Services		15,661			15,489			58,528		62,060
Amortization of purchased technology		4,469			5,612			19,393		20,231
Total cost of revenues		21,971			23,577			85,502		90,877
Gross profit		172,560			178,022			609,734		644,500
Operating expenses:
Sales and marketing		76,211			77,889			272,944		312,493
Research and development		36,442			38,777			144,370		153,464
General and administrative		21,578			18,143			76,748		84,954
Amortization of other purchased intangible assets		3,235			3,572			13,159		11,302
In-process research and development		—			—			—		955
Litigation loss provision, net		(10,375	)		—			19,025		—
Total operating expenses		127,091			138,381			526,246		563,168
Income from operations		45,469			39,641			83,488		81,332
Other income (expense), net		(789	)		(3,355	)		2,549		1,030
Income before income tax provision		44,680			36,286			86,037		82,362
Income tax provision		7,658			7,115			15,678		14,319
Net income	$	37,022		$	29,171		$	70,359	$	68,043
Net income per share:
Basic	$	0.41		$	0.28		$	0.77	$	0.65
Diluted	$	0.40		$	0.28		$	0.75	$	0.64
Weighted average shares:
Basic		90,105			103,781			91,926		104,192
Diluted		92,800			105,265			94,066		106,261

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 5 of 10

Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures (Unaudited)

The Company has provided a reconciliation of each non-GAAP financial measure used in this earnings release and related conference call and webcast to the most directly comparable GAAP financial measure. These measures differ from GAAP in that they exclude amortization of intangible assets acquired with business combinations, share-based compensation expenses, acquisition related costs, expenses, including indemnification advances and settlement amounts, associated with litigation arising from Quest Software’s stock option investigation and the estimated tax effect related to each of these items. The Company’s basis for these adjustments is described below.

Quest Software’s management prepares and uses non-GAAP financial measures in the presentation of the Company’s results to provide a consistent understanding of its historical operating performance and comparisons with peer companies. Management believes that non-GAAP reporting provides a meaningful representation of the Company’s on-going economic performance and therefore uses non-GAAP reporting internally to evaluate and manage the Company’s operations. Management believes excluding charges such as those described above from its GAAP results facilitates investors’ understanding of the Company’s ongoing business operating results. These non-GAAP financial measures also facilitate comparisons to the operating results of the Company’s competitors and provide investors with transparency with respect to the supplemental information used by management in its operational and financial decision making. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for measures of financial performance prepared in conformity with GAAP.

Management excludes the expenses described above when evaluating the Company’s operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the Company’s operating performance due to the following factors:

• The Company does not acquire businesses on a predictable cycle. The Company, therefore, believes that the presentation of non-GAAP measures that adjust for the impact of intangible asset amortization that are related to business combinations, provides investors and financial analysts with a consistent basis for comparison across accounting periods and, therefore, is useful to help investors and financial analysts understand the Company’s operating results and underlying operational trends.

• Amortization costs are fixed at the time of an acquisition, then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 6 of 10

• Although share-based compensation is an important aspect of the compensation of the Company’s employees and executives, share-based compensation expense and its related tax impact are excluded as such charges are generally fixed at the time of grant and amortized over a period of several years and cannot be changed nor influenced by management after the grant.

• Share-based compensation is not an expense that typically requires or will require cash settlement by the Company.

• Acquisition related costs include expenses incurred for outside legal fees and costs and other professional fees.

• Litigation expenses arising from Quest Software’s stock option investigation includes expenses incurred for outside legal fees and costs, consulting services and other professional fees, indemnification expenses for current and former directors and officers, and settlement amounts. Because these expenses are non-recurring and unique to the stock option investigation, the Company believes they are not indicative of future operating results and that investors benefit from an understanding of Quest Software’s operating results without giving effect to them.

• The estimated income tax effects on the above items adjust the provision for income taxes to reflect the effect of the non-GAAP adjustments on non-GAAP operating income.

These non-GAAP financial measures are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and may differ from the non-GAAP information used by other companies. There are significant limitations associated with the use of non-GAAP financial measures. The additional non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP (such as net income and earnings per share) and should not be considered measures of the Company’s liquidity. Furthermore, the Company in the future may exclude amortization related to new business combinations from financial measures that it releases, and the Company expects to continue to incur share-based compensation expenses.

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 7 of 10

QUEST SOFTWARE, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(Unaudited)

	Three Months Ended December 31						Twelve Months Ended December 31
	2009			2008			2009			2008
GAAP total cost of revenues	$	21,971		$	23,577		$	85,502		$	90,877
Amortization of purchased technology		(4,469	)		(5,612	)		(19,393	)		(20,231	)
Share-based compensation expense		(216	)		(192	)		(737	)		(880	)
Prepaid royalty impairment charge		—			(400	)		—			(400	)
Non-GAAP total cost of revenues	$	17,286		$	17,373		$	65,372		$	69,366
GAAP gross profit	$	172,560		$	178,022		$	609,734		$	644,500
Amortization of purchased technology		4,469			5,612			19,393			20,231
Share-based compensation expense		216			192			737			880
Prepaid royalty impairment charge		—			400			—			400
Non-GAAP gross profit	$	177,245		$	184,226		$	629,864		$	666,011
GAAP income from operations	$	45,469		$	39,641		$	83,488		$	81,332
Amortization of purchased technology		4,469			5,612			19,393			20,231
Amortization of other purchased intangible assets		3,235			3,572			13,159			11,302
Share-based compensation expense		3,813			3,013			15,178			18,235
Prepaid royalty impairment charge		—			400			—			400
Acquisition related costs		133			—			253			—
Professional fees related to our legal and indemnification expense relating to our previous restatement		1,542			331			5,153			3,566
In-process research and development		—			—			—			955
Litigation loss provision		(10,375	)		—			19,025			—
Non-GAAP income from operations	$	48,286		$	52,569		$	155,649		$	136,021
GAAP net income	$	37,022		$	29,171		$	70,359		$	68,043
Amortization of purchased technology		4,469			5,612			19,393			20,231
Amortization of other purchased intangible assets		3,235			3,572			13,159			11,302
Share-based compensation expense		3,813			3,013			15,178			18,235
Prepaid royalty impairment charge		—			400			—			400
Acquisition related costs		133			—			253			—
Professional fees related to our legal and indemnification expense relating to our previous restatement		1,542			331			5,153			3,566
In-process research and development		—			—			—			955
Litigation loss provision		(10,375	)		—			19,025			—
Impairment charge for cost method investments		—			2,001			—			2,001
Tax effect of these adjustments		(2,900	)		(4,614	)		(24,760	)		(18,552	)
Non-GAAP net income	$	36,939		$	39,486		$	117,760		$	106,181
GAAP net income per basic share	$	0.41		$	0.28		$	0.77		$	0.65
Amortization of purchased technology		0.05			0.05			0.21			0.19
Amortization of other purchased intangible assets		0.04			0.03			0.14			0.11
Share-based compensation expense		0.04			0.03			0.17			0.18
Prepaid royalty impairment charge		—			0.01			—			0.01
Acquisition related costs		0.00			—			0.01			—
Professional fees related to our legal and indemnification expense relating to our previous restatement		0.02			0.00			0.06			0.03
In-process research and development		—			—			—			0.01
Litigation loss provision		(0.12	)		—			0.21			—
Impairment charge for cost method investments		—			0.02			—			0.02
Tax effect of these adjustments		(0.03	)		(0.04	)		(0.27	)		(0.18	)
Non-GAAP net income per basic share	$	0.41		$	0.38		$	1.28		$	1.02
Shares used in basic per share amounts		90,105			103,781			91,926			104,192
GAAP net income per fully diluted share	$	0.40		$	0.28		$	0.75		$	0.64
Amortization of purchased technology		0.05			0.05			0.21			0.19
Amortization of other purchased intangible assets		0.03			0.03			0.14			0.11
Share-based compensation expense		0.04			0.03			0.16			0.17
Prepaid royalty impairment charge		—			0.01			—			0.00
Acquisition related costs		0.00			—			0.00			—
Professional fees related to our legal and indemnification expense relating to our previous restatement		0.02			0.00			0.05			0.03
In-process research and development		—			—			—			0.01
Litigation loss provision		(0.11	)		—			0.20			—
Impairment charge for cost method investments		—			0.02			—			0.02
Tax effect of these adjustments		(0.03	)		(0.04	)		(0.26	)		(0.17	)
Non-GAAP net income per fully diluted share	$	0.40		$	0.38		$	1.25		$	1.00
Shares used in fully diluted per share amounts		92,800			105,265			94,066			106,261

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 8 of 10

QUEST SOFTWARE, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES (Continued)

(In thousands, except per share data)

(Unaudited)

	Three Months Ended December 31, 2009
	Sales and Marketing			Research and Development			General and Administrative			Amortization of Other Purchased Intangible Assets			Litigation Loss Provision			Total Operating Expenses
GAAP operating expenses	$	76,211		$	36,442		$	21,578		$	3,235		$	(10,375	)	$	127,091
Amortization of other purchased intangible assets		—			—			—			(3,235	)		—			(3,235	)
Share-based compensation expense		(1,229	)		(1,311	)		(1,057	)		—			—			(3,597	)
Acquisition related costs		—			—			(133	)		—			—			(133	)
Professional fees related to our legal and indemnification expense relating to our previous restatement		—			—			(1,542	)		—			—			(1,542	)
Litigation loss provision		—			—			—			—			10,375			10,375
Non-GAAP operating expenses	$	74,982		$	35,131		$	18,846		$	—		$	—		$	128,959
	Three Months Ended December 31, 2008
	Sales and Marketing			Research and Development			General and Administrative			Amortization of Other Purchased Intangible Assets			In-process Research and Development			Total Operating Expenses
GAAP operating expenses	$	77,889		$	38,777		$	18,143		$	3,572		$	—		$	138,381
Amortization of other purchased intangible assets		—			—			—			(3,572	)		—			(3,572	)
Share-based compensation expense		(1,292	)		(1,295	)		(234	)		—			—			(2,821	)
Professional fees related to our legal and indemnification expense relating to our previous restatement		—			—			(331	)		—			—			(331	)
In-process research and development		—			—			—			—			—			—
Non-GAAP operating expenses	$	76,597		$	37,482		$	17,578		$	—		$	—		$	131,657
	Twelve Months Ended December 31, 2009
	Sales and Marketing			Research and Development			General and Administrative			Amortization of Other Purchased Intangible Assets			Litigation Loss Provision			Total Operating Expenses
GAAP operating expenses	$	272,944		$	144,370		$	76,748		$	13,159		$	19,025		$	526,246
Amortization of other purchased intangible assets		—			—			—			(13,159	)		—			(13,159	)
Share-based compensation expense		(4,997	)		(5,384	)		(4,060	)		—			—			(14,441	)
Acquisition related costs		—			—			(253	)		—			—			(253	)
Professional fees related to our legal and indemnification expense relating to our previous restatement		—			—			(5,152	)		—			—			(5,152	)
Litigation loss provision		—			—			—			—			(19,025	)		(19,025	)
Non-GAAP operating expenses	$	267,947		$	138,986		$	67,283		$	—		$	—		$	474,216
	Twelve Months Ended December 31, 2008
	Sales and Marketing			Research and Development			General and Administrative			Amortization of Other Purchased Intangible Assets			In-process Research and Development			Total Operating Expenses
GAAP operating expenses	$	312,493		$	153,464		$	84,954		$	11,302		$	955		$	563,168
Amortization of other purchased intangible assets		—			—			—			(11,302	)		—			(11,302	)
Share-based compensation expense		(6,829	)		(5,800	)		(4,726	)		—			—			(17,355	)
Professional fees related to our legal and indemnification expense relating to our previous restatement		—			—			(3,566	)		—			—			(3,566	)
In-process research and development		—			—			—			—			(955	)		(955	)
Non-GAAP operating expenses	$	305,664		$	147,664		$	76,662		$	—		$	—		$	529,990

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 9 of 10

QUEST SOFTWARE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	December 31
	2009		2008
ASSETS
Current assets:
Cash and cash equivalents	$	292,940	$	215,895
Restricted cash		796		2,425
Short-term investments		90,109		632
Accounts receivable, net		157,534		153,892
Prepaid expenses and other current assets		32,178		17,362
Deferred income taxes		11,832		18,460
Total current assets		585,389		408,666
Property and equipment, net		70,051		77,394
Long-term investments		2,411		41,410
Intangible assets, net		76,072		104,567
Goodwill		670,481		655,777
Deferred income taxes		34,127		28,026
Other assets		26,607		29,819
Total assets	$	1,465,138	$	1,345,659
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,714	$	3,798
Accrued compensation		45,831		45,079
Other accrued expenses		31,902		39,927
Loans payable		32,602		—
Deferred revenue		285,907		272,626
Total current liabilities		399,956		361,430
Long-term liabilities:
Deferred revenue		86,231		66,086
Income taxes payable		44,433		40,846
Loans payable		33,292		—
Other long-term liabilities		8,434		3,545
Total long-term liabilities		172,390		110,477
Total liabilities		572,346		471,907
Stockholders’ equity		892,792		873,752
Total liabilities and stockholders’ equity	$	1,465,138	$	1,345,659

Quest Software Reports Fourth Quarter and Full Year 2009 Results – page 10 of 10

QUEST SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2009			2008			2009			2008
Cash flows from operating activities:
Net income	$	37,022		$	29,171		$	70,359		$	68,043
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,377			13,396			47,973			48,255
Compensation expense associated with share-based payments		3,812			2,800			15,178			17,106
Deferred income taxes		510			185			1,694			(236	)
Unrealized (gain) loss on short-term investments and put options		(151	)		642			(634	)		642
Impairment losses on cost method investments		—			2,001			—			2,001
Excess tax benefit related to share-based compensation		(1,186	)		(87	)		(1,825	)		(3,415	)
Provision for bad debts		(48	)		602			72			1,358
In-process research and development		—			—			—			955
Litigation loss provision		(10,375	)		—			—			—
Other non-cash adjustments, net		312			578			251			578
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(31,808	)		(44,578	)		320			(6,915	)
Prepaid expenses and other current assets		(4,640	)		631			(4,674	)		1,809
Other assets		969			1,334			2,656			986
Accounts payable		1,497			(137	)		(491	)		(1,694	)
Accrued compensation		4,483			3,969			(3,208	)		(3,871	)
Other accrued expenses		(16,667	)		(1,621	)		(8,226	)		(5,359	)
Income taxes payable		5,131			2,192			(3,149	)		(5,465	)
Deferred revenue		37,159			26,442			33,426			37,113
Other liabilities		(702	)		(73	)		2,806			(40	)
Net cash provided by operating activities		36,695			37,447			152,528			151,851
Cash flows from investing activities:
Purchases of property and equipment		(3,009	)		(4,063	)		(11,286	)		(12,244	)
Cash paid for acquisitions, net of cash acquired		(12,157	)		(1,981	)		(12,253	)		(137,207	)
Change in restricted cash		(196	)		(58	)		1,494			46,496
Purchases of cost method investments		—			—			(3,000	)		(3,160	)
Purchases of investment securities		(35,860	)		—			(47,853	)		(52,003	)
Sales and maturities of investment securities		1,525			42,749			2,814			82,071
Net cash (used in) provided by investing activities		(49,697	)		36,647			(70,084	)		(76,047	)
Cash flows from financing activities:
Proceeds from loans payable		—			—			68,428			—
Repayment of loans payable		(1,677	)		—			(2,459	)		—
Repurchase of common stock		(11,328	)		(145,250	)		(112,447	)		(145,250	)
Repayment of capital lease obligations		(70	)		(51	)		(263	)		(256	)
Cash paid for line of credit fees		—			—			(1,979	)		—
Proceeds from the exercise of stock options		15,664			1,320			43,264			39,964
Excess tax benefit related to share-based compensation		1,186			87			1,825			3,415
Proceeds received from certain executive officers as part of our restatement remedial actions		—			—			—			200
Net cash provided by (used in) financing activities		3,775			(143,894	)		(3,631	)		(101,927	)
Effect of exchange rate changes on cash and cash equivalents		(1,298	)		5,204			(1,768	)		6,450
Net (decrease) increase in cash and cash equivalents		(10,525	)		(64,596	)		77,045			(19,673	)
Cash and cash equivalents, beginning of period		303,465			280,491			215,895			235,568
Cash and cash equivalents, end of period	$	292,940		$	215,895		$	292,940		$	215,895