Revenue from Contracts with Customers (Tables)

9 Months Ended

Jun. 29, 2019

Revenue from Contract with Customer [Abstract]

Contract with Customer, Asset and Liability [Table Text Block]

Contract Assets and Contract Liabilities



	June 29, 2019		October 1, 2018, as adjusted
	(in thousands)
Contract asset	$	22,808	$	26,265
Deferred revenue	$	382,579	$	357,490

Disaggregation of Revenue [Table Text Block]

Disaggregation of Revenue



	Three months ended						Nine months ended
	As Reported ASC 606		ASC 605		As Reported ASC 605		As Reported ASC 606		ASC 605		As Reported ASC 605
	June 29, 2019		June 29, 2019		June 30, 2018		June 29, 2019		June 29, 2019		June 30, 2018
Revenue	June 29, 2019		June 29, 2019		June 30, 2018		June 29, 2019		June 29, 2019		June 30, 2018
	(in thousands)
Subscription license	$	53,705					$	168,762
Subscription support & cloud services	90,159						250,811
Total Subscription	143,864		$	171,631	$	126,712	419,573		$	482,114	$	339,651
Perpetual support	100,328		99,664		121,127		315,242		312,453		379,007
Total recurring revenue	244,192		271,295		247,839		734,815		794,567		718,658
Perpetual license	9,213		10,644		25,780		61,354		63,661		82,604
Total software revenue	253,405		281,939		273,619		796,169		858,228		801,262
Professional services	42,081		40,471		41,158		124,457		118,438		128,041
Total revenue	$	295,486	$	322,410	$	314,777	$	920,626	$	976,666	$	929,303

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

The following tables present our Balance Sheets and Statements of Operations as reported under ASC 606 for the current period with comparative periods reported under ASC 605:



	As Reported ASC 606			ASC 605			As Reported ASC 605
	June 29, 2019			June 29, 2019			September 30, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	267,862		$	267,862		$	259,946
Short-term marketable securities	33,073			33,073			25,836
Accounts receivable⁽¹⁾	321,426			111,165			129,297
Prepaid expenses	69,819			75,504			48,997
Other current assets ⁽²⁾	60,483			139,997			169,708
Total current assets	752,663			627,601			633,784
Property and equipment, net	107,752			107,752			80,613
Goodwill	1,245,084			1,245,084			1,182,457
Acquired intangible assets, net	183,180			183,180			200,202
Long-term marketable securities	21,553			21,553			30,115
Deferred tax assets⁽³⁾	189,371			222,477			165,566
Other assets ⁽⁴⁾	148,998			41,121			36,285
Total assets	$	2,648,601		$	2,448,768		$	2,329,022
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	44,065		$	44,065		$	53,473
Accrued expenses and other current liabilities⁽⁵⁾	95,790			71,506			74,388
Accrued compensation and benefits	78,854			78,854			101,784
Accrued income taxes⁽³⁾	8,222			4,135			18,044
Deferred revenue⁽⁶⁾	374,291			542,888			487,590
Total current liabilities	601,222			741,448			735,279
Long-term debt	698,916			698,916			643,268
Deferred tax liabilities⁽³⁾	37,354			6,635			5,589
Deferred revenue⁽⁶⁾	8,288			8,045			11,852
Other liabilities	87,226			87,226			58,445
Total liabilities	1,433,006			1,542,270			1,454,433

Stockholders’ equity:
Preferred stock	—			—			—
Common stock	1,151			1,151			1,180
Additional paid-in capital	1,504,512			1,504,512			1,558,403
Accumulated deficit	(197,056		)	(508,225		)	(599,409		)
Accumulated other comprehensive loss	(93,012		)	(90,940		)	(85,585		)
Total stockholders’ equity	1,215,595			906,498			874,589
Total liabilities and stockholders’ equity	$	2,648,601		$	2,448,768		$	2,329,022

The changes in balance sheet accounts due to the adoption of ASC 606 are due primarily to the following:


(1)	Up front license recognition under our subscription contracts and billed but uncollected support and subscription receivables that had corresponding deferred revenue, which were included in other current assets prior to our adoption of ASC 606.

(2) Support and subscription receivables previously included in other current assets described in note (1) above, offset by contract assets and capitalized commission costs.


(3)	The tax effect of the accumulated deficit impact related to the acceleration of revenue and deferral of costs (primarily commissions).

(4) The long-term portion of unbilled receivables due to the acceleration of license revenue on multi-year subscription contracts and the long-term portion of capitalized commission costs.

(5) Refund liability, primarily associated with the annual right to exchange on-premise subscription software described above in Judgments and Estimates.

(6) The decrease in deferred revenue recorded to accumulated deficit upon adoption of ASC 606 primarily related to on-premise subscription software licenses.



	Three months ended									Nine months ended
	As Reported ASC 606			ASC 605			As Reported ASC 605			As Reported ASC 606			ASC 605			As Reported ASC 605
	June 29, 2019			June 29, 2019			June 30, 2018			June 29, 2019			June 29, 2019			June 30, 2018
Revenue:
License⁽¹⁾	$	62,918		$	163,220		$	136,568		$	230,116		$	493,256		$	376,591
Support and cloud services⁽¹⁾	190,487			118,719			137,051			566,053			364,972			424,671
Total software revenue	253,405			281,939			273,619			796,169			858,228			801,262
Professional services	42,081			40,471			41,158			124,457			118,438			128,041
Total revenue	295,486			322,410			314,777			920,626			976,666			929,303
Cost of revenue:
Cost of license revenue	13,307			12,998			11,982			38,745			37,590			35,950
Cost of support and cloud services revenue	33,785			33,606			34,291			97,856			97,213			103,128
Total cost of software revenue	47,092			46,604			46,273			136,601			134,803			139,078
Cost of professional services revenue	35,613			34,629			35,360			103,360			99,593			109,298
Total cost of revenue⁽²⁾	82,705			81,233			81,633			239,961			234,396			248,376
Gross margin	212,781			241,177			233,144			680,665			742,270			680,927
Operating expenses:
Sales and marketing⁽³⁾	108,202			113,533			107,801			316,142			330,258			305,566
Research and development	60,590			60,590			61,221			182,774			182,774			187,390
General and administrative	28,773			28,773			33,098			102,008			102,008			101,487
Amortization of acquired intangible assets	5,920			5,920			7,850			17,786			17,786			23,566
Restructuring and other charges, net	(9		)	(9		)	1,627			45,464			45,464			1,846
Total operating expenses	203,476			208,807			211,597			664,174			678,290			619,855
Operating income	9,305			32,370			21,547			16,491			63,980			61,072
Interest expense	(10,816		)	(10,816		)	(10,646		)	(32,475		)	(32,475		)	(31,072		)
Other income (expense), net	1,026			736			(930		)	2,501			2,349			(2,013		)
Income (loss) before income taxes	(485		)	22,290			9,971			(13,483		)	33,854			27,987
Provision (benefit) for income taxes⁽⁴⁾	14,273			10,585			(7,026		)	23,803			14,931			(10,809		)
Net income (loss)	$	(14,758	)	$	11,705		$	16,997		$	(37,286	)	$	18,923		$	38,796

(1)

The reduction in license revenue and increase in support revenue is a result of the support component of subscription licenses which is included in license revenue under ASC 605. Additionally, for the three months ended June 29, 2019, license revenue decreased by approximately $49.8 million as a result of the revenue recorded to accumulated deficit, which would have been recognized during the third quarter of 2019 and approximately $28.7 million as a result of revenue recognized during the first two quarters of 2019 which would have been recognized during the third quarter of 2019. For the nine months ended June 29, 2019, license revenue decreased by approximately $173.1 million as a result of the revenue recorded to accumulated deficit which would have been recognized during the period. This was partially offset by approximately $51.7 million and $115.1 million of upfront license revenue recognition on new and renewal bookings for the three and nine months ending June 29, 2019, respectively.

(2) Cost of revenue under ASC 606 is higher than under ASC 605 due to the treatment of deferred professional services costs under the new accounting guidance, partially offset by the timing of revenue recognition under ASC 606 resulting in lower associated royalty costs.

(3) Sales and marketing costs are lower under ASC 606 due to the amortization of commissions costs capitalized upon adoption of ASC 606, offset by the deferral of ongoing commission expenses under the new accounting guidance.

(4) The benefit for income taxes under ASC 606 includes indirect effects of the adoption.