##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number 001-33685
 
 COMPELLENT TECHNOLOGIES, INC.
 (Exact name of Registrant as specified in its charter)
 
 Delaware
    
    37-1434895(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 7625 Smetana Lane
Eden Prairie, Minnesota 55344
(952) 294-3300
 (Address, including zip code, and telephone number, including area code, of registrants principal executive offices)
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



COMPELLENT TECHNOLOGIES, INC.
 FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2009
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets  As of June 30, 2009 (unaudited) and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations (unaudited)  Three and Six Months Ended June 30, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows (unaudited)  Six Months Ended June 30, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4. Controls and Procedures
    
    
    20PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    20Item 1A. Risk Factors
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32Item 3. Defaults Upon Senior Securities
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other Information
    
    
    33Item 6. Exhibits
    
    
    34Signatures
    
    
    35EX-31.1EX-31.2EX-32.1
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 COMPELLENT TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2009
    
    
    2008(unaudited)
    
    
    See Note(in thousands, except share andper share amounts)AssetsCurrent assetsCash and cash equivalents
    
    $
    33,142
    
    
    $
    51,989Short-term investments
    
    
    32,757
    
    
    
    29,146Accounts receivable, net
    
    
    29,449
    
    
    
    19,167Inventories, net
    
    
    3,497
    
    
    
    3,564Other current assets
    
    
    2,793
    
    
    
    1,592Total current assets
    
    
    101,638
    
    
    
    105,458Long-term investments
    
    
    38,743
    
    
    
    19,153Property and equipment, net
    
    
    4,227
    
    
    
    3,446Total assets
    
    $
    144,608
    
    
    $
    128,057Liabilities and stockholders equityCurrent liabilitiesAccounts payable
    
    $
    8,255
    
    
    $
    2,885Accrued compensation
    
    
    4,176
    
    
    
    4,834Accrued liabilities
    
    
    1,185
    
    
    
    1,480Deferred revenue
    
    
    20,108
    
    
    
    15,128Total current liabilities
    
    
    33,724
    
    
    
    24,327Deferred revenue, net of current portion
    
    
    8,509
    
    
    
    5,464Commitments and contingenciesStockholders equityCommon stock, $0.001 par value, 300,000,000
shares authorized; 30,879,688 and 30,768,706
shares issued and outstanding as of June 30,
2009 and December 31, 2008
    
    
    31
    
    
    
    31Additional paid in capital
    
    
    150,740
    
    
    
    147,974Accumulated deficit
    
    
    (48,595
    )
    
    
    (49,855
    )Accumulated other comprehensive income
    
    
    199
    
    
    
    116Total stockholders equity
    
    
    102,375
    
    
    
    98,266Total liabilities and stockholders equity
    
    $
    144,608
    
    
    $
    128,057
   3




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##### Table of Contents



COMPELLENT TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands, except
    
    
    (in thousands, exceptper share amounts)
    
    
    per share amounts)RevenuesProduct
    
    $
    20,288
    
    
    $
    17,039
    
    
    $
    41,577
    
    
    $
    31,915Support and services
    
    
    8,428
    
    
    
    3,973
    
    
    
    15,212
    
    
    
    7,410Total revenues
    
    
    28,716
    
    
    
    21,012
    
    
    
    56,789
    
    
    
    39,325Cost of revenuesCost of product
    
    
    10,306
    
    
    
    8,031
    
    
    
    21,132
    
    
    
    15,378Cost of support and services
    
    
    2,983
    
    
    
    1,606
    
    
    
    5,407
    
    
    
    3,014Total cost of revenues
    
    
    13,289
    
    
    
    9,637
    
    
    
    26,539
    
    
    
    18,392Gross profit
    
    
    15,427
    
    
    
    11,375
    
    
    
    30,250
    
    
    
    20,933Operating expensesSales and marketing
    
    
    10,846
    
    
    
    8,829
    
    
    
    20,666
    
    
    
    16,782Research and development
    
    
    3,074
    
    
    
    2,311
    
    
    
    5,884
    
    
    
    4,659General and administrative
    
    
    1,550
    
    
    
    1,459
    
    
    
    2,950
    
    
    
    3,204Total operating expenses
    
    
    15,470
    
    
    
    12,599
    
    
    
    29,500
    
    
    
    24,645Income (loss) from operations
    
    
    (43
    )
    
    
    (1,224
    )
    
    
    750
    
    
    
    (3,712
    )Interest income
    
    
    419
    
    
    
    621
    
    
    
    915
    
    
    
    1,493Income (loss) before taxes
    
    
    376
    
    
    
    (603
    )
    
    
    1,665
    
    
    
    (2,219
    )Income tax expense
    
    
    (129
    )
    
    
    
    
    
    
    (405
    )
    
    
    Net income (loss)
    
    $
    247
    
    
    $
    (603
    )
    
    $
    1,260
    
    
    $
    (2,219
    )Net income (loss) per weighted average share, basic
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    0.04
    
    
    $
    (0.07
    )Weighted average shares, basic
    
    
    30,729
    
    
    
    30,434
    
    
    
    30,688
    
    
    
    30,389Net income (loss) per weighted average share, diluted
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    0.04
    
    
    $
    (0.07
    )Weighted average shares, diluted
    
    
    32,840
    
    
    
    30,434
    
    
    
    32,634
    
    
    
    30,389
  4




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COMPELLENT TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 For the Six MonthsEnded June 30,2009
    
    
    2008(in thousands)Operating activitiesNet income (loss)
    
    $
    1,260
    
    
    $
    (2,219
    )Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    1,076
    
    
    
    700Stock-based compensation expense
    
    
    2,075
    
    
    
    990Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (10,282
    )
    
    
    (5,711
    )Inventories, net
    
    
    67
    
    
    
    (1,183
    )Other current assets
    
    
    (1,201
    )
    
    
    33Accounts payable
    
    
    5,370
    
    
    
    889Accrued compensation and liabilities
    
    
    (908
    )
    
    
    1,322Deferred revenue
    
    
    8,025
    
    
    
    5,040Net cash provided by (used in) operating activities
    
    
    5,482
    
    
    
    (139
    )Investing activitiesPurchase of property and equipment
    
    
    (1,857
    )
    
    
    (1,227
    )Purchase of investments
    
    
    (54,119
    )
    
    
    (50,675
    )Proceeds from sales and maturities of investments
    
    
    31,014
    
    
    
    26,150Net cash used in investing activities
    
    
    (24,962
    )
    
    
    (25,752
    )Financing activitiesProceeds from issuance of common stock
    
    
    633
    
    
    
    535Net decrease in cash and cash equivalents
    
    
    (18,847
    )
    
    
    (25,356
    )Cash and cash equivalents, beginning of period
    
    
    51,989
    
    
    
    82,382Cash and cash equivalents, end of period
    
    $
    33,142
    
    
    $
    57,026Supplemental disclosure of cash flow information:Cash paid for income taxes
    
    $
    443
    
    
    $
    Supplemental non-cash disclosure:Vesting of restricted common stock
    
    $
    58
    
    
    $
    61Unrealized gain (loss) on available-for-sale investments
    
    $
    96
    
    
    $
    (23
    )
  5




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##### Table of Contents



COMPELLENT TECHNOLOGIES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 1. Business Description and Summary of Significant Accounting Policies
 Business Description
  Basis of Presentation
  Revenue Recognition
 Software
Revenue Recognition, Modification of SOP No. 97-2,
Software Revenue Recognition with Respect to Certain Transactions Revenue Recognition
 
    
    Persuasive Evidence of an Arrangement Exists.The Company determines that persuasive
evidence of an arrangement exists by receiving a purchase order or by obtaining a signed
quote.
 
    
    Delivery has Occurred.Substantially all products are shipped to end users. Delivery is
deemed to have occurred upon shipment when title has transferred. Products shipped with
acceptance criteria are not recognized as revenue until all conditional criteria are
satisfied.
 
    
    The Fee is Fixed or Determinable. Fees are considered to be fixed and determinable upon
establishment of an arrangement that contains the final terms of sale including description,
quantity and price of each product or service purchased, and the payment term is less than
twelve months.
 
    
    Collectability is Probable. Probability of collection is assessed on a case-by-case
basis. Customers are subject to a credit review process that evaluates the customers
financial position and ultimately their ability to pay. If the Company is unable to
determine from the outset of an arrangement that collectability is probable based upon its
review process, revenue is recognized upon cash receipt.
  6




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Revenue Arrangements with Multiple Deliverables
   Recent Accounting Pronouncements
 Subsequent Events
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles The Hierarchy of Generally Accepted Accounting Principles
 7




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2. Investments
 Fair Value Measurements
 Fair Value Measurements,
 Fair Value Measurements at June 30, 2009 UsingJune 30,Description
    
    2009
    
    
    Level 1 (1)
    
    
    Level 2 (2)
    
    
    Level 3 (3)Available-for-sale investments:Corporate debt securities (4)
    
    $
    30,134
    
    
    $
    25,469
    
    
    $
    4,665
    
    
    $
    Variable rate demand notes (4)
    
    
    7,291
    
    
    
    
    
    
    
    7,291
    
    
    
    U.S. agency securities (4)
    
    
    25,071
    
    
    
    
    
    
    
    25,071
    
    
    
    Municipal bonds (4)
    
    
    2,554
    
    
    
    
    
    
    
    2,554
    
    
    
    Certificates of deposit (5)
    
    
    7,350
    
    
    
    
    
    
    
    7,350
    
    
    
    Money market funds (6)
    
    
    25,014
    
    
    
    25,014
    
    
    
    
    
    
    
    Total
    
    $
    97,414
    
    
    $
    50,483
    
    
    $
    46,931
    
    
    $
    
 Fair Value Measurements at December 31, 2008 UsingDecember 31,Description
    
    2008
    
    
    Level 1 (1)
    
    
    Level 2 (2)
    
    
    Level 3 (3)Available-for-sale investments:Corporate debt securities (4)
    
    $
    12,934
    
    
    $
    11,363
    
    
    $
    1,571
    
    
    $
    Variable rate demand notes (4)
    
    
    7,291
    
    
    
    
    
    
    
    7,291
    
    
    
    U.S. agency securities (4)
    
    
    23,612
    
    
    
    
    
    
    
    23,612
    
    
    
    Certificates of deposit (5)
    
    
    7,406
    
    
    
    
    
    
    
    7,406
    
    
    
    Money market funds (6)
    
    
    36,496
    
    
    
    36,496
    
    
    
    
    
    
    
    Total
    
    $
    87,739
    
    
    $
    47,859
    
    
    $
    39,880
    
    
    $
    
 
 (1)
    
    Level 1 classification is applied to any asset that has a readily available quoted price from
an active market where there is significant transparency in the executed/quoted price.(2)
    
    Level 2 classification is applied to assets that have evaluated prices received from fixed
income vendors where the data inputs to these valuations, which are observable either directly
or indirectly, but do not represent quoted prices from an active market for each individual
security.(3)
    
    Level 3 classification is applied to assets when prices are not derived from existing market
data.(4)
    
    Included in both short-term and long-term investments on the condensed consolidated balance
sheets.(5)
    
    Included in both cash and cash equivalents, short-term and long-term investments on the
condensed consolidated balance sheets.(6)
    
    Included in cash and cash equivalents on the condensed consolidated balance sheets.  8




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Investments
  Gross UnrealizedContractual Maturities
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCorporate debt securities
    
    Less than 3 years
    
    $
    29,929
    
    
    $
    223
    
    
    $
    (18
    )
    
    $
    30,134Variable rate demand notes
    
    Less than 12 months
    
    
    7,291
    
    
    
    
    
    
    
    
    
    
    
    7,291U.S. agency securities
    
    Less than 3 years
    
    
    25,046
    
    
    
    30
    
    
    
    (5
    )
    
    
    25,071Municipal bonds
    
    Less than 2 years
    
    
    2,556
    
    
    
    
    
    
    
    (2
    )
    
    
    2,554Certificates of deposit
    
    Less than 12 months
    
    
    7,351
    
    
    
    
    
    
    
    (1
    )
    
    
    7,350Money market funds
    
    Less than 12 months
    
    
    25,014
    
    
    
    
    
    
    
    
    
    
    
    25,014Total
    
    
    
    $
    97,187
    
    
    $
    253
    
    
    $
    (26
    )
    
    $
    97,414
   3. Inventories
  June 30,
    
    
    December 31,2009
    
    
    2008Component materials
    
    $
    450
    
    
    $
    280Finished systems
    
    
    3,047
    
    
    
    3,284Total
    
    $
    3,497
    
    
    $
    3,564
 4. Property and Equipment
  June 30,
    
    
    December 31,2009
    
    
    2008Computer equipment
    
    $
    888
    
    
    $
    698Office furniture and equipment
    
    
    7,181
    
    
    
    5,632Computer software
    
    
    820
    
    
    
    710Leasehold improvements
    
    
    1,038
    
    
    
    1,0659,927
    
    
    
    8,105Accumulated depreciation and amortization
    
    
    (5,700
    )
    
    
    (4,659
    )Total
    
    $
    4,227
    
    
    $
    3,446
 5. Comprehensive Income/(Loss)
  9




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6. Stock-Based Compensation
 Stock-Based Compensation Expense
 Share-Based Payment,
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Cost of product
    
    $
    12
    
    
    $
    53
    
    
    $
    26
    
    
    $
    87Cost of support and services
    
    
    75
    
    
    
    
    
    
    
    138
    
    
    
    Sales and marketing
    
    
    544
    
    
    
    243
    
    
    
    893
    
    
    
    435Research and development
    
    
    267
    
    
    
    106
    
    
    
    413
    
    
    
    194General and administrative
    
    
    389
    
    
    
    135
    
    
    
    605
    
    
    
    274Effect on income (loss) before taxes
    
    $
    1,287
    
    
    $
    537
    
    
    $
    2,075
    
    
    $
    990Effect on basic and diluted earnings (loss) per share
    
    $
    0.04
    
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    0.03
  Stock Options Exercised for Unvested Restricted Common Stock
   Numberof SharesBalance outstanding at December 31, 2008
    
    
    151,820Vested
    
    
    (59,160
    )Balance outstanding at June 30, 2009
    
    
    92,660
 7. Income Taxes
  Accounting
for Uncertainties in Income Taxes
 10




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8. Net Income (Loss) Per Common Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    247
    
    
    $
    (603
    )
    
    $
    1,260
    
    
    $
    (2,219
    )Shares used in computing net income (loss) per share, basic
    
    
    30,729
    
    
    
    30,434
    
    
    
    30,688
    
    
    
    30,389Dilutive effect of stock options and unvested restricted common stock
    
    
    2,111
    
    
    
    
    
    
    
    1,946
    
    
    
    Shares used in computing net income (loss) per share, diluted
    
    
    32,840
    
    
    
    30,434
    
    
    
    32,634
    
    
    
    30,389Net income (loss) per common share, basic and diluted
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    0.04
    
    
    $
    (0.07
    )
  9. Commitments and Contingencies
 Indemnification Obligations
  Legal Proceedings
   10. Segment and Geographic Information
  11




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesUnited States
    
    $
    22,997
    
    
    $
    17,809
    
    
    $
    46,643
    
    
    $
    33,248International
    
    
    5,719
    
    
    
    3,203
    
    
    
    10,146
    
    
    
    6,077Total
    
    $
    28,716
    
    
    $
    21,012
    
    
    $
    56,789
    
    
    $
    39,325
 11. Subsequent Events
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, that are based on our managements beliefs and assumptions and on
information currently available to our management. Forward-looking statements include all
statements other than statements of historical fact contained in this Quarterly Report on Form
10-Q, including, but not limited to, statements about:
 
    
    our expectations regarding our revenue, gross margin and expenses;
 
    
    our ability to compete in our industry;
 
    
    our ability to maintain and grow our channel partner relationships;
 
    
    our growth strategy and our growth rate;
 
    
    our ability to protect our intellectual property rights;
    
    pricing and availability of our suppliers products; and
 
    
    assumptions underlying or related to any of the foregoing.
 In some cases, you can identify forward-looking statements by terms such as anticipate,
believe, can, continue, could, estimate, expect, intend, may, potential,
predict, project, should, will, would and similar expressions intended to identify
forward-looking statements. These statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance, time frames or achievements to be
materially different from any future results, performance, time frames or achievements expressed or
implied by the forward-looking statements. We discuss many of these risks, uncertainties and other
factors in this Quarterly Report on Form 10-Q in greater detail in Part II, Item IA. Risk
Factors. Given these risks, uncertainties and other factors, you should not place undue reliance
on these forward-looking statements. Also, these forward-looking statements represent our estimates
and assumptions only as of the date hereof. We hereby qualify all of our forward-looking statements
by these cautionary statements. Except as required by law, we assume no obligation to update these
forward-looking statements publicly, or to update the reasons actual results could differ
materially from those anticipated in these forward-looking statements, even if new information
becomes available in the future.
 The following discussion should be read in conjunction with our condensed consolidated
financial statements and the related notes contained elsewhere in this Quarterly Report on Form
10-Q and in our other Securities and Exchange Commission, or SEC, filings, including our Annual
Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 16, 2009.
 12




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Overview
   Critical Accounting Policies and Estimates
   13




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Results of Operations
  Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedJune 30,
    
    
    Change
    
    
    June 30,
    
    
    Change2009
    
    
    2008
    
    
    $
    
    
    %
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %(unaudited)
    
    
    (unaudited)RevenuesProduct
    
    $
    20,288
    
    
    $
    17,039
    
    
    $
    3,249
    
    
    
    19.1
    %
    
    $
    41,577
    
    
    $
    31,915
    
    
    $
    9,662
    
    
    
    30.3
    %Support and services
    
    
    8,428
    
    
    
    3,973
    
    
    
    4,455
    
    
    
    112.1
    
    
    
    15,212
    
    
    
    7,410
    
    
    
    7,802
    
    
    
    105.3Total revenues
    
    
    28,716
    
    
    
    21,012
    
    
    
    7,704
    
    
    
    36.7
    
    
    
    56,789
    
    
    
    39,325
    
    
    
    17,464
    
    
    
    44.4Cost of revenuesCost of product
    
    
    10,306
    
    
    
    8,031
    
    
    
    2,275
    
    
    
    28.3
    
    
    
    21,132
    
    
    
    15,378
    
    
    
    5,754
    
    
    
    37.4Cost of support and services
    
    
    2,983
    
    
    
    1,606
    
    
    
    1,377
    
    
    
    85.7
    
    
    
    5,407
    
    
    
    3,014
    
    
    
    2,393
    
    
    
    79.4Total cost of revenues
    
    
    13,289
    
    
    
    9,637
    
    
    
    3,652
    
    
    
    37.9
    
    
    
    26,539
    
    
    
    18,392
    
    
    
    8,147
    
    
    
    44.3Gross profit
    
    
    15,427
    
    
    
    11,375
    
    
    
    4,052
    
    
    
    35.6
    
    
    
    30,250
    
    
    
    20,933
    
    
    
    9,317
    
    
    
    44.5Operating expensesSales and marketing
    
    
    10,846
    
    
    
    8,829
    
    
    
    2,017
    
    
    
    22.8
    
    
    
    20,666
    
    
    
    16,782
    
    
    
    3,884
    
    
    
    23.1Research and development
    
    
    3,074
    
    
    
    2,311
    
    
    
    763
    
    
    
    33.0
    
    
    
    5,884
    
    
    
    4,659
    
    
    
    1,225
    
    
    
    26.3General and administrative
    
    
    1,550
    
    
    
    1,459
    
    
    
    91
    
    
    
    6.2
    
    
    
    2,950
    
    
    
    3,204
    
    
    
    (254
    )
    
    
    (7.9
    )Total operating expenses
    
    
    15,470
    
    
    
    12,599
    
    
    
    2,871
    
    
    
    22.8
    
    
    
    29,500
    
    
    
    24,645
    
    
    
    4,855
    
    
    
    19.7Income (loss) from operations
    
    
    (43
    )
    
    
    (1,224
    )
    
    
    1,181
    
    
    
    96.5
    
    
    
    750
    
    
    
    (3,712
    )
    
    
    4,462
    
    
    
    120.0Interest income
    
    
    419
    
    
    
    621
    
    
    
    (202
    )
    
    
    (32.5
    )
    
    
    915
    
    
    
    1,493
    
    
    
    (578
    )
    
    
    (38.7
    )Income (loss) before taxes
    
    
    376
    
    
    
    (603
    )
    
    
    979
    
    
    
    162.4
    
    
    
    1,665
    
    
    
    (2,219
    )
    
    
    3,884
    
    
    
    175.0Income tax expense
    
    
    (129
    )
    
    
    
    
    
    
    (129
    )
    
    
    
    
    
    
    (405
    )
    
    
    
    
    
    
    (405
    )
    
    
    Net income (loss)
    
    $
    247
    
    
    $
    (603
    )
    
    $
    850
    
    
    
    141.0
    %
    
    $
    1,260
    
    
    $
    (2,219
    )
    
    $
    3,479
    
    
    
    156.8
    %
 Comparison of Three Months Ended June 30, 2009 and 2008
 Revenues
  Three Months Ended June 30,2009
    
    
    2008%
    
    
    
    
    
    
    %of Total
    
    
    
    
    
    
    of Total
    
    
    Change$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    $
    
    
    %RevenuesProduct
    
    $
    20,288
    
    
    
    70.7
    %
    
    $
    17,039
    
    
    
    81.1
    %
    
    $
    3,249
    
    
    
    19.1
    %Support and services
    
    
    8,428
    
    
    
    29.3
    
    
    
    3,973
    
    
    
    18.9
    
    
    
    4,455
    
    
    
    112.1Total revenues
    
    $
    28,716
    
    
    
    100.0
    %
    
    $
    21,012
    
    
    
    100.0
    %
    
    $
    7,704
    
    
    
    36.7
    %
 Product Revenue.
 Support and Services Revenue.
 14




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##### Table of Contents



Cost of Revenues and Gross Margin
  Three Months Ended June 30,2009
    
    
    2008%
    
    
    
    
    
    
    %of Related
    
    
    
    
    
    
    of Related
    
    
    Change$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    $
    
    
    %Cost of revenuesCost of product
    
    $
    10,306
    
    
    
    50.7
    %
    
    $
    8,031
    
    
    
    47.1
    %
    
    $
    2,275
    
    
    
    28.3
    %Cost of support and services
    
    
    2,983
    
    
    
    35.4
    
    
    
    1,606
    
    
    
    40.4
    
    
    
    1,377
    
    
    
    85.7Total cost of revenues
    
    $
    13,289
    
    
    
    46.3
    %
    
    $
    9,637
    
    
    
    45.9
    %
    
    $
    3,652
    
    
    
    37.9
    %Gross margin
    
    
    
    
    
    
    53.7
    %
    
    
    
    
    
    
    54.1
    %
 Cost of Product Revenue.
 Cost of Support and Services Revenue.
 Gross Margin.
 Operating Expenses
  Three Months Ended June 30,2009
    
    
    2008%
    
    
    
    
    
    
    %of Total
    
    
    
    
    
    
    of Total
    
    
    Change$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    $
    
    
    %Operating expensesSales and marketing
    
    $
    10,846
    
    
    
    37.8
    %
    
    $
    8,829
    
    
    
    42.0
    %
    
    $
    2,017
    
    
    
    22.8
    %Research and development
    
    
    3,074
    
    
    
    10.7
    
    
    
    2,311
    
    
    
    11.0
    
    
    
    763
    
    
    
    33.0General and administrative
    
    
    1,550
    
    
    
    5.4
    
    
    
    1,459
    
    
    
    7.0
    
    
    
    91
    
    
    
    6.2Total operating expenses
    
    $
    15,470
    
    
    
    53.9
    %
    
    $
    12,599
    
    
    
    60.0
    %
    
    $
    2,871
    
    
    
    22.8
    %
 Sales and Marketing Expense.
 Research and Development Expense.
 General and Administrative Expense.
 15




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Interest Income
 Interest Income.
 Income Tax Expense
 Income Tax Expense.
 Comparison of Six Months Ended June 30, 2009 and 2008
 Revenues
  Six Months Ended June 30,2009
    
    
    2008%
    
    
    
    
    
    
    %of Total
    
    
    
    
    
    
    of Total
    
    
    Change$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    $
    
    
    %RevenuesProduct
    
    $
    41,577
    
    
    
    73.2
    %
    
    $
    31,915
    
    
    
    81.2
    %
    
    $
    9,662
    
    
    
    30.3
    %Support and services
    
    
    15,212
    
    
    
    26.8
    
    
    
    7,410
    
    
    
    18.8
    
    
    
    7,802
    
    
    
    105.3Total revenues
    
    $
    56,789
    
    
    
    100.0
    %
    
    $
    39,325
    
    
    
    100.0
    %
    
    $
    17,464
    
    
    
    44.4
    %
 Product Revenue.
 Support and Services Revenue.
 16




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##### Table of Contents



Cost of Revenues and Gross Margin
  Six Months Ended June 30,2009
    
    
    2008%
    
    
    
    
    
    
    %of Related
    
    
    
    
    
    
    of Related
    
    
    Change$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    $
    
    
    %Cost of revenuesCost of product
    
    $
    21,132
    
    
    
    50.8
    %
    
    $
    15,378
    
    
    
    48.2
    %
    
    $
    5,754
    
    
    
    37.4
    %Cost of support and services
    
    
    5,407
    
    
    
    35.5
    
    
    
    3,014
    
    
    
    40.7
    
    
    
    2,393
    
    
    
    79.4Total cost of revenues
    
    $
    26,539
    
    
    
    46.7
    %
    
    $
    18,392
    
    
    
    46.8
    %
    
    $
    8,147
    
    
    
    44.3
    %Gross margin
    
    
    
    
    
    
    53.3
    %
    
    
    
    
    
    
    53.2
    %
 Cost of Product Revenue.
 Cost of Support and Services Revenue.
 Gross Margin.
 Operating Expenses
  Six Months Ended June 30,2009
    
    
    2008%
    
    
    
    
    
    
    %of Total
    
    
    
    
    
    
    of Total
    
    
    Change$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    $
    
    
    %Operating expensesSales and marketing
    
    $
    20,666
    
    
    
    36.4
    %
    
    $
    16,782
    
    
    
    42.7
    %
    
    $
    3,884
    
    
    
    23.1
    %Research and development
    
    
    5,884
    
    
    
    10.4
    
    
    
    4,659
    
    
    
    11.8
    
    
    
    1,225
    
    
    
    26.3General and administrative
    
    
    2,950
    
    
    
    5.2
    
    
    
    3,204
    
    
    
    8.2
    
    
    
    (254
    )
    
    
    (7.9
    )Total operating expenses
    
    $
    29,500
    
    
    
    51.9
    %
    
    $
    24,645
    
    
    
    62.7
    %
    
    $
    4,855
    
    
    
    19.7
    %
 Sales and Marketing Expense.
 Research and Development Expense.
 General and Administrative Expense.
 17




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##### Table of Contents



Interest Income
 Interest Income.
 Income Tax Expense
 Income Tax Expense.
 Liquidity and Capital Resources
  Cash Flows
  Six Months EndedJune 30,2009
    
    
    2008Net cash provided by (used in) operating activities
    
    $
    5,482
    
    
    $
    (139
    )Net cash used in investing activities
    
    
    (24,962
    )
    
    
    (25,752
    )Net cash provided by financing activities
    
    
    633
    
    
    
    535Net decrease in cash and cash equivalents
    
    $
    (18,847
    )
    
    $
    (25,356
    )
 Operating Activities
   18




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##### Table of Contents



Investing Activities
   Financing Activities
  Operating and Capital Expenditure Requirements
  Contractual Obligations
 Managements
Discussion and Analysis of Financial Condition and Results of Operations  Contractual Obligations
 Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 Quantitative and Qualitative Disclosure About Market Risk,
 19




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##### Table of Contents



Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  Inherent Limitations of Internal Controls
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
   
 Item 1A. Risk Factors.
 We have identified the following risks and uncertainties that may have a material adverse
effect on our business, financial condition or results of operations. Investors should carefully
consider the risks described below before making an investment decision. The risks described below
are not the only ones we face. Additional risks not presently known to us or that we currently
believe are immaterial may also significantly impair our business operations. Our business could be
harmed by any of these risks. The trading price of our common stock could decline due to any of
these risks, and investors may lose all or part of their investment.
 20




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##### Table of Contents



Risks Related to Our Business
 Unfavorable economic and market conditions and a lessening demand in the information technology
market could adversely affect our operating results.
  We have a limited operating history and a history of losses, and we may not achieve or sustain
profitability in the future on a quarterly or annual basis.
  Our quarterly operating results may fluctuate significantly, which makes our future results
difficult to predict.
   
    
    reductions in end users budgets for information technology purchases and delays in their
budgeting and purchasing cycles, given current macroeconomic conditions;
 
    
    hardware and software configuration and mix;
 
    
    fluctuations in demand, including due to seasonality, for our products and services;
 21




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##### Table of Contents




    
    changes in pricing by us in response to competitive pricing actions;
 
    
    the sale of Storage Center in the timeframes we anticipate, including the number and size
of orders in each quarter;
 
    
    our ability to develop, introduce and ship in a timely manner new products and product
enhancements that meet end user requirements;
 
    
    the timing of product releases or upgrades by us or by our competitors;
 
    
    any significant changes in the competitive dynamics of our market, including new entrants
or substantial discounting of products;
 
    
    our ability to control costs, including our operating expenses and the costs of the
components we purchase;
 
    
    the extent to which our end users renew their service and maintenance agreements with us;
 
    
    volatility in our stock price, which may lead to higher stock compensation expenses; and
 
    
    general economic conditions in our domestic and international markets.
 The markets in which we compete are highly competitive and dominated by large corporations and we
may not be able to compete effectively.
   
    
    our products functionality, scalability, performance, ease of use, reliability,
availability and cost effectiveness relative to that of our competitors products;
 
    
    our success in utilizing new and proprietary technologies to offer products and features
previously not available in the marketplace;
 
    
    our success in identifying new markets, applications and technologies;
 
    
    our ability to attract and retain value-added resellers, which we refer to as channel
partners;
 
    
    our name recognition and reputation;
 
    
    our ability to recruit software engineers and sales and marketing personnel; and
 
    
    our ability to protect our intellectual property.
   22




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##### Table of Contents



We are dependent on a single product and the lack of continued market acceptance of Storage Center
would result in lower revenue.
  
    
    any decline in demand for Storage Center;
 
    
    the failure of Storage Center to achieve continued market acceptance;
 
    
    the introduction of products and technologies that serve as a replacement or substitute
for, or represent an improvement over, Storage Center;
 
    
    technological innovations or new communications standards that Storage Center does not
address; and
 
    
    our inability to release enhanced versions of Storage Center on a timely basis.
  Our products must meet exacting specifications, and defects and failures may occur, which may cause
channel partners or end users to return or stop buying our products.
  
    
    lost revenue;
 
    
    increased costs, including warranty expense and costs associated with end user support;
 
    
    delays or cancellations or rescheduling of orders or shipments;
 
    
    product returns or discounts;
 
    
    diversion of management resources;
 
    
    damage to our reputation and brand equity;
 23




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##### Table of Contents




    
    payment of damages for performance failures;
 
    
    reduced orders from existing channel partners and end users; and
 
    
    declining interest from potential channel partners or end users.
   We may not sustain our percentage growth rate, and we may not be able to manage any future growth
effectively.
   
    
    increase our channel partners and end users in the mid-size enterprise market;
 
    
    address new markets, such as large enterprise end users and end users outside the United
States;
 
    
    control expenses;
 
    
    recruit, hire, train and manage additional qualified engineers;
 
    
    add additional sales and marketing personnel;
 
    
    expand our international operations; and
 
    
    implement and improve our administrative, financial and operational systems, procedures
and controls.
   Our gross margin may vary and such variation may make it more difficult to forecast our earnings.
  24




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##### Table of Contents




    
    demand for Storage Center and related services;
 
    
    discount levels and price competition;
 
    
    average order system size and end user mix;
 
    
    hardware and software component mix;
 
    
    the cost of components;
 
    
    level of fixed costs of customer service personnel;
 
    
    the mix of services as a percentage of revenue;
 
    
    new product introductions and enhancements; and
 
    
    geographic sales mix.
  We receive a substantial portion of our revenue from a limited number of channel partners, and the
loss of, or a significant reduction in, orders from one or more of our major channel partners would
result in lower revenue.
   The loss of any key suppliers or the failure to accurately forecast demand for our products or
successfully manage our relationships with our key suppliers could negatively impact our ability to
sell our products.
  25




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##### Table of Contents



If our third-party repair service fails to timely and correctly resolve hardware failures
experienced by our end users, our reputation will suffer, our competitive position will be impaired
and our expenses could increase.
  If we are unsuccessful in developing and selling new products, services and product enhancements,
our competitive position will be adversely affected and our ability to grow our revenue will be
impaired.
  If our channel partners fail to timely and correctly install and configure our storage systems, or
face disruptions in their business, our reputation will suffer, our competitive position could be
impaired and we could lose customers.
  26




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##### Table of Contents



If we fail to attract or retain engineering or sales and marketing personnel or if we lose the
services of our founders or key management, our ability to grow our business and our competitive
position would be impaired.
   We expect to face numerous challenges as we attempt to grow our operations, and our channel partner
and end user base internationally.
   
    
    difficulties of managing and staffing international offices, and the increased travel,
infrastructure and legal compliance costs associated with international locations;
 27




---



##### Table of Contents




    
    greater difficulty in collecting accounts receivable and longer collection periods;
 
    
    difficulty in contract enforcement;
 
    
    regulatory, political or economic conditions in a specific country or region;
 
    
    compliance with local laws and regulations and unanticipated changes in local laws and
regulations, including tax laws and regulations;
 
    
    export and import controls; trade protection measures and other regulatory requirements;
 
    
    effects of changes in currency exchange rates;
 
    
    potentially adverse tax consequences;
 
    
    service provider and government spending patterns;
 
    
    reduced protection of our intellectual property and other assets in some countries;
 
    
    greater difficulty documenting and testing our internal controls;
 
    
    differing employment practices and labor issues; and
 
    
    man-made problems such as computer viruses and acts of terrorism and international
conflicts.
  If we fail to protect our intellectual property rights adequately, our ability to compete
effectively or to defend ourselves from litigation could be impaired which could reduce our revenue
and increase our costs.
   28




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##### Table of Contents



Assertions by third parties of infringement by us of their intellectual property rights could
result in a significant diversion of managements time and increased expenses.
  
    
    stop selling products or using technology that contains the allegedly infringing
intellectual property;
 
    
    lose the opportunity to license our technology to others or to collect royalty payments
based upon successful protection and assertion of our intellectual property against others;
 
    
    incur significant legal expenses;
 
    
    pay substantial damages to the party whose intellectual property rights we may be found
to be infringing;
 
    
    redesign those products that contain the allegedly infringing intellectual property; or
 
    
    attempt to obtain a license to the relevant intellectual property from third parties,
which may not be available on reasonable terms or at all.
  If we fail to comply with the terms of our open source software license agreement, we could be
required to release portions of our software codes, which could impair our ability to compete and
result in lower revenue.
  We may need to raise additional funds in the future, which may not be available to us on terms
acceptable to us, or at all.
  29




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##### Table of Contents



We may engage in future acquisitions that could disrupt our business, cause dilution to our
stockholders, reduce our financial resources and result in increased expenses.
  Risks Related to the Ownership of Our Common Stock
 Our stock price is volatile and purchasers of our common stock could incur substantial losses.
  
    
    quarterly variations in our results of operations or those of our competitors;
 
    
    fluctuations in the valuation of companies perceived by investors to be comparable to us;
 
    
    economic developments in the storage industry as a whole;
 
    
    general economic conditions and slow or negative growth of related markets;
 
    
    changes in financial estimates including our ability to meet our future revenue and
operating profit or loss projections;
 
    
    changes in earnings estimates or recommendations by securities analysts;
 
    
    announcements by us or our competitors of acquisitions, new products, significant
contracts, commercial relationships or capital commitments;
 
    
    our ability to develop and market new and enhanced products on a timely basis;
 
    
    commencement of, or our involvement in, litigation;
 
    
    disruption to our operations;
 
    
    any major change in our board of directors or management; and
 
    
    changes in governmental regulations.
  30




---



##### Table of Contents



If securities analysts or industry analysts downgrade our stock, publish negative research or
reports, or do not publish reports about our business, our stock price and trading volume could
decline.
  A limited number of stockholders will have the ability to influence the outcome of director
elections and other matters requiring stockholder approval.
  Delaware law and our amended and restated certificate of incorporation and bylaws contain
provisions that could delay or discourage takeover attempts that stockholders may consider
favorable and result in a lower market price for our common stock.
  
    
    the division of our board of directors into three classes;
 
    
    the right of the board of directors to elect a director to fill a vacancy created by the
expansion of the board of directors or due to the resignation or departure of an existing
board member;
 
    
    the prohibition of cumulative voting in the election of directors, which would otherwise
allow less than a majority of stockholders to elect director candidates;
 
    
    the requirement for the advance notice of nominations for election to the board of
directors or for proposing matters that can be acted upon at a stockholders meeting;
 
    
    the ability of our board of directors to alter our bylaws without obtaining stockholder
approval;
 
    
    the ability of the board of directors to issue, without stockholder approval, up to
10,000,000 shares of preferred stock with terms set by the board of directors, which rights
could be senior to those of our common stock;
 
    
    the elimination of the rights of stockholders to call a special meeting of stockholders
and to take action by written consent in lieu of a meeting; and
 
    
    the required approval of at least 66 2/3% of the shares entitled to vote at an election
of directors to adopt, amend or repeal our bylaws or repeal the provisions of our amended
and restated certificate of incorporation regarding the election and removal of directors.
  31




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Unregistered Sales of Equity Securities
  Use of Proceeds from the Sale of Registered Securities
   
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
   Directors
    
    For
    
    WithheldNeel Sarkar
    
    
    23,086,366
    
    
    
    201,666R. David Spreng
    
    
    22,345,097
    
    
    
    942,935Duston M. Williams
    
    
    23,086,366
    
    
    
    201,666
   For
    
    Against
    
    Abstain23,156,501
    
    108,201
    
    23,330
 32




---



##### Table of Contents



Item 5. Other Information.
  33




---



##### Table of Contents



Item 6. Exhibits.
 Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    Date
    
    Number
    
    Herewith3.1
    
    Amended and Restated Certificate of Incorporation of Compellent Technologies, Inc.
    
    8-K
    
    10/16/07
    
    
    3.13.2
    
    Amended and Restated Bylaws of Compellent Technologies, Inc.
    
    S-1
    
    07/02/07
    
    
    3.44.1
    
    Reference is made to Exhibits 3.1 and 3.2.4.2
    
    Specimen Common Stock Certificate.
    
    S-1/A
    
    09/21/07
    
    
    4.231.1
    
    Certification of Chief Executive Officer of Compellent Technologies, Inc., as
required by Rule 13a-14(a) or Rule 15d-14(a).
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of Chief Financial Officer of Compellent Technologies, Inc., as
required by Rule 13a-14(a) or Rule 15d-14(a).
    
    
    
    
    
    
    
    
    
    X32.1
    
    Certification by the Chief Executive Officer and Chief Financial Officer, as
required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 36 of
Title 18 of the United States Code (18 U.S.C. §1350).*
    
    
    
    
    
    
    
    
    
    X
 
 *
    
    The certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form
10-Q, is not deemed filed with the SEC and is not to be incorporated by reference into any
filing of Compellent Technologies, Inc. under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the date of this
Form 10-Q, irrespective of any general incorporation language contained in such filing. 34




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##### Table of Contents



SIGNATURES
   Compellent Technologies, Inc./s/ John. R. JuddJohn R. JuddChief Financial Officer 35




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##### Table of Contents



EXHIBIT INDEX
 Incorporated by ReferenceExhibit
Number
    
    Exhibit Description
    
    Form
    
    Date
    
    
    

    Number
    
    Filed
 Herewith3.1
    
    
    Amended and Restated Certificate of Incorporation of
Compellent Technologies, Inc.
    
    8-K
    
    10/16/07
    
    
    
    
    3.13.2
    
    
    Amended and Restated Bylaws of Compellent Technologies, Inc.
    
    S-1
    
    07/02/07
    
    
    
    
    3.44.1
    
    
    Reference is made to Exhibits 3.1 and 3.2.4.2
    
    
    Specimen Common Stock Certificate.
    
    S-1/A
    
    09/21/07
    
    
    
    
    4.231.1
    
    
    Certification of Chief Executive Officer of Compellent
Technologies, Inc., as required by Rule 13a-14(a) or Rule
15d-14(a).
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    
    Certification of Chief Financial Officer of Compellent
Technologies, Inc., as required by Rule 13a-14(a) or Rule
15d-14(a).
    
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    
    Certification by the Chief Executive Officer and Chief
Financial Officer, as required by Rule 13a-14(b) or Rule
15d-14(b) and Section 1350 of Chapter 36 of Title 18 of the
United States Code (18 U.S.C. §1350).*
    
    
    
    
    
    
    
    
    
    
    
    X
 
 *
    
    The certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form
10-Q, is not deemed filed with the SEC and is not to be incorporated by reference into any
filing of Compellent Technologies, Inc. under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the date of this
Form 10-Q, irrespective of any general incorporation language contained in such filing. 36