##### 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 March 31, 2010
 OR
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 001-33685
 COMPELLENT TECHNOLOGIES, INC.
 (Exact name of Registrant as specified in its charter)
 Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    37-1434895
(I.R.S. Employer
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 March 31, 2010
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    1Condensed Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009
    
    
    2Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009
    
    
    3Notes to the Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    14Item 4. Controls and Procedures
    
    
    14PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 3. Defaults Upon Senior Securities
    
    
    25Item 4. (Removed and Reserved)
    
    
    25Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    26Signatures
    
    
    27EX-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(in thousands, except share and 
per share amounts)
 March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    47,973
    
    
    $
    29,155Short-term investments
    
    
    24,751
    
    
    
    35,218Accounts receivable, net
    
    
    30,194
    
    
    
    36,702Inventories, net
    
    
    6,407
    
    
    
    4,750Other current assets
    
    
    4,005
    
    
    
    3,497Total current assets
    
    
    113,330
    
    
    
    109,322Long-term investments
    
    
    58,590
    
    
    
    59,472Property and equipment, net
    
    
    6,241
    
    
    
    5,153Total assets
    
    $
    178,161
    
    
    $
    173,947Liabilities and stockholders equityCurrent liabilitiesAccounts payable
    
    $
    8,410
    
    
    $
    8,968Accrued compensation
    
    
    6,049
    
    
    
    5,489Accrued liabilities
    
    
    1,065
    
    
    
    1,261Deferred revenues, current
    
    
    27,791
    
    
    
    25,668Total current liabilities
    
    
    43,315
    
    
    
    41,386Deferred revenues, net of current
    
    
    13,746
    
    
    
    12,529Commitments and contingencies
    
    
    
    
    
    
    Stockholders equityCommon stock, par value $0.001 per share:Authorized 300,000,000 shares; issued and
outstanding shares  March 31, 2010 
31,736,807 and December 31, 2009  31,674,940
    
    
    32
    
    
    
    32Additional paid in capital
    
    
    166,570
    
    
    
    164,885Accumulated deficit
    
    
    (45,842
    )
    
    
    (45,062
    )Accumulated other comprehensive income
    
    
    340
    
    
    
    177Total stockholders equity
    
    
    121,100
    
    
    
    120,032Total liabilities and stockholders equity
    
    $
    178,161
    
    
    $
    173,947
  1




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##### Table of Contents



COMPELLENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited, in thousands, 
except per share amounts)
 For the Three MonthsEnded March 31,2010
    
    
    2009RevenuesProduct
    
    $
    20,615
    
    
    $
    21,289Support and services
    
    
    11,212
    
    
    
    6,784Total revenues
    
    
    31,827
    
    
    
    28,073Cost of revenuesProduct
    
    
    10,581
    
    
    
    10,827Support and services
    
    
    3,791
    
    
    
    2,424Total cost of revenues
    
    
    14,372
    
    
    
    13,251Gross profit
    
    
    17,455
    
    
    
    14,822Operating expensesSales and marketing
    
    
    12,150
    
    
    
    9,819Research and development
    
    
    4,295
    
    
    
    2,810General and administrative
    
    
    2,083
    
    
    
    1,400Total operating expenses
    
    
    18,528
    
    
    
    14,029Operating income (loss)
    
    
    (1,073
    )
    
    
    793Other income, net
    
    
    405
    
    
    
    496Income (loss) before income taxes
    
    
    (668
    )
    
    
    1,289Income tax expense
    
    
    112
    
    
    
    275Net income (loss)
    
    $
    (780
    )
    
    $
    1,014Net income (loss) per weighted average share, basic
    
    $
    (0.02
    )
    
    $
    0.03Net income (loss) per weighted average share,
diluted
    
    $
    (0.02
    )
    
    $
    0.03Weighted average shares, basic
    
    
    31,683
    
    
    
    30,647Weighted average shares, diluted
    
    
    31,683
    
    
    
    32,662
  2




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##### Table of Contents



COMPELLENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in thousands)
 For the Three MonthsEnded March 31,2010
    
    
    2009Operating activitiesNet income (loss)
    
    $
    (780
    )
    
    $
    1,014Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    712
    
    
    
    494Stock-based compensation expense
    
    
    1,324
    
    
    
    788Changes in operating assets and liabilities:Accounts receivable, net
    
    
    6,508
    
    
    
    (1,530
    )Inventories, net
    
    
    (1,657
    )
    
    
    350Other current assets
    
    
    (508
    )
    
    
    (752
    )Accounts payable
    
    
    (558
    )
    
    
    1,288Accrued compensation and accrued liabilities
    
    
    376
    
    
    
    (875
    )Deferred revenues
    
    
    3,340
    
    
    
    3,598Net cash provided by operating activities
    
    
    8,757
    
    
    
    4,375Investing activitiesPurchases of property and equipment
    
    
    (1,800
    )
    
    
    (1,033
    )Purchases of investments
    
    
    (16,259
    )
    
    
    (30,325
    )Proceeds from sales of investments
    
    
    20,279
    
    
    
    294Proceeds from maturities of investments
    
    
    7,500
    
    
    
    20,151Net cash provided by (used in) investing activities
    
    
    9,720
    
    
    
    (10,913
    )Financing activitiesProceeds from issuance of common stock
    
    
    341
    
    
    
    62Net increase (decrease) in cash and cash equivalents
    
    
    18,818
    
    
    
    (6,476
    )Cash and cash equivalents, beginning of period
    
    
    29,155
    
    
    
    51,989Cash and cash equivalents, end of period
    
    $
    47,973
    
    
    $
    45,513Supplemental cash flow disclosure:Cash paid for income taxes
    
    $
    48
    
    
    $
    160Supplemental non-cash disclosure:Vesting of restricted common stock
    
    $
    20
    
    
    $
    29Unrealized gain (loss) on available-for-sale investments, net
    
    $
    171
    
    
    $
    (323
    )
  3




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##### Table of Contents



COMPELLENT TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 1. Nature of Business, Basis of Presentation and Recent Accounting Pronouncements
 Nature of Business
  Basis of Presentation
    Recent Accounting Pronouncements
     2. Fair Value Measurements and Investments
 Fair Value Measurements
  4




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##### Table of Contents



Fair Value Measurements UsingMarch 31,
    
    
    
    
    
    
    (in thousands)Description
    
    2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Available-for-sale investments:Corporate debt securities (1)
    
    $
    47,384
    
    
    $
    47,384
    
    
    $
    
    
    
    $
    U.S. agency securities (3)
    
    
    29,099
    
    
    
    
    
    
    
    29,099
    
    
    
    Municipal bonds (2)
    
    
    5,913
    
    
    
    
    
    
    
    5,913
    
    
    
    Commercial paper (4)
    
    
    9,899
    
    
    
    
    
    
    
    9,899
    
    
    
    Certificates of deposit (2)
    
    
    945
    
    
    
    
    
    
    
    945
    
    
    
    Money market funds (4)
    
    
    38,074
    
    
    
    38,074
    
    
    
    
    
    
    
    Total
    
    $
    131,314
    
    
    $
    85,458
    
    
    $
    45,856
    
    
    $
    Fair Value Measurements UsingDecember 31,
    
    
    
    
    
    
    (in thousands)Description
    
    2009
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Available-for-sale investments:Corporate debt securities (1)
    
    $
    50,172
    
    
    $
    50,172
    
    
    $
    
    
    
    $
    U.S. agency securities (1)
    
    
    27,394
    
    
    
    
    
    
    
    27,394
    
    
    
    Municipal bonds (1)
    
    
    5,925
    
    
    
    
    
    
    
    5,925
    
    
    
    Commercial paper (2)
    
    
    2,998
    
    
    
    
    
    
    
    2,998
    
    
    
    Certificates of deposit (2)
    
    
    1,396
    
    
    
    
    
    
    
    1,396
    
    
    
    Variable rate demand notes (2)
    
    
    6,806
    
    
    
    
    
    
    
    6,806
    
    
    
    Money market funds (4)
    
    
    27,878
    
    
    
    27,878
    
    
    
    
    
    
    
    Total
    
    $
    122,569
    
    
    $
    78,050
    
    
    $
    44,519
    
    
    $
    
 
 (1)
    
    Included in short-term and long-term investments on the consolidated balance sheets.(2)
    
    Included in short-term investments on the consolidated balance sheets.(3)
    
    Included in long-term investments on the consolidated balance sheets.(4)
    
    Included in cash and cash equivalents on the consolidated balance sheets.  Investments
  Gross UnrealizedAt March 31, 2010
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCorporate debt securities
    
    $
    47,048
    
    
    $
    359
    
    
    $
    (23
    )
    
    $
    47,384U.S. agency securities
    
    
    29,078
    
    
    
    40
    
    
    
    (19
    )
    
    
    29,099Municipal bonds
    
    
    5,894
    
    
    
    19
    
    
    
    
    
    
    
    5,913Commercial paper
    
    
    9,899
    
    
    
    
    
    
    
    
    
    
    
    9,899Certificates of deposit
    
    
    945
    
    
    
    
    
    
    
    
    
    
    
    945Money market funds
    
    
    38,074
    
    
    
    
    
    
    
    
    
    
    
    38,074Total
    
    $
    130,938
    
    
    $
    418
    
    
    $
    (42
    )
    
    $
    131,314
 5




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##### Table of Contents



Gross UnrealizedAt December 31, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCorporate debt securities
    
    $
    49,972
    
    
    $
    323
    
    
    $
    (123
    )
    
    $
    50,172U.S. agency securities
    
    
    27,399
    
    
    
    34
    
    
    
    (39
    )
    
    
    27,394Municipal bonds
    
    
    5,915
    
    
    
    13
    
    
    
    (3
    )
    
    
    5,925Commercial paper
    
    
    2,998
    
    
    
    
    
    
    
    
    
    
    
    2,998Certificates of deposit
    
    
    1,396
    
    
    
    
    
    
    
    
    
    
    
    1,396Variable rate demand notes
    
    
    6,806
    
    
    
    
    
    
    
    
    
    
    
    6,806Money market funds
    
    
    27,878
    
    
    
    
    
    
    
    
    
    
    
    27,878Total
    
    $
    122,364
    
    
    $
    370
    
    
    $
    (165
    )
    
    $
    122,569
  Cost
    
    
    Fair ValueDue in one year or less
    
    $
    72,577
    
    
    $
    72,724Due between one year to 3 years
    
    
    58,361
    
    
    
    58,590Total
    
    $
    130,938
    
    
    $
    131,314
  3. Inventories
  March 31,
    
    
    December 31,2010
    
    
    2009Component materials
    
    $
    2,419
    
    
    $
    2,045Finished systems
    
    
    3,988
    
    
    
    2,705Total
    
    $
    6,407
    
    
    $
    4,750
 4. Property and Equipment
  March 31,
    
    
    December 31,2010
    
    
    2009Computer equipment
    
    $
    10,036
    
    
    $
    8,855Computer software
    
    
    952
    
    
    
    951Office furniture and fixtures
    
    
    1,370
    
    
    
    1,200Leasehold improvements
    
    
    1,665
    
    
    
    1,21714,023
    
    
    
    12,223Accumulated depreciation and amortization
    
    
    (7,782
    )
    
    
    (7,070
    )Total
    
    $
    6,241
    
    
    $
    5,153
 5. Comprehensive Income (Loss)
  For the Three MonthsEnded March 31,2010
    
    
    2009Net income (loss)
    
    $
    (780
    )
    
    $
    1,014Net changes in other comprehensive income (loss):Cumulative translation adjustment
    
    
    (8
    )
    
    
    (5
    )Unrealized gain (loss) on investments, net
    
    
    171
    
    
    
    (322
    )Total comprehensive income (loss)
    
    $
    (617
    )
    
    $
    687
 6




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##### Table of Contents



6. Stock-Based Compensation
 Option Activity
  Weighted
    
    WeightedAverage
    
    AverageExercise
    
    RemainingNumber of
    
    Price per
    
    ContractualShares
    
    Share
    
    LifeOptions outstanding at December 31, 2009
    
    
    3,374,061
    
    
    $
    9.19
    
    
    
    6.00Granted
    
    
    737,835
    
    
    
    16.38
    
    
    
    Exercised
    
    
    (61,867
    )
    
    
    5.30
    
    
    
    Cancelled
    
    
    (36,952
    )
    
    
    11.43
    
    
    
    Options outstanding at March 31, 2010
    
    
    4,013,077
    
    
    $
    10.55
    
    
    
    5.96Options exercisable at March 31, 2010
    
    
    1,629,502
    
    
    $
    6.74
    
    
    
    5.76
 Stock-Based Compensation Expense
  For the Three MonthsEnded March 31,2010
    
    
    2009Cost of product
    
    $
    15
    
    
    $
    14Cost of support and services
    
    
    40
    
    
    
    63Sales and marketing
    
    
    615
    
    
    
    349Research and development
    
    
    270
    
    
    
    146General and administrative
    
    
    384
    
    
    
    216Total stock-based compensation expense
    
    $
    1,324
    
    
    $
    788
  7. Net Income (Loss) Per Share
  For the Three MonthsEnded March 31,2010
    
    
    2009Basic weighted-average shares outstanding
    
    
    31,683
    
    
    
    30,647Dilutive effect of stock options and unvested restricted common stock
    
    
    
    
    
    
    2,015Diluted weighted-average shares outstanding
    
    
    31,683
    
    
    
    32,662Net income (loss)
    
    $
    (780
    )
    
    $
    1,014Net income (loss) per weighted average share, basic
    
    $
    (0.02
    )
    
    $
    0.03Net income (loss) per weighted average share, diluted
    
    $
    (0.02
    )
    
    $
    0.03
  8. Income Taxes
  7




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##### Table of Contents



Balance at December 31, 2009
    
    $
    430Increase related to current year tax positions
    
    
    6Balance at March 31, 2010
    
    $
    436
  9. Commitments and Contingencies
 Indemnification Obligations
  Legal Proceedings
    8




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##### Table of Contents



10. Segment and Geographic Information
  Three Months EndedMarch 31,2010
    
    
    2009United States
    
    $
    26,131
    
    
    $
    23,647International
    
    
    5,696
    
    
    
    4,426Total
    
    $
    31,827
    
    
    $
    28,073
  11. Subsequent Events
  9




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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 revenues, gross margin and expenses;
    
    our expectations regarding unfavorable economic and market
conditions, including lessening demand in the information
technology market;
    
    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, plan, 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, 2009, filed with the SEC on March 5, 2010.
 Overview
   Critical Accounting Policies and Estimates
  10




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##### Table of Contents



Results of Operations
  Three Months EndedMarch 31,
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %RevenuesProduct
    
    $
    20,615
    
    
    $
    21,289
    
    
    $
    (674
    )
    
    
    (3.2
    %)Support and services
    
    
    11,212
    
    
    
    6,784
    
    
    
    4,428
    
    
    
    65.3Total revenues
    
    
    31,827
    
    
    
    28,073
    
    
    
    3,754
    
    
    
    13.4Cost of revenuesProduct
    
    
    10,581
    
    
    
    10,827
    
    
    
    (246
    )
    
    
    (2.3
    )Support and services
    
    
    3,791
    
    
    
    2,424
    
    
    
    1,367
    
    
    
    56.4Total cost of revenues
    
    
    14,372
    
    
    
    13,251
    
    
    
    1,121
    
    
    
    8.5Gross profit
    
    
    17,455
    
    
    
    14,822
    
    
    
    2,633
    
    
    
    17.8Operating expensesSales and marketing
    
    
    12,150
    
    
    
    9,819
    
    
    
    2,331
    
    
    
    23.7Research and development
    
    
    4,295
    
    
    
    2,810
    
    
    
    1,485
    
    
    
    52.8General and administrative
    
    
    2,083
    
    
    
    1,400
    
    
    
    683
    
    
    
    48.8Total operating expenses
    
    
    18,528
    
    
    
    14,029
    
    
    
    4,499
    
    
    
    32.1Operating income (loss)
    
    
    (1,073
    )
    
    
    793
    
    
    
    (1,866
    )
    
    
    *Other income, net
    
    
    405
    
    
    
    496
    
    
    
    (91
    )
    
    
    (18.3
    )Income (loss) before income
taxes
    
    
    (668
    )
    
    
    1,289
    
    
    
    (1,957
    )
    
    
    *Income tax expense
    
    
    112
    
    
    
    275
    
    
    
    (163
    )
    
    
    (59.3
    %)Net income (loss)
    
    $
    (780
    )
    
    $
    1,014
    
    
    $
    (1,794
    )
    
    
    *
 
 *
    
    Percentage is not meaningful Comparison of Three Months Ended March 31, 2010 and 2009
 Revenues
  Three Months Ended March 31,2010
    
    
    2009%
    
    
    
    
    
    
    %of Total
    
    
    
    
    
    
    of Total
    
    
    Change$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    $
    
    
    %RevenuesProduct
    
    $
    20,615
    
    
    
    64.8
    %
    
    $
    21,289
    
    
    
    75.8
    %
    
    $
    (674
    )
    
    
    (3.2
    %)Support and services
    
    
    11,212
    
    
    
    35.2
    
    
    
    6,784
    
    
    
    24.2
    
    
    
    4,428
    
    
    
    65.3Total revenues
    
    $
    31,827
    
    
    
    100.0
    %
    
    $
    28,073
    
    
    
    100.0
    %
    
    $
    3,754
    
    
    
    13.4
    %
 Product Revenue.
 Support and Services Revenues.
 11




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##### Table of Contents



Cost of Revenues and Gross Profit
  Three Months Ended March 31,2010
    
    
    2009%
    
    
    
    
    
    
    %of Related
    
    
    
    
    
    
    of Related
    
    
    Change$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    $
    
    
    %Cost of revenuesProduct
    
    $
    10,581
    
    
    
    51.3
    %
    
    $
    10,827
    
    
    
    50.9
    %
    
    $
    (246
    )
    
    
    (2.3
    %)Support and services
    
    
    3,791
    
    
    
    33.8
    
    
    
    2,424
    
    
    
    35.7
    
    
    
    1,367
    
    
    
    56.4Total cost of revenues
    
    $
    14,372
    
    
    
    45.2
    %
    
    $
    13,251
    
    
    
    47.2
    %
    
    $
    1,121
    
    
    
    8.5
    %Gross profit
    
    
    
    
    
    
    54.8
    %
    
    
    
    
    
    
    52.8
    %
 Cost of Product Revenue.
 Cost of Support and Services Revenues.
 Gross Profit.
 Operating Expenses
  Three Months Ended March 31,2010
    
    
    2009%
    
    
    
    
    
    
    %of Total
    
    
    
    
    
    
    of Total
    
    
    Change$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    $
    
    
    %Operating expensesSales and marketing
    
    $
    12,150
    
    
    
    38.2
    %
    
    $
    9,819
    
    
    
    35.0
    %
    
    $
    2,331
    
    
    
    23.7
    %Research and development
    
    
    4,295
    
    
    
    13.5
    
    
    
    2,810
    
    
    
    10.0
    
    
    
    1,485
    
    
    
    52.8General and administrative
    
    
    2,083
    
    
    
    6.5
    
    
    
    1,400
    
    
    
    5.0
    
    
    
    683
    
    
    
    48.8Total operating expenses
    
    $
    18,528
    
    
    
    58.2
    %
    
    $
    14,029
    
    
    
    50.0
    %
    
    $
    4,499
    
    
    
    32.1
    %
 Sales and Marketing.
 Research and Development.
 General and Administrative.
 Other Income, Net
 Other Income, Net.
 12




---



##### Table of Contents



Income Tax Expense
 Income Tax Expense.
 Liquidity and Capital Resources
   Cash Flows
  Three Months EndedMarch 31,2010
    
    
    2009Net cash provided by operating activities
    
    $
    8,757
    
    
    $
    4,375Net cash provided by (used in) investing activities
    
    
    9,720
    
    
    
    (10,913
    )Net cash provided by financing activities
    
    
    341
    
    
    
    62Net increase (decrease) in cash and cash equivalents
    
    $
    18,818
    
    
    $
    (6,476
    )
 Operating Activities
   Investing Activities
   13




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##### Table of Contents



Financing Activities
   Operating and Capital Expenditure Requirements
  Contractual Obligations
 Managements
Discussion and Analysis of Financial Condition and Results of Operations  Contractual
Obligations
 Seasonality
  Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  14




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##### Table of Contents



Inherent Limitations of Internal Controls
  15




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
    
 Item 1A. Risk Factors
 We have identified the following additional 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.
 Risks Related to Our Business
 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;
    
    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;
 16




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##### Table of Contents




    
    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.
 We have a history of losses, and we may not return to profitability on a quarterly basis or sustain
profitability on an annual basis in the future.
  Unfavorable economic and market conditions and a lessening demand in the information technology
market could adversely affect our operating results.
  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.
  17




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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 revenues.
  
    
    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 revenues;
    
    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;
    
    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.
  18




---



##### Table of Contents



We will 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 profit may vary and such variation may make it more difficult to forecast our earnings.
  
    
    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 revenues;
    
    new product introductions and enhancements; and
    
    geographic sales mix.
  We receive a substantial portion of our revenues 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 revenues.
 19




---



##### Table of Contents



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.
   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 revenues will be
impaired.
 20




---



##### Table of Contents



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.
  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.
   21




---



##### Table of Contents




    
    difficulties of managing and staffing international offices, and the increased
travel, infrastructure and legal compliance costs associated with international
locations;
    
    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
revenues and increase our costs.
   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;
 22




---



##### Table of Contents




    
    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 revenues.
  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.
  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.
  23




---



##### Table of Contents




    
    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 revenues 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.
  We have been named a defendant in a purported securities class action lawsuit. This, and
potential similar or related litigation, could result in substantial damages and may divert
managements time and attention from our business.
   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.
 24




---



##### Table of Contents



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;
    
    the required approval of at least 662/3% 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; and
    
    the required approval of at least a majority of the shares entitled to vote at an election of
directors to remove directors without cause.
  
 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. (Removed and Reserved)
 25




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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
 Exhibit
    
    
    
    Incorporated by Reference
    
    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
    
    
    4.210.1
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and Philip E. Soran, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.810.2
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and John P. Guider, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.910.3
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and Lawrence E. Aszmann,
dated February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.1010.4
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and John R. Judd, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.1110.5
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and Brian P. Bell, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.1210.6
    
    2009 Management Incentive Plan, as amended.
    
    8-K
    
    02/12/10
    
    
    10.110.7
    
    2010 Management Incentive Plan.
    
    8-K
    
    02/12/10
    
    
    10.210.8
    
    2010 Non-Employee Director Compensation Policy.
    
    10-K
    
    03/05/10
    
    10.14(ii)31.1
    
    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. 26




---



##### Table of Contents



SIGNATURES
   Compellent Technologies, Inc./s/ John. R. JuddJohn R. JuddChief Financial Officer 27




---



##### Table of Contents



EXHIBIT INDEX
 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
    
    
    4.210.1
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and Philip E. Soran, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.810.2
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and John P. Guider, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.910.3
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and Lawrence E. Aszmann, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.1010.4
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and John R. Judd, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.1110.5
    
    Amended and Restated Employment Agreement, by and between
Compellent Technologies, Inc., and Brian P. Bell, dated
February 3, 2010.
    
    8-K
    
    02/04/10
    
    
    10.1210.6
    
    2009 Management Incentive Plan, as amended.
    
    8-K
    
    02/12/10
    
    
    10.110.7
    
    2010 Management Incentive Plan.
    
    8-K
    
    02/12/10
    
    
    10.210.8
    
    2010 Non-Employee Director Compensation Policy.
    
    10-K
    
    03/05/10
    
    10.14(ii)31.1
    
    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. 28