Business Context and Reporting Period
Company: Palo Alto Networks, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: September 20, 2012
Event: Entry into Material Definitive Agreements (Lease Agreements)
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, debt, or liquidity metrics. It details a new long-term operating lease obligation.
| Lease Property | Location | Space (Sq. Ft.) | Commencement | Expiration |
|---|---|---|---|---|
| 4301 Building | 4301 Great America Parkway, Santa Clara, CA | 150,128 | Nov 1, 2012 (Initial); Aug 1, 2013 (Remainder) | July 31, 2023 |
| 4401 Building | 4401 Great America, Santa Clara, CA | 151,035 | Aug 1, 2013 | July 31, 2023 |
Rental Rate: Approximately $2.60 per rentable square foot per month (average over lease term).
Rent Abatement: 4 months for 4301 Initial Space; 6 months for 4401 Building.
Extensions: Two optional 5-year extensions at 95% of then-current market rate.
Material Changes
The Company has entered into two new lease agreements totaling approximately 301,163 square feet of office space in Santa Clara, California. This represents a significant expansion of the Company's physical footprint and creates a new direct financial obligation for rent and operating expense reimbursements (including real estate taxes and insurance).
Outlook, Risks, and Contingencies
Management Commentary: The filing indicates a strategic commitment to long-term occupancy in Santa Clara through 2023, with options to extend through 2033.
Risks: The Company is now contractually obligated to pay rent and reimburse operating expenses for the specified terms, regardless of future business needs or market conditions. The filing notes that the summaries are qualified by reference to the full lease agreements to be filed in the 10-K.
Investor Verification Checklist
- Verify the total committed capital expenditure for tenant improvements not explicitly detailed in this summary.
- Confirm the impact of these new lease obligations on the Company's future operating cash flow and EBITDA.
- Review the full lease agreements (exhibits to the 10-K) for specific clauses regarding termination, subletting, and escalation of operating expenses.
- Assess whether the expansion aligns with current headcount growth projections.