What was the primary reason for filing this 8-K?

This 8-K was filed primarily to announce Arista Networks' financial results for the first quarter ended March 31, 2015, and to disclose a correction to its previously issued 2014 financial statements, specifically the consolidated statement of cash flows. Additionally, it announced the appointment of a new Chief Financial Officer.

What was the financial reporting error, and did it impact the company's net income or cash?

The error involved a $17.4 million misclassification between operating and financing cash flows in the 2014 consolidated statement of cash flows, due to duplicate recognition of excess tax benefits. This error did not impact the company's reported net income or its total cash and cash equivalents balance for the year ended December 31, 2014.

What are the implications of the material weakness identified?

The identification of a material weakness in internal controls over financial reporting as of December 31, 2014, indicates a deficiency in the company's controls that could result in a misstatement of financial statements. Arista Networks intends to file an amendment to its 2014 10-K to correct the error and plans to address the remediation of this weakness.

Who is the new CFO, and what are the key terms of her appointment?

Ita Brennan has been appointed as the new Senior Vice President, Chief Financial Officer. Her compensation includes an annual base salary of $300,000, eligibility for bonuses, and grants of 50,000 restricted stock units and 50,000 stock options, with vesting terms over approximately five years. A severance agreement is also in place.

ANET 8-K: Earnings & Results, Leadership Changes & More

Summary

Arista Networks, Inc. (ANET) filed an 8-K on May 14, 2015, primarily to announce its first-quarter 2015 financial results and report a correction to its previously filed 2014 financial statements. The company reported its Q1 2015 results via a press release (Exhibit 99.1), though the specific financial metrics were not detailed within the 8-K text itself. More significantly, Arista disclosed an error in its 2014 consolidated statement of cash flows, specifically an overstatement of financing cash flows and an understatement of operating cash flows by $17.4 million due to duplicate recognition of excess tax benefits from equity incentive plans. This error did not impact net income or the total cash balance, but it necessitated a restatement of the 2014 10-K and indicated a material weakness in internal controls over financial reporting as of December 31, 2014. In addition to the financial reporting adjustments, the 8-K announced a key executive change: the appointment of Ita Brennan as the new Chief Financial Officer (CFO), effective on or before May 18, 2015. Ms. Brennan brings significant financial leadership experience from companies like Infinera and Maxtor. Her compensation package includes a base salary, bonus eligibility, and grants of restricted stock units and stock options. The appointment of Ms. Brennan means Andreas Bechtolsheim will step down from his interim CFO role.

Key Highlights

1Arista Networks announced its Q1 2015 financial results via press release (Exhibit 99.1).
2The company is restating its 2014 Form 10-K due to an error in the consolidated statement of cash flows.
3The error involved a $17.4 million overstatement of cash from financing activities and a corresponding understatement of cash from operating activities for the year ended December 31, 2014.
4The inaccuracy stemmed from duplicate recognition of excess tax benefits related to equity incentive plans.
5The correction does not affect reported net income, earnings per share, or the total cash balance for 2014.
6A material weakness in internal control over financial reporting was identified as of December 31, 2014, related to this error.
7Ita Brennan has been appointed as the new Senior Vice President and Chief Financial Officer, effective on or before May 14, 2015.

Arista Networks, Inc. 8-K Report, Financial Results (May 14, 2015)

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