Fortinet, Inc.
Jan 28, 2015

Fortinet Reports Strong Fourth Quarter and Full Year 2014 Financial Results

Investment Strategy Paying Off: Q4 Billings Rise 35% Year Over Year and FY14 Billings Grow 31% Year Over Year

SUNNYVALE, CA -- (Marketwired) -- 01/28/15 -- Fortinet® (NASDAQ: FTNT)

Fourth Quarter 2014 Highlights

Full Year 2014 Highlights

Fortinet® (NASDAQ: FTNT), a global leader in high performance cyber security solutions, today announced financial results for the fourth quarter and full year ended December 31, 2014.

"Fortinet had an excellent fourth quarter, exceeding or meeting our expectations across all key metrics," said Ken Xie, founder, chairman and chief executive officer of Fortinet. "We are a growth-oriented company, we've been investing for growth, and that strategy is paying off. Our Q4 billings growth was the highest in sixteen quarters and we saw a continued increase in new enterprise customer wins and the number of large deals closed. Cyber security remains at the forefront of enterprise IT priorities and Fortinet has a proven platform of competitively-differentiated products and threat research to address these complex threats. Entering 2015, we are confident in our direction and opportunity and thus are continuing to invest for future growth and market share gains."

Financial Highlights for the Fourth Quarter of 2014

Financial Highlights for the Full Year 2014

1  A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

2 During the fourth quarter of fiscal 2014, we repurchased $5.4 million of our common stock under our share repurchase program.

3 During fiscal 2014, we repurchased $38.6 million of our common stock under our share repurchase program.

4  Beginning in the first quarter of 2014, we combined ratable and other revenue with services revenue to present the combined amounts as services and other revenue in the consolidated statements of operations. The related cost of revenue and gross profit, including prior period amounts, have also been combined to conform to the current period presentation. We believe the ratable and other revenue amounts, including the related cost of revenue and gross profit amounts, are not material.

Conference Call Details
Fortinet will host a conference call today, January 28, 2015, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its financial results. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 62498213. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet's website at http://investor.fortinet.com and a replay will be archived and accessible at http://investor.fortinet.com/events.cfm. A replay of this conference call can also be accessed through February 4, 2015, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 62498213.

Following Fortinet's financial results conference call, the Company will host an additional question-and-answer session at 3:30 p.m. Pacific Time (6:30 p.m. Eastern Time) to provide an opportunity for financial analysts and investors to ask more detailed questions. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 62499586. This follow-up call will be webcast live and accessible at http://investor.fortinet.com, and a replay will be archived and available after the call at http://investor.fortinet.com/events.cfm. A replay of this conference call will also be available through February 4, 2015 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 62499586.

Fortinet (NASDAQ: FTNT) protects the most valuable assets of some of the largest enterprise, service provider and government organizations across the globe. The company's fast, secure and global cyber security solutions provide broad, high-performance protection against dynamic security threats while simplifying the IT infrastructure. They are strengthened by the industry's highest level of threat research, intelligence and analytics. Unlike pure-play network security providers, Fortinet can solve organizations' most important security challenges, whether in networked, application or mobile environments -- be it virtualized/cloud or physical. More than 200,000 customers worldwide, including some of the largest and most complex organizations, trust Fortinet to protect their brands. Learn more at http://www.fortinet.com, the Fortinet Blog or FortiGuard Labs.

Copyright © 2015 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and unregistered trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet's trademarks include, but are not limited to, the following: Fortinet, FortiGate, FortiGuard, FortiManager, FortiMail, FortiClient, FortiCare, FortiAnalyzer, FortiReporter, FortiOS, FortiASIC, FortiWiFi, FortiSwitch, FortiVoIP, FortiBIOS, FortiLog, FortiResponse, FortiCarrier, FortiScan, FortiAP, FortiDB, FortiVoice and FortiWeb. Other trademarks belong to their respective owners.

FTNT-F

Forward-looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding confidence in our business and current expectations regarding business momentum, growth and market share gains. Although we attempt to be accurate in making forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks; increasing competitiveness in the security market; the dynamic nature of the security market; specific economic risks in different geographies, and among different customer segments; uncertainty regarding increased business and renewals from existing customers; uncertainties around continued success in sales growth and market share gains; the risk that our investments in sales and marketing will not continue to generate additional sales; failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; execution risks around new product development and introductions and innovation; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby; market acceptance of new products and services; the ability to attract and retain personnel; changes in strategy; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; risks associated with the adoption of, and demand for, our model in general and by specific customer segments; competition in general and pricing pressure; the impact of fluctuating foreign exchange rates; and the other risk factors set forth from time to time in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our other filings with the SEC, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events.

Non-GAAP Financial Measures
We have provided in this release financial information that has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures below. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

Billings. We define billings as revenue recognized plus the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period. We consider billings to be a useful metric for management and investors because billings drive deferred revenue, which is an important indicator of the health and visibility of our business, and has historically represented a majority of the quarterly revenue that we recognize. There are a number of limitations related to the use of billings versus revenue calculated in accordance with GAAP. First, billings include amounts that have not yet been recognized as revenue. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. Management compensates for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with revenues calculated in accordance with GAAP.

Free cash flow. We define free cash flow as net cash provided by operating activities minus capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, repurchasing outstanding common stock, and strengthening the balance sheet. Analysis of free cash flow facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating liquidity is that free cash flow does not represent the total increase or decrease in the cash, cash equivalents and investments balance for the period because it excludes cash used for capital expenditures and cash provided by or used for other investing and financing activities. Management compensates for this limitation by providing information about our capital expenditures and other investing and financing activities on the face of the cash flow statement and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K.

Non-GAAP operating income and operating margin. Beginning the first quarter of fiscal 2014, we define non-GAAP operating income as operating income plus stock-based compensation expense, acquisition-related charges, including amortization, impairments and other purchase accounting adjustments, and, when applicable, any other significant non-recurring items in a given quarter. Prior period amounts have been adjusted to conform to the current period presentation. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenue. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense, acquisition-related charges, including amortization, impairments and other purchase accounting adjustments, and, when applicable, any other significant non-recurring items so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First non-GAAP operating income excludes stock-based compensation expense and acquisition-related charges and any other significant non-recurring items. Stock-based compensation expense has been and will continue to be, for the foreseeable future, a significant recurring expense in our business. Second, stock-based compensation expense is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that other companies exclude when they report their non-GAAP results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.

Non-GAAP net income and diluted net income per share. We define non-GAAP net income as net income plus stock-based compensation expense, acquisition-related charges, including amortization, impairments and other purchase accounting adjustments, and, when applicable, any other significant non-recurring items, adjusted for the impact of the tax adjustment, if any, required to achieve the effective tax rate on a non-GAAP basis, which could differ from the GAAP effective tax rate. We define non-GAAP diluted net income per share as non-GAAP net income divided by the weighted-average diluted shares outstanding. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we include in non-GAAP net income and non-GAAP diluted net income per share, the tax adjustment required to achieve the effective tax rate on a non-GAAP basis, which could differ from the GAAP tax rate. We believe the effective tax rates we used are reasonable estimates of normalized tax rates for our current and prior fiscal years under our global operating structure. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate, including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenues and expenses and other significant events. The same limitations described above regarding our use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP diluted net income per share. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP diluted net income per share and evaluating non-GAAP net income and non-GAAP diluted net income per share together with net income and diluted net income per share calculated in accordance with GAAP.

Changes to non-GAAP financial measures. Beginning the first quarter of 2014, we will no longer adjust our GAAP results for insignificant non-recurring items. As a result, insignificant patent sale, license or settlement income amounts are no longer being excluded from our non-GAAP financial measures. All prior amounts reported in our earnings release have been adjusted to conform to the current period presentation.

 
FORTINET, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
           
           
    December 31,
2014
    December 31,
2013
ASSETS              
CURRENT ASSETS:              
  Cash and cash equivalents   $ 283,254     $ 115,873
  Short-term investments     436,766       375,497
  Accounts receivable-Net     184,741       130,471
  Inventory     69,477       48,672
  Deferred tax assets     41,484       50,980
  Prepaid expenses and other current assets     31,143       14,053
    Total current assets     1,046,865       735,546
LONG-TERM INVESTMENTS     271,724       351,675
PROPERTY AND EQUIPMENT-Net     58,919       36,652
DEFERRED TAX ASSETS     31,080       30,058
GOODWILL     2,824       2,872
OTHER INTANGIBLE ASSETS-Net     2,832       6,841
OTHER ASSETS     10,530       4,820
TOTAL ASSETS   $ 1,424,774     $ 1,168,464
LIABILITIES AND STOCKHOLDERS' EQUITY              
CURRENT LIABILITIES:              
  Accounts payable   $ 49,947     $ 35,599
  Accrued liabilities     29,016       27,380
  Accrued payroll and compensation     45,875       34,997
  Income taxes payable     2,689       21,421
  Deferred revenue     368,929       293,664
    Total current liabilities     496,456       413,061
DEFERRED REVENUE     189,828       138,964
INCOME TAXES PAYABLE     45,139       30,208
OTHER LIABILITIES     17,385       471
    Total liabilities     748,808       582,704
STOCKHOLDERS' EQUITY:              
  Common stock     166       161
  Additional paid-in capital     562,504       462,644
  Accumulated other comprehensive (loss) income     (349 )     1,092
  Retained earnings     113,645       121,863
    Total stockholders' equity     675,966       585,760
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,424,774     $ 1,168,464
                   
   
FORTINET, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited, in thousands, except per share amounts)  
                         
       
                         
    Three Months Ended     Year Ended  
    December 31,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
REVENUE:                                
  Product   $ 110,678     $ 83,884     $ 360,558     $ 278,046  
  Services and other     113,291       93,466       409,806       337,251  
    Total revenue     223,969       177,350       770,364       615,297  
COST OF REVENUE:                                
  Product1     46,070       37,579       151,300       114,611  
  Services and other1     19,554       16,298       79,709       66,032  
    Total cost of revenue     65,624       53,877       231,009       180,643  
GROSS PROFIT:                                
  Product     64,608       46,305       209,258       163,435  
  Services and other     93,737       77,168       330,097       271,219  
    Total gross profit     158,345       123,473       539,355       434,654  
OPERATING EXPENSES:                                
  Research and development1     33,097       27,747       122,880       102,660  
  Sales and marketing1     93,228       62,331       315,804       224,991  
  General and administrative1     12,104       8,752       41,347       34,913  
    Total operating expenses     138,429       98,830       480,031       362,564  
OPERATING INCOME     19,916       24,643       59,324       72,090  
INTEREST INCOME     1,402       1,318       5,393       5,306  
OTHER EXPENSE-Net     (1,200 )     (419 )     (3,168 )     (1,455 )
INCOME BEFORE INCOME TAXES     20,118       25,542       61,549       75,941  
PROVISION FOR INCOME TAXES     13,305       13,526       36,206       31,668  
NET INCOME   $ 6,813     $ 12,016     $ 25,343     $ 44,273  
Net income per share:                                
  Basic   $ 0.04     $ 0.07     $ 0.15     $ 0.27  
  Diluted   $ 0.04     $ 0.07     $ 0.15     $ 0.26  
Weighted-average shares outstanding:                                
  Basic     165,439       163,281       163,831       162,435  
  Diluted     170,927       168,873       169,289       168,183  
                                 
1 Includes stock-based compensation expense as follows:                                
  Cost of product revenue   $ 132     $ 106     $ 483     $ 383  
  Cost of services and other revenue     1,612       1,298       5,826       4,841  
  Research and development     4,706       3,666       17,264       13,271  
  Sales and marketing     7,854       5,599       26,744       19,526  
  General and administrative     2,377       2,018       8,677       6,450  
    $ 16,681     $ 12,687     $ 58,994     $ 44,471  
   
   
FORTINET, INC.  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  
(Unaudited, in thousands)  
                         
                         
                         
    Three Months Ended     Year Ended  
    December 31,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
Net income   $ 6,813     $ 12,016     $ 25,343     $ 44,273  
Other comprehensive loss, net of taxes:                                
  Foreign currency translation losses     -       (716 )     (333 )     (1,617 )
  Unrealized (losses) gains on investments     (715 )     239       (1,708 )     (587 )
  Tax benefit (provision) related to items of other comprehensive income or loss     252       (84 )     600       205  
Other comprehensive loss, net of taxes     (463 )     (561 )     (1,441 )     (1,999 )
Comprehensive income   $ 6,350     $ 11,455     $ 23,902     $ 42,274  
   
   
FORTINET, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited, in thousands)  
                         
                         
    Three Months Ended     Year Ended  
    December 31,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
CASH FLOWS FROM OPERATING ACTIVITIES:                                
  Net income   $ 6,813     $ 12,016     $ 25,343     $ 44,273  
  Adjustments to reconcile net income to net cash provided by operating activities:                                
    Depreciation and amortization     5,509       4,112       22,028       15,623  
    Amortization of investment premiums     2,023       2,734       8,703       11,634  
    Stock-based compensation     16,681       12,125       58,994       43,909  
    Excess tax benefit from stock-based compensation     4,325       (470 )     -       (2,974 )
    Other non-cash items-net     339       441       4,140       961  
    Changes in operating assets and liabilities:                                
    Accounts receivable-Net     (69,028 )     (22,669 )     (55,888 )     (22,080 )
    Inventory     (21,364 )     (3,749 )     (32,459 )     (35,093 )
    Deferred tax assets     21,258       (3,944 )     9,072       (18,750 )
    Prepaid expenses and other current assets     (13,219 )     (1,111 )     (16,000 )     (907 )
    Other assets     (1,143 )     350       (1,302 )     1,243  
    Accounts payable     14,227       (569 )     18,033       10,485  
    Accrued liabilities     4,302       (28 )     7,120       3,602  
    Other liabilities     (32 )     (949 )     14,318       (1,948 )
    Accrued payroll and compensation     5,184       4,613       10,835       6,013  
    Deferred revenue     59,410       32,446       127,416       68,871  
    Income taxes payable     79       11,320       (3,771 )     22,522  
      Net cash provided by operating activities     35,364       46,668       196,582       147,384  
CASH FLOWS FROM INVESTING ACTIVITIES:                                
  Purchases of investments     (108,276 )     (133,654 )     (497,084 )     (552,778 )
  Sales of investments     14,473       32,409       41,755       57,897  
  Maturities of investments     86,356       65,807       458,193       369,659  
  Purchases of property and equipment     (5,395 )     (7,148 )     (32,197 )     (13,877 )
  Payments made in connection with business acquisitions-net of cash acquired     -       -       (17 )     (7,635 )
      Net cash used in investing activities     (12,842 )     (42,586 )     (29,350 )     (146,734 )
CASH FLOWS FROM FINANCING ACTIVITIES:                                
  Proceeds from issuance of common stock     14,795       1,114       55,324       25,584  
  Taxes paid related to net share settlement of equity awards     (2,092 )     (486 )     (10,598 )     (1,452 )
  Excess tax benefit from stock-based compensation     (4,325 )     470       -       2,974  
  Repurchase and retirement of common stock     (5,742 )     (33,529 )     (43,977 )     (33,529 )
      Net cash provided by (used in) financing activities     2,636       (32,431 )     749       (6,423 )
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS     -       (324 )     (600 )     (1,329 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     25,158       (28,673 )     167,381       (7,102 )
CASH AND CASH EQUIVALENTS-Beginning of period     258,096       144,546       115,873       122,975  
CASH AND CASH EQUIVALENTS-End of period   $ 283,254     $ 115,873     $ 283,254     $ 115,873  
               
               
Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures        
(Unaudited, in thousands)        
              
              
Reconciliation of GAAP revenue to billings        
                         
                         
    Three Months Ended     Year Ended  
    December 31,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
Total revenue   $ 223,969     $ 177,350     $ 770,364     $ 615,297  
  Add increase in deferred revenue     58,745       32,455       126,129       69,443  
  Less deferred revenue balance acquired in business combination     -       -       -       (550 )
Total billings (Non-GAAP)   $ 282,714     $ 209,805     $ 896,493     $ 684,190  
                                 
                                 
Reconciliation of net cash provided by operating activities to free cash flow        
                         
                         
    Three Months Ended     Year Ended  
    December 31,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 
Net cash provided by operating activities   $ 35,364     $ 46,668     $ 196,582     $ 147,384  
  Less purchases of property and equipment     (5,395 )     (7,148 )     (32,197 )     (13,877 )
Free cash flow (Non-GAAP)   $ 29,969     $ 39,520     $ 164,385     $ 133,507  
   
   
Reconciliation of non-GAAP results of operations to the nearest comparable GAAP measures  
(Unaudited, in thousands, except per share amounts)  
                                             
Reconciliation of GAAP to Non-GAAP operating income, operating margin, net income and diluted net income per share  
                                             
                                             
    Three Months Ended December 31, 2014     Three Months Ended December 31, 2013  
    GAAP Results     Adjustments         Non-GAAP Results     GAAP Results     Adjustments         Non-GAAP Results  
Operating income   $ 19,917     $ 16,925   (a )   $ 36,842     $ 24,643     $ 13,664   (b )   $ 38,307  
Operating margin     9 %                 16 %     14 %                 22 %
Adjustments:                                                        
  Stock-based compensation expense             16,681                           12,687              
  Amortization expense of certain intangible assets             244                           508              
  Impairment charges of certain intangible assets             -                           469              
  Tax adjustment             340   (c )                   $ 588   (c )        
Net income   $ 6,813     $ 17,265         $ 24,078     $ 12,016     $ 14,252         $ 26,268  
Diluted net income per share   $ 0.04                 $ 0.14     $ 0.07                 $ 0.16  
Shares used in diluted net income per share calculations     170,927                   170,927       168,873                   168,873  
                                                         
(a) To exclude $16.7 million of stock-based compensation expense and $0.2 million of amortization expense of certain intangible assets in the three months ended December 31, 2014.  
                                                         
(b) To exclude $12.7 million of stock-based compensation expense, $0.5 million of amortization expense of certain intangible assets, and $0.5 million of impairment charges of certain intangible assets in the three months ended December 31, 2013.  
                                                         
(c) Non-GAAP financial information is adjusted to achieve an overall 35 percent and 33 percent effective tax rate on a non-GAAP basis, which differs from the GAAP tax rate, in fiscal 2014 and fiscal 2013, respectively.  
                                                         
                                                         
    Year Ended December 31, 2014     Year Ended December 31, 2013  
    GAAP Results     Adjustments         Non-GAAP Results     GAAP Results     Adjustments         Non-GAAP Results  
Operating income   $ 59,325     $ 62,805   (a )   $ 122,130     $ 72,090     $ 46,491   (b )   $ 118,581  
Operating margin     8 %                 16 %     12 %                 19 %
Adjustments:                                                        
  Stock-based compensation expense             58,994                           44,471              
  Amortization expense of certain intangible assets             1,407                           1,551              
  Impairment charges of certain intangible assets             2,404                           469              
  Tax adjustment             (7,318 ) (c )                     (8,735 ) (c )        
Net income   $ 25,343     $ 55,487         $ 80,830     $ 44,273     $ 37,756         $ 82,029  
Diluted net income per share   $ 0.15                 $ 0.48     $ 0.26                 $ 0.49  
Shares used in diluted net income per share calculations     169,289                   169,289       168,183                   168,183  
                                                         
(a) To exclude $59.0 million of stock-based compensation expense, $1.4 million of amortization expense of certain intangible assets, and $2.4 million of impairment charges of certain intangible assets in fiscal 2014.  
                                                         
(b) To exclude $44.5 million of stock-based compensation expense, $1.6 million of amortization expense of certain intangible assets, and $0.5 million of impairment charges of certain intangible assets in fiscal 2013.  
                                                         
(c) Non-GAAP financial information is adjusted to achieve an overall 35 percent and 33 percent effective tax rate on a non-GAAP basis, which differs from the GAAP tax rate, in fiscal 2014 and fiscal 2013, respectively.  

Investor Contact:   
    
Michelle Spolver   
Fortinet, Inc.   
408-486-7837   
mspolver@fortinet.com   

Media Contact:

Andrea Cousens 
Fortinet, Inc. 
310-270-8903 
acousens@fortinet.com

Source: Fortinet

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