Fortinet, Inc.
Jan 28, 2016

Fortinet Reports Fourth Quarter and Full Year 2015 Financial Results

Company Grows Q415 Billings 35% and FY15 Billings 37% Year Over Year

SUNNYVALE, CA -- (Marketwired) -- 01/28/16 --

Fortinet® (NASDAQ: FTNT)

Fourth Quarter 2015 Highlights

Full Year 2015 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, 2015.

"Fortinet's solid fourth quarter results help close a strong year, highlighted by our ability to achieve, for the full year, 37% billings growth and reach more than $1 billion in billings and revenue," said Ken Xie, founder, chairman and chief executive officer. "Very few companies have achieved this type of growth at Fortinet's scale and it is due to our strong technology advantage and early returns on our customer acquisition and expansion strategy. With cyber security remaining at the forefront of enterprise IT priorities, Fortinet is well-positioned to grow and gain global market share in 2016 and beyond."

Financial Highlights for the Fourth Quarter of 2015

Financial Highlights for the Full Year 2015

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 and year ended December 31, 2015, we repurchased $60.0 million of our common stock under our share repurchase program. During the fourth quarter and year ended December 31, 2014, we repurchased $5.4 million and $38.6 million, respectively, of our common stock under our share repurchase program.

Conference Call Details

Fortinet will host a conference call today, January 28, 2016, 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 # 20590459. 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, 2016, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 20590459.

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 # 20592139. 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, 2016 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 20592139.

About Fortinet (www.fortinet.com)

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 www.fortinet.com, the Fortinet Blog or FortiGuard Labs.

Copyright © 2016 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, FortiCloud, 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 the enterprises' focus on cybersecurity and Fortinet's position to grow and gain market share. 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; global economic conditions and foreign currency risks; increasing competitiveness in the security market; the dynamic nature of the security market; specific economic risks worldwide and 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; longer sales cycles, particularly for larger enterprise customers; 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; risks associated with management of growth; 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 products and services in general and by specific customer segments; competition and pricing pressure; risks related to integrating acquisitions; 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 peer companies, 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 provided in the financial statement tables below.

Billings. We define billings as revenue recognized in accordance with GAAP 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 drives deferred revenue, which is an important indicator of the health and viability of our business. There are a number of limitations related to the use of billings versus GAAP revenue. 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 GAAP revenue.

Free cash flow. We define free cash flow as net cash provided by operating activities minus capital expenditures (purchases of property and equipment). 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 peer companies. 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 free cash flow excludes 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. We define non-GAAP operating income as operating income plus stock-based compensation, business acquisition-related charges, including inventory fair value adjustment amortization and other purchase accounting adjustments, impairment and amortization of acquired intangible assets, restructuring charges, expenses associated with the implementation of a new Enterprise Resource Planning (ERP) system, and, when applicable, any other significant non-recurring items in a given quarter. Non-GAAP operating margin is defined as non-GAAP operating income divided by GAAP revenue. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the items noted above 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 the items noted above. Stock-based compensation 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 may impact their performance. Third, the components of the costs that we exclude from our calculation of non-GAAP operating income may differ from the components that peer 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 the items noted above under non-GAAP operating income and operating margin, adjusted for the impact of the tax adjustment, if any required, resulting in an effective tax rate on a non-GAAP basis, which often differs 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 resulting in an effective tax rate on a non-GAAP basis, which often differs 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. 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.

   
FORTINET, INC.  
CONSOLIDATED BALANCE SHEETS  
(Unaudited, in thousands)  
    December 31,
 2015
    December 31,
 2014
 
ASSETS                
CURRENT ASSETS:                
  Cash and cash equivalents   $ 543,277     $ 283,254  
  Short-term investments     348,074       436,766  
  Accounts receivable-net     259,563       184,741  
  Inventory     83,868       69,477  
  Prepaid expenses and other current assets     35,761       31,143  
    Total current assets     1,270,543       1,005,381  
LONG-TERM INVESTMENTS     272,959       271,724  
DEFFERRED TAX ASSETS 1     119,216       72,564  
PROPERTY AND EQUIPMENT-net     91,067       58,919  
OTHER INTANGIBLE ASSETS-net     17,640       2,832  
GOODWILL     4,692       2,824  
OTHER ASSETS     14,393       10,530  
TOTAL ASSETS   $ 1,790,510     $ 1,424,774  
LIABILITIES AND STOCKHOLDERS' EQUITY                
CURRENT LIABILITIES:                
  Accounts payable   $ 61,500     $ 49,947  
  Accrued liabilities     33,028       29,016  
  Accrued payroll and compensation     61,111       45,875  
  Income taxes payable     8,379       2,689  
  Deferred revenue     514,652       368,929  
    Total current liabilities     678,670       496,456  
DEFERRED REVENUE     276,651       189,828  
INCOME TAXES PAYABLE     60,624       45,139  
OTHER LIABILITIES     19,188       17,385  
    Total liabilities     1,035,133       748,808  
STOCKHOLDERS' EQUITY:                
  Common stock     171       166  
  Additional paid-in capital     687,658       562,504  
  Accumulated other comprehensive loss     (933 )     (349 )
  Retained earnings     68,481       113,645  
    Total stockholders' equity     755,377       675,966  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,790,510     $ 1,424,774  
                 

1 In November 2015, the Financial Accounting Standards Board issued Accounting Standard Update No. 2015-17, which requires that deferred tax assets be classified as noncurrent in a classified statement of financial position. We early adopted this standard and applied the requirements retrospectively. The adoption of this standard resulted in the reclassification of $41.5 million from deferred tax assets-current in the consolidated balance sheet as of December 31, 2014 to deferred tax assets-noncurrent.

   
FORTINET, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited, in thousands, except per share amounts)  
    Three Months Ended     Year Ended  
    December 31,
 2015
    December 31,
 2014
    December 31,
 2015
    December 31,
 2014
 
REVENUE:                                
  Product   $ 144,759     $ 110,678     $ 476,782     $ 360,558  
  Service     151,770       113,291       532,486       409,806  
    Total revenue     296,529       223,969       1,009,268       770,364  
COST OF REVENUE:                                
  Product 1     55,466       46,070       190,398       151,300  
  Service 1     26,510       19,554       96,379       79,709  
    Total cost of revenue     81,976       65,624       286,777       231,009  
GROSS PROFIT:                                
  Product     89,293       64,608       286,384       209,258  
  Service     125,260       93,737       436,107       330,097  
    Total gross profit     214,553       158,345       722,491       539,355  
OPERATING EXPENSES:                                
  Research and development 1     42,814       33,097       158,129       122,880  
  Sales and marketing 1     136,840       93,228       470,371       315,804  
  General and administrative 1     20,315       12,104       71,514       41,347  
  Restructuring charges     1,717       -       7,600       -  
    Total operating expenses     201,686       138,429       707,614       480,031  
OPERATING INCOME     12,867       19,916       14,877       59,324  
INTEREST INCOME     1,176       1,402       5,295       5,393  
OTHER EXPENSE-net     (1,007 )     (1,200 )     (3,167 )     (3,168 )
INCOME BEFORE INCOME TAXES     13,036       20,118       17,005       61,549  
PROVISION FOR INCOME TAXES     15,570       13,305       9,018       36,206  
NET INCOME (LOSS)   $ (2,534 )   $ 6,813     $ 7,987     $ 25,343  
Net income (loss) per share:                                
  Basic   $ (0.01 )   $ 0.04     $ 0.05     $ 0.15  
  Diluted   $ (0.01 )   $ 0.04     $ 0.05     $ 0.15  
Weighted-average shares outstanding:                                
  Basic     171,831       165,439       170,385       163,831  
  Diluted     171,831       170,927       176,141       169,289  
                                 
1 Includes stock-based compensation as follows:                                
  Cost of product revenue   $ 332     $ 132     $ 973     $ 483  
  Cost of service revenue     1,980       1,612       7,121       5,826  
  Research and development     7,194       4,706       24,555       17,264  
  Sales and marketing     14,954       7,854       49,436       26,744  
  General and administrative     3,627       2,377       13,003       8,677  
    $ 28,087     $ 16,681     $ 95,088     $ 58,994  
                                 
   
FORTINET, INC.  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)  
(Unaudited, in thousands)  
   
    Three Months Ended     Year Ended  
    December 31,
 2015
    December 31,
 2014
    December 31,
 2015
    December 31,
 2014
 
Net income (loss)   $ (2,534 )   $ 6,813     $ 7,987     $ 25,343  
Other comprehensive loss-net of taxes:                                
  Foreign currency translation losses     -       -       -       (333 )
  Unrealized losses on investments     (1,297 )     (715 )     (897 )     (1,708 )
  Tax provision related to items of other comprehensive loss     454       252       313       600  
Other comprehensive loss-net of taxes     (843 )     (463 )     (584 )     (1,441 )
Comprehensive income (loss)   $ (3,377 )   $ 6,350     $ 7,403     $ 23,902  
                                 
 
FORTINET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands) 
    Three Months Ended     Year Ended  
    December 31,     December 31,     December 31,     December 31,  
    2015     2014     2015     2014  
                                 
CASH FLOWS FROM OPERATING ACTIVITIES:                                
  Net income (loss)   $ (2,534 )   $ 6,813     $ 7,987     $ 25,343  
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:                                
    Depreciation and amortization     9,383       5,509       31,589       22,028  
    Amortization of investment premiums     1,687       2,023       7,457       8,703  
    Stock-based compensation     28,087       16,681       95,088       58,994  
    Excess tax benefit from stock-based compensation     -       4,325       -       -  
    Other non-cash items-net     1,285       339       3,965       4,140  
    Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:                                
      Accounts receivable-net     (86,125 )     (69,028 )     (65,202 )     (55,888 )
      Inventory     (6,661 )     (21,364 )     (19,088 )     (32,459 )
      Deferred tax assets     (1,554 )     21,258       (29,851 )     9,072  
      Prepaid expenses and other current assets     5,176       (13,219 )     (2,630 )     (16,000 )
      Other assets     931       (1,143 )     667       (1,302 )
      Accounts payable     7,325       14,227       (2,517 )     18,033  
      Accrued liabilities     4,179       4,302       883       7,120  
      Accrued payroll and compensation     13,196       5,184       11,301       10,835  
      Other liabilities     3,247       (32 )     2,016       14,318  
      Deferred revenue     84,317       59,410       220,510       127,416  
      Income taxes payable     6,619       79       20,372       (3,771 )
        Net cash provided by operating activities     68,558       35,364       282,547       196,582  
CASH FLOWS FROM INVESTING ACTIVITIES:                                
  Purchases of investments     (130,216 )     (108,276 )     (459,903 )     (497,084 )
  Sales of investments     12,516       14,473       47,900       41,755  
  Maturities of investments     122,163       86,356       486,419       458,193  
  Purchases of property and equipment     (8,345 )     (5,395 )     (37,358 )     (32,197 )
  Payments made in connection with business acquisitions- net of cash acquired     -       -       (38,025 )     (17 )
        Net cash used in investing activities     (3,882 )     (12,842 )     (967 )     (29,350 )
CASH FLOWS FROM FINANCING ACTIVITIES:                                
  Proceeds from issuance of common stock     3,771       14,795       67,314       55,324  
  Taxes paid related to net share settlement of equity awards     (5,882 )     (2,092 )     (28,871 )     (10,598 )
  Excess tax benefit from stock-based compensation     -       (4,325 )     -       -  
  Repurchase and retirement of common stock     (60,000 )     (5,742 )     (60,000 )     (43,977 )
        Net cash provided by (used in) financing activities     (62,111 )     2,636       (21,557 )     749  
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS     -       -       -       (600 )
NET INCREASE IN CASH AND CASH EQUIVALENTS     2,565       25,158       260,023       167,381  
CASH AND CASH EQUIVALENTS-Beginning of period     540,712       258,096       283,254       115,873  
CASH AND CASH EQUIVALENTS-End of period   $ 543,277     $ 283,254     $ 543,277     $ 283,254  
                                 

Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures

(Unaudited, in thousands)

 Reconciliation of total consolidated GAAP revenue to billings

    Three Months Ended   Year Ended
    December 31,
 2015
  December 31,
 2014
  December 31,
 2015
    December 31,
 2014
Total revenue   $ 296,529   $ 223,969   $ 1,009,268     $ 770,364
  Add increase in deferred revenue     84,392     58,745     232,546       126,129
  Less deferred revenue balance acquired in business combination     -     -     (9,800 )     -
Total billings (Non-GAAP)   $ 380,921   $ 282,714   $ 1,232,014     $ 896,493
                           

Reconciliation of Meru's GAAP revenue to billings

    Three Months Ended   Year Ended
    December 31,
 2015
  December 31,
 2015
Total revenue   $ 16,026   $ 28,050
  Add increase in deferred revenue     513     4,706
Total billings (Non-GAAP)   $ 16,539   $ 32,756
             

Reconciliation of net cash provided by operating activities to free cash flow

    Three Months Ended     Year Ended  
    December 31,     December 31,     December 31,     December 31,  
    2015     2014     2015     2014  
Net cash provided by operating activities   $ 68,558     $ 35,364     $ 282,547     $ 196,582  
  Less purchases of property and equipment     (8,345 )     (5,395 )     (37,358 )     (32,197 )
Free cash flow (Non-GAAP)   $ 60,213     $ 29,969     $ 245,189     $ 164,385  
                                 

Reconciliation of non-GAAP results of operations to the nearest comparable GAAP measures

(Unaudited, in thousands, except per share amounts)

Reconciliation of GAAP operating income to Non-GAAP operating income, operating margin, net income and diluted net income per share

    Three Months Ended December 31, 2015     Three Months Ended December 31, 2014  
    GAAP Results     Adjustments         Non-GAAP Results     GAAP Results     Adjustments         Non-GAAP Results  
Operating income   $ 12,867     $ 34,712   (a )   $ 47,579     $ 19,916     $ 16,925   (b )   $ 36,841  
Operating margin     4 %                 16 %     9 %                 16 %
Adjustments:                                                        
  Stock-based compensation             28,087                           16,681              
  Amortization of acquired intangible assets             1,319                           244              
  ERP-related expenses             1,558                           -              
  Business acquisition-related charges             451                           -              
  Inventory fair value adjustment amortization             1,580                           -              
  Restructuring charges             1,717                           -              
  Tax adjustment             213   (c )                     340   (c )        
Net income (loss)   $ (2,534 )   $ 34,925         $ 32,391     $ 6,813     $ 17,265         $ 24,078  
Diluted net income (loss) per share   $ (0.01 )               $ 0.18     $ 0.04                 $ 0.14  
Shares used in diluted net income per share calculations     171,831                   176,657       170,927                   170,927  
                                                         

(a) To exclude $28.1 million of stock-based compensation, $1.3 million of amortization of acquired intangible assets, $1.6 million of ERP-related expenses, $0.5 million of business acquisition-related charges, $1.6 million of inventory fair value adjustment amortization recorded pursuant to our business acquisition, and $1.7 million of restructuring charges in the three months ended December 31, 2015.

(b) To exclude $16.7 million of stock-based compensation and $0.2 million of amortization of acquired intangible assets in the three months ended December 31, 2014.

(c) Non-GAAP financial information is adjusted to achieve an overall 34% percent and 35% percent effective tax rate in 2015 and 2014, respectively, on a non-GAAP basis, which differs from the GAAP effective tax rate.

             
    Year Ended December 31, 2015     Year Ended December 31, 2014  
    GAAP Results     Adjustments           Non-GAAP Results     GAAP Results     Adjustments           Non-GAAP Results  
Operating income   $ 14,877     $ 118,447     (a )   $ 133,324     $ 59,324     $ 62,805     (b )   $ 122,129  
Operating margin     1 %                   13 %     8 %                   16 %
Adjustments:                                                            
  Stock-based compensation             95,088                             58,994                
  Impairment of acquired intangible assets             1,593                             2,404                
  Amortization of acquired intangible assets             3,126                             1,407                
  ERP-related expenses             5,426                             -                
  Business acquisition-related charges             2,732                             -                
  Inventory fair value adjustment amortization             2,882                             -                
  Restructuring charges             7,600                             -                
  Tax adjustment             (37,036 )   (c )                     (7,318 )   (c )        
Net income   $ 7,987     $ 81,411           $ 89,398     $ 25,343     $ 55,487           $ 80,830  
Diluted net income per share   $ 0.05                   $ 0.51     $ 0.15                   $ 0.48  
Shares used in diluted net income per share calculations     176,141                     176,141       169,289                     169,289  
                                                             

(a) To exclude $95.1 million of stock-based compensation, $1.6 million of impairment of acquired intangible assets, $3.1 million of amortization of acquired intangible assets, $5.4 million of ERP-related expenses, $2.7 million of business acquisition-related charges, $2.9 million of inventory fair value adjustment amortization recorded pursuant to our business acquisition, and $7.6 million of restructuring charges in 2015.

(b) To exclude $59.0 million of stock-based compensation, $2.4 million of impairment of acquired intangible assets, and $1.4 million of amortization of acquired intangible assets in 2014.

(c) Non-GAAP financial information is adjusted to achieve an overall 34% percent and 35% percent effective tax rate in 2015 and 2014, respectively, on a non-GAAP basis, which differs from the GAAP effective tax rate.

Investor Contact:

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

Media Contact:

Sandra Wheatley
Fortinet, Inc.
408-391-9408
swheatley@fortinet.com

Source: Fortinet

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