Fourth Quarter 2013
Highlights
•
Billings of $209.8
million, up 20% year over year1,2
•
Revenues of $177.4
million, up 17% year over year2
•
GAAP diluted net
income per share of $0.072
•
Non-GAAP diluted net
income per share of $0.151,2
•
Cash flow from
operations of $46.7 million
•
Free cash flow of
$39.5 million1
•
Cash, cash
equivalents and investments of $843.0 million7, with no debt
Full Year 2013
Highlights
•
Billings of $684.2
million, up 14% year over year1,3
•
Revenues of $615.3
million, up 15% year over year3
•
GAAP diluted net
income per share of $0.263
•
Non-GAAP diluted net
income per share of $0.481,3
•
Cash flow from
operations of $147.4 million
•
Free cash flow of
$133.5 million1
Dubai, UAE. –
February 4, 2014 - Fortinet® (NASDAQ: FTNT) - a leader in
high-performance network security - today announced financial results for the
fourth quarter and full year ended December 31, 2013.
"We had a strong finish to 2013,
meeting or exceeding our expectations across our key non-GAAP operating metrics
during the fourth quarter," said Ken Xie, founder, chairman, and chief
executive officer. “Our performance
highlights the global demand for our network security solutions, improved
execution, and the leverage we are now experiencing from prior investments in
our sales, marketing, and product development.
Looking forward, we expect the advanced persistent threat opportunity,
continued execution in the data center with 100Gbps deployments, and
next-generation firewall displacements, to be key drivers of our
business."
Financial Highlights
for the Fourth Quarter of 2013
•
Billings1,2:
Total
billings were $209.8 million for the fourth quarter of 2013, an increase of 20%
compared to $174.3 million in the same quarter of 2012.
•
Revenue2: Total revenue was
$177.4 million for the fourth quarter of 2013, an increase of 17% compared to
$151.2 million in the same quarter of 2012.
Within total revenue, product revenue was $83.9 million, an increase of
18% compared to the same quarter of 2012.
Services revenue was $90.3 million, an increase of 18% compared to the
same quarter of 2012.
•
Deferred Revenue: Deferred revenue was
$432.6 million as of December 31, 2013, up $32.5 million from $400.2 million as
of September 30, 2013.
•
Cash and Cash Flow1,4,6: As of December 31,
2013, cash, cash equivalents and investments were $843.0 million, compared to
$839.0 million as of September 30, 2013. In the fourth quarter of 2013, cash
flow from operations was $46.7 million and free cash flow was $39.5 million.
•
GAAP Operating Income2,5: GAAP operating
income was $24.6 million for the fourth quarter of 2013, representing a GAAP
operating margin of 14%. GAAP operating income was $35.0 million for the same
quarter of 2012, representing a GAAP operating margin of 23%.
•
GAAP Net Income and
Diluted Net Income Per Share2,5: GAAP net income was $12.0 million for
the fourth quarter of 2013, based on a 53% tax rate for the quarter. This
compares to GAAP net income of $21.5 million for the same quarter of 2012,
based on a 41% tax rate for the quarter.
GAAP diluted net income per share was $0.07 for the fourth quarter of
2013, based on 168.9 million weighted-average diluted shares outstanding,
compared to $0.13 for the same quarter of 2012, based on 167.0 million
weighted-average diluted shares outstanding.
•
Non-GAAP Operating
Income1,2,5: Non-GAAP operating income was $37.8 million for the fourth
quarter of 2013, representing a non-GAAP operating margin of 21%. Non-GAAP
operating income was $41.6 million for the same quarter of 2012, representing a
non-GAAP operating margin of 27%.
•
Non-GAAP Net
Income and Diluted Net Income Per Share1,2,5: Non-GAAP net income
was $25.9 million for the fourth quarter of 2013, based on a 33% effective tax
rate for the quarter. Non-GAAP net
income for the same quarter of 2012 was $28.2 million, based on a 34% effective
tax rate. Non-GAAP diluted net income
per share was $0.15 for the fourth quarter of 2013 based on 168.9 million
weighted-average diluted shares outstanding, compared to $0.17 for the same
quarter of 2012, based on 167.0 million weighted-average diluted shares
outstanding.
Financial Highlights
for the Full Year 2013
•
Billings1,3:
Total
billings were $684.2 million for fiscal 2013, an increase of 14% compared to
$602.0 million in fiscal 2012.
•
Revenue3: Total revenue was
$615.3 million for fiscal 2013, an increase of 15% compared to $533.6 million
for fiscal 2012. Within total revenue,
product revenue was $278.0 million for fiscal 2013, an increase of 12% compared
to $248.9 million for fiscal 2012. Services
revenue was $329.7 million for fiscal 2013, an increase of 20% compared to
$274.0 million for fiscal 2012.
•
Deferred Revenue: Deferred revenue was
$432.6 million as of December 31, 2013, an increase of 19% compared to deferred
revenue of $363.2 million as of December 31, 2012.
•
Cash and Cash Flow1,4,7: As of December 31, 2013,
cash, cash equivalents and investments were $843.0 million4,
compared to $739.6 million as of December 31, 2012. In fiscal 2013, cash flow
from operations was $147.4 million and free cash flow was $133.5 million.
•
GAAP Operating Income3,5: GAAP operating
income was $72.1 million for fiscal 2013, representing a GAAP operating margin
of 12%. GAAP operating income was $100.5 million for fiscal 2012, representing
a GAAP operating margin of 19%.
•
GAAP Net Income and
Diluted Net Income Per Share3,5: GAAP net income was $44.3 million for
fiscal 2013, based on a 42% tax rate for the year. This compares to GAAP net
income of $66.8 million for fiscal 2012, based on a 36% tax rate for the
year. GAAP diluted net income per share
was $0.26 for fiscal 2013, based on 168.2 million weighted-average diluted
shares outstanding, compared to $0.40 for fiscal 2012, based on 166.3 million
weighted-average diluted shares outstanding.
•
Non-GAAP Operating
Income1,3,5: Non-GAAP operating income was $116.7 million for fiscal
2013, representing a non-GAAP operating margin of 19%. Non-GAAP operating
income was $130.1 million for fiscal 2012, representing a non-GAAP operating
margin of 24%.
•
Non-GAAP Net
Income and Diluted Net Income Per Share1,3,5: Non-GAAP net income
was $80.7 million for fiscal 2013, based on a 33% effective tax rate for the
year. Non-GAAP net income for fiscal
2012 was $88.8 million, based on a 34% effective tax rate. Non-GAAP diluted net income per share was
$0.48 for fiscal 2013 based on 168.2 million weighted-average diluted shares
outstanding, compared to $0.53 for fiscal 2012, based on 166.3 weighted-average
diluted shares outstanding.
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 Includes the impact of a $2.2 million and $1.9 million sale
of patents during the fourth quarter of fiscal 2013 and 2012, respectively.
3 Includes the impact
of a $2.8 million and $3.7 million sale of patents during fiscal 2013 and 2012,
respectively.
4 Excludes $2.0 million
equity investment in a privately-held company, which is recorded in other
assets on the consolidated balance sheets.
5 Includes the impact of a $1.5 million non-recurring
cumulative out-of-period adjustment recorded during the fourth quarter of
fiscal 2012 to reflect a true-up related to forfeitures of stock awards granted
to employees. The adjustment resulted in lower stock-based compensation expense
and higher operating income and net income during the fourth quarter of fiscal
2012.
6 During the fourth
quarter of fiscal 2013, the Company repurchased $38.9 million of its common
stock under its share repurchase program, all of which was paid in the fourth
quarter of fiscal 2013 except for $5.4 million which was settled and paid in
January 2014. In addition, capital expenditure related to the construction and
improvement of the Company's future corporate headquarters amounted to $5.5
million.
7 During fiscal 2013, the Company repurchased $38.9 million
of its common stock under its repurchase program, all of which was paid in
fiscal 2013 except for $5.4 million which was settled and paid in January 2014.
In addition, capital expenditure related to the construction and improvement of
the Company's future corporate headquarters amounted to $6.8 million.
Conference
Call Details
Fortinet will host a
conference call today, January 29, 2014, 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 # 34200682. 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 5, 2014, by dialing (855) 859-2056 (domestic) or
(404) 537-3406 (international) with conference ID# 34200682.
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 #
34200866. 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 5,
2014 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international)
with conference ID # 34200866.
فورتينت
تصدر تقرير الربع الرابع والتقرير السنوي للنتائج المالية لعام 2013
أبرز ملامح
تقرير الربع الرابع 2013
·
بلغ حجم الفواتير 209.8 مليون
دولار بزيادة قدرها 20٪ على أساس سنوي
·
بلغ حجم الإيرادات 177.4
مليون دولار، بزيادة قدرها 17٪ على أساس سنوي
·
صافي دخل السهم الواحد المخفض
وفق مبادئ المحاسبة المتعارف عليها 0.07 دولار
·
صافي دخل السهم الواحد المخفض
دون مبادئ المحاسبة المتعارف عليها 0.15 دولار
·
التدفق النقدي للعمليات
46.7مليون دولار
·
التدفقات النقدية الحرة
39.5 مليون دولار
·
التدفقات النقدية وشبه
النقدية والاستثمارات 843.0 مليون دولار، ودون دين
أبرز ملامح
التقرير السنوي لعام 2013
·
بلغ حجم الفواتير 684.2 مليون
دولار بزيادة قدرها 14٪ على أساس سنوي
·
بلغ حجم الإيرادات 615.3
مليون دولار، بزيادة قدرها 15٪ على أساس سنوي
·
صافي دخل السهم الواحد المخفض
وفق مبادئ المحاسبة المتعارف عليها 0.26 دولار
·
صافي دخل السهم الواحد المخفض
دون مبادئ المحاسبة المتعارف عليها 0.48 دولار
·
التدفق النقدي للعمليات 147.4
مليون دولار
·
التدفقات النقدية الحرة 133.5
مليون دولار
Dubai, UAE. –
February 4,, 2014 - Fortinet® (NASDAQ: FTNT) - a leader in
high-performance network security - today announced financial results for the
fourth quarter and full year ended December 31, 2013.
"We had a strong finish to 2013,
meeting or exceeding our expectations across our key non-GAAP operating metrics
during the fourth quarter," said Ken Xie, founder, chairman, and chief
executive officer. “Our performance
highlights the global demand for our network security solutions, improved
execution, and the leverage we are now experiencing from prior investments in
our sales, marketing, and product development.
Looking forward, we expect the advanced persistent threat opportunity,
continued execution in the data center with 100Gbps deployments, and
next-generation firewall displacements, to be key drivers of our
business."
Financial Highlights
for the Fourth Quarter of 2013
•
Billings1,2:
Total
billings were $209.8 million for the fourth quarter of 2013, an increase of 20%
compared to $174.3 million in the same quarter of 2012.
•
Revenue2: Total revenue was
$177.4 million for the fourth quarter of 2013, an increase of 17% compared to
$151.2 million in the same quarter of 2012.
Within total revenue, product revenue was $83.9 million, an increase of
18% compared to the same quarter of 2012.
Services revenue was $90.3 million, an increase of 18% compared to the
same quarter of 2012.
•
Deferred Revenue: Deferred revenue was
$432.6 million as of December 31, 2013, up $32.5 million from $400.2 million as
of September 30, 2013.
•
Cash and Cash Flow1,4,6: As of December 31,
2013, cash, cash equivalents and investments were $843.0 million, compared to
$839.0 million as of September 30, 2013. In the fourth quarter of 2013, cash
flow from operations was $46.7 million and free cash flow was $39.5 million.
•
GAAP Operating Income2,5: GAAP operating
income was $24.6 million for the fourth quarter of 2013, representing a GAAP
operating margin of 14%. GAAP operating income was $35.0 million for the same
quarter of 2012, representing a GAAP operating margin of 23%.
•
GAAP Net Income and
Diluted Net Income Per Share2,5: GAAP net income was $12.0 million for
the fourth quarter of 2013, based on a 53% tax rate for the quarter. This
compares to GAAP net income of $21.5 million for the same quarter of 2012,
based on a 41% tax rate for the quarter.
GAAP diluted net income per share was $0.07 for the fourth quarter of
2013, based on 168.9 million weighted-average diluted shares outstanding,
compared to $0.13 for the same quarter of 2012, based on 167.0 million
weighted-average diluted shares outstanding.
•
Non-GAAP Operating
Income1,2,5: Non-GAAP operating income was $37.8 million for the fourth
quarter of 2013, representing a non-GAAP operating margin of 21%. Non-GAAP
operating income was $41.6 million for the same quarter of 2012, representing a
non-GAAP operating margin of 27%.
•
Non-GAAP Net
Income and Diluted Net Income Per Share1,2,5: Non-GAAP net income
was $25.9 million for the fourth quarter of 2013, based on a 33% effective tax
rate for the quarter. Non-GAAP net
income for the same quarter of 2012 was $28.2 million, based on a 34% effective
tax rate. Non-GAAP diluted net income
per share was $0.15 for the fourth quarter of 2013 based on 168.9 million
weighted-average diluted shares outstanding, compared to $0.17 for the same
quarter of 2012, based on 167.0 million weighted-average diluted shares
outstanding.
Financial Highlights
for the Full Year 2013
•
Billings1,3:
Total
billings were $684.2 million for fiscal 2013, an increase of 14% compared to
$602.0 million in fiscal 2012.
•
Revenue3: Total revenue was
$615.3 million for fiscal 2013, an increase of 15% compared to $533.6 million
for fiscal 2012. Within total revenue,
product revenue was $278.0 million for fiscal 2013, an increase of 12% compared
to $248.9 million for fiscal 2012.
Services revenue was $329.7 million for fiscal 2013, an increase of 20%
compared to $274.0 million for fiscal 2012.
•
Deferred Revenue: Deferred revenue was
$432.6 million as of December 31, 2013, an increase of 19% compared to deferred
revenue of $363.2 million as of December 31, 2012.
•
Cash and Cash Flow1,4,7: As of December 31,
2013, cash, cash equivalents and investments were $843.0 million4,
compared to $739.6 million as of December 31, 2012. In fiscal 2013, cash flow
from operations was $147.4 million and free cash flow was $133.5 million.
•
GAAP Operating Income3,5: GAAP operating
income was $72.1 million for fiscal 2013, representing a GAAP operating margin
of 12%. GAAP operating income was $100.5 million for fiscal 2012, representing
a GAAP operating margin of 19%.
•
GAAP Net Income and
Diluted Net Income Per Share3,5: GAAP net income was $44.3 million for
fiscal 2013, based on a 42% tax rate for the year. This compares to GAAP net
income of $66.8 million for fiscal 2012, based on a 36% tax rate for the
year. GAAP diluted net income per share
was $0.26 for fiscal 2013, based on 168.2 million weighted-average diluted
shares outstanding, compared to $0.40 for fiscal 2012, based on 166.3 million
weighted-average diluted shares outstanding.
•
Non-GAAP Operating
Income1,3,5: Non-GAAP operating income was $116.7 million for fiscal
2013, representing a non-GAAP operating margin of 19%. Non-GAAP operating
income was $130.1 million for fiscal 2012, representing a non-GAAP operating
margin of 24%.
•
Non-GAAP Net
Income and Diluted Net Income Per Share1,3,5: Non-GAAP net income
was $80.7 million for fiscal 2013, based on a 33% effective tax rate for the
year. Non-GAAP net income for fiscal
2012 was $88.8 million, based on a 34% effective tax rate. Non-GAAP diluted net income per share was
$0.48 for fiscal 2013 based on 168.2 million weighted-average diluted shares
outstanding, compared to $0.53 for fiscal 2012, based on 166.3 weighted-average
diluted shares outstanding.
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 Includes the impact of a $2.2 million and $1.9 million sale
of patents during the fourth quarter of fiscal 2013 and 2012, respectively.
3 Includes the impact of
a $2.8 million and $3.7 million sale of patents during fiscal 2013 and 2012,
respectively.
4 Excludes $2.0 million
equity investment in a privately-held company, which is recorded in other
assets on the consolidated balance sheets.
5 Includes the impact of a $1.5 million non-recurring
cumulative out-of-period adjustment recorded during the fourth quarter of
fiscal 2012 to reflect a true-up related to forfeitures of stock awards granted
to employees. The adjustment resulted in lower stock-based compensation expense
and higher operating income and net income during the fourth quarter of fiscal
2012.
6 During the fourth
quarter of fiscal 2013, the Company repurchased $38.9 million of its common
stock under its share repurchase program, all of which was paid in the fourth
quarter of fiscal 2013 except for $5.4 million which was settled and paid in
January 2014. In addition, capital expenditure related to the construction and
improvement of the Company's future corporate headquarters amounted to $5.5 million.
7 During fiscal 2013, the Company repurchased $38.9 million
of its common stock under its repurchase program, all of which was paid in
fiscal 2013 except for $5.4 million which was settled and paid in January 2014.
In addition, capital expenditure related to the construction and improvement of
the Company's future corporate headquarters amounted to $6.8 million.
Conference
Call Details
Fortinet will host a
conference call today, January 29, 2014, 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 # 34200682. 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 5, 2014, by dialing (855) 859-2056 (domestic) or
(404) 537-3406 (international) with conference ID# 34200682.
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 # 34200866. 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 5, 2014 by
dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with
conference ID # 34200866.
About
Fortinet (www.fortinet.com)
Fortinet (NASDAQ:
FTNT) is a worldwide provider of network security appliances and a market
leader in unified threat management (UTM). Our products and subscription
services provide broad, integrated and high-performance protection against
dynamic security threats while simplifying the IT security infrastructure. Our
customers include enterprises, service providers and government entities
worldwide, including the majority of the 2012 Fortune Global 100. Fortinet's
flagship FortiGate product delivers ASIC-accelerated performance and integrates
multiple layers of security designed to help protect against application and
network threats. Fortinet's broad product line goes beyond UTM to help secure
the extended enterprise -- from endpoints, to the perimeter and the core,
including databases and applications. Fortinet is headquartered in Sunnyvale,
Calif., with offices around the world.
# # #
Copyright © 2014 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, FortiDB 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 demand for our solutions, momentum of
our business and our expectations regarding the drivers of our future business.
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; specific economic risks in different geographies and among different
customer segments, including specific economic risks such as those that may
result from the U.S. budget process; uncertainty regarding increased business
and renewals from existing customers; uncertainties around continued success in
sales growth and market share gains; failure to grow the sales pipeline and to
convert sales pipeline into final sales, and other sales execution risks; 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; customer support
challenges; 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, and the loss
of any key personnel; changes in strategy; risks associated with management of
growth; lengthy sales and implementation cycles, particularly in larger
organizations and service providers; technological changes that make our
products and services less competitive; risks associated with the adoption of,
and demand for, the UTM model in general and by specific customer segments;
timing of higher capacity data center deployments and upgrades; competition and
pricing pressure and the impact of increasing competition and new entrants in
the market; 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 other 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, 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 the Company is that free cash flow does not represent the total
increase or decrease in the cash balance from operations for the period because
it excludes cash used for capital expenditures. Management compensates for this
limitation by providing information about our capital expenditures 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 expense, amortization expense
and impairment charges related to certain intangible assets, reduced by the
income from payments we received from a patent settlement. 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,
amortization expense and impairment charges related to certain intangible
assets, and patent settlement related income 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, amortization expense and impairment charges related to certain
intangible assets. 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 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, amortization expense and
impairment charges related to certain intangible assets reduced by the income
from payments we received from a patent settlement, and includes the impact of
the tax adjustment, if any, required to achieve the effective tax rate on a pro
forma 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 pro forma basis, which could differ from the GAAP tax
rate. We believe the effective tax rates we used are reasonable estimates of
long-term normalized tax rates 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. Management compensates 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. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited,
in thousands)
|
|
December 31,
2013 |
|
December 31,
2012 |
||||
|
ASSETS
|
|
|
|
||||
|
CURRENT
ASSETS:
|
|
|
|
||||
|
Cash and
cash equivalents
|
$
|
115,873
|
|
|
$
|
122,975
|
|
|
Short-term
investments
|
375,497
|
|
|
290,719
|
|
||
|
Accounts
receivable, net of allowance for doubtful accounts of $32 and $115,
respectively
|
130,471
|
|
|
107,642
|
|
||
|
Inventory
|
48,672
|
|
|
21,060
|
|
||
|
Deferred
tax assets
|
50,980
|
|
|
13,663
|
|
||
|
Prepaid
expenses and other current assets
|
14,053
|
|
|
13,215
|
|
||
|
Total
current assets
|
735,546
|
|
|
569,274
|
|
||
|
PROPERTY
AND EQUIPMENT—Net
|
33,599
|
|
|
25,638
|
|
||
|
DEFERRED
TAX ASSETS—Non-current
|
30,058
|
|
|
48,525
|
|
||
|
LONG-TERM
INVESTMENTS
|
351,675
|
|
|
325,892
|
|
||
|
OTHER
INTANGIBLE ASSETS—Net
|
6,841
|
|
|
2,117
|
|
||
|
GOODWILL
|
2,872
|
|
|
—
|
|
||
|
OTHER
ASSETS
|
4,820
|
|
|
4,051
|
|
||
|
TOTAL
ASSETS
|
$
|
1,165,411
|
|
|
$
|
975,497
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
|
CURRENT
LIABILITIES:
|
|
|
|
||||
|
Accounts
payable
|
$
|
32,546
|
|
|
$
|
20,816
|
|
|
Accrued
liabilities
|
27,380
|
|
|
18,481
|
|
||
|
Accrued
payroll and compensation
|
34,997
|
|
|
28,957
|
|
||
|
Income
taxes payable
|
21,421
|
|
|
3,782
|
|
||
|
Deferred
revenue
|
293,664
|
|
|
247,268
|
|
||
|
Total
current liabilities
|
410,008
|
|
|
319,304
|
|
||
|
DEFERRED
REVENUE—Non-current
|
138,964
|
|
|
115,917
|
|
||
|
INCOME
TAXES PAYABLE—Non-current
|
30,208
|
|
|
28,778
|
|
||
|
OTHER
LIABILITIES
|
471
|
|
|
564
|
|
||
|
Total
liabilities
|
579,651
|
|
|
464,563
|
|
||
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
||||
|
Common
stock
|
161
|
|
|
162
|
|
||
|
Additional
paid-in capital
|
462,644
|
|
|
400,075
|
|
||
|
Treasury
stock
|
—
|
|
|
(2,995
|
)
|
||
|
Accumulated
other comprehensive income
|
1,092
|
|
|
3,091
|
|
||
|
Retained
earnings
|
121,863
|
|
|
110,601
|
|
||
|
Total
stockholders' equity
|
585,760
|
|
|
510,934
|
|
||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
1,165,411
|
|
|
$
|
975,497
|
|
FORTINET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in
thousands, except per share amounts)
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
December 31,
2013 |
|
December 31,
2012 |
|
December 31,
2013 |
|
December 31,
2012 |
||||||||
|
REVENUE:
|
|
|
|
|
|
|
|
||||||||
|
Product
|
$
|
83,884
|
|
|
$
|
71,025
|
|
|
$
|
278,046
|
|
|
$
|
248,948
|
|
|
Services
|
90,276
|
|
|
76,711
|
|
|
329,723
|
|
|
274,043
|
|
||||
|
Ratable
and other revenue
|
3,190
|
|
|
3,426
|
|
|
7,528
|
|
|
10,648
|
|
||||
|
Total
revenue
|
177,350
|
|
|
151,162
|
|
|
615,297
|
|
|
533,639
|
|
||||
|
COST OF
REVENUE:
|
|
|
|
|
|
|
|
||||||||
|
Product 1
|
37,579
|
|
|
26,974
|
|
|
114,611
|
|
|
93,971
|
|
||||
|
Services 1
|
15,916
|
|
|
13,836
|
|
|
64,123
|
|
|
50,682
|
|
||||
|
Ratable
and other revenue
|
382
|
|
|
632
|
|
|
1,909
|
|
|
2,767
|
|
||||
|
Total cost
of revenue
|
53,877
|
|
|
41,442
|
|
|
180,643
|
|
|
147,420
|
|
||||
|
GROSS
PROFIT:
|
|
|
|
|
|
|
|
||||||||
|
Product
|
46,305
|
|
|
44,051
|
|
|
163,435
|
|
|
154,977
|
|
||||
|
Services
|
74,360
|
|
|
62,875
|
|
|
265,600
|
|
|
223,361
|
|
||||
|
Ratable
and other revenue
|
2,808
|
|
|
2,794
|
|
|
5,619
|
|
|
7,881
|
|
||||
|
Total
gross profit
|
123,473
|
|
|
109,720
|
|
|
434,654
|
|
|
386,219
|
|
||||
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
||||||||
|
Research
and development 1
|
27,747
|
|
|
20,525
|
|
|
102,660
|
|
|
81,078
|
|
||||
|
Sales and
marketing 1
|
62,331
|
|
|
48,117
|
|
|
224,991
|
|
|
179,155
|
|
||||
|
General
and administrative
1
|
8,752
|
|
|
6,038
|
|
|
34,913
|
|
|
25,511
|
|
||||
|
Total
operating expenses
|
98,830
|
|
|
74,680
|
|
|
362,564
|
|
|
285,744
|
|
||||
|
OPERATING
INCOME
|
24,643
|
|
|
35,040
|
|
|
72,090
|
|
|
100,475
|
|
||||
|
INTEREST
INCOME
|
1,318
|
|
|
1,400
|
|
|
5,306
|
|
|
5,006
|
|
||||
|
OTHER
EXPENSE—Net
|
(419
|
)
|
|
(170
|
)
|
|
(1,455
|
)
|
|
(485
|
)
|
||||
|
INCOME
BEFORE INCOME TAXES
|
25,542
|
|
|
36,270
|
|
|
75,941
|
|
|
104,996
|
|
||||
|
PROVISION
FOR INCOME TAXES
|
13,526
|
|
|
14,763
|
|
|
31,668
|
|
|
38,160
|
|
||||
|
NET INCOME
|
$
|
12,016
|
|
|
$
|
21,507
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
|
Net income
per share:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.07
|
|
|
$
|
0.13
|
|
|
$
|
0.27
|
|
|
$
|
0.42
|
|
|
Diluted
|
$
|
0.07
|
|
|
$
|
0.13
|
|
|
$
|
0.26
|
|
|
$
|
0.40
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
163,281
|
|
|
160,034
|
|
|
162,435
|
|
|
158,074
|
|
||||
|
Diluted
|
168,873
|
|
|
166,955
|
|
|
168,183
|
|
|
166,329
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
1 Includes
stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
||||||||
|
Cost of
product revenue
|
$
|
106
|
|
|
$
|
96
|
|
|
$
|
383
|
|
|
$
|
333
|
|
|
Cost of
services revenue
|
1,298
|
|
|
1,032
|
|
|
4,841
|
|
|
3,736
|
|
||||
|
Research
and development
|
3,666
|
|
|
2,452
|
|
|
13,271
|
|
|
9,226
|
|
||||
|
Sales and
marketing
|
5,599
|
|
|
1,996
|
|
|
19,526
|
|
|
12,793
|
|
||||
|
General
and administrative
|
2,018
|
|
|
1,186
|
|
|
6,450
|
|
|
4,602
|
|
||||
|
|
$
|
12,687
|
|
|
$
|
6,762
|
|
|
$
|
44,471
|
|
|
$
|
30,690
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(Unaudited, in
thousands)
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
December 31,
2013 |
|
December 31,
2012 |
|
December 31,
2013 |
|
December 31,
2012 |
||||||||
|
Net income
|
$
|
12,016
|
|
|
$
|
21,507
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
|
Other
comprehensive (loss) income, net of reclassification adjustments:
|
|
|
|
|
|
|
|
||||||||
|
Foreign
currency translation (losses) gains
|
(716
|
)
|
|
(344
|
)
|
|
(1,617
|
)
|
|
524
|
|
||||
|
Unrealized
gains (losses) on investments
|
239
|
|
|
(110
|
)
|
|
(587
|
)
|
|
3,331
|
|
||||
|
Tax
(provision) benefit related to items of other comprehensive income or loss
|
(84
|
)
|
|
(32
|
)
|
|
205
|
|
|
(1,166
|
)
|
||||
|
Other
comprehensive (loss) income
|
(561
|
)
|
|
(486
|
)
|
|
(1,999
|
)
|
|
2,689
|
|
||||
|
Comprehensive
income
|
$
|
11,455
|
|
|
$
|
21,021
|
|
|
$
|
42,274
|
|
|
$
|
69,525
|
|
FORTINET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in
thousands)
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
December 31,
2013 |
|
December 31,
2012 |
|
December 31,
2013 |
|
December 31,
2012 |
||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||||
|
Net income
|
$
|
12,016
|
|
|
$
|
21,507
|
|
|
$
|
44,273
|
|
|
$
|
66,836
|
|
|
Adjustments
to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
|
Depreciation
and amortization
|
4,112
|
|
|
3,488
|
|
|
15,623
|
|
|
11,564
|
|
||||
|
Amortization
of investment premiums
|
2,734
|
|
|
2,960
|
|
|
11,634
|
|
|
12,962
|
|
||||
|
Stock-based
compensation
|
12,687
|
|
|
6,762
|
|
|
44,471
|
|
|
30,690
|
|
||||
|
Excess tax
benefits from employee stock option plan
|
(470
|
)
|
|
(2,458
|
)
|
|
(2,974
|
)
|
|
(12,069
|
)
|
||||
|
Other
non-cash items, net
|
441
|
|
|
(12
|
)
|
|
961
|
|
|
881
|
|
||||
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Accounts
receivable—net
|
(22,669
|
)
|
|
(17,800
|
)
|
|
(22,080
|
)
|
|
(12,120
|
)
|
||||
|
Inventory
|
(3,749
|
)
|
|
3,674
|
|
|
(35,093
|
)
|
|
(11,303
|
)
|
||||
|
Deferred
tax assets
|
(3,944
|
)
|
|
(4,739
|
)
|
|
(18,750
|
)
|
|
(9,254
|
)
|
||||
|
Prepaid
expenses and other current assets
|
(1,111
|
)
|
|
862
|
|
|
(907
|
)
|
|
791
|
|
||||
|
Other
assets
|
350
|
|
|
585
|
|
|
1,243
|
|
|
2,470
|
|
||||
|
Accounts
payable
|
(569
|
)
|
|
(2,088
|
)
|
|
10,485
|
|
|
961
|
|
||||
|
Accrued
liabilities
|
(1,539
|
)
|
|
(1,000
|
)
|
|
1,092
|
|
|
301
|
|
||||
|
Accrued
payroll and compensation
|
4,613
|
|
|
3,036
|
|
|
6,013
|
|
|
4,599
|
|
||||
|
Deferred
revenue
|
32,446
|
|
|
23,100
|
|
|
68,871
|
|
|
68,292
|
|
||||
|
Income
taxes payable
|
11,320
|
|
|
12,416
|
|
|
22,522
|
|
|
28,265
|
|
||||
|
Net cash
provided by operating activities
|
46,668
|
|
|
50,293
|
|
|
147,384
|
|
|
183,866
|
|
||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||||
|
Purchases
of investments
|
(133,654
|
)
|
|
(77,698
|
)
|
|
(552,778
|
)
|
|
(601,087
|
)
|
||||
|
Sales of
investments
|
32,409
|
|
|
500
|
|
|
57,897
|
|
|
26,268
|
|
||||
|
Maturities
of investments
|
65,807
|
|
|
72,266
|
|
|
369,659
|
|
|
415,440
|
|
||||
|
Purchases
of property and equipment
|
(7,148
|
)
|
|
(1,800
|
)
|
|
(13,877
|
)
|
|
(22,083
|
)
|
||||
|
Payments
made in connection with business acquisitions, net of cash acquired
|
—
|
|
|
(500
|
)
|
|
(7,635
|
)
|
|
(1,249
|
)
|
||||
|
Net cash
used in investing activities
|
(42,586
|
)
|
|
(7,232
|
)
|
|
(146,734
|
)
|
|
(182,711
|
)
|
||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||||
|
Proceeds
from issuance of common stock
|
1,114
|
|
|
2,081
|
|
|
25,584
|
|
|
38,087
|
|
||||
|
Taxes
paid related to net share settlement of equity awards
|
(486
|
)
|
|
—
|
|
|
(1,452
|
)
|
|
—
|
|
||||
|
Excess tax
benefit from employee stock option plan
|
470
|
|
|
2,458
|
|
|
2,974
|
|
|
12,069
|
|
||||
|
Repurchase
and retirement of common stock
|
(33,529
|
)
|
|
—
|
|
|
(33,529
|
)
|
|
—
|
|
||||
|
Net cash
(used in)/provided by financing activities
|
(32,431
|
)
|
|
4,539
|
|
|
(6,423
|
)
|
|
50,156
|
|
||||
|
EFFECT
OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
(324
|
)
|
|
(91
|
)
|
|
(1,329
|
)
|
|
(326
|
)
|
||||
|
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(28,673
|
)
|
|
47,509
|
|
|
(7,102
|
)
|
|
50,985
|
|
||||
|
CASH
AND CASH EQUIVALENTS—Beginning of period
|
144,546
|
|
|
75,466
|
|
|
122,975
|
|
|
71,990
|
|
||||
|
CASH
AND CASH EQUIVALENTS—End of period
|
$
|
115,873
|
|
|
$
|
122,975
|
|
|
$
|
115,873
|
|
|
$
|
122,975
|
|
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,
2013 |
|
December 31,
2012 |
|
December 31,
2013 |
|
December 31,
2012 |
||||||||
|
Total
revenue
|
$
|
177,350
|
|
|
$
|
151,162
|
|
|
$
|
615,297
|
|
|
$
|
533,639
|
|
|
Increase in deferred
revenue
|
32,455
|
|
|
23,107
|
|
|
69,443
|
|
|
68,352
|
|
||||
|
Less deferred revenue
balance acquired in business combination
|
—
|
|
|
—
|
|
|
(550
|
)
|
|
—
|
|
||||
|
Total
billings (Non-GAAP)
|
$
|
209,805
|
|
|
$
|
174,269
|
|
|
$
|
684,190
|
|
|
$
|
601,991
|
|
Reconciliation of net
cash provided by operating activities to free cash flow
|
|
Three Months
Ended
|
|
Year Ended
|
||||||||||||
|
|
December 31,
2013 |
|
December 31,
2012 |
|
December 31,
2013 |
|
December 31,
2012 |
||||||||
|
Net
cash provided by operating activities
|
$
|
46,668
|
|
|
$
|
50,293
|
|
|
$
|
147,384
|
|
|
$
|
183,866
|
|
|
Less purchases of
property and equipment
|
(7,148
|
)
|
|
(1,800
|
)
|
|
(13,877
|
)
|
|
(22,083
|
)
|
||||
|
Free
cash flow (Non-GAAP)
|
$
|
39,520
|
|
|
$
|
48,493
|
|
|
$
|
133,507
|
|
|
$
|
161,783
|
|
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, 2013
|
|
Three Months
Ended December 31, 2012
|
||||||||||||||||||||
|
|
GAAP Results
|
|
Adjustments
|
|
Non-GAAP Results
|
|
GAAP Results
|
|
Adjustments
|
|
Non-GAAP Results
|
||||||||||||
|
Operating
Income
|
$
|
24,643
|
|
|
$
|
13,186
|
|
(a)
|
$
|
37,829
|
|
|
$
|
35,040
|
|
|
$
|
6,510
|
|
(b)
|
$
|
41,550
|
|
|
Operating
Margin
|
14
|
%
|
|
|
|
21
|
%
|
|
23
|
%
|
|
|
|
27
|
%
|
||||||||
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Stock-based
compensation expense
|
|
|
12,687
|
|
|
|
|
|
|
6,762
|
|
|
|
||||||||||
|
Amortization
expense of certain intangible assets
|
|
|
508
|
|
(c)
|
|
|
|
|
226
|
|
(c)
|
|
||||||||||
|
Impairment
charges related to certain intangible assets
|
|
|
469
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Patent
settlement income
|
|
|
(478
|
)
|
|
|
|
|
|
(478
|
)
|
|
|
||||||||||
|
Tax
adjustment
|
|
|
746
|
|
(d)
|
|
|
|
|
218
|
|
(e)
|
|
||||||||||
|
Net
Income
|
$
|
12,016
|
|
|
$
|
13,932
|
|
|
$
|
25,948
|
|
|
$
|
21,507
|
|
|
$
|
6,728
|
|
|
$
|
28,235
|
|
|
Diluted
net income per share
|
$
|
0.07
|
|
|
|
|
$
|
0.15
|
|
|
$
|
0.13
|
|
|
|
|
$
|
0.17
|
|
||||
|
Shares
used in per share calculations - diluted
|
168,873
|
|
|
|
|
168,873
|
|
|
166,955
|
|
|
|
|
166,955
|
|
||||||||
(a) 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 related to certain intangible assets offset by $0.5 million
of patent settlement income in the three months ended December 31, 2013.
(b) To
exclude $6.8 million of stock-based compensation expense, $0.2 million of
amortization expense of certain intangible assets offset by $0.5 million of
patent settlement income in the three months ended December 31, 2012.
(c) Effective
second quarter of fiscal 2013, amortization expense of certain intangible
assets is excluded from GAAP operating income and GAAP net income. Prior period
amounts have been adjusted to conform to the current period presentation.
(d) Non-GAAP financial
information is adjusted to achieve an overall 33 percent effective tax rate on
a pro forma basis, which differs from the GAAP tax rate, in the three months
ended December 31, 2013.
(e) Non-GAAP
financial information is adjusted to achieve an overall 34 percent effective
tax rate on a pro forma basis, which differs from the GAAP tax rate, in the
three months ended December 31, 2012.
|
|
Year Ended
December 31, 2013
|
|
Year Ended
December 31, 2012
|
||||||||||||||||||||
|
|
GAAP Results
|
|
Adjustments
|
|
Non-GAAP Results
|
|
GAAP Results
|
|
Adjustments
|
|
Non-GAAP Results
|
||||||||||||
|
Operating
Income
|
$
|
72,090
|
|
|
$
|
44,579
|
|
(f)
|
$
|
116,668
|
|
|
$
|
100,475
|
|
|
$
|
29,604
|
|
(g)
|
$
|
130,079
|
|
|
Operating
Margin
|
12
|
%
|
|
|
|
19
|
%
|
|
19
|
%
|
|
|
|
24
|
%
|
||||||||
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Stock-based
compensation expense
|
|
|
44,471
|
|
|
|
|
|
|
30,690
|
|
|
|
||||||||||
|
Amortization
expense of certain intangible assets
|
|
|
1,551
|
|
(h)
|
|
|
|
|
826
|
|
(h)
|
|
||||||||||
|
Impairment
charges related to certain intangible assets
|
|
|
469
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Patent
settlement income
|
|
|
(1,912
|
)
|
|
|
|
|
|
(1,912
|
)
|
|
|
||||||||||
|
Tax
adjustment
|
|
|
(8,104
|
)
|
(i)
|
|
|
|
|
(7,604
|
)
|
(j)
|
|
||||||||||
|
Net
Income
|
$
|
44,273
|
|
|
$
|
36,475
|
|
|
$
|
80,748
|
|
|
$
|
66,836
|
|
|
$
|
22,000
|
|
|
$
|
88,836
|
|
|
Diluted
net income per share
|
$
|
0.26
|
|
|
|
|
$
|
0.48
|
|
|
$
|
0.40
|
|
|
|
|
$
|
0.53
|
|
||||
|
Shares
used in per share calculations - diluted
|
168,183
|
|
|
|
|
168,183
|
|
|
166,329
|
|
|
|
|
166,329
|
|
||||||||
(f) 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 related to certain intangible assets offset by $1.9 million
of patent settlement income in the twelve months ended December 31, 2013.
(g) To
exclude $30.7 million of stock-based compensation expense, $0.8 million of
amortization expense of certain intangible assets offset by $1.9 million of
patent settlement income in the twelve months ended December 31, 2012.
(h) Effective second quarter of fiscal 2013,
amortization expense of certain intangible assets is excluded from GAAP
operating income and GAAP net income. Prior period amounts have been adjusted
to conform to the current period presentation.
(i) Non-GAAP financial information is adjusted to
achieve an overall 33 percent effective tax rate on a pro forma basis, which
differs from the GAAP tax rate, in the twelve months ended December 31, 2013.
(j) Non-GAAP
financial information is adjusted to achieve an overall 34 percent effective
tax rate on a pro forma basis, which differs from the GAAP tax rate, in the
twelve months ended December 31, 2012.
