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SUNNYVALE, CA -- (Marketwired) -- 10/22/14 -- Fortinet® (NASDAQ: FTNT)

• Billings of $213.2 million, up 29% year over year(1)
• Revenues of $193.3 million, up 25% year over year
• Non-GAAP diluted net income per share of $0.12(1)
• Free cash flow of $50.7 million(1)
• Cash, cash equivalents and investments of $963.8 million(2), with no debt
• Deferred revenue of $500.0 million, up 25% year over year

Fortinet® (NASDAQ: FTNT), a global leader in high-performance network security, today announced financial results for the third quarter ended September 30, 2014.

"We are pleased to report another strong quarter that exceeded expectations, as we continued to execute well against our growth strategy and benefit from security market demand and customer adoption of new Fortinet products," said Ken Xie, founder, chairman and chief executive officer. "Our investments in sales and marketing have continued to pay off evidenced by another quarter of traction in both new customer wins, as well as expansion within our existing large and growing global customer base. We currently believe that Fortinet remains well positioned for the remainder of the year and into 2015."

Financial Highlights for the Third Quarter of 2014

• Billings(1): Total billings were $213.2 million for the third quarter of 2014, an increase of 29% compared to $165.2 million in the same quarter of 2013.
  
  
• Revenue(3): Total revenue was $193.3 million for the third quarter of 2014, an increase of 25% compared to $154.7 million in the same quarter of 2013. Within total revenue, product revenue was $87.7 million, an increase of 26% compared to the same quarter of 2013. Services and other revenue was $105.6 million, an increase of 24% compared to the same quarter of 2013.
  
  
• Deferred Revenue: Total deferred revenue was $500.0 million as of September 30, 2014, an increase of 25% compared to deferred revenue of $400.2 million as of September 30, 2013, and an increase of $19.8 million from $480.2 million as of June 30, 2014.
  
  
• Cash and Cash Flow(2): As of September 30, 2014, cash, cash equivalents and investments were $963.8 million, compared to $910.6 million as of June 30, 2014. In the third quarter of 2014, cash flow from operations was $56.5 million and free cash flow(1) was $50.7 million.
  
  
• GAAP Operating Income: GAAP operating income was $15.5 million for the third quarter of 2014, representing a GAAP operating margin of 8%. GAAP operating income was $18.3 million for the same quarter of 2013, representing a GAAP operating margin of 12%.
  
  
• GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $4.1 million for the third quarter of 2014, compared to GAAP net income of $11.0 million for the same quarter of 2013. GAAP diluted net income per share was $0.02 for the third quarter of 2014, compared to $0.07 for the same quarter of 2013.
  
  
• Non-GAAP Operating Income(1): Non-GAAP operating income was $30.4 million for the third quarter of 2014, representing a non-GAAP operating margin of 16%. Non-GAAP operating income was $30.5 million for the same quarter of 2013, representing a non-GAAP operating margin of 20%.
  
  
• Non-GAAP Net Income and Diluted Net Income Per Share(1): Non-GAAP net income was $20.0 million for the third quarter of 2014, compared to non-GAAP net income of $20.5 million for the same quarter of 2013. Non-GAAP diluted net income per share was $0.12 for the third quarter of 2014, consistent with the same quarter of 2013.
  
  

(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 third quarter of fiscal 2014, we repurchased $10.7 million of our common stock under our share repurchase program.

(3) 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 condensed 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, October 22, 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 # 14959718. 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 October 29, 2014, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 14959718.

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 # 14961850. 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 October 29, 2014 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 14961850.

About Fortinet (www.fortinet.com)
Fortinet (NASDAQ: FTNT) helps protect networks, users and data from continually evolving threats. As a global leader in high-performance network security, we enable businesses and governments to consolidate and integrate stand-alone technologies without suffering performance penalties. Unlike costly, inflexible and low-performance alternatives, Fortinet solutions empower customers to embrace new technologies and business opportunities while protecting essential systems and content. Learn more at www.fortinet.com.

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, 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 position of our business and current expectations regarding business momentum and growth. 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; 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; 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.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                          (Unaudited, in thousands)


                                                 September 30, December 31,
                                                      2014          2013
                                                 ------------- -------------
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                      $     258,096 $     115,873
  Short-term investments                               402,495       375,497
  Accounts receivable-Net                              116,382       130,471
  Inventory                                             51,344        48,672
  Deferred tax assets                                   51,297        50,980
  Prepaid expenses and other current assets             16,826        14,053
                                                 ------------- -------------
    Total current assets                               896,440       735,546
LONG-TERM INVESTMENTS                                  303,168       351,675
PROPERTY AND EQUIPMENT-Net                              56,812        36,652
DEFERRED TAX ASSETS                                     42,276        30,058
GOODWILL                                                 2,824         2,872
OTHER INTANGIBLE ASSETS-Net                              3,104         6,841
OTHER ASSETS                                             7,977         4,820
                                                 ------------- -------------
TOTAL ASSETS                                     $   1,312,601 $   1,168,464
                                                 ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                               $      36,520 $      35,599
  Accrued liabilities                                   25,662        27,380
  Accrued payroll and compensation                      40,692        34,997
  Income taxes payable                                   2,490        21,421
  Deferred revenue                                     329,132       293,664
                                                 ------------- -------------
    Total current liabilities                          434,496       413,061
DEFERRED REVENUE                                       170,880       138,964
INCOME TAXES PAYABLE                                    40,532        30,208
OTHER LIABILITIES                                       17,467           471
                                                 ------------- -------------
    Total liabilities                                  663,375       582,704
                                                 ------------- -------------
STOCKHOLDERS' EQUITY:
  Common stock                                             165           161
  Additional paid-in capital                           537,450       462,644
  Accumulated other comprehensive income                   114         1,092
  Retained earnings                                    111,497       121,863
                                                 ------------- -------------
    Total stockholders' equity                         649,226       585,760
                                                 ------------- -------------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $   1,312,601 $   1,168,464
                                                 ============= =============


                               FORTINET, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            (Unaudited, in thousands, except per share amounts)



                      Three Months Ended             Nine Months Ended
                 ----------------------------  ----------------------------
                 September 30,  September 30,  September 30,  September 30,
                      2014           2013           2014           2013
                 -------------  -------------  -------------  -------------
REVENUE:
  Product        $      87,731  $      69,687  $     249,880  $     194,162
  Services and
   other               105,617         85,012        296,515        243,785
                 -------------  -------------  -------------  -------------
    Total revenue      193,348        154,699        546,395        437,947
                 -------------  -------------  -------------  -------------
COST OF REVENUE:
  Product (1)           35,636         27,126        105,230         77,032
  Services and
   other (1)            21,249         16,804         60,155         49,734
                 -------------  -------------  -------------  -------------
    Total cost of
     revenue            56,885         43,930        165,385        126,766
                 -------------  -------------  -------------  -------------
GROSS PROFIT:
  Product               52,095         42,561        144,650        117,130
  Services and
   other                84,368         68,208        236,360        194,051
                 -------------  -------------  -------------  -------------
    Total gross
     profit            136,463        110,769        381,010        311,181
                 -------------  -------------  -------------  -------------
OPERATING
 EXPENSES:
  Research and
   development
   (1)                  30,790         26,421         89,783         74,913
  Sales and
   marketing (1)        80,433         56,687        222,576        162,660
  General and
   administrative
   (1)                   9,789          9,382         29,243         26,161
                 -------------  -------------  -------------  -------------
    Total
     operating
     expenses          121,012         92,490        341,602        263,734
                 -------------  -------------  -------------  -------------
OPERATING INCOME        15,451         18,279         39,408         47,447
INTEREST INCOME          1,339          1,282          3,991          3,988
OTHER EXPENSE-Net       (1,005)        (1,151)        (1,968)        (1,036)
                 -------------  -------------  -------------  -------------
INCOME BEFORE
 INCOME TAXES           15,785         18,410         41,431         50,399
PROVISION FOR
 INCOME TAXES           11,729          7,381         22,901         18,142
                 -------------  -------------  -------------  -------------
NET INCOME       $       4,056  $      11,029  $      18,530  $      32,257
                 =============  =============  =============  =============
Net income per
 share:
  Basic          $        0.02  $        0.07  $        0.11  $        0.20
                 =============  =============  =============  =============
  Diluted        $        0.02  $        0.07  $        0.11  $        0.19
                 =============  =============  =============  =============
Weighted-average
 shares
 outstanding:
  Basic                164,294        162,906        163,289        162,150
                 =============  =============  =============  =============
  Diluted              169,727        168,666        168,735        168,054
                 =============  =============  =============  =============

(1) Includes
 stock-based
 compensation
 expense as
 follows:
  Cost of product
   revenue       $          60  $          91  $         351  $         277
  Cost of
   services and
   other revenue         1,522          1,297          4,214          3,543
  Research and
   development           4,505          3,548         12,558          9,605
  Sales and
   marketing             7,397          5,215         18,890         13,927
  General and
   administrative        1,183          1,627          6,300          4,432
                 -------------  -------------  -------------  -------------
                 $      14,667  $      11,778  $      42,313  $      31,784
                 =============  =============  =============  =============


                               FORTINET, INC.
         CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                         (Unaudited, in thousands)



                      Three Months Ended             Nine Months Ended
                 ----------------------------  ----------------------------
                 September 30,  September 30,  September 30,  September 30,
                      2014           2013           2014           2013
                 -------------  -------------  -------------  -------------
Net income       $       4,056  $      11,029  $      18,530  $      32,257
Other
 comprehensive
 (loss) income,
 net of taxes:
  Foreign
   currency
   translation
   (losses) gains         (432)           912           (333)          (901)
  Unrealized
   (losses) gains
   on investments         (977)           600           (993)          (826)
  Tax benefit
   (provision)
   related to
   items of other
   comprehensive
   income or loss          342           (209)           348            289
                 -------------  -------------  -------------  -------------
Other
 comprehensive
 (loss) income,
 net of taxes           (1,067)         1,303           (978)        (1,438)
                 -------------  -------------  -------------  -------------
Comprehensive
 income          $       2,989  $      12,332  $      17,552  $      30,819
                 =============  =============  =============  =============


                               FORTINET, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (Unaudited, in thousands)


                                                     Nine Months Ended
                                               ----------------------------
                                               September 30,  September 30,
                                                    2014           2013
                                               -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                   $      18,530  $      32,257
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                     16,519         11,511
    Amortization of investment premiums                6,680          8,900
    Stock-based compensation                          42,313         31,784
    Excess tax benefit from stock-based
     compensation                                     (4,325)        (2,504)
    Other non-cash items-net                           3,801            520
    Changes in operating assets and
     liabilities:
    Accounts receivable-Net                           13,140            589
    Inventory                                        (11,095)       (31,344)
    Deferred tax assets                              (12,186)       (14,806)
    Prepaid expenses and other current assets         (2,781)           204
    Other assets                                        (159)           893
    Accounts payable                                   3,806         11,054
    Accrued liabilities                                2,818          3,630
    Other liabilities                                 14,350           (999)
    Accrued payroll and compensation                   5,651          1,400
    Deferred revenue                                  68,006         36,425
    Income taxes payable                              (3,850)        11,202
                                               -------------  -------------
      Net cash provided by operating activities      161,218        100,716
                                               -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of investments                          (388,808)      (419,124)
  Sales of investments                                27,282         25,488
  Maturities of investments                          371,837        303,852
  Purchases of property and equipment                (26,802)        (6,729)
  Payments made in connection with business
   acquisitions-net of cash acquired                     (17)        (7,635)
                                               -------------  -------------
      Net cash used in investing activities          (16,508)      (104,148)
                                               -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock              40,529         24,470
  Taxes paid related to net share settlement of
   equity awards                                      (8,506)          (966)
  Excess tax benefit from stock-based
   compensation                                        4,325          2,504
  Repurchase and retirement of common stock          (38,235)             -
                                               -------------  -------------
      Net cash (used in) provided by financing
       activities                                     (1,887)        26,008
                                               -------------  -------------
EFFECT OF EXCHANGE RATES ON CASH AND CASH
 EQUIVALENTS                                            (600)        (1,005)
                                               -------------  -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS            142,223         21,571
CASH AND CASH EQUIVALENTS-Beginning of period        115,873        122,975
                                               -------------  -------------
CASH AND CASH EQUIVALENTS-End of period        $     258,096  $     144,546
                                               =============  =============




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
                                               ----------------------------
                                               September 30,  September 30,
                                                    2014           2013
                                               -------------  -------------
Total revenue                                  $     193,348  $     154,699
  Add increase in deferred revenue                    19,810         10,491
                                               -------------  -------------
Total billings (Non-GAAP)                      $     213,158  $     165,190
                                               =============  =============

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

                                                    Three Months Ended
                                               ----------------------------
                                               September 30,  September 30,
                                                    2014           2013
                                               -------------  -------------
Net cash provided by operating activities      $      56,518  $      25,384
  Less purchases of property and equipment            (5,780)        (3,160)
                                               -------------  -------------
Free cash flow (Non-GAAP)                      $      50,738  $      22,224
                                               =============  =============


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             Three Months Ended
                     September 30, 2014             September 30, 2013
               ------------------------------ ------------------------------
                                       Non-                           Non-
                 GAAP                  GAAP     GAAP                  GAAP
                Results Adjustments   Results  Results Adjustments   Results
               -------- ------------ -------- -------- ------------ --------
Operating
 income        $ 15,451 $  14,911(a) $ 30,362 $ 18,279 $  12,201(b) $ 30,480
               ======== =========    ======== ======== =========    ========
Operating
 margin              8%                   16%      12%                   20%
               ========              ======== ========              ========
Adjustments:
 Stock-based
  compensation
  expense                  14,667                         11,778
 Amortization
  expense of
  certain
  intangible
  assets                      244                            423
 Tax
  adjustment                  985(c)                     (2,721)(c)
                        ---------                      ---------
 Net income    $  4,056 $  15,896    $ 19,952 $ 11,029 $   9,480    $ 20,509
               ======== =========    ======== ======== =========    ========
Diluted net
 income per
 share         $   0.02              $   0.12 $   0.07              $   0.12
               ========              ======== ========              ========
Shares used in
 diluted net
 income per
 share
 calculations   169,727               169,727  168,666               168,666
               ========              ======== ========              ========


(a) To exclude $14.7 million of stock-based compensation expense and $0.2
 million of amortization expense of certain intangible assets in the three
 months ended September 30, 2014.

(b) To exclude $11.8 million of stock-based compensation expense and $0.4
 million of amortization expense of certain intangible assets in the three
 months ended September 30, 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.