SUNNYVALE, CA--(Marketwire - Apr 27, 2011) - Fortinet® (NASDAQ: FTNT)
-- Billings of $106.7 million, up 34% year over year
-- Revenues of $93.3 million, up 34% year over year(1)
-- GAAP EPS of $0.17(1)
-- Non-GAAP EPS of $0.17(1)
-- Free cash flow of $36.5 million
Fortinet® (NASDAQ: FTNT) -- a leading network security provider and the
worldwide leader in unified threat management (UTM) solutions -- today
announced financial results for the first quarter ended March 31, 2011.
Financial Highlights for the First Quarter of 2011
-- Billings(2): Total billings were $106.7 million for the first quarter
of 2011, an increase of 34% compared to the first quarter of 2010. We
define billings, a non-GAAP financial measure, as revenue recognized
during the period plus the change in deferred revenue from the
beginning to the end of the period.
-- Revenue: Total revenue was $93.3 million for the first quarter of 2011,
an increase of 34% compared to the first quarter of 2010. Within total
revenue, product revenue was $40.2 million, an increase of 48% compared
to the first quarter of 2010. Services revenue was $48.7 million, an
increase of 26% compared to the first quarter of 2010. Ratable product
and services revenue was $4.4 million, an increase of 9% compared to
the first quarter of 2010. Revenue includes a $3.3 million positive
impact related to the implementation of new revenue recognition
rules.(1)
-- Deferred Revenue: Deferred revenue was $266.0 million as of March 31,
2011, an increase of 26% compared to deferred revenue as of March 31,
2010, and up $13.4 million from December 31, 2010.
-- Cash and Cash Flow: As of March 31, 2011, cash, cash equivalents and
investments were $432.7 million, compared to $387.5 million as of
December 31, 2010. Cash flow from operations was $40.2 million for the
first quarter of 2011, compared to $21.8 million for the first quarter
of 2010. In the first quarter of 2011, free cash flow was $36.5
million, compared to $20.8 million for the first quarter of 2010. We
define free cash flow, a non-GAAP financial measure of liquidity, as
net cash provided by operating activities less capital expenditures and
the upfront payment related to the patent settlement.(2)
-- GAAP Operating Income: GAAP operating income was $17.4 million for the
first quarter of 2011, representing a GAAP operating margin of 19% and
an increase of 160% compared to the first quarter of 2010. Excluding
the impact of the new revenue recognition rules and its related tax
effects, operating income would have been $15.0 million during the
first quarter of 2011, representing an operating margin of 17%.
-- Non-GAAP(2) Operating Income: Non-GAAP operating income was $20.0
million for the first quarter of 2011, representing a non-GAAP
operating margin of 21% and an increase of 126% compared to the
first quarter of 2010. Non-GAAP operating income and operating margin
exclude stock-based compensation expense and income from patent
settlement. Excluding the impact of the new revenue recognition rules
and its related tax effects, non-GAAP operating income would have been
$17.6 million during the first quarter of 2011, representing a
non-GAAP operating margin of 20%.
-- GAAP Net Income and EPS: GAAP net income was $13.6 million for the
first quarter of 2011, based on a 25% tax rate for the quarter. This
compares to GAAP net income of $4.2 million for the first quarter of
2010. GAAP diluted EPS was $0.17 for the first quarter of 2011, based
on 81.4 million weighted-average diluted shares outstanding, compared
to $0.06 for the first quarter of 2010, based on 74.9 million
weighted-average diluted shares outstanding. Excluding the impact of
the new revenue recognition rules and its related tax effects, EPS
would have been $0.14 during the first quarter of 2011.
-- Non-GAAP(2) Net Income and EPS: Non-GAAP net income was $13.9 million
for the first quarter of 2011, based on a 33% tax rate for the quarter.
Non-GAAP net income for the first quarter of 2010 was $5.8 million,
based on a 35% tax rate. Non-GAAP diluted EPS was $0.17 for the first
quarter of 2011 based on 81.4 million weighted-average diluted shares
outstanding, compared to $0.08 for the first quarter of 2010 based on
74.9 million weighted-average diluted shares outstanding. Non-GAAP
net income and non-GAAP EPS exclude stock-based compensation expense,
income from patent settlement and the related tax effects. Excluding
the impact of the new revenue recognition rules and its related tax
effects, non-GAAP EPS would have been $0.15 during the first quarter
of 2011.
(1) Effective January 1, 2011, Fortinet prospectively adopted the Financial
Accounting Standards Board's new accounting standards related to software
revenue recognition for applicable transactions originating or materially
modified after December 31, 2010. Adoption of the new accounting standards
changes how we account for certain items, particularly ratable revenues.
(2) 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."
Management Commentary:
Ken Xie, founder, president and chief executive officer of Fortinet,
stated: "The first quarter marked a strong start to the year for Fortinet
with solid execution and a healthy pipeline of business. Our recent
investments in our global sales organization and sharpened focus on
penetrating the large enterprise have resulted in significant momentum in
our business across geographic regions, with especially strong performance
in the Americas. Our ability to demonstrate the price performance
advantage of our solutions and to introduce new cutting edge technologies
continues to strengthen our competitive position in the marketplace,
particularly as demand trends in the broader UTM market accelerate."
Ken Goldman, chief financial officer of Fortinet, stated: "We are very
pleased with our solid first quarter results, which exceeded our
expectations across the board. Our ability to successfully execute our
global go-to-market strategy combined with the underlying strength of our
business model drove strong top line results, healthy profitability levels,
and substantial cash flow generation. We remain focused on investing in
our sales and R&D resources in order to expand our reach into new high
growth verticals and emerging markets."
Stock Split
Fortinet also announced today that its Board of Directors has approved a
two-for-one stock split of the company's outstanding shares of common stock
to be effected in the form of a stock dividend. The stock split will
entitle each stockholder of record at the close of business on May 9, 2011,
to receive one additional share for every one share owned as of that date.
The additional shares resulting from the stock split are expected to be
distributed by the company's transfer agent on or about June 1, 2011. Upon
the completion of the stock split, Fortinet will have approximately 153
million shares of common stock outstanding.
Conference Call Details
Fortinet will host a conference call today, April 27, 2011, 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 # 60694521. 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 May 11, 2011, by dialing (800) 642-1687
(domestic) or (706) 645-9291 (international) with conference ID# 60694521.
Following Fortinet's earnings 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 to ask more
detailed product and financial questions. To access this call, dial (877)
303-6913 (domestic) or (224) 357-2188 (international) with conference ID #
60696602. This follow-up call will be webcast live and accessible at
http://investor.fortinet.com, and 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 May 11, 2011, by dialing
(800) 642-1687 (domestic) or (706) 645-9291 (international) with conference
ID # 60696602.
About Fortinet (www.fortinet.com)
Fortinet (NASDAQ: FTNT) is a worldwide provider of network security
appliances and the 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 2009 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 © 2011 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 and FortiWeb. Other trademarks belong to their respective
owners. Fortinet has not independently verified statements or
certifications herein attributed to third parties and Fortinet does not
independently endorse such statements.
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 momentum in our business across geographic regions, the
continued strength of our competitive position and our plans to invest in
our sales and research and development resources to expand our reach into
new high growth verticals and emerging markets. Although Fortinet attempts
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; uncertainty regarding increased business and
renewals from existing customers; uncertainties around continued success in
sales growth and market share gains; risks associated with successful
implementation of multiple integrated software products and other product
functionality risks; execution risks around new product introductions and
innovation; 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, the UTM model; and the
other risk factors set forth from time to time in our 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 Fortinet's 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
Fortinet has provided in this release financial information that has not
been prepared in accordance with GAAP. Fortinet uses these non-GAAP
financial measures internally in analyzing its financial results and
believes they are useful to investors, as a supplement to GAAP measures, in
evaluating Fortinet's ongoing operational performance. Fortinet believes
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 its financial results with other companies in
Fortinet's industry, many of which present similar non-GAAP financial
measures to investors. Note that in addition to other non-GAAP measures,
Fortinet is providing additional non-GAAP financial information to
illustrate the effects of the newly-adopted revenue recognition rules for
comparability purposes on a period-over-period basis.
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. Fortinet
considers 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 Fortinet's business, and has historically
represented a majority of the quarterly revenue that Fortinet recognizes.
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, Fortinet 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 revenues 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 and the cash received from the patent
settlement. 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 also 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 Fortinet 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 during the period and the cash received in connection with our
patent settlement. Our 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 Quarterly Report on Form 10-Q and Annual Report
on Form 10-K. Fortinet has computed free cash flow using the same
consistent method from quarter to quarter and year to year.
Non-GAAP operating income and operating margin. We define non-GAAP
operating income as operating income plus stock-based compensation reduced
by the income from patent settlement. Non-GAAP operating margin is defined
as non-GAAP operating income divided by revenue. Fortinet considers these
non-GAAP financial measures to be useful metrics for management and
investors because they exclude the effect of stock-based compensation
expense and patent settlement related income/expenses so that Fortinet's
management and investors can compare Fortinet's 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. Stock-based compensation has
been and will continue to be for the foreseeable future a significant
recurring expense in Fortinet's 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 our 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 EPS. We define non-GAAP net income as net income
plus stock-based compensation expense reduced by the income from patent
settlement, less the related tax effects for both periods presented. We
define non-GAAP EPS as non-GAAP net income divided by the weighted-average
shares outstanding, on a fully-diluted basis. We consider these
non-GAAP financial measures to be a useful metric for management and
investors for the same reasons that Fortinet uses 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 exclude from non-GAAP
net income and non-GAAP EPS the tax effects associated with stock-based
compensation and the patent settlement. We used a 33 percent effective tax
rate to calculate non-GAAP net income for the first quarter of 2011. We
believe the 33 percent effective tax rate is a reasonable estimate of a
long-term normalized tax rate under our global operating structure. Our
effective tax rate for the first quarter of 2010 was 35 percent which
reflects only our foreign tax provision as our US operations had net
operating losses to offset any taxable income. The same limitations
described above regarding Fortinet's use of non-GAAP operating income and
non-GAAP operating margin apply to our use of non-GAAP net income and
non-GAAP EPS. Management compensates for these limitations by providing
specific information regarding the GAAP amounts excluded from non-GAAP net
income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS
together with net income and EPS calculated in accordance with GAAP.
FORTINET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, December 31,
ASSETS 2011 2010
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 68,981 $ 66,859
Short-term investments 232,617 246,651
Accounts receivable, net of allowance for
doubtful accounts of $232 and $303,
respectively 71,326 72,336
Inventory 12,125 13,517
Deferred tax asset 8,175 8,158
Prepaid expenses and other current assets 6,806 8,849
Deferred cost of revenues 3,168 3,788
----------- -----------
Total current assets 403,198 420,158
PROPERTY AND EQUIPMENT -- Net 7,098 7,056
DEFERRED TAX ASSET -- Non-current 37,443 37,443
DEFERRED COST OF REVENUES 4,788 5,543
LONG-TERM INVESTMENTS 131,105 73,950
OTHER ASSETS 3,178 1,272
----------- -----------
TOTAL ASSETS $ 586,810 $ 545,422
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,696 $ 12,761
Accrued liabilities 18,697 16,303
Accrued payroll and compensation 20,071 19,670
Deferred revenue 187,517 169,648
----------- -----------
Total current liabilities 234,981 218,382
DEFERRED REVENUE -- Non-current 78,512 82,983
OTHER NON-CURRENT LIABILITIES 15,225 11,603
----------- -----------
Total liabilities 328,718 312,968
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock 77 75
Additional paid-in-capital 263,394 251,920
Treasury stock -- common (2,995) (2,995)
Accumulated other comprehensive income 2,756 2,181
Accumulated deficit (5,140) (18,727)
----------- -----------
Total stockholders' equity 258,092 232,454
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 586,810 $ 545,422
=========== ===========
- -
FORTINET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
------------------------
March 31, March 31,
2011 2010
----------- -----------
REVENUE:
Product $ 40,165 $ 27,110
Services 48,686 38,625
Ratable product and services 4,415 4,060
----------- -----------
Total revenue 93,266 69,795
----------- -----------
COST OF REVENUE:
Product(1) 14,075 11,314
Services(1) 7,781 6,468
Ratable product and services 1,560 1,593
----------- -----------
Total cost of revenue 23,416 19,375
----------- -----------
GROSS PROFIT:
Product 26,090 15,796
Services 40,905 32,157
Ratable product and services 2,855 2,467
----------- -----------
Total gross profit 69,850 50,420
----------- -----------
OPERATING EXPENSES:
Research and development(1) 14,421 11,934
Sales and marketing(1) 32,718 26,723
General and administrative(1) 5,266 5,059
----------- -----------
Total operating expenses 52,405 43,716
----------- -----------
OPERATING INCOME 17,445 6,704
INTEREST INCOME 793 268
OTHER INCOME (EXPENSE) -- NET (95) (250)
----------- -----------
INCOME BEFORE INCOME TAXES 18,143 6,722
PROVISION FOR INCOME TAXES 4,556 2,504
----------- -----------
NET INCOME $ 13,587 $ 4,218
=========== ===========
Net income per share(2):
Basic $ 0.18 $ 0.06
=========== ===========
Diluted $ 0.17 $ 0.06
=========== ===========
Weighted-average shares outstanding(2):
Basic 75,154 67,181
=========== ===========
Diluted 81,432 74,878
=========== ===========
(1) Includes stock-based compensation expense as
follows:
Cost of product revenue $ 22 $ 24
Cost of services revenue 198 208
Research and development 453 554
Sales and marketing 1,900 866
General and administrative 497 496
----------- -----------
$ 3,070 $ 2,148
=========== ===========
(2) The income per share and shares outstanding amounts do not reflect the
stock split as the shares are not yet trading on a post-split or
dividend basis. The post-split or dividend trading is expected to
begin on June 1, 2011.
FORTINET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
------------------------
March 31, March 31,
2011 2010
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,587 $ 4,218
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,678 1,375
Amortization of investment premiums 3,261 1,090
Stock-based compensation 3,070 2,148
Excess tax benefit from employee stock option
plans (1,115) (795)
Changes in operating assets and liabilities:
Accounts receivable -- net 1,009 3,236
Inventory 550 (27)
Deferred tax assets (17) (10)
Prepaid expenses and other current assets (1,130) (529)
Deferred cost of revenues 1,375 379
Other assets (1,904) 3
Accounts payable (4,225) (505)
Accrued liabilities 2,389 (576)
Other liabilities 3,623 -
Accrued payroll and compensation (23) 839
Deferred revenue 13,398 9,607
Income taxes payable 4,650 1,363
----------- -----------
Net cash provided by operating activities 40,176 21,816
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments (129,695) (73,903)
Maturities and sales of investments 83,455 13,945
Purchase of property and equipment (694) (1,014)
----------- -----------
Net cash used in investing activities (46,934) (60,972)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and
warrants 6,960 1,386
Offering costs paid in connection with Initial
Public Offering - (872)
Excess tax benefit from employee stock option
plans 1,115 795
----------- -----------
Net cash provided by financing activities 8,075 1,309
----------- -----------
EFFECT OF EXCHANGE RATES ON CASH AND CASH
EQUIVALENTS 805 (356)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,122 (38,203)
CASH AND CASH EQUIVALENTS -- Beginning of period 66,859 212,458
----------- -----------
CASH AND CASH EQUIVALENTS -- End of period $ 68,981 $ 174,255
=========== ===========
Reconciliations of non-GAAP results of operations measures to the nearest
comparable GAAP measures
(in thousands)
(unaudited)
Reconciliation of GAAP revenue to billings
Three Months Ended
-------------------------
March 31, March 31,
2011 2010
------------ ------------
Total revenue $ 93,266 $ 69,795
Increase in deferred revenue 13,398 9,607
------------ ------------
Total billings (Non-GAAP) $ 106,664 $ 79,402
============ ============
Reconciliation of cash provided by operating activities to free cash flow
Three Months Ended
------------------------
March 31, March 31,
2011 2010
----------- -----------
Net cash provided by operating activities $ 40,176 $ 21,816
Less purchases of property and equipment (694) (1,014)
Less patent litigation settlement (3,000) -
----------- -----------
Free cash flow (Non-GAAP) $ 36,482 $ 20,802
=========== ===========
Net cash used in investing activities* $ (46,934) $ (60,972)
=========== ===========
Net cash provided by financing activities $ 8,075 $ 1,309
=========== ===========
*includes purchases of property and equipment.
Reconciliations of non-GAAP results of operations measures to the nearest
comparable GAAP measures and other non-GAAP financial information
(in thousands, except per share amounts)
(unaudited)
Reconciliation of GAAP to non-GAAP operating income, operating margin, net
income and net income per share.
Three Months Ended March 31, Three Months Ended March 31,
2011 2010
----------------------------- -----------------------------
GAAP Adjust- Non-GAAP GAAP Adjust- Non-GAAP
Results ments Results Results ments Results
------- ------- -------- ------- ------- --------
Operating
Income $17,445 2,593 (a) $ 20,038 $ 6,704 2,148 (b) $ 8,852
======= ======= ======== ======= ======= ========
Operating
Margin 18.7% 21.5% 9.6% 12.7%
======= ======== ======= ========
2,593 (a) 2,148 (b)
(2,287)(c) (601)(c)
------- -------
Net Income $13,587 306 $ 13,893 $ 4,218 1,547 $ 5,765
======= ======== ======= ========
Net income
per share -
diluted $ 0.17 $ 0.17 $ 0.06 $ 0.08
======= ======== ======= ========
Shares used
in per share
calculation
- diluted 81,432 81,432 74,878 74,878
======= ======== ======= ========
(a) To eliminate $3.1 million of stock-based compensation expense offset
by the $0.5 million of patent settlement income in the three months
ended March 31, 2011.
(b) To eliminate $2.1 million of stock-based compensation expense in the
three months ended March 31, 2010.
(c) To eliminate the tax effects related to expenses noted in (a) and (b).
Reconciliation of our GAAP results (post adoption of the new revenue
recognition rules) to the adjusted GAAP results (pre-adoption of the new
revenue recognition rules).
Three Months Ended March 31, 2011
------------------------------------
Adjusted
GAAP GAAP
Results Adjustments Results
--------- ----------- ---------
Operating Income $ 17,445 (2,444)(a) $ 15,001
========= =========== =========
Operating Margin 18.7% 16.7%
========= =========
(2,444)(a)
631 (b)
-----------
Net Income $ 13,587 (1,813) $ 11,774
========= =========
Net income per share - diluted $ 0.17 $ 0.14
========= =========
Shares used in per share
calculation - diluted 81,432 81,432
========= =========
(a) To eliminate the $3.3 million of incremental revenue recognized due to
the new revenue guidance, offset by $0.9 million of related COGS in
the three months ended March 31, 2011.
(b) To eliminate the tax effects related to adjustments noted in (a).
Reconciliation of our Non-GAAP results (post adoption of the new revenue
recognition rules) to the adjusted Non-GAAP results (pre-adoption of the
new revenue recognition rules).
Three Months Ended March 31, 2011
------------------------------------
Adjusted
Non-GAAP Non-GAAP
Results Adjustments Results
--------- ----------- ---------
Operating Income $ 20,038 (2,444)(a) $ 17,594
========= =========== =========
Operating Margin 21.5% 19.6%
========= =========
(2,444)(a)
807 (b)
-----------
Net Income $ 13,893 (1,637) $ 12,256
========= =========
Net income per share - diluted $ 0.17 $ 0.15
========= =========
Shares used in per share
calculation - diluted 81,432 81,432
========= =========
(a) To eliminate the $3.3 million of incremental revenue recognized due
to the new revenue guidance, offset by $0.9 million of related COGS in
the three months ended March 31, 2011.
(b) To eliminate the tax effects related to adjustments noted in (a).