OPNET Announces Financial Results for the Second Quarter of Fiscal 2013
BETHESDA, Md., Oct. 29, 2012 (GLOBE NEWSWIRE) -- OPNET Technologies, Inc. (Nasdaq:OPNT), the leading provider of solutions for application and network performance management, today announced that revenue for the second fiscal quarter, ended September 30, 2012, was $47.1 million. GAAP diluted earnings per share for the second quarter of fiscal 2013 were $0.17.
Non-GAAP diluted earnings per share for the second quarter of fiscal 2013 were $0.22. Non-GAAP results exclude the income statement effects of stock-based compensation and acquisition-related amortization of intangible assets. A reconciliation of non-GAAP results to GAAP results has been provided in the financial statement table following the text of the press release. For further information, please refer to the section of this press release titled "Use of Non-GAAP Measures."
Separately, the company today announced that OPNET has signed a definitive agreement to be acquired by Riverbed Technology. Additional information about this transaction is available at the following link: http://www.riverbed.com/us/company/news/press_releases/2012/press_102912.php. As a result of this agreement OPNET will not conduct the investor conference call previously scheduled for Wednesday, November 7, 2012 at 5:00 p.m. Eastern Time to review financial results for the second quarter of fiscal 2013.
Use of Non-GAAP Measures
OPNET uses a variety of financial measures that are not in accordance with generally accepted accounting principles, or GAAP, as supplemental measures to GAAP to evaluate its operational performance. These financial measures, which include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per common share, exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. A detailed explanation of each of the adjustments to such financial measures is described below. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is also included below. Non-GAAP gross margin is non-GAAP gross profit expressed as a percentage of GAAP total revenue.
Non-GAAP operating margin is non-GAAP operating income expressed as a percentage of GAAP total revenue.
Management uses non-GAAP financial measures (a) to evaluate OPNET's historical and prospective financial performance as well as its performance relative to its competitors, and (b) to measure operational profitability and the accuracy of forecasting. In addition, many financial analysts who follow OPNET focus on and publish both historical results and future projections based on non-GAAP financial measures. OPNET believes that it is in the best interest of its investors to provide this information to analysts so that they accurately report the non-GAAP financial information. Moreover, investors have historically requested these non-GAAP financial measures as a means of providing consistent and comparable information with past reports of financial results.
While management believes that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of OPNET's competitors and may not be directly comparable to similarly titled measures of OPNET's competitors due to potential differences in the exact method of calculation. OPNET compensates for these limitations by using these non-GAAP financial measures only as supplements to GAAP financial measures and by providing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.
The adjustments we use to derive these non-GAAP financial measures, and the basis for such adjustments, are outlined below:
Amortization of intangibles and its related tax impact. OPNET incurs amortization of intangibles related to various acquisitions it has made in recent years. This amortization is included in the following line items of its GAAP presentation:
cost of revenue -- amortization of acquired technology and customer relationships
operating expenses -- research and development
Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per common share when it evaluates the continuing operational performance of OPNET because these costs are fixed at the time of an acquisition, are then amortized over a period of three to five years after the acquisition and generally cannot be changed or influenced by management after the acquisition. Accordingly, management does not consider these expenses for purposes of evaluating the performance of OPNET during the applicable time period after a given acquisition, and it excludes such expenses when evaluating OPNET's financial performance.
Stock-based compensation expense and its related tax impact. OPNET incurs expense related to stock-based compensation, which is included in the following line items of its GAAP presentation:
cost of revenue -- product updates, technical support and services
cost of revenue -- professional services
operating expenses -- research and development
operating expenses -- sales and marketing
operating expenses -- general and administrative
Although stock-based compensation is an expense of OPNET and is viewed as a form of compensation, management excludes these expenses for the purpose of calculating non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per common share when it evaluates the continuing operational performance of OPNET. Specifically, OPNET excludes stock-based compensation during its quarterly and annual assessments of OPNET's and management's performance. In evaluating the performance of senior management, stock-based compensation is excluded from expenditure and profitability results.
Diluted weighted average common shares outstanding. Non-GAAP diluted net income per common share reflects the elimination of amortization of intangibles, stock-based compensation expense and the related tax impacts, all as discussed above. In addition, in cases in which the non-GAAP net income changes from negative to positive when compared to the GAAP net income, or vice versa, the non-GAAP per-share calculation also gives effect to an adjustment to the number of diluted weighted average common shares outstanding reflecting the application of the treasury method and the fact that shares previously considered anti-dilutive would now be considered dilutive, or vice versa.
Additional Information and Where to Find It
The exchange offer for the outstanding common stock of OPNET Technologies, Inc. ("OPNET") referred to in this press release has not yet commenced. This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares of OPNET. OPNET stockholders are urged to read the relevant exchange offer documents when they become available because they will contain important information that stockholders should consider before making any decision regarding tendering their shares. At the time the offer is commenced, Riverbed Technology, Inc. ("Riverbed") will file exchange offer materials with the U.S.
Securities and Exchange Commission and OPNET will file a Solicitation/Recommendation Statement with respect to the offer. The exchange offer materials (including a Prospectus and certain other offer documents) and the Solicitation/Recommendation Statement will contain important information, which should be read carefully before any decision is made with respect to the exchange offer. The Prospectus and certain other offer documents, as well as the Solicitation/Recommendation Statement, will be made available to all shareholders of OPNET at no expense to them. The exchange offer materials and the Solicitation/Recommendation Statement will be made available for free at the Securities and Exchange Commission's web site at www.sec.gov. Free copies of the Offer to Purchase,
the related Letter of Transmittal and certain other offering documents will be made available by Riverbed by mail to Riverbed Technologies, Inc., 199 Fremont Street, San Francisco, CA 94105, attention: Investor Relations, and free copies of the Solicitation/Recommendation Statement will be made available by OPNET by mail to OPNET Technologies, Inc., 7255 Woodmont Avenue, Bethesda, Maryland 20814-7900, attention: Investor Relations.
Interests of Certain Persons in the Offer and the Merger
Riverbed will be, and certain other persons may be, soliciting OPNET stockholders to tender their shares into the exchange offer. The directors and executive officers of Riverbed and the directors and executive officers of OPNET may be deemed to be participants in Riverbed's solicitation of OPNET's stockholders to tender their shares into the exchange offer.
Investors and shareholders may obtain more detailed information regarding the names, affiliations and interests of the directors and officers of Riverbed and OPNET in the exchange offer by reading the Prospectus and certain other offer documents, as well as the Solicitation/Recommendation Statement, when they become available.
About OPNET Technologies, Inc.
Founded in 1986, OPNET Technologies, Inc. (Nasdaq:OPNT) is the leading provider of solutions for application and network performance management. For more information about OPNET and its products, visit www.opnet.com.
OPNET and OPNET Technologies, Inc. are trademarks of OPNET Technologies, Inc. All other trademarks are the property of their respective owners.
Statements in this press release that are not purely historical facts may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. OPNET Technologies, Inc. ("OPNET") assumes no obligation to update such statements. Forward-looking statements are predictions based upon information available to OPNET as of the date of this press release and involve risks and uncertainties; therefore, actual events or results may differ materially. Factors that may cause OPNET's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements include, among others,
those factors listed under the caption "Risk Factors" in OPNET's Annual Report on Form 10-K for the fiscal year ended March 31, 2012, as filed with the Securities and Exchange Commission on June 8, 2012, as updated from time to time in subsequent SEC filings. The risk factors set forth in the Company's Form 10-K under the caption "Risk Factors," as updated from time to time in subsequent SEC filings, are specifically incorporated by reference into this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Note to editors: The word OPNET is spelled with all upper-case letters.
OPNET TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
September 30,
Six Months Ended
September 30,
2012
2011
2012
2011
Revenue:
Product
$ 21,996
$ 20,599
$ 42,115
$ 40,028
Product updates, technical support, and services
17,953
15,413
35,004
30,105
Professional services
7,111
5,909
13,972
12,035
Total revenue
47,060
41,921
91,091
82,168
Cost of revenue:
Product
3,794
3,928
6,734
6,399
Product updates, technical support, and services
1,667
1,380
3,311
2,827
Professional services
4,786
3,751
9,360
7,617
Amortization of acquired technology and customer relationships
800
537
1,418
1,076
Total cost of revenue
11,047
9,596
20,823
17,919
Gross profit
36,013
32,325
70,268
64,249
Operating expenses:
Research and development
10,986
9,088
21,346
18,330
Sales and marketing
15,236
13,471
29,458
26,070
General and administrative
3,695
2,504
7,179
6,293
Total operating expenses
29,917
25,063
57,983
50,693
Income from operations
6,096
7,262
12,285
13,556
Interest and other expense, net
34
--
44
(59)
Income before provision for income taxes
6,130
7,262
12,329
13,497
Provision for income taxes
2,275
2,476
4,681
4,522
Net income
$ 3,855
$ 4,786
$ 7,648
$ 8,975
Basic net income per common share
$ 0.17
$ 0.21
$ 0.33
$ 0.40
Diluted net income per common share
$ 0.17
$ 0.21
$ 0.33
$ 0.39
Basic weighted average common shares outstanding
22,642
22,240
22,528
22,149
Diluted weighted average common shares outstanding
22,924
22,687
22,843
22,646
OPNET TECHNOLOGIES, INC.
RECONCILIATION OF NON-GAAP RESULTS TO GAAP RESULTS
(in thousands, except per share data)
(unaudited)
Three Months Ended
September 30,
Three Months
Ended June 30,
2012
2011
2012
GAAP gross profit
$ 36,013
$ 32,325
$ 34,255
Stock-based compensation expense included in cost of revenue
50
27
43
Amortization of intangibles included in cost of revenue
800
537
618
Non-GAAP gross profit
$ 36,863
$ 32,889
$ 34,916
GAAP income from operations
$ 6,096
$ 7,262
$ 6,189
Stock-based compensation expense – total (included in cost of revenue and in operating expenses)
1,381
606
987
Amortization of intangibles – total (included in cost of revenue and in research and development expenses)
825
562
643
Non-GAAP income from operations
$ 8,302
$ 8,430
$ 7,819
GAAP net income
$ 3,855
$ 4,786
$ 3,794
Stock-based compensation expense – total
1,381
606
987
Amortization of intangibles – total
825
562
643
Provision for income tax (1)
(861)
(456)
(635)
Non-GAAP net income
$ 5,200
$ 5,498
$ 4,789
Diluted net income per common share:
GAAP
$ 0.17
$ 0.21
$ 0.16
Non-GAAP
$ 0.22
$ 0.24
$ 0.21
Diluted weighted average common shares outstanding
GAAP
22,924
22,687
22,781
Non-GAAP
22,924
22,687
22,781
(1) Reflects the tax effect of non-GAAP adjustments above at the statutory rate of 39% based on projected taxable income.
OPNET TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
September 30,
March 31,
2012
2012
ASSETS
Current assets:
Cash and cash equivalents
$ 54,736
$ 72,357
Marketable securities
39,862
38,975
Accounts receivable, net
41,073
40,787
Unbilled accounts receivable
2,710
1,864
Inventory
1,286
1,704
Deferred income taxes, prepaid expenses and other current assets
13,571
5,084
Total current assets
153,238
160,771
Property and equipment, net
16,227
13,936
Intangible assets, net
7,001
2,970
Goodwill
22,416
15,406
Deferred income taxes and other assets
5,930
5,182
Total assets
$ 204,812
$ 198,265
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 1,533
$ 1,175
Accrued liabilities
16,986
17,717
Other income taxes
1,163
754
Deferred rent
225
222
Deferred revenue
46,301
47,909
Total current liabilities
66,208
67,777
Accrued liabilities
44
9
Deferred rent
3,655
2,745
Deferred revenue
6,799
6,950
Other income taxes
811
790
Total liabilities
77,517
78,271
Stockholders' equity:
Common stock
31
30
Additional paid-in capital
136,393
129,439
Retained earnings
14,478
13,748
Accumulated other comprehensive loss
(1,245)
(995)
Treasury stock, at cost
(22,362)
(22,228)
Total stockholders' equity
127,295
119,994
Total liabilities and stockholders' equity
$ 204,812
$ 198,265
CONTACT: OPNET Media Contact:
Sue Cole
OPNET Technologies, Inc.
(919) 461-2445
Media@opnet.com
www.opnet.com
OPNET Investor Relations:
Mel Wesley
OPNET Technologies, Inc.
(240) 497-3000
ir@opnet.com
www.opnet.com
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