DGAP-News: OPNET Announces Record Financial Results for Third Quarter of Fiscal 2011

OPNET Technologies, Inc.

27.01.2011 22:02
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March Dividend Set at $0.10 Per Share

BETHESDA, Md., 2011-01-27 22:02 CET (GLOBE NEWSWIRE) –OPNET Technologies, Inc. (Nasdaq:OPNT), a leading provider of solutions for
application and network performance management, today announced that revenue
for the third fiscal quarter, ended December 31, 2010, was $39.7 million,
compared to $33.6 million for the same quarter in the prior fiscal year.
Diluted earnings per share for the third quarter of fiscal 2011 were $0.19,
compared to $0.11 for the same quarter in the prior fiscal year. The Company
also announced today a quarterly dividend of $0.10 per share, which represents
one quarter of the Company–s fiscal 2011 annual dividend target of $0.40,
payable on March 30, 2011 to stockholders of record as of the close of business
on March 16, 2011.

Marc A. Cohen, OPNET–s Chairman and CEO, stated, –We are very pleased to report
strong sales execution during our third fiscal quarter. Our application
performance management (APM) products continue to drive sales growth and
profitability, and allowed us to achieve financial records including total
revenue of $39.7 million, product revenue of $20.2 million, and operating
income of $5.6 million. APM product sales accounted for 71% of our total
product bookings during the quarter, and increased 45% over the same quarter
last year and 22% sequentially.

Mr. Cohen continued, –We believe our growth in APM product sales is largely the
result of taking market share by offering key competitive advantages, including
broad coverage of the infrastructure, deep instrumentation, and superior
analytics. In addition to strong sales execution during the quarter, we also
completed development of our first Software-as-a-Service (SaaS) solution
offering, AppMapper Xpert. This new solution automatically produces a run-time
application map, identifying the underlying application and infrastructure
components that enable a production application. We believe this new offering,
which leverages information generated by our performance management solutions,
including AppResponse Xpert and AppInternals Xpert, will further enhance our
competitive position in the APM market.–

The Company–s third quarter fiscal 2011 financial highlights are presented
below. The non-GAAP results exclude the income statement effects of stock-based
compensation and acquisition-related amortization of intangible assets. A
reconciliation of GAAP results to non-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 the press release titled –Use of
Non-GAAP Measures.–

GAAP Financial Highlights for the Third Quarter of Fiscal 2011:

— Total revenue increased year-over-year 18.2% to $39.7 million from $33.6
million for the same quarter of fiscal 2010. Total revenue for the quarter
increased sequentially 9.9% from $36.1 million for the second quarter of
fiscal 2011.
— Product revenue increased year-over-year by 30.3% to $20.2 million from
$15.5 million for the same quarter of fiscal 2010. Product revenue for the
quarter increased sequentially 14.2% from $17.7 million for the second
quarter of fiscal 2011.
— Deferred revenue increased year-over-yearby 9.8% to $42.9 million from
$39.1 million at the end of the same quarter of fiscal 2010. Deferred
revenue for the quarter increased sequentially 6.6% from $40.2 million at
the end of the second quarter of fiscal 2011.
— Gross margin increased year-over-year to 78.8% from 75.9% for the same
quarter of fiscal 2010. Gross margin increased sequentially from 76.6% in
the second quarter of fiscal 2011.
— Operating margin increased year-over-year to 14.1% from 10.2% for the same
quarter of fiscal 2010. Operating margin increased sequentially from 12.9%
in the second quarter of fiscal 2011.
— Diluted net income per common share increased year-over-year to $0.19 from
$0.11 for the same quarter of fiscal 2010. Diluted net income per common
share was $0.13 in the second quarter of fiscal 2011.

Non-GAAP Financial Highlights for the Third Quarter of Fiscal 2011:

— Non-GAAP gross margin increased year-over-year to 80.3% from 77.4% for the
same quarter of fiscal 2010. Non-GAAP gross margin increased sequentially
from 78.0% in the second quarter of fiscal 2011.
— Non-GAAP operating margin increased year-over-year to 17.3% from 12.9% for
the same quarter of fiscal 2010. Non-GAAP operating margin increased
sequentially from 15.4% in the second quarter of fiscal 2011.
— Non-GAAP diluted net income per common share increased year-over-year to
$0.23 from $0.14 for the same quarter of fiscal 2010. Non-GAAP diluted net
income per common share was $0.16 in the second quarter of fiscal 2011.

Fourth Quarter Fiscal Year 2011 Financial Outlook

OPNET currently expects fiscal 2011 fourth quarter GAAP revenue to be between
$37.5 million and $40.5 million, GAAP diluted net income per common share to be
between $0.13 and $0.18 and non-GAAP diluted net income per common share to be
between $0.16 and $0.19. The non-GAAP diluted net income per common share
expectation excludes approximately $589,000 of expense associated with
stock-based compensation expense, amortization of acquired intangible assets,
and the related impact of these adjustments on the provision for income taxes.

OPNET will hold an investor conference call on Thursday, January 27, 2011 at
5:00 pm Eastern Time to review financial results for the third quarter of
fiscal 2011.

To listen to the OPNET investor conference call:

— Call 877-377-7550 in the U.S. or 408-337-0151 for international callers,
or
— Use the webcast at www.opnet.com. Investors are advised to go to the web
site at least 15 minutes early to register, download, and install any
necessary audio software.

To listen to the archived call:

— Call the replay phone number at 800-642-1687 or 706-645-9291 for
international callers. For replay, enter passcode # 37256541. The replay
will be available from 8:00 pm Eastern Time January 27, 2011 through 11:59
pm Eastern Time February 3, 2011.
— The webcast will be available at www.opnet.com, archived for seven days.

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.

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 operating income, 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 theGAAP 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.

About OPNET Technologies, Inc.

Founded in 1986, OPNET Technologies, Inc. (Nasdaq:OPNT) is a leading provider
of application and network performance management solutions. For more
information about OPNET and its products, visit www.opnet.com.

OPNET, OPNET Technologies, Inc., AppMapper Xpert, AppResponse Xpert, and
AppInternals Xpert 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, including
statements regarding the impact of enhancements to our APM product portfolio or
our competitive position and statements concerning expected revenue and diluted
net income per common share and Non-GAAP diluted net income per common share
for the fourth quarter of fiscal 2011, 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, 2010, as filed with the Securities and Exchange Commission
on June 4, 2010, 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 Nine Months
Ended Ended
December 31, December 31,
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2010 2009 2010 2009
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Revenue:
Product $20,177 $15,485 $50,822 $36,071
Product updates, technical support, and 13,908 11,960 39,280 34,913
services
Professional services 5,593 6,110 16,779 20,926
———————————–
Total revenue 39,678 33,555 106,881 91,910———————————–

Cost of revenue:
Product 2,893 1,762 6,672 4,106
Product updates, technical support, and 1,269 1,172 3,827 3,575
services
Professional services 3,689 4,680 12,186 14,568
Amortization of acquired technology and 553 459 1,511 1,376
customer relationships
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Total cost of revenue 8,404 8,073 24,196 23,625
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Gross profit 31,274 25,482 82,685 68,285
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Operating expenses:
Research and development 8,757 7,996 25,398 23,563
Sales and marketing 13,265 11,360 35,117 31,701
General and administrative 3,649 2,696 9,607 8,012
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Total operating expenses 25,671 22,052 70,122 63,276
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Income from operations 5,603 3,430 12,563 5,009
Interest and other expense, net (54) (16) (85) (4)
———————————–
Income before provision for income taxes 5,549 3,414 12,478 5,005
Provision for income taxes 1,225 1,074 3,900 1,491
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Net income $4,324 $2,340 $8,578 $3,514
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Basic net income per common share $0.19 $0.11 $0.40 $0.17
===================================
Diluted net income per common share $0.19 $0.11 $0.38 $0.17
===================================
Basic weighted average common shares 21,608 20,540 21,263 20,572
outstanding
===================================
Diluted weighted average common shares 22,230 20,823 21,921 20,786
outstanding
===================================

OPNET TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP INCOME
(in thousands, except per share data)
(unaudited)

Three Months Three
EndedMonths
Ended
December 31, September
30,
—————————-
2010 2009 2010
—————————-

GAAP gross profit $31,274 $25,482 $27,667
Stock-based compensation expense included in cost 25 29 23
of revenue
Amortization of intangibles included in cost of 552 459 499
revenue
—————————-
Non-GAAP gross profit $31,851 $25,970 $28,189
============================

GAAP income from operations $5,603 $3,430 $4,652
Stock-based compensation expense — total 664 424 389
(included in cost of revenue and in operating
expenses)
Amortization of intangibles — total (included in 578 484 525
cost of revenue and in research and development
expenses)
—————————-
Non-GAAP income from operations $6,845 $4,338 $5,566
============================

GAAP net income $4,324 $2,340 $2,916
Stock-based compensation expense — total 664 424 389
Amortization of intangibles — total 578 484 525
Provision for income tax (1) (497) (363) (366)
—————————-
Non-GAAP net income $5,069 $2,885 $3,464
============================

Diluted net income per common share:
GAAP $0.19 $0.11 $0.13
============================
Non-GAAP $0.23 $0.14 $0.16
============================

Diluted weighted average common shares outstanding
GAAP 22,230 20,823 21,788
============================
Non-GAAP 22,230 20,823 21,788
============================
(1) Reflects the tax effect of non-GAAP adjustments above at the statutory rate
of 40%

OPNET TECHNOLOGIES, INC.
CONDENSEDCONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
December March 31,
31,
2010 2010
———————–
ASSETS
Current assets:
Cash and cash equivalents $66,026 $104,681
Marketable securities 34,951 —
Accounts receivable, net 32,084 28,015
Unbilled accounts receivable 1,902 4,765
Inventory 336 872
Deferred income taxes, prepaid expenses and other 5,729 2,816
current assets
———————–
Total current assets 141,028 141,149
———————–

Property and equipment, net 13,017 13,245
Intangible assets, net 5,071 5,109
Goodwill 15,406 14,639
Deferred income taxes and other assets 4,402 4,210
———————–
Total assets $178,924 $178,352
=======================

LIABILITIES AND STOCKHOLDERS– EQUITY
Current liabilities:
Accounts payable $1,680 $1,405
Accrued liabilities 11,790 10,932
Other income taxes 312 498
Deferred rent 200 432
Deferred revenue 38,533 38,425
———————–
Total current liabilities 52,515 51,692
———————–

Accrued liabilities 75 145
Deferred rent 2,025 2,138
Deferred revenue 4,364 4,946
Other income taxes 594 755
———————–
Total liabilities 59,573 59,676
———————–

Stockholders– equity:
Common stock 30 28
Additional paid-in capital 117,304 99,229
Retained earnings 23,745 37,920
Accumulated other comprehensive loss (882) (999)
Treasury stock, at cost (20,846) (17,502)
———————–
Total stockholders– equity 119,351 118,676
———————–
Total liabilities and stockholders– equity $178,924 $178,352
=======================

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
News Source: NASDAQ OMX

27.01.2011 Dissemination of a Corporate News, transmitted by DGAP –
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Language: English
Company: OPNET Technologies, Inc.

United States
Phone:
Fax:
E-mail:
Internet:
ISIN: US6837571081
WKN:

End of Announcement DGAP News-Service

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