-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B2Pn/ltGwSBKW+zt/o4N8qQUwtbl+msMC8cSYQOtRwqN8cj6R7ppI8uKyTYbMDSv YvFEYHcuEPbd44tSQ7FuVw== 0001157523-06-007377.txt : 20060726 0001157523-06-007377.hdr.sgml : 20060726 20060726160644 ACCESSION NUMBER: 0001157523-06-007377 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060726 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060726 DATE AS OF CHANGE: 20060726 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETSCOUT SYSTEMS INC CENTRAL INDEX KEY: 0001078075 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 042837575 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26251 FILM NUMBER: 06981746 BUSINESS ADDRESS: STREET 1: 4 TECHNOLOGY PARK DR CITY: WESTFORD STATE: MA ZIP: 01886 BUSINESS PHONE: 9786144000 MAIL ADDRESS: STREET 1: 4 TECHNOLOGY PARK DRIVE CITY: WESTFORD STATE: MA ZIP: 01886 8-K 1 a5196652.txt NETSCOUT SYSTEMS, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 26, 2006 NetScout Systems, Inc. ---------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware ------------------------------------------------------ (State or Other Jurisdiction of Incorporation) 0000-26251 04-2837575 - ---------------------------------------- --------------------------------- (Commission File Number) (IRS Employer Identification No.) 310 Littleton Road, Westford, Massachusetts 01886 - -------------------------------------------- --------------------------------- (Address of Principal Executive Offices) (Zip Code) (978) 614-4000 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable ------------------------------------------------------------- (Former Name or Former Address, If Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The following information and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing. On July 26, 2006, NetScout Systems, Inc. (the "Company") issued a press release regarding its financial results for the quarter ended June 30, 2006, its expectations of future performance and its intention to hold a conference call regarding these topics. The Company's press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference. ITEM 8.01. OTHER EVENTS. On July 26, 2006, the Company announced that its Board of Directors expanded the Company's existing open market stock repurchase program to enable the Company to purchase up to an additional three million shares of the Company's outstanding common stock, bringing the total number of shares available for repurchase to 3.85 million shares. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits. The Company hereby furnishes the following exhibit: 99.1 Press release dated July 26, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NETSCOUT SYSTEMS, INC. By: /s/ David P. Sommers ----------------------------------------- David P. Sommers Chief Financial Officer and Senior Vice President, General Operations Date: July 26, 2006 EXHIBIT INDEX Exhibit Number Description - ---------------------------- -------------------------------------------------- 99.1 Press release dated July 26, 2006. EX-99.1 2 a5196652ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 NetScout Systems Reports First Quarter Financial Results for Fiscal 2007 WESTFORD, Mass.--(BUSINESS WIRE)--July 26, 2006-- EPS Up 100% Year over Year 3 Million Additional Share Repurchase Announced Fiscal 2007/2008 EPS Growth to Exceed 40% NetScout Systems, Inc. (NASDAQ:NTCT), a leading provider of network performance management solutions, today announced financial results for its first quarter of fiscal year 2007. Total revenue for the first quarter was $23.6 million, flat year-over-year and a 9% decrease sequentially. Net income for the first quarter was $1.4 million, or $0.04 per diluted share, compared to net income of $652,000, or $0.02 per diluted share, in the first quarter of fiscal year 2006 and compared to net income of $1.8 million, or $0.06 per diluted share, for the previous quarter. Operating income for the quarter was $1.1 million, which includes stock-based compensation expense of $387,000 and amortization of intangible assets of $143,000. "We were disappointed that our first quarter results came in below our original expectation. We historically experience seasonal weakness in the first quarter, but this year's seasonality was accentuated by an unusual softness in Europe. After careful review of our first quarter performance and outlook for the remainder of this fiscal year and beyond, we believe this is a temporary slowdown. We remain confident about our competitive position in an attractive and growing market," said Anil Singhal, President and CEO of NetScout Systems. "The underlying drivers of our revenue and market share growth remain intact, evidenced by strong new product flow and expanding sales force. We remain focused on tight expense control and expanding operating margins as we have over the last several years. Based on these factors, we remain confident about full year EPS growth for fiscal 2007 and 2008 of 40 percent or more. Because of our confidence in the future of our business, we are announcing today an expansion of our existing stock repurchase program which enables us to purchase up to three million shares in addition to the 850,000 shares currently authorized for repurchase, using our strong cash flow to provide increased returns to shareholders," he added. During the quarter NetScout released two new products based upon its next generation Application Fabric Performance Management architecture -- nGenius Analytics and Application Fabric Monitor. The new products are market-leading solutions that proactively identify and resolve performance problems faster and assure business service reliability in increasingly complex, high-speed networks. Guidance: For the second quarter of fiscal year 2007, the Company expects total revenue to be in the range of $25 million to $26 million and net income per diluted share to be in the range of $0.05 to $0.06. The Company modifies its long-range guidance for net income per diluted share to grow by 40% or more in each of fiscal years 2007 and 2008. Financial Highlights for the First Fiscal Quarter 2007: -- Product revenue decreased 5% year-over-year and 17 % sequentially. Total revenue was flat year-over-year and down 9% sequentially. -- Operating margin was 4% of total revenue, up 2 points year-over-year and down 4 points sequentially. -- Cash and short and long-term marketable securities increased by $3.3 million to $90.8 million in the first quarter. The increase in cash was provided by strong positive cash flow from operations, as well as a one-time federal tax refund of $1.1 million. -- 32 new customers were added worldwide. -- 261 customers made repeat purchases. -- 47 customers placed orders over $100,000. -- 16% of total revenue came from international operations. CONFERENCE CALL INSTRUCTIONS: The Company invites shareholders to listen to its conference call today at 4:30 p.m. ET, which will be webcast live through the Company's website at http://www.netscout.com/investors. Alternatively, people can listen to the call by dialing 866-701-8242 for U.S./Canada and 706-634-5113 for international callers and using conference ID: 2920982. A replay of the call will be available after 7:30 p.m. ET on July 26 for approximately two weeks. The number for the replay is 800-642-1687 for U.S./Canada and 706-645-9291 for international callers. The conference ID is: 2920982. About NetScout Systems, Inc. NetScout Systems, Inc. (NASDAQ:NTCT) is a market leader and pioneer of integrated network performance management products that unify performance across the enterprise. NetScout's nGenius(R) Performance Management System is helping more than 3,000 leading companies increase their return on infrastructure investments by optimizing the performance of networks and applications according to business priorities. NetScout is headquartered in Westford, Massachusetts and has offices worldwide. Further information is available at http://www.netscout.com. Safe Harbor: Forward-looking statements in this release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and other federal securities laws. Investors are cautioned that statements in this press release, which are not strictly historical statements, including the plans, objectives and future financial performance of NetScout, constitute forward-looking statements which involve risks and uncertainties. Actual results could differ materially from the forward-looking statements. Risks and uncertainties which could cause actual results to differ include, without limitation, risks and uncertainties associated with the Company's relationships with strategic partners, dependence upon broad-based acceptance of the Company's network performance management solutions, the Company's ability to achieve and maintain a high rate of growth, introduction and market acceptance of new products and product enhancements such as the delivery of nGenius product platform probes and software solutions, High Definition Performance Management functionality, the analytic solutions acquired from Quantiva and the implementation of the Company's CDM Technology strategy, the ability of the Company to take advantage of service provider opportunities, competitive pricing pressures, reliance on sole source suppliers, successful expansion and management of direct and indirect distribution channels and dependence on proprietary technology, and risks of further slowdowns or downturns in economic conditions generally and in the market for network performance management solutions specifically. For a more detailed description of the risk factors associated with the Company, please refer to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2006 on file with the Securities and Exchange Commission. NetScout assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein. (C)2006 NetScout Systems, Inc. All rights reserved. NetScout and the NetScout logo, nGenius, and Quantiva are registered trademarks of NetScout Systems, Inc. Other brands, product names and trademarks are property of their respective owners. NetScout Systems, Inc. Condensed Consolidated Statements of Operations (In thousands) (Unaudited) Three Months Ended June 30, ----------------- 2006 2005 -------- -------- Revenue: Product $14,227 $15,046 Service 9,348 8,271 License and royalty - 184 -------- -------- Total revenue 23,575 23,501 -------- -------- Cost of revenue: Product (1), (2) 3,856 4,626 Service (1) 1,267 1,257 -------- -------- Total cost of revenue 5,123 5,883 -------- -------- Gross margin 18,452 17,618 -------- -------- Operating expenses: Research and development (1) 4,422 4,614 Sales and marketing (1) 10,830 10,022 General and administrative (1) 2,106 2,286 Amortization of other intangible assets 39 32 In-process research and development - 143 -------- -------- Total operating expenses 17,397 17,097 -------- -------- Income from operations 1,055 521 Interest income and other expenses, net 1,015 515 -------- -------- Income before income tax expense and cumulative effect of accounting change 2,070 1,036 Income tax expense 766 384 -------- -------- Income before cumulative effect of accounting change 1,304 652 Cumulative effect of accounting change, net of taxes of $41 70 - -------- -------- Net income $1,374 $652 ======== ======== Earnings Per Common Share Basic Income before cumulative effect of accounting change $0.04 $0.02 Cumulative effect of accounting change $- $- Net income per share $0.04 $0.02 Diluted Income before cumulative effect of accounting change $0.04 $0.02 Cumulative effect of accounting change $- $- Net income per share $0.04 $0.02 Weighted Average Shares Outstanding: Basic shares 31,480 30,840 Diluted shares 33,049 31,413 (1) Share-based compensation expense included in these amounts are as follows: Cost of product revenue 9 - Cost of service revenue 13 - Research and development 133 59 Sales and marketing 157 20 General and administrative 75 - (2) Amortization expense related to acquired software included in these amounts are as follows: Cost of product revenue 104 87 NetScout Systems, Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) June 30, March 31, 2006 2006 ----------- --------- Assets Current assets: Cash and cash equivalents $51,999 $61,676 Marketable securities 32,761 19,810 Accounts receivable, net 15,021 16,765 Inventories 4,386 2,816 Refundable income taxes 202 985 Deferred income taxes 2,837 2,896 Restricted Cash 1,342 1,339 Prepaids and other current assets 2,953 3,119 ----------- --------- Total current assets 111,501 109,406 Fixed assets, net 7,757 7,577 Goodwill 36,561 36,561 Other intangible assets, net 872 1,015 Capitalized software development costs 293 312 Deferred income taxes 4,803 4,889 Long-term marketable securities 6,030 5,979 Other assets 13 16 ----------- --------- Total assets $167,830 $165,755 =========== ========= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $2,469 $2,727 Accrued compensation 7,490 8,635 Accrued other 2,139 2,325 Income tax payable 467 - Deferred acquisition payment - Quantiva 1,342 1,339 Deferred revenue 21,747 21,382 ----------- --------- Total current liabilities 35,654 36,408 Accrued other 1,103 1,157 Long-term deferred revenue 1,248 1,599 ----------- --------- Total liabilities 38,005 39,164 ----------- --------- Stockholders' equity: Common stock 36 35 Additional paid-in capital 117,494 120,057 Accumulated other comprehensive income (134) (122) Deferred compensation - (4,434) Treasury stock (26,490) (26,490) Retained earnings 38,919 37,545 ----------- --------- Total stockholders' equity 129,825 126,591 ----------- --------- Total liabilities and stockholders' equity $167,830 $165,755 =========== ========= CONTACT: NetScout Systems, Inc. Catherine Taylor, 978-614-4286 IR@netscout.com -----END PRIVACY-ENHANCED MESSAGE-----