UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 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 19, 2012
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 |
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, 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, except as expressly set forth by specific reference in such filing.
On July 19, 2012, NetScout Systems, Inc. (the “Company”) issued a press release regarding its financial results for the first quarter of fiscal year 2013 ended June 30, 2012, 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 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The Company hereby furnishes the following exhibit:
99.1 Press release dated July 19, 2012.
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. |
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By: |
/s/ Jean Bua |
Jean Bua |
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Chief Financial Officer |
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Date: |
July 19, 2012 |
Exhibit Index
Exhibit Number |
Description | |
99.1 |
Press release dated July 19, 2012. |
Exhibit 99.1
NetScout Systems Reports Financial Results for First Quarter Fiscal Year 2013
Q1 GAAP and Non-GAAP Revenue Up 21% Year-over-Year
Q1 Net Income Up Year-over-Year: 109% GAAP; 49% Non-GAAP
Announces Acquisition of Assets of Accanto® Systems, S.r.l.
WESTFORD, Mass.--(BUSINESS WIRE)--July 19, 2012--NetScout Systems, Inc. (NASDAQ: NTCT):
Q1 FY 2013 | ||||||
GAAP | Non-GAAP | |||||
Revenue | $76.4 million | $76.5 million | ||||
Net income | $5.0 million | $8.1 million | ||||
Net Income per share | $0.12 | $0.19 |
NetScout Systems, Inc. (NASDAQ: NTCT), an industry leader for advanced application and service assurance solutions, today announced financial results for its first quarter of fiscal year 2013 ended June 30, 2012.
“We are pleased to start the new fiscal year with a solid quarter,” said Anil Singhal, President and CEO of NetScout Systems. “Revenue and EPS were at the high end of our first quarter guidance. Total bookings were up 27% year-over-year with strength across all of our vertical markets, and we maintained a significant backlog.”
“In addition, we are pleased to have announced today the acquisition of assets and technology from Accanto Systems, providing service assurance products for telecommunications service providers which enable carriers to monitor and manage the delivery of voice services over converged, next-generation telecom architectures. This technology is synergistic with our packet flow strategy and brings important voice service monitoring capabilities for legacy voice environments and for next generation network voice services, including Voice over IP (VoIP) and Voice over Long Term Evolution (VoLTE).”
For more details regarding the acquisition of Accanto Systems, S.r.l. please see the corresponding press release issued today.
Total GAAP revenue for the first quarter was $76.4 million; non-GAAP revenue was $76.5 million. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.
Product revenue for the first quarter, on a GAAP and non-GAAP basis was $40.3 million. Service revenue on a GAAP basis was $36.1 million and non-GAAP service revenue was $36.2 million.
GAAP net income for the first quarter was $5.0 million, or $0.12 per diluted share. GAAP income from operations was $8.2 million. On a non-GAAP basis, net income for the quarter was $8.1 million, or $0.19 per diluted share, and non-GAAP income from operations was $13.2 million.
Financial Highlights:
For the first quarter:
In addition:
Guidance:
For fiscal year 2013, we are reiterating the non-GAAP guidance we issued last quarter since we expect the Accanto acquisition to have minimal impact on our full year non-GAAP results. We expect GAAP and non-GAAP revenue to be in the range of $340 million to $355 million. We are adjusting our GAAP net income per diluted share to be in the range of $0.91 to $1.00. The revised GAAP net income per diluted share range includes additional expenses related to the acquisition of technology and assets from Accanto Systems, organizational restructuring related to the Accanto acquisition and anticipated business development expenses. Non-GAAP net income per diluted share remains unchanged and is expected to be between $1.21 and $1.30.
For fiscal year 2013, the non-GAAP net income per diluted share expectation excludes the acquisition accounting adjustment to fair value of approximately $300 thousand for deferred revenue, forecasted share-based compensation expenses of approximately $9.9 million, estimated amortization of acquired intangible assets of approximately $7.0 million, compensation for post combination services of approximately $1.0 million, restructuring charges of approximately $1.1 million, business development charges of approximately $1.2 million and the related impact of these adjustments on the provision for income taxes of $7.8 million.
CONFERENCE CALL INSTRUCTIONS:
The Company invites shareholders to listen to its conference call today at 8:30 a.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 (763)416-6912 for international callers and using conference ID: 99537074. A replay of the call will be available after 11:30 a.m. ET on July 19 for approximately one week. The number for the replay is (855)859-2056 for U.S./Canada and (404) 537-3406 for international callers. The conference ID is: 99537074.
Use of Non-GAAP Financial Information
To supplement the financial measures presented in the Company's press release in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company also presents non-GAAP measures relating to revenue and net income per diluted share. Non-GAAP results eliminate the GAAP effects of acquisitions by adding back revenue related to deferred revenue revaluation and removing expenses related to the amortization of acquired intangible assets, the GAAP effects of stock-based compensation, and restructuring charges. Non-GAAP results also exclude certain expenses relating to acquisitions including compensation for post combination services and business development charges. Non-GAAP results also exclude the related impact of all these adjustments on the provision for income taxes.
These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP, and may have limitations in that they do not reflect all of NetScout’s results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate NetScout’s results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with GAAP.
The Company believes these non-GAAP financial measures will enhance the reader’s overall understanding of NetScout’s current financial performance and the Company's prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how the Company plans and measures its own business. The Company believes that providing these non-GAAP measures affords investors a view of the Company’s operating results that may be more easily compared to peer companies and also enables investors to consider the Company’s operating results on both a GAAP and non-GAAP basis during and following the integration period of the Company’s acquisitions. Presenting the GAAP measures on their own would not be indicative of the Company’s core operating results. Furthermore, NetScout believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provide useful information to management and investors regarding present and future business trends relating to its financial condition and results of operations.
Company management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions. These non-GAAP measures are among the primary factors that management uses in planning and forecasting future periods.
About NetScout Systems, Inc.
NetScout Systems, Inc.
(NASDAQ: NTCT) is the market leader in Unified Service Delivery
Management enabling comprehensive end-to-end network and application
assurance. For 27 years, NetScout has delivered breakthrough packet-flow
technology that provides trusted and comprehensive real-time network and
application performance intelligence enabling unified assurance of the
network, applications and users. These solutions enable IT staff to
predict, preempt and resolve network and service delivery problems while
facilitating the optimization and capacity planning of the network
infrastructure. NetScout nGenius® and Sniffer®
solutions are deployed at more than 20,000 of the world’s largest
enterprises, government agencies, and more than 148 service providers,
on over one million physical and 2,000 virtual network segments to
assure the network, applications, and service delivery to their users
and customers. For more information about NetScout go to 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, as amended and other federal securities
laws. Investors are cautioned that statements in this press release,
which are not strictly historical statements, including without
limitation, our financial guidance for fiscal 2013 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
slowdowns or downturns in economic conditions generally and in the
market for advanced network and service assurance solutions
specifically, 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, 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 the ability of NetScout to successfully
integrate Psytechnics, Fox Replay, Simena and Accanto, and achieve
operational efficiencies. 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, 2012 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.
©2012 NetScout Systems, Inc. All rights reserved. NetScout and the NetScout logo and nGenius are registered trademarks of NetScout Systems, Inc.
NetScout Systems, Inc. | |||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Three Months Ended |
|||||||||||||||
2012 | 2011 | ||||||||||||||
Revenue: | |||||||||||||||
Product | $ | 40,262 | $ | 29,531 | |||||||||||
Service | 36,099 | 33,765 | |||||||||||||
Total revenue | 76,361 | 63,296 | |||||||||||||
Cost of revenue: | |||||||||||||||
Product | 10,070 | 7,647 | |||||||||||||
Service | 6,793 | 6,249 | |||||||||||||
Total cost of revenue | 16,863 | 13,896 | |||||||||||||
Gross profit | 59,498 | 49,400 | |||||||||||||
Operating expenses: | |||||||||||||||
Research and development | 14,077 | 11,320 | |||||||||||||
Sales and marketing | 30,149 | 26,772 | |||||||||||||
General and administrative | 6,557 | 6,534 | |||||||||||||
Amortization of acquired intangible assets | 586 | 482 | |||||||||||||
Restructuring charges | (87 | ) | - | ||||||||||||
Total operating expenses | 51,282 | 45,108 | |||||||||||||
Income from operations | 8,216 | 4,292 | |||||||||||||
Interest and other expense, net | (356 | ) | (399 | ) | |||||||||||
Income before income tax expense | 7,860 | 3,893 | |||||||||||||
Income tax expense | 2,852 | 1,494 | |||||||||||||
Net income | $ | 5,008 | $ | 2,399 | |||||||||||
Basic net income per share | $ | 0.12 | $ | 0.06 | |||||||||||
Diluted net income per share | $ | 0.12 | $ | 0.06 | |||||||||||
Weighted average common shares outstanding used in computing: | |||||||||||||||
Net income per share - basic | 41,742 | 42,608 | |||||||||||||
Net income per share - diluted | 42,453 | 43,343 |
NetScout Systems, Inc. | |||||||||||||
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures | |||||||||||||
(In thousands, except per share data) | |||||||||||||
Three Months Ended June 30, |
|||||||||||||
2012 | 2011 | ||||||||||||
GAAP Revenue | $ | 76,361 | $ | 63,296 | |||||||||
Deferred revenue fair value adjustment | 138 | 20 | |||||||||||
Non-GAAP Revenue | $ | 76,499 | $ | 63,316 | |||||||||
GAAP Gross profit | $ | 59,498 | $ | 49,400 | |||||||||
Deferred revenue fair value adjustment | 138 | 20 | |||||||||||
Shared-based compensation expense (1) | 115 | 112 | |||||||||||
Amortization of acquired intangible assets (2) | 1,417 | 1,098 | |||||||||||
Business development and integration expense (3) | - | 4 | |||||||||||
Non-GAAP Gross profit | $ | 61,168 | $ | 50,634 | |||||||||
GAAP Income from operations | $ | 8,216 | $ | 4,292 | |||||||||
Deferred revenue fair value adjustment | 138 | 20 | |||||||||||
Shared-based compensation expense (1) | 2,247 | 2,159 | |||||||||||
Amortization of acquired intangible assets (2) | 2,003 | 1,580 | |||||||||||
Business development and integration expense (3) | 357 | 602 | |||||||||||
Compensation for post combination services (4) | 372 | - | |||||||||||
Restructuring charges | (87 | ) | - | ||||||||||
Non-GAAP Income from operations | $ | 13,246 | $ | 8,653 | |||||||||
GAAP Net income | $ | 5,008 | $ | 2,399 | |||||||||
Deferred revenue fair value adjustment | 138 | 20 | |||||||||||
Shared-based compensation expense (1) | 2,247 | 2,159 | |||||||||||
Amortization of acquired intangible assets (2) | 2,003 | 1,580 | |||||||||||
Business development and integration expense (3) | 357 | 602 | |||||||||||
Compensation for post combination services (4) | 372 | - | |||||||||||
Restructuring charges | (87 | ) | - | ||||||||||
Income tax adjustments (5) | (1,911 | ) | (1,295 | ) | |||||||||
Non-GAAP Net income | $ | 8,127 | $ | 5,465 | |||||||||
GAAP Diluted Net income per share | $ | 0.12 | $ | 0.06 | |||||||||
Share impact of non-GAAP adjustments identified above | 0.07 | 0.07 | |||||||||||
Non-GAAP Diluted net income per share | $ | 0.19 | $ | 0.13 | |||||||||
Shares used in computing non-GAAP diluted net income per share | 42,453 | 43,343 | |||||||||||
(1 | ) | Share-based compensation expense included in these amounts | |||||||||||
is as follows: | |||||||||||||
Cost of product revenue | $ | 49 | $ | 47 | |||||||||
Cost of service revenue | 66 | 65 | |||||||||||
Research and development | 644 | 577 | |||||||||||
Sales and marketing | 718 | 770 | |||||||||||
General and administrative | 770 | 700 | |||||||||||
Total share-based compensation expense | $ | 2,247 | $ | 2,159 | |||||||||
(2 | ) | Amortization expense related to acquired software and product | |||||||||||
technology included in these amounts is as follows: | |||||||||||||
Cost of product revenue | $ | 1,417 | $ | 1,098 | |||||||||
Operating expenses | 586 | 482 | |||||||||||
Total amortization expense | $ | 2,003 | $ | 1,580 | |||||||||
(3 | ) | Business development and integration expense included in | |||||||||||
these amounts is as follows: | |||||||||||||
Cost of service revenue | $ | - | $ | 4 | |||||||||
Research and development | - | 27 | |||||||||||
Sales and marketing | - | 28 | |||||||||||
General and administrative | 357 | 543 | |||||||||||
Other income (expense), net | - | - | |||||||||||
Total business development and integration expense | $ | 357 | $ | 602 | |||||||||
(4 | ) | Compensation for post combination services included in these | |||||||||||
amounts is as follows: | |||||||||||||
Research and development | $ | 372 | $ | - | |||||||||
(5 | ) | Total income tax adjustment is as follows: | |||||||||||
Tax effect of non-GAAP adjustments above at 38% | $ | (1,911 | ) | $ | (1,657 | ) | |||||||
Discrete tax adjustment | - | 362 | |||||||||||
Total income tax adjustments | $ | (1,911 | ) | $ | (1,295 | ) |
Consolidated Balance Sheets | ||||||||||||||
(In thousands) | ||||||||||||||
June 30, 2012 |
March 31, 2012 |
|||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash, cash equivalents and marketable securities | $ | 209,542 | $ | 196,872 | ||||||||||
Accounts receivable, net | 38,809 | 69,795 | ||||||||||||
Inventories | 7,494 | 8,021 | ||||||||||||
Prepaid expenses and other current assets | 14,863 | 14,999 | ||||||||||||
Total current assets | 270,708 | 289,687 | ||||||||||||
Fixed assets, net | 17,029 | 16,457 | ||||||||||||
Goodwill and intangible assets, net | 221,974 | 225,069 | ||||||||||||
Deferred income taxes | 15,385 | 17,892 | ||||||||||||
Long-term marketable securities | 29,690 | 16,644 | ||||||||||||
Other assets | 1,840 | 2,008 | ||||||||||||
Total assets | $ | 556,626 | $ | 567,757 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 8,106 | $ | 7,539 | ||||||||||
Accrued compensation | 19,119 | 23,050 | ||||||||||||
Accrued other | 9,574 | 10,009 | ||||||||||||
Deferred revenue | 88,759 | 93,493 | ||||||||||||
Total current liabilities | 125,558 | 134,091 | ||||||||||||
Deferred tax liability | 1,330 | 1,410 | ||||||||||||
Other long-term liabilities | 5,818 | 7,175 | ||||||||||||
Accrued long-term retirement benefits | 1,933 | 1,990 | ||||||||||||
Long-term deferred revenue | 18,005 | 18,722 | ||||||||||||
Long-term debt, net of current portion | 62,000 | 62,000 | ||||||||||||
Total liabilities | 214,644 | 225,388 | ||||||||||||
Stockholders' equity: | ||||||||||||||
Common stock | 48 | 48 | ||||||||||||
Additional paid-in capital | 239,455 | 237,289 | ||||||||||||
Accumulated other comprehensive loss | (936 | ) | 212 | |||||||||||
Treasury stock, at cost | (62,445 | ) | (56,032 | ) | ||||||||||
Retained earnings | 165,860 | 160,852 | ||||||||||||
Total stockholders' equity | 341,982 | 342,369 | ||||||||||||
Total liabilities and stockholders' equity | $ | 556,626 | $ | 567,757 |
CONTACT:
NetScout Systems, Inc.
Catherine Taylor, 978-614-4286
Director
of Investor Relations
IR@netscout.com