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F5 Networks Announces Fourth Quarter And Fiscal 2012 Results

F5 believes that presenting its non-GAAP measure of earnings and earnings per share provides investors with an additional tool for evaluating the performance of the company’s core business and which management uses in its own evaluation of the company’s performance. Investors are encouraged to look at GAAP results as the best measure of financial performance. However, while the GAAP results are more complete, the company provides investors this supplemental measure since, with reconciliation to GAAP, it may provide additional insight into the company’s operational performance and financial results.

For reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, please see the section in our Condensed Consolidated Statement of Operations entitled “GAAP to Non-GAAP Reconciliation.”

 
F5 Networks, Inc.
Consolidated Balance Sheets
(unaudited, in thousands)
 
 

September 30,

September 30,
  2012     2011  
 

Assets

Current assets
Cash and cash equivalents $ 211,181 $ 216,784
Short-term investments 320,970 325,766
Accounts receivable, net of allowances of $3,254 and $2,898 185,172 165,676
Inventories 17,410 17,149
Deferred tax assets 10,362 8,391
Other current assets   30,986     29,907  
Total current assets   776,081     763,673  
 
Property and equipment, net 59,604 47,998
Long-term investments 662,803 470,203
Deferred tax assets 35,478 34,762
Goodwill 348,239 234,691
Other assets, net   28,996     17,222  
Total assets $ 1,911,201   $ 1,568,549  
 
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable $ 27,026 $ 33,525
Accrued liabilities 86,409 67,902
Deferred revenue   352,594     270,880  
Total current liabilities   466,029     372,307  
 
Other long-term liabilities 21,078 18,388
Deferred revenue, long-term   94,694     72,418  
Total long-term liabilities   115,772     90,806  
 
Commitments and contingencies
 
Shareholders’ equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding - -
Common stock, no par value; 200,000 shares authorized, 78,715 and 79,145
shares issued and outstanding 326,922 380,737
Accumulated other comprehensive loss (3,829 ) (6,422 )
Retained earnings   1,006,307     731,121  
Total shareholders' equity   1,329,400     1,105,436  
Total liabilities and shareholders' equity $ 1,911,201   $ 1,568,549  
 
       
F5 Networks, Inc.
Consolidated Statements of Operations

(unaudited, in thousands, except per share amounts)

 
 
Three Months Ended Twelve Months Ended
September 30, September 30,
  2012     2011     2012     2011  
 
Net revenues

Products

$ 209,718 $ 197,446 $ 818,555 $ 721,975
Services   152,841     117,169     558,692     429,859  
Total 362,559 314,615 1,377,247 1,151,834
 
Cost of net revenues (1)(2)
Products 35,752 34,485 137,102 129,325
Services   26,929     21,435     99,066     78,679  
Total   62,681     55,920     236,168     208,004  
Gross Profit 299,878 258,695 1,141,079 943,830
 
Operating expenses (1)(2)(3)
Sales and marketing 116,298 100,945 445,595 370,735
Research and development 47,731 36,552 177,406 138,910
General and administrative   24,015     21,867     91,775     83,523  
Total   188,044     159,364     714,776     593,168  
 
Income from operations 111,834 99,331 426,303 350,662
Other income, net   909     4,087     5,911     10,089  
Income before income taxes 112,743 103,418 432,214 360,751
Provision for income taxes   45,026     35,808     157,028     119,354  
Net Income $ 67,717   $ 67,610   $ 275,186   $ 241,397  
 
 
Net income per share - basic $ 0.86   $ 0.84   $ 3.48   $ 2.99  
Weighted average shares - basic   78,980     80,317     79,135     80,658  
 
Net income per share - diluted $ 0.85   $ 0.84   $ 3.45   $ 2.96  
Weighted average shares - diluted   79,425     80,766     79,780     81,482  
 
 
Non-GAAP Financial Measures
 
Net income as reported $ 67,717 $ 67,610 $ 275,186 $ 241,397
Stock-based compensation expense (4) 26,343 22,134 95,348 89,747
Amortization of purchased intangible assets (5) 1,610 - 4,843 -
Acquisition-related charges (5) - - 750 -
Tax effects related to above items (6,965 ) (4,499 ) (27,495 ) (22,835 )
Net income excluding stock-based compensation, amortization of purchased        
intangible assets and acquisition-related charges (non-GAAP) - diluted $ 88,705   $ 85,245   $ 348,632   $ 308,309  
 
Net income per share excluding stock-based compensation, amortization of
purchased intangible assets and acquisition-related charges (non-GAAP) - diluted $ 1.12   $ 1.06   $ 4.37   $ 3.78  
 
Weighted average shares - diluted   79,425     80,766     79,780     81,482  
 
(1) Includes stock-based compensation as follows:
Cost of net revenues $ 3,082 $ 2,565 $ 10,910 $ 9,358
Sales and marketing 10,043 8,756 36,988 34,682
Research and development 8,036 5,913 27,876 23,312
General and administrative   5,182     4,900     19,574     22,395  
$ 26,343   $ 22,134   $ 95,348   $ 89,747  
 
(2) Includes amortization of purchased intangible assets as follows:
Cost of net revenues $ 1,458 $ - $ 4,361 $ -
Sales and marketing   152       -       482       -  
$ 1,610     $ -     $ 4,843     $ -  
 
(3) Includes acquisition-related charges as follows:
General and administrative $ -     $ -     $ 750     $ -  
$ -     $ -     $ 750     $ -  
 
 
(4) Stock-based compensation is accounted for in accordance with the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”)
 
(5) Beginning with the second quarter of fiscal 2012, the company will exclude amortization of purchased intangible assets and acquisition-related charges in addition to stock-based compensation expense as a non-GAAP financial measure
 
 
F5 Networks, Inc.
Consolidated Statements of Cash Flows
(unaudited, in thousands)
 
 
Years Ended
September 30,
  2012     2011  
 
Operating activities
Net income $ 275,186 $ 241,397
Adjustments to reconcile net income to net cash provided by operating activities:
Realized loss (gain) on disposition of assets and investments 546 (163 )
Stock-based compensation 95,348 89,747
Provisions for doubtful accounts and sales returns 1,572 982
Depreciation and amortization 35,139 20,887
Deferred income taxes (4,293 ) 4,487
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable (20,207 ) (54,526 )
Inventories (262 ) 1,666
Other current assets (998 ) 8,000
Other assets (134 ) 81
Accounts payable and accrued liabilities 9,953 20,476
Deferred revenue   103,587     83,904  
Net cash provided by operating activities   495,437     416,938  
 
Investing activities
Purchases of investments (1,059,853 ) (979,597 )
Maturities of investments 784,601 795,142
Sales of investments 81,444 80,877
(Increase) decrease in restricted cash (19 ) 19
Acquisition of intangible assets (250 ) (5,715 )
Acquisition of businesses, net of cash acquired (128,335 ) -
Purchases of property and equipment   (29,867 )   (30,445 )
Net cash used in investing activities   (352,279 )   (139,719 )
 
Financing activities
Excess tax benefit from stock-based compensation 10,371 23,623
Proceeds from the exercise of stock options and
purchases of stock under employee stock purchase plan 25,174 21,239
Repurchase of common stock   (184,776 )   (271,526 )
Net cash used in financing activities   (149,231 )   (226,664 )
 
Net (decrease) increase in cash and cash equivalents (6,073 ) 50,555
Effect of exchange rate changes on cash and cash equivalents 470 (2,525 )
Cash and cash equivalents, beginning of period   216,784     168,754  
Cash and cash equivalents, end of period $ 211,181   $ 216,784  
 




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