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F5 Networks Announces Results For First Quarter Of Fiscal 2013

Stocks in this article: FFIV

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)
 
 
December 31, September 30,
2012 2012
 
Assets
Current assets
Cash and cash equivalents $ 184,563 $ 211,181
Short-term investments 333,174 320,970
Accounts receivable, net of allowances of $3,309 and $3,254 209,078 185,172
Inventories 18,723 17,410
Deferred tax assets 10,335 10,362
Other current assets   35,916     30,986  
Total current assets   791,789     776,081  
 
Property and equipment, net 62,026 59,604
Long-term investments 771,300 662,803
Deferred tax assets 36,234 35,478
Goodwill 348,239 348,239
Other assets, net   28,064     28,996  
Total assets $ 2,037,652   $ 1,911,201  
 
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable $ 32,221 $ 27,026
Accrued liabilities 117,413 86,409
Deferred revenue   379,944     352,594  
Total current liabilities   529,578     466,029  
 
Other long-term liabilities 21,163 21,078
Deferred revenue, long-term   100,612     94,694  
Total long-term liabilities   121,775     115,772  
 
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, 78,574 and 78,715 shares issued and outstanding

315,039 326,922
Accumulated other comprehensive loss (4,540 ) (3,829 )
Retained earnings   1,075,800     1,006,307  
Total shareholders' equity   1,386,299     1,329,400  
Total liabilities and shareholders' equity $ 2,037,652   $ 1,911,201  
 
         
F5 Networks, Inc.

Consolidated Statements of Operations

(unaudited, in thousands, except per share amounts)
 
 
Three months ended Three months ended Three months ended
December 31, September 30, December 31,
2012 2012 2011
 
Net revenues
Products $ 204,712 $ 209,718 $ 196,554
Services   160,739     152,841     125,878  
Total 365,451 362,559 322,432
 
Cost of net revenues (1)(2)
Products 31,792 35,752 33,200
Services   29,093     26,929     22,406  
Total   60,885     62,681     55,606  
Gross profit 304,566 299,878 266,826
 
Operating expenses (1)(2)
Sales and marketing 122,268 116,298 106,238
Research and development 48,541 47,731 39,122
General and administrative   24,673     24,015     21,677  
Total   195,482     188,044     167,037  
 
Income from operations 109,084 111,834 99,789
Other income, net   1,550     909     1,861  
Income before income taxes 110,634 # 112,743 101,650
Provision for income taxes   41,141     45,026     35,158  
Net Income $ 69,493   $ 67,717   $ 66,492  
 
 
Net income per share - basic $ 0.88   $ 0.86   $ 0.84  
Weighted average shares - basic   78,789     78,980     79,272  
 
Net income per share - diluted $ 0.88   $ 0.85   $ 0.83  
Weighted average shares - diluted   79,278     79,425     79,822  
 
 
Non-GAAP Financial Measures
 
Net income as reported $ 69,493 $ 67,717 $ 66,492
Stock-based compensation expense (3) 26,710 26,343 22,123
Amortization of purchased intangible assets (4) 1,033 1,610 -
Tax effects related to above items (6,613 ) (6,965 ) (6,375 )

 

     

Net income excluding stock-based compensation and amortization of purchased intangible assets (non-GAAP) - diluted

$ 90,623   $ 88,705   $ 82,240  
 

Net income per share excluding stock-based compensation and amortization of purchased intangible assets (non-GAAP) - diluted

$ 1.14   $ 1.12   $ 1.03  
 
Weighted average shares - diluted   79,278     79,425     79,822  
 
(1) Includes stock-based compensation as follows:
Cost of net revenues $ 2,967 $ 3,082 $ 2,538
Sales and marketing 10,556 10,043 9,054
Research and development 7,802 8,036 5,826
General and administrative   5,385     5,182     4,705  
$ 26,710   $ 26,343   $ 22,123  
 
(2) Includes amortization of purchased intangible assets as follows:
Cost of net revenues $ 958 $ 1,458 $ -
Sales and marketing   75       152     -  
$ 1,033     $ 1,610   $ -  
 

(3) 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”)

 

(4) 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)
 
 
Three months ended
December 31,
2012 2011
 

Operating activities

Net income $ 69,493 $ 66,492
Adjustments to reconcile net income to net cash provided by operating activities:
Realized loss on disposition of assets and investments 26 579
Stock-based compensation 26,710 22,123
Provisions for doubtful accounts and sales returns 349 415
Depreciation and amortization 9,934 5,822
Deferred income taxes (1,265 ) (598 )
Changes in operating assets and liabilities:
Accounts receivable (24,256 ) (22,601 )
Inventories (1,313 ) (344 )
Other current assets (4,979 ) (3,879 )
Other assets 428 562
Accounts payable and accrued liabilities 36,411 26,576
Deferred revenue   33,268     36,732  
Net cash provided by operating activities   144,806     131,879  
 
Investing activities
Purchases of investments (313,114 ) (262,499 )
Maturities of investments 165,193 199,102
Sales of investments 23,020 1,886
Increase in restricted cash (728 ) (3 )
Purchases of property and equipment   (7,788 )   (5,857 )
Net cash used in investing activities   (133,417 )   (67,371 )
 
Financing activities
Excess tax benefit from stock-based compensation 503 1,399

Proceeds from the exercise of stock options and purchases of stock under employee stock purchase plan

11,583 9,577
Repurchase of common stock   (50,000 )   (34,473 )
Net cash used in financing activities   (37,914 )   (23,497 )
 
Net (decrease) increase in cash and cash equivalents (26,525 ) 41,011
Effect of exchange rate changes on cash and cash equivalents (93 ) (307 )
Cash and cash equivalents, beginning of period   211,181     216,784  
Cash and cash equivalents, end of period $ 184,563   $ 257,488  
 




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