UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Commission file number: 000-30931)
OPNET TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 7372 | 52-1483235 | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
7255 Woodmont Avenue
Bethesda, MD 20814
(Address of principal executive office)
(240) 497-3000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.). Yes x No ¨
The number of shares of the registrant’s Common Stock outstanding on December 31, 2004 was 20,208,937.
2
ITEM 1. Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
| December 31, 2004 |
March 31, 2004 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 43,029 | $ | 41,492 | ||||
| Marketable securities |
37,640 | 40,001 | ||||||
| Accounts receivable, net of $293 and $349 in allowance for doubtful accounts at December 31 and March 31, 2004, respectively |
13,900 | 10,044 | ||||||
| Unbilled accounts receivable |
2,189 | 2,559 | ||||||
| Deferred income taxes, prepaid expenses and other current assets |
2,503 | 1,772 | ||||||
| Total current assets |
99,261 | 95,868 | ||||||
| Property and equipment, net |
6,051 | 6,410 | ||||||
| Intangible assets, net |
1,470 | 1,240 | ||||||
| Goodwill |
15,818 | 12,212 | ||||||
| Deferred income taxes and other assets |
620 | 952 | ||||||
| Total assets |
$ | 123,220 | $ | 116,682 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 564 | $ | 934 | ||||
| Accrued liabilities |
4,378 | 4,218 | ||||||
| Deferred and accrued income taxes |
99 | 173 | ||||||
| Deferred revenue |
15,775 | 12,918 | ||||||
| Total current liabilities |
20,816 | 18,243 | ||||||
| Notes payable |
300 | 300 | ||||||
| Deferred rent |
1,101 | 994 | ||||||
| Deferred revenue |
982 | 774 | ||||||
| Total liabilities |
23,199 | 20,311 | ||||||
| Commitments and contingencies (Note 9) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock- par value $0.001; 5,000 shares authorized, no shares issued and outstanding at December 31 and March 31, 2004 |
— | — | ||||||
| Common stock-par value $0.001; 100,000 authorized; 26,343 and 26,184 shares issued at December 31 and March 31, 2004, respectively; 20,209 and 20,050 shares outstanding at December 31 and March 31, 2004, respectively |
26 | 26 | ||||||
| Additional paid-in capital |
78,640 | 77,808 | ||||||
| Deferred compensation |
— | (21 | ) | |||||
| Retained earnings |
25,365 | 22,661 | ||||||
| Accumulated other comprehensive loss |
90 | (3 | ) | |||||
| Treasury stock, at cost - 6,134 shares at December 31 and March 31, 2004 |
(4,100 | ) | (4,100 | ) | ||||
| Total stockholders’ equity |
100,021 | 96,371 | ||||||
| Total liabilities and stockholders’ equity |
$ | 123,220 | $ | 116,682 | ||||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three Months Ended December 31, |
Nine Months Ended December 31, | |||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||
| Revenues: |
||||||||||||
| New software licenses |
$ | 7,793 | $ | 7,113 | $ | 21,578 | $ | 19,987 | ||||
| Software license updates and technical support |
4,998 | 3,940 | 14,617 | 10,907 | ||||||||
| Professional services |
3,272 | 3,379 | 10,869 | 9,244 | ||||||||
| Total revenues |
16,063 | 14,432 | 47,064 | 40,138 | ||||||||
| Cost of revenues: |
||||||||||||
| New software licenses |
202 | 126 | 578 | 614 | ||||||||
| Software license updates and technical support |
597 | 445 | 1,734 | 1,188 | ||||||||
| Professional services |
2,367 | 2,048 | 7,128 | 5,302 | ||||||||
| Amortization of acquired technology |
192 | 125 | 460 | 375 | ||||||||
| Total cost of revenues |
3,358 | 2,744 | 9,900 | 7,479 | ||||||||
| Gross profit |
12,705 | 11,688 | 37,164 | 32,659 | ||||||||
| Operating expenses: |
||||||||||||
| Research and development |
3,780 | 3,144 | 10,836 | 9,450 | ||||||||
| Sales and marketing |
5,867 | 4,964 | 16,568 | 14,044 | ||||||||
| General and administrative |
2,475 | 1,438 | 5,865 | 4,208 | ||||||||
| Total operating expenses |
12,122 | 9,546 | 33,269 | 27,702 | ||||||||
| Income from operations |
583 | 2,142 | 3,895 | 4,957 | ||||||||
| Interest and other income, net |
326 | 135 | 787 | 436 | ||||||||
| Income before provision for income taxes |
909 | 2,277 | 4,682 | 5,393 | ||||||||
| Provision for income taxes |
740 | 658 | 1,979 | 1,666 | ||||||||
| Net income |
$ | 169 | $ | 1,619 | $ | 2,703 | $ | 3,727 | ||||
| Basic net income per common share |
$ | 0.01 | $ | 0.08 | $ | 0.13 | $ | 0.19 | ||||
| Diluted net income per common share |
$ | 0.01 | $ | 0.08 | $ | 0.13 | $ | 0.18 | ||||
| Basic weighted average common shares outstanding |
20,168 | 19,759 | 20,129 | 19,605 | ||||||||
| Diluted weighted average common shares outstanding |
20,758 | 20,906 | 20,626 | 20,489 | ||||||||
See accompanying notes to condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended December 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 2,703 | $ | 3,727 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
1,640 | 1,568 | ||||||
| Provision for losses on accounts receivable |
— | 72 | ||||||
| Deferred income taxes |
451 | (358 | ) | |||||
| Expense related to employee and other stock options |
2 | 158 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
(3,486 | ) | (1,680 | ) | ||||
| Prepaid expenses and other current assets |
(618 | ) | (827 | ) | ||||
| Other assets |
(240 | ) | (98 | ) | ||||
| Accounts payable |
(370 | ) | (104 | ) | ||||
| Accrued liabilities |
(724 | ) | 960 | |||||
| Accrued income taxes |
25 | (82 | ) | |||||
| Tax benefit from exercise of stock options |
— | 957 | ||||||
| Deferred revenue |
2,982 | 2,145 | ||||||
| Deferred rent |
107 | 281 | ||||||
| Net cash provided by operating activities |
2,472 | 6,719 | ||||||
| Cash flows from investing activities: |
||||||||
| Acquisition of businesses |
(3,431 | ) | — | |||||
| Purchase of property and equipment |
(810 | ) | (610 | ) | ||||
| Purchase of investments |
(40,759 | ) | (60,622 | ) | ||||
| Proceeds from sale/maturity of investments |
43,120 | 16,000 | ||||||
| Acquired technology |
— | (179 | ) | |||||
| Net cash used in investing activities |
(1,880 | ) | (45,411 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from exercise of common stock options |
487 | 2,062 | ||||||
| Proceeds from issuance of common stock under employee stock purchase plan |
364 | 312 | ||||||
| Net cash provided by financing activities |
851 | 2,374 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
94 | 4 | ||||||