View all news

NETSCOUT Systems Reports Fourth Quarter & Year-End Financial Results for Fiscal 2003

April 30, 2003

WESTFORD, Mass., April 30 /PRNewswire-FirstCall/ -- NetScout Systems, Inc. (Nasdaq: NTCT), a leading provider of network performance management solutions, today announced financial results for its fourth quarter and fiscal year ended March 31, 2003.

Revenue for the fourth quarter of fiscal year 2003 was $17.7 million, compared to revenue of $18.2 million in the previous quarter and revenue of $22.9 million in the fourth quarter of fiscal year 2002. The net loss for the quarter was $354,000, or ($0.01) per basic and diluted share, compared to a net loss of $328,000, or ($0.01) per basic and diluted share, for the previous quarter and compared to a net loss of $1.7 million, or ($0.06) per basic and diluted share, in the fourth quarter of fiscal year 2002.

For the fiscal year ended March 31, 2003, NetScout reported revenue of $71.7 million, a 13 percent decrease from $82.3 million for the fiscal year ended March 31, 2002. The net loss for the fiscal year ended March 31, 2003 was $2.5 million, or ($0.08) per basic and diluted share, compared to a net loss of $11.4 million, or ($0.39) per basic and diluted share, for the prior fiscal year.

Pro forma net loss for the fourth quarter of fiscal year 2003 was $27,000, or $0.00 per pro forma basic and diluted share, versus pro forma net income of $10,000, or $0.00 per pro forma diluted share, in the previous quarter and compared to pro forma net income of $1.4 million or $0.05 per pro forma diluted share in the fourth quarter of fiscal year 2002. Pro forma net income and net loss excludes acquisition and stock-based compensation costs.

Pro forma net loss for the fiscal year was $553,000, or ($0.02) per pro forma basic and diluted share, compared to pro forma net income of $1.4 million, or $0.05 per pro forma diluted share, in fiscal 2002.

"Given the continuing weak economy and tight enterprise IT spending, we achieved good results for the quarter," said Anil Singhal, President and CEO of NetScout Systems. "With the uncertainty of improving market conditions, we continue to maintain tight expense controls while we sustain our product development and sales momentum. We are on course in the deployment of our CDM(TM) strategy through innovative new products to be released during fiscal year 2004. We are pleased with the early success of our nGenius(R) Performance Manager product that is being adopted by customers as their core network management solution for superior data, optimal network performance and high ROI."

    Financial Highlights for the Fourth Quarter:
    * Total revenue decreased 2% sequentially and decreased 23% from the
     fourth quarter of fiscal year 2002.  Product revenue decreased 4%
     sequentially, and was down 32% from the fourth quarter of fiscal year
     2002.  Service revenue increased 1% sequentially, and increased 7% from
     the fourth quarter of fiscal year 2002.   Royalty revenue decreased 5%
     sequentially and was down 44% from the fourth quarter of fiscal year
     2002.
    * Gross margin was 76% of total revenue, up 1 point sequentially and up 2
     points compared to the fourth quarter of fiscal year 2002.
    * Cash flow from operations was positive.
    * Cash and short and long-term marketable securities increased by $949,000
     in the fourth quarter to $71.3 million.
    * 43 new customers were added worldwide in the fourth quarter.
    * 320 customers made repeat purchases.
    * 46 orders over $100,000 were received.
    * Direct sales represented 41% of total revenue; reseller revenue
     represented 59% of total revenue.
    * International business comprised approximately 25% of total revenue in
     the fourth quarter.

    Product Highlights for the Fourth Quarter:
    * NetScout released a new family of nGenius(R) WAN/Frame Relay Probes that
     will allow enterprises to extend management capabilities to T3/E3
     circuits in their corporate data centers and to T1/E1 circuits at remote
     sites.  The probes can optionally be configured with either Fast
     Ethernet LAN monitoring for integrated LAN and WAN performance
     management of remote facilities or an nGenius(R) Network Security
     Adaptor to extend the security perimeter of the corporate network.

    * A new nGenius(R) Gigabit Ethernet over Copper Probe was released during
     the quarter for enterprises that have upgraded their network from Fast
     Ethernet to Gigabit Ethernet while leveraging their existing twisted
     pair cabling.

    Fiscal Year 2003 in Review:
    * A major NetScout achievement in fiscal 2003 was the announcement and
     initial delivery of its new Common Data Model (CDM(TM)) technology and
     architecture, which will allow customers to consolidate performance
     management functions through its single solution, the nGenius(R)
     Performance Manager that advances the state of network management by
     reducing the number of tools and the complexity required to optimize the
     monitoring, troubleshooting, and performance of networks.  nGenius
     Performance Manager utilizes a simplified architecture that allows
     enterprises to address performance across the enterprise with superior
     information and greater ease. The nGenius Performance Manager provides
     capacity planning, application monitoring, network monitoring,
     troubleshooting, performance fault management, and service level
     management from a single, integrated solution.

    * NetScout introduced an Alliance Program targeted at both network
     infrastructure vendors and network management application providers.
     The alliances will leverage the value of the nGenius Performance
     Management solution by incorporating data from a wider range of network
     devices and by providing nGenius information to complementary network
     management applications.
    * New probes and probe add-ons were released during the year.  The
      additions and enhancements focused on incorporating a reduced size
      chassis, broader functions and higher speeds:
          * New probe product lines with reduced chassis size from 3U to 1U
           for conserving rack space.
          * nGenius(R) Gigabit Ethernet Aggregation Probe and the nGenius
           Eight-Port Gigabit Ethernet Probe for the fast growing gigabit
           Ethernet market.
          * nGenius(R) ATM OC-3/OC-12 probe for high-speed optical ATM
           environments.
          * nGenius(R) Fibre Channel probe for expanding nGenius Performance
           Manager's LAN and WAN support to include storage area networks.
          * nGenius(R) Network Security Adaptor for lending focus,
           flexibility, and forensics to network-based intrusion detection
           system deployments.
          * nGenius(R) Gigabit Ethernet over Copper Probe.
          * nGenius(R) WAN/Frame Relay Probes.
    * NetScout held its first User Conference that was attended by
     representatives from over 40 domestic and international companies.
    * This year NetScout added 51 partners to its channel partner program with
     an emphasis on international alliances, including Digital China,
     Dimension Data (UK and Germany), and SCS Networks (Singapore).

    Guidance:

NetScout's near term expectations are based on the continued climate of tight enterprise IT spending and the uncertain timing of general economic improvement. For the first quarter of fiscal 2004, the Company expects revenue to show little change from the fourth quarter of fiscal 2003, GAAP loss per share to be in the range of ($0.02) to ($0.01) and pro forma loss per share to be in the range of ($0.01) to $0.00. The difference between GAAP and pro forma earnings per share is stock-based compensation of $49,000 and amortization of other intangible assets of $272,000. The Company expects to be cash neutral in the quarter.

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. Please log onto the website 15 minutes prior to the broadcast. Alternatively, shareholders can listen to the call by dialing 800-450-0785 (U.S.) and 612-332-0228 (International). A replay of the call will be available after 8:00 p.m. ET this evening for approximately two weeks. The numbers for the replay are 800-475-6701 (U.S.) and 320-365-3844 (International). The access code is 678639.

About NetScout Systems, Inc.

NetScout Systems, Inc. (Nasdaq: NTCT) is a market leader and pioneer of integrated network performance management solutions for leading companies and service providers worldwide. NetScout's offerings are based upon its nGenius(R) Performance Management System, an integrated solution of advanced monitoring and reporting applications that draw on the rich performance data generated by NetScout's real-time, application-aware probes, advanced intelligent software agents and other network devices. The nGenius System helps organizations increase their return on infrastructure investments by optimizing the performance of their network and applications. NetScout is headquartered in Westford, Massachusetts and has offices in North America, Europe and Asia. Further information on the company is available on the World Wide Web 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. 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 strategic relationships with Cisco Systems and other 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(R) product platform probes and software solutions and the implementation of the Company's CDM(TM) Technology strategy, the ability of NetScout 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, as well as risks associated with a continued climate of tight IT spending, 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, 2002, and its quarterly report on Form 10-Q for the quarter ended December 31, 2002 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.

NetScout, nGenius, and the NetScout logo are registered trademarks of NetScout Systems, Inc., Because the network is the business and Common Data Model (CDM) Technology are trademarks of NetScout Systems, Inc. NetScout reserves the right, at its sole discretion, to make changes at any time in its technical information, specifications, and service and support programs.

The Company's condensed consolidated statements of operations and balance sheets are attached.

    Contacts:
     Catherine Taylor
     Director of Investor Relations
     NetScout Systems, Inc.
     978-614-4286
     IR@netscout.com

                              NetScout Systems, Inc.
                       Condensed Consolidated Balance Sheets
                                  (In thousands)
                                    (Unaudited)

                                                    March 31,     March 31,
                                                      2003          2002
         Assets
         Current assets:
            Cash and cash equivalents                $43,823        $19,332
            Marketable securities                     27,442         44,849
            Accounts receivable, net                  11,906         12,932
            Inventories                                2,982          3,698
            Refundable income taxes                    1,226            -
            Deferred income taxes                      1,782          1,293
            Prepaids and other current assets          2,088          2,876

               Total current assets                   91,249         84,980

         Fixed assets, net                             6,912          8,628
         Other intangible assets, net                    272          1,429
         Goodwill, net                                28,839         28,770
         Deferred income taxes                         7,651          7,617
         Long-term marketable securities                 -            5,084
         Other assets                                    -              790

                 Total assets                       $134,923       $137,298

         Liabilities and Stockholders' Equity
         Current liabilities:
            Accounts payable                          $1,403         $2,456
            Accrued compensation                       3,658          5,775
            Accrued other                              1,819          2,715
            Income tax payable                           -              542
            Deferred revenue                          16,242         13,103

               Total current liabilities              23,122         24,591

         Stockholders' equity:
            Common stock                                  34             34
            Additional paid-in capital               108,835        107,529
            Other comprehensive income                     7            -
            Deferred compensation                      (132)        (1,063)
            Treasury stock                          (26,366)       (25,755)
            Retained earnings                         29,423         31,962

               Total stockholders' equity            111,801        112,707

                 Total liabilities and
                  stockholders' equity              $134,923       $137,298

                               NetScout Systems Inc.
                              Condensed Consolidated
                             Statements of Operations
                                  (In thousands)
                                    (Unaudited)

                                        Three Months Ended    Year Ended
                                             March 31,          March 31,
                                           2003     2002     2003     2002
         Revenue:
            Product                      $10,223  $15,016  $41,696   $51,583
            Service                        6,441    6,000   24,527    21,102
            License and royalty            1,053    1,887    5,435     9,599
               Total revenue              17,717   22,903   71,658    82,284

         Cost of revenue:
              Product (including stock-based
               compensation of $0, $0, $0
              and $1, respectively)        3,070    5,043   13,282    18,465
              Service (including stock-based
               compensation of $1, $2, $6
              and $8, respectively)        1,203      960    4,565     3,628
                Total cost of revenue      4,273    6,003   17,847    22,093

         Gross margin                     13,444   16,900   53,811    60,191

         Operating expenses:
            Research and development
             (including stock-based
             compensation of
            $42, $551, $821 and $2,193,
             respectively)                 4,266    5,361   17,100    19,841
            Sales and marketing (including
             stock-based compensation of $11
            $26, $65 and $109,
              respectively)                8,091    9,079   33,380    36,017
            General and administrative
             (including stock-based
             compensation
            of $1, $2, $6 and $7,
             respectively)                 1,494    2,376    7,447     8,107
            Amortization of goodwill         -      2,202      -       9,026
            Amortization of other intangible
             assets                          272      380    1,088     1,457
                Total operating expenses  14,123   19,398   59,015    74,448

         Loss from operations              (679)  (2,498)  (5,204)  (14,257)
         Interest income and other expenses,
          net                                248      360    1,145     1,919
         Loss before income tax benefit    (431)  (2,138)  (4,059)  (12,338)
         Income tax benefit                 (77)    (397)  (1,520)     (927)
         Net loss                         $(354) $(1,741) $(2,539) $(11,411)

         Basic and diluted net
          loss per share                 $(0.01)  $(0.06)  $(0.08)   $(0.39)

         Shares used in computing:
              Basic and diluted net loss per
               share                      29,981   29,606   29,897    29,533

         Calculation of non-GAAP financial
          measures:
         Net loss                         $(354) $(1,741) $(2,539) $(11,411)
         Stock-based compensation (as detailed
          in expense categories above)        55      581      898     2,318
         Amortization of goodwill and other
          intangible assets                  272    2,582    1,088    10,483
         Pro forma net income (loss) excluding
          acquisition and stock-based
            compensation costs              $(27)  $1,422    $(553)   $1,390

         Pro forma diluted net income (loss)
          per share, excluding
             acquisition and stock-based
              compensation costs            $-      $0.05   $(0.02)    $0.05

         Shares used in computing pro forma
          diluted net income (loss) per share,
             excluding acquisition and stock-
              based compensation costs    29,981   30,341   29,897    30,051

SOURCE NetScout Systems, Inc.

Categories: Press Releases
View all news