OPNET Announces Results for Fourth Quarter of Fiscal 2005; Conference

OPNET Announces Results for Fourth Quarter of Fiscal 2005; Conference call/Webcast scheduled for 5:00 pm EDT, May 16, 2005

    Business Editors/Technology Writers

    BETHESDA, Md.--(BUSINESS WIRE)--May 16, 2005--OPNET Technologies, Inc. (NASDAQ:OPNT), a leading provider of management software for networks and applications, today announced financial results for the fourth quarter of fiscal 2005. Revenue for the quarter ended March 31, 2005 was a record $17.2 million compared to $16.3 million for the same quarter in the prior year. Earnings per share for the fourth quarter of fiscal 2005 was negative $0.03 on a diluted basis, compared to a positive $0.10 in the same quarter of the prior year.
    For the year ended March 31, 2005, revenues were $64.2 million, compared to $56.5 million for the prior year. Earnings per share for the year ended March 31, 2005 was $0.10 on a diluted basis, compared to $0.28 for the year ended March 31, 2004.
    Marc A. Cohen, OPNET's Chairman and CEO, stated, "We are very pleased to report record quarterly revenues for Q4 of fiscal 2005, in addition to full year revenue growth of 13.8% over fiscal 2004. We maintained strong revenue visibility as a result of our deferred revenues as of March 31, 2005. While we are pleased with these top line results, we are disappointed that our Q4 EPS fell short of our Q4 guidance. Our Q4 EPS was negatively impacted by Sarbanes-Oxley implementation costs of approximately $1.8 million. Total costs associated with Sarbanes-Oxley implementation efforts during fiscal 2005 were approximately $2.4 million. The degree to which Sarbanes-Oxley-related costs will negatively impact EPS is expected to significantly decrease during fiscal 2006." Mr. Cohen continued, "During Q4 we also accelerated investments in personnel to support our recently announced agreement with Cisco Systems, along with other business opportunities. We believe our alliance with Cisco represents a significant worldwide opportunity to reach new customers and grow our business. We are therefore making the necessary strategic investments to support this next phase of growth."

    Financial Highlights for the Fourth Quarter of Fiscal 2005

--	Grew revenue 5.3% to a record $17.2 million from $16.3 million in revenue for the fourth quarter of fiscal 2004.
--	Grew revenue sequentially 7% from $16.1 million for the third quarter of fiscal 2005.
--	Maintained a strong balance sheet with $82.2 million in cash and marketable securities at March 31, 2005.

    First Quarter Fiscal Year 2006 Financial Outlook

    OPNET expects fiscal first quarter revenue to be between $16.6 and $17.5 million and earnings per share on a diluted basis to be between negative $0.03 and $0.01. These amounts represent management's current expectations about the Company's future financial performance, based on information available at this time.
    OPNET will hold an investor conference call on Monday, May 16, 2005 at 5:00 pm Eastern Time to review financial results for the fourth quarter of fiscal 2005. OPNET's fiscal 2005 fourth quarter financial results will be released after the market closes on Monday, May 16, 2005.

    To listen to the OPNET investor conference call:

    -- Call 877-407-9205 in the U.S. or 201-689-8054 for
    international callers, or

    -- Use the webcast at www.opnet.com, or at www.vcall.com (click
    on OPNT under "Today's VCalls"). Investors are advised to go
    to the web site at least 15 minutes early to register,
    download, and install any necessary audio software.

    To listen to the archived call:

    -- Call the replay phone number at 877-660-6853 or 201-612-7415
    for international callers. For replay, enter account # 286,
    conference ID # 147919. The replay will be available from 7:00
    pm Eastern Time May 16th through 11:59 pm Eastern Time May
    20th.

    -- The webcast will be available at www.opnet.com or at
    www.vcall.com, archived for seven days.

    About OPNET Technologies, Inc.

    Founded in 1986, OPNET Technologies, Inc. (NASDAQ:OPNT) is a leading provider of management software for networks and applications. For more information about OPNET and its products, visit www.opnet.com.

    OPNET and OPNET Technologies, Inc. are trademarks of OPNET Technologies, Inc. All other trademarks are the property of their respective owners.

    Statements in this press release that are not purely historical facts may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. OPNET Technologies, Inc. ("OPNET") assumes no obligation to update statements. Forward-looking statements are predictions based upon information available to OPNET as of the date of this press release and involve risks and uncertainties; therefore, actual events or results may differ materially. For a discussion of risk factors, see OPNET's reports, including its most recent 10-Q and 10-K, filed with the Securities & Exchange Commission. In particular, OPNET's estimates of its quarterly financial results discussed in this press release are based on preliminary estimates, and OPNET has not yet completed a full detailed analysis of its financial results for the quarter. Final results could differ from these estimates.

    Note to editors: The word OPNET is spelled with all upper-case letters.

OPNET Technologies, Inc. Condensed Consolidated Statements of Operations (unaudited)

Three Months Twelve Months Ended Ended March 31, March 31, ----------------- ----------------- 2005 2004 2005 2004 -------- -------- -------- -------- (in thousands, except per share data) Revenues: New software licenses $ 7,929 $ 8,177 $29,507 $28,164 Software license updates and technical support 5,188 4,245 19,805 15,152 Professional services 4,062 3,893 14,931 13,137 -------- -------- -------- -------- Total revenues 17,179 16,315 64,243 56,453 -------- -------- -------- --------

Cost of revenues: New software licenses 200 217 778 831 Software license updates and technical support 614 542 2,348 1,730 Professional services 3,026 2,208 10,154 7,510 Amortization of acquired technology 191 134 651 509 -------- -------- -------- -------- Total cost of revenues 4,031 3,101 13,931 10,580 -------- -------- -------- --------

Gross profit 13,148 13,214 50,312 45,873 -------- -------- -------- -------- Operating expenses: Research and development 4,619 3,590 15,455 13,040 Sales and marketing 6,235 5,402 22,803 19,446 General and administrative 3,877 1,509 9,742 5,717 -------- -------- -------- -------- Total operating expenses 14,731 10,501 48,000 38,203 -------- -------- -------- --------

(Loss) income from operations (1,583) 2,713 2,312 7,670 Interest and other income, net 597 158 1,384 594 -------- -------- -------- -------- (Loss) income before provision for income taxes (986) 2,871 3,696 8,264 (Benefit) provision for income taxes (335) 840 1,644 2,506 -------- -------- -------- -------- Net (loss) income $ (651) $ 2,031 $ 2,052 $ 5,758 ======== ======== ======== ======== Basic net (loss) income per common share $ (0.03) $ 0.10 $ 0.10 $ 0.29 ======== ======== ======== ======== Diluted net (loss) income per common share $ (0.03) $ 0.10 $ 0.10 $ 0.28 ======== ======== ======== ======== Basic weighted average common shares outstanding 20,248 19,973 20,158 19,697 ======== ======== ======== ======== Diluted weighted average common shares outstanding 20,548 21,161 20,624 20,650 ======== ======== ======== ========

OPNET TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS (unaudited)

March 31, ------------------- 2005 2004 --------- --------- (in thousands) ASSETS Current assets: Cash and cash equivalents $ 38,171 $ 41,492 Marketable securities 44,014 40,001 Accounts receivable, net 13,480 10,044 Unbilled accounts receivable 2,341 2,559 Deferred income taxes, prepaid expenses and other current assets 3,599 1,772 --------- --------- Total current assets 101,605 95,868 --------- ---------

Property and equipment, net 6,227 6,410 Intangible assets, net 1,279 1,240 Goodwill 14,639 12,212 Deferred income taxes and other assets 1,264 952 --------- --------- Total assets $125,014 $116,682 ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 828 $ 934 Accrued liabilities 6,874 4,218 Deferred and accrued income taxes 208 173 Deferred revenue 14,824 12,918 --------- --------- Total current liabilities 22,734 18,243 --------- ---------

Note payable 150 300 Deferred rent 1,107 994 Deferred revenue 1,058 774 --------- --------- Total liabilities 25,049 20,311 --------- ---------

Commitments and contingencies (note 9)

Stockholders' equity: Common stock 26 26 Additional paid-in capital 79,421 77,808 Deferred compensation (15) (21) Retained earnings 24,713 22,661 Accumulated other comprehensive (loss) income (80) (3) Treasury stock (4,100) (4,100) --------- --------- Total stockholders' equity 99,965 96,371 --------- --------- Total liabilities and stockholders' equity $125,014 $116,682 ========= =========

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CONTACT: OPNET Technologies, Inc. Media Contact: Margarita Castillo, 240-497-3000 Media@opnet.com or Investor Relations: Mel Wesley, 240-497-3000 ir@opnet.com

KEYWORD: MARYLAND INDUSTRY KEYWORD: BANKING SOFTWARE NETWORKING EARNINGS CONFERENCE CALLS SOURCE: OPNET Technologies, Inc.

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