8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 25, 2005

F5 Networks, Inc.

(Exact name of registrant as specified in its charter)

Washington	000-26041	91-1714307
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

401 Elliott Avenue West
Seattle, WA 98119

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code                (206) 272-5555

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition
	Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT 99.1

Item 2.02 Results of Operations and Financial Condition

On October 25, 2005, F5 Networks, Inc. issued a press release regarding its financial results for the fourth quarter ended September 30, 2005. The press release is attached hereto as Exhibit 99.1. The information in this report shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:
  99.1      Press Release of F5 Networks, Inc. announcing quarterly earnings dated October 25, 2005.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	F5 NETWORKS, INC. (Registrant)
Date: October 25, 2005	By:	/s/ John McAdam
		John McAdam
		President and Chief Executive Officer

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT:	Investor Relations
	John Eldridge
	(206) 272-6571
	j.eldridge@f5.com

Public Relations

Alane Moran

(206) 272-6850

a.moran@f5.com

F5 Networks Announces Fourth Quarter and Fiscal 2005 Results

Quarterly revenue up 61 percent year over year

SEATTLE, WA — October 25, 2005 — F5 Networks, Inc . (NASDAQ: FFIV) today announced revenue of $80.6 million for the fourth quarter of fiscal 2005, up 10 percent from $73.1 million in the prior quarter and 61 percent from $50.2 million in the fourth quarter of fiscal 2004. Fourth quarter net income was $15.7 million ($0.39 per diluted share) compared to net income of $15.8 million ($.43 per diluted share) in the fourth quarter a year ago. For fiscal 2005, the company reported record annual revenue of $281.4 million, up 64 percent from $171.1 million in fiscal 2004. Net income for the year was $51.7 million ($1.34 per diluted share) compared to net income of $32.9 million ($0.92 per diluted share) in fiscal 2004.

During the fourth quarter of fiscal 2005, the company began expensing stock-based compensation. During the fourth quarter of fiscal 2004, F5 became subject to income taxes on U.S. income and also reversed the valuation allowance on U.S. deferred tax assets. The company is presenting pro forma annual and fourth quarter net income for fiscal years 2004 and 2005 to eliminate the impact of these items and report net income on a comparable basis.

On a pro forma basis, net income for the fourth quarter of fiscal 2005 was $19.0 million ($0.47 per diluted share) compared to net income of $14.0 million ($0.35 per diluted share) in the third quarter and $7.3 million ($0.20 per diluted share) for the fourth quarter of fiscal 2004, and net income for fiscal 2005 was $55.1 million ($1.42 per diluted share) compared to $18.9 million ($0.52 per diluted share) for fiscal 2004.

A reconciliation of reported net income to pro forma net income is included on the attached Consolidated Statements of Operations.

F5 president and chief executive officer John McAdam said the company’s second consecutive year of strong revenue growth resulted from growing demand for application delivery networking products that enhance the security, performance and availability of Web-based applications. “In addition, the

introduction of our new TMOS-based products in September 2004 has enabled us to leverage this growing demand by delivering integrated application delivery networking solutions that are demonstrably superior in functionality and performance. Both increasing awareness of the F5 brand and accelerating demand for the new products drove our growth throughout the year and propelled the company to a strong finish, with Q4 product revenue up 67 percent year-over-year.”

“With solid sequential revenue growth and gross margin steady at 77 percent, we continued to see further improvements in our operating results during the fourth quarter. Excluding stock-based compensation expense, which we began expensing in Q4, we achieved an operating margin of 31 percent, compared to 27 percent in the prior quarter and 20 percent in the fourth quarter a year ago. On the balance sheet, $32.7 million in cash flow from operations during the quarter helped boost cash and investments to $365 million at year end.”

As a result of the growing demand for application delivery networking solutions, coupled with the strength of the company’s current offerings and plans for the delivery and integration of new technology, McAdam said he expects the company’s growth to continue in fiscal 2006. “Earlier this month, we completed our acquisition of Swan Labs, rounding out our capabilities in application acceleration and WAN optimization. During the current quarter, we expect Swan’s products — Web Accelerator and WANJet — to begin contributing to our top-line growth, and over the next 12 months, we plan to migrate both products to TMOS. Also this month, we announced the availability of TrafficShield, our application firewall, as an application security module on BIG-IP, and early customer response to this tightly integrated solution has been very positive.”

“Moving ahead into the first quarter of fiscal 2006, I believe F5’s technology leadership, strong partnerships, channel leverage, and sound business model will further strengthen our competitive position and enable us to deliver continued sequential growth.” For the first quarter of fiscal 2006, McAdam said the company’s revenue target is $85 million to $87 million. Earnings for the first quarter are expected to be $0.33 to $0.34 per diluted share, including the charge for stock-based compensation. Excluding the compensation charge, the anticipated earnings range would have been $0.44 to $0.45 per diluted share. A reconciliation of the company’s expected reported and pro forma earnings is provided in the following table:

	Three months ended
	December 31, 2005
Reconciliation of Expected Pro Forma First Quarter Earnings	Low		High
Net income	$	13,400	$	13,900
Stock-based compensation expense, net of tax		4,400		4,400
Pro forma net income excluding stock-based compensation expense	$	17,800	$	18,300
Net income per share — diluted	$	0.33	$	0.34
Pro forma net income per share — diluted	$	0.44	$	0.45

Analyst/Investor Meeting

On Tuesday, November 1, F5 Networks will hold a meeting for analysts and investors at the Omni Berkshire Place in New York from 8:00am to noon. To register for this meeting, contact Carolyn Burkhardt (206.272.6590) or send email to analystmeeting2005@f5.com. The meeting will also be webcast live and an archived version will be available through Friday, November 18. The link for the live webcast and the archived version is http://www.f5.com/f5/ir/analystswebcast.html.

About F5 Networks

F5 Networks is the global leader in Application Delivery Networking. F5 provides solutions that make applications secure, fast and available for everyone, helping organizations get the most out of their investment. By adding intelligence and manageability into the network to offload applications, F5 optimizes applications and allows them to work faster and consume fewer resources. F5’s extensible architecture intelligently integrates application optimization, protection for the application and the network, and delivers application reliability — all on one universal platform. The company is headquartered in Seattle, Washington, with offices worldwide. For more information go to www.f5.com.

Forward Looking Statements

Statements in this press release concerning revenue and earnings targets and expected stock-based compensation expense for the first quarter of fiscal 2006 and other statements that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: customer acceptance of our new traffic management, security, application delivery and WAN optimization offerings, the timely development, introduction and acceptance of additional new products and features by F5 or its competitors; competitive pricing pressures; increased sales discounts; F5’s ability to sustain, develop and effectively utilize distribution relationships; F5’s ability to attract, train and retain qualified product development, marketing, sales, professional services and customer support personnel; F5’s ability to expand in international markets; and the unpredictability of F5’s sales cycle. F5 has no duty to update any guidance provided or other matters discussed in this press release. More information about potential risk factors that could affect F5’s business and financial results is included in the company’s annual report on Form 10-K for the fiscal year ended September 30, 2004, and other public filings with the Securities and Exchange Commission.

# # # #

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

	September 30,			September 30,
	2005			2004
Assets
Current assets
Cash and cash equivalents	$	51,867		$	24,901
Short-term investments		184,314			115,600
Accounts receivable, net of allowances of $2,969 and $3,161		41,703			22,665
Inventories		2,699			1,696
Deferred tax assets		3,935			2,934
Other current assets		9,906			5,776
Total current assets		294,424			173,572
Restricted cash		3,871			6,243
Property and equipment, net		16,158			11,954
Long-term investments		128,834			81,792
Deferred tax assets, long-term		36,212			28,446
Goodwill		49,677			50,067
Other assets, net		8,323			8,279
Total assets	$	537,499		$	360,353
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	7,668		$	4,840
Accrued liabilities		19,648			15,948
Deferred revenue		36,009			25,692
Total current liabilities		63,325			46,480
Other long-term liabilities		6,650			3,856
Deferred revenue, long-term		3,314			2,372
Total long-term liabilities		9,964			6,228
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value; 10,000 shares authorized, no shares outstanding		—			—
Common stock, no par value; 100,000 shares authorized 38,593 and 34,772 shares issued and outstanding		412,419			306,655
Accumulated other comprehensive loss		(1,430	)		(498	)
Retained earnings		53,221			1,488
Total shareholders’ equity		464,210			307,645
Total liabilities and shareholders’ equity	$	537,499		$	360,353

F5 Networks, Inc.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)

	Three months ended					Twelve months ended
	September 30,					September 30,
	2005		2004			2005		2004
Net revenues
Products	$	62,762	$	37,536		$	219,603	$	126,169
Services		17,845		12,683			61,807		45,021
Total		80,607		50,219			281,410		171,190
Cost of net revenues (1)
Products		13,886		8,489			48,985		28,404
Services		4,572		3,055			16,172		10,975
Total		18,458		11,544			65,157		39,379
Gross profit		62,149		38,675			216,253		131,811
Operating expenses (1)
Sales and marketing		25,521		17,597			89,253		65,378
Research and development		9,039		6,764			31,349		24,361
General and administrative		7,067		4,463			23,760		15,744
Total		41,627		28,824			144,362		105,483
Income from operations		20,522		9,851			71,891		26,328
Other income, net		2,925		891			8,076		2,731
Income before income taxes		23,447		10,742			79,967		29,059
Provision (benefit) for income taxes (1)		7,796		(5,039	)		28,234		(3,894	)
Net income	$	15,651	$	15,781		$	51,733	$	32,953
Net income per share — basic	$	0.41	$	0.46		$	1.39	$	0.99
Weighted average shares — basic		38,479		34,593			37,220		33,221
Net income per share — diluted	$	0.39	$	0.43		$	1.34	$	0.92
Weighted average shares — diluted		40,015		36,779			38,733		35,992
Reconciliation to pro forma results
Net income as reported	$	15,651	$	15,781		$	51,733		$32,953
Benefit for income taxes as reported		—		(5,039	)		—		(3,894	)
Income before income taxes		15,651		10,742			51,733		29,059
Stock-based compensation expense, net of income taxes (1)		3,328		—			3,328		—
Pro forma 32% and 35% provision for income taxes, respectively		—		3,437			—		10,171
Pro forma net income	$	18,979	$	7,305		$	55,061	$	18,888
Pro forma net income per share — diluted	$	0.47	$	0.20		$	1.42	$	0.52
Pro forma weighted average shares — diluted		40,015		36,779			38,733		35,992

(1) Includes stock-based compensation as follows:
Cost of net revenues	$	315		$	315
Sales and marketing		1,850			1,850
Research and development		1,345			1,345
General and administrative		1,063			1,063
Tax effect of stock based compensation		(1,245	)		(1,245	)
	$	3,328		$	3,328