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8-K - FORM 8-K - ACME PACKET INCd430013d8k.htm

Exhibit 99.1

 

LOGO

 

Investor Relations Contact:

Brian Norris

Acme Packet

+1.781.328.4790

bnorris@acmepacket.com

  

Media and Analyst Contact:

Mike O’Malley

Acme Packet

+1.781.869.2975

momalley@acmepacket.com

Acme Packet Reports Results for Third Quarter of 2012

– Company Updates Outlook for 2012 –

Bedford, Massachusetts – October 25, 2012 — Acme Packet, Inc. (NASDAQ: APKT), the leader in session delivery network solutions, today announced results for the third quarter of 2012 and updated its business outlook for 2012. All earnings per share results are on a fully diluted basis.

Results for the Third Quarter of 2012

Total revenue for the third quarter of 2012 was $65.3 million, compared to $70.6 million in the third quarter of 2011 and $67.6 million in the second quarter of 2012. GAAP net loss for the third quarter of 2012 was $5.5 million, or $(0.08) per share, compared to GAAP net income of $7.9 million, or $0.11 per share, in the third quarter of 2011 and GAAP net loss of $0.1 million, or $(0.00) per share, in the second quarter of 2012. Net income on a non-GAAP1 basis for the third quarter of 2012 was $4.7 million, or $0.07 per share, compared to $14.6 million, or $0.21 per share, in the third quarter of 2011, and $9.5 million, or $0.13 per share, in the second quarter of 2012.

Company Updates Business Outlook for 2012

The Company today updated its business outlook for 2012. The Company’s outlook is based on the current indications for its business, which may change at any time. A reconciliation of the Company’s expected GAAP to non-GAAP business outlook, and a statement as to the use of non-GAAP financial measures, is included at the end of this press release.


     

Business Outlook for Year Ending December 31, 2012

Estimate

  

Issued on July 26, 2012

  

Issued on October 25, 2012

Total revenue (in millions)    $270-$275    No change
GAAP Earnings (loss) Per Share    $(0.11)-$(0.07)    $(0.11)-$(0.08)
Non-GAAP1 Earnings Per Share    $0.43-$0.47    $0.44-$0.46

Company to Host Live Conference Call and Webcast

The Company’s management team plans to host a live conference call and webcast at 4:30 p.m. eastern time today to discuss the financial results as well as management’s outlook for the business. The conference call may be accessed in the United States by dialing 1.800.230.1085 and using access code “APKT”. The conference call may be accessed outside of the United States by dialing +1.612.234.9960 and using access code “APKT”. The conference call will be simultaneously webcast on the Company’s investor relations website, which can be accessed at www.ir.acmepacket.com. A replay of the conference call will be available approximately two hours after the call by dialing 1.800.475.6701 or +1.320.365.3844 and using access code 265599 or by accessing the webcast replay on the Company’s investor relations website.

1A reconciliation of GAAP to non-GAAP results, and a statement on the use of non-GAAP financial measures, is included at the end of this press release.

About Acme Packet

Acme Packet (NASDAQ: APKT), the leader in session delivery network solutions, enables the trusted, first-class delivery of next-generation voice, video, data and unified communications services and applications across IP networks. Our Net-Net product family fulfills demanding security, service assurance and regulatory requirements in service provider, enterprise and contact center networks. Based in Bedford, Massachusetts, Acme Packet designs and manufactures its products primarily in the USA, selling them through over 309 reseller partners worldwide. More than 1,850 customers in 109 countries have deployed over 20,000 Acme Packet systems, including 89 of the top 100 service providers and 48 of the Fortune 100. For more information visit www.acmepacket.com.

Acme Packet, Inc. Safe Harbor Statement

Statements contained herein that are not historical fact may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may relate to, among other things, expected financial and operating results, expected growth rates, future stock-based compensation and amortization expenses, future business prospects and market conditions. Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated. These include, but are not limited to: the amount of stock-based compensation awarded; the applicable Company stock price used to determine stock-based compensation; the exercise pattern of employee stock options; difficulties expanding the Company’s customer base; difficulties leveraging market opportunities; difficulties providing solutions that meet the needs of customers; poor product sales; long sales cycles; difficulties developing new products; difficulties in relationships with vendors and partners; higher risks in international operations; difficulties managing rapid growth; difficulties managing the Company’s financial performance; the ability to hire and retain employees and appropriately staff operations; the Company’s cash needs; the impact of new accounting pronouncements and increased competition. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in the Company’s recent filings with the Securities and Exchange Commission, including those factors discussed under the caption “Risk Factors” in such filings.


Acme Packet, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2012     2011     2012     2011  

Revenue:

        

Product

   $ 46,771      $ 53,077      $ 149,791      $ 177,507   

Maintenance, support and service

     18,550        17,544        53,944        46,814   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     65,321        70,621        203,735        224,321   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue:

        

Product

     9,584        8,778        29,347        30,090   

Maintenance, support and service

     4,261        3,042        11,894        8,573   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     13,845        11,820        41,241        38,663   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     51,476        58,801        162,494        185,658   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Sales and marketing

     35,090        27,201        98,230        75,640   

Research and development

     16,898        13,249        48,252        37,262   

General and administrative

     6,154        5,406        18,441        15,771   

Merger related costs

     30        120        643        300   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     58,172        45,976        165,566        128,973   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

     (6,696     12,825        (3,072     56,685   

Other income (expense), net

     52        (53     127        (147
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

     (6,644     12,772        (2,945     56,538   

(Benefit from) provision for income taxes

     (1,129     4,846        268        20,895   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (5,515   $ 7,926      $ (3,213   $ 35,643   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share:

        

Basic

   $ (0.08   $ 0.12      $ (0.05   $ 0.54   

Diluted

   $ (0.08   $ 0.11      $ (0.05   $ 0.50   

Weighted average number of common shares used in the calculation of net (loss) income per share:

        

Basic

     68,246,091        66,752,669        68,235,987        66,011,761   

Diluted

     68,246,091        70,908,590        68,235,987        70,887,241   


Acme Packet, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     September 30,
2012
    December 31,
2011
 
Assets     

Current assets:

    

Cash and cash equivalents

   $ 56,167      $ 160,403   

Short-term investments

     307,294        191,672   

Accounts receivable, net

     57,155        59,739   

Inventory

     11,354        10,246   

Deferred product costs

     814        1,515   

Deferred tax asset, net

     4,809        4,809   

Income taxes receivable

     4,599        4,341   

Other current assets

     5,091        4,385   
  

 

 

   

 

 

 

Total current assets

     447,283        437,110   

Long-term investments

     10,046        20,096   

Property and equipment, net

     38,030        26,252   

Intangible assets, net

     20,327        8,569   

Goodwill

     15,170        3,778   

Deferred tax asset, net

     18,371        18,371   

Other assets

     395        230   
  

 

 

   

 

 

 

Total assets

   $ 549,622      $ 514,406   
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Current liabilities:

    

Accounts payable

   $ 10,544      $ 10,318   

Accrued expenses and other current liabilities

     14,798        12,715   

Deferred revenue

     26,385        22,261   
  

 

 

   

 

 

 

Total current liabilities

     51,727        45,294   
  

 

 

   

 

 

 

Deferred revenue, net of current portion

     2,235        2,049   
  

 

 

   

 

 

 

Deferred rent

     9,640        4,533   
  

 

 

   

 

 

 

Deferred tax liability

     4,064        —     
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     75        74   

Additional paid-in capital

     415,196        363,769   

Treasury stock, at cost

     (66,311     (37,522

Accumulated other comprehensive income

     1        1   

Retained earnings

     132,995        136,208   
  

 

 

   

 

 

 

Total stockholders’ equity

     481,956        462,530   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 549,622      $ 514,406   
  

 

 

   

 

 

 

Condensed Consolidated Statements of Cash Flow Data

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2012     2011      2012     2011  

Cash provided by operating activities

   $ 6,701      $ 16,441       $ 57,020      $ 36,646   

Cash provided by (used in) investing activities

     16,521        10,516         (143,820     (14,486

Cash (used in) provided by financing activities

     (28,398     9,434         (17,436     43,133   


Acme Packet, Inc.

Statement on Use of Non-GAAP Financial Measures and

Reconciliation of Non-GAAP Net (Loss) Income and Non-GAAP Net (Loss) Income Per Share

(in thousands, except share and per share data)

(unaudited)

Statement on Use of Non-GAAP Financial Measures:

To supplement its condensed consolidated statements of operations presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company discloses certain non-GAAP financial measures, including “non-GAAP net (loss) income”, “net (loss) income on a non-GAAP basis”, “non-GAAP EPS”, and “net (loss) income per share on a non-GAAP basis”. These non-GAAP financial measures are not presented in accordance with GAAP and are not meant to be a substitute for the most directly comparable GAAP measures of “net (loss) income”, “EPS” or “net (loss) income per share”. Rather, these non-GAAP financial measures should be evaluated in conjunction with its most directly comparable GAAP financial measure and the Company’s financial statements as a whole.

Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in the Company’s business, to assess its performance relative to its competitors, and to establish operational goals and forecasts that are used in allocating resources. Management uses these non-GAAP financial measures because they exclude stock-based compensation expense which is a non-cash charge and related payroll taxes, amortization of acquired intangible assets, and merger and related costs associated with the Company’s acquisition activities all of which are non-operational costs and expenses. By excluding stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, and merger and related costs, management can compare the Company’s operations to prior periods and to the operations of other companies in its industry who may have materially different unusual, non-operational charges. Management does not consider any of stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, and merger and related costs to be part of the Company’s operating activities or meaningful in evaluating the Company’s past financial performance or future prospects. Management believes that excluding these items is useful to investors because it is more representative of ongoing costs and therefore more comparable to historical operations.

Because management uses them, management believes that the disclosure of these non-GAAP financial measures to investors provides greater transparency and useful information to help the investor better understand the Company’s operating performance and to evaluate the methodology used by management to evaluate and measure such performance. Notwithstanding their utility to investors in understanding operational trends, these non-GAAP measures should not be considered measures of the Company’s liquidity. In addition, the Company cautions that its definition of “non-GAAP net (loss) income”, “net (loss) income on a non-GAAP basis”, “non-GAAP EPS” and “net (loss) income per share on a non-GAAP basis” may differ from similar measures used by other companies and may differ from period to period. Also, in future periods, management may make other adjustments for expenses and gains that it does not consider reflective of core operating performance in a particular period thereby modifying its definition of “non-GAAP net (loss) income”, “non-GAAP EPS” and “non-GAAP net (loss) income per share” by excluding these other or additional expenses and gains.


Reconciliation of GAAP to Non-GAAP Financial Measures for the Three Months Ended September 30, 2012, June 30, 2012 and September 30, 2011 and for the Nine Months Ended September 30, 2012 and September 30, 2011:

Acme Packet, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended September 30, 2012

(in thousands, except per share data)

(unaudited)

 

     GAAP     Stock-based
compensation
expense and
related payroll
taxes
    Amortization of
acquired
intangible
assets
    Merger
related
costs
    Non-GAAP1  

Cost of revenue:

          

Product

   $ 9,584      $ (438   $ (658   $ —        $ 8,488   

Maintenance, support and service

     4,261        (702     —          —          3,559   

Operating expenses:

          

Sales and marketing

     35,090        (6,794     (261     —          28,035   

Research and development

     16,898        (4,181     (51     —          12,666   

General and administrative

     6,154        (1,336     —          —          4,818   

Merger related costs

     30        —          —          (30     —     

(Benefit from) provision for income taxes

     (1,129     3,844        359        —          3,074   

Net (loss) income

     (5,515     9,607        611        30        4,733   

Net (loss) income per share:

          

Basic

   $ (0.08   $ 0.14      $ 0.01      $ 0.00      $ 0.07   

Diluted

   $ (0.08   $ 0.14      $ 0.01      $ 0.00      $ 0.07   

Weighted average number of shares used in the calculation of net (loss) income per share:

          

Basic

     68,246,091        68,246,091        68,246,091        68,246,091        68,246,091   

Diluted

     68,246,091        70,102,125        70,102,125        70,102,125        70,102,125   


Acme Packet, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended June 30, 2012

(in thousands, except per share data)

(unaudited)

 

     GAAP     Stock-based
compensation
expense and
related payroll
taxes
    Amortization
of acquired
intangible
assets
    Merger
related
costs
    Non-GAAP1  

Cost of revenue:

          

Product

   $ 9,785      $ (442   $ (583   $ —        $ 8,760   

Maintenance, support and service

     3,675        (717     —          —          2,958   

Operating expenses:

          

Sales and marketing

     32,138        (6,570     (238     —          25,330   

Research and development

     16,257        (4,354     (34     —          11,869   

General and administrative

     5,849        (1,502     —          —          4,347   

Merger related costs

     576        —          —          (576     —     

(Benefit from) provision for income taxes

     (588     5,072        319        —          4,803   

Net (loss) income

     (127     8,513        536        576        9,498   

Net (loss) income per share:

          

Basic

   $ (0.00   $ 0.12      $ 0.01      $ 0.01      $ 0.14   

Diluted

   $ (0.00   $ 0.12      $ 0.01      $ 0.01      $ 0.13   

Weighted average number of shares used in the calculation of net (loss) income per share:

          

Basic

     68,507,111        68,507,111        68,507,111        68,507,111        68,507,111   

Diluted

     68,507,111        70,927,009        70,927,009        70,927,009        70,927,009   


Acme Packet, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended September 30, 2011

(in thousands, except per share data)

(unaudited)

 

     GAAP      Stock-based
compensation
expense and
related payroll
taxes
    Amortization
of acquired
intangible
assets
    Merger related
costs
    Non-GAAP1  

Cost of revenue:

           

Product

   $ 8,778       $ (327   $ (385   $ —        $ 8,066   

Maintenance, support and service

     3,042         (568     —          —          2,474   

Operating expenses:

           

Sales and marketing

     27,201         (4,784     (101     —          22,316   

Research and development

     13,249         (2,929     (11     —          10,309   

General and administrative

     5,406         (1,615     —          —          3,791   

Merger related costs

     120         —          —          (120     —     

Provision for income taxes

     4,846         3,896        179        43        8,964   

Net income

     7,926         6,327        318        77        14,648   

Net income per share:

           

Basic

   $ 0.12       $ 0.09      $ 0.01      $ 0.00      $ 0.22   

Diluted

   $ 0.11       $ 0.09      $ 0.01      $ 0.00      $ 0.21   

Weighted average number of common shares used in the calculation of net income per share:

           

Basic

     66,752,669         66,752,669        66,752,669        66,752,669        66,752,669   

Diluted

     70,908,590         70,908,590        70,908,590        70,908,590        70,908,590   


Acme Packet, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

Nine Months Ended September 30, 2012

(in thousands, except per share data)

(unaudited)

 

     GAAP     Stock-based
compensation
expense and
related payroll
taxes
    Amortization
of acquired
intangible
assets
    Merger
related
costs
    Non-GAAP1  

Cost of revenue:

          

Product

   $ 29,347      $ (1,308   $ (1,675   $ —        $ 26,364   

Maintenance, support and service

     11,894        (2,121     —          —          9,773   

Operating expenses:

          

Sales and marketing

     98,230        (19,778     (556     —          77,896   

Research and development

     48,252        (12,830     (85     —          35,337   

General and administrative

     18,441        (4,915     —          —          13,526   

Merger related costs

     643        —          —          (643     —     

Provision for income taxes

     268        13,389        866        —          14,523   

Net (loss) income

     (3,213     27,563        1,450        643        26,443   

Net (loss) income per share:

          

Basic

   $ (0.05   $ 0.40      $ 0.02      $ 0.01      $ 0.39   

Diluted

   $ (0.05   $ 0.39      $ 0.02      $ 0.01      $ 0.37   

Weighted average number of common shares used in the calculation of net income per share:

          

Basic

     68,235,987        68,235,987        68,235,987        68,235,987        68,235,987   

Diluted

     68,235,987        70,698,124        70,698,124        70,698,124        70,698,124   


Acme Packet, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

Nine Months Ended September 30, 2011

(in thousands, except per share data)

(unaudited)

 

     GAAP      Stock-based
compensation
expense and
related payroll
taxes
    Amortization
of acquired
intangible
assets
    Merger
related
costs
    Non-GAAP1  

Cost of revenue:

           

Product

   $ 30,090       $ (916   $ (1,292   $ —        $ 27,882   

Maintenance, support and service

     8,573         (1,518     —          —          7,055   

Operating expenses:

           

Sales and marketing

     75,640         (12,804     (287     —          62,549   

Research and development

     37,262         (7,823     (34     —          29,405   

General and administrative

     15,771         (3,898     —          —          11,873   

Merger related costs

     300         —          —          (300     —     

Provision for income taxes

     20,895         9,874        581        43        31,393   

Net income

     35,643         17,085        1,032        257        54,017   

Net income per share:

           

Basic

   $ 0.54       $ 0.26      $ 0.02      $ 0.00      $ 0.82   

Diluted

   $ 0.50       $ 0.24      $ 0.02      $ 0.00      $ 0.76   

Weighted average number of common shares used in the calculation of net income per share:

           

Basic

     66,011,761         66,011,761        66,011,761        66,011,761        66,011,761   

Diluted

     70,887,241         70,887,241        70,887,241        70,887,241        70,887,241   


Reconciliation of Expected Non-GAAP Net Income and Non-GAAP Net Income Per Share for the Year Ending December 31, 2012 (unaudited):

 

     Twelve Months  Ending
December 31, 2012
(unaudited)
(in thousands, except per share data)
 
     Low     High  

Revenue

   $ 270,000      $ 275,000   

Reconciliation of non-GAAP net income:

    

GAAP net loss

   $ (7,243   $ (5,243

Adjustments:

    

Stock-based compensation expense and related payroll taxes, net of taxes

     35,500        35,500   

Amortization of acquired intangible assets, net of taxes

     2,100        2,100   

Merger related costs

     643        643   
  

 

 

   

 

 

 

Non-GAAP net income

   $ 31,000      $ 33,000   
  

 

 

   

 

 

 

Reconciliation of diluted non-GAAP net income per share:

    

GAAP net loss per share

   $ (0.11   $ (0.08

Adjustments:

    

Stock-based compensation expense and related payroll taxes, net of taxes

     0.50        0.50   

Amortization of acquired intangible assets, net of taxes

     0.03        0.03   

Merger related costs

     0.01        0.01   
  

 

 

   

 

 

 

Non-GAAP net income per share

   $ 0.44      $ 0.46   
  

 

 

   

 

 

 

Acme Packet, Inc.

Other Operational Data

(unaudited)

 

     Three Months Ended  
     September 30,
2012
     June 30,
2012
     September 30,
2011
 

Other operational data:

        

Depreciation and amortization (in thousands)

   $ 3,991       $ 3,591       $ 2,835   

Capital expenditures (in thousands)

     5,151         6,576         5,570   

Days sales outstanding

     79         66         65   

Total headcount

     863         831         741   

Quarterly inventory turnover – annualized

     3.28         3.40         3.27