News Column

Acme Packet Reports Results for Fourth Quarter of 2012

Page 4 of 1

Tracker

BEDFORD, MA -- (Marketwire) -- 02/04/13 -- Acme Packet, Inc. (NASDAQ: APKT), the leader in session delivery network solutions, today announced results for the fourth quarter of 2012.

Results for the Fourth Quarter of 2012
Total revenue for the fourth quarter of 2012 was $70.7 million, compared to $83.0 million in the fourth quarter of 2011 and $65.3 million in the third quarter of 2012. GAAP net loss for the fourth quarter of 2012 was $2.0 million, or $(0.03) per share, compared to GAAP net income of $8.7 million, or $0.12 per share, in the fourth quarter of 2011 and GAAP net loss of $5.5 million, or $(0.08) per share, in the third quarter of 2012. Net income on a non-GAAP(1) basis for the fourth quarter of 2012 was $6.5 million, or $0.09 per share, compared to $18.3 million, or $0.26 per share, in the fourth quarter of 2011, and $4.7 million, or $0.07 per share, in the third quarter of 2012. All earnings per share results, referenced above, are on a fully diluted basis.

Quarterly Conference Call Cancelled

As a result of the earlier announcement, Oracle to Buy Acme Packet, Acme Packet is cancelling its financial results conference call previously scheduled for today.

(1)A 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 330 reseller partners worldwide. More than 1,925 customers in 109 countries have deployed over 21,000 Acme Packet systems, including 89 of the top 100 service providers and 51 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 Twelve Months Ended December 31, December 31, 2012 2011 2012 2011 ----------- ----------- ----------- -----------Revenue: Product $ 51,307 $ 64,276 $ 201,098 $ 241,783 Maintenance, support and service 19,395 18,720 73,339 65,534 ----------- ----------- ----------- ----------- Total revenue 70,702 82,996 274,437 307,317 ----------- ----------- ----------- -----------Cost of revenue: Product 10,145 12,155 39,492 42,245 Maintenance, support and service 3,464 3,118 15,358 11,691 ----------- ----------- ----------- ----------- Total cost of revenue 13,609 15,273 54,850 53,936 ----------- ----------- ----------- -----------Gross profit 57,093 67,723 219,587 253,381 ----------- ----------- ----------- -----------Operating expenses: Sales and marketing 38,406 29,940 136,636 105,580 Research and development 16,528 14,221 64,780 51,483 General and administrative 5,211 6,073 23,652 21,844 Merger related costs - - 643 300 ----------- ----------- ----------- ----------- Total operating expenses 60,145 50,234 225,711 179,207 ----------- ----------- ----------- -----------(Loss) income from operations (3,052) 17,489 (6,124) 74,174Other expense, net (159) (91) (32) (238) ----------- ----------- ----------- -----------(Loss) income before income taxes (3,211) 17,398 (6,156) 73,936(Benefit from) provision for income taxes (1,182) 8,681 (914) 29,576 ----------- ----------- ----------- -----------Net (loss) income $ (2,029) $ 8,717 $ (5,242) $ 44,360 =========== =========== =========== ===========Net (loss) income per share: Basic $ (0.03) $ 0.13 $ (0.08) $ 0.67 Diluted $ (0.03) $ 0.12 $ (0.08) $ 0.63Weighted average number of common shares used in the calculation of net (loss) income per share: Basic 67,627,896 67,314,606 68,084,305 66,346,008 Diluted 67,627,896 70,679,690 68,084,305 70,902,293 Acme Packet, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) December 31, December 31, 2012 2011 ------------- ------------- AssetsCurrent assets: Cash and cash equivalents $ 55,381 $ 160,403 Short-term investments 302,865 191,672 Accounts receivable, net 58,610 59,739 Inventory, net 10,539 10,246 Deferred product costs 1,006 1,515 Deferred tax asset, net 9,423 4,809 Income taxes receivable - 4,341 Other current assets 7,190 4,385 ------------- ------------- Total current assets 445,014 437,110Long-term investments 27,220 20,096Property and equipment, net 44,264 26,252Intangible assets, net 19,331 8,569Goodwill 15,263 3,778Deferred tax asset, net 27,758 18,371Other assets 362 230 ------------- ------------- Total assets $ 579,212 $ 514,406 ============= ============= Liabilities and Stockholders' EquityCurrent liabilities: Accounts payable $ 12,845 $ 10,318 Accrued expenses and other current liabilities 18,964 12,715 Deferred revenue 23,482 22,261 ------------- ------------- Total current liabilities 55,291 45,294 ------------- -------------Deferred revenue, net of current portion 3,663 2,049 ------------- -------------Deferred rent, net of current portion 9,620 4,533 ------------- -------------Deferred tax liability 2,914 - ------------- -------------Stockholders' equity: Common stock 76 74 Additional paid-in capital 442,990 363,769 Treasury stock, at cost (66,311) (37,522) Accumulated other comprehensive income 3 1 Retained earnings 130,966 136,208 ------------- ------------- Total stockholders' equity 507,724 462,530 ------------- ------------- Total liabilities and stockholders' equity $ 579,212 $ 514,406 ============= ============= Condensed Consolidated Statements of Cash Flow Data (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2012 2011 2012 2011 ---------- ---------- ---------- ----------Cash provided by operating activities $ 3,856 $ 18,695 $ 63,357 $ 55,341Cash used in investing activities (19,738) (34,550) (166,039) (49,036)Cash provided by (used in) financing activities 15,096 19,296 (2,340) 62,429




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 December 31, 2012, September 30, 2012, and December 31, 2011 and for the Twelve Months Ended December 31, 2012 and December 31, 2011:


Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended December 31, 2012 (in thousands, except per share data) (unaudited) Stock-based compensation Amortization expense and of acquired related intangible GAAP payroll taxes assets Non-GAAP(1) ----------- ------------- ------------ -----------Cost of revenue: Product $ 10,145 $ (379) $ (657) $ 9,109 Maintenance, support and service 3,464 (522) - 2,942Operating expenses: Sales and marketing 38,406 (6,991) (288) 31,127 Research and development 16,528 (3,201) (51) 13,276 General and administrative 5,211 (1,088) - 4,123(Benefit from) provision for income taxes (1,182) 4,305 369 3,492Net (loss) income (2,029) 7,876 627 6,474Net (loss) income per share: Basic $ (0.03) $ 0.12 $ 0.01 $ 0.10 Diluted $ (0.03) $ 0.11 $ 0.01 $ 0.09Weighted average number of shares used in the calculation of net (loss) income per share: Basic 67,627,896 67,627,896 67,627,896 67,627,896 Diluted 67,627,896 69,611,815 69,611,815 69,611,815 Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended September 30, 2012 (in thousands, except per share data) (unaudited) Stock-based compensation expense and Amortization related of acquired Merger payroll intangible related GAAP taxes assets costs Non-GAAP(1) ----------- ------------ ------------ ----------- -----------Cost of revenue: Product $ 9,584 $ (438)$ (658)$ - $ 8,488 Maintenance, support and service 4,261 (702) - - 3,559Operating 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 - 3,074Net (loss) income (5,515) 9,607 611 30 4,733Net (loss) income per share: Basic $ (0.08)$ 0.14 $ 0.01 $ 0.00 $ 0.07 Diluted $ (0.08)$ 0.14 $ 0.01 $ 0.00 $ 0.07Weighted 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 December 31, 2011 (in thousands, except per share data) (unaudited) Stock-based compensation expense and Amortization related of acquired payroll intangible GAAP taxes assets Non-GAAP(1) ----------- ------------ ------------ -----------Cost of revenue: Product $ 12,155 $ (314) $ (385) $ 11,456 Maintenance, support and service 3,118 (577) - 2,541Operating expenses: Sales and marketing 29,940 (4,857) (100) 24,983 Research and development 14,221 (3,063) (11) 11,147 General and administrative 6,073 (1,574) - 4,499Provision for income taxes 8,681 1,148 174 10,003Net income $ 8,717 $ 9,237 $ 322 $ 18,276Net income per share: Basic $ 0.13 $ 0.14 $ 0.00 $ 0.27 Diluted $ 0.12 $ 0.13 $ 0.00 $ 0.26Weighted average number of shares used in the calculation of net (loss) income per share: Basic 67,314,606 67,314,606 67,314,606 67,314,606 =========== ============ ============ =========== Diluted 70,679,690 70,679,690 70,679,690 70,679,690 =========== ============ ============ =========== Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Twelve Months Ended December 31, 2012 (in thousands, except per share data) (unaudited) Stock-based compensation expense and related GAAP payroll taxes ------------- ------------- Cost of revenue: Product $ 39,492 $ (1,687) Maintenance, support and service 15,358 (2,642) Operating expenses: Sales and marketing 136,636 (26,769) Research and development 64,780 (16,031) General and administrative 23,652 (6,003) Merger related costs 643 - (Benefit from) provision for income taxes (914) 17,694 Net (loss) income (5,242) 35,439 Net (loss) income per share: Basic $ (0.08) $ 0.52 Diluted $ (0.08) $ 0.50 Weighted average number of common shares used in the calculation of net income per share: Basic 68,084,305 68,084,305 Diluted 68,084,305 70,445,310 Amortization of acquired Merger intangible related assets costs Non-GAAP(1) ------------- ------------- -------------Cost of revenue: Product $ (2,332) $ - $ 35,473 Maintenance, support and service - - 12,716Operating expenses: Sales and marketing (844) - 109,023 Research and development (136) - 48,613 General and administrative - - 17,649 Merger related costs - (643) -(Benefit from) provision for income taxes 1,235 - 18,015Net (loss) income 2,077 643 32,917Net (loss) income per share: Basic $ 0.03 $ 0.01 $ 0.48 Diluted $ 0.03 $ 0.01 $ 0.47Weighted average number of common shares used in the calculation of net income per share: Basic 68,084,305 68,084,305 68,084,305 Diluted 70,445,310 70,445,310 70,445,310 Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Twelve Months Ended December 31, 2011 (in thousands, except per share data) (unaudited) Stock-based compensation expense and related GAAP payroll taxes ------------- ------------- Cost of revenue: Product $ 42,245 $ (1,230) Maintenance, support and service 11,691 (2,095) Operating expenses: Sales and marketing 105,580 (17,661) Research and development 51,483 (10,886) General and administrative 21,844 (5,472) Merger related costs 300 - Provision for income taxes 29,576 11,022 Net income $ 44,360 $ 26,322 Net income per share: Basic $ 0.67 $ 0.40 Diluted $ 0.63 $ 0.37 Weighted average number of common shares used in the calculation of net income per share: Basic 66,346,008 66,346,008 Diluted 70,902,293 70,902,293 Amortization of acquired Merger intangible related assets costs Non-GAAP(1) ------------- ------------- -------------Cost of revenue: Product $ (1,677) $ - $ 39,338 Maintenance, support and service - - 9,596Operating expenses: Sales and marketing (387) - 87,532 Research and development (45) - 40,552 General and administrative - - 16,372 Merger related costs - (300) -Provision for income taxes 755 43 41,396Net income $ 1,354 $ 257 $ 72,293Net income per share: Basic $ 0.02 $ 0.00 $ 1.09 Diluted $ 0.02 $ 0.00 $ 1.02Weighted average number of common shares used in the calculation of net income per share: Basic 66,346,008 66,346,008 66,346,008 Diluted 70,902,293 70,902,293 70,902,293 Acme Packet, Inc. Other Operational Data (unaudited) Three Months Ended ----------------------------------------- December 31, September 30, December 31, 2012 2012 2011 ------------- ------------- -------------Other operational data:Depreciation and amortization (in thousands) $ 4,013 $ 3,991 $ 2,944Capital expenditures (in thousands) 8,902 5,151 4,186Days sales outstanding 75 79 65Total headcount 880 863 752Quarterly inventory turnover - annualized 3.71 3.28 4.41