SOURCE: Acme Packet

February 04, 2013 08:05 ET

Acme Packet Reports Results for Fourth Quarter of 2012

BEDFORD, MA--(Marketwire - Feb 4, 2013) - 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-GAAP1 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.

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 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 )     74,174  
                                 
Other 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 )   $ 0.63  
                                 
Weighted 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,
2012
    December 31,
2011
 
Assets                
Current 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       437,110  
Long-term investments     27,220       20,096  
Property and equipment, net     44,264       26,252  
Intangible assets, net     19,331       8,569  
Goodwill     15,263       3,778  
Deferred tax asset, net     27,758       18,371  
Other assets     362       230  
  Total assets   $ 579,212     $ 514,406  
                 
Liabilities and Stockholders' Equity                
Current 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     $ 55,341  
Cash 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)
 
   




GAAP
   
Stock-based compensation expense and related payroll taxes
   

Amortization of acquired intangible assets
   




Non-GAAP1
Cost of revenue:                              
  Product   $ 10,145     $ (379 )   $ (657 )   $ 9,109
  Maintenance, support and service     3,464       (522 )     -       2,942
                               
Operating 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       3,492
                               
Net (loss) income     (2,029 )     7,876       627       6,474
                               
Net (loss) income per share:                              
  Basic   $ (0.03 )   $ 0.12     $ 0.01     $ 0.10
  Diluted   $ (0.03 )   $ 0.11     $ 0.01     $ 0.09
                               
Weighted 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)
 
 




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 December 31, 2011
(in thousands, except per share data)
(unaudited)
   




GAAP
 
Stock-based compensation expense and related payroll taxes
   

Amortization of acquired intangible assets
   




Non-GAAP1
Cost of revenue:                            
  Product   $ 12,155   $ (314 )   $ (385 )   $ 11,456
  Maintenance, support and service     3,118     (577 )     -       2,541
                             
Operating 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 )     -       4,499
                             
Provision for income taxes     8,681     1,148       174       10,003
                             
Net income   $ 8,717   $ 9,237     $ 322     $ 18,276
                             
Net income per share:                            
  Basic   $ 0.13   $ 0.14     $ 0.00     $ 0.27
  Diluted   $ 0.12   $ 0.13     $ 0.00     $ 0.26
                             
Weighted 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)
 
   




GAAP
   
Stock-based compensation expense and related payroll taxes
   

Amortization of acquired intangible assets
   


Merger
related
costs
   




Non-GAAP1
Cost of revenue:                                      
  Product   $ 39,492     $ (1,687 )   $ (2,332 )   $ -     $ 35,473
  Maintenance, support and service     15,358       (2,642 )     -       -       12,716
                                       
Operating expenses:                                      
  Sales and marketing     136,636       (26,769 )     (844 )     -       109,023
  Research and development     64,780       (16,031 )     (136 )     -       48,613
  General and administrative     23,652       (6,003 )     -       -       17,649
  Merger related costs     643       -       -       (643 )     -
                                       
(Benefit from) provision for income taxes     (914 )     17,694       1,235       -       18,015
                                       
Net (loss) income     (5,242 )     35,439       2,077       643       32,917
                                       
Net (loss) income per share:                                      
  Basic   $ (0.08 )   $ 0.52     $ 0.03     $ 0.01     $ 0.48
  Diluted   $ (0.08 )   $ 0.50     $ 0.03     $ 0.01     $ 0.47
                                       
Weighted average number of common shares used in the calculation of net income per share:                                      
  Basic     68,084,305       68,084,305       68,084,305       68,084,305       68,084,305
  Diluted     68,084,305       70,445,310       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)
 
   




GAAP
 
Stock-based compensation expense and related payroll taxes
   

Amortization of acquired intangible assets
   


Merger
related
costs
   




Non-GAAP1
Cost of revenue:                                    
  Product   $ 42,245   $ (1,230 )   $ (1,677 )   $ -     $ 39,338
  Maintenance, support and service     11,691     (2,095 )     -       -       9,596
                                     
Operating expenses:                                    
  Sales and marketing     105,580     (17,661 )     (387 )     -       87,532
  Research and development     51,483     (10,886 )     (45 )     -       40,552
  General and administrative     21,844     (5,472 )     -       -       16,372
  Merger related costs     300     -       -       (300 )     -
                                     
Provision for income taxes     29,576     11,022       755       43       41,396
                                     
Net income   $ 44,360   $ 26,322     $ 1,354     $ 257     $ 72,293
                                     
Net income per share:                                    
  Basic   $ 0.67   $ 0.40     $ 0.02     $ 0.00     $ 1.09
  Diluted   $ 0.63   $ 0.37     $ 0.02     $ 0.00     $ 1.02
                                     
Weighted average number of common shares used in the calculation of net income per share:                                    
  Basic     66,346,008     66,346,008       66,346,008       66,346,008       66,346,008
  Diluted     70,902,293     70,902,293       70,902,293       70,902,293       70,902,293
 
 
 
Acme Packet, Inc.
Other Operational Data
(unaudited)
 
    Three Months Ended
    December 31,
2012
  September 30,
2012
  December 31,
2011
Other operational data:                  
Depreciation and amortization (in thousands)   $ 4,013   $ 3,991   $ 2,944
Capital expenditures (in thousands)     8,902     5,151     4,186
Days sales outstanding     75     79     65
Total headcount     880     863     752
Quarterly inventory turnover - annualized     3.71     3.28     4.41