Acme Packet Reports Record Results for Third Quarter of 2009

http://www.businesswire.com/news/home/20091029006429/en

- Company Posts Record Revenue of $36.3 Million and Non-GAAP1 EPS of $0.09 -

- Company Raises Revenue and Earnings Outlook for 2009 -
BURLINGTON, Mass.--(Business Wire)--
Acme Packet, Inc. (NASDAQ: APKT), the leader in session border control
solutions, today announced its results for the third quarter ended September 30,
2009 and raised its business outlook for the remainder of 2009.

Results for the Third Quarter of 2009

Total revenue for the third quarter of 2009 was $36.3 million, compared to $28.4
million in the third quarter of last year and $32.9 million in the second
quarter of 2009. Net income for the third quarter of 2009 was $3.6 million, or
$0.06 per share on a diluted basis, compared to $2.0 million, or $0.03 per share
on a diluted basis, in the same period last year, and $1.7 million, or $0.03 per
share on a diluted basis, in the second quarter of 2009. Net income on a
non-GAAP1 basis for the third quarter of 2009 was $5.7 million, or $0.09 per
share on a diluted basis, compared to $3.4 million, or $0.05 per share on a
diluted basis, in the same period last year, and $4.5 million, or $0.07 per
share on a diluted basis, in the second quarter of 2009. Non-GAAP net income1
differs from GAAP net income in the third quarter of 2009 as it excludes
stock-based compensation expense and amortization of acquired intangible assets,
all net of tax, of $2.1 million, or approximately $0.03 per share. Non-GAAP net
income1 differs from GAAP net income in the third quarter of 2008 as it excludes
stock-based compensation expense, net of tax, of $1.4 million, or approximately
$0.02 per share. Non-GAAP net income1 differs from GAAP net income in the second
quarter of 2009 as it excludes stock-based compensation expense, amortization of
acquired intangible assets, and merger and integration-related costs, all net of
tax, of $2.8 million, or approximately $0.04 per share. A reconciliation of GAAP
to non-GAAP1 results is included at the end of this press release.

Results for the First Nine Months of 2009

Total revenue for the first nine months of 2009 was $100.2 million compared to
$85.8 million in the same period last year. Net income for the first nine months
of 2009 was $8.0 million, or $0.13 per share on a diluted basis, compared to
$7.9 million, or $0.12 per share on a diluted basis, in the same period last
year. Net income on a non-GAAP1 basis for the first nine months of 2009 was
$14.5 million, or $0.24 per share on a diluted basis, compared to $11.5 million,
or $0.18 per share on a diluted basis, in the same period last year. Non-GAAP
net income1 differs from GAAP net income in the first nine months of 2009 as it
excludes stock-based compensation expense, amortization of acquired intangible
assets, and merger and integration-related costs, all net of tax, of $6.5
million, or approximately $0.11 per share. Non-GAAP net income1 differs from
GAAP net income in the first nine months of 2008 as it excludes stock-based
compensation expense, net of tax, of $3.6 million, or approximately $0.06 per
share. A reconciliation of GAAP to non-GAAP1 results is included at the end of
this press release.

Company Raises Business Outlook for 2009

The Company today raised its full year business outlook for 2009. The Company`s
outlook is based on the current indications for its business, which may change
at any time.

Year Ended December 31, 2009
In Millions Except Per Share Previous New

Amounts and Tax Rates Business Business

Outlook*
Outlook
Total revenue $ 130.0-$134.0 $ 138.0-$140.0
Non-GAAP1 diluted EPS $ 0.28-$0.30 $ 0.34-$0.35
Non-GAAP1 tax rate 35% 34%
Diluted share count 62.0 No Change
* As previously issued by the Company on July 30, 2009

Company to Host Live Conference Call and Webcast

The Company`s management team will host a live conference call and webcast at
5:00 p.m. eastern daylight savings 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 (800) 230-1096 and using access code
"APKT". The conference call may be accessed outside of the United States by
dialing +1 612.332.0226 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 (800) 475-6701 and
using access code 118025 or by accessing the webcast replay on the Company`s
investor relations website.

About Acme Packet, Inc.

Acme Packet, Inc. (NASDAQ: APKT), the leader in session border control
solutions, enables the delivery of trusted, first-class interactive
communications-voice, video and multimedia sessions-and data services across IP
network borders. Our Net-Net family of session border controllers, multiservice
security gateways and session routing proxies supports multiple applications in
service provider, enterprise and contact center networks-from VoIP trunking to
hosted enterprise and residential services to fixed-mobile convergence. They
satisfy critical security, service assurance and regulatory requirements in
wireline, cable and wireless networks; and support multiple protocols-SIP,
H.323, MGCP/NCS, H.248 and RTSP-and multiple border points-service provider
access and interconnect, and enterprise access and trunking. Our products have
been selected by 910 customers in 100 countries. They include 48 of the top 50,
and 90 of the top 100 service providers in the world; and 8 of the Fortune 25.
For more information, contact us at +1 781.328.4400, or visit
www.acmepacket.com.

Acme Packet, Inc. Safe Harbor Statement

Statements contained herein that are not historical fact (including those in the
section "Company Raises Business Outlook for 2009") 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, among other things, to expected financial and operating
results and to 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: difficulties expanding its customer base; difficulties leveraging
market opportunities; difficulties providing solutions that meet the needs of
customers; poor product sales; long sales cycles; difficulty developing new
products; difficulty in relationships with vendors and partners; difficulties in
integrating an acquired business; higher risk in international operations;
difficulty managing rapid growth; difficulty managing its financial performance;
its ability to hire and retain employees and appropriately staff its operations;
the spending of the proceeds of its capital raising activities; its cash needs;
and 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.

(1) The Company uses the financial measures "non-GAAP net income" and "non-GAAP
net income per share" to supplement its consolidated financial statements, which
are presented in accordance with accounting principles generally accepted in the
United States ("GAAP"). The presentation of non-GAAP net income and non-GAAP net
income per share is not meant to be a substitute for "net income" or "net income
per share", presented in accordance with GAAP, but rather should be evaluated in
conjunction with net income and net income per share. The Company`s management
believes that the presentation of non-GAAP net income and non-GAAP net income
per share provides useful information to investors because this financial
measure excludes stock-based compensation expense which is a non-cash charge.
Non-GAAP net income and non-GAAP net income per share for the three and nine
months ended September 30, 2009 and the three months ended June 30, 2009 also
excludes amortization of acquired intangible assets associated with the
Company`s acquisition of Covergence Inc. on April 30, 2009. Non-GAAP net income
and non-GAAP net income per share for the three months ended June 30, 2009 and
the nine months ended September 30, 2009 also excludes merger and
integration-related costs associated with the Company`s acquisition of
Covergence Inc. on April 30, 2009. By excluding stock-based compensation
expense, amortization of acquired intangible assets and merger and
integration-related expenses, management can compare the Company`s ongoing
operations to prior periods and to the ongoing operations of other companies in
its industry who may have materially different unusual charges. Management does
not consider any of stock-based compensation expense, amortization of acquired
intangible assets and merger and integration-related expenses to be part of the
Company`s ongoing 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.
Non-GAAP net income and non-GAAP net income per share are primary financial
indicators that the Company`s management uses to evaluate the Company`s
financial results and forecast anticipated financial results for future periods.
Management also uses these non-GAAP figures to make financial and operational
decisions as these numbers exclude non-operational activities. These non-GAAP
measures should not be considered measures of the Company`s liquidity. The
Company`s definition of "non-GAAP net income" and/or "non-GAAP net income per
share" may differ from similar measures used by other companies and may differ
from period to period. Subject to the review and approval of the audit committee
of the Board of Directors, management may make other adjustments for expenses
and gains that it does not consider reflective of core operating performance in
a particular period and may modify "non-GAAP net income" and/or "non-GAAP net
income per share" by excluding these expenses and gains.

Acme Packet, Inc.

Condensed Consolidated Statements of Income

(in thousands, except share and per share data)

Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
(unaudited) (unaudited)
Revenue:
Product $ 27,726 $ 22,318 $ 75,020 $ 68,786
Maintenance, support and service 8,621 6,118 25,175 16,991
Total revenue 36,347 28,436 100,195 85,777

Cost of revenue (2) (3):
Product 5,178 4,861 15,280 14,094
Maintenance, support and service 1,773 1,132 3,903 3,739
Total cost of revenue 6,951 5,993 19,183 17,833

Gross profit 29,396 22,443 81,012 67,944

Operating expenses (2) (3):
Sales and marketing 13,703 11,359 37,647 33,135
Research and development 7,271 6,075 20,513 17,451
General and administrative 3,253 2,332 9,674 7,085
Merger and integration-related costs - - 1,102 -
Total operating expenses 24,227 19,766 68,936 57,671

Income from operations 5,169 2,677 12,076 10,273

Other income, net 28 726 150 2,780
Income before provision for income taxes 5,197 3,403 12,226 13,053

Provision for income taxes 1,617 1,369 4,195 5,165

Net income $ 3,580 $ 2,034 $ 8,031 $ 7,888

Net income per share:
Basic $ 0.06 $ 0.03 $ 0.14 $ 0.13
Diluted $ 0.06 $ 0.03 $ 0.13 $ 0.12

Weighted average number of common shares used in net income per share calculation:
Basic 58,143,857 58,120,027 56,622,433 59,568,054
Diluted 62,927,591 62,282,852 60,904,244 64,275,760

(2) Amounts include stock-based compensation expense, as follows:
Cost of product revenue $ 125 $ 116 $ 381 $ 329
Cost of maintenance, support and service revenue 154 122 415 301
Sales and marketing 1,261 967 3,537 2,732
Research and development 934 639 2,537 1,409
General and administrative 322 174 848 560

(3) Amounts include amortization of acquired intangible assets, as follows:
Cost of product revenue $ 208 $ - $ 347 $ -
Sales and marketing 21 - 30 -
Research and development 23 - 33 -

Acme Packet, Inc.

(in thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2009 2009 2008 2009 2008
(unaudited) (unaudited)
Reconciliation of

non-GAAP net income (1):
Net income $ 3,580 $ 1,693 $ 2,034 $ 8,031 $ 7,888
Adjustments:
Stock-based compensation expense, net of taxes 1,923 1,826 1,346 5,313 3,603
Amortization of acquired intangible assets 164 103 - 267 -
Merger and integration-related costs, net of taxes - 903 - 903 -
Non-GAAP net income (1) $ 5,667 $ 4,525 $ 3,380 $ 14,514 $ 11,491

Non-GAAP net income per share (1):
Basic $ 0.10 $ 0.08 $ 0.06 $ 0.26 $ 0.19
Diluted $ 0.09 $ 0.07 $ 0.05 $ 0.24 $ 0.18

Other operational data:
Depreciation and $ 1,529 $ 1,333 $ 1,491 $ 3,789 $ 4,114
amortization
Capital expenditures $ 1,449 $ 1,228 $ 1,050 $ 3,786 $ 3,215

(1) The Company uses the financial measures "non-GAAP net income" and "non-GAAP
net income per share" to supplement its consolidated financial statements, which
are presented in accordance with accounting principles generally accepted in the
United States ("GAAP"). The presentation of non-GAAP net income and non-GAAP net
income per share is not meant to be a substitute for "net income" or "net income
per share", presented in accordance with GAAP, but rather should be evaluated in
conjunction with net income and net income per share. The Company`s management
believes that the presentation of non-GAAP net income and non-GAAP net income
per share provides useful information to investors because this financial
measure excludes stock-based compensation expense which is a non-cash charge.
Non-GAAP net income and non-GAAP net income per share for the three and nine
months ended September 30, 2009 and the three months ended June 30, 2009 also
excludes amortization of acquired intangible assets associated with the
Company`s acquisition of Covergence Inc. on April 30, 2009. Non-GAAP net income
and non-GAAP net income per share for the three months ended June 30, 2009 and
the nine months ended September 30, 2009 also excludes merger and
integration-related costs associated with the Company`s acquisition of
Covergence Inc. on April 30, 2009. By excluding stock-based compensation
expense, amortization of acquired intangible assets and merger and
integration-related expenses, management can compare the Company`s ongoing
operations to prior periods and to the ongoing operations of other companies in
its industry who may have materially different unusual charges. Management does
not consider any of stock-based compensation expense, amortization of acquired
intangible assets and merger and integration-related expenses to be part of the
Company`s ongoing 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.
Non-GAAP net income and non-GAAP net income per share are primary financial
indicators that the Company`s management uses to evaluate the Company`s
financial results and forecast anticipated financial results for future periods.
Management also uses these non-GAAP figures to make financial and operational
decisions as these numbers exclude non-operational activities. These non-GAAP
measures should not be considered measures of the Company`s liquidity. The
Company`s definition of "non-GAAP net income" and/or "non-GAAP net income per
share" may differ from similar measures used by other companies and may differ
from period to period. Subject to the review and approval of the audit committee
of the Board of Directors, management may make other adjustments for expenses
and gains that it does not consider reflective of core operating performance in
a particular period and may modify "non-GAAP net income" and/or "non-GAAP net
income per share" by excluding these expenses and gains.

Acme Packet, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

September 30, December 31,
2009 2008
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 158,801 $ 125,723
Accounts receivable, net 25,594 26,163
Inventory 8,303 7,008
Deferred tax asset 1,684 1,262
Other current assets 4,191 1,362
Total current assets 198,573 161,518
Property and equipment, net 6,647 5,485
Intangible assets, net 10,557 -
Other assets 215 467
Deferred tax asset, net 10,576 6,540
Total assets $ 226,568 $ 174,010

Liabilities and Stockholders` Equity
Current liabilities:
Accounts payable $ 5,533 $ 3,364
Accrued expenses and other current liabilities 9,136 6,865
Deferred revenue 22,167 15,283
Total current liabilities 36,836 25,512

Deferred rent - 96
Deferred revenue 3,259 1,591

Stockholders` equity:
Common stock 65 61
Treasury stock, at cost (37,522 ) (37,522 )
Additional paid-in capital 184,194 152,567
Retained earnings 39,736 31,705
Total stockholders` equity 186,473 146,811
Total liabilities and stockholders` equity $ 226,568 $ 174,010

Condensed Consolidated Statements of Cash Flow

(in thousands)

Three Months Ended Nine Months Ended
September 30, September30, September 30, September30,
2009 2008 2009 2008
(unaudited) (unaudited)

Cash provided by operating activities $ 4,142 $ 2,547 $ 29,339 $ 21,625
Cash (used in) provided by investing activities (1,427 ) (1,050 ) 2,074 (3,215 )
Cash provided by (used in) financing activities 463 (22,371 ) 1,665 (27,793 )

Investor Relations:
Acme Packet
Brian Norris, 781-328-4790
bnorris@acmepacket.com
or
Industry Analysts / Trade and Business Press:
Connect2 Communications
Carmen Harris, 919-554-3532
carmen@connect2comm.com

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