Acme Packet Reports Results for Third Quarter of 2012

Thu Oct 25, 2012 4:05pm EDT

* Reuters is not responsible for the content in this press release.

  BEDFORD, MA, Oct 25 (Marketwire) -- 
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-GAAP(1) 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              $270-$275                   No change
 millions)
GAAP Earnings (loss)
 Per Share                  $(0.11)-$(0.07)             $(0.11)-$(0.08)
Non-GAAP(1) 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.

    (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 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         Nine Months Ended
                               September 30,             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,   December 31, 
                                                    2012           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    Nine Months Ended
                                      September 30,        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)

                         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
  Mainten-
   ance,
   support
   and
   service       4,261          (702)            -            -        3,559

Operating
 expenses:
  Sales
   and
   market-
   ing          35,090        (6,794)         (261)           -       28,035
  Research
   and
   develop-
   ment         16,898        (4,181)          (51)           -       12,666
  General
   and
   admini-
   strative      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)

                         Stock-based
                        compensation
                         expense and  Amortization
                           related     of acquired    Merger
                           payroll     intangible     related
               GAAP         taxes        assets        costs     Non-GAAP(1)
           -----------  ------------  ------------  -----------  -----------
Cost of
 revenue:
  Product  $     9,785  $       (442) $       (583) $         -  $     8,760
  Mainten-
   ance,
   support
   and
   service       3,675          (717)            -            -        2,958

Operating
 expenses:
  Sales
   and
   market-
   ing          32,138        (6,570)         (238)           -       25,330
  Research
   and
   develop-
   ment         16,257        (4,354)          (34)           -       11,869
  General
   and
   admini-
   strative      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)

                         Stock-based
                        compensation
                         expense and  Amortization
                           related     of acquired     Merger
                           payroll     intangible     related
               GAAP         taxes        assets        costs     Non-GAAP(1)
           -----------  ------------  ------------  -----------  -----------
Cost of
 revenue:
  Product  $     8,778  $       (327) $       (385) $         -  $     8,066
  Mainten-
   ance,
   support
   and
   service       3,042          (568)            -            -        2,474

Operating
 expenses:
  Sales
   and
   market-
   ing          27,201        (4,784)         (101)           -       22,316
  Research
   and
   develop-
   ment         13,249        (2,929)          (11)           -       10,309
  General
   and
   admini-
   strative      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)

                         Stock-based
                        compensation
                         expense and  Amortization
                           related     of acquired    Merger
                           payroll     intangible     related
               GAAP         taxes        assets        costs     Non-GAAP(1)
           -----------  ------------  ------------  -----------  -----------
Cost of
 revenue:
  Product  $    29,347  $     (1,308) $     (1,675) $         -  $    26,364
  Mainten-
   ance,
   support
   and
   service      11,894        (2,121)            -            -        9,773

Operating
 expenses:
  Sales
   and
   market-
   ing          98,230       (19,778)         (556)           -       77,896
  Research
   and
   develop-
   ment         48,252       (12,830)          (85)           -       35,337
  General
   and
   admini-
   strative     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)

                         Stock-based
                        compensation
                         expense and  Amortization
                           related     of acquired    Merger
                           payroll     intangible     related
               GAAP         taxes        assets        costs     Non-GAAP(1)
           -----------  ------------  ------------  -----------  -----------
Cost of
 revenue:
  Product  $    30,090  $       (916) $     (1,292) $         -  $    27,882
  Mainten-
   ance,
   support
   and
   service       8,573        (1,518)            -            -        7,055

Operating
 expenses:
  Sales
   and
   market-
   ing          75,640       (12,804)         (287)           -       62,549
  Research
   and
   develop-
   ment         37,262        (7,823)          (34)           -       29,405
  General
   and
   admini-
   strative     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,    June 30,   September 30,
                                        2012          2012          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


    


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 

Copyright 2012, Marketwire, All rights reserved.

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