NEWS

Front Page Top Stories Breaking News World Politics Business Health Food & Wine Women Women in Business Opinion Letters to the Editor High Tech Sports Horoscope Entertainment Entertainment Goss Music Features Books Poetry Movie Reviews Personal Development Home & Garden Industry States UFOs Environment Education SupportOurTroops Middle East South Asia Cartoons NewsBlaze Blog Most Read

WIRES

News Wires

OTHER

About Us Contact Us Writers Editors Link to Us Advertise Sitemap

Acme Packet Reports Record Revenue and Earnings in Fourth Quarter of 2010

BEDFORD, Mass. - (BUSINESS WIRE) - Acme Packet, Inc. (NASDAQ: APKT), the leader in session border control solutions, today announced record results for the fourth quarter ended December 31, 2010 and raised its business outlook for 2011. All earnings per share results are on a fully diluted basis unless otherwise noted.

Results for the Fourth Quarter of 2010

Total revenue for the fourth quarter of 2010 was $70.2 million, an increase of 70% compared to $41.3 million in the fourth quarter of 2009 and an increase of 24% compared to $56.6 million in the third quarter of 2010. Net income for the fourth quarter of 2010 was $14.5 million, or $0.21 per share, compared to $9.1 million, or $0.14 per share in the fourth quarter of 2009 and $10.5 million, or $0.15 per share, in the third quarter of 2010. Net income on a non-GAAP¹ basis for the fourth quarter of 2010 was $17.9 million, or $0.26 per share, compared to $6.8 million, or $0.11 per share, in the fourth quarter of 2009, and $13.6 million, or $0.20 per share, in the third quarter of 2010.

Results for 2010

Total revenue in 2010 was $231.2 million, an increase of 63% compared to $141.5 million in 2009. Net income in 2010 was $43.0 million, or $0.63 per share, compared to $17.1 million, or $0.28 per share, in 2009. Net income on a non-GAAP¹ basis in 2010 was $54.5 million, or $0.80 per share, compared to $21.3 million, or $0.35 per share, in the same period last year.

Company Raises Business Outlook for 2011

The Company today raised its full year business outlook for 2011. The Company's outlook is based on the current indications for its business, which may change at any time.

						Business Outlook for Year Ending December 31, 2011
Estimate						Issued October 28, 2010				Issued February 1, 2011
Total revenue (in millions)						$286-$287				Approximately $300
GAAP diluted EPS						$0.77-$0.78				Approximately $0.76
Non-GAAP1 diluted EPS						$0.99-$1.00				Approximately $1.05
Diluted share count (in millions)						-				71.0

The Company expects net income on a non-GAAP¹ basis to differ from net income on a GAAP basis in 2011 as it is expected to exclude estimated stock-based compensation expense of approximately $19.1 million, or $0.27 per share, and amortization of acquired intangible assets of approximately $1.1 million, or $0.02 per share. A reconciliation of the Company's expected GAAP to non-GAAP¹ business outlook, and a statement as to the use of non-GAAP¹ financial measures, is included at the end of this press release.

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 standard 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) 230-1951 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 186975 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 border control solutions, enables the delivery of trusted, first-class IP communications, powering a new generation of applications and services for voice, data, video, multimedia and unified communications. Our Net-Net product family fulfills demanding security, interoperability, service assurance and regulatory requirements in service provider, enterprise and contact center networks. Based in Bedford, Massachusetts, Acme Packet designs and manufactures its products in the USA, selling them through over 140 reseller partners worldwide. More than 1,270 customers in 105 countries have deployed over 11,000 Acme Packet systems, including 90 of the top 100 service providers and 30 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 (including those in the section "Company Raises Business Outlook for 2011" ) 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; 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 Income (in thousands, except share and per share data) (unaudited)
			Three Months Ended December 31,								Twelve Months Ended December 31,
				2010				2009				2010				2009
Revenue:
Product			$	57,346			$	32,124			$	186,798			$	107,144
Maintenance, support and service				12,886				9,139				44,434				34,314
Total revenue				70,232				41,263				231,232				141,458
Cost of revenue (a) (b):
Product				8,980				6,333				31,866				21,613
Maintenance, support and service				2,301				1,765				9,265				5,668
Total cost of revenue				11,281				8,098				41,131				27,281
Gross profit				58,951				33,165				190,101				114,177
Operating expenses (a) (b):
Sales and marketing				23,005				15,996				73,067				53,643
Research and development				9,330				7,685				35,565				28,198
General and administrative				4,286				2,631				15,071				12,305
Merger and integration-related costs				223				-				223				1,102
Total operating expenses				36,844				26,312				123,926				95,248
Income from operations				22,107				6,853				66,175				18,929
Other income, net				27				25				381				175
Gain on acquisition of business				-				4,293				-				4,293
Income before provision for income taxes				22,134				11,171				66,556				23,397
Provision for income taxes				7,624				2,096				23,519				6,291
Net income			$	14,510			$	9,075			$	43,037			$	17,106
Net income per share:
Basic			$	0.23			$	0.16			$	0.69			$	0.30
Diluted			$	0.21			$	0.14			$	0.63			$	0.28
Weighted average number of common shares used in the calculation of net income per share:
Basic				63,867,523				58,423,418				62,002,543				57,077,639
Diluted				69,418,243				63,446,095				67,915,525				61,551,040
(a) Amounts include stock-based compensation expense, as follows:
Cost of product revenue			$	204			$	120			$	761			$	501
Cost of maintenance, support and service revenue				343				155				1,080				570
Sales and marketing				2,067				1,169				7,406				4,706
Research and development				1,259				902				4,810				3,440
General and administrative				655				294				2,416				1,143
(b) Amounts include amortization of acquired intangible assets, as follows:
Cost of product revenue				399				238				1,536				585
Sales and marketing				45				41				179				68
Research and development				11				17				45				53

Acme Packet, Inc.

Statement on Use of Non-GAAP Financial Measures and

Reconciliation of Non-GAAP Net Income and Non-GAAP Net Income Per Share

(in thousands, except per share data)

(unaudited)

Statement on Use of Non-GAAP Financial Measures:

The Company uses the financial measures "non-GAAP net income" , "net income on a non-GAAP basis" , "non-GAAP net income per share" and "net income per share on a non-GAAP basis" 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" , "net income on a non-GAAP basis" , "non-GAAP net income per share" and "net income per share on a non-GAAP basis" 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" , "net income on a non-GAAP basis" , "non-GAAP net income per share" and "net income per share on a non-GAAP basis" provides useful information to investors because these financial measures exclude stock-based compensation expense which is a non-cash charge, as well as amortization of acquired intangible assets and merger and integration-related costs associated with the Company's acquisition activities. By excluding stock-based compensation expense, amortization of acquired intangible assets, and merger and integration-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 charges. Management does not consider any of stock-based compensation expense, amortization of acquired intangible assets, and merger and integration-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. 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 measures 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 non-GAAP net income per share may differ from similar measures used by other companies and may differ from period to period. 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 non-GAAP net income per share by excluding these expenses and gains.

Reconciliation of Non-GAAP Net Income and Diluted Non-GAAP Net Income Per Share for the Three Months Ended December 31, 2010, September 30, 2010, and December 31, 2009 and the Twelve Months Ended December 31, 2010 and December 31, 2009 (Unaudited):

				Three Months Ended														Twelve Months Ended
				December 31, 2010				September 30, 2010				December 31, 2009						December 31, 2010				December 31, 2009
Reconciliation of non-GAAP net income:
Net income				$	14,510			$	10,465			$	9,075					$	43,037			$	17,106
Adjustments:
Stock-based compensation expense, net of taxes					2,898				2,826				1,824						10,129				7,137
Amortization of acquired intangible assets, net of taxes					292				274				194						1,130				461
Merger and integration-related costs, net of taxes					223				-				-						223				903
Gain on acquisition of business					-				-				(4,293	)					-				(4,293	)
Non-GAAP net income				$	17,923			$	13,565			$	6,800					$	54,519			$	21,314
Reconciliation of diluted non-GAAP net income per share:
Net income per share				$	0.21			$	0.15			$	0.14					$	0.63			$	0.28
Adjustments:
Stock-based compensation expense, net of taxes					0.05				0.05				0.03						0.15				0.12
Amortization of acquired intangible, assets net of taxes					-				-				-						0.02				0.01
Merger and integration-related costs, net of taxes					-				-				-						-				0.01
Gain on acquisition of business					-				-				(0.06	)					-				(0.07	)
Non-GAAP net income per share				$	0.26			$	0.20			$	0.11					$	0.80			$	0.35

Reconciliation of Expected Non-GAAP Net Income and Diluted Non-GAAP Net Income Per Share for the Year Ending December 31, 2011 (Unaudited):

					Twelve Months Ending December 31, 2011
Revenue					$	300,000
Reconciliation of non-GAAP net income:
Net income					$	53,300
Adjustments:
Stock-based compensation expense, net of taxes						19,100
Amortization of acquired intangible assets, net of taxes						1,100
Merger and integration-related costs, net of taxes						100
Non-GAAP net income					$	73,600
Reconciliation of diluted non-GAAP net income per share:
Net income per share					$	0.76
Adjustments:
Stock-based compensation expense, net of taxes						0.27
Amortization of acquired intangible assets, net of taxes						0.02
Merger and integration-related costs, net of taxes						0.00
Non-GAAP net income per share					$	1.05

Acme Packet, Inc. Other Operational Data (in thousands) (unaudited)
				Three Months Ended													Twelve Months Ended
				December 31, 2010				September 30, 2010				December 31, 2009					December 31, 2010				December 31, 2009
Other operational data:
Depreciation and amortization				$	2,177			$	2,065			$	1,588				$	8,003			$	5,377
Capital expenditures				$	2,770			$	4,479			$	1,083				$	13,316			$	4,869

Acme Packet, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited)
				December 31, 2010						December 31, 2009
Assets
Current assets:
Cash and cash equivalents				$	101,669					$	90,471
Short-term investments					169,024						39,990
Accounts receivable, net					34,797						25,604
Inventory					6,662						4,372
Deferred product costs					3,572						3,400
Deferred tax asset					3,814						1,567
Income taxes receivable					10,034						350
Other current assets					3,176						2,360
Total current assets					332,748						168,114
Long-term investments					5,030						44,526
Property and equipment, net					17,156						6,437
Acquired intangible assets, net					9,468						11,228
Deferred tax asset, net					14,802						15,622
Other assets					940						799
Total assets				$	380,144					$	246,726
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable				$	7,161					$	3,895
Accrued expenses and other current liabilities					14,629						9,261
Deferred revenue					31,998						31,506
Total current liabilities					53,788						44,662
Deferred revenue					1,546						1,841
Deferred rent					4,265						-
Stockholders' equity:
Common stock					71						65
Treasury stock, at cost					(37,522	)					(37,522	)
Additional paid-in capital					266,114						188,871
Other comprehensive income (loss)					34						(2	)
Retained earnings					91,848						48,811
Total stockholders' equity					320,545						200,223
Total liabilities and stockholders' equity				$	380,144					$	246,726

Condensed Consolidated Statements of Cash Flow (in thousands) (unaudited)
				Three Months Ended December 31,								Twelve Months Ended December 31,
					2010				2009				2010				2009
Cash provided by operating activities				$	22,440			$	15,808			$	55,189			$	45,147
Cash used in by investing activities				$	50,995			$	86,231			$	104,767			$	84,157
Cash provided by financing activities				$	19,582			$	2,093			$	60,776			$	3,758

Investor Relations:
Acme Packet
Brian Norris, +1 781-328-4790
bnorris@acmepacket.com
or
Media and Analyst Contact:
CHEN PR
Chris Carleton, +1 781-672-3115
ccarleton@chenpr.com