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Press release from CNW Group

Sandvine reports Q4 and fiscal year 2011 results

Thursday, January 12, 2012

Sandvine reports Q4 and fiscal year 2011 results07:00 EST Thursday, January 12, 2012WATERLOO, ON, Jan. 12, 2012 /CNW/ - Sandvine, (TSX: SVC) (AIM: SAND) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported revenue of $20.6 million and a GAAP net loss of 3.6 million (non-GAAP1 loss of $2.8 million) for its fourth quarter of 2011. Fiscal year 2011 revenue was $89.3 million and the GAAP net loss was 5.8 million (non-GAAP1: $2.2 million loss). All results are reported in U.S. dollars.Q4 2011 highlights:Revenue by access technology market: DSL 21% (FY '11: 41%); wireless 37% (FY '11: 34%); cable 40% (FY '11: 23%); other 2% (FY '11: 2%)Revenue by geography: NA 51% (FY '11: 40%); EMEA 23% (FY '11: 30%); APAC 10% (FY '11: 19%); CALA 16% (FY '11: 11%)Revenue by sales channel: reseller 44% (FY'11: 54%) direct 56% (FY'11: 46%)7 new customers: 4 wireless; 2 DSL ; 1 fibre-to-the-home.Awarded $4.5 million expansion order for Network Analytics by Tier 1 US MSOWon industry award for "Best Implementation of Tiered Data Pricing" for its Usage Management product and another industry award for its Network Analytics productDavid Thomson, strategy consultant and bestselling author of Blueprint to a Billion joined Sandvine's Board of Directors"We added 44 new customers in 2011 and have the largest and most diversified customer base in our industry. We also offer the broadest portfolio of Network Policy Control solutions in the market. In 2012 our goal is to return to revenue growth and profitability by leveraging the value of our newest solutions for existing customers and continuing to add new customers across markets," said Dave Caputo, Sandvine's President and CEO.FINANCIAL HIGHLIGHTS (All amounts are in U.S. dollars)          Millions of dollars, except per share data and where otherwise indicatedQ42011 Q32011 Change Q42010 ChangeRevenue20.6 25.6 -19.4% 24.2 -14.7%Gross Margin percent72% 76% -4pp 72% NilR&D, SG&A15.8 16.6 -4.5% 14.7 7.6%Net Income (Loss)-3.6 0.5 - 0.6 -Diluted Earnings (Loss) Per Share-0.026 0.004 - 0.004 -          Non-GAAP1 Income (Loss)-2.8 1.5 - 1.4 -Non-GAAP1 Diluted Income (Loss) Per Share-0.020 0.010 - 0.010 -Sandvine's cash, cash equivalents and short term investments balance at the end of the fourth quarter remained strong at $74 million (August 31, 2011: $75.1 million).CONFERENCE CALLThe Company will discuss the financial results and business outlook on a conference call at 8:30 a.m. Eastern time (1:30 BST) today. A webcast will be available on Sandvine's website.Local dial-in numberToll-free North AmericaToll-free United Kingdom416 644 3415877 974 04450800 358 5256A replay of the call will be available at 416-640-1917 or toll-free at 877-289-8525 (passcode 4499834#) from approximately 10:30 a.m. Eastern time today through January 19.ABOUT SANDVINESandvine's network policy control solutions focus on protecting and improving the quality of experience on the Internet.Our award-winning network equipment and software helps DSL, FTTx, cable, fixed wireless and mobile operators better understand network traffic, manage network congestion, create new services and revenues, mitigate traffic that is malicious or undesirable to subscribers, deliver QoS-prioritized multimedia services and increase subscriber satisfaction. With well over 200 service provider customers in more than 85 countries serving hundreds of millions of broadband and mobile data subscribers, Sandvine is enhancing the Internet experience worldwide. For more information, please visit www.sandvine.comCAUTION REGARDING FORWARD LOOKING INFORMATIONCertain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements related to Sandvine's projected revenues, earnings, growth rates, revenue mix and product plans are forward-looking statements as are any statements relating to future events, conditions or circumstances. The use of terms such as "may", "anticipated", "expected", "projected", "targeting", "estimate", "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements or developments of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.   Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.Many factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, each of the following factors, and those factors which are further discussed in the Company's Annual Information Form ("AIF"), a copy of which is available on SEDAR at www.sedar.com.The Company's revenues may fluctuate from quarter to quarter and year to year depending upon sales cycles, customer demand and the timing of customer purchase decisions;The Company's gross margins may fluctuate from period to period depending upon a variety of factors including product mix in the quarter, competitive pricing pressures and the level of sales generated through indirect channels;The Company is dependent upon and expects to continue to derive a large percentage of its revenue from both a small number of key customers and key reseller partners, none of whom are bound to any fixed purchase commitment or exclusivity obligations and could change their buying patterns and/or source of supply at any time, which could have a material impact on the Company's revenues.  The Company's reseller partners may offer their own products which are competitive with the Company's products;The Company faces intense competition in markets where there are typically several different competing technologies and rapid technological changes.  The Company faces the risk of emergence of new technologies that may be either competitive to those of the Company or that change the requirements of the Company's customers for solutions such as those offered by the Company;The Company's growth is dependent on the development of the market for network policy control solutions and the decisions of the Company's target customers to deploy and further invest in those technologies, which decisions may be impacted upon by changing requirements in the area of broadband network management policies and/or changes in the regulatory framework to which the Company's customers may be subject.  In particular, numerous telecommunications legislators and regulators in various jurisdictions have considered or are considering what, if any, regulations might be appropriate with respect to how internet service providers manage the impact of different types of traffic on their networks.  These ongoing processes may cause uncertainty in the network investment decisions of the Company's target customers, and any new rules or regulations that result from these considerations may impact the demand for the Company's products within various markets, including markets that may not be considering any new regulation but where the Company's customers may look to other markets for future guidance or trends;The majority of the Company's operating expenses are denominated in Canadian dollars, U.S. dollars and New Israeli Shekels. The Company's earnings are impacted by fluctuations in the exchange rates between the U.S. dollar and these currencies.Table 11. Non-GAAP Financial MeasuresThe following table provides a reconciliation of GAAP net income (loss) and related per share amounts to non-GAAP net income (loss) and the related per share amounts for the periods indicated.  These non-GAAP financial measures which are used internally by management to evaluate the Company's ongoing performance exclude the impact of stock based compensation, amortization of intangible assets acquired through business acquisitions and goodwill and intangible impairment expenses (collectively referred to as "Excluded Expenses").  The Company provides these non-GAAP financial measures as it is the Company's view that the Excluded Expenses are either (i) not part of its normal day-to-day operations and/or (ii) represent a "non-cash" accounting charge that does not deplete its cash resources.  Accordingly, the Company believes that such financial measures may also be useful to investors in enhancing their understanding of the Company's operating performance.  Non-GAAP net income (loss) is not recognized under Canadian GAAP and does not have a standardized meaning prescribed by Canadian GAAP.  Therefore it is unlikely to be comparable to similarly titled measures reported by other issuers. Non-GAAP financial measures should be considered in the context of the Company's GAAP results.        Three month period endedTwelve month period ended November 302011$August 31 2011$November 302010$November 302011$November 302010$ Amounts in US$ thousands      Net income (loss)(3,635)522603(5,763)4,713      Excluded Expenses     Stock based compensation expense6507526312,7602,631Amortization of intangible assets acquired through business acquisitions1851851877541,072Intangible impairment----643Net income (loss) excluding the impact of Excluded Expenses(2,800)1,4591,421(2,249)9,059       Three month period endedTwelve month period ended November 302011$August 31 2011$November 302010$November 302011$November 302010$      Diluted earnings (loss) per share(0.026)0.0040.004(0.042)0.033Impact on diluted earnings (loss) per share of Excluded Expenses0.0060.0060.0060.0260.034Diluted earnings (loss) per share excluding the impact of Excluded Expenses(0.020)0.0100.010(0.016)0.068            Sandvine CorporationConsolidated Balance SheetsAs at November, 2011(in U.S. dollars, amounts in thousands) 2011$2010$Assets Restated   Current assets  Cash and cash equivalents2,95287,949Short term investments71,030-Accounts receivable28,19425,485Inventory18,23011,268Other3,5863,201 123,992127,903   Non current assets  Plant and equipment11,94212,341Intangible assets5,4545,125Other assets511511 17,90717,977    141,899145,880   Liabilities     Current liabilities  Accounts payable and accrued liabilities10,68812,005Current portion of deferred revenue10,26910,257 20,95722,262   Non current liabilities  Deferred revenue913703    21,87022,965   Shareholders' equity     Share capital120,711119,570Contributed surplus12,35810,007Accumulated other comprehensive income 19,60320,218Deficit(32,643)(26,880) 120,029122,915    141,899145,880   Sandvine CorporationConsolidated Statements of OperationsFor the three and twelve month periods ended November 30, 2011(in U.S. dollars, amounts in thousands, except share and per share data) (unaudited)Three month period endedTwelve month period ended November302011$November 302010$November30 2011$November 30 2010$  Restated RestatedRevenue    Product13,40718,65864,08570,442Service7,1905,50025,25419,217 20,59724,15889,33989,659Cost of sales    Product3,9765,27416,49318,526Service1,8901,5496,6055,273 5,8666,82323,09823,799     Gross margin14,73117,33566,24165,860     Expenses    Sales and marketing5,2855,28520,25218,682Research and development7,7487,03331,66925,093General and administrative2,7762,38010,7828,560Stock based compensation6506312,7602,631Amortization of intangible assets5523451,9981,563Depreciation1,3241,2324,4824,295Intangible impairment---643 18,33516,90671,94361,467Income (loss) from operations(3,604)429(5,702)4,393     Interest and other income35222129465Income (loss) before provision for income taxes(3,569)651(5,573)4,858     Provision for income taxes     Current6648190145     Net income (loss) for the period(3,635)603(5,763)4,713     Earnings (loss) per share    Basic(0.026)0.004(0.042)0.035Diluted(0.026)0.004(0.042)0.033Basic weighted average number of shares outstanding137,802,512136,724,475137,566,098136,256,258Diluted weighted average number of shares outstanding137,802,512141,248,727137,566,098140,715,500Sandvine CorporationConsolidated Interim Statements of Cash FlowsFor the three and twelve month periods ended November 30, 2011(in U.S. dollars, amounts in thousands) (unaudited)Three month period endedTwelve month period ended      November 30 2011$November 302010$RestatedNovember 302011$November 302010$RestatedCash provided by (used in)         Operating activities    Net income (loss) for the year(3,635)603(5,763)4,713Items not affecting cash     Amortization of intangible assets5523451,9981,563 Depreciation1,3631,3224,6784,615 Unrealized foreign exchange loss286107180279 Stock-based compensation6506312,7602,631 Intangible impairment  -643 Other(27)-(90)- (811)3,0083,76314,444          Changes in non-current balances64271210(45)Changes in non-cash working capital balances367(480)(12,102)(3,627)      (380)2,799(8,129)10,772     Investing activities    Purchase of plant, equipment and intangible software assets(774)(2,426)(6,603)(7,313)Purchase of short term investments(8,245)(203)(243,913)(79,871)Sale of short term investments10,50282,597172,864161,326      1,48379,968(77,652)74,142     Financing activities    Proceeds from the issuance of share capital183222833652     Effect of foreign exchange gain on cash and cash equivalents(130)188(49)165     Net increase (decrease) in cash during year1,15683,177(84,997)85,731     Cash and cash equivalents - beginning of year1,7964,77287,9492,218     Cash and cash equivalents - end of year2,95287,9492,95287,949          Cash and cash equivalents are represented by289,334289,334Balances with banks2,92478,6152,92478,615Cash equivalents For further information: INVESTOR RELATIONS CONTACT Rick Wadsworth Sandvine +1 519 880 2400 ext. 3503 rwadsworth@sandvine.com MEDIA CONTACT Sacha DeGroot Sandvine +1 519 880 2232 sdegroot@sandvine.com AIM NOMAD Andrew Chubb/Simon Bridges Canaccord Adams Limited +44 0207 050 6500