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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

February 17, 2021

 

Date of Report (Date of earliest event reported)

 

 

 

RIBBON COMMUNICATIONS INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware		001-38267		82-1669692
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

4 TECHNOLOGY PARK DRIVE, WESTFORD, massachusetts 01886

(Address of Principal Executive Offices) (Zip Code)

 

(978) 614-8100

(Registrant’s telephone number, including area code)

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001		RBBN		The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

Item 2.02.

Results of Operations and Financial Condition.

 

The information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), otherwise subject to the liabilities of that Section or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

On February 17, 2021, Ribbon Communications Inc. issued a press release reporting its financial results for the quarter and year ended December 31, 2020, a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

  

Item 9.01.

Financial Statements and Exhibits.

 

(d)        Exhibits.

 

99.1

Press Release of Ribbon Communications, Inc., dated February 17, 2021, reporting financial results of the quarter and year ended December 31, 2020.

  

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date:  February 17, 2021	Ribbon Communications Inc.
	By:	/s/ Patrick Macken
		Name:	Patrick W. Macken
		Title:	Executive Vice President, Chief Legal Officer and Secretary

  

 

 

 

 

Exhibit 99.1

 

 

 

Ribbon Communications Inc. Reports
Fourth Quarter and Full Year 2020 Financial Results

 

Second Consecutive Quarter of Positive Net Income and Record Adjusted EBITDA

 

Revenue Grew 6% Sequentially

 

 

 

 

 

“This was an exceptional year from a cash perspective,” said Mick Lopez, Chief Financial Officer of Ribbon Communications. “Our performance once again demonstrated strong focus and execution as we ended the year on a high note with strong growth and profitability.”

 

Customer and Company Highlights

	·	In addition to the Company’s first IP Optical win in North America with a Top 4 cable MSO, Ribbon earned new IP Optical business with 5 regional telco carriers
	·	Closed significant new orders with North American Tier-1 service providers as they continue to utilize Ribbon solutions to grow and evolve their networks
	·	Revenue from customers outside the United States increased to 60% of total sales in 4Q20; international highlights include:

	o	New network transformation project with a Tier-1 carrier in CALA using new virtualized C20 Call Session Controller
	o	Secured the first large-scale OTN deployment for metro access for a defense customer in Europe
	o	Implementing metro optical networks globally with Telecom Italia and collaborating with them to win new regional public, private, and enterprise IP optical opportunities in Europe
	o	Signed over $10 million in Cloud and Edge deals in Japan with Tier-1 service providers
	o	4Q20 India sales consistent with those in 3Q20 with improvements in several accounts

 

Business Outlook¹

The Company’s outlook is based on current indications for its business, which are subject to change. For the first quarter of 2021, the Company projects revenue of $190 million to $200 million, non-GAAP gross margin of 55% to 56%, non-GAAP earnings per share of $0.01 to $0.03, and Adjusted EBITDA of $14 million to $18 million. For the full year 2021, the Company projects revenue of $925 million to $945 million, non-GAAP gross margin of 55% to 56%, non-GAAP earnings per share of $0.49 to $0.54, and Adjusted EBITDA of $145 million to $155 million. The current outlook assumes no worsening of conditions related to the COVID-19 pandemic.

¹ Please see the reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures and additional information about the non-GAAP measures in the section entitled “Discussion of Non-GAAP Financial Measures” in the attached schedules.

 

Upcoming Virtual Investor Conference Schedule

·

May 24-26, 2021 – JP Morgan Global Technology, Media and Communications Conference (presentation and one-on-one institutional investor meetings).

 

About Ribbon

Ribbon Communications (Nasdaq: RBBN) delivers communications software, IP and optical networking solutions to service providers, enterprises and critical infrastructure sectors globally. We engage deeply with our customers, helping them modernize their networks for improved competitive positioning and business outcomes in today's smart, always-on and data-hungry world. Our innovative, end-to-end solutions portfolio delivers unparalleled scale, performance, and agility, including core to edge software-centric solutions, cloud-native offers, leading-edge security and analytics tools, along with IP and optical networking solutions for 5G. To learn more about Ribbon visit rbbn.com.

 

Important Information Regarding Forward-Looking Statements

The information in this release contains “forward-looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to several risks and uncertainties. All statements other than statements of historical facts contained in this release, including without limitation statements regarding, projected financial results for the first quarter 2021 and beyond, sales trends, and plans and objectives of management for future operations are forward-looking statements. Without limiting the foregoing, the words “believes”, “estimates”, “expects”, “expectations”, “intends”, “may”, “plans”, “projects” and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

 

 

 

 

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated in these forward-looking statements due to various risks, uncertainties and other important factors, including, among others, risks related to the COVID-19 pandemic; risks that the business of ECI will not be integrated successfully or that the combined companies will not realize estimated cost savings; failure to realize anticipated benefits of the merger with ECI or the sale of the Kandy business; disruptions from the integration efforts or sale of the Kandy business that could harm our business; our ability to recruit and retain key personnel; reductions in customer spending; geopolitical tensions, including those in India, that could disrupt shipments to customers; a slowdown in customer payments and changes in customer requirements, including the timing of customer purchasing decisions and our recognition of revenues; conditions in the credit markets, credit risks and risks related to the terms of our credit agreement; our international operations, which are subject to the risks of currency fluctuations and foreign exchange controls; unpredictable fluctuations in quarterly revenue and business from our existing customers; increases in tariffs, trade restrictions or taxes on our products; and currency fluctuations.

 

These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect our business and results from operations. Additional information regarding these and other factors can be found in our reports filed with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2019 and our Form 10-Q for the quarter ended September 30, 2020. In providing forward-looking statements, the Company expressly disclaims any obligation to update these statements publicly or otherwise, whether as a result of new information, future events or otherwise, except as required by law.

 

Discussion of Non-GAAP Financial Measures

Ribbon Communications’ management uses several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of its business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. We consider the use of non-GAAP financial measures helpful in assessing the core performance of our continuing operations and when planning and forecasting future periods. Our annual financial plan is prepared on a non-GAAP basis and is approved by our board of directors. In addition, budgeting and forecasting for revenue and expenses are conducted on a non-GAAP basis and actual results on a non-GAAP basis are assessed against the annual financial plan. By continuing operations, we mean the ongoing results of the business adjusted for certain expenses and credits, as described below. We believe that providing non-GAAP information to investors will allow investors to view the financial results in the way our management views them and helps investors to better understand our core financial and operating performance and evaluate the efficacy of the methodology and information used by our management to evaluate and measure such performance.

 

While our management uses non-GAAP financial measures as tools to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, GAAP measures. In addition, our presentations of these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measures should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures. In particular, many of the adjustments to our financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.

 

Acquisition-Related Inventory Adjustment

Acquisition-related inventory adjustment amounts are inconsistent in frequency and amount and are significantly impacted by the then-current market prices of such inventory items. We believe that excluding non-cash inventory adjustments arising from acquisitions facilitates the comparison of our financial results to our historical operating results and to other companies in our industry as if the inventory had been acquired by us through our normal channels rather than acquired.

 

Stock-Based Compensation

The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. We believe that presenting non-GAAP operating results that exclude stock-based compensation provides investors with visibility and insight into our management’s method of analysis and the Company’s core operating performance.

 

 

 

 

Amortization of Acquired Intangible Assets

Amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. We believe that excluding non-cash amortization of intangible assets facilitates the comparison of our financial results to our historical operating results and to other companies in our industry as if the acquired intangible assets had been developed internally rather than acquired.

 

Impairment of Goodwill

We performed our annual testing for impairment of goodwill in the fourth quarter of 2019, determined as a result of the testing that our goodwill was impaired, and recorded an impairment charge. We believe that such expenses are not part of our core business or ongoing operations. Accordingly, we believe that excluding the goodwill impairment charge facilitates the comparison of our financial results to our historical operating results and to other companies in our industry.

 

Litigation Costs

We have been involved in litigation with one of our competitors and with a former GENBAND business partner and have reached settlements in both cases. We exclude the costs of such litigation because we believe such costs are not part of our core business or ongoing operations.

 

Acquisition-, Disposal- and Integration-Related Expense

We consider certain acquisition-, disposal- and integration-related costs to be unrelated to the organic continuing operations of our acquired businesses and the Company, and such costs are generally not relevant to assessing or estimating the long-term performance of the acquired assets. We exclude such acquisition-, disposal- and integration-related costs to allow more accurate comparisons of our financial results to our historical operations and the financial results of less acquisitive peer companies and allows management and investors to consider the ongoing operations of the business both with and without such expenses.

 

Restructuring and Related Expense

We have recorded restructuring and related expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. We believe that excluding restructuring and related expense facilitates the comparison of our financial results to our historical operating results and to other companies in our industry, as there are no future revenue streams or other benefits associated with these costs.

 

Gain on Sale of Business

On December 1, 2020, we completed the sale of Kandy to AVCT. As consideration, we received units of AVCT securities, comprised of AVCT’s Series A-1 convertible debentures (“Debentures”) and warrants to purchase shares of AVCT’s common stock (“Warrants”), with an aggregate fair value approximating $84 million on the date of sale. We exclude this gain because we believe that such gain is not part of our core business or ongoing operations.

 

Increase in Fair Value of Investments

We calculate the fair value of the Debentures and Warrants at each quarter-end and record any adjustments to their fair values in Other income, net. We recorded the increase in the aggregate fair value of the Debentures and Warrants as of December 31, 2020 for the period since the sale of Kandy. We exclude this and any subsequent gains and losses from the change in fair value of the Debentures and Warrants because we believe that such gains or losses are not part of our core business or ongoing operations.

 

Reduction to Deferred Purchase Consideration

We reached an agreement related to the outstanding cash deferred purchase consideration for our acquisition of Edgewater Networks, Inc. in the first quarter of 2019 and recorded the gain on the reduction in Other income, net. We believe that such reductions to the cash deferred purchase consideration are not part of our core business or ongoing operations, as they relate to specific acquisitive transactions and that excluding such reductions facilitates the comparison of our financial results to our historical results and to other companies in our industry.

 

 

 

 

Gain on Litigation Settlement

We were involved in litigation with one of our competitors with whom we reached a settlement in the second quarter of 2019, which we recorded in Other income, net. We believe that such gains are not part of our core business or ongoing operations and that excluding such gains facilitates the comparison of our financial results to our historical operating results and to other companies in our industry.

 

Tax Effect of Non-GAAP Adjustments

Non-GAAP income tax expense is presented based on an estimated tax rate applied against forecasted annual non-GAAP income. Non-GAAP income tax expense assumes no available net operating losses or valuation allowances for the U.S. because of reporting significant cumulative non-GAAP income over the past several years. On a go-forward basis, we intend to report our non-GAAP quarterly income taxes by computing an annual rate for the Company and applying that single rate (rather than multiple rates by jurisdiction) to our consolidated quarterly results. We expect that this methodology will provide a more consistent rate throughout the year and allow investors to better understand the impact of income taxes on our results. We have re-cast the 2020 and 2019 historical results using this methodology; this did not change our full year non-GAAP income tax expense. Due to the methodology applied to our estimated annual tax rate, our estimated tax rate on non-GAAP income will differ from our GAAP tax rate and from our actual tax liabilities.

 

Adjusted EBITDA

We use Adjusted EBITDA as a supplemental measure to review and assess our performance. We calculate Adjusted EBITDA by excluding from Income (loss) from operations: depreciation; amortization of acquired intangible assets; stock-based compensation; acquisition-related inventory adjustments; certain litigation costs; impairment of goodwill; acquisition-, disposal- and integration-related expense; and restructuring and related expense. In general, we exclude the expenses that we consider to be non-cash and/or not part of our ongoing operations. We may exclude other items in the future that have those characteristics. Adjusted EBITDA is a non-GAAP financial measure that is used by our investing community for comparative and valuation purposes. We disclose this metric to support and facilitate our dialogue with research analysts and investors. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

 

 

RIBBON COMMUNICATIONS INC.

Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)

 

		Three months ended
		December 31,				September 30,				December 31,
		2020				2020				2019
Revenue:
Product		$	142,225			$	128,926			$	81,339
Service			101,977				102,192				79,770
Total revenue			244,202				231,118				161,109
Cost of revenue:
Product			59,669				58,545				23,977
Service			40,171				37,619				27,873
Total cost of revenue			99,840				96,164				51,850
Gross profit			144,362				134,954				109,259
Gross margin:
Product			58.0	%			54.6	%			70.5	%
Service			60.6	%			63.2	%			65.1	%
Total gross margin			59.1	%			58.4	%			67.8	%
Operating expenses:
Research and development			51,321				49,113				35,604
Sales and marketing			37,551				36,898				26,701
General and administrative			14,966				16,021				13,037
Amortization of acquired intangible assets			15,558				16,349				12,396
Impairment of goodwill			-				-				164,300
Acquisition-, disposal- and integration-related expense			2,557				1,366				6,092
Restructuring and related expense			5,509				3,290				(49	)
Total operating expenses			127,462				123,037				258,081
Income (loss) from operations			16,900				11,917				(148,822	)
Interest expense, net			(5,393	)			(6,854	)			(525	)
Other income, net			115,534				407				316
Income (loss) before income taxes			127,041				5,470				(149,031	)
Income tax (provision) benefit			(3,281	)			782				(1,332	)
Net income (loss)		$	123,760			$	6,252			$	(150,363	)
Earnings (loss) per share:
Basic		$	0.85			$	0.04			$	(1.36	)
Diluted		$	0.81			$	0.04			$	(1.36	)
Weighted average shares used to compute earnings (loss) per share:
Basic			145,311				144,948				110,269
Diluted			153,441				151,680				110,269

 

 

RIBBON COMMUNICATIONS INC.

Consolidated Statements of Operations

(in thousands, except percentages and per share amounts)

(unaudited)

 

		Year ended
		December 31,				December 31,
		2020				2019
Revenue:
Product		$	467,912			$	262,030
Service			375,883				301,081
Total revenue			843,795				563,111
Cost of revenue:
Product			204,772				95,774
Service			145,916				112,680
Total cost of revenue			350,688				208,454
Gross profit			493,107				354,657
Gross margin:
Product			56.2	%			63.4	%
Service			61.2	%			62.6	%
Total gross margin			58.4	%			63.0	%
Operating expenses:
Research and development			194,525				141,060
Sales and marketing			139,318				106,310
General and administrative			63,286				53,870
Amortization of acquired intangible assets			60,910				49,225
Impairment of goodwill			-				164,300
Acquisition-, disposal- and integration-related expense			17,164				12,953
Restructuring and related expense			16,235				16,399
Total operating expenses			491,438				544,117
Income (loss) from operations			1,669				(189,460	)
Interest expense, net			(21,042	)			(3,877	)
Other income, net			112,690				70,444
Income (loss) before income taxes			93,317				(122,893	)
Income tax provision			(4,726	)			(7,182	)
Net income (loss)		$	88,591			$	(130,075	)
Earnings (loss) per share:
Basic		$	0.64			$	(1.19	)
Diluted		$	0.61			$	(1.19	)
Weighted average shares used to compute earnings (loss) per share:
Basic			138,967				109,734
Diluted			144,650				109,734

 

 

RIBBON COMMUNICATIONS INC.

Consolidated Balance Sheets

(in thousands)

(unaudited)

 

		December 31,				December 31,
		2020				2019
Assets
Current assets:
Cash and cash equivalents		$	128,428			$	44,643
Restricted cash			7,269				-
Accounts receivable, net			237,738				192,706
Inventory			45,750				14,800
Other current assets			28,461				27,146
Total current assets			447,646				279,295
Property and equipment, net			48,888				28,976
Intangible assets, net			417,356				213,366
Goodwill			416,892				224,896
Investments			115,183				-
Deferred income taxes			10,651				4,959
Operating lease right-of-use assets			69,757				36,654
Other assets			20,892				26,762
		$	1,547,265			$	814,908
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of term debt		$	15,531			$	2,500
Revolving credit facility			-				8,000
Accounts payable			63,387				31,412
Accrued expenses and other			134,865				56,700
Operating lease liabilities			17,023				7,719
Deferred revenue			96,824				100,406
Total current liabilities			327,630				206,737
Long-term debt, net of current			369,035				45,995
Operating lease liabilities, net of current			72,614				37,202
Deferred revenue, net of current			26,010				20,482
Deferred income taxes			16,842				4,648
Other long-term liabilities			48,281				16,589
Total liabilities			860,412				331,653
Commitments and contingencies
Stockholders' equity:
Common stock			15				11
Additional paid-in capital			1,870,256				1,747,784
Accumulated deficit			(1,178,476	)			(1,267,067	)
Accumulated other comprehensive (loss) income			(4,942	)			2,527
Total stockholders' equity			686,853				483,255
		$	1,547,265			$	814,908

 

 

RIBBON COMMUNICATIONS INC.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

		Year ended
		December 31,				December 31,
		2020				2019
Cash flows from operating activities:
Net income (loss)		$	88,591			$	(130,075	)
Adjustments to reconcile net income (loss) to cash flows provided by operating activities:
Depreciation and amortization of property and equipment			17,188				11,949
Amortization of intangible assets			60,910				49,225
Amortization of debt issuance costs			5,673				360
Stock-based compensation			13,899				12,601
Impairment of intangible assets and goodwill			-				164,300
Deferred income taxes			(5,305	)			5,299
Gain on sale of business			(83,552	)			-
Increase in fair value of investments			(30,296	)			-
Reduction in deferred purchase consideration			(70	)			(8,124	)
Foreign currency exchange losses			2,961				1,090
Changes in operating assets and liabilities:
Accounts receivable			9,578				(3,936	)
Inventory			11,842				7,776
Other operating assets			45,032				(17,849	)
Accounts payable			(49,561	)			(16,282	)
Accrued expenses and other long-term liabilities			20,629				(18,538	)
Deferred revenue			(5,955	)			(2,111	)
Net cash provided by operating activities			101,564				55,685
Cash flows from investing activities:
Purchases of property and equipment			(26,721	)			(10,824	)
Business acqusitions, net of cash acquired			(346,852	)			-
Maturities of marketable securities			-				7,295
Proceeds from the sale of fixed assets			43,500				-
Net cash used in investing activities			(330,073	)			(3,529	)
Cash flows from financing activities:
Borrowings under revolving line of credit			615				117,000
Principal payments on revolving line of credit			(8,615	)			(164,000	)
Proceeds from issuance of term debt			478,500				50,000
Principal payment of debt, related party			-				(24,716	)
Principal payments of term debt			(134,188	)			(1,250	)
Payment of deferred purchase consideration			-				(21,876	)
Principal payments of finance leases			(1,258	)			(913	)
Payment of debt issuance costs			(14,147	)			(891	)
Proceeds from the sale of common stock in connection with employee stock purchase plan			-				863
Proceeds from the exercise of stock options			70				235
Payment of tax withholding obligations related to net share settlements of restricted stock awards			(1,674	)			(1,193	)
Repurchase of common stock			-				(4,536	)
Net cash provided by (used in) financing activities			319,303				(51,277	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			260				70
Net increase in cash, cash equivalents and restricted cash			91,054				949
Cash and cash equivalents, beginning of year			44,643				43,694
Cash, cash equivalents and restricted cash, end of year		$	135,697			$	44,643

 

 

RIBBON COMMUNICATIONS INC.

Supplemental Information

(in thousands)

(unaudited)

 

The following tables provide the details of stock-based compensation included as components of other line items in the Company's Consolidated Statements of Operations and the line items in which these amounts are reported.  

 

		Three months ended												Year ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2020				2020				2019				2020				2019
Stock-based compensation
Cost of revenue - product		$	51			$	57			$	14			$	174			$	76
Cost of revenue - service			208				204				111				701				478
Cost of revenue			259				261				125				875				554
Research and development			804				868				539				2,968				1,898
Sales and marketing			1,177				1,189				763				4,129				3,028
General and administrative			1,492				1,651				3,020				5,927				7,121
Operating expense			3,473				3,708				4,322				13,024				12,047
Total stock-based compensation		$	3,732			$	3,969			$	4,447			$	13,899			$	12,601

 

 

RIBBON COMMUNICATIONS INC.

Reconciliation of Non-GAAP and GAAP Financial Measures

(in thousands, except per share amounts)

(unaudited)

 

		Three months ended
		December 31,				September 30,				December 31,
		2020				2020				2019
GAAP Total gross margin			59.1	%			58.4	%			67.8	%
Stock-based compensation			0.1	%			0.1	%			0.1	%
Acquisition-related inventory adjustment			0.0	%			0.9	%			0.0	%
Non-GAAP Total gross margin			59.2	%			59.4	%			67.9	%
GAAP Net income (loss)		$	123,760			$	6,252			$	(150,363	)
Acquisition-related inventory adjustment			-				2,000				-
Stock-based compensation			3,732				3,969				4,447
Amortization of acquired intangible assets			15,558				16,349				12,396
Impairment of goodwill			-				-				164,300
Litigation costs			-				-				1,767
Acquisition-, disposal- and integration-related expense			2,557				1,366				6,092
Restructuring and related expense			5,509				3,290				(49	)
Gain on sale of business			(83,552	)			-				-
Increase in fair value of investments			(30,296	)			-				-
Tax effect of non-GAAP adjustments			(10,000	)			(11,409	)			(8,904	)
Non-GAAP Net income		$	27,268			$	21,817			$	29,686
Earnings (loss) per share
GAAP Diluted earnings per share or (loss) per share		$	0.81			$	0.04			$	(1.36	)
Acquisition-related inventory adjustment			-				0.01				-
Stock-based compensation			0.02				0.03				0.04
Amortization of acquired intangible assets			0.10				0.11				0.10
Impairment of goodwill			-				-				1.49
Litigation costs			-				-				0.02
Acquisition-, disposal- and integration-related expense			0.02				0.01				0.06
Restructuring and related expense			0.04				0.02				*
Gain on sale of business			(0.54	)			-				-
Increase in fair value of investments			(0.20	)			-				-
Tax effect of non-GAAP adjustments			(0.07	)			(0.08	)			(0.08	)
Non-GAAP Diluted earnings per share		$	0.18			$	0.14			$	0.27
Weighted average shares used to compute diluted earnings per share or (loss) per share
Shares used to compute GAAP diluted earnings per share or (loss) per share			153,441				151,680				110,269
Shares used to compute Non-GAAP diluted earnings per share			153,441				151,680				110,491
Adjusted EBITDA
GAAP Income (loss) from operations		$	16,900			$	11,917			$	(148,822	)
Depreciation			4,434				4,494				3,125
Amortization of acquired intangible assets			15,558				16,349				12,396
Stock-based compensation			3,732				3,969				4,447
Acquisition-related inventory adjustment			-				2,000				-
Litigation costs			-				-				1,767
Impairment of goodwill			-				-				164,300
Acquisition-, disposal- and integration-related expense			2,557				1,366				6,092
Restructuring and related expense			5,509				3,290				(49	)
Non-GAAP Adjusted EBITDA		$	48,690			$	43,385			$	43,256

 

*	Less than $0.01 impact on earnings (loss) per share.

 

 

RIBBON COMMUNICATIONS INC.

Reconciliation of Non-GAAP and GAAP Financial Measures

(in thousands, except per share amounts)

(unaudited)

 

		Year ended
		December 31,				December 31,
		2020				2019
GAAP Total gross margin			58.4	%			63.0	%
Stock-based compensation			0.1	%			0.1	%
Acquisition-related inventory adjustment			0.3	%			0.0	%
Non-GAAP Total gross margin			58.8	%			63.1	%
GAAP Net income (loss)		$	88,591			$	(130,075	)
Acquisition-related inventory adjustment			2,000				-
Stock-based compensation			13,899				12,601
Amortization of acquired intangible assets			60,910				49,225
Impairment of goodwill			-				164,300
Litigation costs			2,101				7,734
Acquisition-, disposal- and integration-related expense			17,164				12,953
Restructuring and related expense			16,235				16,399
Gain on sale of business			(83,552	)			-
Increase in fair value of investments			(30,296	)			-
Reduction to deferred purchase consideration			-				(8,124	)
Gain on litigation settlement			-				(63,000	)
Tax effect of non-GAAP adjustments			(25,335	)			(10,560	)
Non-GAAP Net income		$	61,717			$	51,453
Earnings (loss) per share
GAAP Diluted earnings per share or (loss) per share		$	0.61			$	(1.19	)
Acquisition-related inventory adjustment			0.01				-
Stock-based compensation			0.11				0.11
Amortization of acquired intangible assets			0.42				0.46
Impairment of goodwill			-				1.49
Litigation costs			0.01				0.07
Acquisition-, disposal- and integration-related expense			0.12				0.12
Restructuring and related expense			0.11				0.15
Gain on sale of business			(0.58	)			-
Increase in fair value of investments			(0.21	)			-
Reduction to deferred purchase consideration			-				(0.07	)
Gain on litigation settlement			-				(0.57	)
Tax effect of non-GAAP adjustments			(0.17	)			(0.10	)
Non-GAAP Diluted earnings per share		$	0.43			$	0.47
Weighted average shares used to compute diluted earnings per share or (loss) per share
Shares used to compute GAAP diluted earnings per share or (loss) per share			144,650				109,734
Shares used to compute Non-GAAP diluted earnings per share			144,650				110,271
Adjusted EBITDA
GAAP Income (loss) from operations		$	1,669			$	(189,460	)
Depreciation			17,188				11,949
Amortization of acquired intangible assets			60,910				49,225
Stock-based compensation			13,899				12,601
Acquisition-related inventory adjustment			2,000				-
Litigation costs			2,101				7,734
Impairment of goodwill			-				164,300
Acquisition-, disposal- and integration-related expense			17,164				12,953
Restructuring and related expense			16,235				16,399
Non-GAAP Adjusted EBITDA		$	131,166			$	85,701

 

 

RIBBON COMMUNICATIONS INC.

Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook

(unaudited)

 

		Three months ending									Year ending
		March 31, 2021									December 31, 2021
		Range									Range
Revenue		$	190		to		$	200			$	925			$	945
Gross margin
GAAP outlook			54.8	%				55.8	%			54.9	%			55.9	%
Stock-based compensation			0.2	%				0.2	%			0.1	%			0.1	%
Non-GAAP outlook			55.0	%				56.0	%			55.0	%			56.0	%
(Loss) earnings per share **
GAAP outlook		$	(0.18	)			$	(0.15	)		$	(0.03	)		$	0.03
Stock-based compensation			0.03					0.03				0.12				0.12
Amortization of acquired intangible assets			0.10					0.10				0.43				0.43
Acquisition-, disposal- and integration-related expense			0.01					0.01				0.02				0.02
Restructuring and related expense			0.05					0.05				0.07				0.07
Tax effect of non-GAAP adjustments			*					(0.01	)			(0.12	)			(0.13	)
Non-GAAP outlook		$	0.01				$	0.03			$	0.49			$	0.54
Weighted average shares used to compute (loss) per share or diluted earnings per share (in thousands)
Shares used to compute GAAP loss per share or diluted earnings per share			146,000					146,000				147,000				154,000
Shares used to compute Non-GAAP diluted earnings per share			153,000					153,000				154,000				154,000
Adjusted EBITDA (in $ millions)
GAAP (loss) income from operations		$	(19.9	)			$	(15.9	)		$	27.5			$	37.5
Depreciation			4.2					4.2				17.4				17.4
Amortization of acquired intangible assets			15.9					15.9				66.7				66.7
Stock-based compensation			4.4					4.4				19.1				19.1
Acquisition-, disposal- and integration-related expense			1.7					1.7				3.5				3.5
Restructuring and related expense			7.7					7.7				10.8				10.8
Non-GAAP outlook		$	14.0				$	18.0			$	145.0			$	155.0

 

*	Less than $0.01 impact on earnings (loss) per share
**	Excludes any income (loss) related to the change in fair value of the Debentures and Warrants received as sale consideration