Sandvine Reports Q3 2014 Results -2-Sandvine Reports Q3 2014 Results -2- 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 Company is dependent on certain third party sub-assembly manufacturers in its supply chain and any disruption in the operations or quality of those suppliers or any increase in expected lead times from those suppliers could result in lost or delayed revenue and/or reduced profits; -- The majority of the Company's operating expenses are denominated in Canadian dollars, U.S. dollars, and Indian rupees. The Company's earnings are impacted by fluctuations in the exchange rates between the U.S. dollar and these currencies; -- The Company operates in various jurisdictions throughout the world and generates revenues through its international sales efforts. The Company's financial results may be impacted by political and economic developments of a particular country or geography, including but not limited to the economic and political climate in Argentina. If the current economic and/or political climate in Argentina continues or deteriorates it may negatively impact the Company's financial results including the ultimate collection of outstanding receivables; and those factors which are discussed in the Company's 2013 Annual Information Form, a copy of which is available on SEDAR at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except to the extent required by applicable law. Table 1 1. Non-IFRS Financial Measures The following table provides a reconciliation of net income and related per share amounts to non-IFRS net income and the related per share amounts for the periods indicated. These non-IFRS financial measures, which are used internally by management to evaluate the Company's ongoing performance, exclude the impact of stock based compensation expense related to the Company's stock option plan and amortization of intangible assets acquired through business acquisitions (collectively referred to as "non-IFRS Expenses"). The Company provides these non-IFRS financial measures as it is the Company's view that the non-IFRS Expenses either (i) affect the comparability of results from period to period as the non-IFRS Expenses are not part of its normal day-to-day operations or only impact the current or comparable period 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. These non-IFRS measures are not recognized under IFRS and do not have standardized meanings prescribed by IFRS. Therefore it is unlikely that these measures will be comparable to similarly titled measures reported by other issuers. Non-IFRS financial measures should be considered in the context of the Company's IFRS results. Three month period ended Nine month period ended August 31, August 31, August 31, August 31, 2014 2013 2014 2013 $ $ $ $ Amounts in US$ thousands Net income 3,055 4,652 14,925 7,242 Adjustment for Stock based compensation expense 262 457 1,080 1,481 Non-IFRS Net income 3,317 5,109 16,005 8,723 Three month period ended Nine month period ended August 31, August 31, August 31, August 31, 2014 2013 2014 2013 $ $ $ $ Diluted earnings per share 0.020 0.033 0.098 0.051 Impact on diluted earnings per share of non-IFRS measures 0.001 0.003 0.007 0.011 Non-IFRS Diluted earnings per share 0.021 0.036 0.105 0.062 Sandvine Corporation Consolidated Statements of Financial Position (in thousands of United States dollars, except share and per share data) (unaudited) As at August 31, November 30, 2014 2013 $ $ Assets Current assets Cash and cash equivalents 8,584 5,454 Short term investments 142,059 83,856 Accounts receivable 28,731 36,662 Inventory 8,167 7,481 Grant receivable - 6,853 Other current assets 2,546 3,171 190,087 143,477 Non current assets Plant and equipment 8,691 10,405 Intangible assets 3,081 3,477 Deferred tax asset 212 212 Other assets 511 511 12,495 14,605 202,582 158,082 Liabilities Current liabilities Trade and other payables 10,889 16,566 Current portion of deferred revenue 20,377 14,214 31,266 30,780 Non current liabilities Deferred revenue 1,537 1,571 32,803 32,351 Shareholders' equity Share capital 150,172 121,509 Contributed surplus 15,833 15,784 Accumulated comprehensive income (loss) (74) (485) Retained earnings (deficit) 3,848 (11,077) 169,779 125,731 202,582 158,082 Sandvine Corporation Consolidated Statements of Income (in thousands of United States dollars, except share and per share data) (unaudited) For the three month period For the nine month period ended ended August 31, August 31, August 31, August 31, 2014 2013 2014 2013 $ $ $ $ Revenue Product 15,911 17,838 57,950 51,337 Service 11,986 9,345 31,220 24,412 27,897 27,183 89,170 75,749 Cost of sales Product 2,640 3,607 10,310 11,506 Service 3,430 2,932 9,752 8,308 6,070 6,539 20,062 19,814 Gross margin 21,827 20,644 69,108 55,935 Expenses Sales and marketing 8,124 7,238 24,310 21,480 Research and development 3,208 5,815 15,562 16,183 General and administrative 3,674 2,786 9,915 8,484 Other losses, net 3 7 21 79 15,009 15,846 49,808 46,226 Income from operations 6,818 4,798 19,300 9,709 Finance income (costs), net Finance income 82 43 198 113 Finance costs - (63) - (304) Foreign exchange losses (13) (18) (325) (67) Finance income (costs), net 69 (38) (127) (258) Income before provision for income taxes 6,887 4,760 19,173 9,451 Current provision for income (MORE TO FOLLOW) Dow Jones Newswires October 09, 2014 07:00 ET (11:00 GMT) .. 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