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Ubiquiti Networks Reports Q4 Fiscal 2012 Results

These non-GAAP measures are not in accordance with or an alternative to GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures, used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income or earnings per diluted share prepared in accordance with GAAP. 

Safe Harbor for Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact including words such as "look", "anticipate", "believe", "estimate", "expect", "consider" and "plan" and statements in the future tense are forward looking statements.  The statements in this press release that could be deemed forward-looking statements include statements regarding growth prospects, market positioning, potential of new technology platforms, effect of anti-counterfeit manufacturing processes, short and long term opportunities, and any statements or assumptions underlying any of the foregoing.

Forward-looking statements are subject to certain risks and uncertainties that could cause our actual future results to differ materially, or cause a material adverse impact on our results. Potential risks and uncertainties include, but are not necessarily limited to, fluctuations in our operating results; varying demand for our products due to the financial and operating condition of our distributors and their customers, distributors inventory management practices and general economic conditions; our reliance on a limited number of distributors; inability of our contract manufacturers and suppliers to meet our demand; our dependence on Qualcomm Atheros for chipsets without a short-term alternative; as we move into new markets competition from certain of our current or potential competitors who may be more established in such markets; our ability to keep pace with technological and market developments; success and timing of new product introductions by us and the performance of our products generally; if we fail to effectively manage the significant increase in our transactional sales volumes; we may become subject to warranty claims, product liability and product recalls; that a substantial majority of our sales are into countries outside the United States and we are subject to numerous U.S. export control and economic sanctions laws; costs related to responding to government inquiries related to regulatory compliance; our reliance on the Ubiquiti Community; our reliance on certain key members of our management team, including our founder and chief executive officer, Robert J. Pera; adverse tax-related matters such as tax audits, changes in our effective tax rate or new tax legislative proposals; if the final determination of our income tax liability may be materially different from our income tax provisions; the impact of any intellectual property litigation and claims for indemnification and litigation related to U.S. Securities laws and economic and political conditions in the United States and abroad. We discuss these risks in greater detail under the heading "Risk Factors" and elsewhere in our Quarterly Report on Form 10-Q for the period ended March 31, 2012 and other filings filed with the U.S. Securities and Exchange Commission (SEC), which are available at the SEC's website at . Copies may also be obtained by contacting Ubiquiti Networks' Investor Relations Department, attn: John Ritchie by phone at 408.942.3085 ext. 329 or by email at or Ubiquiti Networks' Investor Relations website at .

Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date made. Ubiquiti Networks undertakes no obligation to update information contained in this press release. You should review our SEC filings carefully and with the understanding that our actual future results may be materially different from what we expect.

Ubiquiti Networks Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share data) 
  Three Months Ended June 30, Years Ended June 30,
    2012 2011 2012 2011
Revenues  $ 94,868  $ 67,554  $ 353,517  $ 197,874
Cost of revenues 53,827 39,517 202,514 117,062
Gross profit 41,041 28,037 151,003 80,812
Operating expenses:        
Research and development 5,028 3,336 16,699 11,374
Sales, general and administrative 1,953 2,051 9,012 7,358
Total operating expenses 6,981 5,387 25,711 18,732
Income from operations 34,060 22,650 125,292 62,080
Interest income (expense) and other, net  (133) 29  (1,269) 79
Income before provision for income taxes 33,927 22,679 124,023 62,159
Provision for income taxes 5,442 4,544 21,434 12,432
Net income  $ 28,485  $ 18,135  $ 102,589  $ 49,727
Preferred stock cumulative dividend and accretion of cost of preferred stock  (27,518)  (112,431)  (42,068)
Less allocation of net income to participating preferred stockholders  (2,784)
Net income (loss) attributable to common stockholders—basic  $ 28,485  $ (9,383)  $ (9,842)  $ 4,875
Undistributed earnings re-allocated to common stockholders 103
Net income (loss) attributable to common stockholders—diluted  $ 28,485  $ (9,383)  $ (9,842)  $ 4,978
Net income (loss) per share of common stock:        
Basic  $ 0.31 $ (0.15) $ (0.12)  $ 0.08
Diluted  $ 0.30 $ (0.15) $ (0.12)  $ 0.07
Weighted average shares used in computing net income (loss) per share of common stock:        
Basic 91,958 62,652 83,460 63,092
Diluted 94,168 62,652 83,460 66,907
Ubiquiti Networks Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share data)
  Three Months Ended June 30, Years Ended June 30,
  2012 2011 2012 2011
Net income  $ 28,485  $ 18,135  $ 102,589  $ 49,727
Stock-based compensation:        
Cost of revenues 43 10 117 30
Research and development 177 94 542 285
Sales, general and administrative 241 172 834 637
Income from a coexistence licensing agreement (1,500) (1,500)
Tax effect of stock-based compensation and income from a coexistence licensing agreement 416 (111) 3 (381)
Non-GAAP net income  $ 27,862  $ 18,300  $ 102,585  $ 50,298
Non-GAAP diluted EPS (1)  $ 0.30  $ 0.18  $ 1.09  $ 0.49
Weighted-average shares used in non-GAAP diluted EPS (1) 94,168 102,592 93,762 102,942
(1)  Non-GAAP Diluted EPS is calculated using non-GAAP net income excluding stock-based compensation and income from a coexistence licensing agreement, net of taxes and weighted-average shares outstanding as if Series A preferred stock is treated as common stock for the periods presented.
Ubiquiti Networks, Inc.
Reconciliation of Weighted-Average Shares Used in Computing Net Income (Loss) Per Share of Common Stock-Diluted to Weighted-Average Shares Used In Computing Non-GAAP Diluted EPS
(In thousands, except per share data)
  Three Months Ended June 30, Years Ended June 30,
  2012 2011 2012 2011
Weighted-average shares used in computing net income(loss) per share of common stock- diluted 94,168 62,652 83,460 66,907
Add back:        
Weighted-average dilutive effect of stock options and restricted stock units 3,905 2,695
Weighted-average shares of Series A preferred shares outstanding 36,035 7,607 36,035
Weighted-average shares used in computing non-GAAP diluted EPS 94,168 102,592 93,762 102,942
Ubiquiti Networks Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts) 
  June 30,
  2012  2011 (1)
Current assets:    
Cash and cash equivalents   $ 122,060  $ 76,361
Accounts receivable, net  75,644 39,811
Inventories  7,734 5,663
Deferred costs  -- 881
Prepaid expenses and other current assets  1,577 5,386
Total current assets  207,015 128,102
Property and equipment, net  4,471 1,022
Intangible assets 748 --
Long-term deferred tax asset 1,114 324
Other long–term assets  388 2,230
Total assets   $ 213,736  $ 131,678
Liabilities, Convertible Preferred Stock and Stockholders' Deficit    
Current liabilities:     
Accounts payable   $ 26,450  $ 14,758
Customer deposits  235 1,675
Deferred revenues  805 1,734
Income taxes payable  8,673 4,428
Debt – short-term 6,968  --
Other current liabilities  17,031 15,206
Total current liabilities  60,162 37,801
Long–term deferred tax liabilities  -- 1,870
Debt – long-term 22,623  --
Other long–term liabilities -- 32
Total liabilities  82,785 39,703
Redeemable convertible preferred stock -- 145,847
Stockholders' deficit:    
Common stock  92 63
Additional paid–in capital  128,981 545
Treasury stock (69,515) (69,515)
Retained earnings  71,393 15,035
Total stockholders' deficit  130,951 (53,872)
Total liabilities, convertible preferred stock and stockholders' deficit  $ 213,736  $ 131,678
(1) Derived from audited consolidated statements as of and for the year ended June 30, 2011.
Ubiquiti Networks Inc.
Revenue by Product Category and Geographical Area
(In thousands) 
  Three Months Ended June 30, Years Ended June 30,
  2012 2011 2012 2011
Revenue by Product Category        
AirMax  $ 58,991  $ 41,960  $ 223,743  $ 113,001
New platforms 12,591 1,583 29,465 2,513
Other systems 10,759 11,339 52,086 44,884
Systems 82,341 54,882 305,294 160,398
Embedded radio 2,032 4,093 10,056 14,762
Antennas/other 10,495 8,579 38,167 22,714
Total revenues  $ 94,868  $ 67,554  $ 353,517  $ 197,874
Revenue by Geographical Area        
North America  $ 25,281  $ 22,010  $ 88,309  $ 61,920
South America 16,574 18,278 88,325 50,824
Europe, the Middle East and Africa 38,957 21,866 130,494 68,297
Asia Pacific 14,056 5,400 46,389 16,833
Total revenues  $ 94,868  $ 67,554  $ 353,517  $ 197,874

About our Non-GAAP Net Income and Adjustments

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income and earnings per diluted share that are GAAP net income and GAAP earnings per diluted share adjusted to exclude certain recurring costs, expenses and gains. 

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