Procera Networks to Acquire Vineyard Networks

Procera Networks to Acquire Vineyard Networks 
Acquisition Broadens Addressable Market Into Enterprise Through OEM
Channel 
FREMONT, CA -- (Marketwire) -- 01/07/13 --  Procera Networks, Inc.
(NASDAQ: PKT), the global intelligent policy enforcement company,
today announced that it has entered into a definitive agreement to
acquire Vineyard Networks Inc., a leader in the Enterprise OEM DPI
market. The acquisition will enable Procera to extend its Intelligent
Policy Enforcement business into the growing Enterprise DPI market.  
Procera believes that network intelligence technology is foundational
for networks of the future. James Brear, Procera's President and CEO,
said: "Every network element will require intelligence. Our strategic
vision is to enable networks of any size to have the intelligence
needed to operate effectively. Procera directly addresses this need
for service providers of all types through our PacketLogic solutions.
Vineyard enables Procera to expand our total addressable market
through their OEM business to include enterprise network equipment
vendors, adding the entire enterprise space along with additional
opportunities in the service provider OEM market. The addition of
Vineyard, which has 34 employees mostly in engineering and product
development, establishes Procera as the clear leader in the
high-growth DPI market." 
"Procera and Vineyard have natural synergies," said Jason Richards,
Vineyard's CEO. "Vineyard's leadership in Enterprise DPI combined
with Procera's industry-leading suite of PacketLogic products
provides customers and partners with a single solution for
Intelligence, Analytics and Enforcement." 
The growing use of Software Defined Networking, cloud services and
storage, as well as the "Bring Your Own Device" (BYOD) trend for
consumer and enterprise, has blurred the line between enterprise and
service provider networks. Consumer, enterprise and service provider
network operators are searching for solutions that provide better
visibility and control in an ever-changing landscape of applications,
content owners and content-delivery networks. Existing network
solutions that do not have sophisticated network intelligence cannot
effectively meet the Quality of Experience expectations of broadband
subscribers. "Powered by Proc
era" solutions will deliver superior
visibility and enable a variety of use cases. Procera believes that
its combination with Vineyard will create a new force in the DPI
market for Service Providers and Enterprises. The total addressable
market (TAM) for the Enterprise OEM DPI market is expected to be over
$300 million in 2013.  
The total consideration for the acquisition is $28.0 million CAD,
comprised of $15.4 million CAD in Procera common stock and $12.6
million CAD in cash. The acquisition is subject to the satisfaction
of certain closing conditions, and is expected to close on or before
January 15, 2013. 
Outlook
 Subject to closing, Procera expects to
realize meaningful bookings, revenue and operating scale from the
acquisition. On a non-GAAP basis, excluding stock-based compensation
expenses and amortization of acquired intangible assets, management
currently expects the following: 


 
--  Vineyard is expected to add approximately $4 million to $5 million to
    Procera's 2013 revenue, with gross margin in excess of 90%.
--  Including one-time, non-cash purchase accounting adjustments, the
    acquisition is expected to be slightly dilutive to Procera's 2013 EPS;
    without these adjustments the acquisition would have been expected to
    be EPS neutral in 2013.
--  The acquisition is expected to be accretive to Procera's 2014 EPS on a
    non-GAAP basis.

  
Procera has not provided a reconciliation of forward-looking non-GAAP
financial measures to the directly comparable GAAP measures because,
due primarily to variability and difficulty in making accurate
forecasts and projections, not all of the information necessary for a
quantitative reconciliation is available to the company without
unreasonable efforts. 
On a GAAP basis, Procera expects to record significant quarterly
operating charges for the amortization of intangible assets and
compensation following the allocation of the purchase price.  
Conference Call Information
 Procera Networks, Inc. will host a
conference call at 8:15 a.m. Eastern Time today, January 7, 2013 to
discuss this announcement. Interested parties can access the live
call by dialing 877-941-1427 or 480-629-9664 (International) and
request the "Procera" call. A replay of the call will be available
approximately one hour following the end of the call through 11:59
p.m. ET on Monday, January 14, 2013, by dialing 800-406-7325 and
entering the r
eplay code of 4588157#. To access the replay from
international locations, dial 303-590-3030 using the same passcode.
An archive of the conference call will be available on the Quarterly
Results and Events section of the Procera Networks' Investor
Relations Web site at www.proceranetworks.com/investors. 
About Procera Networks, Inc. 
 Procera Networks Inc. (NASDAQ: PKT)
delivers Intelligent Policy Enforcement solutions designed for
carriers, service providers and enterprises worldwide. Procera's
PacketLogic solutions provide actionable intelligence and policy
enforcement to ensure a high quality experience for any Internet
connected devices. Network operators deploy Procera's technology to
enable real-time visibility, superior performance and scalability,
and deliver personalized services for millions of enterprises and
consumers. For more information, visit www.proceranetworks.com or
follow Procera on twitter at @ProceraNetworks.  
About Vineyard Networks Inc.
 Vineyard Networks delivers
next-generation Deep Packet Inspection technology to network
infrastructure vendors around the world. Vineyard's NAVL DPI engine
is an OEM solution powering today's application aware platforms, from
next-generation Firewalls to Mobile Telco Gateways. NAVL inspects and
analyzes network data in real-time providing accurate detection of
today's most popular applications with the ability to extract
metadata and applica
tion attributes from the network traffic. For
more information, please visit www.vineyardnetworks.com 
Cautionary Note Regarding Forward-Looking Statements
 This press
release includes "forward-looking statements" within the meaning of
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Any statements in this press release that are not
historical facts may be considered "forward-looking statements."
These forward-looking statements include, but are not limited to,
statements regarding: the transaction, including closing and the
timing of closing and the expected benefits of the transaction;
operating the Vineyard business following the transaction;
expectations regarding the financial impact of the acquisition on
Procera, including our revenue and EPS; the expected size of the
markets to be addressed by Procera's and Vineyard's products; and our
ability to deliver superior visibility and enable a variety of use
cases. These statements are based on current expectations of future
events. Actual results could differ materially from those projected
in the forward-looking statements as a result of certain risk factors
including, but not limited to: the risk that the transaction
described above is not completed or is delayed; the risk that the
transaction may involve unexpected costs; the risk that benefits of
the transaction described above are not realized; the effect of
competitive factors and our reactions to those factors; risks related
to our integration of Vineyard's operations and employees; the
acceptance and adoption of our products; our ability to service and
upgrade our products; lengthy sales cycles and lab and field trial
delays by service providers; our dependence on a limited product
line; our dependence on key employees; our ability to compete in our
industry with companies that are significantly larger and have
greater resources; our ability to protect our intellectual property
rights in a global market; our ability to manufacture product quickly
enough to meet potential demand; and other risks and uncertainties
described more fully in our documents filed with or furnished to the
Securities and Exchange Commission. More information about these and
other risks that may impact our business are set forth in our Form
10-K filed for the year ended December 31, 2011, and in the
subsequently filed quarterly reports on Form 10-Q. All
forward-looking statements in this press release are based on
information available to us as of the date hereof, and we assume no
obligation to update these forward-looking statements. 
Press Contact
Fran Lowe
Engage PR for Procera Networks
510-748-8200 x225
flowe@engagepr.com  
Investor Relations Contact
Charles Messman or Todd Kehrli
MKR Group Inc.
323-468-2300
pkt@mkr-group.com 
 
 
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