ShoreTel, Inc.
Aug 2, 2017

ShoreTel Reports Financial Results for Fourth Quarter and Fiscal Year 2017

Full Year 2017 Hosted Revenue Growth of 19%;
Fourth Quarter Total Revenue Reached Record Level

SUNNYVALE, Calif., Aug. 2, 2017 /PRNewswire/ -- ShoreTel ® (NASDAQ: SHOR), a leading provider of communication solutions that make interactions simple, today announced financial results for the fourth quarter and fiscal year 2017, which ended June 30, 2017.

ShoreTel logo. (PRNewsFoto/ShoreTel, Inc.) (PRNewsFoto/SHORETEL_ INC_)

As the Company's strategic shift in revenue mix towards hosted revenue continues, fourth quarter of fiscal 2017 total revenue was $95.7 million, compared to $94.6 million in the fourth quarter of fiscal 2016 and $87.7 million in the prior quarter. GAAP net loss was $1.0 million, or $0.01 per share, in the fourth quarter of fiscal 2017, compared with a GAAP net loss of $0.7 million, or $0.01 per share, in the fourth quarter of fiscal 2016, and a GAAP net loss of $2.9 million, or $0.04 per share, in the prior quarter. Non-GAAP net income, which excludes stock-based compensation charges, amortization of acquisition-related intangibles, severance costs, acquisition-related cost, other adjustments and related tax charges, for the fourth quarter of fiscal year 2017, was $4.5 million, or $0.06 per diluted share. This compares with a non-GAAP net income of $3.5 million, or $0.05 per diluted share, in the fourth quarter of fiscal 2016 and a non-GAAP net income in the prior quarter of $0.6 million or $0.01 per diluted share.   

"We ended our fiscal year with strong results in our June quarter. Our total revenue in the quarter was a record and our non-GAAP profitability reached its highest level in over a year," said Don Joos, president and CEO of ShoreTel.  "While we continue to transform the business, our Hosted revenue growth was 19% for fiscal year 2017 and we had a significant sequential increase in premise customers migrating to our hosted solution." 

Fourth Quarter of Fiscal 2017 Financial Highlights
Hosted revenues of $39.7 million in the fourth quarter of fiscal 2017 were up 17 percent year-over-year and 4 percent sequentially. GAAP hosted gross margin for the fourth quarter of fiscal year 2017 was 54.0 percent, compared with 50.4 percent in the fourth quarter of fiscal year 2016.  Non-GAAP hosted gross margin increased to 55.0 percent in the fourth quarter of fiscal 2017, representing an improvement over the 54.3 percent in the fourth quarter of fiscal 2016. The total number of installed customer seats increased 23 percent over the fourth quarter of fiscal 2016 to approximately 283,800.  Hosted revenue churn was 5.3 percent annualized in the fourth quarter of fiscal 2017.

Product revenues of $36.5 million in the fourth quarter of fiscal 2017 were down 13 percent year-over-year but up 20 percent sequentially. GAAP product gross margin for the fourth quarter of fiscal year 2017 was 65.5 percent, compared with 67.5 percent in the fourth quarter of fiscal year 2016.  Non-GAAP product gross margin was 65.5 percent in the fourth quarter of fiscal 2017, compared with 67.6 percent in the fourth quarter of fiscal 2016. 

Support and services revenues of $19.6 million in the fourth quarter of fiscal 2017 were up 4 percent year-over-year and up 3 percent sequentially. GAAP support and service gross margin for the fourth quarter of fiscal year 2017 was 77.9 percent, compared with 75.0 percent in the fourth quarter of fiscal year 2016.  Non-GAAP support and service gross margin was 80.0 percent in the fourth quarter of fiscal 2017, compared with 75.7 percent in the fourth quarter of fiscal 2016.

GAAP total gross margin for the fourth quarter of fiscal year 2017 was 63.3 percent compared with 62.9 percent in the fourth quarter of fiscal year 2016.  Non-GAAP total gross margin, for the fourth quarter of fiscal year 2017, was 64.1 percent compared with 64.4 percent in the fourth quarter of fiscal 2016.

As of June 30, 2017, the Company had $115.9 million in cash, cash equivalents and short-term investments and no outstanding debt.  The Company generated $11.7 million in cash flow from operations in the quarter ended June 30, 2017.

Fiscal Year 2017 Financial Highlights
Hosted revenues for fiscal 2017 were $150.2 million, up 19 percent compared to fiscal 2016.  GAAP hosted gross margin for fiscal 2017 was 53.1 percent, compared with 51.5 percent in fiscal 2016.  Non-GAAP hosted gross margin increased to 55.6 percent in fiscal 2017, compared with 55.4 percent in fiscal 2016. 

Product revenues for fiscal 2017 were $131.2 million, down 17 percent compared to fiscal 2016.  GAAP product gross margin in fiscal 2017 was 66.8 percent compared to 67.2 percent in fiscal 2016. Non-GAAP product gross margin was 66.9 percent in fiscal 2017, compared with 67.3 percent in fiscal 2016.

Support and services revenues for fiscal 2017 were $76.3 million, up 1 percent compared to fiscal 2016. GAAP support and service gross margin for fiscal year 2017 was 77.5 percent, compared with 74.5 percent in fiscal 2016. Non-GAAP support and service gross margin was 78.6 percent in fiscal 2017 compared to 75.3 percent in fiscal 2016.

Total revenues for fiscal 2017 were $357.8 million, down 1 percent compared to fiscal 2016.  GAAP total gross margin for fiscal year 2017 was 63.3 percent compared with 63.2 percent in fiscal year 2016. Non-GAAP total gross margin, for the fiscal year 2017, was 64.6 percent compared with 64.8 percent in fiscal 2016.

GAAP net loss in fiscal 2017 was $12.4 million, or $0.18 per share, compared with a GAAP net loss of $4.8 million, or $0.07 per share in fiscal 2016.  Non-GAAP net income for the fiscal year 2017 was $7.6 million, or $0.11 per diluted share.  This compares with a non-GAAP net income of $12.4 million, or $0.18 per diluted share in fiscal 2016.   

Selected Operational Metrics


Quarter Ended


Quarter Ended


Quarter Ended


Quarter Ended


Quarter Ended


06/30/17


03/31/17


12/31/16


09/30/16


06/30/16

Recurring Revenue as a Percent of Total Revenue

60%


63%


61%


61%


54%











Annual Recurring Revenue Run Rate (in millions)

$                   229


$                   223


$                   216


$                   211


$                   203











Hosted Average Monthly Recurring Revenue Per Customer

$               1,989


$               1,991


$               1,998


$               2,076


$               2,135











Hosted Monthly Average Revenue Per User (ARPU)

$                     48


$                     48


$                     48


$                     50


$                     51











Hosted Average # of Seats per Customer 

42


41


41


42


42











Hosted Revenue Churn Rate Annualized

5.3%


5.1%


4.6%


4.0%


5.8%











Total Company Headcount

1,158


1,166


1,144


1,145


1,194

Fourth Quarter of Fiscal 2017 Business Highlights

ShoreTel Connect CLOUD Launched in Australia
ShoreTel announced the introduction of ShoreTel Connect™ CLOUD and ShoreTel Connect CLOUD Contact Center solutions in Australia.

Australia marks the latest step in ShoreTel's continued global expansion of its Connect CLOUD Unified Communications as-a-Service (UCaaS) solution. Connect CLOUD services are also available to customers in the United States, Canada and the United Kingdom. Additionally, Connect CLOUD follows the successful introduction of ShoreTel's first cloud based voice service in Australia, which has seen rapid partner uptake and strong customer demand since its launch last April.

Connect CLOUD services are sold through ShoreTel's Australian cloud partners who can also offer customers a range of professional services. The solution will not only be available to new customers but also for current ShoreTel customers as an opportunity to upgrade their existing cloud solution or migrate from an onsite system.

ShoreTel to Offer SMS APIs Through Google Cloud Platform

ShoreTel announced it has become a Google Cloud PlatformTM Technology Partner. As part of this partnership, ShoreTel is offering an SMS API solution through the Google Cloud Launcher.

Google Cloud Launcher offers ready-to-go development stacks, solutions, and services to accelerate development. Developers are able to explore, deploy, and manage solutions with only a few clicks.

Through the Google Cloud Launcher, ShoreTel will offer developers the ability to integrate inbound and outbound SMS capabilities into new or existing applications using the SMS REST APIs of ShoreTel SummitTM. A Communications Platform as a Service (CPaaS) solution, Summit's rich developer toolkits and API frameworks make it easy to embed SMS capabilities into system workflows or build custom apps for activities such as customer notifications, appointment reminders, marketing promotions, emergency alerts and more.

ShoreTel Introduces Global Numbers Service in Four Countries
ShoreTel announced it has expanded its ShoreTel Connect™ CLOUD unified communications solution with the addition of Global Numbers service.

Global Numbers allows multi-national organizations to create a local presence in the countries they serve by establishing unique Direct Inward Dial (DID) or International Toll-free Service (ITFS) numbers in each country. Global inbound calls can be routed to auto-attendants, IVRs or contact center queues and handled by teams at a central location, such as corporate headquarters. The service is available to Connect CLOUD customers in the U.S., Canada, U.K. and Australia.

ShoreTel's Global Numbers footprint covers countries where there has been strong demand. The service offers simple pricing with flat monthly rates for local DIDs and affordable per minute charges for inbound toll-free service.

ShoreTel and Its Leadership Recognized for Six Industry Awards

ShoreTel was honored with six awards that recognize the Company's senior leadership and commitment to innovation.

ShoreTel was awarded a Silver Stevie award for Most Innovative Tech Company - up to 2,500 employees, for its overall company growth, increased total revenue and elevated size of customer base.

At the Midsize Enterprise Summit TM ShoreTel chief marketing officer, Mark Roberts, was awarded the Best Vendor Spotlight which honors the event's top performing technology solution providers based on IT decision makers' perceptions during MES.  Additionally, ShoreTel Teamwork was awarded Best Midmarket Solution: Services. ShoreTel Teamwork is a real-time collaboration application that allows teams to increase productivity on the go with features such as pervasive chat, task management, file sharing and more.

Eugenia Corrales, SVP of Solutions Group at ShoreTel, has been recognized by the Silicon Valley Business Journal with a Women of Influence 2017 award at a ceremony held on May 18th in San Jose, CA. This award recognizes professional accomplishments combined with impactful community involvement.

CRN TM named Heather Tenuto, vice president channels, to both the Women of the Channel 2017 and the Power 100 for her leadership at ShoreTel, including supporting market demand and empowering channel adoption around cloud technologies.

Business Outlook
Given the announcement made on July 27, 2017 regarding the Company's entry into a definitive agreement to be acquired by Mitel we will not be providing a business outlook.

Conference Call Information
Given the announcement made on July 27, 2017 regarding the Company's entry into a definitive agreement to be acquired by Mitel there will be no conference call in conjunction with this release.

Use of Non-GAAP Financial Measures
ShoreTel reports all required financial information in accordance with generally accepted accounting principles in the United States ("GAAP"), but it believes that evaluating its ongoing operating results may be difficult to understand if limited to reviewing only GAAP financial measures. Many investors have requested that ShoreTel disclose this non-GAAP information because it is useful in understanding the Company's performance as it excludes non-cash charges, other non-recurring adjustments and related tax changes, that many investors feel may obscure the Company's true operating performance. Likewise, management uses these non-GAAP measures to manage and assess the profitability of its business. ShoreTel has provided a reconciliation of non-GAAP financial measures following the text of this press release. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.

Legal Notice Regarding Forward-Looking Statements
ShoreTel assumes no obligation to update the forward-looking statements included in this release. This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws, including, without limitation, statements by Don Joos, statements regarding future growth and market opportunities. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The risks and uncertainties include the intense competition in our industry, the impact of the announcement of the proposed acquisition by Mitel on ShoreTel's business; the ability of ShoreTel and Mitel to complete the proposed transaction; our reliance on third parties to sell and support our products, our ability to continue to grow our cloud-based solutions, our ability to grow or maintain our premises products, supply and manufacturing risks, the impact of service disruptions or security breaches, uncertainties related to global operations, our ability to control costs as we expand our business and seek to maintain the minimum cash closing condition from the proposed merger with Mitel; difficulties in managing more dispersed business operations, our ability to attract, retain and ramp new personnel, potentially longer sales cycles, uncertainties inherent in the product development cycle, our ability to identify and execute on strategic opportunities, uncertainty as to market acceptance of new products and services, the potential for litigation in our industry, the impact of mergers and consolidations in our industry, the uncertain impact of global economic conditions and foreign exchange rates, including impact on customers' purchasing decisions, and other risk factors set forth in ShoreTel's Form 10-K for the year ended June 30, 2016 and most recent Quarterly Report on Form 10-Q.

About ShoreTel, Inc.
ShoreTel (NASDAQ: SHOR) provides businesses worldwide with communication solutions that make interactions simple. From business phone systems, unified communications https://www.shoretel.com/solutions/solution-tech-unified-communications and contact center solutions to a fully hosted voice and SMS development platform, ShoreTel delivers unmatched flexibility and ease for companies looking to increase productivity and drive innovation. ShoreTel offers solutions in the cloud, onsite or a hybrid of both, giving customers the freedom to choose the best fit for their business needs now and in the future. Headquartered in Sunnyvale, Calif., ShoreTel has offices and partners worldwide. For more information, visit shoretel.com.

ShoreTel, ShoreTel Connect, ShoreTel Summit and the ShoreTel logo are trademarks or registered trademarks of ShoreTel, Inc. in the United States and/or other countries. Google Cloud Platform is a trademark of Google Inc.  Midsize Enterprise Summit and CRN are registered trademarks of The Channel Company in the United States and/or other countries.  All other trademarks, trade names and service marks herein are the property of their respective owners.

Investor Contact:
Barry Hutton
Investor Relations Officer
408-962-2573
bhutton@shoretel.com

(Tables follow)









SHORETEL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)














As of


As of






June 30,


June 30,






2017


2016









ASSETS




Current assets:






Cash and cash equivalents

$   67,223


$   61,726


Short-term investments

48,665


46,433


Accounts receivable - net 

31,393


32,902


Inventories


11,624


12,488


Prepaid expenses and other current assets

13,019


13,420




Total current assets

171,924


166,969









Property and equipment - net 

19,066


21,551

Goodwill



129,449


129,449

Intangible assets


12,087


18,788

Other assets


6,926


5,581




Total assets

$ 339,452


$ 342,338

















LIABILITIES AND STOCKHOLDERS' EQUITY












Current liabilities:






Accounts payable 

$   14,011


$   14,932


Accrued liabilities and other

15,633


20,397


Accrued employee compensation

16,740


18,925


Accrued taxes and surcharges

3,614


3,917


Deferred revenue

61,524


56,765




Total current liabilities

111,522


114,936










Long-term deferred revenue

21,245


20,940


Other long-term liabilities

4,492


3,733




Total liabilities

137,259


139,609









Stockholders' equity:













Common stock

390,995


379,088


Accumulated deficit

(188,802)


(176,359)




Total stockholders' equity

202,193


202,729












Total liabilities and stockholders' equity 

$ 339,452


$ 342,338

 

SHORETEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)
















Three Months Ended


Twelve Months Ended




June 30,


March 31,


June 30,


June 30,




2017


2017


2016


2017


2016













Revenue:











Hosted and related services

$39,654


$   38,272


$34,016


$150,242


$126,670


Product  

36,510


30,535


41,732


131,174


158,232


Support and services  

19,557


18,923


18,844


76,343


75,382



Total revenue  

95,721


87,730


94,592


357,759


360,284

Cost of revenue:











Hosted and related services

18,233


17,381


16,856


70,406


61,384


Product

12,593


9,958


13,544


43,543


51,881


Support and services

4,328


4,169


4,705


17,194


19,199



Total cost of revenue  

35,154


31,508


35,105


131,143


132,464

Gross profit

60,567


56,222


59,487


226,616


227,820


Gross profit %

63.3%


64.1%


62.9%


63.3%


63.2%













Operating expenses:











Research and development

17,173


17,122


16,375


67,068


60,509


Sales and marketing

32,902


31,598


32,471


127,637


126,123


General and administrative

10,890


11,080


10,683


43,532


41,778


Acquisition related costs

-


-


133


-


1,489


Settlements and defense fees

-


(19)


56


(30)


56



Total operating expenses  

60,965


59,781


59,718


238,207


229,955

Loss from operations

(398)


(3,559)


(231)


(11,591)


(2,135)

Other income (expense), net

(138)


778


(446)


86


(2,097)

Loss before provision for  income tax

(536)


(2,781)


(677)


(11,505)


(4,232)

Provision for income tax

420


159


67


938


560

Net loss


$    (956)


$   (2,940)


$    (744)


$ (12,443)


$   (4,792)

Net loss per share:











Basic and diluted

$   (0.01)


$     (0.04)


$   (0.01)


$     (0.18)


$     (0.07)













Shares used in computing net loss per share:











Basic and diluted

68,518


68,235


67,300


68,100


66,405













 

SHORETEL, INC.

GAAP TO NON-GAAP RECONCILIATION

(Amounts in thousands, except per share amounts)

(Unaudited)




















































Three Months Ended





Twelve Months Ended




June 30,


March 31,


June 30,


June 30,


June 30,




2017


2017


2016


2017


2016

GAAP Hosted and related services gross profit

$ 21,421




$      20,891




$ 17,160




$   79,836




$   65,286




Stock-based compensation charges

61


 (a) 


63


 (a) 


317


 (a) 


261


 (a) 


1,272


 (a) 


Amortization of acquisition-related intangibles

327


 (b)  


921


 (b)  


977


 (b)  


3,202


 (b)  


3,613


 (b)  


Severance costs

-


 (d)  


50


 (d)  


-


 (d)  


50


 (d)  


-


 (d)  


Lease termination fee

-


 (g)  


-


 (g)  


-


 (g)  


155


 (g)  


-


 (g)  

Non-GAAP Hosted and related services gross profit

$ 21,809




$       21,925




$ 18,454




$   83,504




$   70,171



Non-GAAP Hosted and related services gross margin

55.0%




57.3%




54.3%




55.6%




55.4%

























GAAP Product gross profit

$ 23,917




$     20,577




$ 28,188




$   87,631




$ 106,351




Stock-based compensation charges

9


 (a) 


10


 (a) 


11


 (a) 


53


 (a) 


64


 (a) 


Amortization of acquisition-related intangibles

-


 (b)  


-


 (b)  


-


 (b)  


-


 (b)  


19


 (b)  


Severance costs

-


 (d)  


-


 (d)  


-


 (d)  


9


 (d)  


-


 (d)  

Non-GAAP Product gross profit

$ 23,926




$       20,587




$ 28,199




$   87,693




$ 106,434



Non-GAAP Product gross margin

65.5%




67.4%




67.6%




66.9%




67.3%

























GAAP Support and services gross profit

$ 15,229




$      14,754




$ 14,139




$   59,149




$   56,183




Stock-based compensation charges

76


 (a) 


80


 (a) 


122


 (a) 


370


 (a) 


590


 (a) 


Severance costs

341


 (d)  


-


 (d)  


-


 (d)  


454


 (d)  


10


 (d)  

Non-GAAP Support and services gross profit

$ 15,646




$       14,834




$ 14,261




$   59,973




$   56,783



Non-GAAP Support and services gross margin

80.0%




78.4%




75.7%




78.6%




75.3%

























GAAP total gross profit

$ 60,567




$      56,222




$ 59,487




$ 226,616




$ 227,820




Stock-based compensation charges

146


 (a) 


153


 (a) 


450


 (a) 


684


 (a) 


1,926


 (a) 


Amortization of acquisition-related intangibles

327


 (b)  


921


 (b)  


977


 (b)  


3,202


 (b)  


3,632


 (b)  


Severance costs

341


 (d)  


50


 (d)  


-


 (d)  


513


 (d)  


10


 (d)  


Lease termination fee

-


 (g)  


-


 (g)  


-


 (g)  


155


 (g)  


-


 (g)  

Non-GAAP total gross profit

$ 61,381




$      57,346




$ 60,914




$ 231,170




$ 233,388



Non-GAAP total gross margin

64.1%




65.4%




64.4%




64.6%




64.8%

























GAAP loss from operations

$    (398)




$     (3,559)




$    (231)




$ (11,591)




$   (2,135)




Stock-based compensation charges

2,102


 (a) 


2,194


 (a) 


2,010


 (a) 


9,789


 (a) 


8,871


 (a) 


Amortization of acquisition-related intangibles

1,229


 (b)  


1,824


 (b)  


1,881


 (b)  


6,811


 (b)  


7,112


 (b)  


Litigation, settlements and defense fees

-


 (c)  


(19)


 (c)  


56


 (c)  


(30)


 (c)  


56


 (c)  


Severance costs

2,053


 (d)  


523


 (d)  


336


 (d)  


3,734


 (d)  


493


 (d)  


Acquisition related costs

-


 (e)  


-


 (e)  


133


 (e)  


-


 (e)  


1,489


 (e)  


Strategic alternatives review costs

52


 (f)  


42


 (f)  


-


 (f)  


557


 (f)  


-


 (f)  


Lease termination fee

-


 (g)  


-


 (g)  


54


 (g)  


155


 (g)  


54


 (g)  

Non-GAAP income from operations

$   5,038




$       1,005




$   4,239




$     9,425




$   15,940

























GAAP net loss

$    (956)




$      (2,940)




$    (744)




$ (12,443)




$   (4,792)




Stock-based compensation charges

2,102


 (a) 


2,194


 (a) 


2,010


 (a) 


9,789


 (a) 


8,871


 (a) 


Amortization of acquisition-related intangibles

1,229


 (b)  


1,824


 (b)  


1,881


 (b)  


6,811


 (b)  


7,112


 (b)  


Litigation, settlements and defense fees

-


 (c)  


(19)


 (c)  


56


 (c)  


(30)


 (c)  


56


 (c)  


Severance costs

2,053


 (d)  


523


 (d)  


336


 (d)  


3,734


 (d)  


493


 (d)  


Acquisition related costs

-


 (e)  


-


 (e)  


133


 (e)  


-


 (e)  


1,489


 (e)  


Strategic alternatives review costs

52


 (f)  


42


 (f)  


-


 (f)  


557


 (f)  


-


 (f)  


Lease termination fee

-


 (g)  


-


 (g)  


54


 (g)  


155


 (g)  


54


 (g)  


Gain on sale of non-marketable investments

-


 (h)  


(920)


 (h)  


-


 (h)  


(920)


 (h)  


-


 (h)  


Deferred tax benefit (provision) arising from tax impact of above items

29


 (i) 


(154)


 (i) 


(238)


 (i) 


(34)


 (i) 


(871)


 (i) 

Non-GAAP net income

$   4,509




$       550




$   3,488




$     7,619




$   12,412

























Non-GAAP net income per share:





















Basic

$     0.07




$       0.01




$     0.05




$       0.11




$       0.19




Diluted

$     0.06




$       0.01




$     0.05




$       0.11




$       0.18

























Shares used in computing net income per share: 





















Basic 

68,518




68,235




67,300




68,100




66,405




Diluted

69,534




69,344




68,487




69,397




67,941



 























SHORETEL, INC.

GAAP TO NON-GAAP RECONCILIATION FOOTNOTES

(Amounts in thousands)

(Unaudited)
































































































Three Months Ended


Twelve Months Ended




June 30,


March 31,


June 30,


June 30,


June 30,




2017


2017


2016


2017


2016

(a)

Stock-based compensation included in:






















Cost of hosted and related services revenue

$        61




$     63




$      317




$        261




$     1,272





Cost of product revenue

9




10




11




53




64





Cost of support and services revenue

76




80




122




370




590





Research and development

518




550




495




2,256




1,854





Sales and marketing

637




650




566




2,909




2,569





General and administrative

801




841




499




3,940




2,522






$   2,102




$        2,194




$   2,010




$     9,789




$     8,871

























(b) 

Amortization of acquisition-related intangibles included in:






















Cost of hosted and related services

$      327




$     921




$      977




$     3,202




$     3,613





Cost of product revenue

-




-




-




-




19





Sales and marketing

895




895




896




3,579




3,465





General and administrative

7




8




8




30




15






$   1,229




$   1,824




$   1,881




$     6,811




$     7,112

























(c) 

Litigation, settlements and defense fees included in:






















Settlements and defense fees

$         -




$         (19)




$        56




$        (30)




$          56






$         -




$         (19)




$        56




$        (30)




$          56

























(d) 

Severance costs included in:






















Cost of hosted and related services

$         -




$         50




$         -




$          50




$           -





Cost of product revenue

-




-




-




9




-





Cost of support and services

341




-




-




454




10





Research and development

242




107




277




412




402





Sales and marketing

1,406




366




59




2,738




78





General and administrative

64




-




-




71




3






$   2,053




$       523




$      336




$     3,734




$        493

























(e) 

Direct acquisition costs included in:






















 Acquisition-related costs 

$         -




$            -




$      133




$           -




$     1,489






$         -




$            -




$      133




$           -




$     1,489

























(f) 

Strategic alternatives review costs included in:






















General and administrative

$        52




$         42




$         -




$        557




$           -






$        52




$         42




$         -




$        557




$           -

























(g) 

Lease termination fee included in:






















Cost of hosted and related services

$         -




$            -




$         -




$        155




$           -





General and administrative

-




-




54




-




54






$         -




$             -




$        54




$        155




$          54

























(h) 

Gain on sale of non-marketable investments included in:






















Other income (expense), net

$         -




$       (920)




$         -




$      (920)




$           -






$         -




$        (920)




$         -




$      (920)




$           -


























(i)

The deferred tax benefit (provision) arising from acquisition and tax impact of the items which are excluded in (a) to (h) above. 

 

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