Ribbon Communications Inc. - Annual Report: 2019 (Form 10-K)

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

•	consolidation within the telecommunications industry, including acquisitions of or by our customers;

•	general economic conditions in our markets, both domestic and international, as well as the level of discretionary IT spending;

•	competitive conditions in our markets, including the effects of new entrants, consolidation, technological innovation and substantial price discounting;

•	fluctuation in demand for our products and services, and the timing and size of customer orders;

•	fluctuations in foreign exchange rates;

•	cancellation or deferral of existing customer orders or the renegotiation of existing contractual commitments;

•	mix of product configurations sold;

•	length and variability of the sales cycle for our products;

•	application of complex revenue recognition accounting rules to our customer arrangements;

•	timing of revenue recognition;

•	changes in our pricing policies, the pricing policies of our competitors and the prices of the components of our products;

•	market acceptance of new products, product enhancements and services that we offer;

•	the quality and level of our execution of our business strategy and operating plan, and the effectiveness of our sales and marketing programs;

---

•	new product announcements, introductions and enhancements by us or our competitors, which could result in deferrals of customer orders;

•	our ability to develop, introduce, ship and successfully deliver new products and product enhancements that meet customer requirements in a timely manner;

•	our reliance on contract manufacturers for the production and shipment of our appliance products;

•	our or our contract manufacturers' ability to obtain sufficient supplies of sole or limited source components or materials;

•	our ability to attain and maintain production volumes and quality levels for our products;

•	variability and unpredictability in the rate of growth in the markets in which we compete;

•	costs related to mergers, acquisitions and divestitures; and

•	corporate restructurings.

•	Within the network transformation space, mid-size vendors of networking and telecommunications equipment and specialty vendors, including AudioCodes Ltd., Dialogic Inc., Mavenir Systems, Inc., Metaswitch Networks Ltd., Oracle Corporation (Session Border Controller), and ADTRAN, Inc.;

•	Within the enterprise and cloud solutions space, 8x8, Inc., Avaya Inc., Bandwidth Inc., Cisco Inc. (with Broadsoft, Inc.), Mitel Networks Corporation (with ShoreTel, Inc.), Plivo Inc., RingCentral, Inc., Twilio Inc., Telestax Inc., Fuze, Inc., Genesys and Vonage Holdings Corp. (with Nexmo, Inc. and Tokbox Inc.); and

•	Within the audio and video security and analytics space, SecureLogix Corporation, RedShift Networks Corporation, Empirix Inc. and Oracle Corporation.

---

•	provide extremely high reliability and quality;

•	deploy and scale easily and efficiently;

•	interoperate with existing network infrastructures and multivendor solutions;

•	provide effective network management;

•	are accompanied by comprehensive customer support and professional services;

•	provide a cost-effective and space-efficient solution for enterprises and service providers;

•	meet price competition from low cost equipment providers; and

•	offer solutions that are timely for the market and support where the industry is heading.

•	economic conditions that discourage potential new customers from making the capital investments required to adopt new technologies;

•	deterioration in the general financial condition of service providers and enterprises, or their ability to raise capital or access lending sources;

•	new product introductions by our competitors; and

•	the success of our channel partner program.

•	customer willingness to implement our products;

•	pricing pressures due to the commoditization of our products;

•	the timing of industry transitions to new network technologies;

•	acquisitions of or by our customers;

•	delays or difficulties that we may incur in completing the development and introduction of our planned products or product enhancements;

•	failure of our products to perform as expected; and

•	difficulties we may incur in meeting customers' delivery requirements or with software development, appliance design, manufacturing or marketing of our products and/or services.

---

•	the pending merger between T-Mobile US, Inc. and Sprint Corporation (anticipated to close in early 2020);

•	the acquisition of Blue Face Ltd. by Comcast Corporation in January 2020;

•	the active network sharing partnership between Vodafone Group Plc and Telecom Italia Group in July 2019;

•	the acquisition of Hawaiian Telecom, Inc. by Cincinnati Bell Inc. in July 2018;

•	the acquisition of Level 3 Communications Inc. by CenturyLink Inc. in November 2017; and

•	the acquisition of XO Communications, LLC by Verizon Communications Inc. in February 2017.

•	the closing of a strategic partnership between RingCentral, Inc. and Avaya Holdings Corp. in October 2019;

•	the acquisition of Spoken Communications Inc. by Avaya Holdings Corp. in March 2018;

•	the acquisition of Broadsoft, Inc. by Cisco Systems, Inc. in February 2018; and

•	the acquisition of ShoreTel Inc. by Mitel Networks Corporation in September 2017.

•	loss of key employees;

•	diversion of management's attention from normal daily operations of the business;

•	diminished ability to respond to customer requirements related to both products and services;

•	decrease in cash and profits related to severance payments and facility termination costs;

•	disruption of our engineering and manufacturing processes, which could adversely affect our ability to introduce new products and to deliver products both on a timely basis and in accordance with the highest quality standards; and/or

•	reduced ability to execute effectively internal administrative processes, including the implementation of key information technology programs.

---

---

---

•	loss of, or delay in, revenue;

•	increased service, support and warranty costs and a diversion of development resources; and

•	network performance penalties.

•	loss of customers and market share; and

•	failure to attract new customers or achieve market acceptance for our products.

---

•	loss of, or delay in, revenue or increased expense;

•	loss of customers and market share;

•	failure to attract new customers or achieve market acceptance for our products;

---

•	increased service, support and warranty costs and a diversion of development resources; and/or

•	costly and time-consuming legal actions by our customers.

•	loss of customers and market share;

•	failure to attract new customers in new markets and geographies;

•	increased service, support and warranty costs and a diversion of development resources; and/or

•	network performance penalties.

---

•	problems or delays in assimilating or transitioning to us the acquired assets, operations, systems, processes, controls, technologies, products or personnel;

•	loss of acquired customer accounts;

•	unanticipated costs associated with the acquisitions;

•	failure to identify in the due diligence process or assess the magnitude of certain liabilities we assumed in the acquisitions, which could result in unexpected litigation or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes due, significant issues with product quality or development or other adverse effects on our business or results of operations;

•	multiple or overlapping product lines as a result of the acquisitions that are offered, priced and supported differently, which could cause customer confusion and delays;

•	higher than anticipated costs in continuing support and development of acquired products and services;

•	diversion of management’s attention from our core business and the challenges of managing larger and more widespread operations from the acquisitions;

•	adverse effects on existing business relationships of any of the acquired businesses with their respective suppliers, licensors, contract manufacturers, customers, distributors, resellers and industry experts;

•	significant impairment, exit and/or restructuring charges if the products or technologies acquired in the acquisitions do not meet our sales expectations or are unsuccessful;

•	insufficient revenue to offset increased expenses associated with the acquisitions;

•	risks associated with entering markets in which we have no or limited prior experience;

•	potential loss of the employees we acquired in the acquisitions or our own employees; and/or

•	failure to properly integrate internal controls and financial systems of the combined companies.

•	issue stock that would dilute existing stockholders' percentage ownership;

•	incur debt or assume liabilities;

•	significantly reduce our cash;

•	incur significant impairment charges related to the write-off of goodwill and intangible assets;

•	incur significant amortization expenses related to intangible assets; and/or

•	incur large and immediate write-offs for in-process research and development and stock-based compensation.

---

---

---

•	reduced demand for our products and services as a result of our customers choosing to refrain from building capital intensive networks;

•	increased price competition for our products, not only from our competitors, but also as a consequence of customers disposing of unutilized products;

•	risk of excess and obsolete inventories;

•	excess facilities and manufacturing capacity; and/or

---

•	higher overhead costs as a percentage of revenue and higher interest expense.

---

•	delay shipments of, or stop selling, incorporating or using our products that use the challenged intellectual property;

•	obtain from the owner of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available at acceptable prices, on acceptable terms, or at all; or

•	redesign those products that use any allegedly infringing technology, if feasible.

---

•	reliance on channel partners;

•	greater difficulty collecting accounts receivable and longer collection cycles;

•	difficulties and costs of staffing and managing international operations;

•	impacts of differing technical standards outside the United States;

•	compliance with international trade, customs and export control regulations;

•	reduced protection for intellectual property rights in some countries;

•	foreign government regulations limiting or prohibiting potential sales or increasing the cost of doing business in such markets, including adverse tax policies, tariffs, customs regulations, trade protection measures, export quotas and qualifications to transact business;

•	differing regulatory requirements, including tax laws, data privacy laws and labor regulations;

•	challenging pricing environments in highly competitive new markets;

•	foreign currency exchange controls, restrictions on repatriation of cash and changes in currency exchange rates;

•	management communication and integration problems related to entering new markets with different languages, cultures and political systems;

•	potential exposure to liability or damage of reputation resulting from a higher incidence of corruption or unethical business practices in some countries;

•	greater risk of a failure of employees to comply with both U.S. and foreign laws, including antitrust regulations, the U.S. Foreign Corrupt Practices Act (“FCPA”) and any trade regulations ensuring fair trade practices;

•	higher or more variable network service provider fees outside of the United States;

•	any need to adapt and localize our products for specific countries;

•	our ability to effectively price our products in competitive international markets;

•	potentially adverse tax consequences; and

•	political, social and economic instability, including as a result of the fragility of global financial markets, health pandemics or epidemics and/or acts of war or terrorism.

---

•	difficulty hiring and retaining appropriate engineering and management resources due to intense competition for such resources and resulting wage inflation;

•	knowledge transfer related to our technology and resulting exposure to misappropriation of intellectual property or information that is proprietary to us, our customers and other third parties;

•	heightened exposure to changes in economic, security and global political conditions; and

•	fluctuations in currency exchange rates and tax compliance.

---

---

•	addition or loss of any major customer;

•	continued significant declines in customer spending in the media gateway trunking business;

•	decreased spending by customers in the SBC and/or DSC security businesses;

•	consolidation among our customers and/or our competitors in the telecommunications industry;

•	changes in the financial condition or anticipated capital expenditures of any existing or potential major customer;

•	economic conditions for the telecommunications, networking and related industries;

•	quarterly variations in our bookings, revenue and operating results;

•	failure to meet our earnings guidance or securities analysts’ estimates;

•	changes in financial estimates by securities analysts;

•	speculation in the press or investment community, and shorting of our stock by investors;

•	announcements by us or our competitors of significant contracts, new products or acquisitions, distribution partnerships, joint ventures, mergers or capital commitments;

•	activism by any single large stockholder or combination of stockholders;

•	sales of common stock or other securities by us or by our stockholders, including the OEP Stockholders, in the future;

•	securities and other litigation;

•	developments with respect to intellectual property rights, including any related litigation;

•	repurchases under our stock buyback program;

•	departure of key personnel or other major changes in our board of directors or management;

•	changes in governmental regulations;

•	our ability to develop and market new and enhanced products on a timely basis;

•	announcement of a stock split, reverse stock split, stock dividend or similar event; and/or

•	emergence or adoption of new technologies or industry standards.

---

•	authorizing the Board of Directors to issue shares of preferred stock;

•	limiting the persons who may call special meetings of stockholders;

•	prohibiting stockholder actions by written consent;

•	permitting the Board of Directors to increase the size of the Board and to fill vacancies;

•	providing indemnification to our directors and officers;

•	controlling the procedures for conduct and scheduling of Board and stockholder meetings;

•	requiring a super-majority vote of our stockholders to amend our amended and restated by-laws and certain provisions of our amended and restated certificate of incorporation; and

•	establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

*

Debt obligations - principal represents the outstanding balance on our 2019 Credit Facility of $56.8 million at December 31, 2019, comprised of $8.0 million outstanding under the revolving credit facility and $48.8 million outstanding term loan principal. We periodically make payments and borrow on the revolving credit facility, and accordingly, we have included it in current liabilities in our consolidated balance sheet. However, we have reported the outstanding balance payment due in the table above in the "3-5 years" column based solely on the expiration date of the 2019 Credit Facility.

**	This liability is not subject to fixed payment terms and the amount and timing of payments, if any, that we will make related to this liability are not known. See Note 20 to our consolidated financial statements appearing in this Annual Report on Form 10-K for additional information.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

(1)	Includes the results of Anova for the period subsequent to February 28, 2019.

(2)	Includes the results of Edgewater for the period subsequent to August 3, 2018.

(3)	(Loss) earnings per share is calculated independently for each of the quarters presented; accordingly, the sum of the

---

---

---

---

---

---

---

---

---

*	Filed herewith.

#	Furnished herewith.

+	Management contract or compensatory plan or arrangement filed in response to Item 15(a)(3) of the Instructions to the Annual Report on Form 10-K.

**	Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant hereby undertakes to furnish copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission.

---