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Audiocodes Ltd. — Interim / Quarterly Report 2008
Apr 29, 2008
6659_rns_2008-04-29_7ba29478-3e4c-4322-865d-68b9810d8d04.pdf
Interim / Quarterly Report
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PRESS RELEASE
Company Contacts IR Agency Contact Nachum Falek, Shirley Nakar, Erik Knettel, VP Finance & CFO Director, Investor Relations Grayling Global AudioCodes AudioCodes Tel: +1-646-284-9415 Tel: +972-3-976-4000 Tel: +972-3-976-4072 [email protected] [email protected] [email protected]
AudioCodes Reports First Quarter 2008 Results
Quarterly Revenues Rise 19.7% Year-Over-Year to $43.7 million
Lod, Israel – April 29, 2008 – AudioCodes (NasdaqGS: AUDC) , a leading provider of Voice over Packet (VoP) technologies and Voice Network products, today announced financial results for the first quarter ended March 31, 2008.
Revenues for the first quarter ended March 31, 2008 were a record $43.7 million compared to $42.8 million for the quarter ended December 31, 2007 and $36.5 million for the quarter ended March 31, 2007. First quarter revenues grew 2.1% compared to the quarter ended December 31, 2007 and increased 19.7% compared to the first quarter of 2007. Net income in accordance with generally accepted accounting principles (GAAP) was $457,000, or $0.01 per diluted share, for the first quarter of 2008 compared to $1.0 million, or $0.02 per diluted share, for the fourth quarter of 2007 and a net loss of $3.4 million, or ($0.08) per diluted share, for the corresponding period last year.
Non-GAAP net income was $3.1 million, or $0.07 per diluted share, in the first quarter of 2008 compared to $3.7 million, or $0.08 per diluted share, in the fourth quarter of 2007 and $506,000, or $0.01 per diluted share, in the first quarter of 2007. Non-GAAP net income excludes (i) stock-based compensation expenses and (ii) amortization expenses related to the Nuera, Netrake and CTI Squared acquisitions. A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the tables that accompany the condensed consolidated financial statements contained in this release.
Net cash provided by operating activities was $3.8 million in the first quarter of 2008 compared to net cash used in operating activities of $2.0 million in first quarter of 2007.
Q1 2008 Financial Results
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Cash and cash equivalents, short-term and long-term marketable securities, short-term and long-term bank deposits and structured notes were $137.6 million as of March 31, 2008 compared to $143.0 million as of December 31, 2007, and $132.6 million as of March 31, 2007. During the first quarter, AudioCodes made the second and final $5.0 million cash payment in connection with the Company’s acquisition of CTI Squared.
During the first quarter of 2008, AudioCodes announced that the Company’s Board of Directors approved a stock repurchase program authorizing the purchase of up to 4,000,000 ordinary shares of AudioCodes stock, or the equivalent of approximately 10 percent of the Company’s outstanding share capital. As of April 28, 2008, 1.9 million shares had been repurchased through this program at a total cost of $7.6 million.
“AudioCodes is pleased to report record quarterly revenues and a fourth consecutive quarter of sequential top line growth,” stated Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. “In the first quarter of 2008, we enjoyed continued momentum in our networking business and stability in our technology business. Leading the growth were sales of low and mid-density Media Gateways which increased 5% over the previous quarter. Additionally, we enjoyed new customer project wins, increased collaboration with our OEM and application software partners, and progressed in developing joint sales activities with large enterprise system integrators. With progress made this quarter in new product initiatives planned for the second half of 2008 and early 2009, we believe we have set a solid foundation for further growth in 2008 and beyond,” concluded Mr. Adlersberg.
In the process of finalizing AudioCodes’ financial statements for the year ended December 31, 2007, the Company adjusted the deferred tax liability. The adjustment was a non-cash item that impacted AudioCodes’ GAAP results of operations for the year ended December 31, 2007. This adjustment does not affect the Company’s Non-GAAP results as previously reported. As a result of the adjustment, for the year ended December 31, 2007, AudioCodes recorded additional income tax expense in the amount of $2.0 million in the Company’s statements of operations. As the result, AudioCodes’ GAAP net loss for 2007 is $3.9 million, or ($0.09) per share, compared to the net loss for 2007 of $1.8 million, or ($0.04) per share, previously reported in the Company’s press release dated February 4, 2008. GAAP financial figures that contain this adjustment for the year ended December 31, 2007, as well as for each quarter in 2007, appear in a table that accompanies the condensed consolidated financial statements contained in this release. The audited financial statements that will be included in the Company’s Annual Report on Form 20-F to be filed with the Securities and Exchange Commission will reflect this adjustment.
Q1 2008 Financial Results
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Conference Call & Webcast Information
AudioCodes will conduct a conference call at 9:00 A.M., Eastern Daylight Time on Wednesday, April 30, 2008 to discuss the first quarter financial results. The conference call will be simultaneously Webcast. Investors are invited to listen to the call live via Webcast at the AudioCodes corporate website at www.audiocodes.com.
About AudioCodes
AudioCodes Ltd. (NasdaqGS: AUDC) provides innovative, reliable and cost-effective Voice over IP (VoIP) technology, Voice Network Products, and Value Added Applications to Service Providers, Enterprises, OEMs, Network Equipment Providers and System Integrators worldwide. AudioCodes provides a diverse range of flexible, comprehensive media gateway, and media processing enabling technologies based on VoIPerfect(tm) -- AudioCodes' underlying, best-of-breed, core media architecture. The company is a market leader in VoIP equipment, focused on VoIP Media Gateway, Media Server, Session Border Controllers (SBC), Security Gateways and Value Added Application network products. AudioCodes has deployed tens of millions of media gateway and media server channels globally over the past ten years and is a key player in the emerging best-of-breed, IMS based, VoIP market. The Company is a VoIP technology leader focused on quality and interoperability, with a proven track record in product and network interoperability with industry leaders in the Service Provider and Enterprise space. AudioCodes Voice Network Products feature media gateway and media server platforms for packet-based applications in the converged, wireline, wireless, broadband access, cable, enhanced voice services, video, and Enterprise IP Telephony markets. AudioCodes' headquarters and R&D are located in Israel with an additional R&D facility in the U.S. Other AudioCodes' offices are located in Europe, India, the Far East, and Latin America. For more information on AudioCodes, visit http://www.audiocodes.com.
Statements concerning AudioCodes' business outlook or future economic performance; product introductions and plans and objectives related thereto; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are ``forward-looking statements'' as that term is defined under U.S. Federal securities laws. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include, but are not limited to: the effect of global economic conditions in general and conditions in AudioCodes' industry and target markets in particular; shifts in supply and demand; market acceptance of new products and continuing products' demand; the impact of competitive products and pricing on AudioCodes' and its customers' products and markets; timely product and technology development/upgrades and the ability to manage changes in market conditions as needed; possible disruptions from acquisitions and other factors detailed in AudioCodes' filings with the Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.
Q1 2008 Financial Results
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(c) 2008 AudioCodes Ltd. All rights reserved, AudioCodes, AC, Ardito, AudioCoded, NetCoder, TrunkPack, VoicePacketizer, MediaPack, Stretto, Mediant, VoIPerfect and IPmedia, OSN, Open Solutions Network, What's Inside Matters, Your Gateway To VoIP, 3GX and Nuera, Netrake, InTouch, CTI(2) and CTI Squared are trademarks or registered trademarks of AudioCodes Limited. All other products or trademarks are property of their respective owners.
Summary financial data follows
Q1 2008 Financial Results
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AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
| ASSETSCURRENT ASSETS:Cash and cash equivalentsShort-term bank deposits and structured notesShort-term marketable securities and accrued interestTrade receivables, netOther receivables and prepaid expensesInventoriesTotal current assetsLONG-TERM INVESTMENTS:Long-term bank deposits and structured notesInvestments in companiesDeferred tax assetsSeverance pay fundsTotal long-term investmentsPROPERTY AND EQUIPMENT, NETINTANGIBLE ASSETS, DEFERRED CHARGES ANDOTHER, NETGOODWILLTotal assetsLIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:Trade payablesOther payables and accrued expensesTotal current liabilitiesACCRUED SEVERANCE PAYSENIOR CONVERTIBLE NOTESTotal shareholders' equityTotal liabilities and shareholders' equity | March 31,2008(Unaudited)$ 88,43310,0296,04924,2137,32020,910156,95433,0641,6482,05810,68447,4547,09817,998111,212$ 340,716$ 9,53323,95633,48912,202121,244173,781$340,716 | December 31,2007 |
|---|---|---|
| $ 75,06318,06517,24425,6046,59218,736 | ||
| 161,304 | ||
| 32,6701,3432,0589,799 | ||
| 45,870 | ||
| 7,094 | ||
| 19,007 | ||
| 111,212 | ||
| $ 344,487 | ||
| $ 8,84928,780 | ||
| 37,629 | ||
| 11,168 | ||
| 121,198 | ||
| 174,492 | ||
| $344,487 |
Page 5 of 11
Q1 2008 Financial Results
AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS In thousands, except share and per share data
| RevenuesCost of revenuesGross profitOperating expenses:Research and development, netSelling and marketingGeneral and administrativeTotal operating expensesOperating income (loss)Financial income, netEquity in losses of affiliated companiesIncome (loss) before taxes on incomeIncome TaxesNet income (loss)Basic net earnings (loss) per shareDiluted net earnings (loss) per shareWeighted average number of shares used in computingbasic net earnings per share (in thousands)Weighted average number of shares used in computingdiluted net earnings per share (in thousands) | Three months endedMarch 31, | Three months endedMarch 31, |
|---|---|---|
| 20082007(Unaudited) | 2007 | |
| $ 43,73919,12424,61510,23611,5602,50024,296319558280597140$457$ 0.01$ 0.0143,01043,511 | $ 36,54315,975 | |
| 20,56810,03610,8402,555 | ||
| 23,431 | ||
| (2,863)504329 | ||
| (2,688)761 | ||
| $ (3,449) | ||
| $ (0.08) | ||
| $ (0.08) | ||
| 42,313 | ||
| 42,313 |
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Q1 2008 Financial Results
AUDIOCODES LTD. AND ITS SUBSIDIARIES NON-GAAP PROFORMA STATEMENTS OF OPERATIONS In thousands, except share and per share data
| RevenuesCost of revenues *) **)Gross profitOperating expenses:Research and development, net *)Selling and marketing *) **)General and administrative *)Total operating expensesOperating incomeFinancial income, netEquity in losses of affiliated companiesIncome before taxes on incomeIncome TaxesNon-GAAP net incomeNon-GAAP diluted net earnings per shareWeighted average number of shares used incomputing non-GAAP diluted net earningsper share (in thousands) | Three months endedMarch 31, | Three months endedMarch 31, |
|---|---|---|
| 20082007(Unaudited) | 2007 | |
| $ 43,73918,44925,2909,51910,5722,25722,3482,9425582803,220140$ 3,080$ 0.0743,511 | $ 36,54315,146 | |
| 21,3979,2019,5992,210 | ||
| 21,010 | ||
| 387504329 | ||
| 56256 | ||
| $ 506 | ||
| $ 0.01 | ||
| 43,847 |
*) Excluding stock-based compensation expenses related to options granted to employees and others as a result of the adoption of SFAR 123R as of January 1, 2006
**) Excluding amortization of intangible assets related to the acquisitions of Nuera and Netrake during the third quarter of 2006 and to the acquisition of CTI Squared during the second quarter of 2007.
Note: Non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. The Company believes that non-GAAP information is useful because it can enhance the understanding of its ongoing economic performance and therefore uses internally this non-GAAP information to evaluate and manage its operations. The Company has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results and because many comparable companies report this type of information as well.
Q1 2008 Financial Results
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AUDIOCODES LTD. AND ITS SUBSIDIARIES RECONCILIATION BETWEEN GAAP NET INCOME AND NON-GAAP NET INCOME In thousands, except per share data
| GAAP Net income (loss)GAAP Diluted net earnings (loss) per shareCost of revenues:Stock-based compensation *)Amortization expenses **)Research and development, net:Stock-based compensation *)Selling and marketing:Stock-based compensation *)Amortization expenses **)General and administrative:Stock-based compensation *)Income tax effect **)Non-GAAP Net incomeNon-GAAP Diluted net earnings per share | Three months endedMarch 31, | Three months endedMarch 31, | Three months endedMarch 31, |
|---|---|---|---|
| 20082007(Unaudited) | 2007 | ||
| $457 $ 0.01140535675717727261988243-$ 3,080 $0.07 | $ (3,449) | ||
| $ (0.08) | |||
| 170658 | |||
| 828835980261 | |||
| 1,241345706 | |||
| $ 506 | |||
| $0.01 |
*) Stock-based compensation expenses related to options granted to employees and others as a result of the adoption of SFAR 123R as of January 1, 2006.
**) Amortization of intangible assets related to the acquisitions of Nuera and Netrake during the third quarter of 2006 and to the acquisition of CTI Squared during the second quarter of 2007.
Note: Non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. The Company believes that non-GAAP information is useful because it can enhance the understanding of its ongoing economic performance and therefore uses internally this non-GAAP information to evaluate and manage its operations. The Company has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results and because many comparable companies report this type of information
Q1 2008 Financial Results
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AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS U.S. dollars in thousands
| Cash flows from operating activities:Net income (loss)Adjustments required to reconcile net income tonet cash provided by operating activities:Depreciation and amortizationAmortization of marketable securitiespremiums and accretion of discounts, netEquity in losses of affiliated companiesIncrease in accrued severance pay, netStock-based compensation expensesAmortization of senior convertible notesdiscount and deferred chargesIncrease in accrued interest on marketablesecurities, bank deposits and structured notesIncrease in deferred tax assetsDecrease in trade receivables, netIncrease in other receivables and prepaidexpensesIncrease in inventoriesIncrease in trade payablesIncrease (Decrease) in other payables andaccrued expensesIncrease in deferred tax liabilitiesNet cash provided by (used in) operating activitiesCash flows from investing activities:Investment in short-term bank depositsProceeds from sale and maturity of marketablesecuritiesProceeds from bank depositsAdditional payment for the acquisition of CTISquared LtdInvestments in companiesPurchase of property and equipmentNet cash provided by investing activities | Three months endedMarch 31, | Three months endedMarch 31, |
|---|---|---|
| 2008 | 2007 | |
| $ 4571,916(9)2801491,82751(262)-1,391(648)(2,174)684176-3,838-11,0008,036(5,000)(585)(916)12,535 | $ (3,449)2,074363292482,33050(113)(137)3,146(905)(1,938)1,443(5,859)706 | |
| (2,039) | ||
| 18,0008,8007,000-(700)(878) | ||
| 32,222 |
Q1 2008 Financial Results
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AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Cont.) U.S. dollars in thousands
| Cash flows from financing activities:Repurchase of sharesProceeds from issuance of shares upon exerciseof options and employee stock purchase planNet cash provided by (used in) financing activitiesIncrease in cash and cash equivalentsCash and cash equivalents at the beginning of theperiodCash and cash equivalents at the end of the period | Three months endedMarch 31, | Three months endedMarch 31, |
|---|---|---|
| 20082007(Unaudited) | 2007 | |
| (4,222)1,219(3,003)13,37075,063$ 88,433 | -2,475 | |
| 2,475 | ||
| 32,65825,171 | ||
| $ 57,829 |
Q1 2008 Financial Results
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AUDIOCODES LTD. AND ITS SUBSIDIARIES ADJUSTED GAAP FINANCIAL FIGURES In thousands, except per share data
| Income taxesNet income (loss)Diluted net earnings (loss)per share | Three months ended | Three months ended | December 31,2007$ 223$ 1,041$ 0.02 | Year endedDecember 31,2007 | |
|---|---|---|---|---|---|
| March 31,2007 | June 30,2007September 30.2007(unaudited) | ||||
| $ 1,265 | |||||
| $ 761$(3,449)$ (0.08) | $ 77$(1,403)$ (0.03) | $ 204$(74)$ (0.00) | |||
| $(3,885) | |||||
| $ (0.09) |
Q1 2008 Financial Results
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