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Audiocodes Ltd. — Interim / Quarterly Report 2009
Nov 3, 2009
6659_rns_2009-11-03_92872575-d24a-4108-ae00-16a3465e82fb.pdf
Interim / Quarterly Report
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P R E S S R E L E A S E
Company Contacts IR Agency Contact Nachum Falek, Shirley Nakar, Erik Knettel, VP Finance & CFO Director, Investor Relations Grayling AudioCodes AudioCodes Tel: +1-646-284-9415 Tel: +972-3-976-4000 Tel: +972-3-976-4000 [email protected] [email protected] [email protected]
AudioCodes Reports Third Quarter 2009 Results
Lod, Israel – November 3, 2009 – AudioCodes Ltd. (NasdaqGS: AUDC) , a leading provider of Voice over IP (VoIP) technologies and Voice Network products, today announced financial results for the third quarter of 2009, ended September 30, 2009.
Revenues for the third quarter ended September 30, 2009 were $32.1 million compared to $30.4 million for the second quarter of 2009 and $46.6 million for the quarter ended September 30, 2008. Net income in accordance with U.S. generally accepted accounting principles (GAAP) was $139,000, or $0.01 per share, for the third quarter of 2009 compared to a GAAP net loss of $891,000, or ($0.02) per share, for the second quarter of 2009, and GAAP net income of $2.3 million, or $0.06 per share, for the corresponding third quarter of 2008.
Non-GAAP net income was $1.6 million, or $0.04 per diluted share, for the third quarter of 2009 compared to non-GAAP net income of $614,000, or $0.02 per diluted share, for the second quarter of 2009, and non-GAAP net income of $4.8 million, or $0.11 per diluted share, for the third quarter of 2008.
Non-GAAP net income excludes (i) stock-based compensation expenses, (ii) amortization expenses related to the Nuera, Netrake and CTI Squared acquisitions and (iii) an adjustment to expenses related to the Company’s Senior Convertible Notes due to implementation of FASB Staff Position APB 14-1. A reconciliation between net income on a GAAP basis and nonGAAP net income is provided in the tables that accompany the condensed consolidated financial statements contained in this press release.
Third Quarter 2009 Financial Results
Page 1 of 9
During the third quarter of 2009, AudioCodes generated $5.6 million from operating activities compared to $3.5 million in the second quarter of 2009 and $193,000 in the third quarter of 2008.
“We are pleased to report improved third quarter performance highlighted by sequential improvements in top line revenue, bottom line profitability, positive cash flow from operating activities and growing backlog. Our continued success in improving key financial metrics underlines our return to a consistent pattern of growth in our business,” stated Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. “Throughout the third quarter and into the beginning of the fourth quarter of 2009, we have witnessed a healthy VoIP market and increased partner and customer activities in both the enterprise and service provider markets. Capitalizing on our continued investments throughout the economic downturn, AudioCodes enters the final quarter of 2009, and looks ahead to 2010, with a robust pipeline of new product launches and initiatives,” concluded Mr. Adlersberg.
Cash and cash equivalents, short-term and long-term bank deposits and short-term marketable securities were $116.4 million as of September 30, 2009, compared to $114.9 million as of June 30, 2009 and $158.7 million as of September 30, 2008. The year-over-year decline was primarily attributable to the repurchase of some of the Company’s Senior Convertible Notes in the fourth quarter of 2008, offset, in part, by cash provided by operating activities.
Pursuant to the terms of the Indenture governing the Company’s Senior Convertible Notes (the “Notes”), the Company is required to offer to repurchase the remaining $73.5 million in principal amount of the Notes in November 2009. As a result, on October 8, 2009, the Company notified holders of the Notes (CUSIP Nos. 050732AB2 and 050732AA4) that they have an option, pursuant to the terms of the Notes, to require the Company to purchase, promptly after November 9, 2009, all or a portion of such holders’ Notes at a cash price equal to 100% of the aggregate principal amount of the Notes, together with any accrued and unpaid interest up to but not including November 9, 2009. The Company maintains funds on hand allocated for the repurchase of any or all of the outstanding Notes, as well as adequate working capital to support the Company’s operations and capital expenditures.
Third Quarter 2009 Financial Results Page 2 of 9
Conference Call & Web cast Information
AudioCodes will conduct a conference call at 9:00 A.M., Eastern Time on Wednesday, November 4, 2009 to discuss the Company’s third quarter operational and financial results. The conference call will be simultaneously Web cast. Investors are invited to listen to the call live via Web cast at the AudioCodes corporate website at www.audiocodes.com
About AudioCodes
AudioCodes Ltd. (NasdaqGS: AUDC) designs, develops and sells advanced Voice over IP (VoIP) and converged VoIP and Data networking products and applications to Service Providers and Enterprises. AudioCodes is a VoIP technology leader focused on VoIP communications, applications and networking elements, and its products are deployed globally in Broadband, Mobile, Cable, and Enterprise networks. The Company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Gateways, Residential Gateways, IP Phones, Media Servers, Session Border Controllers (SBC), Security Gateways and Value Added Applications. AudioCodes underlying technology, VoIPerfectHD(TM), relies primarily on AudioCodes leadership in DSP, voice coding and voice processing technologies. AudioCodes High Definition (HD) VoIP technologies and products provide enhanced intelligibility, and a better end user communication experience in emerging Voice networks. 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; the bankruptcy filing in January 2009 of AudioCodes’ largest customer in 2008, 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; the integration of acquired companies' products and operations into AudioCodes' business; the obligation to offer to repurchase the outstanding senior convertible notes in November 2009 and other factors detailed in AudioCodes' filings with the Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.
©2009 AudioCodes Ltd. All rights reserved. AudioCodes, AC, AudioCoded, Ardito, CTI2, CTI(2), CTI Squared, HD VoIP, InTouch, IPmedia, Mediant, MediaPack, NetCoder, Netrake, Nuera, Open Solutions Network, OSN, Stretto, TrunkPack, VoicePacketizer, VoIPerfect, VoIPerfectHD, What's Inside Matters, Your Gateway To VoIP and 3GX are trademarks or registered trademarks of AudioCodes Limited. All other products or trademarks are property of their respective owners.
Summary financial data follows
Third Quarter 2009 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 depositsShort-term marketable securities and accrued interestTrade receivables, netOther receivables and prepaid expensesDeferred tax assetsInventoriesTotal current assetsLONG-TERM INVESTMENTS:Investments in companiesDeferred tax assetsSeverance pay fundsTotal long-term investmentsPROPERTY AND EQUIPMENT, NETGOODWILL, INTANGIBLE ASSETS, DEFERREDCHARGES AND OTHER, NET (1)Total assetsLIABILITIES AND EQUITYCURRENT LIABILITIES:Current maturities of long-term bank loansTrade payablesOther payables and accrued expensesDeferred tax liability (1)Senior convertible notes (1)Total current liabilitiesACCRUED SEVERANCE PAYLONG-TERM BANK LOANSTotal equity (1)Total liabilities and equity | September 30,2009(Unaudited)$ 70,44438,7317,23222,6236,10797216,430162,5391,5151,25512,00214,7725,29939,537$222,147$ 6,0007,58122,33326673,130109,31013,17217,25082,415 $222,147 | December 31,2008 |
|---|---|---|
| (Audited) | ||
| $ 36,77961,87016,48129,5643,37397220,623 | ||
| 169,662 | ||
| 1,2451,25510,297 | ||
| 12,797 | ||
| 6,844 | ||
| 41,001 | ||
| $230,304 | ||
| $ 6,00011,66124,18973570,670 | ||
| 113,255 | ||
| 12,174 | ||
| 21,750 | ||
| 83,125 | ||
| $230,304 |
(1) December 31, 2008 amounts adjusted due to implementation of FSP APB 14-1.
Third Quarter 2009 Financial Results
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AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS In thousands, except per share data
| RevenuesCost of revenuesGross profitOperating expenses:Research and development, netSelling and marketingGeneral and administrativeTotal operating expensesOperating income (loss)Financial expenses, net (1)Income (loss) before taxes on incomeTaxes benefit, net (1)Equity in losses of affiliated companiesNet income (loss)Net loss attributable to the noncontrolling interestNet income (loss) attributable to AudioCodesBasic net earnings (loss) per shareDiluted net earnings (loss) per shareWeighted average number of shares used in computingbasic net earnings per share (in thousands)Weighted average number of shares used in computingdiluted net earnings per share (in thousands) | Nine months endedSeptember 30,20092008(Unaudited)$ 91,736$ 135,99240,92759,65550,80976,33722,69729,13524,08934,4595,8577,04752,64370,641(1,834)5,696(2,349)(2,689)(4,183)3,007(403)(581)681,061$ (3,848)$2,527553-$ (3,295)$2,527$ (0.08)$ 0.06$ (0.08)$ 0.0640,18941,54040,18941,967 | Three months endedSeptember 30, | Three months endedSeptember 30, | Three months endedSeptember 30, |
|---|---|---|---|---|
| 20092008(Unaudited) | 2008 | |||
| $ 91,73640,92750,80922,69724,0895,85752,643(1,834)(2,349)(4,183)(403)68$ (3,848)553$ (3,295)$ (0.08)$ (0.08)40,18940,189 | $ 32,08214,36217,7207,2457,7491,93116,925795(751)44(112)17$139191$ 330$ 0.01$ 0.0140,20440,309 | $ 46,60220,535 | ||
| 26,0679,15511,1162,226 | ||||
| 22,497 | ||||
| 3,570(1,047) | ||||
| 2,523(166)428 | ||||
| $2,261 | ||||
| - | ||||
| $2,261 | ||||
| $ 0.06 | ||||
| $ 0.06 | ||||
| 40,200 | ||||
| 40,517 |
(1) Amounts for three and nine months ended September 30, 2008 adjusted due to implementation of FSP APB 14-1.
Third Quarter 2009 Financial Results Page 5 of 9
AUDIOCODES LTD. AND ITS SUBSIDIARIES
NON-GAAP PROFORMA STATEMENTS OF OPERATIONS
In thousands, except per share data
| RevenuesCost of revenues (1) (2)Gross profitOperating expenses:Research and development, net (1)Selling and marketing (1) (2)General and administrative (1)Total operating expensesOperating incomeFinancial income, net (3)Income before taxes on incomeIncome taxes, net (3)Equity in losses of affiliated companiesNon-GAAP net incomeNon-GAAP diluted net earnings per shareWeighted average number of shares usedin computing non-GAAP diluted netearnings per share (in thousands) | Nine months endedSeptember 30,20092008(Unaudited)$ 91,736$ 135,99239,89757,77851,83978,21422,23027,82523,11331,9455,6966,56351,03966,33380011,881651,16286513,043236480681,061$ 561$ 11,502$ 0.01$ 0.2740,24844,195 | Three months endedSeptember 30, | Three months endedSeptember 30, |
|---|---|---|---|
| 20092008(Unaudited) | 2008 | ||
| $ 91,73639,89751,83922,23023,1135,69651,0398006586523668$ 561$ 0.0140,248 | $ 32,08214,02818,0547,1117,4481,89216,4511,603761,67910617$ 1,556$ 0.0440,331 | $ 46,60219,955 | |
| 26,6478,94210,4142,140 | |||
| 21,496 | |||
| 5,151267 | |||
| 5,418196428 | |||
| $ 4,794 | |||
| $ 0.11 | |||
| 47,198 |
(1) Excluding stock-based compensation expenses related to options granted to employees and others.
(2) Excluding amortization of intangible assets related to the acquisitions of Nuera, Netrake and CTI Squared.
(3) Excluding adjustments to interest expense with respect to Senior Convertible Notes, and related income tax expense, due to implementation of FSP APB 14-1.
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.
Third Quarter 2009 Financial Results Page 6 of 9
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 earnings (loss) per shareCost of revenues:Stock-based compensation (1)Amortization expenses (2)Research and development, net:Stock-based compensation (1)Selling and marketing:Stock-based compensation (1)Amortization expenses (2)General and administrative:Stock-based compensation (1)Financial expenses:FSP APB 14-1 adjustment (3)Income Taxes:FSP APB 14-1 adjustment (3)Non-GAAP Net incomeNon-GAAP Diluted earnings per share | Nine months endedSeptember 30,20092008(Unaudited) $ (3,848) $2,527 $ (0.08) $0.06942789361,5991,0301,8774671,3107251,7312517839762,5141614842,4143,851(639)(1,061)$561$11,502$0.01$0.27 | Three months endedSeptember 30, | Three months endedSeptember 30, |
|---|---|---|---|
| 20092008(Unaudited) | 2008 | ||
| $ (3,848) $ (0.08)949361,0304677252519761612,414(639)$561$0.01 | $139 $0.01243103341342267530139827 (218)$1,556$0.04 | $2,261 | |
| $0.06 | |||
| 50530 | |||
| 580213441261 | |||
| 702861,314(362) | |||
| $4,794 | |||
| $0.11 |
(1) Stock-based compensation expenses related to options granted to employees and others.
(2) Amortization of intangible assets related to the acquisitions of Nuera, Netrake and CTI Squared.
(3) Adjustments to interest expense with respect to Senior Convertible Notes, and related income tax expense, due to implementation of FSP APB 14-1.
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 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.
Third Quarter 2009 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) (1)Adjustments required to reconcile net income to netcash provided by operating activities:Depreciation and amortizationNet loss from sale of marketable securitiesAmortization of marketable securities premiumsand accretion of discounts, netEquity in losses of affiliated companiesDecrease (increase) in accrued severance pay, netStock-based compensation expensesAmortization of senior convertible notes discountand deferred chargesDecrease (increase) in accrued interest onmarketable securities, bank deposits andstructured notesDecrease (increase) in trade receivables, netDecrease (increase) in other receivables andprepaid expensesDecrease (increase) in inventoriesIncrease (decrease) in trade payablesIncrease (decrease) in other payables and accruedexpensesDecrease in deferred tax liabilities (1)Net cash provided by operating activitiesCash flows from investing activities:Proceeds from sale and maturity of marketablesecuritiesProceeds from sale of bank depositsInvestments in companiesPayment for acquisition of CTI SquaredPurchase of property and equipmentInvestment in short-term depositInvestment in marketable securitiesInvestment in long-term depositNet cash provided (used) by (in) investing activities | Nine months endedSeptember 30,20092008(Unaudited)$ (3,848)$ 5,3173,8255,676--15223561,061(707)(57)1,4473,8032,5091532,024(794)6,938(10,227)(1,304)(1,280)4,193(1,332)(4,080)1,659(1,628)4,000(468)-9,1098,0029,00017,00070,53034,639(326)(2,370)-(5,000)(863)(2,893)(49,318)(92,109)-(16,795)- (255)29,023(67,783) | Three months endedSeptember 30, | Three months endedSeptember 30, |
|---|---|---|---|
| 20092008(Unaudited) | 2008 | ||
| $ (3,848)3,825-15256(707)1,4472,5092,0246,938(1,304)4,193(4,080)(1,628)(468)9,1099,00070,530(326)-(863)(49,318)--29,023 | $ 1391,178-685(292)4238612,473(1,636)(1,138)2,894(3,245)3, 962(49)5,6438,00048,825(77)-(94)(15,300)--41,354 | $ 3,2131,821-394286279051(787)(6,123)(982)(73)(1,621)3,375- | |
| 193 | |||
| 4,00016,545(1,054)-(726)(22,005)(16,795)- | |||
| (20,035) |
Third Quarter 2009 Financial Results
Page 8 of 9
AUDIOCODES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Cont.) U.S. dollars in thousands
| AUDIOCODES LTD. AND ITS SUBSIDIARIECONDENSED CONSOLIDATED STATEMEN | AUDIOCODES LTD. AND ITS SUBSIDIARIECONDENSED CONSOLIDATED STATEMEN | ST OF CASH FLO | ST OF CASH FLO | ST OF CASH FLO | |||
|---|---|---|---|---|---|---|---|
| WS(Cont.) | |||||||
| U.S. dollars in thousands | |||||||
| Cash flows from financing activities:Repurchase of sharesIncrease in current maturities of long-term bankloansLong-term bank loans receivedRepayment of loan from bankProceeds from issuance of shares upon exercise ofoptions and employee stock purchase planNet cash provided (used) by (in) financing activitiesIncrease (decrease) in cash and cash equivalentsCash and cash equivalents at the beginning of theperiod | NinS | e months endedeptember 30,092008(Unaudited)-(13,747)-6,000-24,00000)(750)331,54767)17,050665(42,731)77975,063 | Three months endSeptember 30, | ed | |||
| 20 | 2009200(Unaudited) | 200 | 8 | ||||
| (4,5 | ---00)3367)665779 | ---(1,500)33(1,467)45,53024,914 | (2,33,012,0(72 | 39)000050)47 | |||
| (4,4 | 12,1 | 58 | |||||
| 33,36, | (7,640,0 | 84)16 | |||||
| Cash and cash equivalents at the end of the period | $70,444 | $32,332 | $70,444 |
(1) Amounts for nine and three months ended September 30, 2008 adjusted due to implementation of FSP APB 14-1.
Third Quarter 2009 Financial Results
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