LOD, Israel, Feb. 11, 2009 (GLOBE NEWSWIRE) -- AudioCodes Ltd. (Nasdaq:AUDC), a leading provider of Voice over IP (VoIP) technologies and Voice Network products, today announced financial results for the fourth quarter and year ended December 31, 2008.
Revenues for the fourth quarter of 2008 were $38.8 million compared to $42.8 million for the fourth quarter ended December 31, 2007, a year-over-year decline of $4.1 million, or 9.5%. Revenues for the full year 2008 were $174.7 million compared to $158.2 million in 2007, a year-over-year increase of $16.5 million, or 10.4%. Revenues for the fourth quarter of 2008 do not include $1.7 million of revenues which were recorded as unpaid deferred revenues as a result of the Nortel Group seeking creditor protection in January 2009.
During the fourth quarter, the Company recognized a non-cash impairment charge of $86.1 million with respect to goodwill, long-lived assets and investment in an affiliate. The charge, which is subject to change based on completion of valuation procedures, was identified in connection with the Company's annual impairment tests and reflects market conditions. Net loss in accordance with U.S. generally accepted accounting principles (GAAP) was $86.7 million, or ($2.16) per diluted share, for the fourth quarter of 2008 compared to GAAP net income of $1.0 million, or $0.02 per diluted share, for the corresponding fourth quarter of 2007. The Company reported a GAAP net loss of $81.3 million, or ($1.97) per diluted share, for 2008 compared to a GAAP net loss of $3.9 million, or ($0.09) per diluted share, for 2007.
Non-GAAP net income was $776,000, or $0.02 per diluted share, for the fourth quarter of 2008 compared to non-GAAP net income of $3.7 million, or $0.08 per diluted share, for the fourth quarter of 2007. Non-GAAP net income for 2008 was $12.3 million, or $0.29 per diluted share, compared to non-GAAP net income of $8.3 million, or $0.19 per diluted share, for 2007. Non-GAAP net income does not include $1.7 million which were recorded as unpaid deferred revenues as a result of the Nortel Group announcement in January 2009.
Non-GAAP net income excludes (i) stock-based compensation expenses, (ii) amortization expenses related to the Nuera, Netrake and CTI Squared acquisitions and (iii) the non-cash impairment charge with respect to goodwill, long-lived assets and investment in an affiliate. 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 press release.
Cash flow from operating activities was $9.4 million in the fourth quarter of 2008, and was $16.4 million for 2008, compared to $9.0 million in the fourth quarter last year and $12.4 million for 2007.
"In 2008 AudioCodes has significantly strengthened its leading position in the VoIP networking market. The improvement in 2008 revenues and in non-GAAP net income and operating margin reflect the success of our networking strategy to innovate and deploy leading-edge VoIP network products," stated Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. "While we are disappointed with the decrease in revenues and earnings during the fourth quarter of 2008 and the uncertain outlook for 2009 due to the global economic crisis, we are encouraged with the increased level of customer activity and our ability to continue to generate positive operating cash flow."
"AudioCodes has always been synonymous with superior voice quality and in 2008 we put in motion a range of new product initiatives aimed at extending our leadership position for long-term growth. As the demand for more integrated VoIP solutions has grown, we have launched our new Mediant(tm) 1000 Multi-Service Business Gateway (MSBG). Our High Definition (HD) VoIP strategy, and recent launch of our new HD VoIP enabled IP Phones, set the stage for substantially enhanced voice quality across the network, and we are very pleased with the favorable feedback from potential partners and customers," commented Mr. Adlersberg.
In January 2009, Nortel, AudioCodes' largest customer, announced that it would seek creditor protection for the company and some of its subsidiaries. As of December 31, 2008, a total of $1.7 million of sales to the Nortel Group was recorded as unpaid deferred revenues which reduced trade receivables in the Company's balance sheets.
During the fourth quarter, the Company repurchased approximately $51.5 million in principal amount of its 2% Senior Convertible Notes due 2024 for a total cost, including accrued interest, of $50.2 million. The Company issued $125.0 million in principal amount of these notes in November 2004.
Cash and cash equivalents, short-term and long-term marketable securities, short-term and long-term bank deposits were $115.1 million as of December 31, 2008, compared to $158.7 million as of September 30, 2008 and $143.1 million as of December 31, 2007. The year-over-year decline was attributable to the repurchase of the Senior Convertible Notes.
As of December 1, 2008 AudioCodes began consolidating the financial results of Natural Speech Communication Ltd. (NSC), an Israeli based company engaged in speech recognition, into AudioCodes' financial results. As of December 31, 2008, AudioCodes owned 56.6% of the outstanding share capital of NSC (51.0% of the share capital of NSC on a fully diluted basis). During the fourth quarter, NSC revenues were $83,000 and it had a net loss of $625,000. AudioCodes included $73,000 of NSC revenues in AudioCodes' revenues for the fourth quarter. NSC results will be fully consolidated into AudioCodes income statement in 2009 since AudioCodes holds the majority of risk with respect to NSC.
Conference Call & Web cast Information
AudioCodes will conduct a conference call at 9:00 A.M., Eastern Standard Time on Thursday, February 12, 2009 to discuss the fourth quarter and full year 2008 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. (Nasdaq: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; the integration of acquired companies' products and operations into AudioCodes' business; and other factors detailed in AudioCodes' filings with the Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.
AudioCodes, AC, AudioCoded, Ardito, CTI2, CTI(2), CTI Squared, 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.
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------
U.S. dollars in thousands
December 31, December 31,
2008 2007
------------ ------------
(Unaudited) (Unaudited)
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 36,779 $ 75,063
Short-term bank deposits 61,870 *) 18,157
Short-term marketable securities and
accrued interest 16,481 17,244
Trade receivables, net 29,564 25,604
Other receivables and prepaid expenses 3,373 *) 6,500
Deferred tax assets 972 1,001
Inventories 20,623 18,736
------------ ------------
Total current assets 169,662 162,305
------------ ------------
LONG-TERM INVESTMENTS:
Long-term bank deposits and structured
notes -- 32,670
Investments in companies 1,245 1,343
Deferred tax assets 1,255 1,057
Severance pay funds 10,297 9,799
------------ ------------
Total long-term investments 12,797 44,869
------------ ------------
PROPERTY AND EQUIPMENT, NET 6,844 7,094
------------ ------------
GOODWILL, INTANGIBLE ASSETS, DEFERRED
CHARGES AND OTHER, NET 41,179 130,219
------------ ------------
Total assets $230,482 $344,487
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term bank loans $ 6,000 $ --
Trade payables 11,661 8,849
Other payables and accrued expenses 24,189 28,780
Senior convertible notes 71,374 --
------------ ------------
Total current liabilities 113,224 37,629
------------ ------------
ACCRUED SEVERANCE PAY 12,174 11,168
------------ ------------
LONG-TERM BANK LOANS 21,750 --
------------ ------------
SENIOR CONVERTIBLE NOTES -- 121,198
------------ ------------
Total shareholders' equity 83,334 174,492
------------ ------------
Total liabilities and shareholders' equity $230,482 $344,487
============ ============
*) reclassified
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------------------------------------
In thousands, except per share data
Year ended Three months ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
------------------ ------------------
Revenues $174,744 $158,235 $ 38,752 $ 42,840
Cost of revenues 77,455 69,185 17,800 18,673
-------- -------- -------- --------
Gross profit 97,289 89,050 20,952 24,167
Operating expenses:
Research and development, net 37,833 40,706 8,698 10,086
Selling and marketing 44,657 42,900 10,199 10,818
General and administrative 9,219 9,637 2,172 2,437
Impairment of goodwill and
long-lived assets(1) 85,015 -- 85,015 --
-------- -------- -------- --------
Total operating expenses 176,724 93,243 106,084 23,341
-------- -------- -------- --------
Operating income (loss) (79,435) (4,193) (85,132) 826
Financial income, net 1,182 2,670 20 784
Equity in losses of affiliated
companies 2,582 1,097 1,521 346
-------- -------- -------- --------
Income (loss) before taxes on
income (80,835) (2,620) (86,633) 1,264
Taxes on income (loss), net 505 1,265 25 224
-------- -------- -------- --------
Net income (loss) $(81,340) $ (3,885) $(86,658) $ 1,040
======== ======== ======== ========
Basic net earnings (loss) per
share $ (1.97) $ (0.09) $ (2.16) $ 0.02
======== ======== ======== ========
Diluted net earnings (loss)
per share $ (1.97) $ (0.09) $ (2.16) $ 0.02
======== ======== ======== ========
Weighted average number of
shares used in computing basic
net earnings (loss) per share
(in thousands) 41,201 42,699 40,182 43,080
======== ======== ======== ========
Weighted average number of
shares used in computing
diluted net earnings (loss)
per share (in thousands) 41,201 42,699 40,182 43,938
======== ======== ======== ========
(1) Impairment charge is subject to change based on completion of
valuation procedures
AUDIOCODES LTD. AND ITS SUBSIDIARIES
NON-GAAP PROFORMA STATEMENTS OF OPERATIONS
---------------------------------------------------------------------
In thousands, except per share data
Year ended Three months ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
------------------ ------------------
Revenues $174,744 $158,235 $ 38,752 $ 42,840
Cost of revenues(1)(2) 75,014 66,079 17,236 17,960
-------- -------- -------- --------
Gross profit 99,730 92,156 21,516 24,880
Operating expenses:
Research and development,
net(1) 36,366 37,695 8,541 9,456
Selling and marketing(1)(2) 41,587 38,380 9,643 9,779
General and administrative(1) 8,689 8,770 2,126 2,209
-------- -------- -------- --------
Total operating
expenses(1)(2)(3) 86,642 84,845 20,310 21,444
-------- -------- -------- --------
Operating income 13,088 7,311 1,206 3,436
Financial income, net 1,182 2,670 20 784
Equity in losses of affiliated
companies(4) 1,486 1,097 425 346
-------- -------- -------- --------
Income before taxes on income 12,784 8,884 801 3,874
Taxes on income, net 505 561 25 224
-------- -------- -------- --------
Non-GAAP net income $ 12,279 $ 8,323 $ 776 $ 3,650
======== ======== ======== ========
Non-GAAP diluted net earnings
per share $ 0.29 $ 0.19 $ 0.02 $ 0.08
======== ======== ======== ========
Weighted average number of
shares used in computing
non-GAAP diluted net earnings
per share (in thousands) 43,205 43,740 40,232 43,955
======== ======== ======== ========
(1) 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
(2) Excluding amortization of intangible assets related to the
acquisitions of Nuera, Netrake and CTI Squared
(3) Excluding impairment charge of goodwill and long-lived assets
(4) Excluding impairment charge of investment in affiliate
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.
AUDIOCODES LTD. AND ITS SUBSIDIARIES
RECONCILIATION BETWEEN GAAP NET INCOME AND NON-GAAP NET INCOME
---------------------------------------------------------------------
In thousands, except per share data
Year ended Three months ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
------------------ ------------------
GAAP Net income (loss) $(81,340) $ (3,885) $(86,658) $ 1,040
======== ======== ======== ========
GAAP Diluted net earnings
(loss) per share $ (1.97) $ (0.09) $ (2.16) $ 0.02
======== ======== ======== ========
Cost of revenues:
Stock-based compensation(1) 318 613 40 131
Amortization expenses(2) 2,123 2,493 524 582
-------- -------- -------- --------
2,441 3,106 564 713
Research and development, net:
Stock-based compensation(1) 1,467 3,011 157 630
Selling and marketing:
Stock-based compensation(1) 2,026 3,476 295 778
Amortization expenses(2) 1,044 1,044 261 261
-------- -------- -------- --------
3,070 4,520 556 1,039
General and administrative:
Stock-based compensation(1) 530 867 46 228
Impairment of goodwill,
long-lived assets and
investment in an affiliate(3) 86,111 -- 86,111 --
Income tax effect(2) -- 704 -- --
-------- -------- -------- --------
Non- GAAP Net income $ 12,279 $ 8,323 $ 776 $ 3,650
======== ======== ======== ========
Non-GAAP Diluted net earnings
per share $ 0.29 $ 0.19 $ 0.02 $ 0.08
======== ======== ======== ========
(1) 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
(2) Amortization of intangible assets related to the acquisitions of
Nuera, Netrake and CTI Squared
(3) Impairment charge is subject to change based on completion of
valuation procedures
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.
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
---------------------------------------------------------------------
U.S. dollars in thousands
Year ended Three months ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
------------------ ------------------
Cash flows from operating
activities:
-------------------------
Net income (loss) $(81,340) $ (3,885) $(86,658) $ 1,040
Adjustments required to
reconcile net income to net
cash provided by operating
activities:
Depreciation and amortization 7,441 7,789 1,765 1,867
Impairment of goodwill,
long-lived assets and
investment in an affiliate 86,111 -- 86,111 --
Amortization of marketable
securities premiums and
accretion of discounts, net 112 39 89 (11)
Equity in losses of
affiliated companies 1,486 1,097 425 346
Increase in accrued severance
pay, net 451 356 508 152
Stock-based compensation
expenses 4,341 7,967 538 1,767
Amortization of senior
convertible notes discount
and deferred charges and
income from redemption of
senior convertible notes 142 203 (11) 52
Decrease (increase) in
accrued interest on
marketable securities, bank
deposits and structured
notes 125 (427) 922 (92)
Decrease (increase) in
deferred tax assets (169) 2,390 (169) 2,021
Decrease (increase) in trade
receivables, net (3,960) 5,014 6,267 3,987
Decrease (increase) in other
receivables and prepaid
expenses 450 (1,596) 2,729 (867)
Increase in inventories (1,840) (2,643) (508) (970)
Increase in trade payables 2,728 1,263 1,069 2,085
Increase (decrease) in other
payables and accrued
expenses 333 (5,181) (3,668) (2,413)
-------- -------- -------- --------
Net cash provided by operating
activities 16,411 12,386 9,409 8,964
-------- -------- -------- --------
Cash flows from investing
activities:
-------------------------
Investment in short-term bank
deposits (100,609) (18,065) (8,500) (18,065)
Investment in long-term bank
deposits (255) (11,000) -- --
Proceeds from sale and
maturity of marketable
securities 17,000 31,600 -- 9,000
Proceeds from bank deposits 90,142 28,700 55,503 --
Investments in companies, net (1,330) (1,003) 40 --
Payment for acquisition of
CTI Squared*) (5,000) (4,897) -- --
Purchase of property and
equipment (3,158) (2,629) (265) (574)
Purchase of marketable
securities (16,795) -- -- --
Proceed from structured notes
called by the bank -- 10,000 -- 10,000
-------- -------- -------- --------
Net cash provided by (used in)
investing activities (20,005) 32,706 46,778 361
-------- -------- -------- --------
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Cont.)
---------------------------------------------------------------------
U.S. dollars in thousands
Year ended Three months ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
------------------ ------------------
Cash flows from financing
activities:
-------------------------
Repurchase of shares (13,747) -- -- --
Repurchase of Senior
convertible notes (50,240) -- (50,240)
Increase in current maturities
of long-term bank loans 6,000 -- -- --
Long-term bank loans received 24,000 -- -- --
Repayment of loan from bank (2,250) -- (1,500) --
Proceeds from issuance of
shares upon exercise of
options and employee stock
purchase plan 1,547 4,800 -- 158
-------- -------- -------- --------
Net cash provided by (used in)
financing activities (34,690) 4,800 (51,740) 158
-------- -------- -------- --------
Increase (decrease) in cash
and cash equivalents (38,284) 49,892 4,447 9,483
Cash and cash equivalents at
the beginning of the period 75,063 25,171 32,332 65,580
-------- -------- -------- --------
Cash and cash equivalents at
the end of the period $ 36,779 $ 75,063 $ 36,779 $ 75,063
======== ======== ======== ========
*) Excluding cash and cash equivalents