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AudioCodes Reports Fourth Quarter and Full Year 2013 Results

LOD, Israel, Jan. 29, 2014 (GLOBE NEWSWIRE) -- AudioCodes (Nasdaq:AUDC), a leading provider of converged voice solutions that enable enterprises and service providers to transition to all-IP voice networks, today announced financial results for the fourth quarter and full year periods ended December 31, 2013.

Fourth Quarter Highlights:

  • Revenues totaled $36.3 million, a 10.5% increase over the year ago quarter
  • Quarterly networking revenues increased 16.7% year-over-year and 7.1% over previous quarter
  • Non-GAAP net income was $1.9 million, or $0.05 per diluted share
  • Net cash provided by operating activities was $5.6 million
  • As of December 31, 2013, the amount of un-earned revenues that are expected to be recognized in the future were 45% higher than as of December 31, 2012
  • Strong momentum in revenues from SBC, Services and Microsoft Lync related activities

Revenues for the fourth quarter of 2013 were $36.3 million, compared to $35.0 million for the third quarter of 2013 and $32.8 million for the fourth quarter of 2012. Revenues were $137.2 million in 2013 compared to $127.5 million in 2012.

Net income in accordance with U.S. generally accepted accounting principles (GAAP) was $2.8 million, or $0.07 per diluted share, for the fourth quarter of 2013, compared to GAAP net income of $935,000, or $0.02 per diluted share, for the third quarter of 2013, and GAAP net income of $524,000, or $0.01 per diluted share, for the fourth quarter of 2012.

The Company reported GAAP net income of $4.2 million, or $0.11 per diluted share, in 2013 compared to a GAAP net loss of $4.2 million, or ($0.11) per diluted share, in 2012.

Non-GAAP net income for the fourth quarter of 2013 was $1.9 million, or $0.05 per diluted share, compared to $1.8 million, or $0.04 per diluted share, for the third quarter of 2013, and $1.1 million, or $0.03 per diluted share, for the fourth quarter of 2012.

The Company reported non-GAAP net income of $5.3 million, or $0.14 per diluted share, in 2013 compared to a non-GAAP net loss of $1.5 million, or ($0.04) per diluted share, in 2012.

Non-GAAP net income (loss) excludes: (i) stock-based compensation expenses; (ii) amortization expenses related to intangible assets; and (iii) non-cash deferred tax benefit. A reconciliation of net income (loss) on a GAAP basis to a non-GAAP basis is provided in the tables that accompany the condensed consolidated financial statements contained in this press release.

Net cash provided by operating activities for the fourth quarter of 2013 totaled $5.6 million. Cash and cash equivalents, bank deposits and marketable securities were $62.2 million as of December 31, 2013 compared to $58.0 million as of September 30, 2013 and $58.5 million as of December 31, 2012.

"We are pleased to report our sixth consecutive quarter of improved financial performance and solid growth for the full year 2013," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "AudioCodes fourth quarter 2013 performance was underlined by strong sequential growth of sales in the Microsoft Lync voice segment and growth in sales of session border controller products. We also achieved better than anticipated increase in our services revenues in 2013. This business momentum drove better fourth quarter operating margin and cash flow contribution from operations. Investments made with our global partners over the past few years continue to contribute to our sustained growth and leadership in the voice networking business. These investments, coupled with increased focus on software products, solutions and services, are expected to provide further strength and support to our expected success in coming years."

"As we look ahead to 2014, AudioCodes stands well positioned to extend its leadership in wide-area voice networking solutions and services for the fast growing segments of unified communications, business services and contact centers. AudioCodes end-to-end One Voice connectivity and networking solutions for Microsoft Lync, hosted PBX services and emerging cloud-based voice solutions have proved to provide high value to our enterprise and service provider customer base globally. Our deep knowledge and rich voice technologies portfolio for connectivity, security, quality of service, routing and mobility, among other features, is key to our success in recent years and is expected to enable our success in next coming years. We believe that these capabilities are a clear competitive advantage within one of the most attractive segments of the communications sector," concluded Mr. Adlersberg.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 9:00 A.M., Eastern Time today to discuss the Company's fourth quarter and full year 2013 operating performance, financial results and outlook. Interested parties may participate in the conference call by dialing one the following numbers:

United States Participants: +1 (877) 407-0778

International Participants: +1 (201) 689-8565

The conference call will also 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) 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 market leader focused on converged VoIP and data communications and its products are deployed globally in Broadband, Mobile, Enterprise networks and Cable. The Company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Routers, Session Border Controllers (SBC), Residential Gateways, IP Phones, Media Servers, Value Added Applications and Professional Services. AudioCodes' underlying technology, VoIPerfectHD™, relies 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 Voice communications. 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 the demand for existing products; 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 need for additional financing; the ability to satisfy covenants in the Company's loan agreements; possible disruptions from acquisitions; the ability of AudioCodes to successfully integrate the products and operations of acquired companies into AudioCodes' business; and other factors detailed in AudioCodes' filings with the U.S. Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.

©2014 AudioCodes Ltd. All rights reserved. AudioCodes, AC, HD VoIP, HD VoIP Sounds Better, IPmedia, Mediant, MediaPack, OSN, SmartTAP, VMAS, VoIPerfect, VoIPerfectHD, 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. Product specifications are subject to change without notice.

Summary financial data follows

AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, December 31,
2013 2012
Unaudited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $30,763 $15,219
Short-term and restricted bank deposits 9,101 10,330
Short-term marketable securities and accrued interest 15,706 7,966
Trade receivables, net 26,431 24,198
Other receivables and prepaid expenses 6,184 7,274
Inventories 13,811 16,797
Total current assets 101,996 81,784
LONG-TERM ASSETS:
Long-term and restricted bank deposits $6,628 $9,251
Long-term marketable securities -- 15,762
Investments in an affiliated company -- 1,084
Deferred tax assets 4,855 3,565
Severance pay funds 19,549 15,772
Total long-term assets 31,032 45,434
PROPERTY AND EQUIPMENT, NET 3,191 3,619
GOODWILL, INTANGIBLE ASSETS AND OTHER, NET 38,001 34,952
Total assets $174,220 $165,789
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term bank loans $4,686 $8,436
Trade payables 7,215 6,817
Other payables and accrued expenses 17,874 15,062
Deferred revenues 6,940 4,871
Total current liabilities 36,715 35,186
LONG-TERM LIABILITIES:
Accrued severance pay $19,845 $16,284
Long-term bank loans 9,791 14,477
Senior convertible notes 353 353
Deferred revenues and other liabilities 2,707 1,192
Total long-term liabilities 32,696 32,306
Total equity 104,809 98,297
Total liabilities and equity $174,220 $165,789
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Year ended Three months ended
December 31, December 31,
2013 2012 2013 2012
(Unaudited) (Audited) (Unaudited)
Revenues:
Products $111,750 $103,651 $29,004 $26,070
Services 25,482 23,839 7,248 6,736
Total Revenues 137,232 127,490 36,252 32,806
Cost of revenues:
Products 51,996 48,371 13,586 12,613
Services 6,568 5,923 1,869 1,487
Total Cost of revenues 58,564 54,294 15,455 14,100
Gross profit 78,668 73,196 20,797 18,706
Operating expenses:
Research and development, net 28,194 28,677 7,200 6,231
Selling and marketing 39,279 40,040 10,288 9,721
General and administrative 8,456 8,214 2,048 1,733
Total operating expenses 75,929 76,931 19,536 17,685
Operating income (loss) 2,739 (3,735) 1,261 1,021
Financial income (expenses), net 96 453 (55) 87
Income (loss) before taxes on income 2,835 (3,282) 1,206 1,108
Income tax benefit (expense), net 1,404 (541) 1,565 (257)
Equity in losses of an affiliated company, net (21) (354) -- (327)
Net income (loss) $4,218 $(4,177) $2,771 $524
Basic net earnings (loss) per share $0.11 $(0.11) $0.07 $0.01
Diluted net earnings (loss) per share $0.11 $(0.11) $0.07 $0.01
Weighted average number of shares used in computing basic net earnings (loss) per share (in thousands) 38,241 39,125 38,602 37,931
Weighted average number of shares used in computing diluted net earnings (loss) per share (in thousands) 39,097 39,125 39,825 38,169
AUDIOCODES LTD. AND ITS SUBSIDIARIES
NON-GAAP PROFORMA STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Year ended Three months ended
December 31, December 31,
2013 2012 2013 2012
(Unaudited) (Unaudited)
Revenues:
Products $111,750 $103,651 $29,004 $26,070
Services 25,482 23,839 7,248 6,736
Total Revenues 137,232 127,490 36,252 32,806
Cost of revenues:
Products 51,247 47,544 13,365 12,402
Services 6,398 5,865 1,814 1,487
Total Cost of revenues (1) (2) 57,645 53,409 15,179 13,889
Gross profit 79,587 74,081 21,073 18,917
Operating expenses:
Research and development, net (1) 27,786 28,247 7,076 6,103
Selling and marketing (1) (2) 38,317 39,299 10,009 9,592
General and administrative (1) 7,850 7,613 1,866 1,587
Total operating expenses 73,953 75,159 18,951 17,282
Operating income (loss) 5,634 (1,078) 2,122 1,635
Financial income (expenses), net 96 453 (55) 87
Income (loss) before taxes on income 5,730 (625) 2,067 1,722
Income tax expenses, net (3) (368) (541) (207) (257)
Equity in losses of an affiliated company, net (21) (354) -- (327)
Net income (loss) $5,341 $(1,520) $1,860 $1,138
Diluted net earnings (loss) per share $0.14 $(0.04) $0.05 $0.03
Weighted average number of shares used in computing basic net earnings (loss) per share (in thousands) 39,439 39,125 40,201 38,375
(1) Excluding stock-based compensation expenses related to options and restricted stock units granted to employees and others.
(2) Excluding amortization of intangible assets related to the acquisitions of Nuera, Netrake, CTI Squared and Mailvision assets.
(3) Excluding non-cash deferred tax benefit.
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.
AUDIOCODES LTD. AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
U.S. dollars in thousands, except per share data
Year ended Three months ended
December 31, December 31,
2013 2012 2013 2012
(Unaudited) (Unaudited)
GAAP net income (loss) $4,218 $(4,177) $2,771 $524
GAAP net earnings (loss) per share $0.11 $(0.11) $0.07 $0.01
Cost of revenues:
Stock-based compensation (1) 62 61 28 5
Amortization expenses (2) 857 824 248 206
919 885 276 211
Research and development, net:
Stock-based compensation (1) 408 430 124 128
Selling and marketing:
Stock-based compensation (1) 625 437 188 53
Amortization expenses (2) 337 304 91 76
962 741 279 129
General and administrative:
Stock-based compensation (1) 606 601 182 146
Income taxes:
Deferred tax (3) (1,772) -- (1,772) --
Non-GAAP net income (loss) $5,341 $(1,520) $1,860 $1,138
Non-GAAP Diluted net earnings (loss) per share $0.14 $(0.04) $0.05 $0.03
(1) Stock-based compensation expenses related to options and restricted stock units granted to employees and others.
(2) Amortization of intangible assets related to the acquisitions of Nuera, Netrake, CTI Squared and Mailvision assets.
(3) Non-cash deferred tax benefit.
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
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,
2013 2012 2013 2012
(Unaudited) (Audited) (Unaudited)
Cash flows from operating activities:
Net income (loss) $4,218 $(4,177) $2,771 $524
Adjustments required to reconcile net income or loss to net cash provided by or used in operating activities:
Depreciation and amortization 3,047 2,883 814 747
Amortization of marketable securities premiums and accretion of discounts, net 349 436 81 109
Equity in losses of an affiliated company, net 21 350 -- 336
Increase (decrease) in accrued severance pay, net (495) (184) (709) 125
Stock-based compensation expenses 1,701 1,529 522 332
Increase (decrease) in accrued interest on marketable securities, bank deposits and structured notes 73 4 (42) (1)
Increase in long-term deferred tax assets, net (1,290) (965) (1,187) (965)
Decrease (increase) in trade receivables, net (2,254) 6,725 1,639 2,520
Decrease (increase) in other receivables and prepaid expenses (462) 1,106 2,201 3,514
Decrease (increase) in inventories 2,986 3,618 (418) 1,935
Increase (decrease) in trade payables 403 (5,545) (1,399) 153
Increase (decrease) in deferred revenues 3,138 270 (5) 171
Increase (decrease) in other payables and accrued expenses 2,493 (3,054) 1,300 (1,265)
Net cash provided by operating activities 13,928 2,996 5,568 8,235
Cash flows from investing activities:
Decrease in short-term deposits, net 1,229 3,678 500 377
Investment in affiliated company (1,211) (183) -- (111)
Investments in long-term deposits -- (131) -- --
Proceeds from redemption of long-term bank deposits 2,623 851 --
Proceeds from redemption of marketable securities upon maturity 7,600 -- 3,600 850
Purchase of property and equipment (1,426) (2,006) (363) (162)
Net cash provided by investing activities 8,815 1,358 4,588 954
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
U.S. dollars in thousands
Year ended Three months ended
December 31, December 31,
2013 2012 2013 2012
(Unaudited) (Audited) (Unaudited)
Cash flows from financing activities:
Purchase of treasury stock -- (6,917) -- (618)
Repayment of long-term bank loans (8,436) (10,242) (1,366) (2,866)
Consideration related to payment of acquisition of NSC (515) (336) -- --
Proceeds from issuance of shares upon exercise of options and warrants 1,752 103 376 68
Net cash used in financing activities (7,199) (17,392) (990) (3,416)
Increase (decrease) in cash and cash equivalents 15,544 (13,038) 9,166 5,773
Cash and cash equivalents at the beginning of the period 15,219 28,257 21,597 9,446
Cash and cash equivalents at the end of the period $30,763 $15,219 $30,763 $15,219

CONTACT: Company Contacts Guy Avidan, VP Finance & CFO AudioCodes Tel: +972-3-976-4000 guy.avidan@audiocodes.com Shirley Nakar, Director, Investor Relations AudioCodes Tel: +972-3-976-4000 shirley@audiocodes.com IR Agency Contact Erik Knettel, Grayling Tel: +1-646-284-9415 erik.knettel@grayling.comSource:AudioCodes Ltd.