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AudioCodes Reports Second Quarter 2013 Results

LOD, Israel, July 30, 2013 (GLOBE NEWSWIRE) -- AudioCodes (Nasdaq:AUDC), a leading provider of Voice over IP (VoIP) technologies, products and services, today announced financial results for the second quarter ended June 30, 2013.

Second Quarter Highlights:

  • Revenues for the quarter were $33.7 million, 4.4% increase over the previous quarter
  • 8% sequential increase in our networking business
  • Non-GAAP gross margin was 57.5% (57.0% on a GAAP basis)
  • Non-GAAP net margin was 3% (1% net margin on a GAAP basis)
  • Net cash provided by operating activities were 4.1 million and net cash at the end of the quarter increased to 39.6 million

Revenues for the second quarter of 2013 were $33.7 million, compared to $32.3 million for the first quarter of 2013 and $31.0 million for the second quarter of 2012.

Net income in accordance with U.S. generally accepted accounting principles (GAAP) was $441,000, or $0.01 per diluted share, for the second quarter of 2013, compared to GAAP net income of $71,000, or $0.002 per diluted share, for the first quarter of 2013, and a GAAP net loss of $2.0 million, or ($0.05) per diluted share, for the second quarter of 2012.

Non-GAAP net income for the second quarter of 2013 was $1.0 million, or $0.03 per diluted share, compared to non-GAAP net income of $691,000, or $0.02 per diluted share, for the first quarter of 2013, and a non-GAAP net loss of $1.4 million, or ($0.04) per diluted share, for the second quarter of 2012.

Non-GAAP net income (loss) excludes: (i) stock-based compensation expenses; and (ii) amortization expenses related to intangible assets. 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 second quarter of 2013 totaled $4.1 million, compared to net cash used in operating activities of $4.6 million for the second quarter of 2012. Cash and cash equivalents, bank deposits and marketable securities were $57.5 million as of both June 30, 2013 and March 31, 2013, compared to $60.7 million as of June 30, 2012.

In May 2013, AudioCodes completed the previously announced asset purchase agreement with its affiliated company, MailVision. MailVision is an Israeli company which develops markets and licenses VoIP solutions for mobile, PC, web and tablet devices for telecom operators and service providers.

"We are pleased to report another quarter of growing revenues and improved financial performance. This is our fourth consecutive quarter of growth since July 2012 when we realigned operations in order to position our business for growth," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "In the second quarter of 2013 we experienced good momentum and success in our networking business which grew 8% over the previous quarter and 14% year-over-year. Our networking business now comprises approximately 86% of our total revenues. We are aligned with leading software and networking industry leaders through numerous partnerships. Accordingly, we are confident in our ability to sustain similar growth rates in our business as we move forward. Supporting this longer term potential is the solid multi-year growth in markets where we play a leading role, such as Unified Communications, Hosted Telephony, SIP Trunking and Contact Centers. In addition, the increased pace of transition from voice into cloud and hosted telephony applications opens opportunities for us in new two strategic directions."

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 9:00 A.M., Eastern Time today to discuss the Company's second quarter 2013 operating performance, financial results and outlook. 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) 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 and Value Added Applications. AudioCodes' underlying technology, VoIPerfectHD(TM), 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.

©2013 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
June 30, December 31,
2013 2012
Unaudited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,474 $ 15,219
Short-term and restricted bank deposits 10,599 10,330
Short-term marketable securities and accrued interest 19,484 7,966
Trade receivables, net 26,406 24,198
Other receivables and prepaid expenses 7,660 7,274
Inventories 13,466 16,797
Total current assets 97,089 81,784
LONG-TERM ASSETS::
Long-term and restricted bank deposits $ 7,939 $ 9,251
Long-term marketable securities -- 15,762
Investments in an affiliated company -- 1,084
Deferred income tax assets 3,565 3,565
Severance pay funds 17,214 15,772
Total long-term assets 28,718 45,434
PROPERTY AND EQUIPMENT, NET 3,409 3,619
GOODWILL AND INTANGIBLE ASSETS, NET 38,698 34,952
Total assets $ 167,914 $ 165,789
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term bank loans $ 4,836 $ 8,436
Trade payables 6,277 6,817
Other payables and accrued expenses 16,121 15,062
Deferred revenues 7,386 4,871
Total current liabilities 34,620 35,186
LONG-TERM LIABILITIES:
Accrued severance pay $ 18,119 $ 16,284
Long-term bank loans, net of current maturities 12,734 14,477
Senior convertible notes 353 353
Deferred revenues and other liabilities 2,309 1,192
Total long-term liabilities 33,515 32,306
Total equity 99,779 98,297
Total liabilities and equity $ 167,914 $ 165,789
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Six months ended Three months ended
June 30, June 30,
2013 2012 2013 2012
(Unaudited) (Unaudited)
Revenues:
Products $ 53,712 $ 51,943 $ 27,541 $ 25,125
Services 12,243 11,378 6,146 5,883
Total Revenues 65,955 63,321 33,687 31,008
Cost of revenues:
Products 24,706 23,693 12,912 11,722
Services 3,104 2,950 1,566 1,469
Total Cost of revenues 27,810 26,643 14,478 13,191
Gross profit 38,145 36,678 19,209 17,817
Operating expenses:
Research and development, net 14,280 15,245 6,970 7,127
Selling and marketing 18,956 20,752 9,742 10,256
General and administrative 4,116 4,203 2,077 2,244
Total operating expenses 37,352 40,200 18,789 19,627
Operating income (loss) 793 (3,522) 420 (1,810)
Financial income (expenses), net (122) 135 81 (93)
Income (loss) before taxes on income 671 (3,387) 501 (1,903)
Taxes on income, net (138) (183) (60) (99)
Equity in losses of an affiliated company, net (21) (23) -- (33)
Net income (loss) $ 512 $ (3,593) $ 441 $ (2,035)
Basic net earnings (loss) per share $ 0.01 $ (0.09) $ 0.01 $ (0.05)
Diluted net earnings (loss) per share $ 0.01 $ (0.09) $ 0.01 $ (0.05)
Weighted average number of shares used in computing basic net earnings (loss) per share (in thousands) 38,035 39,948 38,060 39,627
Weighted average number of shares used in computing diluted net earnings (loss) per share (in thousands) 38,615 39,948 38,653 39,627
AUDIOCODES LTD. AND ITS SUBSIDIARIES
NON-GAAP PROFORMA STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Six months ended Three months ended
June 30, June 30,
2013 2012 2013 2012
(Unaudited) (Unaudited)
Revenues:
Products $ 53,712 $ 51,943 $ 27,541 $ 25,125
Services 12,243 11,378 6,146 5,883
Total Revenues 65,955 63,321 33,687 31,008
Cost of revenues:
Products 24,412 23,260 12,788 11,479
Services 3,037 2,933 1,538 1,491
Total Cost of revenues (1) (2) 27,449 26,193 14,326 12,970
Gross profit 38,506 37,128 19,361 18,038
Operating expenses:
Research and development, net (1) 14,094 15,034 6,877 7,052
Selling and marketing (1) (2) 18,566 20,365 9,533 10,067
General and administrative (1) 3,842 3,897 1,940 2,106
Total operating expenses 36,502 39,296 18,350 19,225
Operating income (loss) 2,004 (2,168) 1,011 (1,187)
Financial income (expenses), net (122) 135 81 (93)
Income (loss) before taxes on income 1,882 (2,033) 1,092 (1,280)
Taxes on income, net (138) (183) (60) (99)
Equity in losses of an affiliated company, net (21) (23) -- (33)
Net income (loss) $ 1,723 $ (2,239) $ 1,032 $ (1,412)
Diluted net earnings (loss) per share $ 0.04 $ (0.06) $ 0.03 $ (0.04)
Weighted average number of shares used in computing basic net earnings (loss) per share (in thousands) 38,922 39,948
38,949
39,627
(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 and CTI Squared.
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
Six months ended Three months ended
June 30, June 30,
2013 2012 2013 2012
(Unaudited) (Unaudited)
GAAP net income (loss) $ 512 $ (3,593) $ 441 $ (2,035)
GAAP net earnings (loss) per share $ 0.01 $ (0.09) $ 0.01 $ 0.05
Cost of revenues:
Stock-based compensation (1) 19 38 10 15
Amortization expenses (2) 342 412 142 206
361 450 152 221
Research and development, net:
Stock-based compensation (1) 186 211 93 75
Selling and marketing:
Stock-based compensation (1) 238 235 133 113
Amortization expenses (2) 152 152 76 76
390 387 209 189
General and administrative:
Stock-based compensation (1) 274 306 137 138
Non-GAAP net income (loss) $ 1,723 $ (2,239) $ 1,032 $ (1,412)
Non-GAAP Diluted net earnings (loss) per share $ 0.04 $ (0.06) $ 0.03 $ (0.04)
(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 and CTI Squared.
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.
Six months ended Three months ended
June 30, June 30,
2013 2012 2013 2012
( Unaudited) ( Unaudited) ( Unaudited) ( Unaudited)
Cash flows from operating activities:
Net income (loss) $ 512 $ (3,593) $ 441 $ (2,035)
Adjustments required to reconcile net income or loss to net cash provided by or used in operating activities:
Depreciation and amortization 1,379 1,401 597 695
Amortization of marketable securities premiums and accretion of discounts, net 192 217 85 109
Equity in losses of an affiliated company, net 21 23 -- 33
Increase (decrease) in accrued severance pay, net 114 (220) (152) (115)
Stock-based compensation expenses 717 790 373 341
Increase in accrued interest on marketable securities, bank deposits and structured notes 52 5 45 2
Decrease (increase) in trade receivables, net (2,229) 4,010 (1,524) (471)
Increase in other receivables and prepaid expenses (736) (1,513) (96) (80)
Decrease in inventories 3,331 845 2,065 417
Increase (decrease) in trade payables (535) (5,236) 991 31
Increase (decrease) in deferred revenues 3,200 943 1,348 (1,197)
Increase (decrease) in other payables and accrued expenses 726 (1,666) (112) (2,347)
Net cash provided by (used in) operating activities 6,744 (3,994) 4,061 (4,617)
Cash flows from investing activities:
Short-term deposits, net (269) 1,689 (675) (118)
Investment in affiliated company (1,211) (50) (596) (50)
Proceeds from redemption of long-term bank deposits 1,312 990 851 390
Proceeds from redemption of marketable securities upon maturity 4,000 -- 4,000 --
Purchase of property and equipment (673) (1,170) (395) (519)
Net cash provided by (used in) investing activities 3,159 1,459 3,185 (297)
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
Six months ended Three months ended
June 30, June 30,
2013 2012 2013 2012
( Unaudited) ( Unaudited) ( Unaudited) ( Unaudited)
Cash flows from financing activities:
Purchase of treasury stock -- (4,249) -- (1,736)
Repayment of long-term bank loans (5,343) (4,899) (2,866) (2,544)
Payment of acquisition of NSC (515) (336) (120) --
Proceeds from issuance of shares upon exercise of options, warrants and employee stock purchase plan 210 35 81 --
Net cash used in financing activities (5,648) (9,449) (2,905) (4,280)
Increase (decrease) in cash and cash equivalents 4,255 (11,984) 4,341 (9,194)
Cash and cash equivalents at the beginning of the period 15,219 28,257 15,133 25,467
Cash and cash equivalents at the end of the period $ 19,474 $ 16,273 $ 19,474 $ 16,273

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.