ex1.htm

Exhibit 1

P R E S S R E L E A S E

Company Contacts		IR Agency Contact
Nachum Falek, VP Finance & CFO AudioCodes Tel: +972-3-976-4000 nachum@audiocodes.com	Shirley Nakar, Director, Investor Relations AudioCodes Tel: +972-3-976-4000 shirley@audiocodes.com	Erik Knettel, Grayling Global Tel: +1-646-284-9415 eknettel@hfgcg.com

AudioCodes Reports Second Quarter 2008 Results

Quarterly Revenues Rise 18.7% Year-Over-Year to Record $45.7 million

Lod, Israel – July 29, 2008 – AudioCodes (NasdaqGS: AUDC), a leading provider of Voice over Packet (VoP) technologies and Voice Network products, today announced financial results for the second quarter ended June 30, 2008.

Revenues for the second quarter ended June 30, 2008 were a record $45.7 million compared to $43.7 million for the quarter ended March 31, 2008 and $38.4 million for the quarter ended June 30, 2007. Second quarter revenues grew 4.4% compared to the quarter ended March 31, 2008 and increased 18.7% compared to the second quarter of 2007. Net income in accordance with U.S. generally accepted accounting principles (GAAP) was $1.6 million, or $0.04 per diluted share, for the second quarter of 2008 compared to $457,000 or $0.01 per diluted share, for the first quarter of 2008 and a net loss of $1.4 million, or ($0.03) per diluted share, for the corresponding period last year.

Non-GAAP net income was $3.6 million, or $0.09 per diluted share, in the second quarter of 2008 compared to $3.1 million, or $0.07 per diluted share, in the first quarter of 2008 and $1.4 million, or $0.03 per diluted share, in the second 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 $4.0 million in the second quarter of 2008 compared to $2.7 million in the second quarter of 2007.

Q2 2008 Financial Results

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“We are very pleased to report yet another quarter of record revenues and growing profits, our fifth consecutive quarter of sequential growth,” stated Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. “In the second quarter of 2008 we enjoyed continued momentum in our networking business which grew 10% sequentially and over 25% year-over-year.”

“This quarter we made an important step to diversify and grow our market reach and product offerings by introducing the Mediant™ 1000 Multi-Service Business Gateway (MSBG), our first converged voice and data services customer premises equipment (CPE) product. The Mediant 1000 MSBG integrates a VoIP media gateway with an enterprise level session border controller and data services such as switching, routing and security. The MSBG product provides us with access to a new market segment which is estimated by In-Stat, a market research firm, to be approximately $500 million in 2008 and predicted to grow 30% annually to above $1 billion by 2011,” continued Mr. Adlersberg.

“With progress made this quarter in new product initiatives and improved budget and expense control, we believe we have set a strong foundation for further success in coming years,” concluded Mr. Adlersberg.

AudioCodes repurchased approximately 1.8 million of its ordinary shares during the second quarter of 2008 at a cost of $7.2 million. In the first half of 2008, AudioCodes has repurchased a total of 2.8 million ordinary shares at a total cost of $11.4 million under the current stock repurchase program which authorized the Company to purchase up to 4,000,000 AudioCodes ordinary shares, or the equivalent of approximately 10% of the Company’s outstanding share capital.

Cash and cash equivalents, short-term and long-term marketable securities, short-term and long-term bank deposits and structured notes were $147.3 million as of June 30, 2008 compared to $137.6 million as of March 31, 2008, and $130.5 million as of June 30, 2007. During the second quarter, AudioCodes borrowed $15.0 million from a bank.

Conference Call & Web cast Information

AudioCodes will conduct a conference call at 9:00 A.M., Eastern Daylight Time on Wednesday, July 30, 2008 to discuss the second quarter 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.

Q2 2008 Financial Results

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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™ -- 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.

(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

Q2 2008 Financial Results

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AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

	June 30,		December 31,
	2008		2007
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	40,016	$	75,063
Short-term bank deposits		76,075		18,065
Short-term marketable securities and accrued interest		4,073		17,244
Trade receivables, net		29,708		25,604
Other receivables and prepaid expenses		5,853		6,592
Inventories		19,995		18,736

Total current assets		175,720		161,304

LONG-TERM INVESTMENTS:
Long-term bank deposits		27,109		32,670
Investments in companies		2,026		1,343
Deferred tax assets		2,058		2,058
Severance pay funds		11,871		9,799

Total long-term investments		43,064		45,870

PROPERTY AND EQUIPMENT, NET		7,361		7,094

INTANGIBLE ASSETS, DEFERRED CHARGES AND OTHER, NET		17,043		19,007

GOODWILL		111,212		111,212

Total assets	$	354,400	$	344,487

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Current maturities of long-term bank loans	$	3,000	$	-
Trade payables		12,129		8,849
Other payables and accrued expenses		24,405		28,780

Total current liabilities		39,534		37,629

ACCRUED SEVERANCE PAY		13,121		11,168

LONG-TERM BANK LOANS		12,000		-

SENIOR CONVERTIBLE NOTES		121,291		121,198

Total shareholders' equity		168,454		174,492

Total liabilities and shareholders' equity	$	354,400	$	344,487

Q2 2008 Financial Results

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AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

In thousands, except share and per share data

	Six months ended					Three months ended
	June 30,					June 30,
	2008		2007			2008		2007
	(Unaudited)					(Unaudited)

Revenues	$	89,390	$	74,987		$	45,651	$	38,444

Cost of revenues		39,120		32,881			19,996		16,906

Gross profit		50,270		42,106			25,655		21,538

Operating expenses:
Research and development, net		19,980		20,381			9,744		10,345
Selling and marketing		23,343		21,750			11,783		10,910
General and administrative		4,821		4,726			2,321		2,171

Total operating expenses		48,144		46,857			23,848		23,426

Operating income (loss)		2,126		(4,751	)		1,807		(1,888	)
Financial income, net		895		1,270			337		766

Income (loss) before taxes on income		3,021		(3,481	)		2,144		(1,122	)
Income taxes		284		842			144		80
Equity in losses of affiliated companies		633		533			353		204

Net income (loss)	$	2,104	$	(4,856	)	$	1,647	$	(1,406	)

Basic net earnings (loss) per share	$	0.05	$	(0.11	)	$	0.04	$	(0.03	)

Diluted net earnings (loss) per share	$	0.05	$	(0.11	)	$	0.04	$	(0.03	)

Weighted average number of shares used in computing basic net earnings per share (in thousands)		42,210		42,416			41,410		42,519

Weighted average number of shares used in computing diluted net earnings per share (in thousands)		42,694		42,416			41,873		42,519

Q2 2008 Financial Results

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AUDIOCODES LTD. AND ITS SUBSIDIARIES

NON-GAAP PROFORMA STATEMENTS OF OPERATIONS

In thousands, except share and per share data

	Six months ended				Three months ended
	June 30,				June 30,
	2008		2007		2008		2007
	(Unaudited)				(Unaudited)

Revenues	$	89,390	$	74,987	$	45,651	$	38,444

Cost of revenues ) *)		37,823		31,171		19,374		16,025

Gross profit		51,567		43,816		26,277		22,419

Operating expenses:
Research and development, net *)		18,883		18,795		9,364		9,594
Selling and marketing ) *)		21,531		19,363		10,959		9,764
General and administrative *)		4,423		4,370		2,166		2,160

Total operating expenses		44,837		42,528		22,489		21,518

Operating income		6,730		1,288		3,788		901
Financial income, net		895		1,270		337		766

Income before taxes on income		7,625		2,558		4,125		1,667
Income taxes, net **)		284		136		144		80
Equity in losses of affiliated companies		633		533		353		204

Non-GAAP net income	$	6,708	$	1,889	$	3,628	$	1,383

Non-GAAP diluted net earnings per share	$	0.16	$	0.04	$	0.09	$	0.03

Weighted average number of shares used in computing non-GAAP diluted net earnings per share (in thousands)		42,694		43,664		41,887		43,481

*) 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.

Q2 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

	Six months ended					Three months ended
	June 30,					June 30,
	2008		2007			2008		2007
	(Unaudited)					(Unaudited)
GAAP Net income (loss)	$	2,104	$	(4,856	)	$	1,647	$	(1,406	)
GAAP Diluted earnings (loss) per share	$	0.05	$	(0.11	)	$	0.04	$	(0.03	)

Cost of revenues:
Stock-based compensation (*)		228		331			88		161
Amortization expenses(**)		1,069		1,379			534		720
		1,297		1,710			622		881
Research and development, net:
Stock-based compensation (*)		1,097		1,586			380		751

Selling and marketing:
Stock-based compensation (*)		1,290		1,865			563		885
Amortization expenses(**)		522		522			261		261
		1,812		2,387			824		1,146
General and administrative:
Stock-based compensation (*)		398		356			155		11

Income tax effect(**)		-		706			-		-

Non- GAAP Net income	$	6,708	$	1,889		$	3,628	$	1,383
Non-GAAP Diluted earnings per share	$	0.16	$	0.04		$	0.09	$	0.03

*) 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.

Q2 2008 Financial Results

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AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands

	Six months ended June 30,						Three months ended June 30,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	2,104		$	(4,856	)	$	1,647		$	(1,406	)
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,855			4,049			1,939			1,975
Net loss from sale of marketable securities		-			-			-			-
Amortization of marketable securities premiums and accretion of discounts, net		(16	)		53			(7	)		17
Equity in losses of affiliated companies		633			533			353			204
Increase (decrease) in accrued severance pay, net		(119	)		227			(268	)		(21	)
Stock-based compensation expenses		3,013			4,138			1,186			1,808
Amortization of senior convertible notes discount and deferred charges		102			100			51			50
Decrease (increase) in accrued interest on marketable securities, bank deposits and structured notes		(99	)		(319	)		163			(206	)
Increase in deferred tax assets		-			(347	)		-			(210	)
Decrease (increase) in trade receivables, net		(4,104	)		5,126			(5,495	)		1,980
Decrease (increase) in other receivables and prepaid expenses		(206	)		(633	)		442			272
Decrease (increase) in inventories		(1,259	)		(3,729	)		915			(1,791	)
Increase (decrease) in trade payables		3,280			432			2,596			(1,011	)
Increase (decrease) in other payables and accrued expenses		625			(4,811	)		449			1,048
Increase in deferred tax liabilities		-			706			-			-
Other		-			4			-			3

Net cash provided by operating activities		7,809			673			3,971			2,712

Cash flows from investing activities:
Proceeds from sale and maturity of marketable securities		13,000			16,600			2,000			7,800
Proceeds from sale of bank deposits		18,094			25,000			10,029			-
Investments in companies		(1,316	)		(538	)		(731	)		(338	)
Payment for acquisition of CTI Squared*)		(5,000	)		(4,897	)		-			(4,397	)
Purchase of property and equipment		(2,167	)		(1,352	)		(1,251	)		(474	)
Investment in short-term deposit		(70,104	)		-			(70,075	)		-
Investment in long-term deposit		(255	)		(11,000	)		(255	)		(11,000	)

Net cash provided by (used in) investing activities		(47,748	)		23,813			(60,283	)		(8,409	)

Q2 2008 Financial Results

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AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Cont.)

U.S. dollars in thousands

	Six months ended June 30,					Three months ended June 30,
	2008			2007		2008			2007
	(Unaudited)					(Unaudited)
Cash flows from financing activities:
Repurchase of shares		(11,408	)		-		(7,186	)		-
Increase in current maturities of long-term bank loans		3,000			-		3,000			-
Long-term bank loans received		12,000			-		12,000			-
Proceeds from issuance of shares upon exercise of options and employee stock purchase plan		1,300			2,730		81			255

Net cash provided by financing activities		4,892			2,730		7,895			255

Increase (decrease) in cash and cash equivalents		(35,047	)		27,216		(48,417	)		(5,442	)
Cash and cash equivalents at the beginning of the period		75,063			25,171		88,433			57,829

Cash and cash equivalents at the end of the period	$	40,016		$	52,387	$	40,016		$	52,387

*)Excluding cash and cash equivalents

Q2 2008 Financial Results

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