EX-1 2 ex-1.htm EXHIBIT 1 ex-1.htm
Exhibit 1
 
GRAPHIC
 
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 Third Quarter 2008 Results
 
Revenues Rise 15.3% Year-Over-Year, to Record $46.6 Million
GAAP Net Income Increases to $3.2 Million, or $0.08 Per Diluted Share
Non-GAAP Net Income Increases 72.3% Year-Over-Year to $4.8 Million, or $0.11 Per Diluted Share
 
Lod, Israel – November 3, 2008 – AudioCodes (NasdaqGS: AUDC), a leading provider of Voice over Packet (VoP) technologies and Voice Network products, today announced financial results for the third quarter ended September 30, 2008.
 
Revenues for the third quarter were a record $46.6 million compared to $45.7 million for the second quarter ended June 30, 2008 and $40.4 million for the quarter ended September 30, 2007. Third quarter revenues grew 2.1% sequentially and increased 15.3% compared to the third quarter of 2007. Net income in accordance with U.S. generally accepted accounting principles (GAAP) was $3.2 million, or $0.08 per diluted share, for the third quarter of 2008 compared to net income of $1.6 million, or $0.04 per diluted share, for the second quarter of 2008 and a net loss of $72,000, or ($0.00) per diluted share, for the corresponding period last year.
 
Non-GAAP net income was $4.8 million, or $0.11 per diluted share, for the third quarter of 2008 compared to $3.6 million, or $0.09 per diluted share, for the second quarter of 2008 and $2.8 million, or $0.06 per diluted share, for the third 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 press release.
 
   
Third Quarter 2008 Financial Results
Page 1 of 10
 
“AudioCodes delivered excellent financial results for the third quarter of 2008, including record quarterly revenues, significant growth in operating margin to above 10% and bottom line profitability,” stated Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. “These results reflect solid and continuing momentum in our business for the sixth quarter in a row, despite the challenging global economic environment. The ongoing growth in our networking business of more than 20% year-over-year underscores our competitive position in the VoIP industry and is expected to allow us to do well in these challenging times and emerge a stronger leader when the economy recovers.”
 
Mr. Adlersberg added, “Today we announced one of the most important milestones in our Company’s history, AudioCodes’ initiative for High Definition (HD) VoIP. With the growing adoption of broadband IP networks worldwide and the resulting larger bandwidth available for end-users, wideband speech codecs, which are at the heart of HD VoIP, deliver double the voice spectrum and unprecedented clarity and intelligibility while providing a better user experience. AudioCodes’ products are already well known for providing best in class voice quality, and with HD VoIP, we are making another big step in excelling in voice quality. This opportunity is expected to translate into a substantial market and revenue opportunity for us on top of our current success in the VoIP communications market.”
 
“Our continued focus on investing in new products and sales operations, our ability to improve our operational efficiency, and our proven success in executing our objectives and plans, provides a solid foundation for AudioCodes’ future performance,” concluded Mr. Adlersberg.
 
AudioCodes repurchased 626,417 of its ordinary shares during the third quarter of 2008 at an aggregate cost of $2.3 million. In the first nine months of 2008, AudioCodes repurchased a total of approximately 3.5 million ordinary shares at a total cost of $13.7 million. Under the current stock repurchase program, the Company is authorized to purchase up to 4,000,000 of its ordinary shares, or the equivalent of approximately 10% of the Company’s outstanding ordinary shares prior to the commencement of the repurchase program.
 
Cash and cash equivalents, short-term and long-term marketable securities, short-term and long-term bank deposits were $158.7 million as of September 30, 2008, compared to $147.3 million as of June 30, 2008 and $134.2 million as of September 30, 2007. During the third quarter, AudioCodes borrowed $15.0 million from a bank.
 
Subsequent to September 30, 2008, 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.
 
   
Third Quarter 2008 Financial Results
Page 2 of 10
 
 
Conference Call & Web cast Information
 
AudioCodes will conduct a conference call at 9:00 A.M., Eastern Daylight Time on Tuesday, November 4, 2008 to discuss the third quarter 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. (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.
 
   
Third Quarter 2008 Financial Results
Page 3 of 10
 
©2008 AudioCodes Ltd. All rights reserved. AudioCodes, AC, AudioCoded, Ardito, CTI2, CTI², 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.
 
Summary financial data follows
 
   
Third Quarter 2008 Financial Results
Page 4 of 10
 
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands

   
September 30,
2008
  
December 31,
2007
  
   
(Unaudited)
      
ASSETS
              
               
CURRENT ASSETS:
              
Cash and cash equivalents
  
$
32,332
  
$
75,063
  
Short-term bank deposits
    
109,743
  
*)
18,157
  
Short-term marketable securities and accrued interest
    
9,515
    
17,244
  
Trade receivables, net
    
35,831
    
25,604
  
Other receivables and prepaid expenses
    
6,982
  
*)
6,500
  
Inventories
    
20,068
    
18,736
  
               
Total current assets
    
214,471
    
161,304
  
               
LONG-TERM INVESTMENTS:
              
Long-term bank deposits
    
—
    
32,670
  
Long-term marketable securities
    
7,107
    
—
  
Investments in companies
    
2,652
    
1,343
  
Deferred tax assets
    
2,058
    
2,058
  
Severance pay funds
    
11,766
    
9,799
  
               
Total long-term investments
    
23,583
    
45,870
  
               
PROPERTY AND EQUIPMENT, NET
    
7,210
    
7,094
  
               
INTANGIBLE ASSETS, DEFERRED CHARGES AND OTHER, NET
    
16,092
    
19,007
  
               
GOODWILL
    
111,212
    
111,212
  
               
Total assets
  
$
372,568
  
$
344,487
  
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
              
               
CURRENT LIABILITIES:
              
               
Current maturities of long-term bank loans
  
$
6,000
  
$
—
  
Trade payables
    
10,508
    
8,849
  
Other payables and accrued expenses
    
27,780
    
28,780
  
Senior convertible notes
    
48,759
    
—
  
               
Total current liabilities
    
93,047
    
37,629
  
               
ACCRUED SEVERANCE PAY
    
13,078
    
11,168
  
               
LONG-TERM BANK LOANS
    
23,250
    
—
  
               
SENIOR CONVERTIBLE NOTES
    
72,579
    
121,198
  
               
Total shareholders’ equity
    
170,614
    
174,492
  
               
Total liabilities and shareholders’ equity
  
$
372,568
  
$
344,487
  
 
*) reclassified
 
   
Third Quarter 2008 Financial Results
Page 5 of 10
 
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share data

   
Nine months ended
September 30,
  
Three months ended
September 30,
  
   
2008
  
2007
  
2008
  
2007
  
   
(Unaudited)
  
(Unaudited)
  
                           
Revenues
  
$
135,992
  
$
115,395
  
$
46,602
  
$
40,408
  
                           
Cost of revenues
    
59,655
    
50,512
    
20,535
    
17,631
  
                           
Gross profit
    
76,337
    
64,883
    
26,067
    
22,777
  
                           
Operating expenses:
                          
Research and development, net
    
29,135
    
30,620
    
9,155
    
10,239
  
Selling and marketing
    
34,459
    
32,082
    
11,116
    
10,332
  
General and administrative
    
7,047
    
7,200
    
2,226
    
2,474
  
                           
Total operating expenses
    
70,641
    
69,902
    
22,497
    
23,045
  
                           
Operating income (loss)
    
5,696
    
(5,019
)
  
3,570
    
(268
)
Financial income, net
    
1,162
    
1,886
    
267
    
616
  
                           
Income (loss) before taxes on income
    
6,858
    
(3,133
)
  
3,837
    
348
  
Taxes on income
    
480
    
1,043
    
196
    
202
  
Equity in losses of affiliated companies
    
1,061
    
751
    
428
    
218
  
                           
Net income (loss)
  
$
5,317
  
$
(4,927
)
$
3,213
  
$
(72
)
                           
Basic net earnings (loss) per share
  
$
0.13
  
$
(0.12
)
$
0.08
  
$
(0.00
)
                           
Diluted net earnings (loss) per share
  
$
0.13
  
$
(0.12
)
$
0.08
  
$
(0.00
)
                           
Weighted average number of shares used in computing basic net earnings per share
    
41,540
    
42,572
    
40,200
    
42,885
  
                           
Weighted average number of shares used in computing diluted net earnings per share
    
41,967
    
42,572
    
40,517
    
42,885
  

   
Third Quarter 2008 Financial Results
Page 6 of 10
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
NON-GAAP PROFORMA STATEMENTS OF OPERATIONS
In thousands, except per share data

                           
   
Nine months ended
September 30,
  
Three months ended
September 30,
  
   
2008
  
2007
  
2008
  
2007
  
   
(Unaudited)
  
(Unaudited)
  
                           
Revenues
  
$
135,992
  
$
115,395
  
$
46,602
  
$
40,408
  
                           
Cost of revenues *) **)
    
57,778
    
48,119
    
19,955
    
16,948
  
                           
Gross profit
    
78,214
    
67,276
    
26,647
    
23,460
  
                           
Operating expenses:
                          
Research and development, net *)
    
27,825
    
28,239
    
8,942
    
9,444
  
Selling and marketing *) **)
    
31,945
    
28,601
    
10,414
    
9,238
  
General and administrative *)
    
6,563
    
6,561
    
2,140
    
2,191
  
                           
Total operating expenses
    
66,333
    
63,401
    
21,496
    
20,873
  
                           
Operating income
    
11,881
    
3,875
    
5,151
    
2,587
  
Financial income, net
    
1,162
    
1,886
    
267
    
616
  
                           
Income before taxes on income
    
13,043
    
5,761
    
5,418
    
3,203
  
Taxes on income **)
    
480
    
337
    
196
    
202
  
Equity in losses of affiliated companies
    
1,061
    
751
    
428
    
218
  
                           
Non-GAAP net income
  
$
11,502
  
$
4,673
  
$
4,794
  
$
2,783
  
                           
Non-GAAP diluted net earnings per share
  
$
0.27
  
$
0.11
  
$
0.11
  
$
0.06
  
                           
Weighted average number of shares used in computing non-GAAP diluted net earnings per share
    
44,195
    
43,668
    
47,198
    
43,677
  
 
*) 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.
   
   
Third Quarter 2008 Financial Results
Page 7 of 10
 
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
  
RECONCILIATION BETWEEN GAAP NET INCOME AND NON-GAAP NET INCOME
In thousands, except per share data
  
 
   
Nine months ended
September 30,
  
Three months ended
September 30,
  
   
2008
  
2007
  
2008
  
2007
  
   
(Unaudited)
  
(Unaudited)
  
                           
GAAP Net income (loss)
  
$
5,317
  
$
(4,927
)
$
3,213
  
$
(72
)
                           
GAAP Diluted earnings (loss) per share
  
$
0.13
  
$
(0.12
)
$
0.08
  
$
(0.00
)
                           
Cost of revenues:
                          
Stock-based compensation (*)
    
278
    
482
    
50
    
151
  
Amortization expenses(**)
    
1,599
    
1,911
    
530
    
532
  
     
1,877
    
2,393
    
580
    
683
  
Research and development, net:
                          
Stock-based compensation (*)
    
1,310
    
2,381
    
213
    
795
  
                           
Selling and marketing:
                          
Stock-based compensation (*)
    
1,731
    
2,698
    
441
    
833
  
Amortization expenses(**)
    
783
    
783
    
261
    
261
  
     
2,514
    
3,481
    
702
    
1,094
  
General and administrative:
                          
Stock-based compensation (*)
    
484
    
639
    
86
    
283
  
                           
Income tax effect(**)
    
—
    
706
    
—
    
—
  
                           
Non-GAAP Net income
  
$
11,502
  
$
4,673
  
$
4,794
  
$
2,783
  
                           
Non-GAAP Diluted earnings per share
  
$
0.27
  
$
0.11
  
$
0.11
  
$
0.06
  
 
*) 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.
 
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.
   
   
Third Quarter 2008 Financial Results
Page 8 of 10
 
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
 
   
Nine months ended
September 30,
  
Three months ended
September 30,
  
   
2008
  
2007
  
2008
  
2007
  
   
(Unaudited)
  
(Unaudited)
  
Cash flows from operating activities:
                          
Net income (loss)
  
$
5,317
  
$
(4,927
)
$
3,213
  
$
(72
)
Adjustments required to reconcile net income to net cash provided by operating activities:
                          
Depreciation and amortization
    
5,676
    
5,922
    
1,821
    
1,873
  
Net loss from sale of marketable securities
    
—
    
—
    
—
    
—
  
Amortization of marketable securities premiums and accretion of discounts, net
    
23
    
50
    
39
    
(3
)
Equity in losses of affiliated companies
    
1,061
    
751
    
428
    
218
  
Increase (decrease) in accrued severance pay, net
    
(57
)
  
204
    
62
    
(23
)
Stock-based compensation expenses
    
3,803
    
6,200
    
790
    
2,062
  
Amortization of senior convertible notes discount and deferred charges
    
153
    
151
    
51
    
51
  
                           
Increase in accrued interest on marketable securities, bank deposits and structured notes
    
(794
)
  
(535
)
  
(787
)
  
(216
)
Decrease (Increase) in deferred tax assets
    
—
    
(336
)
  
—
    
11
  
Decrease (increase) in trade receivables, net
    
(10,227
)
  
1,027
    
(6,123
)
  
(4,099
)
Decrease (increase) in other receivables and prepaid expenses
    
(1,280
)
  
(526
)
  
(982
)
  
107
  
Decrease (increase) in inventories
    
(1,332
)
  
(1,673
)
  
(73
)
  
2,056
  
Increase (decrease) in trade payables
    
1,659
    
(822
)
  
(1,621
)
  
(1,254
)
Increase (decrease) in other payables and accrued expenses
    
4,000
    
(2,768
)
  
3,375
    
2,045
  
Increase in deferred tax liabilities
    
—
    
706
    
—
    
—
  
Other
    
—
    
1
    
—
    
(4
)
                           
Net cash provided by operating activities
    
8,002
    
3,425
    
193
    
2,752
  
                           
Cash flows from investing activities:
                          
Proceeds from sale and maturity of marketable securities
    
17,000
    
22,600
    
4,000
    
6,000
  
Proceeds from sale of bank deposits
    
34,639
    
28,700
    
16,545
    
3,700
  
Investments in companies
    
(2,370
)
  
(1,006
)
  
(1,054
)
  
(468
)
Payment for acquisition of CTI Squared*)
    
(5,000
)
  
(4,897
)
  
—
    
—
  
Purchase of property and equipment
    
(2,893
)
  
(2,055
)
  
(726
)
  
(703
)
Investment in short-term deposit
    
(92,109
)
  
—
    
(22,005
)
  
—
  
Investment in marketable securities
    
(16,795
)
  
—
    
(16,795
)
  
—
  
Investment in long-term deposit
    
(255
)
  
(11,000
)
  
—
    
—
  
                           
Net cash provided by (used in) investing activities
    
(67,783
)
  
32,342
    
(20,035
)
  
8,529
  
 
   
Third Quarter 2008 Financial Results
Page 9 of 10
 
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Cont.)
U.S. dollars in thousands
 
   
Nine months ended
September 30,
  
Three months ended
September 30,
  
   
2008
  
2007
  
2008
  
2007
  
   
(Unaudited)
  
(Unaudited)
  
Cash flows from financing activities:
                          
Repurchase of shares
    
(13,747
)
  
—
    
(2,339
)
  
—
  
Increase in current maturities of long-term bank loans
    
6,000
    
—
    
3,000
    
—
  
Long-term bank loans received
    
24,000
    
—
    
12,000
    
—
  
Repayment of loan from bank
    
(750
)
  
—
    
(750
)
  
—
  
Proceeds from issuance of shares upon exercise of options and employee stock purchase plan
    
1,547
    
4,642
    
247
    
1,912
  
                           
Net cash provided by financing activities
    
17,050
    
4,642
    
12,158
    
1,912
  
                           
Increase (decrease) in cash and cash equivalents
    
(42,731
)
  
40,409
    
(7,684
)
  
13,193
  
Cash and cash equivalents at the beginning of the period
    
75,063
    
25,171
    
40,016
    
52,387
  
                           
Cash and cash equivalents at the end of the period
  
$
32,332
  
$
65,580
  
$
32,332
  
$
65,580
  

*) Excluding cash and cash equivalents
   
   
Third Quarter 2008 Financial Results
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