updated 1/26/2011 8:16:50 AM ET 2011-01-26T13:16:50

LOD, Israel, Jan. 26, 2011 (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 full year 2010, ended December 31, 2010.

Revenues for the fourth quarter of 2010 were $40.5 million compared to $38.3 million for the third quarter of 2010 and $34.2 million for the fourth quarter of 2009. Revenues were $150.0 million in 2010 compared to $125.9 million in 2009.

Net income in accordance with U.S. generally accepted accounting principles (GAAP) was $5.4 million, or $0.13 per diluted share, for the fourth quarter of 2010 compared to GAAP net income of $2.9 million, or $0.07 per diluted share, for the third quarter of 2010, and GAAP net income of $1.2 million, or $0.03 per diluted share, for the fourth quarter of 2009. During 2010, the Company recorded a non-cash tax benefit of $2.3 million, equivalent to $0.06 per diluted share, due to deferred tax.

The Company reported GAAP net income of $12.0 million, or $0.30 per diluted share, in 2010 compared to a GAAP net loss of $3.3 million, or ($0.07) per share, in 2009.

Non-GAAP net income for the fourth quarter of 2010 was $4.5 million, or $0.11 per diluted share, compared to non-GAAP net income of $3.6 million, or $0.09 per diluted share, for the third quarter of 2010, and non-GAAP net income of $2.5 million, or $0.06 per diluted share, for the fourth quarter of 2009.

Non-GAAP net income excludes (i) stock-based compensation expenses, (ii) amortization expenses related to intangible assets, (iii) for the 2009 period, an adjustment to expenses related to the Company's Senior Convertible Notes due to application of FASB Staff Position APB 14-1, and (iv) a non-cash deferred tax income. Almost all of the Company's Senior Convertible Notes were repurchased in November 2009. 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.

During the fourth quarter of 2010, AudioCodes generated $5.7 million in cash from operating activities compared to $5.8 million in the third quarter of 2010 and $11.9 million in the fourth quarter of 2009. The Company generated $16.4 million in cash from operations in 2010 compared to $21.0 million in 2009.

Cash and cash equivalents and short-term deposits were $64.1 million as of December 31, 2010, compared to $58.6 million as of September 30, 2010 and $52.9 million as of December 31, 2009.

"I am pleased to announce strong results for the fourth quarter and full year 2010," stated Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. "This is the seventh consecutive quarter of improved performance and momentum gain in our networking business. Year-over-year, revenues grew 19% and proforma net income grew more than 330%. Coupling these results with the ability to achieve a better-than-expected gross margin, continued positive cash flow, and our stated objective of 10% proforma operating margin, further underscores our improved performance. In 2010, we gained market share in the VoIP media gateway market, introduced our new enterprise session border controller product line for the SIP Trunking market, strengthened our partnerships with leading players in the telecom, applications and over-the-top (OTT) market, made first steps into the new mobile VoIP market, and grew sales coverage worldwide. SIP connectivity, mobility and security are increasingly becoming main trends in the VoIP market, and we believe that our continued investments in these areas will further drive market share gain and growth in 2011 and beyond," 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 2010 operational and 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) 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 & data communications and its products are deployed globally in Broadband, Mobile, Cable, and Enterprise networks. The company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Gateways, Session Border Controllers (SBC), Residential Gateways, IP Phones, Media Servers and Value Added Applications. 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 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.

©2011 AudioCodes Ltd. All rights reserved. AudioCodes, AC, AudioCoded, Ardito, CTI2, CTI², CTI Squared, HD VoIP, HD VoIP Sounds Better, InTouch, IPmedia, Mediant, MediaPack, NetCoder, Netrake, Nuera, Open Solutions Network, OSN, Stretto, TrunkPack, VMAS, 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. 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,

2010
December 31,

2009
   (Unaudited)  (Audited)
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents $ 50,311 $ 38,969
Short-term deposits 13,825 13,902
Trade receivables, net 25,881 18,522
Other receivables and prepaid expenses 3,646 2,754
Deferred tax assets 2,287 1,053
Inventories 18,043 13,516
     
Total current assets 113,993 88,716
     
LONG-TERM INVESTMENTS:    
Investments in companies 1,317 1,510
Deferred tax assets 2,261 1,174
Severance pay funds 15,039 12,235
     
Total long-term investments 18,617 14,919
     
PROPERTY AND EQUIPMENT, NET 3,703 4,956
     
GOODWILL, INTANGIBLE ASSETS, DEFERRED

CHARGES AND OTHER, NET
 

37,405
 

38,942
     
Total assets $ 173,718 $ 147,533
     
LIABILITIES AND EQUITY    
     
CURRENT LIABILITIES:    
Current maturities of long-term bank loans $ 6,000 $ 6,000
Trade payables 13,519 8,609
Other payables and accrued expenses 27,937 19,550
     
Total current liabilities 47,456 34,159
     
LONG-TERM LIABILITIES:    
Accrued severance pay $ 15,821 $ 13,336
Long-term bank loans 9,750 15,750
Senior convertible notes 353 403
Other payables 1,158 --
     
Total long term liabilities 27,082 29,489
     
Total equity 99,180 83,885
     
Total liabilities and equity  $ 173,718  $ 147,533
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share data
   
  Year ended

December 31,
Three months ended

December 31,
  2010 2009 2010 2009
  (Unaudited) (Audited) (Unaudited)
         
Revenues $ 150,040 $ 125,894 $ 40,464 $ 34,158
         
Cost of revenues 66,138 56,194 17,227 15,267
         
Gross profit 83,902 69,700 23,237 18,891
         
Operating expenses:        
Research and development, net 30,189 29,952 7,839 7,255
Selling and marketing 35,024 32,111 9,998 8,022
General and administrative 8,252 7,821 2,115 1,964
         
Total operating expenses 73,465 69,884 19,952 17,241
         
Operating income (loss) 10,437 (184) 3,285 1,650
Financial income (expenses), net (94) (2,744) 191 (395)
         
Income (loss) before taxes on income 10,343 (2,928) 3,476 1,255
Income tax expense (income), net (1,885) 290 (2,110) 54
Equity in losses of affiliated companies 213 76 230 8
         
Net income (loss) $ 12,015 $ (3,294) $ 5,356 $ 1,193
         
Net loss attributable to the noncontrolling interest 111 472 -- 98
 

Net income (loss) attributable to AudioCodes
 

$ 12,126
 

$ (2,822)
 

$ 5,356
 

$ 1,291
         
Basic net earnings (loss) per share $ 0.30 $ (0.07) $ 0.13 $ 0.03
         
Diluted net earnings (loss) per share $ 0.30 $ (0.07) $ 0.13 $ 0.03
Weighted average number of shares used in computing basic net earnings per share  

40,560
 

40,208
 

40,951
 

40,262
Weighted average number of shares used in computing diluted net earnings per share  

40,961
 

40,208
 

41,556
 

40,397
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
NON-GAAP PROFORMA STATEMENTS OF OPERATIONS
In thousands, except per share data
 
  Year ended

December 31,
Three months ended

December 31,
  2010 2009 2010 2009
  (Unaudited) (Unaudited)
         
Revenues $ 150,040 $ 125,894 $ 40,464 $ 34,158
         
Cost of revenues (1) (2) 64,840 54,833 16,903 14,936
         
Gross profit 85,200 71,061 23,561 19,222
         
Operating expenses:        
Research and development, net (1) 29,796 29,310 7,723 7,080
Selling and marketing (1) (2) 33,540 30,872 9,155 7,759
General and administrative (1) 7,799 7,502 1,967 1,806
         
Total operating expenses 71,135 67,684 18,845 16,645
         
Operating income 14,065 3,377 4,716 2,577
Financial income (expenses), net (3) (94) 32 191 (33)
         
Income before taxes on income 13,971 3,409 4,907 2,544
Income tax expense, net (4) 436 290 211 54
Equity in losses of affiliated companies 213 76 230 8
         
Non-GAAP net income $ 13,322 $ 3,043 $ 4,466 $ 2,482
         
Net loss attributable to the noncontrolling interest 111 472 -- 98
 

Net income attributable to AudioCodes
 

$ 13,433
 

$ 3,515
 

$ 4,466
 

$ 2,580
 

Non-GAAP diluted net earnings per share
 

$ 0.33
 

$ 0.09
 

$ 0.11
 

$ 0.06
         
Weighted average number of shares used in computing non-GAAP diluted net earnings per share  

40,975
 

40,338
 

41,875
 

40,607
         
(1) Excluding stock-based compensation expenses related to options granted to employees and others.
(2) Excluding amortization of intangible assets related to the acquisitions of Nuera, Netrake and CTI Squared.
(3) Excluding adjustments to interest expense with respect to Senior Convertible Notes, due to implementation of FSP APB 14-1 (2009).
(4) 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 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,
  2010 2009 2010 2009
  (Unaudited) (Unaudited)
         
GAAP Net income (loss) $ 12,015 $ (3,294) $ 5,356  $ 1,193
GAAP Diluted earnings (loss) per share  

 $ 0.30
 

 $ (0.07)
 

 $ 0.13
 

 $ 0.03
         
Cost of revenues:        
 Stock-based compensation (1) 62 117 14 23
 Amortization expenses (2) 1,236 1,244 310 308
  1,298 1,361 324 331
Research and development, net:        
 Stock-based compensation (1) 393 642 116 175
         
Selling and marketing:        
 Stock-based compensation (1) 1,180 913 766 188
 Amortization expenses (2) 304 326 77 75
  1,484 1,239 843 263
General and administrative:        
Stock-based compensation (1) 453 319 148 158
         
Financial expenses:        
FSP APB 14-1 adjustment (3) -- 2,776 -- 362
 

Income taxes:
       
Deferred tax income (4) (2,321) --  (2,321) --
 

Non-GAAP Net income
 

$ 13,322
 

$ 3,043
 

$ 4,466
 

$ 2,482
Non-GAAP Diluted earnings per share  

$ 0.33
 

$ 0.09
 

$ 0.11
 

$ 0.06
         
(1) Stock-based compensation expenses related to options granted to employees and others.
(2) Amortization of intangible assets related to the acquisitions of Nuera, Netrake and CTI Squared.
(3) Adjustments to interest expense with respect to Senior Convertible Notes, due to implementation of FSP APB 14-1.
(4) 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

December 31,
Three months ended

December 31,
  2010 2009 2010 2009
  (Unaudited) (Audited) (Unaudited)
         
Cash flows from operating activities:        
Net income (loss)  $ 12,015  $ (3,294)  $ 5,356  $ 1,193
Adjustments required to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization 4,359 4,969  958  1,144
Amortization of marketable securities premiums and accretion of discounts, net -- 252 --  100
Equity in losses of affiliated companies 193 76 230 20
Decrease (increase) in accrued severance pay, net  (319)  (776)  39  (69)
Stock-based compensation expenses  1,370  1,991  326  544
Amortization of senior convertible notes discount and deferred charges and gain from redemption -- 2,930 -- 421
         
Decrease in accrued interest on marketable securities, bank deposits and structured notes --  2,312 --  288
Increase in deferred tax assets (2,321) -- (2,321) --
Decrease (increase) in trade receivables, net (7,359) 11,042 (677) 4,104
Decrease (increase) in other receivables and prepaid expenses (168)  908 1,165  2,212
Decrease (increase) in inventories (4,527) 7,107 (2,097) 2,914
Increase (decrease) in trade payables  4,910  (3,052) 921 1,028
Increase (decrease) in other payables and accrued expenses  

8,249
 

 (3,491)
 

 1,791
 

 (2,034)
         
Net cash provided by operating activities 16,402 20,974 5,691 11,865
         
Cash flows from investing activities:        
Proceeds from sale and maturity of marketable

securities
-- 16,000 -- 7,000
Proceeds from sale of deposits 57,956 95,203 14,314 24,673
Investments in companies  --  (341) -- (15)
Purchase of property and equipment  (1,569)  (1,271)  (284)  (408)
Investment in short-term deposit (57,879)   (49,318) (13,825) --
         
Net cash provided by (used in) investing activities (1,492) 60,273 205 31,250
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Cont.)
U.S. dollars in thousands
 
  Year ended

December 31,
Three months ended

December 31,
  2010 2009 2010 2009
  (Unaudited) (Audited) (Unaudited)
         
Cash flows from financing activities:        
Payment for the acquisition of NSC (74) -- -- --
Repurchase of convertible notes, net of costs (50) (73,147) -- (73,147)
Repayment of loan from bank (6,000) (6,000) (1,500) (1,500)
Proceeds from issuance of shares upon exercise of options and employee stock purchase plan 2,556 90 1,649 57
         
Net cash provided by (used in) financing activities (3,568) (79,057) 149 (74,590)
         
Increase (decrease) in cash and cash equivalents 11,342 2,190 6,045 (31,475)
Cash and cash equivalents at the beginning of the period 38,969 36,779 44,266 70,444
         
Cash and cash equivalents at the end of the period  $ 50,311  $ 38,969  $ 50,311  $ 38,969
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.com

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