LOD, Israel, Oct. 20, 2010 (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 third quarter of 2010, ended September 30, 2010.

Revenues for the third quarter of 2010 were $38.3 million compared to $36.5 million for the second quarter of 2010 and $32.1 million for the third quarter of 2009.

Net income in accordance with U.S. generally accepted accounting principles (GAAP) was $2.9 million, or $0.07 per diluted share, for the third quarter of 2010 compared to net income of $2.1 million, or $0.05 per diluted share, for the second quarter of 2010, and a net loss of $79,000, or $0.00 per share, for the third quarter of 2009.

Non-GAAP net income for the third quarter of 2010 was $3.6 million, or $0.09 per diluted share, compared to $2.8 million, or $0.07 per diluted share, for the second quarter of 2010, and $1.6 million, or $0.04 per diluted share, for the third quarter of 2009.

Non-GAAP net income excludes (i) stock-based compensation expenses, (ii) amortization expenses related to intangible assets, and (iii) for the 2009 periods, an adjustment to expenses related to the Company's Senior Convertible Notes due to application of FASB Staff Position APB 14-1. 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.

"I am pleased to announce another strong quarter of sequential and year-over-year revenue and net income growth. Our financial performance underscores our execution of our strategic initiative to migrate from a pure play VoIP gateway focus to a global provider of converged VoIP and data solutions for service providers and enterprises," said Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. "AudioCodes has put in place a number of new growth opportunities for our business which are starting to ramp up as we look ahead to 2011 and beyond. These include our Mobile VoIP solutions which are expected to enable us to emerge as an early leader in mobile VoIP clients for the smartphone market and our Enterprise Session Border Controllers which are seeing solid demand. We continue to launch leading edge products including our recently announced All-In-One Multimedia Home Gateway that provides service integration for the broadband home user, an increasingly important feature for our service provider customers. Overall, we continue to focus on financial execution, supported by our solid balance sheet, healthy cash flows from operations and a strict focus on maintaining an efficient operating expense base," concluded Mr. Adlersberg.

During the third quarter of 2010, AudioCodes generated $5.8 million in cash from operating activities compared to $5.6 million in the third quarter of 2009.

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

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 9:00 A.M., Eastern Time on October 20, 2010 to discuss the Company's third quarter 2010 operating 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; the ability of AudioCodes to raise additional financing; 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 and upgrades and the ability to manage changes in market conditions as needed; 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 Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.

© 2010 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  
  September 30, December 31,
  2010 2009
  (Unaudited) (Audited)
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $ 44,266 $ 38,969
Short-term bank deposits 14,314 13,902
Trade receivables, net 25,204 18,522
Other receivables and prepaid expenses 4,683 2,754
Deferred tax assets 1,053 1,053
Inventories 15,946 13,516
     
Total current assets 105,466 88,716
     
LONG-TERM INVESTMENTS:    
Investments in companies 1,547 1,510
Deferred tax assets 1,174 1,174
Severance pay funds 14,183 12,235
     
Total long-term investments 16,904 14,919
     
PROPERTY AND EQUIPMENT, NET 3,993 4,956
     
GOODWILL, INTANGIBLE ASSETS, DEFERRED CHARGES AND OTHER, NET 37,790 38,942
     
Total assets $ 164,153 $ 147,533
     
LIABILITIES AND EQUITY    
CURRENT LIABILITIES:    
Current maturities of long-term bank loans $ 6,000 $ 6,000
Trade payables 12,598 8,609
Other payables and accrued expenses 26,282 19,550
     
Total current liabilities 44,880 34,159
     
LONG-TERM LIABILITIES:    
Accrued severance pay $ 14,926 $ 13,336
Long-term bank loans 11,250 15,750
Senior convertible notes 353 403
Other payables 1,135 --
Total Long-Term liabilities   27,664 29,489
     
Total equity 91,609 83,885
     
Total liabilities and equity $ 164,153 $ 147,533
 
 
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,
  2010 2009 2010 2009
  (Unaudited) (Unaudited)
         
Revenues $ 109,576 $ 91,736 $ 38,294 $ 32,082
         
Cost of revenues 48,911 40,927 17,080 14,362
         
Gross profit 60,665 50,809 21,214 17,720
         
Operating expenses:        
Research and development, net 22,350 22,697 7,264 7,245
Selling and marketing 25,026 24,089 8,814 7,749
General and administrative 6,137 5,857 2,106 1,931
         
Total operating expenses 53,513 52,643 18,184 16,925
         
Operating income (loss) 7,152 (1,834) 3,030 795
Financial expenses, net 285 2,349 84 751
         
Income (loss) before taxes on income 6,867 (4,183) 2,946 44
Income taxes, net 225 236 91 106
Equity in income (losses) of an affiliated  companies 17  (68) 17  (17)
         
Net income (loss) $ 6,659 $(4,487) $ 2,872 $(79)
         
Net loss attributable to non-controlling Interest  111  374  --  165
         
Net income (loss) attributable to AudioCodes $ 6,770 $(4,113) $ 2,872 $86
         
Basic net earnings (loss) per share $ 0.17 $(0.11) $ 0.07 $0.00
         
Diluted net earnings (loss) per share $ 0.17 $(0.11) $ 0.07 $0.00
         
Weighted average number of shares used in computing basic net earnings per share  40,429  40,189  40,550  40,204
         
Weighted average number of shares used in computing diluted net earnings per share  40,763   40,189  40,743  40,309
 
 
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,
  2010 2009 2010 2009
  (Unaudited) (Unaudited)
         
Revenues $ 109,576 $ 91,736 $ 38,294 $ 32,082
         
Cost of revenues (1) (2) 47,937 39,897 16,762 14,028
         
Gross profit 61,639 51,839 21,532 18,054
         
Operating expenses:        
Research and development, net (1) 22,073 22,230 7,187 7,111
Selling and marketing (1) (2) 24,385 23,113 8,629 7,448
General and administrative (1) 5,832 5,696 2,007 1,892
         
Total operating expenses 52,290 51,039 17,823 16,451
         
Operating income 9,349 800 3,709 1,603
Financial income (expenses), net (3) (285) 65 (84) 76
         
Income before taxes on income 9,064 865 3,625 1,679
Income taxes, net 225 236 91 106
Equity in income (losses) of an affiliated companies 17  (68)  17  (17)
         
Net income (loss) $ 8,856 $561 $ 3,551 $1,556
         
Net loss attributable to non-controlling Interest  111  374  --  165
         
Net income (loss) attributable to AudioCodes $ 8,967 $935 $ 3,551 $ 1,721
         
Diluted net earnings (loss) per share $ 0.22 $0.01 $ 0.09 $ 0.04
         
Weighted average number of shares used in computing diluted net earnings per share  40,675  40,248  40,011  40,331
 
(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.
 
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
 
  Nine months ended September 30, Three months ended September 30,
  2010 2009 2010 2009
  (Unaudited) (Unaudited)
         
GAAP net income (loss) $ 6,659 $(4,487) $ 2,872 $(79)
         
GAAP net income (loss) per share $ 0.17 $(0.11) $ 0.07 $0.00
         
Cost of revenues:        
Stock-based compensation (1) 48 94 9 24
Amortization expenses (2) 926 936 309 310
  974 1,030 318 334
Research and development, net:        
Stock-based compensation (1) 277 467 77 134
         
Selling and marketing:        
Stock-based compensation (1) 414 725 109 226
Amortization expenses (2) 227 251 76 75
  641 976 185 301
General and administrative:        
Stock-based compensation (1) 305 161 99 39
         
Financial expenses:        
FSP APB 14-1 adjustment (3) -- 2,414 -- 827
         
Non-GAAP net income $ 8,856 $561 $ 3,551 $ 1,566
         
Non-GAAP Diluted net income per share $ 0.22 $0.01 $ 0.09 $ 0.04
 
(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.
 
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
     
  Nine months ended September 30, Three months ended September 30,
  2010 2009 2010 2009
  ( Unaudited) ( Unaudited) ( Unaudited) ( Unaudited)
Cash flows from operating activities:        
Net income (loss)  $ 6,659  $ (4,487)  $ 2,872  $ (79)
Adjustments required to reconcile net income to net cash provided by operating activities:    --     -- 
Depreciation and amortization  3,401  3,825  1,377  1,178
Amortization of marketable securities premiums and accretion of discounts, net  --  152  --   68
Equity in losses (income)  of affiliated companies and interest on loans to affiliated company  (37)  56  (17)  5
Decrease in accrued severance pay, net  (358)  (707)  (94)  (292)
Stock-based compensation expenses  1,044  1,447  294  423
Amortization of senior convertible notes discount and deferred charges  --   2,509  --   861
Increase in accrued interest on marketable securities, bank deposits and structured notes  --   2,024  --   2,473
Decrease (increase) in trade receivables, net  (6,682)  6,938  (368)  (1,636)
Decrease (increase) in other receivables and prepaid expenses  (1,333)  (1,304) 113  (1,138)
Decrease (increase) in inventories  (2,430)  4,193  (880) 2,894
Increase (decrease) in trade payables  3,989  (4,080)  (1,512)  (3,245)
Increase (decrease) in other payables and accrued expenses  6,458  (1,457)  4,058 4,131
         
Net cash provided by operating activities  10,711  9,109  5,843  5,643
         
Cash flows from investing activities:        
Proceeds of marketable securities  --   9,000  --   8,000
Proceeds from sale of short-term deposits  43,642  70,530  13,516  48,825
Investment in affiliated companies  --   (326)  --   (77)
Purchase of property and equipment  (1,285)  (863)  (652)  (94)
Investment in short-term deposits  (44,054)  (49,318)  (14,314)  (15,300)
         
Net cash provided by (used in) investing activities  (1,697) 29,023 (1,450)  41,354
 
 
AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
U.S. dollars in thousands
     
  Nine months ended September 30, Three months ended September 30,
  2010 2009 2010 2009
  ( Unaudited) ( Unaudited) ( Unaudited) ( Unaudited)
Cash flows from financing activities:        
Bank loan refund  (4,500)  (4,500)  (1,500)  (1,500)
Payment of acquisition of NSC  (74)  --  --  -- 
Repurchase of convertible notes, net of costs (50) -- (50) --
Proceeds from issuance of shares upon exercise of options, warrants and employee stock purchase plan  907 33   394 33 
         
Net cash used in financing activities  (3,717)  (4,467)  (1,156)  (1,467)
         
Increase in cash and cash equivalents  5,297  33,665  3,237  45,530
Cash and cash equivalents at the beginning of the period  38,969  36,779  41,029  24,914
         
Cash and cash equivalents at the end of the period  $ 44,266  $ 70,444  $ 44,266  $ 70,444
CONTACT:  AudioCodes          Guy Avidan, VP Finance & CFO            +972-3-976-4000            guy.avidan@audiocodes.com          Shirley Nakar, Director, Investor Relations            +972-3-976-4000            shirley@audiocodes.com            Grayling            IR Agency Contact            Erik Knettel            +1-646-284-9415            erik.knettel@grayling.com

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