8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  July 31, 2007

AUDIBLE, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-26529	22-3407945
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1 Washington Park, Newark, NJ	07102
(Address of Principal Executive Offices)	(Zip Code)

(973) 820-0400

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

      

                  NEWY1\8102378.2              

    

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On August 2, 2007, Audible, Inc. (“Audible” or the “Company”) announced its financial results for the fiscal quarter ended June 30, 2007 and certain other information. A copy of this press release is attached hereto as Exhibit 99.1.

The information in this Form 8-K and the Exhibit attached hereto is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Use of Non-GAAP Measures

In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, Audible presents financial measures that are non-GAAP measures, specifically adjusted EBITDA. Adjusted EBITDA is net (loss) income excluding interest, taxes, depreciation, amortization, impairment and stock based compensation. Audible believes that this non-GAAP measure, viewed in addition to and not in lieu of Audible's reported GAAP results, provides useful information to investors regarding its performance and overall results of operations. These metrics are an integral part of Audible’s internal reporting to measure the performance of the Company and the overall effectiveness of senior management. Reconciliations to comparable GAAP measures are available on the Company’s Web site and in the accompanying schedules to the attached press release. The GAAP financial measures presented in the attached press release are consistent with the Company's historical financial reporting practices. The non-GAAP measures presented in the attached press release may not be comparable to similarly titled measures presented by other companies, and are not identical to corresponding measures used in the Company’s various agreements or other public filings. Management also presents total cash sales. The measurement of total cash sales is defined as the change in deferred revenue plus consolidated net sales. Management believes that total cash sales is a useful measurement when analyzing period results.

ITEM 5.02  DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

Upon the recommendation of the Compensation Committee of Audible, Inc. (“Audible” or the “Company), the Board of Directors of the Company (the “Board”) approved a compensation arrangement for the Company’s non-employee directors of the Board, effective as of July 31, 2007, whereby such directors will be paid $10,000 annually, in quarterly increments of $2,500, beginning October 1, 2007, for their service to the Board and newly appointed non-employee directors of the Board will receive a grant of an option to purchase 50,000 shares of the Company’s common stock upon appointment. The stock options granted to the newly appointed non-employee directors will be granted with an exercise price equal to the opening price on the day of appointment with a vesting schedule as follows:  25% of the shares subject to the option will vest on the date that is six months after the grant date, and subsequently 3% of the shares will vest on the last day of each succeeding month after the initial vesting date until fully vested, provided that any unvested portion is forfeited if the director ceases to serve as a director for any reason other than in the event of a “change of control” as such term is defined in the governing grant agreement. In the event of a “change of control”, the director shall become fully vested in 50% of the shares that remain subject to vesting as of the effective date of the “change of control.”

In addition, the Board, upon the of the recommendation of the Compensation Committee of the Board, approved a special grant to Gary L. Ginsberg, a non-employee director of the Board, of an option to purchase 25,000 shares of the Company’s common stock and a special grant to James P. Bankoff, a newly appointed non-employee director of the Board, of an option to purchase 50,000 shares of the Company’s common stock.  Each of these stock options will be granted on August 7, 2007, with an exercise price equal to the opening market price of the Company’s common stock on August 7, 2007.  The terms of these stock option awards provide that such shares are subject to the following vesting schedule:  25% of the shares subject to the option will vest on the date that is six months after the grant date and subsequently 3% of the shares will vest on the last day of each succeeding month after the initial vesting date until fully vested, provided that any unvested portion is forfeited if Ginsberg or Bankoff, as applicable, ceases to serve as a director for any reason other than in the event of a “change of control” of the Company as such term is defined in their respective grant agreement. In the event of a “change of control” both Ginsberg and Bankoff, shall become fully vested in 50% of the shares that remain subject to vesting as of the effective date of the “change of control.”

The Board also agreed to the appointment of Mr. Bankoff to Audible’s Nominating and Governance Committee and Compensation Committee.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

a) Financial Statements of Business Acquired - Not Applicable.

b) Pro Forma Financial Information - Not Applicable.

c) Shell Company Transactions – Not Applicable

d) Exhibits:

99.1 Press Release dated August 2, 2007 regarding financial results.

      

                  NEWY1\8102378.2              

    

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Audible, Inc.
Date:  August 2, 2007		/s/ Donald R. Katz
	By:	Donald R. Katz
	Title:	Chief Executive Officer and Chairman of the Board of Directors

EX-99.1

Exhibit 99.1

AUDIBLE ANNOUNCES SECOND QUARTER 2007

FINANCIAL RESULTS

Revenue up 36% Year-over-Year, Adjusted EBITDA of $2.1 Million for Quarter

NEWARK, NJ, August 2, 2007 — Audible, Inc. (NASDAQ: ADBL; www.audible.com), the leader in spoken audio entertainment, information, and educational programming on the Internet, today announced unaudited financial results for the second quarter ended June 30, 2007.

Audible reported consolidated second quarter net revenues of $25.9 million, up 36% over the $19.1 million reported in the second quarter of 2006 and 3% over $25.3 million in the first quarter of 2007. Adjusted EBITDA (“EBITDA”) increased to $2.1 million, up from $113,000 EBITDA reported in the second quarter of 2006 and $1.0 million in the first quarter of 2007.  Net loss for the second quarter of 2007 was ($125,000), or $(0.01) per share, a decrease from the net loss of ($2.2) million, or $(0.09) per share reported in the second quarter of 2006, and ($1.2) million or $(0.05) per share in the first quarter of 2007.

During the quarter, approximately 56,000 new AudibleListener® members were acquired. There were nearly 431,000 AudibleListener members at the end of the quarter, an increase compared to 309,000 at the end of second quarter of 2006 and 415,000 at the end of first quarter of 2007.

“During the second quarter of 2007 our continued focus on acquiring higher value AudibleListener members produced stellar results. We served them with superior listening, while offering targeted customer communications and consistent customer support,” noted Donald Katz, CEO and Chairman, Audible, Inc. “We are pleased to have achieved a quarter that demonstrates our commitment to profitable growth.”

Second Quarter 2007 Key Financial and Operating Metrics

Consolidated Net Revenue: Consolidated net revenue totaled $25.9 million in the second quarter of 2007, a 36% increase over the $19.1 million in consolidated net revenue in the second quarter of 2006 and a 3% increase over $25.3 million in the first quarter 2007.

Adjusted EBITDA: EBITDA increased to $2.1 million, up from $113,000 EBITDA reported in the second quarter of 2006. EBITDA for the second quarter of 2007 is based upon a net loss of ($125,000) which then excludes stock-based compensation of $1.5 million, depreciation and amortization of $1.3 million, interest income (net) of $854,000, and asset impairment of $160,000.

Deferred revenue: Deferred revenue was $16.3 million at June 30, 2007, a $1.9 million or 14% increase over the $14.4 million balance reported at December 31, 2006.

Total New Audible Listener Members: Nearly 56,000 new AudibleListener members were acquired during the second quarter of 2007, a decrease from the 65,000 Audible Listener members reported in second quarter of 2006. However, 96% percent of new members acquired in Q2 2007 were higher revenue AudibleListener Gold and Platinum members, versus 47% of new members acquired in the second quarter of 2006.

Conference Call

Senior management will host an investor teleconference at 5:00 p.m. EDT today to discuss second quarter results as well as related financial and operational developments. A live webcast of the conference call will be available at www.audible.com/ir for audio streaming access to the call. To participate in the call, the dial-in number is 800-238-9007 or +1-719-457-2622. Passcode 5495299.

Use of Non-GAAP Measures

In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, Audible presents financial measures that are non-GAAP measures, specifically adjusted EBITDA. Adjusted EBITDA is net (loss) income excluding interest, taxes, depreciation, amortization, asset impairment, loss on equity investment and stock based compensation. Audible believes that this non-GAAP measure, viewed in addition to and not in lieu of Audible's reported GAAP results, provides useful information to investors regarding its performance and overall results of operations. These metrics are an integral part of Audible’s internal reporting to measure the performance of the company and the overall effectiveness of senior management. Reconciliations to comparable GAAP measures are available in the accompanying schedules to this press release and on Audible's Web site. The GAAP financial measures presented are consistent with Audible's historical financial reporting practices. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies, and are not identical to corresponding measures used in our various agreements or other public filings. Management also presents total cash sales. The measurement of total cash sales is defined as the change in deferred revenue plus consolidated net sales. Management believes that total cash sales is a useful measurement when analyzing period results.

About Audible, Inc.:

Audible (www.audible.com) is the leader in spoken audio information and entertainment on the Internet.  Content from Audible is downloaded and played back on personal computers, CDs, or AudibleReady computer-based and wireless mobile devices. Audible has 140,000 hours of audio programs from more than 470 content partners that include leading audiobook publishers, broadcasters, entertainers, magazine and newspaper publishers, and business information providers. Audible is the preeminent provider of spoken-word audio products for Apple’s iTunes Store.  Among Audible’s key business relationships are Apple, Inc., Amazon.com, Palm, Inc., Creative Labs Inc., SanDisk, and XM Satellite Radio. Audible has approximately 170 employees with headquarters in Newark, NJ and an office in London, England. Audible, audible.com, AudibleListener, and AudibleReady are registered trademarks of Audible, Inc. and all are part of the family of Audible, Inc. trademarks. Other product or service names mentioned herein are the trademarks of their respective owners.

Forward-Looking Statements

The statements in this press release which are not historical facts may be deemed to contain forward-looking statements about Audible. Actual results may differ materially from those anticipated in any forward-looking statements as a result of certain risks and uncertainties, including, without limitation, Audible's limited operating history, history of losses, uncertain market for its services, and its inability to license or produce compelling audio content and other risks and uncertainties detailed in Audible's Securities and Exchange Commission filings. No forward-looking statement can be guaranteed. Forward-looking statements speak only as of the date on which they are made and Audible, Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)
	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2007			2007			2006			2007			2006
Revenue, net:
Content and services:
Consumer content	$	25,727		$	24,979		$	18,835		$	50,706		$	38,116
Point of sale rebates		(10	)		(19	)		(126	)		(29	)		(293	)
Services		38			24			26			62			59
Total content and services		25,755			24,984			18,735			50,739			37,882
Hardware		87			77			85			164			210
Related party revenue		20			91			257			111			630
Other		85			112			64			197			134
Total revenue, net		25,947			25,264			19,141			51,211			38,856
Operating expenses:
Cost of content and services revenue:
Royalties and other content charges		11,210			11,256			7,720			22,466			15,703
Discount certificate rebates		73			260			305			333			603
Total cost of content and services revenue		11,283			11,516			8,025			22,799			16,306
Cost of hardware revenue		121			179			206			300			881
Cost of related party revenue		108			129			171			237			329
Operations		3,406			3,826			2,854			7,232			5,956
Technology and development		4,569			4,571			4,362			9,140			8,056
Marketing		4,049			3,904			3,573			7,953			7,874
General and administrative		3,359			3,104			2,663			6,463			5,864
Total operating expenses		26,895			27,229			21,854			54,124			45,266
Loss from operations		(948	)		(1,965	)		(2,713	)		(2,913	)		(6,410	)
Loss on equity investment		-			(60	)		(180	)		(60	)		(180	)
Other income (expense):
Interest income		857			845			714			1,702			1,374
Other expense		(3	)		(6	)		-			(9	)		-
Other income, net		854			839			714			1,693			1,374
Loss before income taxes		(94	)		(1,186	)		(2,179	)		(1,280	)		(5,216	)
Income tax expense		(31	)		(24	)		(3	)		(55	)		(6	)
Net loss	$	(125	)	$	(1,210	)	$	(2,182	)	$	(1,335	)	$	(5,222	)
Basic and diluted net loss per common share	$	(0.01	)	$	(0.05	)	$	(0.09	)	$	(0.06	)	$	(0.21	)
Basic and diluted weighted average common shares outstanding		24,279,102			24,205,043			24,501,629			24,242,777			24,491,745

AUDIBLE INC. AND SUBSIDIARY
NON-GAAP INFORMATION
(Unaudited)
(in thousands)
	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2007			2007			2006			2007			2006
Stock-based compensation included in expense line items:
Operations	$	218		$	347		$	300		$	565		$	443
Technology and development		271			293			287			564			417
Marketing		306			300			321			606			525
General and administrative		737			636			655			1,373			1,271
	$	1,532		$	1,576		$	1,563		$	3,108		$	2,656
Depreciation and amortization included in expense line items:
Operations	$	7		$	11		$	14		$	18		$	28
Technology and development		1,112			1,131			1,112			2,243			2,106
Marketing		-			-			-			-			-
General and administrative		201			168			137			369			252
	$	1,320		$	1,310		$	1,263		$	2,630		$	2,386
Asset impairment included in expense line items:
Technology and development		160			-			-			160			-
	$	160		$	-		$	-		$	160		$	-
Reconciliation to Non-GAAP Financial Measures (unaudited)
Net loss	$	(125	)	$	(1,210	)	$	(2,182	)	$	(1,335	)	$	(5,222	)
Add back:
Stock-based compensation		1,532			1,576			1,563			3,108			2,656
Depreciation and amortization		1,320			1,310			1,263			2,630			2,386
Asset impairment		160			-			-			160			-
Loss on equity investment		-			60			180			60			180
Income tax expense		31			24			3			55			6
Less:
Interest income, net		(854	)		(839	)		(714	)		(1,693	)		(1,374	)
Non-GAAP adjusted EBITDA	$	2,064		$	921		$	113		$	2,985		$	(1,368	)
Reconciliation to Non-GAAP Financial Measures (unaudited)
Total revenue, net	$	25,947		$	25,264		$	19,141		$	51,211		$	38,856
Add:
Change in deferred revenue		548			1,430			1,273			1,978			3,353
Non-GAAP total cash sales	$	26,495		$	26,694		$	20,414		$	53,189		$	42,209

AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
	June 30,			December 31,
Assets	2007			2006
	(unaudited)
Current Assets:
Cash and cash equivalents	$	18,597		$	14,925
Short-term investments		48,720			51,295
Interest receivable on short-term investments		536			626
Accounts receivable, net of allowance		3,122			4,181
Accounts receivable, related parties		232			100
Royalty advances		504			710
Prepaid expenses and other current assets		3,106			1,797
Inventory		103			212
Total current assets		74,920			73,846
Property and equipment, net		10,537			8,149
Other assets		1,416			781
Total Assets	$	86,873		$	82,776
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$	2,385		$	3,121
Accrued expenses and other current liabilities		5,391			4,678
Accrued royalties		6,543			9,028
Accrued compensation		2,049			778
Deferred revenue, current		15,691			13,840
Total current liabilities		32,059			31,445
Deferred revenue, non current		644			513
Other liabilities, non current		1,703			262
Royalty obligations, non current		75			90
Commitments and contingencies
Stockholders' Equity:
Common stock		243			241
Additional paid-in capital		194,070			190,799
Accumulated other comprehensive loss		(48	)		(36	)
Accumulated deficit		(141,873	)		(140,538	)
Total Stockholders' Equity		52,392			50,466
Total Liabilities and Stockholders' Equity	$	86,873		$	82,776

AUDIBLE INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Cash flows from operating activities:
Net loss	$	(125	)	$	(2,182	)	$	(1,335	)	$	(5,222	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		1,320			1,263			2,630			2,385
Impairment loss on purchased software		160			-			160			-
Non-cash stock-based compensation charge		1,532			1,563			3,108			2,657
Accretion of discounts on short-term investments		(233	)		(219	)		(492	)		(449	)
Changes in assets and liabilities:
Interest receivable on short-term investments		(157	)		(102	)		90			(67	)
Accounts receivable, net		470			991			1,061			409
Accounts receivable, related parties		(64	)		(10	)		(132	)		(13	)
Royalty advances		135			29			208			40
Prepaid expenses and other current assets		(404	)		286			(58	)		(797	)
Inventory		23			(524	)		109			(301	)
Other assets		(465	)		(47	)		(634	)		(821	)
Accounts payable		(476	)		356			(737	)		(2,057	)
Accrued expenses		32			(707	)		(195	)		(1,189	)
Other liabilities, non current		106			-			369			-
Accrued royalties		(785	)		(7	)		(2,492	)		-
Accrued compensation		1,240			32			1,269			425
Deferred revenue		548			1,273			1,978			3,349
Net cash provided by (used in ) operating activities		2,857			1,995			4,907			(1,651	)
Cash flows from investing activities:
Purchases of property and equipment		(858	)		(257	)		(4,142	)		(3,973	)
Capitalized software development costs		(212	)		(56	)		(327	)		(254	)
Purchases of short-term investments		(17,620	)		(20,605	)		(39,356	)		(35,569	)
Proceeds from maturity of short-term investments		15,548			17,300			42,423			41,800
Net cash (used in) provided by investing activities		(3,142	)		(3,618	)		(1,402	)		2,004
Cash flows from financing activities:
Proceeds from exercise of common stock options		-			203			371			354
Proceeds from exercise of common stock warrants		-			-			-			750
Payment of taxes due on vested restricted stock		(206	)					(206	)
Repurchase of treasury stock at cost		-			(1,927	)		-			(2,287	)
Net cash (used in) provided by financing activities		(206	)		(1,724	)		165			(1,183	)
Effect of exchange rate changes on cash and cash equivalents		2			(7	)		2			(12	)
(Decrease) increase in cash and cash equivalents		(489	)		(3,354	)		3,672			(842	)
Cash and cash equivalents at beginning of period		19,086			14,061			14,925			11,549
Cash and cash equivalents at end of period	$	18,597		$	10,707		$	18,597		$	10,707
Supplemental Cash Flow information
Accrued purchases of property and equipment	$	709			-		$	709			-

AUDIBLE INC. AND SUBSIDIARY
UNAUDITED SUPPLEMENTAL OPERATING DATA
(Numbers in thousands)
New AudibleListener Membership Reporting:	Q2 2007	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Q4 2005	Q1 2006	Q2 2006	Q3 2006	Q4 2006	Q1 2007	Q2 2007
Total AudibleListener® Members1	115	132	157	186	205	224	245	279	309	345	383	415	431
Year-over-year	--	--	--	77%	78%	70%	56%	50%	51%	54%	56%	49%	39%
Quarter-over-quarter	10%	15%	19%	18%	10%	9%	9%	14%	11%	12%	11%	8%	4%
New AudibleListener® Members2	22	29	39	54	52	60	62	79	65	71	70	72	56
Year-over-year	--	--	--	143%	136%	107%	59%	46%	25%	18%	13%	-9%	-14%
Quarter-over-quarter	-2%	32%	34%	38%	-4%	15%	3%	27%	-18%	9%	-1%	3%	-22%
Average Monthly Churn in AudibleListener® Members3	3.0%	3.0%	2.6%	4.0%	4.7%	5.1%	4.8%	4.6%	3.4%	3.1%	2.5%	3.0%	2.8%
Cost per New AL	$64	$62	$64	$52	$57	$57	$94	$51	$44	$45	$49	$41	$49
(1) Total number of AudibleListener® members at the end of the period.
(2) Total number of new AudibleListener® members added during the period. Members canceling and rejoining a membership within the same day are counted as one membership.
(3) Churn is defined as member cancellations in the period divided by the sum of members at the beginning of the period plus gross member adds, divided by three months.

Contact:

James Pearson

Audible, Inc.

(973) 820-0474

jpearson@audible.com