EX-1 2 ex-1.htm AUDIOCODES REPORTS FOURTH QUARTER AND YEAR END 2005 RESULTS AudioCodes Reports Fourth Quarter and Year End 2005 Results
                                        

 
PRESS RELEASE
 
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: +972-3-976-4072
shirley.nakar@audiocodes.com
Erik Knettel,
The Global Consulting Group
Tel: +1-646-284-9415
eknettel@hfgcg.com

 
AudioCodes Reports Fourth Quarter and Year End 2005 Results

 
Quarterly Revenues Rise 3% Sequentially and 21% Year-over-Year

 
Lod, Israel - January 30, 2006 - AudioCodes (NASDAQ: AUDC), a leading provider of Voice over Packet (VoP) technologies and Voice Network products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2005.
 
Revenues for the fourth quarter ended December 31, 2005 were a record $30.6 million compared to $29.7 million for the quarter ended September 30, 2005 and $25.2 million for the quarter ended December 31, 2004. Fourth quarter revenues grew 3% sequentially and increased 21% compared to the fourth quarter of 2004. Net income for the fourth quarter of 2005 was $3.9 million, or $0.09 per diluted share, compared to net income of $3.5 million, or $0.08 per diluted share, in the third quarter of 2005 and $2.6 million, or $0.06 per diluted share, for the corresponding period last year.
 
Revenues for the year ended December 31, 2005 were a record $115.8 million compared to $82.8 million in 2004, a year-over-year increase of $33.1 million, or 40%. Net income for the year ended December 31, 2005 was $13.4 million, or $0.31 per diluted share, compared to net income of $5.0 million, or $0.12 per diluted share, in 2004.
 
Cash flow from operating activities was $3.4 million in the fourth quarter of 2005 and totaled $13.2 million in 2005, compared to $3.5 million in 2004.

 
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Cash and cash equivalents, short-term and long-term marketable securities, short-term and long-term bank deposits and structured notes were $220.3 million as of December 31, 2005 compared to $217.1 million as of September 30, 2005 and $217.0 million as of December 31, 2004.

 
“AudioCodes had an excellent year in 2005, both strategically and financially. We grew revenue, secured strategic design wins, and executed on our initiative to develop direct relationships with service providers and be integrated into their networks.  While investing substantially in our technology, products and people and growing staff by 17%, we were able to grow net income by 168%, improve our net income margin to 11.6% from 6% in 2004, and increase cash flow from operating activities year over year by 283%,” said Shabtai Adlersberg, President, Chairman and CEO of AudioCodes.
 
 
“Our financial achievements reflect the strength of our underlying business strategy and execution as we continue to capitalize on the growing worldwide market for VoIP networks and products. Within our networking business we experienced solid demand from service providers in access and trunking applications in wireline, wireless and cable customers, and further strengthened our position as leading vendor of VoIP media gateway and media server products across a range of densities. New meaningful design wins with service providers and leading NEPs in the fourth quarter of 2005 further validate the quality, performance and competitiveness of our offerings that continue to drive business unit growth, as well as broaden our base of partners and customers.
 
 
“Looking ahead to 2006, we continue to forecast market growth and increased demand for our products. We anticipate additional organic growth and a strengthened sales pipeline due to new customer wins and current integration activities with service providers and OEMs. Moreover, emerging interest in areas such as IMS, fixed mobile convergence, and VoIP over broadband are expected to provide further catalysts for AudioCodes’ long-term business growth,” stated Mr. Adlersberg.
 

Conference Call & Webcast Information

AudioCodes will conduct a conference call on January 31, 2006 to discuss the fourth quarter and year end 2005 financial results, which will be simultaneously Webcast at 9:00 A.M. Eastern Time. Investors are invited to listen to the call live via Webcast at the AudioCodes corporate Website at http://www.audiocodes.com.

 
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About AudioCodes
AudioCodes Ltd. enables the new voice infrastructure by providing innovative, reliable and cost-effective Voice over Packet technology and Voice Network products to OEMs, network equipment providers and system integrators. AudioCodes provides its customers and partners with a diverse range of flexible, comprehensive media gateway and media processing technologies, based on VoIPerfect(TM) -- AudioCodes' underlying, best-of-breed, core media gateway architecture. The company is a market leader in voice compression technology and is a key originator of the ITU G.723.1 standard for the emerging Voice over IP market. AudioCodes voice network products feature media gateway and media server platforms for packet-based applications in the converged, wireline, wireless, broadband access, and enhanced voice services markets. AudioCodes enabling technology products include VoIP and CTI communication boards, VoIP media gateway processors and modules, and CPE devices. Its customers include the leading telecom and data network equipment providers globally. AudioCodes' headquarters and R&D facilities are located in Israel with an R&D extension in the U.S. Other AudioCodes' offices are located in Europe, 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; and other factors detailed in AudioCodes' filings with the Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.

AudioCodes, AC, Ardito, AudioCoded, NetCoder, TrunkPack, VoicePacketizer, MediaPack, Stretto, Mediant, VoIPerfect IPmedia and Your Gateway to VoIP are trademarks or registered trademarks of AudioCodes Limited. All other products or trademarks are property of their respective owners.

Summary financial data follows


 
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AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands

   
December 31,
  
   
2005
  
2004
  
           
ASSETS
          
           
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
70,957
  
$
166,832
  
Short-term bank deposits and structured notes
    
61,929
    
-
  
Short-term marketable securities and accrued interest
    
9,863
    
-
  
Trade receivables, net
    
17,990
    
14,470
  
Other receivables and prepaid expenses
   
4,891
    
4,608
  
Inventories
   
11,562
    
10,059
  
               
Total current assets
    
177,192
    
195,969
  
               
LONG-TERM INVESTMENTS:
              
Long-term bank deposits and structured notes
   
27,781
    
50,195
  
Long-term marketable securities
    
49,791
    
-
  
Investments in companies
    
1,112
    
487
  
Deferred tax assets
    
2,489
    
-
  
Severance pay funds
   
5,406
    
4,538
  
               
Total long-term investments
    
86,579
    
55,220
  
               
PROPERTY AND EQUIPMENT, NET
    
6,494
    
6,694
  
               
INTANGIBLE ASSETS, DEFERRED CHARGES AND OTHER, NET
    
3,279
    
5,127
  
               
GOODWILL
    
18,679
    
9,135
  
               
Total assets
  
$
292,223
  
$
272,145
  
     
LIABILITIES AND SHAREHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Trade payables
  
$
7,774
  
$
6,541
  
Other payables and accrued expenses
   
18,620
    
17,981
  
               
Total current liabilities
    
26,394
    
24,522
  
               
ACCRUED SEVERANCE PAY
   
5,887
    
4,978
  
               
SENIOR CONVERTIBLE NOTES
    
120,836
    
120,660
  
               
Total shareholders' equity
    
139,106
    
121,985
  
               
Total liabilities and shareholders' equity
  
$
292,223
  
$
272,145
  




 
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AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data

   
Year ended
  
Three months ended
  
   
December 31,
  
December 31,
  
   
2005
  
2004
  
2005
  
2004
  
       
Unaudited
  
                   
Revenues
  
$
115,827
  
$
82,756
  
$
30,640
  
$
25,241
  
                           
Cost of revenues
    
46,993
    
34,375
    
12,289
    
10,290
  
                           
Gross profit
   
68,834
    
48,381
    
18,351
    
14,951
  
                           
Operating expenses:
                          
Research and development, net
    
24,415
    
20,009
    
6,456
    
5,526
  
Selling and marketing
    
25,944
    
19,891
    
6,960
    
5,545
  
General and administrative
    
6,004
    
4,851
    
1,621
    
1,487
  
                           
Total operating expenses
    
56,363
    
44,751
    
15,037
    
12,558
  
                           
Operating income
    
12,471
    
3,630
    
3,314
    
2,393
  
Financial income, net
   
2,457
    
2,166
    
949
    
550
  
Equity in losses of affiliated companies, net
    
(693
)
  
(517
)
  
(95
)
  
(181
)
                           
Income before taxes on income
    
14,235
    
5,279
    
4,168
    
2,762
  
Taxes on income
    
799
    
273
    
264
    
172
  
                           
Net income
 
$
13,436
  
$
5,006
  
$
3,904
  
$
2,590
  
                           
Basic net earnings per share
 
$
0.33
  
$
0.13
  
$
0.10
  
$
0.07
  
                           
Diluted net earnings per share
 
$
0.31
  
$
0.12
  
$
0.09
  
$
0.06
  
                           
Weighted average number of shares used in computing basic net earnings per share (in thousands)
   
40,296
    
38,614
    
40,545
    
39,393
  
                           
Weighted average number of shares used in computing diluted net earnings per share (in thousands)
   
43,086
    
42,607
    
43,117
    
43,400
  




 
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AUDIOCODES LTD. AND ITS SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

   
Year ended
December 31,
 
Three months ended
December 31,
  
   
2005
  
2005
  
       
Unaudited
  
Cash flows from operating activities:
          
Net income
  
$
13,436
  
$
3,904
  
Adjustments required to reconcile net income to net cash provided by operating activities:
              
Depreciation and amortization
    
3,296
   
872
 
Amortization of marketable securities premium and accretion of discount, net
   
143
   
61
 
Equity in losses of affiliated companies, net
    
693
   
95
 
Increase (decrease) in accrued severance pay, net
    
41
   
(30
)
Amortization of deferred stock compensation
   
36
   
6
 
Amortization of senior convertible notes discount and deferred charges
    
195
   
50
 
Increase in accrued interest on marketable securities, bank deposits and structured notes
    
(736
)
  
(545
)
Increase in deferred tax assets
    
(2,033
)
  
(2,033
)
Increase in trade receivables, net
    
(3,520
)
  
(733
)
Decrease (increase) in other receivables and prepaid expenses
    
57
    
(150
)
Increase in inventories
    
(1,503
)
  
(1,141
)
Increase in trade payables
    
1,233
   
961
 
Increase in other payables and accrued expenses
    
1,912
   
2,087
 
Other
    
(12
)
  
-
 
               
Net cash provided by operating activities
    
13,238
   
3,404
 
               
Cash flows from investing activities:
              
Investment in short-term marketable securities
    
(3,051
)
  
-
  
Investment in short-term bank deposits
    
(33,969
)
  
-
  
Proceeds from sale of short-term bank deposits
    
3,969
   
3,969
 
Investments in companies
    
(1,668
)
  
(63
)
Purchase of property and equipment
   
(2,315
)
  
(842
)
Proceeds from sale of property and equipment
    
96
   
-
  
Investment in structured notes
    
(20,000
)
  
-
  
Proceeds from structured notes called by the banks
    
10,000
   
-
  
Investment in long-term marketable securities
    
(56,009
)
  
(11,046
)
Payment for acquisition of Ai-Logix
    
(10,000
)
  
-
  
           
Net cash used in investing activities
    
(112,947
)
  
(7,982
)
               
Cash flows from financing activities:
              
Issuance costs for senior convertible notes
    
(84
)
  
-
 
Proceeds from issuance of shares upon exercise of options and employee stock purchase plan
    
3,918
   
296
 
           
Net cash provided by financing activities
    
3,834
   
296
 
               
Decrease in cash and cash equivalents
    
(95,875
)
  
(4,282
)
Cash and cash equivalents at the beginning of the period
    
166,832
   
75,239
 
               
Cash and cash equivalents at the end of the period
  
$
70,957
  
$
70,957
  
               


 
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