EX-99.1 2 v191685_ex1.htm

Exhibit 1

PRESS RELEASE

Company Contacts		IR Agency Contact
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	Erik Knettel, Grayling Tel: +1-646-284-9415 erik.knettel@grayling.com

AudioCodes Reports Second Quarter 2010 Financial Results

Lod, Israel – July 28, 2010 – AudioCodes Ltd. (NasdaqGS: AUDC), a leading provider of Voice over IP (VoIP) technologies and Voice Network products, today announced financial results for the second quarter 2010, ended June 30, 2010.

Revenues for the second quarter 2010 were $36.5 million compared to $34.8 million for the first quarter of 2010 and $30.4 million for the second quarter of 2009.

Net income in accordance with U.S. generally accepted accounting principles (GAAP) was $2.1 million, or $0.05 per share, for the second quarter of 2010 compared to GAAP net income of $1.7 million, or $0.04 per share, for the first quarter of 2010, and a GAAP net loss of $1.1 million, or ($0.03) per share, for the second quarter of 2009.

Non-GAAP net income for the second quarter of 2010 was $2.8 million, or $0.07 per diluted share, compared to $2.5 million, or $0.06 per diluted share, for the first quarter of 2010 and $614,000, or $0.02 per diluted share, for the second quarter of 2009.

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

Second Quarter 2010 Financial Results Page 1 of 9

During the second quarter of 2010, AudioCodes generated $1.6 million in cash from operating activities compared to $3.4 million in the second quarter of 2009.

Cash and cash equivalents, short-term and long-term deposits and short-term marketable securities were $54.5 million as of June 30, 2010, compared to $54.7 million as of March 31, 2010 and $114.9 million as of June 30, 2009. The year-over-year decline in this amount was attributable to the repurchase of approximately $73.1 million in principal amount of the Company’s Senior Convertible Notes in the fourth quarter of 2009, offset, in part, by cash provided by operating activities.

“We are pleased to report another sequential quarter of growing revenues and earnings. The strength of our second quarter 2010 financial results were highlighted by double-digit year-over-year top line growth, a 22.2 percent improvement in GAAP net income compared to the first quarter of 2010 and continued positive cash flows from operations.  Building on our efforts in past quarters, our focus on partnering with world leading solution partners and continued investment in growing our global network of value add resellers is proving itself,” said Shabtai Adlersberg, Chairman of the Board, President and CEO of AudioCodes. “While we generally enjoyed good industry activity across our core networking business, we also experienced increased activity in the Mobile VoIP area and in SIP Trunking and Session Border Controller applications for the enterprise market segment where we achieved more wins and success compared to previous quarters. These market activities are expanding our addressable markets and should support continued growth in 2010 and beyond,” concluded Shabtai Adlersberg.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 9:00 A.M., Eastern Time on July 28, 2010 to discuss the Company’s second 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

Second Quarter 2010 Financial Results Page 2 of 9

About AudioCodes

AudioCodes Ltd. (NasdaqGS: 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

Second Quarter 2010 Financial Results Page 3 of 9

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

		June 30,				December 31,
		2010				2009
		(Unaudited)				(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	41,029			$	38,969
Short-term bank deposits			13,516				13,902
Trade receivables, net			24,836				18,522
Other receivables and prepaid expenses			4,102				2,754
Deferred tax assets			1,053				1,053
Inventories			15,066				13,516
Total current assets			99,602				88,716
LONG-TERM INVESTMENTS:
Investments in companies			1,530				1,510
Deferred tax assets			1,174				1,174
Severance pay funds			12,930				12,235
Total long-term investments			15,634				14,919
PROPERTY AND EQUIPMENT, NET			4,333				4,956
GOODWILL, INTANGIBLE ASSETS, DEFERRED CHARGES AND OTHER, NET			38,174				38,942
Total assets		$	157,743			$	147,533
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term bank loans		$	6,000			$	6,000
Trade payables			14,110				8,609
Other payables and accrued expenses			22,594				19,550
Total current liabilities			42,704				34,159
LONG-TERM LIABILITIES:
Accrued severance pay		$	13,767			$	13,336
Long-term bank loans			12,750				15,750
Senior convertible notes			353				403
Other payables			1,118				-
Total Long-Term liabilities			27,988				29,489
Total equity			87,051				83,885
Total liabilities and equity		$	157,743			$	147,533

Second Quarter 2010 Financial Results Page 4 of 9

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

In thousands, except share and per share data

		Six months ended								Three months ended
		June 30,								June 30,
		2010				2009				2010				2009
		(Unaudited)								(Unaudited)
Revenues		$	71,282			$	59,654			$	36,478			$	30,357
Cost of revenues			31,831				26,565				16,260				13,657
Gross profit			39,451				33,089				20,218				16,700
Operating expenses:
Research and development, net			15,086				15,452				7,730				7,241
Selling and marketing			16,212				16,340				8,148				7,726
General and administrative			4,031				3,926				2,063				1,873
Total operating expenses			35,329				35,718				17,941				16,840
Operating income (loss)			4,122				(2,629	)			2,277				(140	)
Financial expenses, net			201				1,598				122				884
Income (loss) before taxes on income			3,921				(4,227	)			2,155				(1,024	)
Income taxes, net			134				130				68				78
Equity in losses of an affiliated companies			-				51				4				11
Net income (loss)		$	3,787			$	(4,408	)		$	2,083			$	(1,113	)
Net loss attributable to non-controlling Interest			111				209				20				30
Net income (loss) attributable to AudioCodes		$	3,898			$	(4,199	)		$	2,103			$	(1,083	)
Basic net earnings (loss) per share		$	0.10			$	(0.10	)		$	0.05			$	(0.03	)
Diluted net earnings (loss) per share		$	0.10			$	(0.10	)		$	0.05			$	(0.03	)
Weighted average number of shares used in computing basic net earnings per share (in thousands)			40,369				40,182				40,437				40,182
Weighted average number of shares used in computing diluted net earnings per share (in thousands)			40,772				40,182				40,813				40,182

Second Quarter 2010 Financial Results Page 5 of 9

AUDIOCODES LTD. AND ITS SUBSIDIARIES

NON-GAAP PROFORMA STATEMENTS OF OPERATIONS

In thousands, except share and per share data

		Six months ended								Three months ended
		June 30,								June 30,
		2010				2009				2010				2009
		(Unaudited)								(Unaudited)
Revenues		$	71,282			$	59,654			$	36,478			$	30,357
Cost of revenues (1) (2)			31,175				25,869				15,932				13,311
Gross profit			40,107				33,785				20,546				17,046
Operating expenses:
Research and development, net (1)			14,886				15,119				7,634				7,081
Selling and marketing (1) (2)			15,756				15,665				7,920				7,399
General and administrative (1)			3,825				3,804				1,960				1,817
Total operating expenses			34,467				34,588				17,514				16,297
Operating income (loss)			5,640				(803	)			3,032				749
Financial expenses, net (3)			201				11				122				46
Income (loss) before taxes on income			5,439				(814	)			2,910				703
Income taxes, net			134				130				68				78
Equity in losses of an affiliated companies			-				51				4				11
Net income (loss)		$	5,305			$	(995	)		$	2,838			$	614
Net loss attributable to non-controlling Interest			111				209				20				30
Net income (loss) attributable to AudioCodes		$	5,416			$	(786	)		$	2,858			$	644
Diluted net earnings (loss) per share		$	0.13			$	(0.02	)		$	0.07			$	0.02
Weighted average number of shares used in computing diluted net earnings per share (in thousands)			41,008				40,182				41,036				40,206

(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.

Second Quarter 2010 Financial Results Page 6 of 9

AUDIOCODES LTD. AND ITS SUBSIDIARIES

RECONCILIATION BETWEEN GAAP NET INCOME AND NON-GAAP NET INCOME

In thousands, except per share data

		Six months ended								Three months ended
		June 30,								June 30,
		2010				2009				2010				2009
		(Unaudited)								(Unaudited)
GAAP net income (loss)		$	3,787			$	(4,408	)		$	2,083			$	(1,113	)
GAAP net income (loss) per share		$	0.10			$	(0.11	)		$	0.05			$	(0.03	)
Cost of revenues:
Stock-based compensation (1)			39				70				19				34
Amortization expenses (2)			617				626				309				312
			656				696				328				346
Research and development, net:
Stock-based compensation (1)			200				333				96				160
Selling and marketing:
Stock-based compensation (1)			305				499				152				239
Amortization expenses (2)			151				176				76				88
			456				675				228				327
General and administrative:
Stock-based compensation (1)			206				122				103				56
Financial expenses:
FSP APB 14-1 adjustment (3)			-				1,587				-				838
Non-GAAP net income (loss)		$	5,305			$	(995	)		$	2,838			$	614
Non-GAAP Diluted net income (loss) per share		$	0.13			$	(0.02	)		$	0.07			$	0.02

(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 as well 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.

Second Quarter 2010 Financial Results Page 7 of 9

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands

		Six months ended								Three months ended
		June 30,								June 30,
		2010				2009				2010				2009
		( Unaudited)				( Unaudited)				( Unaudited)				( Unaudited)
Cash flows from operating activities:
Net income		$	3,787			$	(4,408	)		$	2,083			$	(1,113	)
Adjustments required to reconcile net income to net cash provided by operating activities:							-								-
Depreciation and amortization			2,024				2,647				991				1,286
Amortization of marketable securities premiums and accretion of discounts, net			-				84				-				89
Equity in losses of affiliated companies and interest on loans to affiliated company			(20	)			51				(7	)			11
Decrease in accrued severance pay, net			(264	)			(415	)			(521	)			(277	)
Stock-based compensation expenses			750				1,024				370				489
Amortization of senior convertible notes discount and deferred charges			-				1,648				-				868
Increase in accrued interest on marketable securities, bank deposits and structured notes			-				(449	)			-				(214	)
Decrease (increase) in trade receivables, net			(6,314	)			8,574				(3,650	)			334
Decrease (increase) in other receivables and prepaid expenses			(1,446	)			(166	)			145				1,497
Decrease (increase) in inventories			(1,550	)			1,299				(579	)			2,788
Increase (decrease) in trade payables			5,501				(835	)			656				(1,436	)
Increase (decrease) in other payables and accrued expenses			2,400				(5,588	)			2,122				(882	)
Net cash provided by operating activities			4,868				3,466				1,610				3,440
Cash flows from investing activities:
Proceeds of marketable securities			-				1,000				-				1,000
Proceeds from sale of short-term deposits			30,126				21,705				16,224				10,206
Investment in affiliated companies			-				(249	)			-				(149	)
Purchase of property and equipment			(633	)			(769	)			(304	)			(429	)
Investment in short-term deposits			(29,740	)			(34,018	)			(13,516	)			(18,205	)
Net cash provided by (used in) investing activities			(247	)			(12,331	)			2,404				(7,577	)

Second Quarter 2010 Financial Results Page 8 of 9

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

U.S. dollars in thousands

		Six months ended								Three months ended
		June 30,								June 30,
		2010				2009				2010				2009
		( Unaudited)				( Unaudited)				( Unaudited)				( Unaudited)
Cash flows from financing activities:
Bank loan refund			(3,000	)			(3,000	)			(1,500	)			(1,500	)
Payment of acquisition of NSC			(74	)			-				(74	)			-
Proceeds from issuance of shares upon exercise of options, warrants and employee stock purchase plan			513				-				128				-
Net cash used in financing activities			(2,561	)			(3,000	)			(1,446	)			(1,500	)
Increase (decrease) in cash and cash equivalents			2,060				(11,865	)			2,568				(5,637	)
Cash and cash equivalents at the beginning of the period			38,969				36,779				38,461				30,551
Cash and cash equivalents at the end of the period		$	41,029			$	24,914			$	41,029			$	24,914

Second Quarter 2010 Financial Results Page 9 of 9