UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the Month of August, 2014
Commission file number 0-30070
AUDIOCODES LTD.
(Translation of registrant’s name
into English)
1 Hayarden Street • Airport City,
Lod 7019900 • ISRAEL
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ý Form 40-F
¨
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1)
only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Note: Regulation S-T Rule 101(b)(7)
only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on
which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to
be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on EDGAR.
The following documents are attached hereto
and incorporated by reference herein:
| Exhibit 99.1. | Interim Condensed Consolidated Financial Statements as
of June 30, 2014. |
| Exhibit 99.2. | Operating Results and Financial Review in connection
the Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2014. |
The Interim Condensed Consolidated Financial
Statements of AudioCodes Ltd. as of June 30, 2014 attached as Exhibit 99.1 and the Operating Results and Financial Review in connection
with the Interim Condensed Consolidated Financial Statements of AudioCodes Ltd. for the six months ended June 30, 2014 attached
as Exhibit 99.2 to this Report on Form 6-K are hereby incorporated by reference into (i) the Registrant’s Registration Statement
on Form S-8, File No. 333-11894; (ii) the Registrant’s Registration Statement on Form S-8, File No. 333-13268; (iii) the
Registrant’s Registration Statement on Form S-8, File No. 333-105473; (iv) the Registrant’s Registration Statement
on Form S-8, File No. 333-144825; (v) the Registrant’s Registration Statement on Form S-8, File No. 333-160330; (vi) the
Registrant’s Registration Statement on Form S-8, File No. 333-170676; (vii) the Registrant’s Registration Statement
on Form S-8, File No. 333-190437; and (viii) the Registrant’s Registration Statement on Form F-3, File No. 333-193209.
SIGNATURE
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.
AUDIOCODES LTD.
(Registrant)
By: /s/
GUY AVIDAN
Guy Avidan
Chief Financial Officer
Dated: August 27, 2014
EXHIBIT INDEX
Exhibit
No. |
Description |
|
|
99.1 |
Interim Unaudited Condensed Consolidated Financial Statements of AudioCodes Ltd. as of June 30, 2014 |
|
|
99.2 |
Operating Results and Financial Review in connection with the Interim Condensed Consolidated Financial Statements of AudioCodes Ltd. for the six months ended June 30, 2014 |
Exhibit 99.1
AUDIOCODES LTD.
INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
AS OF JUNE 30, 2014
IN U.S. DOLLARS
UNAUDITED
INDEX
|
Page |
|
|
Interim Condensed Consolidated
Balance Sheets |
2 - 3 |
|
|
Interim Condensed Consolidated Statements of Operations |
4 |
|
|
Interim Condensed Consolidated Statements of Comprehensive Income (Loss) |
5 |
|
|
Interim Condensed Statements of Changes in Equity |
6 |
|
|
Interim Condensed Consolidated Statements of Cash Flows |
7 - 8 |
|
|
Notes to Interim Condensed Consolidated Financial Statements |
9 - 17 |
- - - - - - - - -
- -
INTERIM
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
| |
June 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
| |
Unaudited | | |
Audited | |
| |
| | |
| |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
CURRENT ASSETS: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 18,201 | | |
$ | 30,763 | |
Short-term and restricted bank deposits | |
| 8,101 | | |
| 9,101 | |
Short-term marketable securities and accrued interest | |
| 535 | | |
| 15,706 | |
Trade receivables (net of allowance for doubtful accounts of $ 2,363 (unaudited) and $ 2,347 at June 30, 2014 and December 31, 2013, respectively) | |
| 30,794 | | |
| 26,431 | |
Other receivables and prepaid expenses | |
| 6,220 | | |
| 3,922 | |
Deferred tax assets, net | |
| 2,283 | | |
| 2,277 | |
Inventories | |
| 14,045 | | |
| 13,811 | |
| |
| | | |
| | |
Total
current assets | |
| 80,179 | | |
| 102,011 | |
| |
| | | |
| | |
LONG-TERM ASSETS: | |
| | | |
| | |
Long-term and restricted bank deposits and accrued interest | |
| 5,382 | | |
| 6,697 | |
Long-term marketable securities | |
| 59,582 | | |
| - | |
Deferred tax assets, net | |
| 3,888 | | |
| 4,855 | |
Severance pay funds | |
| 19,579 | | |
| 19,549 | |
| |
| | | |
| | |
Total
long-term assets | |
| 88,431 | | |
| 31,101 | |
| |
| | | |
| | |
PROPERTY AND EQUIPMENT, NET | |
| 2,959 | | |
| 3,191 | |
| |
| | | |
| | |
INTANGIBLE ASSETS, NET | |
| 3,574 | | |
| 4,252 | |
| |
| | | |
| | |
GOODWILL | |
| 33,749 | | |
| 33,749 | |
| |
| | | |
| | |
Total
assets | |
$ | 208,892 | | |
$ | 174,304 | |
The accompanying notes are an integral
part of the interim condensed consolidated financial statements.
INTERIM
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except per
share data
| |
June 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
| |
Unaudited | | |
Audited | |
LIABILITIES AND EQUITY | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Short-term loan and current maturities of long-term bank loans | |
$ | 4,686 | | |
$ | 4,686 | |
Trade payables | |
| 7,761 | | |
| 7,215 | |
Senior convertible notes | |
| 53 | | |
| 353 | |
Other payables and accrued expenses | |
| 18,887 | | |
| 17,958 | |
Deferred revenues | |
| 9,872 | | |
| 6,940 | |
| |
| | | |
| | |
Total
current liabilities | |
| 41,259 | | |
| 37,152 | |
| |
| | | |
| | |
LONG-TERM LIABILITIES: | |
| | | |
| | |
Accrued severance pay | |
| 19,689 | | |
| 19,845 | |
Long-term banks loans | |
| 7,448 | | |
| 9,791 | |
Deferred revenues and other liabilities | |
| 2,839 | | |
| 2,707 | |
| |
| | | |
| | |
Total
long-term liabilities | |
| 29,976 | | |
| 32,343 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENT LIABILITIES | |
| | | |
| | |
| |
| | | |
| | |
EQUITY: | |
| | | |
| | |
Share capital - | |
| | | |
| | |
Ordinary shares of NIS 0.01 par value - | |
| | | |
| | |
Authorized: 100,000,000 shares at June 30, 2014 and December 31, 2013; Issued: 54,647,213 shares at June 30, 2014 and 50,090,696 shares at December 31, 2013; Outstanding: 43,290,506 shares at June 30, 2014 and 38,733,989 shares at December 31, 2013 | |
| 128 | | |
| 114 | |
Additional paid-in capital | |
| 234,406 | | |
| 201,248 | |
Treasury stock at cost- 11,356,707 shares as of June 30, 2014 and December 31, 2013 | |
| (35,768 | ) | |
| (35,768 | ) |
Accumulated deficit | |
| (61,109 | ) | |
| (60,785 | ) |
| |
| | | |
| | |
Total equity | |
| 137,657 | | |
| 104,809 | |
| |
| | | |
| | |
Total
liabilities and equity | |
$ | 208,892 | | |
$ | 174,304 | |
The accompanying notes are an integral
part of the interim condensed consolidated financial statements.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per
share data
| |
Six months ended June 30, | |
| |
2014 | | |
2013 | |
| |
Unaudited | |
Revenues: | |
| | | |
| | |
Products | |
$ | 57,917 | | |
$ | 53,712 | |
Services | |
| 15,600 | | |
| 12,243 | |
| |
| | | |
| | |
Total
revenues | |
| 73,517 | | |
| 65,955 | |
| |
| | | |
| | |
Cost of revenues: | |
| | | |
| | |
Products | |
| 26,193 | | |
| 24,706 | |
Services | |
| 3,961 | | |
| 3,104 | |
| |
| | | |
| | |
Total
cost of revenues | |
| 30,154 | | |
| 27,810 | |
| |
| | | |
| | |
Gross profit | |
| 43,363 | | |
| 38,145 | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Research and development, net | |
| 16,228 | | |
| 14,280 | |
Selling and marketing | |
| 22,895 | | |
| 18,956 | |
General and administrative | |
| 3,716 | | |
| 4,116 | |
| |
| | | |
| | |
Total
operating expenses | |
| 42,839 | | |
| 37,352 | |
| |
| | | |
| | |
Operating income | |
| 524 | | |
| 793 | |
Financial income (expenses), net | |
| 102 | | |
| (122 | ) |
| |
| | | |
| | |
Income before taxes on income | |
| 626 | | |
| 671 | |
Income tax expenses, net | |
| (950 | ) | |
| (138 | ) |
Equity in losses of affiliated company, net | |
| - | | |
| (21 | ) |
| |
| | | |
| | |
Net income (loss) | |
$ | (324 | ) | |
$ | 512 | |
| |
| | | |
| | |
Basic net earnings (loss) per share | |
$ | (0.01 | ) | |
$ | 0.01 | |
Diluted net earnings (loss) per share | |
$ | (0.01 | ) | |
$ | 0.01 | |
The accompanying notes are an integral
part of the interim condensed consolidated financial statements.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
U.S. dollars in thousands
| |
Six months ended June 30, | |
| |
2014 | | |
2013 | |
| |
Unaudited | |
| |
| | |
| |
Net income (loss) | |
$ | (324 | ) | |
$ | 512 | |
| |
| | | |
| | |
Other comprehensive income (“OCI”), related to: | |
| | | |
| | |
Gain on derivatives recognized in OCI | |
| - | | |
| 934 | |
Gain on derivatives (effective portion) recognized in income | |
| - | | |
| (891 | ) |
Other comprehensive income, related to unrealized gains on cash flow hedges | |
| - | | |
| 43 | |
| |
| | | |
| | |
Total comprehensive income (loss) | |
$ | (324 | ) | |
$ | 555 | |
The accompanying notes are an integral
part of the interim condensed consolidated financial statements.
INTERIM
CONDENSED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
| |
| | |
| | |
| | |
Accumulated | | |
| | |
| |
| |
| | |
Additional | | |
| | |
other | | |
| | |
| |
| |
Share | | |
paid-in | | |
Treasury | | |
comprehensive | | |
Accumulated | | |
Total | |
| |
capital | | |
capital | | |
stock | | |
income (loss) | | |
deficit | | |
equity | |
Balance as of December 31, 2012 (audited) | |
| 112 | | |
| 197,653 | | |
| (35,768 | ) | |
| 1,303 | | |
| (65,003 | ) | |
| 98,297 | |
Issuance of shares upon exercise of options (audited) | |
| 2 | | |
| 1,894 | | |
| - | | |
| - | | |
| - | | |
| 1,896 | |
Stock compensation related to options granted to employees (audited) | |
| - | | |
| 1,701 | | |
| - | | |
| - | | |
| - | | |
| 1,701 | |
Other comprehensive loss (audited) | |
| - | | |
| - | | |
| - | | |
| (1,303 | ) | |
| - | | |
| (1,303 | ) |
Net income (audited) | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4,218 | | |
| 4,218 | |
Balance as of December 31, 2013 (audited) | |
$ | 114 | | |
$ | 201,248 | | |
$ | (35,768 | ) | |
$ | - | | |
$ | (60,785 | ) | |
$ | 104,809 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of shares upon exercise of options (unaudited) | |
| 2 | | |
| 2,110 | | |
| - | | |
| - | | |
| - | | |
| 2,112 | |
Stock compensation related to options granted to employees (unaudited) | |
| - | | |
| 1,316 | | |
| - | | |
| - | | |
| - | | |
| 1,316 | |
Issuance of ordinary shares (unaudited) | |
| 12 | | |
| 29,732 | | |
| - | | |
| - | | |
| - | | |
| 29,744 | |
Net loss (unaudited) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (324 | ) | |
| (324 | ) |
Balance as of June 30, 2014 (unaudited) | |
$ | 128 | | |
$ | 234,406 | | |
$ | (35,768 | ) | |
$ | - | | |
$ | (61,109 | ) | |
$ | 137,657 | |
The accompanying notes are an integral
part of the interim condensed consolidated financial statements.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
| |
Six months ended June 30, | |
| |
2014 | | |
2013 | |
| |
Unaudited | |
Cash flows from operating activities: | |
| | | |
| | |
| |
| | | |
| | |
Net income (loss) | |
$ | (324 | ) | |
$ | 512 | |
Adjustments required to reconcile net income (loss) to net cash provided by operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 1,629 | | |
| 1,379 | |
Amortization of marketable securities premiums and accretion of discounts, net | |
| 195 | | |
| 192 | |
Equity in losses of affiliated companies, net and interest on loans to affiliate company | |
| - | | |
| 21 | |
Stock-based compensation expenses | |
| 1,316 | | |
| 717 | |
Decrease in accrued interest on loans, convertible notes, marketable securities, bank deposits and structured notes | |
| 159 | | |
| 52 | |
Decrease in deferred tax assets, net | |
| 961 | | |
| - | |
Increase in trade receivables, net | |
| (4,363 | ) | |
| (2,229 | ) |
Increase in other accounts receivable and prepaid expenses | |
| (2,364 | ) | |
| (736 | ) |
Decrease (increase) in inventories | |
| (234 | ) | |
| 3,331 | |
Increase (decrease) in trade payables | |
| 546 | | |
| (535 | ) |
Increase in other accounts payable and accrued expenses | |
| 953 | | |
| 726 | |
Increase in deferred revenues | |
| 3,273 | | |
| 3,200 | |
Increase (decrease) in accrued severance pay, net | |
| (186 | ) | |
| 114 | |
| |
| | | |
| | |
Net cash provided by operating activities | |
| 1,561 | | |
| 6,744 | |
The accompanying notes are
an integral part of the interim condensed consolidated financial statements.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
| |
Six months ended June 30, | |
| |
2014 | | |
2013 | |
| |
Unaudited | |
Cash flows from investing activities: | |
| | | |
| | |
| |
| | | |
| | |
Purchase of marketable securities | |
| (60,170 | ) | |
| - | |
Proceeds from redemption of marketable securities upon maturity | |
| 15,390 | | |
| 4,000 | |
Decrease (increase) short-term deposits | |
| 1,000 | | |
| (269 | ) |
Investment in affiliated company | |
| - | | |
| (1,211 | ) |
Proceeds from redemption of long-term bank deposits | |
| 1,381 | | |
| 1,312 | |
Purchase of property and equipment | |
| (719 | ) | |
| (673 | ) |
| |
| | | |
| | |
Net cash provided by (used in) investing activities | |
| (43,118 | ) | |
| 3,159 | |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
| |
| | | |
| | |
Repayment of senior convertible notes | |
| (285 | ) | |
| - | |
Repayment of long-term bank loans | |
| (2,343 | ) | |
| (5,343 | ) |
Consideration related to
acquisition of NSC non- controlling interest | |
| - | | |
| (515 | ) |
Proceeds from issuance of shares upon exercise of stock options and warrants | |
| 2,112 | | |
| 210 | |
Proceeds from issuance of shares,
net of issuance cost in the amount of $ 2,456 (unaudited) | |
| 29,744 | | |
| - | |
Consideration related to payment of acquisition of Mailvision | |
| (233 | ) | |
| - | |
| |
| | | |
| | |
Net cash provided by (used in) financing activities | |
| 28,995 | | |
| (5,648 | ) |
| |
| | | |
| | |
Increase (decrease) in cash and cash equivalents | |
| (12,562 | ) | |
| 4,255 | |
Cash and cash equivalents at the beginning of the period | |
| 30,763 | | |
| 15,219 | |
| |
| | | |
| | |
Cash and cash equivalents at the end of the period | |
$ | 18,201 | | |
$ | 19,474 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow activities: | |
| | | |
| | |
| |
| | | |
| | |
Cash paid during the period for income taxes | |
$ | 185 | | |
$ | 172 | |
| |
| | | |
| | |
Cash paid during the period for interest | |
$ | 229 | | |
$ | 320 | |
The accompanying notes are an integral
part of the interim condensed consolidated financial statements.
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
AudioCodes Ltd. (the "Company")
and its subsidiaries (together the "Group") design, develop and market products and services for voice, data and video
over IP networks to service providers and channels (such as distributors), OEMs, network equipment providers and systems integrators.
The Company operates through
its wholly-owned subsidiaries in the United States, Europe, Asia, Latin America and Israel.
| b. | The Group's major customer in the six months ended June 30, 2014, and 2013, accounted for 14.3%
(unaudited) and 17.7% (unaudited) of the Group's revenues in those periods, respectively. No other customer accounted for more
than 10% of the Group's revenues in those periods. |
| c. | Asset Purchase Agreement with Mailvision Ltd ("Mailvision"): |
In April 2013, the Company entered
into an asset purchase agreement with Mailvision, an Israeli company which develops, markets and licenses VoIP solutions for mobile,
PC and tablet devices for telecom operators and service providers, in which the Company held 29.2% of the outstanding share capital.
Pursuant to the agreement, in May 2013, the Company acquired certain assets and assumed certain liabilities of Mailvision.
The purchase agreement
provides that, under certain limited circumstances, if the Company were to sell the acquired assets and assumed liabilities
of Mailvision to a third party prior to May 2014, the proceeds from such sale in excess of a specified amount would be
payable to Mailvision, and, if the purchase price offered by a third party prior to May 2014 exceeds a specified amount,
subject to a number of conditions, the Company would be required to sell the acquired assets and assumed liabilities (the
"Sale Option"). In May 2014, the Sale Option expired. In addition, the Company paid the liability with respect to
the commitment for future payment in the amount of $ 233 (unaudited). (See also Note 5 for changes in the fair value of
contingent consideration liabilities related to Mailvision's acquisition).
| d. | The Group is dependent upon sole source suppliers for certain key components used in its products,
including certain digital signal processing chips. Although there are a limited number of manufacturers of these particular components,
management believes that other suppliers could provide similar components at comparable terms. A change in suppliers, however,
could cause a delay in manufacturing and a possible loss of sales, which could adversely affect the operating results of the Group
and its financial position. |
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES |
The significant
accounting policies applied in the annual financial statements of the Company as of December 31, 2013, are applied consistently
in these financial statements. For further information refer to the consolidated financial statements as of December 31, 2013.
| a. | Interim financial statements: |
The interim
condensed consolidated balance sheet as of June 30, 2014 and the related interim condensed consolidated statements of operations,
comprehensive income (loss) and cash flows for the six months ended June 30, 2014 and 2013, and the statement of equity for the
six months ended June 30, 2014, are unaudited. This unaudited information has been prepared by the Company in accordance with accounting
principles generally accepted in the United States of America ("U.S. GAAP") for interim financial statements, and on
the same basis as the audited annual consolidated financial statements and in management's opinion, reflects all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of the financial information, in accordance with generally
accepted accounting principles, for interim financial reporting for the periods presented and accordingly, they do not include
all of the information and footnotes required by generally accepted accounting principles for audited financial statements. However,
the Company believes that the disclosures are adequate to make the information presented not misleading. These Interim Condensed
Consolidated Financial Statements should be read in conjunction with the 2013 Annual Consolidated Financial Statements and the
notes thereto. The Interim Condensed Consolidated Balance Sheet Data as of December 31, 2013 was derived from the 2013 Annual Consolidated
Financial Statements, but does not include all disclosures required by U.S. GAAP.
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and
assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company's management
believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they
are made. As applicable to these interim condensed consolidated financial statements, the most significant estimates and
assumptions relate to revenue recognition and allowance for sales returns, allowance for doubtful accounts, inventories,
intangible assets, goodwill, income taxes and valuation allowance, stock-based compensation and contingent liabilities and
certain liabilities related to the acquisition of Mailvision. Actual results could differ from those estimates.
| c. | New accounting guidance recently adopted: |
In July 2013,
the Financial Accounting Standards Board ("FASB") issued ASU 2013-11, Topic 740, " Income Taxes", which limits
the situations in which unrecognized tax benefits are offset against a deferred tax asset for a net operating loss carryforward,
similar tax loss or tax credit carryforward. The relevant presentation and disclosures have been applied retrospectively for all
periods presented.
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| d. | Impact of recently issued accounting standard not yet
adopted: |
In May 2014,
the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) "Revenue from Contracts with Customers." ASU 2014-09
supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize
revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning
after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Company is
currently in the process of evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements.
| NOTE 3:- | MARKETABLE SECURITIES AND ACCRUED INTEREST |
The following is a summary of
held to maturity marketable securities:
| |
December 31, 2013 | |
| |
Amortized | | |
Unrealized | | |
Fair | |
| |
cost | | |
gains | | |
Value | |
| |
Audited | |
Corporate debentures: | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Maturing within one year | |
$ | 15,438 | | |
$ | 35 | | |
$ | 15,473 | |
Accrued interest | |
| 268 | | |
| - | | |
| 268 | |
| |
| | | |
| | | |
| | |
| |
$ | 15,706 | | |
$ | 35 | | |
$ | 15,741 | |
| |
June 30, 2014 | |
| |
Amortized | | |
Unrealized | | |
Unrealized | | |
Fair | |
| |
cost | | |
gains | | |
losses | | |
Value | |
| |
Unaudited | |
Corporate debentures: | |
| | | |
| | | |
| | | |
| | |
Maturing between one to five years | |
$ | 59,582 | | |
$ | 27 | | |
$ | (220 | ) | |
$ | 59,389 | |
Accrued interest | |
| 535 | | |
| - | | |
| - | | |
| 535 | |
| |
| | | |
| | | |
| | | |
| | |
| |
$ | 60,117 | | |
$ | 27 | | |
$ | (220 | ) | |
$ | 59,924 | |
These investments were issued
by highly rated corporations. Accordingly, it is expected that the securities would not be settled at a price less than the amortized
cost of the Company's investment. As of June 30, 2014 and December 31, 2013, the Group did not have any investment in marketable
securities that was in an unrealized loss position for twelve months period or greater. Since the Company had the ability and intent
to hold these investments until an anticipated recovery of fair value, which may be until maturity, the Company did not consider
these investments to be other-than-temporarily impaired as of June 30, 2014. Unrealized gains (losses) are valued using alternative
pricing sources and models utilizing market observable inputs.
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
| |
June 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
| |
Unaudited | | |
Audited | |
| |
| | | |
| | |
Raw materials | |
$ | 6,417 | | |
$ | 5,931 | |
Finished products | |
| 7,628 | | |
| 7,880 | |
| |
| | | |
| | |
| |
$ | 14,045 | | |
$ | 13,811 | |
In the six months ended June
30, 2014 and 2013, the Group wrote-off inventories in a total amount of $ 60 (unaudited) and $ 561 (unaudited), respectively.
| NOTE 5:- | FAIR VALUE MEASUREMENTS |
In accordance
with ASC No. 820, the Group measures its foreign currency derivative instruments, its contingent consideration to NSC's former
shareholders and its contingent consideration to Mailvision, at fair value. Investments in foreign currency derivative instruments
are classified within Level 2 value hierarchy. This is because these assets are valued using alternative pricing sources and models
utilizing market observable inputs. The contingent consideration to NSC's former shareholders and the Earn Out and the Sale Option
provided to Mailvision are classified within Level 3 value hierarchy because these liabilities are based on present value calculations
and an external valuation models whose inputs include market interest rates, estimated operational capitalization rates and volatilities.
Unobservable inputs used in these models are significant.
The Group's
financial assets and liabilities measured at fair value on a recurring basis, consisted of the following types of instruments as
of the following dates:
| |
December 31, 2013 | |
| |
Fair value measurements using input type | |
| |
Level 2 | | |
Level 3 | | |
Total | |
| |
Audited | |
| |
| | |
| | |
| |
Contingent consideration related to Mailvision's acquisition | |
$ | - | | |
$ | (556 | ) | |
$ | (556 | ) |
| |
| | | |
| | | |
| | |
Total Financial liability | |
$ | - | | |
$ | (556 | ) | |
$ | (556 | ) |
| |
June 30, 2014 | |
| |
Fair value measurements using input type | |
| |
Level 2 | | |
Level 3 | | |
Total | |
| |
Unaudited | |
Contingent consideration related to Mailvision's acquisition | |
$ | - | | |
$ | (459 | ) | |
$ | (459 | ) |
| |
| | | |
| | | |
| | |
Total Financial liability | |
$ | - | | |
$ | (459 | ) | |
$ | (459 | ) |
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
| NOTE 5:- | FAIR VALUE MEASUREMENTS (Cont.) |
Fair
value measurements using significant unobservable inputs (Level 3):
Balance at January 1, 2014 (audited) | |
$ | (556 | ) |
Adjustment due to time change value (unaudited) | |
| 97 | |
| |
| | |
Balance at June 30, 2014 (unaudited) | |
$ | (459 | ) |
| NOTE 6:- | SENIOR CONVERTIBLE NOTES |
In November
2004, the Company issued an aggregate of $ 125,000 principal amount of its 2% Senior Convertible Notes due November 9,
2024 (the "Notes"). As of December 31, 2013, there was $ 353 (audited) in principal amount of the Notes outstanding.
In January 2014, the Company repurchased Notes in the principal amount of $300 (unaudited).
| NOTE 7:- | COMMITMENTS AND CONTINGENT LIABILITIES |
The Company's
facilities are rented under several lease agreements in Israel, Europe and the U.S. for periods ending in 2024.
As of June
30, 2014, future minimum rental commitments under non-cancelable operating leases are as follows:
Year ending June 30, | |
| |
| |
Unaudited | |
2015 | |
$ | 6,708 | |
2016 | |
| 6,442 | |
2017 | |
| 6,571 | |
2018 | |
| 6,414 | |
2019 and on | |
| 33,571 | |
| |
| | |
Total minimum lease payments *) | |
$ | 59,706 | |
| *) | Minimum payments have been reduced by minimum sublease rental of $ 1,218 (unaudited) due in
the future under non-cancelable subleases. |
In connection
with the Company's offices lease agreement in Israel, the lessor has a lien of approximately $ 5,500 (unaudited) which is
included in short-term and restricted bank deposits.
Rent expenses
for the six months ended June 30, 2014 and 2013, were approximately $ 3,150 (unaudited) and $ 2,591 (unaudited), respectively.
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
| NOTE 8:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
The Company
is obligated under certain agreements with its suppliers to purchase specified items of excess inventory. Non-cancelable obligations
as of June 30, 2014, were $ 13,547 (unaudited).
| c. | Royalty commitment to the Office of the Chief Scientist of the Israeli Ministry of Economy ("OCS"): |
As of June
30, 2014 and December 31, 2013 , the Company and its Israeli subsidiaries have a contingent obligation to pay royalties in the
amount of $ 36,058 (unaudited) and $ 34,034 (audited), respectively.
As of June
30, 2014 and December 31, 2013, the Company and its Israeli subsidiaries have paid or accrued royalties to the OCS in the amount
of $ 2,733 (unaudited) and $ 2,408 (audited), respectively, which was recorded as cost of revenues.
| 1. | In January 2013, one of the Company’s former senior executives sent a letter of demand claiming
an amount of NIS 4 million (approximately $ 1,200) relating to the termination of his employment (the "Letter").
The Company has denied his allegations and believes that it has valid defenses to this claim. In May 2014, the former senior executive
filed a claim to court with similar allegations to those described in the Letter. The Company believes it has good grounds to contest
the claim. At this early stage, the Company cannot predict the outcome of this claim. |
| 2. | In February 2013, a patent infringement action was commenced against AudioCodes Inc. and other
defendants, in Federal Court in California alleging that AudioCodes Inc. infringed the plaintiff’s intellectual property
rights in one patent. One of the other defendants is a customer of the Group that has informed the Group that it believes it is
entitled to indemnification from the Group with respect to this litigation. AudioCodes Inc. has filed an answer to the complaint
and the parties have exchanged a first set of discovery requests. The parties are currently negotiating a settlement. The Group
recorded an appropriate provision for this claim. |
| 3. | In May 2013, the Company received letters from two of its customers who have been sued for alleged
patent infringement. The customers may seek to be indemnified by the Company. At this early stage, the Company cannot predict the
outcome of these demands. |
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
| NOTE 8:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
| 4. | In October 2013, the Company filed a claim against a customer and one of its employees in Hong
Kong for damages in connection with a breach of a supply agreement, infringement of intellectual property and breach of confidentiality.
In January 2014, a counterclaim was filed by that customer against the Company for an indeterminate amount. At this early stage,
the Company cannot predict the outcome of this counterclaim. |
| 5. | In November 2013, a former employee filed a claim against the Company’s subsidiary in Brazil
alleging that he is entitled to approximately $ 600 as a result of the termination of his employment by the subsidiary. The Group
believes that it has valid defenses to the claim and a provision is not required. |
| 6. | In February 2014, the Company received a letter offering a license to some or all of the patent
portfolio of the demanding Company (suggesting alleged infringement of patents if a license is not obtained). At this early stage,
the Company cannot predict the outcome of these demands. |
| NOTE 9:- | SHAREHOLDERS EQUITY |
Issuance
of ordinary shares:
On March 10,
2014, the Company sold in a public offering 4,025,000 (unaudited) of its ordinary shares, including 525,000 (unaudited) shares
sold pursuant to the underwriters’ full exercise of their over-allotment option, at a price of $ 8.00 per share. The Company’s
net proceeds from this offering were approximately $ 29,744 (unaudited), after deducting underwriting discounts, commissions and
other offering expenses in the total amount of $ 2,456 (unaudited).
| NOTE 10:- | BASIC AND DILUTED NET EARNINGS (LOSS) PER SHARE |
| |
Six months ended June 30, | |
| |
2014 | | |
2013 | |
| |
Unaudited | |
Numerator: | |
| | | |
| | |
| |
| | | |
| | |
Net earnings (loss) available to ordinary shareholders | |
$ | (324 | ) | |
$ | 512 | |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
| |
| | | |
| | |
Denominator for basic earnings per share - weighted average number of ordinary shares, net of treasury stock | |
| 41,599,731 | | |
| 38,034,532 | |
Effect of dilutive securities: | |
| | | |
| | |
Employee stock options | |
| *)- | | |
| 580,560 | |
Senior convertible notes | |
| **)- | | |
| *)- | |
| |
| | | |
| | |
Denominator for diluted net earnings per share - adjusted weighted average number of shares | |
| 41,599,731 | | |
| 38,615,092 | |
**)
Insignficant.
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
| NOTE 11:- | DERIVATIVE INSTRUMENTS |
As of June
30, 2014 and December 31, 2013, there was no deferred gain associated with cash flow hedges recorded in other comprehensive
income.
The Group
entered into forward contracts to hedge the fair value of assets denominated in New Israeli Shekels that did not meet the requirement
for hedge accounting. The Group measured the fair value of the contracts in accordance with ASC No. 820 at level 2. The net gain
(loss) recognized in "financial and other expenses, net" during the six months ended June 30, 2014 and 2013 was $ 165
(unaudited) and $ (58) (unaudited), respectively.
As of June
30, 2014 and December 31, 2013, the Group did not hold any outstanding foreign exchange forward or option collar (cylinder).
The effect of derivative instruments
in cash flow hedging relationship on income for the six months ended June 30, 2013 is $ 934 (unaudited) gain recognized in OCI
and $ 891 (unaudited) gain recognized in income as a decrease to operating expenses (effective portion).
| NOTE 12:- | GEOGRAPHIC INFORMATION |
| a. | Summary information about geographic areas: |
The Group
manages its business on a basis of one reportable segment (see Note 1 for a brief description of the Group's business). The data
is presented in accordance with ASC 280, "Segment Reporting". Revenues in the table below are attributed to geographical
areas based on the location of the end customers.
The following
presents total revenues for the six months ended June 30, 2014 and 2013.
| |
Six months ended June 30, | |
| |
2014 | | |
2013 | |
| |
Unaudited | |
| |
| | |
| |
Israel Israel | |
$ | 4,483 | | |
$ | 3,858 | |
Americas | |
| 37,170 | | |
| 34,629 | |
Europe | |
| 21,093 | | |
| 17,572 | |
Far East | |
| 10,771 | | |
| 9,896 | |
| |
| | | |
| | |
| |
$ | 73,517 | | |
$ | 65,955 | |
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
| NOTE 12:- | GEOGRAPHIC INFORMATION (Cont.) |
The following
presents long-lived assets as of June 30, 2014 and December 31, 2013.
| |
June 30, 2014 | | |
December 31,
2013 | |
| |
Unaudited | | |
Audited | |
| |
| | |
| |
Israel | |
$ | 2,746 | | |
$ | 2,941 | |
Americas | |
| 126 | | |
| 147 | |
Europe | |
| 54 | | |
| 74 | |
Far East | |
| 33 | | |
| 29 | |
| |
| | | |
| | |
| |
$ | 2,959 | | |
$ | 3,191 | |
Total revenues
from external customers divided on the basis of the Company's product lines are as follows:
| |
Six months ended June 30, | |
| |
2014 | | |
2013 | |
| |
Unaudited | |
| |
| | |
| |
Technology | |
$ | 9,414 | | |
$ | 10,454 | |
Networking | |
| 64,103 | | |
| 55,501 | |
| |
| | | |
| | |
| |
$ | 73,517 | | |
$ | 65,955 | |
|
NOTE 13:- |
SUBSEQUENT EVENT |
In
August 2014, the Company’s Board of Directors approved a share repurchase plan pursuant to which the Company is authorized
to repurchase up to $ 3,000 of the Company's ordinary shares. In addition, the Company intends to apply to the court in Israel
for authorization to repurchase an additional amount of ordinary shares for an aggregate purchase price of between $ 10,000 to
$ 15,000.
- -
- - - - - - - - - - - - - - - - - - -
Exhibit 99.2
OPERATING RESULTS AND FINANCIAL REVIEW
IN CONNECTION WITH THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2014.
The following discussion and analysis
should be read in conjunction with our interim condensed consolidated financial statements as of and for the six months ended June
30, 2014, appearing elsewhere in this Form 6-K, our audited consolidated financial statements and other financial information for
the year ended December 31, 2013 appearing in our Annual Report on Form 20-F for the year ended December 31, 2013 and Item 5—"Operating
and Financial Review and Prospects" of that Annual Report.
Statements in this Report on Form 6-K concerning
our business outlook or future economic performance; anticipated revenues, expenses or other financial items; 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 the United States 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. Factors that could cause or contribute to such differences include,
but are not limited to, those set forth under “Risk Factors” in our Annual Report on Form 20-F for the year ended December
31, 2013, as well as those discussed elsewhere in that Annual Report and in our other filings with the Securities and Exchange
Commission.
Overview
We design, develop
and sell advanced voice over IP, or VoIP, and converged VoIP and data networking products and applications to service providers
and enterprises. We are a VoIP technology leader focused on VoIP communications, applications and networking elements. Our products
are deployed globally in broadband, mobile, cable, and enterprise networks. We provide a range of innovative, cost-effective products
including media gateways, multi-service business gateways, residential gateways, IP phones, media servers, session border controllers,
and value-added applications. Our underlying technology, VoIPerfectHD, relies primarily on our leadership in digital signal processing,
or DSP, voice coding and voice processing technologies. Our high definition (“HD”) VoIP technologies and products provide
enhanced intelligibility and a better end user communication experience in emerging voice networks.
Our headquarters and
research and development facilities are located in Israel with research and development extensions in the U.S., China and U.K.
We have other offices located in Europe, the Far East, and Latin America.
The identities of
our principal customers have changed and we expect that they will continue to change, from year to year. Historically, a substantial
portion of our revenue has been derived from large purchases by a limited number of original equipment manufacturers, or OEMs,
and network equipment providers, or NEPs, systems integrators and distributors. ScanSource Communications, our largest customer,
accounted for 14.3% of our revenues in the six months ended June 30, 2014 and 17.7% of our revenues in the same period in 2013.
Our top five customers accounted for 32.5% of our revenues in the six months ended June 30, 2014 and 34.1% of our revenues in the
same period in 2013. If we lose a large customer and fail to add new customers to replace lost revenue, our operating results may
be materially adversely affected.
Revenues based on
the location of our customers for the six months ended September 30, 2013 and 2014 are as follows:
| |
Six Months Ended June 30, | |
| |
2014 | | |
2013 | |
Americas | |
| 50.5 | % | |
| 52.5 | % |
Far East | |
| 14.7 | | |
| 15.0 | |
Europe | |
| 28.7 | | |
| 26.6 | |
Israel | |
| 6.1 | | |
| 5.9 | |
Total | |
| 100.0 | % | |
| 100.0 | % |
In March 2014,
we sold in a public offering 4,025,000 of our ordinary shares, including 525,000 shares sold pursuant to the exercise in full of
an over-allotment option granted to the underwriters, at a purchase price of $8.00 per share. Our net proceeds from this offering
were approximately $29.7 million, after deducting underwriting commissions and other offering expenses.
In April, 2014, the
Israeli Office of the Chief Scientist (OCS) has approved in principle a three-year program (2014-2016) for approximately NIS100
million (equal to approximately $29 million) to enable us to establish an advanced innovative research and development center for
cloud computing technologies and Unified Communications. The new research and development center is expected to increase its staff
to 100 engineers by 2016. We expect that a significant portion of the cost of this project will be reimbursed to us through grants
from the Office of the Chief Scientist pursuant to this program. The grants are subject to conditions relating to grants by the
Office of the Chief Scientist. Funding for the whole term of the program is subject to the continued review and approval of the
progress of the project by the Office of the Chief Scientist.
Results of Operations
The following table
sets forth the percentage relationships of certain items from our consolidated statements of operations, as a percentage of total
revenues for the periods indicated:
| |
Six Months Ended June 30, | |
Statement of Operations Data: | |
2014 | | |
2013 | |
| |
| | |
| |
Revenues | |
| 100.0 | % | |
| 100.0 | % |
Cost of revenues | |
| 41.0 | | |
| 42.2 | |
Gross profit | |
| 59.0 | | |
| 57.8 | |
Operating expenses: | |
| | | |
| | |
Research and development, net | |
| 22.1 | | |
| 21.7 | |
Selling and marketing | |
| 31.1 | | |
| 28.7 | |
General and administrative | |
| 5.1 | | |
| 6.2 | |
Total operating expenses | |
| 58.3 | | |
| 56.6 | |
| |
| | | |
| | |
Operating income | |
| 0.7 | | |
| 1.2 | |
Financial income (expenses), net | |
| 0.2 | | |
| (0.2 | ) |
Income before taxes on income | |
| 0.9 | | |
| 1.0 | |
Income tax expense | |
| (1.3 | ) | |
| (0.2 | ) |
Equity in losses of affiliated companies, net | |
| 0.0 | | |
| 0.0 | |
| |
| | | |
| | |
Net income (loss) | |
| (0.4 | )% | |
| 0.8 | % |
Revenues. Revenues
increased 11.5% to $73.5 million in the six months ended June 30, 2014 from $66.0 million in the same period in 2013. The increase
in revenues was primarily attributable to an increase in revenues from our networking product line.
Our revenues from
products in the six months ended June 30, 2014 increased by 7.8% to $57.9 million, or approximately 79% of total revenues, from
$53.7 million, or 81% of total revenues, in the same period in 2013. The increase in revenues from products was primarily attributable
to the increase in our networking product line, particularly with respect to our Session Boarder Controller and Multi Service Business
Router (MSBR) product lines, as well as due to the growing demand for our networking product line in the Unified Communications
market.
Our revenues from services
in the six months ended June 30, 2014 increased by 27.4% to $15.6 million, or approximately 21% of total revenues, from $12.2 million,
or 19% of total revenues, in the same period in 2013. The increase in revenues from services was predominantly driven by the growth
in support services related to the increase in revenues from products.
Cost of Revenues
and Gross Profit. Cost of revenues includes the manufacturing cost of hardware, quality assurance, overhead related
to manufacturing activity, technology licensing and royalty fees payable to third parties and royalties payables to the Office
of the Chief Scientist of the Israeli Ministry of Economy. Gross profit increased to $43.4 million in the six months ended September
30, 2014 from $38.1 million in the same period in 2013. Gross profit as a percentage of revenues increased to 59.0% in the six
months ended June 30, 2014 from 57.8% in the same period in 2013.
Cost of revenues from
products increased by 6.0% to $26.2 million in the six months ended June 30, 2014 from $24.7 million in the same period in 2013.
This increase is primarily attributable to an increase in the procurement of materials, in line with the increase in revenues from
products. Gross margin percentage from products was 55% in the six-month periods ended June 30, 2014 and 54% in the same period
in 2013.
Cost of revenues from
services increased by 27.6% to $4.0 million in the six months ended June 30, 2014 from $3.1 million in the same period in 2014.
This increase is primarily attributable to higher support personnel expenses associated with providing services and implementation
of our products with service providers as well as enterprise customers. Gross margin percentage from services was 75% in each of
the six-month periods ended June 30, 2014 and 2013.
Research and Development
Expenses, net. Research and development expenses, net consist primarily of compensation and related costs of employees
engaged in ongoing research and development activities, development-related raw materials and the cost of subcontractors less grants
from the Office of the Chief Scientist of the Israeli Ministry of Economy. Research and development expenses, net increased by
13.6% to $16.2 million in the six months ended June 30, 2014 from $14.3 million in the same period in 2013 and increased as a percentage
of revenues to 22.1% in the six months ended June 30, 2014 from 21.7% in the same period in 2013. Research and development expenses
increased primarily as a result of adding personnel in connection with our continued development of new products and as a result
of the NIS appreciation against the U.S. dollar. We expect that research and development expenses will increase on an absolute
dollar basis in 2014 as a result of our continued development of new products and adding the new research and development center
focusing on cloud computing and Unified Communications.
Selling and Marketing
Expenses. Selling and marketing expenses consist primarily of compensation for selling and marketing personnel,
as well as exhibition, travel and related expenses. Selling and marketing expenses increased by 20.8% in the six months ended June
30, 2014 to $22.9 million from $19.0 million in the same period in 2013 and increased as a percentage of revenues to 31.1% in the
six months ended June 30, 2014 from 28.7% in the same period in 2013. These expenses increased on an absolute basis as a result
of an increase in our sales force and marketing activities.
General and Administrative
Expenses. General and administrative expenses consist primarily of compensation for finance, human resources, general
management, rent, network and bad debt reserve, as well as insurance and consultant services expenses. General and administrative
expenses decreased by 9.7% to $3.7 million in in the six months ended June 30, 2014 from $4.1 million in the same period in 2013.
As a percentage of revenues, general and administrative expenses decreased to 5.1% in the six months ended June 30, 2014 from 6.2%
in the same period in 2013.
Financial Income
(expenses), Net. Financial income, net consists primarily of interest derived on cash and cash equivalents, marketable
securities and bank deposits, net of interest accrued in connection with our bank loans and bank charges, as well as our remaining
senior convertible notes outstanding. Financial income, net, in the six months ended June 30, 2014 was $102,000 compared to financial
expenses, net of $122,000 in the same period in 2013. The increase in financial income, net in the six months ended June 30, 2014
was primarily due to lower expenses recorded with respect to our bank loans interest and lower expenses related to exchange rate
fluctuations.
Taxes on Income. We
had a net income tax expenses of $950,000 in the six months ended June 30, 2014 compared to $138,000 in the same period in 2013.
The increase in the net income tax expenses in the six months ended June 30, 2014 is primarily a result of utilization of deferred
tax assets.
LIQUIDITY
AND CAPITAL RESOURCES
We finance our operations
primarily from our cash and cash equivalents, bank deposits, bank borrowings and cash from operations. In addition, in March 2014
we realized net proceeds of approximately $29.7 million as a result of the sale by us of 4,025,000 of our ordinary shares in a
public offering.
As of June 30, 2014,
we had $91.8 million in cash and cash equivalents, marketable securities and bank deposits compared to $62.3 million at December
31, 2013. This increase is the result of the proceeds from our public offering in March 2014. As of June 30, 2014, we were restricted
with respect to using approximately $12.6 million of our cash as a result of provisions in our loan agreements, a lease agreement
and foreign exchange derivatives transactions.
In August 2014, our Board
approved a program to allow us to repurchase up to $3.0 million of our ordinary shares. Purchases would be made from time-to-time
at the discretion of management subject, among other things, to our share price, market conditions, trading volume and other factors.
Repurchases, if any, would be funded from available working capital. Under applicable Israeli law and based on current market prices,
we are permitted to purchase up to approximately $3.0 million of our ordinary shares without further approval. In addition, we
intend to apply to the competent court in Israel for authorization to repurchase an additional amount of our ordinary shares for
an aggregate purchase price of $10-15 million. We expect that the approval process will take approximately three months from August
2014.
Cash Flows from Operating Activities
Our operating activities
provided cash in the amount of $1.6 million in the six months ended June 30, 2014, primarily due to an increase in deferred revenues
of $3.3 million, non-cash depreciation and amortization in the amount $1.6 million, non-cash stock-based compensation expenses
of $1.3 million utilization of deferred tax asset of $1.0 million and an increase in other payables and accrued expenses in the
amount of $1.0 million, partly offset by an increase in trade receivables in the amount of $4.4 million and in other receivables
in the amount of $2.4 million.
Cash Flows from Investing Activities
In the six months
ended June 30, 2014, we used cash in investing activities in the amount of $43.1 million, primarily due to the purchase of marketable
securities of $60.2 million offset, in part, by proceeds from redemption of marketable securities of $15.4 million and a decrease
in bank deposits of 2.4 million.
Cash Flows from Financing Activities
In the six months
ended June 30, 2014, our financing activities provided cash in the amount of $29.0 million, primarily due to the $29.7 million
of proceeds from the sale of our ordinary shares in a public offering and $2.1 million of proceeds from the issuance of shares
upon exercise of stock options, offset, in part, by $2.6 million used for repayment of loans.
Financing Needs
We anticipate that our operating expenses will be a material
use of our cash resources for the foreseeable future. We believe that our current working capital is sufficient to meet
our operating cash requirements for at least the next twelve months, including payments required under our existing bank loans. Part
of our strategy is to pursue acquisition opportunities. If we do not have available sufficient cash to finance our operations and
the completion of additional acquisitions, we may be required to obtain additional debt or equity financing. We cannot be certain
that we will be able to obtain, if required, additional financing on acceptable terms or at all.
AudioCodes (NASDAQ:AUDC)
Historical Stock Chart
From Aug 2024 to Sep 2024
AudioCodes (NASDAQ:AUDC)
Historical Stock Chart
From Sep 2023 to Sep 2024