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): August 4,
2008
ClearOne
Communications, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Utah
(State or
Other Jurisdiction of Incorporation)
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000-17219
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87-0398877
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|
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(Commission
File Number)
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(I.R.S.
employer
identification
number)
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5225 Wiley Post Way, Suite 500
Salt Lake City, Utah
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84116
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(Address
of principal executive offices)
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(Zip
Code)
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(801)
975-7200
(Registrant’s
Telephone Number, Including Area Code)
Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
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:
[ ] 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 pursuatn to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14-d-2(b))
[ ] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
[ ] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
1
Item
2.02 Results of Operations and Financial Condition.
On August
4, 2008, ClearOne Communications, Inc. (the “Company”) issued a press release
announcing its financial results for the quarter and full-year ended June 30,
2008. The full text of the Company’s press release is furnished
herewith as Exhibit 99.1.
Item
9.01 Financial
Statements and Exhibits.
(d) Exhibits.
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Exhibit No.
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Title of Document
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Location
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99.1
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Press
Release dated August 4, 2008 captioned “ClearOne Reports Fiscal 2008
Fourth Quarter and Full-Year Financial Results.”
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This
Filing
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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 hereunto
duly authorized.
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CLEARONE
COMMUNICATIONS, INC.
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Date: August
4, 2008
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By:
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/s/ Greg A. LeClaire
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Greg
A. LeClaire
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Chief
Financial Officer
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||
2
Contacts:
ClearOne Communications, Inc.
Investor Relations
(801)
303-3555
CLEARONE
REPORTS FISCAL 2008 FOURTH QUARTER
AND
FULL-YEAR FINANCIAL RESULTS
Salt Lake City, UT –August 4, 2008 –
ClearOne Communications, Inc. (NASDAQ: CLRO) today reported financial
results for the fourth quarter and fiscal year ended June 30, 2008.
Full
Year Results
Revenue
for fiscal 2008 amounted to $39.8 million compared with $39.9 million in fiscal
2007. Gross profit grew to $23.3 million, or 59% of revenue, from $22.1 million,
or 56% of revenue, for the prior year period. Income from continuing
operations was $5.6 million compared with $4.8 million in the same period of
fiscal 2007. Net income was $5.7 million, or $0.52 per diluted share,
compared with fiscal 2007 net income of $5.2 million, or $0.45 per diluted
share, which included income from discontinued operations of $422,000, or $0.04
per diluted share.
Fiscal
2008 financial results included a $2.8 million income tax benefit due primarily
to the reversal of a $4.1 million valuation allowance recorded against deferred
tax assets. In accordance with generally accepted accounting
principles (GAAP), the company recorded the reversal in the fiscal 2008 fourth
quarter due to its recent and sustained profitability. Also included
in fiscal 2008 operating expenses was a $3.3 million accrual for a contingent
liability associated with the advancement of funds related to indemnification
agreements with two former officers, whose trial has been scheduled for October
2008.
“While
revenue remained steady year-over-year due largely to the slowdown in the U.S.
economy, we made solid progress on several key operational areas,” said Zee
Hakimoglu, president, chief executive officer and chairman of
ClearOne. “Our gross profit improved as a result of enhanced product
cost efficiencies and selective channel price increases, and we significantly
lowered our sales and marketing expenses.
“Looking
ahead, we are planning a number of key new product launches in fiscal 2009 and
expect our conferencing products to become an ever more appealing option for
businesses looking to offset the effects of rising energy costs and expense and
inconvenience of airline travel. We also expect to further grow our
international business, especially in Europe and Asia Pacific, which has
developed into a significant portion of our sales mix.”
Fourth
Quarter Results
Revenue
for the fiscal 2008 fourth quarter decreased to $10.4 million from $11.0 million
in the same quarter of last year. Gross profit declined to $6.1
million, or 58% of revenue, from $6.6 million, or 60% of revenue, for the prior
year period. Income from continuing operations was $3.7 million
compared with $2.1 million in the same quarter last year. Net income
was $3.7 million, or $0.36 per diluted share, which included a $1.2 million
expense accrued for a contingent liability and the reversal of a $4.1 million
valuation allowance recorded against deferred tax assets. This
compares with fiscal 2007 fourth quarter net income of $2.2 million, or $0.20
per diluted share, which included income from discontinued operations of
$118,000.
The
company repurchased approximately 222,000 shares of its common stock for
$985,000 and 835,000 shares of its of common stock for $4.3 million during its
fourth quarter and full-year ended June 30, 2008, respectively.
At June
30, 2008, the company had cash, cash equivalents, and investments of $20.5
million and no long-term debt. In November 2007, the company posted a
$908,000 bond with the United States District Court in conjunction with the
Court’s grant of ClearOne’s motion for a preliminary injunction against WideBand
Solutions, Inc, et al. The bond was subsequently reduced to $210,000
by the Court, and the company expects to receive the difference of approximately
$700,000 in November 2008.
The
balance of the contingent liability associated with the advancement of funds
related to the indemnification agreements with two former officers was
approximately $1.5 million on June 30, 2008, which represents the probable
amount that as of the date of the financial statements could be reasonably
estimated of the company’s liability through trial.
1
During
the third fiscal quarter, ClearOne reclassified its entire cost basis balance of
auction rate securities (ARSs), $12.25 million, from short-term to long-term
securities following failed auctions occurring since February
2008. With the exception of a $25,000 redemption during the fiscal
2008 fourth quarter, the auctions continued to fail. The company
continues to hold these securities and the issuers are paying interest at the
maximum contractual rate. Based on current credit market conditions,
it is likely that future auctions related to these securities will be
unsuccessful in the near term. At June 30, 2008, ClearOne determined
there was a decline in the fair value of its ARS investments of about $1.1
million, which, in accordance with SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, and related guidance issued by FASB
and the SEC, was deemed temporary and recognized as an unrealized loss in the
other comprehensive income section of the Company’s statement of
operations. ClearOne believes that the underlying securities or
collateral have not been affected and any lack of liquidity in its ARSs will not
impact its ability to fund its operations.
About
ClearOne
ClearOne
is a communications solutions company that develops and sells audio conferencing
systems and other related products for audio, video, and web conferencing
applications. The reliability, flexibility, and performance of
ClearOne’s comprehensive solutions create a natural communications environment,
which saves organizations time and money by enabling more effective and
efficient communication. For more information, visit ClearOne’s
website at www.clearone.com.
This release contains
“forward-looking” statements that are based on present circumstances and
on ClearOne’s predictions with respect to events that have not occurred, that
may not occur, or that may occur with different consequences and timing than
those now assumed or anticipated. Such forward-looking statements,
including statements regarding the company’s ability to successfully
commercialize newer products and enter new markets, are not guarantees of future
performance or results and involve risks and uncertainties that could cause
actual events or results to differ materially from the events or results
described in the forward-looking statements. Such forward-looking
statements are made only as of the date of this release and ClearOne assumes no
obligation to update forward-looking statements to reflect subsequent events or
circumstances. Readers should not place undue reliance on these
forward-looking statements.
Regulation
G and other provisions of the securities laws regulate the use of financial
measures that are not prepared in accordance with generally accepted accounting
principles. ClearOne believes these non-GAAP measures provide
important supplemental information to investors. ClearOne uses these measures,
together with GAAP measures, for internal managerial purposes and as a means to
evaluate period-to-period comparisons. ClearOne believes that presenting
financial information net of certain material non-recurring items such as
litigation expenses associated with the indemnification of two former officers
and the removal of a deferred tax valuation allowance, help facilitate
period-to-period comparisons. However, ClearOne does not, and you
should not, rely on non-GAAP financial measures alone as measures of the
company’s performance. ClearOne believes that non-GAAP financial
measures reflect an additional way of viewing aspects of its operations that –
when taken together with GAAP results and the reconciliations to corresponding
GAAP financial measures that it also provides in its news releases – provide a
more complete understanding of factors and trends affecting the company’s
business. Because non-GAAP financial measures are not standardized,
it may not be possible to compare these financial measures with other companies’
non-GAAP financial measures, even if they have similar names.
# #
#
http://www.b2i.us/irpass.asp?BzID=509&to=ea&s=0
FINANCIAL
TABLES FOLLOW
2
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CLEARONE
COMMUNICATIONS, INC.
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||||||||
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CONDENSED
CONSOLIDATED BALANCE SHEETS
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||||||||
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(in
thousands of dollars, except per share amounts)
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||||||||
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(audited)
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||||||||
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June
30,
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June
30,
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|||||||
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2008
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2007
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ASSETS
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||||||||
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Current
assets:
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||||||||
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Cash
and cash equivalents
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$ | 3,327 | $ | 2,782 | ||||
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Marketable
securities
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5,922 | 19,871 | ||||||
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Accounts
receivable, net of allowance for doubtful accounts
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7,238 | 8,025 | ||||||
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of
$87 and $54, respectively
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||||||||
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Deposit,
Bond for Preliminary Injunction
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908 | 0 | ||||||
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Note
Receivable
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43 | 163 | ||||||
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Inventories,
net
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7,799 | 7,263 | ||||||
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Income
tax receivable
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15 | 0 | ||||||
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Deferred
income taxes
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2,828 | 0 | ||||||
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Prepaid
expenses and other assets
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805 | 213 | ||||||
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Total
current assets
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28,885 | 38,317 | ||||||
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Long-term
Securities
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11,168 | 0 | ||||||
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Property
and equipment, net
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2,554 | 2,694 | ||||||
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Intangible
Assets, net
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47 | 0 | ||||||
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Note
Receiveable - long-term
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0 | 43 | ||||||
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Long-term
deferred tax asset
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1,639 | 0 | ||||||
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Other
assets
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7 | 9 | ||||||
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Total
assets
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$ | 44,300 | $ | 41,063 | ||||
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LIABILITIES
AND SHAREHOLDERS' EQUITY
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||||||||
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Current
liabilities:
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||||||||
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Accounts
payable
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$ | 2,187 | $ | 1,745 | ||||
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Accrued
taxes
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72 | 660 | ||||||
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Accrued
liabilities
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3,600 | 1,874 | ||||||
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Deferred
product revenue
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4,547 | 4,872 | ||||||
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Total
current liabilities
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10,406 | 9,151 | ||||||
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Deferred
rent
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700 | 855 | ||||||
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Other
long-term liabilities
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1,054 | 619 | ||||||
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Total
liabilities
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12,160 | 10,625 | ||||||
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Total
shareholders' equity
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32,140 | 30,438 | ||||||
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Total
liabilities and shareholders' equity
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$ | 44,300 | $ | 41,063 | ||||
3
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CLEARONE
COMMUNICATIONS, INC.
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(in
thousands of dollars, except per share amounts)
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Three
Months Ended June 30,
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Years
Ended June 30,
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|||||||||||||||||||||||||||||||
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2008
GAAP
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2008
Adjusting Items
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2008
Non-GAAP (1)
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2007
GAAP
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2008
GAAP (audited)
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2008
Adjusting Items
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2008
Non-GAAP (1)
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2007
GAAP (audited)
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|||||||||||||||||||||||||
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Revenue
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$ | 10,359 | - | $ | 10,359 | $ | 10,988 | $ | 39,752 | - | $ | 39,752 | $ | 39,861 | ||||||||||||||||||
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Cost
of goods sold
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4,308 | - | 4,308 | 4,357 | 16,461 | - | 16,461 | 17,723 | ||||||||||||||||||||||||
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Gross
profit
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6,051 | - | 6,051 | 6,631 | 23,291 | - | 23,291 | 22,138 | ||||||||||||||||||||||||
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Operating
expenses:
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Sales
& Marketing
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1,853 | - | 1,853 | 2,080 | 6,673 | - | 6,673 | 7,791 | ||||||||||||||||||||||||
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Research
and product development
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1,936 | - | 1,936 | 1,753 | 7,070 | - | 7,070 | 7,535 | ||||||||||||||||||||||||
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General
and administrative (2)
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2,393 | (1,224 | ) | 1,169 | 831 | 7,669 | (3,274 | ) | 4,395 | 3,091 | ||||||||||||||||||||||
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Total
operating expenses
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6,182 | (1,224 | ) | 4,958 | 4,664 | 21,412 | (3,274 | ) | 18,138 | 18,417 | ||||||||||||||||||||||
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Operating
income (loss)
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-131 | 1,224 | 1,093 | 1,967 | 1,879 | 3,274 | 5,153 | 3,721 | ||||||||||||||||||||||||
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Total
other income (expense), net
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157 | - | 157 | 294 | 1,005 | - | 1,005 | 1,523 | ||||||||||||||||||||||||
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Income
from continuing operations before income taxes
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26 | 1,224 | 1,250 | 2,261 | 2,884 | 3,274 | 6,158 | 5,244 | ||||||||||||||||||||||||
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Benefit
(Provision) for income taxes (3)
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3,711 | (4,144 | ) | -433 | -154 | 2,756 | (4,144 | ) | -1,388 | -457 | ||||||||||||||||||||||
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Income
(loss) from continuing operations
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3,737 | (2,920 | ) | 817 | 2,107 | 5,640 | (870 | ) | 4,770 | 4,787 | ||||||||||||||||||||||
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Income
from discontinued operations
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0 | - | 0 | 118 | 16 | - | 16 | 422 | ||||||||||||||||||||||||
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Net
income (loss)
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$ | 3,737 | $ | (2,920 | ) | $ | 817 | $ | 2,225 | $ | 5,656 | $ | (870 | ) | $ | 4,786 | $ | 5,209 | ||||||||||||||
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Diluted
earnings (loss) per common share from continuing
operations
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$ | 0.36 | (0.28 | ) | $ | 0.08 | $ | 0.19 | $ | 0.52 | (0.08 | ) | $ | 0.44 | $ | 0.41 | ||||||||||||||||
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Diluted
earnings per common share from discontinued operations
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$ | 0.00 | - | $ | 0.00 | $ | 0.01 | $ | 0.00 | - | $ | 0.00 | $ | 0.04 | ||||||||||||||||||
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Diluted
earnings (loss) per common share
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$ | 0.36 | (0.28 | ) | $ | 0.08 | $ | 0.20 | $ | 0.52 | (0.08 | ) | $ | 0.44 | $ | 0.45 | ||||||||||||||||
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Diluted
weighted average shares outstanding
|
10,424,149 | - | 10,424,149 | 10,975,220 | 10,798,281 | - | 10,798,281 | 11,575,721 | ||||||||||||||||||||||||
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(1) This presentation
includes non-GAAP measures. The non-GAAP measures are not meant to be
considered in isolation or as a substitute for comparable GAAP measures,
and should be read only in conjunction with the Company's consolidated
financial statements prepared in accordance with GAAP. Please refer to the
detailed discussion on SEC Regulation G included in this earnings
release.
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(2) The adjusting item
reflects an accrual for a contingent liability associated with the
advancement of funds related to indemnification agreements with two former
officers
|
||||||||||||||||||||||||||||||||
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(3) The adjusting item
reflects a $4.1 million reversal of a deferred tax valuation
allowance
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4