April 2, 2012

ClearOne Reports 2011 Fourth Quarter and Full Year Financial Results

SALT LAKE CITY, April 2, 2012 /PRNewswire/ -- ClearOne (NASDAQ: CLRO) today reported its financial results for the fourth quarter and full year ended December 31, 2011.

For the 2011 full year, revenue increased 12% to $46.1 million from $41.3 million for 2010.  Gross profit rose 12% to $27.5 million, or 60% of revenue, from $24.6 million, or 60% of revenue, for the prior year.  Operating expenses declined to $17.0 million from $22.8 million for 2010.  Operating income climbed to $10.6 million from $1.8 million for the prior year.  The company recorded a provision for income taxes of $3.7 million versus a benefit from income taxes of $681,000 for 2010.  Net income more than doubled to $6.9 million, or $0.75 per diluted share, from $2.4 million, or $0.27 per diluted share, for 2010.  Operating expenses, operating income and net income for 2011 were impacted by a favorable judgment award of $3.7 million related to litigation against Biamp Systems Corp. for theft of ClearOne trade secrets.  Operating expenses, operating income and net income for 2010 were affected by an unfavorable accrual of $2.2 million of legal expenses in connection with the indemnification of a former ClearOne Officer. Non-GAAP net income increased by 5% to $5.3 million, or $0.57 per diluted share, from $5.1 million, or $0.57 per diluted share, for 2010. Non-GAAP Adjusted EBITDA for 2011 increased by 37% to $9.0 million, or $0.97 per diluted share, from $6.6 million, or $0.74 per diluted share, for 2010. The reconciliation between GAAP and Non-GAAP measures is available in the tables attached to this release.

"Our strong 2011 financial results were primarily driven by increased demand for our portfolio of products in North America and Asia Pacific combined with consistent high gross margins," said Zee Hakimoglu, President, Chief Executive Officer and Chairman of ClearOne.  "Our continued stellar operational performance in 2011 is reflected in the 37% increase in adjusted EBITDA from a year ago.

"Looking ahead, we will leverage our technology acquisitions, benefit from the wealth of experience the retained management teams bring, and continue to develop our sales channels to enter significantly larger and higher growth markets."

For the 2011 fourth quarter, revenue was $12.0 million compared with $12.6 million for the fourth quarter of 2010.  Gross profit was $7.1 million, or 59% of revenue, compared with $7.5 million, or 60% of revenue, for the prior year fourth quarter.  Operating expenses declined to $5.0 million from $7.5 million in the prior year fourth quarter.  Operating income climbed to $2.1 million from $39,000 for the fourth quarter last year.  Net income grew to $1.4 million, or $0.15 per diluted share, from $817,000, or $0.09 per diluted share, for the 2010 fourth quarter. Operating expenses, operating income and net income for the prior year fourth quarter were affected by an unfavorable accrual of $2.2 million legal expenses in connection with the indemnification of a former ClearOne Officer. Non-GAAP net income decreased to $1.5 million, or $0.17 per diluted share, from $2.3 million, or $0.26 per diluted share, for 2010. Non-GAAP Adjusted EBITDA for 2011 decreased to $2.6 million, or $0.28 per diluted share, from $2.8 million, or $0.32 per diluted share, for 2010. The reconciliation between GAAP and Non-GAAP measures is available in the tables attached to this release.

At December 31, 2011, the company had cash and cash equivalents of $16.7 million, and no debt.

Recent Highlights

ClearOne announced several significant developments.

  • In February 2012, the company completed the acquisition of Israel-based VCON Video Conferencing, a leader in high-performance, end-to-end, software video conferencing.  The acquisition extends ClearOne's leadership in the enterprise marketplace to video conferencing and collaboration.  Combined, the companies will seamlessly deliver VCON's full HD video conferencing technology and ClearOne's legacy crystal-clear audio for a variety of enterprise applications, including feature-rich room systems and desktop video applications to enhanced infrastructure and network management solutions.
  • In December, the company collected its $3.7 million judgment against Biamp.  In August, the United States Court of Appeals for the Tenth Circuit issued an opinion, affirming a November 2008 jury verdict issued by a federal district court in favor of ClearOne against Biamp Systems Corp. for theft of ClearOne's trade secrets, including the federal district court's award of exemplary damages based upon the finding that Biamp's misappropriation was willful and malicious.  

Non-GAAP Financial Measures

ClearOne provides non-GAAP financial information in the form of Non-GAAP net income, EBITDA, Adjusted EBITDA and earnings per share to investors to supplement GAAP financial information. ClearOne believes that excluding certain items from GAAP results allows ClearOne's management to better understand ClearOne's consolidated financial performance from period to period as management does not believe that the excluded items are reflective of underlying operating performance. Non-GAAP net income, EBITDA, Adjusted EBITDA and earnings per share excludes certain costs and expenses, the details of which are provided in the tables below containing the reconciliation between GAAP and Non-GAAP financial measures. The exclusion of these items in the non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. ClearOne believes non-GAAP financial measures will provide investors with useful information to help them evaluate ClearOne's operating results and projections. This non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating income, net income or other financial measures prepared in accordance with GAAP. There are limitations to the use of non-GAAP financial measures. Other companies, including companies in ClearOne's industry, may calculate non-GAAP financial measures differently than ClearOne does, limiting the usefulness of those measures for comparative purposes.  A detailed reconciliation of Non-GAAP net income to GAAP net income is included with this news release.

About ClearOne

ClearOne is a global company that designs, develops and sells conferencing, collaboration, streaming and digital signage solutions for audio, video and data multimedia communication. The performance and simplicity of its advanced comprehensive solutions enhance the quality of life. ClearOne products are designed for business and residential use, offering unprecedented levels of functionality, reliability and scalability. More information about the company can be found 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 any statements of the plans and objectives of management for future operations, 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.

http://www.b2i.us/irpass.asp?BzID=509&to=ea&s=0

CLEARONE COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)





As of December 31,


  2011 

    2010 

ASSETS



Current assets:



Cash and cash equivalents

$  16,683

$  11,431

Receivables, net of allowance for doubtful accounts of $149 and
    $206, respectively

8,457

9,951

Inventories

12,565

8,780

Deferred income taxes

2,987

3,389

Prepaid expenses and other assets

740

446

Total current assets

41,432

33,997




Long-term inventories, net

1,905

2,617

Property and equipment, net

2,338

2,965

Intangibles, net

2,690

2,745

Goodwill

1,153

726

Deferred income taxes

-

913

Other assets

41

18

Total assets

$  49,559

$  43,981




LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:



Accounts payable

2,814

2,362

Accrued liabilities

2,534

4,573

Deferred product revenue

3,404

4,306

Total current liabilities

8,752

11,241




Deferred income taxes

101

-

Deferred rent

494

584

Other long-term liabilities

548

421

Total liabilities

9,895

12,246




Shareholders' equity:



Common stock, par value $0.001, 50,000,000 shares authorized,
   9,098,152 and 8,929,439 shares issued and outstanding, respectively

9

9

Additional paid-in capital

40,073

39,073

Accumulated deficit

(418)

(7,347)

Total shareholders' equity

39,664

31,735

Total liabilities and shareholders' equity

$  49,559

$  43,981



CLEARONE COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share value)








Quarter ended December 31,


Year ended December 31,


2011

2010


2011

2010

Revenue

$  11,965

$  12,632


$  46,067

$  41,284

Cost of goods sold

4,855

5,101


18,522

16,643

Gross profit

7,110

7,531


27,545

24,641







Operating expenses:






Sales and marketing

1,846

2,358


8,120

8,685

Research and product development

1,880

1,967


7,128

7,739

General and administrative

1,262

3,167


5,427

6,420

Proceeds from litigation

-

-


(3,702)

-

Total operating expenses

4,988

7,492


16,973

22,844







Operating income

2,122

39


10,572

1,797

Other income (expense), net

10

16


24

(104)







Income before income taxes

2,132

55


10,596

1,693

(Provision for) benefit from income taxes

(711)

762


(3,667)

681

Net income

$  1,421

$  817


$  6,929

$  2,374







Basic earnings per common share

$  0.16

$  0.09


$  0.77

$  0.27

Diluted earnings per common share

$  0.15

$  0.09


$  0.75

$  0.27







Basic weighted average shares outstanding

9,095,333

8,929,421


9,027,934

8,929,305

Diluted weighted average shares outstanding

9,237,214

8,960,103


9,271,811

8,942,929



CLEARONE COMMUNICATIONS, INC.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(Dollars in thousands, except per share value)










Quarter ended December 31, 2011


Quarter ended December 31, 2010


GAAP

Adjustments

Non-GAAP


GAAP

Adjustments

Non-GAAP

Revenue

$  11,965

$  -

$  11,965


$  12,632

$  -

$  12,632

Cost of goods sold

$  4,855

(43)

4,812


5,101

-

5,101

Gross profit

7,110

43

7,153


7,531

-

7,531









Operating expenses:








Sales and marketing

1,846

(12)

1,834


2,358

(4)

2,354

Research and product development

1,880

(6)

1,874


1,967

(8)

1,959

General and administrative

1,262

(156)

1,106


3,167

(2,551)

616

Total operating expenses

4,988

(174)

4,814


7,492

(2,563)

4,929









Operating income

2,122

217

2,339


39

2,563

2,602

Other income (expense), net

10

-

10


16

-

16









Income before income taxes

2,132

217

2,349


55

2,563

2,618

Provision for (benefit from) income taxes

711

110

821


(762)

1,058

296

Net income

$  1,421

$  107

$  1,528


$  817

$  1,505

$  2,322









Basic earnings per common share

$  0.16


$  0.17


$  0.09


$  0.26

Diluted earnings per common share

$  0.15


$  0.17


$  0.09


$  0.26









Basic weighted average shares outstanding

9,095,333


9,095,333


8,929,421


8,929,421

Diluted weighted average shares outstanding

9,237,214


9,237,214


8,960,103


8,960,103









The adjustments consist of the following:








Share-based compensation


$  56




$  39


Amortization of purchased intangibles


130




88


Legal expenses for litigation relating to indemnification of former officers, intellectual property claims and our claim for damages


31




212


Accrual of legal expenses in connection with the indemnification of a former ClearOne officer


-




2,224


Total of adjustments before taxes


217




2,563


Income taxes affected by the above adjustments


110




1,058


Total adjustments


$  107




$  1,505




CLEARONE COMMUNICATIONS, INC.

(Dollars in thousands, except per share value)









RECONCILIATION OF GAAP TO NON-GAAP NET INCOME










Year ended December 31, 2011


Year ended December 31, 2010


GAAP

Adjustments

Non-GAAP


GAAP

Adjustments

Non-GAAP

Revenue

$  46,067

$  -

$  46,067


$  41,284

$  -

$  41,284

Cost of goods sold

$  18,522

(43)

18,479


16,643

(1)

16,642

Gross profit

27,545

43

27,588


24,641

1

24,642









Operating expenses:








Sales and marketing

8,120

(25)

8,095


8,685

(35)

8,650

Research and product development

7,128

(18)

7,110


7,739

(30)

7,709

General and administrative

5,427

(1,207)

4,220


6,420

(3,918)

2,502

Proceeds from litigation

(3,702)

3,702

-


-

-

-

Total operating expenses

16,973

2,452

19,425


22,844

(3,983)

18,861









Operating income

10,572

(2,409)

8,163


1,797

3,984

5,781

Other income (expense), net

24

-

24


(104)

51

(53)









Income before income taxes

10,596

(2,409)

8,187


1,693

4,035

5,728

Provision for (benefit from) income taxes

3,667

(805)

2,862


(681)

1,329

648

Net income

$  6,929

$  (1,604)

$  5,325


$  2,374

$  2,706

$  5,080









Basic earnings per common share

$  0.77


$  0.59


$  0.27


$  0.57

Diluted earnings per common share

$  0.75


$  0.57


$  0.27


$  0.57









Basic weighted average shares outstanding

9,027,934


9,027,934


8,929,305


8,929,305

Diluted weighted average shares outstanding

9,271,811


9,271,811


8,942,929


8,942,929









The adjustments consist of the following:








Share-based compensation


$  187




$  263


Amortization of purchased intangibles


393




351


Legal expenses for litigation relating to indemnification of former officers, intellectual property claims and our claim for damages


872




1,146


Accrual of legal expenses in connection with the indemnification of  a former ClearOne officer


-




2,224


Proceeds from litigation


(3,861)




-


Interest expense on NetStreams debt


-




51


Total of adjustments before taxes


(2,409)




4,035


Income taxes affected by the adjustments


(805)




1,329


Total adjustments


$  (1,604)




$  2,706




CLEARONE COMMUNICATIONS, INC.

(Dollars in thousands, except per share value)








RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA











Quarter ended December 31,


Year ended December 31,



2011

2010


2011

2010

GAAP Net Income


$  1,421

$  817


$  6,929

$  2,374

Adjustments:







Provision for (benefit from) for income taxes


711

(762)


3,667

(681)

Depreciation and Amortization


348

301


1,220

1,201

Interest


-

-


-

51

Non-GAAP EBITDA


2,480

356


11,816

2,945

Share-based compensation


56

39


187

263

Legal expenses for (proceeds from) litigation relating to indemnification of former officers, intellectual property claims and our claim for damages, net


31

2,436


(2,989)

3,370

Non-GAAP Adjusted EBITDA


$  2,567

$  2,831


$  9,014

$  6,578








Basic weighted average shares outstanding


9,095,333

8,929,421


9,027,934

8,929,305

Diluted weighted average shares outstanding


9,237,214

8,960,103


9,271,811

8,942,929








Basic Adjusted EBITDA per common share


$  0.28

$  0.32


$  1.00

$  0.74

Diluted Adjusted EBITDA per common share


$  0.28

$  0.32


$  0.97

$  0.74



Contact:
Jeff LeFevre
Investor Relations
801-303-3438
jeff.lefevre@clearone.com

SOURCE ClearOne


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