ClearOne Reports 2012 Second Quarter Financial Results

August 13, 2012
ClearOne Reports 2012 Second Quarter Financial ResultsSALT LAKE CITY, Aug. 13, 2012 /PRNewswire/ -- ClearOne (NASDAQ: CLRO) today reported its financial results for the three and six months ended June 30, 2012.

For the 2012 second quarter, revenue was $11.7 million compared with $11.9 million for the second quarter of 2011.  Gross profit was $7.1 million, or 61% of revenue, compared with $7.2 million, or 60% of revenue, for the second quarter of 2011.  Operating expenses increased to $6.0 million from $5.3 million in the prior year second quarter.  Operating income declined to $1.1 million from $1.9 million for the second quarter of last year.  Net income declined to $575,000, or $0.06 per diluted share, from $1.3 million, or $0.14 per diluted share, for the 2011 second quarter.  Non-GAAP net income decreased to $905,000, or $0.10 per diluted share, from $1.7 million, or $0.18 per diluted share, for the second quarter of 2011.  Non-GAAP Adjusted EBITDA decreased to $1.9 million, or $0.20 per diluted share, from $2.6 million, or $0.27 per diluted share, for the second quarter of 2011. 

For the first half of 2012, revenue was $21.8 million compared with $22.6 million for the same period in 2011.  Gross profit was $13.2 million, or 61% of revenue, compared with $13.5 million, or 60% of revenue, for the first half of 2011.  Operating expenses, excluding litigation proceeds, increased to $11.6 million from $10.4 million in the first six months of the prior year.  Operating income declined to $1.8 million from $3.1 million for the same period in the previous year.  Net income declined to $1.0 million, or $0.11 per diluted share, from $2.1 million, or $0.23 per diluted share, for the 2011 first half.  Non-GAAP net income decreased to $1.5 million, or $0.17 per diluted share, from $2.8 million, or $0.30 per diluted share, for the first half of 2011.  Non-GAAP Adjusted EBITDA decreased to $3.1 million, or $0.33 per diluted share, from $4.5 million, or $0.48 per diluted share, for the first half of 2011. 

The reconciliation between GAAP and Non-GAAP measures is available in the tables attached to this release. The results for the first six months of 2012 include the operations of VCON, a video conferencing solutions company acquired in February 2012. 

At June 30, 2012, the Company had cash and cash equivalents of $10.4 million, and no debt after paying for the acquisition of VCON.

"Our financial performance for the 2012 second quarter met our expectations but did not match last year's record-setting results, due to overall softness in all the markets in which we operate," said Zee Hakimoglu, President, Chief Executive Officer and Chairman of ClearOne. "We continue to build and align our sales channel and internal sales organization for the new video solutions we are bringing to the market. The new products from our acquisition of VCON are in production and will be shipping under the ClearOne brand at the end of this month. The introduction of these new software-based video conferencing products complements our industry-leading enterprise audio, expands our total available market and we believe will make immediate contributions to ClearOne's top-line."

Recent Highlights:

  • At InfoComm, ClearOne demonstrated COLLABORATE™, software-based video conferencing solutions for desktop, room, infrastructure and management to provide future-proof solutions for video and audio conferencing and collaboration.
  • ClearOne introduced at InfoComm CONNECT™ AVB and CONNECT™ CobraNet™, its first network audio bridges to provide a modular approach for networked audio using ClearOne's flagship audio products.
  • The company also unveiled at the tradeshow the Beamforming Microphone Array, the Pro Audio industry's first professional-grade microphone array with patent-pending audio beamforming with adaptive steering and next generation AEC technology.
  • Also, Frost & Sullivan, recognized ClearOne with the 2012 Global Tabletop Audio Conferencing Endpoints Product Line Strategy Award. The award recognizes ClearOne's breadth of product line for emerging UC and VoIP trends for enterprise and SMBs. The Product Line Strategy Award criteria measured ClearOne's tabletop solutions against the competition in several categories, including breadth of product line, size of addressable customer base, impact on market share and breadth of applications and markets served. When compared to competitive solutions, the Frost & Sullivan analysis gave top ratings to ClearOne in every category, including a perfect score for breadth of applications and markets served.

Non-GAAP Financial Measures
ClearOne provides non-GAAP financial information in the form of Non-GAAP net income, EBITDA, Adjusted EBITDA and corresponding 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 corresponding 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.

Contact:
Brent Johnson
Investor Relations
801-303-3577
brent.johnson@clearone.com

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

CLEARONE COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)





As of

June 30, 2012

As of

December 31, 2011


Unaudited

Audited

ASSETS



Current assets:



Cash and cash equivalents

$             10,418

$                        16,683

Receivables, net of allowance for doubtful accounts of $61 and $149, respectively

7,409

8,457

Inventories

15,064

12,565

Deferred income taxes

3,025

2,987

Prepaid expenses and other assets

1,501

740

Total current assets

37,417

41,432




Long-term inventories, net

2,064

1,905

Property and equipment, net

2,135

2,338

Intangibles, net

5,858

2,690

Goodwill

1,939

1,153

Other assets

64

41

Total assets

$             49,477

$                     49,559




LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:



Accounts payable

$                1,285

$                          2,814

Accrued liabilities

2,648

2,534

Deferred product revenue

3,451

3,404

Total current liabilities

7,384

8,752




Deferred income taxes

128

101

Deferred rent

487

494

Other long-term liabilities

686

548

Total liabilities

8,685

9,895




Shareholders' equity:



Common stock, par value $0.001, 50,000,000 shares authorized, 9,125,774 and 9,098,152 shares issued and outstanding,  respectively

9

9

Additional paid-in capital

40,265

40,073

Treasury stock at cost - 22,814 shares as of June 30, 2012

(92)

-

Retained earnings (accumulated deficit)

610

(418)

Total shareholders' equity

40,792

39,664

Total liabilities and shareholders' equity

$             49,477

$                     49,559


CLEARONE COMMUNICATIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share value)








Three months ended June 30,


Six Months ended June 30,


2012

2011


2012

2011

Revenue

$         11,655

$        11,890


$        21,809

$        22,591

Cost of goods sold

4,562

4,734


8,608

9,133

Gross profit

7,093

7,156


13,201

13,458







Operating expenses:






Sales and marketing

2,254

2,106


4,388

4,089

Research and product development

2,029

1,816


4,037

3,453

General and administrative

1,686

1,361


3,191

2,833

Proceeds from litigation

-

-


(250)

-

Total operating expenses

5,969

5,283


11,366

10,375







Operating income

1,124

1,873


1,835

3,083

Other income (expense), net

(5)

7


11

18







Income before income taxes

1,119

1,880


1,846

3,101

Provision for income taxes

544

559


818

968

Net income

$               575

$          1,321


$           1,028

$          2,133







Basic earnings per common share

$              0.06

$            0.15


$             0.11

$            0.24

Diluted earnings per common share

$              0.06

$            0.14


$             0.11

$            0.23







Basic weighted average shares outstanding

9,107,420

8,992,500


9,102,786

8,962,171

Diluted weighted average shares outstanding

9,226,426

9,433,650


9,224,727

9,279,800


CLEARONE COMMUNICATIONS, INC.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(Dollars in thousands, except per share value)










Three Months ended June 30, 2012


Three Months ended June 30, 2011


GAAP

Adjustments

Non-GAAP


GAAP

Adjustments

Non-GAAP

Revenue

$    11,655

$        -

$    11,655


$       11,890

$        -

$     11,890

Cost of goods sold

4,562

-

4,562


4,734

-

4,734

Gross profit

7,093

-

7,093


7,156

-

7,156









Operating expenses:








Sales and marketing

2,254

(17)

2,237


2,106

(6)

2,100

Research and product development

2,029

(10)

2,019


1,816

(4)

1,812

General and administrative

1,686

(534)

1,152


1,361

(479)

882

Proceeds from litigation

-

-

-


-

-

-

Total operating expenses

5,969

(561)

5,408


5,283

(489)

4,794









Operating income

1,124

561

1,685


1,873

489

2,362

Other income, net

(5)

-

(5)


7

-

7









Income before income taxes

1,119

561

1,680


1,880

489

2,369

Provision for income taxes

544

231

775


559

142

701

Net income

$         575

$    330

$         905


$         1,321

$    347

$       1,668









Basic earnings per common share

$        0.06


$        0.10


$           0.15


$         0.19

Diluted earnings per common share

$        0.06


$        0.10


$           0.14


$         0.18









Basic weighted average shares outstanding

9,107,420


9,107,420


8,992,500


8,992,500

Diluted weighted average shares outstanding

9,226,426


9,226,426


9,433,650


9,433,650

















The adjustments consist of the following:








Share-based compensation


$      60




$      44


Amortization of purchased intangibles


224




87


Legal expenses for litigation relating to indemnification of former







officers, intellectual property claims and our claim for damages

237




358


Acquisition related expenses


40




-




561




489


Provision for income taxes affected by the above adjustments

231




142


Total adjustments


$    330




$    347



CLEARONE COMMUNICATIONS, INC.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(Dollars in thousands, except per share value)










Six Months ended June 30, 2012


Six Months ended June 30, 2011


GAAP

Adjustments

Non-GAAP


GAAP

Adjustments

Non-GAAP

Revenue

$    21,809

$           -

$   21,809


$     22,591

$        -

$   22,591

Cost of goods sold

8,608

(1)

8,607


9,133

-

9,133

Gross profit

13,201

1

13,202


13,458

-

13,458









Operating expenses:








Sales and marketing

4,388

(30)

4,358


4,089

(10)

4,079

Research and product development

4,037

(17)

4,020


3,453

(8)

3,445

General and administrative

3,191

(1,005)

2,186


2,833

(942)

1,891

Proceeds from litigation

(250)

250

-


-

-

-

Total operating expenses

11,366

(802)

10,564


10,375

(960)

9,415









Operating income

1,835

803

2,638


3,083

960

4,043

Other income, net

11

-

11


18

-

18









Income before income taxes

1,846

803

2,649


3,101

960

4,061

Provision for (benefit from) income taxes

818

300

1,118


968

294

1,262

Net income

$      1,028

$      503

$     1,531


$       2,133

$    666

$     2,799









Basic earnings per common share

$        0.11


$       0.17


$         0.24


$       0.31

Diluted earnings per common share

$        0.11


$       0.17


$         0.23


$       0.30









Basic weighted average shares outstanding

9,102,786


9,102,786


8,962,171


8,962,171

Diluted weighted average shares outstanding

9,224,727


9,224,727


9,279,800


9,279,800

















The adjustments consist of the following:








Share-based compensation


$      111




$      83


Amortization of purchased intangibles


351




175


Legal expenses for litigation relating to indemnification of former







officers, intellectual property claims and our claim for damages

364




702


Acquisition related expenses


227




-


Proceeds from litigation


(250)




-


Total of adjustments before taxes


803




960


Income taxes affected by the above adjustments


300




294


Total adjustments


$      503




$    666



CLEARONE COMMUNICATIONS, INC.

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA

(Dollars in thousands, except per share value)










Three months ended June 30,


Six months ended June 30,



2012

2011


2012

2011

GAAP Net Income


$           575

$        1,321


$       1,028

$        2,133

Adjustments:







Provision for (benefit from) for income taxes


544

559


818

968

Depreciation and Amortization


417

292


754

587

Non-GAAP EBITDA


1,536

2,172


2,600

3,688

Share-based compensation


60

44


111

83

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








237

358


364

702

Acquisition related expenses


40

-


227

-

Proceeds from litigation


-

-


(250)

-

Non-GAAP Adjusted EBITDA


$        1,873

$        2,574


$       3,075

$        4,473








Basic weighted average shares outstanding


9,107,420

8,992,500


9,102,786

8,962,171

Diluted weighted average shares outstanding


9,226,426

9,433,650


9,224,727

9,279,800








Basic Adjusted EBITDA per common share


$          0.21

$          0.29


$         0.34

$          0.50

Diluted Adjusted EBITDA per common share


$          0.20

$          0.27


$         0.33

$          0.48

SOURCE ClearOne