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ClearOne Reports 2012 Third Quarter Financial Results

November 15, 2012

SALT LAKE CITY, Nov. 15, 2012 /PRNewswire/ — ClearOne (NASDAQ: CLRO) today reported its financial results for the three and nine months ended September 30, 2012.

For the 2012 third quarter, revenue was $11.6 million compared with $11.5 million for the third quarter of 2011. Gross profit was $6.7 million, or 58% of revenue, compared with $7.0 million, or 61% of revenue, for the third quarter of 2011. Operating income was $1.4 million and net income was $929,000, or $0.10 per diluted share. For the third quarter of 2011, which included a favorable judgment award of $3.7 million, operating income was $5.4 million and net income was $3.4 million, or $0.36 per diluted share. Non-GAAP net income, which excludes proceeds from litigation, share-based compensation and other non-operating items, rose to $1.3 million, or $0.14 per diluted share, from $1.2 million, or $0.13 per diluted share, for the third quarter of 2011. Non-GAAP Adjusted EBITDA was $2.1 million, or $0.23 per diluted share, for third quarters of both 2012 and 2011.

For the first nine months of 2012, revenue was $33.4 million compared with $34.1 million for the same period in 2011. Gross profit was $19.9 million, or 60% of revenue, compared with $20.4 million, or 60% of revenue, for the first nine months of 2011. Operating income was $3.2 million and net income was $2.0 million, or $0.21 per diluted share. For the first nine months of the prior year, which included the $3.7 judgment award, operating income was $8.4 million and net income was $5.5 million, or $0.59 per diluted share. Non-GAAP net income was $2.8 million, or $0.30 per diluted share, compared to $3.8 million, or $0.41 per diluted share, for the nine-month period of 2011. Non-GAAP Adjusted EBITDA was $5.2 million, or $0.56 per diluted share, compared with $6.6 million, or $0.71 per diluted share, for the first nine months of 2011.

The reconciliation between GAAP and Non-GAAP measures is available in the tables attached to this release.

“Revenue for the 2012 third quarter increased slightly over the same period last year, driven by increased sales in our EMEA region, offset by a decline in revenues from our Asia Pacific region,” said Zee Hakimoglu, President, Chief Executive Officer and Chairman of ClearOne. “During the quarter, we made solid progress strengthening our balance sheet as evidenced by our increased cash position and lower inventory levels.

“While the technology companies continue to be impacted by global economic headwinds, our business had performed better than many of our industry peers. Looking ahead, we plan to launch several new products over the next three months, which will provide positive momentum as we enter 2013.”

At September 30, 2012, the company had cash and cash equivalents of $14.3 million, up $3.9 million from June 30, 2012, and no debt.

Recent Highlights:

  • September 2012. The company launched an enhanced corporate website, which streamlines the user experience with new organization of the full breadth of ClearOne audio and video products and solutions.
  • October 2012. The company’s president, CEO and chairman, Zee Hakimoglu, received the 2012 InfoComm International Women in AV Award; created to raise awareness of the growing role of female professionals in the male-dominated field of audiovisual technology.
  • October 2012. The company established a distribution agreement with Ingram Micro Inc. under which Ingram Micro will distribute ClearOne’s new line of software-based video conferencing solutions and its USB, analog and VoIP conference phones to authorized technology resellers in the U.S.
  • October 2012. The company launched the MagicBox on-premise Entry-Level Server (ELS) to extend its web-based, digital signage offering. The ELS runs MagicBox WebSuite software applications for digital signage, including content creation and asset management inside a browser for a comprehensive content management experience — from design to verification.

Non-GAAP Financial Measures

ClearOne provides non-GAAP financial information in the form of Non-GAAP net income, 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, 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 offer 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 the successful commercialization of expected future product launches and 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.
                                                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                                 (Dollars in thousands, except par value)

                                                            September 30, 2012             December 31, 2011
                                                                Unaudited
                                                                ---------
                                             ASSETS
    Current assets:
    Cash and cash equivalents                                                     $14,332                    $16,683
    Receivables, net of
     allowance for doubtful
     accounts of $64 and $149,
     respectively                                                                   7,667                      8,457
    Inventories                                                                    11,992                     12,565
    Deferred income taxes                                                           3,025                      2,987
    Prepaid expenses and other
     assets                                                                         1,448                        740
                                                                                    -----                        ---
    Total current assets                                                           38,464                     41,432

    Long-term inventories, net                                                      2,432                      1,905
    Property and equipment, net                                                     1,971                      2,338
    Intangibles, net                                                                5,636                      2,690
    Goodwill                                                                        1,939                      1,153
    Other assets                                                                       64                         41
    Total assets                                                                  $50,506                    $49,559
                                                                                  =======                    =======

                            LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
    Accounts payable                                                               $1,411                     $2,814
    Accrued liabilities                                                             2,568                      2,534
    Deferred product revenue                                                        3,545                      3,404
                                                                                    -----                      -----
    Total current liabilities                                                       7,524                      8,752

    Deferred income taxes                                                             128                        101
    Deferred rent                                                                     454                        494
    Other long-term liabilities                                                       686                        548
    Total liabilities                                                               8,792                      9,895
                                                                                    -----                      -----

    Shareholders' equity:
    Common stock, par value
     $0.001, 50,000,000 shares
     authorized,                                                                        9                          9
    9,191,099 and 9,098,152 shares issued and
     outstanding,  respectively
    Additional paid-in capital                                                     40,550                     40,073
    Treasury stock at cost -
     94,744 shares as of
     September 30, 2012                                                              (384)                         -
    Retained earnings
     (accumulated deficit)                                                          1,539                       (418)
    Total shareholders' equity                                                     41,714                     39,664
                                                                                   ------                     ------
    Total liabilities and
     shareholders' equity                                                         $50,506                    $49,559
                                                                                  =======                    =======

                                      CLEARONE COMMUNICATIONS, INC.
                        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Dollars in thousands, except per share value)

                                   Three months ended                             Nine Months ended
                                      September 30,                                 September 30,
                                      -------------                                 -------------
                                           2012                     2011                   2012          2011
                                           ----                     ----                   ----          ----
    Revenue                             $11,573                  $11,511                $33,382       $34,102
    Cost of goods sold                    4,856                    4,534                 13,464        13,666
    Gross profit                          6,717                    6,977                 19,918        20,436
                                          -----                    -----                 ------        ------

    Operating expenses:
    Sales and
     marketing                            1,821                    2,184                  6,209         6,274
    Research and
     product
     development                          1,959                    1,796                  5,996         5,249
    General and
     administrative                       1,545                    1,333                  4,736         4,166
    Proceeds from
     litigation                               -                   (3,702)                  (250)       (3,702)
    Total operating
     expenses                             5,325                    1,611                 16,691        11,987
                                          -----                    -----                 ------        ------

    Operating income                      1,392                    5,366                  3,227         8,449
    Other income
     (expense), net                          29                       (4)                    40            15
                                            ---                      ---                    ---           ---

    Income before
     income taxes                         1,421                    5,362                  3,267         8,464
    Provision for
     income taxes                           492                    1,987                  1,310         2,956
    Net income                             $929                   $3,375                 $1,957        $5,508
                                           ====                   ======                 ======        ======

    Basic earnings per
     common share                         $0.10                    $0.37                  $0.21         $0.61
    Diluted earnings
     per common share                     $0.10                    $0.36                  $0.21         $0.59

    Basic weighted
     average shares
     outstanding                      9,113,713                9,089,919              9,106,455     9,005,221
    Diluted weighted
     average shares
     outstanding                      9,193,574                9,358,292              9,219,161     9,276,619

                                                                                                               CLEARONE COMMUNICATIONS, INC.
                                                                                                       RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
                                                                                                       (Dollars in thousands, except per share value)

                                                                        Quarter ended September 30, 2012                                             Quarter ended September 30, 2011
                                                                        --------------------------------                                             --------------------------------
                                                                                      GAAP                             Adjustments                         Non-GAAP                   GAAP            Adjustments          Non-GAAP
                                                                                      ----                             -----------                         --------                   ----            -----------          --------
    Revenue                                                                                      $11,573                           $         -                         $11,573               $11,511            $       -             $11,511
    Cost of goods sold                                                                             4,856                                    (2)                          4,854                 4,534                    -               4,534
    Gross profit                                                                                   6,717                                     2                           6,719                 6,977                    -               6,977
                                                                                                   -----                                   ---                           -----                 -----                  ---               -----

    Operating expenses:
    Sales and marketing                                                                            1,821                                   (15)                          1,806                 2,184                   (4)              2,180
    Research and product development                                                               1,959                                    (9)                          1,950                 1,796                   (4)              1,792
    General and administrative                                                                     1,545                                  (467)                          1,078                 1,333                 (267)              1,066
    Proceeds from litigation                                                                           -                                     -                               -                (3,702)               3,702                   -
    Total operating expenses                                                                       5,325                                  (491)                          4,834                 1,611                3,427               5,038
                                                                                                   -----                                  ----                           -----                 -----                -----               -----

    Operating income                                                                               1,392                                   493                           1,885                 5,366               (3,427)              1,939
    Other income, net                                                                                 29                                     -                              29                    (4)                   -                  (4)
                                                                                                     ---                                   ---                             ---                   ---                  ---                 ---

    Income before income taxes                                                                     1,421                                   493                           1,914                 5,362               (3,427)              1,935
    Provision for income taxes                                                                       492                                   171                             663                 1,987               (1,285)                702
                                                                                                     ---                                   ---                             ---                 -----               ------                 ---
    Net income                                                                                      $929                                  $322                          $1,251                $3,375              $(2,142)             $1,233
                                                                                                    ====                                  ====                          ======                ======              =======              ======

    Basic earnings per common share                                                                $0.10                                                                 $0.14                 $0.37                                    $0.14
    Diluted earnings per common share                                                              $0.10                                                                 $0.14                 $0.36                                    $0.13

    Basic weighted average shares outstanding                                                  9,113,713                                                             9,113,713             9,089,919                                9,089,919
    Diluted weighted average shares outstanding                                                9,193,574                                                             9,193,574             9,358,292                                9,358,292

    The adjustments consist of the following:
    -----------------------------------------
    Proceeds from litigation                                                                                                       $         -                                                                    $(3,702)
    Share-based compensation                                                                                                                65                                                                         48
    Amortization of purchased intangibles                                                                                                  222                                                                         87
    Legal expenses for litigation relating to indemnification of former
    officers, intellectual property claims and our claim for damages                                                                       162                                                                        139
    Acquisition related expenses                                                                                                            44                                                                          -
                                                                                                                                           ---                                                                        ---
                                                                                                                                           493                                                                     (3,428)
    Provision for income taxes affected by the above adjustments                                                                           171                                                                     (1,285)
    Total adjustments                                                                                                                     $322                                                                    $(2,143)
                                                                                                                                          ====                                                                    =======

                                                                                                     CLEARONE COMMUNICATIONS, INC.
                                                                                             RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
                                                                                            (Dollars in thousands, except per share value)

                                                                         Nine Months ended                                                  Nine Months ended
                                                                        September 30, 2012                                                 September 30, 2011
                                                                        ------------------                                                 ------------------
                                                                               GAAP                           Adjustments                  Non-GAAP           GAAP            Adjustments          Non-GAAP
                                                                               ----                           -----------                  --------           ----            -----------          --------
    Revenue                                                                             $33,382                         $           -                 $33,382        $34,102            $       -             $34,102
    Cost of goods sold                                                                   13,464                                    (3)                 13,461         13,666                    -              13,666
    Gross profit                                                                         19,918                                     3                  19,921         20,436                    -              20,436
                                                                                         ------                                   ---                  ------         ------                  ---              ------

    Operating expenses:
    Sales and marketing                                                                   6,209                                   (45)                  6,164          6,274                  (14)              6,260
    Research and product development                                                      5,996                                   (26)                  5,970          5,249                  (12)              5,237
    General and administrative                                                            4,736                                (1,452)                  3,284          4,166               (1,070)              3,096
    Proceeds from litigation                                                               (250)                                  250                       -         (3,702)               3,702                   -
    Total operating expenses                                                             16,691                                (1,273)                 15,418         11,987                2,606              14,593
                                                                                         ------                                ------                  ------         ------                -----              ------

    Operating income                                                                      3,227                                 1,276                   4,503          8,449               (2,606)              5,843
    Other income, net                                                                        40                                     -                      40             15                    -                  15
                                                                                            ---                                   ---                     ---            ---                  ---                 ---

    Income before income taxes                                                            3,267                                 1,276                   4,543          8,464               (2,606)              5,858
    Provision for (benefit from) income taxes                                             1,310                                   481                   1,791          2,956                 (943)              2,013
                                                                                          -----                                   ---                   -----          -----                 ----               -----
    Net income                                                                           $1,957                                  $795                  $2,752         $5,508              $(1,663)             $3,845
                                                                                         ======                                  ====                  ======         ======              =======              ======

    Basic earnings per common share                                                       $0.21                                                         $0.30          $0.61                                    $0.43
    Diluted earnings per common share                                                     $0.21                                                         $0.30          $0.59                                    $0.41

    Basic weighted average shares outstanding                                         9,106,455                                                     9,106,455      9,005,221                                9,005,221
    Diluted weighted average shares outstanding                                       9,219,161                                                     9,219,161      9,276,619                                9,276,619

    The adjustments consist of the following:
    -----------------------------------------
    Proceeds from litigation                                                                                                    $(250)                                                    $(3,702)
    Share-based compensation                                                                                                      176                                                         131
    Amortization of purchased intangibles                                                                                         554                                                         263
    Legal expenses for litigation relating to indemnification of former
    officers, intellectual property claims and our claim for damages                                                              526                                                         841
    Acquisition related expenses                                                                                                  270                                                           -
                                                                                                                                  ---                                                         ---
    Total of adjustments before taxes                                                                                           1,276                                                      (2,467)
    Income taxes affected by the above adjustments                                                                                481                                                        (893)
    Total adjustments                                                                                                            $795                                                     $(1,574)
                                                                                                                                 ====                                                     =======

                                                                                        CLEARONE COMMUNICATIONS, INC.
                                                                        RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA
                                                                               (Dollars in thousands, except per share value)

                                                                                         Three months ended                                      Nine months ended
                                                                                           September 30,                                           September 30,
                                                                                           -------------                                           -------------
                                                                                                             2012                          2011                         2012       2011
                                                                                                             ----                          ----                         ----       ----
    GAAP Net Income                                                                                          $929                        $3,375                       $1,957     $5,508
    Adjustments:
    ------------
    Provision for (benefit from) for income taxes                                                             492                         1,987                        1,310      2,956
    Depreciation and Amortization                                                                             412                           285                        1,166        872
                                                                                                              ---                           ---                        -----        ---
    Non-GAAP EBITDA                                                                                         1,833                         5,647                        4,433      9,336
    Proceeds from litigation                                                                                    -                        (3,702)                        (250)    (3,702)
    Share-based compensation                                                                                   65                            48                          176        131
    Legal expenses for litigation relating to indemnification of former
    officers, intellectual property claims and our claim for damages                                          162                           139                          526        841
    Acquisition related expenses                                                                               44                             -                          270          -
    Non-GAAP Adjusted EBITDA                                                                               $2,104                        $2,132                       $5,155     $6,606
                                                                                                           ------                        ------                       ------     ------

    Basic weighted average shares outstanding                                                           9,113,713                     9,089,919                    9,106,455  9,005,221
    Diluted weighted average shares outstanding                                                         9,193,574                     9,358,292                    9,219,161  9,276,619

    Basic Adjusted EBITDA per common share                                                                  $0.23                         $0.23                        $0.57      $0.73
    Diluted Adjusted EBITDA per common share                                                                $0.23                         $0.23                        $0.56      $0.71

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

SOURCE ClearOne Communications, Inc.


Source: PR Newswire