Audience Announces Fourth Quarter and Calendar Year 2012 Financial Results

Audience Announces Fourth Quarter and Calendar Year 2012 Financial Results 
MOUNTAIN VIEW, CA -- (Marketwire) -- 01/31/13 --  Audience, Inc.
(NASDAQ: ADNC), the leader in advanced voice and audio processing for
mobile devices, today announced its fourth quarter and calendar year
2012 financial results. 
Revenue for the fourth quarter of 2012 was $38.7 million, compared
with $18.0 million for the same period in 2011. As reported under
U.S. generally accepted accounting principles (GAAP), fourth quarter
2012 net income was $3.1 million, or $0.14 per diluted share based on
weighted average shares outstanding of 22.5 million. GAAP net income
for the fourth quarter of 2012 included a $1.2 million income tax
benefit from the release of a valuation allowance against Audience's
deferred tax asset. This compares with a GAAP net loss of $5.6
million, or $(5.56) per diluted share based on weighted average
shares outstanding of 1.0 million, for the same period in 2011. Gross
margin on a GAAP basis for the fourth quarter of 2012 was 53.8% of
revenue, compared to 44.5% of revenue for the same period in 2011. 
Revenue for calendar year 2012 was $143.9 million, compared with
$97.7 million for 2011. Net income for calendar year 2012 was $15.2
million, or $0.63 per diluted share based on weighted average shares
outstanding of 15.7 million, compared to net income of $8.3 million,
or $0.14 per diluted share based on weighted average shares
outstanding of 3.4 million for 2011. 
Using Audience's non-GAAP measure defined below, non-GAAP net income
for the fourth quarter of 2012 was $3.2 million, or $0.14 per diluted
share based on weighted average shares outstanding of 22.5 million.
This compares with a non-GAAP net loss of $4.8 million, or $(4.70)
per diluted share based on weighted average shares outstanding of 1.0
million, for the same period in 2011. Gross margin on a non-GAAP
basis for the fourth quarter of 2012 was 54.0% of revenue, compared
to 44.6% of revenue for the same period in 2011. For calendar year
2012, non-GAAP net income was $18.0 million, or $0.88 per diluted
share based on weighted average shares outstanding of 20.6 million,
compared to 2011 non-GAAP net income of $10.5 million, or $0.79 per
diluted share based on weighted average shares outstanding of 3.4
million
.  
"In the final quarter of 2012, we continued to execute our strategy
to provide a compelling voice user experience on leading global
mobile platforms, with ongoing adoption of our technology in exciting
new mobile devices around the world, including the Motorola Razr I,
Google's Nexus 10 tablet, the Huawei Ascend D2 and BBK's vivo X1,"
said Peter Santos, president and chief executive officer. "As we
expand our earSmart voice and audio capabilities, and continue to
diversify our business in this fast growing market, we look forward
to the opportunity ahead of us in 2013." 
"In a challenging quarter for the industry, our top line and bottom
line achieved results above guidance," said Kevin Palatnik, chief
financial officer. "With that strong end to the year, and anticipated
growth in the first quarter, we believe we are well-positioned for
2013." 
The following statements are based on current expectations. These
statements are forward looking and actual results may differ
materially. 
Business Outlook
 For the first quarter of 2013, the company expects
total revenue to be in the range of $43 to $46 million. First quarter
GAAP gross margin is expected to be in the range of 53% to 56%. First
quarter GAAP net income, which includes $1.1 million of expected
stock based compensation expense and $0.7 million of non-cash rent
expense, is expected to be in the range of $1.9 to $2.9 million, or
$0.08 to $0.12 per diluted share on approximately 23.2 million
diluted weighted average shares outstanding. 
First quarter non-GAAP gross margin is expected to be in the range of
53% to 56%. First quarter non-GAAP net income is expected to be in
the range of $3.7 to $4.7 million, or $0.15 to $0.19 per share on a
diluted basis. 
A schedule showing a reconciliation of the business outlook from GAAP
diluted net income per share to non-GAAP diluted net income per share
is included with this release. 
Quarterly Conference Call Today
 Peter Santos, president and chief
executive officer, and Kevin Palatnik, chief financial officer, will
host a fourth quarter 2012 financial results conference call today at
1:30 pm (Pacific) / 4:30 pm (Eastern). Attendees are asked to join
the conference call at least ten minutes prior to the scheduled
conference call time. The call may be accessed by dialing
1-877-303-3199 (toll free) or 1-253-237-1247 (international). The
passcode is 87087101. A live and archived webcast 
of the call will be
available on Audience's website at http://investor.audience.com/ for
30 days. 
Audience expects that its corporate representatives will meet
privately during the quarter with investors, the media, investment
analysts and others. At these meetings, Audience may reiterate the
business outlook published in this press release. At the same time,
Audience will keep this press release, including the business
outlook, publicly available on its website. 
Beginning March 15, 2013, Audience will observe a Quiet Period during
which Audience's representatives will not comment on Audience's
business outlook, financial results or expectations. The Quiet Period
will extend until the day when Audience's First Quarter 2013 Earnings
Release is published, which is currently scheduled for May 2, 2013. 
Use of Non-GAAP Financial Measures
 Audience prepares its financial
statements in accordance with generally accepted accounting
principles for the United States (GAAP). The non-GAAP financial
measures, such as gross margin, net income and earnings per share
information for the three months and year ended December 31, 2012 and
similar periods from the prior year included in this press release
are different from those otherwise presented under GAAP. The
following are explanations of each type of adjustment that we
incorporate into non-GAAP financial measures: 
Stock-based compensation expense relates t
o equity incentive awards
granted to our employees, directors, and consultants accounted for
under GAAP. Stock-based compensation expense has been and will
continue to be a significant recurring expense for Audience. While we
include the dilutive impact of such equity awards in weighted average
shares outstanding, the expense associated with stock-based awards
reflects a non-cash charge that we exclude from non-GAAP net income. 
Stock warrant revaluation expense is related to preferred stock
warrants outstanding that had to be revalued each quarter prior to
our initial public offering. We believe the comparisons of ongoing
operations should exclude effects of such revaluations as preferred
stock warrant revaluation represents a non-cash expense. 
On June 5, 2012, Audience entered into a lease agreement for its
future corporate headquarters facility in Mountain View, CA. The
facility is in the process of being constructed. Pursuant to the
lease agreement, the lease falls under "build-to-suit" accounting
treatment and therefore, in accordance with accounting for the effect
of lessee involvement in asset construction, the company is
considered to be the owner of the real estate project during the
construction period. As such, Audience recorded an asset for
construction in progress for incurred construction costs, and a
liability for those costs that are not funded by the company.
Additionally the rent co
sts associated with the ground lease during
construction was recorded to the income statement. This rent cost is
a non-cash charge that the company excluded from its non-GAAP net
income. 
During the fourth quarter of 2012, Audience's non-GAAP net income
also excluded the effect of an income tax benefit associated with the
release of a valuation allowance against Audience's deferred tax
assets. Audience believes it is useful to exclude the tax benefit
associated with the release of this valuation allowance as Audience
does not expect releases in the valuation allowance of the magnitude
recorded in the fourth quarter of 2012 to be recorded frequently. 
The shares used to compute non-GAAP basic and diluted net income per
share include the assumed conversion of all outstanding shares of
convertible preferred stock into shares of common stock using the
as-if converted method as of the beginning of each period presented
or the date of issuance, if later. In May 2012, in conjunction with
the closing of our initial public offering, all of our outstanding
preferred stock was converted into shares of our common stock. 
Audience has provided these measures in addition to GAAP financial
results because management believes these non-GAAP measures help
provide a consistent basis for comparison between quarters and annual
growth rates that are not influenced by certain non-cash charges and
therefore are helpful in 
understanding Audience's underlying
operating results. These non-GAAP measures are some of the primary
measures Audience's management uses for planning and forecasting.
These measures are not in accordance with, or an alternative to, GAAP
and these non-GAAP measures may not be comparable to information
provided by other companies. Reconciliations of the GAAP to non-GAAP
results are presented at the end of this press release. 
Cautionary Note Concerning Forward-Looking Statements
 Statements in
the press release and certain matters to be discussed on the fourth
quarter conference call regarding Audience, Inc., which are not
historical facts, are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may be identified by terms such as
believe, expect, may, will, provide, could and should and the
negative of these terms or other similar expressions. These
statements, including statements relating to expectations of future
revenue, net income and operating margin performance, future success
for various products and our leadership position in the market, the
demand for our solutions including continued demand by customers upon
whom we are substantially dependent and diversification of our
customer base are based on current expectations and assumptions that
are subject to risks and uncertainties. Our actual results could
diff
er materially from those we anticipate as a result of various
factors, including: our dependence on a single OEM, Samsung, for a
substantial portion of our revenue; the transition our relationship
with Apple, Inc. is undergoing; our need to maintain and expand our
existing relationships with our OEMs and to establish relationships
with new OEMs in order to maintain and increase our revenue; our
ability to sustain profitable operations due to our history of losses
and accumulated deficit; quarterly fluctuations in our results due to
factors such as the timing of OEM product launches, customer
purchasing behavior in light of anticipated mobile phone launches and
our assessments of whether we have excess or obsolete inventory,
among other factors; competition in the market for our products; our
ability to enter end user product markets, such as notebooks and
smart TVs, as well as new geographic markets; pressure on the average
selling prices for our products; our lengthy sales cycle and the lack
of certainty as to whether any given OEM's products will achieve
market acceptance; our OEMs' lengthy and expensive process to qualify
our products; our ability to develop new or enhanced products in a
timely manner that achieve market acceptance; our reliance on fourth
parties to manufacture, assemble and test our products; defects that
may be present in our products; the impact of future intellectual
property liti
gation and claims for indemnification; changes in tax
laws or our ability to utilize our tax structure and net operating
losses and other risks inherent in fabless semiconductor businesses.
For a discussion of these and other related risks, please refer to
"Risk Factors" in our most recent Form 10-Q, which is available on
the SEC's website at www.sec.gov. Given these uncertainties, you
should not place undue reliance on these forward-looking statements.
Also, forward-looking statements represent our management's beliefs
and assumptions only as of the date made. You should review our SEC
filings carefully and with the understanding that our actual future
results may be materially different from what we expect. 
Except as required by law, we assume no obligation to update these
forward-looking statements, or to update the reasons actual results
could differ materially from those anticipated in these
forward-looking statements, even if new information becomes available
in the future. 
About Audience 
 Audience is the leader in advanced voice and audio
processing for mobile devices. Its family of earSmart(TM) intelligent
voice processors is based on the processes of human hearing, to
suppress background noise and enhance mobile voice quality.
Audience's technology substantially improves the mobile voice
experience, while also improving the performance of speech-based
services, and enhancing audio quality for multimedia. Audience
earSmart(TM) processors are featured in mobile devices from leading
providers in Asia-Pacific, Europe and the U.S. The company is based
in Mountain View, California. For more information, see
www.audience.com. 
ADNC-F 


 
                                                                            
                               Audience, Inc.                               
                    Condensed consolidated balance sheets                   
                               (in thousands)                               
                                 (unaudited)                                
                                                                            
                                                 December 31,  December 31, 
                                                     2012          2011     
                                                 ------------  ------------ 
Assets                                                                      
Current assets:                                                             
  Cash and cash equivalents                      $    109,606  $     15,983 
  Restricted cash                                           -            40 
  Marketable securities                                18,032             - 
  Accounts receivable, net                             12,926         8,465 
  Inventories                                          13,266        20,242 
  Prepaid expenses and other current assets             3,669         2,659 
                                                 ------------  ------------ 
    Total current assets                              157,499        47,389 
Property and equipment, net                            11,801         2,237 
Other noncurrent assets                                 1,009            69 
Restricted cash - noncurrent portion                      170           170 
                                                 ------------  ------------ 
    Total assets                                 $    170,479  $     49,865 
                                                 ============  ============ 
Liabilities, convertible preferred stock and                                
 stockholders' equity (deficit)                                             
Current liabilities:                                                        
  Equipment leasing                              $          -  $        103 
  Accounts payable                                      9,745         7,711 
  Accrued and other current liabilities                 9,228         4,405 
  Deferred credits and income                             285           474 
  Financing obligation for construction in                                  
   progress                                             5,290             - 
                                                 ------------  ------------ 
    Total current liabilities                          24,548        12,693 
Deferred rent - noncurrent portion                          -           132 
Convertible preferred stock warrant liability               -         1,137 
Taxes payable - noncurrent                                376             - 
                                                 ------------  ------------ 
    Total liabilities                                  24,924        13,962 
                                                 ------------  ------------ 
Convertible preferred stock                                 -        74,348 
Stockholders' equity (deficit):                                             
Preferred stock                                             -             - 
Common stock                                               21             1 
Additional paid-in capital                            172,461         3,732 
Accumulated other comprehensive income (loss)               3           (31)
Accumulated deficit                                   (26,930)      (42,147)
                                                 ------------  ------------ 
    Total stockholders' equity (deficit)              145,555       (38,445)
                                                 ------------  ------------ 
Total liabilities, convertible preferred stock                              
 and stockholders' equity (deficit)              $    170,479  $     49,865 
                                                 ============  ============ 
                                                                            

 
                                                                            
                               Audience, Inc.                               
          Condensed consolidated statements of comprehensive income         
                    (in thousands, except per share data)                   
                                 (unaudited)                                
                                                                            
                                  Three months ended   Twelve months ended  
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
                                                                            
Revenue:                                                                    
  Hardware                       $  34,462  $  17,952  $ 107,267  $  97,668 
  Licensing                          4,227          -     36,638          - 
       
                          ---------  ---------  ---------  --------- 
    Total revenue                   38,689     17,952    143,905     97,668 
                                 ---------  ---------  ---------  --------- 
Cost of revenue                     17,855      9,962     62,247     45,707 
                                 ---------  ---------  ---------  --------- 
    Gross profit                    20,834      7,990     81,658     51,961 
Operating expenses:                                                         
  Research and development           8,473      6,973     31,520     21,578 
  Selling, general and                                                      
   administrative                   10,498      6,367     35,271     21,237 
                                 ---------  ---------  ---------  --------- 
Total operating expenses            18,971     13,340     66,791     42,815 
                                 ---------  ---------  ---------  --------- 
Income (loss) from operations        1,863     (5,350)    14,867      9,146 
Interest income (expense), net          74         (3)       164         (8)
Other income (expense), net            (82)      (286)      (586)      (843)
                                 ---------  ---------  ---------  --------- 
Income (loss) before income                                                 
 taxes                               1,855     (5,639)    14,445      8,295 
Income tax benefit                   1,204          -        772          - 
                                 ---------  ---------  ---------  --------- 
Net income (loss)                $   3,059  $  (5,639) $  15,217  $   8,295 
                                 =========  =========  =========  ========= 
Net income (loss) per share:                                                
    Basic                        $    0.15  $   (5.56) $    0.71  $    0.16 
                                 =========  =========  =========  ========= 
    Diluted                      $    0.14  $   (5.56) $    0.63  $    0.14 
                                 =========  =========  =========  ========= 
Weighted average shares used in                                             
 computing net income (loss) per                                            
 share:                                                                     
    Basic                           20,587      1,014     13,377        948 
                                 =========  =========  =========  ========= 
    Diluted                         22,460      1,014     15,687      3,384 
                                 =========  =========  =========  ========= 
Other comprehensive income                                                  
 (loss):                                                                    
  Foreign currency translation                                              
   adjustments                   $       -  $     (18) $      31  $     (59)
  Unrealized gain on marketable      
                                       
   securities                            3          -          3          - 
                                 ---------  ---------  ---------  --------- 
Net comprehensive income (loss)  $   3,062  $  (5,657) $  15,251  $   8,236 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                               Audience, Inc.                               
                    Consolidated statements of operations                   
                 GAAP to Non-GAAP net income reconciliation                 
                               (in thousands)                               
                                                                            
                                   Three months ended   Twelve months ended 
                                      December 31,          December 31,    
                                  --------------------  --------------------
                                     2012       2011       2012       2011  
                                  ---------  ---------  ---------  ---------
                                                                            
GAAP net income (loss)            $   3,059  $  (5,639) $  15,217  $   8,295
  Stock-based compensation              944        606      3,134      1,390
  Non-cash rent expense                 431          -        579          -
  Revaluation of warrant liability        -        267        290        823
  Valuation allowance                (1,225)         -     (1,225)         -
                                  ---------  ---------  ---------  ---------
Non-GAAP net income (loss)        $   3,209  $  (4,766) $  17,995  $  10,508
                                  =========  =========  =========  =========
                                                                            
                                                                            
                               Audience, Inc.                               
              Unaudited computation of GAAP earnings per share              
                (in thousands, except for per share amounts)                
                                                                            
                                  Three months ended   Twelve months ended  
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
                                                                            
Computation of GAAP net income                                              
 (loss) per share:                                                          
GAAP net income (loss)           $   3,059  $  (5,639) $  15,217  $   8,295 
Non-cumulative dividends to                                                 
 preferred stockholders                  -          -     (2,247)    (5,993)
Undistributed earnings allocated                                            
 to preferred stockholders               -          -     (3,481)    (2,148)
                                 ---------  ---------  ---------  --------- 
Net income (loss), basic             3,059     (5,639)     9,489        154 
Adjustments to net income (loss)                                            
 for preferred anti-dilutive             -          -        390        315 
                                 ---------  ---------  ---------  --------- 
Net income (loss), diluted       $   3,059  $  (5,639) $   9,879  $     469 
                                 =========  =========  =========  ========= 
Weighted average shares used in                                             
 computing net income (loss) per                                            
 share:                                                                     
  Basic                             20,587      1,014     13,377        948 
                                 =========  =========  =========  ========= 
  Diluted                           22,460      1,014     15,687      3,384 
                                 =========  =========  =========  ========= 
Net income (loss) per share:                                                
  Basic                          $    0.15  $   (5.56) $    0.71  $    0.16 
                                 =========  =========  =========  ========= 
  Diluted                        $    0.14  $   (5.56) $    0.63  $    0.14 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                               Audience, Inc.                               
   Unaudited reconciliation of GAAP to non-GAAP diluted earnings per share  
                  (in thousands, except per share amounts)                  
                                                                            
                                  Three months ended   Twelve months ended  
                                     December 31,          December 31,     
                                  ------------------  --------------------- 
                                    2012      2011      2012         2011   
                                  --------  --------  --------     -------- 
GAAP net income (loss)        
    $  3,059  $ (5,639) $ 15,217     $  8,295 
Non-cumulative dividends to                                                 
 preferred stockholders                  -         -    (2,247)(B)   (5,993)
Undistributed earnings allocated                                            
 to preferred stockholders               -         -    (3,481)      (2,148)
                                  --------  --------  --------     -------- 
GAAP net income (loss) - basic       3,059    (5,639)    9,489          154 
Adjustment to two-class method                                              
 diluted net income (loss)               -         -       390          315 
                                  --------  --------  --------     -------- 
GAAP net income (loss) - diluted     3,059    (5,639)    9,879          469 
Non-GAAP adjustments:                                                       
  Stock-based compensation             944       606     3,134        1,390 
  Non-cash rent expense                431         -       579            - 
  Revaluation of warrant                                                    
   liability                             -       267       290          823 
  Valuation allowance               (1,225)        -    (1,225)           - 
Non-GAAP as if converted method          -         -     5,338 (A)        - 
                                  --------  --------  --------     -------- 
Non-GAAP net income (loss) -                                                
 diluted                          $  3,209  $ (4,766) $ 17,995     $  2,682 
                                  ========  ========  ========     ======== 
GAAP - diluted weighted average                                             
 shares                             22,460     1,014    15,687        3,384 
                                  ========  ========  ========     ======== 
Non-GAAP - diluted weighted                                                 
 average shares                     22,460     1,014    20,558        3,384 
                                  ========  ========  ========     ======== 
GAAP - diluted net income (loss)                                            
 per share                        $   0.14  $  (5.56) $   0.63     $   0.14 
Non-GAAP adjustments:                                                       
  Stock-based compensation            0.04      0.60      0.15         0.41 
  Non-cash rent expense               0.02         -      0.03            - 
  Revaluation of warrant                                                    
   liability                             -      0.26      0.02         0.24 
  Valuation allowance                (0.06)        -     (0.06)           - 
Non-GAAP as if converted method          -         -      0.11 (B)        - 
                                  --------  --------  --------     -------- 
Non-GAAP - diluted net income                                               
 (loss) per share                 $   0.14  $  (4.70) $   0.88     $   0.79 
                                  ========  ========  ========     ======== 
                                                                            
 (A) For the twelve months ended December 31, 2012, non-GAAP net income was 
     adjusted by $5,338 to give effect to the conversion of our convertible 
     preferred stock and certain preferred stock warrants using the as-if   
     converted method into common shares as if the conversion had occurred  
     as of the beginning of the period presented.                           
 (B) For the twelve months ended December 31, 2012, non-GAAP diluted EPS was
     computed to give effect to the conversion of our convertible preferred 
     stock and certain preferred stock warrants using the as-if converted   
     method into common shares as if the conversion had occurred as of the  
     beginning of the period presented. Therefore to bridge the GAAP to non-
     GAAP EPS the $2,247 non-cumulative dividends to preferred stockholders 
     should not be allocated to stockholders.                               
                                                                            
                               Audience, Inc.                               
          Non-GAAP condensed consolidated statements of operations          
     Impact of Non-GAAP adjustments on reported GAAP net income (loss)      
                   (in thousands, except per share data)                    
                                (unaudited)                                 
                                                                            
                  Three months ended December   Three months ended December 
                           31, 2012                      31, 2011           
                 ----------------------------  ---------------------------- 
                 Reported  Adjust-      Non-   Reported  Adjust-      Non-  
                   GAAP     ments       GAAP     GAAP     ments       GAAP  
                 --------  -------    -------  --------  -------    ------- 
                                                                            
Revenue:                                                                    
 Hardware        $ 34,462  $    --    $34,462  $ 17,952  $    --    $
17,952 
 Licensing          4,227       --      4,227        --       --         -- 
                 --------  -------    -------  --------  -------    ------- 
  Total revenue    38,689       --     38,689    17,952       --     17,952 
                 --------  -------    -------  --------  -------    ------- 
 Cost of revenue   17,855      (45)(A) 17,810     9,962      (24)(B)  9,938 
                 --------  -------    -------  --------  -------    ------- 
  Gross profit     20,834       45     20,879     7,990       24      8,014 
 Operating                                                                  
  expenses:                                                                 
  Research and                                                              
   development      8,473     (565)(A)  7,908     6,973     (132)(B)  6,841 
  Selling,                                                                  
   general and                                                              
   administrative                                                           
                   10,498     (765)(A)  9,733     6,367     (450)(B)  5,917 
                 --------  -------    -------  --------  -------    ------- 
  Total                                                                     
   operating                                                                
   expenses        18,971   (1,330)    17,641    13,340     (582)    12,758 
                 --------  -------    -------  --------  -------    ------- 
Income (loss)                                                               
 from operations    1,863    1,375      3,238    (5,350)     606     (4,744)
Interest income                                                             
 (expense), net        74       --         74        (3)      --         (3)
Other income                                                                
 (expense), net       (82)      --        (82)     (286)     267 (D)    (19)
                 --------  -------    -------  --------  -------    ------- 
Income (loss)                                                               
 before income                                                              
 taxes              1,855    1,375      3,230    (5,639)     873     (4,766)
Income tax                                                                  
 benefit                                                                    
 (expense)          1,204   (1,225)(C)    (21)       --       --         -- 
                 --------  -------    -------  --------  -------    ------- 
Net income                                                                  
 (loss)          $  3,059  $   150    $ 3,209  $ (5,639) $   873    $(4,766)
                 ========  =======    =======  ========  =======    ======= 
Net income                                                                  
 (loss) per                                                                 
 share:                                                                     
  Basic          $   0.15             $  0.16  $  (5.56)            $ (4.70)
                 ========             =======  ========             ======= 
  Diluted        $   0.14             $  0.14  $  (5.56)            $ (4.70)
                 ========             =======  ========             ======= 
Weighted average                                                            
 shares used in                                                             
 computing net                                                              
 income (loss)                                                              
 per share:                                                                 
  Basic            20,587              20,587     1,014               1,014 
                 ========             =======  ========             ======= 
  Diluted          22,460              22,460     1,014               1,014 
                 ========             =======  ========             ======= 
                                                                            
 (A) Stock-based compensation expense total - $944 and Non-cash rent expense
     total - $431                                                           
 (B) Stock-based compensation expense total - $606                          
 (C) Valuation allowance - $1,225                                           
 (D) Quarterly warrant revaluation - $267                                   
                                                                            
                                                                            
                               Audience, Inc.                               
          Non-GAAP condensed consolidated statements of operations          
         Impact of Non-GAAP adjustments on reported GAAP net income         
                    (in thousands, except per share data)                   
                                 (unaudited)                                
                                                                            
             Twelve months ended December    Twelve months ended December   
                       31, 2012                        31, 2011             
            ------------------------------   ----------------------------   
              Repor                           Repor                         
              -ted      Adjust                 -ted     Adjust      Non-    
              GAAP      -ments    Non-GAAP     GAAP     -ments      GAAP    
            --------   --------   --------   -------   --------   -------   
                                                                            
Revenue:                                                                    
 Hardware   $107,267   $     --   $107,267   $97,668   $     --   $97,668   
 Licensing    36,638         --     36,638        --         --        --   
            --------   --------   --------   -------   --------   -------   
  Total                                                                     
   revenue   143,905         --    143,905    97,668         --    97,668   
            --------   --------   --------   -------   --------   -------   
Cost of                                                                     
 revenue      62,247      (150)(A)  62,097    45,707       (90)(B) 45,617   
            --------   --------   --------   -------   --------   -------   
 Gross                                                                      
  profit      81,658        150     81,808    51,961         90    52,051   
Operating                                                                   
 expenses:                                                                  
 Research                                                                   
  and                                                                       
  development                                                                 
              31,520    (1,338)(A)  30,182    21,578      (416)(B) 21,162   
 Selling,                                                                   
  general                                                                   
  and                                                                       
  admini-                                                                   
  strative    35,271    (2,225)(A)  33,046    21,237      (884)(B) 20,353   
            --------   --------   --------   -------   --------   -------   
 Total                                                                      
  operating                                                                 
  expenses    66,791    (3,563)     63,228    42,815    (1,300)    41,515   
            --------   --------   --------   -------   --------   -------   
Income from                                                                 
 operations   14,867      3,713     18,580     9,146      1,390    10,536   
Interest                                                                    
 income                                                                     
 (expense),                                                                 
 net             164         --        164       (8)         --       (8)   
Other                                                                       
 income                                                                     
 (expense),                                                                 
 net           (586)        290(C)   (296)     (843)        823(D)   (20)   
            --------   --------   --------   -------   --------   -------   
Income                                                                      
 before                                                                     
 income                                                                     
 taxes        14,445      4,003     18,448     8,295      2,213    10,508   
Income tax                                                                  
 benefit                                                                    
 (expense)       772    (1,225)(E)   (453)        --         --        --   
            --------   --------   --------   -------   --------   -------   
Net income  $ 15,217   $  2,778   $ 17,995   $ 8,295   $  2,213   $10,508   
            ========   ========   ========   =======   ========   =======   
Net income                                                                  
 per share:                                                                 
  Basic     $   0.71(F)           $   0.99   $  0.16(G)           $  2.50(I)
            ========              ========   =======              =======   
  Diluted   $   0.63(F)           $   0.88   $  0.14(G)           $  0.79(I)
            ========              ========   =======              =======   
Weighted                                                                    
 average                                                                    
 shares                                                                     
 used in                                                                    
 computing                                                                  
 net income                                                                 
 per share:                                                                 
  Basic       13,377                18,248(H)    948                  948   
            ========              ========   =======              =======   
  Diluted     15,687                20,558(H)  3,384                3,384   
            ========              ========   =======              =======   
                                                                            
 (A) Stock-based compensation expense total - $3,134 and Non-cash rent      
     expense total - $579                                                   
 (B) Stock-based compensation expense total - $1,390                        
 (C) Twelve months ended December 31, 2012 warrant revaluation - $290       
 (D) Twelve months ended December 31, 2011 warrant revaluation - $823       
 (E) Valuation allowance - $1,225                                           
 (F) GAAP basic and diluted EPS was calculated using the two-class method   
     until our convertible preferred stock converted to common stock upon   
     the closure of our initial public offering. Therefore, our GAAP net    
     income was adjusted by a decrease of $5,728 and $5,338 in arriving to  
     "net income" for the calculation of basic and diluted GAAP EPS,        
     respectively.                                                          
 (G) GAAP basic and diluted EPS was calculated using the two-class method.  
     Therefore, our GAAP net income was adjusted by a decrease of $8,141 and
     $7,826 in arriving to "net income" for the calculation of basic and    
     diluted GAAP EPS, respectively.                                        
 (H) Non-GAAP basic and diluted EPS was computed to give effect to the      
     conversion of our convertible preferred stock and certain preferred    
     stock warrants using the as-if converted method into common shares as  
     if the conversion had occurred as of the beginning of each period      
     presented.                                                             
 (I) Non-GAAP basic and diluted EPS was calculated using the two-class      
     method. Therefore, our Non-GAAP net income was adjusted by a decrease  
     of $8,141 and $7,826 in arriving to "net income" for the calculation of
     basic and diluted Non-GAAP EPS, respectively.                          
                                                                           
                               Audience, Inc.                              
    Estimated computation of GAAP to non-GAAP diluted earnings per share   
                                                                           
                                                        Three months ending
                                                          March 31, 2013   
                                                       --------------------
Estimated GAAP diluted net income per share                $0.08 - $0.12   
Estimated stock-based compensation expense per share           $0.04       
Estimated non-cash rent expense per share                      $0.03       
                                                       --------------------
Non-GAAP - diluted net income per share                    $0.15 - $0.19   
                                                       ====================

  
For more information, contact: 
Investors and Shareholders
The Blueshirt Group
Suzanne Craig 
415-217-4962 
suzanne@blueshirtgroup.com  
Melanie Friedman
415-217-4964
melanie@blueshirtgroup.com 
Media and Industry Analysts
Diane Vanasse
408-242-0027
dvanasse@audience.com 
 
 
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