ClearOne Reports 2012 Fourth Quarter, Full Year Financial Results

      ClearOne Reports 2012 Fourth Quarter, Full Year Financial Results

Company Reports Record Q4 Revenue, Exceeds $13 Million

PR Newswire

SALT LAKE CITY, Feb. 27, 2013

SALT LAKE CITY, Feb. 27, 2013 /PRNewswire/ --ClearOne (NASDAQ: CLRO) today
reported its financial results for the fourth quarter and full year ended
December 31, 2012.

For the 2012 fourth quarter, revenue increased 9% to $13.0 million from $12.0
million for the fourth quarter of 2011. Gross profit was $7.4 million, or 57%
of revenue, compared with $7.1 million, or 59% of revenue, for the fourth
quarter of 2011. Operating income was $39.1 million and net income was $24.5
million, or $2.67 per diluted share, which included $38.3 million of proceeds
from litigation, net. For the prior year fourth quarter, operating income was
$2.1 million and net income was $1.4 million, or $0.15 per diluted share.
Non-GAAP net income, which excludes proceeds from litigation, share-based
compensation and other non-operating items, was $1.2 million, or $0.13 per
diluted share, compared with $1.5 million, or $0.17 per diluted share, for
fourth quarter 2011. Non-GAAP Adjusted EBITDA was $2.9 million, or $0.31 per
diluted share, compared with $2.6 million, or $0.28 per diluted share, for
fourth quarter of 2011.

For the 2012 full year, revenue was $46.4 million compared with $46.1 million
for 2011. Gross profit was $27.3 million, or 59% of revenue, compared with
$27.5 million, or 60% of revenue, for 2011. Operating income, which included
$38.5 million of proceeds from litigation was $42.5 million and net income was
$26.6 million, or $2.89 per diluted share. For the prior year, which included
$3.7 million of proceeds from litigation, operating income was $10.6 million
and net income was $6.9 million, or $0.75 per diluted share. Non-GAAP net
income was $4.0 million, or $0.43 per diluted share, compared with $5.3
million, or $0.57 per diluted share, for 2011. Non-GAAP Adjusted EBITDA was
$8.0 million, or $0.87 per diluted share, compared with $9.0 million, or $0.97
per diluted share, for 2011.

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

"We finished 2012 with a record performance due to substantial increase in
demand for our products in North America. We are optimistic that our positive
momentum will be not only sustained but further propelled by the introduction
of new and innovative audio and video products into our channel," said Zee
Hakimoglu, President, Chief Executive Officer and Chairman of ClearOne. "The
strong cash position we currently enjoy has also allowed us to increase our
commitment to our stock buy-back program. We will also carefully evaluate
over time, opportunities available to us and use the cash for selective
infusions of technology, sales & marketing, infrastructure, and other
investments to fuel our growth, as well as acquisitions that may strategically
fit our business and are accretive to our performance."

At December 31, 2012, the company had cash and cash equivalents of $55.5
million, up from $16.7 million at the end of the prior year, and no debt.

Recent Highlights:

  oDecember 2012. The company settled an arbitration proceeding for $45.0
    million, subject to a 15% contingency legal fee paid to ClearOne's
    litigation counsel.
  oDecember 2012. The company established a distribution agreement with D&H
    Distributing, under which D&H will distribute ClearOne's new line of
    software-based video conferencing solutions and its USB, analog and VoIP
    conference phones to authorized technology resellers and retailers in
    North America.
  oDecember 2012. The company announced its new WS800 Digital Wireless
    Microphone System to complement its professionally installed audio
    conferencing product lines. The microphone system uses radio-frequency
    digital wireless signal transmission technology with highly secure
    encryption and is optimized to work with CONVERGE^® Pro and INTERACT^® Pro
    products.
  oJanuary 2013. The company appointed video conferencing veteran Adi Regev
    as Vice President of its video conferencing business. Regev will be
    responsible for the strategic positioning, business development and growth
    of the company's COLLABORATE™ portfolio of software-based video
    conferencing products, which includes desktop video applications, room
    systems, and infrastructure and management solutions.
  oFebruary 2013. The company's Board of Directors approved an increase in
    the company's stock repurchase program to $10.0 million from $3.0 million
    of its outstanding shares of common stock in open market or privately
    negotiated transactions.

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 and visual
communications. The performance and simplicity of its advanced comprehensive
solutions 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 acquisitions or investments the company
may make to fuel growth, the purchase of common stock under the company's
stock repurchase program 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://investors.clearone.com

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

CLEARONE INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
                                         As of              As of

                                         December 31, 2012  December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents                $      55,509 $      16,683
Receivables, net of allowance for
doubtful accounts of $60 and $149,       8,388              8,457
respectively
Inventories                              10,873             12,565
Deferred income taxes                    3,148              2,987
Prepaid expenses and other assets        1,369              740
Total current assets                     79,287             41,432
Long-term inventories, net               1,955              1,905
Property and equipment, net              1,708              2,338
Intangibles, net                         4,258              2,690
Goodwill                                 3,472              1,153
Deferred income taxes                    1,195              —
Other assets                             64                 41
Total assets                             $      91,939 $      49,559
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                         $            $      
                                         2,302              2,814
Accrued liabilities                      2,143              2,234
Income taxes payable                     14,782             300
Deferred product revenue                 3,593              3,404
Total current liabilities                22,820             8,752
Deferred income taxes                    -                  101
Deferred rent                            422                494
Other long-term liabilities              2,029              548
Total liabilities                        25,271             9,895
Shareholders' equity:
Common stock, par value $0.001,
50,000,000 shares authorized, 9,258,206  9                  9
and 9,098,152 shares issued and
outstanding, respectively
Additional paid-in capital               40,814             40,073
Treasury stock at cost - 94,744 as of    (384)              —
December 31, 2012
Retained earnings (accumulated deficit)  26,229             (418)
Total shareholders' equity               66,668             39,664
Total liabilities and shareholders'      $      91,939 $      49,559
equity

CLEARONE INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share value)
                      Quarter ended December 31,   Year ended December 31,
                      2012          2011           2012          2011
Revenue               $         $          $         $     
                      13,036       11,965         46,417       46,067
Cost of goods sold    5,625         4,855          19,089        18,522
Gross profit          7,411         7,110          27,328        27,545
Operating expenses:
Sales and marketing   1,903         1,846          8,112         8,120
Research and product  2,265         1,880          8,261         7,128
development
General and           2,374         1,262          6,934         5,427
administrative
Proceeds from         (38,250)      -              (38,500)      (3,702)
litigation, net
Total operating       (31,708)      4,988          (15,193)      16,973
expenses
Operating income      39,119        2,122          42,521        10,572
Other income          (7)           10             34            24
(expense), net
Income before income  39,112        2,132          42,555        10,596
taxes
Provision for income  14,598        711            15,908        3,667
taxes
Net income            $         $         $         $      
                      24,514       1,421          26,647       6,929
Basic earnings per    $       $        $       $      
common share          2.69         0.16           2.93          0.77
Diluted earnings per  $       $        $       $      
common share          2.67         0.15           2.89          0.75
Basic weighted
average shares        9,109,552     9,095,333      9,107,234     9,027,934
outstanding
Diluted weighted
average shares        9,192,714     9,237,214      9,214,685     9,271,811
outstanding

CLEARONE INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(Dollars in thousands, except per share value)
               Quarter ended December 31, 2012  Quarter ended December 31, 2011
               GAAP      Adjustments Non-GAAP   GAAP      Adjustments Non-GAAP
Revenue        $       $      $       $       $      $   
               13,036      -      13,036     11,965    -         11,965
Cost of goods  5,625     (3)         5,622      4,855     (43)        4,812
sold
Gross profit   7,411     3           7,414      7,110     43          7,153
Operating
expenses:
Sales and      1,903     (13)        1,890      1,846     (12)        1,834
marketing
Research and
product        2,265     (11)        2,254      1,880     (6)         1,874
development
General and    2,374     (1,394)     980        1,262     (156)       1,106
administrative
Proceeds from  (38,250)  38,250      -          -         -           -
litigation
Total
operating      (31,708)  36,832      5,124      4,988     (174)       4,814
expenses
Operating      39,119    (36,829)    2,290      2,122     217         2,339
income
Other income   (7)       -           (7)        10        -           10
(expense), net
Income before  39,112    (36,829)    2,283      2,132     217         2,349
income taxes
Provision for  14,598    (13,540)    1,058      711       110         821
income taxes
Net income     $       $          $      $      $        $    
               24,514    (23,289)   1,225      1,421    107        1,528
Basic earnings $                 $      $                 $    
per common     2.69                   0.13     0.16                  0.17
share
Diluted        $                 $      $                 $    
earnings per   2.67                   0.13     0.15                  0.17
common share
Basic weighted
average shares 9,109,552             9,109,552  9,095,333             9,095,333
outstanding
Diluted
weighted       9,192,714             9,192,714  9,237,214             9,237,214
average shares
outstanding
The
adjustments
consist of the
following:
Share-based              $                           $    
compensation              65                             56
Amortization
of purchased             301                              130
intangibles
Legal expenses for
litigation relating to
indemnification of
former officers,         376                              31
intellectual property
claims and our claim for
damages
Acquisition
related                  57                               -
expenses
Proceeds from
litigation,
net of legal
expenses and             (37,628)                         -
special bonus
to key
litigation
participants
Total of
adjustments              (36,829)                         217
before taxes
Income taxes
affected by              (13,540)                         110
the above
adjustments
Total                    $                               $   
adjustments              (23,289)                        107

CLEARONE INC.
(Dollars in thousands, except per share value)
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
               Year ended December 31, 2012     Year ended December 31, 2011
               GAAP      Adjustments Non-GAAP   GAAP      Adjustments Non-GAAP
Revenue        $        $      $       $        $      $   
               46,417    -        46,417     46,067   -          46,067
Cost of goods  19,089    (6)         19,083     18,522    (43)        18,479
sold
Gross profit   27,328    6           27,334     27,545    43          27,588
Operating
expenses:
Sales and      8,112     (58)        8,054      8,120     (25)        8,095
marketing
Research and
product        8,261     (37)        8,224      7,128     (18)        7,110
development
General and    6,934     (2,670)     4,264      5,427     (1,207)     4,220
administrative
Proceeds from  (38,500)  38,500      -          (3,702)   3,702       -
litigation
Total
operating      (15,193)  35,735      20,542     16,973    2,452       19,425
expenses
Operating      42,521    (35,729)    6,792      10,572    (2,409)     8,163
income
Other income   34        -           34         24        -           24
(expense), net
Income before  42,555    (35,729)    6,826      10,596    (2,409)     8,187
income taxes
Provision for  15,908    (13,059)    2,849      3,667     (805)       2,862
income taxes
Net income     $        $ (22,670) $      $       $ (1,604)  $    
               26,647               3,977      6,929                5,325
Basic earnings $                  $      $                  $    
per common     2.93                  0.44     0.77                  0.59
share
Diluted        $                  $      $                  $    
earnings per   2.89                  0.43     0.75                  0.57
common share
Basic weighted
average shares 9,107,234             9,107,234  9,027,934             9,027,934
outstanding
Diluted
weighted       9,214,685             9,214,685  9,271,811             9,271,811
average shares
outstanding
The
adjustments
consist of the
following:
Share-based              $                            $    187
compensation             241
Amortization
of purchased             679                              393
intangibles
Legal expenses for
litigation relating to
indemnification of
former officers,         902                              872
intellectual property
claims and our claim for
damages
Acquisition
related                  327                              -
expenses
Proceeds from
litigation,
net of legal
expenses and             (37,878)                         (3,861)
special bonus
to key
litigation
participants
Total of
adjustments              (35,729)                         (2,409)
before taxes
Income taxes
affected by              (13,059)                         (805)
the above
adjustments
Total                    $ (22,670)                      $ (1,604)
adjustments

CLEARONE INC.
(Dollars in thousands, except per share value)
UNAUDITED RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED
EBITDA
                              Quarter ended December   Year ended December 31,
                              31,
                              2012        2011         2012        2011
GAAP net income               $        $        $         $   
                              24,514      1,421        26,647     6,929
Adjustments:
Provision for income taxes    14,598      711          15,908      3,667
Depreciation and              874         348          1,864       1,220
amortization
Non-GAAP EBITDA               39,986      2,480        44,419      11,816
Proceeds from litigation,
net of legal expenses and     (37,628)    -            (37,878)    (3,861)
special bonus to officers
Share-based compensation      65          56           241         187
Legal expenses for
litigation relating to
indemnification of former     376         31           902         872
officers, intellectual
property claims and our
claim for damages
Acquisition related expenses  57          -            327         -
Non-GAAP Adjusted EBITDA      $       $        $        $   
                              2,856       2,567        8,011      9,014
Basic weighted average        9,109,552   9,095,333    9,107,234   9,027,934
shares outstanding
Diluted weighted average      9,192,714   9,237,214    9,214,685   9,271,811
shares outstanding
Basic Adjusted EBITDA per     $      $       $       $    
common share                  0.31        0.28         0.88       1.00
Diluted Adjusted EBITDA per   $      $       $       $    
common share                  0.31        0.28         0.87       0.97



SOURCE ClearOne

Website: http://www.clearone.com