AudioCodes Reports Second Quarter Results

7/25/2002 - AudioCodes Ltd. (NASDAQ: AUDC), a leading provider of Voice over Packet technologies, today announced financial results for the quarter ended June 30, 2002. Revenues for the quarter ended June 30, 2002 were $6.7 million compared to $5.7 million for the quarter ended March 31, 2002 and $11.6 million for the quarter ended June 30, 2001. Net loss for the second quarter of 2002 was $3.7 million, or $(0.09) per basic and diluted share, compared to net income of $306,000, or $0.01 per diluted share, for the same period last year. Revenues for the six months ended June 30, 2002 were $12.4 million compared to $25.2 million in the same period in 2001. Net loss for the six months ended June 30, 2002 was $7.7 million, or $(0.20) per basic and diluted share, compared to net income of $2.5 million, or $0.06 per diluted share, in the same period in 2001.

Cash, cash equivalents and short-term deposits as of June 30, 2002 were $120.8 million compared to $125.4 million as of March 31, 2002.

"This was the third consecutive quarter of improved revenue. In addition, results came in stronger than expected," said Shabtai Adlersberg, President, Chairman and CEO of AudioCodes. "We are pleased with our strengthening position as a reliable, long-term, leading supplier of Voice over Packet technologies for the global markets. The progress made this quarter in the marketplace in our media gateway systems initiative and our enabling technology products supports this position. This quarter we began shipping our Mediant VoIP media gateway for wireline networks. Based on positive feedback from OEMs and soft switch partners, we anticipate growing interest in our systems products. Trials are proceeding smoothly and we are glad to report a successful interoperability test of our Mediant cable access gateway in an MSO cable network in Europe."

Effective July 15, 2002, AudioCodes implemented a global wage reduction for all employees which is expected to result in a reduction in salary expenses of approximately 7% per quarter based on current personnel levels. This reduction in costs is in addition to the ongoing cost reduction programs adopted by AudioCodes' management.

"The implementation of a wage cut by the Company is designed to accelerate AudioCodes objective to return to profitability as quickly as possible," said Mike Lilo, COO & CFO of AudioCodes. "We are aware of our employees' sincere and significant contribution towards achieving this goal," he added.

During the second quarter, the Company announced the launch of its System Integrator Partner Program. Product launches announced during the second quarter included the Mediant™ Media Gateway for the cable market and IPmedia™ -1610, a high density board with rich voice processing functions and the IPmedia™ 2000 a market-ready standards compliant media server platform. Design wins announced during the quarter in the IPmedia product line included Oki Electric for Oki's CTstage series and with Interactive Intelligence for its interaction management software for contact centers, called Customer Interaction Center.

Pursuant to the Company's share repurchase programs previously announced in January 2001 and April 2002, the Company repurchased 385,726 shares during the second quarter of 2002 for an aggregate purchase price of $1.2 million.

About AudioCodes
AudioCodes Ltd. (NASDAQ: AUDC) enables the new voice infrastructure by providing network equipment providers and system integrators with innovative, reliable and cost-effective voice over packet media gateway and media processing technology and systems solutions. The company is a market leader in voice compression technology and the key originator of the ITU G.723.1 standard for the emerging Voice over IP market. AudioCodes' has built on its market leading core technology expertise to develop enabling technology products and a carrier-grade product line that continues to facilitate the evolving demands of the new wireline, wireless and cable communications infrastructure. AudioCodes products include its highly flexible, scalable, and leading edge media gateway systems, VoIP communication boards, VoIP media gateway modules, VoP chip processors, and analog media gateways for access and enterprise solutions. Its customers include the leading global telecom and datacom network equipment providers. AudioCodes' international headquarters and R&D facilities are located in Israel, with U.S. headquarters in San Jose, California.

For more information on AudioCodes, visit or call +1 (408) 577-4088.

Statements concerning AudioCodes' business outlook or future economic performance; product introductions and plans and objectives related thereto; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are "forward-looking statements'' as that term is defined under U.S. Federal securities laws. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include, but are not limited to: the effect of global economic conditions in general and conditions in AudioCodes' industry and target markets in particular; shifts in supply and demand; market acceptance of new products and continuing products' demand; the impact of competitive products and pricing on AudioCodes' and its customers' products and markets; timely product and technology development/upgrades and the ability to manage changes in market conditions as needed; and other factors detailed in AudioCodes' filings with the Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.

AudioCodes, AC, AudioCoded, NetCoder, TrunkPack, VoicePacketizer, MediaPack, Stretto, Mediant and IPmedia are trademarks or registered trademarks of AudioCodes Limited. All other products or trademarks are property of their respective owners.

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