ClearOne Reports Financial Results

SALT LAKE CITY--(BUSINESS WIRE)--ClearOne Communications, Inc. (NASDAQ: CLRO) today reported financial results for the fourth quarter and fiscal year ended June 30, 2008.

Full Year Results

Revenue for fiscal 2008 amounted to $39.8 million compared with $39.9 million in fiscal 2007. Gross profit grew to $23.3 million, or 59% of revenue, from $22.1 million, or 56% of revenue, for the prior year period. Income from continuing operations was $5.6 million compared with $4.8 million in the same period of fiscal 2007. Net income was $5.7 million, or $0.52 per diluted share, compared with fiscal 2007 net income of $5.2 million, or $0.45 per diluted share, which included income from discontinued operations of $422,000, or $0.04 per diluted share.

Fiscal 2008 financial results included a $2.8 million income tax benefit due primarily to the reversal of a $4.1 million valuation allowance recorded against deferred tax assets. In accordance with generally accepted accounting principles (GAAP), the company recorded the reversal in the fiscal 2008 fourth quarter due to its recent and sustained profitability. Also included in fiscal 2008 operating expenses was a $3.3 million accrual for a contingent liability associated with the advancement of funds related to indemnification agreements with two former officers, whose trial has been scheduled for October 2008.

“While revenue remained steady year-over-year due largely to the slowdown in the U.S. economy, we made solid progress on several key operational areas,” said Zee Hakimoglu, president, chief executive officer and chairman of ClearOne. “Our gross profit improved as a result of enhanced product cost efficiencies and selective channel price increases, and we significantly lowered our sales and marketing expenses.

“Looking ahead, we are planning a number of key new product launches in fiscal 2009 and expect our conferencing products to become an ever more appealing option for businesses looking to offset the effects of rising energy costs and expense and inconvenience of airline travel. We also expect to further grow our international business, especially in Europe and Asia Pacific, which has developed into a significant portion of our sales mix.”

Fourth Quarter Results

Revenue for the fiscal 2008 fourth quarter decreased to $10.4 million from $11.0 million in the same quarter of last year. Gross profit declined to $6.1 million, or 58% of revenue, from $6.6 million, or 60% of revenue, for the prior year period. Income from continuing operations was $3.7 million compared with $2.1 million in the same quarter last year. Net income was $3.7 million, or $0.36 per diluted share, which included a $1.2 million expense accrued for a contingent liability and the reversal of a $4.1 million valuation allowance recorded against deferred tax assets. This compares with fiscal 2007 fourth quarter net income of $2.2 million, or $0.20 per diluted share, which included income from discontinued operations of $118,000.

The company repurchased approximately 222,000 shares of its common stock for $985,000 and 835,000 shares of its of common stock for $4.3 million during its fourth quarter and full-year ended June 30, 2008, respectively.

At June 30, 2008, the company had cash, cash equivalents, and investments of $20.5 million and no long-term debt. In November 2007, the company posted a $908,000 bond with the United States District Court in conjunction with the Court’s grant of ClearOne’s motion for a preliminary injunction against WideBand Solutions, Inc, et al. The bond was subsequently reduced to $210,000 by the Court, and the company expects to receive the difference of approximately $700,000 in November 2008.

The balance of the contingent liability associated with the advancement of funds related to the indemnification agreements with two former officers was approximately $1.5 million on June 30, 2008, which represents the probable amount that as of the date of the financial statements could be reasonably estimated of the company’s liability through trial.