Edgar Filing: MAGICJACK VOCALTEC LTD

zk1517176.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(MARK ONE)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from __________ to __________

Commission file number: 000-27648

MAGICJACK VOCALTEC LTD.

(Exact name or Registrant as specified in its charter)

STATE OF ISRAEL

(State or Other Jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

12 BENNY GAON STREET, BUILDING 2B

POLEG INDUSTRIAL AREA, NETANYA, ISRAEL 42504

(Address of principal executive offices, including zip code)

(561) 749-2255

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer ¨	Accelerated filer x

Non-accelerated filer ¨ (do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

There were 16,701,001 ordinary shares with no par value outstanding at July 31, 2015.

TABLE OF CONTENTS

PART I		FINANCIAL INFORMATION

	ITEM 1.	Financial Statements
		Condensed Consolidated Balance Sheets (Unaudited)	3
		Condensed Consolidated Statements of Operations (Unaudited)	4
		Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5
		Condensed Consolidated Statement of Capital Equity (Unaudited)	6
		Condensed Consolidated Statements of Cash Flows (Unaudited)	7
		Notes to Condensed Consolidated Financial Statements (Unaudited)	9

	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	33
	ITEM 4.	Controls and Procedures	33

PART II		OTHER INFORMATION

	ITEM 1.	Legal Proceedings	34
	ITEM 1A.	Risk Factors	34
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
	ITEM 3.	Defaults Upon Senior Securities	34
	ITEM 4.	Mine Safety Disclosures	34
	ITEM 5.	Other Information	35
	ITEM 6.	Exhibits	35

DEFINITIONS

In this quarterly report on Form 10-Q, unless the context otherwise requires:

references to “magicJack VocalTec,” the “Company,” “we,” “us” or “our” are to magicJack VocalTec Ltd., a company organized under the laws of the State of Israel (the “Registrant”), and its subsidiaries;

references to “ordinary shares”, “our shares” and similar expressions refer to the Registrant’s Ordinary Shares, no par value;

references to “$” or “dollars” are to U.S. dollars and all references to “NIS” are to New Israeli Shekels. Except as otherwise indicated, financial statements of, and information regarding, magicJack VocalTec are presented in U.S. dollars; and

references to the “magicJack devices” are to the original magicJack®, the magicJack PLUSTM, the New magicJack PLUSTM , the magicJackGO and the magicJackEXPRESSTM.

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

MAGICJACK VOCALTEC LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30,			December 31,
	2015			2014
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	82,327		$	75,945
Investments, at fair value		367			367
Accounts receivable, net of allowance for doubtful accounts and billing adjustments
of $528 and $1,171, respectively		2,271			3,903
Inventories		6,771			5,635
Deferred costs		2,166			2,765
Prepaid income taxes		581			12,513
Deferred tax assets, current		13,341			13,341
Deposits and other current assets		1,550			1,170
Total current assets		109,374			115,639

Property and equipment, net		3,704			3,564
Intangible assets, net		7,846			9,473
Goodwill		32,304			32,304
Deferred tax assets, non-current		29,511			32,510
Deposits and other non-current assets		756			743
Total assets	$	183,495		$	194,233
LIABILITIES AND CAPITAL EQUITY
Current liabilities:
Accounts payable	$	1,272		$	2,879
Income tax payable		2,504			9,197
Accrued expenses and other current liabilities		5,007			8,406
Deferred revenue, current portion		56,033			56,445
Total current liabilities		64,816			76,927

Deferred revenue, net of current portion		52,599			54,782
Other non-current liabilities		11,279			13,438
Total liabilities		128,694			145,147

Commitments and contingencies (Note 9)
Capital equity
Ordinary shares, No par value; 100,000 shares authorized; 25,032 shares
issued at June 30, 2015 and December 31, 2014, respectively		111,771			111,771
Additional paid-in capital		12,663			10,414
Treasury stock (7,786 and 7,164 shares at June 30, 2015
and December 31, 2014, respectively)		(112,477	)		(107,683	)
Retained earnings		42,844			34,584
Total capital equity		54,801			49,086
Total liabilities and capital equity	$	183,495		$	194,233