Edgar Filing: MAGICJACK VOCALTEC LTD

zk1619137.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended September 30, 2016

oTRANSITION 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 HAOMANUT STREET, 1ST FLOOR

POLEG INDUSTRIAL ZONE, NETANYA, ISRAEL 4250445

(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 15,896,695 ordinary shares with no par value outstanding at October 31, 2016.

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	29
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	41
	ITEM 4.	Controls and Procedures	42

PART II		OTHER INFORMATION

	ITEM 1.	Legal Proceedings	42
	ITEM 1A.	Risk Factors	42
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
	ITEM 3.	Defaults Upon Senior Securities	42
	ITEM 4.	Mine Safety Disclosures	42
	ITEM 5.	Other Information	42
	ITEM 6.	Exhibits	43

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)

	September 30,			December 31,
	2016			2015
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	51,526		$	78,589
Investments, at fair value		447			367
Accounts receivable, net of allowance for doubtful accounts and billing adjustments
of $528 and $455, respectively		2,626			2,925
Inventories		4,463			5,723
Deferred costs		2,316			2,097
Prepaid income taxes		602			2,747
Receivable from earnout escrow		2,000			-
Deposits and other current assets		2,508			2,655
Total current assets		66,488			95,103

Property and equipment, net		3,805			3,302
Intangible assets, net		29,924			6,687
Goodwill		47,485			32,304
Deferred tax assets, non-current		30,824			30,689
Deposits and other non-current assets		819			751
Total assets	$	179,345		$	168,836
LIABILITIES AND CAPITAL EQUITY
Current liabilities:
Accounts payable	$	2,780		$	1,086
Income tax payable		1,764			-
Accrued expenses and other current liabilities		7,223			6,284
Deferred revenue, current portion		49,324			52,554
Total current liabilities		61,091			59,924

Deferred revenue, net of current portion		45,811			50,146
Other non-current liabilities		13,451			11,098
Total liabilities		120,353			121,168

Commitments and contingencies (Note 10)
Capital equity
Ordinary shares, No par value; 100,000 shares authorized; 25,039 and 25,036 shares
issued at September 30, 2016 and December 31, 2015, respectively		111,781			111,773
Additional paid-in capital		15,640			14,573
Treasury stock (9,179 and 9,426 shares at September 30, 2016
and December 31, 2015, respectively)		(122,994	)		(126,772	)
Retained earnings		55,046			48,094
Total magicJack VocalTec, LTD. shareholders's equity		59,473			47,668
Noncontrolling interest		(481	)		-
Total capital equity		58,992			47,668
Total liabilities and capital equity	$	179,345		$	168,836