ALLT Allot Ltd

HOD HASHARON, Israel, February 12 /PRNewswire-FirstCall/ -- - 2008 Revenues Increase by 14% over 2007 Key highlights: - Fourth quarter revenues were $9.6 million, representing a 10% increase over fourth quarter of 2007 - Fourth quarter non-GAAP operating loss narrowed to $1.2 million, a decrease of 20% from $1.5 million operating loss for the third quarter 2008 - Fourth quarter non-GAAP net loss declined to $1.1 million, or ($0.05) per diluted share, from $1.6 million, or ($0.07) per diluted share, in the third quarter 2008 - Cash, cash equivalents and short term deposits and investments increased to $42.1 million, while ARS portfolio further devalued by $2.8 million - Addition of five Tier 1 mobile operators during 2008 Allot Communications Ltd. (NASDAQ:ALLT), a leader in IP service optimization solutions based on deep packet inspection (DPI) technology, today announced financial results for the fourth quarter and full year ended December 31, 2008. Total revenues for the fourth quarter of 2008 reached $9.6 million, a 10% increase from the $8.7 million of revenues reported in the fourth quarter of 2007, and a 2% decrease from the $9.8 million revenues reported for the third quarter of 2008. On a GAAP basis, net income for the fourth quarter of 2008 was $1.0 million, or $0.05 per share (basic and diluted), which includes a net gain of $2.5 million in respect of auction rate securities as described below. This compares with a net loss of $6.7 million, or $0.31 per share (basic and diluted), in the fourth quarter of 2007, and a net loss of $9.0 million, or $0.41 per share (basic and diluted), for the third quarter of 2008. For the full year 2008, revenues reached $37.1 million, representing a 14% increase over the $32.5 million in revenues in 2007. On a GAAP basis, net loss in 2008 totaled $16.5 million, or $0.75 per share (basic and diluted), as compared with a net loss of $9.9 million, or $0.46 per share (basic and diluted), in 2007. On a non-GAAP basis, excluding the impact of share-based compensation, ARS devaluation and recoveries, certain legal expenses and amortization of acquired core technology, non-GAAP net loss for the fourth quarter of 2008 totaled $1.1 million, or $0.05 per share (basic and diluted), as compared with a non-GAAP net loss of $1.4 million, or $0.06 per share (basic and diluted), for the fourth quarter of 2007 and a non-GAAP loss of $1.6 million, or $0.07 per share (basic and diluted), for the third quarter of 2008. These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable GAAP measures. A full reconciliation between GAAP and non-GAAP net loss is provided in the accompanying Table 2. The Company provides these non-GAAP financial measures because it believes that they present a better measure of the Company's core business and management uses the non-GAAP measures internally to evaluate the Company's ongoing performance. Accordingly, the Company believes that they are useful to investors in enhancing an understanding of the Company's operating performance. "We were pleased with the growth which Allot reported in 2008," commented Rami Hadar, Allot Communications' President and Chief Executive Officer. "We were particularly proud of our continued leadership position in the mobile markets, which we see as a significant opportunity going forward. The record results for 2008 were attained despite the challenging economic conditions, and demonstrate Allot's attractive value proposition of optimizing our customers' networks in the near term while enabling opportunities to monetize their networks in the future. While our short term results may be affected by the evolving macroeconomic conditions, we believe that we are well-positioned to address the potential of the market in the long term." Recently, the Company achieved the following significant goals: - Addition of five Tier 1 mobile operators during 2008, four of which have more than 10 million subscribers; - During the quarter, concluded 12 large deals with service providers, of which six represented new customers and six represented expansion deals; and - Allot's Service Gateway has been deployed with 12 service providers, and is the most widely deployed system providing true 10 Gbps performance. As of December 31, 2008, cash, cash equivalents, deposits and investments in marketable securities totaled $57.5 million. During the fourth quarter, the Company monetized $6.6 million of ARS at par value, recording a gain of $5.3 million on a GAAP basis. Recent external valuations showed a further devaluation of ARS in the Company's portfolio as of the end of the fourth quarter. As a result, the Company recorded an additional impairment charge of $2.8 million in its statement of operations on a GAAP basis, in respect of ARS, the devaluation of which is considered "other than temporary", leaving the Company with a total of $15.3 million in ARS at the end of the quarter. As a result of all of the above the Company has recorded a net gain of $2.5 million on a GAAP basis during the fourth quarter. Conference Call & Webcast The Allot management team will host a conference call to discuss its fourth quarter and full year 2008 results on Thursday, February 12, 2009, at 8:30 AM EST, 3:30 PM Israel time. The quarterly results will be published prior to the conference call. To access the conference call, please dial one of the following numbers: US: 1-866-966-5335, International: +44-20-3003-2666, Israel: 1-809-216-213. A replay of the conference call will be available from 12:01 am EST on February 13, 2009 through March 12, 2009 at 11:59 pm EST. To access the replay, please dial: +44-20-8196-1998, access code: 650204#. A live webcast of the conference call can be accessed on the Allot Communications website at http://www.allot.com/. The webcast will also be archived on the website following the conference call. About Allot Communications Allot Communications Ltd. (NASDAQ:ALLT) is a leading provider of intelligent IP service optimization solutions. Designed for carriers, service providers and enterprises, Allot solutions apply deep packet inspection (DPI) technology to transform broadband pipes into smart networks. This creates the visibility and control vital to manage applications, services and subscribers, guarantee quality of service (QoS), contain operating costs and maximize revenue. Allot believes in listening to customers and provides them access to its global network of visionaries, innovators and support engineers. For more information, please visit http://www.allot.com/. Safe Harbor Statement Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the Company's plans, objectives and expectations for future operations. These forward-looking statements are based upon management's current estimates and projections of future results or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These factors include, but are not limited to: changes in general economic and business conditions and, specifically, a decline in demand for the Company's products; the Company's inability to develop and introduce new technologies, products and applications; loss of market; and other factors discussed under the heading "Risk Factors" in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. TABLE - 1 ALLOT COMMUNICATIONS LTD.AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) Three Months Ended Year Ended December 31, December 31, 2008 2007 2008 2007 (Unaudited) (Unaudited) (Audited) Revenues $ 9,562 $ 8,673 $ 37,101 $ 32,502 Cost of revenues 2,448 2,196 9,696 8,019 Gross profit 7,114 6,477 27,405 24,483 Operating expenses: Research and development costs, net 2,777 2,491 11,886 9,384 Sales and marketing 4,588 5,010 19,859 18,081 General and administrative 1,363 1,606 6,174 5,583 In - process research and development - - 244 - Total Operating expenses 8,728 9,107 38,163 33,048 Operating Loss (1,614) (2,630) (10,758) (8,565) Financial and other income (loss), net 2,730 (3,785) (5,517) (845) Income (loss) before income tax expenses 1,116 (6,415) (16,275) (9,410) Income tax expenses 82 325 220 530 Net Income (Loss) 1,034 (6,740) (16,495) (9,940) Basic net earnings (loss) per share $ 0.05 $ (0.31) $ (0.75) $ (0.46) Diluted net earnings (loss) per share $ 0.05 $ (0.31) $ (0.75) $ (0.46) Weighted average number of shares used in computing basic net earnings (loss) per share 22,065,556 21,945,602 22,054,211 21,525,822 Weighted average number of shares used in computing diluted net earnings (loss) per share 22,225,288 21,945,602 22,054,211 21,525,822 TABLE - 2 ALLOT COMMUNICATIONS LTD. AND ITS SUBSIDIARIES RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except per share data) Three Months Ended Year Ended December 31, December 31, 2008 2007 2008 2007 (Unaudited) (Unaudited) GAAP net income (loss) as $ 1,034 $ (6,740) $ (16,495) $ (9,940) reported Non-GAAP adjustments: Expenses recorded for stock-based compensation Cost of revenues 6 13 52 48 Research and development costs, net 84 70 321 231 Sales and marketing 64 140 465 340 General and administrative 218 218 855 742 In-process research and development - - 244 - ARS and law suit litigation expenses General and administrative - 20 197 154 Core technology amortization- cost of revenues 30 - 119 - Total adjustments to operating loss 402 461 2,253 1,515 Impairment of auction rate securities Financial and other (income) loss, net (2,507) 4,881 7,681 4,881 Total adjustments (2,105) 5,342 9,934 6,396 Non-GAAP net Loss $ (1,071) $ (1,398) $ (6,561) $ (3,544) Non- GAAP basic net Loss per share $ (0.05) $ (0.06) $ (0.30) $ (0.16) Non-GAAP diluted net Loss per share $ (0.05) $ (0.06) $ (0.30) $ (0.16) TABLE - 3 ALLOT COMMUNICATIONS LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) December 31, 2008 2007 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 40,029 $ 28,101 Marketable securities and short term deposits 2,121 7,305 Trade receivables 6,163 6,122 Other receivables and prepaid expenses 1,498 3,799 Inventories 4,259 4,789 Total current assets 54,070 50,116 LONG-TERM ASSETS: Marketable securities 15,319 35,371 Severence pay fund 3,402 3,302 Other assets 839 1,008 Total long-term assets 19,560 39,681 PROPERTY AND EQUIPMENT, NET 4,970 4,619 GOODWILL AND INTANGIBLE ASSETS, NET 4,264 239 Total assets $ 82,864 $ 94,655 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 2,902 $ 3,409 Deferred revenues 4,475 3,968 Other payables and accrued expenses 6,466 5,514 Total current liabilities 13,843 12,891 LONG-TERM LIABILITIES: Deferred revenues 2,293 1,404 Accrued severence pay 3,536 3,175 Total long-term liabilities 5,829 4,579 SHAREHOLDERS' EQUITY 63,192 77,185 Total liabilities and shareholders' equity $ 82,864 $ 94,655 Investor Relations Contact: Jay Kalish, Executive Director Investor Relations, International access code +972-54-221-1365, DATASOURCE: Allot Communications Ltd. CONTACT: Investor Relations Contact: Jay Kalish, Executive Director Investor Relations, International access code +972-54-221-1365,

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