zk1110425.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE AS OF 1934

For the month of September 2011
Commission file number: 000-27648

MAGICJACK VOCALTEC LTD.

(Translation of registrant’s name into English)

12 BENNY GAON STREET, BUILDING 2B
POLEG INDUSTRIAL AREA, NETANYA, ISRAEL 42504
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x    Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x
 
If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b). Not applicable.
 
Attached hereto are magicJack VocalTec’s financial results for the second quarter of 2011.
 
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
MAGICJACK VOCALTEC LTD.
  
 
(Registrant)
 
 
  
 
By:
/s/ Daniel Borislow  
  Name: 
Daniel Borislow
  
  Title: 
President and Chief Executive Officer
  
       
Date: September 13, 2011
 
 
 
 
 
The following unaudited consolidated financial information presents summary information and does not include notes and other information required by Generally Accepted Accounting Principles in the United States. This information should be read in conjunction with magicJack VocalTec’s audited consolidated financial statements included in the annual report on Form 20-F for the year ended December 31, 2010.

MAGICJACK VOCALTEC LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)

   
December 31,
    
June 30,
  
   
2010
    
2011
  
ASSETS
  
(Unaudited)
    
(Unaudited)
  
Current assets:
            
Cash and cash equivalents
   $ 28,628     $ 19,463  
Marketable securities, at fair value
     19,331       20,200  
Accounts receivable, net of allowance for doubtful accounts and billing adjustments
of $8,498 and $13,487, respectively
     10,336       11,662  
Inventories
     3,008       6,134  
Deferred costs
     6,615       5,170  
Deposits and other current assets
     1,541       1,616  
Total current assets
     69,459       64,245  
                 
Property and equipment, net
     3,771       3,402  
Intangible assets, net
     7,275       12,494  
Goodwill
     32,304       32,304  
Deposits and other non-current assets
     1,739       1,810  
Total assets
   $ 114,548     $ 114,255  
LIABILITIES AND CAPITAL DEFICIT
                
Current liabilities:
                
Accounts payable
   $ 2,590     $ 4,494  
Accrued expenses and other current liabilities
     9,834       11,147  
Accrued bonuses
     1,000       -  
Deferred revenue, current portion
     58,087       49,025  
Total current liabilities
     71,511       64,666  
                 
Deferred revenue, net of current portion
     34,121       44,151  
Other non-current liabilities
     664       3,953  
Total liabilities
     106,296       112,770  
                 
Commitments and contingencies
                
Redeemable ordinary shares, No par value; 333 shares issued and outstanding
     8,373       8,210  
Capital deficit:
                
Ordinary shares, No par value; 100,000 shares authorized; 11,476 and 10,924 shares
issued, respectively; 11,473 and 10,916 shares outstanding, respectively
     91,527        78,161   
Additional paid-in capital
     1,971       3,082  
Accumulated other comprehensive income
     989       1,803  
Treasury stock (3 and 8 shares, respectively)
     (81 )     (204 )
Deficit
     (94,527 )     (89,567 )
Total capital deficit
     (121 )     (6,725 )
Total liabilities and capital deficit
   $ 114,548     $ 114,255  
 
 
 
 

 
MAGICJACK VOCALTEC LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION
(in thousands, except per share information)
 
   
Three Months
Ended
    
Six Months
Ended
    
Three Months
Ended
    
Six Months
Ended
  
   
June 30, 2010
    
June 30, 2010
    
June 30, 2011
    
June 30, 2011
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
Revenues
   $ 30,579     $ 61,377     $ 28,818     $ 58,904  
Cost of revenues
     14,021       29,104       12,096       25,089  
Gross profit
     16,558       32,273       16,722       33,815  
                                 
Operating expenses:
                                
Advertising
     7,747       17,801       6,835       13,511  
General and administrative
     7,039       15,175       6,743       13,573  
Research and development
     517       1,571       670       1,326  
Total operating expenses
     15,303       34,547       14,248       28,410  
Operating income (loss)
     1,255       (2,274 )     2,474       5,405  
                                 
Other income (expense):
                                
Realized gains (losses) on marketable securities
     (1,139 )     (237 )     552       (757 )
Interest and dividend income
     332       580       188       382  
Interest expense
     -       (146 )     (40 )     (40 )
Other income, net
     9       15       10       22  
Gain on extinguishment of debt
     234       234       -       -  
Total other income (expense)
     (564 )     446       710       (393 )
Net income (loss) before income taxes
     691       (1,828 )     3,184       5,012  
Income tax expense
     -       7       24       52  
Net income (loss)
   $ 691     $ (1,835 )   $ 3,160     $ 4,960  
                                 
Income (loss) per ordinary share:
                                
Basic
   $ 0.05     $ (0.21 )   $ 0.28     $ 0.43  
Diluted
   $ 0.05     $ (0.21 )   $ 0.27     $ 0.42  
 
 
 
 
 
MAGICJACK VOCALTEC LTD AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CAPITAL DEFICIT INFORMATION
For the Six Months Ended June 30, 2011
(in thousands)

   
Common Stock
      
Additional
Paid-in
     Accumulated
Other
Comprehensive
    
Treasury
Stock
    
 
    
Total
  
   
Number
    
Amount
    
Capital
    
Income
    
Amount
    
Deficit
    
Capital Deficit
  
Balance, January 1, 2011
     11,473     $ 91,527     $ 1,971     $ 989     $ (81 )   $ (94,527 )   $ (121 )
                                                         
Exercise of ordinary share options
     164       1,355       -       -       -       -       1,355  
Share based compensation
     17       413       112       -       -       -       525  
Purchase of treasury stock
     (738 )     -       798       -       (15,257 )     -       (14,459 )
Retirement of treasury stock
     -       (15,134 )     -       -       15,134       -       -  
Contributed services
     -       -       38       -       -       -       38  
Unrealized gain on marketable securities
     -       -       -       814       -       -       814  
Adjustment of redemption value of
    redeemable ordinary shares
     -       -       163       -       -       -       163  
Net income
     -       -       -       -       -       4,960       4,960  
Balance, June 30, 2011
     10,916     $ 78,161     $ 3,082     $ 1,803     $ (204 )   $ (89,567 )   $ (6,725 )
 
 
 
 
 
MAGICJACK VOCALTEC LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS INFORMATION
(in thousands)
 
   
Six Months Ended
June 30,
  
   
2010
    
2011
  
Cash flows from operating activities:
  
(Unaudited)
    
(Unaudited)
  
Net (loss) income
   $ (1,835 )   $ 4,960  
Adjustments to reconcile net (loss) income to
                
net cash provided by operating activities:
                
Provision for doubtful accounts and billing adjustments
     1,901       5,071  
Stock-based compensation
     4,990       324  
Depreciation and amortization
     1,421       2,055  
Deferred income tax provision
     -       46  
Interest expense - non-cash
     85       40  
Realized loss on sale of securities
     237       757  
Gain on extinguishment of debt
     (234 )     -  
Contributed services
     -       38  
Decrease (increase) in operating assets:
                
Accounts receivable
     (2,061 )     (6,397 )
Inventories
     734       (3,126 )
Deferred costs
     492       1,445  
Deposits and other current assets
     1,512       (4 )
Deposits and other non-current assets
     (698 )     59  
Increase (decrease) in operating liabilities:
                
Accounts payable
     143       1,888  
Accrued expenses and other current liabilities
     768       (975 )
Accrued bonuses
     -       (1,000 )
Deferred revenue
     8,393       968  
Other non-current liabilities
     -       (52 )
Net cash provided by operating activities
     15,848       6,097  
                 
Cash flows from investing activities:
                
Purchase of marketable securities
     (21,743 )     (4,233 )
Sales of marketable securities
     12,952       4,016  
Purchases to cover short investment positions
     -       (7,415 )
Sales of short investment positions
     -       7,555  
Purchases of property and equipment
     (724 )     (617 )
Acquisition of other intangible assets
     (24 )     (1,517 )
Net cash used in investing activities
     (9,539 )     (2,211 )
                 
Cash flows from financing activities:
                
Repurchase of ordinary shares to settle bonus withholding liability
     (3,981 )     -  
Purchase of treasury stock
     -       (14,406 )
Repayment of debt
     (4,766 )     -  
Proceeds from exercise of ordinary share options
     28       1,355  
Net cash used in financing activities
     (8,719 )     (13,051 )
Net decrease in cash and cash equivalents
     (2,410 )     (9,165 )
Cash and cash equivalents, beginning of period
     13,335       28,628  
Cash and cash equivalents, end of period
   $ 10,925     $ 19,463