VocalTec Announces First Quarter 2009 Results

Non-GAAP ongoing operating loss reduced by 17% sequentially
HERZLIA, Israel--(Business Wire)--
VocalTec Communications Ltd. (NasdaqCM:VOCL), a global provider of carrier-class
multimedia and voice-over-IP solutions for communication service providers,
today reported results for the first quarter ended March 31, 2009.

Revenues for the first quarter of 2009 were $1.0 million compared with $1.5
million for the fourth quarter of 2008. The lower revenue level in the quarter
was in line with the Company`s expectations, as previously announced, and was
due to seasonal effects as well as the global economic slowdown. In addition,
the changes that management has recently instituted, primarily as reflected in
the restructuring of the sales organization, are expected to impact the business
in the second half of the year.

Gross margin for the first quarter of 2009 was 64% compared with 52% for the
fourth quarter of 2008.

Excluding the effect of the impairment of goodwill and intangible assets,
amortization of intangible assets and share based compensation expenses, the
operating expenses and the operating loss in the first quarter of 2009 were $1.9
million and $1.2 million, respectively. This is compared with $2.3 million and
$1.5 million in the fourth quarter of 2008, respectively (which also excludes
the income from the sale of patents). This represents a sequential reduction of
18% in operating expenses and a reduction of 17% in operating loss.

Net loss for the first quarter of 2009 was $1.5 million, or $0.21 per share,
compared with a net income of $0.5 million, or $0.07 per share, in the fourth
quarter of 2008. On a non-GAAP basis, net loss for the first quarter was $1.1
million or $0.17 per share, compared with a net income of $4.7 million, or $0.64
per share in the fourth quarter of 2008, which includes $6.1 million in income
from the sale of patents.

As of March 31, 2009, the Company had net cash and cash equivalents, short and
long term bank deposits and restricted cash in the amount of $12.3 million, or
$1.79 per share.

Commenting on the results, Ido Gur, the Company`s President and Chief Executive
Officer, said, "Our first quarter 2009 results demonstrate that we are on track
with our strategic plan, growing our pipeline and bookings, while continuing to
reduce costs. We reduced our non-GAAP operating loss by 17% sequentially,
improving our bottom line, and we expect this trend to continue in the coming
quarters. An additional recent positive development was the order we announced
for US$5 million from Mobitel Nigeria, for the roll-out of its next-generation
network over the coming twelve months. Our pipeline also increased in the
quarter, particularly in Russia and Africa, two of our primary strategic
markets."

Continued Mr. Gur, "As we approach the half-way point in 2009, I feel more
comfortable reiterating my expectations that our revenues in 2009 will be
greater than those of 2008, especially as the recent changes made by the new
management team come to fruition. We have a highly motivated management team, as
well as a very strong and more than adequate cash position, exceeding $12
million with which to execute on our strategic plan."

Conference Call

Mr. Ido Gur, President and CEO of VocalTec invites investors to participate in a
conference call scheduled for later today, Monday, May 11, 2009. The conference
call will be held at 9:00am ET. On the call, management will review and discuss
the results, and will be available to answer questions.

To participate, please call one of the following teleconferencing numbers, 5
minutes before the conference call commences. If you are unable to connect using
the toll-free numbers, please try the international dial-in number.

US Dial-in Number: 1 888 723 3164

ISRAEL Dial-in Number: 03 918 0688

INTERNATIONAL Dial-in Number: +972 3 918 0688

For those unable to listen to the live call, a replay of the call will be
available from a link in the investor relations section of VocalTec`s website,
at: www.vocaltec.com

About VocalTec

VocalTec Communications (NasdaqCM:VOCL) is a global provider of carrier-class
multimedia and voice-over-IP solutions for communication service providers. A
pioneer in VoIP technology since 1994, VocalTec provides proven trunking,
peering and residential/enterprise VoIP application solutions that enable
flexible deployment of next-generation networks (NGNs). Partnering with
prominent system integrators and equipment manufacturers, VocalTec serves an
installed base of dozens of leading carriers including Deutsche Telekom and
Telecom Italia San Marino. VocalTec is led by a management team comprised of
respected industry veterans.

www.vocaltec.com

Forward Looking Statements

This press release contains historical information and forward-looking
statements within the meaning of The Private Securities Litigation Reform Act of
1995 with respect to the business, financial condition and results of operations
of VocalTec. The words "believe," "expect," "intend," "plan," "should" and
similar expressions are intended to identify forward-looking statements. Such
statements reflect the current views, assumptions and expectations of the
Company with respect to future events and are subject to risks and
uncertainties. Many factors could cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements that may be expressed or implied by such
forward-looking statements, including, among others, changes in the
telecommunications and VoIP markets and in general economic and business
conditions, loss of key customers and unpredictable sales cycles, competitive
pressures, market acceptance of new products, inability to meet efficiency and
cost reduction objectives, changes in business strategy and various other
factors, both referenced and not referenced in this press release. Various risks
and uncertainties may affect the Company and its results of operations, as
described in reports filed by the Company with the Securities and Exchange
Commission from time to time. Should one or more of these or other risks or
uncertainties materialize, or should any underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected, intended, planned or projected. The Company does
not intend or assume any obligation to update these forward-looking statements.

** Tables to follow **

VOCALTEC COMMUNICATIONS LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
Reconciliation of GAAP to non GAAP results *
All data in thousands of U.S. dollars

Three months ended Three months ended
March 31, December 31,
2009 2008
GAAP results GAAP results
(as reported) (as reported)

Sales
Product 541 1,058
Services 490 442
1,031 1,500
Cost of sales
Product 245 509
Services 124 146
369 655
Amortization - 70
of intangible
assets
369 725
Gross profit 662 775

Operating Expenses
Research and 757 918
development,
net.
Selling and 865 852
marketing
General and 606 660
administrativ
e
Income from - (6,112 )
sale of
Patents, net
Impairment of - 3,993
goodwill and
intangible
assets
Amortization 6 45
of intangible
assets
Total 2,234 356
Operating
Expenses

Operating income (loss) (1,572 ) 419

Financial Income (expense), net 108 183
Net incomet (loss) before income (1,464 ) 602
taxes
Income taxes - 69
Net income (loss) (1,464 ) 533

GAAP net income (loss) (1,464 ) 533
Adjustments

Impairment of - 3,993
goodwill
Amortization of intangible assets
included in - 70
cost of sales
included in 6 45
operating
expenses

Equity based compensation expense
included in 5 2
cost of sales
included in 93 35
research and
development
included in 61 49
sales and
marketing
included in 166 6
general and
administrativ
e
Non-GAAP net income (loss) (1,133 ) 4,733

* To supplement our consolidated financial statement presented in accordance with generally accepted accounting principles (GAAP), we use NON-GAAP measures of operating results, net income, which are adjusted from results based on GAAP to exclude the expense we recorded for share-based compensation and amortization of intangible assets. These NON-GAAP financial measures are provided to enhance overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the NON-GAAP results provide useful information to both management and investors as these NON- GAAP results exclude matters that we believe are not indicative of our core operating results. Further, these NON-GAAP results are one of the primary indicators management uses for assessing our performance, allocating resources and planning and forecasting future periods. These measures should be considered in addition to results prepared in accordance with
GAAP, but should not be considered a substitute for or superior to GAAP results. These NON-GAAP measures may be different than the NON-GAAP measures used by other companies.

VOCALTEC COMMUNICATIONS LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars except share data)

March 31 December 31
2009 2008
Current Assets
Cash and Cash equivalents 2,930 5,090
Short term bank deposits 7,500 9,900
Restricted cash 834 554
Trade receivables, net 256 214
Other receivables 503 483
Severance pay funds 85 489
Inventories 23 38
Total Current 12,131 16,768
Assets

Long term bank deposits 1,000 -
Severance pay funds 594 618
Equipment, net 558 614
Intangible assets, net 154 160
Total Assets 14,437 18,160

Current Liabilities
Trade payable 747 1,707
Accrued expenses 3,144 3,300
Accrued severance pay 111 756
Deferred revenues 1,047 885
Total Current 5,049 6,648
Liabilities
Long Term Liabilities
Accrued severance pay 844 870
Total Long Term 844 870
Total Liabilities 5,893 7,518

Shareholders Equity
Share capital 213 213
Other comprehensive income (214) 76
Additional paid-in capital 95,086 94,761
Treasury stock (669) -
Accumulated deficit (85,872) (84,408)
Total 8,544 10,642
Shareholders
Equity
Total Liabilities and Shareholders Equity 14,437 18,160

This PR is also available on:
http://www.vocaltec.com/site/modules/newsItem.asp?Sid=7&Pid=55&itemID=142&NewsYear=2009

VocalTec
Gali Rosenthal, +972 9 970 3805
gali@vocaltec.com
or
GK Investor Relations
Kenny Green, (646) 201-9246
info@gkir.com

Copyright Business Wire 2009