FOR IMMEDIATE RELEASE
Ceragon Networks® Reports Fourth
Quarter and Fiscal Year 2002 Financial Results
TEL AVIV, Israel, February 6, 2003 — Ceragon Networks Ltd. (NASDAQ: CRNT),www.ceragon.com, a global provider of high-capacity broadband wireless systems, today reported results for the fourth quarter and fiscal year, which ended December 31, 2002. Revenues for the fourth quarter were $6.1 million, up from $3.3 million for the fourth quarter of 2001 and from $5.0 million for the third quarter of 2002. This represents an increase of more than 85% as compared to the fourth quarter of 2001, and an increase of more than 20% as compared to the third quarter of 2002. This past quarter was Ceragon’s fifth consecutive quarter of revenue growth.
Pro-forma gross profit (*) for the fourth quarter of 2002 increased to $2.1 million, or 34.5% of revenues. This compares to pro-forma gross profit for the fourth quarter of 2001 of $0.7 million, or 20.3% of revenues, and to pro-forma gross profit for the third quarter of 2002 of $1.5 million, or 30.5% of revenues. Pro-forma net loss for the fourth quarter of 2002 has decreased for the sixth consecutive quarter to $(2.2) million, or $(0.10) basic and diluted net loss per ordinary share. This compares to pro-forma net loss for the fourth quarter of 2001 of $(3.6) million, or $(0.17) basic and diluted net loss per ordinary share, and to pro-forma net loss for the third quarter of 2002 of $(2.6) million, or $(0.12) basic and diluted net loss per ordinary share.For an explanation of pro-forma results see the notes at * below.
The company ended the fourth quarter of 2002 with $43.2 million in cash and liquid investments.
“At Ceragon, we again solidified our position as a leader in the high capacity fixed wireless communications marketplace by consistently improving our performance throughout 2002,” said Shraga Katz, president and CEO, Ceragon Networks Ltd. “We are focused on growing our revenues, gaining market share and reaching profitability. We intend to achieve these goals by further increasing penetration into our target markets, expanding our reach into new geographic regions and by leveraging our technology leadership.”
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Ceragon Reports Fourth Quarter and Fiscal Year 2002 Results – 2
A conference call discussing Ceragon’s results for the fourth quarter of 2002 will take place today, February 6, 2003, at 11:00 a.m. (EST). Details can be found on Ceragon’s website atwww.ceragon.com. The live call and its replay will be accessible on Ceragon’s website. The replay will be available through February 10, 2003.
* Pro-Forma Financial Presentation
Pro-forma results are presented for informational purposes only. Pro-forma financial results for all periods presented exclude the effect of stock-based, non-cash deferred compensation expenses. In addition,the pro-forma results for the year ended December 31, 2001 exclude one-time charges of $28.8 million for an inventory write-down and a fixed asset impairment presented in cost of revenues, $2.6 million for doubtful debt presented in general and administrative expenses, and $4.7 million due to restructuring plans presented in non-recurring expenses, net. The pro-forma results for the three months and for the year ended December 31, 2002, exclude $83 thousand, presented in non-recurring expenses, net.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT), a pacesetter in broadband wireless networking systems, enables rapid and cost-effective deployment of high-capacity network connectivity for mobile cellular infrastructure, fixed networks and private networks.
Ceragon’s modular FibeAir™ product family operates across multiple frequencies from 6 to 38 GHz, supports integrated high-capacity services from 155 to 622 Mbps over SONET/SDH, ATM and IP networks, and offers innovative built-in add/drop multiplexing and encryption functionality to meet the growing demand for value-added broadband services.
Ceragon’s FibeAir™ product family complies with North American and international standards and is installed with over 100 customers in 40 countries.
More information is available atwww.ceragon.com.
Ceragon Networks®and CeraView® are registered trademarks of Ceragon Networks Ltd. and Ceragon™, FibeAir™, PolyView™, ConfigAir™, CeraMon™, EtherAir™, QuickAir™, QuickAir Partner Program™, QuickAir Partner Certification Program™, QuickAir Partner Zone™, EncryptAir™ and Microwave Fiber™ are trademarks of Ceragon Networks Ltd.
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Ceragon Reports Fourth Quarter and Fiscal Year 2002 Results - 3
PRO-FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (*)
U.S. dollars in thousands, except share and per share data
Three months ended December 31, | Year ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2002 | 2001 | 2002 | 2001 | |||||||||||
Unaudited | Audited | |||||||||||||
Revenues | $ | 6,071 | $ | 3,274 | $ | 18,394 | $ | 24,852 | ||||||
Cost of revenues | 3,974 | 2,609 | 12,791 | 16,451 | ||||||||||
Gross profit | 2,097 | 665 | 5,603 | 8,401 | ||||||||||
Operating expenses: | ||||||||||||||
Research and development | 2,362 | 2,433 | 9,143 | 12,967 | ||||||||||
Less: participation by the Chief | ||||||||||||||
Scientist of the Government of | ||||||||||||||
Israel | 544 | 394 | 1,870 | 2,660 | ||||||||||
Research and development, net | 1,818 | 2,039 | 7,273 | 10,307 | ||||||||||
Sales and marketing | 2,310 | 2,129 | 9,130 | 11,924 | ||||||||||
General and administrative | 510 | 585 | 2,031 | 3,138 | ||||||||||
Total operating expenses | 4,638 | 4,753 | 18,434 | 25,369 | ||||||||||
Operating loss | (2,541 | ) | (4,088 | ) | (12,831 | ) | (16,968 | ) | ||||||
Financial income, net | 292 | 470 | 1,528 | 2,769 | ||||||||||
Net loss | $ | (2,249 | ) | $ | (3,618 | ) | $ | (11,303 | ) | $ | (14,199 | ) | ||
Basic and diluted net loss per share | $ | (0.10 | ) | $ | (0.17 | ) | $ | (0.51 | ) | $ | (0.67 | ) | ||
Weighted average number of shares used | ||||||||||||||
in computing basic and diluted net | ||||||||||||||
loss per share | 22,498,846 | 21,807,946 | 22,375,939 | 21,099,336 | ||||||||||
* Pro-Forma Financial Presentation
Pro-forma results are presented for informational purposes only. Pro-forma financial results for all periods presented exclude the effect of stock-based, non-cash deferred compensation expenses. In addition,the pro-forma results for the year ended December 31, 2001 exclude one-time charges of $28.8 million for an inventory write-down and a fixed asset impairment presented in cost of revenues, $2.6 million for doubtful debt presented in general and administrative expenses, and $4.7 million due to restructuring plans presented in non-recurring expenses, net. The pro-forma results for the three months and for the year ended December 31, 2002, exclude $83 thousand, presented in non-recurring expenses, net.
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Ceragon Reports Fourth Quarter and Fiscal Year 2002 Results – 4
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Three months ended December 31, | Year ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2002 | 2001 | 2002 | 2001 | |||||||||||
Unaudited | Audited | |||||||||||||
Revenues | $ | 6,071 | $ | 3,274 | $ | 18,394 | $ | 24,852 | ||||||
Cost of revenues | 3,974 | 2,609 | 12,791 | 45,282 | ||||||||||
Gross profit (loss) | 2,097 | 665 | 5,603 | (20,430) | ||||||||||
2,362 | 2,433 | 9,143 | 12,967 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 2,362 | 2,433 | 9,143 | 12,967 | ||||||||||
Less: participation by the Chief | ||||||||||||||
Scientist of the Government of | ||||||||||||||
Israel | 544 | 394 | 1,870 | 2,660 | ||||||||||
Research and development, net | 1,818 | 2,039 | 7,273 | 10,307 | ||||||||||
Sales and marketing | 2,310 | 2,129 | 9,130 | 11,924 | ||||||||||
General and administrative | 510 | 585 | 2,031 | 5,770 | ||||||||||
Amortization of deferred stock | ||||||||||||||
compensation (a) | 575 | 1,205 | 2,974 | 6,431 | ||||||||||
Non-recurring expenses, net | 83 | -- | 83 | 4,750 | ||||||||||
Total operating expenses | 5,296 | 5,958 | 21,491 | 39,182 | ||||||||||
Operating loss | (3,199 | ) | (5,293 | ) | (15,888 | ) | (59,612 | ) | ||||||
Financial income, net | 292 | 470 | 1,528 | 2,769 | ||||||||||
Net loss | $ | (2,907 | ) | $ | (4,823 | ) | $ | (14,360 | ) | $ | (56,843 | ) | ||
Basic and diluted net loss per share | $ | (0.13 | ) | $ | (0.22 | ) | $ | (0.64 | ) | $ | (2.69 | ) | ||
Weighted average number of shares used | ||||||||||||||
in computing basic and diluted net | ||||||||||||||
loss per share | 22,498,846 | 21,807,946 | 22,375,939 | 21,099,336 | ||||||||||
(a)Amortization of deferred stock | ||||||||||||||
compensation relates to the | ||||||||||||||
following: | ||||||||||||||
Cost of revenues | $ | 47 | $ | 86 | $ | 214 | $ | 400 | ||||||
Research and development | 177 | 385 | 958 | 2,248 | ||||||||||
Sales and marketing | 210 | 388 | 1,072 | 1,984 | ||||||||||
General and administrative | 141 | 346 | 730 | 1,799 | ||||||||||
Totalamortization of deferred | ||||||||||||||
stock compensation | $ | 575 | $ | 1,205 | $ | 2,974 | $ | 6,431 | ||||||
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Ceragon Reports Fourth Quarter and Fiscal Year 2002 Results – 5
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
December 31, | ||||||||
---|---|---|---|---|---|---|---|---|
2002 | 2001 | |||||||
Audited | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 9,807 | $ | 6,421 | ||||
Short-term bank deposits | 4,075 | 26,741 | ||||||
Corporate bonds | 6,624 | 19,813 | ||||||
Trade receivables, net | 4,329 | 2,822 | ||||||
Other accounts receivable and prepaid expenses | 1,268 | 2,143 | ||||||
Inventories | 8,054 | 7,377 | ||||||
Total current assets | 34,157 | 65,317 | ||||||
LONG-TERM INVESTMENTS: | ||||||||
Long-term corporate bonds | 11,675 | 746 | ||||||
Long-term bank deposits | 10,992 | -- | ||||||
Severance pay funds | 1,200 | 930 | ||||||
Total long-term investments | 23,867 | 1,676 | ||||||
PROPERTY AND EQUIPMENT, NET | 3,616 | 5,093 | ||||||
Total assets | $ | 61,640 | $ | 72,086 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 5,744 | $ | 5,040 | ||||
Other accounts payable and accrued expenses | 4,805 | 4,916 | ||||||
Total current liabilities | 10,549 | 9,956 | ||||||
ACCRUED SEVERANCE PAY | 1,825 | 1,511 | ||||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital: | ||||||||
Ordinary shares of NIS 0.01 par value: Authorized: 40,000,000 | ||||||||
shares | ||||||||
as of December 31, 2001 and December 31, 2002, respectively; | ||||||||
issued and outstanding: | ||||||||
22,165,196 and 22,578,346 as of December 31, 2001 and December | ||||||||
31, 2002, respectively | ||||||||
56 | 56 | |||||||
Additional paid-in capital | 169,286 | 169,355 | ||||||
Deferred stock compensation | (1,772 | ) | (4,848 | ) | ||||
Accumulated deficit | (118,304 | ) | (103,944 | ) | ||||
Total shareholders' equity | 49,266 | 60,619 | ||||||
Total liabilities and shareholders' equity | $ | 61,640 | $ | 72,086 | ||||
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Ceragon Reports Fourth Quarter and Fiscal Year 2002 Results – 6
This press release may contain statements concerning Ceragon’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections that involve a number of risks and uncertainties. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially from forecasts and estimates include: Ceragon’s limited operating history and history of losses; Ceragon’s dependence on a limited number of key customers, independent manufacturers and suppliers; and the demand for Ceragon’s products and technology. These risks and uncertainties, as well as others, are discussed in greater detail in Ceragon’s Annual Report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made and Ceragon undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made.
_________________
Contacts:
Linda Pitt
GAJ Services Inc.
859-291-1005
lpitt@gajservices.com
Daphna Golden (Investors)
Ceragon Networks Ltd.
+972-3-645-5513
ir@ceragon.com