Exhibit A
CERAGON NETWORKS® REPORTS SECOND QUARTER 2005
FINANCIAL RESULTS
Cellular Backhaul Continues to be Main Growth Driver for Ceragon
TEL AVIV, Israel, July 21, 2005 – Ceragon Networks Ltd. (NASDAQ and TASE: CRNT), www.ceragon.com, a global provider of high-capacity broadband wireless systems, today reported results for the second quarter, which ended June 30, 2005.
Revenues for the quarter were $17.97 million, up from $13 million for the second quarter of 2004 and from $16.8 million for the first quarter of 2005. This represents an increase of 38% as compared to the first quarter of 2004, and an increase of 6.8% as compared to the first quarter of 2005.
Net income for the second quarter of 2005 increased to $1 million, or $0.04 per basic and diluted share. In comparison, net income in the second quarter of 2004 was $290 thousand or $0.01 per basic and diluted share.
Gross profit for the second quarter of 2005 increased to $7.2 million, or 40.1% of revenues.
Total cash, cash equivalents and liquid investments at the end of the quarter were $35.5 million.
The second quarter of 2005 was another quarter of cellular business wins with sales to cellular operators representing over 50% of revenue.
“Our strategy of targeting cellular operators is paying off and we are fast approaching sales of $10 million per quarter to Cellular operators with over 40 such customers. This growth trend continues as cellular operators require higher capacity networking solutions to upgrade existing networks, build new networks and begin providing 3G services,” said Shraga Katz, President and CEO, Ceragon Networks Ltd.
“As my role shifts from day-to-day management to consultant and founding shareholder of the company, I would like to thank the Ceragon team. Ceragon is an outstanding company that is well-equipped to sustain growth and capitalize on the many opportunities going forward. I wish Ira Palti, the incoming CEO, good luck and I look forward to seeing Ceragon achieve new levels of success under his leadership”.
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Ceragon Reports Second Quarter 2005 Results – 2
A conference call discussing Ceragon’s results for the second quarter of 2005 will take place today, July 30, 2005, at 9:00 a.m. (EST). Investors can also join the company’s teleconference by calling 719-457-2733 and referencing confirmation number 6304626 at 8:50 a.m. EST. The call-in lines will be available on a first-come, first-serve basis.
Investors are also invited to listen to the call live via the Internet by accessing Ceragon Networks’ website at the investors’ page: http://www.ceragon.com/site/Investor_events.asp, selecting the webcast link, and following the registration instructions. The link will be accessible through Sunday, July 31, 2005.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ & TASE: CRNT), a pacesetter in broadband wireless networking systems, enables rapid and cost-effective high-capacity network connectivity for mobile cellular infrastructure, fixed networks, private networks and enterprises. Ceragon’s modular FibeAir® product family operates across multiple frequencies, supports integrated high-capacity services 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 150 customers in more than 60 countries. More information is available at www.ceragon.com.
Ceragon Networks®, CeraView®, FibeAir® and the FibeAir®design mark are registered trademarks of Ceragon Networks Ltd., and Ceragon™, 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 Second Quarter 2005 Results – 3
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Six months ended June 30, | Three months ended June 30, | Year ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | 2004 | 2005 | 2004 | 2004 | |||||||||||||
Revenues | $ | 34,791 | $ | 24,404 | $ | 17,972 | $ | 13,007 | $ | 54,831 | |||||||
Cost of revenues | 20,813 | 14,132 | 10,772 | 7,600 | 32,191 | ||||||||||||
Gross profit | 13,978 | 10,272 | 7,200 | 5,407 | 22,640 | ||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 5,346 | 4,576 | 2,648 | 2,390 | 9,686 | ||||||||||||
Less - grants and participations | 888 | 1,013 | 426 | 520 | 2,293 | ||||||||||||
Research and development, net | 4,458 | 3,563 | 2,222 | 1,870 | 7,393 | ||||||||||||
Selling and marketing | 6,456 | 5,583 | 3,367 | 2,848 | 11,645 | ||||||||||||
General and administrative | 1,408 | 1,079 | 706 | 555 | 2,429 | ||||||||||||
Amortization of deferred stock | |||||||||||||||||
compensation (a) | 40 | 245 | 9 | 87 | 374 | ||||||||||||
Total operating expenses | 12,362 | 10,470 | 6,304 | 5,360 | 21,841 | ||||||||||||
Operating Income (loss) | 1,616 | (198 | ) | 896 | 47 | 799 | |||||||||||
Financial income, net | 226 | 435 | 121 | 182 | 674 | ||||||||||||
Other income | 11 | 92 | 2 | 61 | 141 | ||||||||||||
Net income | $ | 1,853 | $ | 329 | $ | 1,019 | $ | 290 | $ | 1,614 | |||||||
Basic net earnings per share | $ | 0.07 | $ | 0.01 | $ | 0.04 | $ | 0.01 | $ | 0.06 | |||||||
Diluted net earnings per share | $ | 0.07 | $ | 0.01 | $ | 0.04 | $ | 0.01 | $ | 0.06 | |||||||
Weighted average number of shares | |||||||||||||||||
used in computing basic net earnings | |||||||||||||||||
per share | 25,991,778 | 24,790,561 | 26,081,009 | 24,851,571 | 25,066,937 | ||||||||||||
Weighted average number of shares | |||||||||||||||||
used in computing diluted net | |||||||||||||||||
earnings per share | 28,266,708 | 28,291,805 | 28,193,715 | 28,177,109 | 28,069,844 | ||||||||||||
(a)Amortization of deferred stock | |||||||||||||||||
compensation relates to | |||||||||||||||||
the following: | |||||||||||||||||
Cost of revenues | $ | 2 | $ | 22 | $ | - | $ | 7 | $ | 36 | |||||||
Research and development | |||||||||||||||||
costs, net | 12 | 58 | - | 14 | 86 | ||||||||||||
Selling and marketing | |||||||||||||||||
expenses, net | 16 | 134 | 5 | 59 | 196 | ||||||||||||
General and | |||||||||||||||||
administrative expenses | 10 | 31 | 4 | 7 | 56 | ||||||||||||
Total amortization of | |||||||||||||||||
deferred stock compensation | $ | 40 | $ | 245 | $ | 9 | $ | 87 | $ | 374 | |||||||
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Ceragon Reports Second Quarter 2005 Results – 4
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
June 30, 2005 | December 31, 2004 | |||||||
---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 12,862 | $ | 11,234 | ||||
Short-term bank deposits | 5,089 | 3,973 | ||||||
Marketable securities | 6,577 | 11,101 | ||||||
Trade receivables, net | 10,399 | 6,939 | ||||||
Other accounts receivable and prepaid expenses | 3,787 | 4,435 | ||||||
Inventories | 20,883 | 19,083 | ||||||
Total current assets | 59,597 | 56,765 | ||||||
LONG-TERM INVESTMENTS: | ||||||||
Long-term bank deposits | 5,288 | 4,451 | ||||||
Long-term marketable securities | 5,665 | 7,042 | ||||||
Long-term receivables | 390 | 390 | ||||||
Severance pay funds | 1,972 | 1,947 | ||||||
Total long-term investments | 13,315 | 13,830 | ||||||
PROPERTY AND EQUIPMENT, NET | 2,494 | 2,516 | ||||||
Total assets | $ | 75,406 | $ | 73,111 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 10,123 | $ | 9,348 | ||||
Deferred revenue | 2,468 | 3,114 | ||||||
Other accounts payable and accrued expenses | 5,260 | 5,476 | ||||||
Total current liabilities | 17,851 | 17,938 | ||||||
ACCRUED SEVERANCE PAY | 3,107 | 2,986 | ||||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital: | ||||||||
Ordinary shares of NIS 0.01 par value: Authorized: | ||||||||
40,000,000 shares as of March 31,2005 and June 30, 2005; | ||||||||
Issued and outstanding: 25,951,673 shares and 26,210,345 | ||||||||
shares as of March 31,2005 and June 30, 2005, respectively | 64 | 64 | ||||||
Additional paid-in capital | 177,029 | 176,546 | ||||||
Deferred stock compensation | (33 | ) | (73 | ) | ||||
Accumulated other comprehensive income | (53 | ) | 62 | |||||
Accumulated deficit | (122,559 | ) | (124,412 | ) | ||||
Total shareholders' equity | 54,448 | 52,187 | ||||||
Total liabilities and shareholders' equity | $ | 75,406 | $ | 73,111 | ||||
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Ceragon Reports Second Quarter 2005 Results – 5
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:
Vered Shaked
Ceragon Networks Ltd.
+972-3-645-5513
ir@ceragon.com
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