Exhibit A
![](https://capedge.com/proxy/6-K/0001178913-09-000246/ceragon.jpg)
CERAGON NETWORKS REPORTS FOURTH QUARTER AND
YEAR-END 2008 FINANCIAL RESULTS
TEL AVIV, Israel, February 4, 2009 –Ceragon Networks Ltd. (NASDAQ and TASE: CRNT), a leading provider of high-capacity wireless backhaul solutions, today reported results for the fourth quarter and year which ended December 31, 2008.
Revenues for the fourth quarter of 2008 were $56.8 million, up 23.0% from $46.1 million for the fourth quarter of 2007 and down 2.3% from $58.1 million in the third quarter of 2008.
Net income in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2008 was $2.7 million or $0.07 per basic and diluted share, compared to net income of $4.4 million in the fourth quarter of 2007, or $0.13 per basic share and $0.12 per diluted share.
On a non-GAAP basis, net income for the fourth quarter, excluding $594,000 of equity-based compensation expenses, was $3.3 million, or $0.09 per basic and diluted share. Non-GAAP net income for the fourth quarter of 2007 was $4.9 million, or $0.15 per basic share and $0.14 per diluted share (please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP).
Revenues for the full year of 2008 were $217.3 million, up 34.2% from $161.9 million in 2007. Net income on a GAAP basis for 2008 was $26 million or $0.70 per basic share and $0.68 per diluted share including $11.2 million of tax benefit relates to the initial creation of deferred tax asset in the second quarter of 2008. Net income for the year 2007 was $13.1 million or $0.44 per basic share and $0.41 per diluted share.
On a non-GAAP basis, net income for 2008 was $17.3 million, or $0.47 per basic share and $0.45 per diluted share compared to a non-GAAP net income of $15.3 million, or $0.52 per basic share and $0.48 per diluted share for 2007.
Gross margin on a GAAP basis in the fourth quarter of 2008 was 33.4% of revenues. Gross margin on a non-GAAP basis in the fourth quarter of 2008 was 33.5% of revenues.
Cash and cash investments at the end of the quarter were $97.8 million.
“In 2008 we continued to achieve excellent growth based on the strong foundation we’ve been building for several years” said Ira Palti, President and CEO of Ceragon. The underlying drivers of our business, such as growth in mobile data usage and mobile subscriber growth, are part of long term trends expected to continue for several years. Meanwhile, we lack short term visibility as customers focus on maintaining flexibility, reducing inventory and conserving cash in response to the spreading global financial crisis. We will manage through this period by staying close to our customers, capitalizing on our strong position, and preparing to take the company to the next level once economic conditions improve.”
Supplemental revenue breakouts:
Geographical breakdown: | ||||||||
---|---|---|---|---|---|---|---|---|
Fourth quarter 2008 | Full year 2008 | |||||||
Asia Pacific | 47 | % | 52 | % | ||||
Europe Middle-East and Africa | 34 | % | 31 | % | ||||
North America | 12 | % | 9 | % | ||||
Latin America | 7 | % | 8 | % |
Segment breakdown: | ||||||||
---|---|---|---|---|---|---|---|---|
Fourth quarter 2008 | Full Year 2008 | |||||||
Service providers | 88 | % | 88 | % | ||||
Private networks | 12 | % | 12 | % |
A conference call discussing Ceragon’s results for the fourth quarter of 2008, will take place today, February 4, 2009, at 9:00 a.m. (ET). Investors are invited to join the Company’s teleconference by calling (800) 230-1093 or international (612) 332-0228 at 8:50 a.m. ET. The call-in lines will be available on a first-come, first-serve basis.
Investors can also listen to the call live via the Internet by accessing Ceragon Networks’ website at the investors’ page: http://www.ceragon.com/ir_events.asp?lang=0 selecting the webcast link, and following the registration instructions.
If you are unable to join us live, the replay numbers are: (800) 475-6701 or international (320) 365-3844, Access code 980455.
A replay of both the call and the webcast will be available through March 4, 2009.
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About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ and TASE: CRNT) is a leading provider of high capacity wireless backhaul solutions that enable wireless service providers to deliver voice and premium data services, such as Internet browsing, music and video applications. Ceragon’s wireless backhaul solutions use microwave technology to transfer large amounts of network traffic between base stations and the infrastructure at the core of the mobile network. Ceragon designs solutions to provide fiber-like connectivity for circuit-switched, or SONET/SDH, networks, next generation Ethernet/Internet Protocol, or IP-based, networks, and hybrid networks that combine circuit-switched and IP-based networks. Ceragon’s solutions support all wireless access technologies, including GSM, CDMA, EV-DO and WiMAX. These solutions address wireless service providers’ need to cost-effectively build-out and scale their infrastructure to meet the increasing demands placed on their networks by growing numbers of subscribers and the increasing demand for premium data services. Ceragon also provides its solutions to businesses and public institutions that operate their own private communications networks. Ceragon’s solutions are deployed by more than 150 service providers of all sizes, as well as in hundreds of private networks, in nearly 100 countries. More information is available at www.ceragon.com
Ceragon Networks®, CeraView®, FibeAir® the FibeAir® design mark and Native²® 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.
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. These are important factors that could cause actual results to differ materially from forecasts and estimates. 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.
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Ceragon Reports Fourth Quarter and Year-End 2008 Results |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Year ended December 31 | Three months ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | 2007 | 2008 | 2007 | |||||||||||
Revenues | $ | 217,278 | $ | 161,888 | $ | 56,779 | $ | 46,145 | ||||||
Cost of revenues | 144,607 | 103,406 | 37,802 | 29,454 | ||||||||||
Gross profit | 72,671 | 58,482 | 18,977 | 16,691 | ||||||||||
Operating expenses: | ||||||||||||||
Research and development | 20,310 | 15,457 | 5,195 | 4,373 | ||||||||||
Selling and marketing | 32,252 | 25,344 | 8,989 | 7,220 | ||||||||||
General and administrative | 7,150 | 5,277 | 2,160 | 1,526 | ||||||||||
Expense in respect to settlement | ||||||||||||||
reserve | - | 450 | - | - | ||||||||||
Total operating expenses | $ | 59,712 | $ | 46,528 | $ | 16,344 | $ | 13,119 | ||||||
Operating profit | 12,959 | 11,954 | 2,633 | 3,572 | ||||||||||
Financial income, net | 2,184 | 1,182 | 69 | 856 | ||||||||||
Income before taxes | 15,143 | 13,136 | 2,702 | 4,428 | ||||||||||
Tax benefit | 10,834 | - | 36 | - | ||||||||||
Net Income | $ | 25,977 | $ | 13,136 | $ | 2,738 | $ | 4,428 | ||||||
Basic net earnings per share | $ | 0.70 | $ | 0.44 | $ | 0.07 | $ | 0.13 | ||||||
Diluted net earnings per share | $ | 0.68 | $ | 0.41 | $ | 0.07 | $ | 0.12 | ||||||
Weighted average number of shares used | ||||||||||||||
in computing basic net earnings per | ||||||||||||||
share | 36,863,684 | 29,692,670 | 36,517,147 | 33,152,306 | ||||||||||
Weighted average number of shares used | ||||||||||||||
in computing diluted net earnings | ||||||||||||||
per share | 38,338,584 | 32,101,393 | 36,938,654 | 35,889,636 | ||||||||||
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Ceragon Reports Fourth Quarter and Year-End 2008 Results |
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
December 31, 2008 | December 31, 2007 | |||||||
---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 28,224 | $ | 58,650 | ||||
Short-term bank deposits | 35,044 | 25,997 | ||||||
Marketable securities | 2,187 | 6,399 | ||||||
Trade receivables, net | 70,811 | 40,533 | ||||||
Deferred taxes | 4,082 | - | ||||||
Other accounts receivable and prepaid expenses | 11,508 | 10,888 | ||||||
Inventories | 40,113 | 36,763 | ||||||
Total current assets | $ | 191,969 | $ | 179,230 | ||||
LONG-TERM INVESTMENTS: | ||||||||
Long-term bank deposits | 8,204 | 12,030 | ||||||
Long-term marketable securities | 24,102 | 18,665 | ||||||
Severance pay funds | 4,065 | 3,268 | ||||||
Deferred taxes | 8,007 | - | ||||||
Total long-term investments | $ | 44,378 | $ | 33,963 | ||||
PROPERTY AND EQUIPMENT, NET | 8,891 | 4,447 | ||||||
Total assets | $ | 245,238 | $ | 217,640 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 41,998 | $ | 25,173 | ||||
Deferred revenues | 5,886 | 6,702 | ||||||
Other accounts payable and accrued expenses | 7,791 | 14,935 | ||||||
Total current liabilities | $ | 55,675 | $ | 46,810 | ||||
LONG-TERM LIABILITIES | ||||||||
Accrued severance pay | 6,647 | 5,286 | ||||||
Other payables | - | 4,650 | ||||||
Total long-term liabilities | $ | 6,647 | $ | 9,936 | ||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital: | ||||||||
Ordinary shares | 91 | 91 | ||||||
Additional paid-in capital | 285,141 | 281,086 | ||||||
Treasury shares at cost | (7,923 | ) | - | |||||
Other comprehensive income | 193 | 280 | ||||||
Accumulated deficits | (94,586 | ) | (120,563 | ) | ||||
Total shareholders' equity | $ | 182,916 | $ | 160,894 | ||||
Total liabilities and shareholders' equity | $ | 245,238 | $ | 217,640 | ||||
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Ceragon Reports Fourth Quarter and Year-End 2008 Results |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended December 31, | Year ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2008 | 2007 | 2008 | 2007 | |||||||||||
Cash flow from operating activities: | ||||||||||||||
Net income | $ | 2,738 | $ | 4,428 | $ | 25,977 | $ | 13,136 | ||||||
Adjustments to reconcile net income to net cash used in | ||||||||||||||
operating activities: | ||||||||||||||
Depreciation | 685 | 382 | 2,070 | 1,342 | ||||||||||
Stock-based compensation expense | 594 | 480 | 2,557 | 1,758 | ||||||||||
Increase in trade and other receivables, net | (7,299 | ) | (9,775 | ) | (30,918 | ) | (16,847 | ) | ||||||
Decrease (increase) in inventory | (657 | ) | 2,306 | (3,350 | ) | (9,452 | ) | |||||||
Increase (decrease) in trade payables and accrued | ||||||||||||||
liabilities | (687 | ) | (2,441 | ) | 8,579 | 6,623 | ||||||||
Increase (decrease) in deferred revenues | 257 | (487 | ) | (816 | ) | 2,963 | ||||||||
Increase in deferred tax asset | (241 | ) | - | (11,353 | ) | - | ||||||||
Increase (decrease) in long term payable | - | 388 | (4,650 | ) | (3,275 | ) | ||||||||
Other adjustments | 97 | (692 | ) | 349 | (576 | ) | ||||||||
Net cash used in operating activities | $ | (4,513 | ) | $ | (5,411 | ) | $ | (11,555 | ) | $ | (4,328 | ) | ||
Cash flow from investing activities: | ||||||||||||||
Purchase of property and equipment ,net | (1,956 | ) | (647 | ) | (5,029 | ) | (2,830 | ) | ||||||
Investment in short and long-term bank deposit | (13,124 | ) | (33,627 | ) | (66,267 | ) | (35,654 | ) | ||||||
Proceeds from short and long-term bank deposits | 13,542 | 371 | 61,376 | 6,181 | ||||||||||
Investment in held-to-maturity marketable | ||||||||||||||
securities | - | (20,286 | ) | (14,851 | ) | (22,186 | ) | |||||||
Proceeds from maturities of held-to-maturity marketable | ||||||||||||||
securities | 7,450 | 3,908 | 13,500 | 8,638 | ||||||||||
Net cash provided by (used in) investing activities | $ | 5,912 | $ | (50,281 | ) | $ | (11,271 | ) | $ | (45,851 | ) | |||
Cash flow from financing activities: | ||||||||||||||
Proceeds from exercise of options | 104 | 1,111 | 695 | 9,959 | ||||||||||
Proceeds from issuance of shares, net | - | 88,700 | - | 88,700 | ||||||||||
Issuance costs | - | - | (372 | ) | - | |||||||||
Purchase of treasury shares at cost | (7,923 | ) | - | (7,923 | ) | - | ||||||||
Net cash provided by (used in) financing activities | $ | (7,819 | ) | $ | 89,811 | $ | (7,600 | ) | $ | 98,659 | ||||
Increase (decrease) in cash and cash equivalents | $ | (6,420 | ) | $ | 34,119 | $ | (30,426 | ) | $ | 48,480 | ||||
Cash and cash equivalents at the beginning of the period | 34,644 | 24,531 | 58,650 | 10,170 | ||||||||||
Cash and cash equivalents at the end of the period | $ | 28,224 | $ | 58,650 | $ | 28,224 | $ | 58,650 | ||||||
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Ceragon Reports Fourth Quarter and Year-End 2008 Results |
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
U.S. dollars in thousands, except share and per share data
Three months ended December 31, 2008 | 2007 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
GAAP (as reported) | Adjustments (*) | Non-GAAP | Non-GAA | |||||||||||
Revenues | $ | 56,779 | $ | 56,779 | $ | 46,145 | ||||||||
Cost of revenues | 37,802 | 53 | 37,749 | 29,419 | ||||||||||
Gross profit | 18,977 | 19,030 | 16,726 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 5,195 | 127 | 5,068 | 4,284 | ||||||||||
Selling and marketing | 8,989 | 237 | 8,752 | 6,996 | ||||||||||
General and administrative | 2,160 | 177 | 1,983 | 1,394 | ||||||||||
Total operating expenses | $ | 16,344 | $ | 15,803 | $ | 12,674 | ||||||||
Operating profit | 2,633 | 3,227 | 4,052 | |||||||||||
Financial income, net | 69 | 69 | 856 | |||||||||||
Income before taxes | 2,702 | 3,296 | 4,908 | |||||||||||
Tax benefit on income | 36 | 36 | - | |||||||||||
Net income | $ | 2,738 | $ | 3,332 | $ | 4,908 | ||||||||
Basic net earnings per share | $ | 0.07 | $ | 0.09 | $ | 0.15 | ||||||||
Diluted net earnings per share | $ | 0.07 | $ | 0.09 | $ | 0.14 | ||||||||
Weighted average number of shares used in | ||||||||||||||
computing basic net earnings per share | 36,517,147 | 36,517,147 | 33,152,306 | |||||||||||
Weighted average number of shares used in | ||||||||||||||
computing diluted net earnings per share | 36,938,654 | 36,938,654 | 35,889,636 | |||||||||||
Total adjustments | 594 | |||||||||||||
(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R)
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Ceragon Reports Fourth Quarter and Year-End 2008 Results |
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
U.S. dollars in thousands, except share and per share data
Year ended December 31, 2008 | 2007 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
GAAP (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||
Revenues | $ | 217,278 | $ | 217,278 | $ | 161,888 | ||||||||
Cost of revenues | 144,607 | 257 | (*) | 144,350 | 103,280 | |||||||||
Gross profit | 72,671 | 72,928 | 58,608 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 20,310 | 586 | (*) | 19,724 | 15,164 | |||||||||
Selling and marketing | 32,252 | 1,007 | (*) | 31,245 | 24,596 | |||||||||
General and administrative | 7,150 | 707 | (*) | 6,443 | 4,686 | |||||||||
Total operating expenses | $ | 59,712 | $ | 57,412 | $ | 44,446 | ||||||||
Operating profit | 12,959 | 15,516 | 14,162 | |||||||||||
Financial income, net | 2,184 | 2,184 | 1,182 | |||||||||||
Income before taxes | 15,143 | 17,700 | 15,344 | |||||||||||
Tax benefit (taxes on income) | 10,834 | (11,207 | )(**) | (373 | ) | - | ||||||||
Net income | $ | 25,977 | $ | 17,327 | $ | 15,344 | ||||||||
Basic net earnings per share | $ | 0.70 | $ | 0.47 | $ | 0.52 | ||||||||
Diluted net earnings per share | $ | 0.68 | $ | 0.45 | $ | 0.48 | ||||||||
Weighted average number of shares used in | ||||||||||||||
computing basic net earnings per share | ||||||||||||||
36,863,684 | 36,863,684 | 29,692,670 | ||||||||||||
Weighted average number of shares used in computing diluted net earnings per share | 38,338,584 | 38,338,584 | 32,101,393 | |||||||||||
Total adjustments | (8,650 | ) | ||||||||||||
(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R)
(**)Adjustment related to initial creation of deferred tax asset.
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Ceragon Reports Fourth Quarter and Year-End 2008 Results
Contact: Vered Shaked
Investor Relations Manager
Ceragon Networks Ltd.
Int'l +(972) 52 573 5513
US (201) 853 0228
vereds@ceragon.com
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