Exhibit B
CERAGON NETWORKS REPORTS SECOND QUARTER 2010 FINANCIAL RESULTS
Achieves record revenues, higher gross margins and improved operating margin
Paramus, New Jersey, July 26, 2010 – Ceragon Networks Ltd. (NASDAQ: CRNT), the provider of high-capacity, LTE/4G-ready wireless backhaul networks, today reported results for the second quarter which ended June 30, 2010.
Revenues for the second quarter of 2010 reached an all-time high of $60.9 million, up 44% from $42.2 million for the second quarter of 2009 and up 2% from $59.7 million in the first quarter of 2010.
Net income in accordance with US Generally Accepted Accounting Principles (GAAP) for the second quarter of 2010 was $2.6 million or $0.07 per basic share and diluted share, including a one-time expense of $1.15 million to acquire technology for further development. Net income in the second quarter of 2009 was $0.2 million, or $0.01 per basic and diluted share.
On a non-GAAP basis, net income for the first quarter, excluding $852,000 of equity-based compensation expenses and the $1.15 million one-time expense for technology, was $4.6 million, or $0.13 per basic and diluted share. Non-GAAP net income for the second quarter of 2009 was $1.04 million, or $0.03 per basic and diluted share (please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP).
Gross margin on a GAAP basis in the second quarter of 2010 was 35.3%. Gross margin on a non-GAAP basis was 35.4% of revenues.
Cash and cash investments at the end of the quarter were $94.9 million.
“We had an excellent second quarter with record revenues, higher gross margin, and improved operating margin,” said Ira Palti, President and CEO of Ceragon. “Global demand remains very strong. Outside of India, where orders are being delayed pending a security-related process being implemented by the government, our book-to-bill was above one. We expect revenues in the third and fourth quarters to be similar to the second quarter. For the full year, we continue to target revenue growth in the range of 30-35%, with profits growing at a higher rate than revenue.”
Supplemental revenue breakouts:
Geographical breakdown, first quarter of 2010:
EMEA: | 25 | % | ||
North America: | 16 | % | ||
Asia Pacific: | 53 | % | ||
Latin America: | 6 | % |
A conference call will follow, beginning at 9:00 a.m. EDT. Investors are invited to join the Company’s teleconference by calling (800) 230-1059 or international (612) 234-9959 at 8:50 a.m. EDT. 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) 475-6701or international (320) 365-3844, Access Code 162768.
A replay of both the call and the webcast will be available through August 26, 2010.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is a leading provider of high capacity LTE/4G ready wireless backhaul solutions that enable cellular operators and other wireless service providers to deliver voice and data services, such as Internet browsing, music and video applications. Our wireless backhaul solutions use microwave technology to transfer large amounts of telecommunication traffic between base stations and the core of the service provider’s network. Designed to enable risk-free migration from legacy to next-generation backhaul networks, our solutions 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. Our solutions support all wireless access technologies, includ ing GSM, CDMA, EV-DO, HSPA, LTE and WiMAX. These solutions allow wireless service providers to cost-effectively and seamlessly evolve their network from circuit-switched and hybrid concepts to all IP thereby meeting the increasing demands by the growing numbers of subscribers and the increasing demand for mobile data services. We also provide our solutions to businesses and public institutions that operate their own private communications networks. Our solutions are deployed by more than 200 service providers of all sizes, as well as in hundreds of private networks, in more than 130 countries. More information is available at www.ceragon.com.
- 2 -
Ceragon Networks®, CeraView®, FibeAir®, the FibeAir® design mark and Native2® are registered trademarks., 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.
Contact:Yoel Knoll
Director of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972 (0) 52 830 6419
Office (Int’l): +972 (0)3 766 6419
yoell@ceragon.com
- 3 -
Ceragon Reports Second Quarter 2010 Results
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended June 30 | Six months ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues | $ | 60,889 | $ | 42,246 | $ | 120,576 | $ | 86,148 | ||||||||
Cost of revenues | 39,420 | 28,555 | 78,731 | 57,386 | ||||||||||||
Gross profit | 21,469 | 13,691 | 41,845 | 28,762 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 6,919 | 4,323 | 12,192 | 9,096 | ||||||||||||
Selling and marketing | 8,959 | 7,028 | 18,141 | 14,807 | ||||||||||||
General and administrative | 2,996 | 2,504 | 5,776 | 5,080 | ||||||||||||
Total operating expenses | $ | 18,874 | $ | 13,855 | $ | 36,109 | $ | 28,983 | ||||||||
Operating profit (loss) | 2,595 | (164 | ) | 5,736 | (221 | ) | ||||||||||
Financial income, net | 276 | 468 | 510 | 822 | ||||||||||||
Income before taxes | 2,871 | 304 | 6,246 | 601 | ||||||||||||
Taxes on income | 273 | 71 | 625 | 153 | ||||||||||||
Net Income | $ | 2,598 | $ | 233 | $ | 5,621 | $ | 448 | ||||||||
Basic net earnings per share | $ | 0.07 | $ | 0.01 | $ | 0.16 | $ | 0.01 | ||||||||
Diluted net earnings per share | $ | 0.07 | $ | 0.01 | $ | 0.15 | $ | 0.01 | ||||||||
Weighted average number of shares used in computing basic net earnings per share | 34,881,532 | 34,247,005 | 34,686,410 | 34,523,460 | ||||||||||||
Weighted average number of shares used in computing diluted net earnings per share | 36,317,945 | 34,994,702 | 36,542,735 | 35,157,903 |
(more)
- 4 -
Ceragon Reports Second Quarter 2010 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
June 30, 2010 | December 31, 2009 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 30,231 | $ | 38,339 | ||||
Short-term bank deposits | 22,867 | 30,183 | ||||||
Marketable securities | 16,356 | 16,724 | ||||||
Trade receivables, net | 56,690 | 68,452 | ||||||
Deferred taxes | 3,964 | 3,462 | ||||||
Other accounts receivable and prepaid expenses | 7,724 | 7,492 | ||||||
Inventories | 68,577 | 65,925 | ||||||
Total current assets | 206,409 | 230,577 | ||||||
LONG-TERM INVESTMENTS: | ||||||||
Long-term bank deposits | 9,220 | 10,824 | ||||||
Long-term marketable securities | 16,223 | 2,250 | ||||||
Severance pay funds | 5,049 | 4,971 | ||||||
Deferred taxes | 8,899 | 8,942 | ||||||
Total long-term investments | $ | 39,391 | $ | 26,987 | ||||
PROPERTY AND EQUIPMENT, NET | 14,574 | 11,809 | ||||||
Total assets | $ | 260,374 | $ | 269,373 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | 34,358 | 52,898 | ||||||
Deferred revenues | 17,806 | 18,548 | ||||||
Other accounts payable and accrued expenses | 9,874 | 9,847 | ||||||
Total current liabilities | $ | 62,038 | $ | 81,293 | ||||
LONG-TERM LIABILITIES | ||||||||
Accrued severance pay | $ | 7,282 | $ | 7,174 | ||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital: | ||||||||
Ordinary shares | 94 | 92 | ||||||
Additional paid-in capital | 296,573 | 291,736 | ||||||
Treasury shares at cost | (20,091 | ) | (20,091 | ) | ||||
Other comprehensive income (loss) | (212 | ) | 100 | |||||
Accumulated deficits | (85,310 | ) | (90,931 | ) | ||||
Total shareholders' equity | $ | 191,054 | $ | 180,906 | ||||
Total liabilities and shareholders' equity | $ | 260,374 | $ | 269,373 |
- 5 -
Ceragon Reports Second Quarter 2010 Results
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net income | $ | 2,598 | $ | 233 | $ | 5,621 | $ | 448 | ||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation | 1,138 | 760 | 2,178 | 1,471 | ||||||||||||
Stock-based compensation expense | 852 | 805 | 1,823 | 1,594 | ||||||||||||
Decrease in trade and other receivables, net | 1,673 | 7,700 | 11,118 | 21,237 | ||||||||||||
Decrease (increase) in inventory | 5,172 | (2,922 | ) | (2,652 | ) | (2,055 | ) | |||||||||
Decrease in trade payables and accrued liabilities | (11,213 | ) | (145 | ) | (17,985 | ) | (12,708 | ) | ||||||||
Increase (decrease) in deferred revenues | (2,063 | ) | (1,270 | ) | (742 | ) | 165 | |||||||||
Increase in deferred tax asset | (28 | ) | - | (359 | ) | - | ||||||||||
Other adjustments | 557 | (95 | ) | 536 | (233 | ) | ||||||||||
Net cash provided by (used in) operating activities | $ | (1,314 | ) | $ | 5,066 | $ | (462 | ) | $ | 9,919 | ||||||
Cash flow from investing activities: | ||||||||||||||||
Purchase of property and equipment ,net | (2,577 | ) | (1,287 | ) | (5,471 | ) | (3,774 | ) | ||||||||
Investment in short and long-term bank deposit | (11,032 | ) | (10,495 | ) | (11,032 | ) | (18,955 | ) | ||||||||
Proceeds from short and long-term bank deposits | 12,607 | 3,599 | 19,680 | 20,559 | ||||||||||||
Investment in held-to-maturity marketable securities | (3,230 | ) | - | (18,339 | ) | (1,500 | ) | |||||||||
Proceeds from maturities of held-to-maturity marketable securities | - | 1,300 | 4,500 | 11,754 | ||||||||||||
Net cash provided by (used in) investing activities | $ | (4,232 | ) | $ | (6,883 | ) | $ | (10,662 | ) | $ | 8,084 | |||||
Cash flow from financing activities: | ||||||||||||||||
Proceeds from exercise of options | 430 | 215 | 3,016 | 215 | ||||||||||||
Purchase of treasury shares at cost | - | (1,618 | ) | - | (8,040 | ) | ||||||||||
Net cash provided by (used in) financing activities | $ | 430 | $ | (1,403 | ) | $ | 3,016 | $ | (7,825 | ) | ||||||
Increase (decrease) in cash and cash equivalents | $ | (5,116 | ) | $ | (3,220 | ) | $ | (8,108 | ) | $ | 10,178 | |||||
Cash and cash equivalents at the beginning of the period | 35,347 | 41,622 | 38,339 | 28,224 | ||||||||||||
Cash and cash equivalents at the end of the period | $ | 30,231 | $ | 38,402 | $ | 30,231 | $ | 38,402 |
- 6 -
Ceragon Reports Second Quarter 2010 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended June 30, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
GAAP (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
Revenues | $ | 60,889 | $ | 60,889 | $ | 42,246 | ||||||||||
Cost of revenues | 39,420 | (*) 72 | 39,348 | 28,494 | ||||||||||||
Gross profit | 21,469 | 21,541 | 13,752 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 6,919 | (*) 184 | 5,585 | 4,157 | ||||||||||||
(**) 1,150 | ||||||||||||||||
Selling and marketing | 8,959 | (*) 352 | 8,607 | 6,706 | ||||||||||||
General and administrative | 2,996 | (*) 244 | 2,752 | 2,248 | ||||||||||||
Total operating expenses | $ | 18,874 | $ | 16,944 | $ | 13,111 | ||||||||||
Operating profit | 2,595 | 4,597 | 641 | |||||||||||||
Financial income, net | 276 | 276 | 468 | |||||||||||||
Income before taxes | 2,871 | 4,873 | 1,109 | |||||||||||||
Taxes on income | 273 | 273 | 71 | |||||||||||||
Net income | $ | 2,598 | $ | 4,600 | $ | 1,038 | ||||||||||
Basic net earnings per share | $ | 0.07 | $ | 0.13 | $ | 0.03 | ||||||||||
Diluted net earnings per share | $ | 0.07 | $ | 0.13 | $ | 0.03 | ||||||||||
Weighted average number of shares used in computing basic net earnings per share | 34,881,532 | 34,881,532 | 34,247,005 | |||||||||||||
Weighted average number of shares used in computing diluted net earnings per share | 36,317,945 | 36,317,945 | 34,994,702 | |||||||||||||
Total adjustments | 2,002 | |||||||||||||||
(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R) (**) Adjustment related to purchase of technology for further development |
- 7 -
Ceragon Reports Second Quarter 2010 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Six months ended June 30, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
GAAP (as reported) | Adjustments(*) | Non-GAAP | Non-GAAP | |||||||||||||
Revenues | $ | 120,576 | $ | 120,576 | $ | 86,148 | ||||||||||
Cost of revenues | 78,731 | (*) 138 | 78,593 | 57,262 | ||||||||||||
Gross profit | 41,845 | 41,983 | 28,886 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 12,192 | (*) 361 | 10,681 | 8,770 | ||||||||||||
(**) 1,150 | ||||||||||||||||
Selling and marketing | 18,141 | (*) 614 | 17,527 | 14,179 | ||||||||||||
General and administrative | 5,776 | (*) 710 | 5,066 | 4,564 | ||||||||||||
Total operating expenses | $ | 36,109 | $ | 33,274 | $ | 27,513 | ||||||||||
Operating profit | 5,736 | 8,709 | 1,373 | |||||||||||||
Financial income, net | 510 | 510 | 822 | |||||||||||||
Income before taxes | 6,246 | 9,219 | 2,195 | |||||||||||||
Taxes on income | 625 | 625 | 153 | |||||||||||||
Net Income | $ | 5,621 | $ | 8,594 | $ | 2,042 | ||||||||||
Basic net earnings per share | $ | 0.16 | $ | 0.25 | $ | 0.06 | ||||||||||
Diluted net earnings per share | $ | 0.15 | $ | 0.24 | $ | 0.06 | ||||||||||
Weighted average number of shares used in computing basic net earnings per share | 34,686,410 | 34,686,410 | 34,523,460 | |||||||||||||
Weighted average number of shares used in computing diluted net earnings per share | 36,542,735 | 36,542,735 | 35,157,903 | |||||||||||||
Total adjustments | 2,973 | |||||||||||||||
(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R) (**) Adjustment related to purchase of technology for further development |
- 8 -
Ceragon Reports Second Quarter 2010 Results
Contact:Yoel Knoll
Director of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972 (0) 52 830 6419
Office (Int’l): +972 (0)3 766 6419
yoell@ceragon.com
- 9 -