Exhibit A
Press Release
Ceragon Q4 and 2010 Year End Financial Results– Jan. 31, 2011
CERAGON NETWORKS REPORTS FOURTH QUARTER AND YEAR-END 2010 FINANCIAL RESULTS
Full Year Revenues Increase by 36% to a Record $249.9 million
Paramus, New Jersey, January 31, 2011 – Ceragon Networks Ltd. (NASDAQ: CRNT), the provider the premier wireless backhaul specialist, today reported results for the fourth quarter which ended December 31, 2010.
Revenues for the fourth quarter of 2010 reached an all-time high of $67.0 million, up 26% from $53.4 million for the fourth quarter of 2009 and up 8% from $62.3 million in the third quarter of 2010.
Net income in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2010 was $3.8 million or $0.10 per diluted share. Net income in the fourth quarter of 2009 was $2.1 million or $0.06 per diluted share.
On a non-GAAP basis, net income for the fourth quarter of 2010, excluding $1.5 million of equity-based compensation expenses and charges of $775,000 relating to the acquisition of Nera Networks in January 2011, was $6.1 million, or $0.17 per diluted share. Non-GAAP net income for the fourth quarter of 2009 was $3.4 million, or $0.09 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 2010 were $249.9 million, up 36% from $184.2 million in 2009. Net income on a GAAP basis for 2010 was $14.1 million or $0.38 per diluted share. Net income for the year 2009 was $3.7 million or $0.10 per diluted share.
On a non-GAAP basis, net income for 2010 was $20.2 million, or $0.55 per diluted share. Net income for the year 2009 was $7.3 million $0.20 per diluted share.
Gross margin on a GAAP basis in the fourth quarter of 2010 was 37%. Gross margin on a non-GAAP basis was 37.1% of revenues.
Cash and cash investments at the end of the quarter were $81.5 million.
“Q4 results represent a strong finish to an excellent year,” said Ira Palti, President and CEO of Ceragon. “In addition to exceeding the high end of our revenue guidance, we had a book-to-bill ratio significantly above one. We are excited to be entering 2011 with strong momentum in our base business. In addition, we continue to believe that after a period of integration during 2011, the Nera acquisition will enable us to realize a substantial increase in revenue and earning power in 2012.”
Supplemental revenue breakouts:
Geographical breakdown, fourth quarter of 2010:
| EMEA: | 34% |
| North America: | 16% |
| Asia Pacific: | 42% |
| Latin America: | 8% |
A conference call will follow, beginning at 9:00 a.m. EDT. Investors are invited to join the Company’s teleconference by calling (888) 428-4479, or international (651) 291-0900 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: USA (800) 475-6701 or International (320) 365-3844, Access Code: 187498.
A replay of both the call and the webcast will be available through March 7, 2011.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the premier wireless backhaul specialist. Ceragon provides high capacity solutions that enable cellular operators and other wireless service providers to deliver voice and data services, enabling smart-phone applications such as Internet browsing, music and video. With unmatched technology and cost innovation, Ceragon’s advanced point-to-point microwave systems allow wireless service providers to evolve their networks from circuit-switched and hybrid concepts to all IP networks. Ceragon solutions are designed to support all wireless access technologies, delivering more capacity over longer distances under any given deployment scenario. Ceragon’s solutions are deployed by more than 200 service providers of all sizes, and hundreds of private networks in more than 130 countries. Visit Cerag on at www.ceragon.com.
Ceragon Networks® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries.
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Company and Investor Contact: Yoel Knoll Ceragon Networks Ltd. Tel. 201-853-0228 yoelk@ceragon.com | Media Contact: Karen Quatromoni Rainier Communications Tel. 508-475-0025 x150 kquatromoni@rainierco.com |
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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. Some of the factors that could significantly impact the forward-looking statements in this press release include the risk that Nera and Ceragon’s businesses will not be integrated successfully; the risk that any synergies from the transaction may not be fully rea lized or may take longer to realize than expected; disruption from the Nera transaction making it more difficult to maintain relationships with customers, employees or suppliers, the risk that Nera business may not perform as expected, and other risks and uncertainties, which 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. Ceragon’s public filings are available from the Securities and Exchange Commission’s website at www.sec.gov or may be obtained on Ceragon’s website at www.ceragon.com .
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| | Ceragon Reports Fourth Quarter 2010 Results |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended December 31, | Year ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Revenues | $ | 66,983 | $ | 53,357 | $ | 249,852 | $ | 184,220 | ||||||||
| Cost of revenues | 42,225 | 35,007 | 160,470 | 122,662 | ||||||||||||
| Gross profit | 24,758 | 18,350 | 89,382 | 61,558 | ||||||||||||
| Operating expenses: | ||||||||||||||||
Research and development | 6,732 | 5,479 | 25,115 | 18,954 | ||||||||||||
Selling and marketing | 9,641 | 7,675 | 37,179 | 29,251 | ||||||||||||
General and administrative | 3,612 | 3,003 | 12,328 | 10,705 | ||||||||||||
Acquisition related costs | 775 | - | 775 | - | ||||||||||||
Total operating expenses | $ | 20,760 | $ | 16,157 | $ | 75,397 | $ | 58,910 | ||||||||
| Operating profit | 3,998 | 2,193 | 13,985 | 2,648 | ||||||||||||
Financial income, net | 124 | 228 | 1,255 | 1,496 | ||||||||||||
| Income before taxes | 4,122 | 2,421 | 15,240 | 4,144 | ||||||||||||
| Taxes on income | 304 | 293 | 1,178 | 489 | ||||||||||||
| Net Income | $ | 3,818 | $ | 2,128 | $ | 14,062 | $ | 3,655 | ||||||||
Basic net earnings per share | $ | 0.11 | $ | 0.06 | $ | 0.40 | $ | 0.11 | ||||||||
Diluted net earnings per share | $ | 0.10 | $ | 0.06 | $ | 0.38 | $ | 0.10 | ||||||||
| Weighted average number of | ||||||||||||||||
| shares used in computing basic | ||||||||||||||||
net earnings per share | 35,106,882 | 34,256,957 | 34,854,657 | 34,369,212 | ||||||||||||
Weighted average number of | ||||||||||||||||
| shares used in computing | ||||||||||||||||
diluted net earnings per share | 36,995,821 | 36,365,610 | 36,564,830 | 35,796,878 | ||||||||||||
(more)
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Ceragon Reports Fourth Quarter 2010 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
| December 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 37,725 | $ | 38,339 | ||||
| Short-term bank deposits | 23,357 | 30,183 | ||||||
| Marketable securities | 7,363 | 16,724 | ||||||
| Trade receivables, net | 88,074 | 68,452 | ||||||
| Deferred taxes | 4,057 | 3,462 | ||||||
| Other accounts receivable and prepaid expenses | 15,425 | 7,492 | ||||||
| Inventories | 65,921 | 65,925 | ||||||
Total current assets | 241,922 | 230,577 | ||||||
| LONG-TERM INVESTMENTS: | ||||||||
| Long-term bank deposits | - | 10,824 | ||||||
| Long-term marketable securities | 13,088 | 2,250 | ||||||
| Severance pay funds | 6,039 | 4,971 | ||||||
Total long-term investments | $ | 19,127 | $ | 18,045 | ||||
| OTHER ASSETS | ||||||||
| Deferred taxes | 8,829 | 8,942 | ||||||
| Goodwill | 1,093 | - | ||||||
Total other assets | $ | 9,922 | $ | 8,942 | ||||
| PROPERTY AND EQUIPMENT, NET | 16,211 | 11,809 | ||||||
Total assets | $ | 287,182 | $ | 269,373 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payables | 40,537 | 52,898 | ||||||
| Deferred revenues | 20,661 | 18,548 | ||||||
| Other accounts payable and accrued expenses | 13,215 | 9,847 | ||||||
Total current liabilities | $ | 74,413 | $ | 81,293 | ||||
| ACCRUED SEVERANCE PAY | $ | 8,600 | $ | 7,174 | ||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Share capital: | ||||||||
| Ordinary shares | 95 | 92 | ||||||
| Additional paid-in capital | 300,875 | 291,736 | ||||||
| Treasury shares at cost | (20,091 | ) | (20,091 | ) | ||||
| Other comprehensive income | 159 | 100 | ||||||
| Accumulated deficits | (76,869 | ) | (90,931 | ) | ||||
Total shareholders' equity | $ | 204,169 | $ | 180,906 | ||||
Total liabilities and shareholders' equity | $ | 287,182 | $ | 269,373 | ||||
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Ceragon Reports Fourth Quarter 2010 Results
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended December 31, | Year ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Cash flow from operating activities: | ||||||||||||||||
| Net income | $ | 3,818 | $ | 2,128 | $ | 14,062 | $ | 3,655 | ||||||||
Adjustments to reconcile net income to net cash provided by | ||||||||||||||||
| (used in) operating activities: | ||||||||||||||||
| Depreciation | 1,321 | 960 | 4,712 | 3,283 | ||||||||||||
Stock-based compensation expense | 1,541 | 1,317 | 4,207 | 3,607 | ||||||||||||
Decrease (increase) in trade and other | ||||||||||||||||
| receivables, net | (26,050 | ) | (9,751 | ) | (27,535 | ) | 4,724 | |||||||||
| Decrease (increase) | ||||||||||||||||
| in inventory | (4,071 | ) | (15,755 | ) | 4 | (25,415 | ) | |||||||||
Increase (decrease) in trade payables | ||||||||||||||||
| and accrued liabilities | 20,084 | 18,932 | (8,323 | ) | 14,619 | |||||||||||
| Increase in deferred revenues | 7,902 | 4,565 | 2,113 | 12,662 | ||||||||||||
| Increase in deferred tax asset | (114 | ) | (281 | ) | (469 | ) | (281 | ) | ||||||||
| Other adjustments | 497 | 374 | 532 | (42 | ) | |||||||||||
| Net cash provided by (used in) | ||||||||||||||||
| operating activities | $ | 4,928 | $ | 2,489 | $ | (10,697 | ) | $ | 16,812 | |||||||
| Cash flow from investing activities: | ||||||||||||||||
| Purchase of property and | ||||||||||||||||
| equipment ,net | (2,083 | ) | (1,640 | ) | (9,798 | ) | (6,737 | ) | ||||||||
| Payment of business acquired *) | - | - | (1,232 | ) | - | |||||||||||
| Investment in short and | ||||||||||||||||
| long-term bank deposit | (1,972 | ) | (16,214 | ) | (13,754 | ) | (44,009 | ) | ||||||||
| Proceeds from short and | ||||||||||||||||
| long-term bank deposits | 6,580 | 19,284 | 31,680 | 46,177 | ||||||||||||
Investment in marketable securities | - | (3,203 | ) | (18,339 | ) | (4,703 | ) | |||||||||
| Proceeds from maturities | ||||||||||||||||
| of marketable securities | 9,091 | - | 16,591 | 11,754 | ||||||||||||
| Net cash provided by (used in) | ||||||||||||||||
| investing activities | $ | 11,616 | $ | (1,773 | ) | $ | 5,148 | $ | 2,482 | |||||||
| Cash flow from financing activities: | ||||||||||||||||
Proceeds from exercise of options | 1,635 | 2,205 | 4,935 | 2,989 | ||||||||||||
Purchase of treasury shares at cost | - | (4,128 | ) | - | (12,168 | ) | ||||||||||
Net cash used in financing activities | $ | 1,635 | $ | (1,923 | ) | $ | 4,935 | $ | (9,179 | ) | ||||||
| Increase (decrease) in cash and cash | ||||||||||||||||
| equivalents | $ | 18,179 | $ | (1,207 | ) | $ | (614 | ) | $ | 10,115 | ||||||
| Cash and cash equivalents at the beginning of | ||||||||||||||||
| the period | 19,546 | 39,546 | 38,339 | 28,224 | ||||||||||||
| Cash and cash equivalents at the end of | ||||||||||||||||
| the period | $ | 37,725 | $ | 38,339 | $ | 37,725 | $ | 38,339 | ||||||||
*) Excluding cash and cash equivalents
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Ceragon Reports Fourth Quarter 2010 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
| Three months ended December 31, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| GAAP | ||||||||||||||||
| (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
| Revenues | $ | 66,983 | $ | 66,983 | $ | 53,357 | ||||||||||
| Cost of revenues | 42,225 | (*) 83 | 42,142 | $ | 34,937 | |||||||||||
| Gross profit | 24,758 | 24,841 | 18,420 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 6,732 | (*) 261 | 6,471 | 5,309 | ||||||||||||
| Selling and marketing | 9,641 | (*) 239 | 9,402 | 7,359 | ||||||||||||
| General and administrative | 3,612 | (*) 958 | 2,654 | 2,242 | ||||||||||||
| Acquisition related costs | 775 | (**) 775 | - | - | ||||||||||||
Total operating expenses | $ | 20,760 | $ | 18,527 | $ | 14,910 | ||||||||||
| Operating profit | 3,998 | 6,314 | 3,510 | |||||||||||||
| Financial income, net | 124 | 124 | 228 | |||||||||||||
| Income before taxes | 4,122 | 6,438 | 3,738 | |||||||||||||
| Taxes on income | 304 | 304 | 293 | |||||||||||||
| Net income | $ | 3,818 | $ | 6,134 | $ | 3,445 | ||||||||||
| Basic net earnings per share | $ | 0.11 | $ | 0.17 | $ | 0.10 | ||||||||||
| Diluted net earnings per share | $ | 0.10 | $ | 0.17 | $ | 0.09 | ||||||||||
Weighted average number of shares used in computing | ||||||||||||||||
basic net earnings per share | 35,106,882 | 35,106,882 | 34,256,957 | |||||||||||||
Weighted average number of shares used in | ||||||||||||||||
| computing diluted net earnings per share | 36,995,821 | 36,995,821 | 36,365,610 | |||||||||||||
| Total adjustments | 2,316 | |||||||||||||||
(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R)
(**) Nera Networks acquisition costs
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Ceragon Reports Fourth Quarter 2010 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
| Year ended December 31, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| GAAP | ||||||||||||||||
| (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
| Revenues | $ | 249,852 | $ | 249,852 | $ | 184,220 | ||||||||||
| Cost of revenues | 160,470 | (*) 315 | 160,155 | $ | 122,406 | |||||||||||
| Gross profit | 89,382 | 89,697 | 61,814 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 25,115 | (*) 814 | 23,151 | 18,311 | ||||||||||||
| (**) 1,150 | ||||||||||||||||
| Selling and marketing | 37,179 | (*) 1,177 | 36,002 | 28,066 | ||||||||||||
| General and administrative | 12,328 | (*) 1,901 | 10,427 | 9,182 | ||||||||||||
| Acquisition related costs | 775 | (***) 775 | - | - | ||||||||||||
Total operating expenses | $ | 75,397 | $ | 69,580 | $ | 55,559 | ||||||||||
| Operating profit | 13,985 | 20,117 | 6,255 | |||||||||||||
| Financial income, net | 1,255 | 1,255 | 1,496 | |||||||||||||
| Income before taxes | 15,240 | 21,372 | 7,751 | |||||||||||||
| Taxes on income | 1,178 | 1,178 | 489 | |||||||||||||
| Net income | $ | 14,062 | $ | 20,194 | $ | 7,262 | ||||||||||
Basic net earnings per share | $ | 0.40 | $ | 0.58 | $ | 0.21 | ||||||||||
Diluted net earnings per share | $ | 0.38 | $ | 0.55 | $ | 0.20 | ||||||||||
Weighted average number of shares used in computing | ||||||||||||||||
basic net earnings per share | 34,854,657 | 34,854,657 | 34,369,212 | |||||||||||||
Weighted average number of shares used in computing | ||||||||||||||||
diluted net earnings per share | 36,564,830 | 36,564,830 | 35,796,878 | |||||||||||||
| Total adjustments | 6,132 | |||||||||||||||
(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R)
(**) Adjustment related to purchase of technology for further development
(***) Nera Networks acquisition costs
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Ceragon Reports Fourth 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
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