Exhibit A
Press Release
Ceragon Reports Second Quarter 2011 – August 8, 2011
CERAGON NETWORKS REPORTS SECOND QUARTER 2011 FINANCIAL RESULTS
Achieves record revenue of $110.4 million
Paramus, New Jersey, August 8, 2011 - Ceragon Networks Ltd. (NASDAQ: CRNT), the premier wireless backhaul specialist today reported results for the second quarter which ended June 30, 2011.
Revenues for the second quarter of 2011 reached $110.4 million, up 81% from $60.9 million for the second quarter of 2010, and up 10% from $100.3 million in the first quarter of 2011.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the second quarter of 2011 was ($17.4) million or $(0.48) per basic share and diluted share, compared to net income of $2.6 million in the second quarter of 2010, or $0.07 per basic share and diluted share.
On a non-GAAP basis, net loss for the second quarter, excluding (a) $1.4 of equity-based compensation expenses, and (b)$14.4, million charges related to the Nera acquisition and integration plan, was ($1.6) million , or $(0.04) per basic share and diluted share. Non-GAAP net income for the second quarter of 2010 was $4.6 million, or $0.13 per basic and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP).
Gross margin on a GAAP basis in the second quarter of 2011 was 21.4% of revenues. Gross margin on a non-GAAP basis was 31.9% of revenues.
Operating loss on a GAAP basis in the second quarter of 2011 was ($16.2) million. On a non-GAAP basis operating loss was ($470,000).
Cash and cash investments at the end of the quarter were $64.4 million.
“Our plan to move swiftly to create a single global organization is clearly paying off,” said Ira Palti, President and CEO of Ceragon. “The continued progress of the integration is apparent in the second quarter revenues, which exceeded the high end of our guidance, and in our strong bookings that were again above one.
“We are creating company with balanced geographic exposure and a broad customer base with full capabilities to address new opportunities in each region around the world,” continued Mr. Palti.
Supplemental revenue breakouts:
Geographical breakdown, second quarter of 2011:
| · | Europe: | 28% | |
| · | Africa: | 9% | |
| · | North America: | 9% | |
| · | Latin America: | 32% | |
| · | India: | 3% | |
| · | APAC: | 19% |
A conference call will follow today, August 8, 2011, 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: (USA) (800) 475-6701 or international: (320) 365-3844, Access Code: 208325. A replay of both the call and the webcast will be available through September 8, 2011.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the premier wireless backhaul specialist. Ceragon’s high capacity wireless backhaul solutions enable cellular operators and other wireless service providers to deliver 2G/3G and LTE/4G voice and data services that enable 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 230 service providers of all sizes, and hundreds of private networks in more than 130 countries. Visit Ceragon at www.ceragon.com.
Ceragon Networks® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries. Other names mentioned are owned by their respective holders.
Join the discussion, |  |
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 Networks and Ceragon’s businesses will not be integrated successfully; the risk that any synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the Nera Networks transaction making it more difficult to maintain relationships with customers, employees or suppliers, the risk that Nera Networks 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
Use of non-GAAP Measures:
This press release provides financial measures that exclude certain items and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these Non-GAAP financial measures provide meaningful supplemental information regarding our performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors
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Ceragon Reports Second Quarter 2011 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, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenues | $ | 110,350 | $ | 60,889 | $ | 210,662 | $ | 120,576 | ||||||||
| Cost of revenues | 86,716 | 39,420 | 157,444 | 78,731 | ||||||||||||
| Gross profit | 23,634 | 21,469 | 53,218 | 41,845 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 12,660 | 6,919 | 25,117 | 12,192 | ||||||||||||
| Selling and marketing | 21,003 | 8,959 | 40,188 | 18,141 | ||||||||||||
| General and administrative | 6,212 | 2,996 | 11,735 | 5,776 | ||||||||||||
| Restructuring costs | - | - | 7,834 | - | ||||||||||||
| Acquisition related costs | - | - | 4,919 | - | ||||||||||||
Total operating expenses | $ | 39,875 | $ | 18,874 | $ | 89,793 | $ | 36,109 | ||||||||
| Operating profit (loss) | (16,241 | ) | 2,595 | (36,575 | ) | 5,736 | ||||||||||
| Financial income (expenses), net | (312 | ) | 276 | (759 | ) | 510 | ||||||||||
| Income (loss) before taxes | (16,553 | ) | 2,871 | (37,334 | ) | 6,246 | ||||||||||
| Taxes on income | 817 | 273 | 1,412 | 625 | ||||||||||||
| Net Income (loss) | $ | (17,370 | ) | $ | 2,598 | $ | (38,746 | ) | $ | 5,621 | ||||||
| Basic net earnings per share | $ | (0.48 | ) | $ | 0.07 | $ | (1.08 | ) | $ | 0.16 | ||||||
| Diluted net earnings per share | $ | (0.48 | ) | $ | 0.07 | $ | (1.08 | ) | $ | 0.15 | ||||||
| Weighted average number of shares used in computing basic net earnings (loss) per share | 35,983,033 | 34,881,532 | 35,794,446 | 34,686,410 | ||||||||||||
| Weighted average number of shares used in computing diluted net earnings (loss) per share | 35,983,033 | 36,317,945 | 35,794,446 | 36,542,735 | ||||||||||||
(more)
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Ceragon Reports Second Quarter 2011 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
| June 30, 2011 | December 31, 2010 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 33,546 | $ | 37,725 | ||||
| Short-term bank deposits | 10,991 | 23,357 | ||||||
| Marketable securities | 15,186 | 7,363 | ||||||
| Trade receivables, net | 113,978 | 88,074 | ||||||
| Deferred taxes | 4,446 | 4,057 | ||||||
| Other accounts receivable and prepaid expenses | 37,312 | 15,425 | ||||||
| Inventories | 103,000 | 65,921 | ||||||
Total current assets | 318,459 | 241,922 | ||||||
| LONG-TERM INVESTMENTS: | ||||||||
| Long-term marketable securities | 4,662 | 13,088 | ||||||
| Severance pay funds | 6,113 | 6,039 | ||||||
Total long-term investments | 10,775 | 19,127 | ||||||
| OTHER ASSETS: | ||||||||
| Long-term receivables | 5,426 | - | ||||||
| Deferred taxes | 8,408 | 8,829 | ||||||
| Goodwill and intangible assets, net | 48,284 | 1,093 | ||||||
Total other assets | 62,118 | 9,922 | ||||||
| PROPERTY AND EQUIPMENT, NET | 27,351 | 16,211 | ||||||
Total assets | $ | 418,703 | $ | 287,182 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current maturities of long term bank loan | $ | 4,116 | $ | - | ||||
| Trade payables | 64,100 | 40,537 | ||||||
| Deferred revenues | 36,228 | 20,661 | ||||||
| Other accounts payable and accrued expenses | 61,886 | 13,215 | ||||||
Total current liabilities | 166,330 | 74,413 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Long term bank loan, net of current maturities | 30,884 | - | ||||||
| Accrued severance pay and pension | 14,545 | 8,600 | ||||||
| Other long term payables | 36,915 | - | ||||||
| 82,344 | 8,600 | |||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Share capital: | ||||||||
| Ordinary shares | 97 | 95 | ||||||
| Additional paid-in capital | 307,309 | 300,875 | ||||||
| Treasury shares at cost | (20,091 | ) | (20,091 | ) | ||||
| Other comprehensive income (loss) | (1,671 | ) | 159 | |||||
| Accumulated deficits | (115,615 | ) | (76,869 | ) | ||||
Total shareholders' equity | 170,029 | 204,169 | ||||||
Total liabilities and shareholders' equity | $ | 418,703 | $ | 287,182 | ||||
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Ceragon Reports Second Quarter 2011 Results
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Cash flow from operating activities: | ||||||||||||||||
| Net income (loss) | $ | (17,370 | ) | $ | 2,598 | $ | (38,746 | ) | $ | 5,621 | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||||||
| Depreciation and amortization | 2,951 | 1,138 | 6,152 | 2,178 | ||||||||||||
| Stock-based compensation expense | 1,437 | 852 | 2,856 | 1,823 | ||||||||||||
| Decrease in trade and other receivables, net | 6,640 | 1,673 | 29,134 | 11,118 | ||||||||||||
| Decrease (increase) in inventory | 14,168 | 5,172 | 23,993 | (2,652 | ) | |||||||||||
| Decrease in trade payables and accrued liabilities | (7,743 | ) | (11,213 | ) | (24,680 | ) | (17,985 | ) | ||||||||
| Decrease in deferred revenues | (12,755 | ) | (2,063 | ) | (12,765 | ) | (742 | ) | ||||||||
| Other adjustments | 1,662 | 529 | 1,682 | 177 | ||||||||||||
| Net cash used in operating activities | $ | (11,010 | ) | $ | (1,314 | ) | $ | (12,374 | ) | $ | (462 | ) | ||||
| Cash flow from investing activities: | ||||||||||||||||
| Purchase of property and equipment ,net | (3,240 | ) | (2,577 | ) | (6,029 | ) | (5,471 | ) | ||||||||
| Payment for business acquisition *) | - | - | (42,405 | ) | - | |||||||||||
| Investment in short and long-term bank deposit | (7,589 | ) | (11,032 | ) | (9,843 | ) | (11,032 | ) | ||||||||
| Proceeds from short and long-term bank deposits | 10,273 | 12,607 | 24,069 | 19,680 | ||||||||||||
| Investment in held-to-maturity marketable securities | - | (3,230 | ) | - | (18,339 | ) | ||||||||||
| Proceeds from maturities of held-to-maturity marketable securities | 23 | - | 4,258 | 4,500 | ||||||||||||
| Net cash used in investing activities | $ | (533 | ) | $ | (4,232 | ) | $ | (29,950 | ) | $ | (10,662 | ) | ||||
| Cash flow from financing activities: | ||||||||||||||||
| Proceeds from exercise of options | 284 | 430 | 3,580 | 3,016 | ||||||||||||
| Long term bank loan raised in connection with business acquisition | - | - | 35,000 | - | ||||||||||||
| Net cash provided by financing activities | $ | 284 | $ | 430 | $ | 38,580 | $ | 3,016 | ||||||||
| Translation adjustments on cash and cash equivalents | $ | (789 | ) | $ | - | $ | (435 | ) | $ | - | ||||||
| Decrease in cash and cash equivalents | $ | (12,048 | ) | $ | (5,116 | ) | $ | (4,179 | ) | $ | (8,108 | ) | ||||
| Cash and cash equivalents at the beginning of the period | 45,594 | 35,347 | 37,725 | 38,339 | ||||||||||||
| Cash and cash equivalents at the end of the period | $ | 33,546 | $ | 30,231 | $ | 33,546 | $ | 30,231 | ||||||||
| *) | Excluding cash and cash equivalents |
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Ceragon Reports Second Quarter 2011 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
| Three months ended June 30, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| GAAP (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
| Revenues | $ | 110,350 | $ | 110,350 | $ | 60,889 | ||||||||||
| Cost of revenues | 86,716 | 11,588 | (a) | 75,128 | 39,348 | |||||||||||
| Gross profit | 23,634 | 35,222 | 21,541 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 12,660 | 1,207 | (b) | 11,453 | 5,585 | |||||||||||
| Selling and marketing | 21,003 | 2,273 | (c) | 18,730 | 8,607 | |||||||||||
| General and administrative | 6,212 | 703 | (d) | 5,509 | 2,752 | |||||||||||
Total operating expenses | $ | 39,875 | $ | 35,692 | $ | 16,944 | ||||||||||
| Operating profit (loss) | (16,241 | ) | (470 | ) | 4,597 | |||||||||||
| Financial income (expenses), net | (312 | ) | (312 | ) | 276 | |||||||||||
| Income (loss) before taxes | (16,553 | ) | (782 | ) | 4,873 | |||||||||||
| Taxes on income | 817 | 817 | 273 | |||||||||||||
| Net income (loss) | $ | (17,370 | ) | $ | (1, 599 | ) | $ | 4,600 | ||||||||
| Basic net earnings (loss) per share | $ | (0.48 | ) | $ | (0.04 | ) | $ | 0.13 | ||||||||
| Diluted net earnings (loss) per share | $ | (0.48 | ) | $ | (0.04 | ) | $ | 0.13 | ||||||||
| Weighted average number of shares used in computing basic net earnings (loss) per share | 35,983,033 | 35,983,033 | 34,881,532 | |||||||||||||
| Weighted average number of shares used in computing diluted net earnings (loss) per share | 35,983,033 | 35,983,033 | 36,317,945 | |||||||||||||
| Total adjustments | 15,771 | |||||||||||||||
| (a) | Cost of revenues includes $0.2 million of amortization of purchased intangible assets, $9.8 million of inventory step-up, $0.1 million of stock based compensation expenses and $1.5 million of on going costs in the three months ended June 30, 2011. |
| (b) | Research and development expenses include $0.8 million of integration plan related costs and $0.4 million of stock based compensation expenses in the three months ended June 30, 2011. |
| (c) | Selling and marketing expenses includes $0.5 million of amortization of purchased intangible assets, $1.2 million of integration plan related costs and $0.5 million of stock based compensation expenses in the three months ended June 30, 2011. |
| (d) | General and administration expenses includes, $0.2 million of integration plan related costs and $0.5 million of stock based compensation expenses in the three months ended June 30, 2011. |
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Ceragon Reports Second Quarter 2011 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
| Six months ended June 30, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| GAAP (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
| Revenues | $ | 210,662 | $ | 210,662 | $ | 120,576 | ||||||||||
| Cost of revenues | 157,444 | 14,483 | (a) | 142,961 | 78,593 | |||||||||||
| Gross profit | 53,218 | 67,701 | 41,983 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 25,117 | 2,623 | (b) | 22,494 | 10,681 | |||||||||||
| Selling and marketing | 40,188 | 4,797 | (c) | 35,391 | 17,527 | |||||||||||
| General and administrative | 11,735 | 1,634 | (d) | 10,101 | 5,066 | |||||||||||
| Restructuring costs | 7,834 | 7,834 | - | - | ||||||||||||
| Acquisition related costs | 4,919 | 4,919 | - | - | ||||||||||||
Total operating expenses | $ | 89,793 | $ | 67,986 | $ | 33,274 | ||||||||||
| Operating profit (loss) | (36,575 | ) | (285 | ) | 8,709 | |||||||||||
| Financial income (expenses), net | (759 | ) | (759 | ) | 510 | |||||||||||
| Income (loss) before taxes | (37,334 | ) | (1,044 | ) | 9,219 | |||||||||||
| Taxes on income | 1,412 | 1,412 | 625 | |||||||||||||
| Net income (loss) | $ | (38,746 | ) | $ | (2,456 | ) | $ | 8,594 | ||||||||
| Basic net earnings (loss) per share | $ | (1.08 | ) | $ | (0.07 | ) | $ | 0.25 | ||||||||
| Diluted net earnings (loss) per share | $ | (1.08 | ) | $ | (0.07 | ) | $ | 0.24 | ||||||||
| Weighted average number of shares used in computing basic net earnings (loss) per share | 35,794,446 | 35,794,446 | 34,686,410 | |||||||||||||
| Weighted average number of shares used in computing diluted net earnings (loss) per share | 35,794,446 | 35,794,446 | 36,542,735 | |||||||||||||
| Total adjustments | 36,290 | |||||||||||||||
| (a) | Cost of revenues includes $0.5 million of amortization of purchased intangible assets, $11.2 million of inventory step-up, $0.1 million of stock based compensation expenses and $2.7 million of integration plan related costs in the six months ended June 30, 2011. |
| (b) | Research and development expenses include $1.9 million of integration plan related costs and $0.7 million of stock based compensation expenses in the six months ended June 30, 2011. |
| (c) | Selling and marketing expenses includes $0.8 million of amortization of purchased intangible assets, $2.9 million of integration plan related costs and $1.1 million of stock based compensation expenses in the six months ended June 30, 2011. |
| (d) | General and administration expenses include, $0.5 million of integration plan related costs and $1.1 million of stock based compensation expenses in the six months ended June 30, 2011. |
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Ceragon Reports Second Quarter 2011 Results
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
OPERATING LOSS
(U.S. dollars in thousands)
(Unaudited)
| Three months ended | Six months ended | |||||||
| June 30, 2011 | ||||||||
| Reported GAAP net operating loss | (16,241 | ) | (36,575 | ) | ||||
| Stock based compensation expenses | 1,437 | 2,856 | ||||||
| Amortization of purchased intangible assets | 717 | 1,274 | ||||||
| Inventory step up | 9,837 | 11,281 | ||||||
| Integration plan related costs | 3,780 | 8,126 | ||||||
| Restructuring costs | - | 7,834 | ||||||
| Acquisition related costs | - | 4,919 | ||||||
| Non-GAAP net operating loss | (470 | ) | (285 | ) | ||||
###
Ceragon Reports Second Quarter 2011 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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