Exhibit A
Press Release
Ceragon Reports Fourth Quarter 2011 – February 28, 2012
CERAGON NETWORKS REPORTS FOURTH QUARTER AND YEAR-END 2011 FINANCIAL RESULTS
Full year revenues reach a record $445.3 million;
improves gross margin and profitability quarter over quarter
Paramus, New Jersey, February 28, 2012 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the fourth quarter which ended December 31, 2011.
Revenues for the fourth quarter of 2011 reached $118.5 million, up 77% from $67.0 million for the fourth quarter of 2010, and up 2% from $116.1 million in the third quarter of 2011.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2011 was ($8.2) million or $(0.23) per basic share and diluted share, compared to net income of $3.8 million in the fourth quarter of 2010, or $0.11 per basic share and $0.10 per diluted share.
On a non-GAAP basis, net income for the fourth quarter, excluding (a) $2.0 million of equity-based compensation expenses, and (b) $8.4 million charges related to the Nera acquisition and integration plan, was $2.3 million, or $0.06 per basic share and diluted share. Non-GAAP net income for the fourth quarter of 2010 was $6.1 million, or $0.17 per basic and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP).
Revenues for the full year of 2011 were $445.3 million, up 78% from $249.9 million in 2010. Net loss on a GAAP basis for 2011 was $(53.7) million or $(1.49) per basic share and diluted share. Net income for the year 2010 was $14.1 million or $0.40 per basic share and $0.38 per diluted share.
On a non-GAAP basis, net income for 2011, excluding (a) $6.6 million of equity-based compensation expenses, and (b) $47.5 million charges related to the Nera acquisition and integration plan, was $400,000 or $0.01 per basic share and diluted share. Net income for the year 2010 was $20.2 million, or $0.58 per basic share and $0.55 per diluted share.
Gross margin on a GAAP basis in the fourth quarter of 2011 was 29.0% of revenues. Gross margin on a non-GAAP basis in the fourth quarter was 33.0% of revenues.
Operating loss on a GAAP basis in the fourth quarter of 2011 was ($7.0) million. On a non-GAAP basis operating income in the fourth quarter of 2011 was $3.4 million.
Cash and cash investments at the end of the quarter were $49.5 million.
“As a result of our continued strong execution, we reported higher revenues, gross margin and profitability for the fourth quarter,” said Ira Palti, President and CEO of Ceragon. “I am delighted to report that the integration of the Nera business is complete. We believe our decision to seize the first-mover advantage in the latest round of industry consolidation, combined with the rapid integration, positions us to continue to grow and to gain market share as the #1 wireless backhaul specialist.
“We expect revenues in Q1 to be similar to the fourth quarter, as macroeconomic and political concerns weigh on operators’ plans in several regions,” continued Mr. Palti. “We have recently added new customers and, with other tangible reasons to expect bookings to increase, our outlook for the year continues to call for moderate growth of 10-12% for 2012. With improvement as the year progresses, our goal is to exit 2012 with gross margin in the mid-30’s and a non-GAAP operating margin of 8%-9%.”
Supplemental revenue breakouts:
Geographical breakdown, fourth quarter of 2011:
· | Europe: | 24% |
· | Africa: | 21% |
· | North America: | 8% |
· | Latin America: | 21% |
· | India: | 10% |
· | APAC: | 16% |
A conference call will follow, beginning at 9:00 a.m. EST. Investors are invited to join the Company’s teleconference by calling (800) 398-9402, or international +1(612) 332-0720 from 8:50 a.m. EST. 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 (International) +1(320) 365-3844, Access Code: 231788.
A replay of both the call and the webcast will be available through March 28, 2012.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 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.
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Ceragon Networks® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries.
Company and Investor Contact: Yoel Knoll Ceragon Networks Ltd. Tel. +1 (201)-853-0228 yoelk@ceragon.com | Media Contact: Abigail Levy-Gurwitz Ceragon Networks Ltd. Tel: +1-(201)-853-0271 abigaill@ceragon.com | Media Contact: Karen Quatromoni Rainier Communications Tel. 508-475-0025 x150 kquatromoni@rainierco.com |
Join the Discussion: |
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 of significant expenses in connection with potential contingent tax liability associated with Nera’s prior operations or facilities, the risk that the combined Ceragon and 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 .
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
* * *
Contact: Yoel Knoll
Vice President of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972 (0) 52-830-6419
Office (Int’l): +972 (0) 3-5431-132
Office (US): +1 (201|) 406-1037
yoell@ceragon.com
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Ceragon Reports Fourth Quarter and Year End 2011 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, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues | $ | 118,487 | $ | 66,983 | $ | 445,269 | $ | 249,852 | ||||||||
Cost of revenues | 84,096 | 42,225 | 323,191 | 160,470 | ||||||||||||
Gross profit | 34,391 | 24,758 | 122,078 | 89,382 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, net | 12,534 | 6,732 | 50,456 | 25,115 | ||||||||||||
Selling and marketing | 20,540 | 9,641 | 81,716 | 37,179 | ||||||||||||
General and administrative | 8,337 | 3,612 | 26,524 | 12,328 | ||||||||||||
Restructuring costs | - | - | 7,834 | - | ||||||||||||
Acquisition related costs | - | 775 | 4,919 | 775 | ||||||||||||
Total operating expenses | $ | 41,411 | $ | 20,760 | $ | 171,449 | $ | 75,397 | ||||||||
Operating profit (loss) | (7,020 | ) | 3,998 | (49,371 | ) | 13,985 | ||||||||||
Financial income (expenses), net | (1,024 | ) | 124 | (2,024 | ) | 1,255 | ||||||||||
Income (loss) before taxes | (8,044 | ) | 4,122 | (51,395 | ) | 15,240 | ||||||||||
Taxes on income | 123 | 304 | 2,259 | 1,178 | ||||||||||||
Net Income (loss) | $ | (8,167 | ) | $ | 3,818 | $ | (53,654 | ) | $ | 14,062 | ||||||
Basic net earnings (loss) per share | $ | (0.23 | ) | $ | 0.11 | $ | (1.49 | ) | $ | 0.40 | ||||||
Diluted net earnings (loss) per share | $ | (0.23 | ) | $ | 0.10 | $ | (1.49 | ) | $ | 0.38 | ||||||
Weighted average number of shares used in computing basic net earnings (loss) per share | 36,241,106 | 35,106,882 | 35,975,434 | 34,854,657 | ||||||||||||
Weighted average number of shares used in computing diluted net earnings (loss) per share | 36,241,106 | 36,995,821 | 35,975,434 | 36,564,830 |
(more)
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Ceragon Reports Fourth Quarter and Year End 2011 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
December 31, 2011 | December 31, 2010 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 28,991 | $ | 37,725 | ||||
Short-term bank deposits | 7,159 | 23,357 | ||||||
Marketable securities | 9,665 | 7,363 | ||||||
Trade receivables, net | 143,247 | 88,074 | ||||||
Deferred taxes, net | 6,874 | 4,057 | ||||||
Other accounts receivable and prepaid expenses | 37,281 | 15,425 | ||||||
Inventories | 93,465 | 65,921 | ||||||
Total current assets | 326,682 | 241,922 | ||||||
LONG-TERM INVESTMENTS: | ||||||||
Long-term marketable securities | 3,716 | 13,088 | ||||||
Severance pay funds and pension | 6,360 | 6,039 | ||||||
Total long-term investments | 10,076 | 19,127 | ||||||
OTHER ASSETS: | ||||||||
Long-term receivables | 5,257 | - | ||||||
Deferred taxes, net | 10,266 | 8,829 | ||||||
Goodwill and intangible assets, net | 28,032 | 1,093 | ||||||
Total other assets | 43,555 | 9,922 | ||||||
PROPERTY AND EQUIPMENT, NET | 30,573 | 16,211 | ||||||
Total assets | $ | 410,886 | $ | 287,182 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current maturities of long term loan | $ | 8,232 | $ | - | ||||
Trade payables | 77,395 | 40,537 | ||||||
Deferred revenues | 38,308 | 20,661 | ||||||
Other accounts payable and accrued expenses | 47,309 | 13,215 | ||||||
Total current liabilities | 171,244 | 74,413 | ||||||
LONG-TERM LIABILITIES | ||||||||
Long term bank loan, net of current maturities | 26,768 | - | ||||||
Accrued severance pay and pension | 11,996 | 8,600 | ||||||
Other long term payables | 39,827 | - | ||||||
78,591 | 8,600 | |||||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital: | ||||||||
Ordinary shares | 97 | 95 | ||||||
Additional paid-in capital | 311,911 | 300,875 | ||||||
Treasury shares at cost | (20,091 | ) | (20,091 | ) | ||||
Other comprehensive income (loss) | (343 | ) | 159 | |||||
Accumulated deficits | (130,523 | ) | (76,869 | ) | ||||
Total shareholders' equity | 161,051 | 204,169 | ||||||
Total liabilities and shareholders' equity | $ | 410,886 | $ | 287,182 |
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Ceragon Reports Fourth Quarter and Year End 2011 Results
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net income (loss) | $ | (8,167 | ) | $ | 3,818 | $ | (53,654 | ) | $ | 14,062 | ||||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||||||
Depreciation and amortization | 4,497 | 1,321 | 14,393 | 4,712 | ||||||||||||
Stock-based compensation expense | 2,031 | 1,541 | 6,564 | 4,207 | ||||||||||||
Decrease (Increase) in trade and other receivables, net | 6,930 | (25,744 | ) | 3,440 | (27,229 | ) | ||||||||||
Decrease (Increase) in inventory, net of write off | 7,617 | (4,071 | ) | 40,643 | 4 | |||||||||||
Increase (decrease) in trade payables and accrued liabilities | (4,756 | ) | 20,084 | (20,650 | ) | (8,323 | ) | |||||||||
Increase (decrease) in deferred revenues | (42 | ) | 7,902 | (11,925 | ) | 2,113 | ||||||||||
Increase in deferred tax asset, net | (1,269 | ) | (114 | ) | (1,237 | ) | (469 | ) | ||||||||
Other adjustments | 595 | 191 | 2,301 | 226 | ||||||||||||
Net cash provided by (used in) operating activities | $ | 7,436 | $ | 4,928 | $ | (20,125 | ) | $ | (10,697 | ) | ||||||
Cash flow from investing activities: | ||||||||||||||||
Purchase of property and equipment ,net | (4,696 | ) | (2,083 | ) | (14,447 | ) | (9,798 | ) | ||||||||
Payment for business acquisition *) | - | - | (42,405 | ) | (1,232 | ) | ||||||||||
Investment in short and long-term bank deposit | - | (1,972 | ) | (7,304 | ) | (13,754 | ) | |||||||||
Proceeds from short and long-term bank deposits | 2,368 | 6,580 | 25,664 | 31,680 | ||||||||||||
Investment in held-to-maturity marketable securities | - | - | - | (18,339 | ) | |||||||||||
Proceeds and maturities of held-to-maturity and available-for-sale marketable securities | 201 | 9,091 | 10,459 | 16,591 | ||||||||||||
Net cash provided by (used in) investing activities | $ | (2,127 | ) | $ | 11,616 | $ | (28,033 | ) | $ | 5,148 | ||||||
Cash flow from financing activities: | ||||||||||||||||
Proceeds from exercise of options | 518 | 1,635 | 4,474 | 4,935 | ||||||||||||
Long term bank loan raised in connection with business acquisition | - | - | 35,000 | - | ||||||||||||
Net cash provided by financing activities | $ | 518 | $ | 1,635 | $ | 39,474 | $ | 4,935 | ||||||||
Translation adjustments on cash and cash equivalents | $ | 223 | $ | - | $ | (50 | ) | $ | - | |||||||
Increase (Decrease) in cash and cash equivalents | $ | 6,050 | $ | 18,179 | $ | (8,734 | ) | $ | (614 | ) | ||||||
Cash and cash equivalents at the beginning of the period | 22,941 | 19,546 | 37,725 | 38,339 | ||||||||||||
Cash and cash equivalents at the end of the period | $ | 28,991 | $ | 37,725 | $ | 28,991 | $ | 37,725 |
*) Excluding cash and cash equivalents |
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Ceragon Reports Fourth Quarter and Year End 2011 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended December 31, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
GAAP (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
Revenues | $ | 118,487 | $ | 118,487 | $ | 66,983 | ||||||||||
Cost of revenues | 84,096 | 4,740 | (a) | 79,356 | 42,142 | |||||||||||
Gross profit | 34,391 | 39,131 | 24,841 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, net | 12,534 | 626 | (b) | 11,908 | 6,471 | |||||||||||
Selling and marketing | 20,540 | 2,604 | (c) | 17,936 | 9,402 | |||||||||||
General and administrative | 8,337 | 2,465 | (d) | 5,872 | 2,654 | |||||||||||
Total operating expenses | $ | 41,411 | $ | 35,716 | $ | 18,527 | ||||||||||
Operating profit (loss) | (7,020 | ) | 3,415 | 6,314 | ||||||||||||
Financial income (expenses), net | (1,024 | ) | (1,024 | ) | 124 | |||||||||||
Income (loss) before taxes | (8,044 | ) | 2,391 | 6,438 | ||||||||||||
Taxes on income | 123 | 123 | 304 | |||||||||||||
Net income (loss) | $ | (8,167 | ) | $ | 2,268 | $ | 6,134 | |||||||||
Basic net earnings (loss) per share | $ | (0.23 | ) | $ | 0.06 | $ | 0.17 | |||||||||
Diluted net earnings (loss) per share | $ | (0.23 | ) | $ | 0.06 | $ | 0.17 | |||||||||
Weighted average number of shares used in computing basic net earnings (loss) per share | 36,241,106 | 36,241,106 | 35,106,882 | |||||||||||||
Weighted average number of shares used in computing diluted net earnings (loss) per share | 36,241,106 | 37,504,556 | 36,995,821 | |||||||||||||
Total adjustments | 10,435 | |||||||||||||||
(a) | Cost of revenues includes $0.4 million of amortization of purchased intangible assets, $2.8 million of inventory step-up, $0.1 million of stock based compensation expenses and $1.5 million of integration plan related costs in the three months ended December 31, 2011. |
(b) | Research and development expenses include $0.2 million of integration plan related costs and $0.4 million of stock based compensation expenses in the three months ended December 31, 2011. |
(c) | Selling and marketing expenses includes $1.1 million of amortization of purchased intangible assets, $0.8 million of integration plan related costs and $0.7 million of stock based compensation expenses in the three months endedDecember 31, 2011. |
(d) | General and administration expenses includes $1.6 million of integration plan related costs and $0.8 million of stock based compensation expenses in the three months ended December 31, 2011. |
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Ceragon Reports Fourth Quarter and Year End 2011 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Year ended December 31, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
GAAP (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
Revenues | $ | 445,269 | $ | 445,269 | $ | 249,852 | ||||||||||
Cost of revenues | 323,191 | 22,207 | (a) | 300,984 | 160,155 | |||||||||||
Gross profit | 122,078 | 144,285 | 89,697 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, net | 50,456 | 4,031 | (b) | 46,425 | 23,151 | |||||||||||
Selling and marketing | 81,716 | 10,030 | (c) | 71,686 | 36,002 | |||||||||||
General and administrative | 26,524 | 5,040 | (d) | 21,484 | 10,427 | |||||||||||
Restructuring costs | 7,834 | 7,834 | - | - | ||||||||||||
Acquisition related costs | 4,919 | 4,919 | - | - | ||||||||||||
Total operating expenses | $ | 171,449 | $ | 139,595 | 69,580 | |||||||||||
Operating profit (loss) | (49,371 | ) | 4,690 | 20,117 | ||||||||||||
Financial income (expenses), net | (2,024 | ) | (2,024 | ) | 1,255 | |||||||||||
Income (loss) before taxes | (51,395 | ) | 2,666 | 21,372 | ||||||||||||
Taxes on income | 2,259 | 2,259 | 1,178 | |||||||||||||
Net income (loss) | $ | (53,654 | ) | $ | 407 | $ | 20,194 | |||||||||
Basic net earnings (loss) per share | $ | (1.49 | ) | $ | 0.01 | $ | 0.58 | |||||||||
Diluted net earnings (loss) per share | $ | (1.49 | ) | $ | 0.01 | $ | 0.55 | |||||||||
Weighted average number of shares used in computing basic net earnings (loss) per share | 35,975,434 | 35,975,434 | 34,854,657 | |||||||||||||
Weighted average number of shares used in computing diluted net earnings (loss) per share | 35,975,434 | 37,522,665 | 36,564,830 | |||||||||||||
Total adjustments | 54,061 |
(a) | Cost of revenues includes $1.2 million of amortization of purchased intangible assets, $15.4 million of inventory step-up, $0.3 million of stock based compensation expenses and $5.3 million of integration plan related costs in the year ended December 31, 2011. |
(b) | Research and development expenses include $2.5 million of integration plan related costs and $1.5 million of stock based compensation expenses in the year ended December 31, 2011. |
(c) | Selling and marketing expenses includes $3.0 million of amortization of purchased intangible assets, $4.6 million of integration plan related costs and $2.5 million of stock based compensation expenses in the year ended December 31, 2011. |
(d) | General and administration expenses include $2.7 million of integration plan related costs and $2.3 million of stock based compensation expenses in the year ended December 31, 2011. |
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Ceragon Reports Fourth Quarter and Year End 2011 Results
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
OPERATING PROFIT (LOSS)
(U.S. dollars in thousands)
(Unaudited)
Three months ended | Year ended | |||||||
December 31, 2011 | ||||||||
Reported GAAP net operating loss | (7,020 | ) | (49,371 | ) | ||||
Stock based compensation expenses | 2,031 | 6,564 | ||||||
Amortization of purchased intangible assets | 1,457 | 4,162 | ||||||
Inventory step up | 2,815 | 15,442 | ||||||
Integration plan related costs | 4,132 | 15,140 | ||||||
Restructuring costs | - | 7,834 | ||||||
Acquisition related costs | - | 4,919 | ||||||
Non-GAAP net operating profit | 3,415 | 4,690 |
###
Ceragon Reports Fourth Quarter 2011 Results
Contact: Yoel Knoll
Vice President of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972 (0) 52-830-6419
Office (Int’l): +972 (0) 3-5431-132
Office (US): +1 (201|) 406-1037
yoell@ceragon.com
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