Exhibit A
Press Release
Ceragon Reports Second Quarter 2013 – August 12, 2013
CERAGON NETWORKS REPORTS SECOND QUARTER 2013 FINANCIAL RESULTS
Booking increased on expanding penetration of large operators
Paramus, New Jersey, August 12, 2013 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the second quarter which ended June 30, 2013.
Revenues for the second quarter of 2013 were $90.1 million, down 20% from $112.7 million for the second quarter of 2012, and about the same as revenues in the first quarter of 2013.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the second quarter of 2013 was $(7.5) million or $(0.20) per basic share and diluted share, compared to a net loss of $(2.9) million in the second quarter of 2012, or $(0.08) per basic share and diluted share.
On a non-GAAP basis, net loss for the second quarter, excluding (a) $1.0 million of equity-based compensation expenses, (b) $0.6 million amortization of intangible assets, and (c) $0.2 million of changes in pre-acquisition indirect tax positions, was $(5.7) million, or $(0.15) per basic share and diluted share. Non-GAAP net income for the second quarter of 2012 was $0.2 million, or $0.01 per basic share 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 2013 was 31.7% of revenues. Gross margin on a non-GAAP basis was 32.4% of revenues.
Operating loss on a GAAP basis in the second quarter of 2013 was $(4.6) million. On a non-GAAP basis operating loss was $(2.8) million.
Cash and cash investments at the end of the quarter were $49.1 million.
“We see signs of improvement in the business environment and our bookings increased significantly in the second quarter, as expected,” said Ira Palti, President and CEO of Ceragon. “We are particularly pleased with our expanding penetration of large carriers, mainly in Latin America and Africa.
“Our new products continue to garner early wins, and we are receiving excellent feedback on our roadmap from customers anticipating very high bandwidth requirements and the upcoming network architecture transition.”
Geographical breakdown, second quarter of 2013:
• Europe: 17%
• Africa: 34%
• North America: 7%
• Latin America: 28%
• India: 3%
• APAC: 11%
A conference call will follow beginning at 9:00 a.m. EDT. Investors are invited to join the Company’s teleconference by calling: USA (800) 230-1059 – or –international: +1 (612) 332-0107 from 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, selecting the webcast link, and following the registration instructions.
If you are unable to join us live, the replay numbers are: Telephone: (USA) (800) 475-6701 (International) +1 320-365-3844, Access Code: 297410. A replay of both the call and the webcast will be available through September 12, 2013.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We provide innovative, flexible and cost-effective wireless backhaul and fronthaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers. Ceragon’s high-capacity, solutions use microwave technology to transfer voice and data traffic while maximizing bandwidth efficiency, to deliver more capacity over longer distances under any deployment scenario. Based on our extensive global experience, Ceragon delivers turnkey solutions that support service provider profitability at every stage of the network lifecycle enabling faster time to revenue, cost-effective operation and simple migration to all-IP networks. As the demand for data pushes the need for ever-increasing capacity, Ceragon is committed to serve the market with unmatched technology and innovation, ensuring effective solutions for the evolving needs of the marketplace. Our solutions are deployed by more than 430 service providers in over 130 countries. www.ceragon.com
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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.
Company & Investor Contact: Yoel Knoll Ceragon Networks Ltd. Tel: +1-(201)-853-0228 Office (Int’l): +972 (0)3 5431 132 yoelk@ceragon.com | Media Contact: Abigail Levy-Gurwitz Ceragon Networks Ltd. Tel: +1-(201)-853-0271 (Int’l): +972 (0)3 5431 166 abigaill@ceragon.com | Media Contact: Justine Schneider Calysto Communications (404)-266-2060 x507 jschneider@calysto.com |
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, risks associated with unexpected changes in customer demand, risks associated with increased working capital needs, 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 Second Quarter 2013 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, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues | $ | 90,084 | $ | 112,669 | $ | 180,181 | $ | 222,715 | ||||||||
Cost of revenues | 61,545 | 76,756 | 124,182 | 153,993 | ||||||||||||
Gross profit | 28,539 | 35,913 | 55,999 | 68,722 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 10,582 | 11,900 | 22,488 | 24,055 | ||||||||||||
Selling and marketing | 16,808 | 19,953 | 34,341 | 39,587 | ||||||||||||
General and administrative | 5,764 | 6,163 | 12,479 | 13,378 | ||||||||||||
Total operating expenses | $ | 33,154 | $ | 38,016 | $ | 69,308 | $ | 77,020 | ||||||||
Operating loss | 4,615 | 2,103 | 13,309 | 8,298 | ||||||||||||
Financial expenses, net | 2,247 | 554 | 6,876 | 1,460 | ||||||||||||
Loss before taxes | 6,862 | 2,657 | 20,185 | 9,758 | ||||||||||||
Taxes on income | 658 | 245 | 1,476 | 535 | ||||||||||||
Net loss | $ | 7,520 | $ | 2,902 | $ | 21,661 | $ | 10,293 | ||||||||
Basic and diluted net loss per share | $ | 0.20 | $ | 0.08 | $ | 0.59 | $ | 0.28 | ||||||||
Weighted average number of shares used in computing basic and diluted net loss per share | 36,806,059 | 36,421,106 | 36,673,228 | 36,354,389 |
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Ceragon Reports Second Quarter 2013 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
June 30, 2013 | December 31, 2012 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 44,908 | $ | 47,099 | ||||
Short-term bank deposits | 321 | 422 | ||||||
Trade receivables, net | 122,641 | 149,120 | ||||||
Deferred taxes | 5,781 | 8,589 | ||||||
Other accounts receivable and prepaid expenses | 37,757 | 38,743 | ||||||
Inventories | 57,663 | 65,554 | ||||||
Total current assets | 269,071 | 309,527 | ||||||
NON-CURRENT ASSETS: | ||||||||
Marketable securities | 3,833 | 4,068 | ||||||
Deferred tax assets, net | 11,097 | 9,140 | ||||||
Severance pay and pension fund | 7,270 | 7,163 | ||||||
Property and equipment, net | 34,974 | 33,642 | ||||||
Intangible assets, net | 8,509 | 9,809 | ||||||
Goodwill | 15,112 | 15,283 | ||||||
Other non-current assets | 5,477 | 4,964 | ||||||
86,272 | 84,069 | |||||||
$ | 355,343 | $ | 393,596 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Short term loan, including current maturities of long term bank loan | $ | 39,922 | $ | 25,232 | ||||
Trade payables | 79,628 | 102,079 | ||||||
Deferred revenues | 12,184 | 16,719 | ||||||
Other accounts payable and accrued expenses | 36,651 | 36,090 | ||||||
Total current liabilities | 168,385 | 180,120 | ||||||
LONG-TERM LIABILITIES | ||||||||
Long term bank loan, net of current maturities | 14,420 | 18,536 | ||||||
Accrued severance pay and pension | 12,198 | 12,311 | ||||||
Other long term payables | 36,033 | 38,920 | ||||||
62,651 | 69,767 | |||||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital: | ||||||||
Ordinary shares | 98 | 98 | ||||||
Additional paid-in capital | 321,325 | 318,106 | ||||||
Treasury shares at cost | (20,091 | ) | (20,091 | ) | ||||
Other comprehensive loss | (1,450 | ) | (490 | ) | ||||
Accumulated deficits | (175,575 | ) | (153,914 | ) | ||||
Total shareholders' equity | 124,307 | 143,709 | ||||||
Total liabilities and shareholders' equity | $ | 355,343 | $ | 393,596 |
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Ceragon Reports Second Quarter 2013 Results
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net loss | $ | (7,520 | ) | $ | (2,902 | ) | $ | (21,661 | ) | $ | (10,293 | ) | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||||||
Depreciation and amortization | 3,733 | 3,648 | 7,771 | 7,419 | ||||||||||||
Stock-based compensation expense | 998 | 1,257 | 2,073 | 2,842 | ||||||||||||
Decrease (increase) in trade and other receivables, net | 2,812 | (21,705 | ) | 26,464 | (23,809 | ) | ||||||||||
Decrease in inventory | 4,539 | 573 | 7,402 | 17,616 | ||||||||||||
Increase (decrease) in trade payables and accrued liabilities | (10,248 | ) | 8,557 | (23,673 | ) | 10,331 | ||||||||||
Decrease in deferred revenues | (3,283 | ) | (3,219 | ) | (4,535 | ) | (12,391 | ) | ||||||||
Decrease (increase) in deferred tax asset, net | 365 | 114 | 515 | (263 | ) | |||||||||||
Other adjustments | (220 | ) | (325 | ) | (321 | ) | (429 | ) | ||||||||
Net cash used in operating activities | $ | (8,824 | ) | $ | (14,002 | ) | $ | (5,965 | ) | $ | (8,977 | ) | ||||
Cash flow from investing activities: | ||||||||||||||||
Purchase of property and equipment, net | (4,802 | ) | (3,065 | ) | (7,697 | ) | (6,368 | ) | ||||||||
Investment in short-term bank deposit | (38 | ) | - | (255 | ) | (1,266 | ) | |||||||||
Proceeds from short-term bank deposits | 336 | 3,186 | 336 | 5,436 | ||||||||||||
Investment in available for sale marketable securities | - | (64 | ) | - | (64 | ) | ||||||||||
Proceeds from sale of available for sale marketable securities, net | 301 | - | 301 | 9,717 | ||||||||||||
Net cash provided by (used in) investing activities | $ | (4,203 | ) | $ | 57 | $ | (7,315 | ) | $ | 7,455 | ||||||
Cash flow from financing activities: | ||||||||||||||||
Proceeds from exercise of options | 8 | 251 | 1,145 | 464 | ||||||||||||
Proceeds from bank loans | 13,690 | 14,600 | 16,690 | 14,600 | ||||||||||||
Repayment of bank loan | (2,058 | ) | (2,058 | ) | (6,116 | ) | (4,116 | ) | ||||||||
Net cash provided by financing activities | $ | 11,640 | $ | 12,793 | $ | 11,719 | $ | 10,948 | ||||||||
Translation adjustments on cash and cash equivalents | $ | (510 | ) | $ | (322 | ) | $ | (630 | ) | $ | (473 | ) | ||||
Increase (decrease) in cash and cash equivalents | $ | (1,897 | ) | $ | (1,474 | ) | $ | (2,191 | ) | $ | 8,953 | |||||
Cash and cash equivalents at the beginning of the period | 46,805 | 39,418 | 47,099 | 28,991 | ||||||||||||
Cash and cash equivalents at the end of the period | $ | 44,908 | $ | 37,944 | $ | 44,908 | $ | 37,944 |
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Ceragon Reports Second Quarter 2013 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended June 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
GAAP (as reported) | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
Revenues | $ | 90,084 | $ | 90,084 | $ | 112,669 | ||||||||||
Cost of revenues | 61,545 | (a) 605 | 60,940 | 75,385 | ||||||||||||
Gross profit | 28,539 | 29,144 | 37,284 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 10,582 | (b) 337 | 10,245 | 11,293 | ||||||||||||
Selling and marketing | 16,808 | (c) 655 | 16,153 | 18,841 | ||||||||||||
General and administrative | 5,764 | (d) 249 | 5,515 | 6,116 | ||||||||||||
Total operating expenses | $ | 33,154 | $ | 31,913 | $ | 36,250 | ||||||||||
Operating profit (loss) | (4,615 | ) | (2,769 | ) | 1,034 | |||||||||||
Financial expenses, net | 2,247 | 2,247 | 554 | |||||||||||||
Income (loss) before taxes | (6,862 | ) | (5,016 | ) | 480 | |||||||||||
Taxes on income | 658 | 658 | 245 | |||||||||||||
Net income (loss) | $ | (7,520 | ) | $ | (5,674 | ) | $ | 235 | ||||||||
Basic net earnings (loss) per share | $ | (0.20 | ) | $ | (0.15 | ) | $ | 0.01 | ||||||||
Diluted net earnings (loss) per share | $ | (0.20 | ) | $ | (0.15 | ) | $ | 0.01 | ||||||||
Weighted average number of shares used in computing basic net earnings (loss) per share | 36,806,059 | 36,806,059 | 36,421,106 | |||||||||||||
Weighted average number of shares used in computing diluted net earnings (loss) per share | 36,806,059 | 36,806,059 | 37,380,275 | |||||||||||||
Total adjustments | 1,846 |
(a) | Cost of revenues includes $0.3 million of amortization of intangible assets, $0.1 million of stock based compensation expenses and $0.2 million of changes in pre-acquisition indirect tax positions in the three months ended June 30, 2013. |
(b) | Research and development expenses include $0.3 million of stock based compensation expenses in the three months ended June 30, 2013. |
(c) | Selling and marketing expenses include $0.3 million of amortization of intangible assets and $0.4 million of stock based compensation expenses in the three months ended June 30, 2013. |
(d) | General and administrative expenses include $0.2 million of stock based compensation expenses in the three months ended June 30, 2013. |
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Ceragon Reports Second Quarter 2013 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Six months ended June 30, | |||||||||||||
2013 | 2012 | ||||||||||||
GAAP (as reported) | Adjustments | Non-GAAP | Non-GAAP | ||||||||||
Revenues | $ | 180,181 | $ | 180,181 | $ | 222,715 | |||||||
Cost of revenues | 124,182 | (a) 1,900 | 122,282 | 150,325 | |||||||||
Gross profit | 55,999 | 57,899 | 72,390 | ||||||||||
Operating expenses: | |||||||||||||
Research and development | 22,488 | (b) 1,860 | 20,628 | 23,024 | |||||||||
Selling and marketing | 34,341 | (c) 2,078 | 32,263 | 36,860 | |||||||||
Genera l and administrative | 12,479 | (d) 1,316 | 11,163 | 12,479 | |||||||||
Total operating expenses | $ | 69,308 | $ | 64,054 | $ | 72,363 | |||||||
Operating profit (loss) | (13,309 | ) | (6,155 | ) | 27 | ||||||||
Financial expenses, net | 6,876 | (e) 3,133 | 3,743 | 1,460 | |||||||||
Loss before taxes | 20,185 | 9,898 | 1,433 | ||||||||||
Taxes on income | 1,476 | 1,476 | 535 | ||||||||||
Net loss | $ | 21,661 | $ | 11,374 | $ | 1,968 | |||||||
Basic and diluted net loss per share | $ | 0.59 | $ | 0.31 | $ | 0.05 | |||||||
Weighted average number of shares used in computing basic and diluted net loss per share | 36,673,228 | 36,673,228 | 36,354,389 | ||||||||||
Total adjustments | 10,287 |
(a) | Cost of revenues includes $0.6 million of amortization of intangible assets, $0.5 million of inventory step-up, $0.1 million of stock based compensation expenses, $0.2 million of integration plan related costs and $0.5 million of changes in pre-acquisition indirect tax positions in the six months ended June 30, 2013. |
(b) | Research and development expenses include $1.3 million of integration plan related costs and $0.6 million of stock based compensation expenses in the six months ended June 30, 2013. |
(c) | Selling and marketing expenses include $0.7 million of amortization of intangible assets, $0.7 million of integration plan related costs and $0.7 million of stock based compensation expenses in the six months ended June 30, 2013. |
(d) | General and administrative expenses include, $0.7 million of integration plan related costs and $0.6 million of stock based compensation expenses in the six months ended June 30, 2013. |
(e) | Financial expenses include $3.1 million non-recurring currency devaluation in Venezuela in the six months ended June, 2013. |
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Ceragon Reports Second Quarter 2013 Results
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
NET LOSS
(U.S. dollars in thousands)
(Unaudited)
Three months ended | Six months ended | |||||||
June 30, 2013 | ||||||||
Reported GAAP net loss | 7,520 | 21,661 | ||||||
Stock based compensation expenses | 998 | 2,073 | ||||||
Amortization of intangible assets | 604 | 1,270 | ||||||
Inventory step up | - | 459 | ||||||
Integration plan related costs | - | 2,844 | ||||||
Changes in pre-acquisition indirect tax positions | 244 | 508 | ||||||
Financial expenses related to non-recurring currency devaluation in Venezuela | - | 3,133 | ||||||
Non-GAAP net loss | 5,674 | 11,374 |
Ceragon Reports Second Quarter 2013 Results
Contact: Yoel Knoll
Vice President of Investor Relations
Ceragon Networks Ltd.
US: +1-(201)-853-0228
Cell (Int'l): +972 (0) 52 830 6419
Office (Int’l): +972 (0)3 766 6419
yoelk@ceragon.com
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