☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Ordinary Shares, Par Value NIS 0.01 | CRNT | Nasdaq Global Select Market |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐
Other ☐
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PART II | ||
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PART III | ||
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• | references to “Ceragon,” the “Company,” “us,” “we” “our” and the “registrant” refer to Ceragon Networks Ltd., an Israeli company, and its consolidated subsidiaries; |
• | references to “ordinary shares,” “our shares” and similar expressions refer to our Ordinary Shares, NIS 0.01 nominal (par) value per share; |
• | references to “dollars,” “U.S. dollars” and “$” are to United States Dollars; |
• | references to “shekels” and “NIS” are to New Israeli Shekels, the Israeli currency; |
• | references to the “Companies Law” are to Israel’s Companies Law, 5759-1999; |
• | references to the “SEC” are to the United States Securities and Exchange Commission; and |
• | references to the "Nasdaq Rules" are to the rules of the Nasdaq Global Select Market. |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
Year ended December 31, | ||||||||||||||||||||
Consolidated Statement of Operations Data: | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||
(In thousands of dollars, except share and per share data) | ||||||||||||||||||||
Revenues | 349,435 | 293,641 | 332,033 | 343,874 | 285,583 | |||||||||||||||
Cost of revenues | 246,487 | 194,479 | 224,698 | 227,705 | 188,741 | |||||||||||||||
Gross profit | 102,948 | 99,162 | 107,335 | 116,169 | 96,842 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development, net | 22,930 | 21,695 | 25,703 | 28,180 | 26,793 | |||||||||||||||
Selling and marketing | 40,816 | 39,515 | 41,656 | 42,961 | 39,469 | |||||||||||||||
General and administrative | 16,386 | 18,459 | 16,830 | 18,884 | 23,278 | |||||||||||||||
Restructuring costs | 1,225 | - | - | - | - | |||||||||||||||
Total operating expenses | 81,357 | 79,669 | 84,189 | 90,025 | 89,540 | |||||||||||||||
Operating income | 21,591 | 19,493 | 23,146 | 26,144 | 7,302 | |||||||||||||||
Financial expenses and others, net | (14,738 | ) | (6,303 | ) | (5,889 | ) | (6,349 | ) | (6,521 | ) | ||||||||||
Income before taxes | 6,853 | 13,190 | 17,257 | 19,795 | 781 | |||||||||||||||
Tax benefit (taxes) on income | (5,842 | ) | (1,761 | ) | (1,697 | ) | 3,251 | (2,476 | ) | |||||||||||
Equity loss in affiliates | - | - | - | - | 649 | |||||||||||||||
Net income (loss) | 1,011 | 11,429 | 15,560 | 23,046 | (2,344 | ) | ||||||||||||||
Basic net earnings (loss) per share | $ | 0.01 | $ | 0.15 | $ | 0.20 | $ | 0.29 | $ | (0.03 | ) | |||||||||
Diluted net earnings (loss) per share | $ | 0.01 | $ | 0.15 | $ | 0.19 | $ | 0.28 | $ | (0.03 | ) | |||||||||
Weighted average number of shares used in computing basic earnings (loss) per share | 77,239,409 | 77,702,788 | 77,916,912 | 78,579,013 | 80,296,581 | |||||||||||||||
Weighted average number of shares used in computing diluted earnings (loss) per share | 77,296,681 | 78,613,528 | 79,942,353 | 81,021,527 | 80,296,581 |
Year ended December 31, | ||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents, bank deposits | 36,318 | 36,338 | 26,873 | 36,600 | 23,956 | |||||||||||||||
Working capital | 81,957 | 95,950 | 105,362 | 114,990 | 111,267 | |||||||||||||||
Total assets | 267,249 | 244,225 | 253,593 | 283,000 | 289,889 | |||||||||||||||
Total long term liabilities | 19,915 | 17,555 | 14,245 | 13,231 | 25,100 | |||||||||||||||
Shareholders’ equity | 102,821 | 116,164 | 133,898 | 159,568 | 160,421 |
• | Economic downturn and slowdown of the macro-economic development and significant decline of business that can harm the strength of the worldwide telecommunications industry in general and the wireless fabrication and services industry in particular. Such downturn or slowdown could affect demand for our products and services and decrease our sales of products and related services to such industry; |
• | Material reduction in new orders and in procurement of our products, issuance of work stoppage orders or delay in the award of new orders on part of our customers; |
• | Significant decline of our business, that can harm our ability to conduct or to further develop our business, including, cancellation, suspension or reduction in new equipment purchase, postponement or cancellation of rollout of wireless networks, postponement in the transition to 5G technologies or new products and technologies, inability or imposition of restrictions limiting or preventing our ability to deliver and perform under our contracts or to bill and collect amounts due from our customers, or the materialization of other circumstances that may result from the above market conditions, adversely affecting our financial performance, cashflow, available cash and working capital balance, financing options, revenue and financial results; |
• | Coronavirus infection could harm the health of one or more of our employees, including key employees, which could in turn require us to reduce the workforce or completely shut down all, or almost all, work in our facility in order to prevent further infections and spread of the Coronavirus. Key employees may lose their ability to manage and run our operations, share their knowhow and further pursue the development of our products and business; |
• | Issuance of quarantine orders by governmental authorities, prohibiting some or all of our employees to exit their home other than for specific purposes, which could in turn require us to reduce the workforce or completely shut down all, or almost all, work in our facility, and could have an adverse effect on our operations, including our R&D efforts, marketing and sales activities; |
• | Disruption, reduction or interruption in supply, including potential disruptions in our global supply chain, disruption to our suppliers, manufacturers or customers and their other vendors, lack or delay in the supply of raw materials and goods, or in the performance of work or services by our contractors and subcontractors; |
• | Slowdown in production and manufacturing, and a significant increase in the price of one or more components or materials; |
• | Disruptions or restrictions on our operations and those of our suppliers, contractors and customers, including on our or their ability to travel, distribute, install or maintain our products or provide services relating thereto, due to, among other things, restrictions on mobility, quarantine or lock-down orders or similar event in territories in which we or our customers are operating, as well as temporary closures of our facilities or the facilities of our suppliers, manufacturers or customers, and prohibitions on the export, import or release from customs of product and components; |
• | Disruptions or restrictions on our marketing and sales operations, ability to submit bids and purchase orders, participate in RFPs and contract negotiations and site-visits and surveys, difficulties in engaging subcontractors or hire new employees, inability to provide outdoor/field services or reach our facilities to provide certain after sale support, maintenance and repair services; |
• | Lower work efficiency and productivity, service quality, and financial performance generally; |
• | Imposition of fines, penalties, damages and contract terminations (including the exercise of certain force majeure clauses), and damage to our reputation and relationships with our customers, as a result of delays in production, shipment and deliveries due to any of the above constraints; |
• | Financial difficulties and insolvencies of major customers, which could lead to slowing the payment of their obligations to us or even discharging those obligations; |
• | Difficulties in collection of amounts due from customers and in satisfying revenue recognition procedures or collection/payment procedures, including inability to surrender or receive payment documents such acceptance certificates, invoices, receipts, guaranties, bills of lading, airway bills or documentary payment certificates, and in particular, to surrender hard copy originals were required; |
• | Difficulties in obtaining credit lines, financing or financial services, including issuance of bid bonds, advance payment bonds, performance and warranty bonds, insurance policies and credit risk hedging facilities, creation of credit crunch and lack of financing or fund raising activities, which might adversely affect our liquidity, credit rating, satisfaction of our financial covenants or other obligations to our lenders or creditors, or limit or hinder our ability to obtain new orders or be awarded new contracts or do business generally; |
• | Inability to dismiss or suspend the employment of employees due to ad-hoc local protective legislation while blocking the Company’s ability to effectively pursue cost-saving measures; |
• | Inability to remotely access our IT systems or work from home during full or partial lockout, and exposure to endpoint and communication channels and gateways cyber-attacks; |
• | Macro-Economic downturn and slowdown of development and significant decline of business that can harm our customers’ ability to develop their business and pursue network development towards 5G, and consequently, our ability to grow our business or gain 5G design wins, including, postponement of rollout of wireless networks, postponement in the transition to 5G technologies and in the introduction of new products and capabilities, and suspension or reduction in the investment in new technologies and new equipment purchases; |
• | Disengagement on part of our business or other partners, walk away from or breach of agreements on part of partners, contractors, subcontractors suppliers or customers, entering into disagreements, disputes and litigation; all, as a result from the materialization of any of the risks detailed in this risk factor with respect to our business or the business of our counterparty, may incur significant expenditure and loss; |
• | Disruption of our working routines, delays and errors due to difficulties to enable joint work or work-teams gathering, connectivity, remote access and lack of equipment issues, difficulties in and inefficiencies of our effective control over our business and operations, delays in projects’ timelines and annual business plan implementation, delay in managerial and financial reporting and SEC filings, inability to perform audits and apply effective financial controls, or failure under other regulatory requirements to which we are subject; and |
• | Adverse effect on our business as a result from the materialization of these or similar risks with respect to our significant customers. |
Factors such as geographical mix, delivery terms and timeline(s), product mix, related services mix and other deal terms may differ significantly from our expectations, and thus impact our revenue recognition timing, gross margins, costs and expenses, as well as cash flow from operations. In addition, the spending decisions of our customers throughout the year may also create unpredictable fluctuations in the timing in which we receive orders and can recognize revenues, which may impact our quarterly results. Such unpredictable fluctuations could be material in cases where these spending decisions are made by our largest customers or regarding significant deals. In addition, the quarterly variation of our operating results may in turn create volatility in the market price for our shares.
• | unexpected or inconsistent changes in regulatory requirements, including security regulations, licensing and allocation processes; |
• | unexpected changes in or imposition of tax, tariffs, customs levies or other barriers and restrictions; |
• | fluctuations in foreign currency exchange rates; |
• | restrictions on currency and cash repatriation; |
• | burden of complying with a variety of foreign laws, including foreign import restrictions which may be applicable to our products; |
• | difficulties in protecting intellectual property; |
• | laws and business practices favoring local competitors; |
• | collection delays and uncertainties; |
• | business interruptions resulting from geopolitical actions, including war and acts of terrorism, or natural disasters, emergence of a pandemic, or other widespread health emergencies (or concerns over the possibility of such an emergency, including for example, the recent Coronavirus outbreak); |
• | requirements to do business in local currency; and |
• | requirements to manufacture or purchase locally, including the possible transfer of knowhow and intellectual property licenses. |
Introduction of new product platforms may expose us to risks associated with failure to commercialize those products or bring them to the market, or to risks associated with quality assurance, product liability or reliability
• | The component suppliers may experience shortages in components and interrupt or delay their shipments to our contract manufacturers. Consequently, these shortages could delay the manufacture of our products and shipments to our customers, which could result in increased manufacturing and shipment costs, penalties or cancellation of orders for our products. |
• | The component suppliers could discontinue the manufacture or supply of components used in our systems. In such an event, we or our contract manufacturers may be unable to develop alternative sources for the components necessary to manufacture our products, which could force us to redesign our products or buy a large stock of the component into inventory before it is discontinued. Any such redesign of our products would likely interrupt the manufacturing process and could cause delays in our product shipments. Moreover, a significant modification in our product design may increase our manufacturing costs and bring about lower gross margins. In addition, we may be exposed to excess inventory of such component, which we will have to write-down in case the demand is not as high as we have anticipated at the time of buying these components. |
• | The component suppliers may significantly increase component prices at any time and with immediate effect, particularly if demand for certain components increases dramatically in the global market. These price increases would increase component procurement costs and could significantly reduce our gross margins and profitability. |
• | The component suppliers may refuse or be unable to further supply such component for various reasons, including, among other things, their prioritization, focus, regulations, force majeure events or financial situation. |
• | we may fail to reveal that the business, legal and other due diligence materials and documents contain untrue statements of material facts or omit to state a material fact necessary to make the statements therein not misleading, hence fail to achieve the objectives of acquisition and suffer a substantial loss; |
• | we may fail to correctly assess the due diligence investigation findings, establish a correct investment thesis or establish a correct post-merger integration plan; |
• | the process of integrating an acquired business including, for example, the operations, systems, technologies, products, and personnel of the combined companies, particularly companies with large and widespread operations and/or complex products, may be prolonged due to unforeseen difficulties; |
• | the implementation of the transaction may distract and divert management’s attention from the normal daily operations of our business; |
• | we may sustain and record significant expenditure and costs associated with outstanding transactions that either did not or will not materialize or would fail to achieve its objectives; |
• | there will be increased expenses associated with the transaction, we may need to use a substantial portion of our cash resources or incur debt in order to cover such expenses; expenses which the combined revenues of the merged companies may not be sufficient to offset; |
• | we may generate negative cash flow as a result of such transaction, which may require fund raising that will not be available for us; |
• | we may incur unexpected accounting and other expenses associated with the transaction, such as tax expenses, write offs, amortization expenses related to intangible assets, restructuring costs, litigation costs or such other costs derived from the acquisition; |
• | the transaction may harm our business as currently conducted e.g. there may be a temporary loss of revenues, we may experience loss of current key employees, customers, resellers, vendors and other business partners or companies with whom we engage today or which relate to any acquired company; |
• | we may be required to issue ordinary shares as part of the transaction, which would dilute our current shareholders; |
• | we may need to assume material liabilities of the merged entity; |
• | the failure to successfully complete the integration associated with the transaction (including integrating any acquired technology into our products), which may cause new markets we were aiming for not to materialize or in which competitors may have a stronger market position; or |
• | we may fail to effectively obtain the technological improvement. |
• | new generations of products replacing older ones, including changes in products because of technological advances and cost reduction measures; and |
• | the need of our contract manufacturers to order raw materials that have long lead times and our inability to estimate exact amounts and types of items thus needed, especially regarding the frequencies in which the final products ordered will operate. |
• | Our business is subject to numerous laws and regulations designed to protect the environment, including with respect to discharge management of hazardous substances. Although we believe that we comply with these requirements and that such compliance does not have a material adverse effect on our results of operations, financial condition or cash flows, the failure to comply with current or future environmental requirements could expose the Company to criminal, civil and administrative charges. Due to the nature of our business and environmental risks, we cannot provide assurance that any such material liability will not arise in the future. |
• | Our wireless communications products emit electromagnetic radiation. While we are currently unaware of any negative effects associated with our products, there has been publicity regarding the potentially negative direct and indirect health and safety effects of electromagnetic emissions from wireless telephones and other wireless equipment sources, including allegations that these emissions may cause cancer. Health and safety issues related to our products may arise that could lead to litigation or other actions against us or to additional regulation of our products, and we may be required to modify our technology without the ability to do so. Even if these concerns prove to be baseless, the resulting negative publicity could affect our ability to market these products and, in turn, could harm our business and results of operations. Claims against other wireless equipment suppliers or wireless service providers could adversely affect the demand for our hauling solutions. |
• | The regulatory framework for data protection and privacy issues is rapidly evolving worldwide and is likely to continue developing in the foreseeable future. As such, in May 2016, the European Union adopted the General Data Protection Regulation (“GDPR”), fully enforceable as of May 25, 2018, which imposes striker data protection obligations and provides for greater penalties for noncompliance. We may be required to incur significant costs to comply with such data and privacy protection laws, rules and regulations, as applicable upon our Company. Any inability to adequately address these privacy and data protection concerns or to comply with the respective applicable laws, rules and regulations could have an adverse effect on our business prospects, results of operations and/or financial position. |
• | Part of our products could be characterized as “dual-use” products or include “dual-use” components that are subject to export controls and limitations. Refusal to award us with export licenses or the imposition of export restrictions could adversely affect our ability to market and sale such products. |
• | announcements of technological innovations or new commercial products by us or by our competitors; |
• | competitors’ positions and other events related to our market; |
• | changes in the Company’s estimations regarding forward looking statements and/or announcement of actual results that vary significantly from such estimations; |
• | the announcement of corporate transactions, merger and acquisition activities or other similar events by companies in our field or industry; |
• | changes and developments effecting our field or industry; |
• | period to period fluctuations in our results of operations; |
• | changes in financial estimates by securities analysts; |
• | our earnings releases and the earnings releases of our competitors; |
• | our ability to show and accurately predict revenues; |
• | our need to raise additional funds and the success or failure thereof; |
• | other announcements, whether by the Company or others, referring to the Company’s financial condition, results of operations and changes in strategy; |
• | changes in senior management or the board of directors; |
• | the general state of the securities markets (with a particular emphasis on the technology and Israeli sectors thereof); |
• | the general state of the credit markets, the volatility of which could have an adverse effect on our investments; and |
• | global macroeconomic developments, including in connection with the Coronavirus outbreak. |
• | hostilities involving Israel; |
• | the interruption or curtailment of trade between Israel and its present trading partners; |
• | a downturn in the economic or financial condition of Israel; and |
• | a full or partial mobilization of the reserve forces of the Israeli army. |
• | The rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q and current reports on Form 8-K; |
• | The sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of securities registered under the Exchange Act, including extensive disclosure of compensation paid or payable to certain of our highly compensated executives as well as disclosure of the compensation determination process; |
• | The provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and |
• | The sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profit realized from any “short-swing” trading transaction (a purchase and sale, or sale and purchase, of the issuer’s equity securities within less than six months). |
• | Short-haul solutions, which typically provide a wireless link capacity of up to 2 Gbps per link for backhaul, and/or a link capacity of up to 20Gbps for fronthaul. These solutions are available for distances of several hundred feet to 10 miles. Short-haul links are deployed in access applications (macro cells and small cells and distributed cells) wirelessly connecting the individual base-stations or base-station element (i.e. a “central unit”, a “distributed unit” or a “radio unit”) towers to the core network. Short-haul solutions are also used in a range of non-carrier “vertical” applications such as state and local government, public safety, education and off-shore communication for oil and gas platforms. |
• | Long-haul solutions, which typically provide a capacity of up to 20 Gbps, are used in the “highways” of the telecommunication backbone network. These links are used to carry services at distances of 10 to 50 miles, and, using the right planning, configuration and equipment, can also bridge distances of 100 miles. Long-haul solutions are also used in a range of non-carrier “vertical” applications such as broadcast, state and local government, public safety, utilities and offshore communication for oil and gas platforms. |
• | Initial 5G networks have already been launched during 2019, primarily in the United States, China, Europe, Australia, Japan and South Korea. When fully deployed, 5G networks are expected to serve 1,000-fold increase in connections compared to 4G networks. Service rates will range up to 1Gbps. The need for supporting 5G service capacities, along with the support of large-scale deployment of IoT devices in networks, will require wireless hauling with higher capacity and scalability to support a variety of 5G use-cases. |
• | SDN and NFV technologies are key to the network slicing approach, which was introduced in recent years to 4G networks and is expected to grow in complexity and in adoption over 5G networks, which are expected to support a much larger set of services. |
• | Sudden and wide widespread surge in network traffic in 2020 emerging from COVID-19 pandemic continues to cause global change to the way business and individuals access information for work and leisure. The result of national lock-ins for large parts of the population brings many businesses to exercise company-wide work-from-home with massive use of video conferencing and cloud network communication. Entire families stay longer at home and extensively consume video streaming and online gaming, along with video chats with friends and relatives. The result is a sudden and sharp increase in home broadband demand, while today’s home broadband networks are not designed for such usage patterns. Some countries, even developed ones, lack broadband communication networks in rural areas. As a result, service providers are required to increase network investment to match the network capabilities to the surge in broadband demand. We anticipate that the increase in network traffic which service providers are experiencing today amidst the pandemic will remain and even increase, as companies and employees adapt to broader use of telecommuting, and families adopt higher use of video calls/chats as larger portions of the world population, young and elderly alike, use highly visual remote communication tools and high volume communication transactions. |
• | 5G technologies will enable operators to enhance their services portfolio with more use cases such as enhanced mobile broadband (to eMBB – Enhanced Mobile Broadband) delivering gigabit broadband, as well as address new market segments such as IoT & IIoT and mission critical applications with URLLC (Ultra Reliable Low Latency Communications) and mMTC (Massive Machine Type Communications) services. Those services, combined with new network architectures will require higher capacity, lower latency networks and in particular higher hauling capacity, far denser macro cells and small/distributed cells grids and the implementation of network virtualization technologies and architectures, namely network slicing using SDN. Our wireless hauling solutions resolve both higher capacity, lower latency and network densification requirements with advanced capabilities, based on our multicore™ technology for microwave narrowband spectrum (up to 224Mhz) and the use of wider bands in millimeter-wave spectrum, up to 2,000MHz. Network virtualization requirements are addressed with layer 3 capabilities and SDN support. |
• | Software Defined Networking (SDN) is an emerging concept aimed at simplifying network operations and allowing network engineers and administrators to quickly respond to a fast-changing business environment. SDN delivers network architectures that transition networks from a world of task-specific dedicated network devices, to a world of optimization of network performance through network intelligence incorporated within network controllers performing control functions and network devices, which perform traffic (data-plane) transport. Our wireless hauling solutions are SDN-ready, built around a powerful software-defined engine and may be incorporated within the SDN network architecture. Our SDN architecture is envisioned to provide a set of applications that can achieve end-to-end wireless hauling network optimization by intelligently making use of the scarce network resources, such as spectrum and power consumption. |
• | The emergence of distributed cells presents hauling challenges that differ from those of traditional macro-cells. Distributed cells are used to provide connectivity and capacity in hot spots and underserved spots, as well as increase coordination between adjacent cells, leading to improved service level. They also significantly reduce the cost of cell-site equipment. This new architecture is forecasted to be present in a high percentage of advanced 5G network deployments. Our distributed-cells wireless hauling portfolio includes a variety of compact all-outdoor solutions that provide operators with optimal flexibility in meeting their unique physical, capacity, networking, and regulatory requirements. |
• | The introduction of a disaggregated model for hardware and software. This model allows better scalability, simplicity and flexibility for network operators as it offers independent elements for hardware and software, allowing the use of commercial off-the-shelf hardware, to accelerate delivery of new solutions and innovations. |
• | The network sharing business model is growing in popularity among mobile network operators (MNOs) who are faced with increasing competition from over-the-top players and an ever-growing capacity crunch. Network sharing can be particularly effective in the hauling portion of mobile networks, especially as conventional macro cells evolve into super-sized macro sites that require exponentially more bandwidth for wireless hauling. It has become abundantly clear that in these new scenarios, a new breed of wireless hauling solutions with a significant investment is required. Our wireless hauling solutions support network sharing concepts by addressing both the ultra-high capacities required for carrying multiple operator traffic, as well as the policing for ensuring that each operator’s service level agreement is maintained. |
• | While green-field deployments tend to be all IP-based, the overwhelming portion of network infrastructure investments goes into upgrading, or “modernizing” existing cell-sites to fit new services with a lower total cost of ownership. Modernizing is more than a simple replacement of network equipment. It helps operators build up a network with enhanced performance, capacity and service support. For example, Ceragon offers a variety of innovative mediation devices that eliminate the need to replace costly antennas, which are already deployed. In doing so, we help our customers to reduce the time and the costs associated with network upgrades. The result: a smoother upgrade cycle, short network down-time during upgrades and faster time to revenue. |
• | A growing market for non-mobile backhaul applications which includes: offshore communications for the oil and gas industry, as well as the shipping industry, which require a unique set of solutions for use on moving rigs and vessels; broadcast networks that require robust, highly reliable communication for the distribution of live video content either as a cost efficient alternative to fiber, or as a backup for fiber installations; and Smart Grid networks for utilities, as well as local and national governments that seek greater energy efficiency, reliability and scale. |
• | A growing demand for high capacity, IP-based long-haul solutions in emerging markets where telecom and broadband infrastructure, such as fiber, is lacking. This demand is driven by the need of service providers to connect more communities in order to bridge the digital divide, using 4G and eventually 5G services. |
• | Subscriber growth continues mainly in emerging markets such as India, Africa and Latin America. |
• | Increase business operational efficiency by reducing network related expenses. Our customers are able to obtain the required capacity with one-quarter of the spectrum needed otherwise, double network capacity without adding more equipment simply by remotely expanding wireless link capacity, significantly reduce energy related expenses by utilizing our energy efficient products, use smaller antennas thereby reducing telecommunication tower leasing costs, and improve their staff productivity with the use of a single wireless hauling platform for their long-haul, short-haul and small/distributed cells hauling needs. We offer a range of solutions for quick and simple modernization of wireless networks to 4G and 5G, which significantly contribute to our customers’ ability to modernize and expand their services. |
• | Enhance service portfolio, quality of experience and reach. Our multicore™ technology allows our customers to introduce new services (e.g. 5G use cases), to improve subscriber (user) quality of experience generated from the voice, data and multimedia services that they provide to their customers and to extend their network and services reach in order to address new markets. |
• | Ensure peace of mind. Our solutions utilize the latest in microwave and millimeter-wave technology, incorporated in-house developed System-on-Chips (baseband and RF integrated circuits), and use the latest advances in SMT (Surface-mount technologies) based manufacturing – allowing our customers to benefit from the highest service availability across their Ceragon-based wireless hauling network. |
• | All-outdoor solutions combine the functionality of both the indoor and outdoor units in a single, compact device. This weather-proof enclosure is fastened to an antenna, eliminating the need for rack space or sheltering, as well as the need for air conditioning. |
• | Split-mount solutions consist of: |
➢ | Indoor units which are used to process and manage information transmitted to and from the outdoor unit, aggregate multiple transmission signals and provide a physical interface to wire-line networks. |
➢ | Outdoor units or Radio Frequency Units (RFU), which are used to control power transmission, and provide an interface between antennas and indoor units. They are contained in compact weather-proof enclosures fastened to antennas. Indoor units are connected to outdoor units by standard coaxial or Cat-5 baseband cables. |
• | All-indoor solutions refer to solutions in which the entire system (indoor unit and RFU) reside in a single rack inside a transmission equipment room. A waveguide connection transports the radio signals to the antenna mounted on a tower. All indoor equipment is typically used in long-haul applications. |
• | Disaggregated wireless hauling solutions offer a single radio suitable for all-outdoor a split-mount scenario, and a networking unit, which provides versatile and scalable hardware options based on merchant routing silicon and will also provide routing capabilities that are radio technologies aware. |
• | Pointing accuracy solutions for high vibration environments. These are advanced microwave radio systems for use on moving rigs/vessels where the antenna is stabilized in one or two axes, azimuth or azimuth/elevation. |
• | Antennas are used to transmit and receive microwave radio signals from one side of the wireless link to the other. These devices are mounted on poles typically placed on rooftops, towers or buildings. We rely on third party vendors to supply this component. |
• | End-to-End Network Management. Our network management system uses standard management protocol to monitor and control managed devices at both the element and network level and can be easily integrated into our customers’ existing network management systems. |
Product | Frequency range | Application | Networking & transport technologies |
IP-20C | 6-42GHz, dual-carrier | Shorthaul, small cells, enterprise | Carrier Ethernet |
IP-20C-HP | 4-11GHz, dual-carrier | Longhaul | Carrier Ethernet |
IP-20S | 6-42GHz | Shorthaul, enterprise | Carrier Ethernet |
IP-20E | 71-86GHz | Shorthaul, small cells, enterprise | Carrier Ethernet |
IP-20V | 57-66GHz | Shorthaul, small cells, enterprise | Carrier Ethernet |
Product | Frequency range | Application | Networking & transport technologies |
IP-20N / IP-20A | 4-86GHz | Shorthaul, Long-haul | Carrier Ethernet, TDM |
IP-20F | 4-86GHz | Shorthaul | Carrier Ethernet, TDM |
IP-20G | 6-42GHz | Shorthaul | Carrier Ethernet, TDM |
Product | Frequency range | Application | Networking & transport technologies |
IP-50E | 71-86GHz | Shorthaul, Fronthaul, Enterprise access | IP/MPLS, CE |
IP-50C | 6-42GHz, dual-carrier | Shorthaul | IP/MPLS, CE |
IP-50FX | 6-86GHz | Shorthaul | IP/MPLS, CE |
IP-50S | 6-42GHz | Shorthaul | IP/MPLS, CE |
Year Ended December 31, | ||||||||||||
Region | 2017 | 2018 | 2019 | |||||||||
North America | 12 | % | 12 | % | 15 | % | ||||||
Europe | 14 | % | 11 | % | 15 | % | ||||||
Africa | 4 | % | 7 | % | 9 | % | ||||||
India | 39 | % | 38 | % | 17 | % | ||||||
APAC (excluding India) | 13 | % | 14 | % | 19 | % | ||||||
Latin America | 18 | % | 18 | % | 25 | % |
• | for the standard character mark Ceragon Networks and our logo in the United States, Israel, and the European Union; |
• | for the standard character mark Ceragon Networks in Canada; |
• | for the standard character mark CERAGON in Morocco, Malaysia, Indonesia, Japan, Russia, Israel, Mexico, the United States, South Africa, the Philippines, Argentina, Venezuela and Colombia and International Registration (protection granted in Australia, Iceland, Bosnia & Herzegovina, Switzerland, Croatia, Norway, Russia, China, Ukraine, CTM (European Union), Turkey, Singapore, and Macedonia); |
• | for our design mark for FibeAir in the United States, Israel and the European Union; |
• | for the standard character mark FibeAir in the United States; |
• | for the standard character mark CeraView in Israel and the European Union. |
• | The diversification of our technologies and capabilities, which allows flexible vertical integration options, including the development of the core technology – RFIC and modems; |
• | our focus and active involvement in shaping next generation standards and technologies, which deliver best customer value; |
• | our product performance, reliability and functionality, which assist our customers to achieve the highest value; |
• | the range and maturity of our product portfolio, including the ability to provide solutions in every widely available microwave and millimeter-wave licensed and license-exempt frequency, as well as our ability to provide both IP and circuit switch solutions and therefore to facilitate a migration path for circuit-switched to IP-based networks; |
• | our cost structure; |
• | our focus on high-capacity, point-to-point microwave and millimeter-wave technologies, which allows us to quickly adapt to our customers’ evolving needs; |
• | the range of rollout services offering for faster deployment of an entire network and reduced total cost of ownership; |
• | our support and technical service, experience and commitment to high quality customer service, and |
• | our ability to expand to other vertical markets such as oil and gas and public safety, by drawing upon the capabilities of our technologies and solutions. |
Company | Place of Incorporation | Ownership Interest | |||
Ceragon Networks, Inc. | New Jersey | 100 | % | ||
Ceragon Networks (India) Private Limited | India | 100 | % |
• | in the United States, we lease approximately 5,300 square feet of premises in Overlook at Great Notch, New Jersey, expiring November 2021 and approximately 8,200 square feet of office and warehouse space in Richardson, Texas, expiring March 2024. |
• | in India, we lease approximately 11,700 square feet of office space in New Delhi, expiring in March 2028. In addition, we lease 1,348 square feet of office space in Mumbai, expiring in July 2020. |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. | Operating Results |
• | Sudden and wide widespread surge in network traffic in 2020 emerging from COVID-19 pandemic continues to cause global change to the way business and individuals access information for work and leisure. The result of national lock-ins for large parts of the population brings many businesses to exercise company-wide work-from-home with massive use of video conferencing and cloud network communication. Entire families stay longer at home and extensively consume video streaming and online gaming, along with video chats with friends and relatives. The result is a sudden and sharp increase in home broadband demand, while today’s home broadband networks are not designed for such usage patterns. Some countries, even developed ones, lack broadband communication networks in rural areas. As a result, service providers are required to increase network investment to match the network capabilities to the surge in broadband demand. We anticipate that the increase in network traffic which service providers are experiencing today amidst the pandemic will remain and even increase, as companies and employees adapt to broader use of telecommuting, and families adopt higher use of video calls/chats as larger portions of the world population, young and elderly alike, use highly visual remote communication tools and high volume communication transactions. |
• | 5G technologies will enable operators to enhance their services portfolio with more use cases such as enhanced mobile broadband (to eMBB – Enhanced Mobile Broadband) delivering gigabit broadband, as well as address new market segments such as IoT & IIoT and mission critical applications with URLLC (Ultra Reliable Low Latency Communications) and mMTC (Massive Machine Type Communications) services. Those services, combined with new network architectures will require higher capacity, lower latency networks and in particular higher hauling capacity, far denser macro cells and small/distributed cells grids and the implementation of network virtualization technologies and architectures, namely network slicing using SDN. Our wireless hauling solutions resolve both higher capacity, lower latency and network densification requirements with advanced capabilities, based on our multicore™ technology for microwave narrowband spectrum (up to 224Mhz) and the use of wider bands in millimeter-wave spectrum, up to 2,000MHz. Network virtualization requirements are addressed with layer 3 capabilities and SDN support. |
• | Software Defined Networking (SDN) is an emerging concept aimed at simplifying network operations and allowing network engineers and administrators to quickly respond to a fast-changing business environment. SDN delivers network architectures that transition networks from a world of task-specific dedicated network devices, to a world of optimization of network performance through network intelligence incorporated within network controllers performing control functions and network devices, which perform traffic (data-plane) transport. Our wireless hauling solutions are SDN-ready, built around a powerful software-defined engine and may be incorporated within the SDN network architecture. Our SDN architecture is envisioned to provide a set of applications that can achieve end-to-end wireless hauling network optimization by intelligently making use of the scarce network resources, such as spectrum and power consumption. |
• | The emergence of distributed cells presents hauling challenges that differ from those of traditional macro-cells. Distributed cells are used to provide connectivity and capacity in hot-spots and underserved spots, as well as increase coordination between adjacent cells, leading to improved service level. They also significantly reduce the cost of cell-site equipment. This new architecture is forecasted to be highly present in advanced 5G network deployments. Our distributed-cells wireless hauling portfolio includes a variety of compact all-outdoor solutions that provide operators with optimal flexibility in meeting their unique physical, capacity, networking, and regulatory requirements. |
• | The introduction of a disaggregated model for hardware and software. This model allows better scalability, simplicity and flexibility for network operators as it offers independent elements for hardware and software, allowing the use of commercial off-the-shelf hardware, to accelerate delivery of new solutions and innovations. |
• | The network sharing business model is growing in popularity among mobile network operators (MNOs) who are faced with increasing competition from over-the-top players and an ever-growing capacity crunch. Network sharing can be particularly effective in the hauling portion of mobile networks, especially as conventional macro cells evolve into super-sized macro sites that require exponentially more bandwidth for wireless hauling. It has become abundantly clear that in these new scenarios, a new breed of wireless hauling solutions with a significant investment is required. Our wireless hauling solutions support network sharing concepts by addressing both the ultra-high capacities required for carrying multiple operator traffic, as well as the policing for ensuring that each operator’s service level agreement is maintained. |
• | While green-field deployments tend to be all IP-based, the overwhelming portion of network infrastructure investments goes into upgrading, or “modernizing” existing cell-sites to fit new services with a lower total cost of ownership. Modernizing is more than a simple replacement of network equipment. It helps operators build up a network with enhanced performance, capacity and service support. For example, Ceragon offers a variety of innovative mediation devices that eliminate the need to replace costly antennas, which are already deployed. In doing so, we help our customers to reduce the time and the costs associated with network upgrades. The result: a smoother upgrade cycle, short network down-time during upgrades and faster time to revenue. |
• | A growing market for non-mobile backhaul applications which includes: offshore communications for the oil and gas industry, as well as the shipping industry, which require a unique set of solutions for use on moving rigs and vessels; broadcast networks that require robust, highly reliable communication for the distribution of live video content either as a cost efficient alternative to fiber, or as a backup for fiber installations; and Smart Grid networks for utilities, as well as local and national governments that seek greater energy efficiency, reliability and scale. |
• | A growing demand for high capacity, IP-based long-haul solutions in emerging markets where telecom and broadband infrastructure, such as fiber, is lacking. This demand is driven by the need of service providers to connect more communities in order to bridge the digital divide, using 4G and eventually 5G services. |
• | Subscriber growth continues mainly in emerging markets such as India, Africa and Latin America. |
• | Increased competition. Our target market is characterized by vigorous, worldwide competition for market share and rapid technological development. These factors have resulted in aggressive pricing practices and downward pricing pressures, and growing competition from both start-up companies and well-capitalized telecommunication systems providers. |
• | Reional pricing pressures. A significant portion of our sales derives from India, in response to the rapid build-out of cellular networks in that country. For the years ended December 31, 2018 and 2019, 38.2% and 17.4%, respectively, of our revenues were earned in India. Sales of our products in these markets are generally at lower gross margins in comparison to other regions. Recently, network operators have started to share parts of their network infrastructure through cooperation agreements, which may adversely affect demand for network equipment. |
• | Transaction size. Competition for larger equipment orders is increasingly intensifying due to the fact that the number of large equipment orders in any year is limited. Consequently, we generally experience greater pricing pressure when we compete for larger orders as a result of this increased competition and demand from purchasers for greater volume discounts. As an increasing portion of our revenues is derived from large orders, we believe that our business will be more susceptible to these pressures. |
• | Revenue recognition; |
• | Inventory valuation; and |
• | Provision for doubtful accounts. |
Year Ended December 31 | ||||||||
2018 | 2019 | |||||||
Revenues | 100 | % | 100 | % | ||||
Cost of revenues | 66.2 | 66.1 | ||||||
Gross profit | 33.8 | 33.9 | ||||||
Operating expenses: | ||||||||
Research and development, net | 8.2 | 9.4 | ||||||
Selling and marketing | 12.5 | 13.8 | ||||||
General and administrative | 5.5 | 8.1 | ||||||
Total operating expenses | 26.2 | 31.3 | ||||||
Operating income | 7.6 | 2.5 | ||||||
Financial expenses and others, net | 1.8 | 2.3 | ||||||
Taxes on income (benefit) | (0.9 | ) | 0.9 | |||||
Equity loss in affiliates | - | 0.2 | ||||||
Net income (loss) | 6.7 | (0.8 | ) |
• | Lower material costs primarily due to lower volume of products revenues; while |
• | Partially offset by higher services subcontractors and employees’ costs, primarily resulting from an increased volume of services. |
B. | Liquidity and Capital Resources |
• | our net loss of $2.3 million; |
• | $24.8 million decrease in trade payables and accrued expenses; |
• | $9.5 million increase in inventories; and |
• | $0.3 million increase in deferred tax assets, net. |
• | $9.7 million of depreciation and amortization expenses; |
• | $7.8 million decrease in trade and other receivables, net; |
• | $4.2 million increase in deferred revenues paid in advance; |
• | $2.1 million share-based compensation expenses; and |
• | $0.3 million accrued severance pay and pensions, net. |
• | our net income of $23.0 million; |
• | $7.8 million of depreciation and amortization expenses; |
• | $4.4 million increase in trade payables and accrued expenses; and |
• | $2.0 million share-based compensation expenses. |
• | $16.5 million increase in trade and other receivables, net; |
• | $6.6 million increase in deferred tax assets, net; |
• | $0.6 million decrease in deferred revenues paid in advance; and |
• | $1.0 million increase in inventories. |
We believe that current working capital, cash and cash equivalent balances together with the Credit Facility available with the four financial institutions, will be sufficient for our expected requirements through at least the next 12 months.
C. | Research and Development |
D. | Trend Information |
E. | Off Balance Sheet Arrangements |
F. | Tabular Disclosure of Contractual Obligations |
Payments due by period (in thousands of dollars) | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Operating lease obligations1 | 11,494 | 5,723 | 3,613 | 1,299 | 859 | |||||||||||||||
Purchase obligations2 | 12,585 | 12,585 | - | - | - | |||||||||||||||
Other long-term commitment3 | 5,246 | 198 | 364 | 304 | 4,380 | |||||||||||||||
Uncertain income tax positions4 | 2,492 | - | - | - | 2,492 | |||||||||||||||
Total | 31,817 | 18,506 | 3,977 | 1,603 | 7,731 |
(1) | Consists of operating leases for our facilities and for vehicles. |
(2) | Consists of all outstanding purchase orders for our products from our suppliers. |
(3) | Our obligation for accrued severance pay under Israel’s Severance Pay Law as of December 31, 2019 was approximately $8.1 million, of which approximately $5.7 million was funded through deposits in severance pay funds, leaving a net commitment of approximately $2.4 million. In addition, the commitment includes a net amount of approximately $2.8 million in pension accruals in other subsidiaries, mainly in Norway. |
(4) | Uncertain income tax position under ASC 740-10, “Income Taxes,” are due upon settlement and we are unable to reasonably estimate the ultimate amount or timing of settlement. See Note 14g of our Consolidated Financial Statements for further information regarding the Company’s liability under ASC 740-10. |
A. | Directors and Senior Management |
Name | Age | Position | ||||
Zohar Zisapel | 71 | Chairman of the Board of Directors | ||||
Meir Sperling(1)(2) | 71 | Director | ||||
Shlomo Liran(2) | 69 | Director | ||||
Yael Langer | 55 | Director | ||||
Avi Berger (1)(2) | 57 | Director | ||||
Avi Eizenman(2) | 63 | Director | ||||
Ira Palti | 62 | President and Chief Executive Officer, Director | ||||
Ran Vered(4) | 41 | Chief Financial Officer | ||||
Oz Zimerman | 56 | Executive Vice President, Global Corporate Development | ||||
Shai Yaniv | 49 | Executive Vice President Marketing & 5G Business Development | ||||
Erez Schwartz(7) | 56 | Executive Vice President R&D | ||||
Guy Toibin(7) | 48 | Executive Vice President Chief Information Officer (CIO), IT | ||||
Muki Burla(7) | 46 | Executive Vice President Global Services | ||||
Zvi Maayan(8) | 53 | Executive Vice President, General Counsel & Corporate Secretary | ||||
Michal Goldstein(9) | 49 | Executive Vice President, Global Human Resources | ||||
Ram Prakash Tripathi | 53 | Regional President, India | ||||
Amit Ancikovsky | 49 | Regional President, North America and Latin America | ||||
Adrian Hipkiss(7) | 54 | Regional President, Europe and Oil & Gas | ||||
Mario Querner(7) | 58 | Regional President, Asia-Pacific and Arica | ||||
Nurit Kruk-Zilca(5) | 46 | Executive Vice President, Human Resources | ||||
Charles Meyo(6) | 56 | Regional President, North America | ||||
Doron Arazi(3) | 56 | Deputy Chief Executive Officer | ||||
Yuval Reina(3) | 53 | Chief Operating Officer | ||||
Flavio Perrucchetti(3) | 52 | Regional President, Europe |
(1) | External director until September 16, 2019 and thereafter an independent director. See “Opting Out of External Directors” below. |
(2) | Independent Director |
(3) | Ceased service as of December 31, 2019. |
(4) | Commencing April 1, 2019. |
(5) | Will cease serving on March 31, 2020. |
(6) | Ceased service as of February 29, 2020. |
(7) | Commencing January 1, 2020. |
(8) | Commencing November 3, 2019. |
(9) | Commencing March 1, 2020. |
Ira Palti has served as our President and Chief Executive Officer since August 2005 and as a Director since June 2018. From January 2003 to August 2005, Mr. Palti was Chief Executive Officer of Seabridge Ltd., a Siemens company that is a global leader in the area of broadband services and networks. Prior to joining Seabridge, he was the Chief Operating Officer of VocalTec Communications Ltd., responsible for sales, marketing, customer support and product development. Among the positions he held before joining VocalTec was founder of Rosh Intelligent Systems, a company providing software maintenance and AI diagnostic solutions and one of the first startups in Israel. Mr. Palti received a B.Sc. in mathematics and computer science (magna cum laude) from the Tel Aviv University.
B. | Compensation |
a) | Aggregate Executive Compensation |
• | Salary Costs. Salary Costs include gross salary, benefits and perquisites, including those mandated by applicable law which may include, to the extent applicable to each Covered Office Holder’s, payments, contributions and/or allocations for pension, severance, car or car allowance, medical insurance and risk insurance (e.g., life, disability, accidents), phone, convalescence pay, relocation, payments for social security, and other benefits consistent with the Company’s guidelines. |
• | Performance Bonus Costs. Performance Bonus Costs represent bonuses granted to the Covered Office Holder’s with respect to the year ended December 31, 2019, paid in accordance with the Covered Office Holder’s performance of targets as set forth in his bonus plan, as well as a proportionate amount of a retention bonus that is related to the reported year, and approved by the Company’s Compensation Committee and Board of Directors. |
• | Equity Costs represent the expense recorded in our financial statements for the year ended December 31, 2019, with respect to equity-based compensation granted in 2019 and in previous years. For assumptions and key variables used in the calculation of such amounts see note 2u of our audited consolidated financial statements. |
• | Ira Palti – CEO. Salary Costs - $378,607; Performance Bonus Costs - $0; Equity Costs - $337,264 |
• | Doron Arazi – Deputy CEO. Salary Cost - $470,245; Performance Bonus Cost - $21,400; Equity Costs - $105,833. |
• | Amit Ancikovsky – Regional President Latin America & Africa. Salary Costs - $324,000; Performance Bonus Costs - $136,493; Equity Costs - $83,850. |
• | Charles Meyo – Regional President North America. Salary Costs - $323,886; Performance Bonus Costs - $148,465; Equity Costs -$62,417. |
• | Flavio Perrucchetti – Regional President Europe. Salary Costs - $855,744; Performance Bonus Costs - $104,181; Equity Costs - $1,201. |
C. | Board Practices |
• | transactions with office holders and third parties, where an office holder has a personal interest in the transaction; |
• | employment terms of office holders; and |
• | extraordinary transactions with controlling parties, and extraordinary transactions with a third party where a controlling party has a personal interest in the transaction, or any transaction with the controlling shareholder or his relative regarding terms of service provided directly or indirectly (including through a company controlled by the controlling shareholder) and terms of employment (for a controlling shareholder who is not an office holder). A “relative” is defined in the Companies Law as spouse, sibling, parent, grandparent, descendant, spouse’s descendant, sibling or parent and the spouse of any of the foregoing. |
• | the majority of the shares of shareholders who have no personal interest in the transaction and who are present and voting, not taking into account any abstentions, vote in favor; or |
• | shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent of the aggregate voting rights in the company. |
• | a breach of his or her duty of care to us or to another person; |
• | a breach of his or her duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice our interests; |
• | monetary liabilities or obligations imposed upon him or her in favor of another person; and/or |
• | any other event, occurrence or circumstance in respect of which we may lawfully insure an office holder. |
• | a financial liability imposed on him or her in favor of another person by any judgment, including a settlement or an arbitration award approved by a court. |
• | reasonable litigation expenses, including attorney’s fees, incurred by the office holder as a result of an investigation or proceeding instituted against him by a competent authority which concluded without the filing of an indictment against him and without the imposition of any financial liability in lieu of criminal proceedings, or which concluded without the filing of an indictment against him but with the imposition of a financial liability in lieu of criminal proceedings concerning a criminal offense that does not require proof of criminal intent or in connection with a financial sanction (the phrases “proceeding concluded without the filing of an indictment” and “financial liability in lieu of criminal proceeding” shall have the meaning ascribed to such phrases in section 260(a)(1a) of the Companies Law); |
• | reasonable litigation expenses, including attorneys’ fees, expended by an office holder or charged to the office holder by a court, in a proceeding instituted against the office holder by the Company or on its behalf or by another person, or in a criminal charge from which the office holder was acquitted, or in a criminal proceeding in which the office holder was convicted of an offense that does not require proof of criminal intent; |
• | expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or payment required to be made to an injured party, pursuant to certain provisions of the Securities Law; and/or |
• | any other event, occurrence or circumstance in respect of which we may lawfully indemnify an office holder. |
• | a breach by the office holder of his or her duty of loyalty, except that the company may enter into an insurance contract or indemnify an office holder if the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach by the office holder of his or her duty of care, if such breach was intentional or reckless, but unless such breach was solely negligent; |
• | any act or omission intended to derive an illegal personal benefit; or |
• | any fine civil fine, financial sanction or monetary settlement in lieu of criminal proceedings imposed on such office holder. |
D. | Employees |
Name | Number of Ordinary Shares(1) | Percentage of Outstanding Ordinary Shares | Number of Stock Options Held(2) | Exercise price of Options | Number of RSUs Held(2) | |||||||||||||||
Zohar Zisapel(3) | 10,543,885 | 13.04 | 300,000 | $ | 2.02 - 11.10 | - | ||||||||||||||
Ira Palti | 1,018,754 | 1.26 | 1,375,000 | $ | 2.06 - 13.04 | - | ||||||||||||||
All directors and senior management as a group consisting of 24 people(4) | 12,813,137 | 15.85 | 3,716,867 | $ | 1.14 - 13.04 | 68,276 |
(1) | Consists of ordinary shares and options to purchase ordinary shares which are vested or shall become vested within 60 days of March 24, 2020. |
(2) | Each stock option is exercisable into one ordinary share and expires between 6 and 10 years from the date of its grant. Of the number of stock options listed, 300,000, 1,018,754 and 2,569,252 options, are vested or shall become vested within 60 days of March 24, 2020 for Mr. Zisapel, Mr. Palti and all directors and senior management as a group, respectively. No RSUs are expected to vest within 60 days of March 24, 2020. |
(3) | The number of ordinary shares held by Zohar Zisapel includes (i) 5,494,015 ordinary shares held by Mr. Zohar Zisapel, (ii) 2,231,153 ordinary shares held by Lomsha Ltd., an Israeli company wholly owned by Mr. Zohar Zisapel, (iii) 2,500,000 ordinary shares held by Michael & Klil Holdings (93) Ltd. an Israeli company, wholly owned by Mr. Zohar Zisapel, (iv) 18,717 ordinary shares held by RAD Data Communications Ltd., an Israeli company of which Mr. Zisapel is a principal shareholder and a director, and (v) 300,000 ordinary shares issuable upon exercise of options, with an average exercise price per share of $5.07, expiring between the years 2020 and 2025. This information is based on information provided to the Company by Mr. Zohar Zisapel. |
(4) | Each of the directors and senior management other than Messrs. Zohar Zisapel and Ira Palti, beneficially owns less than 1% of the outstanding ordinary shares as of March 24, 2020 (including options held by each such person and which are vested or shall become vested within 60 days of March 24, 2020) and have therefore not been separately listed. |
Cumulative Ordinary Shares Reserved for Option and RSU Grants (1) | Remaining Reserved Shares Available for Option and RSU Grants | Options and RSUs Outstanding (2) | Weighted Average Exercise Price (3) | |||||||
24,895,688 | 1,273,936 | 7,449,223 | $ | 3.71 |
(1) | Total of 2,230,871 relates to RSU grants and 22,664,817 relates to options grants |
(2) | Total of 373,623 relates to RSUs outstanding and 7,075,600 relates to options outstanding |
(3) | Weighted average price refers only to options |
Options and RSUs Outstanding | Unvested Options and RSUs | |||||||
Directors and senior management | 4,130,185 | 1,490,460 | ||||||
All other grantees | 3,319,038 | 1,390,010 |
Name | Number of Ordinary Shares(2) | Percentage of Outstanding Ordinary Shares(1) | ||||||
Zohar Zisapel (3) | 10,543,885 | 13.04 | % | |||||
Joseph D. Samberg (4) | 8,100,065 | 10.02 | % |
(1) | Based on 80,852,309 ordinary shares outstanding as of March 24, 2020. |
(2) | Consists of ordinary shares and options to purchase ordinary shares, which are vested or shall become vested within 60 days as of March 24, 2020. |
(3) | Zohar Zisapel’s address is 24 Raoul Wallenberg St., Tel Aviv 69719, Israel. The ordinary shares held by Zohar Zisapel includes (i) 5,494,015 ordinary shares held by Mr. Zohar Zisapel, (ii) 2,231,153 ordinary shares held by Lomsha Ltd., an Israeli company wholly owned by Mr. Zohar Zisapel, (iii) 2,500,000 ordinary shares held by Michael & Klil Holdings (93) Ltd. an Israeli company, wholly owned by Mr. Zohar Zisapel, (iv) 18,717 ordinary shares held by RAD Data Communications Ltd., an Israeli company of which Mr. Zisapel is a principal shareholder and a director, and (v) 300,000 ordinary shares issuable upon exercise of options, with an average exercise price per share of $5.07, expiring between the years 2020 and 2025. This information is based on information provided to the Company by Mr. Zohar Zisapel. |
(4) | Joseph D. Samberg’s address is 1091 Boston Post Road, Rye, NY 10580. |
• | the holders of the ordinary shares resulting from the conversion of such preferred shares; and |
• | Yehuda Zisapel and Zohar Zisapel. |
Tax Year | Development "Zone A" | Other Areas within Israel | Regular Corporate Tax Rate |
2011-2012 | 10% | 15% | 24%-25% |
2013 | 7% | 12.5% | 25% |
2014-2015 | 9% | 16% | 26.5% |
2016 | 9% | 16% | 25% |
2017 | 7.5% | 16% | 24% |
2018 | 7.5% | 16% | 23% |
2019 | 7.5% | 16% | 23% |
2020 | 7.5% | 16% | 23% |
• | the expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
• | the research and development is for the promotion or development of the company; and |
• | the research and development is carried out by or on behalf of the company seeking the deduction. |
• | deduction of purchases of know-how, patents and the right to use a patent over an eight-year period for tax purposes; |
• | deduction over a three-year period of specified expenses incurred with the issuance and listing of shares on the Tel Aviv Stock Exchange or on a recognized stock exchange outside of Israel (including Nasdaq); |
• | the right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial companies; and |
• | accelerated depreciation rates on equipment and buildings. |
• | holds the ordinary shares as a capital asset; |
• | qualifies as a resident of the United States within the meaning of the U.S.-Israel tax treaty; and |
• | is entitled to claim the benefits available to the person by the U.S.-Israel tax treaty. |
• | an individual citizen or resident of the United States; |
• | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any political subdivision thereof or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
• | a trust (i) if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person. |
• | are broker-dealers or insurance companies; |
• | have elected mark-to-market accounting; |
• | are tax-exempt organizations or retirement plans; |
• | are grantor trusts; |
• | are S corporations; |
• | are certain former citizens or long-term residents of the United States; |
• | are financial institutions; |
• | hold ordinary shares as part of a straddle, hedge or conversion transaction with other investments; |
• | acquired their ordinary shares upon the exercise of employee stock options or otherwise as compensation; |
• | are real estate investment trusts or regulated investment companies; |
• | own directly, indirectly or by attribution at least 10% of our shares (by vote or value); or |
• | have a functional currency that is not the U.S. dollar. |
• | the item is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States and, in the case of a resident of a country which has a treaty with the United States, the item is attributable to a permanent establishment, or in the case of an individual, the item is attributable to a fixed place of business in the United States; or |
• | the non-U.S. holder is an individual who holds the ordinary shares as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition, and certain other conditions are met. |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES. |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS. |
ITEM 15. | CONTROLS AND PROCEDURES |
(a) | Disclosure Controls and Procedures |
(b) | Management’s Annual Report on Internal Control Over Financial Reporting |
(i) | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
(ii) | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
(iii) | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
(d) | Changes in Internal Controls Over Financial Reporting |
Year Ended December 31, | ||||||||||||||||
2018 | 2019 | |||||||||||||||
Services Rendered | Fees | Percentages | Fees | Percentages | ||||||||||||
Audit Fees (1) | $ | 678,000 | 83 | % | $ | 763,000 | 57 | % | ||||||||
Audit related fees (2) | $ | - | - | $ | 450,000 | 33 | % | |||||||||
Tax Fees (3) | $ | 117,500 | 14 | % | $ | 115,000 | 8 | % | ||||||||
Other Services (4) | $ | 22,000 | 3 | % | $ | 22,000 | 2 | % | ||||||||
Total | $ | 817,500 | 100 | % | $ | 1,350,000 | 100 | % |
(1) | Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements, including services that generally only the independent accountant can reasonably provide. |
(2) | Audit related fees principally relates to assistance with audit services and consultation |
(3) | Tax fees relate to tax compliance, planning and advice |
(4) | Other consulting services |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
- | Compensation Committee Charter: We have opted out of the requirement to adopt and file a compensation committee charter as set forth in Nasdaq Rule 5605(d)(1). Instead, our Compensation Committee conducts itself in accordance with provisions governing the establishment (but not the composition) and the responsibilities of a compensation committee as set forth in the Companies Law and as further stipulated in our Compensation Policy. |
- | Shareholder Approval: We have opted out of the requirement for shareholder approval of stock option plans and other equity-based compensation arrangements as set forth in Nasdaq Rule 5635. Nevertheless, as required under the Companies Law, shareholder voting procedures are followed for the approval of equity-based compensation of certain office holders or employees, such as our CEO and members of our Board of Directors. Equity based compensation arrangements with other office holders are approved by our Compensation Committee and our Board of Directors, provided they are consistent with our Compensation Policy, and in special circumstances in deviation therefrom, taking into account certain considerations as set forth in the Companies Law. |
- | Annual General Meetings of Shareholders: We have opted out of the requirement for conducting annual meetings as set forth in Nasdaq Rule 5620(a), which requires Ceragon to hold its annual meetings of shareholders within twelve months of the end of its fiscal year end. Instead, Ceragon is following home country practice and law in this respect. The Companies Law requires that an annual meeting of shareholders be held every year, and not later than 15 months following the last annual meeting (see in Item 10.B above –”Additional Information –Voting, Shareholders’ Meetings and Resolutions”). |
- | Quorum at General Meetings of Shareholders: We have opted out of the requirement set under Rule 5620(c) of the Nasdaq Rules, which requires the presence of two or more shareholders holding at least 33 1/3%, and in lieu follow our home country practice and Israeli law, according to which the quorum for any shareholders meeting will be the presence (in person or by Proxy) of two or more shareholders holding at least 25% of the voting rights in the aggregate - within half an hour from the time set for opening the meeting. |
- | Distribution of Annual Reports: We have chosen to follow our home country practice in lieu of the requirements of Nasdaq Rule 5250(d)(1), relating to an issuer’s furnishing of its annual report to shareholders. Specifically, we file annual reports on Form 20-F, which contain financial statements audited by an independent accounting firm, electronically with the SEC, and also post a copy on our website. |
ITEM 17. | FINANCIAL STATEMENTS |
ITEM 18. | FINANCIAL STATEMENTS |
Index to Consolidated Financial Statements | Page |
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F-7 | |
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F-12 - F-49 |
101 | The following financial information from Ceragon Networks Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017; (ii) Consolidated Statements of Comprehensive Income (Loss) at December 31, 2019, 2018 and 2017; (iii) Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017; and (v) Notes to Consolidated Financial Statements. Users of this data are advised, in accordance with Rule 406T of Regulation S-T promulgated by the SEC, that this Interactive Data File is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections. |
Page | |
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F-10 - F-11 | |
F-12 - F-49 |
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
A Member of EY Global
Tel-Aviv, Israel
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
A Member of EY Global
December 31, | |||||||||||
Note | 2018 | 2019 | |||||||||
ASSETS | |||||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents | $ | 35,581 | $ | 23,939 | |||||||
Short- term bank deposits | 515 | - | |||||||||
Trade receivables (net of allowance for doubtful accounts of $ 4,327 and $ 4,236 at December 31, 2018 and 2019, respectively) | 123,451 | 118,531 | |||||||||
Other accounts receivable and prepaid expenses | 3 | 12,135 | 11,033 | ||||||||
Inventories | 4 | 53,509 | 62,132 | ||||||||
Total current assets | 225,191 | 215,635 | |||||||||
NON-CURRENT ASSETS: | |||||||||||
Long-term bank deposits | 504 | 17 | |||||||||
Deferred tax assets | 14e | 7,476 | 8,106 | ||||||||
Severance pay and pension fund | 5,096 | 5,661 | |||||||||
Other non-current assets | 4,544 | 17,707 | |||||||||
PROPERTY AND EQUIPMENT, NET | 5 | 33,613 | 34,865 | ||||||||
INTANGIBLE ASSETS, NET | 6 | 6,576 | 7,898 | ||||||||
Total long-term assets | 57,809 | 74,254 | |||||||||
Total assets | $ | 283,000 | $ | 289,889 |
December 31, | |||||||||||
Note | 2018 | 2019 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
CURRENT LIABILITIES: | |||||||||||
Trade payables | 78,892 | 59,635 | |||||||||
Deferred revenues | 3,873 | 1,734 | |||||||||
Short-term loans | 8 | - | 14,600 | ||||||||
Other accounts payable and accrued expenses | 7 | 27,436 | 28,399 | ||||||||
Total current liabilities | 110,201 | 104,368 | |||||||||
LONG-TERM LIABILITIES: | |||||||||||
Deferred tax liability | 14e | 28 | - | ||||||||
Accrued severance pay and pensions | 9,531 | 10,709 | |||||||||
Deferred revenues | - | 6,265 | |||||||||
Other long-term payables | 3,672 | 8,126 | |||||||||
Total long-term liabilities | 13,231 | 25,100 | |||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | 11 | ||||||||||
SHAREHOLDERS' EQUITY: | 13 | ||||||||||
Share capital - | |||||||||||
Ordinary shares of NIS 0.01 par value - | |||||||||||
Authorized: 120,000,000 shares at December 31, 2018 and 2019; Issued: 83,571,181 and 84,144,328 shares at December 31, 2018 and 2019, respectively; Outstanding: 80,089,658 and 80,662,805 shares at December 31, 2018 and 2019, respectively | 214 | 215 | |||||||||
Additional paid-in capital | 415,408 | 418,062 | |||||||||
Treasury shares at cost – 3,481,523 ordinary shares as of December 31, 2018 and 2019 | (20,091 | ) | (20,091 | ) | |||||||
Accumulated other comprehensive loss | (9,208 | ) | (8,666 | ) | |||||||
Accumulated deficit | (226,755 | ) | (229,099 | ) | |||||||
Total shareholders' equity | 159,568 | 160,421 | |||||||||
Total liabilities and shareholders' equity | $ | 283,000 | $ | 289,889 |
Year ended December 31, | |||||||||||||||
Note | 2017 | 2018 | 2019 | ||||||||||||
Revenues | 15 | $ | 332,033 | $ | 343,874 | $ | 285,583 | ||||||||
Cost of revenues | 224,698 | 227,705 | 188,741 | ||||||||||||
Gross profit | 107,335 | 116,169 | 96,842 | ||||||||||||
Operating expenses: | |||||||||||||||
Research and development, net | 25,703 | 28,180 | 26,793 | ||||||||||||
Selling and marketing | 41,656 | 42,961 | 39,469 | ||||||||||||
General and administrative | 16,830 | 18,884 | 23,278 | ||||||||||||
Total operating expenses | 84,189 | 90,025 | 89,540 | ||||||||||||
Operating income | 23,146 | 26,144 | 7,302 | ||||||||||||
Financial expenses and others, net | 17 | 5,889 | 6,349 | 6,521 | |||||||||||
Income before taxes on income | 17,257 | 19,795 | 781 | ||||||||||||
Taxes on income (benefit) | 14d | 1,697 | (3,251 | ) | 2,476 | ||||||||||
Equity loss in affiliates | - | - | 649 | ||||||||||||
Net income (loss) | $ | 15,560 | $ | 23,046 | $ | (2,344 | ) | ||||||||
Net Income (loss) per share: | |||||||||||||||
Basic net income (loss) per share | $ | 0.20 | $ | 0.29 | $ | (0.03 | ) | ||||||||
Diluted net income (loss) per share | $ | 0.19 | $ | 0.28 | $ | (0.03 | ) | ||||||||
Weighted average number of ordinary shares used in computing basic net income (loss) per share | 77,916,912 | 78,579,013 | 80,296,581 | ||||||||||||
Weighted average number of ordinary shares used in computing diluted net income (loss) per share | 79,942,353 | 81,021,527 | 80,296,581 |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Net income (loss) | $ | 15,560 | $ | 23,046 | $ | (2,344 | ) | |||||
Other comprehensive income (loss): | ||||||||||||
Change in foreign currency translation adjustment | 118 | (1,150 | ) | (360 | ) | |||||||
Cash flow hedges: | ||||||||||||
Change in net unrealized gains (losses) | 2,331 | (2,260 | ) | 1,797 | ||||||||
Amounts reclassified into net income (loss) | (1,772 | ) | 1,373 | (895 | ) | |||||||
Net change | 559 | (887 | ) | 902 | ||||||||
Other comprehensive income (loss), net | 677 | (2,037 | ) | 542 | ||||||||
Total of comprehensive income (loss) | $ | 16,237 | $ | 21,009 | $ | (1,802 | ) |
Ordinary shares | Share capital | Additional paid-in capital | Treasury shares at cost | Accumulated other comprehensive loss | Accumulated deficit | Total shareholders' equity | ||||||||||||||||||||||
Balance as of January 1, 2017 | 77,768,929 | $ | 214 | $ | 409,320 | $ | (20,091 | ) | $ | (7,848 | ) | $ | (265,431 | ) | $ | 116,164 | ||||||||||||
Exercise of options and vesting of RSU's | 276,263 | *)- | 294 | - | - | - | 294 | |||||||||||||||||||||
Share-based compensation expense | - | - | 1,203 | - | - | - | 1,203 | |||||||||||||||||||||
Other comprehensive income, net | - | - | - | - | 677 | - | 677 | |||||||||||||||||||||
Net income | - | - | - | - | - | 15,560 | 15,560 | |||||||||||||||||||||
Balance as of December 31, 2017 | 78,045,192 | 214 | 410,817 | (20,091 | ) | (7,171 | ) | (249,871 | ) | 133,898 | ||||||||||||||||||
Cumulative effect of the new revenue recognition standard | - | - | - | - | - | 70 | 70 | |||||||||||||||||||||
Exercise of options and vesting of RSU's | 2,044,466 | *)- | 2,611 | - | - | - | 2,611 | |||||||||||||||||||||
Share-based compensation expense | - | - | 1,980 | - | - | - | 1,980 | |||||||||||||||||||||
Other comprehensive loss, net | - | - | - | - | (2,037 | ) | - | (2,037 | ) | |||||||||||||||||||
Net income | - | - | - | - | - | 23,046 | 23,046 | |||||||||||||||||||||
Balance as of December 31, 2018 | 80,089,658 | 214 | 415,408 | (20,091 | ) | (9,208 | ) | (226,755 | ) | 159,568 | ||||||||||||||||||
Exercise of options and vesting of RSU's | 573,147 | 1 | 601 | - | - | - | 602 | |||||||||||||||||||||
Share-based compensation expense | - | - | 2,053 | - | - | - | 2,053 | |||||||||||||||||||||
Other comprehensive income, net | - | - | - | - | 542 | - | 542 | |||||||||||||||||||||
Net loss | - | - | - | - | - | (2,344 | ) | (2,344 | ) | |||||||||||||||||||
Balance as of December 31, 2019 | 80,662,805 | $ | 215 | $ | 418,062 | $ | (20,091 | ) | $ | (8,666 | ) | $ | (229,099 | ) | $ | 160,421 |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 15,560 | $ | 23,046 | $ | (2,344 | ) | |||||
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation and amortization | 9,205 | 7,758 | 9,691 | |||||||||
Share-based compensation expense | 1,203 | 1,980 | 2,053 | |||||||||
Accrued severance pay and pensions, net | 3 | (11 | ) | 271 | ||||||||
Decrease (increase) in trade receivables, net | (6,403 | ) | (11,098 | ) | 4,533 | |||||||
Decrease (increase) in other accounts receivable and prepaid expenses (including other long term assets) | (259 | ) | 4,624 | 3,262 | ||||||||
Increase in inventories | (8,592 | ) | (956 | ) | (9,475 | ) | ||||||
Increase (decrease) in trade payables | 4,836 | 2,340 | (15,933 | ) | ||||||||
Increase (decrease) in deferred revenues | 2,575 | (650 | ) | 4,150 | ||||||||
Decrease (increase) in deferred tax assets, net | 497 | (6,601 | ) | (258 | ) | |||||||
Increase (decrease) in other accounts payable and accrued expenses (including other long term liabilities) | (1,474 | ) | 2,062 | (8,881 | ) | |||||||
Net cash provided by (used in) operating activities | 17,151 | 22,494 | (12,931 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||
Purchase of property and equipment, net | (8,533 | ) | (10,303 | ) | (11,592 | ) | ||||||
Purchase of intangible assets, net | (1,407 | ) | (3,412 | ) | (3,274 | ) | ||||||
Proceeds from (repayment of) bank deposits | (996 | ) | 48 | 1,002 | ||||||||
Investment in shares | - | (1,628 | ) | - | ||||||||
Net cash used in investing activities | (10,936 | ) | (15,295 | ) | (13,864 | ) |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from (repayment of) bank credits and loans, net | (17,000 | ) | - | 14,600 | ||||||||
Proceeds from exercise of stock options | 294 | 2,611 | 602 | |||||||||
Net cash (used in) provided by financing activities | (16,706 | ) | 2,611 | 15,202 | ||||||||
Translation adjustments on cash and cash equivalents | 30 | (106 | ) | (49 | ) | |||||||
Increase (decrease) in cash and cash equivalents | (10,461 | ) | 9,704 | (11,642 | ) | |||||||
Cash and cash equivalents at the beginning of the year | 36,338 | 25,877 | 35,581 | |||||||||
Cash and cash equivalents at the end of the year | $ | 25,877 | $ | 35,581 | $ | 23,939 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for income taxes | $ | 2,493 | $ | 1,617 | $ | 3,833 | ||||||
Cash paid for interest on bank loans | $ | 1,837 | $ | 1,752 | $ | 1,796 |
NOTE 1:- | GENERAL |
a. | Ceragon Networks Ltd. ("the Company") is a wireless backhaul specialist. It provides wireless backhaul solutions that enable cellular operators and other wireless service providers to deliver voice and data services, enabling smart-phone applications such as internet browsing, social networking applications, image sharing, music and video applications. Its wireless backhaul solutions use microwave radio technology to transfer large amounts of telecommunication traffic between base stations and small-cells and the core of the service provider's network. The Company also provides wireless fronthaul solutions that use microwave technology for ultra-high speed, ultra-low latency communication for wireless 5G and 4G base stations. |
b. | Investment in Compass Network Ltd: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES |
a. | Basis of presentation: |
b. | Use of estimates: |
c. | Financial statements in U.S. dollars: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
d. | Principles of consolidation: |
e. | Cash equivalents: |
f. | Short term bank deposits: |
g. | Long-term bank deposits: |
h. | Inventories: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
i. | Property and equipment: |
% | |
Computers, manufacturing and peripheral equipment | 6 – 33 |
Office furniture and equipment | Mainly 15 |
Leasehold improvements | Over the shorter of the term of the lease or useful life of the asset |
j. | Impairment of long-lived assets: |
k. | Income taxes: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
l. | Intangible assets, net: |
m. | Revenue recognition: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
o. | Warranty costs: |
p. | Derivative instruments: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
q. | Concentrations of credit risk: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
t. | Severance pay: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
December 31, | ||||||
2017 | 2018 | 2019 | ||||
Dividend yield | 0% | 0% | 0% | |||
Volatility | 53%-69% | 53%-62% | 53%-65% | |||
Risk free interest | 0.8%-2.2% | 1.8%-2.9% | 1.2%-2.7% | |||
Early exercise multiple | 2.10-2.20 | 2.00-2.30 | 1.30-2.30 |
v. | Fair value of financial instruments: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Level 1 - | Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. |
Level 2 - | Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
Level 3 - | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
w. | Comprehensive income: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Unrealized Gains (Losses) on Cash Flow Hedges | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance as of January 1, 2019 | $ | (584 | ) | $ | (8,624 | ) | $ | (9,208 | ) | |||
Other comprehensive income before reclassifications | 1,797 | (360 | ) | 1,437 | ||||||||
Amounts reclassified from AOCI | (895 | ) | - | (895 | ) | |||||||
Other comprehensive income | 902 | (360 | ) | 542 | ||||||||
Balance as of December 31, 2019 | $ | 318 | $ | (8,984 | ) | $ | (8,666 | ) |
y. | Basic and diluted net earnings per share: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
ab. | Fair value measurement: |
December 31, 2019 | ||||||||
Fair value measurements using input type | ||||||||
Level 2 | Total | |||||||
Derivatives instruments | $ | 260 | $ | 260 | ||||
Total Assets | $ | 260 | $ | 260 |
December 31, 2018 | ||||||||
Fair value measurements using input type | ||||||||
Level 2 | Total | |||||||
Derivatives instruments | $ | (1,028 | ) | $ | (1,028 | ) | ||
Total liabilities | $ | (1,028 | ) | $ | (1,028 | ) |
NOTE 3:- | OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES |
December 31, | ||||||||
2018 | 2019 | |||||||
Government authorities | $ | 6,573 | $ | 5,168 | ||||
Deferred charges and prepaid expenses | 3,186 | 3,639 | ||||||
Deposits receivable | 367 | 532 | ||||||
Advances to suppliers | 812 | 357 | ||||||
Hedging asset | 5 | 372 | ||||||
Other | 1,192 | 965 | ||||||
$ | 12,135 | $ | 11,033 |
NOTE 4:- | INVENTORIES |
December 31, | ||||||||
2018 | 2019 | |||||||
Raw materials | $ | 15,065 | $ | 18,211 | ||||
Work in progress | 374 | 349 | ||||||
Finished products | 38,070 | 43,572 | ||||||
$ | 53,509 | $ | 62,132 |
December 31, | ||||||||
2018 | 2019 | |||||||
Cost: | ||||||||
Computers, manufacturing, peripheral equipment | $ | 111,012 | $ | 120,796 | ||||
Office furniture and equipment | 2,201 | 1,925 | ||||||
Leasehold improvements | 1,410 | 1,716 | ||||||
114,623 | 124,437 | |||||||
Accumulated depreciation: | ||||||||
Computers, manufacturing, peripheral equipment | 78,317 | 86,892 | ||||||
Office furniture and equipment | 1,856 | 1,577 | ||||||
Leasehold improvements | 837 | 1,103 | ||||||
81,010 | 89,572 | |||||||
Depreciated cost | $ | 33,613 | $ | 34,865 |
December 31, | ||||||||
2018 | 2019 | |||||||
Original amounts: | ||||||||
Technology | $ | 13,109 | $ | 13,755 | ||||
Software development costs | 2,067 | 2,879 | ||||||
15,176 | 16,634 | |||||||
Accumulated amortization: | ||||||||
Technology | 8,600 | 8,600 | ||||||
Software development costs | - | 136 | ||||||
8,600 | 8,736 | |||||||
Net amounts: | ||||||||
Technology | 4,509 | 5,155 | ||||||
Software development costs | 2,067 | 2,743 | ||||||
Intangible assets, net | $ | 6,576 | $ | 7,898 |
NOTE 7:- | OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
December 31, | ||||||||
2018 | 2019 | |||||||
Employees and payroll accruals | $ | 15,389 | $ | 12,321 | ||||
Provision for warranty costs | 2,106 | 1,452 | ||||||
Government authorities | 2,450 | 2,071 | ||||||
Accrued expenses | 3,529 | 3,675 | ||||||
Advanced payments from customers | 1,864 | 1,731 | ||||||
Hedging Liability | 1,033 | 112 | ||||||
Lease liabilities | - | 5,644 | ||||||
Other | 1,065 | 1,393 | ||||||
$ | 27,436 | $ | 28,399 |
NOTE 9:- | DERIVATIVE INSTRUMENTS |
Other accounts receivable and prepaid expenses | Other accounts payable and accrued expenses | |||||||
December 31, 2019 | ||||||||
Derivatives designated as hedging instruments | ||||||||
Currency forward contracts | $ | 318 | $ | - | ||||
Derivatives not designated as hedging instruments | ||||||||
Currency forward and option contracts | $ | 55 | $ | 112 | ||||
Total derivatives | $ | 373 | $ | 112 |
Other accounts receivable and prepaid expenses | Other accounts payable and accrued expenses | |||||||
December 31, 2018 | ||||||||
Derivatives designated as hedging instruments | ||||||||
Currency forward contracts | $ | 3 | $ | 587 | ||||
Derivatives not designated as hedging instruments | ||||||||
Currency forward and option contracts | $ | 2 | $ | 446 | ||||
Total derivatives | $ | 5 | $ | 1,033 |
Year ended December 31, | ||||||||
2018 | 2019 | |||||||
Operating income (expenses) | $ | (1,373 | ) | $ | 895 | |||
Financial income (expenses) | $ | 1,172 | $ | (207 | ) |
NOTE 10:- | PENSION LIABILITIES, NET |
December 31, | ||||||||
2018 | 2019 | |||||||
Change in projected benefit obligation | ||||||||
Projected benefit obligation at beginning of year | $ | 2,123 | $ | 2,177 | ||||
Service cost | 16 | 12 | ||||||
Interest cost | 47 | 47 | ||||||
Expenses paid | (227 | ) | (203 | ) | ||||
Exchange rates differences | 121 | (26 | ) | |||||
Actuarial loss | 97 | 361 | ||||||
Projected benefit obligation at end of year | $ | 2,177 | $ | 2,368 |
NOTE 10:- | PENSION LIABILITIES, NET (Cont.) |
December 31, | ||||||||
2018 | 2019 | |||||||
Weighted-average assumptions | ||||||||
Discount rate | 2.60 | % | 2.30 | % | ||||
Rate of compensation increase | 2.75 | % | 2.25 | % |
December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Components of net periodic benefit cost | ||||||||||||
Service cost | $ | 18 | $ | 16 | $ | 12 | ||||||
Interest cost | 47 | 47 | 47 | |||||||||
Net periodic benefit cost | $ | 65 | $ | 63 | $ | 59 |
December 31, | ||||
2019 | ||||
2020 | 198 | |||
2021 | 202 | |||
2022 | 162 | |||
2023 | 152 | |||
2024 and thereafter | 1,654 | |||
$ | 2,368 |
NOTE 11:- | COMMITMENTS AND CONTINGENT LIABILITIES |
a. | Leases |
b. | During 2017, 2018 and 2019, the Company received several grants from the Israeli Innovation Authority ("IIA"). The grants require the Company to comply with the requirements of the Research and Development Law, however, the Company is not obligated to pay royalties on sales of products based on technology or know how developed from the grants. In a case involving the transfer of technology or know how developed from the grants outside of Israel, the Company may be required to pay royalties related to past sales of products based on the technology or the developed know how. The Company recorded income from IIA grants for the years ended December 31, 2017, 2018 and 2019 in the amount of $ 1,548, $ 1,174 and $ 801, respectively. |
c. | Charges and guarantees: |
d. | In September 2018, the Company signed commercial agreements with Orocom, a new operator in Peru, to provide broadband connectivity in rural regions. The Peruvian Government (“Fitel”) chose Orocom for the deployment of transport and broadband access networks in three of six regions in Peru. Orocom is owned by a consortium of companies, comprising telecommunications license holders as well as companies with expertise in fiber-based technologies. |
NOTE 11:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
Provisions of the operating agreement mentioned above grant the Company certain protective rights in Orocom during the network build-out phase and until the bank guarantees are returned to the Company, as well as recovery rights against Orocom and its shareholders. Based on the above, Orocom and its shareholders were defined as related companies. For more information see Note 18. The Company and Orocom are in discussion regarding the effect of the return of the bank guarantees. |
e. | Litigations: |
NOTE 11:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
NOTE 11:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
NOTE 12:- | LEASES |
NOTE 12:- | LEASES (cont.) |
December 31, 2018 | Adjustments | January 1, 2019 | ||||||||||
Other non-current assets | $ | 4,544 | $ | 7,129 | $ | 11,673 | ||||||
Other accounts payable and accrued expenses | $ | (27,256 | ) | $ | (4,952 | ) | $ | (32,208 | ) | |||
Other long-term payables | $ | (3,672 | ) | $ | (2,177 | ) | $ | (5,849 | ) |
December 31, 2019 | ||||
Other non-current assets | $ | 10,128 | ||
Other accounts payable and accrued expenses | $ | (5,644 | ) | |
Other long-term payables | $ | (4,718 | ) |
Year ended December 31, 2019 | ||||
Components of lease expense | ||||
Operating lease cost | $ | 5,624 | ||
Short-term lease | $ | 75 | ||
Total lease expenses | $ | 5,699 |
Year ended December 31, 2019 | ||||
Supplemental cash flow information | ||||
Cash paid for amounts included in the measurement of lease liabilities | $ | 5,718 | ||
Supplemental non-cash information related to lease liabilities arising from | ||||
obtaining ROU assets | $ | 8,346 |
NOTE 12:- | LEASES (cont.) |
2020 | $ | 5,723 | ||
2021 | 2,062 | |||
2022 | 1,551 | |||
2023 | 1,004 | |||
2024 and thereafter | 1,154 | |||
Total operating lease payments | 11,494 | |||
Less: imputed interest | 1,132 | |||
Present value of lease liability | $ | 10,362 |
NOTE 13:- | SHAREHOLDERS' EQUITY |
a. | General: |
b. | Stock options plans: |
1. | In 2003, the Company adopted a share option plan (the "Plan"). Under the Plan, options and RSU's may be granted to officers, directors, employees and consultants of the Company or its subsidiaries. The options vest primarily over four years. The options expire between six to ten years from the date of grant. In December 2012, the Company extended the term of the Plan for an additional period of ten years. |
2. | On September 6, 2010, the Company's board of directors amended the Plan so as to enable to grant Restricted Share Units ("RSUs") pursuant to such Plan. |
NOTE 13:- | SHAREHOLDERS' EQUITY (Cont.) |
3. | The following table summarizes the activities for the Company’s stock options for the year ended December 31, 2019: |
Year ended December 31, 2019 | ||||||||||||||||
Number of options | Weighted average exercise price | Weighted average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
Outstanding at beginning of year | 6,751,606 | $ | 3.99 | 3.47 | $ | 7,937 | ||||||||||
Granted | 1,435,333 | 2.46 | ||||||||||||||
Exercised | (422,311 | ) | 1.42 | |||||||||||||
Forfeited or expired | (689,028 | ) | 5.97 | |||||||||||||
Outstanding at end of the year | 7,075,600 | $ | 3.64 | 3.30 | $ | 1,366 | ||||||||||
Options exercisable at end of the year | 4,568,753 | $ | 4.25 | 2.42 | $ | 1,242 | ||||||||||
Vested and expected to vest | 6,635,385 | $ | 3.77 | 3.17 | $ | 1,362 |
Year ended December 31, 2019 | ||||||||
Number of RSUs | Aggregate intrinsic value | |||||||
Unvested at beginning of year | 376,811 | $ | 1,424 | |||||
Granted | 182,874 | |||||||
Vested | (152,393 | ) | ||||||
Forfeited | (33,669 | ) | ||||||
Unvested at end of the year | 373,623 | 785 | ||||||
Vested and expected to vest | 280,061 | 588 |
NOTE 13:- | SHAREHOLDERS' EQUITY (Cont.) |
Exercise price (range) | Options and RSUs outstanding as of December 31, 2019 | Weighted average remaining contractual life (years) for outstanding options | Weighted average exercise price | Options and RSUs exercisable as of December 31, 2019 | Weighted average remaining contractual life (years) for exercisable options | Weighted average exercise price | |||||||||||||||||||
$ | $ | $ | |||||||||||||||||||||||
RSUs 0.0 | 373,623 | - | 0.00 | - | - | 0.00 | |||||||||||||||||||
0.01-2.00 | 1,520,110 | 1.73 | 1.21 | 1,362,569 | 1.61 | 1.20 | |||||||||||||||||||
2.01-4.00 | 4,159,085 | 4.31 | 2.73 | 1,905,266 | 3.45 | 2.70 | |||||||||||||||||||
4.01-6.00 | 325,321 | 3.62 | 4.59 | 229,834 | 2.98 | 4.75 | |||||||||||||||||||
6.01-8.00 | 31,000 | 2.72 | 6.50 | 31,000 | 2.72 | 6.50 | |||||||||||||||||||
8.01-10.00 | 459,334 | 2.19 | 8.99 | 459,334 | 2.19 | 8.99 | |||||||||||||||||||
10.01-13.04 | 580,750 | 0.90 | 12.40 | 580,750 | 0.90 | 12.40 | |||||||||||||||||||
7,449,223 | 4,568,753 |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Cost of revenues | $ | 54 | $ | 42 | $ | 71 | ||||||
Research and development | 229 | 313 | 366 | |||||||||
Selling and marketing | 292 | 640 | 708 | |||||||||
General and administrative | 628 | 985 | 908 | |||||||||
Total share-based compensation expenses | $ | 1,203 | $ | 1,980 | $ | 2,053 |
c. | Dividends: |
a. | Israeli taxation: |
1. | Measurement of taxable income: |
2. | Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the "Law"): |
3. | Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969: |
4. | Tax rates: |
b. | Tax Reform in U.S: |
c. | Income taxes for non-Israeli subsidiaries: |
d. | The income tax expense (benefit) for the years ended December 31, 2017, 2018 and 2019 consisted of the following: |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Current | $ | 1,200 | $ | 3,350 | $ | 2,734 | ||||||
Deferred | 497 | (6,601 | ) | (258 | ) | |||||||
$ | 1,697 | $ | (3,251 | ) | $ | 2,476 | ||||||
Domestic (Israel) | $ | 1,533 | $ | (5,919 | ) | $ | 781 | |||||
Foreign | 164 | 2,668 | 1,695 | |||||||||
$ | 1,697 | $ | (3,251 | ) | $ | 2,476 |
e. | Deferred income taxes: |
December 31, | ||||||||
2018 | 2019 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carry forward | $ | 75,755 | $ | 71,653 | ||||
Temporary differences mainly relating to Research and Development, reserves and allowances | 24,875 | 25,773 | ||||||
Deferred tax asset before valuation allowance | 100,630 | 97,426 | ||||||
Valuation allowance | (93,154 | ) | (89,320 | ) | ||||
Deferred tax asset | 7,476 | 8,106 | ||||||
Deferred tax liabilities: | ||||||||
Other temporary differences | (28 | ) | - | |||||
Deferred tax asset, net | $ | 7,448 | $ | 8,106 |
f. | Net operating loss carry forward and capital loss: |
g. | Income (Loss) before taxes is comprised as follows: |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Domestic | $ | 13,145 | $ | 17,921 | $ | (2,171 | ) | |||||
Foreign | 4,112 | 1,874 | 2,952 | |||||||||
$ | 17,257 | $ | 19,795 | $ | 781 |
h. | Reconciliation of the theoretical tax expense to the actual tax expense: |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Income before taxes as reported in the consolidated statements of operations | $ | 17,257 | $ | 19,795 | $ | 781 | ||||||
Statutory tax rate | 24 | % | 23 | % | 23 | % | ||||||
Theoretical tax income on the above amount at the Israeli statutory tax rate | $ | 4,142 | $ | 4,553 | $ | 180 | ||||||
Non-deductible expenses | 290 | 1,299 | 519 | |||||||||
Non-deductible expenses related to employee stock options | 289 | 376 | 472 | |||||||||
Changes in tax rate | 124 | 179 | (5 | ) | ||||||||
Losses in respect of which no deferred taxes were generated (including changes in valuation allowance) | (3,225 | ) | (4,068 | ) | 977 | |||||||
Recognition of deferred taxes during the year, for which valuation allowance was provided in prior years | - | (7,200 | ) | - | ||||||||
Other | 77 | 1,610 | 333 | |||||||||
Actual tax expense (benefit) | $ | 1,697 | $ | (3,251 | ) | $ | 2,476 |
i. | A reconciliation of the beginning and ending balances of unrecognized tax benefits related to uncertain tax positions is as follows: |
December 31, | ||||||||
2018 | 2019 | |||||||
Beginning balance | $ | 2,160 | $ | 2,373 | ||||
Decreases in tax positions for prior years | (304 | ) | (406 | ) | ||||
Increases related to tax positions taken during prior years | 18 | 40 | ||||||
Increase related to tax positions taken during the current year | 499 | 485 | ||||||
Ending balance | $ | 2,373 | $ | 2,492 |
Year ended December 31, 2018 | Year ended December 31, 2019 | |||||||
Balance, beginning of the period | $ | 5,193 | $ | 3,873 | ||||
New performance obligations | 12,746 | 11,195 | ||||||
Reclassification to revenue as a result of satisfying performance obligations | (14,066 | ) | (7,069 | ) | ||||
Balance, end of the period | 3,873 | 7,999 | ||||||
Less: long-term portion of deferred revenue | - | 6,265 | ||||||
Current portion, end of period | $ | 3,873 | $ | 1,734 |
2020 | 2021 | 2022 and thereafter | ||||||||||
Unsatisfied performance obligations | $ | 7,404 | $ | 4,182 | $ | 6,265 |
NOTE 16:- | SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION |
a. | The Company applies ASC topic 280, "Segment Reporting", ("ASC 820"). The Company operates in one reportable segment (see Note 1a for a brief description of the Company's business). The total revenues are attributed to geographic areas based on the location of the end customer. |
b. | The following tables present total revenues for the years ended December 31, 2017, 2018 and 2019 and long-lived assets as of December 31, 2018 and 2019: |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Revenues from sales to unaffiliated customers: | ||||||||||||
North America | $ | 39,498 | $ | 41,384 | $ | 42,474 | ||||||
Europe | 45,448 | 38,919 | 42,439 | |||||||||
Africa | 12,111 | 23,690 | 25,614 | |||||||||
Asia-Pacific and Middle East | 44,983 | 47,320 | 53,948 | |||||||||
India | 130,042 | 131,201 | 49,748 | |||||||||
Latin America | 59,951 | 61,360 | 71,360 | |||||||||
$ | 332,033 | $ | 343,874 | $ | 285,583 |
December 31, | ||||||||
2018 | 2019 | |||||||
Israel | $ | 28,494 | $ | 29,165 | ||||
Others | 5,119 | 5,700 | ||||||
$ | 33,613 | $ | 34,865 |
NOTE 16:- | SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION (Cont.) |
c. | Major customer data as a percentage of total revenues: |
a. | Financial expenses and others, net: |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Financial income: | ||||||||||||
Interest on deposits | $ | 126 | $ | 111 | $ | 111 | ||||||
Foreign currency translation differences and derivatives (*) | 2,522 | 3,981 | 190 | |||||||||
2,648 | 4,092 | 301 | ||||||||||
Financial expenses: | ||||||||||||
Bank charges and interest on loans | (4,830 | ) | (4,597 | ) | (3,787 | ) | ||||||
Foreign currency translation differences and derivatives | (3,707 | ) | (5,844 | ) | (2,627 | ) | ||||||
Others | - | - | (408 | ) | ||||||||
(8,537 | ) | (10,441 | ) | (6,822 | ) | |||||||
$ | (5,889 | ) | $ | (6,349 | ) | $ | (6,521 | ) |
b. | Net income (loss) per share: |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Numerator: | ||||||||||||
Numerator for basic and diluted net income (loss) per share - income (loss) available to shareholders of Ordinary shares | $ | 15,560 | $ | 23,046 | $ | (2,344 | ) | |||||
Denominator: | ||||||||||||
Denominator for basic net income (loss) per share - weighted average number of Ordinary shares | 77,916,912 | 78,579,013 | 80,296,581 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee stock options and RSU | 2,025,441 | 2,442,514 | - | |||||||||
Denominator for diluted net income (loss) per share - adjusted weighted average number of shares | 79,942,353 | 81,021,527 | 80,296,581 |
Year ended December 31, | ||||||||||||
2017 | 2018 | 2019 | ||||||||||
Revenues | $ | 173 | $ | 3,336 | $ | 6,745 | ||||||
Cost of revenues | $ | 2,160 | $ | 1,111 | $ | 1,659 | ||||||
Research and development expenses | $ | 1,063 | $ | 1,008 | $ | 1,248 | ||||||
Selling and marketing expenses | $ | 813 | $ | 771 | $ | 763 | ||||||
General and administrative expenses | $ | 995 | $ | 1,067 | $ | 1,002 | ||||||
Purchase of property and equipment | $ | 224 | $ | 148 | $ | 46 |
December 31, | ||||||||
2018 | 2019 | |||||||
Trade payables, other accounts payable and accrued expenses | $ | 2,077 | $ | 1,148 | ||||
Trade Receivables | $ | 1,733 | $ | 7,378 |