2014

Ceragon Networks Reports Fourth Quarter and Year-End 2011 Financial Results Full year revenues reach a record $445.3 million; improves gross margin and profitability quarter over quarter

PARAMUS, New Jersey, February 28, 2012 /PRNewswire/ --

Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the fourth quarter which ended December 31, 2011.

Revenues for the fourth quarter of 2011 reached $118.5 million, up 77% from $67.0 million for the fourth quarter of 2010, and up 2% from $116.1 million in the third quarter of 2011.

Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2011 was ($8.2) million or $(0.23) per basic share and diluted share, compared to net income of $3.8 million in the fourth quarter of 2010, or $0.11 per basic share and $0.10 per diluted share.

On a non-GAAP basis, net income for the fourth quarter, excluding (a) $2.0 million of equity-based compensation expenses, and (b) $8.4 million charges related to the Nera acquisition and integration plan, was $2.3 million, or $0.06 per basic share and diluted share. Non-GAAP net income for the fourth quarter of 2010 was $6.1 million, or $0.17 per basic and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP).

Revenues for the full year of 2011 were $445.3 million, up 78% from $249.9 million in 2010. Net loss on a GAAP basis for 2011 was $(53.7) million or $(1.49) per basic share and diluted share. Net income for the year 2010 was $14.1 million or $0.40 per basic share and $0.38 per diluted share.

On a non-GAAP basis, net income for 2011, excluding (a) $6.6 million of equity-based compensation expenses, and (b) $47.5 million charges related to the Nera acquisition and integration plan, was $400,000 or $0.01 per basic share and diluted share. Net income for the year 2010 was $20.2 million, or $0.58 per basic share and $0.55 per diluted share.

Gross margin on a GAAP basis in the fourth quarter of 2011 was 29.0% of revenues. Gross margin on a non-GAAP basis in the fourth quarter was 33.0% of revenues.

Operating loss on a GAAP basis in the fourth quarter of 2011 was ($7.0) million. On a non-GAAP basis operating income in the fourth quarter of 2011 was $3.4 million.

Cash and cash investments at the end of the quarter were $49.5 million.

"As a result of our continued strong execution, we reported higher revenues, gross margin and profitability for the fourth quarter," said Ira Palti, President and CEO of Ceragon. "I am delighted to report that the integration of the Nera business is complete. We believe our decision to seize the first-mover advantage in the latest round of industry consolidation, combined with the rapid integration, positions us to continue to grow and to gain market share as the #1 wireless backhaul specialist.  

"We expect revenues in Q1 to be similar to the fourth quarter, as macroeconomic and political concerns weigh on operators' plans in several regions," continued Mr. Palti. "We have recently added new customers and, with other tangible reasons to expect bookings to increase, our outlook for the year continues to call for moderate growth of 10-12% for 2012. With improvement as the year progresses, our goal is to exit 2012 with gross margin in the mid-30's and a non-GAAP operating margin of 8%-9%."

Supplemental revenue breakouts:

Geographical breakdown, fourth quarter of 2011:

  • Europe:            24%    
  • Africa:            21%        
  • North America:      8%
  • Latin America:     21%
  • India:             10%
  • APAC:              16%

A conference call will follow, beginning at 9:00 a.m. EST. Investors are invited to join the Company's teleconference by calling (800) 398-9402, or international +1(612) 332-0720 from 8:50 a.m. EST. The call-in lines will be available on a first-come, first-serve basis.

Investors can also listen to the call live via the Internet by accessing Ceragon Networks' website at the investors' page: http://www.ceragon.com/ir_events.asp?lang=0  selecting the webcast link, and following the registration instructions.

If you are unable to join us live, the replay numbers are: (USA) (800) 475-6701 (International) +1(320)-365-3844, Access Code: 231788.

A replay of both the call and the webcast will be available through March 28, 2012.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist.  Ceragon's high capacity wireless backhaul solutions enable cellular operators and other wireless service providers to deliver 2G/3G and LTE/4G voice and data services that enable smart-phone applications such as Internet browsing, music and video. With unmatched technology and cost innovation, Ceragon's advanced point-to-point microwave systems allow wireless service providers to evolve their networks from circuit-switched and hybrid concepts to all IP networks. Ceragon solutions are designed to support all wireless access technologies, delivering more capacity over longer distances under any given deployment scenario. Ceragon's solutions are deployed by more than 230 service providers of all sizes, and hundreds of private networks in more than 130 countries. Visit Ceragon at http://www.ceragon.com.

Ceragon Networks® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries.  


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This press release may contain statements concerning Ceragon's future prospects that are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections that involve a number of risks and uncertainties. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts and estimates. These are important factors that could cause actual results to differ materially from forecasts and estimates. Some of the factors that could significantly impact the forward-looking statements in this press release include the risk of significant expenses in connection with potential contingent tax liability associated with Nera's prior operations or facilities, the risk that the combined Ceragon and Nera business may not perform as expected, and other risks and uncertainties, which are discussed in greater detail in Ceragon's Annual Report on Form 20-F and Ceragon's other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made and Ceragon undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made. Ceragon's public filings are available from the Securities and Exchange Commission's website at http://www.sec.gov  or may be obtained on Ceragon's website at http://www.ceragon.com  

Use of non-GAAP Measures:

This press release provides financial measures that exclude certain items and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these Non-GAAP financial measures provide meaningful supplemental information regarding our performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)

(Unaudited)

                               Three months ended             Year ended
 
                                   December 31               December 31,
                                2011           2010        2011           2010
 
    Revenues               $ 118,487       $ 66,983   $ 445,269      $ 249,852
    Cost of revenues          84,096         42,225     323,191        160,470
 
    Gross profit              34,391         24,758     122,078         89,382
 
    Operating expenses:
    Research and
    development, net          12,534          6,732      50,456         25,115
    Selling and
    marketing                 20,540          9,641      81,716         37,179
    General and
    administrative             8,337          3,612      26,524         12,328
  
    Restructuring costs            -              -       7,834              -    Acquisition related                                   
    costs                          -            775       4,919            775
 
    Total operating
    expenses                $ 41,411       $ 20,760   $ 171,449       $ 75,397
 
    Operating profit
    (loss)                    (7,020)         3,998     (49,371)        13,985
 
    Financial income
    (expenses), net           (1,024)           124      (2,024)         1,255
 
    Income (loss) before
    taxes                     (8,044)         4,122     (51,395)        15,240
 
    Taxes on income              123            304       2,259          1,178
 
    Net Income (loss)       $ (8,167)       $ 3,818   $ (53,654)      $ 14,062
 
    Basic net earnings
    (loss) per share         $ (0.23)        $ 0.11     $ (1.49)        $ 0.40
 
    Diluted net earnings
    (loss) per share         $ (0.23)        $ 0.10     $ (1.49)        $ 0.38
 
    Weighted average
    number of shares
    used in computing
    basic net earnings
    (loss) per share      36,241,106     35,106,882  35,975,434     34,854,657
 
    Weighted average
    number of shares
    used in computing
    diluted net earnings
    (loss) per share      36,241,106     36,995,821  35,975,434     36,564,830


CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

(Unaudited)

                                
                                 December 31,  December 31,
                                        2011          2010
    ASSETS
 
    CURRENT ASSETS:
    Cash and cash equivalents       $ 28,991      $ 37,725
    Short-term bank deposits           7,159        23,357
    Marketable securities              9,665         7,363
    Trade receivables, net           143,247        88,074
    Deferred taxes, net                6,874         4,057
    Other accounts receivable
    and prepaid expenses              37,281        15,425
    Inventories                       93,465        65,921
    Total current assets             326,682       241,922
 
    LONG-TERM INVESTMENTS:
    Long-term marketable
    securities                         3,716        13,088
    Severance pay funds and
    pension                            6,360         6,039
    Total long-term
    investments                       10,076        19,127
 
    OTHER ASSETS:
    Long-term receivables              5,257             -
    Deferred taxes, net               10,266         8,829
    Goodwill and intangible
    assets, net                       28,032         1,093
 
    Total other assets                43,555         9,922
 
    PROPERTY AND EQUIPMENT,
    NET                               30,573        16,211
    Total assets                   $ 410,886     $ 287,182
    LIABILITIES AND
    SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Current maturities of long
    term loan                        $ 8,232           $ -
    Trade payables                    77,395        40,537
    Deferred revenues                 38,308        20,661
    Other accounts payable and
    accrued expenses                  47,309        13,215
    Total current liabilities        171,244        74,413

    LONG-TERM LIABILITIES
    Long term bank loan, net
    of current maturities             26,768             -
    Accrued severance pay and
    pension                           11,996         8,600
    Other long term payables          39,827             -
    Total Long-Term Liabilities       78,591         8,600

    SHAREHOLDERS' EQUITY:
    Share capital:
    Ordinary shares                       97            95
    Additional paid-in capital       311,911       300,875
    Treasury shares at cost          (20,091)      (20,091)
    Other comprehensive income
    (loss)                              (343)          159
    Accumulated deficits            (130,523)      (76,869)
 
    Total shareholders' equity       161,051       204,169
 
    Total liabilities and
    shareholders' equity           $ 410,886     $ 287,182


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)

                                        Three months ended              Year ended
                                          December 31,                December 31,
                                        2011            2010        2011            2010
    Cash flow from operating 
    activities:
    Net income (loss)               $ (8,167)        $ 3,818   $ (53,654)       $ 14,062
 
    Adjustments to reconcile net 
    income to net cash used in 
    operating activities:
 
    Depreciation and amortization      4,497           1,321      14,393           4,712
    Stock-based compensation expense   2,031           1,541       6,564           4,207
    Decrease (Increase) in trade and 
    other receivables, net             6,930         (25,744)      3,440         (27,229)
    Decrease (Increase) in inventory,
    net of write off                   7,617          (4,071)     40,643               4
    Increase (decrease) in trade 
    payables and accrued liabilities  (4,756)         20,084     (20,650)         (8,323)
    Increase (decrease) in deferred 
    revenues                             (42)          7,902     (11,925)          2,113
    Increase in deferred tax asset, 
    net                               (1,269)           (114)     (1,237)           (469)
    Other adjustments                    595             191       2,301             226
    Net cash provided by (used in) 
    operating activities             $ 7,436         $ 4,928   $ (20,125)      $ (10,697)
 
    Cash flow from investing 
    activities:
    Purchase of property and 
    equipment ,net                    (4,696)         (2,083)    (14,447)         (9,798)
    Payment for business 
    acquisition *)                         -               -     (42,405)         (1,232)
    Investment in short and 
    long-term bank deposit                 -          (1,972)     (7,304)        (13,754)
    Proceeds from short and 
    long-term bank deposits            2,368           6,580      25,664          31,680
    Investment in held-to-maturity
    marketable securities                  -               -           -         (18,339)
    Proceeds and maturities of 
    held-to-maturity and 
    available-for-sale marketable
    securities                           201           9,091      10,459          16,591
    Net cash provided by (used in) 
    investing activities            $ (2,127)       $ 11,616   $ (28,033)        $ 5,148
 
    Cash flow from financing 
    activities:
    Proceeds from exercise of 
    options                              518           1,635       4,474           4,935
    Long term bank loan raised in 
    connection with business 
    acquisition                            -               -      35,000               -
    Net cash provided by 
    financing activities               $ 518         $ 1,635    $ 39,474         $ 4,935
 
    Translation adjustments on 
    cash and cash equivalents          $ 223             $ -       $ (50)            $ -
    Increase (Decrease) in cash 
    and cash equivalents             $ 6,050        $ 18,179    $ (8,734)         $ (614)
    Cash and cash equivalents 
    at the beginning of the period    22,941          19,546      37,725          38,339
    Cash and cash equivalents 
    at the end of the period        $ 28,991        $ 37,725    $ 28,991        $ 37,725
    *) Excluding cash and cash equivalents


RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands, except share and per share data)

(Unaudited)

 
                                          Three months ended December 31,
 
                                                2011                                2010
                             GAAP        Adjustments           Non-GAAP         Non-GAAP
                          (as reported)
    Revenues               $ 118,487                          $ 118,487         $ 66,983
    Cost of revenues          84,096       4,740 (a)             79,356           42,142
 
    Gross profit              34,391                             39,131           24,841
 
    Operating expenses:
    Research and 
    development, net          12,534         626 (b)             11,908            6,471
    Selling and marketing     20,540       2,604 (c)             17,936            9,402
    General and 
    administrative             8,337       2,465 (d)              5,872            2,654
 
    Total operating 
    expenses                $ 41,411                           $ 35,716         $ 18,527
 
    Operating profit (loss)   (7,020)                             3,415            6,314
    Financial income 
    (expenses), net           (1,024)                            (1,024)             124
 
    Income (loss) before 
    taxes                     (8,044)                             2,391            6,438
 
    Taxes on income              123                                123              304
 
    Net income (loss)       $ (8,167)                           $ 2,268          $ 6,134
 
    Basic net earnings (loss) 
    per share                $ (0.23)                            $ 0.06           $ 0.17
 
    Diluted net earnings 
    (loss) per share         $ (0.23)                            $ 0.06           $ 0.17
 
    Weighted average 
    number of shares
    used in computing basic
    net earnings
    (loss) per share      36,241,106                         36,241,106       35,106,882
 
    Weighted average 
    number of shares
    used in computing diluted
    net earnings 
    (loss) per share      36,241,106                         37,504,556       36,995,821
 
    Total adjustments                     10,435
 


a. Cost of revenues includes $0.4 million of amortization of purchased intangible assets, $2.8 million of inventory step-up, $0.1 million of stock based compensation expenses and $1.5 million of integration plan related costs in the three months ended December 31, 2011.

b. Research and development expenses include $0.2 million of integration plan related costs and $0.4 million of stock based compensation expenses in the three months ended December 31, 2011.

c. Selling and marketing expenses includes $1.1 million of amortization of purchased intangible assets, $0.8 million of integration plan related costs and $0.7 million of stock based compensation expenses in the three months ended December 31, 2011.

d. General and administration expenses includes $1.6 million of integration plan related costs and $0.8 million of stock based compensation expenses in the three months ended December 31, 2011.


RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands, except share and per share data)

(Unaudited)


                                                 Year ended December 31,
 
                                                    2011                             2010
                                      GAAP   Adjustments         Non-GAAP        Non-GAAP
                               (as reported)

 
    Revenues                     $ 445,269                      $ 445,269       $ 249,852
    Cost of revenues               323,191      22,207 (a)        300,984         160,155
    Gross profit                   122,078                        144,285          89,697
 
    Operating expenses:
    Research and development, net   50,456       4,031 (b)         46,425          23,151
    Selling and marketing           81,716      10,030 (c)         71,686          36,002
    General and administrative      26,524       5,040 (d)         21,484          10,427
    Restructuring costs              7,834       7,834                  -               -
    Acquisition related costs        4,919       4,919                  -               -
 
    Total operating expenses     $ 171,449                      $ 139,595          69,580
 
    Operating profit (loss)        (49,371)                         4,690          20,117
    Financial income (expenses), 
    net                             (2,024)                        (2,024)          1,255
 
    Income (loss) before taxes     (51,395)                         2,666          21,372
 
    Taxes on income                  2,259                          2,259           1,178
 
    Net income (loss)            $ (53,654)                         $ 407        $ 20,194
 
    Basic net earnings (loss) 
    per share                      $ (1.49)                        $ 0.01          $ 0.58
 
    Diluted net earnings (loss) 
    per share                      $ (1.49)                        $ 0.01          $ 0.55
 
    Weighted average number 
    of shares used in computing 
    basic net earnings
    (loss) per share            35,975,434                     35,975,434      34,854,657
 
    Weighted average number
    of shares used in computing
    diluted net earnings (loss) 
    per share                   35,975,434                     37,522,665      36,564,830
 
    Total adjustments                           54,061
 


a. Cost of revenues includes $1.2 million of amortization of purchased intangible assets, $15.4 million of inventory step-up, $0.3 million of stock based compensation expenses and $5.3 million of integration plan related costs in the year ended December 31, 2011.

b. Research and development expenses include $2.5 million of integration plan related costs and $1.5 million of stock based compensation expenses in the year ended December 31, 2011.

c. Selling and marketing expenses includes $3.0 million of amortization of purchased intangible assets, $4.6 million of integration plan related costs and $2.5 million of stock based compensation expenses in the year ended December 31, 2011.

d. General and administration expenses include $2.7 million of integration plan related costs and $2.3 million of stock based compensation expenses in the year ended December 31, 2011.


RECONCILIATION BETWEEN REPORTED AND NON-GAAP

OPERATING PROFIT (LOSS)

(U.S. dollars in thousands)

(Unaudited)

                                                 Three months ended            Year ended
                                                             December 31, 2011
 
    Reported GAAP net operating loss                  (7,020)                   (49,371) 
    Stock based compensation expenses                  2,031                      6,564
    Amortization of purchased intangible assets        1,457                      4,162
    Inventory step up                                  2,815                     15,442
    Integration plan related costs                     4,132                     15,140
    Restructuring costs                                  -                        7,834
    Acquisition related costs                            -                        4,919
 
    Non-GAAP net operating profit                      3,415                      4,690



    
Company and Investor Contact:
Yoel Knoll
Vice President of Investor Relations                       
Ceragon Networks Ltd.
Cell (Int'l): +972-(0)-52-830-6419
Office (Int'l):  +972-(0)-3-5431-132
Office (US): +1-(201)-406-1037            
Tel. +1-(201)-853-0228           
yoelk@ceragon.com 

Media Contact:  
Abigail Levy-Gurwitz    
Ceragon Networks Ltd.
Tel: +1-(201)-853-0271       
abigaill@ceragon.com

Media Contact:
Karen Quatromoni
Rainier Communications
Tel. +1-508-475-0025 x150
kquatromoni@rainierco.com

 

SOURCE Ceragon Networks Ltd



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