2014

Ceragon Networks Reports Fourth Quarter and Year-End 2012 Financial Results

PARAMUS, New Jersey, February 14, 2013 /PRNewswire/ --

Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the fourth quarter and full year of 2012 which ended December 31, 2012.

Fourth quarter 2012 results:

Revenues for the fourth quarter of 2012 were $106.8 million.

Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2012 was ($8.4) million or $(0.23) per basic share and diluted share, compared to net loss of $(8.2) million in the fourth quarter of 2011, or $(0.23) per basic share and diluted share.

On a non-GAAP basis, excluding (a) $1.2 million of equity-based compensation expenses, (b) $0.9 million amortization of intangible assets, (c) $0.1 million inventory step up related to the Nera acquisition, (d) 6.7 million restructuring and other charges related to reduction in workforce (e) $(0.1) million of changes in pre-acquisition indirect tax positions, net income for the fourth quarter was $0.4 million, or $0.01 per basic share and diluted share. Non-GAAP net income for the fourth quarter of 2011 was $2.3 million, or $0.06 per basic share and diluted share. (Please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP.)

Gross margin on a GAAP basis in the fourth quarter of 2012 was 32.8% of revenues. Gross margin on a non-GAAP basis in the fourth quarter was 33.3% of revenues.

Operating loss on a GAAP basis in the fourth quarter of 2012 was ($7.1) million. On a non-GAAP basis operating income in the fourth quarter of 2012 was $1.8 million.

Cash and cash investments at the end of the quarter were $51.6 million.

"Our revenues in Q4 were within the range of our guidance and our book-to-bill ratio was above 1," said Ira Palti, President and CEO of Ceragon. "As expected, we generated substantial positive cash flow from operations during the quarter."

"We achieved a number of important milestones during 2012 that will contribute to improving profitability.  After a complete transition of all customers to our short-haul solution and the completion of our program to reduce product cost of the long-haul product, we are poised to achieve further improvement in gross margin. We also increased our market share, becoming the clear #1 in the long haul business and added several new Tier 1 customers while continuing to penetrate others.  We recently introduced a new premium solution, the FibeAir IP-20C  that could begin to contribute to revenues toward the end of the year, and the expense reduction initiatives implemented during Q4 positions us to achieve significant operating leverage once top line growth resumes," concluded Mr. Palti.

Supplemental quarterly revenue breakouts:

Geographical breakdown, fourth quarter of 2012:

  • Europe:           25%    
  • Africa:            6%        
  • North America:     8%
  • Latin America:    32%
  • India:             7%
  • APAC:             22%

Full Year 2012 Results

As previously announced, in late December 2012, management learned that a major customer was requiring additional acceptance procedures and documentation for part of the equipment it had purchased from Ceragon and previously accepted.   As a result, the Company has deferred a portion of revenues previously recognized in 2012 related to such equipment until the additional acceptance procedures are completed, currently expected in 2013. This deferral of revenue recognition also impacted the recognition of the related costs of revenues and expenses, but had no impact on operating cash flow. Accordingly, adjustments have been made to our financial results for the first three quarters of fiscal 2012, which are described in the supplemental tables on page 10 of this press release. All comparative information in this release is on an adjusted basis.

Revenues for the full year of 2012 were $446.7 million, up 0.3% from $445.3 million in 2011. Net loss on a GAAP basis for 2012 was $(23.4) million or $(0.64) per basic share and diluted share. Net loss for the year 2011 was $(53.7) million or $(1.49) per basic share and diluted share.

On a non-GAAP basis, net income for 2012, excluding (a) $5.5 million of equity-based compensation expenses, (b) $3.5 million amortization of intangible assets, (c) $4.5 million inventory step up related to the Nera acquisition, (d) 6.7 million restructuring and other charges related to reduction in workforce (e) $1.0 million integration plan related costs and (f) $2.3 million of changes in pre-acquisition indirect tax positions, was $0.1 million or $0.002 per basic share and diluted share. Net income for the year 2011, was $0.4 million, or $0.01 per basic share and diluted share.

A conference call will follow, beginning at 9:00 a.m. EST. Investors are invited to join the Company's teleconference by calling USA: (800) 611-1147 or International: +1 (612) 332-0630,  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 or International +1 (320) 365-3844 Access Code: 280782. A replay of both the call and the webcast will be available through March 14, 2013.

About Ceragon Networks Ltd.

Ceragon Networks Ltd.(NASDAQ: CRNT) is the #1 wireless backhaul specialist.  We provide innovative, flexible and cost-effective wireless backhaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers.  Ceragon's high-capacity, solutions use microwave technology to transfer voice and data traffic while maximizing bandwidth efficiency, to deliver more capacity over longer distances under any deployment scenario. Based on our extensive global experience, Ceragon delivers turnkey solutions that support service provider profitability at every stage of the network lifecycle enabling faster time to revenue, cost-effective operation and simple migration to all-IP networks.  As the demand for data pushes the need for ever-increasing capacity, Ceragon is committed to serve the market with unmatched technology and innovation, ensuring effective solutions for the evolving needs of the marketplace. Our solutions are deployed by more than 430 service providers in over 130 countries.

Ceragon Networks® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries. CERAGON® is a trademark of Ceragon Networks Ltd., registered in various countries. Other names mentioned are owned by their respective holders.


    
 
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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, risks associated with increased working capital needs, and other risks and uncertainties, which are discussed in greater detail in Ceragon's Annual Report on Form 20-F and Ceragon's other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made and Ceragon undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made. Ceragon's public filings are available from the Securities and Exchange Commission's website at http://www.sec.gov  or may be obtained on Ceragon's website at http://www.ceragon.com

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,
                                2012           2011        2012           2011

    Revenues              $  106,849      $ 118,487   $ 446,651      $ 445,269
    Cost of revenues          71,802         84,096     308,354        323,191

    Gross profit              35,047         34,391     138,297        122,078

    Operating expenses:
    Research and
    development, net          12,007         12,534      47,487         50,456
    Selling and
    marketing                 18,565         20,540      77,326         81,716
    General and
    administrative             6,925          8,337      27,519         26,524

    Restructuring costs       4,608               -       4,608          7,834

    Acquisition related
    costs                         -               -           -          4,919

    Total operating
    expenses               $ 42,105        $ 41,411   $ 156,940      $ 171,449

    Operating loss           (7,058)         (7,020)    (18,643)       (49,371)

    Financial expenses,
    net                         938           1,024       3,547          2,024

    Loss before taxes        (7,996)         (8,044)    (22,190)       (51,395)

    Taxes on income             405             123       1,201          2,259

    Net loss               $ (8,401)       $ (8,167)  $ (23,391)     $ (53,654)

    Basic net loss per
    share                   $ (0.23)        $ (0.23)    $ (0.64)       $ (1.49)

    Diluted net loss per
    share                   $ (0.23)        $ (0.23)    $ (0.64)       $ (1.49)

    Weighted average
    number of shares
    used in computing
    basic net loss per
    share                36,565,168      36,241,106  36,457,989     35,975,434

    Weighted average
    number of shares
    used in computing
    diluted net loss per
    share                36,565,168      36,241,106  36,457,989     35,975,434


 

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

(Unaudited)

                                                       December 31, December 31,
                                                           2012         2011
    ASSETS

    CURRENT ASSETS:
    Cash and cash equivalents                              $ 47,099   $ 28,991
    Short-term bank deposits                                    422      7,159
    Marketable securities                                         -      9,665
    Trade receivables, net                                  149,120    143,247
    Deferred taxes, net                                       8,589      8,622
    Other accounts receivable and prepaid expenses           38,901     37,281
    Inventories                                              65,554     93,465
    Total current assets                                    309,685    328,430

    LONG-TERM INVESTMENTS:
    Long-term marketable securities                           4,068      3,716
    Severance pay funds and pension                           7,163      6,360
    Total long-term investments                              11,231     10,076

    OTHER ASSETS:
    Long-term receivables                                     4,964      5,257
    Deferred taxes, net                                       9,140      8,898
    Goodwill and intangible assets, net                      25,644     28,032

    Total other assets                                       39,748     42,187

    PROPERTY AND EQUIPMENT, NET                              33,642     30,465
    Total assets                                          $ 394,306  $ 411,158
    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Short term loan, including current maturities
    of long term bank loan                                 $ 25,232    $ 8,232
    Trade payables                                          102,079     77,395
    Deferred revenues                                        16,719     38,308
    Other accounts payable and accrued expenses              36,642     49,508
    Total current liabilities                               180,672    173,443
    LONG-TERM LIABILITIES
    Long term bank loan, net of current maturities           18,536     26,768
    Accrued severance pay and pension                        12,311     11,996
    Other long term payables                                 38,920     37,900
                                                             69,767     76,664
    SHAREHOLDERS' EQUITY:
    Share capital:
    Ordinary shares                                              98         97
    Additional paid-in capital                              318,106    311,911
    Treasury shares at cost                                (20,091)   (20,091)
    Other comprehensive loss                                  (332)      (343)
    Accumulated deficits                                  (153,914)  (130,523)

    Total shareholders' equity                              143,867    161,051

    Total liabilities and shareholders' equity            $ 394,306  $ 411,158


 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)

                                                 Three months ended       Year ended
                                                      December 31,        December 31,
                                                  2012        2011       2012       2011
    Cash flow from operating activities:

    Net loss                                  $ (8,401)   $ (8,167) $ (23,391) $ (53,654)
    Adjustments to reconcile net loss
    to net cash used in operating activities:
    Depreciation and amortization                3,802       4,497     15,030     14,393
    Stock-based compensation expense             1,219       2,031      5,464      6,564
    Decrease (Increase) in trade and other
    receivables, net                            27,610       6,930    (11,911)     3,440
    Decrease (Increase) in inventory, net
    of write off                                (1,598)      7,617     27,210     40,643
    Increase (decrease) in trade payables
    and accrued liabilities                      1,635      (1,706)    19,073    (17,600)
    Increase in Goodwill                        (1,365)          -     (1,365)         -
    Decrease in deferred revenues               (5,170)        (42)   (21,589)   (11,925)
    Increase in deferred tax asset, net           (324)     (1,269)      (743)    (1,237)
    Other adjustments                             (323)     (2,455)      (569)      (749)
    Net cash provided by (used in) operating
    activities                                $ 17,085     $ 7,436    $ 7,209  $ (20,125)

    Cash flow from investing activities:
    Purchase of property and equipment ,net     (4,317)     (4,696)   (14,530)   (14,447)
    Payment for business acquisition *)              -           -          -    (42,405)
    Investment in short and long-term bank
    deposit                                          -           -     (1,266)    (7,304)
    Proceeds from maturities of short and
    long-term bank deposits                          -       2,368      7,920     25,664
    Investment in available for sale
    marketable securities                            -           -        (64)         -
    Proceeds from sales of available for
    sale marketable securities                       -         201      9,781     10,459

    Net cash provided by (used in)
    investing activities                      $ (4,317)   $ (2,127)   $ 1,841  $ (28,033)

    Cash flow from financing activities:
    Proceeds from exercise of options                2         518        736      4,474
    Proceeds from financial institutions,
    net                                         (8,000)          -     17,000     35,000
    Repayments of bank loans                    (2,058)          -     (8,232)         -
    Net cash provided by (used in)
    financing activities                     $ (10,056)      $ 518    $ 9,504   $ 39,474

    Translation adjustments on cash and
    cash equivalents                              $ 36       $ 223     $ (446)     $ (50)
    Increase (Decrease) in cash and cash
    equivalents                                $ 2,748     $ 6,050   $ 18,108   $ (8,734)
    Cash and cash equivalents at the
    beginning of the period                     44,351      22,941     28,991     37,725

    Cash and cash equivalents at the end
    of the period                             $ 47,099    $ 28,991   $ 47,099    $ 28,991
    *) 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,
                                                              2012                  2011
                                     GAAP (as reported)  Adjustments  Non-GAAP    Non-GAAP

    Revenues                             $ 106,849                   $ 106,849   $ 118,487
    Cost of revenues                        71,802           (a) 495    71,307      79,356

    Gross profit                            35,047                      35,542      39,131

    Operating expenses:
    Research and development, net           12,007         (b) 1,468    10,539      11,908
    Selling and marketing                   18,565         (c) 1,221    17,344      17,936
    General and administrative               6,925         (d) 1,030     5,895       5,872
    Restructuring costs                      4,608             4,608         -           -

    Total operating expenses              $ 42,105                    $ 33,778    $ 35,716

    Operating profit (loss)                 (7,058)                      1,764       3,415
    Financial expenses, net                    938                         938       1,024

    Income (loss) before taxes              (7,996)                        826       2,391

    Taxes on income                            405                         405         123

    Net income (loss)                     $ (8,401)                      $ 421     $ 2,268

    Basic net earnings (loss) per share    $ (0.23)                     $ 0.01      $ 0.06

    Diluted net earnings (loss) per share  $ (0.23)                     $ 0.01      $ 0.06

    Weighted average number of shares
    used in computing basic net earnings
    (loss) per share                    36,565,168                  36,565,168  36,241,106

    Weighted average number of shares
    used in computing diluted net
    earnings (loss) per share           36,565,168                  36,641,920  37,504,556

    Total adjustments                                          8,822



  1. Cost of revenues includes $0.3 million of amortization of intangible assets, $0.1 million of inventory step-up, $(0.1) million of changes in pre-acquisition indirect tax positions and $0.2 million of restructuring and other charges related to reduction in workforce in the three months ended December 31, 2012.
  2. Research and development expenses include $1.2 million of restructuring and other charges related to reduction in workforce and $0.2 million of stock based compensation expenses in the three months ended December 31, 2012.
  3. Selling and marketing expenses includes $0.5 million of amortization of intangible assets, $0.3 million of restructuring and other charges related to reduction in workforce$0.4 million of stock based compensation expenses in the three months ended December 31, 2012.
  4. General and administrative expenses include $0.4 million of restructuring and other charges related to reduction in workforce and $0.6 million of stock based compensation expenses in the three months ended December 31, 2012.

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

(Unaudited)


                                                      Year ended December 31,

                                                            2012                      2011
                               GAAP (as reported)    Adjustments     Non-GAAP     Non-GAAP

    Revenues                            $ 446,651                   $ 446,651    $ 445,269
    Cost of revenues                      308,354      (a) 8,573      299,781      300,984
    Gross profit                          138,297                     146,870      144,285

    Operating expenses:
    Research and development, net          47,487      (b) 2,903       44,584       46,425
    Selling and marketing                  77,326      (c) 5,020       72,306       71,686
    General and administrative             27,519      (d) 2,352       25,167       21,484
    Restructuring costs                     4,608          4,608            -            -

    Total operating expenses            $ 156,940                   $ 142,057    $ 139,595

    Operating profit (loss)               (18,643)                      4,813        4,690
    Financial expenses, net                 3,547                       3,547       (2,024)

    Income (loss) before taxes            (22,190)                      1,266        2,666

    Taxes on income                         1,201                       1,201        2,259

    Net income (loss)                   $ (23,391)                       $ 65        $ 407

    Basic net earnings (loss) per share   $ (0.64)                     $ 0.00       $ 0.01

    Diluted net earnings (loss) per share $ (0.64)                     $ 0.00       $ 0.01

    Weighted average number of shares
    used in computing basic net earnings
    (loss) per share                   36,457,989                  36,457,989   35,975,434

    Weighted average number of shares
    used in computing diluted net
    earnings (loss) per share          36,457,989                  37,092,887   37,522,665

    Total adjustments                                     23,456



  1. Cost of revenues includes $1.2 million of amortization of intangible assets, $4.5 million of inventory step-up, $2.3 million of changes in pre-acquisition indirect tax positions, $0.2 million of stock based compensation expenses and $0.4 million of restructuring, integration plan related costs and other charges related to reduction in workforce in the year ended December 31, 2012.
  2. Research and development expenses include $1.3 million of restructuring, integration plan related costs and other charges related to reduction in workforce and $1.6 million of stock based compensation expenses in the year ended December 31, 2012.
  3. Selling and marketing expenses includes $2.3 million of amortization of purchased intangible assets, $0.7 million of restructuring, integration plan related costs and other charges related to reduction in workforce and $2.0 million of stock based compensation expenses in the year ended December 31, 2012.
  4. General and administrative expenses include $0.7 million of restructuring, integration plan related costs and other charges related to reduction in workforce and $1.7 million of stock based compensation expenses in the year ended December 31, 2012.

 

RECONCILIATION BETWEEN REPORTED AND NON-GAAP

OPERATING PROFIT (LOSS)

(U.S. dollars in thousands)

(Unaudited)

                                             Three months ended             Year ended
                                                            December 31, 2012

    Reported GAAP net operating loss                    (7,058)               (18,643)

    Stock based compensation expenses                    1,219                  5,464
    Amortization of purchased intangible assets            880                  3,536
    Inventory step up                                       93                  4,511
    Restructuring and other charges related
    to reduction in workforce                            6,712                  6,712
    Integration plan related costs                           -                    955
    Changes in pre-acquisition indirect tax positions      (82)                 2,277

    Non-GAAP net operating profit                        1,764                  4,812


Supplemental Information

    The Company has adjusted its quarterly results for fiscal 2012 as furnished to the
    Securities and Exchange Commission under cover of
    - Forms 6K on October 29, 2012, August 6, 2012, and May 7, 2012. The impact of these
    adjustments on our financial results for the first three quarters of fiscal 2012 is
    as follows:

                       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        (U.S. dollars in thousands, except share and per share data)
                                                (Unaudited - GAAP)

                                Three months         Three months          Three months
                                       Ended                Ended                 Ended
                              March 31, 2012        June 30, 2012    September 30, 2012

    Revenues - as reported         $ 117,783            $ 119,050             $ 118,046
    Revenues - as adjusted           110,046              112,669               117,087

    Gross Profit - as reported        36,939               37,969                36,570
    Gross Profit - as adjusted        32,809               35,913                34,528

    Basic and diluted net loss
    per share - as reported          $ (0.10)             $ (0.03)              $ (0.07)
    Basic and diluted net loss
    per share - as adjusted          $ (0.20)             $ (0.08)              $ (0.13)

                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                          (U.S. dollars in thousands, except share and per share data)
                                              (Unaudited - non-GAAP)

                                 Three months         Three months          Three months
                                        Ended                Ended                 Ended
                               March 31, 2012        June 30, 2012    September 30, 2012

    Revenues - as reported          $ 117,783            $ 119,050             $ 118,046
    Revenues - as adjusted            110,046              112,669               117,087

    Gross Profit - as reported         39,231               40,194                40,681
    Gross Profit - as adjusted         35,106               37,284                38,938

    Basic and diluted net loss
    per share - as reported            $ 0.05               $ 0.08                $ 0.09
    Basic and diluted net loss
    per share - as adjusted           $ (0.06)              $ 0.01                $ 0.04



Company and Investor Contact:
Yoel Knoll
Ceragon Networks Ltd.
Tel. +1(201)-853-0228
yoelk@ceragon.com

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

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

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


SOURCE Ceragon Networks Ltd



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