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
- 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.
- 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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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
[email protected]
Media Contact:
Abigail Levy-Gurwitz
Ceragon Networks Ltd.
Tel: +1-(201)-853-0271
[email protected]
Media Contact:
Karen Quatromoni
Rainier Communications
Tel. +1-508-475-0025 x150
[email protected]
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
[email protected]
SOURCE Ceragon Networks Ltd
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