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Ceragon Networks Reports Second Quarter 2012 Financial ResultsPARAMUS, New Jersey, August 6, 2012 /PRNewswire via COMTEX/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the second quarter which ended June 30, 2012. Revenues for the second quarter of 2012 reached $119.1 million, up 8% from $110.4 million for the second quarter of 2011, and up 1% from $117.8 million in the first quarter of 2012. Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the second quarter of 2012 was $(1.0) million or $(0.03) per basic share and diluted share, compared to net loss of $(17.4) million in the second quarter of 2011, or $(0.48) per basic share and diluted share. On a non-GAAP basis, net income for the second quarter, excluding (a) $1.3 million of equity-based compensation expenses, (b) $0.9 million amortization of intangible assets, (c) $1.6 million inventory step up related to the Nera acquisition and (d) $0.2 million of changes in pre-acquisition indirect tax positions, was $3.0 million, or $0.08 per basic share and diluted share. Non-GAAP net loss for the second quarter of 2011 was $(1.6) million, or $(0.04) per basic share and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP). Gross margin on a GAAP basis in the second quarter of 2012 was 31.9% of revenues. Gross margin on a non-GAAP basis was 33.8% of revenues. Operating loss on a GAAP basis in the second quarter of 2012 was $(0.2) million. On a non-GAAP basis operating profit was $3.8 million. Cash and cash investments at the end of the quarter were $44.8 million. Negative cash flow from operations in the quarter relates mainly to additional working capital requirements associated with more sales to Tier 1 operators in Latin America and Africa that have longer payment terms and practices. "We continued to grow in Q2, achieving all-time record revenues, better gross margin and improved profitability," said Ira Palti, President and CEO of Ceragon. "Record bookings resulted in a book-to-bill ratio well above one. Our success in securing several large orders from Tier 1 operators expands our working capital needs. We believe this represents a temporary timing issue, which we have addressed by drawing down on our unused credit facilities. "Ceragon has a comprehensive portfolio of solutions with the most advanced technology, we are gaining share in key growth regions, and we are executing very well. Therefore, we expect to be able to continue to grow revenues and improve profitability and cash flow, even in light of growing macro headwinds," concluded Mr. Palti. Supplemental revenue breakouts: Geographical breakdown, second quarter of 2012: Europe: 18% Africa: 20% North America: 8% Latin America: 31% India: 16% APAC: 7% A conference call will follow today, August 6, 2012, beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (USA) (800) 230-1074 or international +1 (612) 234-9960 from 8:50 a.m. EDT. The call-in lines will be available on a first-come, first-serve basis. Investors can also listen to the call live via the Internet by accessing Ceragon Networks' website at the investors' page: 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: Telephone: (USA) (800) 475-6701 or international +1 (320) 365-3844, Access Code: 252653. A replay of both the call and the webcast will be available through September 6, 2012. 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. Other names mentioned are owned by their respective holders. 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, 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.govor may be obtained on Ceragon's website at http://www.ceragon.com Ceragon Reports Second Quarter 2012 Results CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) (Unaudited) Three months ended Six months ended June 30, June 30, 2012 2011 2012 2011 Revenues $ 119,050 $ 110,350 $ 236,833 $ 210,662 Cost of revenues 81,081 86,716 161,925 157,444 Gross profit 37,969 23,634 74,908 53,218 Operating expenses: Research and development 11,900 12,660 24,055 25,117 Selling and marketing 20,129 21,003 39,976 40,188 General and administrative 6,163 6,212 13,378 11,735 Restructuring costs - - - 7,834 Acquisition related costs - - - 4,919 Total operating expenses $ 38,192 $ 39,875 $ 77,409 $ 89,793 Operating loss (223) (16,241) (2,501) (36,575) Financial expenses, net (554) (312) (1,460) (759) Loss before taxes (777) (16,553) (3,961) (37,334) Taxes on income 245 817 535 1,412 Net loss $ (1,022) $ (17,370) $ (4,496) $ (38,746) Basic net loss per share $ (0.03) $ (0.48) $ (0.12) $ (1.08) Diluted net loss per share $ (0.03) $ (0.48) $ (0.12) $ (1.08) Weighted average number of shares used in computing basic net loss per share 36,421,106 35,983,033 36,354,389 35,794,446 Weighted average number of shares used in computing diluted net loss per share 36,421,106 35,983,033 36,354,389 35,794,446 Ceragon Reports Second Quarter 2012 Results CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) (Unaudited) June 30, December 31, 2012 2011 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 37,944 $ 28,991 Short-term bank deposits 2,901 7,159 Marketable securities - 9,665 Trade receivables, net 174,482 143,247 Deferred taxes 8,695 8,622 Other accounts receivable and prepaid expenses 34,834 37,281 Inventories 68,830 93,465 Total current assets 327,686 328,430 LONG-TERM INVESTMENTS: Long-term marketable securities 3,970 3,716 Severance pay funds 6,572 6,360 Total long-term investments 10,542 10,076 OTHER ASSETS: Deferred taxes 8,828 8,898 Goodwill and intangible assets, net 26,118 28,032 Other long-term receivables 8,871 5,257 Total other assets 43,817 42,187 PROPERTY AND EQUIPMENT, NET 32,059 30,465 Total assets $ 414,104 $ 411,158 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short term loan, including current maturities of long term bank loan $ 22,832 $ 8,232 Trade payables 92,875 77,395 Deferred revenues 25,917 38,308 Other accounts payable and accrued expenses 41,880 49,508 Total current liabilities 183,504 173,443 LONG-TERM LIABILITIES Long term bank loan, net of current maturities 22,652 26,768 Accrued severance pay and pension 12,020 11,996 Other long term payables 36,921 37,900 71,593 76,664 SHAREHOLDERS' EQUITY: Share capital: Ordinary shares 97 97 Additional paid-in capital 315,217 311,911 Treasury shares at cost (20,091) (20,091) Other comprehensive loss (1,197) (343) Accumulated deficits (135,019) (130,523) Total shareholders' equity 159,007 161,051 Total liabilities and shareholders' equity $ 414,104 $ 411,158 Ceragon Reports Second Quarter 2012 Results CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (U.S. dollars, in thousands) (Unaudited) Three months ended Six months ended June 30, June 30, 2012 2011 2012 2011 Cash flow from operating activities: Net loss $ (1,022) $ (17,370) $ (4,496) $ (38,746) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 3,648 2,951 7,419 6,152 Stock-based compensation expense 1,257 1,437 2,842 2,856 Decrease (increase) in trade and other receivables, net (27,812) 6,640 (36,463) 29,134 Decrease in inventory 4,623 14,168 24,083 23,993 Increase (decrease) in trade payables and accrued liabilities 8,734 (7,743) 10,721 (24,680) Decrease in deferred revenues (3,219) (12,755) (12,391) (12,765) Decrease (increase) in deferred tax asset, net 114 1 (263) 32 Other adjustments (325) 1,661 (429) 1,650 Net cash used in operating activities $ (14,002) $ (11,010) $ (8,977) $ (12,374) Cash flow from investing activities: Purchase of property and equipment ,net (3,065) (3,240) (6,368) (6,029) Payment for business acquisition(*) - - - (42,405) Investment in short and long-term bank deposit - (7,589) (1,266) (9,843) Proceeds from short and long-term bank deposits 3,186 10,273 5,436 24,069 Investment in held-to-maturity marketable securities (64) - (64) - Proceeds from maturities of held-to-maturity marketable securities, net - 23 9,717 4,258 Net cash provided by (used in) investing activities $ 57 $ (533) $ 7,455 $ (29,950) Cash flow from financing activities: Proceeds from exercise of options 251 284 464 3,580 Proceeds from bank loans 14,600 - 14,600 35,000 Repayment of bank loan (2,058) - (4,116) - Net cash provided by financing activities $ 12,793 $ 284 $ 10,948 $ 38,580 Translation adjustments on cash and cash equivalents $ (322) $ (789) $ (473) $ (435) Increase (decrease) in cash and cash equivalents $ (1,474) $ (12,048) $ 8,953 $ (4,179) Cash and cash equivalents at the beginning of the period 39,418 45,594 28,991 37,725 Cash and cash equivalents at the end of the period $ 37,944 $ 33,546 $ 37,944 $ 33,546 (*) 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 June 30, 2012 2011 GAAP (as reported) Adjustments Non-GAAP Non-GAAP Revenues $ 119,050 $ 119,050 $ 110,350 Cost of revenues 81,081 2,225 (a) 78,856 75,128 Gross profit 37,969 40,194 35,222 Operating expenses: Research and development 11,900 607 (b) 11,293 11,453 Selling and marketing 20,129 1,113 (c) 19,016 18,730 General and administrative 6,163 47 (d) 6,116 5,509 Total operating expenses $ 38,192 $ 36,425 $ 35,692 Operating profit (loss) (223) 3,769 (470) Financial expenses, net (554) (554) (312) Income (loss) before taxes (777) 3,215 (782) Taxes on income 245 245 817 Net income (loss) $ (1,022) $ 2,970 $ (1,599) Basic net earnings (loss) per share $ (0.03) $ 0.08 $ (0.04) Diluted net earnings (loss) per share $ (0.03) $ 0.08 $ (0.04) Weighted average number of shares used in computing basic net earnings (loss) per share 36,421,106 36,421,106 35,983,033 Weighted average number of shares used in computing diluted net earnings (loss) per share 36,421,106 37,380,275 35,983,033 Total adjustments 3,992 (a) Cost of revenues includes $0.3 million of amortization of intangible assets, $1.6 million of inventory step-up, $0.1 million of stock based compensation expenses and $0.2 million of changes in pre-acquisition indirect tax positions in the three months ended June 30, 2012. (b) Research and development expenses include $0.6 million of stock based compensation expenses in the three months ended June 30, 2012. (c) Selling and marketing expenses include $0.6 million of amortization of intangible assets and $0.5 million of stock based compensation expenses in the three months ended June 30, 2012. (d) General and administrative expenses include $0.05 million of stock based compensation expenses in the three months ended June 30, 2012. RECONCILIATION OF NON-GAAP FINANCIAL RESULTS (U.S. dollars in thousands, except share and per share data) (Unaudited) Six months ended June 30, 2012 2011 GAAP (as reported) Adjustments Non-GAAP Non-GAAP Revenues $ 236,833 $ 236,833 $ 210,662 Cost of revenues 161,925 4,517 (a) 157,408 142,961 Gross profit 74,908 79,425 67,701 Operating expenses: Research and development 24,055 1,031 (b) 23,024 22,494 Selling and marketing 39,976 2,728 (c) 37,248 35,391 General and administrative 13,378 899 (d) 12,479 10,101 Total operating expenses $ 77,409 $ 72,751 $ 67,986 Operating profit (loss) (2,501) 6,674 (285) Financial expenses, net (1,460) (1,460) (759) Income (loss) before taxes (3,961) 5,214 (1,044) Taxes on income 535 535 1,412 Net income (loss) $ (4,496) $ 4,679 $ (2,456) Basic net earnings (loss) per share $ (0.12) $ 0.13 $ (0.07) Diluted net earnings (loss) per share $ (0.12) $ 0.13 $ (0.07) Weighted average number of shares used in computing basic net earnings (loss) per share 36,354,389 36,354,389 35,794,446 Weighted average number of shares used in computing diluted net earnings (loss) per share 36,354,389 37,287,665 35,794,446 Total adjustments 9,175 (a) Cost of revenues includes $0.6 million of amortization of intangible assets, $2.0 million of inventory step-up, $0.1 million of stock based compensation expenses, $0.2 million of integration plan related costs and $1.6 million of changes in pre-acquisition indirect tax positions in the six months ended June 30, 2012. (b) Research and development expenses include $40 thousand of integration plan related costs and $1.0 million of stock based compensation expenses in the six months ended June 30, 2012. (c) Selling and marketing expenses includes $1.2 million of amortization of intangible assets, $0.4 million of integration plan related costs and $1.1 million of stock based compensation expenses in the six months ended June 30, 2012. (d) General and administration expenses include, $0.3 million of integration plan related costs and $0.6 million of stock based compensation expenses in the six months ended June 30, 2012. RECONCILIATION BETWEEN REPORTED AND NON-GAAP OPERATING LOSS (U.S. dollars in thousands) (Unaudited) Three months Six months ended ended June 30, 2012 Reported GAAP net operating loss (223) (2,501) Stock based compensation expenses 1,257 2,842 Amortization of intangible assets 901 1,802 Inventory step up 1,613 2,017 Integration plan related costs - 955 Changes in pre-acquisition indirect tax positions 221 1,559 Non-GAAP net operating profit 3,769 6,674 Company & Investor Contact: Yoel Knoll Ceragon Networks Ltd. Tel: +1-201-853-0228 Office (Int'l): +972(0)3-5431-132 [email protected] Media Contact: Abigail Levy-Gurwitz Ceragon Networks Ltd. Tel: +1-201-853-0271 (Int'l): +972(0)3-5431-166 [email protected] Media Contact: Karen Quatromoni Rainier Communications Tel. +1-508-475-0025 x150 [email protected] Join the discussion http://www.linkedin.com/company/14470 http://www.facebook.com/ceragonnetworks http://twitter.com/Ceragon http://www.youtube.com/user/CeragonNetworks feature=mhum SOURCE Ceragon Networks Ltd |