EX-99 3 pressthirdquar02.txt EXHIBIT 99.1 Exhibit 99.1 CERAGON Networks (R) [GRAPHIC OMITTED][GRAPHIC OMITTED] FOR IMMEDIATE RELEASE CERAGON NETWORKS(R) REPORTS THIRD QUARTER 2002 FINANCIAL RESULTS TEL AVIV, ISRAEL, OCTOBER 24, 2002- Ceragon Networks Ltd. (NASDAQ: CRNT), www.ceragon.com, a global provider of high-capacity broadband wireless systems, today reported results for the third quarter ending September 30, 2002. Revenues for the third quarter increased to $5.0 million, as compared to revenues of $3.1 million for the third quarter of 2001 and to revenues of $4.0 million for the second quarter of 2002. This represents an increase of 61% as compared to the third quarter of 2001, and an increase of 26% as compared to the second quarter of 2002. This past quarter was also the fourth quarter of consecutive revenue growth for Ceragon. Pro-forma gross profit (*) for the third quarter of 2002 was $1.5 million, or 30.5% of revenues. This compares to pro-forma gross profit for the third quarter of 2001 of $0.3 million, or 10.1% of revenues and to pro-forma gross profit for the second quarter of 2002 of $1.2 million, or 29.0% of revenues. Pro-forma net loss for the third quarter of 2002 decreased to $(2.6) million, or $(0.12) basic and diluted net loss per ordinary share. This compares to pro-forma net loss for the third quarter of 2001 of $(3.9) million, or $(0.19) basic and diluted net loss per ordinary share and to pro-forma net loss for the second quarter of 2002 of $(3.0) million, or $(0.14) basic and diluted net loss per ordinary share. For an explanation of pro-forma results see the notes at * below. The company ended the third quarter of 2002 with $45.5 million in cash and liquid investments, as compared to $48.0 million in cash and liquid investments at the end of the previous quarter. "Focusing on our three target markets has resulted in a fourth consecutive quarter of growth and a fifth consecutive quarter of improving bottom line results at Ceragon," said Shraga Katz, president and CEO, Ceragon Networks Ltd. "During this past quarter, we continued generating new and follow-on orders and recurring revenues from cellular carriers, incumbent operators and enterprise organizations. We also expanded our base of new customers and extended our geographic reach into additional regions within Europe and Asia." (MORE) THIRD QUARTER 2002 RESULTS-2 A conference call discussing Ceragon's results for the second quarter of 2002 will take place today, October 24, 2002, at 11:00 a.m. (EDT). Details can be found on Ceragon's website at www.ceragon.com. The live call and its replay will be accessible on Ceragon's website. The replay will be available through October 28, 2002. * Pro-Forma Financial Presentation Pro-forma results are presented for informational purposes only. Pro-forma financial results for all periods presented exclude the effect of stock-based, non-cash deferred compensation expenses. In addition, the pro-forma results for the three months ended September 30, 2001 exclude one-time charges of $17.8 million for an inventory write-down and a fixed asset impairment presented in cost of revenues. The pro-forma results for the nine months ended September 30, 2001 and for the year ended December 31, 2001 exclude one-time charges of $28.8 million for an inventory write-down and a fixed asset impairment presented in cost of revenues, $2.6 million for doubtful debt presented in general and administrative expenses, and $4.7 million due to restructuring plans presented in restructuring costs. ABOUT CERAGON NETWORKS LTD. Ceragon Networks Ltd. (NASDAQ: CRNT), a pacesetter in broadband wireless networking systems, enables the rapid and cost-effective deployment of high-capacity network connectivity. Ceragon's FibeAir(TM) product family was uniquely designed for cellular operators, enterprises and communications service providers to progressively build networks to meet the growing demand for value-added broadband services. The modular FibeAir system operates across multiple frequencies from 7 to 38 GHz and supports integrated high-capacity services over IP, SONET/SDH and ATM networks. Ceragon's equipment complies with North American and international standards and is installed with over 100 customers in more than 35 countries. Ceragon was the first fixed wireless technology provider to break the 155 Mbps capacity barrier in high-frequency bands and the first to commercially deploy a wireless 311 Mbps system. Recently, Ceragon announced another industry first - a high capacity fixed wireless system with a built-in SONET/SDH add-drop multiplexer (ADM). More information is available at www.ceragon.com. --------------- Ceragon Networks(R) is a registered trademark of Ceragon Networks Ltd. and Ceragon(TM), FibeAir(TM), ConfigAir(TM), CeraView(TM), CeraMon(TM), EtherAir(TM), QuickAir(TM), QuickAir Partner Program(TM), QuickAir Partner Certification Program(TM), QuickAir Partner Zone(TM), EncryptAir(TM) and Microwave Fiber(TM) are trademarks of Ceragon Networks Ltd. (MORE) THIRD QUARTER 2002 RESULTS-3
CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) PRO- FORMA(*) THREE MONTHS ENDED NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, ------------------------------- ------------------------------ ----------------- 2002 2001 2002 2001 2001 ------------------------------------------------------------------------------------ UNAUDITED ------------------------------------------------------------------------------------ Revenues $ 5,047 $ 3,142 $ 12,323 $ 21,578 $ 24,852 Cost of revenues 3,507 2,824 8,817 13,842 16,451 ------------ ------------ ------------- ------------- ----------------- Gross profit 1,540 318 3,506 7,736 8,401 ------------ ------------ ------------- ------------- ----------------- Operating expenses: Research and development 2,285 2,948 6,781 10,534 12,967 Less: participation by the Chief Scientist of the Government of Israel 480 716 1,326 2,266 2,660 ------------ ------------ ------------- ------------- ----------------- Research and development, net 1,805 2,232 5,455 8,268 10,307 Sales and marketing 2,236 2,093 6,820 9,795 11,924 General and administrative 480 599 1,521 2,553 3,138 ------------ ------------ ------------- ------------- ----------------- Total operating expenses 4,521 4,924 13,796 20,616 25,3690 ------------ ------------ ------------- ------------- ----------------- Operating loss (2,981) (4,606) (10,290) (12,880) (16,968) Financial income, net 369 683 1,236 2,299 2,769 ------------ ------------ ------------- ------------- ----------------- Net loss $ (2,612) $ (3,923) $ (9,054) $ (10,581) $ (14,199) ============ ============ ============= ============= ================= Basic and diluted net loss per share $ (0.12) $ (0.19) $ (0.41) $ (0.51) $ (0.67) ============ ============ ============= ============= ================= Weighted average number of shares used in computing basic and diluted net 22,425,096 21,064,343 22,334,970 20,863,131 21,099,336 loss per share ============ ============ ============= ============= =================
* PRO-FORMA FINANCIAL PRESENTATION Pro-forma results are presented for informational purposes only. Pro-forma financial results for all periods presented exclude the effect of stock-based, non-cash deferred compensation expenses. In addition, the pro-forma results for the three months ended September 30, 2001 exclude one-time charges of $17.8 million for an inventory write-down and a fixed asset impairment presented in cost of revenues. The pro-forma results for the nine months ended September 30, 2001 and for the year ended December 31, 2001 exclude one-time charges of $28.8 million for an inventory write-down and a fixed asset impairment presented in cost of revenues, $2.6 million for doubtful debt presented in general and administrative expenses, and $4.7 million due to restructuring plans presented in restructuring costs. (MORE) THIRD QUARTER 2002 RESULTS-4
CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) YEAR ENDED THREE MONTHS ENDED NINE MONTHS ENDED DECEMBER SEPTEMBER 30, SEPTEMBER 30, 31, ------------------------------- ------------------------------- ----------------- 2002 2001 2002 2001 2001 -------------- -------------- -------------- -------------- ----------------- UNAUDITED AUDITED ----------------------------------------------------------------------------------- Revenues $ 5,047 $ 3,142 $ 12,323 $ 21,578 $ 24,852 Cost of revenues 3,507 20,605 8,817 42,673 45,282 ------------ ------------ ------------- ------------- ----------------- Gross profit (loss) 1,540 (17,463) 3,506 (21,095) (20,430) Operating expenses: Research and development 2,285 2,948 6,781 10,534 12,967 Less: participation by the Chief Scientist of the Government of Israel 480 716 1,326 2,266 2,660 ------------ ------------ ------------- ------------- ----------------- Research and development, net 1,805 2,232 5,455 8,268 10,307 Sales and marketing 2,236 2,093 6,820 9,795 11,924 General and administrative 480 599 1,521 5,185 5,770 Amortization of deferred stock compensation (a) 679 1,439 2,399 5,226 6,431 Restructuring costs - - - 4,750 4,750 ------------ ------------ ------------- ------------- ----------------- Total operating expenses 5,200 6,363 16,195 33,224 39,182 ------------ ------------ ------------- ------------- ----------------- Operating loss (3,660) (23,826) (12,689) (54,319) (59,612) Financial income, net 369 683 1,236 2,299 2,769 ------------ ------------ ------------- ------------- ----------------- Net loss $ (3,291) $ (23,143) $ (11,453) $ (52,020) $ (56,843) ============ ============ ============= ============= ================= Basic and diluted net loss per share $ (0.15) $ (1.10) $ (0.51) $ (2.49) $ (2.69) ============ ============ ============= ============= ================= Weighted average number of shares used in computing basic and diluted net loss per share 22,425,096 21,064,343 22,334,970 20,863,131 21,099,336 ============ ============ ============= ============= ================= (a) Amortization of deferred stock compensation relates to the following: Cost of revenues $ 49 $ 90 $ 167 $ 314 $ 400 Research and development 218 525 781 1,863 2,248 Sales and marketing 238 426 862 1,596 1,984 General and administrative 174 398 589 1,453 1,799 ------------ ------------ ------------- ------------- ----------------- Total amortization of deferred ----- stock compensation $ 679 $ 1,439 $ 2,399 $ 5,226 $ 6,431 ============ ============ ============= ============= =================
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CONSOLIDATED BALANCE SHEETS (U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) SEPTEMBER DECEMBER 30, 31, 2002 2001 ------------------ ------------------ UNAUDITED AUDITED ------------------ ------------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 10,188 $ 6,421 Short-term bank deposits 10,174 26,741 Corporate bonds 6,664 19,813 Trade receivables, net 3,312 2,822 Other accounts receivable and prepaid expenses 2,259 2,143 Inventories 7,043 7,377 ------------------ ------------------ TOTAL CURRENT ASSETS 39,640 65,317 ------------------ ------------------ LONG-TERM INVESTMENTS: Long-term corporate bonds 11,684 746 Long-term bank deposits 6,818 - Severance pay funds 1,080 930 ------------------ ------------------ TOTAL LONG-TERM INVESTMENTS 19,582 1,676 ------------------ ------------------ PROPERTY AND EQUIPMENT, NET 3,901 5,093 ------------------ ------------------ TOTAL ASSETS $ 63,123 $ 72,086 ================== ================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 5,798 $ 5,040 Other accounts payable and accrued expenses 4,072 4,916 ------------------ ------------------ TOTAL CURRENT LIABILITIES 9,870 9,956 ------------------ ------------------ ACCRUED SEVERANCE PAY 1,655 1,511 ------------------ ------------------ SHAREHOLDERS' EQUITY: Share capital: Ordinary shares of NIS 0.01 par value: Authorized: 40,000,000 shares as of December 31, 2001 and September 30, 2002, respectively; issued and outstanding: 22,165,196 and 22,459,096 as of December 31, 2001 and September 30, 2002, respectively 56 56 Additional paid-in capital 169,334 169,355 Deferred stock compensation (2,395) (4,848) Accumulated deficit (115,397) (103,944) ------------------ ------------------ TOTAL SHAREHOLDERS' EQUITY 51,598 60,619 ------------------ ------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 63,123 $ 72,086 ================== ==================
THIRD QUARTER 2002 RESULTS-5 (MORE) 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. Important factors that could cause actual results to differ materially from forecasts and estimates include: Ceragon's limited operating history and history of losses; Ceragon's dependence on a limited number of key customers, independent manufacturers and suppliers; and the demand for Ceragon's products and technology. These risks and uncertainties, as well as others, 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. ### CONTACT: Linda Pitt GAJ Services Inc. 859-291-1005 lpitt@gajservices.com Daphna Golden (Investors) Ceragon Networks Ltd. +972-3-645-5513 ir@ceragon.com