EX-99 2 exhibit_a.htm EXHIBIT A exhibit_a.htm
Exhibit A
 
Ceragon Reports First Quarter 2015 Results
May 06, 2015
 
 
CERAGON NETWORKS REPORTS FIRST QUARTER 2015
FINANCIAL RESULTS

Company increases non-GAAP operating profit and further reduces cash consumption
 
Paramus, New Jersey, May 6, 2015 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the first quarter ended March 31, 2015.
 
First Quarter 2015 Highlights:
 
Revenues -- $93.7 million, up 33% from the first quarter of 2014, and down 16% from the fourth quarter of 2014.
 
Gross margin – 25.9%, compared to 22.1% in the first quarter of 2014 and 20.5% in the fourth quarter of 2014.
 
Operating income – $0.6 million, compared to an operating loss of $(17.1) million in the first quarter of 2014 and an operating loss of $(25.9) million in the fourth quarter of 2014.
 
Net loss – $(7.0) million or $(0.09) per diluted share. Net loss for the first quarter of 2014 was $(27.0) million, or $(0.51) per diluted share. Net loss for the fourth quarter of 2014 was $(52.0) million or $(0.68) per diluted share.
 
One-time items – First quarter 2015 net loss includes a total of $4.2 million of one-time charges. This amount consists of $1.2 million in restructuring costs and additional financial expense of $3.0 million resulting from re-measurement of certain assets related to Venezuela.
 
Non-GAAP results – gross margin was 26.3%, operating profit was $2.5 million, and net loss was $(1.3) million, or $(0.02) per diluted share. Non-GAAP results exclude one-time items as well as recurring adjustments of $1.5 million.  For a reconciliation of GAAP to non-GAAP results, see the attached tables.
 
Cash and cash equivalents – $37.3 million at March 31, 2015, compared to $41.4 million at December 31, 2014. The decrease represents a combination of $1.2 million of cash consumption and a currency devaluation, primarily in Venezuela, of approximately $3 million.
 
 
 
 
 
“Our first quarter performance clearly reflects the initiatives we have been pursuing to improve profitability,” said Ira Palti, president and CEO of Ceragon. “Gross margin improved and operating expenses declined significantly, resulting in further improvement in our operating result, and we managed to lower our cash consumption to $1.2 million in Q1. We continue to expect to generate positive cash flow in Q2 and will continue to focus on improving profitability with a target of reaching a mid-single-digit non-GAAP operating margin by the end of this year.”
 
Supplemental revenue breakouts:
 
Geographical breakdown, first quarter of 2015:
 
 
·
Europe:
16%
 
 
·
Africa:
  8%
 
 
·
North America:
10%
 
 
·
Latin America:
28%
 
 
·
India:
31%
 
 
·
APAC:
  7%
 
A conference call to discuss the results will begin 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) 234-9959, 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/about-us/ceragon/investor-relations, 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: 357142. A replay of both the call and the webcast will be available through June 6, 2015.
 
About Ceragon Networks Ltd.
 
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We provide innovative, flexible and cost-effective wireless backhaul and fronthaul 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.
 
 
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Join the Discussion
 
Ceragon Networks® and FibeAir® are registered trademarks 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.
 
This press release contains statements concerning Ceragon’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include: projections of capital expenditures and liquidity, competitive pressures, revenues, growth prospects, product development, financial resources, restructuring costs, cost savings and other financial matters. You can identify these and other forward-looking statements by the use of words such as “may,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “expects,” “intends,” “potential” or the negative of such terms, or other comparable terminology. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks associated with increased working capital needs; risks associated with the ability of Ceragon to meet its liquidity needs; the risk that Ceragon will not achieve the benefits it expects from its expense reduction and profit enhancement programs; the risk that Ceragon will not comply with the financial or other covenants in its agreements with its lenders; the risk that sales of Ceragon’s new IP-20 products will not meet expectations; risks associated with doing business in Latin America, including currency export controls and recent economic concerns; risks relating to the concentration of our business in the Asia Pacific region and in developing nations; the risk of significant expenses in connection with potential contingent tax liability associated with Nera’s prior operations or facilities; and other risks and uncertainties detailed from time to time in Ceragon’s Annual Report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission, and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements.
 
Investors:
Doron Arazi            or                      
+972 3 5431 660                                        
dorona@ceragon.com
 
Claudia Gatlin
+1 212 830-9080
claudiag@ceragon.com
 
Media:
Tanya Solomon
+972 3 5431163
tanyas@ceragon.com
 
-tables follow-
 
 
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Ceragon Reports First Quarter 2015 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

   
Three months ended
  
   
March 31,
  
   
2015
    
2014
  
             
Revenues
   $ 93,653     $ 70,515  
Cost of revenues
     69,413       54,936  
                 
Gross profit
     24,240       15,579  
                 
Operating expenses:
                
Research and development, net
     6,399       10,439  
Selling and marketing
     11,308       15,420  
General and administrative
     4,736       5,906  
Restructuring costs
     1,225       936  
                 
Total operating expenses
   $ 23,668     $ 32,701  
                 
Operating income (loss)
     572       (17,122 )
Financial expenses, net
     6,346       8,164  
                 
Loss before taxes
     5,774       25,286  
                 
Taxes on income
     1,221       1,677  
                 
Net loss
   $ 6,995     $ 26,963  
                 
Basic and diluted net loss per share
   $ 0.09     $ 0.51  
                 
Weighted average number of shares used in computing basic and diluted net loss per share
     77,145,265       52,457,168  
 

 
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Ceragon Reports First Quarter 2015 Results

CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
 
   
March 31,
2015
    
December 31,
2014
  
   
Unaudited
    
Audited
  
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
   $ 37,270     $ 41,423  
Short-term bank deposits
     349       413  
Marketable securities
     -       535  
Trade receivables, net
     141,961       162,626  
Other accounts receivable and prepaid expenses
     23,270       22,898  
Deferred taxes, net
     2,993       3,522  
Inventories
     55,700       61,830  
Total current assets
     261,543       293,247  
                 
NON-CURRENT ASSETS:
                
   Deferred taxes, net
     167       239  
   Severance pay funds and pension
     5,313       5,669  
   Property and equipment, net
     31,731       33,138  
   Intangible assets, net
     4,586       5,070  
   Other non-current assets
     4,460       4,510  
Total non-current assets
     46,257       48,626  
Total assets
   $ 307,800     $ 341,873  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Short term loans, including current maturities of long term loan
   $ 50,896     $ 48,832  
Trade payables
     89,916       101,752  
Deferred revenues
     12,190       17,667  
Other accounts payable and accrued expenses
     33,816       37,248  
Total current liabilities
     186,818       205,499  
                 
    LONG-TERM LIABILITIES
                
Long term bank loan, net of current maturities
     -       2,072  
Accrued severance pay and pension
     10,660       11,452  
Other long term liabilities
     16,878       18,298  
Total long-term liabilities
     27,538       31,822  
                 
    SHAREHOLDERS' EQUITY:
                
Share capital:
                
        Ordinary shares
     212       212  
Additional paid-in capital
     406,607       406,413  
Treasury shares at cost
     (20,091 )     (20,091 )
Accumulated other comprehensive loss, net of taxes
     (8,418 )     (4,111 )
Accumulated deficit
     (284,866 )     (277,871 )
                 
Total shareholders' equity
     93,444       104,552  
                 
Total liabilities and shareholders' equity
   $ 307,800     $ 341,873  
 
 
 
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 Ceragon Reports First Quarter 2015 Results

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
 
   
Three months ended
  
   
March 31,
  
   
2015
    
2014
  
Cash flow from operating activities:
            
Net loss
   $ (6,995 )   $ (26,963 )
Adjustments to reconcile net loss to net cash used in operating activities:
                
                 
Depreciation and amortization
     3,503       3,378  
Stock-based compensation expense
     194       1,047  
Decrease in trade and other receivables, net
     14,869       1,894  
Decrease in inventory, net of write-off
     5,109       1,609  
Decrease in deferred tax asset, net
     730       1,317  
Decrease in trade payables and accrued liabilities
     (13,719 )     (15,058 )
Decrease in deferred revenues
     (5,477 )     (2,899 )
Other adjustments
     (106 )     841  
Net cash used in operating activities
   $ (1,892 )   $ (34,834 )
                 
Cash flow from investing activities:
                
Purchase of property and equipment ,net
     (2,042 )     (2,850 )
Proceeds from short and long-term bank deposits
     64       50  
Proceeds from sale and maturities of marketable securities
     122       5,161  
Net cash provided by (used in) investing activities
   $ (1,856 )   $ 2,361  
                 
Cash flow from financing activities:
                
Proceeds from short-term bank loans
     2,050       18,110  
Repayment of loans from financial institutions
     (2,058 )     (2,058 )
Net cash provided by (used in) financing activities
   $ (8 )   $ 16,052  
                 
Translation adjustments on cash and cash equivalents
   $ (397 )   $ 69  
                 
Decrease in cash and cash equivalents
   $ (4,153 )   $ (16,352 )
                 
Cash and cash equivalents at the beginning of the period
     41,423       42,407  
                 
Cash and cash equivalents at the end of the period
   $ 37,270     $ 26,055  
 
 
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Ceragon Reports First Quarter 2015 Results

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
 
 
  
Three months ended March 31,
  
   
2015
    
2014
  
   
GAAP (as reported)
    
Adjustments
    
Non-GAAP
    
Non-GAAP
  
                         
Revenues
   $ 93,653           $ 93,653     $ 70,515  
Cost of revenues
     69,413    
(a)364
       69,049       54,070  
Gross profit
     24,240             24,604       16,445  
                               
Operating expenses:
                              
Research and development, net
     6,399    
(b)96
       6,303       7,853  
Selling and marketing
     11,308    
(c)271
       11,037       14,405  
General and administrative
     4,736    
(d)(16)
       4,752       5,022  
Restructuring costs
     1,225       1,225       -       -  
                                 
Total operating expenses
   $ 23,668             $ 22,092     $ 27,280  
                                 
Operating income (loss)
     572               2,512       (10,835 )
Financial expenses, net
     6,346    
(e)2,974
       3,372       1,854  
                                 
Loss before taxes
     5,774               860       12,689  
                                 
Taxes on income
     1,221    
(f)734
       487       187  
                                 
Net loss
   $ 6,995             $ 1,347     $ 12,876  
                                 
Basic and diluted net loss per share
   $ 0.09             $ 0.02     $ 0.25  
                                 
Weighted average number of shares used in computing basic and diluted net loss  per share
     77,145,265               77,145,265       52,457,168  
                                 
Total adjustments
             5,648                  
 
(a)
Cost of revenues includes $0.3 million of amortization of intangible assets, $30 thousand of changes in pre-acquisition indirect tax positions and $30 thousand of stock based compensation expenses in the three months ended March 31, 2015.
(b)
Research and development expenses include stock-based compensation expenses in the three months ended March 31, 2015.
(c)
Selling and marketing expenses include $0.2 million of amortization of intangible assets and $0.1 million of stock based compensation expenses in the three months ended March 31, 2015.
(d)
General and administrative expenses include net stock based compensation expenses in the three months ended March 31, 2015.
(e)
Financial expenses include the effect of re-measurement of certain assets denominated in or linked to the U.S. dollar in Venezuela, due to restrictive government policies on payments in foreign currency in the three months ended March 31, 2015.
(f)
Taxes on income include non-cash tax adjustments in the three months ended March 31, 2015.

 
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Ceragon Reports First Quarter 2015 Results

RECONCILIATION BETWEEN REPORTED AND NON-GAAP
NET LOSS
(U.S. dollars in thousands)
(Unaudited)
 
   
Three months ended
  
   
March 31,
  
   
2015
    
2014
  
             
Reported GAAP net loss
     6,995       26,963  
                 
Stock based compensation expenses
     194       1,047  
Amortization of intangible assets
     492       523  
Restructuring expenses
     1,225       4,440  
Changes in pre-acquisition indirect tax positions
     30       277  
Currency devaluation in Venezuela
     2,973       4,140  
Expenses related to certain transactions to expatriate cash from Venezuela and Argentina
     -       2,170  
Non-cash tax adjustments
     734       1,490  
                 
Non-GAAP net loss
     1,347       12,876  
 
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