Ceragon Networks Reports Fourth Quarter And Full Year 2013 Financial Results

 Ceragon Networks Reports Fourth Quarter And Full Year 2013 Financial Results

PR Newswire

PARAMUS, N.J., Feb. 13, 2014

PARAMUS,N.J., Feb. 13, 2014 /PRNewswire/ --Ceragon Networks Ltd. (NASDAQ:
CRNT), the #1 high-capacity wireless hauling specialist today reported results
for the fourth quarter and full year of 2013 which ended December 31, 2013.

Revenues for the fourth quarter of 2013 were $89.5 million, down 16% from
$106.8 million for the fourth quarter of 2012, and down 3% from $92.1 million
in the third quarter of 2013.

Net loss in accordance with US Generally Accepted Accounting Principles (GAAP)
for the fourth quarter of 2013 was $(15.4) million or $(0.35) per basic share
and diluted share, compared to net loss of $(8.4) million in the fourth
quarter of 2012, or $(0.23) per basic share and diluted share.

On a non-GAAP basis, net loss for the fourth quarter of 2013 was $(4.1)
million, or $(0.09) per basic and diluted share, excluding (a) $0.9 million of
equity-based compensation expenses, (b) $0.6 million amortization of
intangible assets, (c) $12.6 million restructuring and other expenses
associated with the Q4 2013 restructuring, (d) $7.5 million primarily related
to the expiration of certain pre-acquisition indirect tax exposures, (e) $1.3
million non-recurring adjustment of pension liabilities, and (f) $3.3 million
of financial expenses related to actions taken in order to expatriate cash
from Argentina. Non-GAAP net income for the fourth quarter of 2012 was $0.4
million, or $0.01 per basic share and diluted share, with 16% fewer weighted
average shares outstanding (Please refer to the accompanying financial tables
for reconciliation of GAAP financial information to non-GAAP.)

Revenues for the full year of 2013 were $361.8 million, down 19% from $446.7
million in 2012. Net loss on a GAAP basis for 2013 was $(47.5) million or
$(1.23) per basic share and diluted share. Net loss for the year 2012 was
$(23.4) million or $(0.64) per basic share and diluted share.

On a non-GAAP basis, net loss for 2013 was $(20.0) million or $(0.52) per
basic share and diluted share, excluding (a) $3.7 million of equity-based
compensation expenses, (b) $2.5 million amortization of intangible assets,
(c) $0.5 million of inventory step-up, (d) $15.4 million restructuring and
other expenses associated with Q4 2013 restructuring, (e) $6.4 million related
to the expiration of certain pre-acquisition indirect tax exposures, net of
$1.3 million of interest accretion during the year, (f) $1.3 million
non-recurring adjustment of pension liabilities, (g) $3.1 million
non-recurring currency devaluation in Venezuela, (h) $3.3 million financial
expenses related to actions taken in order to expatriate cash from Argentina,
and (i) $4.0 million non-recurring adjustment of valuation allowance on tax
assets. Net income for the year 2012 was $0.1 million, or $0.00 per basic
share and diluted share.

Gross margin on a GAAP basis in the fourth quarter of 2013 was 31.0% of
revenues. Gross margin on a non-GAAP basis in the fourth quarter was 32.1% of
revenues.

Operating loss on a GAAP basis in the fourth quarter of 2013 was ($9.6)
million. On a non-GAAP basis operating loss in the fourth quarter of 2013 was
$(1.6) million.

Cash and cash investments at the end of the quarter were $52.3 million.

"We ended 2013 as we expected, with Latin America continuing to be the
strongest region," said Ira Palti, President and CEO of Ceragon. "The
restructuring in Q4 was completed swiftly, the organization is operating
efficiently, and the balance of our new product portfolio will be shipping
this quarter as planned.

"The excellent feedback we are receiving from customers is validating our
strategy, our technology and our time-to-market leadership. With the
restructuring behind us, and our new products garnering attention from
existing customers as well as opening doors with important new ones, we are
entering 2014 well-positioned to benefit as overall demand improves, which we
expect to begin gradually in the second half of the year," concluded Mr.
Palti.

Supplemental quarterly revenue breakouts:

Geographical breakdown, fourth quarter of 2013:

  oEurope: 20%
  oAfrica: 11%
  oNorth America: 10%
  oLatin America: 40%
  oIndia: 8%
  oAPAC: 11%

Geographical breakdown, full year 2013:

  oEurope: 18%
  oAfrica: 20%
  oNorth America: 9%
  oLatin America: 34%
  oIndia: 8%
  oAPAC: 11%

A conference call to discuss the results will begin at 9:00 a.m. ET. Investors
are invited to join the Company's teleconference by calling USA: (800)
230-1085 or International: +1 (612) 332-0107, from 8:50 a.m. ET. 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-relationsselecting 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: 314921. A replay of both the
call and the webcast will be available through March 13, 2014.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 high-capacity wireless hauling
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.

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 may contain statements concerning Ceragon's future
prospects that are "forward-looking statements" under the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject
to risks and uncertainties that may cause actual results to differ materially,
including risks associated with doing business in Latin America, including
currency export controls and recent economic concerns, the risks relating to
the concentration of our business in developing nations, 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 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:
Aviram Steinhart    or Claudia Gatlin
+972 3 5431 443        +1 201 853 0228
avirams@ceragon.com    claudiag@ceragon.com
Media:
Yoel Knoll
+972 3 5431 32 or
+1 201 853 0271
yoelk@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,
                        2013          2012          2013          2012
Revenues                $          $           $           $  
                        89,492        106,849       361,772       446,651
Cost of revenues        61,751        71,802        249,543       308,354
Gross profit            27,741        35,047        112,229       138,297
Operating expenses:
Research and            10,409        12,007        42,962        47,487
development, net
Selling and marketing   17,106        18,564        67,743        77,326
General and                               
administrative          8,089         6,925         26,757        27,519

Restructuring costs                 
                        9,345         4,608         9,345         4,608
Other income            (7,657)       -             (7,657)       -
Total operating         $   37,292  $   42,104  $  139,150  $  156,940
expenses
Operating loss          9,551         7,058         26,921        18,643
Financial expenses,     5,162         938           14,018        3,547
net
Loss before taxes       14,713        7,995         40,939        22,190
Taxes on income         664           405           6,539         1,201
Net loss                $          $         $           $  
                        15,377        8,400         47,478       23,391
Basic and diluted net   $         $          $          $   
loss per share          0.35          0.23         1.23         0.64
Weighted average                                               
number of shares used
in computing basic and                                         
diluted net loss per
share                   43,639,777    36,565,168    38,519,606    36,457,989



CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
                                                  December 31,    December 31,
                                                                  2012
                                                  2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                         $  42,407     $  47,099
Short-term bank deposits                          446             422
Marketable securities                             5,499           -
Trade receivables, net                            131,166         149,120
Deferred taxes, net                               7,198           8,589
Other accounts receivable and prepaid expenses    34,205          38,743
Inventories                                       64,239          65,554
Total current assets                              285,160         309,527
NON-CURRENT ASSETS:
Marketable securities                             3,985           4,068
Deferred tax assets, net                          6,542           9,140
 Severance pay and pension funds                7,065           7,163
 Property and equipment, net                    35,245          33,642
 Intangible assets, net                         7,213           9,809
Goodwill                                          14,935          15,283
Other non-current assets                          5,826           4,964
                                                  80,811          84,069
Total assets                                      $   365,971   $ 393,596


LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term loan, including current maturities of  $    46,922  $  25,232
long term bank loan
Trade payables                                    77,979          102,079
Deferred revenues                                 7,968           16,719
Other accounts payable and accrued expenses       45,526          36,090
Total current liabilities                         178,395         180,120


LONG-TERM LIABILITIES
Long term bank loan, net of current maturities    10,304          18,536
Accrued severance pay and pension                 13,635          12,311
Other long term payables                          28,559          38,920
                                                  52,498          69,767
SHAREHOLDERS' EQUITY:
Share capital:
 Ordinary shares                               141             98
Additional paid-in capital                        357,989         318,106
Treasury shares at cost                           (20,091)        (20,091)
Other comprehensive loss                          (1,569)         (490)
Accumulated deficits                              (201,392)       (153,914)
Total shareholders' equity                        135,078         143,709
Total liabilities and shareholders' equity        $  365,971    $  393,596



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
                         Three months ended         Year ended

                         December 31,               December 31,
                         2013          2012         2013          2012
Cash flow from operating
activities:
Net loss                 $  (15,377)  $  (8,400)  $  (47,478)  $  (23,391)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and         3,989         3,802        15,645        15,030
amortization
Stock-based compensation 1,048         1,215        3,822         5,460
expense
Write off of property    2,559         -            2,559         -
and equipment
Capital loss from        2,108         -            2,108         -
marketable securities
Decrease (Increase) in
trade and other          (2,062)       27,768       18,272        (11,753)
receivables, net
Decrease (Increase) in
inventory, net of write  (7,092)       (1,599)      401           27,210
off
Increase (decrease) in
trade payables and       (1,975)       274          (21,044)      17,712
accrued liabilities
Decrease in deferred     (533)         (5,170)      (8,751)       (21,589)
revenues
Decrease (increase) in   (171)         (324)        3,572         (743)
deferred tax asset, net
Other adjustments        1,404         (481)        1,382         (727)
Net cash provided by
(used in) operating      $ (16,102)   $ 17,085    $ (29,512)   $ 7,209
activities
Cash flow from investing
activities:
Purchase of property and (4,717)       (4,317)      (16,423)      (14,530)
equipment ,net
Investment in short and  (424)         -            (679)         (1,266)
long-term bank deposit
Proceeds from maturities
of short and long-term   299           -            635           7,920
bank deposits
Investment in available
for sale marketable      (7,867)       -            (7,867)       (64)
securities
Proceeds from sales of
available for sale       212           -            513           9,781
marketable securities
Net cash provided by
(used in) investing      $ (12,497)   $ (4,317)   $ (23,821)   $ 1,841
activities
Cash flow from financing
activities:
Proceeds from exercise   -             2            1,145         736
of options
Proceeds from issuance   34,957        -            34,957        -
of shares, net
Proceeds from financial  (2,300)       2,000        23,690        27,000
institutions, net
Repayments of bank loans (2,058)       (12,058)     (10,232)      (18,232)
Net cash provided by                                           
(used in) financing
activities               $ 30,599     $ (10,056)  $ 49,560     $ 9,504
Translation adjustments                                        
on cash and cash
equivalents              $ (175)       $ 36         $ (919)      $ (446)
Increase (Decrease) in
cash and cash            $ 1,825      $ 2,748     $ (4,692)    $ 18,108
equivalents
Cash and cash
equivalents at the       40,582        44,351       47,099        28,991
beginning of the period
Cash and cash
equivalents at the end   $ 42,407     $ 47,099    $ 42,407     $ 47,099
of the period



RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
                     Three months ended December 31,
                     2013                                         2012
                     GAAP (as       Adjustments     Non-GAAP      Non-GAAP
                     reported)
Revenues             $  89,492                    $  89,492   $  106,849
Cost of revenues     61,751         (a) 990     60,761        71,307
Gross profit         27,741                         28,731        35,542
Operating
expenses:
Research and         10,409         (b) 1,822    8,587         10,539
development, net
Selling and          17,106         (c) 1,219    15,887        17,344
marketing
General and          8,089          (d) 2,252    5,837         5,895
administrative
Restructuring        9,345          9,345           -             -
costs
Other income         (7,657)        (e)(7,657)    -             -
Total operating      $  37,292                    $ 30,311      $ 33,778
expenses
Operating profit     (9,551)                        (1,580)       1,764
(loss)
Financial            5,162          (f)3,320    1,842         938
expenses, net
Income (loss)        (14,713)                       (3,422)       826
before taxes
Taxes on income      664                            664           405
Net income (loss)    $                             $           $   421
                     (15,377)                      (4,086)
Basic net earnings   $                            $           $   0.01
(loss) per share     (0.35)                        (0.09)
Diluted net          $                            $  
earnings (loss)      (0.35)                        (0.09)       $   0.01
per share
Weighted average
number of shares
used in computing    43,639,777                     43,639,777    36,565,168
basic net earnings
(loss) per share
Weighted average
number of shares
used in computing    43,639,777                     43,639,777    36,641,920
diluted net
earnings (loss)
per share
Total adjustments                   11,291
(a) Cost of revenues includes $0.3 million of amortization of intangible
assets, $40 thousand of stock based compensation expenses, $0.2 million of
changes in pre-acquisition indirect tax positions and $0.4 million of the Q4
2013 restructuring plan related costs in the three months ended December 31,
2013.

(b) Research and development expenses include $1.6 million of the Q4 2013
restructuring related costs and $0.3 million of stock based compensation
expenses in the three months ended December 31, 2013.

(c) Selling and marketing expenses includes $0.3 million of amortization of
intangible assets, $0.6 million of the  Q4  2013 restructuring related costs 
and $0.2 million of stock based compensation expenses in the three months
ended  December 31, 2013.

(d) General and administrative expenses include $0.6 million of the  Q4  2013
restructuring related costs, $1.3 million of non-recurring adjustment of
pension liabilities in Norway as a result of a change in the official
Norwegian data regarding estimated life expectancy  and $0.4 million of stock
based compensation expenses in the three months ended December 31, 2013.

(e) Other income includes $7.7 million related to the expiration of certain
pre-acquisition indirect tax exposures during the three months ended December
31, 2013.

(f) Financial expenses include $3.3 million related to actions taken in order
to expatriate cash from Argentina in the three months ended December 31,
2013.



RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
                      Year ended December 31,
                      2013                                         2012
                      GAAP (as        Adjustments     Non-GAAP     Non-GAAP
                      reported)
Revenues              $  361,772                     $  361,772  $  446,651
Cost of revenues      249,543         (a) 3,792    245,751      299,781
Gross profit          112,229                         116,021      146,870
Operating expenses:
Research and          42,962          (b) 3,810   39,152       44,584
development, net
Selling and           67,743          (c) 3,957   63,786       72,306
marketing
General and           26,757          (d) 3,768   22,989       25,167
administrative
Restructuring costs   9,345           9,345           -            -
Other income          (7,657)         (e)          -            -
                                      (7,657)
Total operating       $  139,150                     $  125,927  $  142,057
expenses
Operating profit      (26,921)                        (9,906)      4,813
(loss)
Financial expenses,   14,018          (f)         7,565        3,547
net                                   6,453
Income (loss)         (40,939)                        (17,471)     1,266
before taxes
Taxes on income       6,539           (g) 4,037   2,502        1,201
Net income (loss)     $  (47,478)                    $           $  65
                                                      (19,973)
Basic net earnings    $   (1.23)                    $          $   0.00
(loss) per share                                      (0.52)
Diluted net                                           $  
earnings (loss) per   $   (1.23)                    (0.52)       $   0.00
share
Weighted average
number of shares
used in computing     38,519,606                      38,519,606   36,457,989
basic net earnings
(loss) per share
Weighted average
number of shares
used in computing     38,519,606                      38,519,606   37,092,887
diluted net
earnings (loss)
per share
Total adjustments                     27,505
(a) Cost of revenues includes $1.2 million of amortization of intangible
assets, $0.5 million of inventory step-up, $1.3 million of changes in
pre-acquisition indirect tax positions, $0.2 million of stock based
compensation expenses and $0.7 million of the Q4 2013 restructuring related
costs in the year ended December 31, 2013.

(b) Research and development expenses include $2.8 million of the Q4 2013
restructuring related costs and $1.0 million of stock based compensation
expenses in the year ended December 31, 2013.

(c) Selling and marketing expenses includes $1.3 million of amortization of
intangible assets, $1.3 million of the Q4 2013 restructuring related costs and
$1.3 million of stock based compensation expenses in the year ended December
31, 2013.

(d) General and administrative expenses include $1.3 million of the Q4 2013
restructuring related costs, $1.3 million of non-recurring adjustment of
pension liabilities in Norway as a result of a change in the official
Norwegian data regarding estimated life expectancy and $1.2 million of stock
based compensation expenses, in the year ended December 31, 2013.

(e) Other income includes $7.7 million related to the expiration of certain
pre-acquisition indirect tax exposures during the year ended December 31,
2013.

(f) Financial expenses include $3.1 million non-recurring currency devaluation
in Venezuela and $3.3 million charge related to actions taken in order to
expatriate cash from Argentina in the year ended December 31, 2013.

(g) Taxes on income include $4.0 million non-recurring adjustment of valuation
allowance on tax assets in the year ended December 31, 2013.



RECONCILIATION BETWEEN REPORTED AND NON-GAAP
OPERATING PROFIT (LOSS)
(U.S. dollars in thousands)
(Unaudited)
                                                     Three months   Year ended
                                                     ended
                                                     December 31, 2013
Reported GAAP net operating loss                     (9,551)        (26,921)
Stock based compensation expenses                    932            3,706
Amortization of purchased intangible assets          632            2,534
Inventory step up                                    -              459
Restructuring expenses                               9,345          9,345
Q4 2013 restructuring related costs                  3,232          6,076
Expiration of certain pre-acquisition indirect tax
exposures,                                           (7,461)        (6,396)
net of interest accretion
Non-recurring adjustment of pension liabilities      1,291          1,291
Non-GAAP net operating loss                          (1,580)        (9,906)





SOURCE Ceragon Networks Ltd.
 
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