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.