Ceragon Networks Reports First Quarter 2014 Financial Results PR Newswire PARAMUS, N.J., May 8, 2014 PARAMUS, N.J., May 8, 2014 /PRNewswire/ --Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless hauling specialist today reported results for the first quarter which ended March 31, 2014. Revenues for the first quarter of 2014 were within the range of updated guidance at $70.5 million, down 22% from $90.1 million for the first quarter of 2013, and down 21% from $89.5 million in the fourth quarter of 2013. Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the first quarter of 2014 was $(27.0) million or $(0.51) per basic share and diluted share, compared to net loss of $(14.1) million in the first quarter of 2013, or $(0.38) per basic share and diluted share. On a non-GAAP basis, net loss for the first quarter was $(12.9) million, or $(0.25) per basic share and diluted share, excluding (a) $1.1 million of stock-based compensation expenses, (b) $0.5 million amortization of intangible assets, (c) $4.4 million restructuring and other expenses associated with the 2013 restructuring (d) $0.3 million of changes in pre-acquisition indirect tax positions (e) $4.1 million finance expenses related to a currency devaluation in Venezuela (f) $2.2 million related to certain transactions to expatriate cash from Venezuela and Argentina, and (g) $1.5 million of non-cash tax adjustments. Non-GAAP net loss for the first quarter of 2013 was $(5.7) million, or $(0.16) 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 first quarter of 2014 was 22.1% of revenues. Gross margin on a non-GAAP basis was 23.3% of revenues. Operating loss on a GAAP basis in the first quarter of 2014 was $(17.1) million. On a non-GAAP basis, operating loss was $(10.8) million. Cash and cash investments at the end of the quarter were $30.5 million. On April 2, the company announced a settlement agreement with Eltek ASA pursuant to which it has received $17 million in cash in the second quarter. "We are pleased to see the strong bookings during the first quarter, especially for our new IP-20 products," said Ira Palti, President and CEO of Ceragon. "As previously indicated, our bookings increased substantially from the fourth quarter and the IP-20 products accounted for more than 40% of total bookings. The number of requests for proposals, evaluations, trials and other new business activity continues to increase with both existing and new customers, and we are making progress on some large projects. These factors are the basis of our expectation that the second half of the year will be substantially better than the first half. "Meanwhile, as we indicated in our update on April 2^nd, our first quarter revenues were affected by our decision not to ship and install an order we received from a large customer pending renegotiation of payment terms, and the higher than expected proportion of orders for new IP-20 products during the initial phase of the manufacturing ramp. We have reached an understanding with the customer that will improve payment terms but also will result in spreading shipments over a longer time period in the future. We have made good progress during the initial phase of ramping our manufacturing for the new products during the first quarter, and we continue to ramp production as quickly as possible to meet the growing demand for the IP-20 products." Supplemental revenue breakouts: Geographical breakdown, first quarter of 2014: oEurope: 19% oAfrica: 11% oNorth America: 13% oLatin America: 30% oIndia: 14% oAPAC: 13% A conference call will follow today, May 8, 2014, beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (877) 777-1968, or international +1(612) 332-0632 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: 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: 325517. A replay of both the call and the webcast will be available through June 8, 2014. About Ceragon Networks Ltd. Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 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. Safe Harbor 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 increased working capital needs, 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, 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, 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: Media: Aviram Steinhart or Claudia Gatlin Yoel Knoll +972 3 5431 443 +1 201 853 0228 +972 3 5431132 or +1 201 853 0271 email@example.com firstname.lastname@example.org email@example.com CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) (Unaudited) Three months ended March 31, 2014 2013 Revenues $ 70,515 $ 90,097 Cost of revenues 54,936 62,637 Gross profit 15,579 27,460 Operating expenses: Research and development, net 10,439 11,906 Selling and marketing 15,420 17,533 General and administrative 5,906 6,715 Restructuring costs 936 - Total operating expenses $ 32,701 $ 36,154 Operating loss 17,122 8,694 Financial expenses, net 8,164 4,629 Loss before taxes 25,286 13,323 Taxes on income 1,677 818 Net loss $ 26,963 $ 14,141 Basic and diluted net loss per share $ 0.51 $ 0.38 Weighted average number of shares used in computing basic and diluted net loss per 52,457,168 36,755,603 share CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) (Unaudited) March 31, December 31, 2013 2014 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 26,055 $ 42,407 Short-term bank deposits 396 446 Marketable securities - 5,499 Trade receivables, net 129,976 131,166 Other accounts receivable and prepaid expenses 33,179 34,205 Deferred taxes, net 6,986 7,198 Inventories 62,951 64,239 Total current assets 259,543 285,160 NON-CURRENT ASSETS: Marketable securities 4,060 3,985 Deferred taxes, net 5,620 6,542 Severance pay funds and pension 6,883 7,065 Property and equipment, net 35,140 35,245 Intangible assets, net 6,703 7,213 Goodwill 15,036 14,935 Other non-current assets 6,995 5,826 Total non-current assets 80,437 80,811 Total assets $ 339,980 $ 365,971 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short term loans, including current maturities $ 65,032 $ 46,922 of long term loan Trade payables 64,841 77,979 Deferred revenues 5,070 7,968 Other accounts payable and accrued expenses 44,282 45,526 Total current liabilities 179,225 178,395 LONG-TERM LIABILITIES Long term bank loan, net of current maturities 8,246 10,304 Accrued severance pay and pension 13,879 13,635 Other long term liabilities 29,116 28,559 51,241 52,498 SHAREHOLDERS' EQUITY: Share capital: Ordinary shares 141 141 Additional paid-in capital 359,036 357,989 Treasury shares at cost (20,091) (20,091) Accumulated other comprehensive loss, net of (1,217) (1,569) taxes Accumulated deficit (228,355) (201,392) Total shareholders' equity 109,514 135,078 Total liabilities and shareholders' equity $ 339,980 $ 365,971 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (U.S. dollars, in thousands) (Unaudited) Three months ended March 31, 2014 2013 Cash flow from operating activities: Net loss $ (26,963) $ (14,141) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 3,378 4,038 Stock-based compensation expense 1,047 1,075 Decrease in trade and other receivables, net 1,894 23,652 Decrease in inventory, net of write-off 1,609 2,863 Decrease in deferred tax asset, net 1,317 150 Decrease in trade payables and accrued (15,058) (13,425) liabilities Decrease in deferred revenues (2,899) (1,252) Other adjustments 841 (101) Net cash provided by (used in) operating $ (34,834) $ 2,859 activities Cash flow from investing activities: Purchase of property and equipment ,net (2,850) (2,895) Investment in short and long-term bank deposits - (217) Proceeds from short and long-term bank deposits 50 - Proceeds from sale and maturities of marketable 5,161 - securities Net cash provided by (used in) investing $ 2,361 $ (3,112) activities Cash flow from financing activities: Proceeds from exercise of options - 1,137 Proceeds from short-term bank loans 18,110 3,000 Repayment of loans from financial institutions (2,058) (4,058) Net cash provided by financing activities $ 16,052 $ 79 Translation adjustments on cash and cash $ 69 $ (120) equivalents Decrease in cash and cash equivalents $ (16,352) $ (294) Cash and cash equivalents at the beginning of 42,407 47,099 the period Cash and cash equivalents at the end of the $ 26,055 $ 46,805 period RECONCILIATION OF NON-GAAP FINANCIAL RESULTS (U.S. dollars in thousands, except share and per share data) (Unaudited) Three months ended March 31, 2014 2013 GAAP (as Adjustments Non-GAAP Non-GAAP reported) Revenues $ 70,515 $ 70,515 $ 90,097 Cost of revenues 54,936 (a) 866 54,070 61,342 Gross profit 15,579 16,445 28,755 Operating expenses: Research and 10,439 (b) 2,586 7,853 10,383 development, net Selling and 15,420 (c) 1,015 14,405 16,110 marketing General and 5,906 (d) 884 5,022 5,648 administrative Restructuring costs 936 936 - - Total operating $ 32,701 $ 27,280 $ 32,141 expenses Operating loss 17,122 10,835 3,386 Financial expenses, 8,164 (e) 6,310 1,854 1,496 net Loss before taxes 25,286 12,689 4,882 Taxes on income 1,677 (f) 1,490 187 818 Net loss $ 26,963 $ 12,876 $ 5,700 Basic and diluted $ 0.51 $ 0.25 $ 0.16 net loss per share Weighted average number of shares used in computing 52,457,168 52,457,168 36,755,603 basic and diluted net loss per share Total adjustments 14,087 (a) Cost of revenues includes $0.3 million of amortization of intangible assets, $0.3 million of changes in pre-acquisition indirect tax positions, $0.1 million of stock based compensation expenses and $0.2 million of restructuring plan related costs in the three months ended March 31, 2014. (b)Research and development expenses include $2.1 million of restructuring plan related costs and $0.5 million of stock-based compensation expenses in the three months ended March 31, 2014. (c) Selling and marketing expenses include $0.2 million of amortization of intangible assets, $0.5 million of restructuring plan related costs and $0.3 million of stock based compensation expenses in the three months ended March 31, 2014. (d) General and administrative expenses include $0.6 million of restructuring plan related costs and $0.3 million of stock based compensation expenses in the three months ended March 31, 2014. (e) Financial expenses include $4.1 million of currency devaluation in Venezuela and $2.2 million related to certain transactions to expatriate cash from Venezuela and Argentina in the three months ended March 31, 2014. (f) Taxes on income include $1.5 million of non-cash tax adjustments in the three months ended March 31, 2014. RECONCILIATION BETWEEN REPORTED AND NON-GAAP NET LOSS (U.S. dollars in thousands) (Unaudited) Three months ended March 31, 2014 2013 Reported GAAP net loss 26,963 14,141 Stock based compensation expenses 1,047 1,075 Amortization of intangible assets 523 666 Inventory step-up - 459 Restructuring expenses 4,440 2,844 Changes in pre-acquisition indirect tax positions 277 264 Currency devaluation in Venezuela 4,140 3,133 Expenses related to certain transactions to expatriate 2,170 - cash from Venezuela and Argentina Non-cash tax adjustments 1,490 - Non-GAAP net loss 12,876 5,700 SOURCE Ceragon Networks Ltd. Website: http://www.ceragon.com
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Ceragon Networks Reports First Quarter 2014 Financial Results
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