Ceragon Networks Reports Third Quarter 2002 Financial Results.Business Editors, High Tech Writers TEL AVIV Tel Aviv (tĕl əvēv`), city (1994 pop. 355,200), W central Israel, on the Mediterranean Sea. Oficially named Tel Aviv–Jaffa, it is Israel's commercial, financial, communications, and cultural center and the core of its largest , Israel--(BUSINESS WIRE)--Oct. 24, 2002 Ceragon Ceragon Networks Ltd. (NASDAQ: CRNT and TASE: CRNT) is a provider of high-capacity wireless backhaul hardware solutions, which provide high-capacity network connectivity for cellular network infrastructure, fixed networks and private networks. Networks(R) Ltd. (Nasdaq:CRNT CRNT Current ), www.ceragon.com, a global provider of high-capacity broadband wireless See wireless broadband. systems, today reported results for the third quarter ending September September: see month. 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(a) 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 di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. 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 (a) 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 Katz , Bernard 1911-2003. German-born British physiologist. He shared a 1970 Nobel Prize for the study of nerve impulse transmission. , president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Ceragon Networks Ltd. "During this past quarter, we continued generating new and follow-on fol·low-on adj. Following as a related or consequent aspect or development: "Such contracts involve follow-on sales of maintenance services" Christian Science Monitor. orders and recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenues from cellular carriers, incumbent Refers to an entity that is currently in power. For example, in politics, the "incumbent senator" is the person who holds that office today. An "incumbent company" is an organization that has been providing goods and services for some time. See ILEC. operators and enterprise organizations. We also expanded our base of new customers and extended our geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. reach into additional regions within Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and
Asia."A conference call discussing Ceragon's results for the second quarter of 2002 will take place today, October October: see month. 24, 2002, at 11:00 a.m. (EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York 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. (a) 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 one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges of $17.8 million for an inventory write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. and a fixed asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. presented in cost of revenues. The pro-forma results for the nine months ended September 30, 2001 and for the year ended December December: see month. 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 restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). 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 cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. of high-capacity network connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. . Ceragon's FibeAir(TM) product family was uniquely designed for cellular operators, enterprises and communications service providers A Communications Service Provider or CSP is a company that transports information electronically. The term encompasses public and private companies in the wireline, wireless, Internet, cable, satellite, and managed services businesses. to progressively build networks to meet the growing demand for value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: broadband services See broadband and broadband service provider. . The modular FibeAir system operates across multiple frequencies from 7 to 38 GHz and supports integrated high-capacity services over IP, SONET/SDH (Synchronous Optical NETwork/Synchronous Digital Hierarchy) A common reference to SONET networks worldwide. See SONET. and ATM networks. Ceragon's equipment complies with North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. 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 built-in - (Or "primitive") A built-in function or operator is one provided by the lowest level of a language implementation. This usually means it is not possible (or efficient) to express it in the language itself. SONET/SDH add-drop multiplexer Not to be confused with optical add-drop multiplexer. An add-drop multiplexer (ADM) is an important element of optical fiber networks. A multiplexer combines, or multiplexes, several lower-bandwidth streams of data into a single beam of light. (ADM See add/drop multiplexer. (language) ADM - A picture query language, extension of Sequel2. ["An Image-Oriented Database System", Y. Takao et al, in Database Techniques for Pictorial Applications, A. Blaser ed, pp. 527-538]. ). 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 microwave, electromagnetic wave having a frequency range from 1,000 megahertz (MHz) to 300,000 MHz, corresponding to a wavelength range from 300 mm (about 12 in.) to 1 mm (about 0.04 in.). Like light waves, microwaves travel essentially in straight lines. Fiber(TM) are trademarks of Ceragon Networks Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
PRO-FORMA(a)
Year ended
Three months ended Nine months ended December
September 30, September 30, 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 25,369
--------- ----------- ----------- ----------- -----------
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 loss
per share 22,425,096 21,064,343 22,334,970 20,863,131 21,099,336
=========== =========== =========== =========== ===========
(a) 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
Three months ended Nine months ended Year 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
========== ========== ========== ========== ==========
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
========= =========
This press release may contain statements concerning Ceragon's future prospects that are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date any such statement is made. |
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